UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q



ý	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For Quarterly Period Ended ~~September~~June 30, ~~2017~~2019



¨	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)



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

1420 Kensington Road, Suite 220, Oak Brook, Illinois	60523
(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

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



Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, Par Value $0.01 Per Share	CTAM	OCTQX Best Market

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 (§232.405 of this chapter) 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, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.



Large accelerated filer	¨			Accelerated filer	¨
Non-accelerated filer	¨	~~(Do not check if a smaller reporting company)~~	ý	Smaller reporting company	ý
				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

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

Yesý No¨

The number of shares outstanding of the registrant’s common stock as of ~~November 10, 2017~~August 12, 2019 was ~~3,734,109~~3,649,658 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~~Loss~~) Income~~	4
	Condensed Consolidated Statements of Cash Flows	5
	Condensed Consolidated Statements of Stockholders' Equity (Deficit)	6
	Notes to Condensed Consolidated Financial Statements	87
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	3221
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29
Item 4.	Controls and Procedures	4429

Part II. Other Information
Item 1.	Legal Proceedings	4530
Item 1A.	Risk Factors	4530
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5430
Item 3.	Defaults Upon Senior Securities	5430
Item 4.	Mine Safety Disclosures	30
Item 5.	Other Information	30
Item 6.	Exhibits	5430

~~Exhibit Index~~		55

Signature		5631

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. Condensed Consolidated Balance Sheets							A.M. Castle & Co. Condensed Consolidated Balance Sheets
	Successor				Predecessor			As of
	September 30, 2017				December 31, 2016			June 30, 2019			December 31, 2018
ASSETS
Current assets:
Cash and cash equivalents	$	11,116			$	35,624		$	6,534		$	8,668
Accounts receivable, less allowances of $422 and $1,945, respectively	76,802				64,385
Accounts receivable, less allowances of $1,701 and $1,364, respectively								93,337			79,757
Inventories	154,321				146,603			157,715			160,686
Prepaid expenses and other current assets	16,223				10,141			10,593			14,344
Income tax receivable	388				433			1,268			1,268
Total current assets	258,850				257,186			269,447			264,723
Goodwill and intangible assets, net	8,175				4,101
Goodwill and intangible assets								8,176			8,176
Prepaid pension cost	9,518				8,501			2,131			1,754
Deferred income taxes	—				381			1,268			1,261
Operating right-of-use assets								32,175			—
Other noncurrent assets	823				9,449			867			1,278
Property, plant and equipment:
Land	5,940				2,070			5,579			5,577
Buildings	22,017				37,341			20,936			21,218
Machinery and equipment	29,693				125,836			40,734			38,394
Property, plant and equipment, at cost	57,650				165,247			67,249			65,189
Accumulated depreciation	(502		)		(115,537		)	(16,075		)	(11,989		)
Property, plant and equipment, net	57,148				49,710			51,174			53,200
Total assets	$	334,514			$	329,328		$	365,238		$	330,392
LIABILITIES AND STOCKHOLDERS’ (EQUITY) DEFICIT
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable	$	47,170			$	33,083		$	48,475		$	42,719
Accrued and other current liabilities	14,586				19,854			13,109			16,631
Operating lease liabilities								6,725			—
Income tax payable	—				209			1,519			1,589
Short-term borrowings	3,581				—			7,979			5,498
Current portion of long-term debt	118				137
Current portion of finance leases								631			119
Total current liabilities	65,455				53,283			78,438			66,556
Long-term debt, less current portion	244,347				286,459			260,527			245,966
Deferred income taxes	1,785				—			6,478			7,540
Finance leases, less current portion								8,483			61
Build-to-suit liability	9,973				12,305			—			9,975
Other noncurrent liabilities	3,931				5,978			2,964			3,334
Pension and postretirement benefit obligations	6,395				6,430			6,300			6,321
Commitments and contingencies (Note 15)
Stockholders’ equity (deficit):
Predecessor 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 December 31, 2016	—				—
Predecessor common stock, $0.01 par value—60,000 shares authorized; 32,768 shares issued and 32,566 outstanding at December 31, 2016	—				327
Successor common stock, $0.01 par value—200,000 Class A shares authorized with 3,734 shares issued and outstanding at September 30, 2017	20			—	—
Predecessor additional paid-in capital	—				244,825
Successor additional paid-in capital	5,791			—	—
Noncurrent operating lease liabilities								25,486			—
Commitments and contingencies (see Note 13)
Stockholders’ deficit:
Common stock, $0.01 par value—200,000 Class A shares authorized with 3,818 shares issued and 3,650 shares outstanding at June 30, 2019, and 3,803 shares issued and outstanding at December 31, 2018								38			38
Additional paid-in capital								58,556			55,421
Accumulated deficit	(821		)		(253,291		)	(66,533		)	(50,472		)
Accumulated other comprehensive loss	(2,362		)		(25,939		)	(15,045		)	(14,348		)
Treasury stock, at cost—no shares at September 30, 2017 and 202 shares at December 31, 2016	—				(1,049		)
Total stockholders’ equity (deficit)	2,628				(35,127		)
Total liabilities and stockholders’ equity (deficit)	$	334,514			$	329,328
Treasury stock, at cost — 168 shares at June 30, 2019 and no shares at December 31, 2018								(454		)	—
Total stockholders’ deficit								(23,438		)	(9,361		)
								$	365,238		$	330,392

The accompanying notes are an integral part of these financial statements.

A.M. Castle & Co.
Condensed Consolidated Statements of Operations
and Comprehensive (Loss) Income
Successor Predecessor
September 1, 2017 Through September 30, 2017 July 1, 2017
Through
August 31, 2017 Three Months
Ended
September 30, 2016

Net sales $ 41,725
$ 81,518
$ 124,893
Costs and expenses:
Cost of materials (exclusive of depreciation and amortization) 31,482
63,406
92,406
Warehouse, processing and delivery expense 5,972
12,277
19,561
Sales, general and administrative expense 4,846
10,048
16,820
Restructuring expense —
398
912
Depreciation and amortization expense 502
2,391
3,845
Total costs and expenses 42,802
88,520
133,544
Operating loss (1,077 ) (7,002 ) (8,651 )
Interest expense, net 1,408
2,602
8,743
Financial restructuring expense —
424
—
Unrealized gain on embedded debt conversion option —
—
(6,285 )
Other (income) expense, net (2,078 ) (823 ) 6,250
Reorganization items, net 128
(80,033 ) —
(Loss) income from continuing operations before income taxes and equity in losses of joint venture (535 ) 70,828
(17,359 )
Income tax expense (benefit) 286
(1,395 ) 903
(Loss) income from continuing operations before equity in losses of joint venture (821 ) 72,223
(18,262 )
Equity in losses of joint venture —
—
(36 )
(Loss) income from continuing operations (821 ) 72,223
(18,298 )
Loss from discontinued operations, net of income taxes —
—
(1,688 )
Net (loss) income $ (821 ) $ 72,223
$ (19,986 )

Basic and diluted earnings (loss) per common share:
Continuing operations $ (0.41 ) $ 2.27
$ (0.57 )
Discontinued operations —
—
(0.05 )
Net basic and diluted (loss) earnings per common share $ (0.41 ) $ 2.27
$ (0.62 )

Comprehensive (loss) income:
Net (loss) income $ (821 ) $ 72,223
$ (19,986 )
Change in unrecognized pension and postretirement benefit costs, net of tax —
9,369
456
Foreign currency translation adjustments, net of tax (2,362 ) 17,827
2,967
Comprehensive (loss) income $ (3,183 ) $ 99,419
$ (16,563 )



A.M. Castle & Co. Condensed Consolidated Statements of Operations and Comprehensive Loss
	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
Net sales	$	147,930		$	150,414		$	297,457		$	296,287
Costs and expenses:
Cost of materials (exclusive of depreciation)	109,941			111,061			220,899			220,965
Warehouse, processing and delivery expense	20,541			21,165			40,818			41,520
Sales, general and administrative expense	16,477			16,974			32,979			33,522
Depreciation expense	2,130			2,362			4,251			4,738
Total costs and expenses	149,089			151,562			298,947			300,745
Operating loss	(1,159		)	(1,148		)	(1,490		)	(4,458		)
Interest expense, net	9,850			8,129			19,299			15,255
Other (income) expense, net	(2,480		)	673			(4,082		)	(4,101		)
Loss before income taxes	(8,529		)	(9,950		)	(16,707		)	(15,612		)
Income tax benefit	(225		)	(1,437		)	(400		)	(1,958		)
Net loss	$	(8,304	)	$	(8,513	)	$	(16,307	)	$	(13,654	)

Basic and diluted loss per common share	$	(3.77	)	$	(4.26	)	$	(7.58	)	$	(6.83	)

Comprehensive loss:
Net loss	$	(8,304	)	$	(8,513	)	$	(16,307	)	$	(13,654	)
Change in unrecognized pension and postretirement benefit costs, net of tax	23			—			46			—
Foreign currency translation adjustments, net of tax	(279		)	(1,124		)	(743		)	(1,999		)
Comprehensive loss	$	(8,560	)	$	(9,637	)	$	(17,004	)	$	(15,653	)

The accompanying notes are an integral part of these financial statements.



A.M. Castle & Co. Condensed Consolidated Statements of Cash Flows
	Six Months Ended
	June 30,
	2019			2018
Operating activities:
Net loss	$	(16,307	)	$	(13,654	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	4,251			4,738
Amortization of deferred financing costs and debt discount	5,394			3,628
Loss (gain) on sale of property, plant and equipment	154			(5		)
Unrealized foreign currency gain	(748		)	(11		)
Noncash interest paid in kind	7,788			6,138
Noncash rent expense	476			—
Noncash compensation expense	1,191			1,342
Deferred income taxes	(1,836		)	—
Other, net	—			298
Changes in assets and liabilities:
Accounts receivable	(13,354		)	(17,283		)
Inventories	3,213			(10,776		)
Prepaid expenses and other current assets	3,764			(3,586		)
Other noncurrent assets	(13		)	806
Prepaid pension costs	(377		)	(1,376		)
Accounts payable	5,573			10,663
Income tax payable and receivable	(770		)	(2,288		)
Accrued and other current liabilities	(3,546		)	964
Lease liabilities	(62		)	—
Pension and postretirement benefit obligations and other noncurrent liabilities	(89		)	(195		)
Net cash used in operating activities	(5,298		)	(20,597		)
Investing activities:
Capital expenditures	(2,627		)	(3,379		)
Proceeds from sale of property, plant and equipment	21			5
Net cash used in investing activities	(2,606		)	(3,374		)
Financing activities:
Proceeds from long-term debt including credit facilities	3,500			39,461
Repayments of long-term debt including credit facilities	—			(17,570		)
Proceeds from (repayments of) short-term borrowings, net	2,528			(852		)
Principal paid on financing leases	(301		)	—
Payments of debt issue costs	—			(482		)
Payments of build-to-suit liability	—			(897		)
Net cash from financing activities	5,727			19,660
Effect of exchange rate changes on cash and cash equivalents	43			(157		)
Net change in cash and cash equivalents	(2,134		)	(4,468		)
Cash and cash equivalents - beginning of year	8,668			11,104
Cash and cash equivalents - end of period	$	6,534		$	6,636

The accompanying notes are an integral part of these financial statements.

A.M. Castle & Co.
Condensed Consolidated Statements of Operations
and Comprehensive (Loss) Income Continued
Successor Predecessor
September 1, 2017 Through September 30, 2017 January 1, 2017
Through
August 31, 2017 Nine Months
Ended
September 30, 2016

Net sales $ 41,725
$ 353,926
$ 419,433
Costs and expenses:
Cost of materials (exclusive of depreciation and amortization) 31,482
266,495
323,808
Warehouse, processing and delivery expense 5,972
50,314
63,772
Sales, general and administrative expense 4,846
39,139
51,486
Restructuring expense —
566
14,674
Depreciation and amortization expense 502
10,150
12,498
Total costs and expenses 42,802
366,664
466,238
Operating loss (1,077 ) (12,738 ) (46,805 )
Interest expense, net 1,408
23,402
28,711
Financial restructuring expense —
7,024
—
Unrealized loss (gain) on embedded debt conversion option —
146
(7,569 )
Debt restructuring loss, net —
—
6,562
Other (income) expense, net (2,078 ) (3,582 ) 4,587
Reorganization items, net 128
(74,531 ) —
(Loss) income from continuing operations before income taxes and equity in losses of joint venture (535 ) 34,803
(79,096 )
Income tax expense (benefit) 286
(1,387 ) 1,099
(Loss) income from continuing operations before equity in losses of joint venture (821 ) 36,190
(80,195 )
Equity in losses of joint venture —
—
(4,177 )
(Loss) income from continuing operations (821 ) 36,190
(84,372 )
Income from discontinued operations, net of income taxes —
—
6,246
Net (loss) income $ (821 ) $ 36,190
$ (78,126 )

Basic and diluted earnings (loss) per common share:
Continuing operations $ (0.41 ) $ 1.12
$ (3.02 )
Discontinued operations —
—
0.22
Net basic and diluted (loss) income per common share $ (0.41 ) $ 1.12
$ (2.80 )

Comprehensive (loss) income:
Net (loss) income $ (821 ) $ 36,190
$ (78,126 )
Change in unrecognized pension and postretirement benefit costs, net of tax —
9,797
1,368
Foreign currency translation adjustments, net of tax (2,362 ) 16,142
(497 )
Comprehensive (loss) income $ (3,183 ) $ 62,129
$ (77,255 )

~~The accompanying notes are an integral part of these financial statements.~~



A.M. Castle & Co. Consolidated Statements of Stockholders' Equity (Deficit)
	Common Shares	Treasury Shares		Common Stock		Treasury Stock			Additional Paid-in Capital		(Accumulated Deficit) Retained Earnings			Accumulated Other Comprehensive Loss			Total
Balance as of March 31, 2018	3,734	—		$	37	$	—		$	51,526	$	(18,468	)	$	(3,544	)	$	29,551
Net loss	—	—		—		—			—		(8,513		)	—			(8,513		)
Foreign currency translation, net of tax	—	—		—		—			—		—			(1,124		)	(1,124		)
Change in unrecognized pension and postretirement benefit costs, $0 tax effect	—	—		—		—			—		—			—			—
Reclassification to equity of interest paid in kind attributable to conversion option, net of $0 tax effect	—	—		—		—			1,150		—			—			1,150
Share-based compensation	69	—		—		—			454		—			—			454
Vesting of restricted shares and other	—	—		1		—			82		—			—			83
Balance as of June 30, 2018	3,803	—		$	38	$	—		$	53,212	$	(26,981	)	$	(4,668	)	$	21,601

Balance as of March 31, 2019	3,803	(168	)	$	38	$	(454	)	$	57,247	$	(58,229	)	$	(14,789	)	$	(16,187	)
Net loss	—	—		—		—			—		(8,304		)	—			(8,304		)
Foreign currency translation, net of tax	—	—		—		—			—		—			(279		)	(279		)
Change in unrecognized pension and postretirement benefit costs, net of $0 tax effect	—	—		—		—			—		—			23			23
Reclassification to equity of interest paid in kind attributable to conversion option, net of $320 tax effect	—	—		—		—			912		—			—			912
Share-based compensation	—	—		—		—			371		—			—			371
Vesting of restricted shares and other	15	—		—		—			26		—			—			26
Balance as of June 30, 2019	3,818	(168	)	$	38	$	(454	)	$	58,556	$	(66,533	)	$	(15,045	)	$	(23,438	)

A.M. Castle & Co.
Condensed Consolidated Statements of Cash Flows
Successor Predecessor
September 1, 2017 Through September 30, 2017
January 1, 2017
Through
August 31, 2017

Nine Months
Ended
September 30, 2016

Operating activities:
Net (loss) income $ (821 ) $ 36,190
$ (78,126 )
Less: Income from discontinued operations, net of income taxes —
—
6,246
(Loss) income from continuing operations (821 ) 36,190
(84,372 )
Adjustments to reconcile (loss) income from continuing operations to net cash used in operating activities of continuing operations:
Depreciation and amortization 502
10,150
12,498
Amortization of deferred gain (9 ) (56 ) (92 )
Amortization of deferred financing costs and debt discount 73
3,810
4,258
Debt restructuring loss, net —
—
6,562
Loss from lease termination —
—
4,452
Unrealized loss (gain) on embedded debt conversion option —
146
(7,569 )
Noncash reorganization items, net —
(87,107 ) —
Loss on sale of property, plant and equipment —
7
1,720
Unrealized gain on commodity hedges —
—
(813 )
Unrealized foreign currency transaction (gain) loss (1,292 ) (4,439 ) 2,484
Equity in losses of joint venture —
—
4,141
Noncash interest paid in kind 951
—
—
Share-based compensation expense 215
630
916
Deferred income taxes —
(953 ) 113
Other, net 75
593
679
Changes in assets and liabilities:
Accounts receivable (3,658 ) (6,061 ) (5,128 )
Inventories (784 ) (2,703 ) 34,780
Prepaid expenses and other current assets (3,050 ) (3,100 ) (301 )
Other noncurrent assets 567
1,664
(302 )
Prepaid pension costs (168 ) (849 ) (406 )
Accounts payable 235
8,602
6,026
Income tax payable and receivable 174
(340 ) 198
Accrued and other current liabilities 523
(6,002 ) 8,604
Pension and postretirement benefit obligations and other noncurrent liabilities (93 ) (471 ) 865
Net cash used in operating activities of continuing operations (6,560 ) (50,289 ) (10,687 )
Net cash used in operating activities of discontinued operations —
—
(6,907 )
Net cash used in operating activities (6,560 ) (50,289 ) (17,594 )
Investing activities:
Proceeds from sale of investment in joint venture —
—
31,550
Capital expenditures (924 ) (2,850 ) (2,431 )
Proceeds from sale of property, plant and equipment 5
619
2,829
Proceeds from release of cash collateralization of letters of credit —
7,492
—
Net cash (used in) from investing activities of continuing operations (919 ) 5,261
31,948



A.M. Castle & Co. Consolidated Statements of Stockholders' Equity (Deficit)
	Common Shares	Treasury Shares		Common Stock		Treasury Stock			Additional Paid-in Capital		(Accumulated Deficit) Retained Earnings			Accumulated Other Comprehensive Loss			Total
Balance as of December 31, 2017	3,734	—		$	37	$	—		$	49,944	$	(13,327	)	$	(2,669	)	$	33,985
Net loss	—	—		—		—			—		(13,654		)	—			(13,654		)
Foreign currency translation, net of tax	—	—		—		—			—		—			(1,999		)	(1,999		)
Change in unrecognized pension and postretirement benefit costs, $0 tax effect	—	—		—		—			—		—			—			—
Reclassification to equity of interest paid in kind attributable to conversion option, net of $0 tax effect	—	—		—		—			2,278		—			—			2,278
Share-based compensation	69	—		—		—			908		—			—			908
Vesting of restricted shares and other	—	—		1		—			82		—			—			83
Balance as of June 30, 2018	3,803	—		$	38	$	—		$	53,212	$	(26,981	)	$	(4,668	)	$	21,601

Balance as of December 31, 2018	3,803	—		$	38	$	—		$	55,421	$	(50,472	)	$	(14,348	)	$	(9,361	)
Cumulative effect from adoption of the new lease standard (Leases: Topic 842) (Note 8)	—	—		$	—	—			—		246			—			246
Net loss	—	—		—		—			—		(16,307		)	—			(16,307		)
Foreign currency translation, net of tax	—	—		—		—			—		—			(743		)	(743		)
Change in unrecognized pension and postretirement benefit costs, net of $0 tax effect	—	—		—		—			—		—			46			46
Reclassification to equity of interest paid in kind attributable to conversion option, net of $635 tax effect	—	—		—		—			1,808		—			—			1,808
Share-based compensation	—	—		—		—			772		—			—			772
Vesting of restricted shares and other	15	(168	)	—		(454		)	555		—			—			101
Balance as of June 30, 2019	3,818	(168	)	$	38	$	(454	)	$	58,556	$	(66,533	)	$	(15,045	)	$	(23,438	)

A.M. Castle & Co.
Condensed Consolidated Statements of Cash Flows
Successor Predecessor
September 1, 2017 Through September 30, 2017
January 1, 2017
Through
August 31, 2017

Nine Months
Ended
September 30, 2016

Net cash from investing activities of discontinued operations —
—
53,570
Net cash (used in) from investing activities (919 ) 5,261
85,518
Financing activities:
Proceeds from long-term debt including credit facilities 8,677
195,026
581,052
Repayments of long-term debt including credit facilities (25 ) (175,414 ) (640,415 )
Short-term borrowings (repayments), net (216 ) 3,797
—
Payments of debt restructuring costs —
—
(8,677 )
Payments of debt issue costs —
(1,831 ) —
Payments of build-to-suit liability —
(3,000 ) (687 )
Net cash from (used in) financing activities 8,436
18,578
(68,727 )
Effect of exchange rate changes on cash and cash equivalents 95
890
(292 )
Net change in cash and cash equivalents 1,052
(25,560 ) (1,095 )
Cash and cash equivalents - beginning of period 10,064
35,624
11,100
Cash and cash equivalents - end of period $ 11,116
$ 10,064
$ 10,005

The accompanying notes are an integral part of these financial statements.

A. M. Castle & Co.

Notes to Condensed Consolidated Financial Statements

Unaudited - Amounts in thousands except per share data and percentages

(1) Basis of Presentation

As previously disclosed, on June 18, 2017 (the "Petition Date"), A. M. Castle & Co. (the "Company") and four of its subsidiaries (together with the Company, the "Debtors") filed voluntary petitions for reorganization under chapter 11 of the United States Bankruptcy Code (the "Bankruptcy Code") with the United States Bankruptcy Court for the District of Delaware in Wilmington, Delaware (the "Bankruptcy Court"). The four subsidiaries in the chapter 11 cases were 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. On August 2, 2017, the Bankruptcy Court entered an order (the "Confirmation Order") confirming the Plan. On August 31, 2017 (the "Effective Date"), the Plan became effective pursuant to its terms and the Debtors emerged from their chapter 11 cases. Refer to ~~Note 2 - Bankruptcy Related Disclosures.~~

The condensed consolidated financial statements included herein have been prepared to reflect the application of FASB Accounting Standards Codification ("ASC") No. 852, "Reorganizations" and ASC 805, "Business Combinations". Accordingly, the Company adopted fresh-start accounting upon emergence from their Chapter 11 Cases and became a new entity for financial reporting purposes as of September 1, 2017. For accounting purposes all emergence related transactions of the Predecessor including the impact of the issuance of the Successor common stock, the entry into a new asset-based revolving credit facility and new senior secured convertible notes, and the accelerated debt obligations of the Company that were satisfied pursuant to the terms of the Plan, were recorded as of August 31, 2017. Accordingly, the Condensed Consolidated Financial Statements for the Successor are not comparable to the consolidated financial statements for the Predecessor.

Also in connection with the adoption of fresh-start accounting, the Company elected to make an accounting policy change related to the accounting for stock-based compensation. The Predecessor estimated the level of forfeitures expected to occur at the time of each grant and recorded compensation expense only for those stock-based awards that it ultimately expected would vest. The estimate was based on the Company's historical rates of forfeitures and was updated periodically. The Successor has elected to no longer estimate the number of stock-based awards expected to vest but rather, will account for forfeitures as they occur.

The Condensed Consolidated Financial Statements of A.M. Castle & Co. and its consolidated subsidiaries (collectively, the "Company") included herein and the Notes thereto have been prepared by 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”). This report contains Condensed Consolidated Financial Statements of the Company as of September 30, 2017 (Successor), for the three-month and nine-month periods ended September 30, 2016 (Predecessor), for the period from July 1, 2017 to August 31, 2017 (Predecessor), for the period from January 1, 2017 to August 31, 2017 (Predecessor), and for the period from September 1, 2017 to September 30, 2017 (Successor). The Condensed Consolidated Balance Sheet at December 31, ~~2016 (Predecessor)~~2018 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 the Company's 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~~Consolidated Financial Statements and the ~~notes~~Notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2018. The ~~2017~~ ~~interim~~operating results for the three and six months ended June 30, 2019, as reported herein, may not necessarily be indicative of the ~~results of the~~ Company’s ~~operations~~operating results for the full year.

The Company has reclassified certain prior year presentations to conform to the current period presentation.

(2) ~~Bankruptcy Related Disclosures~~

~~Chapter 11 Bankruptcy Filing~~

On the Petition Date, the Debtors filed voluntary chapter 11 petitions for reorganization under the Bankruptcy Code with the Bankruptcy Court pursuant to the terms of a Restructuring Support Agreement (as defined below) that contemplated the reorganization of the Debtors pursuant to a prepackaged plan of reorganization. The chapter 11 cases were consolidated for procedural purposes only and were administered jointly under the caption ~~In re Keystone Tube Company, LLC., et al.~~ ~~(Case No. 17-11330). No trustee was appointed in the chapter 11 cases, and during the~~

pendency of the chapter 11 cases, the Debtors continued to operate their business as “debtors-in-possession” subject to the supervision and orders of the Bankruptcy Court in accordance with the Bankruptcy Code.

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 (as defined below) and the 11.00% Senior Secured Term Loan Credit Facilities due 2018 issued pursuant thereto (the "Credit Facilities"), (ii) the Indenture dated February 8, 2016 (the "Senior Notes Indenture") and the 12.75% Senior Secured Notes due 2018 issued pursuant thereto (the "12.75% 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 "5.25% 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 were 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 Restructuring Support Agreement (as defined below) and the Bankruptcy Code.

Prior to the Petition Date, 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 the Credit Facility term loans made to the Company under a Credit and Guaranty Agreement, dated December 8, 2016, by and among the Company, Highbridge International Capital Management, LLC, Corre Partners Management, LLC, Whitebox Credit Partners, L.P., WFF Cayman II Limited, and SGF, LLC and Cantor Fitzgerald Securities, among others (as amended, 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.

The Company continued its operations without interruption during the pendency of the chapter 11 cases and reorganization process. 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.

~~Plan of Reorganization and Emergence from Chapter 11~~

~~Pursuant to the terms of the RSA, on the Petition Date, the Debtors filed the Plan with the Bankruptcy Court.~~

~~The Plan allowed general unsecured claims and claims that are unimpaired under the Plan to be paid in full in cash.~~

On August 2, 2017, the Bankruptcy Court entered the Confirmation Order approving and confirming the Plan. On the Effective Date, the Plan became effective pursuant to the terms described above and the Debtors emerged from their Chapter 11 Cases.

~~Key components of the Plan, which became effective on August 31, 2017, include:~~

Entry into a new senior secured exit financing facility in the form of an asset-based revolving credit facility (the "New ABL Facility") with PNC Bank, National Association, as lender and as administrative and collateral agent (the “Agent”), and the other lenders party thereto. The New ABL Agreement provides for a $125,000 senior secured, revolving credit facility for the Company. The proceeds of the advances under the New ABL Facility may only be used to (i) pay certain fees and expenses to the Agent and the lenders under the New ABL Facility, (ii) provide for Borrowers' working capital needs and reimburse drawings under letters of credit, (iii) repay the obligations under the Debtor-in-Possession Revolving Credit and Security Agreement dated as of June 10, 2017 ("DIP Facility"), by and among the Company, the lenders party thereto, and PNC Bank, National Association, and certain other existing indebtedness, and (iv) provide for the Borrowers' capital expenditure needs, in accordance with the New ABL Facility.

◦

On the Effective Date, in connection with its entering into the New ABL Agreement, the Company borrowed an aggregate amount equal to $78,797, proceeds from which, along with proceeds of the New Money Notes of $38,002, were used to pay down all outstanding indebtedness, accrued interest, and related fees of the Company under the Credit Facilities Agreement and the borrowings outstanding under the DIP Facility.

Entry into an Indenture (the “Second Lien Notes Indenture”) with Wilmington Savings Fund Society, FSB (“WSFS, FSB”), as trustee and collateral agent (“Indenture Agent”) and, pursuant thereto, issued approximately$162,502 in aggregate original principal amount of its 5.00% / 7.00% Convertible Senior Secured Paid-in-Kind ("PIK") Toggle Notes due 2022 (the “Second Lien Notes”), excluding restricted notes issued under the A.M. Castle & Co. 2017 Management Incentive Plan (See ~~Note 11 - Share Based Compensation, for full description).~~

~~The Second Lien Notes were issued as follows:~~


◦	~~$111,875 in aggregate principal Second Lien Notes issued to holders of Prepetition Second Lien Secured Claims in partial satisfaction of their claims;~~


◦	~~$3,125 in aggregate principal Second Lien Notes issued to holders of Prepetition Third Lien Secured Claims in partial satisfaction of their claims; and~~


◦	~~$47,502 in aggregate principal Second Lien Notes issued to the Commitment Parties pursuant to the Commitment Agreement (the "New Money Notes").~~

~~As a result of these Plan actions, all of the outstanding indebtedness of the 12.75% Secured Notes and 5.25% Convertible Notes was discharged and canceled.~~

~~Issuance of an aggregate of 2,000 shares of new common stock, as follows:~~


◦	~~1,300 shares issued to holders of Prepetition Second Lien Secured Claims in partial satisfaction of their claims;~~


◦	~~300 shares issued to holders of Prepetition Third Lien Secured Claims in partial satisfaction of their claims; and~~


◦	~~400 shares issued to participating holders of the Company's outstanding common stock as of August 2, 2017.~~

~~Payment in full of all general unsecured claims and claims that were unimpaired under the Plan in cash in the ordinary course of business.~~

~~Cash payment of~~ ~~$6,646~~ ~~to holders of Prepetition Second Lien Secured Claims.~~

~~Cash payment of a put option fee of $2,000 to the Commitment Parties pursuant to the Commitment Agreement.~~

All agreements, instruments, and other documents evidencing, relating to or connected with any equity interests of the Company (which include warrants to purchase the Company’s prior common stock and unvested/unexercised awards under any existing pre-Effective Date management incentive compensation plans) were canceled without recovery.

All prior director, officer and employee incentive plans, as well as the awards issued thereunder, were canceled. The new A.M. Castle & Co. 2017 Management Incentive Plan, under which persons eligible to receive awards include directors, officers and employees of the Company and its subsidiaries, became effective.

~~Reporting During Bankruptcy~~

During the pendency of the Company's Chapter 11 Cases, expenses and income directly associated with the chapter 11 proceedings were 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 liabilities subject to compromise ("LSTC") at their estimated allowed claim amounts, as such adjustments were determined. In addition, effective as of the Petition Date and during the pendency of the Company's Chapter 11 Cases, the Company discontinued recording interest expense on outstanding prepetition debt classified as LSTC. Upon the Company's emergence from its Chapter 11 Cases, the Company settled and extinguished or reinstated liabilities that were subject to compromise.

~~Fresh-Start Accounting~~

~~Under ASC No. 852,~~ ~~Reorganizations~~, fresh-start accounting is required upon emergence from Chapter 11 if (i) the reorganization value of the assets of the emerging entity immediately before the date of confirmation is less than the total of all post-petition liabilities and allowed claims; and (ii) holders of existing voting shares immediately before confirmation receive less than 50% of the voting shares of the emerging entity. The Company qualified for and adopted fresh-start accounting as of the Effective Date. Adopting fresh-start accounting results in a new reporting entity with

no beginning retained earnings or deficits. The cancellation of all existing common shares outstanding on the Effective Date and issuance of new shares of the reorganized entity resulted in a change of control of the Company under ASC No. 852.

Adoption of fresh-start accounting resulted in the Company becoming a new entity for financial reporting purposes and the recording of the Company’s assets and liabilities at their fair value as of the Effective Date, with the excess of reorganization value over net asset values recorded as goodwill, in conformity with ASC No. 805, ~~Business Combinations~~. The estimated fair values of the Company’s assets and liabilities as of that date differed from the recorded values of its assets and liabilities as reflected in its historical consolidated financial statements. In addition, the Company’s adoption of fresh-start accounting affected its results of operations following the fresh-start reporting date, as the Company had a new basis in its assets and liabilities. The Company also adopted one new accounting policy in connection with its adoption of fresh-start accounting (see ~~Note 1 - Basis of Presentation)~~. Consequently, the Company’s financial statements on or after the Effective Date are not comparable with the financial statements prior to that date and the historical financial statements before the Effective Date are not reliable indicators of its financial condition and results of operations for any period after it adopted fresh-start accounting.

~~Reorganization Value~~

Reorganization value is the value attributed to an entity emerging from bankruptcy, as well as the expected net realizable value of those assets that will be disposed before emergence occurs. This value is viewed as the value of the entity before considering liabilities and approximates the amount a willing buyer would pay for the assets of the entity immediately after emergence. Fresh-start accounting 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, with the excess of reorganization value over net asset values recorded as goodwill. The Company’s valuation of the reorganized Company, which was included in the Disclosure Statement related to the Plan, estimated the enterprise value of the Company to be in a range between $234 million and $264 million. The Company estimated the enterprise value of the Successor Company to be $244 million. The estimated enterprise value and the equity value are highly dependent on the achievement of the future financial results contemplated in the projections that were set forth in the Plan. The estimates and assumptions made in the valuation are inherently subject to significant uncertainties. The primary assumptions for which there is a reasonable possibility of the occurrence of a variation that would have significantly affected the reorganization value include the assumptions regarding revenue growth, operating expenses, the amount and timing of capital expenditures and the discount rate utilized.

~~In order to determine the reorganization value, the Company estimated the enterprise value of the Successor utilizing the discounted cash flow analysis.~~

To estimate the fair value utilizing the discounted cash flow analysis, the Company established an estimate of future cash flows for the period from August 31, 2017 to December 31, 2021 and discounted the estimated future cash flows to the present value, adding the present value of the terminal value of cash flows beyond December 31, 2021. The expected cash flows for the period August 31, 2017 to December 31, 2021 were derived from earnings forecasts and assumptions regarding growth and margin projections and adjusted for other cash flows including capital expenditures and charges to working capital, as applicable, and expressed as a multiple of Earnings before Interest, Taxes, Depreciation and Amortization ("EBITDA"). The discount rate of 11.1% was estimated based on an after-tax weighted average cost of capital reflecting the rate of return that would be expected by a market participant.

~~The following table reconciles the Company's enterprise value to the estimated fair value of the Successor's equity as of the Effective Date:~~

Enterprise value $ 244,000
Less: fair value of debt (238,340 )
Equity value $ 5,660

The fair value of the convertible notes portion of the debt was determined based on market information and a review of prices and terms available for similar debt instruments that do not contain a conversion feature, as well as other factors related to the callable nature of the convertible notes. Given the nature and the variable interest rates, the fair value of borrowings under the asset-based lending facility approximated carrying value as of the Effective Date.

~~The following table reconciles the Company's enterprise value to the reorganization value of the Successor's assets:~~

Enterprise value $ 244,000
Current liabilities 64,992
Noncurrent liabilities 23,479
Reorganization value of Successor assets $ 328,648

~~The total of all postpetition liabilities and allowed claims immediately prior to confirmation of the Plan was approximately~~ ~~$404 million~~.

~~Fresh-Start Balance Sheet~~

The following fresh-start balance sheet as of the Effective Date, August 31, 2017, illustrates the financial effects on the Company of the implementation of the Plan and the adoption of fresh-start reporting. This fresh-start balance sheet reflects the effect of the completion of the transactions included in the Plan, including the issuance of successor equity and the settlement of prepetition indebtedness.

Reorganization adjustments, shown in column 2 of the following schedule, represent amounts recorded on the Effective Date for the implementation of the Plan, including the settlement of liabilities subject to comprise and related payments, the issuance of new debt and new shares of common stock, repayment of the debtor-in-possession revolving credit facility and cancellation of Predecessor common stock.

Fresh-start adjustments, as shown in column 3 of the following schedule, represent amounts recorded on the Effective Date as a result of the adoption of fresh-start accounting, which resulted in the Company becoming a new entity for financial reporting purposes. The Company’s assets and liabilities have been recorded at estimated fair value as of the fresh-start reporting date or Effective Date.

As of August 31, 2017
Predecessor Reorganization Adjustments Fresh-Start Adjustments Successor
ASSETS
Current assets:
Cash and cash equivalents $ 20,443
$ (10,379 ) (a) $ —
$ 10,064
Accounts receivable, net 73,056
—
—
73,056
Inventories 153,785
—
—
153,785
Prepaid expenses and other current assets 14,217
—
—
14,217
Income tax receivable 588
—
—
588
Total current assets 262,089
(10,379 ) —
251,710
Intangible assets, net 24
—
8,151
(j) 8,175
Prepaid pension cost 9,350
—
—
9,350
Deferred income taxes 1,381
—
—
1,381
Other noncurrent assets 1,364
—
—
1,364
Property, plant and equipment: —
Land 2,073
—
3,867
(i) 5,940
Buildings 37,498
—
(15,518 ) (i) 21,980
Machinery and equipment 129,324
—
(100,576 ) (i) 28,748
Property, plant and equipment, at cost 168,895
—
(112,227 ) 56,668
Accumulated depreciation (122,087 ) —
122,087
—
Property, plant and equipment, net 46,808
—
9,860
56,668
Total assets $ 321,016
$ (10,379 ) $ 18,011
$ 328,648
LIABILITIES AND STOCKHOLDERS’ EARNINGS (DEFICIT)
Current liabilities:
Accounts payable $ 47,063
$ —
$ —
$ 47,063
Accrued and other current liabilities 12,145
1,961
(b) —
14,106
Short-term borrowings 3,797
—
—
3,797
Current portion of long-term debt 109,213
(109,187 ) (c) —
26
Total current liabilities 172,218
(107,226 ) —
64,992
Long-term debt, less current portion —
234,517
(d) —
234,517
Deferred income taxes —
—
3,159
(m) 3,159
Build-to-suit liability 9,898
—
—
9,898
Other noncurrent liabilities 5,711
—
(1,715 ) (k) 3,996
Pension and postretirement benefit obligations 6,426
—
—
6,426
Liabilities subject to compromise 211,363
(211,363 ) (e) —
—
Commitments and contingencies

Stockholders’ earnings (deficit):
Predecessor common stock 327
(327 ) (f) —
—
Successor common stock —
20
(g) —
20
Predecessor additional paid-in capital 245,546
(1,883 ) (f) (243,663 ) (l) —
Successor additional paid-in capital —
5,640
(g) —
5,640
Retained (deficit) earnings (302,833 ) 69,165
(h) 233,668
(l) —
Accumulated other comprehensive loss (26,562 ) —
26,562
(l) —
Treasury stock, at cost (1,078 ) 1,078
(f) —
—
Total stockholders’ earnings (deficit) (84,600 ) 73,693
16,567
5,660
Total liabilities and stockholders’ earnings (deficit) $ 321,016
$ (10,379 ) $ 18,011
$ 328,648

~~Reorganization Adjustments~~

The unaudited consolidated financial information gives effect to the following Reorganization Adjustments, the Plan and the implementation of the transactions contemplated by the Plan. These adjustments give effect to the terms of the Plan and certain underlying assumptions, which include, but are not limited to, the following:


a.	~~Represents net cash outflows occurring upon the Plan becoming effective on August 31, 2017 as follows:~~

Cash received from initial draw on New ABL Facility $ 78,797
Repayment of Debtor-In-Possession financing borrowings, including interest and fees (66,932 )
Cash received from issuance of New Money Notes 38,002
Payment of put option fee (2,000 )
Repayment of prepetition First Lien Notes, including interest and fees (49,415 )
Payment of cash recovery to prepetition Second Lien Noteholders (6,646 )
Payment related to key employee incentive plan (1,229 )
Professional fees paid upon emergence (956 )
Net cash paid upon emergence $ (10,379 )


b.	~~Represents the accrual of success fees earned upon emergence of $2,416 net of payment of accrued interest on the prepetition First Lien Notes of $455.~~


c.	Represents repayment of the Debtor-In-Possession financing balance of $66,599 and the repayment of the prepetition First Lien Notes principal balance of $48,000, net of the write-off of unamortized original issue discount and deferred issuance costs related to the prepetition First Lien Notes of $5,412.


d.	~~Represents the fair value of the Second Lien Notes Indenture issued upon emergence of $155,720 and the initial draw on New ABL Facility of $78,797.~~


e.	~~Liabilities subject to compromise were satisfied as follows:~~

12.75% Senior Secured Notes due December 15, 2018 $ 177,019
5.25% Convertible Notes due December 30, 2019 22,323
Accrued interest payable 12,021
Liabilities subject to compromise 211,363
Cash payment to prepetition Second Lien Noteholders (6,646 )
Fair value of Second Lien Notes (including conversion option) issued to prepetition Second and Third Lien Noteholders (110,200 )
New equity issued to prepetition Second and Third Lien Noteholders (4,528 )
Gain on settlement of liabilities subject to compromise $ 89,989


f.	~~Represents the cancellation of the Predecessor common stock, warrants and treasury stock.~~


g.	~~Represents the issuance of 2,000 common shares of the Successor company in accordance with the Plan.~~


h.	~~The cumulative effect on retained earnings of the reorganization adjustments discussed above is as follows:~~

Gain on settlement of liabilities subject to compromise $ 89,989
Write off of original issue discount and deferred financing costs (5,412 )
Backstop and other fees related to the repayment of old debt and issuance of new debt (10,811 )
Success fees and key employee incentive plan payments (4,601 )
Net impact to retained earnings (accumulated deficit) $ 69,165

~~Fresh-Start Adjustments~~

Represents the adjustments made to increase the carrying value of property, plant and equipment to their estimated fair value. The Company’s overall range of useful lives from an accounting policy perspective did not change. However, when the fair value of each asset was adjusted, a new remaining useful life was assigned to each asset, and the new value will be depreciated over that time period, which may be different from the remaining depreciable life of that asset at the end of the Predecessor period. Estimated fair value was determined as follows:

The cost approach was utilized to estimate the fair value of personal property as well as buildings and land improvements. This approach considers the amount required to construct or purchase a new asset of equal utility at current market prices, with adjustments in value for physical deterioration.

The sales comparison approach was utilized to estimate fair value of owned real property. The sales comparison approach relies upon recent sales, offerings of similar assets or a specific inflationary adjustment to original purchase price to arrive at a probable selling price.


j.	An adjustment of $8,151 was made to record the estimated fair value of the Successor trade name of $5,500 and write off $24 of Predecessor intangible assets, and to record goodwill of $2,675, representing the excess of the reorganization value of the assets over the fair value of identifiable assets, as follows:

Reorganization value of assets $ 328,648
Less: fair value of:
Total current assets (251,710 )
Property, plant and equipment (56,668 )
Successor trade name (5,500 )
Other noncurrent assets (12,095 )
Goodwill $ 2,675

~~The fair value of the Successor's customer relationships was determined to be nil.~~


k.	~~Represents the elimination of deferred rent and deferred gains of $2,105, adjusting these balances to zero fair value, net of a liability for unfavorable contracts of $390.~~


l.	~~Represents the cumulative impact of fresh-start adjustments as discussed above and the elimination of Predecessor retained deficit and other comprehensive loss.~~


m.	~~Represents the recording of a tax liability related to indefinite lived trade names and land.~~

~~Contractual Interest~~

Effective June 18, 2017, the Company discontinued recording interest expense on outstanding prepetition debt classified as LSTC. The table below shows contractual interest amounts for debt classified as LSTC calculated in accordance with the respective agreements without giving effect to any penalties as a result of the default on such agreements, which are amounts due under the contractual terms of the outstanding debt. Interest expense reported in the Condensed Consolidated Statement of Operations for the periods after the Effective Date does not include $4,089 and $4,880, per the table below, in contractual interest on prepetition debt classified as LSTC, which was stayed by the Bankruptcy Court effective on the Petition Date.

Predecessor

July 1, 2017
Through
August 31, 2017

June 18, 2017
Through
August 31, 2017
12.75% Senior Secured Notes due December 15, 2018 $ 3,887
$ 4,639
5.25% Convertible Notes due December 30, 2019 202
241
Total Contractual Interest $ 4,089
$ 4,880

~~Reorganization Items, Net~~

During the pendency of the Company's Chapter 11 Cases, expenses and income directly associated with the chapter 11 proceedings were 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 were determined. The following table presents reorganization items incurred in the the periods after the Effective Date, as reported in the accompanying Condensed Consolidated Statement of Operations:

Successor Predecessor
September 1, 2017 Through September 30, 2017
July 1, 2017
Through
August 31, 2017

June 18, 2017
Through
August 31, 2017
Gain on extinguishment of debt —
(89,989 ) (89,989 )
Gain on fresh-start revaluation —
(16,566 ) (16,566 )
Write-off of unamortized debt issuance costs and discounts —
5,412
10,262
Prepayment penalties and debt-related fees —
13,191
13,191
Professional fees 128
6,690
7,342
Key employee incentive plan —
1,229
1,229
Reorganization items, net $ 128
$ (80,033 ) $ (74,531 )

For the period from June 18, 2017 through August 31, 2017, the cash reorganization items included approximately $8,571 of professional fees and employee incentives and $3,673 of debt issuance and repayment costs. Cash reorganization items included approximately $128 for professional fees for the period from September 1, 2017 through September 30, 2017 (Successor). The cash outflow is included in net cash provided by operating activities in our Condensed Consolidated Statements of Cash Flows for the periods presented.

~~(3)~~ New Accounting Standards

Standards Updates Adopted

Effective January 1, 2017, the Company adopted FASB 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 company 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. This aspect of the guidance is required to be applied prospectively. 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. Upon adoption, the Company elected to continue to estimate forfeitures expected to occur to determine the amount of compensation cost to be recognized in each period. The adoption of ASU No. 2016-09 did not have a material impact on the Company's consolidated financial statements. As described in ~~Note 1 - Basis of Presentation, upon emergence from bankruptcy, the Company elected to account for forfeitures as they occur, which did not have a material impact on the condensed 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 business entities, the guidance is effective for fiscal years beginning after December 15, 2017, and interim periods within those years. Early adoption is permitted as of the beginning of an annual period for which interim financial statements have not been issued. The Company is currently evaluating the impact the adoption of ASU No. 2017-07 will have on its consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, "Intangibles – Goodwill and Other (Topic 350)", which simplifies the subsequent measurement of goodwill by eliminating step two from the goodwill impairment test. ASU 2017-04 is effective for annual and interim impairment tests beginning January 1, 2020 for the Company and is required to be adopted using a prospective approach. Early adoption is allowed for annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements and related disclosures.

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~~Financial Accounting Standards Board ("FASB") issued ~~ASU~~Accounting Standards Update ("ASU") No. 2016-02, "Leases (Topic 842)"," which requires that lessees recognize assets and liabilities for leases with lease terms greater than ~~twelve~~12 months in the statement of financial position. ASU No. 2016-02 also requires additional disclosures to help users of financial statements better understand the amount, timing and uncertainty of cash flows arising from leases. The provisions 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. Topic 842 was subsequently amended by ASU No. 2018-01, “Land Easement Practical Expedient for Transition to Topic 842”; ASU No. 2018-10, “Codification Improvements to Topic 842, Leases”; ASU No. 2018-11, “Leases (Topic 842): Targeted Improvements” (“ASU 2018-11”); and ASU No. 2018-20, “Narrow-Scope Improvements for Lessors” (collectively, "ASC 842"). ASU 2018-11 provides clarity on separating components of a lease contract and includes an option to not restate comparative periods in transition and elect to use the effective date of Topic 842 as the date of initial application.

The Company adopted ASC 842 effective January 1, 2019 using the modified retrospective approach, as required. The Company elected the transition method that allows it to apply the new standard only to leases existing at the date of initial application, January 1, 2019, and recognized the cumulative effect of initially applying the standard as an adjustment to opening retained earnings for the fiscal year beginning January 1, 2019. Consequently, financial information will not be updated and the disclosures required under the new standard will not be provided for dates and periods before January 1, 2019.

The Company has also elected the package of practical expedients permitted under the transition guidance, which among other things, allows the Company to carryforward the historical lease classification. ASC 842 also provides practical expedients for an entity’s ongoing accounting. The Company has made an accounting policy election to keep leases with an initial term of 12 months or less off the balance sheet and recognize those lease payments in the Condensed Consolidated Statements of Operations and Comprehensive Loss on a straight-line basis over the lease term. The Company has also elected the practical expedient to not separate lease and non-lease components for all of its real estate leases.

The adoption of ASC 842 resulted in recognition of additional operating right of use assets and lease liabilities on the Company's Condensed Consolidated Balance Sheets as of January 1, 2019 of $35,508 and $35,470, respectively. Additionally, the Company’s build-to-suit financing obligation has been classified as a finance lease liability, resulting in a $246 adjustment to the Company’s beginning accumulated deficit. The adoption of Topic 842 did not have a material effect on the Company's consolidated net loss or liquidity. Refer to Note 8 - Leases, for further information and disclosures related to the adoption of ASC 842.

Standards Updates Issued Not Yet Effective

In August 2018, the FASB issued ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement.” ASU No. 2018-13 amends Fair Value Measurement (Topic 820) to add, remove, and modify fair value measurement disclosure requirements. The ASU’s changes to disclosures aim to improve the effectiveness of Topic 820's disclosure requirements under the aforementioned FASB disclosure framework project. ASU No. 2018-13 is effective for all entities for fiscal years beginning after December 15, 2019, including interim periods within the year of adoption. Early adoption is permitted for any eliminated or modified disclosures prescribed by the ASU. The Company will adopt the disclosure requirements of ASU No. 2018-13 in fiscal year 2020.

Also in August 2018, the FASB issued ASU No. 2018-14, “Compensation – Retirement Benefits – Defined Benefit Plans - General (Topic 715-20): Disclosure Framework – Changes to the Disclosure Requirements for Defined Benefit Plan.” ASU No. 2018-14 amends Compensation - Retirement Benefits (Topic 715) to add or remove certain disclosure requirements related to defined benefit pension and other postretirement plans. The ASU’s changes to disclosures aim to improve the effectiveness of Topic 715's disclosure requirements under the FASB’s disclosure framework project. ASU No. 2018-14 is effective for public entities for fiscal years beginning after December 15, 2020. ASU No. 2018-14 does not impact the interim disclosure requirements of Topic 715. Early adoption is permitted. The Company will adopt the disclosure requirements of this new guidance in fiscal year 2021.

(3) Revenue

The Company recognizes revenue from the sale of products when the earnings process is ~~currently evaluating~~complete and when the ~~impact~~title and risk and rewards of ownership have passed to the customer, which is primarily at the time of shipment. Revenue recognized other than at the time of shipment represented less than 1% of the Company’s consolidated net sales in the three and six months ended June 30, 2019 and June 30, 2018, respectively. Customer payment terms are established prior to the time of shipment. Provisions for allowances related to sales discounts and rebates are recorded based on terms of the sale in the period that the ~~adoption~~sale is recorded. The Company utilizes historical information and the current sales trends of ~~ASU No. 2016-02 will have on its consolidated financial statements, but~~ the ~~Company expects that most existing operating lease commitments will be recognized as operating lease obligations~~Company's business to estimate such provisions. The provisions related to discounts and ~~right-of-use assets~~rebates due to customers are recorded as a ~~result~~reduction within net sales in the Company’s Condensed Consolidated Statements of ~~adoption.~~Operations and Comprehensive Loss.

The Company records revenue from shipping and handling charges in net sales. Costs incurred in connection with shipping and handling the Company’s products, which are related to third-party carriers or performed by Company personnel, are included in warehouse, processing and delivery expenses. In ~~May 2014,~~ the ~~FASB issued ASU~~three months ended June 30, 2019 and June 30, 2018, shipping and handling costs included in warehouse, processing and delivery expenses were $6,160 and $6,813, respectively. In the six months ended June 30, 2019 and June 30, 2018, shipping and handling costs included in warehouse, processing and delivery expenses were $12,296 and $13,605, respectively. As a practical expedient under Accounting Standards Codification No. ~~2014-09,~~606, "Revenue from Contracts with Customers (Topic 606)" ("ASC 606"), the Company has elected to account for shipping and ~~has subsequently issued several supplemental and/~~handling activities as fulfillment costs and not a promised good or ~~clarifying ASUs (collectively, "ASC 606"). The underlying principle of~~service. As a result, there is no change to the Company's accounting for revenue from shipping and handling charges under ASC 606 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. Adoption of ASC 606 is required for annual and interim periods beginning after December 15, 2017. 606.

The Company ~~plans~~maintains an allowance for doubtful accounts related to ~~adopt ASC 606~~the potential inability of customers to make required payments. The allowance for doubtful accounts is maintained at a level considered appropriate based on ~~January 1, 2018 using the modified retrospective transition method with the cumulative effect~~historical experience and specific identification of ~~initial adoption, if any, recognized~~customer receivable balances for which collection is unlikely. The provision for doubtful accounts is recorded in ~~opening retained earnings or accumulated deficit on the adoption date. Almost all of~~sales, general and administrative expense in the Company’s purchase orders, contracts or purchase agreements do not contain performance obligations other than delivery of the agreed upon product, with title transfer generally occurring at the time of shipment. Thus, the Company generally recognizes revenue upon shipment of the product. While the Company is still in the process of completing an analysis of all of its revenue generating activities and the contracts which might impact its revenue generating activities in light of the new standard, the Company does not believe that any of its revenue streams will be materially affected by the adoption of ASC 606, and therefore it does not expect itsCondensed Consolidated Statements of Operations ~~will be materially affected.~~ and Comprehensive Loss. Estimates of doubtful accounts are based on historical write-off experience as a percentage of net sales and judgments about the probable effects of economic conditions on certain customers.

The Company ~~is currently in the process~~also maintains an allowance for credit memos for estimated credit memos to be issued against current sales. Estimates of ~~evaluating additional disclosures which may be required~~allowance for credit memos are based upon the ~~adoption~~application of a historical issuance lag period to the average credit memos issued each month.

Accounts receivable allowance for doubtful accounts and credit memos activity is as follows:



	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
Balance, beginning of period	$	1,507		$	1,663		$	1,364		$	1,586
Add Provision charged to expense^(a)	195			58			387			173
Recoveries	—			15			11			26
Less Charges against allowance	(1		)	(58		)	(61		)	(107		)
Balance, end of period	$	1,701		$	1,678		$	1,701		$	1,678

^(a) Includes the net amount of credit memos reserved and issued.

The Company operates primarily in North America. Net sales are attributed to countries based on the location of the Company’s subsidiary that is selling direct to the customer. Net sales exclude assessed taxes such as sales and excise tax. Company-wide geographic data is as follows:



	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Net sales
United States	$	93,891	$	97,933	$	189,023	$	191,499
Canada	11,708		11,821		23,548		24,275
Mexico	12,865		15,590		25,521		31,538
France	13,527		13,158		28,625		27,037
China	11,167		7,480		21,578		13,816
All other countries	4,772		4,432		9,162		8,122
Total	$	147,930	$	150,414	$	297,457	$	296,287

The Company does not incur significant incremental costs when obtaining customer contracts and any costs that are incurred are generally not recoverable from its customers. Substantially all of the Company's customer contracts are for a duration of less than one year. As a practical expedient under ASC 606, the Company has elected to continue to recognize incremental costs of obtaining a contract, if any, as an expense when incurred if the amortization period of the asset would have been one year or less. The Company does not have any costs to obtain a contract that are capitalized under ASC 606.

(4) ~~Discontinued Operation~~

On March 15, 2016, the Company completed the sale of substantially 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 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. The sale ultimately resulted in pre-tax and after-tax gains of $2,003 and $1,306, respectively, for the year ended December 31, 2016.

~~Summarized results of the discontinued operation for the nine months ended September 30, 2016 were as follows:~~

Predecessor
Three Months Ended September 30, 2016 Nine Months Ended September 30, 2016
Net sales $ —
$ 29,680
Cost of materials —
21,027
Operating costs and expenses —
7,288
Interest expense^(a)
—
333
Income from discontinued operations before income taxes —
1,032
Income tax expense benefit ^(b)
—
(3,908 )
(Loss) gain on sale of discontinued operations, net of income taxes (1,688 ) 1,306
Income from discontinued operations, net of income taxes $ (1,688 ) $ 6,246

^(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 nine months ended September 30, 2016 includes $4,207 reversal of valuation allowance resulting from the sale of TPI.~~

~~(5) Earnings (Loss)~~Loss Per Share

Diluted ~~earnings (loss)~~loss per common share is computed by dividing ~~income (loss)~~net loss by the weighted average number of shares of the common stock of A.M. Castle & Co. outstanding plus outstanding common stock equivalents. Common stock equivalents consist of ~~employee and director stock options (Predecessor),~~ restricted stock awards ~~(Predecessor~~ and ~~Successor),~~ other share-based payment awards, ~~(Predecessor), and contingently issuable~~ shares ~~related to~~that may be issued upon conversion of the Company’s ~~5.25%~~outstanding 5.00% / 7.00% Convertible Senior Secured Paid-in-Kind ("PIK") Toggle Notes ~~(Predecessor), and the Company's Second~~due 2022 (the “Second Lien ~~Notes (Successor)~~Notes”), which are included in the calculation of weighted average shares outstanding using the ~~treasury stock method, if dilutive.~~if-converted method. Refer to Note 86 - Debt, for further description of the ~~New Convertible Notes and~~ Second Lien Notes.

The following ~~tables are reconciliations~~table is a reconciliation of the basic and diluted ~~earnings (loss)~~loss per common share calculations:

Successor Predecessor
September 1, 2017 Through September 30, 2017 July 1, 2017
Through
August 31, 2017 Three Months
Ended
September 30, 2016

Numerator:
(Loss) income from continuing operations $ (821 ) $ 72,223
$ (18,298 )
Income from discontinued operations, net of income taxes —
—
(1,688 )
Net (loss) income $ (821 ) $ 72,223
$ (19,986 )
Denominator:
Weighted average common shares outstanding 2,000
31,790
32,260
Effect of dilutive securities:
Outstanding common stock equivalents —
—
—
Denominator for diluted earnings (loss) per common share 2,000
31,790
32,260

Basic earnings (loss) per common share:
Continuing operations $ (0.41 ) $ 2.27
$ (0.57 )
Discontinued operations —
—
(0.05 )
Net basic (loss) earnings per common share $ (0.41 ) $ 2.27
$ (0.62 )

Diluted earnings (loss) per common share:
Continuing operations $ (0.41 ) $ 2.27
$ (0.57 )
Discontinued operations —
—
(0.05 )
Net diluted (loss) earnings per common share $ (0.41 ) $ 2.27
$ (0.62 )
Excluded outstanding share-based awards having an anti-dilutive effect 1,734
—
2,326
Excluded "in the money" portion of 5.25% Convertible Notes (Predecessor) having an anti-dilutive effect —
—
—
Excluded "in the money" portion of Second Lien Notes (Successor) having an anti-dilutive effect —
—
—

Successor Predecessor
September 1, 2017 Through September 30, 2017 January 1, 2017
Through
August 31, 2017 Nine Months
Ended
September 30, 2016

Numerator:
Loss from continuing operations $ (821 ) $ 36,190
$ (84,372 )
Income from discontinued operations, net of income taxes —
—
6,246
Net loss $ (821 ) $ 36,190
$ (78,126 )
Denominator:
Weighted average common shares outstanding 2,000
32,174
27,909
Effect of dilutive securities:
Outstanding common stock equivalents —
—
—
Denominator for diluted earnings (loss) per common share 2,000
32,174
27,909

Basic earnings (loss) per common share:
Continuing operations $ (0.41 ) $ 1.12
$ (3.02 )
Discontinued operations —
—
0.22
Net basic (loss) earnings per common share $ (0.41 ) $ 1.12
$ (2.80 )

Diluted earnings (loss) per common share:
Continuing operations $ (0.41 ) $ 1.12
$ (3.02 )
Discontinued operations —
—
0.22
Net diluted (loss) earnings per common share $ (0.41 ) $ 1.12
$ (2.80 )
Excluded outstanding share-based awards having an anti-dilutive effect 1,734
—
2,326
Excluded "in the money" portion of 5.25% Convertible Notes (Predecessor) having an anti-dilutive effect —
—
—
Excluded "in the money" portion of Second Lien Notes (Successor) having an anti-dilutive effect —
—
—



	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
Numerator:
Net loss	$	(8,304	)	$	(8,513	)	$	(16,307	)	$	(13,654	)
Denominator:
Weighted average common shares outstanding	2,203			2,000			2,150			2,000
Effect of dilutive securities:
Outstanding common stock equivalents	—			—			—			—
Denominator for diluted loss per common share	2,203			2,000			2,150			2,000

Basic loss per common share	$	(3.77	)	$	(4.26	)	$	(7.58	)	$	(6.83	)
Diluted loss per common share	$	(3.77	)	$	(4.26	)	$	(7.58	)	$	(6.83	)
Excluded outstanding share-based awards having an anti-dilutive effect	1,437			1,803			1,518			1,803

The computation of diluted loss per common share does not include common shares issuable upon conversion of the Company’s Second Lien Notes, ~~(Successor) are dilutive to~~as they were anti-dilutive under the ~~extent the Company generates net income and the average stock price during the period is greater than $3.77 per share, which is the conversion price of the Second Lien Notes.~~ if-converted method.

The Second Lien Notes are ~~only dilutive for the “in the money” portion~~convertible into shares of ~~the Second Lien Notes that could be settled with~~ the Company’s common ~~stock.~~stock at any time at the initial conversion price of $3.77 per share. In future periods, absent a fundamental change (as defined in the Second Lien ~~Convertible~~ Notes ~~indenture)~~Indenture, which is described in Note 6 - Debt), the outstanding Second Lien ~~Convertible~~ Notes could increase diluted average shares outstanding by a maximum of approximately ~~43,700~~49,600 shares.

~~(6) Joint Venture~~(5) Goodwill and Intangible Asset

~~Kreher Steel Company, LLC ("Kreher"), a national distributor~~As of both June 30, 2019 and ~~processor of carbon and alloy steel bar products headquartered in Melrose Park, Illinois, was a 50% owned joint venture of the Company. In June 2016,~~December 31, 2018, the Company ~~received~~had goodwill with a carrying value of $2,676, none of which is tax deductible. There were no changes in the amount of goodwill recognized in the six months ended June 30, 2019. The Company's other intangible asset is comprised of an ~~offer from its joint venture partner~~indefinite-lived trade name, which is not subject to ~~purchase its ownership share in Kreher for an amount that was less than the current~~amortization. The gross carrying value of the ~~Company's investment in Kreher.~~ trade name intangible asset was $5,500 at both June 30, 2019 and December 31, 2018.

The Company ~~determined that the offer to purchase~~tests both 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 Kreher for the three months and nine months ended September 30, 2016:~~

Predecessor
Three Months Ended September 30, 2016 Nine Months Ended September 30, 2016
Net sales $ 17,737
$ 79,007
Cost of materials 15,359
67,115
(Loss) income before taxes (234 ) 267
Net income (62 ) 928

~~(7) Goodwill and Intangible Assets~~

~~Goodwill~~

~~In connection with the Company’s adoption of fresh-start accounting on the Effective Date, the Company recorded $2,675 of~~ goodwill ~~representing the excess of reorganization value over the fair value of identifiable tangible~~ and intangible ~~assets. The goodwill will not be tax deductible. The Company will test goodwill~~asset for impairment ~~at the reporting unit level~~ on an annual basis and more often if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value.

~~Intangible assets, net~~

~~Intangible assets, net consisted of the following:~~

Successor Predecessor
September 30, 2017 December 31, 2016

Gross
Carrying
Amount

Accumulated
Amortization

Gross
Carrying
Amount

Accumulated
Amortization
Intangible assets subject to amortization:
Customer relationships $ —
$ —
$ 67,317
$ 63,216
Intangible assets not subject to amortization:
Trade name 5,500
—
—
—
Total intangible assets $ 5,500
$ —
$ 67,317
$ 63,216

In connection with the Company’s adoption of fresh-start accounting on the Effective Date, an insignificant amount of intangible assets and related accumulated amortization of the Predecessor were eliminated. Also as part of fresh-start accounting, the Company recorded an adjustment of $5,500 representing the fair value of the intangible assets of the Successor (refer to Refer to ~~Note 2 - Bankruptcy Related Disclosures).~~ The intangible assets of the Successor are comprised of infinite-lived trade name, which is not subject to amortization. The fair value of the Successor trade name intangible asset was determined based on the relief from royalty method, which estimates the savings that the owner of the asset would realize rather than paying a royalty to use the asset, using forecasted net sales attributable to the trade name and applying a royalty rate, assumed to be 0.1% to those net sales.

The Company recorded amortization expense $1,022 and $1,533 for the period July 1, 2017 through August 31, 2017 and the three months ended September 30, 2016, respectively. Amortization expense was $4,088 and $4,593 for the period January 1, 2017 through August 31, 2017 and the nine months ended September 30, 2016, respectively. The was no amortization expense recorded in the period September 1, 2017 through September 30, 2017.

~~(8)~~(6) Debt

Long-term debt consisted of the following:

Successor Predecessor
September 30,
2017 December 31,
2016
LONG-TERM DEBT
7.0% Convertible Notes due December 15, 2017 $ —
$ 41
11.0% Senior Secured Term Loan Credit Facilities due September 14, 2018 —
99,500
12.75% Senior Secured Notes due December 15, 2018 —
177,019
5.25% Convertible Notes due December 30, 2019 —
22,323
5.00% / 7.00% Convertible Notes due August 31, 2022 165,896
—
Floating rate ABL Credit Facility due February 28, 2022 87,297
—
Other, primarily capital leases 316
96
Plus: derivative liability for embedded conversion feature 61,608
403
Less: unvested restricted Second Lien Notes^(a)
(2,334 ) —
Less: unamortized discount (68,318 ) (7,587 )
Less: unamortized debt issuance costs —
(5,199 )
Total long-term debt 244,465
286,596
Less: current portion 118
137
Total long-term portion $ 244,347
$ 286,459



	As of
	June 30, 2019			December 31, 2018
LONG-TERM DEBT
5.00% / 7.00% Second Lien Notes due August 31, 2022^(a)	$	187,048		$	180,894
Floating rate Revolving A Credit Facility due February 28, 2022	111,988			108,488
12.00% Revolving B Credit Facility due February 28, 2022^(b)	24,276			22,875
Less: unvested restricted Second Lien Notes^(c)	(826		)	(1,378		)
Less: unamortized discount	(61,604		)	(64,491		)
Less: unamortized debt issuance costs	(355		)	(422		)
Total long-term debt	260,527			245,966
Less: current portion of long-term debt	—			—
Total long-term portion	$	260,527		$	245,966

^(a)Included in balance is interest paid in kind of $18,604 as of June 30, 2019 and $12,217 as of December 31, 2018.

^(b)Included in balance is interest paid in kind of $2,776 as of June 30, 2019 and $1,375 as of December 31, 2018.

^(c)Represents unvested portion ~~of $2,400~~ of restricted Second Lien Notes issued to certain members of management (see Note 1110 - Share-based ~~compensation)~~compensation).

Credit Facilities ~~Agreement~~

On August 31, 2017, the Effective Date, by operation of the Plan, all outstanding indebtedness, accrued interest, and related fees of the Debtors under the Credit Facilities Agreement, amounting to $49,400, was paid in full with the proceeds of borrowings under the New ABL Facility and the issuance of Second Lien Notes under the Second Lien Notes Indenture.

~~12.75% Senior Secured Notes~~

~~On the Effective Date, by operation of the Plan, all outstanding indebtedness of the Debtors under the Company's 12.75% Secured Notes and the Senior Notes Indenture, was discharged and canceled.~~

~~5.25% Convertible Senior Secured Notes~~

On the Effective Date, by operation of the Plan, all outstanding indebtedness of the Debtors under the Company's 5.25% Convertible Notes and the Convertible Notes Indenture, was discharged and canceled.

~~New ABL Credit Facility~~

~~Pursuant to the Plan, on the Effective Date, the Successor~~Company entered into the ~~New~~Revolving Credit and Security Agreement with PNC Bank, National Association ("PNC") as lender and as administrative and collateral agent (the “Agent”), and other lenders party thereto (the "ABL Credit Agreement"). The ABL ~~Facility~~Credit Agreement provides for a $125,000 senior secured, revolving credit facility (the "Revolving A Credit Facility"), under which the Company and four of its subsidiaries each are borrowers (collectively, in such capacity, the “Borrowers”). The obligations of the Borrowers have been guaranteed by the subsidiaries of the Company named therein as guarantors.

The ~~New~~Expanded ABL ~~Facility~~Credit Agreement provides for an additional $25,000 last out Revolving B Credit Facility (the "Revolving B Credit Facility" and together with the Revolving A Credit Facility, the "Expanded Credit Facility"). The Expanded Credit Facility was made available in part by way of a ~~$125,000 senior secured, revolving credit facility for~~participation in the ~~Company.~~ Revolving B Credit Facility by certain of the Company’s stockholders. Borrowings under the Expanded Credit Facility will mature on February 28, 2022.

Subject to certain exceptions and permitted encumbrances, the obligations under the ~~New ABL~~Expanded Credit Facility are secured by a first priority security interest in substantially all of the assets of each of the Borrowers and certain subsidiaries of ~~their foreign subsidiaries.~~the Company that are named as guarantors. The proceeds of the advances under the ~~New ABL~~Expanded Credit Facility may only be used to (i) pay certain fees and expenses to the Agent and the lenders under the ~~New ABL~~Expanded Credit Facility, (ii) provide for the Borrowers' working capital needs and reimburse drawings under letters of credit, (iii) repay the obligations under the Debtor-in-Possession Revolving Credit and Security Agreement dated as of July 10, 2017, by and among the Company, the lenders party thereto, and PNC, ~~Bank, National Association,~~ and certain other existing indebtedness, and (iv) provide for the Borrowers' capital expenditure needs, in accordance with the ~~New~~Expanded ABL ~~Facility.~~

Credit Agreement.

on the amount of such commitment reduction, subject to reduction as set forth in the Expanded ABL Credit Agreement. Indebtedness for borrowings under the ~~New ABL~~Expanded Credit Facility is subject to acceleration upon the occurrence of specified defaults or events of default, including (i) failure to pay principal or interest, (ii) the inaccuracy of any representation or warranty of a loan party, (iii) failure by a loan party to perform certain covenants, (iv) defaults under indebtedness owed to third parties, (v) certain liability producing events relating to ERISA, (vi) the invalidity or impairment of the Agent’s lien on its collateral or of any applicable guarantee, and (vii) certain adverse bankruptcy-related and other events.

Interest on indebtedness under the Revolving A Credit Facility accrues at a variable rate based on a grid with the highest interest rate being the applicable ~~Prime or~~ LIBOR-based rate plus a margin of 3.0%, as set forth in the ~~New~~Expanded ABL ~~Facility.~~Credit Agreement. Interest on indebtedness under the Revolving B Credit Facility accrues at a rate of 12.0% per annum, which will be paid in kind unless the Company elects to pay such interest in cash and the Revolving B payment conditions specified in the Expanded ABL Credit Agreement are satisfied. Additionally, the Company must pay a monthly ~~Facility Fee~~facility fee equal to the product of (i) 0.25% per annum (or, if the average daily revolving facility usage is less than 50% of the maximum revolving advance amount of the Expanded Credit Facility, 0.375% per annum) multiplied by (ii) the amount by which the maximum ~~revolving~~ advance amount of the Expanded Credit Facility exceeds such average daily ~~revolving facility~~Expanded Credit Facility usage for such month.

The weighted average interest rate on outstanding borrowings under the Revolving A Credit Facility for the ~~period September 1, 2017 through September~~three and six months ended June 30, ~~2017~~2019 was ~~3.85%~~5.72% and 5.65%, respectively, and 4.73% and 4.49% for the three and six months ended June 30, 2018, respectively. The weighted average ~~Facility Fee~~facility fee for ~~the period~~each such quarter was 0.25%. The Company pays certain customary recurring fees with respect to the Expanded ABL Credit Agreement. Interest expense related to the Revolving B Credit ~~Facility.~~Facility of $715 and $1,401 was paid in kind in the three and six months ended June 30, 2019, respectively. Interest expense related to the Revolving B Credit Facility of $180 was paid in kind in both the three and six months ended June 30, 2018, respectively.

The ~~New~~Expanded ABL ~~Facility~~Credit Agreement includes negative covenants customary for an asset-based revolving loan. Such covenants include limitations on the ability of the Borrowers to, among other things, (i) effect mergers and consolidations, (ii) sell assets, (iii) create or suffer to exist any lien, (iv) make certain investments, (v) incur debt and (vi) transact with affiliates. In addition, the ~~New~~Expanded ABL ~~Facility~~Credit Agreement includes customary affirmative covenants for an asset-based revolving loan, including covenants regarding the delivery of financial statements, reports and notices to the Agent. The ~~New~~Expanded ABL ~~Facility~~Credit Agreement also contains customary representations and warranties and event of default provisions for a secured term loan.

The Company's ~~New~~Expanded ABL ~~Facility~~Credit Agreement contains a springing financial maintenance covenant requiring the Company to maintain a Fixed Charge Coverage Ratio of 1.0 to 1.0 in any ~~covenant testing period~~Covenant Testing Period (as defined in the Expanded ABL Credit Agreement) when the Company's ~~cash~~ liquidity (as defined in the ~~New~~Expanded ABL ~~Facility~~Credit Agreement) is less than ~~the greater of i) 10% of the New ABL Facility's maximum borrowing capacity (as defined in the New ABL Facility Agreement) and ii) $9.0 million.~~$12,500. The Company is not in a ~~covenant testing period~~Covenant Testing Period as of ~~September~~June 30, ~~2017.~~2019.

Unamortized debt issuance costs of $355 associated with the Expanded ABL Credit Agreement were recorded as a reduction in long-term debt as of June 30, 2019.

Second Lien Notes

~~Pursuant to the Plan,~~Also on ~~the Effective Date,~~August 31, 2017, the Company entered into ~~a Second~~an indenture (the “Second Lien Notes ~~Indenture~~Indenture”) with Wilmington Savings Fund Society, FSB, as trustee and collateral agent (“Indenture Agent”) and, pursuant thereto, issued approximately $164,902 in aggregate ~~original~~ principal amount of ~~its~~the Second Lien Notes, including $2,400 of restricted Second Lien Notes issued to certain members of ~~management (see~~ ~~Note 11 - Share-based compensation). The fair value of the Second Lien Notes as of the Effective Date was estimated to be $158,026, resulting in an implied discount upon issuance of $6,876.~~management.

The Second Lien Notes are five year senior obligations of the Company and certain of its subsidiaries, secured by a lien on all or substantially all of the assets of the Company, its domestic subsidiaries and certain of its foreign subsidiaries, which lien the Indenture Agent has agreed will be junior to the lien of the Agent under the ~~New~~Expanded ABL ~~Facility.~~

As further described below, the Second Lien Notes are convertible into common stock at the option of the holder. The Company determined that upon issuance and as of September 30, 2017, the conversion option is not clearly and closely related to the economic characteristics of the Second Lien 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 Second Lien Notes, separately valued, and accounted for as a derivative liability that partially settled the Second Lien Notes. The initial value allocated to the derivative liability at the Effective Date was $61,608, with a corresponding discount recorded to the Second Lien Notes. During each reporting period, the derivative liability, which is classified in long-term debt, will be marked to fair value through earnings. The change in the fair value of the derivative liability was not significant between the Effective Date and September 30, 2017.Credit Agreement.

The Second Lien Notes are convertible into shares of the Company’s common stock at any time at the initial conversion price of $3.77 per share, which rate is subject to adjustment as set forth in the Second Lien Notes Indenture. The value of shares of the Company’s common stock for purposes of the settlement of the conversion right, if the Company elects to settle in cash, will be calculated as provided in the Second Lien Notes Indenture, using a 20 trading day observation period. Upon conversion, the Company will pay and/or deliver, as the case may be, cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, at the Company’s election, together with cash in lieu of fractional shares.

Under the Second Lien Notes Indenture, ~~in a~~upon the conversion of the Second Lien Notes in connection with a ~~“Fundamental Change”~~Fundamental Change (as defined in the Second Lien Notes Indenture), for each $1.00 principal amount of the Second Lien Notes,

that number of shares of the Company’s common stock issuable upon conversion shall equal the greater of (a) $1.00 divided by the then applicable conversion price ~~and~~or (b) $1.00 divided by the price paid per share of the Company's common stock ~~price~~in connection with ~~respect to~~ such Fundamental Change calculated in accordance with the Second Lien Notes Indenture, subject to other provisions of the Second Lien Notes Indenture. Subject to certain exceptions, under the Second Lien Notes Indenture a “Fundamental Change” includes, but is not limited to, the following: (i) the acquisition of more than 50% of the voting power of the Company’s common equity by a “person” or “group” within the meaning of Section 13(d) of the Securities Exchange Act of 1934, as ~~amended,~~amended; (ii) the consummation of any recapitalization, reclassification, share exchange, consolidation or merger of the Company pursuant to which the Company’s common stock will be converted into cash, securities or other ~~property,~~property; (iii) the “Continuing Directors” (as defined in the Second Lien Notes Indenture) cease to constitute at least a majority of the board of ~~directors,~~directors; and (iv) the approval of any plan or proposal for the liquidation or dissolution of the Company by the Company’s stockholders.

The Second Lien Notes are guaranteed, jointly and severally, by certain subsidiaries of the Company. The Second Lien 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 pursuant to certain collateral documents ~~pursuant to~~entered by the Company and the guarantors in connection with Second Lien Notes Indenture. The terms of the Second Lien 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 certain stock; make certain investments; create liens; agree to certain payment restrictions affecting certain subsidiaries; sell or otherwise transfer or dispose assets; enter into transactions with affiliates; and enter into sale and leaseback transactions.

The Second Lien Notes may not be redeemed by the Company in whole or in part at any time, ~~subject to~~except in the event of a Fundamental Change or certain ~~exceptions provided under~~asset sales involving the Company or one of its restricted subsidiaries, as described more particularly in the Second Lien Notes Indenture. In addition, if a Fundamental Change occurs at any time, each holder of any Second Lien Notes has the right to require the Company to repurchase such holder’s Second Lien Notes for cash at a repurchase price equal to 100% of the principal amount thereof, together with accrued and unpaid interest thereon, subject to certain exceptions.

The Company must use the excess proceeds of material sales of collateral to make an offer of repurchase to holders of the Second Lien Notes. Indebtedness for borrowings under the ~~New Credit Agreement~~Second Lien Notes Indenture is subject to acceleration upon the occurrence of specified defaults or events of default, including failure to pay principal or interest, the inaccuracy of any representation or warranty of any obligor under the Second Lien Notes, failure by an obligor under the Second Lien Notes to perform certain covenants, the invalidity or impairment of the Indenture Agent’s lien on its collateral or of any applicable guarantee, and certain adverse bankruptcy-related and other events.

Interest on the Second Lien Notes accrues at the rate of 5.00%~~, except that the Company may, in circumstances where the payment on interest~~ if paid in cash ~~would cause a condition of default under the New ABL Facility, pay~~and at the rate of 7.00% if paid in kind. ~~Currently,~~Pursuant to the terms of the Second Lien Notes Indenture, the Company is currently paying interest on the Second Lien Notes in ~~kind as per~~kind. Interest expense related to the Second Lien Notes ~~Indenture, interest on the Second Lien Notes in the first 12 months is required to be~~of $3,221 and $6,387 was paid in kind ~~at a rate of 7.00%.~~in the three and six months ended June 30, 2019, respectively, and $3,005 and $5,959 in the three and six months ended June 30, 2018, respectively.

Short-term borrowings

~~In July 2017, the~~The Company's French subsidiary ~~entered into~~is party to a local credit facility under which it may borrow against 100% of the eligible accounts receivable factored, with recourse, up to 6,500 Euros. The French subsidiary is charged a factoring fee of 0.16% of the gross amount of accounts receivable factored. Local currency borrowings on the French subsidiary's credit facility are charged interest at the daily 3-months Euribor rate plus a 1.0% margin and U.S dollar borrowings on the credit facility are 3-months LIBOR plus a 1.0% margin. The French subsidiary utilizes the local credit facility to support its operating cash needs. As of ~~September~~June 30, ~~2017,~~2019 and December 31, 2018, the French subsidiary ~~has~~had borrowings of ~~$3,581~~$5,580 and $5,498, respectively, under ~~the~~their local credit facility.

On May 15, 2019, the Company's Chinese subsidiary entered into a local credit facility, which expires on February 18, 2020, under which it may borrow short term loans for up to 90 days in United States Dollars or Chinese Yuan up to the equivalent of 25,000 Chinese Yuan. Under the terms of the agreement, borrowings on the Chinese subsidiary's credit facility are charged interest at a rate of 3.60%. The Chinese subsidiary utilizes the local credit facility to finance its trading activities and all borrowings are guaranteed by the Chinese subsidiary's outstanding accounts receivable. As of June 30, 2019, the Chinese subsidiary had borrowings of $2,399 under their local credit facility.

~~(9)~~

(7) Fair Value Measurements

The three-tier value hierarchy used by 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 ~~September~~June 30, ~~2017~~2019 and December 31, ~~2016~~2018 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 of the pension plan 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.

As of ~~September~~June 30, ~~2017,~~2019, the fair value of the Company's Second Lien Notes, ~~(including~~including the ~~bifurcated embedded~~ conversion ~~option) approximates its~~option, was estimated to be $179,978 compared to a carrying value of ~~$156,852.~~$187,048. As of December 31, 2018, the fair value of the Company's Second Lien Notes, including the conversion option, was estimated to be $174,063 compared to a carrying value of $180,894. The fair value of the Second Lien Notes, ~~which~~including the conversion option, falls within Level 3 of the fair value ~~hierarchy,~~hierarchy. The fair value of the Second Lien Notes was determined using a binomial lattice model using assumptions based on market information and historical data, and a review of prices and terms available for similar debt instruments that do not contain a conversion feature, as well as other factors related to the callable nature of the Second Lien Notes. Given the nature and the variable interest rates, the fair value of borrowings under the New ABL Facility and the French subsidiary's foreign line of credit approximated their carrying value as of September 30, 2017.

The following valuation assumptions were used in determining the fair value of the Second Lien Notes, including the conversion option, as of ~~September~~June 30, ~~2017:~~2019:



Risk-free interest rate	~~1.70~~2.48	%
Credit spreads	~~13.96~~18.96	%
PIK premium spread	2.00	%
Volatility	50.00	%

~~Fair Value Measurements~~As of ~~Embedded Conversion Option~~

~~The fair value of the derivative liability for the embedded conversion option of the Second Lien Notes was estimated to be $61,608 as of September~~June 30, 2017. The estimated fair value of the derivative liability for the embedded conversion option of the Second Lien Notes, which falls within Level 3 of the fair value hierarchy, is 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 Second Lien Notes and observed spreads of similar debt instruments that do not include a conversion feature. The change in2019, the fair value of the Company's Revolving B Credit Facility was estimated to be $23,557 compared to a carrying value of $24,276. As of December 31, 2018, the fair value of the Company's Revolving B Credit Facility was estimated to be $22,124 compared to a carrying value of $22,875.The fair value of the Revolving B Credit Facility was estimated based on a model that discounted future principal and interest payments at interest rates available to the Company at the end of the period for similar debt of the same maturity, which is a Level ~~3 derivative~~2 input as defined by the fair value hierarchy.

Given the short-term nature and/or the variable interest rates, the fair value of borrowings under the Revolving A Credit Facility, the French subsidiary's foreign line of credit and the Chinese subsidiary's foreign line of credit approximated the carrying value as of June 30, 2019.

(8) Leases

The Company adopted ASC 842 effective January 1, 2019 using the modified retrospective approach. Refer to Note - 2 New Accounting Standards for additional information regarding the adoption of ASC 842.

The Company has operating and finance leases covering primarily warehouse and office facilities and equipment, with the lapse of time as the basis for all rental payments. The Company determines if an arrangement is a lease at inception.

Operating right-of-use ("ROU") assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. ROU assets

and lease liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. In determining the estimated present value of lease payments, the Company uses its incremental borrowing rate based on the information available at the lease commencement date, with consideration given to the Company's recent debt issuances as well as publicly available data for instruments with similar characteristics when calculating the Company's incremental borrowing rates.

The ROU assets also include any lease payments made and are reduced by any lease incentives received. The Company’s lease terms may include options to extend or not terminate the lease when it is reasonably certain that it will exercise any such options. Leases with an initial term of 12 months or less are not recorded on the balance sheet. Lease expense is recognized in operating loss on a straight-line basis over the expected lease term.

Real estate leases of warehouse and office facilities are the most significant leases held by the Company. For these leases, the Company has elected the practical expedient permitted under ASC 842 to account for the lease and non-lease components as a single lease component. As a result, non-lease components, such as common area maintenance charges, are accounted for as a single lease element. The Company’s remaining operating leases are primarily comprised of leases of copiers, vehicles, and other warehouse equipment.

Certain of the Company’s operating lease agreements include variable payments that are passed through by the landlord, such as insurance, taxes, and common area maintenance, payments based on the usage of the asset, and rental payments adjusted periodically for inflation. Pass-through charges, payments due to changes in usage of the asset, and payments due to changes in indexation are included within variable rent expense.

As a result of the adoption of ASC 842, the Company's build-to-suit liability ~~between~~recognized under the ~~Effective Date~~previous guidance was reclassified to a finance leases liability in the Condensed Consolidated Balance Sheet and ~~September~~is presented as such as of June 30, ~~2017 was not significant.~~2019.

None of the Company's lease agreements contain significant residual value guarantees, restrictions, or covenants.

Lease-related assets and liabilities consisted of the following:



	Classification on the Balance Sheet	June 30, 2019
ASSETS
Operating lease assets	Operating right-of-use assets	$	32,175
Finance lease assets	Property, plant and equipment, net	10,816
Total lease assets		42,991

LIABILITIES
Current
Operating	Operating lease liabilities	$	6,725
Finance	Current portion of finance leases	631
Noncurrent
Operating	Noncurrent operating lease liabilities	25,486
Finance	Finance leases, less current portion	8,483
Total lease liabilities		$	41,325


Weighted average remaining lease term
Operating leases		5.9 years
Finance leases		11.4 years
Weighted average discount rate
Operating leases		5.2		%
Finance leases		4.7		%

~~(10)~~Lease-related expenses for the three and six months ended June 30, 2019 were as follows:



	Three Months Ended June 30, 2019			Six Months Ended June 30, 2019
Finance lease expense:
Amortization of finance lease assets	$	262		$	523
Interest on finance lease liabilities	107			216
Operating lease expense	2,162			4,317
Variable lease expense	196			331
Short-term lease expense	6			22
Sublease income ⁽¹⁾	(185		)	(428		)
Total lease expense	$	2,548		$	4,981
⁽¹⁾ Relates primarily to one property subleased through September 2020.

Lease-related supplemental cash flow information for the six months ended June 30, 2019 was as follows:



	Six Months Ended June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	(4,323	)
Operating cash flows for finance leases	(216		)
Financing cash flows for finance leases	(301		)
Lease obligations obtained in exchange for right-of-use assets
Operating leases	812
	$	(4,028	)

Maturities of lease liabilities as of June 30, 2019 were as follows:



Year ending December 31,	Finance Leases			Operating Leases
2019 (excluding the six months ended June 30, 2019)	$	518		$	4,429
2020	991			7,579
2021	955			6,738
2022	975			5,699
2023	992			4,789
Later years	7,377			8,062
Total lease payments	11,808			37,296
Less: imputed interest	(2,694		)	(5,085		)
Total lease obligations	$	9,114		$	32,211

Comparable future minimum rental payments under leases that have initial or remaining non-cancelable lease terms in excess of one year as previously disclosed under Accounting Standards Codification No. 840, (Leases) ("ASC 840") as of December 31, 2018 are as follows:



Year ending December 31,	Finance Leases		Operating Leases		Built-to-Suit Lease
2019 (full twelve months)	$	119	$	7,882	$	915
2020	56		7,398		933
2021	2		6,414		952
2022	2		5,702		971
2023	1		4,828		990
Later years	—		8,068		7,461
Total future minimum rental payments under ASC 840	$	180	$	40,292	$	12,222

Total rental payments charged to expense for operating leases under ASC 840 were $2,055 and $4,140 during the three and six months ended June 30, 2018, respectively.

(9) Stockholders’ Equity ~~(Deficit)~~

~~Accumulated Comprehensive Loss~~

The components of accumulated other comprehensive loss are as follows:


	Successor			Predecessor			As of
	September 30, 2017			December 31, 2016			June 30, 2019			December 31, 2018
Unrecognized pension and postretirement benefit costs, net of tax	$	—		$	(9,797	)	$	(9,107	)	$	(9,153	)
Foreign currency translation losses, net of tax	(2,362		)	(16,142		)	(5,938		)	(5,195		)
Total accumulated other comprehensive loss	$	(2,362	)	$	(25,939	)	$	(15,045	)	$	(14,348	)

Changes in accumulated other comprehensive loss by component ~~for periods September 1, 2017 through September 30, 2017 and July 1, 2017 through August 31, 2017 and~~in the three months ended ~~September~~June 30, ~~2016~~2019 and June 30, 2018 are as follows:


	Defined Benefit Pension and Postretirement Items										Foreign Currency Items											Total												Defined Benefit Pension and Postretirement Items								Foreign Currency Items						Total

	Successor		Predecessor								Successor				Predecessor							Successor					Predecessor							Three Months Ended								Three Months Ended						Three Months Ended
	September 1, 2017 Through September 30, 2017		July 1, 2017 Through August 31, 2017				Three Months Ended September 30, 2016				September 1, 2017 Through September 30, 2017				July 1, 2017 Through August 31, 2017			Three Months Ended September 30, 2016				September 1, 2017 Through September 30, 2017					July 1, 2017 Through August 31, 2017				Three Months Ended September 30, 2016			June 30,								June 30,						June 30,
	September 1, 2017 Through September 30, 2017						Three Months Ended September 30, 2016										2019					September 1, 2017 Through September 30, 2017			2018						Three Months Ended September 30, 2016			2019				2018				2019			2018
Beginning Balance	$	—	July 1, 2017 Through August 31, 2017		$	(9,369	)		$	(16,273	September 1, 2017 Through September 30, 2017		)	$	July 1, 2017 Through August 31, 2017	—		Three Months Ended September 30, 2016			$	(17,827	)		$	(20,100	July 1, 2017 Through August 31, 2017	)		$	—				$	(27,196	)		$	(36,373	)	$	(9,130	)	$	34		$	(5,659	)	$	(3,578	)	$	(14,789	)	$	(3,544	)
Other comprehensive loss before reclassifications, net of tax	—		—				—				(2,362		)		2,070			2,967				(2,362		)			2,070				2,967			—				—				(279		)	(1,124		)	(279		)	(1,124		)
Amounts reclassified from accumulated other comprehensive loss, net of tax ^(a)	—		(1,436		)		456				—				—			—				—					(1,436		)		456			23				—				—			—			23			—
Net current period other comprehensive income (loss)	—		(1,436		)		456				(2,362		)		2,070			2,967				(2,362		)			634				3,423			23				—				(279		)	(1,124		)	(256		)	(1,124		)
Adjustment for fresh-start accounting^(b)	—		10,805				—				—				15,757			—				—					26,562				—
Ending Balance	$	—	$	—			$	(15,817	)		$	(2,362	)		$	—		$	(17,133	)		$	(2,362	)			$	—			$	(32,950	)	$	(9,107	)		$	34			$	(5,938	)	$	(4,702	)	$	(15,045	)	$	(4,668	)

^(a)See reclassifications from accumulated other comprehensive loss table below for details of reclassification from accumulated other comprehensive loss ~~for the periods September 1, 2017 through September 30, 2017, July 1, 2017 through August 31, 2017 and~~in the three ~~month period~~months ended ~~September~~June 30, ~~2016.~~

^(b)~~In connection with the application of fresh-start accounting, Predecessor accumulated comprehensive loss was eliminated (Refer to~~ ~~Note 2 - Bankruptcy Related Disclosures~~).2019 and June 30, 2018.

~~Changes~~Changes in accumulated other comprehensive loss by component ~~for~~in the ~~periods September 1, 2017 through September 30, 2017 and January 1, 2017 through August 31, 2017 and for the nine~~six months ended ~~September~~June 30, ~~2016~~2019 and June 30, 2018 are as follows:


	Defined Benefit Pension and Postretirement Items										Foreign Currency Items											Total												Defined Benefit Pension and Postretirement Items								Foreign Currency Items						Total

	Successor		Predecessor								Successor				Predecessor							Successor					Predecessor							Six Months Ended								Six Months Ended						Six Months Ended
	September 1, 2017 Through September 30, 2017		January 1, 2017 Through August 31, 2017				Nine Months Ended September 30, 2016				September 1, 2017 Through September 30, 2017				January 1, 2017 Through August 31, 2017			Nine Months Ended September 30, 2016				September 1, 2017 Through September 30, 2017					January 1, 2017 Through August 31, 2017				Nine Months Ended September 30, 2016			June 30,								June 30,						June 30,
	September 1, 2017 Through September 30, 2017						Nine Months Ended September 30, 2016										2019					September 1, 2017 Through September 30, 2017			2018						Nine Months Ended September 30, 2016			2019				2018				2019			2018
Beginning Balance	$	—	January 1, 2017 Through August 31, 2017		$	(9,797	)		$	(17,185	September 1, 2017 Through September 30, 2017		)	$	January 1, 2017 Through August 31, 2017	—		Nine Months Ended September 30, 2016			$	(16,142	)		$	(16,636	January 1, 2017 Through August 31, 2017	)		$	—				$	(25,939	)		$	(33,821	)	$	(9,153	)	$	34		$	(5,195	)	$	(2,703	)	$	(14,348	)	$	(2,669	)
Other comprehensive income (loss) before reclassifications, net of tax	—		—				—				(2,362		)		385			(497		)		(2,362		)			385				(497		)
Other comprehensive loss before reclassifications, net of tax																																		—				—				(743		)	(1,999		)	(743		)	(1,999		)
Amounts reclassified from accumulated other comprehensive loss, net of tax ^(a)	—		(1,008		)		1,368				—				—			—				—					(1,008		)		1,368			46				—				—			—			46			—
Net current period other comprehensive income (loss)	—		(1,008		)		1,368				(2,362		)		385			(497		)		(2,362		)			(623		)		871			46				—				(743		)	(1,999		)	(697		)	(1,999		)
Adjustment for fresh-start accounting^(b)	—		10,805				—				—				15,757			—				—					26,562				—
Ending Balance	$	—	$	—			$	(15,817	)		$	(2,362	)		$	—		$	(17,133	)		$	(2,362	)			$	—			$	(32,950	)	$	(9,107	)		$	34			$	(5,938	)	$	(4,702	)	$	(15,045	)	$	(4,668	)

^(a)See reclassifications from accumulated other comprehensive loss table below for details of reclassification from accumulated other comprehensive loss ~~for~~in the ~~periods September 1, 2017 through September~~six months ended June 30, ~~2017, January 1, 2017 through August 31, 2017~~2019 and ~~the nine month period ended September~~June 30, ~~2016.~~2018.

^(b)~~In connection with the application of fresh-start accounting, Predecessor accumulated comprehensive loss was eliminated (Refer to~~ ~~Note 2 - Bankruptcy Related Disclosures~~).

Reclassifications from accumulated other comprehensive loss are as follows:


	Successor		Predecessor							Three Months Ended					Six Months Ended
	September 1, 2017 Through September 30, 2017		July 1, 2017 Through August 31, 2017				Three Months Ended September 30, 2016			June 30,					June 30,
	September 1, 2017 Through September 30, 2017					2019					2018			2019		2018
Unrecognized pension and postretirement benefit items:			July 1, 2017 Through August 31, 2017				Three Months Ended September 30, 2016
Prior service cost^(b)(a)	$	—	$	(33	)		$	(50	)	$	(13	)	$	—	$	(26	)	$	—
Actuarial gain (loss) ^(b)(a)	—		1,326				(406		)	(10		)	—		(20		)	—
Total before tax	—		1,293				(456		)	(23		)	—		(46		)	—
Tax effect	—		143				—			—			—		—			—
Total reclassifications for the period, net of tax	$	—	$	1,436			$	(456	)	$	(23	)	$	—	$	(46	)	$	—

^(b)(a)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.~~

Successor Predecessor
September 1, 2017 Through September 30, 2017 January 1, 2017
Through
August 31, 2017 Nine Months
Ended
September 30, 2016

Unrecognized pension and postretirement benefit items:
Prior service cost^(b)
$ —
$ (133 ) $ (150 )
Actuarial gain (loss) ^(b)
—
998
(1,218 )
Total before tax —
865
(1,368 )
Tax effect —
143
—
Total reclassifications for the period, net of tax $ —
$ 1,008
$ (1,368 )

^(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.~~expense (income), net.

~~(11)~~(10) Share-based Compensation

~~On the Effective Date, pursuant to the operation of the Plan, the~~The A.M. Castle & Co. 2017 Management Incentive Plan (the “MIP”) became ~~effective.~~

~~The board~~effective on August 31, 2017. Under the MIP, the Board of ~~directors of the Company (the “Board”)~~Directors, or a committee thereof, (either, in such capacity, the “Administrator”) will administer the MIP. The Administrator has broad authority under the MIP, among other things, to: (i) select participants; (ii) determine the terms and conditions, not inconsistent with the MIP, of any award granted under the MIP; (iii) determine the number of shares of the Company’s common stockmay grant to ~~be covered by each award granted under the MIP; and (iv) determine the fair market value of awards granted under the MIP.~~

~~Persons~~ eligible ~~to receive awards under the MIP include~~ officers, directors and employees of the Company ~~and its subsidiaries. The types of awards that may be granted under the MIP include~~Second Lien Notes, stock options, stock appreciation rights, restricted stock, restricted stock units, performance units, performance shares and other forms of cash or ~~stock based~~share-based awards.

The ~~maximum number~~Board of Directors has issued restricted shares of the ~~Company’s~~Company's common stock ~~that may be issued or transferred pursuant~~("Restricted Shares") to ~~awards under the MIP (including shares initially convertible as a result of conversion of Second Lien Notes issued pursuant to the MIP) is 3,952, which number may be increased with the approval~~certain officers of the ~~Company’s shareholders. If any outstanding award granted under the MIP expires or is terminated or canceled without having been exercised or settled in full, or if shares~~Company and certain members of the ~~Company’s common stock acquired pursuant to an award subject to forfeiture are forfeited, the shares~~Company's Board of ~~the Company’s common stock allocable to the terminated portion of such award or such forfeited shares will revert to the MIP and will be available for grant under the MIP~~Directors, as ~~determined by the Administrator, subject to certain restrictions.~~

As is customary in management incentive plans of this nature, in the event of any change in the outstanding shares of the Company’s common stock by reason of a stock split, stock dividend or other non-recurring dividends or distributions, recapitalization, merger, consolidation, spin-off, combination, repurchase or exchange of stock, reorganization, liquidation, dissolution or other similar corporate transaction, an equitable adjustment will be made in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the MIP. Such adjustment may include an adjustment to the maximum number and kind of shares of stock or other securities or other equity interestswell as to which awards may be granted under the MIP, the number and kind of shares of stock or other securities or other equity interests subject to outstanding awards and the exercise price thereof, if applicable.

~~On the Effective Date, all unvested and/or unexercised equity awards under any existing pre-Effective Date management incentive compensation plans were extinguished without recovery.~~

~~2017 Management Incentive Plan Award~~

~~Pursuant to the Plan, on September 1, 2017, 1,734 shares, together with~~ an aggregate original principal amount of $2,400 of Second Lien Notes (the "Restricted Notes") convertible into an additional 638 shares of ~~new common stock as of the Effective Date, were issued as awards of restricted shares of~~ the Company's common ~~stock (the "Restricted Shares") under the MIP to certain officers of the Company.~~

stock.

The Restricted Shares and Restricted Notes issued to certain officers of the Company cliff vest ~~on August 31, 2020,~~three years from the date of grant, September 1, 2017, subject to the conditions set forth in the MIP. The Restricted Shares ~~grant date fair value of $3.14 per share was based on the value~~issued to certain members of the ~~common stock~~Company's Board of Directors cliff vested one year from the date of grant, April 25, 2018, subject to the conditions set forth in the MIP.

A summary of the ~~Successor company as calculated on the Effective date pursuant to the Plan.~~

~~The following table summarizes the~~ activity ~~relating to~~of the Company's Restricted Shares ~~for~~as of June 30, 2019 and in the ~~period September 1, 2017 through September 30, 2017 (Successor):~~six months then ended follows:


	Number of Shares		Weighted-Average Grant Date Fair Value
Unvested at September 1, 2017 (Successor)	$	—	$	—
					Shares		Weighted-Average Grant Date Fair Value
Outstanding at January 1, 2019					1,803		3.19
Granted	1,734		3.14		15		1.77
Forfeited	—		—		(168	)	3.14
Vested	—		—		(222	)	3.52
Unvested at September 30, 2017 (Successor)	$	1,734	3.14
Expected to vest after September 30, 2017 (Successor)	$	1,734	3.14
Outstanding at June 30, 2019					1,428		3.13
Expected to vest after June 30, 2019					1,428		3.13

On September 10, 2018, the Board of Directors granted as awards under the MIP 664 performance share units ("PSUs") to non-executive senior level managers and other select personnel. The PSUs contain a performance-based condition tied to the enterprise value of the Company. Each PSU that vests will entitle the participant to receive one share of the Company's common stock. Vesting occurs upon achievement of a defined enterprise value of the Company, with 50% vesting upon achievement of the defined enterprise value between the performance period September 30, 2020 and September 30, 2022 and the remaining 50% vesting upon the achievement of the defined enterprise value as a result of a specified transaction, as defined in the PSU agreement, on or before September 30, 2022. At the discretion of the Company's Board of Directors, payment can be made in stock, cash, or a combination of both.

Compensation expense recognized related to the PSUs is based on management’s expectation of future performance compared to the pre-established performance goals. If the performance goals are not expected to be met, no compensation expense is recognized and any previously recognized compensation expense is reversed. As of ~~September~~June 30, ~~2017,~~2019, there are 701 PSUs outstanding and no compensation expense was recognized for these awards to date as the threshold for expense recognition for the performance-based condition had not been met.

As of June 30, 2019, the unrecognized share-based compensation expense related to unvested Restricted Shares was ~~$5,294 and the remaining unrecognized compensation cost is expected to be recognized over a weighted-average period of approximately 2.9 years. As discussed in~~ ~~Note 1 - Basis of Presentation, the Successor has elected to account for forfeitures as they occur.~~

As of September 30, 2017, the unrecognized share-based compensation expense related to the aggregate original principal amount of $2,400 of Second Lien Notes issued to certain officers of the Company was $2,236$1,753 and is expected to be recognized over a weighted-average period of approximately ~~2.9~~1.2 years. Forfeitures are accounted for as they occur.

As of June 30, 2019, the unrecognized share-based compensation expense related to the outstanding Restricted Notes was $722 and is expected to be recognized over a weighted-average period of approximately 1.2 years. The Company will recognize this compensation expense on a straight-line basis over the three-year vesting period using the fair value of the Restricted Notes at the issue ~~date, $2,300.~~date.

~~(12)~~(11) Employee Benefit Plans

Components of the net periodic pension and postretirement benefit ~~cost~~credit are as follows:

Successor Predecessor
September 1, 2017 Through September 30, 2017 July 1, 2017
Through
August 31, 2017 Three Months
Ended
September 30, 2016

Service cost $ 38
$ 71
$ 112
Interest cost 397
806
1,312
Expected return on assets (692 ) (1,356 ) (2,035 )
Amortization of prior service cost —
33
50
Amortization of actuarial loss —
110
406
Net periodic pension and postretirement benefit (credit) cost $ (257 ) $ (336 ) $ (155 )
Contributions paid $ 213
$ —
$ —


	Successor			Predecessor							Three Months Ended								Six Months Ended
	September 1, 2017 Through September 30, 2017			January 1, 2017 Through August 31, 2017				Nine Months Ended September 30, 2016			June 30,								June 30,
	September 1, 2017 Through September 30, 2017						2019					2018			2019					2018
Service cost	$	38		January 1, 2017 Through August 31, 2017	$	282		Nine Months Ended September 30, 2016			$	336		$	106			$	117			$	212			$	234
Interest cost	397			3,227				3,936			1,322				1,225				2,644				2,450
Expected return on assets	(692		)	(5,425		)		(6,105		)	(1,531		)		(1,971		)		(3,062		)		(3,942		)
Amortization of prior service cost	—			133				150			13				—				26				—
Amortization of actuarial loss	—			438				1,218			10				—				20				—
Net periodic pension and postretirement benefit (credit) cost	$	(257	)	$	(1,345	)		$	(465	)
Net periodic pension and postretirement benefit credit											$	(80	)		$	(629	)		$	(160	)		$	(1,258	)
Contributions paid	$	213		$	356			$	—		$	—			$	—			$	—			$	—

The Company anticipates making no additional cash contributions to its pension plans in the remainder of ~~2017.~~2019.

~~Employee retirement contracts and collective bargaining agreements were honored by~~The Company was party to a multi-employer pension plan from which the Company ~~after emergence~~determined to withdraw. At June 30, 2019, the total estimated liability to withdraw from the ~~Chapter 11 cases on the Effective Date.~~

~~Upon the adoption of fresh-start accounting, the Company remeasured its obligations under its defined benefit pension and other postretirement plans.~~plan was $3,204. The ~~re-measurement increased the Company's defined benefit pension and other postretirement benefit obligations by approximately $4,274 and was driven primarily by a change in the discount rate.~~

~~(13) Restructuring Activity~~

In April 2015, the Company announced a restructuring plan consisting of workforce reductions and the consolidation of facilities in locations deemed to have redundant operations. In the three months and nine months ended September 30, 2016, the Company incurred costscurrent liability 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 nine months ended September 30, 2016.

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 exitCompany's withdrawal from the ~~closed facilities, and professional fees at the closed facilities.~~

~~As a result~~multi-employer pension plan of ~~its restructuring activities, the Company incurred the following restructuring expenses:~~

Successor Predecessor
September 1, 2017 Through September 30, 2017 July 1, 2017
Through
August 31, 2017 Three Months
Ended
September 30, 2016

Employee termination and related benefits $ —
$ 140
$ 267
Moving costs associated with plant consolidations —
212
52
Professional fees —
46
593
Total $ —
$ 398
$ 912

Successor Predecessor
September 1, 2017 Through September 30, 2017 January 1, 2017
Through
August 31, 2017 Nine Months
Ended
September 30, 2016

Employee termination and related benefits $ —
$ 185
$ 945
Lease termination costs —
—
6,706
Moving costs associated with plant consolidations —
305
4,447
Professional fees —
76
1,323
Loss on disposal of fixed assets —
—
1,253
Total $ —
$ 566
$ 14,674

~~Restructuring reserve activity for the periods January 1, 2017 through August 31, 2017 and September 1, 2017 through September 30, 2017 is summarized below:~~

Predecessor
Period Activity
Balance January 1, 2017 Charges (gains) Cash receipts (payments) Non-cash activity Balance August 31, 2017
Employee termination and related benefits $ 3,627
$ 185
$ (261 ) $ —
$ 3,551
Lease termination costs 823
—
(496 ) 374
701
Moving costs associated with plant consolidations —
305
(305 ) —
—
Professional fees —
76
(76 ) —
—
Total $ 4,450
$ 566
$ (1,138 ) $ 374
$ 4,252

Successor
Period Activity
Balance September 1, 2017 Charges (gains) Cash receipts (payments) Non-cash activity Balance September 30, 2017
Employee termination and related benefits ^(a)
$ 3,551
$ —
$ (20 ) $ —
$ 3,531
Lease termination costs^(b)
701
—
(16 ) —
685
Total $ 4,252
$ —
$ (36 ) $ —
$ 4,216

^(a)~~As of September 30, 2017 (Successor), the short-term portion of employee termination and related benefits of $340~~$240 is included in accrued and other current liabilities

in the Condensed Consolidated Balance ~~Sheet~~Sheets and the long-term liability ~~associated with the Company's withdrawal from a multi-employer pension plan~~ of ~~$3,191~~$2,964 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 September 30, 2017 (Successor), the short-term portion of the lease termination costs of $304 is included in accrued and other current liabilities and the long-term portion of the lease termination costs of $381 is included in other noncurrent liabilities in the Condensed Consolidated Balance Sheet.Sheets.

~~(14)~~(12) 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 ~~expense, which includes tax expense on the Company’s share of joint venture earnings in the three months and nine months ended September 30, 2016 (Predecessor),~~benefit as a percentage of loss ~~from continuing operations~~ before income ~~taxes and equity in earnings of joint venture.~~taxes.

~~For~~In the ~~period September 1, 2017 through September~~three months ended June 30, ~~2017 (Successor), the Company recorded income tax expense of $286 on pre-tax loss from continuing operations of $535, for an effective tax rate of (53.5)%.~~

~~For the period July 1, 2017 through August 31, 2017 (Predecessor),~~2019, the Company recorded income tax benefit of ~~$1,395~~$225 on ~~pre-tax~~a loss before income ~~from continuing operations~~taxes of ~~$70,828,~~$8,529, for an effective tax rate of ~~(1.97)%~~2.6%. ~~For~~In the three months ended ~~September~~June 30, 2016 (Predecessor), the Company recorded income tax expense of $903 on pre-tax loss from continuing operations before equity in earnings of joint venture of $17,359, for an effective tax rate of (5.2)%.

~~For the period January 1, 2017 through August 31, 2017 (Predecessor),~~2018, the Company recorded income tax benefit of ~~$1,387~~$1,437 on ~~pre-tax~~a loss before income ~~from continuing operations~~taxes of ~~$34,803,~~$9,950, for an effective tax rate of ~~(4.0)%~~14.4%. ~~For~~

In the ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2019, the Company recorded income tax ~~expense~~benefit of ~~$1,099~~$400 on ~~pre-tax~~a loss ~~from continuing operations~~ before ~~equity in earnings~~income taxes of ~~joint venture of $79,096,~~$16,707, for an effective tax rate of ~~(1.4)%~~2.4%. In the six months ended June 30, 2018, the Company recorded income tax benefit of $1,958 on a loss before income taxes of $15,612, for an effective tax rate of 12.5%.

~~The Company's U.S. statutory rate is 35%.~~ The most significant factors impacting the effective tax rate ~~for~~in the three and six months ended June 30, 2019 were (i) the recording of the period ~~September 1, 2017 through September 30, 2017 (Successor) were~~expense associated with the quasi territorial tax regime called the Global Intangible Low Taxed Income Inclusion (“GILTI”), (ii) the foreign rate differential, and ~~release of~~(iii) changes in valuation allowances in ~~jurisdictions that have become profitable. The most significant factors impacting~~various jurisdictions.

Effective January 1, 2018, the ~~effective~~Company's U.S. federal corporate income tax rate is 21%.

On December 22, 2017, the U.S. enacted significant changes to the U.S. tax law following the passage and signing of H.R.1, “An Act to Provide for Reconciliation Pursuant to Titles II and V of the ~~period January 1, 2017 through August 31, 2017 (Predecessor)~~Concurrent Resolution on the Budget for Fiscal Year 2018” (the “Tax Act”) (also known as “The Tax Cuts and Jobs Act”). U.S. federal corporate income tax law changes as a result of the ~~nine months ended September 30, 2016 (Predecessor) were losses in jurisdictions that~~Tax Act continue to impact the Company, ~~is not able~~most significantly, (i) interest deductibility limits imposed by section 163(j), (ii) GILTI and (iii) the immediate deductibility of certain qualified assets acquired and placed in service. The Company continues to ~~benefit due to uncertainty~~monitor proposed regulations and clarifying guidance from U.S. Treasury as a result of the Tax Act and incorporates relevant items to the ~~realization~~computation of ~~those losses, release of valuation allowances in jurisdictions that have become profitable, and~~ the ~~impact of intraperiod allocations.~~tax provision.

~~(15)~~(13) Commitments and Contingent Liabilities

The Company is party to a variety of legal proceedings, claims, and inquiries, including proceedings or inquiries by governmental authorities, which arise ~~from~~in the ~~operation~~ordinary course of, ~~its business. These proceedings, claims,~~ and ~~inquiries~~ are incidental to, ~~and occur in the normal course of~~ the Company's ~~business affairs.~~business. The majority of these legal proceedings, claims, and inquiries relate to commercial disputes with customers, suppliers, and others; employment and employee benefits-related disputes; product 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 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.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Disclosure Regarding Forward-Looking Statements

~~Information provided and~~Certain statements contained in this report ~~that are not purely historical are~~or in other materials we have filed or will file with the Securities and Exchange Commission (the “SEC”) constitute 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~~reflect our expectations, estimates or projections concerning our possible or assumed future results of operations, including, but not limited to, descriptions of our business strategy, and the ~~cost savings and other~~ benefits ~~that~~ we expect to achieve from our ~~restructuring.~~working capital management initiative. These statements are often ~~include~~identified by the use of words such as “believe,” “expect,” “anticipate,” “may,” “could,” “estimate,” “likely,” “will,” “intend,” “predict,” “plan,” "should," or other similar expressions. ~~These~~Forward-looking statements are not guarantees of performance or results and ~~they~~ involve a number of risks ~~uncertainties,~~ and ~~assumptions.~~uncertainties. Although we believe that these forward-looking statements are based on reasonable assumptions and estimates, there are many factors that could ~~affect~~cause our ~~actual financial results or results of operations and could cause~~ actual results to differ materially from those in the forward-looking statements. These factors include our ability to effectively manage our operational initiatives and implemented restructuring activities, the impact of volatility of metals prices, the cyclical and seasonal aspects of our business, our ability to effectively manage inventory levels, and the impact of our substantial level of indebtedness, as well asprojected, including those risk factors identified in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016 and this Quarterly Report on Form 10-Q for the third quarter ended September 30, 2017 in Part II, Item 1A, "Risk Factors".~~2018. 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.~~in this section. Any forward-looking statement speaks only as of the date made. Except as required by ~~the federal securities~~applicable laws, we ~~do not have any obligations or intention~~undertake no obligation to ~~release publicly any revisions to~~update 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)”.

Overview

A. M. Castle & Co., together with its subsidiaries (the ~~“Company”~~“Company,” “we” or “us”), is a global distributor of specialty metals ~~distribution company~~and supply chain services, principally serving ~~customers on a~~the producer durable equipment, commercial aircraft, heavy equipment, industrial goods, construction equipment, and retail sectors of the global ~~basis. The Company has operations in the United States, Canada, Mexico, France, the United Kingdom, Spain, China and Singapore.~~economy. 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~~with a 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.

~~Recent Developments~~

~~Emergence~~

Results of Operations

The following tables set forth certain statement of operations data in each period indicated:



	Three Months Ended June 30,
	2019					2018					Favorable/ (Unfavorable)
(Dollar amounts in millions)	$			% of Net Sales		$			% of Net Sales		Three Month $ Change			Three Month % Change

Net sales	$	147.9		100.0	%	$	150.4		100.0	%	$	(2.5	)	(1.7	)%
Cost of materials (exclusive of depreciation)	110.0			74.3	%	111.1			73.8	%	1.1			1.0	%
Operating costs and expenses	39.1			26.5	%	40.4			26.9	%	1.3			3.2	%
Operating loss	$	(1.2	)	(0.8	)%	$	(1.1	)	(0.7	)%	$	(0.1	)	(9.1	)%



	Six Months Ended June 30,
	2019					2018					Favorable/ (Unfavorable)
(Dollar amounts in millions)	$			% of Net Sales		$			% of Net Sales		Three Month $ Change		Three Month % Change

Net sales	$	297.5		100.0	%	$	296.3		100.0	%	$	1.2	0.4	%
Cost of materials (exclusive of depreciation)	220.9			74.3	%	221.0			74.6	%	0.1		—	%
Operating costs and expenses	78.1			26.2	%	79.8			26.9	%	1.7		2.1	%
Operating loss	$	(1.5	)	(0.5	)%	$	(4.5	)	(1.5	)%	$	3.0	66.7	%

Net Sales

Net sales of $147.9 million in the three months ended June 30, 2019 decreased $2.5 million, or 1.7%, compared to $150.4 million in the three months ended June 30, 2018. The decrease in net sales in the current quarter compared to the prior year quarter was a result of a decrease in tons sold per day, partially offset by an increase in selling prices and a favorable sales mix. Tons sold per day for the Company's products decreased by 17.0% in the three months ended June 30, 2019 compared to the same quarter in the prior year driven primarily by decreased sales volumes of carbon and alloy products, SBQ bar and stainless partially offset by increases in tons sold per day of aluminum products.

Commodities pricing increases continue to have a favorable impact on the Company's selling prices. Overall average selling prices of the Company's product mix sold increased 20.5% in the three months ended June 30, 2019 compared to the three months ended June 30, 2018 with favorable selling prices realized on a majority of the commodities that the Company sells. The most favorable selling prices were realized on the Company's highest selling commodities including carbon and alloy plate, alloy bar, SBQ bar, aluminum, and stainless.

Net sales of $297.5 million in the six months ended June 30, 2019 increased $1.2 million, or 0.4%, compared to $296.3 million in the six months ended June 30, 2018. Overall average selling prices of the Company's product mix sold increased 22.0% in the six months ended June 30, 2019 compared to the six months ended June 30, 2018. Tons sold per day for the Company's products decreased by 17.0% in the six months ended June 30, 2018 compared to the first half of the prior year. The decrease in tons sold was a result of an overall trend towards lower sales volumes in the market and a change in product mix sold by the Company through the first half of 2019. The Company expects the trend towards lower sales with a favorable product sales mix to continue as it focuses on profitable sales in key markets rather than volume of tons sold.

Cost of Materials

Cost of materials (exclusive of depreciation) was $110.0 million in the three months ended June 30, 2019 compared to $111.1 million in the three months ended June 30, 2018. The $1.1 million, or 1.0%, decrease between the three month periods is primarily due to the decrease in net sales volume compared to the same period last year.

Cost of materials (exclusive of depreciation) was 74.3% of net sales in the three months ended June 30, 2019 compared to 73.8% of net sales in the three months ended June 30, 2018. Although increased commodities pricing continues to favorably impact the Company's overall gross material margin (calculated as net sales less cost of materials divided by net sales), the amount of higher material costs that the Company is able to pass to its contractual customers can impact the overall gross material margin between quarters. In the three months ended June 30, 2019, material costs were higher than in the three months ended June 30, 2018 due to several quarters of commodity pricing increases, resulting in a slight decrease in the gross material margin in the three months ended June 30, 2019.

Cost of materials (exclusive of depreciation) was $220.9 million in the six months ended June 30, 2019, virtually flat compared to $221.0 million in the six months ended June 30, 2018. Cost of materials (exclusive of depreciation) was 74.3% of net sales in the six months ended June 30, 2019 compared to 74.6% of net sales in the six months ended June 30, 2018.

Operating Costs and Expenses and Operating Loss

Operating costs and expenses in each period indicated were as follows:



	Three Months Ended June 30,				Favorable/(Unfavorable)
(Dollar amounts in millions)	2019		2018		Three Month $ Change		Three Month % Change
Warehouse, processing and delivery expense	$	20.5	$	21.1	$	0.6	2.8	%
Sales, general and administrative expense	16.5		17.0		0.5		2.9	%
Depreciation expense	2.1		2.3		0.2		8.7	%
Total operating costs and expenses	$	39.1	$	40.4	$	1.3	3.2	%

Operating costs and expenses decreased by $1.3 million from ~~Chapter 11~~$40.4 million in the three months ended June 30, 2018 to $39.1 million in the three months ended June 30, 2019, primarily as a result of the following:

Warehouse, processing and delivery expense decreased by $0.6 million primarily due to a decrease in warehouse and freight costs resulting from lower sales volume.

Sales, general and administrative expense decreased by $0.5 million primarily the result of lower payroll and benefits costs.

Operating loss in the three months ended June 30, 2019 was $1.2 million, compared to $1.1 million in the three months ended June 30, 2018.



	Six Months Ended June 30,				Favorable/(Unfavorable)
(Dollar amounts in millions)	2019		2018		Three Month $ Change		Three Month % Change
Warehouse, processing and delivery expense	$	40.8	$	41.5	$	0.7	1.7	%
Sales, general and administrative expense	33.0		33.5		0.5		1.5	%
Depreciation expense	4.3		4.8		0.5		10.4	%
Total operating costs and expenses	$	78.1	$	79.8	$	1.7	2.1	%

Operating costs and expenses decreased by $1.7 million from $79.8 million in the six months ended June 30, 2018 to $78.1 million in the six months ended June 30, 2019, primarily as a result of the following:

Warehouse, processing and delivery expense decreased by $0.7 million as a decrease in warehouse and freight costs due to lower sales volume was partially offset by higher personal property and real estate taxes.

Sales, general and administrative expense decreased by $0.5 million primarily the result of lower payroll and benefits costs.

Operating loss in the six months ended June 30, 2019 was $1.5 million, compared to $4.5 million in the six months ended June 30, 2018.

Other Income and Expense, Income Taxes and Net Loss

Interest expense, net was $9.9 million in the three months ended June 30, 2019, compared to $8.1 million in the three months ended June 30, 2018. Interest expense includes the interest cost component of the net periodic benefit cost of the Company's pension and post retirement benefits of $1.3 million in the three months ended June 30, 2019 and $1.2 million in the three months ended June 30, 2018. Interest expense, net was $19.3 million in the six months ended June 30, 2019, compared to $15.3 million in the six months ended June 30, 2018. Interest expense includes the interest cost component of the net periodic benefit cost of the Company's pension and post retirement benefits of $2.6 million in the six months ended June 30, 2019 and $2.5 million in the six months ended June 30, 2018. The increase in interest expense in both the three and six months ended June 30, 2019 compared to the same periods in the prior year is primarily due to an increase in non-cash amortization of the Second Lien Note discount as well as increased interest expense on the Company's Revolving B Credit Facility, which it entered into in June 2018. (see Note 6 - Debt in the Notes to the Condensed Consolidated Financial Statements).

Other income, net was $2.5 million in the three months ended June 30, 2019, compared to other expense, net of $0.7 million in the three months ended June 30, 2018. Included in other income (expense), net in the three months ended June 30, 2019 and the three months ended June 30, 2018 was net pension benefit of $1.5 million and $2.0 million, respectively. The remaining other income (expense), net for the comparative periods is the result of foreign currency transaction gains and losses. The Company recorded a foreign currency gain of $1.0 million in the three months ended June 30, 2019, compared to a foreign currency loss of $2.6 million in the three months ended June 30, 2018.

Other income, net was $4.1 million in both the six months ended June 30, 2019 and the six months ended June 30, 2018. Included in other income (expense), net in the six months ended June 30, 2019 and the six months ended June 30, 2018 was net pension benefit of $3.1 million and $3.9 million, respectively. The remaining other income (expense), net for the comparative periods is the result of foreign currency transaction gains and losses. The Company recorded a foreign currency gain of $1.0 million in the six months ended June 30, 2019, compared to a foreign currency gain of $0.2 million in the six months ended June 30, 2018.

Loss before income taxes was $8.5 million in the three months ended June 30, 2019, compared to $10.0 million in the three months ended June 30, 2018. The decrease in the loss before income taxes in the three months ended June 30, 2019 compared to the three months ended June 30, 2018 was primarily the result of other income, net of $2.5 million in the three months ended June 30, 2019, compared to other expense, net of $0.7 million in the three months ended June 30, 2018, partially offset by increased interest expense in the three months ended June 30, 2019. Loss before income taxes was $16.7 million in the six months ended June 30, 2019, compared to $15.6 million in the six months ended June 30, 2018. The decrease in operating loss in the six months ended June 30, 2019 was more than offset by increased interest expense in that period, resulting in a higher loss before income taxes in the six months ended June 30, 2019 compared to the same period last year.

The Company recorded an income tax benefit of $0.2 million in the three months ended June 30, 2019, compared to $1.4 million in the three months ended June 30, 2018 and an income tax benefit of $0.4 million in the six months ended June 30, 2019, compared to $2.0 million in the six months ended June 30, 2018. The Company’s effective tax rate is expressed as income tax expense as a percentage of loss beforeincome taxes. The effective tax rate in the three months ended June 30, 2019 was 2.6% as compared to 14.4% in the three months ended June 30, 2018. The effective tax rate in the six months ended June 30, 2019 was 2.4% as compared to 12.5% in the six months ended June 30, 2018. The change in the effective tax rate between periods resulted from changes in the geographic mix and timing of income or losses, the inclusion of foreign earnings under Internal Revenue Code ("IRC") Section 951A, and the impact of the foreign income tax rate differential.

Net loss was $8.3 million in the three months ended June 30, 2019, compared to $8.5 million in the three months ended June 30, 2018, and $16.3 million in the six months ended June 30, 2019, compared to $13.7 million in the six months ended June 30, 2018.

Liquidity and Capital Resources

Liquidity

Cash and cash equivalents increased (decreased) as follows:



	Six Months Ended
	June 30,
(Dollar amounts in millions)	2019			2018
Net cash used in operating activities	$	(5.3	)	$	(20.6	)
Net cash used in investing activities	(2.6		)	(3.4		)
Net cash from financing activities	5.7			19.7
Effect of exchange rate changes on cash and cash equivalents	0.1			(0.2		)
Net change in cash and cash equivalents	$	(2.1	)	$	(4.5	)

The Company’s principal sources of liquidity are cash provided by operations and proceeds from borrowings under its revolving credit facilities.

Specific components of the change in working capital (defined as current assets less current liabilities), are highlighted below:

Higher accounts receivable at June 30, 2019 compared to December 31, 2018 resulted in a cash flow use of $13.4 million in the six months ended June 30, 2019, compared to a cash flow use of $17.3 million in the six months ended June 30, 2018. Average receivable days outstanding was steady at 54.5 days in the six months ended June 30, 2019 compared to 53.6 days for the six months ended June 30, 2018.

Lower inventory levels at June 30, 2019 compared to December 31, 2018 resulted in a cash flow source of $3.2 million in the six months ended June 30, 2019 compared to a higher inventory levels at June 30, 2018 compared to December 30, 2017, which resulted in a cash flow use of $10.8 million in the six months ended June 30, 2018. Average days sales in inventory was 133.0 days for the six months ended June 30, 2019 compared to 129.8 days for the six months ended June 30, 2018. The increase in average days sales in inventory is primarily due to the higher price of the inventory on-hand as a result of increased commodity pricing within the market.

An increase in total accounts payable and accrued and other current liabilities compared to December 31, 2018 resulted in a $2.0 million cash flow source in the six months ended June 30, 2019 compared to a cash flow source of $11.6 million in the six months ended June 30, 2018. Accounts payable days outstanding was 42.5 days for the six months ended June 30, 2019 compared to 43.1 days for the same period last year.

Working capital and the balances of its significant components are as follows:



	As of
(Dollar amounts in millions)	June 30, 2019		December 31, 2018		Working Capital Increase (Decrease)
Working capital	$	191.0	$	198.2	$	(7.2	)
Cash and cash equivalents	6.5		8.7		(2.2		)
Accounts receivable	93.3		79.8		13.5
Inventories	157.7		160.7		(3.0		)
Accounts payable	48.5		42.7		(5.8		)
Accrued and other current liabilities	13.1		16.6		3.5
Operating lease liabilities	6.7		—		(6.7		)

Approximately $2.1 million of the Company’s consolidated cash and cash equivalents balance of $6.5 million at June 30, 2019 resided in the United States.

The decrease in net cash used in investing activities to $2.6 million during the six months ended June 30, 2019 from $3.4 million in the six months ended June 30, 2018 is due to a decrease in cash paid for capital expenditures, primarily

purchases of warehouse equipment. Management expects capital expenditures will be approximately $4.0 million to $6.0 million for the full-year 2019.

During the six months ended June 30, 2019, the net cash from financing activities of $5.7 million was attributable to proceeds from borrowings under the Company's revolving credit facilities, as well as proceeds from short-term borrowings, which were primarily from the initial borrowings on the Company's Chinese subsidiary's new local credit facility. During the six months ended June 30, 2018, the net cash from financing activities of $19.7 million was primarily attributable to net proceeds of $21.9 million from borrowings under the Company's revolving credit facilities, partially offset by net repayments of short-term borrowings under the Company's foreign line of credit in France and payments made in connection with the Company's build-to-suit liability.

Capital Resources

On ~~June 18,~~August 31, 2017, the Company entered into the Revolving Credit and Security Agreement with PNC Bank, National Association ("PNC") as lender and as administrative and collateral agent (the “Agent”), and other lenders party thereto (the "ABL Credit Agreement"). The ABL Credit Agreement provides for a $125,000 senior secured, revolving credit facility (the "Revolving A Credit Facility"), under which the Company and four of its subsidiaries ~~filed voluntary petitions for reorganization under chapter 11 of~~each are borrowers (collectively, in such capacity, the ~~United States Bankruptcy Code (the "Bankruptcy Code") with the United States Bankruptcy Court for the District of Delaware in Wilmington, Delaware (the "Bankruptcy Court"~~“Borrowers”). The four subsidiaries in the chapter 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. On August 2, 2017, the Bankruptcy Court entered an order (the "Confirmation Order") confirming the the Plan. On August 31, 2017 (the "Effective Date"), the Plan became effective pursuant to its terms and the Debtors emerged from their chapter 11 cases.

~~On the Effective Date, by operation of the Plan, among other things:~~

The Company issued an aggregate of 3,734 shares of its new common stock consisting of 1,300 shares issued to holders of Prepetition Second Lien Secured Claims (as defined by the Plan) in partial satisfaction of their claims; 300 shares issued to holders of Prepetition Third Lien Secured Claims (as defined by the Amended Plan) in partial satisfaction of their claims; 400 shares issued to participating holders of the Company's outstanding common stock as of August 2, 2017 in partial satisfaction of their interests; and 1,734 shares restricted shares, together with an aggregate original principal amount of $2.4 million of Second Lien Notes convertible into an additional 637 shares of new common stock as of the Effective Date, issued as awards under the A.M. Castle & Co. 2017 Management Incentive Plan to certain officers of the Company.

All agreements, instruments, and other documents evidencing, related to or connected with any equity interests of the Company (which include the Company's prior common stock, par value $0.01 per share, warrants to purchase such common stock, and awards under management equity plans adopted before the Effective Date) were extinguished without recovery.

All outstanding indebtedness, accrued interest, and related fees of the Debtors under that certain Credit and Guaranty Agreement, dated December 8, 2016, by and among the Company, Highbridge International Capital Management, LLC, Corre Partners Management, LLC, Whitebox Credit Partners, L.P., WFF Cayman II Limited, and SGF, LLC and Cantor Fitzgerald Securities, among others (as amended, the “Former Credit Agreement”), amounting to $49.4 million, was paid in full with the proceeds of borrowings under the New Credit Agreement and the issuance of Second Lien Notes under the Second Lien Indenture (defined below).

All outstanding indebtedness of the Debtors under the Company’s 12.75% Senior Secured Notes due 2018 and the Indenture dated February 8, 2016, by and between the Company, as issuer, its guarantors, and U.S. Bank National Association, as trustee, and all outstanding indebtedness of the Debtors under the Company’s 5.25% Convertible Senior Secured Notes due 2019 and the Indenture dated May 19, 2016, by and between the Company, as issuer, its guarantors, and U.S. Bank National Association, as trustee, was discharged and canceled in exchange for Second Lien Notes and new common stock in the Company.

~~The A.M. Castle & Co. 2017 Management Incentive Plan became effective.~~

All of the existing members of the Board were deemed to have resigned and were replaced the new Board of the Company consisting of five members, four of whom are new to the Board. A sixth member was appointed to the Board, effective immediately, on October 6, 2017.

~~Pursuant to the Plan, on the Effective Date, the Debtors entered into a New ABL Facility.~~

The obligations of the Borrowers have been guaranteed by the subsidiaries of the Company named therein as guarantors.

On June 1, 2018, the Company entered into an Amendment No. 1 to ABL Credit Agreement (the “Credit Agreement Amendment”) by and among the Company, the Borrowers and guarantors party thereto and the Agent and the other lenders party thereto, which amended the ABL Credit Agreement (as amended by the Credit Agreement Amendment, the “Expanded ABL Credit Agreement”) to provide for additional borrowing capacity. The ~~New~~Expanded ABL ~~Facility~~Credit Agreement provides for an additional $25,000 last out Revolving B Credit Facility (the "Revolving B Credit Facility" and together with the Revolving A Credit Facility, the "Expanded Credit Facility") made available in part by way of a ~~$125.0 million senior secured, revolving credit facility for~~participation in the ~~Company.~~ Revolving B Credit Facility by certain of the Company’s stockholders. Borrowings under the Expanded Credit Facility will mature on February 28, 2022.

Subject to certain exceptions and permitted encumbrances, the obligations under the ~~New ABL~~Expanded Credit Facility are secured by a first priority security interest in substantially all of the assets of each of the Borrowers and certain subsidiaries of ~~their foreign subsidiaries.~~the Company that are named as guarantors. The proceeds of the advances under the ~~New ABL~~Expanded Credit Facility may only be used to (i) pay certain fees and expenses to the Agent and the lenders under the ~~New ABL~~Expanded Credit Facility, (ii) provide for the Borrowers' working capital needs and reimburse drawings under letters of credit, (iii) repay the obligations under the Debtor-in-Possession Revolving Credit and Security Agreement dated as of ~~June~~July 10, 2017, by and among the Company, the lenders party thereto, and PNC, ~~Bank, National Association,~~ and certain other existing indebtedness, and (iv) provide for the Borrowers' capital expenditure needs, in accordance with the ~~New~~Expanded ABL ~~Facility.~~

On the Effective Date, in connection with its entering into the New ABL Facility, the Company borrowed an aggregate amount equal to $78.8 million, of which $49.4 million was used to pay down outstanding indebtedness, accrued interest, and related fees of the Company under the Former Credit Agreement.

Pursuant to the Plan, on the Effective Date, the Company entered into the Second Lien Notes Indenture and, pursuant thereto, issued approximately $164.9 million in aggregate original principal amount of its 5.00% / 7.00% Convertible Senior Secured PIK Toggle Notes due 2022.

The Second Lien Notes are five-year senior obligations of the Company and certain of its subsidiaries, secured by a lien on all or substantially all of the assets of the Company, its domestic subsidiaries and certain of its foreign subsidiaries, which lien the Indenture Agent has agreed will be junior to the lien of the Agent under the New ABL Facility.

~~Financial Reporting Under Reorganization~~

~~Refer to~~ ~~Note 2 - Bankruptcy Related Disclosures,~~ of the Company's Condensed Consolidating Financial Statements for further discussion of financial reporting implications related to the Company's Chapter 11 Cases, and emergence therefrom, including a detail of liabilities subject to compromise and reorganization items, net.

~~Presentation of Predecessor and Successor~~

The Company adopted fresh-start reporting as of the Effective Date. As a result of the application of fresh-start reporting, the Company's financial statements for periods prior to the Effective Date are not comparable to those for periods subsequent to the Effective Date. References in this report to “Successor” refer to the Company on or after the Effective Date. References to “Predecessor” refer to the Company prior to the Effective Date. Operating results for the Successor and Predecessor periods are not necessarily indicative of the results to be expected for a full fiscal year. References such as the “Company,” “we,” “our” and “us” refer to A.M. Castle & Co. and its consolidated subsidiaries, whether Predecessor and/or Successor, as appropriate.

In the following discussion and analysis of the results of operations and liquidity, the Company compares certain financial information for the three and nine months ended September 30, 2017 to the three and nine months ended September 30, 2016. However, the Company believes that in certain instances, combining the financial results when discussing the Predecessor and Successor periods within the three and nine months ended September 30, 2017 is useful for management and investors to assess the Company's ongoing financial and operational performance and trends.

~~Results of Operations: Periods September 1, 2017 through September 30, 2017 and July 1, 2017 through August 31, 2017 Compared to Three Months Ended September 30, 2016~~

The following table sets forth certain statement of operations data for the periods September 1, 2017 through September 30, 2017 and July 1, 2017 through August 31, 2017 and the three months ended September 30, 2016.

Successor Predecessor
September 1, 2017 Through September 30, 2017
July 1, 2017 Through
August 31, 2017

Three Months Ended
September 30, 2016
Favorable/(Unfavorable)
(Dollar amounts in millions) $ % of Net Sales $ % of Net Sales $ % of Net Sales Three Month $ Change Three Month % Change

Net sales $ 41.7
100.0 % $ 81.5
100.0 % $ 124.9
100.0 % $ (1.7 ) (1.4 )%
Cost of materials (exclusive of depreciation and amortization) 31.5
75.5 % 63.4
77.8 % 92.4
74.0 % (2.5 ) (2.7 )%
Operating costs and expenses^(a)
11.3
27.1 % 25.1
30.8 % 41.1
32.9 % 4.7
11.4 %
Operating loss $ (1.1 ) (2.6 )% $ (7.0 ) (8.6 )% $ (8.6 ) (6.9 )% $ 0.5
5.8 %

^(a) ~~Operating costs and expenses include restructuring expenses of $0.4 million for the period July 1, 2017 through August 31, 2017 and $0.9 million for the three months ended September 30, 2016.~~

~~Net Sales~~

Net sales of $41.7 million in the period September 1, 2017 through September 30, 2017 and $81.5 million in the period July 1, 2017 through August 31, 2017 were a decrease of $1.7 million, or 1.4%, compared to the three months ended September 30, 2016. Although the Company experienced a 7.3% increase in tons sold per day to customers compared to the same period in the prior year, with the largest sales volume increases in alloy bar and SBQ bar, the favorable impact of the increase in sales volumes was more than offset by and overall decrease in average selling prices and an overall unfavorable change in product mix.

Average selling prices overall decreased 6.6% in the three months ended September 30, 2017 compared to the three months ended September 30, 2016, driven mainly by decreases in the price per ton sold of aluminum and a slight decrease in the price per ton of stainless. The average price per ton sold of all other product categories increased compared to the prior year quarter.

~~Cost of Materials~~

Cost of materials (exclusive of depreciation and amortization) were $31.5 million in the period September 1, 2017 through September 30, 2017 and $63.4 million in the period July 1, 2017 through August 31, 2017 compared to $92.4 million in the three months ended September 30, 2016. The $2.5 million, or 2.7%, decrease between the three month periods is largely due to the slight decrease in sales volumes in the three months ended September 30, 2017.

Cost of materials (exclusive of depreciation and amortization) was 77.0% of net sales in the three months ended September 30, 2017 compared to 74.0% of net sales in the three months ended September 30, 2016.

~~Operating Costs and Expenses and Operating Loss~~

~~Operating costs and expenses for the periods September 1, 2017 through September 30, 2017 and July 1, 2017 through August 31, 2017 and the three months ended September 30, 2016 were as follows:~~

Successor Predecessor Favorable/(Unfavorable)
September 1, 2017 Through September 30, 2017 July 1, 2017
Through
August 31, 2017 Three Months
Ended
September 30, 2016 Three Month $ Change Three Month % Change
(Dollar amounts in millions)

Warehouse, processing and delivery expense $ 6.0
$ 12.3
$ 19.6
$ 1.3
6.6 %
Sales, general and administrative expense 4.8
10.0
16.8
2.0
11.9 %
Restructuring expense —
0.4
0.9
0.5
55.6 %
Depreciation and amortization expense 0.5
2.4
3.8
0.9
23.7 %
Total operating costs and expenses $ 11.3
$ 25.1
$ 41.1
$ 4.7
11.4 %

Operating costs and expenses decreased by $4.7 million from $41.1 million in the three months ended September 30, 2016 to $11.3 million in the period September 1, 2017 through September 30, 2017 and $25.1 million in the period July 1, 2017 through August 31, 2017.

~~Warehouse, processing and delivery expense decreased by $1.3 million mainly as a result of lower payroll and benefits costs and lower facility costs offset by higher freight costs;~~

Sales, general and administrative expense decreased by $2.0 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;

Depreciation and amortization expense decreased by $0.9 million due to lower depreciation expense in the period September 1, 2017 through September 30, 2017 from a lower depreciable base of property, plant and equipment as a result of fresh-start accounting and no amortization of intangible assets.

Operating loss in the period September 1, 2017 through September 30, 2017 was $1.1 million and $7.0 million, including $0.4 million of restructuring expense, in the period July 1, 2017 through August 31, 2017 compared to operating loss of $8.6 million, including $0.9 million of restructuring expense, in the three months ended September 30, 2016.

~~Other Income and Expense, Income Taxes and Net Loss~~

Interest expense was $1.4 million in the period September 1, 2017 through September 30, 2017 and $2.6 million in the period July 1, 2017 through August 31, 2017, compared to $8.7 million in the three months ended September 30, 2016. Effective on the bankruptcy Petition Date, the Company discontinued recording interest expense on outstanding prepetition debt classified as LTSC. As a result, interest expense for the period July 1, 2017 through the Effective Date, August 31, 2017, excludes approximately $4.1 million of contractual interest expense associated with the 12.75% Senior Secured Notes due December 15, 2018 and 5.25% Convertible Notes due December 30, 2019. Following the Plan from becoming effective on August 31, 2017, the Company has significantly reduced its debt and contractual interest burden from what it had been in the prepetition periods.

Financial restructuring expense of $0.4 million in the period July 1, 2017 through August 31, 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 million in the three months ended September 30, 2016. Because of the chapter 11 bankruptcy proceedings, the fair value of the derivative liability for the embedded conversion feature of the 5.25% Convertible Notes due December 30, 2019 was estimated to be $0 as of the Petition Date, and the carrying value of the embedded conversion feature was written off to reorganization items, net in the second quarter of 2017. Therefore, there was no unrealized gain or loss on the embedded conversion option in the period July 1, 2017 through August 31, 2017 There was no unrealized gain or loss on the embedded conversion option associated with the Second Lien Notes for the period September 1, 2017 through September 30, 2017 as there was no change in the fair value of the conversion option between September 30, 2017 and the Effective Date.

Other (income) expense, net, comprised mostly of foreign currency transaction gains or losses, was a gain of $2.1 million in the period September 1, 2017 through September 30, 2017 and a gain of $0.8 million in the period July 1, 2017 through August 31, 2017, compared to $6.3 million loss in the three months ended September 30, 2016. These gains or losses are primarily related to unhedged intercompany financing arrangements.

Reorganization items, net in the period July 1, 2017 through August 31, 2017 was a gain of $80.0 million and relates to expenses and income directly associated with the chapter 11 proceedings and incurred during the pendency of the Company's Chapter 11 Cases. The balance in the period July 1, 2017 through August 31, 2017 is comprised of a gain on extinguishment of debt of $90.0 million and a gain on fresh-start revaluation of $16.6 million. Offsetting these gains are $5.4 million related to the write-off of unamortized debt issuance costs and discounts related to the 12.75% Senior Secured Notes due 2018 and the 5.25% Convertible Notes due 2019, prepayment penalties and debt related fees of $13.2 million, professional fees of $6.7 million and key employee incentive plan expense of $1.2 million. (Refer to ~~Note 2 - Bankruptcy Relates Disclosuresto the Condensed Consolidated Financial Statements~~.)

The Company recorded income tax expense of $0.3 million in the Successor period September 1, 2017 through September 30, 2017 and income tax benefit of $1.4 million in the Predecessor period July 1, 2017 through August 31, 2017. Income tax expense was $0.9 million in the three months ended September 30, 2016. The Company’s effective tax rate is expressed as income tax expense, which includes income tax expense (benefit) on the Company’s share of joint venture losses in the three months ended September 30, 2016, as a percentage of loss from continuing operations beforeincome taxes and equity in losses of joint venture. The effective tax rate for the periods September 1, 2017 through September 30, 2017 and July 1, 2017 through August 31, 2017 was (53.5)% and (1.97)%, respectively. The effective tax rate for the three months ended September 30, 2016 was (5.2)%. The change in the effective tax rate between periods resulted from changes in the geographic mix and timing of income (losses), the inability to benefit from current year losses due to valuation allowance positions in the U.S., and the impact of intraperiod allocations.

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 6 - Joint Venture~~ ~~to the Condensed Consolidated Financial Statements).~~

Loss from continuing operations was $0.8 million in the period September 1, 2017 through September 30, 2017. The Company had income from continuing operations of $72.2 million in the period July 1, 2017 through August 31, 2017 due mainly to the gain from reorganization items, net, of $80.0 million in that period. Loss from continuing operations was $18.3 million for the three months ended September 30, 2016. 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 adjustment related to the sale of substantially all the assets of the Company's wholly owned subsidiary, Total Plastic, Inc. ("TPI").

Net loss was $0.8 million in the period September 1, 2017 through September 30, 2017. Net income of $72.2 million in the period July 1, 2017 through August 31, 2017 includes the gain from reorganization items, net, of $80.0 million. Net loss in the three months ended September 30, 2016, which includes loss from discontinued operations, net of income taxes of $1.7 million, was $20.0 million.

~~Results of Operations: Periods September 1, 2017 through September 30, 2017 and January 1, 2017 through August 31, 2017 Compared to Nine Months Ended September 30, 2016~~

The following table sets forth certain statement of operations data for the periods September 1, 2017 through September 30, 2017 and January 1, 2017 through August 31, 2017 and for the nine months ended September 30, 2016. Included in the operating results below for the nine months ended September 30, 2016 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.

Successor Predecessor
September 1, 2017 Through September 30, 2017
January 1, 2017 Through
August 31, 2017

Nine Months Ended
September 30, 2016
Favorable/(Unfavorable)
(Dollar amounts in millions)
$ % of Net Sales $ % of Net Sales $ % of Net Sales Nine Month $ Change Nine Month % Change
Net sales $ 41.7
100.0 % $ 353.9
100.0 % $ 419.4
100.0 % $ (23.8 ) (5.7 )%
Cost of materials (exclusive of depreciation and amortization)^(a)
31.5
75.5 % 266.5
75.3 % 323.8
77.2 % 25.8
8.0 %
Operating costs and expenses^(b)
11.3
27.1 % 100.2
28.3 % 142.4
34.0 % 30.9
21.7 %
Operating loss $ (1.1 ) (2.6 )% $ (12.8 ) (3.6 )% $ (46.8 ) (11.2 )% $ 32.9
70.3 %

^(a) ~~Cost of materials includes $0.5 million of inventory scrapping expenses associated with restructuring activity for the nine months ended September 30, 2016.~~

^(b) Operating costs and expenses include $0.6 million of restructuring expenses for the period January 1, 2017 through August 31, 2017 and $14.7 million of restructuring expenses for the nine months ended September 30, 2016.

~~Net Sales~~

Net sales of $41.7 million for the period September 1, 2017 through September 30, 2017 and $353.9 million for the period January 1, 2017 through August 31, 2017 were a decrease of $23.8 million, or 5.7%, compared to the same period last year. Net sales for the nine months ended September 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. The sale of this inventory, which was sold at a zero gross 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. Including that sale of inventory, net sales for the nine months ended September 30, 2016 from the Houston and Edmonton locations, which were closed in February 2016, were $33.0 million. Despite the closure of these two locations, the Company posted an 8.1% increase in tons sold per day to customers compared to the nine months ended September 30, 2016. Excluding the tons sold from the Houston and Edmonton locations in the nine months ended September 30, 2016, tons sold per day increased 9.6%. Products with the most notable improvements in sales volumes were alloy bar and carbon and alloy plate. Offsetting the positive impact of the increase in sales volumes was an overall 5.4% decrease in average selling prices.

Average selling prices for many of the Company's products continue to trend up and were higher in the nine months ended September 30, 2017 compared to the same period last year, but decreases in average selling prices of aluminum and a slight decrease in the average selling price of stainless resulted in the overall 5.4% decrease in average selling prices.

~~Cost of Materials~~

Cost of materials (exclusive of depreciation and amortization) were $31.5 million in the period September 1, 2017 through September 30, 2017 and $266.5 million in the period January 1, 2017 through August 31, 2017 compared to $323.8 million during the nine months ended September 30, 2016. The $25.8 million, or 8.0%, decrease between the nine month periods is mainly due to 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 nine months ended September 30, 2016, as discussed above.

Cost of materials (exclusive of depreciation and amortization) was 75.3% as a percent of net sales in the nine months ended September 30, 2017, compared to 77.2% as a percent of net sales for the comparative prior year period. While the percentage for the nine months ended September 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 nine months ended September 30, 2017 and 2016 were as follows:~~

Successor Predecessor Favorable/(Unfavorable)
September 1, 2017 Through September 30, 2017 January 1, 2017
Through
August 31, 2017 Nine Months
Ended
September 30, 2016 Three Month $ Change Three Month % Change
(Dollar amounts in millions)

Warehouse, processing and delivery expense $ 6.0
$ 50.2
$ 63.7
$ 7.5
11.8 %
Sales, general and administrative expense 4.8
39.2
51.5
7.5
14.6 %
Restructuring expense —
0.6
14.7
14.1
95.9 %
Depreciation and amortization expense 0.5
10.2
12.5
1.8
14.4 %
Total operating costs and expenses $ 11.3
$ 100.2
$ 142.4
$ 30.9
21.7 %

~~Operating costs and expenses decreased by $30.9 million from $142.4 million during the nine months ended September 30, 2016~~to~~$11.3 million in the period September 1, 2017 through September 30, 2017 and $100.2 million in the period January 1, 2017 through August 31, 2017.~~

Warehouse, processing and delivery expense decreased by $7.5 million primarily as a result of lower payroll, benefit, and facility costs resulting from plant consolidations and the closure of the Houston and Edmonton facilities in the first quarter of 2016;

~~Sales, general and administrative expense decreased by $7.5 million mainly as a result of lower payroll, benefit, and outside services costs;~~

Restructuring expense was $0.6 million in the period January 1, 2017 through August 31, 2017, while restructuring expense was $14.7 million in the nine months ended September 30, 2016, which consisted mainly of lease termination charges associated with the closure of the Company's Houston and Edmonton facilities, as well as moving expenses associated with plant consolidations related to the April 2015 restructuring plan; and

Depreciation and amortization expense decreased by $1.8 million due to lower depreciation expense resulting from plant consolidations and closures and equipment sales occurring in the first quarter of 2016, as well as lower depreciation expense in the period September 1, 2017 through September 30, 2017 from a lower depreciable base of property, plant and equipment as a result of fresh-start accounting and no amortization of intangible assets.

Operating loss in the period September 1, 2017 through September 30, 2017 was $1.1 million and $12.8 million, including $0.6 million of restructuring expense, in the period January 1, 2017 through August 31, 2017 compared to an operating loss of $46.8 million, including restructuring charges of $14.7 million, in the nine months ended September 30, 2016.

~~Other Income and Expense, Income Taxes and Net Loss~~

Interest expense was $1.4 million in the period September 1, 2017 through September 30, 2017 and $23.4 million in the period January 1, 2017 through August 31, 2017 compared to $28.7 million in the nine months ended September 30, 2016. Effective on the bankruptcy Petition Date, the Company discontinued recording interest expense on outstanding prepetition debt classified as LTSC. As a result, interest expense for the period January 1, 2017 through the Effective Date, August 31, 2017, excludes approximately $4.9 million of contractual interest expense associated with the 12.75% Senior Secured Notes due December 15, 2018 and 5.25% Convertible Notes due December 30, 2019. Following the Plan becoming effective on August 31, 2017, the Company has significantly reduced its debt and contractual interest burden from what it had been in the comparable prepetition periods.

Financial restructuring expense of $7.0 million in the January 1, 2017 through August 31, 2017 was 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 loss on the embedded conversion option associated with the 5.25% Convertible Notes due December 30, 2019 was an unrealized loss of $0.1 million in the period January 1, 2017 through August 31, 2017 and a gain of $7.6 million in the nine months ended September 30, 2016. Because of the chapter 11 bankruptcy proceedings, the fair

value of the derivative liability for the embedded conversion feature of the 5.25% Convertible Notes due December 30, 2019 was estimated to be $0 as of the Petition Date, and the carrying value of the embedded conversion feature was written off to reorganization items, net in the second quarter of 2017. There was no unrealized gain or loss on the embedded conversion option associated with the Second Lien Notes for the period September 1, 2017 through September 30, 2017 as there was no change in the fair value of the conversion option between September 30, 2017 and the Effective Date.

~~The debt restructuring loss of $6.6 million in the nine months ended September 30, 2016 reflects $7.1 million of eligible holder consent fees and related legal and other direct costs~~ ~~incurred in conjunction with the private exchange offer and consent solicitation to certain eligible holders to exchange~~ 12.75% Senior Secured Notes due 2018 for the Company’s 12.75% Senior Secured Notes due 2016. Those charges were partly offset by a $0.5 million gain that resulted from the exchange of the Company's 7.0% Convertible Notes due 2017 for 5.25% Convertible Notes due 2019, and the subsequent conversion of a portion of the 5.25% Convertible Notes due 2019 to equity.

Other (income) expense, net, comprised mostly of foreign currency transaction gains or losses, was gain of $2.1 million in the period September 1, 2017 through September 30, 2017 and a gain of $3.6 million in the period January 1, 2017 through August 31, 2017 compared to a $4.6 million loss 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 period January 1, 2017 through August 31, 2017 was a gain of $74.5 million and relates to expenses and income directly associated with the chapter 11 proceedings and incurred during the pendency of the Company's Chapter 11 Cases. The balance for the period January 1, 2017 through August 31, 2017 is comprised of a gain on extinguishment of debt of $90.0 million and a gain on fresh-start revaluation of $16.6 million. Offsetting these gains are $10.3 million related to the write-off of debt issuance costs and discounts related to the 12.75% Senior Secured Notes due 2018 and the 5.25% Convertible Notes due 2019, prepayment penalties and debt related fees of $13.2 million, professional fees of $7.3 million and key employee incentive plan expense of $1.2 million. (Refer to ~~Note 2 - Bankruptcy Relates Disclosuresto the Condensed Consolidated Financial Statements~~.)

The Company recorded income tax expense of $0.3 million in the Successor period September 1, 2017 through September 30, 2017 and income tax benefit of $1.39 million in the Predecessor period January 1, 2017 through August 31, 2017. Income tax expense was $1.1 million in the nine months ended September 30, 2016. The Company’s effective tax rate is expressed as income tax expense, which includes tax expense (benefit) on the Company’s share of joint venture losses in the nine months ended September 30, 2016, as a percentage of loss from continuing operations beforeincome taxes and equity in losses of joint venture. The effective tax rate for the period September 1, 2017 through September 30, 2017 and January 1, 2017 through August 31, 2017 was (53.5)% and (4.0)%, respectively, and (1.4)% for the nine months ended September 30, 2017. The change in the effective tax rate between periods resulted from changes in the geographic mix and timing of income (losses), the inability to benefit from current year losses due to valuation allowance positions in the U.S., and the impact of intraperiod allocations.

Equity in losses of joint venture was $4.2 million in the nine months ended September 30, 2016. Included in the equity in losses of joint venture was an impairment charge of $4.6 million 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 joint venture for aggregate cash proceeds of $31.6 million.

Loss from continuing operations was $0.8 million in the period September 1, 2017 through September 30, 2017. Income from continuing operations of $36.2 million in the period January 1, 2017 through August 31, 2017 includes the gain of $74.5 million for reorganization items, net. Loss from continuing operations was $84.4 million in the nine months ended September 30, 2016. Income from discontinued operations, net of income taxes, was $6.2 million for the nine months ended September 30, 2016, which includes an after-tax gain on the sale of TPI of $1.3 million and an income tax benefit of $4.2 million from the reversal of an income tax valuation allowance.

Net loss was $0.8 million in the period September 1, 2017 through September 30, 2017. Net income was $36.2 million in the period January 1, 2017 through August 31, 2017, which includes includes the gain of $74.5 million for reorganization items, net. Net loss was $78.1 million for nine months ended September 30, 2016, which includes income from discontinued operations, net of income taxes, of $6.2 million.

~~Liquidity and Capital Resources~~

~~Cash and cash equivalents increased (decreased) as follows:~~

Successor Predecessor
September 1, 2017 Through September 30, 2017
January 1, 2017
Through
August 31, 2017

Nine Months
Ended
September 30, 2016
(Dollar amounts in millions)

Net cash used in operating activities $ (6.6 ) $ (50.3 ) $ (17.6 )
Net cash (used in) from investing activities (0.9 ) 5.3
85.5
Net cash from (used in) financing activities 8.4
18.6
(68.7 )
Effect of exchange rate changes on cash and cash equivalents 0.1
0.9
(0.3 )
Net change in cash and cash equivalents $ 1.1
$ (25.6 ) $ (1.1 )

The Company’s principal sources of liquidity currently are cash provided by operations and borrowings under the New ABL Facility that was entered into on the Effective Date. The New ABL Facility provides for a $125.0 million senior secured, revolving credit facility for the Company. On the Effective Date, in connection with its entering into the New ABL Facility, the Company borrowed an aggregate amount equal to $78.8 million, of which $49.4 million was used to pay down outstanding indebtedness, accrued interest, and related fees of the Company under the former Credit Facilities Agreement.

~~Specific components of the change in working capital (defined as current assets less current liabilities), are highlighted below:~~

Higher accounts receivable at both September 30, 2017 (Successor) and August 31, 2017 (Predecessor) compared to year-end 2016 (Predecessor) resulted in $3.7 million and $6.1 million of cash flow use, respectively, compared to $5.1 million of cash flow use for the same period last year. Average receivable days outstanding was 52.2 days for the nine months ended September 30, 2017 compared to 53.8 days for the nine months ended September 30, 2016.

Higher inventory levels at both September 30, 2017 (Successor) and August 31, 2017 (Predecessor) compared to year-end 2016 (Predecessor) used $0.8 million and $2.7 million of cash, respectively, while lower inventory levels at September 30, 2016 compared to year-end 2015 were a $34.8 million cash flow source for the nine months ended September 30, 2016. The majority of the cash flow source from inventory in the nine months ended September 30, 2016 was the result of the Houston and Edmonton inventory sale discussed above. Average days sales in inventory was 140.1 days for the nine months ended September 30, 2017 compared to 172.7 days for the nine months ended September 30, 2016, which resulted primarily from improved inventory management.

Increases in accounts payable and accrued and other current liabilities were a $0.8 million and $2.6 million cash flow source, respectively, compared to a $14.6 million cash flow source for the same period last year. Accounts payable days outstanding was 40.7 days for the nine months ended September 30, 2017 compared to 44.5 days for the same period last year.

~~Working capital and the balances of its significant components are as follows:~~

Successor Predecessor
(Dollar amounts in millions)

September 30,
2017 December 31,
2016 Working Capital Increase (Decrease)
Working capital $ 193.4
$ 203.9
$ (10.5 )
Cash and cash equivalents 11.1
35.6
(24.5 )
Accounts receivable 76.8
64.4
12.4
Inventories 154.3
146.6
7.7
Accounts payable 47.2
33.1
(14.1 )
Accrued and other current liabilities 14.6
19.9
5.3

~~Approximately $4.8 million of the Company’s consolidated cash and cash equivalents balance of $11.1 million at September 30, 2017 resided in the United States.~~

Net cash used in investing activities of $0.9 million during the period September 1, 2017 through September 30, 2017 is mostly attributable to cash paid for capital expenditures. Net cash from investing activities of $5.3 million in the period January 1, 2017 through August 31, 2017 is attributable mainly due to $7.5 million reduction in the cash collateralization requirements of outstanding letters of credit offset by cash paid for capital expenditures of $2.9 million in the period. 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 million during the same period last year is mostly attributable to cash proceeds from the sale of TPI and the sale of the Company's 50% ownership in its joint venture. Cash paid for capital expenditures for the nine months ended September 30, 2016 was $2.4 million.

During the period January 1, 2017 through August 31, 2017, net cash from financing activities of $18.6 million was mainly attributable to proceeds and repayments of debt in connection with the Company's bankruptcy proceedings and included the initial borrowings and subsequent repayment of the DIP facility, borrowings under the New ABL Facility, cash proceeds from the issuance of the Second Lien Notes and repayment of the prepetition First Lien Notes, as well as proceeds from short-term borrowings under the Company's foreign line of credit. Offsetting these net cash proceeds were a payment of $3.0 million made in connection with the Company's build-to-suit liability associated with its warehouse in Janesville, WI. During the nine months ended September 30, 2016, all available proceeds from the sale of TPI 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.

In December 2016, the Company entered 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 were in the form of senior secured first lien term loan facilities in an aggregate principal amount of $112.0 million. The Credit Facilities consisted 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 May 4, 2017, the Company entered into an amendment to the Credit Facilities Agreement, whereby 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 $12.5 million was drawn by the Company in May 2017 to finance additional investments in inventory and to service customers' needs.

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 Senior Notes Indenture and the 12.75% Secured Notes issued pursuant thereto, and (iii) the Convertible Notes Indenture and the 5.25% 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 were 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 Restructuring Support Agreement and the Bankruptcy Code.

~~As fully discussed at~~ ~~Note 2 - Bankruptcy Related Disclosures~~, to the Condensed Consolidated Financial Statements, on the August 31, 2017 Effective Date, the Company's bankruptcy Plan became effective pursuant to its terms and the Debtors emerged from their chapter 11 cases. By operation of the Plan, all outstanding indebtedness, accrued interest, and related fees of the Debtors under the Credit Facilities, amounting to $49.4 million, was paid in full with the proceeds of borrowings under the New ABL Facility and the issuance of Second Lien Notes under the Second Lien Indenture. Also, on the Effective Date and by operation of the Plan, all outstanding indebtedness of the Debtors under (i) the Company's Senior Notes Indenture and the 12.75% Secured Notes issued pursuant thereto, and (ii) the Company's Convertible Notes Indenture and the 5.25% Convertible Notes issues pursuant thereto, were discharged and canceled.

The New ABL Facility provides for a $125.0 million senior secured, revolving credit facility for the Company. Subject to certain exceptions and permitted encumbrances, the obligations under the New ABL Facility are secured by a first priority security interest in substantially all of the assets of each of the Borrowers and certain of their foreign subsidiaries. The proceeds of the advances under the New ABL Facility may only be used to (i) pay certain fees and expenses to the Agent and the lenders under the New ABL Facility, (ii) provide for Borrowers' working capital needs and reimburse drawings under letters of credit, (iii) repay the obligations under the Debtor-in-Possession Revolving Credit and Security Agreement dated as of June 10, 2017, by and among the Company, the lenders party thereto, and PNC Bank, National Association, and certain other existing indebtedness, and (iv) provide for the Borrowers' capital expenditure needs, in accordance with the New ABL Facility.

The Company may prepay its obligations under the ~~New ABL~~Expanded Credit Facility at any time without premium or penalty, and must apply the net proceeds of material sales of collateral in prepayment of such obligations. Payments made must be applied to the Company's obligations under the Revolving A Credit Facility, if any, prior to its obligations under the Revolving B Credit Facility. In connection with an early termination or permanent reduction of the Revolving A Credit Facility prior to June 1, 2020, a 0.50% fee shall be due for the period from June 1, 2018 through May 31, 2019 and 0.25% for the period from June 1, 2019 through May 31, 2020, in each case on the amount of such commitment reduction, subject to reduction as set forth in the Expanded ABL Credit Agreement. Indebtedness for borrowings under the Expanded Credit Facility is subject to acceleration upon the occurrence of specified defaults or events of default, including (i) failure to pay principal or interest, (ii) the inaccuracy of any representation or warranty of a loan party, (iii) failure by a loan party to perform certain covenants, (iv) defaults under indebtedness owed to third parties, (v) certain liability producing events relating to ERISA, (vi) the invalidity or impairment of the Agent’s lien on its collateral or of any applicable guarantee, and (vii) certain adverse bankruptcy-related and other events.

Interest on indebtedness under the Revolving A Credit Facility accrues at a variable rate based on a grid with the highest interest rate being the applicable ~~Prime or~~ LIBOR-based rate plus a margin of 3.0%, as set forth in the ~~New~~Expanded ABL ~~Facility.~~Credit Agreement. Interest on indebtedness under the Revolving B Credit Facility accrues at a rate of 12.0% per annum, which will be paid-in-kind unless the Company elects to pay such interest in cash and the Revolving B payment conditions specified in the Expanded ABL Credit Agreement are satisfied. Additionally, the Company must pay a monthly ~~Facility Fee~~facility fee equal to the product of (i) 0.25% per annum (or, if the average daily revolving facility usage is less than 50% of the maximum revolving advance amount of the Expanded Credit Facility, 0.375% per annum) multiplied by (ii) the amount by which the maximum ~~revolving~~ advance amount of the Expanded Credit Facility exceeds such average daily ~~revolving facility~~Expanded Credit Facility usage for such month.

Under the ~~New~~Expanded ABL ~~Facility,~~Credit Agreement, the maximum borrowing capacity of the ~~facility~~Revolving A Credit Facility is based on the Company's borrowing base calculation. ~~The~~As of June 30, 2019, the weighted average advance rates used in the borrowing base calculation are ~~87.3%~~85.0% on eligible accounts receivable and ~~69.2%~~70.9% on eligible inventory.

The Company's ~~New~~Expanded ABL ~~Facility~~Credit Agreement contains certain covenants and restrictions customary to an asset-based revolving loan. Indebtedness for borrowings under the ~~New~~Expanded ABL ~~Facility~~Credit Agreement is subject to acceleration upon the occurrence of specified defaults or events of default, including failure to pay principal or interest, the inaccuracy of any representation or warranty of a loan party, failure by a loan party to perform certain covenants, defaults under indebtedness owed to third parties, certain liability producing events relating to ERISA, the invalidity or impairment of the Agent’s lien on its collateral or of any applicable guarantee, and certain adverse bankruptcy-related and other events.

The Company's ~~New~~Expanded ABL ~~Facility~~Credit Agreement contains a springing financial maintenance covenant requiring the Company to maintain a Fixed Charge Coverage Ratio of 1.0 to 1.0 in any ~~covenant testing period~~Covenant Testing Period (as defined in the Expanded ABL Credit Agreement) when the Company's ~~cash~~ liquidity (as defined in the ~~New~~Expanded ABL ~~Facility~~Credit Agreement), is less than ~~the greater of i) 10% of the New ABL Facility's maximum borrowing capacity (as defined in the New ABL Facility Agreement) and ii) $9.0 million.~~$12.5 million for five consecutive days. The Company iswas not in a ~~covenant testing period~~Covenant Testing Period as of ~~September~~and for the three months ended June 30, ~~2017.~~2019.

Additionally, upon the occurrence and during the continuation of an event of default or upon the failure of the Company to maintain ~~cash~~its liquidity (as defined in the ~~New~~Expanded ABL ~~Facility Facilities Agreement)~~Credit Agreement, inclusive of certain cash balances and the additional unrestricted borrowing capacity shown below) in excess of ~~the greater of $10.0~~$12.5 million, ~~or 12.5% of the New ABL Facility's maximum borrowing capacity (as defined in the New ABL Facility Facilities Agreement),~~ the lender has the right to take full dominion of the Company’s cash collections and apply these proceeds to outstanding loans under the ~~New ABL~~Expanded Credit Facility ~~Facilities~~ Agreement (“Cash Dominion”). Based on the Company's cash projections, it does not anticipate that Cash Dominion will occur, or that it will be in a Covenant Testing Period during the next 12 months.

Additional unrestricted borrowing capacity under the ~~New ABL~~Revolving A Credit Facility ~~at September~~as of June 30, ~~2017~~2019 was as follows (in millions):


Maximum borrowing capacity	$	125.0		$	125.0
Letters of credit and other reserves	(1.7		)	(2.3		)
Availability reserve	(5.0		)
Current maximum borrowing capacity	118.3			122.7
Current borrowings	(87.3		)	(112.0		)
Additional unrestricted borrowing capacity	$	31.0		$	10.7

~~The New ABL Facility matures~~Also on ~~February 28, 2022.~~

August 31, 2017, the Company entered into an indenture (the “Second Lien Notes Indenture”) with Wilmington Savings Fund Society, FSB, as trustee and collateral agent (“Indenture Agent”) and, pursuant thereto, issued approximately $164,902 in aggregate principal amount of 5.00% / 7.00% Convertible Senior Secured Paid-in-Kind ("PIK") Toggle Notes due 2022 (the “Second Lien Notes”), including $2,400 of restricted Second Lien Notes issued to certain members of the Company's management. The Second Lien Notes are five-year senior obligations of the Company and certain of its subsidiaries, secured by a lien on all or substantially all of the assets of the Company, its domestic subsidiaries and certain of its foreign subsidiaries, which lien the Indenture Agent has agreed will be junior to the lien of the Agent under the ~~New~~Expanded ABL ~~Facility.~~Credit Agreement.

The terms of the Second Lien 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 certain stock; make certain investments; create liens; agree to certain payment restrictions

affecting certain subsidiaries; sell or otherwise transfer or dispose assets; enter into transactions with affiliates; and enter into sale and leaseback transactions.

The Second Lien Notes may not be redeemed by the Company in whole or in part at any time, subject to certain exceptions provided under the Second Lien Notes Indenture. In addition, if a Fundamental Change occurs at any time, each holder of any Second Lien Notes has the right to require the Company to repurchase such holder’s Second Lien Notes for cash at a repurchase price equal to 100% of the principal amount thereof, together with accrued and unpaid interest thereon, subject to certain exceptions. Subject to certain exceptions, under the Second Lien Notes Indenture a “Fundamental Change” includes, but is not limited to, the following: (i) the acquisition of more than 50% of the voting power of the Company’s common equity by a “person” or “group” within the meaning of Section 13(d) of the Securities Exchange Act of 1934, as amended; (ii) the consummation of any recapitalization, reclassification, share exchange, consolidation or merger of the Company pursuant to which the Company’s common stock will be converted into cash, securities or other property; (iii) the “Continuing Directors” (as defined in the Second Lien Notes Indenture) cease to constitute at least a majority of the board of directors; and (iv) the approval of any plan or proposal for the liquidation or dissolution of the Company by the Company’s stockholders.

The Company must use the net proceeds of material sales of collateral, which proceeds are not used for other permissible purposes, to make an offer of repurchase to holders of the Second Lien ~~Convertible~~ Notes. Indebtedness for borrowings under the ~~New Credit Agreement~~Second Lien Notes Indenture is subject to acceleration upon the occurrence of specified defaults or events of default, including failure to pay principal or interest, the inaccuracy of any representation or warranty of any obligor under the Second Lien ~~Convertible~~ Notes, failure by an obligor under the Second Lien ~~Convertible~~ Notes to perform certain covenants, the invalidity or impairment of the Indenture Agent’s lien on its collateral or of any applicable guarantee, and certain adverse bankruptcy-related and other events.

Interest on the Second Lien Notes accrues at the rate of 5.00%~~, except that the Company may, in circumstances where the payment on interest~~ if paid in cash ~~would cause a condition of default under the New ABL Facility, pay~~and at the rate of 7.00% if paid in kind. ~~Currently,~~Pursuant to the terms of the Second Lien Notes Indenture, the Company is currently paying interest on the Second Lien Notes in ~~kind as per the Second Lien Notes Indenture, interest on the Second Lien Notes in the first 12 months is required to be paid in kind at a rate of 7.00%.~~kind.

In July 2017, the Company's French subsidiary entered into a local credit facility under which it may borrow against 100% of the eligible accounts receivable factored, with recourse, up to 6.5 million Euros, subject to factoring fees and floating Euribor or LIBOR interest rates, plus a 1.0% margin. The French subsidiary utilizes the local credit facility to support its operating cash needs. As of ~~September~~June 30, ~~2017,~~2019, the French subsidiary has borrowings of ~~$3.6~~$5.6 million under ~~the~~their local credit facility.

In May 2019, the Company's Chinese subsidiary entered into a local credit facility, which expires on February 18, 2020, under which it may borrow short term loans for up to 90 days in United States Dollars or Chinese Yuan up to the equivalent of 25.0 million Chinese Yuan. Under the terms of the loan agreement, borrowings on the Chinese subsidiary's credit facility are charged interest at a rate of 3.60%. The Chinese subsidiary utilizes the local credit facility to finance its trading activities and all borrowings are guaranteed by the Chinese subsidiary's outstanding accounts receivable. As of June 30, 2019, the Chinese subsidiary had borrowings of $2.4 million under their local credit facility. Subsequent to June 30, 2019, the Company repaid $1.0 million of the borrowings outstanding on the Chinese subsidiary's credit facility.

Interest expense in the six months ended June 30, 2019 and the six months ended June 30, 2018 was $19.3 million and $15.3 million, respectively, of which $3.5 million and $3.0 million, respectively, was cash interest.

As of ~~September~~June 30, ~~2017,~~2019, the Company had ~~$1.7~~$2.3 million of irrevocable letters of credit outstanding.

For additional information regarding the terms of the ~~New~~Expanded ABL ~~Facility,~~Credit Agreement, the Second Lien Notes, and the ~~French~~Company's foreign credit ~~facility~~facilities refer to Note 86 - Debt to the Notes to the Condensed Consolidated Financial Statements.

Critical Accounting Policies

The preparation of our financial statements requires us to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Part II, Item 7 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2018 includes a summary of the critical accounting policies we believe are the most important to aid in understanding our financial results. There have been no changes to those critical accounting policies that have had a material impact on our reported amounts of assets, liabilities, revenues or expenses during the six months ended June 30, 2019. Further, we do not believe that the new accounting guidance implemented in 2019 materially changed our critical accounting policies.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Not applicable. As a smaller reporting company, the Company is not required to provide the information required by this item.

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 Chairman and Chief Executive Officer (“CEO”) and ~~Chief Financial Officer~~Executive Vice President, Finance and Administration (“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).~~1934, as amended (the "Exchange Act")) as of the end of the period covered by this Quarterly Report on Form 10-Q. 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.~~June 30, 2019.

(b) Changes in Internal Control over Financial Reporting

There ~~were~~have been no changes in the Company’s internal control over financial reporting ~~identified~~(as defined in ~~connection with the evaluation required by Rules~~Rule 13a-15 and 15d-15 under the Exchange ~~Act~~Act) that occurred during the three months ended ~~September~~June 30, ~~2017~~2019 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

Item 1A. Risk Factors

~~The following information updates, and supercedes,~~There have been no material changes to the ~~information previously~~risk factors disclosed under the caption “Risk Factors” in Part I, Item 1A ~~“Risk Factors”~~ of ~~our~~the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2016, which was filed with the Securities and Exchange Commission on April 7, 2017 and in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2016, which was filed with the Securities and Exchange Commission on August 9, 2017.

~~Our substantial level of indebtedness could adversely affect our financial condition and prevent us from fulfilling our obligations under our debt instruments.~~

We have substantial debt service obligations. As of September 30, 2017, we had approximately $256.8 million of total debt outstanding, excluding capital lease obligations of $0.3 million, all of which is secured. The debt outstanding, in order of priority, was comprised of $87.3 million of borrowings against our new Revolving Credit and Security Agreement (the “New ABL Facility”), $165.9 million aggregate principal amount of 5.00% / 7.00% Convertible Senior Secured Paid In Kind (PIK) Toggle Notes due 2022 (the “Second Lien Notes”), including $2.3 million of restricted Second Lien Notes issued to certain members of management (“MIP Notes”), and short-term borrowings of approximately $3.6 million under a local credit facility, entered into by the Company’s French subsidiary under which it may borrow against 100% of the eligible accounts receivable factored, with recourse, up to 6.5 million Euros (the “Foreign Line of Credit”).

~~Our substantial level of indebtedness could have significant effects on our business, including the following:~~

~~it may be more difficult for us to satisfy our financial obligations;~~

~~our ability to obtain additional financing for working capital, capital expenditures, strategic acquisitions or general corporate purposes may be impaired;~~

we must use a substantial portion of our cash flow from operations to pay interest on our indebtedness, which will reduce the funds available to use for operations and other purposes, including potentially accretive acquisitions;

~~our ability to fund a change of control offer under our debt instruments may be limited;~~

~~our substantial level of indebtedness could place us at a competitive disadvantage compared to our competitors that may have proportionately less debt;~~

~~our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate may be limited; and~~

~~our substantial level of indebtedness may make us more vulnerable to economic downturns and adverse developments in our business.~~

We expect to obtain the funds to pay our expenses and to satisfy our debt obligations from our operations and available resources under the New ABL Facility. Our ability to meet our expenses and make these principal and interest payments as they come due, therefore, depends on our future performance, which will be affected by financial, business, economic and other factors, many of which we cannot control. Our business may not generate sufficient cash flow from operations in the future, and our anticipated revenue and cash flow may not be realized, either or both of which could result in our being unable to repay indebtedness or to fund other liquidity needs. If we do not have enough funds, we may be required to refinance all or part of our then existing debt, sell assets or borrow more funds, which we may not be able to accomplish on terms acceptable to us, or at all. In addition, the terms of existing or future debt agreements may

~~restrict us from pursuing any of these alternatives which could have an adverse effect on our financial condition or liquidity.~~

We may not be able to generate sufficient cash to service all of our existing debt service obligations, and may be forced to take other actions to satisfy our obligations under our debt agreements, which may not be successful.

Our total outstanding debt under our New ABL Facility, the Second Lien Notes, including MIP Notes, and the Foreign Line of Credit has an aggregate principal amount of $256.8 million as of September 30, 2017. Our ability to make scheduled payments on or to refinance our debt obligations depends on our future financial condition and operating performance, which are subject to prevailing economic and competitive conditions and to certain financial, business and other factors beyond our control. Therefore, we may not be able to maintain or realize a level of cash flows from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness.

If our cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay investments, capital expenditures or potentially accretive acquisitions, sell assets, seek additional capital or restructure or refinance our indebtedness. Our ability to restructure or refinance our debt will depend on the condition of the capital markets and our financial condition at such time. Any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous borrowing covenants, which could further restrict our business operations. The terms of existing or future debt instruments may restrict us from adopting some of these alternatives. In addition, any failure to make payments of principal and interest on our outstanding indebtedness on a timely basis would likely result in a reduction of our credit rating, which could harm our ability to incur additional indebtedness or the terms thereof. These alternative measures may not be successful and may not permit us to meet our scheduled debt service obligations which could have an adverse effect on our financial condition or liquidity.

Our debt instruments impose significant operating and financial restrictions, which may prevent us from pursuing certain business opportunities and taking certain actions and our failure to comply with the covenants contained in our debt instruments could result in an event of default that could adversely affect our operating results.

~~Our debt agreements impose, and future debt agreements may impose, operating and financial restrictions on us. These restrictions limit or prohibit, among other things, our ability to:~~

~~incur additional indebtedness, or issue disqualified capital stock;~~

~~pay dividends, redeem subordinated debt or make other restricted payments;~~

~~make certain investments or acquisitions;~~

~~grant or permit certain liens on our assets;~~

~~enter into certain transactions with affiliates;~~

~~merge, consolidate or transfer substantially all of our assets;~~

~~incur dividend or other payment restrictions affecting certain of our subsidiaries;~~

~~transfer, sell or acquire assets; and~~

~~change the business we conduct.~~

These covenants could adversely affect our ability to finance our future operations or capital needs, withstand a future downturn in our business or the economy in general, engage in business activities, including future opportunities that may be in our interest, and plan for or react to market conditions or otherwise execute our business strategies. A breach of any of these covenants could result in a default in respect of the related indebtedness. If a default occurs, in certain circumstances, the relevant lenders or holders of such indebtedness could elect to declare the indebtedness, together with accrued interest and other fees, to be immediately due and payable and proceed against any collateral securing that indebtedness. If the maturity of our indebtedness is accelerated, we may not have sufficient cash resources to satisfy our debt obligations and may not be able to continue our operations as planned.

~~Our future operating results are impacted by the volatility of the prices of metals, which could cause our results to be adversely affected.~~

The prices we pay for metal raw materials and the prices we charge for products may fluctuate depending on many factors, including general economic conditions (both domestic and international), competition, production levels, import duties and other trade restrictions and currency fluctuations. To the extent metal prices decline, we would generally expect lower sales, pricing and possibly lower operating income. Depending on the timing of the price changes and to the extent we are not able to pass on to our customers any increases in our metal raw materials prices, our operating results may be adversely affected. In addition, because we maintain substantial inventories of metals in order to meet short lead-times and the just-in-time delivery requirements of our customers, a reduction in our selling prices could result in lower profitability or, in some cases, losses, either of which could adversely impact our ability to remain in compliance with certain provisions of our debt instruments, as well as result in us incurring impairment charges.

~~The Company’s actual financial results may vary materially from the projections that it filed with the bankruptcy court in connection the confirmation of the Company’s plan of reorganization.~~

In connection with the disclosure statement the Company filed with the bankruptcy court, and the hearing to consider confirmation of its plan of reorganization, the Company prepared projected financial information to demonstrate to the bankruptcy court the feasibility of the plan of reorganization and its ability to continue operations upon its emergence from bankruptcy. Those projections were prepared solely for the purpose of the bankruptcy proceedings and have not been, and will not be, updated on an ongoing basis and should not be relied upon by investors. At the time they were prepared, the projections reflected numerous assumptions concerning the Company’s anticipated future performance and with respect to prevailing and anticipated market and economic conditions that were and remain beyond our control and that may not materialize. Projections are inherently subject to substantial and numerous uncertainties and to a wide variety of significant business, economic and competitive risks and the assumptions underlying the projections and/or valuation estimates may prove to be wrong in material respects. Actual results will likely vary significantly from those contemplated by the projections. As a result, investors should not rely on these projections.

The Company’s financial condition and results of operations for periods after the effective date of the Company’s plan of reorganization are not comparable to the financial condition and results of operations for periods prior to the effective date of the Company’s plan of reorganization and historical financial information may not be indicative of the Company’s future financial performance.

On August 31, 2017, the effective date of the Company’s plan of reorganization, the Company adopted fresh-start reporting as a result of the bankruptcy reorganization as prescribed in accordance with GAAP and the provisions of Financial Accounting Standards Board Accounting Standards Codification 852, Reorganizations. As required by fresh-start reporting, the Company’s assets and liabilities were recorded at fair value by allocating the reorganization value determined in connection with the plan of reorganization. Accordingly, the Company’s financial condition and results of operations from and after the effective date of the Company’s plan of reorganization are not comparable, in various material respects, to the financial condition and results of operations prior to the effective date of the Company’s plan of reorganization. Further, as a result of the implementation of the Company’s plan of reorganization and the transactions contemplated thereby, the Company’s historical financial information may not be indicative of its future financial performance.

Our common stock is now traded on the OTCQB® Venture Market (the “OTCQB”), which could have an adverse impact on the market price and liquidity of our common stock and could involve additional risks compared to being listed on a national securities exchange.

The Company’s Common Stock is presently traded on the OTC Markets under the ticker “CTAM”. The trading of our common stock in the OTC market rather than a national securities exchange may negatively impact the trading price of our common stock and the levels of liquidity available to our shareholders. Securities traded in the OTC market generally have less liquidity due to factors such as the reduced number of investors that will consider investing in the securities, the reduced number of market makers in the securities, and the reduced number of securities analysts that follow such securities. As a result, holders of shares of our common stock may find it difficult to resell their shares at prices quoted in the market or at all.

Furthermore, because of the limited market and generally low volume of trading in our common stock that could occur, the share price of our common stock could be more likely to be affected by broad market fluctuations, general market conditions, fluctuations in our operating results, changes in the markets perception of our business, and announcements made by us, our competitors, or parties with whom we have business relationships.

Because our common stock trades on the OTC market, in some cases, we may be subject to additional compliance requirements under applicable state laws in the issuance of our securities. The lack of liquidity in our common stock may also make it difficult for us to issue additional securities for financing or other purposes, or to otherwise arrange for any financing we may need in the future. Accordingly, we urge that extreme caution be exercised with respect to existing and future investments in our common stock

Holders of our Second Lien Notes can require us to repurchase their Second Lien Notes following a fundamental change, which includes, among other things, the acquisition of more than 50% of our outstanding voting power by a person or group. We may not have sufficient funds to satisfy such cash obligations.

As of September 30, 2017, we had approximately $256.8 million of aggregate principal amount outstanding under the Second Lien Notes. Interest on the Second Lien Notes accrues at the rate of 5.00%, except that the Company may, in certain circumstances, pay at the rate of 7.00% in kind. Interest on the Second Lien Notes in the first 12 months is required to be paid in kind at a rate of 7.00%. Upon the occurrence of a fundamental change (as defined in the indenture for the Second Lien Notes), which includes the acquisition of more than 50% of our outstanding voting power by a person or group, we may be required to repurchase some or all of the Second Lien Notes for cash at a repurchase price equal to 100% of the principal amount of the Second Lien Notes being repurchased, plus any accrued and unpaid interest up to but excluding the relevant fundamental change repurchase date. We may not have sufficient funds to satisfy such cash obligations and, in such circumstances, may not be able to arrange the necessary financing on favorable terms or at all. In addition, our ability to satisfy such cash obligations will be restricted pursuant to covenants contained in the indenture for the Second Lien Notes and will be permitted to be paid only in limited circumstances. We may also be limited in our ability to satisfy such cash obligations by applicable law or the terms of other instruments governing our indebtedness. Our inability to make any cash payments that may be required to satisfy the obligations described above would trigger an event of default under the Second Lien Notes, which in turn could constitute an event of default under our other outstanding indebtedness, thereby potentially resulting in the acceleration of certain of such indebtedness, the prepayment of which could further restrict our ability to satisfy such cash obligations.

~~The conversion of our Second Lien Notes into common stock will dilute the ownership interest of our existing shareholders.~~

Any issuance by us of our common stock upon conversion of our Second Lien Notes will dilute the ownership interest of our existing shareholders. In addition, any such issuance of common stock could have a dilutive effect on our net income per share to the extent that the average stock price during the period is greater than the conversion prices and exercise prices of the Second Lien Notes. Furthermore, any sales in the public market of our common stock issuable upon conversion of the Second Lien Notes could adversely affect prevailing market prices of our common stock.

~~We service industries that are highly cyclical, and any downturn in our customers’ industries could reduce our revenue and profitability.~~

Many of our products are sold to customers in industries that experience significant fluctuations in demand based on economic conditions, energy prices, consumer demand, availability of adequate credit and financing, customer inventory levels, changes in governmental policies and other factors beyond our control. As a result of this volatility in the industries we serve, when one or more of our customers’ industries experiences a decline, we may have difficulty increasing or maintaining our level of sales or profitability if we are not able to divert sales of our products to customers in other industries. Historically, we have made a strategic decision to focus sales resources on certain industries, specifically the aerospace, oil and gas, heavy equipment, machine tools and general industrial equipment industries. A downturn in these industries has had, and may in the future continue to have, an adverse effect on our operating results. We are also particularly sensitive to market trends in the manufacturing sectors of the North American economy. In 2015, the downturn in the oil and gas sector had a significant impact on our financial results as sales to customers which operate in that market were significantly lower than they had been previously. In February 2016, we announced the sale of all inventory from our Houston and Edmonton facilities that primarily serviced the oil and gas sector. With this sale and the subsequent closure of the Houston and Edmonton facilities, we significantly lowered our exposure to oil-related market fluctuations. Going forward, we will be primarily focused on two key industries, aerospace and industrial.

A portion of our sales, particularly in the aerospace industry, are related to contracts awarded to our customers under various U.S. Government defense-related programs. Significant changes in defense spending, or in government priorities and requirements could impact the funding, or the timing of funding, of those defense programs, which could negatively impact our results of operations and financial condition. The level of U.S. spending for defense, alternative energy and other programs to which such funding is allocated, is subject to periodic congressional appropriation actions,

~~including the sequestration of appropriations in fiscal years 2013 and after, under the Budget Control Act of 2011, and is subject to change at any time.~~

~~Our industry is highly competitive, which may force us to lower our prices and may have an adverse effect on our operating results.~~

The principal markets that we serve are highly competitive. Competition is based principally on price, service, quality, processing capabilities, inventory availability and timely delivery. We compete in a highly fragmented industry. Competition in the various markets in which we participate comes from a large number of value-added metals processors and service centers on a regional and local basis, some of which have greater financial resources than we do and some of which have more established brand names in the local markets we serve. We also compete to a lesser extent with primary metals producers who typically sell to very large customers requiring shipments of large volumes of metal. Increased competition could force us to lower our prices or to offer increased services at a higher cost to us, which could have an adverse effect on our operating results.

~~Our operating results are subject to the seasonal nature of our customers’ businesses.~~

A portion of our customers experience seasonal slowdowns. Historically, our revenues in the months of July, November and December have been lower than in other months because of a reduced number of shipping days and holiday or vacation closures for some customers. Dependent on market and economic conditions, our sales in the first two quarters of the year, therefore, can be higher than in the third and fourth quarters due to this seasonality. As a result, analysts and investors may inaccurately estimate the effects of seasonality on our operating results in one or more future quarters and, consequently, our operating results may fall below expectations.

~~An additional impairment or restructuring charge could have an adverse effect on our operating results.~~

We continue to evaluate opportunities to reduce costs and improve operating performance. These actions could result in restructuring and related charges, including but not limited to asset impairments, employee termination costs, charges for pension benefits, and pension curtailments, which could be significant and could adversely affect our financial condition and results of operations.

We have a significant amount of long-lived assets. We review the recoverability of long-lived assets whenever significant events or changes occur which might impair the recovery of recorded costs, making certain assumptions regarding future operating performance. The results of these calculations may be affected by the current demand and any decline in market conditions for our products, as well as interest rates and general economic conditions. If impairment is determined to exist, we will incur impairment losses, which may have an adverse effect on our operating results.

~~Our ability to use our net operating loss carryforwards ("NOLs") may be limited.~~

We have incurred substantial losses since 2008. We may not generate future taxable income so that we can use our available net operating loss carryforwards, or NOLs, as an offset. As of September 30, 2017, we had U.S. federal NOLs of $213.5 million. The U.S. federal NOLs will expire in various years beginning with 2031. Due to the our bankruptcy proceedings, a portion of these NOLs will be reduced relative to cancellation of indebtedness. Additionally, we have determined that an ownership shift of greater than fifty percent occurred in 2015, 2016 and 2017. As such, it is expected that a significant portion of the pre-ownership shift NOLs will be subject to a Section 382 limitation that will act to prevent the Company from utilizing all of its losses against future taxable income. We may experience ownership changes in the future as a result of subsequent shifts in our stock ownership that we cannot predict or control that could result in further limitations being placed on our ability to utilize our federal NOLs. As of September 30, 2017, we have a full valuation allowance against our federal and state NOLs as we have concluded, based on all available evidence, that it is more likely than not that we will not utilize these federal and state NOLs prior to their respective expiration.

~~Disruptions or shortages in the supply of raw materials could adversely affect our operating results and our ability to meet our customers’ demands.~~

Our business requires materials that are sourced from third party suppliers. If, for any reason, our primary suppliers of metals should curtail or discontinue their delivery of raw materials to us at competitive prices and in a timely manner, our operating results could suffer. Unforeseen disruptions in our supply bases could materially impact our ability to deliver products to customers. The number of available suppliers could be reduced by factors such as industry consolidation and bankruptcies affecting metals producers, or suppliers may be unwilling or unable to meet our demand due to industry supply conditions. If we are unable to obtain sufficient amounts of raw materials from our traditional suppliers, we may not be able to obtain such raw materials from alternative sources at competitive prices to meet our delivery schedules, which could have an adverse impact on our operating results. To the extent we have quoted prices

to customers and accepted orders for products prior to purchasing necessary raw materials, or have existing contracts, we may be unable to raise the price of products to cover all or part of the increased cost of the raw materials to our customers.

In some cases the availability of raw materials requires long lead times. As a result, we may experience delays or shortages in the supply of raw materials. If we are unable to obtain adequate and timely deliveries of required raw materials, we may be unable to timely supply customers with sufficient quantities of products. This could cause us to lose sales, incur additional costs, or suffer harm to our reputation, all of which may adversely affect our operating results.

Increases in freight and energy prices would increase our operating costs and we may be unable to pass these increases on to our customers in the form of higher prices, which may adversely affect our operating results.

We use energy to process and transport our products. The prices for and availability of energy resources are subject to volatile market conditions, which are affected by political, economic and regulatory factors beyond our control. Our operating costs increase if energy costs, including electricity, diesel fuel and natural gas, rise. During periods of higher freight and energy costs, we may not be able to recover our operating cost increases through price increases without reducing demand for our products. In addition, we typically do not hedge our exposure to higher freight or energy prices.

~~We operate in international markets, which expose us to a number of risks.~~

Although a majority of our business activity takes place in the United States, we serve and operate in certain international markets, which exposes us to political, economic and currency related risks, including the following:

~~potential for adverse change in the local political or social climate or in government policies, laws and regulations;~~

~~difficulty staffing and managing geographically diverse operations and the application of foreign labor regulations;~~

~~restrictions on imports and exports or sources of supply;~~

~~currency exchange rate risk; and~~

~~changes in duties and taxes.~~

In addition to the United States, we operate in Canada, Mexico, France, the United Kingdom, Singapore, and China. An act of war or terrorism or major pandemic event could disrupt international shipping schedules, cause additional delays in importing or exporting products into or out of any of these countries, including the United States, or increase the costs required to do so. In addition, acts of crime or violence in these international markets could adversely affect our operating results. Fluctuations in the value of the U.S. dollar versus foreign currencies could reduce the value of these assets as reported in our financial statements, which could reduce our stockholders’ equity. If we do not adequately anticipate and respond to these risks and the other risks inherent in international operations, it could have a material adverse impact on our operating results.

Political and economic uncertainty arising from the outcome of the recent referendum on the membership of the United Kingdom in the European Union could adversely impact our financial condition and operating results.

On June 23, 2016, the United Kingdom voted to leave the European Union (the “EU”), which triggered short-term financial volatility, including a decline in the value of the British pound in comparison to both the U.S. dollar and the euro. Before the United Kingdom leaves the EU, a process of negotiation is required to determine the future terms of the United Kingdom’s relationship with the EU. The uncertainty before, during and after the period of negotiation could have a negative economic impact and result in further volatility in the markets for several years. Such ongoing uncertainty may result in various economic and financial consequences for businesses operating in the United Kingdom, the EU and beyond.

During the period September 1, 2017 through September 30, 2017, approximately 0.3% of our consolidated net sales were attributable to operations in the United Kingdom, and approximately 9.3% of our consolidated net sales were attributable to operations in Europe overall. The Company and its various subsidiaries hold financial assets and liabilities denominated in British pounds, including cash and cash equivalents, accounts receivable, and accounts payable, and

~~the future impacts of the United Kingdom’s exit from the EU could have a materially adverse impact on our financial condition and operating results.~~

~~A portion of our workforce is represented by collective bargaining units, which may lead to work stoppages.~~

As of September 30, 2017, approximately 21% of our U.S. employees were represented by the United Steelworkers of America (“USW”) under collective bargaining agreements, including hourly warehouse employees at our distribution centers in Cleveland, Ohio and Hammond, Indiana. As these agreements expire, there can be no assurance that we will succeed in concluding collective bargaining agreements with the USW to replace those that expire. Although we believe that our labor relations have generally been satisfactory, we cannot predict how stable our relationships with the USW will be or whether we will be able to meet the USW requirements without impacting our operating results and financial condition. The USW may also limit our flexibility in dealing with our workforce. Work stoppages and instability in our relationship with the USW could negatively impact the timely processing and shipment of our products, which could strain relationships with customers or suppliers and adversely affect our operating results. On October 1, 2014, we entered into a four-year collective bargaining agreement with the USW, which covers approximately 104 employees at our largest facility in Cleveland, Ohio. This agreement is scheduled to expire in September 2018, and our goal is to engage in early negotiations in the spring of 2018 to secure another four-year agreement and avoid disruption to the business. Approximately 25 employees at our Hammond, Indiana facility are covered by a separate collective bargaining agreement with the USW that was renegotiated in August 2016 and expires in August 2020.

~~We rely upon our suppliers as to the specifications of the metals we purchase from them.~~

We rely on mill or supplier certifications that attest to the physical and chemical specifications of the metals received from our suppliers for resale and generally, consistent with industry practice, do not undertake independent testing of such metals. We rely on our customers to notify us of any product that does not conform to the specifications certified by the supplier or ordered by the customer. Although our primary sources of products have been domestic suppliers, we have and will continue to purchase product from foreign suppliers when we believe it is appropriate. In the event that metal purchased from domestic suppliers is deemed to not meet quality specifications as set forth in the mill or supplier certifications or customer specifications, we generally have recourse against these suppliers for both the cost of the products purchased and possible claims from our customers. However, such recourse will not compensate us for the damage to our reputation that may arise from sub-standard products and possible losses of customers. Moreover, there is a greater level of risk that similar recourse will not be available to us in the event of claims by our customers related to products from foreign suppliers that do not meet the specifications set forth in the mill or supplier certifications. In such circumstances, we may be at greater risk of loss for claims for which we do not carry, or do not carry sufficient, insurance.

~~Our business could be adversely affected by a disruption to our primary distribution hubs.~~

Our largest facilities, in Cleveland, Ohio, and Hammond, Indiana, as well as our facility in Janesville, Wisconsin, serve as primary distribution centers that ship product to our other facilities as well as external customers. Our business could be adversely impacted by a major disruption at any of these facilities due to unforeseen developments occurring in or around the facility, such as:

~~damage to or inoperability of our warehouse or related systems;~~

~~a prolonged power or telecommunication failure;~~

~~a natural disaster, environmental or public health issue, or an act of war or terrorism on-site.~~

~~A prolonged disruption of the services and capabilities of these or other of our facilities could adversely impact our operating results.~~

Damage to or a disruption in our information technology systems could impact our ability to conduct business and could subject us to liability for failure to comply with privacy and information security laws.

Difficulties associated with the design and implementation of our enterprise resource planning (“ERP”) or other information technology systems could adversely affect our business, our customer service and our operating results.

We rely primarily on one information technology system to provide inventory availability to our sales and operating personnel, improve customer service through better order and product reference data and monitor operating results. Difficulties associated with upgrades or integration with new systems could lead to business interruption that could harm our reputation, increase our operating costs and decrease profitability. In addition, any significant disruption relating to our current information technology systems, whether resulting from such things as fire, flood, tornado and

other natural disasters, power loss, network failures, loss of data, security breaches and computer viruses, or otherwise, may have an adverse effect on our business, our operating results and our ability to report our financial performance in a timely manner.

The success of our business depends on the security of our networks and, in part, on the security of the network infrastructures of our third-party vendors. In connection with conducting our business in the ordinary course, we store and transmit limited amounts of customer, vendor, and employee information, including account or credit card information, and other personally identifiable information. Unauthorized or inappropriate access to, or use of, our networks, computer systems or services, whether intentional, unintentional or as a result of criminal activity, could potentially jeopardize the security of this confidential information. A number of other companies have publicly disclosed breaches of their security, some of which have involved sophisticated and highly targeted attacks on portions of their networks. Because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently and often are not recognized until launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures. If an actual or perceived breach of our security occurs, the perception of the effectiveness of our security measures could be harmed and we could lose employees, customers, or vendors. A party that is able to circumvent our security measures could misappropriate our proprietary information or the information of our customers, vendors, or employees, cause interruption in our operations, or damage our computers or those of our customers or vendors which could expose us to claims from such persons or from regulators, financial institutions or others with whom we do business, any of which could have an adverse impact on our financial condition and results of operations.

We may need to expend significant resources to protect against security breaches or to address problems caused by breaches. Security breaches, including any breach related to us or the parties with which we have commercial relationships, could damage our reputation and expose us to a risk of loss, litigation, and possible liability. We cannot give assurance that the security measures we take will be effective in preventing these types of activities. We also cannot give assurance that the security measures of our third-party vendors, including network providers, providers of customer and vendor support services, and other vendors, will be adequate. In addition to potential legal liability, these activities may adversely impact our reputation or our revenues and may interfere with our ability to provide our products and services, all of which could adversely impact our business.

~~Ownership of our stock is concentrated, which may limit stockholders’ ability to influence corporate matters.~~

Following our bankruptcy, the Company’s ownership is concentrated among a small group of institutional investors and/or hedge funds and the Company’s management team. Certain directors, their affiliates, and/or any other concentrated ownership interests may have the voting power to substantially affect or control the outcome of matters requiring a stockholder vote including the election of directors and the approval of significant corporate matters. Such a concentration of control could adversely affect the market price of our common stock or prevent a change in control or other business combinations that might be beneficial to us.

~~We could be vulnerable to interest rate fluctuations on our indebtedness, which could hurt our operating results.~~

We are exposed to various interest rate risks that arise in the normal course of business. Market risk arises from changes in interest rates. We currently finance our operations with both fixed rate and variable rate borrowings, and the market value of our $165.9 million of fixed rate borrowings may be impacted by changes in interest rates. In addition, if in the future interest rates subsequently increase significantly, it could significantly increase the interest expense on our variable rate borrowings which could have an adverse effect on our operating results and liquidity.

~~Commodity hedging transactions may expose us to loss or limit our potential gains.~~

We have entered into certain fixed price sales contracts with customers which expose us to risks associated with fluctuations in commodity prices. As part of our risk management program, we may use financial instruments from time-to-time to mitigate all or portions of these risks, including commodity futures, forwards or other derivative instruments. While intended to reduce the effects of the commodity price fluctuations, these transactions may limit our potential gains or expose us to losses. Also, should our counterparties to such transactions fail to honor their obligations due to financial distress, we would be exposed to potential losses or the inability to recover anticipated gains from these transactions.

~~We may face risks associated with current or future litigation and claims.~~

From time to time, we are involved in a variety of lawsuits, claims and other proceedings relating to the conduct of our business. These suits concern issues including contract disputes, employment actions, employee benefits, taxes,

environmental, health and safety, personal injury and product liability matters. Due to the uncertainties of litigation, we can give no assurance that we will prevail on all claims made against us in the lawsuits that we currently face or that additional claims will not be made against us in the future. While it is not feasible to predict the outcome of all pending lawsuits and claims, we do not believe that the disposition of any such pending matters is likely to have a materially adverse effect on our financial condition or liquidity, although the resolution in any reporting period of one of more of these matters could have an adverse effect on our operating results for that period. Also, we can give no assurance that any other lawsuits or claims brought in the future will not have an adverse effect on our financial condition, liquidity or operating results.

~~We could incur substantial costs in order to comply with, or to address any violations under, environmental and employee health and safety laws, which could adversely affect our operating results.~~

Our operations are subject to various environmental statutes and regulations, including laws and regulations governing materials we use and our facilities. In addition, certain of our operations are subject to international, federal, state and local environmental laws and regulations that impose limitations on the discharge of pollutants into the air and water and establish standards for the treatment, storage and disposal of solid and hazardous wastes. Our operations are also subject to various employee safety and health laws and regulations, including those concerning occupational injury and illness, employee exposure to hazardous materials and employee complaints. Certain of our facilities are located in industrial areas, have a history of heavy industrial use and have been in operation for many years and, over time, we and other predecessor operators of these facilities have generated, used, handled and disposed of hazardous and other regulated wastes. Currently unknown cleanup obligations at these facilities, or at off-site locations at which materials from our operations were disposed, could result in future expenditures that cannot be currently quantified, but which could have a material adverse effect on our financial condition, liquidity or operating results.

Potential environmental legislative and regulatory actions could impose significant costs on the operations of our customers and suppliers, which could have a material adverse impact on our results of operations, financial condition and cash flows.

Climate change regulation or some form of legislation aimed at reducing greenhouse gas (‘‘GHG’’) emissions is currently being considered in the United States as well as elsewhere globally. As a metals distributor, our operations do not emit significant amounts of GHG. However, the manufacturing processes of many of our suppliers and customers are energy intensive and generate carbon dioxide and other GHG emissions. Any adopted future climate change and GHG regulations may impose significant costs on the operations of our customers and suppliers and indirectly impact our operations.

~~Until the timing, scope and extent of any future regulation becomes known, we cannot predict the effect on our results of operations, financial condition and cash flows.~~

~~We have various mechanisms in place that may prevent a change in control that stockholders may otherwise consider favorable.~~

In August 2013, we elected by resolution of the Board of Directors to become subject to Section 3-803 of the Maryland General Corporation Law (the “MGCL”). As a result of this election, the Board of Directors was classified into three separate classes of directors, with each class generally serving three-year terms. Only one class of directors will be elected at each annual meeting of our stockholders, with the other classes continuing for the remainder of their respective three-year terms. The provision for a classified board could prevent a party who acquires control of a majority of our outstanding voting stock from obtaining control of our Board of Directors until the second annual stockholders meeting following the date the acquiring party obtains the controlling interest. The classified board provision could discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of us and could increase the likelihood that incumbent directors will retain their positions.

In addition, our charter and by-laws and the MGCL include provisions that may be deemed to have anti-takeover effects and may delay, defer or prevent a takeover attempt that stockholders might consider to be in their best interests. For example, the MGCL, our charter and bylaws require the approval of the holders of two-thirds of the votes entitled to be cast on the matter to amend our charter (unless our Board of Directors has unanimously approved the amendment, in which case the approval of the holders of a majority of such votes is required), and contain certain advance notice procedures for nominating candidates for election to our Board of Directors.

Furthermore, we are subject to the anti-takeover provisions of the MGCL that prohibit us from engaging in a “business combination” with an “interested stockholder” for a period of five years after the date of the transaction in which the person first becomes an “interested stockholder,” unless the business combination or stockholder interest is approved in a prescribed manner. The application of these and certain other provisions of our charter or the MGCL could have

~~the effect of delaying or preventing a change of control, which could adversely affect the market price of our common stock.~~

The provisions of our debt instruments also contain limitations on our ability to enter into change of control transactions. In addition, the repurchase rights in our Second Lien Notes triggered by the occurrence of a fundamental change (as defined in the indenture for the Second Lien Notes), and the additional shares of our common stock by which the conversion rate is increased in connection with certain fundamental change transactions, as described in the indenture for the Second Lien Notes, could discourage a potential acquirer.2018.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

~~On the Effective Date, by operation of the Plan, the Company issued an aggregate of 3,734,385 shares of its new common stock, as follows:~~

1,300 shares were issued to the holders of Prepetition Second Lien Secured Claims (as defined by the Plan) in partial satisfaction of their claims, pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”) under Section 4(a)(2) of such act and Regulation D promulgated thereunder;

300 shares were issued to the holders of Prepetition Third Lien Secured Claims (as defined by the Amended Plan) in partial satisfaction of their claims, pursuant to an exemption from the registration requirements of the Securities Act under Section 4(a)(2) of such act and Regulation D promulgated thereunder;

400 shares were issued to participating holders of the Company’s outstanding common stock as of August 2, 2017 in partial satisfaction of their interests, pursuant to an exemption from the registration requirements of the Securities Act under Section 1145 of the Bankruptcy Code; and

1,734 shares of restricted stock, together with an aggregate original principal amount of $2,400 of Second Lien Notes convertible into an additional 637 shares of new common stock as of the Effective Date, were issued as awards under the MIP to certain officers of the Company, pursuant to an exemption from the registration requirements of the Securities Act under Section 4(a)(2) of such act, and Regulation D promulgated thereunder.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 September 6, 2017.~~None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

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.~~

~~Exhibit Index~~

The following exhibits are filed ~~herewith~~with this Quarterly Report on Form 10-Q or incorporated herein by reference:



Exhibit No.		Description
~~2.1~~		Debtors' 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
~~3.1~~		Articles of Restatement of the Company filed with the State Department of Assessments and Taxation of Maryland on August 31, 2017. Incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form 8-A filed with the SEC on August 31, 2017. Commission File No. 1-05415
~~3.2~~		Amended and Restated Bylaws of A.M. Castle & Co., as adopted on August 31, 2017. Incorporated by reference to Exhibit 3.2 to the Company's Registration Statement on Form 8-A filed with the SEC on August 31, 2017. Commission File No. 1-05415
10.1*		Revolving Credit and Security Agreement dated August 31, 2017 between the Company and certain of its subsidiaries, PNC Bank, National Association, as lender and as administrative and collateral agent, and the other lenders party thereto. Incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on September 6, 2017. Commission File No. 1-05415
10.2*		Indenture dated August 31, 2017, between the Company, certain of its subsidiaries, WSFS, FSB, as Trustee and Collateral Agent. Incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed with the SEC on September 6, 2017. Commission File No. 1-05415
10.3*		Intercreditor Agreement dated August 31, 2017, between PNC Bank, National Association and Wilmington Savings Fund Society, FSB, and acknowledged by the Company and certain of its subsidiaries. Incorporated by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K filed with the SEC on September 6, 2017. Commission File No. 1-05415
10.4*		~~2017 Management Incentive Plan of the Company~~
10.5*		Form of Award Agreement under the 2017 Management Incentive Plan of the Company. Incorporated by reference to Exhibit 10.4 to the Company's Current Report on Form 8-K filed with the SEC on September 6, 2017. Commission File No. 1-05415
~~10.6~~		Debtor-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 13, 2017. Commission File No. 1-05415
31.1		CEO Certification Pursuant to Section 302 of the Sarbanes Oxley Act of 2002
31.2		CFO Certification Pursuant to Section 302 of the Sarbanes Oxley Act of 2002
32.1		CEO and CFO Certification Pursuant to Section 906 of the Sarbanes Oxley Act of 2002
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~~Management contract or compensatory plan or ~~arrangement.~~arrangement

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:	~~November~~August 14, ~~2017~~2019	By:	/s/ ~~Patrick R. Anderson~~Edward M. Quinn
			~~Patrick R. Anderson, Executive~~Edward M. Quinn, Vice President, Controller and Chief ~~Financial~~Accounting Officer ~~& Treasurer~~
			(Principal ~~Financial Officer & Principal~~ Accounting Officer)
			~~(Mr. Anderson has been authorized to sign on behalf of the Registrant.)~~

5631



Enterprise value	$	244,000
Less: fair value of debt	(238,340		)
Equity value	$	5,660



Enterprise value	$	244,000
Current liabilities	64,992
Noncurrent liabilities	23,479
Reorganization value of Successor assets	$	328,648



	As of August 31, 2017
	Predecessor			Reorganization Adjustments				Fresh-Start Adjustments				Successor
ASSETS
Current assets:
Cash and cash equivalents	$	20,443		$	(10,379	)	(a)	$	—			$	10,064
Accounts receivable, net	73,056			—				—				73,056
Inventories	153,785			—				—				153,785
Prepaid expenses and other current assets	14,217			—				—				14,217
Income tax receivable	588			—				—				588
Total current assets	262,089			(10,379		)		—				251,710
Intangible assets, net	24			—				8,151			(j)	8,175
Prepaid pension cost	9,350			—				—				9,350
Deferred income taxes	1,381			—				—				1,381
Other noncurrent assets	1,364			—				—				1,364
Property, plant and equipment:												—
Land	2,073			—				3,867			(i)	5,940
Buildings	37,498			—				(15,518		)	(i)	21,980
Machinery and equipment	129,324			—				(100,576		)	(i)	28,748
Property, plant and equipment, at cost	168,895			—				(112,227		)		56,668
Accumulated depreciation	(122,087		)	—				122,087				—
Property, plant and equipment, net	46,808			—				9,860				56,668
Total assets	$	321,016		$	(10,379	)		$	18,011			$	328,648
LIABILITIES AND STOCKHOLDERS’ EARNINGS (DEFICIT)
Current liabilities:
Accounts payable	$	47,063		$	—			$	—			$	47,063
Accrued and other current liabilities	12,145			1,961			(b)	—				14,106
Short-term borrowings	3,797			—				—				3,797
Current portion of long-term debt	109,213			(109,187		)	(c)	—				26
Total current liabilities	172,218			(107,226		)		—				64,992
Long-term debt, less current portion	—			234,517			(d)	—				234,517
Deferred income taxes	—			—				3,159			(m)	3,159
Build-to-suit liability	9,898			—				—				9,898
Other noncurrent liabilities	5,711			—				(1,715		)	(k)	3,996
Pension and postretirement benefit obligations	6,426			—				—				6,426
Liabilities subject to compromise	211,363			(211,363		)	(e)	—				—
Commitments and contingencies
Stockholders’ earnings (deficit):
Predecessor common stock	327			(327		)	(f)	—				—
Successor common stock	—			20			(g)	—				20
Predecessor additional paid-in capital	245,546			(1,883		)	(f)	(243,663		)	(l)	—
Successor additional paid-in capital	—			5,640			(g)	—				5,640
Retained (deficit) earnings	(302,833		)	69,165			(h)	233,668			(l)	—
Accumulated other comprehensive loss	(26,562		)	—				26,562			(l)	—
Treasury stock, at cost	(1,078		)	1,078			(f)	—				—
Total stockholders’ earnings (deficit)	(84,600		)	73,693				16,567				5,660
Total liabilities and stockholders’ earnings (deficit)	$	321,016		$	(10,379	)		$	18,011			$	328,648



Cash received from initial draw on New ABL Facility	$	78,797
Repayment of Debtor-In-Possession financing borrowings, including interest and fees	(66,932		)
Cash received from issuance of New Money Notes	38,002
Payment of put option fee	(2,000		)
Repayment of prepetition First Lien Notes, including interest and fees	(49,415		)
Payment of cash recovery to prepetition Second Lien Noteholders	(6,646		)
Payment related to key employee incentive plan	(1,229		)
Professional fees paid upon emergence	(956		)
Net cash paid upon emergence	$	(10,379	)



12.75% Senior Secured Notes due December 15, 2018	$	177,019
5.25% Convertible Notes due December 30, 2019	22,323
Accrued interest payable	12,021
Liabilities subject to compromise	211,363
Cash payment to prepetition Second Lien Noteholders	(6,646		)
Fair value of Second Lien Notes (including conversion option) issued to prepetition Second and Third Lien Noteholders	(110,200		)
New equity issued to prepetition Second and Third Lien Noteholders	(4,528		)
Gain on settlement of liabilities subject to compromise	$	89,989



Gain on settlement of liabilities subject to compromise	$	89,989
Write off of original issue discount and deferred financing costs	(5,412		)
Backstop and other fees related to the repayment of old debt and issuance of new debt	(10,811		)
Success fees and key employee incentive plan payments	(4,601		)
Net impact to retained earnings (accumulated deficit)	$	69,165



Reorganization value of assets	$	328,648
Less: fair value of:
Total current assets	(251,710		)
Property, plant and equipment	(56,668		)
Successor trade name	(5,500		)
Other noncurrent assets	(12,095		)
Goodwill	$	2,675



	Predecessor
	July 1, 2017 Through August 31, 2017		June 18, 2017 Through August 31, 2017
12.75% Senior Secured Notes due December 15, 2018	$	3,887	$	4,639
5.25% Convertible Notes due December 30, 2019	202		241
Total Contractual Interest	$	4,089	$	4,880



	Predecessor
	Three Months Ended September 30, 2016			Nine Months Ended September 30, 2016
Net sales	$	—		$	29,680
Cost of materials	—			21,027
Operating costs and expenses	—			7,288
Interest expense^(a)	—			333
Income from discontinued operations before income taxes	—			1,032
Income tax expense benefit ^(b)	—			(3,908		)
(Loss) gain on sale of discontinued operations, net of income taxes	(1,688		)	1,306
Income from discontinued operations, net of income taxes	$	(1,688	)	$	6,246



	Successor				Predecessor
	September 30, 2017				December 31, 2016
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Intangible assets subject to amortization:
Customer relationships	$	—	$	—	$	67,317	$	63,216
Intangible assets not subject to amortization:
Trade name	5,500		—		—		—
Total intangible assets	$	5,500	$	—	$	67,317	$	63,216



	Predecessor
			Period Activity
	Balance January 1, 2017		Charges (gains)		Cash receipts (payments)			Non-cash activity		Balance August 31, 2017
Employee termination and related benefits	$	3,627	$	185	$	(261	)	$	—	$	3,551
Lease termination costs	823		—		(496		)	374		701
Moving costs associated with plant consolidations	—		305		(305		)	—		—
Professional fees	—		76		(76		)	—		—
Total	$	4,450	$	566	$	(1,138	)	$	374	$	4,252



	Successor
			Period Activity
	Balance September 1, 2017		Charges (gains)		Cash receipts (payments)			Non-cash activity		Balance September 30, 2017
Employee termination and related benefits ^(a)	$	3,551	$	—	$	(20	)	$	—	$	3,531
Lease termination costs^(b)	701		—		(16		)	—		685
Total	$	4,252	$	—	$	(36	)	$	—	$	4,216