Page 1 of 2225

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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


For Quarterly Period Ended	~~March 31,~~September 30, 2007	or,

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


For the transition period from				to


Commission File Number		1-5415

A. M. Castle & Co.

(Exact name of registrant as specified in its charter)


Maryland		36-0879160

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

3400 North Wolf Road, Franklin Park, Illinois		60131

(Address of Principal Executive Offices)		(Zip Code)


Registrant’s telephone, including area code		847/455-7111

None

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No

Indicate by check mark whether the registrant is a large accelerated filer; an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (check one):

Large Accelerated Filer Accelerated Filer X Non-Accelerated Filer

Indicated by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.

Yes No X

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


Class		Outstanding at ~~April 30,~~October 31, 2007
Common Stock, $0.01 Par Value		~~17,451,272~~22,097,869 shares
~~Preferred Stock, $0.01 Par Value~~		~~12,000 shares~~

Page 2 of 22

A. M. CASTLE & CO.

Part I. FINANCIAL INFORMATION


		~~Page~~
				Page
				Number
Part I. Financial Information

	Item 1.	Condensed Consolidated Financial Statements (unaudited):

		Condensed Consolidated Balance Sheets			3

		Condensed Consolidated Statements of Income			4

		Condensed Consolidated Statements of Cash Flows			5

		Notes to Condensed Consolidated Financial Statements			6-14

	~~Consolidated Statements of Income~~		4

	~~Consolidated Statements of Cash Flows~~		5

	~~Notes to Consolidated Financial Statements~~	~~6-13~~

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	~~13-17~~	14-20

	Item 3.	Quantitative and Qualitative Disclosure About Market Risk			1720

	Item 4.	Controls and Procedures		~~17-18~~	20

Part II. Other Information

	Item 1.	Legal Proceedings			1821

	Item 1A.	Risk Factors			1821

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		~~18-19~~	21

	Item 6.	Exhibits			1921
Certification ~~Pursuant to Section 302 by CEO~~
Certification ~~Pursuant to Section 302 by CFO~~
Certification ~~Pursuant to Section 906 by CEO & CFO~~

Page 3 of 2225


CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)	As of
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share and per share data)							As of
Unaudited	March 31,			Dec 31,			Sept 30,			Dec 31,
	2007			2006			2007			2006
ASSETS
Current assets
Cash and cash equivalents	$	11,453		$	9,526		$	19,078		$	9,526
Accounts receivable, less allowances of $3,268 at March 31, 2007 and $3,112 at December 31, 2006		189,934			160,999
Inventories (principally on last-in, first-out basis) (latest cost higher by $142,984 at March 31, 2007 and $128,404 at December 31, 2006)		237,525			202,394
Accounts receivable, less allowances of $3,324 at September 30, 2007 and $3,112 at December 31, 2006								184,101			160,999
Inventories (principally on last-in, first-out basis) (latest cost higher by $146,787 at September 30, 2007 and $128,404 at December 31, 2006)								228,331			202,394
Other current assets		10,360			18,743			14,760			18,743

Total current assets		449,272			391,662			446,270			391,662
Investment in joint venture		14,152			13,577			16,278			13,577
Goodwill		101,790			101,783			100,904			101,783
Intangible assets		64,490			66,169			61,254			66,169
Prepaid pension cost		5,657			5,681			5,607			5,681
Other assets		5,955			5,850			6,274			5,850
Property, plant and equipment, at cost
Land		5,222			5,221			5,195			5,221
Building		48,927			49,017			48,660			49,017
Machinery and equipment		144,348			141,090
Machinery and equipment (includes construction in progress)								153,037			141,090

		198,497			195,328			206,892			195,328
Less — accumulated depreciation		(127,494	)		(124,930	)		(134,874	)		(124,930	)

		71,003			70,398			72,018			70,398

Total assets	$	712,319		$	655,120		$	708,605		$	655,120


LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	152,822		$	117,561		$	111,393		$	117,561
Accrued liabilities		30,825			30,152			35,631			30,152
Income taxes payable		2,748			931			2,436			931
Deferred income taxes — current		15,746			16,339			13,576			16,339
Short-term debt		125,749			123,261			60,470			123,261
Current portion of long-term debt		12,844			12,834			6,823			12,834

Total current liabilities		340,734			301,078			230,329			301,078

Long-term debt, less current portion		88,338			90,051			67,164			90,051
Deferred income taxes		34,341			31,782			28,934			31,782
Deferred gain on sale of assets		5,419			5,666
Pension and postretirement benefit obligations		10,948			10,636
Other non-current liabilities								17,772			16,302
Commitments and contingencies
Stockholders’ equity
Preferred stock, $0.01 par value - 10,000,000 shares authorized; 12,000 shares issued and outstanding		11,239			11,239
Common stock, $0.01 par value — authorized 30,000,000 shares; issued and outstanding 17,085,091 at March 31, 2007 and 17,085,091 at December 31, 2006		170			170
Preferred stock, $0.01 par value - 10,000,000 shares authorized; no shares issued at September 30, 2007 and 12,000 shares issued and outstanding at December 31, 2006								—			11,239
Common stock, $0.01 par value - 30,000,000 shares authorized; 22,327,946 shares issued and 22,094,869 shares outstanding at September 30, 2007; and 17,447,205 shares issued and 17,085,091 outstanding at December 31, 2006								220			170
Additional paid-in capital		70,994			69,775			178,960			69,775
Retained earnings		175,194			160,625			201,761			160,625
Accumulated other comprehensive loss		(17,895	)		(18,504	)		(11,962	)		(18,504	)
Deferred unearned compensation		(1,157	)		(1,392	)		(1,086	)		(1,392	)
Treasury stock, at cost - 362,114 shares at March 31, 2007 and 362,114 shares at December 31, 2006		(6,006	)		(6,006	)
Treasury stock, at cost - 233,077 shares at September 30, 2007 and 362,114 shares at December 31, 2006								(3,487	)		(6,006	)

Total stockholders’ equity		232,539			215,907			364,406			215,907

Total liabilities and stockholders’ equity	$	712,319		$	655,120		$	708,605		$	655,120

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

Page 4 of 2225


CONSOLIDATED STATEMENTS OF INCOME	For The Three						For the Three						For the Nine
(Dollars in thousands, except per share data)	Months Ended						Months Ended						Months Ended
Unaudited	March 31,						Sept 30,						Sept 30,
	2007			2006			2007			2006			2007			2006
Net sales	$	375,351		$	279,193		$	350,319		$	300,809		$	1,098,278		$	855,610
Costs and expenses:
Cost of materials (exclusive of depreciation)		269,450			196,100			253,121			214,792			792,834			606,136
Warehouse, processing and delivery expense		35,570			29,625			35,136			30,117			104,999			88,720
Sales, general, and administrative expense		36,394			24,885			34,852			26,847			105,193			76,805
Depreciation and amortization expense		4,896			2,444			4,903			3,225			14,776			8,323

Operating income		29,041			26,139			22,307			25,828			80,476			75,626
Interest expense, net		(4,261	)		(1,087	)		(2,746	)		(1,903	)		(11,170	)		(3,949	)

Income before income taxes and equity earnings of joint venture		24,780			25,052			19,561			23,925			69,306			71,677
Income taxes		(9,877	)		(10,242	)		(8,073	)		(9,470	)		(27,944	)		(29,110	)

Net income before equity in earnings of joint venture		14,903			14,810			11,488			14,455			41,362			42,567
Equity in earnings of joint venture		932			1,239			1,422			1,037			3,745			3,332

Net income		15,835			16,049			12,910			15,492			45,107			45,899
Preferred stock dividends		(243	)		(242	)		—			(235	)		(593	)		(720	)

Net income applicable to common stock	$	15,592		$	15,807		$	12,910		$	15,257		$	44,514		$	45,179

Basic earnings per share	$	0.84		$	0.95		$	0.58		$	0.82		$	2.22		$	2.46

Diluted earnings per share	$	0.81		$	0.86		$	0.57		$	0.82		$	2.14		$	2.45

Dividends per common share paid	$	0.06		$	0.06		$	0.06		$	0.06		$	0.18		$	0.18

Page 5 of 2225


CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)	For the Three Months						For the Nine Months
Unaudited	Ended Mar 31,						Ended Sept 30,
	2007			2006			2007			2006

Cash flows from operating activities:
Operating activities:
Net income	$	15,835		$	16,049		$	45,107		$	45,899
Adjustments to reconcile net income to net cash from operating activities:
Adjustments to reconcile net income to net cash from (used in) operating activities:
Depreciation and amortization		4,896			2,444			14,776			8,323
Amortization of deferred gain		(223	)		(213	)		(670	)		(559	)
Loss on disposal of fixed assets		1,340			—			1,325			—
Impairment of long-lived asset								589			—
Equity in earnings from joint venture		(932	)		(1,239	)		(3,745	)		(3,332	)
Dividends from joint venture								1,103			1,231
Stock compensation expense		1,454			974			3,798			2,911
Deferred tax provision		1,649			(1,117	)		(5,154	)		4,730
Excess tax benefits from stock-based payment arrangements		—			(168	)		(420	)		(1,210	)
Increase (decrease) from changes, net of acquisitions, in:
Accounts receivable		(28,859	)		(26,712	)		(20,830	)		(40,380	)
Inventories		(35,012	)		(1,846	)		(23,248	)		(36,020	)
Prepaid pension costs		827			1,058			74			2,865
Other current assets		2,216			(813	)		3,357			(2,115	)
Other assets		(67	)		(32	)		2,937			(2,299	)
Accounts payable		32,325			10,100			(6,874	)		20,423
Accrued liabilities		694			(2,514	)		8,252			3,849
Income tax payable		8,055			4,395			2,096			(9,946	)
Postretirement benefit obligations and other liabilities		288			252			2,140			714

Net cash from operating activities		4,486			618
Cash flows from investing activities:
Dividends from joint venture		358			354
Net cash from (used in) operating activities								24,613			(4,916	)
Investing activities:
Investments and acquisitions, net of cash acquired								(280	)		(175,795	)
Capital expenditures		(2,179	)		(4,999	)		(13,150	)		(10,170	)
Proceeds from sale of equipment		9			—			23			—

Net cash used in investing activities		(1,812	)		(4,645	)		(13,407	)		(185,965	)
Cash flows from financing activities:
Proceeds from issuance of short-term debt		2,500			—
Financing activities:
Short-term borrowings, net								(62,904	)		128,943
Proceeds from issuance of long-term debt								—			30,574
Repayments of long-term debt		(1,703	)		(129	)		(29,089	)		(680	)
Payment of debt issuance fees		(21	)		—			(21	)		—
Preferred stock dividend		(243	)		(242	)		(345	)		(720	)
Dividends paid		(1,023	)		(1,004	)
Common stock dividends								(3,378	)		(3,039	)
Proceeds from issuance of common stock								92,883			—
Exercise of stock options and other		—			479			508			6,525
Excess tax benefits from stock-based payment arrangements		—			168			420			1,210

Net cash used in financing activities		(490	)		(728	)
Net cash from (used in) financing activities								(1,926	)		162,813
Effect of exchange rate changes on cash and cash equivalents		(257	)		67			272			432
Net (decrease) increase in cash and cash equivalents		1,927			(4,688	)
Net increase in cash and cash equivalents								9,552			(27,636	)

Cash and cash equivalents — beginning of year	$	9,526		$	37,392		$	9,526		$	37,392

Cash and cash equivalents — end of period	$	11,453		$	32,704		$	19,078		$	9,756

Supplemental disclosure of cash flows information — Cash paid during the period:
Supplemental disclosure of cash flow information — cash paid during period:
Interest	$	3,009		$	54		$	10,109		$	3,391

Income taxes	$	1,035		$	7,044		$	30,479		$	32,190

Page 6 of 2225

A. M. Castle & Co.

Notes to Condensed Consolidated Financial Statements
~~March 31,~~

September 30, 2007

(Unaudited)

1.		Condensed Consolidated Financial Statements

		The condensed consolidated financial statements included herein have been prepared by A.M. Castle & Co. and subsidiaries (the “Company”), without audit, pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). The Condensed Consolidated Balance Sheet at December 31, 2006 is derived from the audited financial statements at that date. The Company believes that the disclosures are adequate and make the information not misleading; however, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to the rules and regulations of the SEC. In the opinion of management, the unaudited statements, included herein, contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the financial position, the cash flows and the results of operations for the periods then ended. It is suggested that these condensed consolidated financial statements be read in conjunction with the financial statements and the notes thereto included in the Company’s latest Annual Report onForm ~~10-K~~.10-K. The 2007 interim results reported herein may not necessarily be indicative of the results of the Company’s operations for the full year.

		The amounts presented on the Condensed Consolidated Statement of Cash Flows for the nine months ended September 30, 2006 have been corrected to report dividends from joint venture as a cash flow from operating activities to conform to the 2007 presentation. The dividends from joint venture were previously reported as a cash flow from investing activities.

		The Company had non-cash investing activities for the nine months ended September 30, 2007 consisting of $3.0 million in profit sharing contributions made in treasury shares and $0.3 million in preferred stock dividends paid in shares of common stock.

2.		New Accounting Standards – Issued Not Yet Adopted

		In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 157, “Fair Value Measurement” and in February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities.” SFAS No. 157 was issued to eliminate the diversity in practice that exists due to the different definitions of fair value and the limited guidance in applying these definitions. SFAS No. 157 encourages entities to combine fair value information disclosed under SFAS No. 157 with other accounting pronouncements, including SFAS No. 107, “Disclosures about Fair Value of Financial Instruments”, where applicable. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007. SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. SFAS No. 159 is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007. The Company does not expect the adoption of these statements to materially affect its consolidated financial results of operations, cash flows or its financial position.

3.		~~Noncash Investing Activity~~

		The Company had noncash investing activities for the quarter ended March 31, 2007 of $2,957,000, which represented capital expenditures in accounts payable. This item is the Company’s initial payment due and payable in April 2007 to Oracle Corporation as part of the Company’s investment in its new Enterprise Resource Planning (“ERP”) technology.

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4.3.		Earnings ~~per share~~Per Share

		~~The~~For the period through the conversion of the preferred stock in connection with the secondary offering on May 24, 2007, the Company’s preferred ~~stock participates~~stockholders participated in dividends paid on the Company’s common stock on an “if converted” basis. In accordance with Emerging Issues Task Force Issue No. 03-6, “Participating Securities and the Two-Class Method under SFAS No. 128, Earnings per Share”, basic earnings per share is computed by applying the two-class method to compute earnings per share. The two-class method is an earnings allocation method under which earnings per share is calculated for each class of common stock and participating security considering both dividends declared and participation rights in undistributed earnings as if all such earnings had been distributed during the period. Diluted earnings per share is computed by dividing net income by the weighted average number of shares of common stock plus common stock ~~equivalents.~~equivalents, to the extent dilutive. Common stock equivalents consist of stock options, restricted stock awards and convertible preferred stock shares, which have been included in the calculation of weighted average shares outstanding using the treasury stock method. In accordance with SFAS No. 128, the following table is a reconciliation of the basic and diluted earnings per share calculations for the three and nine months ended ~~March 31,~~September 30, 2007 and 2006(in thousands, except per share data):


	For The Three Months
	Ended March 31,						For the Three Months					For the Nine Months
	2007			2006			Ended September 30,					Ended September 30,
							2007		2006			2007			2006
Numerator:
Net income	$	15,835		$	16,049		$	12,910	$	15,492		$	45,107		$	45,899
Preferred dividends distributed		(243	)		(242	)		—		(235	)		(593	)		(720	)

Undistributed earnings	$	15,592		$	15,807		$	12,910	$	15,257		$	44,514		$	45,179

Undistributed earnings attributable to:
Common stockholders	$	14,327		$	15,807		$	12,910	$	14,014		$	42,936		$	41,485
Preferred stockholders, as if converted		1,265			—			—		1,243			1,578			3,694

Total undistributed earnings	$	15,592		$	15,807		$	12,910	$	15,257		$	44,514		$	45,179

Denominator:
Denominator for basic earnings per share:
Weighted average common shares outstanding		17,048			16,633			22,076		17,013			19,369			16,860
Effect of dilutive securities:
Outstanding employee and director common stock options and restricted stock		771			322
Outstanding employee and director common stock options								771		125			744			88
Convertible preferred stock		1,794			1,794			—		1,794			979			1,794

Denominator for diluted earnings per share		19,613			18,749			22,847		18,932			21,092			18,742

Basic earnings per common share	$	0.84		$	0.95		$	0.58	$	0.82		$	2.22		$	2.46

Diluted earnings per common share	$	0.81		$	0.86		$	0.57	$	0.82		$	2.14		$	2.45

Outstanding employee & director common stock options and restricted and convertible preferred stock shares having no dilutive effect		30			6
Outstanding employee and director common stock options and restricted and convertible preferred stock shares having no dilutive effect								—		—			—			—

Page 8 of 2225

5.4.		Debt

		Short-term and long-term debt consisted of the following at ~~March 31,~~September 30, 2007 and December 31, 2006 (dollars in thousands):


	March 31,			December			September			December
	2007			31, 2006			30, 2007			31, 2006

SHORT-TERM DEBT
U.S. Revolver	$	108,500		$	108,000		$	45,000		$	108,000
Canadian facility		509			—
Mexico		2,350			1,863			1,350			1,863
Transtar		1,627			1,383			1,652			1,383
Trade acceptances		12,763			12,015			12,468			12,015

Total short-term debt		125,749			123,261			60,470			123,261

LONG-TERM DEBT
U.S. Term Loan due in scheduled installments from 2007 through 2011		27,000			28,500			—			28,500
6.76% insurance company loan due in scheduled installments from 2007 through 2015		69,283			69,283			69,283			69,283
Industrial development revenue bonds due in varying amounts through 2009		3,600			3,600			3,600			3,600
Other, primarily capital leases		1,299			1,502			1,104			1,502

Total long-term debt		101,182			102,885			73,987			102,885
Less-current portion		(12,844	)		(12,834	)		(6,823	)		(12,834	)

Total long-term portion		88,338			90,051			67,164			90,051


TOTAL SHORT-TERM AND LONG-TERM DEBT	$	226,931		$	226,146		$	134,457		$	226,146

Page 9 of 2225

5.		Segment Reporting

		The Company distributes and performs processing on both metals and plastics. Although the distribution processes are similar, different customer markets, supplier bases and types of products exist. Additionally, as Chief Operating Decision-Maker, our Chief Executive Officer reviews and manages these two businesses separately. As such, these businesses are considered operating segments according to SFAS No. 131, “Disclosures about Segments of an Enterprise and Related Information” and are reported accordingly in the Company’s consolidated financial statements.

		The accounting policies for all segments are described in Note 3 “Segment Reporting” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2006. Management evaluates performance of its business segments based on operating income. The Company does not maintain separate standalone financial statements prepared in accordance with GAAP for each of its operating segments.

		The following is the segment information for the three months ended September 30, 2007 and 2006:


	Net		Operating			Capital		Depreciation &
(dollars in millions)	Sales		Income			Expenditures		Amortization

2007
Metals Segment	$	320.8	$	24.1		$	3.8	$	4.6
Plastics Segment		29.5		1.0			1.0		0.3
Other		—		(2.8	)		—		—

Consolidated	$	350.3	$	22.3		$	4.8	$	4.9


2006
Metals Segment	$	272.1	$	25.9		$	2.3	$	2.9
Plastics Segment		28.7		2.2			0.1		0.3
Other		—		(2.3	)		—		—

Consolidated	$	300.8	$	25.8		$	2.4	$	3.2

“Other” – Operating loss includes the costs of executive, finance and legal departments, and other corporate activities which support both the Metals and Plastics segments of the Company.

The following is the segment information for the nine months ended September 30, 2007 and 2006:


	Net		Operating			Capital		Depreciation &
(dollars in millions)	Sales		Income			Expenditures		Amortization

2007
Metals Segment	$	1,010.8	$	83.9		$	11.2	$	13.9
Plastics Segment		87.5		4.2			2.0		0.9
Other		—		(7.6	)		—		—

Consolidated	$	1,098.3	$	80.5		$	13.2	$	14.8


2006
Metals Segment	$	767.5	$	75.8		$	9.4	$	7.5
Plastics Segment		88.1		6.7			0.8		0.8
Other		—		(6.9	)		—		—

Consolidated	$	855.6	$	75.6		$	10.2	$	8.3

“Other” – Operating loss includes the costs of executive, finance and legal departments, and other corporate activities which support both the Metals and Plastics segments of the Company.

Page 10 of 25

The segment information for total assets at September 30, 2007 and December 31, 2006 was as follows:


	September 30,		December 31,
(dollars in millions)	2007		2006

Metals Segment	$	642.4	$	593.7
Plastics Segment		49.9		47.8
Other		16.3		13.6

Consolidated	$	708.6	$	655.1

“Other” — The segment’s total assets consist of the Company’s investment in a joint venture.

6.		Goodwill and Intangible Assets

		Acquisition of Transtar

		On September 5, 2006, the Company acquired all of the issued and outstanding capital stock of Transtar Intermediate Holdings #2, Inc. (“Transtar”), a wholly owned subsidiary of H.I.G. Transtar Inc. The results of Transtar’s operations have been included in the consolidated financial statements since that date. These results and the assets of Transtar are included in the Company’s Metals segment. In accordance with the purchase agreement, the determination of the final purchase price is subject to a working capital adjustment. The final determination and agreement on the adjustment has not yet been completed, but the Company is pursuing a conclusion, the result of which is not expected to be material to the purchase price. The purchase price adjustment will impact the final allocation of purchase price to the acquired assets and liabilities. For more information regarding the acquisition of Transtar, refer to ~~our~~the Company’s 2006 Annual Report on Form 10-K.

		The changes in carrying amounts of goodwill were as follows (dollars in thousands):


	Metals		Plastics				Metals			Plastics
	Segment		Segment		Total		Segment			Segment		Total

Balance as of December 31, 2006	$	88,810	$	12,973	$	101,783	$	88,810		$	12,973	$	101,783
Currency translation		7		—		7		115			—		115

Balance as of March 31, 2007	$	88,817	$	12,973	$	101,790
Deferred tax valuation								(994	)		—		(994	)

Balance as of September 30, 2007							$	87,931		$	12,973	$	100,904

Page 1011 of 2225


	September 30, 2007				December 31, 2006
	Gross				Gross
	Carrying		Accumulated		Carrying		Accumulated
	Amount		Amortization		Amount		Amortization

Customer Relationships	$	66,876	$	6,619	$	66,851	$	2,061
Non-Compete Agreements		1,557		560		1,557		178

Total	$	68,433	$	7,179	$	68,408	$	2,239

The weighted-average amortization period for the intangible assets is 10.8 years, 11 years for customer relationships and 3 years for non-compete agreements. Substantially all of the Company’s intangible assets were acquired as part of the acquisition of Transtar on September 5, 2006.

For the nine-month periods ended September 30, 2007 and 2006, the aggregate amortization expense was $4.9 million and $0.6 million, respectively.

The following is a summary of the estimated aggregate amortization expense for each of the next five years (dollars in thousands):


2008	$	6,609
2009		6,446
2010		6,086
2011		6,075
2012		6,072

7.		~~Inventory~~Inventories

		Inventories consist primarily of finished goods. Final inventory determination under the last-in, first-out (LIFO) method can only be made at the end of each fiscal year based on the actual inventory levels and costs at that time. Accordingly, interim LIFO determinations, including those at ~~March 31,~~September 30, 2007, are based solely on management’s estimates of future inventory levels and costs. Since ~~future~~ estimates of future inventory levels and costs are subject to certain forces beyond the control of management, interim financial results are subject to the estimated fiscal year-end LIFO inventory valuations.

Current replacement cost of inventories exceeded book value by ~~$143.0~~$146.8 million and $128.4 million at ~~March 31,~~September 30, 2007 and December 31, 2006, respectively. Income taxes would become payable on any realization of this excess from reductions in the level of inventories.

The Company has entered into consignment inventory agreements with a few select customers whereby revenue is not recorded until the customer has consumed product from the consigned inventory and title has passed. Net sales derived from consigned inventories at customer locations for 2007 was $4.3 million, or 1.1% of sales. Inventory on consignment at customers as of March 31, 2007 was $4.0 million, or 1.7%, of consolidated net inventory as reported on the Company’s consolidated balance sheets.

8.		Share-Based Compensation

		The Company maintains long-term stock incentive and stock option plans for the benefit of officers, directors and key management employees. The fair value of stock options granted has been estimated using the Black-Scholes option pricing model. There were no stock options granted in the first ~~quarter~~three quarters of 2007. Other forms of share-based compensation ~~have generally used~~use the market price of the Company’s stock on the date of grant to estimate fair value.

		In 2005, the Company established the 2005 Performance Stock Equity Plan (the “Performance Plan”). Under the Performance Plan, 438,448 stock awards have been granted, of which 79,902 have been forfeited. In the third quarter of 2007, no awards were either granted or forfeited under this plan. The number of shares that could potentially be issued is 717,092. Under the 2005 Performance Stock Equity Plan (the “Performance Plan”). Under the Performance Plan, 438,448 stock awards have been granted of which 76,069 have been forfeited. In the first quarter of 2007, no awards were granted and 1,250 were forfeited in this plan. The number of shares that could potentially be issued is 724,758.

		In 2007, the Company established the 2007 Long-Term Incentive Plan (the “2007 Performance Plan”), which is similar in form to the Performance Plan. Under this Plan, 82,400 restricted stock awards were granted in January 2007 and 38,100 restricted stock awards were granted in April 2007. None have been forfeited. The number of shares that could potentially be issued under this plan is 241,000. The grant date fair values range from $25.45 to $34.33. Under the 2007 Performance Plan, the shares related to the awards will be ~~distributed in 2010 contingent upon meeting company-wide performance goals over the 2007-2009 performance period.~~

Page 1112 of 2225

distributed in 2008, contingent upon meeting Company-wide performance goals over the 2005-2007 performance period.

In 2007, the Company established the 2007 Long-Term Incentive Plan (the “2007 Performance Plan”), which is similar in form to the Performance Plan. Under this Plan, 81,700 stock awards were granted in January 2007 and 38,800 stock awards were granted in April 2007. None have been forfeited. The number of shares that could potentially be issued under this plan is 241,000. The grant date fair values range from $25.45 to $34.33. Under the 2007 Performance Plan, the shares related to the awards will be distributed in 2010, contingent upon meeting Company-wide performance goals over the 2007-2009 performance periods.

In December 2006, 37,600 shares of restricted stock awards were granted to certain employees at a grant date fair value of $25.87 per share. Additionally, 13,014 shares of restricted stock awards were granted in April 2007 to the non-employee members of the board of directors at a grant date fair value of $34.58 per share.

The consolidated expense for all share-based compensation plans was $1.3 million and $0.8 million for the three months ended September 30, 2007 and 2006, respectively and $3.8 million and $2.7 million for the nine months ended September 30, 2007 and 2006, respectively. All compensation expense related to share-based compensation plans is recorded in selling, general and administrative expense. The unrecognized compensation cost as of September 30, 2007 associated with all plans is $4.4 million and the weighted average period over which it is to be expensed is 1.3 years.

9.		Comprehensive Income

		Comprehensive income includes net income and all other non-owner changes to equity that are not reported in net income. Below is the Company’s comprehensive income (loss) for the three months ended ~~March 31,~~September 30, 2007 and 2006(dollars in millions).


	March 31,		March 31,			2007		2006
	2007		2006
Net income	$	15.8	$	16.0		$	12.9	$	15.5
Foreign currency translation		0.1		(0.2	)		2.4		(0.2	)
Pension cost amortization, net of tax		0.5		—			0.5		—

Total Comprehensive Income	$	16.4	$	15.8		$	15.8	$	15.3

Page 1213 of 22

		~~“Other” – Operating loss includes the costs of executive, finance and legal departments, and other corporate activities which support both the Metals and Plastics segments of the Company.~~

		~~The segment information for total assets at March 31, 2007 and December 31, 2006 was as follows:~~

March 31, December 31,
(dollars in millions) 2007 2006

Metals Segment $ 648.6 $ 593.7
Plastics Segment 49.5 47.8
Other 14.2 13.6

Consolidated $ 712.3 $ 655.1

25

		~~“Other” — The segment’s total assets consist of the Company’s investment in a joint venture.~~

~~11.~~10.		Pension and Postretirement Benefits

		The following are the components of the net pension and postretirement benefit expenses ((dollarsin thousands):


	For the three months ended						For the Three Months Ended
	March 31,						September 30,
	2007			2006			2007			2006

Service cost	$	934.5		$	917.8		$	935		$	918
Interest cost		1,911.1			1,805.8			1,911			1,806
Expected return on plan		(2,520.0	)		(2,423.9	)
Expected return on plan assets								(2,520	)		(2,424	)
Amortization of prior service cost		26.4			26.4			26			26
Amortization of net loss		787.0			945.8			787			946

Net periodic cost	$	1,139.0		$	1,271.9		$	1,139		$	1,272


	For the Nine Months Ended
	September 30,
	2007			2006

Service cost	$	2,804		$	2,754
Interest cost		5,733			5,417
Expected return on plan assets		(7,560	)		(7,272	)
Amortization of prior service cost		79			79
Amortization of net loss		2,361			2,838

Net periodic cost	$	3,417		$	3,816

As of September 30, 2007, the Company has not made any cash contributions to its pension plans for this fiscal year and does not anticipate making any contributions in 2007.

		~~As of March 31, 2007 the Company has not made any cash contributions to its pension plans for this fiscal year but will continue to evaluate options for funding this plan in 2007.~~

~~12.~~11.		Commitments and Contingent Liabilities

		At ~~March 31,~~September 30, 2007, the Company had ~~$5.3~~$5.9 million of irrevocable letters of credit outstanding, ~~$1.7~~which primarily consisted of $3.6 million in support of ~~which is~~the outstanding industrial development revenue bonds and $2.1 million for compliance with the insurance reserve requirements of its workers’ compensation insurance carrier. ~~The remaining $3.6 million is in support of the outstanding industrial revenue bonds.~~

Page 14 of 25

unrecognized tax benefits was recorded as a result of the adoption. As of January 1, 2007, the Company has a $1.0 million liability recorded for unrecognized tax benefits of which $0.3 million would impact the effective tax rate if recognized. As of September 30, 2007, the Company has a $1.2 million liability recorded for unrecognized tax benefits of which $0.5 million would impact the effective tax rate if recognized. The Company recognizes interest and penalties related to unrecognized tax benefits as a component of tax expense.

The Company does not anticipate the amount of unrecognized tax benefits to change significantly in the next twelve months.

The Company or its subsidiaries files income tax returns in the U.S., 28 states and 5 foreign jurisdictions. The Company’s 2005 U.S. federal income tax return and its Canadian income tax returns for 2002 through 2004 are currently under audit. No material adjustments have been proposed to date. The tax years 2004 through 2006 remain open to examination by the major taxing jurisdictions to which the Company is subject.

13.		Subsequent Events

		~~The Company anticipates the amount of unrecognized tax benefits to increase $0.2 million by December 31, 2007. This increase will result in an increase in currently unrecognized tax benefits.~~

		The Company or its subsidiaries files income tax returns in the U.S., 28 states and 5 foreign jurisdictions. The Canadian income tax returns for 2002 through 2004 are currently under audit. No material adjustments have been proposed to date. The tax years 2003 through 2006 remain open to examination by the major taxing jurisdictions to whichIn October 2007, the Company completed the sale of Metal Mart, LLC for $6.7 million. The impact of the divestiture is ~~subject.~~not material to the Company’s consolidated financial statements. The net proceeds from the sale were used to repay a portion of the Company’s outstanding debt.

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

Financial Review

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

Executive Overview

Economic Trends and Current Business Conditions

A. M. Castle & Co. and subsidiaries ~~(“the Company”~~(the “Company”) continued to ~~enjoy favorable~~experience higher pricing for its products through the third quarter and the first nine months of 2007, which resulted in favorable revenue growth compared to both the third quarter and first nine months of last year. The acquisition of Transtar Metals in the fall of 2006 was also a key contributor to revenue and income growth comparisons. Excluding this acquisition, volume levels in the balance of the business were lower when compared to the third quarter and first nine months of 2006. Metal products sold to the aerospace industry continued to exhibit higher demand through the third quarter of ~~2007. Projected~~ 2007, ~~demand~~but other products sold to the general North American manufacturing sector were not as robust as the record levels achieved in early 2006. Although the outlook for the aerospace and oil and gas markets ~~remain bullish, and~~has softened, current general economic indicators do not ~~currently suggest that a~~lead management to believe any significant prolonged downturn in the Metals business is on the near-term horizon. ~~Forecasted 2007 demand in the North American durable goods manufacturing sector, which is a leading economic indicator, continues to exhibit requirements above 2006 levels.~~

Historically, the Company has used the Purchaser’s Managers Index (“PMI”) provided by the Institute of Supply Managers to track general demand trends in its customer markets. ~~Table 1~~The table below shows recent PMI trends from the first quarter of 2005 through the ~~first~~third quarter of 2007. Generally speaking, an index above 50.0 indicates growth in the manufacturing sector of the U.S. economy. As the table indicates, the demand trend ~~while down from earlier quarters,~~ still reflected a favorable growth rate for the ~~first~~third quarter of 2007. The Company’s revenue growth has historically improved over these same quarters. However, first quarter 2007 volume growth for the Company on a consolidated basis, excluding Transtar, is approximately 5% less than the same quarter in 2006. The Company experienced its highest volume growth rate in the first quarter of 2006 versus any other quarter in recent years. First quarter 2007 volume, excluding Transtar, was up slightly versus each of the prior three quarters.

~~Operating Results by Segment~~


	*Quarter Ended*
	*September 30,*						*Fav/(Unfav)*
	*2007*			*2006*			*$ Change*			*% Change*

Net Sales
Metals	$	320.8		$	272.1		$	48.7			17.9	%
Plastics		29.5			28.7			0.8			2.8	%

Total Net Sales	$	350.3			300.8		$	49.5			16.5	%

Cost of Materials
Metals	$	232.8		$	195.8		$	37.0			18.9	%
% of Metals Sales		72.6	%		72.0	%					(0.6	)%
Plastics		20.3			19.0			1.3			6.8	%
% of Plastics Sales		68.8	%		66.2	%					(2.6	)%

Total Cost of Materials	$	253.1		$	214.8		$	38.3			17.8	%
% of Total Net Sales		72.3	%		71.4	%					(0.9	)%

Other Operating Costs and Expenses
Metals	$	63.9		$	50.4		$	13.5			26.8	%
Plastics		8.2			7.5			0.7			9.3	%
Other		2.8			2.3			0.5			21.7	%

Total Other Operating Costs & Expense	$	74.9		$	60.2		$	14.7			24.4	%
% of Total Net Sales		21.4	%		20.0	%					(1.4	)%

Operating Income (Loss)
Metals	$	24.1		$	25.9		$	(1.8	)		(6.9	)%
% of Metals Sales		7.5	%		9.5	%					(2.0	)%
Plastics		1.0			2.2			(1.2	)		(54.5	)%
% of Plastics Sales		3.4	%		7.7	%					(4.3	)%
Other		(2.8	)		(2.3	)		(0.5	)		(21.7	)%

Total Operating Income	$	22.3		$	25.8		$	(3.5	)		(13.6	)%
% of Total Net Sales		6.4	%		8.6	%					(2.2	)%

Quarter Ended
(dollars in millions) March 31, Fav/(Unfav)
2007 2006 Fav/(Unfav) % Change

Net Sales
Metals $ 346.6 $ 250.7 $ 95.9 38.3 %
Plastics 28.8 28.5 0.3 1.1

Total Net Sales $ 375.4 $ 279.2 $ 96.2 34.4 %

Cost of Materials
Metals $ 250.0 $ 177.1 $ 72.9 41.2 %
% of Metals Sales
72.1 % 70.6 % (1.5 )%
Plastics 19.5 19.0 0.5 2.6 %
% of Plastics Sales
67.7 % 66.7 % (1.0 )%

Total Cost of Materials $ 269.5 $ 196.1 $ 73.4 37.4 %
% of Total Net Sales
71.8 % 70.2 % (1.6 )%

Other Operating Costs and Expenses
Metals $ 66.3 $ 47.1 $ 19.2 40.8 %
Plastics 7.8 7.7 0.1 1.3
Other 2.8 2.2 0.6 27.3

Total Other Operating Costs & Expense $ 76.9 $ 57.0 $ 19.9 34.9 %
% of Total Net Sales
20.5 % 20.4 % (0.1 )%

Operating Income
Metals $ 30.3 $ 26.5 $ 3.8 14.3 %
% of Metals Sales
8.7 % 10.6 % (1.9 )%
Plastics 1.5 1.8 (0.3 ) (16.7 )%
% of Plastics Sales
5.2 % 6.3 % (1.1 )%
Other (2.8 ) (2.2 ) (0.6 ) (27.3 )%

Total Operating Income $ 29.0 $ 26.1 $ 2.9 11.1 %
% of Total Net Sales
7.7 % 9.3 % (1.6 )%

Page 16 of 25

Metals segment. For more information regarding the acquisition of Transtar, refer to ~~our~~the Company’s 2006 Annual Report on Form 10-K. In order to present a consistent quarter-over-quarter analysis of financial condition and results of ~~operation,~~operations, the Company is herein disclosing the incremental impact of its recent acquisition.

Net Sales:

Consolidated net sales of ~~$375.4~~$350.3 million increased ~~34.4%~~16.5%, or ~~$96.2~~$49.5 million, versus the ~~first~~third quarter of 2006. The Transtar acquisition added ~~$72.8~~$65.0 million of net sales for the quarter and the remaining ~~$302.6~~$285.3 million of net sales were ~~$23.4~~$3.1 million, or ~~8.4%~~1.1%, ~~ahead of~~higher than the same quarter of last year.

Metals segment sales of ~~$346.6~~$320.8 million were ~~$95.9~~$48.7 million, or ~~38.3%~~17.9%, ahead of last year. OfTranstar’s sales accounted for nearly all of the ~~38.3%~~17.9% segment net sales increase ~~29.0% was attributable to Transtar and 14.4% was attributable to increased material pricing, offset by a 5.1% decline in volume.~~

versus 2006. Plastics segment net sales of ~~$28.8~~$29.5 million were ~~$0.3~~$0.8 million, or ~~approximately 1.1%, stronger~~2.8% higher than the ~~same~~third quarter of 2006. ~~Volume~~Plastic material prices were 4.2% higher than last year, but volume was 1.3% lower. The Plastics business has not enjoyed any significant sized order in 2007 and ~~material pricing in the plastics segment were essentially flat versus the first quarter of 2006.~~overall volume across their markets was relatively flat.

Cost of ~~Materials~~Materials:

Consolidated ~~first~~third quarter 2007 costs of materials (exclusive of depreciation) increased ~~$73.4~~$38.3 million, or ~~37.4%~~17.8%, to ~~$269.5~~$253.1 million. The acquisition of Transtar contributed ~~$50.8~~$33.2 million of the increase. The balance of the increase was primarily due to higher material costs from suppliers, typically in the form of surcharges. Material costs for the third quarter were 72.3% of sales as compared to 71.4% in the third quarter of 2006. Increased material prices from suppliers in the form of surcharges are passed on to larger program customers, or customers purchasing under a contractual agreement, at cost, resulting in higher material costs as a percent of net sales.

Other Operating Expenses and Operating Income:

~~Total consolidated~~Consolidated operating expenses in the third quarter of ~~$76.9 million increased $19.9~~2007 were $74.9 million, or ~~34.9%, versus the first quarter~~21.4% of sales compared to $60.2 million, or 20.0% of sales last ~~year on a 34.4% increase in net sales. The~~year. Transtar ~~acquisition~~ added ~~$15.9~~$11.1 million of the ~~increase, the systems write-off accounted for $1.4~~$14.7 million ~~and general inflation on wages, benefits and other variable expenses account for the balance of the change.~~increase.

Consolidated operating income for the quarter was $22.3 million, or 6.4% of ~~$29.0~~sales versus prior year of $25.8 million, ~~(7.7%~~or 8.6% of ~~sales) is $2.9 million higher than~~sales. Competitive price pressures have resulted in softer margins, driving the ~~first quarter of last year largely reflecting continued top line growth.~~operating income decline.

Other Income and Expense, Income Taxes and Net Income:

Equity in earnings of joint venture was $1.4 million for the third quarter of ~~$0.9~~2007, or $0.4 million ~~was $0.3 million lower~~higher than ~~in 2006, reflecting weaker automotive industry-related sales at~~ the ~~Company’s~~same period last year due to a recent acquisition by the joint ~~venture, Kreher Steel.~~venture.

Financing costs, ~~which consist~~consisting primarily of interest expense, were ~~$4.3~~$2.7 million in the ~~first~~third quarter of 2007 which was ~~$3.2~~$0.8 million higher than the same period in 2006. The primary driver of higher interest expense was the Company’s increased ~~borrowings related to the acquisition of Transtar in September 2006.~~working capital requirements.

Consolidated net income applicable to common stock was ~~$15.6~~$12.9 million, or ~~$0.81~~$0.57 per diluted share, in the ~~first~~third quarter of 2007 versus a consolidated net income applicable to common stock of ~~$15.8~~$15.3 million, or ~~$0.86~~$0.82 per diluted share, in the corresponding period of 2006. Weighted average diluted shares outstanding increased 20.7% to 22,847 as compared to 18,932 shares for the third quarter of 2006. The increase in weighted average diluted shares outstanding is primarily due to the additional shares issued during the Company’s secondary equity offering in May 2007.

Page 17 of 25

Results of Operations: Nine Months 2007 Comparisons to Nine Months 2006

Consolidated results by business segment are summarized in the following table for the nine months ended September 30, 2007 and 2006(dollars in millions):


	*Nine Months Ended*
	*September 30,*						*Fav/(Unfav)*
	*2007*			*2006*			*$ Change*			*% Change*

Net Sales
Metals	$	1,010.8		$	767.5		$	243.3			31.7	%
Plastics		87.5			88.1			(0.6	)		(0.7	)%

Total Net Sales	$	1,098.3		$	855.6		$	242.7			28.4	%

Cost of Materials
Metals	$	733.5		$	547.5		$	185.9			34.0	%
% of Metals Sales		72.6	%		71.3	%					(1.3	)%
Plastics		59.3			58.6			0.7			1.2	%
% of Plastics Sales		67.8	%		66.5	%					(1.3	)%

Total Cost of Materials	$	792.8		$	606.1		$	186.7			30.8	%
% of Total Net Sales		72.2	%		70.8	%					(1.4	)%

Other Operating Costs and Expenses
Metals	$	193.4		$	144.2		$	49.2			34.1	%
Plastics		24.0			22.8			1.2			5.3	%
Other		7.6			6.9			0.7			10.1	%

Total Other Operating Costs & Expense	$	225.0		$	173.9		$	51.1			29.4	%
% of Total Net Sales		20.5	%		20.3	%					(0.2	)%

Operating Income (Loss)
Metals	$	83.9		$	75.8		$	8.1			10.7	%
% of Metals Sales		8.3	%		9.9	%					(1.6	)%
Plastics		4.2			6.7			(2.5	)		(37.3	)%
% of Plastics Sales		4.8	%		7.6	%					(2.8	)%
Other		(7.6	)		(6.9	)		(0.7	)		(10.1	)%

Total Operating Income	$	80.5		$	75.6		$	4.9			6.5	%
% of Total Net Sales		7.3	%		8.8	%					(1.5	)%

“Other” – Operating loss includes the costs of executive, finance and legal departments, and other corporate activities which support both the Metals and Plastics segments of the Company.

Net Sales:

Nine month 2007 consolidated net sales of $1,098.3 million were $242.7 million, or 28.4%, higher than last year. Excluding Transtar, net sales through the third quarter of $887.9 million were $50.9 million, or 6.1% ahead of last year.

Metal segment sales of $1,010.8 million were $243.3 million, or 31.7%, ahead of last year. The Transtar acquisition added $191.8 million of sales for the first nine months of 2007, or 25.0% of the total 31.7% revenue increase compared to last year. Excluding the acquisition, metal price levels were higher than the first nine months of 2006, more than offsetting the effects of lower overall volume for the balance of the Metals segment.

Page 18 of 25

Plastic segment sales for the quarter of $87.5 million were $0.6 million lower than 2006. Plastics material prices increased 2.3%, but volume was 2.8% lower than the corresponding period of last year, largely due to slower demand across the industry.

Cost of Materials:

Consolidated costs of materials (exclusive of depreciation) for the nine months ended September 30, 2007 increased $186.7 million, or 30.8%, to $792.8 million. The acquisition of Transtar contributed ~~$3.7~~$136.3 million of the increase. The balance of the increase was primarily due to higher material costs from suppliers, typically in the form of surcharges. Material costs for the first nine-months of 2007 were 72.2% of net ~~income during~~sales as compared to 70.8% in 2006. Increased material prices from suppliers in the ~~quarter. First quarter 2007 net income~~form of surcharges are passed on to larger program customers, or customers purchasing under a contractual agreement, at cost, resulting in higher material costs as a percent of sales.

Other Operating Expenses and Operating Income:

Year-to-date consolidated operating expense of $225.0 million included a ~~$0.9~~$1.4 million ~~after-tax~~ charge ~~($0.04 per diluted share)~~ for the write-off of the Company’s ~~prior investment~~former business systems. This charge was triggered by the Company’s decision to implement the Oracle ERP system. The increase in ~~information technology systems.~~

Page 19 of 25

Cash from operating activities infor the first nine months of 2007 was $24.6 million, primarily driven by decreased working capital requirements. Receivable days outstanding were 46.6 days at the end of the third quarter of 2007 ~~was $4.5 million. Working capital, excluding~~as compared to 47.3 days at the ~~current portion of long-term debt, of $121.4 million was up $18.0 million since the beginning~~end of the ~~year. Trade~~fourth quarter of 2006. Total receivables ~~of $189.9 million were up $28.9 million~~increased due to ~~increased~~higher sales. ~~Receivable days sales outstanding declined 4.2 days from December 31, 2006 to a level of 43.1 days reflecting strong collections during the quarter.~~ Inventory ~~at net book value of $237.5 million, including last-in, first-out reserves of $143.0 million, increased $35.1 million from December, 2006. Days~~DSI (days sales in inventory) was 140.1 days at the end of the third quarter of 2007 versus a DSI of 129.2 days at the end of the fourth quarter of 2006. The increase in inventory ~~of 121.7 days reflects higher receipts of~~levels are primarily in the Company’s nickel and aluminum ~~materials in~~products that support the ~~first quarter.~~aerospace and oil and gas markets.

Available revolving credit capacity is primarily used to fund working capital needs. As of ~~March 31,~~September 30, 2007, the Company had outstanding borrowings of ~~$108.5~~$45.0 million under its U.S. Revolver and had availability of ~~$53.7~~$117.6 million. The Company’s Canadian subsidiary had ~~$0.5 million in~~no outstanding borrowings under the Canadian Revolver and availability of ~~$9.4~~$9.9 million at ~~March 31,~~September 30, 2007.

The Company paid a cash ~~dividend~~dividends to its shareholders of ~~$0.06~~$0.18 per common share, or ~~$1.0~~$3.4 million, ~~during the first quarter~~through September of 2007. The Company also paid ~~$0.2~~$0.6 million in preferred stock dividends ~~during the first quarter~~through May of 2007. The preferred stock was converted and sold by the shareholders as part of the secondary equity offering. The $0.6 million preferred stock dividend was comprised of $0.3 million in cash and $0.3 million in shares of common stock.

Capital expenditures ~~in the first quarter~~through September of 2007 were ~~$2.2~~$13.2 million, ~~reflecting typical equipment replacement and upgrades. Despite increased working capital levels,~~including $4.8 million for the ~~Company reduced its debt, net of cash position, by $1.1 million since the beginning of the year.~~Company’s on-going Oracle ERP implementation.

The Company’s principal payments on long-term debt, including the current portion of long-term debt, required over the next ~~few~~five years and thereafter are summarized below(dollars in thousands):



Year ending December 31,	Year ending December 31,

2007 (for the nine months April 1, 2007 to December 31, 2007)		$	11,131
2007(for the three months October 1, 2007 to December 31, 2007)				$	6,247
2008	2008		12,998		7,035
2009	2009		16,470		10,509
2010	2010		13,220		7,256
2011	2011		12,140		7,674
2012 and beyond	2012 and beyond		35,223		35,266

Total debt	Total debt	$	101,182	$	73,987

~~Page 17 of 22~~

Commitments and Contingencies

At ~~March 31,~~September 30, 2007, the Company had ~~$5.3~~$5.9 million of irrevocable letters of credit outstanding ~~$1.7~~which primarily consisted of $3.6 million in support of ~~which were~~the outstanding industrial revenue bonds and $2.1 million for compliance with the insurance reserve requirements of its workers’ compensation insurance carrier. ~~The remaining $3.6 million was in support of the outstanding industrial revenue bonds.~~

The Company is the defendant in several lawsuits arising out of the conduct of its business. These lawsuits are incidental and occur in the normal course of the Company’s business affairs. It is the opinion of the Company, based on current knowledge, that no uninsured liability will result from the outcome of this litigation that would have a material adverse effect on the consolidated results of operations, financial condition or cash flows of the Company.

Page 20 of 25

Item 3. Quantitative and Qualitative Disclosure about Market Risk

The Company is exposed to interest rate, commodity price, and foreign exchange rate risks that arise in the normal course of business.

There have been no significant or material changes to such risks since December 31, 2006. Refer to Item 7a in our Annual Report on Form 10-K filed for the year ended December 31, 2006 for further discussion of such risks.

Item 4. Controls and Procedures

(a)Evaluation of Disclosure Controls and Procedures

A review and evaluation was performed by the Company’s management, including the Chief Executive Officer ~~(CEO)~~ and Chief Financial Officer ~~(CFO)~~ of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) of the Security Exchange Act of 1934) as of the end of the period covered by this report.

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in the Securities Exchange Act of 1934 rule 240.13a-15(f). The Company’s internal control over financial reporting is a process designed under the supervision of the Company’s Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles.

In its Annual Report on Form 10-K for the year ended December 31, 2006, the Company reported that, based upon their review and evaluation, the Company’s disclosure controls and procedures were effective as of December 31, 2006.

As part of its evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of the end of the period covered by this report, and in accordance with the framework published by the Committee of Sponsoring Organizations of the Treadway Commission, referred to as theInternal Control — Integrated Framework,the Company’s management has concluded that our internal control over financial reporting was effective as of the end of the period covered by this report.

~~During the quarter, the Company signed an agreement to purchase Oracle’s ERP system in support~~

Page 21 of its strategic growth initiative. While no changes have been made to our internal control over financial reporting at this time, we will continue to review our internal control over financial reporting as the ERP system is implemented within the Company. Additionally, the Company is in the process of reviewing and documenting the internal control structure of Transtar and, if necessary, will make appropriate changes to Transtar’s internal control over financial reporting.25

Part II. OTHER INFORMATION


~~Item 1.~~		Item 1. Legal Proceedings


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


~~Item 1A.~~		Item 1A. Risk Factors


		During the quarter there were no material changes to the risk factors set forth in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2006.

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


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

(d) Maximum

~~(c) Total Number~~

Number (or

~~of Shares (or~~

Approximate

~~Units) Purchased~~

Dollar Value) of

(a) Total Number

(b) Average Price

~~as Part~~ of Shares (or

Shares (or Units)

of Shares (or

~~Price~~ Paid per

~~Publicly~~Units) Purchased

that May Yet Be

Period

Units) Purchased

Share (or Unit)

~~Announced~~as Part of

Purchased

~~Plans or~~Publicly Announced

(Under the Plans

Plans or Programs

or Programs)

~~January~~July 1 – ~~January~~July 31

—

~~February~~August 1 – ~~February 28~~August 31

—

~~March~~September 1 – ~~March 31~~September 30

—

Total

—


~~Item 6.~~		~~Exhibits~~

Item 6. Exhibits


		Exhibit 31.1 Certification Pursuant to Section 302 by CEO ~~Exhibit 31.2 Certification Pursuant to Section 302 by CFO~~ ~~Exhibit 32.1 Certification Pursuant to Section 906 by CEO & CFO~~

Exhibit 31.2 Certification Pursuant to Section 302 by CFO

Exhibit 32.1 Certification Pursuant to Section 906 by CEO & CFO

~~10.~~		~~Segment Reporting~~

		The Company distributes and performs processing on both metals and plastics. Although the distribution processes are similar, different customer markets, supplier bases and types of products exist. Additionally, our Chief Executive Officer reviews and manages these two businesses separately. As such, these businesses are considered segments according to FAS No. 131 “Disclosures about Segments of an Enterprise and Related Information” and are reported accordingly in the Company’s consolidated financial statements.

		The accounting policies for all segments are described in Note 3 “Segment Reporting” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2006. Management evaluates performance of its business segments based on operating income. The Company does not maintain separate standalone financial statements prepared in accordance with GAAP for each of its operating segments.

~~13.~~12.		Income Taxes

		In June 2006, the FASB issued Interpretation No. 48 (FIN 48), “Accounting for Uncertainty in Income ~~Taxes”~~Taxes – an interpretation of FASB No. ~~109.~~109”. This interpretation clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial statements in accordance with SFAS No. 109, “Accounting for Income Taxes”. It prescribes a recognition threshold and measurement attribute for financial statement disclosure of tax positions taken or expected to be taken on a tax return.

		The Company adopted FIN 48 on January 1, 2007. No increase in liability for unrecognized tax benefits were recorded as a result of the adoption. As of March 31, 2007, the Company has a $1.0 million liability recorded for unrecognized tax benefits of which $0.4


YEAR	Qtr 1	Qtr 2	Qtr 3	Qtr 4	Qtr 1		Qtr 2		Qtr 3		Qtr 4

2005	55.7	53.2	55.8	57.2		55.7		53.2		55.8		57.2
2006	55.6	55.2	53.8	50.9		55.6		55.2		53.8		50.9
2007	50.8					50.8		55.2		52.9


			A. M. Castle & Co.

			(Registrant)

Date: ~~May 4,~~November 2, 2007	By:	/s/ ~~Henry J. Veith~~Patrick R. Anderson

		~~Henry J. Veith~~Patrick R. Anderson


		Vice President – Controller and Chief Accounting Officer
		(Mr. ~~Veith is the Chief Accounting Officer and~~Anderson has been authorized to sign on behalf of the Registrant.)

		During the third quarter ended September 30, 2007, the Company finalized its valuation of deferred taxes associated with the acquisition. The Company performs an annual impairment test on goodwill during the first quarter of each fiscal year. Based on the test performed during the first quarter of 2007, the Company has determined that there is no impairment of goodwill.

		The following summarizes the components of intangible assets at ~~March 31,~~September 30, 2007 and December 31, 2006 (dollars in thousands):


	March 31, 2007				December 31, 2006
	Gross				Gross
	Carrying		Accumulated		Carrying		Accumulated
	Amount		Amortization		Amount		Amortization

Customer Relationships	$	66,851	$	3,578	$	66,851	$	2,061
Non-Compete Agreements		1,557		340		1,557		178

Total	$	68,408	$	3,918	$	68,408	$	2,239

		The weighted-average amortization period is 10.8 years, 11 years for customer contracts and 3 years for non-compete agreements. Substantially all of the Company’s intangible assets were acquired as part of the acquisition of Transtar on September 5, 2006.

		For the three month period ended March 31, 2007, the aggregate amortization expense was $1.7 million. For the three month period ended March 31, 2006, the aggregate amortization expense was immaterial.


	*Quarter Ended*
(dollars in millions)	*March 31,*						*Fav/(Unfav)*
	*2007*			*2006*			*Fav/(Unfav)*			*% Change*

Net Sales
Metals	$	346.6		$	250.7		$	95.9			38.3	%
Plastics		28.8			28.5			0.3			1.1

Total Net Sales	$	375.4		$	279.2		$	96.2			34.4	%

Cost of Materials
Metals	$	250.0		$	177.1		$	72.9			41.2	%
% of Metals Sales		72.1	%		70.6	%		(1.5	)%
Plastics		19.5			19.0			0.5			2.6	%
% of Plastics Sales		67.7	%		66.7	%		(1.0	)%

Total Cost of Materials	$	269.5		$	196.1		$	73.4			37.4	%
% of Total Net Sales		71.8	%		70.2	%		(1.6	)%

Other Operating Costs and Expenses
Metals	$	66.3		$	47.1		$	19.2			40.8	%
Plastics		7.8			7.7			0.1			1.3
Other		2.8			2.2			0.6			27.3

Total Other Operating Costs & Expense	$	76.9		$	57.0		$	19.9			34.9	%
% of Total Net Sales		20.5	%		20.4	%		(0.1	)%

Operating Income
Metals	$	30.3		$	26.5		$	3.8			14.3	%
% of Metals Sales		8.7	%		10.6	%		(1.9	)%
Plastics		1.5			1.8			(0.3	)		(16.7	)%
% of Plastics Sales		5.2	%		6.3	%		(1.1	)%
Other		(2.8	)		(2.2	)		(0.6	)		(27.3	)%

Total Operating Income	$	29.0		$	26.1		$	2.9			11.1	%
% of Total Net Sales		7.7	%		9.3	%		(1.6	)%