Page 1 of 2527

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	~~September 30, 2007~~March 31, 2008	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 incorporation of organization)		(I.R.S. Employer Identification No.)
~~incorporation of organization)~~


3400 North Wolf Road, Franklin Park, Illinois		60131

(Address of Principal Executive Offices)		(Zip Code)


Registrant’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;~~filer, an accelerated filer, a non-accelerated filer, or a ~~non-accelerated filer.~~smaller reporting company. See ~~definition~~the definitions of “large accelerated filer,” “accelerated ~~filer~~filer” and ~~large accelerated filer”~~“smaller reporting company” in Rule 12b-2 of the Exchange Act. ~~(check~~(Check one):

~~Large Accelerated Filer~~ ~~Accelerated Filer~~ X ~~Non-Accelerated Filer~~


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

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 ~~October 31, 2007~~April 25, 2008

Common Stock, $0.01 Par Value		~~22,097,869~~22,636,239 shares

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							��
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share and per share data)	As of
(Dollars in thousands, except share and par value data)								As of
Unaudited	Sept 30,			Dec 31,				March 31,			December 31,
								2008			2007
	2007			2006
ASSETS
Current assets
Cash and cash equivalents	$	19,078		$	9,526			$	31,427		$	22,970
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
Accounts receivable, less allowances of $3,560 at March 31, 2008 and $3,220 at December 31, 2007									205,106			146,675
Inventories, principally on last-in, first-out basis (replacement cost higher by $145,086 at March 31, 2008 and $142,118 at December 31, 2007)									220,392			207,284
Other current assets		14,760			18,743				13,605			13,462

Total current assets		446,270			391,662				470,530			390,391
Investment in joint venture		16,278			13,577				18,810			17,419
Goodwill		100,904			101,783				114,207			101,540
Intangible assets		61,254			66,169				63,039			59,602
Prepaid pension cost		5,607			5,681				27,758			25,426
Other assets		6,274			5,850				5,062			7,516
Property, plant and equipment, at cost
Land		5,195			5,221				5,193			5,196
Building		48,660			49,017				48,995			48,727
Machinery and equipment (includes construction in progress)		153,037			141,090				162,902			155,950

		206,892			195,328				217,090			209,873
Less — accumulated depreciation		(134,874	)		(124,930	)			(136,597	)		(134,763	)

		72,018			70,398				80,493			75,110

Total assets	$	708,605		$	655,120			$	779,899		$	677,004


LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	111,393		$	117,561			$	154,799		$	109,055
Accrued liabilities		35,631			30,152				35,069			33,143
Income taxes payable		2,436			931				6,049			2,497
Deferred income taxes — current		13,576			16,339				6,656			7,298
Current portion of long-term debt									7,599			7,037
Short-term debt		60,470			123,261				24,824			18,739
Current portion of long-term debt		6,823			12,834

Total current liabilities		230,329			301,078				234,996			177,769

Long-term debt, less current portion		67,164			90,051				92,815			60,712
Deferred income taxes		28,934			31,782				39,853			37,760
Other non-current liabilities		17,772			16,302				17,182			15,688
Commitments and contingencies
Stockholders’ equity
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
Common stock, $0.01 par value — 30,000,000 shares authorized; 22,814,440 shares issued and 22,585,861 outstanding at March 31, 2008 and 22,330,946 shares issued and 22,097,869 outstanding at December 31, 2007									228			223
Additional paid-in capital		178,960			69,775				177,109			179,707
Retained earnings		201,761			160,625				219,622			207,134
Accumulated other comprehensive loss		(11,962	)		(18,504	)
Deferred unearned compensation		(1,086	)		(1,392	)
Treasury stock, at cost - 233,077 shares at September 30, 2007 and 362,114 shares at December 31, 2006		(3,487	)		(6,006	)
Accumulated other comprehensive income (loss)									1,493			1,498
Treasury stock, at cost — 228,579 shares at March 31, 2008 and 233,077 shares at December 31, 2007									(3,399	)		(3,487	)

Total stockholders’ equity		364,406			215,907				395,053			385,075

Total liabilities and stockholders’ equity	$	708,605		$	655,120			$	779,899		$	677,004

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CONSOLIDATED STATEMENTS OF INCOME	For the Three						For the Nine
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS													For the Three
(Dollars in thousands, except per share data)	Months Ended						Months Ended						Months Ended
Unaudited	Sept 30,						Sept 30,						March 31,
	2007			2006			2007			2006			2008			2007

Net sales	$	350,319		$	300,809		$	1,098,278		$	855,610		$	393,479		$	375,351
Costs and expenses:
Cost of materials (exclusive of depreciation)		253,121			214,792			792,834			606,136
Cost of materials (exclusive of depreciation and amortization)														291,344			269,450
Warehouse, processing and delivery expense		35,136			30,117			104,999			88,720			38,525			35,570
Sales, general, and administrative expense		34,852			26,847			105,193			76,805			35,482			36,394
Depreciation and amortization expense		4,903			3,225			14,776			8,323			5,811			4,896

Operating income		22,307			25,828			80,476			75,626			22,317			29,041
Interest expense, net		(2,746	)		(1,903	)		(11,170	)		(3,949	)		(2,046	)		(4,261	)

Income before income taxes and equity earnings of joint venture		19,561			23,925			69,306			71,677
Income before income taxes and equity in earnings of joint venture														20,271			24,780
Income taxes		(8,073	)		(9,470	)		(27,944	)		(29,110	)		(8,350	)		(9,877	)

Net income before equity in earnings of joint venture		11,488			14,455			41,362			42,567
Income before equity in earnings of joint venture														11,921			14,903
Equity in earnings of joint venture		1,422			1,037			3,745			3,332			1,893			932

Net income		12,910			15,492			45,107			45,899			13,814			15,835
Preferred stock dividends		—			(235	)		(593	)		(720	)		—			(243	)

Net income applicable to common stock	$	12,910		$	15,257		$	44,514		$	45,179		$	13,814		$	15,592

Basic earnings per share	$	0.58		$	0.82		$	2.22		$	2.46		$	0.62		$	0.84

Diluted earnings per share	$	0.57		$	0.82		$	2.14		$	2.45		$	0.62		$	0.81

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

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CONSOLIDATED STATEMENTS OF CASH FLOWS
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)	For the Nine Months						For the Three Months
Unaudited	Ended Sept 30,						Ended March 31,
	2007			2006			2008			2007

Operating activities:
Net income	$	45,107		$	45,899		$	13,814		$	15,835
Adjustments to reconcile net income to net cash from (used in) operating activities:
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization		14,776			8,323			5,811			4,896
Amortization of deferred gain		(670	)		(559	)		(223	)		(223	)
Loss on disposal of fixed assets		1,325			—			11			1,340
Impairment of long-lived asset		589			—
Equity in earnings from joint venture		(3,745	)		(3,332	)
Equity in earnings of joint venture								(1,893	)		(932	)
Dividends from joint venture		1,103			1,231			503			358
Stock compensation expense		3,798			2,911
Deferred tax provision		(5,154	)		4,730
Excess tax benefits from stock-based payment arrangements		(420	)		(1,210	)
Deferred tax provision (benefit)								745			1,649
Share-based compensation expense								831			1,454
Excess tax benefits from share-based payment arrangements								(2,665	)		—
Increase (decrease) from changes, net of acquisitions, in:
Accounts receivable		(20,830	)		(40,380	)		(44,092	)		(28,859	)
Inventories		(23,248	)		(36,020	)		(2,255	)		(35,012	)
Prepaid pension costs		74			2,865
Other current assets		3,357			(2,115	)		(997	)		2,216
Other assets		2,937			(2,299	)		(110	)		(67	)
Prepaid pension costs								(518	)		827
Accounts payable		(6,874	)		20,423			35,627			32,325
Accrued liabilities		8,252			3,849			(1,538	)		694
Income tax payable		2,096			(9,946	)
Income taxes payable								6,866			8,055
Postretirement benefit obligations and other liabilities		2,140			714			(165	)		288

Net cash from (used in) operating activities		24,613			(4,916	)
Net cash from operating activities								9,752			4,844
Investing activities:
Investments and acquisitions, net of cash acquired		(280	)		(175,795	)
Cash paid for acquisitions, net of cash acquired								(26,876	)		—
Capital expenditures		(13,150	)		(10,170	)		(5,377	)		(2,179	)
Proceeds from sale of equipment		23			—
Proceeds from sale of fixed assets								29			9

Net cash used in investing activities		(13,407	)		(185,965	)		(32,224	)		(2,170	)
Financing activities:
Short-term borrowings, net		(62,904	)		128,943			5,827			2,500
Proceeds from issuance of long-term debt		—			30,574			30,377			—
Repayments of long-term debt		(29,089	)		(680	)		(67	)		(1,703	)
Payment of debt issuance fees		(21	)		—			—			(21	)
Preferred stock dividend		(345	)		(720	)		—			(243	)
Common stock dividends		(3,378	)		(3,039	)		(1,326	)		(1,023	)
Proceeds from issuance of common stock		92,883			—
Exercise of stock options and other		508			6,525
Excess tax benefits from stock-based payment arrangements		420			1,210
Excess tax benefits from share-based payment arrangements								2,665			—
Payment of withholding taxes from share-based incentive issuance								(6,000	)		—

Net cash from (used in) financing activities		(1,926	)		162,813			31,476			(490	)
Effect of exchange rate changes on cash and cash equivalents		272			432			(547	)		(257	)

Net increase in cash and cash equivalents		9,552			(27,636	)		8,457			1,927

Cash and cash equivalents — beginning of year	$	9,526		$	37,392			22,970			9,526

Cash and cash equivalents — end of period	$	19,078		$	9,756		$	31,427		$	11,453

Supplemental disclosure of cash flow information — cash paid during period:
Interest	$	10,109		$	3,391

Income taxes	$	30,479		$	32,190

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A. M. Castle & Co.

Notes to Condensed Consolidated Financial Statements

~~September 30, 2007~~

~~(Unaudited)~~(Unaudited — Amounts in thousands except share and per share data)

1.(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~~2007 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 consolidated financial statements and the notes thereto included in the Company’s latest Annual Report on Form 10-K. The ~~2007~~2008 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~~Subsequent to the issuance of the Condensed Consolidated ~~Statement~~Statements of Cash Flows for the ~~nine~~three months ended ~~September 30, 2006~~March 31, 2007, the Company determined that dividends from joint venture previously reported as cash flows from investing activities in the condensed consolidated statements of cash flows for the three months ended March 31, 2007 of $358 should have been reported as cash flows from operating activities. As a result, the Condensed Consolidated Statements of Cash Flows have been corrected to ~~report~~reduce cash inflows from investing activities and increase cash flows from operating activities by $358 for the three months ended March 31, 2007, from the amount previously reported to properly present 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.~~venture.

		Non-cash investing activities for the three months ended March 31, 2008 related primarily to the acquisition of Metals U.K. Group and consisted of $1,997 of stock consideration currently probable of being paid and $345 of cash consideration payable, but not yet paid. The Company had non-cash investing activities for the ~~nine~~three months ended ~~September 30,~~March 31, 2007 consisting of ~~$3.0 million~~$2,957 which represented capital expenditures in ~~profit sharing contributions made~~accounts payable related to the Company’s initial payment as part of the investment in ~~treasury shares and $0.3 million in preferred stock dividends paid in shares of common stock.~~its new Enterprise Resource Planning (“ERP”) technology.

2.(2)		New Accounting Standards ~~– Issued Not Yet~~

		Standards Adopted

		In September 2006, the ~~Financial Accounting Standards Board (“FASB”)~~FASB issued ~~Statement of Financial Accounting Standards (“SFAS”)~~SFAS No. 157, “Fair Value ~~Measurement”~~Measurements” (“SFAS 157”) and in February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial ~~Liabilities.”~~ Liabilities” (“SFAS ~~No.~~159”). SFAS 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. Additionally, 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.

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		Effective January 1, 2008, the Company adopted SFAS 157 and SFAS 159. In February 2008, the FASB issued FASB Staff Position Nos. FAS 157-1 and FAS 157-2 (“FSP 157-1” and “FSP 157-2”). FSP 157-1 excludes SFAS No. 13, “Accounting for Leases”, as well as other accounting pronouncements that address fair value measurements for leases, from the scope of SFAS No. 157. FSP 157-2 delays the effective date of SFAS No. 157 for nonfinancial assets and nonfinancial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually) until fiscal years beginning after November 15, 2008.

		The Company did not elect the fair value option for any assets or liabilities. The adoption of SFAS 157 and SFAS 159 did not materially affect the Company’s consolidated financial results of operations, cash flows or financial position.

		Standards Issued Not Yet Adopted

		In December 2007, the FASB issued SFAS No. 141R, “Business Combinations” (“SFAS 141R”). SFAS 141R establishes principles and requirements for how the acquirer of a business recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree. The statement also provides guidance for recognizing and measuring the goodwill acquired in the business combination and determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. SFAS 141R is effective for financial statements issued for fiscal years beginning after December 15, 2008. Accordingly, any business combinations the Company engages in will be recorded and disclosed following existing generally accepted accounting principles until January 1, 2009. It is expected that SFAS 141R will have an impact on the Company’s consolidated financial statements when effective, but the nature and magnitude of the specific effects will depend upon the nature, terms and size of the acquisitions the Company consummates after the effective date. The Company is still assessing the full impact of this standard on the Company’s future consolidated financial statements.

		In December 2007, the FASB issued SFAS No. 160, “Non-controlling Interests in Consolidated Financial Statements—an amendment of ARB No. 51” (“SFAS 160”). SFAS 160 requires that accounting and reporting for minority interests will be re-characterized as non-controlling interests and classified as a component of equity. SFAS 160 also establishes reporting requirements that provide sufficient disclosures that clearly identify and distinguish between the interests of the parent and the interests of the non-controlling owners. SFAS 160 applies to all entities that prepare consolidated financial statements, except not-for-profit organizations, but will affect only those entities that have an outstanding non-controlling interest in one or more subsidiaries or that deconsolidate a subsidiary. This statement is effective as of the beginning of an entity’s first fiscal year ~~that begins~~beginning after ~~November~~December 15, ~~2007.~~2008. The Company ~~does not expect~~is currently evaluating the potential impact, if any, of the adoption of ~~these statements to materially affect its consolidated~~SFAS 160 on the Company’s financial condition, results of operations and cash ~~flows~~flows.

(3)		Acquisitions

		Acquisition of Metals U.K. Group

		On January 3, 2008, the Company acquired 100 percent of the outstanding capital stock of Metals U.K. Group (“Metals U.K.” or the “Acquisition”). The Acquisition was accounted for using the purchase method in accordance with SFAS No. 141, “Business Combinations.” Accordingly, the Company recorded the net assets at their estimated fair values, and included operating results in its ~~financial position.~~Metals segment from the date of acquisition.

		Metals U.K. is a distributor and processor of specialty metals primarily serving the oil and gas, aerospace, petrochemical and power generation markets worldwide. Metals U.K. has four

Page 78 of 2527

processing facilities; two in Blackburn, England, one in Hoddesdon North East of London and one in Bilbao, Spain. The acquisition of Metals U.K. will allow the Company to expand its global reach and service potential high growth industries.

The aggregate purchase price was approximately $30,055, or $29,218, net of cash acquired, and represents the aggregate cash purchase price, contingent consideration currently probable of payment, debt paid off at closing, and transaction costs. There is also the potential for additional purchase price of up to $12,000 based on the achievement of performance targets related to fiscal year 2008. The premium paid in excess of the fair value of the net assets acquired was primarily for the ability to expand the Company’s global reach, as well as to obtain Metals U.K.’s skilled, established workforce.

In conjunction with the Acquisition, the Company amended its existing revolving line of credit, expanding it to $230,000, which includes a $50,000 increase in capacity specifically to fund the Acquisition and provide for future working capital needs of its European operations (see Note 5). The increased line of credit allows for funding in either British pounds or Euros to reduce the impact of foreign exchange rate volatility.

The following allocation of the purchase price is preliminary:

Preliminary Purchase Price Allocation


Current assets	$	26,037
Property, plant and equipment, net		3,876
Trade name		516
Customer relationships — contractual		893
Customer relationships — non-contractual		2,421
Non-compete agreements		1,706
Goodwill		12,697

Total assets		48,146

Current liabilities		13,775
Long-term liabilities		4,316

Total liabilities		18,091


Net assets	$	30,055

The final purchase price allocation is subject to adjustment upon the finalization of items such as, the Metals U.K. December 31, 2007 financial statements, the fair-value of certain tangible assets and liabilities, deferred tax valuation and the determination of contingent consideration earned, if any. Any adjustments made to the purchase price in subsequent periods will impact the final allocation of purchase price to the acquired assets and liabilities.

The acquired intangible assets have a weighted average useful life of approximately 4.4 years. Useful lives by intangible asset category are as follows: trade name — 1 year, customer relationships — contractual — 10 years, customer relationships — non-contractual — 4 years and non-compete agreement — 3 years. The goodwill and intangible assets are not deductible for tax purposes.

Pro forma financial information as if the acquisition had been completed as of the beginning of the three months ended March 31, 2007 has not been presented because the effect of the Acquisition was not material to the Company’s financial results of operations.

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3.		Acquisition of Transtar Intermediate Holdings #2, Inc. (“Transtar”)

		As discussed in Note 8 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2007, the final purchase price for acquisition of Transtar is subject to a working capital adjustment. The final determination and agreement on the adjustment has not been completed as of March 31, 2008, 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.

(4)		Earnings Per Share

		The Company determined earnings per share in accordance with SFAS No. 128, “Earnings Per Share” (“SFAS 128”). For the three-month period ~~through~~ended March 31, 2007, prior to the conversion of the preferred stock in connection with the secondary offering onin May ~~24,~~ 2007, the Company’s preferred 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~~FASB Statement 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, to the extent dilutive.~~equivalents. Common stock equivalents consist of stock options, restricted stock awards, ~~and~~ convertible preferred stock shares and other share-based payment awards, 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 ~~September 30,~~March 31, 2008 and 2007 ~~and 2006~~((shares in ~~thousands, except per share data)~~thousands):


	For the Three Months					For the Nine Months
	Ended September 30,					Ended September 30,						2008		2007
	2007		2006			2007			2006
Numerator:
Net income	$	12,910	$	15,492		$	45,107		$	45,899		$	13,814	$	15,835
Preferred dividends distributed		—		(235	)		(593	)		(720	)		—		(243	)

Undistributed earnings	$	12,910	$	15,257		$	44,514		$	45,179		$	13,814	$	15,592

Undistributed earnings attributable to:
Common stockholders	$	12,910	$	14,014		$	42,936		$	41,485		$	13,814	$	14,327
Preferred stockholders, as if converted		—		1,243			1,578			3,694			—		1,265

Total undistributed earnings	$	12,910	$	15,257		$	44,514		$	45,179		$	13,814	$	15,592

Denominator:
Denominator for basic earnings per share:
Weighted average common shares outstanding		22,076		17,013			19,369			16,860			22,195		17,048
Effect of dilutive securities:
Outstanding employee and director common stock options		771		125			744			88
Outstanding employee and directors’ common stock options, restricted stock and share-based awards													172		771
Convertible preferred stock		—		1,794			979			1,794			—		1,794

Denominator for diluted earnings per share		22,847		18,932			21,092			18,742			22,367		19,613

Basic earnings per common share	$	0.58	$	0.82		$	2.22		$	2.46
Basic earnings per share												$	0.62	$	0.84

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

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

Page 810 of 2527


	2008		2007

Diluted earnings per share	$	0.62	$	0.81

Outstanding employees and directors common stock options and convertible preferred stock shares having an anti-dilutive effect		20		30

4.(5)		Debt

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


	September			December			March 31,			December 31,
	30, 2007			31, 2006			2008			2007

SHORT-TERM DEBT
U.S. Revolver	$	45,000		$	108,000
U.S. Revolver A							$	7,900		$	4,300
Mexico		1,350			1,863			2,300			—
Transtar		1,652			1,383
Other Foreign								4,352			2,312
Trade acceptances		12,468			12,015			10,272			12,127

Total short-term debt		60,470			123,261			24,824			18,739

LONG-TERM DEBT
U.S. Term Loan due in scheduled installments from 2007 through 2011		—			28,500
6.76% insurance company loan due in scheduled installments from 2007 through 2015		69,283			69,283
Industrial development revenue bonds due in varying amounts through 2009		3,600			3,600
6.76% insurance company loan due in scheduled installments from 2008 through 2015								63,228			63,228
U.S. Revolver B								30,640			—
Industrial development revenue bonds at a 3.91% weighted average rate, due in varying amounts through 2009								3,600			3,600
Other, primarily capital leases		1,104			1,502			2,946			921

Total long-term debt		73,987			102,885			100,414			67,749
Less-current portion		(6,823	)		(12,834	)		(7,599	)		(7,037	)

Total long-term portion		67,164			90,051			92,815			60,712


TOTAL SHORT-TERM AND LONG-TERM DEBT	$	134,457		$	226,146		$	125,238		$	86,488

~~In September 2006,~~On January 2, 2008, the Company and its Canadian, U.K. and material domestic subsidiaries entered into a ~~$210 million amended senior credit facility~~First Amendment to its Amended and Restated Credit Agreement dated as of September 5, 2006 with its lending syndicate. ~~This facility replaced the Company’s $82.0 million revolving credit facility entered into in July 2005.~~ The amended senior credit facility provides ~~for~~a $230,000 five-year secured revolver. The facility consists of (i) a ~~$170 million~~$170,000 revolving “A” loan (the “U.S. A Revolver”) to be drawn on by the Company from time to time, (ii) a ~~$30 million term~~$50,000 multicurrency revolving “B” loan (the “U.S. B Revolver“and with the U.S. A Revolver, the “U.S. Facility”) to be drawn by the Company or its U.K. subsidiary from time to time, and (iii) a Cdn. ~~$11.1 million~~$9,800 revolving loan ~~(approximately $9.9 million~~(corresponding to $10,000 in U.S. ~~dollars)~~dollars as of the amendment closing date) (the “Canadian Facility”) to be drawn on by the ~~Company’s~~ Canadian subsidiary from time to time. In addition, the maturity date of the facility was extended to January 2, 2013. The ~~revolving loans and term loan mature in 2011.~~

Page 911 of 2527

5.		Depending on the type of borrowing selected by the Company, the applicable interest rate for loans under the U.S. Facility is calculated as a per annum rate equal to (i) LIBOR plus a variable margin or (ii) “Base Rate”, which is the greater of the U.S. prime rate or the federal funds effective rate plus 0.5%, plus a variable margin. The margin on LIBOR or Base Rate loans may fall or rise as set forth in the Amended and Restated Credit Agreement depending on the Company’s debt-to-capital ratio as calculated on a quarterly basis.

		Also, on January 2, 2008, the Company and its material domestic subsidiaries entered into an Amendment No. 2 with its insurance company and affiliate to amend the covenants on the 6.76% Notes so as to be substantially the same as the amended senior credit facility.

		As of March 31, 2008, the Company had outstanding borrowings under its U.S. A Revolver of $7,900 and availability of $152,917. Borrowings under the U.S. B Revolver were $30,640 and availability was $19,360 as of March 31, 2008. The Company’s Canadian subsidiary had no outstanding borrowings under the Canadian Facility and had availability of $10,000. The weighted average interest rate for borrowings under the U.S. A Revolver and U.S. B Revolver as of March 31, 2008 was 6.43% and 6.65%, respectively.

		As of March 31, 2008, the Company remains in compliance with the covenants of its financial agreements, which require it to maintain certain funded debt-to-capital ratios, working capital-to-debt ratios and a minimum adjusted consolidated net worth as defined within the agreements.

(6)		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~~the Company’s Chief Executive Officer, the chief operating decision-maker, reviews and manages these two businesses separately. As such, these businesses are considered ~~operating~~reportable segments according to SFAS No. 131, “Disclosures about Segments of an Enterprise and Related Information” and are reported ~~accordingly~~accordingly.

		In its Metals segment, the Company’s marketing strategy focuses on distributing highly engineered specialty grades and alloys of metals as well as providing specialized processing services designed to meet very tight specifications. Core products include nickel alloys, aluminum, stainless steels and carbon. Inventories of these products assume many forms such as plate, sheet, round bar, hexagon bar, square and flat bars; tubing and coil. Depending on the size of the facility and the nature of the markets it serves, service centers are equipped as needed with bar saws, plate saws, oxygen and plasma arc flame cutting machinery, water-jet cutting, stress relieving and annealing furnaces, surface grinding equipment and sheet shearing equipment. This segment also performs various specialized fabrications for its customers through pre-qualified subcontractors that thermally processes, turns, polishes and straightens alloy and carbon bar.

		The Company’s Plastics segment consists exclusively of Total Plastics, Inc. (“TPI”) headquartered in Kalamazoo, Michigan. The Plastics segment stocks and distributes a wide variety of plastics in forms that include plate, rod, tube, clear sheet, tape, gaskets and fittings. Processing activities within this segment include cut to length, cut to shape, bending and forming according to customer specifications. The Plastics segment’s diverse customer base consists of companies in the ~~Company’s consolidated financial statements.~~retail (point-of-purchase), marine, office furniture and fixtures, transportation and general manufacturing industries. TPI has locations throughout the upper northeast and midwest portions of the U.S. and one facility in Florida from which it services a wide variety of users of industrial plastics.

		The accounting policies ~~for~~of all segments are the same as described in Note ~~3 “Segment Reporting”~~1 “Basis of Presentation and Significant Accounting Policies” in the Company’s Annual Report on Form 10-K for the year

Page 12 of 27

		ended December 31, ~~2006.~~2007. Management evaluates the performance of its business segments based on operating income. The ~~Company does not maintain separate standalone financial statements prepared in accordance with GAAP~~Metals segment includes the operating results of Metals U.K. for ~~each~~the three months ended March 31, 2008.

		Segment information for the three months ended March 31, 2008 and 2007 is as follows:


	Net		Operating			Capital		Depreciation &
	Sales		Income (Loss)			Expenditures		Amortization

2008
Metals segment	$	362,266	$	23,302		$	4,866	$	5,508
Plastics segment		31,213		1,618			511		303
Other		—		(2,603	)		—		—

Consolidated	$	393,479	$	22,317		$	5,377	$	5,811


2007
Metals segment	$	346,592	$	30,330		$	1,745	$	4,604
Plastics segment		28,759		1,505			434		292
Other		—		(2,794	)		—		—

Consolidated	$	375,351	$	29,041		$	2,179	$	4,896

		“Other” — Operating loss includes the costs of ~~its operating~~executive, legal and finance departments, which are shared by both the Metals and Plastics segments.

		~~The following is the segment~~Segment information for ~~the three months ended September 30, 2007 and 2006:~~total assets is as follows:

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


	March 31,		December 31,
	2008		2007

Metals segment	$	707,379	$	607,993
Plastics segment		53,710		51,592
Other		18,810		17,419

Consolidated	$	779,899	$	677,004

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

6.
(7)		Goodwill and Intangible Assets

		Acquisition of ~~Transtar~~Metals U.K.

		~~On September 5, 2006,~~As discussed in Note 3, 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. TheseMetals U.K. on January 3, 2008. Metals U.K.’s results and ~~the~~ assets ~~of Transtar~~ are included in the Company’s Metals ~~segment. In accordance with~~segment from the ~~purchase agreement, the determination~~date 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 the Company’s 2006 Annual Report on Form 10-K.acquisition.

		The changes in carrying amounts of goodwill during the three months ended March 31, 2008 were as ~~follows (~~~~dollars in thousands~~):follows:

Metals Plastics
Segment Segment Total

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

Deferred tax valuation (994 ) — (994 )

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


	Metals			Plastics
	Segment			Segment		Total

Balance as of December 31, 2007	$	88,567		$	12,973	$	101,540
Acquisition of Metals U.K.		12,697			—		12,697
Currency valuation		(30	)		—		(30	)

Balance as of March 31, 2008	$	101,234		$	12,973	$	114,207

~~Page 11 of 25~~

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


	March 31, 2008				December 31, 2007
	Gross Carrying		Accumulated		Gross Carrying		Accumulated
	Amount		Amortization		Amount		Amortization

Customer relationships	$	70,181	$	9,829	$	66,867	$	8,131
Non-compete agreements		3,263		963		1,557		691
Trade name		516		129		—		—

Total	$	73,960	$	10,921	$	68,424	$	8,822

7.		The weighted-average amortization period for the intangible assets is 10.3 years, 10.7 years for customer relationships, 3 years for non-compete agreements and 1 year for trade name. Substantially all of the Company’s intangible assets were acquired as part of the acquisitions of Transtar on September 5, 2006 and Metals U.K. on January 3, 2008, respectively. For the three — month periods ended March 31, 2008 and 2007, amortization expense was $2,099 and $1,679, respectively.

		The following is a summary of the estimated annual amortization expense for each of the next 5 years:


2008	$	8,388
2009		7,699
2010		7,349
2011		6,770
2012		6,161

(8)		Inventories

		~~Inventories consist primarily~~Over 80 percent of ~~finished goods.~~the Company’s inventories are stated at the lower of last-in, first-out (LIFO) cost or market. Final inventory determination under the ~~last-in, first-out (LIFO)~~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~~Interim LIFO determinations, including those at ~~September 30, 2007,~~March 31, 2008, are based solely on management’s estimates of future inventory levels and costs. Since 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 $146.8 million and $128.4 million at 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.

8.
		Current replacement cost of inventories exceeded book value by $145,086 and $142,118 at March 31, 2008 and December 31, 2007, respectively. Income taxes would become payable on any realization of this excess from reductions in the level of inventories.

(9)		~~Share-Based~~Share-based Compensation

		The Company accounts for its share-based compensation programs by recognizing compensation expense for the fair value of the share awards granted ratably over their vesting period in accordance with SFAS No. 123R, “Share-Based Payment.” The compensation cost that has been charged against income for the Company’s share-based compensation arrangements was $831 and $1,454 for the three months ended March 31, 2008 and 2007, respectively. The total income

Page 14 of 27

		tax benefit recognized in the condensed consolidated statements of operations for share-based compensation arrangements was $324 and $427 for the three months ended March 31, 2008 and 2007, respectively. All compensation expense related to share-based compensation plans is recorded in sales, general and administrative expense. The unrecognized compensation cost as of March 31, 2008 associated with all share-based payment arrangements is $6,733 and the weighted average period over which it is to be expensed is 1.7 years.

		Restricted Stock, Stock Option and Equity Compensation Plans— The Company maintains certain long-term stock incentive and stock option plans for the benefit of officers, directors and key management employees. ~~The fair value of~~During the three months ended March 31, 2008, the Company established the 2008 Restricted Stock, Stock Option and Equity Compensation Plan, which authorized up to 2,000,000 shares to be issued under the plan.

		Beginning in 2006, the Company began to utilize restricted stock to compensate non-employee directors and non-vested shares issued under the Long-Term Incentive Performance (“LTIP”) Plans as its long-term incentive compensation method for executives and other key employees. Stock options ~~granted has been estimated using the Black-Scholes option pricing model. There were no stock options~~may be granted in the ~~first three quarters~~future under certain circumstances when deemed appropriate by management and the Board of ~~2007. Other forms of share-based compensation use~~Directors.

		The Company’s stock options have been granted with an exercise price equal to the market price of the Company’s stock on the date of the grant and have a contractual life of 10 years. Options and restricted stock grants generally vest in one to ~~estimate fair value.~~five years for executive and employee option grants and one year for options and restricted stock grants granted to directors. The Company generally issues new shares upon share option exercise. A summary of the stock option activity under the Company’s share-based compensation plans is shown below:

~~In 2005,~~


			Weighted Average
	Shares		Exercise Price

Outstanding at January 1, 2008		284,120	$	11.68

Granted		—
Forfeited		—
Exercised		—

Outstanding at March 31, 2008		284,120	$	11.68

Vested or expected to vest as of March 31, 2008		284,120	$	11.68

As of March 31, 2008, all of the ~~Company established the 2005 Performance Stock Equity Plan (the “Performance Plan”). Under the Performance Plan, 438,448 stock awards have been granted,~~options outstanding were exercisable and had a weighted average remaining contractual life of ~~which 79,902 have been forfeited. In the third quarter~~5.4 years. The total intrinsic value of ~~2007,~~options outstanding at March 31, 2008 is $4,406. There was 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 shares~~unrecognized compensation cost related to stock option compensation arrangements.

A summary of the ~~awards will be~~restricted stock activity is as follows:


			Weighted-Average
Restricted Stock	Shares		Grant Date Fair Value

Non-vested at January 1, 2008		52,714	$	28.51
Granted		4,498	$	22.23
Less vested shares		—

Non-vested at March 31, 2008		57,212	$	28.02

Page 1215 of 25

~~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.27

9.		Deferred Compensation Plan— The Company also has a Director’s Deferred Compensation Plan for directors who are not officers of the Company. Under this plan, directors have the option to defer payment of their retainer and meeting fees into either a stock equivalent unit account or an interest account. Disbursement of the interest account and the stock equivalent unit account can be made only upon a director’s resignation, retirement or death, and is generally made in cash, but the stock equivalent unit account disbursement may be made in common shares at the director’s option. Fees deferred into the stock equivalent unit account are a form of share-based payment and represent a liability award which is re-measured at fair value at each reporting date. As of March 31, 2008, an aggregate 23,913 common share equivalent units are included in the director accounts.

		Long-Term Incentive Performance Plans— The Company maintains the 2005 Performance Stock Equity Plan (the “2005 Plan”), the 2007 Long-Term Incentive Plan (the “2007 Plan”) and the 2008 Long-Term Incentive Plan (the “2008 Plan”) (collectively referred to as the “LTIP Plans”). Under the LTIP Plans, selected executives and other key employees are eligible to receive share-based awards. Final award vesting and distribution of awards granted under the LTIP Plans is determined based on the Company’s actual performance versus the target goals for a three-year consecutive period (as defined in the 2005, 2007 and 2008 Plans, respectively). Partial awards can be earned for performance less than the target goal, but in excess of minimum goals; and award distributions twice the target can be achieved if the maximum goals are met or exceeded. The performance goals are three-year cumulative net income and average return on total capital for the same three year period. Unless covered by a specific change-in-control or severance arrangement, individuals to whom performance shares have been granted under the LTIP Plans must be employed by the Company at the end of the performance period or the award will be forfeited, unless the termination of employment was due to death, disability or retirement. Compensation expense recognized is based on management’s expectation of future performance compared to the pre-established performance goals. If the performance goals are not met, no compensation expense would be recognized and any previously recognized compensation expense would be reversed.

		2005 Plan— Based on the actual results of the Company for the three-year period ended December 31, 2007, the maximum number of shares (724,268) was earned under the 2005 Plan. During the three months ended March 31, 2008, 483,494 shares were issued to participants at a market price of $25.13 per share. The remaining 240,774 shares were withheld to fund required withholding taxes. The excess tax benefit recorded to additional paid in capital as a result of the share issuance was $2,665.

		2007 Plan— The fair value of the awards granted under the 2007 Plan ranged from $25.45 to $34.33 per share and was established using the market price of the Company’s stock on the dates of grant. As of March 31, 2008, based on its projections, the Company estimates that 113,783 shares will be issued. The maximum number of shares that could potentially be issued under the 2007 Plan is 227,566. The shares associated with the 2007 Plan will be distributed in 2010, contingent upon the Company meeting performance goals over the three — year period ending December 31, 2009.

		2008 Plan— The fair value of the awards granted under the 2008 Plan was $22.90 per share and was established using the market price of the Company’s stock on the date of grant. As of March 31, 2008, based on its projections, the Company estimates that 221,750 shares will be issued. The maximum number of shares that could potentially be issued under the 2008 Plan is 443,500. The shares associated with the 2008 Plan will be distributed in 2011, contingent upon the Company meeting performance goals over the three — year period ending December 31, 2010.

Page 16 of 27

(10)		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~~The Company’s comprehensive income ~~(loss) for the three months ended September 30, 2007 and 2006~~is as follows~~(dollars in millions)~~:.

2007 2006

Net income $ 12.9 $ 15.5
Foreign currency translation 2.4 (0.2 )
Pension cost amortization, net of tax 0.5 —

Total Comprehensive Income $ 15.8 $ 15.3

~~Below is the Company’s comprehensive income for the nine months ended September 30, 2007 and 2006~~~~(dollars in millions)~~.

2007 2006

Net income $ 45.1 $ 45.9
Foreign currency translation 5.0 0.9
Pension cost amortization, net of tax 1.5 —

Total Comprehensive Income $ 51.6 $ 46.8

~~The total accumulated other comprehensive losses at September 30, 2007 and December 31, 2006 comprised~~~~of (dollars in millions)~~:

September 30, December 31,
2007 2006

Foreign currency translation $ 8.6 $ 3.6
Unrecognized pension and postretirement benefit costs, net of tax (20.6 ) (22.1 )

Total Accumulated Other Comprehensive Loss $ (12.0 ) $ (18.5 )

~~Page 13 of 25~~


	March 31,
	2008			2007

Net Income	$	13,814		$	15,835
Foreign currency translation (loss) gain		(1,112	)		120
Pension cost amortization, net of tax		1,107			489

Total Comprehensive Income	$	13,809		$	16,444

~~10.~~

The components of accumulated other comprehensive income is as follows:


	March 31,			December 31,
	2008			2007

Foreign currency translation gains	$	6,725		$	7,837
Unrecognized pension and postretirement benefit costs, net of tax		(5,232	)		(6,339	)

Total accumulated other comprehensive income	$	1,493		$	1,498

(11)		Pension and Postretirement ~~Benefits~~Plans

		~~The following are~~Effective July 1, 2008, the ~~components~~Company-sponsored pension plans and supplemental pension plan (collectively, the “pension plans”) will be frozen. During December 2007, certain of the pension plans were amended and as a result, a curtailment charge of $284 was recognized in 2007. During March 2008, the supplemental pension plan was amended and as a result, a curtailment gain of $472 was recognized during the three months ended March 31, 2008. As a result of the decision to freeze the pension plans, the Company is evaluating its current investment portfolio target allocation for the pension plan funds. The Company may decide to change the investment portfolio target allocation which could impact the expected long-term rate of return and the Company’s net periodic pension cost.

		Components of the net periodic pension and postretirement benefit ~~expenses (dollars~~cost for the three months ended are as follows~~in thousands)~~:

For the Three Months Ended
September 30,
2007 2006

Service cost $ 935 $ 918
Interest cost 1,911 1,806
Expected return on plan assets (2,520 ) (2,424 )
Amortization of prior service cost 26 26
Amortization of net loss 787 946

Net periodic cost $ 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.~~


	March 31,
	2008			2007

Service cost	$	529		$	935
Interest cost		1,826			1,911
Expected return on assets		(2,781	)		(2,520	)
Amortization of prior service cost		26			26
Amortization of actuarial loss		83			787

Net periodic pension (benefit) cost, excluding impact of curtailment	$	(317	)	$	1,139

~~11.~~

As of March 31, 2008, the Company had not made any cash contributions to its pension plans for this fiscal year and does not anticipate making any contributions in 2008.

Page 17 of 27

(12)		Commitments and Contingent Liabilities

		At ~~September 30, 2007,~~March 31, 2008, the Company had ~~$5.9 million~~$6,883 of irrevocable letters of credit outstanding which primarily consisted of ~~$3.6 million~~$3,600 in support of the outstanding industrial development revenue bonds and ~~$2.1 million~~$2,100 for compliance with the insurance reserve requirements of its workers’ compensation insurance ~~carrier.~~carrier (see Note 5).

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.

~~12.~~
		The Company is the defendant in several lawsuits arising from the operation of its business. These lawsuits are incidental and occur in the normal course of the Company’s business affairs. It is the opinion of management, 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.

(13)		Income Taxes

		~~In June 2006,~~The following table shows the ~~FASB issued Interpretation No. 48 (FIN 48), “Accounting for Uncertainty~~net change in ~~Income Taxes – an interpretation of FASB No. 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 ofCompany’s unrecognized tax ~~positions taken or expected to be taken on a tax return.~~benefits:

~~The Company adopted FIN 48 on January 1, 2007. No increase in liability for~~

~~Page 14 of 25~~


Balance as of December 31, 2007	$	1,754
Increases (decreases) in unrecognized tax benefits:
Due to tax positions taken during the current year		65

Balance as of March 31, 2008	$	1,819

~~unrecognized tax benefits was recorded as a result of the adoption.~~ As of ~~January 1, 2007,~~March 31, 2008, the Company has a ~~$1.0 million~~$1,819 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~~$658 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~~and its subsidiaries files income tax returns in the U.S., 28 states and 5seven foreign jurisdictions. The ~~Company’s~~ 2005 and 2006 U.S. federal income tax ~~return~~returns and ~~its~~ Canadian income tax returns for 2002 through 2004 are currently under audit. No material adjustments have been proposed to date. ~~The~~Due to the potential for resolution of the IRS and Canadian examinations, it is reasonably possible that the Company’s gross unrecognized tax ~~years 2004 through 2006 remain open~~benefits may change within the next 12 months by a range of zero to ~~examination by the major taxing jurisdictions to which the Company is subject.~~

~~13.~~		~~Subsequent Events~~

		In October 2007, the Company completed the sale of Metal Mart, LLC for $6.7 million. The impact of the divestiture is 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.

$1,150.

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”) continued to experience higher pricing for its products through the ~~third~~first quarter ~~and the first nine months~~ of ~~2007,~~2008, which ~~resulted in~~contributed to favorable revenue growth compared to ~~both~~ the ~~third~~first quarter ~~and first nine months~~ of last year. The acquisition of ~~Transtar~~ Metals U.K. Group (“Metals U.K.”) during the first quarter of 2008 also factored into the revenue growth. Demand for aerospace, oil and gas and plate products, which serves the heavy equipment and infrastructure markets, were strong in comparison to the ~~fall~~first quarter of ~~2006 was also a key contributor to revenue and income growth comparisons. Excluding this acquisition, volume levels~~last year.

Average tons per day sold in aerospace for the ~~balance~~first quarter of ~~the business~~2008 were ~~lower when~~3.5% higher than last year, but margins for specialty aerospace grade aluminum plate were compressed compared to the ~~third~~first quarter ~~and first nine months~~ of ~~2006. Metal products sold~~last year, due to a continuation of oversupply of aluminum plate throughout the entire supply chain. Beginning in the second half of 2007, aerospace aluminum plate was in oversupply due to the ~~aerospace industry continued~~increased production capacity at the mills, the announced production delays of the

Page 18 of 27

Airbus 380 (“A 380”) and Joint Strike Fighter (“JSF”) programs and the excess inventories being held throughout the supply chain. Margins will remain depressed until these excess inventories are utilized, but subsequently should increase as build rates in the A 380, JSF, and other programs increase.

The Company’s Plastics segment reported 8.5% sales growth compared to ~~exhibit higher demand through~~ the ~~third~~first quarter of 2007, ~~but other products sold~~due to increased volume as a result of 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 has softened, current general economic indicators do not lead management to believe any significant prolonged downturn in the Metals business is on the near-term horizon.strength of its program customer business.

~~Historically, the Company has used~~Management uses the Purchaser’s Managers Index (“PMI”) provided by the Institute of Supply ~~Managers to track general~~Management (website is www.ism.ws) as an external indicator for tracking the demand outlook and possible trends in its ~~customer~~general manufacturing markets. The table below shows ~~recent~~ PMI trends from the first quarter of ~~2005~~2006 through the ~~third~~first quarter of ~~2007.~~2008. Generally speaking, it is considered that an index above 50.0 indicates continuing growth in the manufacturing sector of the U.S. economy. As the ~~table~~data indicates, the index experienced a slight decline in the first quarter of 2008.


YEAR	Qtr 1		Qtr 2		Qtr 3		Qtr 4

2006		54.7		54.1		52.9		50.8
2007		50.5		53.0		51.3		49.6
2008		49.2

An unfavorable PMI trend suggests that demand ~~trend still reflected~~for some of the Company’s products and services, in particular those that are sold to the general manufacturing customer base in the U.S., could potentially be at a ~~favorable growth rate~~lower level in the near-term. Although the PMI does offer some insight, management also relies on its relationships with the Company’s supplier and customer base to assess continuing demand trends. As of March 31, 2008, these other indicators generally point to a reasonably healthy demand for the ~~third~~Company’s specialty products in 2008. In particular, products utilized in the oil and gas, aerospace, heavy equipment and certain plastic related industries exhibited strong levels of demand in the first quarter of ~~2007.~~2008 and management believes these industries will remain strong during the next few months. The long-term outlook on demand for the Company’s ~~revenue growth~~end markets is less predictable. However, the Company expanded its international presence with the recent acquisition of Metals U.K. in early 2008 and with the early second quarter 2008 start-up of its Shanghai, China service center. As the Company continues to expand internationally, it becomes less reliant upon the North American general manufacturing economy.

Average metals pricing, in the aggregate, for the products the Company sells have remained at favorably high levels. Management believes that the ongoing consolidation of metal producers has resulted in better material price discipline through enhanced matching of material supply with global demand. The Company believes that this has resulted in and will continue to lead to more stable metal pricing throughout the steel industry.

Material pricing and demand in both the metals and plastics segments of the Company’s business have historically ~~improved over these same quarters.~~proven to be difficult to predict with any degree of accuracy. However, two of the areas of the U.S. economy which are currently experiencing significant decline, the automotive and residential construction markets, are areas in which the Company’s market presence is minimal. The Company has also not seen any effect of the recent credit market squeeze resulting from the residential mortgage lending crisis in its demand for products and services or in its own credit or lending structure.

Page 1519 of 25

             YEAR             Qtr 1             Qtr 2             Qtr 3             Qtr 4

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

27

Results of Operations: ~~Third~~First Quarter ~~2007~~2008 Comparisons to ~~Third~~First Quarter ~~2006~~2007

Consolidated results by business segment are summarized in the following table for the quarter ended ~~September 30, 2007~~March 31, 2008 and ~~2006~~~~(dollars in millions)~~.2007.


	*Quarter Ended*
	*September 30,*						*Fav/(Unfav)*						*(Amounts in 000’s)*						*Fav/(Unfav)*
	*2007*			*2006*			*$ Change*			*% Change*			*2008*			*2007*			*$ Change*			*% Change*

Net Sales
Metals	$	320.8		$	272.1		$	48.7			17.9	%	$	362,266		$	346,592		$	15,674			4.5	%
Plastics		29.5			28.7			0.8			2.8	%		31,213			28,759			2,454			8.5	%

Total Net Sales	$	350.3			300.8		$	49.5			16.5	%	$	393,479		$	375,351		$	18,128			4.8	%

Cost of Materials
Metals	$	232.8		$	195.8		$	37.0			18.9	%	$	270,251		$	249,987		$	20,264			(8.1	)%
% of Metals Sales		72.6	%		72.0	%					(0.6	)%		74.6	%		72.1	%					(2.5	)%
Plastics		20.3			19.0			1.3			6.8	%		21,093			19,463			1,630			(8.4	)%
% of Plastics Sales		68.8	%		66.2	%					(2.6	)%		67.6	%		67.7	%					0.1	%

Total Cost of Materials	$	253.1		$	214.8		$	38.3			17.8	%	$	291,344		$	269,450		$	21,894			(8.1	)%
% of Total Net Sales		72.3	%		71.4	%					(0.9	)%
% of Total Sales														74.0	%		71.8	%					(2.2	)%

Other Operating Costs and Expenses
Metals	$	63.9		$	50.4		$	13.5			26.8	%	$	68,713		$	66,275		$	2,438			(3.7	)%
Plastics		8.2			7.5			0.7			9.3	%		8,502			7,791			711			(9.1	)%
Other		2.8			2.3			0.5			21.7	%		2,603			2,794			(191	)		6.8	%

Total Other Operating Costs & Expense	$	74.9		$	60.2		$	14.7			24.4	%
% of Total Net Sales		21.4	%		20.0	%					(1.4	)%
Total Other Operating Costs & Expenses													$	79,818		$	76,860		$	2,958			(3.8	)%
% of Total Sales														20.3	%		20.5	%					0.2	%

Operating Income (Loss)
Operating Income
Metals	$	24.1		$	25.9		$	(1.8	)		(6.9	)%	$	23,302		$	30,330		$	(7,028	)		(23.2	)%
% of Metals Sales		7.5	%		9.5	%					(2.0	)%		6.4	%		8.7	%					(2.3	)%
Plastics		1.0			2.2			(1.2	)		(54.5	)%		1,618			1,505			113			7.5	%
% of Plastics Sales		3.4	%		7.7	%					(4.3	)%		5.2	%		5.2	%					—
Other		(2.8	)		(2.3	)		(0.5	)		(21.7	)%		(2,603	)		(2,794	)		191			6.8	%

Total Operating Income	$	22.3		$	25.8		$	(3.5	)		(13.6	)%	$	22,317		$	29,041		$	(6,724	)		(23.2	)%
% of Total Net Sales		6.4	%		8.6	%					(2.2	)%
% of Total Sales														5.7	%		7.7	%					(2.0	)%

~~Page 16 of 25~~

Metals segment. For more information regarding the acquisition of ~~Transtar,~~Metals U.K., refer to Note 3 to the ~~Company’s 2006 Annual Report on Form 10-K. In order to present a consistent quarter-over-quarter analysis of~~condensed consolidated financial ~~condition and results of operations, the Company is herein disclosing the incremental impact of its recent acquisition.~~statements.

Net Sales:

Consolidated net sales for the Company were $393.5 million, an increase of ~~$350.3~~$18.1 million, ~~increased 16.5%,~~ or ~~$49.5 million,~~4.8%, versus the ~~third~~first quarter of ~~2006.~~2007. Higher material prices on slightly higher demand resulted in increased revenues. The ~~Transtar~~Metals U.K. acquisition ~~added $65.0 million of~~contributed to the total net sales ~~for the quarter and the remaining $285.3 million of net sales were $3.1 million, or 1.1%, higher than the same quarter of last year.~~increase.

Metals segment sales during the first quarter of ~~$320.8~~2008 of $362.3 million were ~~$48.7~~$15.7 million, or ~~17.9%~~4.5%, ~~ahead~~higher than last year. On a same location basis for the balance of the Metals segment, volume and mix impact on sales was more than offset by a 3.1% average price increase as compared to the first quarter of last year. ~~Transtar’s sales accounted for nearly all of~~The Metals U.K. acquisition also contributed to the ~~17.9%~~ segment ~~net~~ sales increase ~~versus 2006.~~ in the quarter.

Page 20 of 27

Plastics segment ~~net~~ sales during the first quarter of ~~$29.5~~2008 of $31.2 million were ~~$0.8~~$2.5 million, or ~~2.8%~~8.5% higher than the ~~third~~first quarter of ~~2006. Plastic material prices were 4.2% higher than last year, but volume was 1.3% lower.~~2007. The Plastics business ~~has not enjoyed any significant sized order~~experienced an increase in ~~2007 and overall volume across their markets was relatively flat.~~demand from its large contractual accounts during the quarter.

Cost of Materials:

Consolidated ~~third~~first quarter ~~2007 costs~~2008 cost of materials (exclusive of ~~depreciation)~~depreciation and amortization) increased ~~$38.3~~$21.9 million, or ~~17.8%~~8.1%, to ~~$253.1~~$291.3 million. The acquisition of ~~Transtar~~Metals U.K. contributed ~~$33.2 million of~~to the increase. The balance of the increase ~~was primarily due to~~reflected higher ~~material~~metal costs from suppliers ~~typically in the form~~and mix of ~~surcharges.~~products sold. Material costs for the ~~third~~first quarter were ~~72.3%~~74.0% of sales as compared to ~~71.4%~~71.8% in the ~~third~~first quarter of ~~2006.~~2007. 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.~~sales are partly the result of competitive pricing on aerospace grade aluminum plate due to the product oversupply throughout the industry. Also, the Company continues to experience competitive price pressure in other products within the Metals segment.

Other Operating Expenses and Operating Income:

~~Consolidated~~On a consolidated basis, other operating costs and expenses inincreased $3.0 million, or 3.8%, compared to the ~~third~~first quarter of ~~2007~~2007. The Metals U.K. acquisition contributed to the increase. Other operating costs and expenses during the first quarter of 2008 were ~~$74.9~~$79.8 million, or ~~21.4%~~20.3% of sales compared to ~~$60.2~~$76.9 million, or ~~20.0%~~20.5% of sales last year. ~~Transtar added $11.1 million of the $14.7 million increase.~~

Consolidated operating income for the quarter ~~was~~of $22.3 million ~~or 6.4% of sales versus prior year of $25.8~~was $6.7 million, or ~~8.6% of sales. Competitive price pressures have resulted in softer margins, driving~~23.2%, lower than the same quarter last year. The Company’s first quarter 2008 operating profit margin (defined as operating income ~~decline.~~divided by net sales) decreased to 5.7% from 7.7% in the first quarter of 2007, primarily due to competitive market pricing related principally to an oversupply of aluminum plate in the aerospace industry.

Other Income and Expense, Income Taxes and Net Income:

Interest expense was $2.0 million in the first quarter of 2008, a decrease of $2.2 million versus the same period in 2007 as a result of reduced borrowings. The Transtar acquisition debt was repaid with proceeds from the Company’s secondary public equity offering completed in May 2007. (See “Liquidity and Capital Resources” discussion below).

Income tax expense decreased to $8.4 million from $9.9 million in the first quarter of 2007 due to lower taxable earnings. The effective tax rate was 41.2% in the first quarter of 2008 and 39.9% during the same quarter of 2007. The increase in the effective tax rate is largely a result of the increase in earnings and associated tax expense from the Company’s Kreher Steel joint venture.

Equity in earnings of the Company’s joint venture, Kreher Steel, was ~~$1.4~~$1.9 million ~~for~~in the ~~third~~first quarter of ~~2007, or $0.4~~2008, $1.0 million higher than the same period last year, ~~due to a recent acquisition by~~reflecting the joint ~~venture.~~

~~Financing costs, consisting primarily~~venture’s acquisition of ~~interest expense, were $2.7 million~~a metal distribution company in ~~the third quarter of 2007 which was $0.8 million higher than the same period in 2006. The primary driver of higher interest expense was the Company’s increased working capital requirements.~~April 2007.

Consolidated net income ~~applicable to common stock~~ was ~~$12.9~~$13.8 million, or ~~$0.57~~$0.62 per diluted share, in the ~~third~~first quarter of ~~2007~~2008 versus ~~a consolidated net income applicable to common stock of $15.3~~$15.6 million, or $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 $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 sales as compared to 70.8% in 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 sales.

~~Other Operating Expenses and Operating Income:~~

Year-to-date consolidated operating expense of $225.0 million included a $1.4 million charge for the write-off of the Company’s former business systems. This charge was triggered by the Company’s decision to implement the Oracle ERP system. The increase in operating expenses as compared to the first nine months of 2006 was primarily due to the Transtar acquisition.

~~Consolidated operating profit of $80.5 million, or 7.3% of sales, was $4.9 million higher than last year.~~

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

~~Joint venture equity earnings for the first nine months of 2007 of $3.7 million were $0.4 million higher than 2006.~~

~~Financing costs, which consist primarily of interest expense, were $11.2 million for the first nine months of 2007 and were $7.2 million higher than the same period in 2006.~~

~~Year-to-date consolidated net income (after preferred dividends of $0.6 million) was $44.5 million, or $2.14 per diluted share, versus $45.2 million, or $2.45~~$0.81 per diluted share, for the same period in ~~2006.~~2007.

Weighted average diluted shares outstanding increased ~~12.5%~~14.0% to ~~21,092~~22.4 million for the ~~nine month period ended September 30, 2007~~quarter-ended March 31, 2008 as compared to ~~18,742~~19.6 million shares for the same period in ~~2006.~~2007. 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.

~~Critical~~ Accounting Policies:

~~The~~Effective January 1, 2008, the Company adopted SFAS No. 157, “Fair Value Measurement” (“SFAS 157”) and SFAS No. 159, “The Fair Value Option for Financial ~~Accounting Standards Board (“FASB”) Interpretation No. 48 (“FIN 48”), “Accounting for Uncertainty in Income Taxes – an interpretation~~Assets and Financial Liabilities”

Page 21 of ~~FASB No. 109”~~27

(“SFAS 159”). See Note 122 to the condensed consolidated financial statements for more information regarding the Company’s adoption of ~~FIN 48.~~the standards. There have been no ~~other~~ changes in critical accounting policies from those described in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2006.~~2007.

Liquidity and Capital Resources

The Company’s principal sources of liquidity are earnings from operations, management of working capital, and the ~~$210~~$230 million amended senior credit facility.

In late May, 2007, the Company completed a public offering of 5,000,000 shares of its common stock at $33.00 per share. Of these shares, the Company sold 2,347,826 plus an additional 652,174 to cover over-allotments. Selling stockholders sold 2,000,000 shares.

The Company realized net proceeds from the equity offering of $92.9 million. The proceeds were used to permanently repay the $27.0 million outstanding balance on the U.S. Term Loan and reduce current outstanding borrowings and accrued interest under its U.S. Revolver by $66.2 million. The Company did not receive any proceeds from the sale of shares by the selling stockholders.

~~Page 19 of 25~~

Cash from operating activities for the first ~~nine~~three months of ~~2007~~2008 was ~~$24.6 million, primarily driven by decreased working capital requirements.~~$9.8 million. Receivable days outstanding were ~~46.6~~45.4 days at the end of the ~~third~~first quarter of ~~2007~~2008 as compared to ~~47.3~~45.9 days at the end of the fourth quarter of ~~2006. Total receivables increased due to higher sales.~~2007. Average Inventory DSI (days sales in inventory) was ~~140.1~~112.2 days at the end of the ~~third~~first quarter of ~~2007~~2008 versus ~~a DSI of 129.2~~132.4 days at the end of the fourth quarter of ~~2006.~~2007, reflecting stronger sales and improved inventory management.

In anticipation of the Metals U.K. acquisition, on January 2, 2008, the Company and its Canadian, U.K. and material domestic subsidiaries entered into a First Amendment to its Amended and Restated Credit Agreement dated as of September 5, 2006 with its lending syndicate. The ~~increase~~facility consists of (i) a $170 million revolving “A” loan (the “U.S. A Revolver”) to be drawn by the Company from time to time, (ii) a $50 million multicurrency revolving “B” loan (the” U.S. B Revolver” and with the U.S. A Revolver, the “U.S. Facility”) to be drawn by the Company or its U.K. subsidiary from time to time, and (iii) a Cdn. $9.8 million revolving loan (corresponding to $10 million in ~~inventory levels are primarily in~~U.S. dollars as of the amendment closing date) (the “Canadian Facility”) to be drawn by the Company’s ~~nickel~~Canadian subsidiary from time to time. The maturity date of the facility was extended to January 2, 2013. The obligations of the U.K. Subsidiary under the U.S. B Revolver are guaranteed by the Company and ~~aluminum products that support~~its material domestic subsidiaries. The U.S. A Revolver letter of credit sub-facility was increased from $15 million to $20 million. The Company’s U.K. subsidiary drew £14.9 million (or approximately $29.6 million) of the ~~aerospace and oil and gas markets.~~amount available under the U.S. B Revolver to finance the acquisition.

~~Available revolving credit capacity is primarily used to fund working capital needs.~~ As of ~~September 30, 2007,~~March 31, 2008, the Company had outstanding borrowings of ~~$45.0~~$7.9 million under its U.S. A Revolver and had availability of ~~$117.6~~$152.9 million. Borrowings under the U.S. B Revolver were $30.6 million and availability was $19.4 million. The Company’s Canadian subsidiary had no outstanding borrowings under the Canadian ~~Revolver~~Facility and availability of ~~$9.9~~$10 million at ~~September 30, 2007.~~March 31, 2008.

The Company paid cash dividends to its shareholders of ~~$0.18~~$0.06 per common share, or ~~$3.4~~$1.3 million, ~~through September of 2007. The Company also paid $0.6 million in preferred stock dividends through May of 2007. The preferred stock was converted and sold by~~for 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.~~three months ended March 31, 2008.

Capital expenditures through ~~September of 2007~~March 2008 were ~~$13.2~~$5.4 million including ~~$4.8~~approximately $3.1 million for the 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 five years and thereafter are summarized below~~(dollars in thousands)~~:


Year ending December 31,
			(Amounts in 000’s)
2007(for the three months October 1, 2007 to December 31, 2007)	$	6,247

2008		7,035	$	7,374
2009		10,509		11,164
2010		7,256		7,877
2011		7,674		7,994
2012 and beyond		35,266
2012				8,189
2013 and beyond				57,816

Total debt	$	73,987	$	100,414

Page 22 of 27

As of ~~September 30, 2007,~~March 31, 2008, the Company remains in compliance with the covenants of its financial agreements, which require it to maintain certain funded debt-to-capital ratios, working capital-to-debt ratios and a minimum adjusted consolidated net worth as defined within the agreements.

~~The Company expects~~Current business conditions lead management to believe that cash from operations along with funds available under our $230 million credit facility will be sufficient to fund its working capital ~~requirements to decline over the balance of 2007, resulting in increased favorable cash flows from operations. Favorable operating cash flow will fund the Company’s ongoing~~needs, capital expenditure programs and meet its debt obligations.

~~Commitments and Contingencies~~

~~At September 30, 2007,~~ As of March 31, 2008, the Company had ~~$5.9~~$6.9 million of irrevocable letters of credit outstanding, which primarily consisted of $3.6 million in support of the outstanding industrial revenue bonds and $2.1 million for compliance with the insurance reserve requirements of its workers’ compensation insurance carrier.

~~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.~~2007. Refer to Item 7a in ~~our~~the Company’s Annual Report on Form 10-K filed for the year ended December 31, ~~2006~~2007 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 and Chief Financial Officer 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,~~2007, the Company reported that, based upon their review and evaluation, the Company’s disclosure controls and procedures were effective as of December 31, ~~2006.~~2007.

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.

(b)Changes in Internal Controls

There was no change in the Company’s “internal control over financial reporting” (as defined in Rule 13a-15(f) of the Securities Exchange Act of 1934) identified in connection with the evaluation required by Rule 13a-15(d) of the Securities Exchange Act of 1934 that occurred during the period covered by this report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Page 2123 of 25

Part II. OTHER INFORMATION

Item 1. Legal Proceedings

~~There were~~The Company is a defendant in several lawsuits arising from the operation of its business. These lawsuits are incidental and occur in the normal course of the Company’s business affairs. It is the opinion of management, based on current knowledge, that no uninsured liability will result from the outcome of this litigation that would have a material ~~legal proceedings other than~~adverse effect on the ~~ordinary routine litigation incidental to the business~~consolidated results of operations, financial condition or cash flows of the Company.

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.~~2007.

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

~~(d) Maximum~~

~~Number (or~~

~~Approximate~~

~~(c) Total Number~~

~~Dollar Value) of~~

~~(a) Total Number~~

~~(b) Average Price~~

~~of Shares (or~~

~~Shares (or Units)~~

~~of Shares (or~~

~~Paid per~~

~~Units) Purchased~~

~~that May Yet Be~~

~~Period~~

~~Units) Purchased~~

~~Share (or Unit)~~

~~as Part of~~

~~Purchased~~

~~Publicly Announced~~

~~(Under the Plans~~

~~Plans or Programs~~

~~or Programs)~~

~~July 1 – July 31~~

—

~~August 1 – August 31~~

—

~~September 1 – September 30~~

—

~~Total~~

—

None.

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


	A. M. Castle & Co.

	(Registrant)

Date: ~~November 2, 2007~~April 29, 2008	By:	/s/ Patrick R. Anderson

		Patrick R. Anderson

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


			Page
			~~Number~~
Part I. Financial Information

	Item 1.	Condensed Consolidated Financial Statements (unaudited):

		Condensed Consolidated Balance Sheets		3

		Condensed Consolidated Statements of ~~Income~~Operations		4

		Condensed Consolidated Statements of Cash Flows		5

		Notes to Condensed Consolidated Financial Statements		~~6-14~~	6-17

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		~~14-20~~	17-22

	Item 3.	Quantitative and Qualitative Disclosure About Market Risk		20	22

	Item 4.	Controls and Procedures		20	22

Part II. Other Information

	Item 1.	Legal Proceedings		21	23

	Item 1A.	Risk Factors		21	23

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		21	23

	Item 6.	Exhibits		21	23
Section 302 Certification of CEO
Section 302 Certification of CFO
Section 906 Certification of CEO and CFO


	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

		~~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,~~2008, the Company has determined that there is no impairment of goodwill.

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


	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


	For the Three Months Ended
	September 30,
	2007			2006

Service cost	$	935		$	918
Interest cost		1,911			1,806
Expected return on plan assets		(2,520	)		(2,424	)
Amortization of prior service cost		26			26
Amortization of net loss		787			946

Net periodic cost	$	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


	*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	)%