##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 þ
    
    Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For Quarterly Period Ended June 30, 2010 or,
 o
    
    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.)
 3400 North Wolf Road, Franklin Park, Illinois
    
    60131(Address of Principal Executive Offices)
    
    (Zip Code)
 847/455-7111
  (Former name, former address and former fiscal year, if changed since last report)
 Yes þ
No o
 Yes o No o
  Large Accelerated Filer o
    
    Accelerated Filer þ
    
    Non-Accelerated Filer o
    
    Smaller Reporting Company o
 Yes o No þ
  Class
    
    Outstanding at July 23, 2010Common Stock, $0.01 Par Value
    
    22,958,969 shares




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##### 



PagePart I. Financial InformationItem 1. Financial Statements (unaudited):Condensed Consolidated Balance Sheets
    
    
    3Condensed Consolidated Statements of Operations
    
    
    4Condensed Consolidated Statements of Cash Flows
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    6-17Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    18-25Item 3. Quantitative and Qualitative Disclosure About Market Risk
    
    
    25Item 4. Controls and Procedures
    
    
    26Part II. Other InformationItem 6. Exhibits
    
    
    27Signatures
    
    
    28Exhibit Index
    
    
    28Exhibit 31.1Exhibit 31.2Exhibit 32.1
   Page 2 of 31




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Item 1. Financial Statements (unaudited)
 Amounts in thousands, except par value and per share data
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 As ofJune 30,
    
    
    December 31,2010
    
    
    2009ASSETSCurrent assetsCash and cash equivalents
    
    $
    26,406
    
    
    $
    28,311Accounts receivable, less allowances of $4,488 and $4,195
    
    
    132,632
    
    
    
    105,832Inventories, principally on last-in, first-out basis (replacement cost
higher by $120,265 and $116,816)
    
    
    168,535
    
    
    
    170,960Other current assets
    
    
    6,268
    
    
    
    5,241Income tax receivable
    
    
    11,469
    
    
    
    18,970Total current assets
    
    
    345,310
    
    
    
    329,314Investment in joint venture
    
    
    25,501
    
    
    
    23,468Goodwill
    
    
    50,066
    
    
    
    50,072Intangible assets
    
    
    44,910
    
    
    
    48,575Prepaid pension cost
    
    
    20,671
    
    
    
    19,913Other assets
    
    
    3,745
    
    
    
    3,906Property, plant and equipment, at costLand
    
    
    5,192
    
    
    
    5,192Building
    
    
    51,852
    
    
    
    51,945Machinery and equipment
    
    
    181,022
    
    
    
    178,545238,066
    
    
    
    235,682Less  accumulated depreciation
    
    
    (159,195
    )
    
    
    (152,929
    )78,871
    
    
    
    82,753Total assets
    
    $
    569,074
    
    
    $
    558,001LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilitiesAccounts payable
    
    $
    96,257
    
    
    $
    71,295Accrued liabilities
    
    
    24,845
    
    
    
    22,419Income taxes payable
    
    
    189
    
    
    
    1,848Deferred income taxes
    
    
    5,001
    
    
    
    9,706Current portion of long-term debt
    
    
    7,599
    
    
    
    7,778Short-term debt
    
    
    11,202
    
    
    
    13,720Total current liabilities
    
    
    145,093
    
    
    
    126,766Long-term debt, less current portion
    
    
    67,062
    
    
    
    67,686Deferred income taxes
    
    
    29,673
    
    
    
    32,032Other non-current liabilities
    
    
    4,891
    
    
    
    5,281Pension and post retirement benefit obligations
    
    
    8,251
    
    
    
    8,028Commitments and contingenciesStockholders equityPreferred stock, $0.01 par value - 10,000 shares authorized; no shares
issued and outstanding at June 30, 2010 and December 31, 2009
    
    
    
    
    
    
    Common stock, $0.01 par value - 30,000 shares authorized;
23,124 shares issued and 22,956 outstanding at June 30, 2010 and 23,115
shares issued
and 22,906 outstanding at December 31, 2009
    
    
    231
    
    
    
    230Additional paid-in capital
    
    
    178,821
    
    
    
    178,129Retained earnings
    
    
    152,173
    
    
    
    156,387Accumulated other comprehensive loss
    
    
    (14,825
    )
    
    
    (13,528
    )Treasury stock, at cost - 168 shares at June 30, 2010 and 209 shares at
December 31, 2009
    
    
    (2,296
    )
    
    
    (3,010
    )Total stockholders equity
    
    
    314,104
    
    
    
    318,208Total liabilities and stockholders equity
    
    $
    569,074
    
    
    $
    558,001
 The accompanying notes are an integral part of these statements.
  Page 3 of 31




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CONSOLIDATED STATEMENTS OF INCOME
 For the Three
    
    
    For the SixMonths Ended
    
    
    Months EndedJune 30,
    
    
    June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Net sales
    
    $
    240,132
    
    
    $
    195,103
    
    
    $
    463,128
    
    
    $
    447,347Costs and expenses:Cost of materials (exclusive of depreciation and amortization)
    
    
    178,515
    
    
    
    145,067
    
    
    
    347,558
    
    
    
    327,247Warehouse, processing and delivery expense
    
    
    30,176
    
    
    
    26,219
    
    
    
    59,080
    
    
    
    57,145Sales, general, and administrative expense
    
    
    25,808
    
    
    
    25,889
    
    
    
    52,750
    
    
    
    57,849Depreciation and amortization expense
    
    
    5,351
    
    
    
    5,542
    
    
    
    10,501
    
    
    
    10,958Operating income (loss)
    
    
    282
    
    
    
    (7,614
    )
    
    
    (6,761
    )
    
    
    (5,852
    )Interest expense, net
    
    
    (1,252
    )
    
    
    (1,552
    )
    
    
    (2,545
    )
    
    
    (3,257
    )Loss before income taxes and equity in earnings (losses) of joint venture
    
    
    (970
    )
    
    
    (9,166
    )
    
    
    (9,306
    )
    
    
    (9,109
    )Income taxes
    
    
    (70
    )
    
    
    3,782
    
    
    
    2,778
    
    
    
    4,227Loss before equity in earnings (losses) of joint venture
    
    
    (1,040
    )
    
    
    (5,384
    )
    
    
    (6,528
    )
    
    
    (4,882
    )Equity in earnings (losses) of joint venture
    
    
    1,448
    
    
    
    (137
    )
    
    
    2,314
    
    
    
    (159
    )Net income (loss)
    
    $
    408
    
    
    $
    (5,521
    )
    
    $
    (4,214
    )
    
    $
    (5,041
    )Basic earnings (loss) per share
    
    $
    0.02
    
    
    $
    (0.24
    )
    
    $
    (0.18
    )
    
    $
    (0.22
    )Diluted earnings (loss) per share
    
    $
    0.02
    
    
    $
    (0.24
    )
    
    $
    (0.18
    )
    
    $
    (0.22
    )Dividends per common share
    
    $
    
    
    
    $
    0.06
    
    
    $
    
    
    
    $
    0.06
 The accompanying notes are an integral part of these statements.
  Page 4 of 31




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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 For the Six MonthsEnded June 30,2010
    
    
    2009Operating activities:Net loss
    
    $
    (4,214
    )
    
    $
    (5,041
    )Adjustments to reconcile net loss to net cash
from operating activities:Depreciation and amortization
    
    
    10,501
    
    
    
    10,958Amortization of deferred gain
    
    
    (437
    )
    
    
    (447
    )Equity in earnings (losses) of joint venture
    
    
    (2,314
    )
    
    
    159Dividends from joint venture
    
    
    338
    
    
    
    485Deferred tax benefit
    
    
    (7,063
    )
    
    
    (4,593
    )Share-based compensation expense
    
    
    1,020
    
    
    
    710Excess tax (benefits) deficiencies from share-based payment arrangements
    
    
    (166
    )
    
    
    95Increase (decrease) from changes, net of acquisitions, in:Accounts receivable
    
    
    (28,109
    )
    
    
    47,001Inventories
    
    
    287
    
    
    
    31,762Other current assets
    
    
    (889
    )
    
    
    (887
    )Other assets
    
    
    2,221
    
    
    
    (1,292
    )Prepaid pension costs
    
    
    (524
    )
    
    
    (375
    )Accounts payable
    
    
    23,529
    
    
    
    (43,354
    )Accrued liabilities
    
    
    2,763
    
    
    
    (5,861
    )Income taxes payable and receivable
    
    
    5,504
    
    
    
    (11,798
    )Postretirement benefit obligations and other liabilities
    
    
    229
    
    
    
    (1,072
    )Net cash from operating activities
    
    
    2,676
    
    
    
    16,450Investing activities:Capital expenditures
    
    
    (3,254
    )
    
    
    (4,922
    )Proceeds from sale of fixed assets
    
    
    
    
    
    
    19Insurance proceeds
    
    
    
    
    
    
    1,093Net cash used in investing activities
    
    
    (3,254
    )
    
    
    (3,810
    )Financing activities:Short-term (repayments) borrowings, net
    
    
    (2,602
    )
    
    
    (4,438
    )Net borrowings on long-term revolving lines of credit
    
    
    1,469
    
    
    
    Repayments of long-term debt
    
    
    (350
    )
    
    
    (1,609
    )Common stock dividends
    
    
    
    
    
    
    (1,361
    )Excess tax
benefits (deficiencies) from share-based payment arrangements
    
    
    166
    
    
    
    (95
    )Exercise of stock options and other
    
    
    244
    
    
    
    Net cash used in financing activities
    
    
    (1,073
    )
    
    
    (7,503
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    (254
    )
    
    
    279Net (decrease) increase in cash and cash equivalents
    
    
    (1,905
    )
    
    
    5,416Cash and cash equivalents  beginning of year
    
    
    28,311
    
    
    
    15,277Cash and cash equivalents  end of period
    
    $
    26,406
    
    
    $
    20,693
 The accompanying notes are an integral part of these statements.
  Page 5 of 31




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(Unaudited  Amounts in thousands except per share data)
 (1) Condensed Consolidated Financial Statements
   (2) New Accounting Standards Updates
 Updates Adopted
  (3) Earnings Per Share
  For the Three Months
    
    
    For the Six MonthsEnded June 30,
    
    
    Ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Numerator:Net income (loss)
    
    $
    408
    
    
    $
    (5,521
    )
    
    $
    (4,214
    )
    
    $
    (5,041
    )Denominator:Denominator for basic earnings (loss) per share:Weighted average common shares outstanding
    
    
    22,706
    
    
    
    22,903
    
    
    
    22,691
    
    
    
    22,815Effect of dilutive securities:Outstanding common stock equivalents
    
    
    358
    
    
    
    
    
    
    
    
    
    
    
    Denominator for diluted earnings per share
    
    
    23,064
    
    
    
    22,903
    
    
    
    22,691
    
    
    
    22,815Basic earnings (loss) per share
    
    $
    0.02
    
    
    $
    (0.24
    )
    
    $
    (0.18
    )
    
    $
    (0.22
    )Diluted earnings (loss) per share
    
    $
    0.02
    
    
    $
    (0.24
    )
    
    $
    (0.18
    )
    
    $
    (0.22
    )Excluded outstanding share-based awards having an anti-dilutive effect
    
    
    70
    
    
    
    240
    
    
    
    515
    
    
    
    240
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(4) Debt
  June 30, 2010
    
    
    December 31, 2009SHORT-TERM DEBTU.S. Revolver A (a)
    
    $
    1,800
    
    
    $
    5,000Trade acceptances (b)
    
    
    9,402
    
    
    
    8,720Total short-term debt
    
    
    11,202
    
    
    
    13,720LONG-TERM DEBT6.76% insurance company loan due
in scheduled installments from
2007 through 2015
    
    
    50,026
    
    
    
    50,026U.S. Revolver B (a)
    
    
    23,989
    
    
    
    24,246Other, primarily capital leases
    
    
    646
    
    
    
    1,192Total long-term debt
    
    
    74,661
    
    
    
    75,464Less current portion
    
    
    (7,599
    )
    
    
    (7,778
    )Total long-term portion
    
    
    67,062
    
    
    
    67,686TOTAL SHORT-TERM AND LONG-TERM DEBT
    
    $
    85,863
    
    
    $
    89,184
 (a)
    
    The Companys amended and Restated Credit Agreement (the 2008 Senior Credit Facility)
provides a $230,000 five-year secured revolver consisting of (i) a $170,000 revolving A loan (the
U.S. Revolver A), (ii) a $50,000 multicurrency revolving B loan (the U.S. Revolver B), and
(iii) a Canadian dollar $9,784 revolving loan (corresponding to $10,000 in U.S. dollars as of the
amendment closing date; availability expressed in U.S. dollars changes based on movement in the
exchange rate between the Canadian dollar and U.S. dollar). The maturity date of the 2008 Senior
Credit Facility is January 2, 2013.  Page 7 of 31




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The Company has classified U.S. Revolver A as short-term based on its ability and intent to repay
amounts outstanding under this instrument within the next 12 months. U.S. Revolver B is classified
as long-term as the Companys cash projections indicate that amounts outstanding (which are
denominated in British pounds) under this instrument are not expected to be repaid within the next
12 months. The Company had availability of $81,945 under its U.S. Revolver A and $26,011 under its
U.S. Revolver B as of June 30, 2010. The Companys Canadian subsidiary had availability of
approximately $9,276 in U.S dollars. The weighted average interest rate for borrowings under the
U.S. Revolver A and U.S. Revolver B for the six months ended June 30, 2010 was 2.43% and
1.36%, respectively. The weighted average interest rate under the Canadian Revolver for the six
months ended June 30, 2010 was 0.23% and primarily represents unused credit line fees.(b)
    
    A trade acceptance is a form of debt instrument having a definite maturity and obligation to
pay and which has been accepted by an acknowledgement by the company upon whom it is drawn.
At June 30, 2010, the Company had $9,402 in outstanding trade acceptances with varying
maturity dates ranging up to 120 days. The weighted average interest rate was 1.22% for the six
months ended June 30, 2010.   (5) Segment Reporting
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Note 1
  Net
    
    
    Operating
    
    
    Capital
    
    
    Depreciation &Sales
    
    
    Income (Loss)
    
    
    Expenditures
    
    
    Amortization2010Metals segment
    
    $
    213,289
    
    
    $
    463
    
    
    $
    1,137
    
    
    $
    5,018Plastics segment
    
    
    26,843
    
    
    
    1,440
    
    
    
    164
    
    
    
    333Other
    
    
    
    
    
    
    (1,621
    )
    
    
    
    
    
    
    Consolidated
    
    $
    240,132
    
    
    $
    282
    
    
    $
    1,301
    
    
    $
    5,3512009Metals segment
    
    $
    174,076
    
    
    $
    (7,061
    )
    
    $
    1,050
    
    
    $
    5,186Plastics segment
    
    
    21,027
    
    
    
    (218
    )
    
    
    47
    
    
    
    356Other
    
    
    
    
    
    
    (335
    )
    
    
    
    
    
    
    Consolidated
    
    $
    195,103
    
    
    $
    (7,614
    )
    
    $
    1,097
    
    
    $
    5,542
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Net
    
    
    Operating
    
    
    Capital
    
    
    Depreciation &Sales
    
    
    (Loss) Income
    
    
    Expenditures
    
    
    Amortization2010Metals segment
    
    $
    412,963
    
    
    $
    (5,358
    )
    
    $
    3,025
    
    
    $
    9,838Plastics segment
    
    
    50,165
    
    
    
    1,603
    
    
    
    229
    
    
    
    663Other
    
    
    
    
    
    
    (3,006
    )
    
    
    
    
    
    
    Consolidated
    
    $
    463,128
    
    
    $
    (6,761
    )
    
    $
    3,254
    
    
    $
    10,5012009Metals segment
    
    $
    405,158
    
    
    $
    (3,046
    )
    
    $
    4,784
    
    
    $
    10,271Plastics segment
    
    
    42,189
    
    
    
    (626
    )
    
    
    138
    
    
    
    687Other
    
    
    
    
    
    
    (2,180
    )
    
    
    
    
    
    
    Consolidated
    
    $
    447,347
    
    
    $
    (5,852
    )
    
    $
    4,922
    
    
    $
    10,958
   June 30, 2010
    
    
    December 31, 2009Metals segment
    
    $
    496,092
    
    
    $
    488,090Plastics segment
    
    
    47,481
    
    
    
    46,443Other
    
    
    25,501
    
    
    
    23,468Consolidated
    
    $
    569,074
    
    
    $
    558,001
  (6) Goodwill and Intangible Assets
  Metals
    
    
    PlasticsSegment
    
    
    Segment
    
    
    TotalBalance as of January 1, 2010Goodwill
    
    $
    97,316
    
    
    $
    12,973
    
    
    $
    110,289Accumulated impairment losses
    
    
    (60,217
    )
    
    
    
    
    
    
    (60,217
    )Balance as of January 1, 2010
    
    
    37,099
    
    
    
    12,973
    
    
    
    50,072Currency valuation
    
    
    (6
    )
    
    
    
    
    
    
    (6
    )Balance as of June 30, 2010Goodwill
    
    
    97,310
    
    
    
    12,973
    
    
    
    110,283Accumulated impairment losses
    
    
    (60,217
    )
    
    
    
    
    
    
    (60,217
    )Balance as of June 30, 2010
    
    $
    37,093
    
    
    $
    12,973
    
    
    $
    50,066
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Note 8, st
  June 30, 2010
    
    
    December 31, 2009Gross
    
    
    
    
    
    
    GrossCarrying
    
    
    Accumulated
    
    
    Carrying
    
    
    AccumulatedAmount
    
    
    Amortization
    
    
    Amount
    
    
    AmortizationCustomer relationships
    
    $
    69,355
    
    
    $
    24,659
    
    
    $
    69,549
    
    
    $
    21,435Non-compete agreements
    
    
    2,838
    
    
    
    2,624
    
    
    
    2,938
    
    
    
    2,477Trade name
    
    
    378
    
    
    
    378
    
    
    
    378
    
    
    
    378Total
    
    $
    72,571
    
    
    $
    27,661
    
    
    $
    72,865
    
    
    $
    24,290
   2010
    
    $
    7,0412011
    
    
    6,5932012
    
    
    6,1392013
    
    
    6,1392014
    
    
    6,139
 (7) Inventories
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(8) Share-based Compensation
  Long-Term Compensation and Incentive Plans
    Restricted Share Units and Non-Vested Shares
    Page 12 of 31




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Shares
    
    
    UnitsWeighted-
    
    
    
    
    
    
    Weighted-Average Grant
    
    
    
    
    
    
    Average GrantShares
    
    
    Date Fair Value
    
    
    Units
    
    
    Date Fair ValueOutstanding at January 1, 2010
    
    
    262
    
    
    $
    10.76
    
    
    
    
    
    
    
    Granted
    
    
    39
    
    
    $
    18.06
    
    
    
    150
    
    
    $
    12.07Forfeited
    
    
    (16
    )
    
    $
    6.37
    
    
    
    (2
    )
    
    $
    12.07Vested
    
    
    (54
    )
    
    $
    11.19
    
    
    
    Outstanding at June 30, 2010
    
    
    231
    
    
    $
    13.15
    
    
    
    148
    
    
    $
    12.07Expected to vest as of June 30, 2010
    
    
    215
    
    
    $
    13.49
    
    
    
    126
    
    
    $
    12.07
  Performance Shares
   2010Expected volatility
    
    
    61.6
    %Risk-free interest rate
    
    
    1.45
    %Expected life (in years)
    
    
    2.80Expected dividend yield
    
    
    
  Page 13 of 31




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Estimated Number of
    
    
    Maximum Number ofGrant Date Fair
    
    
    Performance Shares to
    
    
    Performance Shares thatPlan Year
    
    Value
    
    
    be Issued
    
    
    could Potentially be Issued2010 LTC Plan
    
    
    $12.26
    
    
    
    121
    
    
    
    2962009 LTI Plan
    
    
    $5.66
    
    
    
    
    
    
    
    6452008 LTI Plan
    
    
    $22.90 - $28.17
    
    
    
    
    
    
    
    331
   Stock Options
   2010Expected volatility
    
    
    58.5
    %Risk-free interest rate
    
    
    2.3
    %Expected life (in years)
    
    
    5.5Expected dividend yield
    
    
    1.2
    %
  Page 14 of 31




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##### Table of Contents



Weighted AverageShares
    
    
    Exercise PriceStock options outstanding at January 1, 2010
    
    
    239
    
    
    $
    11.37Granted
    
    
    303
    
    
    $
    12.79Exercised
    
    
    (23
    )
    
    $
    10.60Forfeited
    
    
    (4
    )
    
    $
    12.79Stock options outstanding at June 30, 2010
    
    
    515
    
    
    $
    12.23Stock options vested or expected to vest as of
June 30, 2010
    
    
    470
    
    
    $
    12.17
  Deferred Compensation Plan
  (9) Comprehensive Loss
  June 30,2010
    
    
    2009Net income (loss)
    
    $
    408
    
    
    $
    (5,521
    )Foreign currency translation (loss) gain
    
    
    (1,495
    )
    
    
    997Pension cost amortization, net of tax
    
    
    71
    
    
    
    60Total comprehensive loss
    
    $
    (1,016
    )
    
    $
    (4,464
    )
  June 30,2010
    
    
    2009Net loss
    
    $
    (4,214
    )
    
    $
    (5,041
    )Foreign currency translation (loss) gain
    
    
    (1,439
    )
    
    
    2,201Pension cost amortization, net of tax
    
    
    142
    
    
    
    119Total comprehensive loss
    
    $
    (5,511
    )
    
    $
    (2,721
    )
  Page 15 of 31




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##### Table of Contents



June 30, 2010
    
    
    December 31, 2009Foreign currency translation losses
    
    $
    (4,653
    )
    
    $
    (3,214
    )Unrecognized pension and postretirement benefit costs,
net of tax
    
    
    (10,172
    )
    
    
    (10,314
    )Total accumulated other comprehensive loss
    
    $
    (14,825
    )
    
    $
    (13,528
    )
 (10)
    
    Employee Benefit Plans  For the Three Months EndedJune 30,2010
    
    
    2009Service cost
    
    $
    200
    
    
    $
    197Interest cost
    
    
    1,919
    
    
    
    1,934Expected return on assets
    
    
    (2,335
    )
    
    
    (2,253
    )Amortization of prior service cost
    
    
    65
    
    
    
    72Amortization of actuarial loss
    
    
    55
    
    
    
    34Net periodic pension and postretirement benefit
    
    $
    (96
    )
    
    $
    (16
    )
  For the Six Months EndedJune 30,2010
    
    
    2009Service cost
    
    $
    400
    
    
    $
    393Interest cost
    
    
    3,838
    
    
    
    3,867Expected return on assets
    
    
    (4,670
    )
    
    
    (4,505
    )Amortization of prior service cost
    
    
    130
    
    
    
    144Amortization of actuarial loss
    
    
    110
    
    
    
    68Net periodic pension and postretirement benefit
    
    $
    (192
    )
    
    $
    (33
    )
    Page 16 of 31




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##### Table of Contents



(11) Joint Venture
  :
 For the Three Months EndedJune 30,2010
    
    
    2009Net sales
    
    $
    46,962
    
    
    $
    22,246Cost of materials
    
    
    39,103
    
    
    
    19,387Income before taxes
    
    
    3,319
    
    
    
    (501
    )Net income (loss)
    
    
    2,896
    
    
    
    (274
    )
 :
 For the Six Months EndedJune 30,2010
    
    
    2009Net sales
    
    $
    85,607
    
    
    $
    53,561Cost of materials
    
    
    71,286
    
    
    
    46,574Income before taxes
    
    
    5,348
    
    
    
    (398
    )Net income (loss)
    
    
    4,628
    
    
    
    (318
    )
 (12)
    
    Commitments and Contingent Liabilities   (13) Income Taxes
    Page 17 of 31




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Amounts in millions except per share data
 Disclosure Regarding Forward-Looking Statements
 Information provided and statements contained in this report that are not purely historical are
forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as
amended (Securities Act), Section 21E of the Securities Exchange Act of 1934, as amended
(Exchange Act), and the Private Securities Litigation Reform Act of 1995. Such forward-looking
statements only speak as of the date of this report and the Company assumes no obligation to update
the information included in this report. Such forward-looking statements include information
concerning our possible or assumed future results of operations, including descriptions of our
business strategy. These statements often include words such as believe, expect, anticipate,
intend, predict, plan, or similar expressions. These statements are not guarantees of
performance or results, and they involve risks, uncertainties, and assumptions. Although we
believe that these forward-looking statements are based on reasonable assumptions, there are many
factors that could affect our actual financial results or results of operations and could cause
actual results to differ materially from those in the forward-looking statements, including those
risk factors identified in Item 1A Risk Factors in the Companys Annual Report on Form 10-K for
the year ended December 31, 2009. All future written and oral forward-looking statements by us or
persons acting on our behalf are expressly qualified in their entirety by the cautionary statements
contained or referred to above. Except for our ongoing obligations to disclose material
information as required by the federal securities laws, we do not have any obligations or intention
to release publicly any revisions to any forward-looking statements to reflect events or
circumstances in the future or to reflect the occurrence of unanticipated events.
 The following discussion should be read in conjunction with the Companys condensed consolidated
financial statements and related notes thereto in ITEM 1 Condensed Consolidated Financial
Statements (unaudited).
 Executive Overview
 Economic Trends and Current Business Conditions
     Page 18 of 31




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##### Table of Contents



YEAR
    
    Qtr 1
    
    
    Qtr 2
    
    
    Qtr 3
    
    
    Qtr 42008
    
    
    49.2
    
    
    
    49.5
    
    
    
    47.8
    
    
    
    36.12009
    
    
    35.9
    
    
    
    42.6
    
    
    
    51.5
    
    
    
    54.62010
    
    
    58.2
    
    
    
    58.8
  Results of Operations: Second Quarter 2010 Comparisons to Second Quarter 2009
  Fav/(Unfav)2010
    
    
    2009
    
    
    $ Change
    
    
    % ChangeNet SalesMetals
    
    $
    213.3
    
    
    $
    174.1
    
    
    $
    39.2
    
    
    
    22.5
    %Plastics
    
    
    26.8
    
    
    
    21.0
    
    
    
    5.8
    
    
    
    27.6
    %Total Net Sales
    
    $
    240.1
    
    
    $
    195.1
    
    
    $
    45.0
    
    
    
    23.1
    %Cost of MaterialsMetals
    
    $
    160.4
    
    
    $
    130.6
    
    
    $
    (29.8
    )
    
    
    (22.8
    )%% of Metals Sales
    
    
    75.2
    %
    
    
    75.0
    %Plastics
    
    
    18.1
    
    
    
    14.5
    
    
    
    (3.6
    )
    
    
    (24.8
    )%% of Plastics Sales
    
    
    67.5
    %
    
    
    69.0
    %Total Cost of Materials
    
    $
    178.5
    
    
    $
    145.1
    
    
    $
    (33.4
    )
    
    
    (23.0
    )%% of Total Sales
    
    
    74.3
    %
    
    
    74.4
    %Operating Costs and ExpensesMetals
    
    $
    52.4
    
    
    $
    50.5
    
    
    $
    (1.9
    )
    
    
    (3.8
    )%Plastics
    
    
    7.3
    
    
    
    6.8
    
    
    
    (0.5
    )
    
    
    (7.4
    )%Other
    
    
    1.6
    
    
    
    0.3
    
    
    
    (1.3
    )
    
    
    (433.3
    )%Total Operating Costs & Expenses
    
    $
    61.3
    
    
    $
    57.6
    
    
    $
    (3.7
    )
    
    
    (6.4
    )%% of Total Sales
    
    
    25.5
    %
    
    
    29.5
    %Operating Income (Loss)Metals
    
    $
    0.5
    
    
    $
    (7.0
    )
    
    $
    7.5
    
    
    
    107.1
    %% of Metals Sales
    
    
    0.2
    %
    
    
    (4.0
    )%Plastics
    
    
    1.4
    
    
    
    (0.3
    )
    
    
    1.7
    
    
    
    566.7
    %% of Plastics Sales
    
    
    5.2
    %
    
    
    (1.4
    )%Other
    
    
    (1.6
    )
    
    
    (0.3
    )
    
    
    (1.3
    )
    
    
    (433.3
    )%Total Operating Income (Loss)
    
    $
    0.3
    
    
    $
    (7.6
    )
    
    $
    7.9
    
    
    
    103.9
    %% of Total Sales
    
    
    0.1
    %
    
    
    (3.9
    )%
 Other includes the costs of executive, legal and finance departments which are shared by both segments of the Company.  Page 19 of 31




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##### Table of Contents



Net Sales:
   Cost of Materials:
  Operating Expenses and Operating (Loss) Income:
  
    
    Warehouse, processing and delivery costs increased by $3.9 million of which $2.9
million is the result of higher sales volume and $1.0 million is due to increased
payroll costs as the Company resumed full workweek schedules beginning in January 2010
and reinstated the Company 401(k) contributions in April 2010;
 
    
    Depreciation and amortization expense was $0.2 million lower primarily due to
certain intangible assets becoming fully amortized in 2009.
   Page 20 of 31




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Other Income and Expense, Income Taxes and Net Income:
     Results of Operations: Six Months 2010 Comparisons to Six Months 2009
  Fav/(Unfav)2010
    
    
    2009
    
    
    $ Change
    
    
    % ChangeNet SalesMetals
    
    $
    413.0
    
    
    $
    405.2
    
    
    $
    7.8
    
    
    
    1.9
    %Plastics
    
    
    50.1
    
    
    
    42.1
    
    
    
    8.0
    
    
    
    19.0
    %Total Net Sales
    
    $
    463.1
    
    
    $
    447.3
    
    
    $
    15.8
    
    
    
    3.5
    %Cost of MaterialsMetals
    
    $
    313.4
    
    
    $
    298.4
    
    
    $
    (15.0
    )
    
    
    (5.0
    )%% of Metals Sales
    
    
    75.9
    %
    
    
    73.6
    %Plastics
    
    
    34.2
    
    
    
    28.9
    
    
    
    (5.3
    )
    
    
    (18.3
    )%% of Plastics Sales
    
    
    68.3
    %
    
    
    68.6
    %Total Cost of Materials
    
    $
    347.6
    
    
    $
    327.3
    
    
    $
    (20.3
    )
    
    
    (6.2
    )%% of Total Net Sales
    
    
    75.1
    %
    
    
    73.2
    %Operating Costs and ExpensesMetals
    
    $
    105.0
    
    
    $
    109.8
    
    
    $
    4.8
    
    
    
    4.4
    %Plastics
    
    
    14.3
    
    
    
    13.9
    
    
    
    (0.4
    )
    
    
    (2.9
    )%Other
    
    
    3.0
    
    
    
    2.2
    
    
    
    (0.8
    )
    
    
    (36.4
    )%Total Operating Costs & Expenses
    
    $
    122.3
    
    
    $
    125.9
    
    
    $
    3.6
    
    
    
    2.9
    %% of Total Net Sales
    
    
    26.4
    %
    
    
    28.1
    %Operating (Loss) IncomeMetals
    
    $
    (5.4
    )
    
    $
    (3.0
    )
    
    $
    (2.4
    )
    
    
    (80.0
    )%% of Metals Sales
    
    
    (1.3
    )%
    
    
    (0.7
    )%Plastics
    
    
    1.6
    
    
    
    (0.7
    )
    
    
    2.3
    
    
    
    328.6
    %% of Plastics Sales
    
    
    3.2
    %
    
    
    (1.7
    )%Other
    
    
    (3.0
    )
    
    
    (2.2
    )
    
    
    (0.8
    )
    
    
    (36.4
    )%Total Operating (Loss) Income
    
    $
    (6.8
    )
    
    $
    (5.9
    )
    
    $
    (0.9
    )
    
    
    (15.3
    )%% of Total Net Sales
    
    
    (1.5
    )%
    
    
    (1.3
    )%
 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 21 of 31




---



##### Table of Contents



Net Sales:
   Cost of Materials:
  Operating Expenses and Operating Loss:
   
    
    Warehouse, processing and delivery costs increased by $1.9 million which is
comprised of a $2.9 million increase due to higher sales volume, partially offset by a
$1.0 million decrease resulting from the incremental impact of the cost reduction
initiatives implemented in 2009 related to workforce reductions and suspension of the
Company 401(k) contributions;
  Page 22 of 31




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##### Table of Contents




    
    Sales, general and administrative costs decreased by $5.1 million primarily due to
lower payroll related costs of $4.6 million resulting from the incremental impact of
the cost reduction initiatives implemented in 2009 related to workforce reductions and
suspension of the Company 401(k) contributions and lower ERP implementation costs of
$0.7 million; and
 
    
    Depreciation and amortization expense was $0.4 million lower due to a decrease in
capital expenditures across the Company in 2009 and 2010 compared to previous years
and certain intangible assets becoming fully amortized in 2009.
  Other Income and Expense, Income Taxes and Net Income:
     Accounting Policies:
  Note 2
 Liquidity and Capital Resources
   Page 23 of 31




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##### Table of Contents



Outstanding
    
    
    
    
    
    
    Weighted AverageBorrowings as of
    
    
    Availability as of
    
    
    Interest Rate for the sixDebt type
    
    June 30, 2010
    
    
    June 30, 2010
    
    
    months ended June 30, 2010U.S. Revolver A
    
    $
    1.8
    
    
    $
    81.9
    
    
    
    2.43
    %U.S. Revolver B
    
    
    24.0
    
    
    
    26.0
    
    
    
    1.36
    %Canadian facility
    
    
    
    
    
    
    9.3
    
    
    
    0.23
    %Trade acceptances
    
    
    9.4
    
    
    
    n/a
    
    
    
    1.22
    %
 (a)
    
    A trade acceptance is a form of debt instrument having a definite maturity and
obligation to pay and which has been accepted by an acknowledgement by the company upon
whom it is drawn.  Page 24 of 31




---



##### Table of Contents



:
 2010
    
    $
    7.62011
    
    
    7.82012
    
    
    8.12013
    
    
    32.52014
    
    
    9.12015 and beyond
    
    
    9.6Total debt
    
    $
    74.7
  Requirement per
    
    
    Actual atCovenant Description
    
    Credit Agreement
    
    
    June 30, 2010Funded debt-to-capital ratio
    
    less than 0.55
    
    
    0.18Working capital-to-debt ratio
    
    greater than 1.0
    
    
    3.60Minimum adjusted consolidated net worth
    
    
    $261.6
    
    
    $
    324.3
  
 Item 3. Quantitative and Qualitative Disclosure about Market Risk
   Page 25 of 31




---



##### Table of Contents



Item 4. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
    Internal Control  Integrated Framework,
 Changes in Internal Controls
   Page 26 of 31




---



##### Table of Contents



Part II. OTHER INFORMATION
 
 Item 6. Exhibits
 ExhibitNo.
    
    Description31.1
    
    
    CEO Certification Pursuant to Section 302 of the Sarbanes Oxley Act of 200231.2
    
    
    CFO Certification Pursuant to Section 302 of the Sarbanes Oxley Act of 200232.1
    
    
    CEO and CFO Certification Pursuant to Section 906 of the Sarbanes Oxley
Act of 2002
  Page 27 of 31




---



##### Table of Contents



SIGNATURE
  A. M. Castle & Co.(Registrant)Date: July 29, 2010
    By:
    /s/ Patrick R. AndersonPatrick R. AndersonVice President  Controller
and Chief Accounting Officer
(Mr. Anderson has been authorized to sign
on behalf of the Registrant.) 
 Exhibit Index
  ExhibitNo.
    
    Description
    
    Page31.1
    
    
    CEO Certification Pursuant to Section 302 of the
Sarbanes Oxley Act of 2002
    
    E-131.2
    
    
    CFO Certification Pursuant to Section 302 of the
Sarbanes Oxley Act of 2002
    
    E-232.1
    
    
    CEO and CFO Certification Pursuant to Section 906 of
the Sarbanes Oxley Act of 2002
    
    E-3
  Page 28 of 31