##### Table of Contents



UNITED STATES
 SECURITIES AND EXCHANGE
    COMMISSION
 Washington, D.C. 20549
    FORM 10-K
  [X]

Annual Report Pursuant to
    Section 13 or 15(d) of the Securities Exchange Act of
    1934
    For the fiscal year ended March 31, 2007[  ]

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 0-14836
     METAL MANAGEMENT,
    INC.
 (Exact Name of Registrant as
    Specified in Its Charter)
     Delaware

94-2835068(State or Other Jurisdiction of
    Incorporation or Organization)

(I.R.S. Employer Identification
    No.)   325 N. LaSalle Street, Suite
    550, Chicago, IL

60610(Address of Principal Executive
    Offices)

(Zip Code)   (312) 645-0700
  Securities
    Registered Pursuant to Section 12(b) of the Act:
  Title of Each Class

Name on Each Exchange on Which
    RegisteredCommon Stock, $0.01 par value

New York Stock Exchange   Securities Registered Pursuant to Section 12(g) of the
    Act:
      X
  X
  X
  Regulation S-K Form 10-K Form 10-K. X
  Rule 12b-2
 X
  Rule 12b-2  X
      Documents
    Incorporated by Reference
  Form 10-K.




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##### 



METAL
    MANAGEMENT, INC.
    ANNUAL REPORT ON
    FORM 10-K
    FOR THE FISCAL YEAR ENDED MARCH 31, 2007
  TABLE OF CONTENTS
  PagePART
    IItem 1.

Business


1Item 1A.

Risk
    Factors


9Item 1B.

Unresolved Staff
    Comments


14Item 2.

Properties


14Item 3.

Legal
    Proceedings


16Item 4.

Submission of
    Matters to a Vote of Security Holders


16PART
    IIItem 5.

Market for
    Registrants Common Equity, Related Stockholder Matters and
    Issuer Purchases of Equity Securities


17Item 6.

Selected Financial
    Data


19Item 7.

Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations


20Item 7A.

Quantitative and
    Qualitative Disclosures About Market Risk


34Item 8.

Financial
    Statements and Supplementary Data


34Item 9.

Changes in and
    Disagreements with Accountants on Accounting and Financial
    Disclosure


35Item 9A.

Controls and
    Procedures


35Item 9B.

Other
    Information


36PART
    IIIItem 10.

Directors,
    Executive Officers and Corporate Governance


37Item 11.

Executive
    Compensation


37Item 12.

Security Ownership
    of Certain Beneficial Owners and Management and Related
    Stockholder Matters


37Item 13.

Certain
    Relationships and Related Transactions, and Director
    Independence


37Item 14.

Principal
    Accountant Fees and Services


37PART
    IVItem 15.

Exhibits and
    Financial Statement Schedules


38Signatures


40Amendment No. 3 to the Amended and Restated Credit AgreementAmended and Restated 2002 Incentive Stock PlanEmployment AgreementEmployment and Non-Compete AgreementSubsidiaries of the CompanyConsent of Independent Registered Public Accounting FirmConsent of Independent Registered Public Accounting FirmCertification of Daniel W. DienstCertification of Robert C. LarrySection 1350 CertificationsAudited Financial Statements




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##### Table of Contents



Certain statements made by us in this
    Form 10-K,
    including statements qualified by the words believe,
    intend, anticipate, expect
    and words of similar import, are forward-looking
    statements and are thus prospective. These statements
    reflect our current expectations regarding (1) our future
    profitability and liquidity and that of our subsidiaries,
    (2) the benefits to be derived from the execution of our
    industry consolidation strategy and (3) other future
    developments in our business or the scrap metals recycling
    industry. These forward-looking statements could involve, among
    other things, statements regarding our intent, belief or
    expectation with respect to our results of operations, financial
    condition, cash flows, liquidity or capital resources, including
    expectations regarding sales growth and our ability to fund our
    capital expenditures, dividends, stock repurchases, interest
    payments and working capital needs; the consummation of
    acquisitions and financial transactions and their effect on our
    business, capitalization, and future operating results; our
    plans and objectives for future operations; expected amounts of
    capital expenditures and the impact of such capital expenditures
    on our results of operations, financial condition, or cash
    flows; expected compliance obligations with respect to
    environmental and other laws, the expected cost of such
    compliance and the timing of such costs; the expected impact of
    any environmental liability on our results of operations,
    financial condition or cash flows; the expected impact of any
    market risks, such as commodity price risks, interest rate risk,
    pension plan risk, foreign currency risk, and rates of return;
    expectations regarding the implementation of financial
    accounting standards and the impact of such implemented
    standards; assumptions used to test long-lived assets including,
    but not limited to, goodwill, expected operating profit and cash
    flows from the use of assets and expected present value of cash
    flows; projections regarding pension benefit obligations,
    including expected returns on plan assets, and expected increase
    in compensation levels; assumptions used to calculate the fair
    value of options, including expected term and stock price
    volatility; our belief regarding our ability to compete; and our
    assumptions and expectations regarding critical accounting
    policies. All such forward-looking statements are subject to
    risks, uncertainties and other factors that could cause actual
    results to differ materially from future results expressed or
    implied by such forward-looking statements. These risks,
    uncertainties and other factors are discussed under the heading
    Risk Factors in Part I, Item 1A of this
    report. Forward-looking statements speak only as of the date
    they are made and we, and our executive officers and directors,
    have no duty under the federal securities laws and undertake no
    obligation to update any such information as future events
    unfold.
 PART I Item 1. Business  Overview
     Recent
    Events
  1




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##### Table of Contents



Business
    Strategy
   Pursuing Growth Opportunities.
  Investing in Our Existing Operations.
  Maximizing Stockholder Value.
  Competitive
    Strengths
   Industry Leader.
 2




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##### Table of Contents



Locations.
  Broad Product Offerings.
  Integration and Branding Initiatives.
  Commitment to Environment, Health and
    Safety.
  Industry
   Ferrous
    Scrap Industry
    3




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##### Table of Contents



price-to-weight
  Non-Ferrous
    Scrap Industry
      4




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##### Table of Contents



Our
    Recycling Operations
   Ferrous
    Operations
 Ferrous Scrap Purchasing.
  Ferrous Scrap Processing.
  Sorting.
  Shredding.
  Shearing or Cutting.
  Baling.
  Briquetting.
  Breaking of Furnace Iron.
  Ferrous Scrap Sales.
 5




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##### Table of Contents



Non-Ferrous
    Operations
 Non-Ferrous Scrap Purchasing.
    Non-Ferrous Scrap Processing.
  Sorting.
  Aluminum and Stainless Steel.
  Copper.
  Other Non-Ferrous Materials.
  Non-Ferrous Scrap Sales.
 6




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##### Table of Contents



Employees
   Customers
   Fiscal


Fiscal


Fiscal2007


2006


2005Domestic

$
1,394,227


$
1,112,221


$
1,269,655Foreign


834,785



476,905



432,303Net sales

$
2,229,012


$
1,589,126


$
1,701,958       Competition
   mini-mills, and/or
 7




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##### Table of Contents



Seasonality
    and Other Conditions
   Backlog
   Patents
    and Trademarks
   Available
    Information
 www.sec.gov
  www.mtlm.com Form 10-K, Form 10-Q, Form 8-K,
  
    Audit Committee Charter;
    Compensation Committee Charter;
    Nominating/Corporate Governance Committee Charter;
    Corporate Governance Guidelines;
    Business Ethics Policy and Code of Conduct; and
    Code of Ethics for Senior Executive Officers and Financial
    Officers.  Form 10-K Form 10-K
 8




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##### Table of Contents



Item 1A. Risk
    Factors    The
    metals recycling industry is highly cyclical and demand from
    export markets, which is important to us, are
    volatile.
       Prices
    of commodities we own are volatile and markets are
    competitive.
 and/or
  
    general economic conditions;
    labor costs;
    competition;
    financial condition of our major customers;
    access to and costs associated with transportation systems;
    the availability of imports;
    the availability and relative pricing of scrap metal substitutes
    (e.g., pig iron) and coke and iron ore; and
    import duties, ocean freight costs, tariffs and currency
    exchange rates.   9




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##### Table of Contents



The
    profitability of our scrap recycling operations depends, in
    part, on the availability of an adequate source of
    supply.
   Our
    indebtedness contains covenants that restrict our ability to
    engage in certain transactions.
   
    incur additional indebtedness;
    pay dividends or make other equity distributions under certain
    conditions;
    enter into transactions with affiliates;
    enter into certain asset sales;
    engage in certain acquisitions, investments, mergers and
    consolidations;
    prepay certain other indebtedness;
    create liens and encumbrances on our assets; and
    engage in other matters customarily restricted in such
    agreements.      Our
    operations present significant risk of injury or
    death.
     We may
    not be able to negotiate future labor contracts on favorable
    terms.
  10




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##### Table of Contents



The
    loss of any member of our senior management team or a
    significant number of our managers could have a material adverse
    effect on our operations.
 day-to-day
  The
    concentration of our customers and our exposure to credit risk
    could have a material adverse effect on our results of
    operations or financial condition.
   Potential
    credit losses from our significant customers could adversely
    affect our results of operations or financial
    condition.
   The
    loss of export sales could adversely affect our results of
    operations or financial condition.
   A
    significant increase in the use of scrap metals alternatives by
    consumers of processed scrap metals could reduce demand for our
    products.
  11




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##### Table of Contents



Our
    defined benefit pension plans are underfunded.
     Our
    operations are subject to stringent regulations, particularly
    under applicable environmental laws.
   
    the acceptance, storage, treatment, handling and disposal of
    solid, hazardous, and Toxic Substances Control Act
    (TSCA) waste;
    the discharge of materials into air;
    the management and treatment of wastewater and storm water;
    the remediation of soil and groundwater contamination;
    the restoration of natural resource damages; and
    the protection of our employees health and safety.         12




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##### Table of Contents



We do not have environmental impairment
    insurance.
  There are risks associated with certain
    by-products
    of our operations.
    We may have potential Superfund
    liability
 13




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##### Table of Contents



Item 1B. Unresolved
    Staff Comments   Item 2. Properties    
    processing areas;
    warehouses for the storage of certain types of raw and processed
    scrap;
    covered and open storage areas for raw and processed scrap;
    machine or repair shops for the maintenance and repair of
    vehicles and equipment;
    scales for weighing scrap;
    loading and unloading facilities; and
    administrative offices.    Approximate


Leased/Location

Square Feet


OwnedAlabama2020 Vanderbilt Rd., Birmingham


914,760


OwnedArizona3640 S. 35th Ave., Phoenix


1,121,670


Owned1525 W. Miracle Mile, Tucson


513,569


OwnedArkansas1102 E Hillsboro St., El Dorado


137,936


OwnedColorado2690 East Las Vegas St., Colorado
    Springs


522,720


Owned5601 York St., Denver


392,040


OwnedConnecticut500 Flatbush Ave., Hartford


1,481,040


Leased808 Washington Ave., New Haven


177,850


Leased234 Universal Dr., North Haven


1,089,000


Owned 14




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##### Table of Contents



Approximate


Leased/Location

Square Feet


OwnedIllinois6660 S. Nashville Ave., Bedford
    Park


304,223


Owned2305 S. Paulina St., Chicago


392,040


Owned2500 S. Paulina St., Chicago


168,255


Owned2425 S. Wood St., Chicago


103,226


Owned2451 S. Wood St., Chicago


178,596


Owned350 N. Artesian Ave., Chicago


348,480


Owned1509 W. Cortland St., Chicago


162,540


Owned1831 N. Elston Ave., Chicago


35,695


Owned26th and Paulina Streets, Chicago


323,848


Owned9331 S. Ewing Ave., Chicago


293,087


Owned3200 E. 96th St., Chicago


364,969


Owned12701 S. Doty Ave., Chicago


784,080


Leased3151 S. California Ave., Chicago


513,500


Leased320 Railroad St., Joliet


43,760


Owned1000 N. Washington, Kankakee


217,800


Owned564 N. Entrance Ave., Kankakee


206,910


OwnedIndiana3601 Canal St., East Chicago


588,784


Owned425 W. 152nd St., East Chicago


1,263,240


OwnedMichigan3075 Lonyo Ave., Detroit


424,274


Owned3100 Lonyo Ave., Detroit


603,306


Owned6801 Stratton St., Detroit


336,912


OwnedMississippi81 Morris Rd., Elliot


604,837


Owned104 Port Rd., Fulton


609,840


Leased2645 S. Harbor Front Rd.,
    Greenville


532,437


Leased405 8th St., Greenwood


194,289


Leased120-121
    Apache Dr., Jackson


74,052


Owned111 West North St., Kosciusko


235,200


Owned304 West Bankhead St., New Albany


8,000


Leased2245 State Hwy 178, Sherman


2,336,868


Owned2337 South Veterans Blvd., Tupelo


506,922


Owned1510 West Churchill Rd., West Point


1,356,148


OwnedNew JerseyFoot of Hawkins St., Newark


382,846


Owned252-254
    Doremus Ave., Newark


384,000


OwnedPort of Newark, Newark


839,414


Leased303 Doremus Ave., Newark


270,100


Leased72-78
    Roanoke Ave., Newark


358,684


Owned 15




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##### Table of Contents



Approximate


Leased/Location

Square Feet


OwnedNew York1340 East Bay Ave., Bronx


120,000


OwnedOhio4431 W. 130th St., Cleveland


2,178,000


LeasedRte. 281 East, Defiance


3,267,000


Owned2535 Hill Ave., Toledo


122,000


OwnedPennsylvania2045 Lincoln Blvd., Elizabeth


423,054


Owned77 E. Railroad St., Monongahela


174,240


OwnedTennessee540 Weakley St., Memphis


1,406,073


OwnedTexas90 Hirsch Rd., Houston


378,972


Owned15-21
    Japhet St., Houston


1,960,200


Owned6747 Avenue W, Houston


223,794


Owned1102 Navigation Blvd., Freeport


352,400


LeasedUtah3260 W. 500 South St., Salt Lake
    City


435,600


Owned    Item 3. Legal
    Proceedings   Item 4. Submission
    of Matters to a Vote of Security Holders   16




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##### Table of Contents



PART II Item 5. Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities    Fiscal 2007


Fiscal 2006High


Low


High


LowFirst Quarter

$
34.91


$
27.93


$
25.96


$
16.88Second Quarter

$
31.87


$
24.12


$
27.62


$
19.64Third Quarter

$
38.75


$
27.39


$
25.86


$
22.93Fourth Quarter

$
46.20


$
36.90


$
32.25


$
23.48   Holders
   Dividends
   Sales of
    Unregistered Common Stock
    17




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##### Table of Contents



Issuer
    Purchases of Equity Securities
   Total Number


Maximum Numberof Shares


of Shares thatTotal





Purchased as


May Yet beNumber of


Average


Part of Publicly


PurchasedShares


Price Paid


Announced


Under thePeriod

Purchased(1)


per Share


Programs(2)


ProgramsJanuary 1, 2007 
    January 31, 2007


0


$
0.00



0



1,936,600February 1, 2007 
    February 28, 2007


388,069



39.38



372,100



1,564,500March 1, 2007 
    March 31, 2007


364,500



39.54



364,500



1,200,000Total


752,569


$
39.46



736,600     (1)
    
    In addition to shares purchased
    under our share repurchase program, included in this column are
    shares of common stock acquired from our employees in connection
    with the settlement of income tax withholding obligations
    arising from the vesting of restricted stock. In the three
    months ended March 31, 2007, 15,969 shares were
    tendered at an average price of $41.22 per share.(2)
    
    In September 2006, we announced
    that our Board of Directors authorized us to repurchase up to
    2.7 million shares of our common stock. This repurchase
    program does not have an expiration date, but may be terminated
    by the Board of Directors at any time. Our Credit Agreement
    limits stock repurchases to $100 million during the term of
    the Credit Agreement.  Stock
    Performance Graph
   
  3/31/02


3/31/03


3/31/04


3/31/05


3/31/06


3/31/07Metal Management, Inc.


100.00



534.48



2,529.66



3,561.82



4,446.34



6,551.73NASDAQ Composite


100.00



71.63



109.32



109.98



131.49



138.22Russell 2000


100.00



73.04



119.66



126.13



158.73



168.11S&P Steel


100.00



56.35



123.08



197.05



341.42



503.79  18




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##### Table of Contents



Item 6. Selected
    Financial Data    Years Ended March 31,(in thousands, except per share
    data)

2007


2006


2005


2004


2003Statement of Operations
    Data:Net sales

$
2,229,012


$
1,589,126


$
1,701,958


$
1,083,413


$
770,009Cost of sales (excluding
    depreciation)


1,952,457



1,400,285



1,460,614



923,000



664,868General and administrative expense


91,309



81,576



79,816



60,963



50,544Depreciation and amortization
    expense


27,991



19,192



18,634



18,193



17,533Severance and other charges
    (income)


857



1,306



-



6,198



(695
)Operating income


156,398



86,767



142,894



75,059



37,759Interest expense


(1,369
)


(1,578
)


(3,298
)


(6,925
)


(11,129
)Net income(1)

$
116,405


$
60,264


$
92,250


$
51,389


$
20,501Basic earnings per share(1)

$
4.54


$
2.45


$
3.96


$
2.42


$
1.01Diluted earnings per share(1)

$
4.43


$
2.35


$
3.74


$
2.27


$
0.99Cash dividends paid per share

$
0.30


$
0.30


$
0.15


$
0.00


$
0.00Weighted average shares outstanding


25,637



24,579



23,279



21,243



20,323Weighted average diluted shares
    outstanding


26,251



25,670



24,659



22,653



20,741Sales Volumes:Ferrous (tons)


4,820



4,447



4,668



4,403



4,137Non-ferrous (lbs.)


513,737



486,528



499,276



424,494



442,234Brokerage  ferrous
    (tons)


482



263



219



304



454Brokerage  non-ferrous
    (lbs.)


5,207



6,188



3,210



4,506



10,688Balance Sheet Data:Cash and short-term investments

$
9,384


$
73,752


$
52,821


$
1,155


$
869Working capital


220,182



190,946



153,198



80,740



(9,691
)Total assets


695,523



555,317



478,782



406,416



248,651Long-term debt (including current
    maturities)


206



3,248



2,531



44,297



89,610Stockholders equity


464,830



383,889



312,616



202,839



78,282     (1)
    
    The year ended March 31, 2007
    includes a $16.3 million ($0.61 per share) after-tax gain
    on the sale of Southern. 19




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##### Table of Contents



Item 7. Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  The purpose of the following discussion is to facilitate the
    understanding and assessment of significant changes and trends
    related to our results of operations and financial condition.
    This discussion should be read in conjunction with the
    consolidated financial statements and notes thereto in
    Part IV, Item 15 of this report.
  Overview
       Recent
    Events
   mega-shredder.
         20




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##### Table of Contents



Results
    of Operations
          21




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##### Table of Contents



Consolidated
    Statement of Operations Selected Items ($ in
    thousands)
  Years Ended March 31,2007


%


2006


%


2005


%Sales by commodity:Ferrous metals

$
1,333,329



59.8
%

$
1,019,856



64.2
%

$
1,218,079



71.6
%Non-ferrous metals


746,086



33.5



484,748



30.5



406,864



23.9Brokerage  ferrous


121,985



5.5



55,953



3.5



54,080



3.2Brokerage  non-ferrous


8,792



0.4



6,507



0.4



3,350



0.2Other


18,820



0.8



22,062



1.4



19,585



1.1Net sales


2,229,012



100.0
%


1,589,126



100.0
%


1,701,958



100.0
%Cost of sales (excluding
    depreciation)


1,952,457



87.6



1,400,285



88.1



1,460,614



85.8General and administrative expense


91,309



4.1



81,576



5.1



79,816



4.7Depreciation and amortization


27,991



1.2



19,192



1.2



18,634



1.1Severance and other charges


857



0.0



1,306



0.1



0



0.0Income from joint ventures


3,087



0.1



9,716



0.6



14,200



0.8Interest expense


(1,369
)


0.1



(1,578
)


0.1



(3,298
)


0.2Interest and other income, net


2,841



0.1



1,891



0.1



257



0.0Loss on debt extinguishment


0



0.0



0



0.0



(1,653
)


0.1Gain on sale of joint venture
    interest


26,362



1.2



0



0.0



0



0.0Provision for income taxes


70,914



3.2



36,532



2.3



60,150



3.5Net income

$
116,405



5.2
%

$
60,264



3.8
%

$
92,250



5.4
% Sales volume by commodity(in thousands):

2007





2006





2005Ferrous metals (tons)


4,820







4,447







4,668Non-ferrous metals (lbs.)


513,737







486,528







499,276Brokerage  ferrous (tons)


482







263







219Brokerage  non-ferrous
    (lbs.)


5,207







6,188







3,210   Fiscal
    2007 compared to Fiscal 2006
  Net
    Sales
  22




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##### Table of Contents



Ferrous
    Sales
     Average Price for #1 HMS
    (per ton)

Fiscal 2007


Fiscal 2006First Quarter

$
248


$
174Second Quarter

$
219


$
189Third Quarter

$
201


$
231Fourth Quarter

$
261


$
232   Non-ferrous
    Sales
       Brokerage
    Ferrous Sales
    23




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##### Table of Contents



Other
    Sales
   Cost
    of Sales (excluding depreciation)
     General
    and Administrative Expense
     Depreciation
    and Amortization
     Severance
    and Other Charges
   Income
    from Joint Ventures
    24




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##### Table of Contents



Interest
    Expense
   Gain
    on Sale of Joint Venture Interest
   Interest
    and Other Income
   Income
    Taxes
     Net
    Income
   Fiscal
    2006 compared to Fiscal 2005
  Net
    Sales
   Ferrous
    Sales
  25




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##### Table of Contents



Average Price for #1 HMS
    (per ton)

Fiscal 2006


Fiscal 2005First Quarter

$
174


$
195Second Quarter

$
189


$
230Third Quarter

$
231


$
236Fourth Quarter

$
232


$
194     Non-ferrous
    Sales
       Brokerage
    Sales
     Other
    Sales
  26




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##### Table of Contents



Cost
    of Sales (excluding depreciation)
     General
    and Administrative Expense
         Depreciation
    and Amortization
   Severance
    and Other Charges
   Income
    from Joint Ventures
   start-up
 27




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##### Table of Contents



Interest
    Expense
   Interest
    and Other Income
   Loss
    on Debt Extinguishment
 write-off
  Income
    Taxes
     Net
    Income
   Liquidity
    and Capital Resources
  28




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##### Table of Contents



Cash
    Flows
   Years ended March 31,2007


2006


2005Net cash provided by operating
    activities

$
49,878


$
72,560


$
121,965Net cash used in investing
    activities

$
(30,483
)

$
(87,999
)

$
(29,435
)Net cash provided by (used in)
    financing activities

$
(47,758
)

$
335


$
(40,864
)   Operating
    Activities
     Investing
    Activities
   Financing
    Activities
   Indebtedness
  29




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##### Table of Contents



Off-Balance
    Sheet Arrangements, Contractual Obligations and Other
    Commitments
 Off-Balance
    Sheet Arrangements
   Contractual
    Obligations
     Less than


One to


Three toTotal


One Year


Three Years


Five Years


ThereafterLong-term debt and capital leases

$
240


$
60


$
120


$
60


$
0Operating leases


60,745



14,524



21,401



10,086



14,734Pension funding obligations


854



854



0



0



0Other contractual obligations


861



711



60



60



30Total contractual cash obligations

$
62,700


$
16,149


$
21,581


$
10,206


$
14,764   Other
    Commitments
  30




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##### Table of Contents



Critical
    Accounting Policies
     Revenue
    Recognition
     Accounts
    Receivable and Allowance for Uncollectible Accounts
    Receivable
   Inventory
 Risk Factors  Prices of commodities
    we own are volatile and markets are competitive
  Self-insured
    Accruals
  31




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##### Table of Contents



Goodwill
   Long-lived
    Assets
   Stock-based
    Compensation
   
    the expected term of award granted;
    the expected volatility of our stock price;
    the risk-free interest rate;
    the expected dividend yield; and
    an estimate for expected forfeitures.    Pension
    Plans
  32




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##### Table of Contents



Income
    Taxes
     Contingencies
     Recent
    Accounting Pronouncements
 .
 33




---



##### Table of Contents



Item 7A. Quantitative
    and Qualitative Disclosures About Market Risk    Commodity
    Price Risk
 Risk Factors  The metals recycling industry
    is highly cyclical and demand from export markets, which is
    import to us, are volatile
  Interest
    Rate Risk
   Foreign
    Currency Risk
  Item 8. Financial
    Statements and Supplementary Data   34




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##### Table of Contents



Item 9. Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure   Item 9A. Controls
    and Procedures  Evaluation
    of Disclosure Controls and Procedures.
 Rules 13a-15(e)
    Managements
    Annual Report on Internal Control over Financial
    Reporting.
 Rule 13a-15(f)
        CEO and
    CFO Certifications.
  35




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##### Table of Contents



Limitations
    on the Effectiveness of Controls.
   Changes
    in Internal Control over Financial Reporting.
  Item 9B. Other
    Information   36




---



##### Table of Contents



PART III Item 10. Directors,
    Executive Officers and Corporate Governance   Item 11. Executive
    Compensation   Item 12. Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters   Item 13. Certain
    Relationships and Related Transactions, and Director
    Independence   Item 14. Principal
    Accountant Fees and Services   37




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##### Table of Contents



PART IV Item 15. Exhibits
    and Financial Statement Schedules      PageReport of
    Independent Registered Public Accounting Firm


F-1Consolidated
    Statements of Operations for the years ended March 31,
    2007, 2006 and 2005


F-3Consolidated
    Balance Sheets at March 31, 2007 and 2006


F-4Consolidated
    Statements of Cash Flows for the years ended March 31,
    2007, 2006 and 2005


F-5Consolidated
    Statements of Stockholders Equity for the years ended
    March 31, 2007, 2006 and 2005


F-6Notes to
    Consolidated Financial Statements


F-7     Schedule II 
    Valuation and Qualifying Accounts for the years ended
    March 31, 2007, 2006 and 2005


F-33Schedules not listed above have
    been omitted because they are not required or they are
    inapplicable.     Number
    and Description of Exhibit
  3
.1

Second Amended and Restated
    Certificate of Incorporation of the Company, as filed with the
    Secretary of State of the State of Delaware on June 29,
    2001 (incorporated by reference to Exhibit 3.1 of the
    Companys Annual Report on
    Form 10-K
    for the year ended March 31, 2001).3
.2

Amended and Restated By-Laws of
    the Company adopted as of April 29, 2003 (incorporated by
    reference to Exhibit 3.2 of the Companys Annual
    Report on
    Form 10-K
    for the year ended March 31, 2003).4
.1

Form of Series C Warrant
    Agreement (incorporated by reference to Exhibit 4.4 of the
    Companys Annual Report on
    Form 10-K
    for the year ended March 31, 2001).4
.2

Amended and Restated Credit
    Agreement, dated as of May 9, 2006, among Metal Management,
    Inc. and certain subsidiaries of Metal Management, Inc.
    specified therein, as borrowers, the lenders party thereto and
    LaSalle Bank National Association, in its capacity as agent for
    the lenders (incorporated by reference to Exhibit 4.1 of
    the Companys Current Report on
    Form 8-K
    dated May 10, 2006).4
.3

First Amendment to the Amended and
    Restated Credit Agreement, dated as of October 13, 2006,
    among Metal Management, Inc. and certain subsidiaries of Metal
    Management, Inc. specified therein, as borrowers, the lenders
    party thereto and LaSalle Bank National Association, in its
    capacity as agent for the lenders (incorporated by reference to
    Exhibit 4.1 of the Companys Current Report on
    Form 8-K
    dated October 13, 2006). 38




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##### Table of Contents



4
.4

Second Amendment to the Amended
    and Restated Credit Agreement, dated as of January 12,
    2007, among Metal Management, Inc. and certain subsidiaries of
    Metal Management, Inc. specified therein, as borrowers, the
    lenders party thereto and LaSalle Bank National Association, in
    its capacity as agent for the lenders (incorporated by reference
    to Exhibit 4.1 of the Companys Current Report on
    Form 8-K
    dated January 12, 2007).4
.5

Third Amendment to the Amended and
    Restated Credit Agreement, dated as of May 18, 2007, among
    Metal Management, Inc. and certain subsidiaries of Metal
    Management, Inc. specified therein, as borrowers, the lenders
    party thereto and LaSalle Bank National Association, in its
    capacity as agent for the lenders.10
.1

Metal Management, Inc. Management
    Equity Incentive Plan (incorporated by reference to
    Exhibit 4.2 of the Companys Annual Report on
    Form 10-K
    for the year ended March 31, 2001). *10
.2

Metal Management, Inc. Amended and
    Restated 2002 Incentive Stock Plan. *10
.3

Employment Agreement, dated
    July 1, 2001, as amended, between Robert C. Larry and
    the Company (incorporated by reference to Exhibit 10.1 of
    the Companys Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2002). *10
.4

Employment Agreement, dated
    January 16, 2004 between Daniel W. Dienst and the
    Company (incorporated by reference to Exhibit 10.8 of the
    Companys Annual Report on
    Form 10-K
    for the year ended March 31, 2004). *10
.5

Form of Outside Director
    Indemnification Agreement (incorporated by reference to
    Exhibit 10.8 of the Companys Annual Report on
    Form 10-K
    for the year ended March 31, 2001). *10
.6

Employment Agreement, dated
    January 16, 2004 between Harold J. Rouster and the
    Company. *10
.7

Employment and Non-Compete
    Agreement, dated May 20, 2005 between Larry Snyder and the
    Company. *10
.8

Terms of the Metal Management,
    Inc. Fiscal 2008 RONA Incentive Compensation Plan Applicable to
    Executive Officers (incorporated by reference to
    Exhibit 10.1 of the Companys Current Report on
    Form 8-K
    dated April 27, 2007). *21
.1

Subsidiaries of the Company.23
.1

Consent of Independent Registered
    Public Accounting Firm.23
.2

Consent of Independent Registered
    Public Accounting Firm.31
.1

Certification of Daniel W.
    Dienst pursuant to
    Section 240.13a-14
    of the Securities Exchange Act of 1934, as amended, as adopted
    pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31
.2

Certification of Robert C.
    Larry pursuant to
    Section 240.13a-14
    of the Securities Exchange Act of 1934, as amended, as adopted
    pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32
.1

Certification of Daniel W.
    Dienst & Robert C. Larry pursuant to
    18 U.S.C. Section 1350, as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.99
.1

Audited Financial Statements for
    the Metal Management, Inc. Employee Stock Purchase Plan.     *
    Management contracts and compensatory plans and arrangements
    required to be filed as exhibits pursuant to Item 15(b) of
    this report. 39




---



##### Table of Contents



SIGNATURES    METAL MANAGEMENT, INC.
  By:
    /s/  Daniel
    W. Dienst         SIGNATURE

TITLE/s/  Norman
    R. BobinsNorman
    R. Bobins

Director/s/  Daniel
    W. DienstDaniel
    W. Dienst

Chairman of the Board, 
    Chief Executive Officer 
    and President 
    (Principal Executive Officer)/s/  John
    T. DiLacquaJohn
    T. DiLacqua

Director/s/  Robert
    C. LarryRobert
    C. Larry

Executive Vice President, Finance,
    
    Chief Financial Officer, 
    Secretary and Treasurer 
    (Principal Financial Officer)/s/  Robert
    LewonRobert
    Lewon

Director/s/  Gerald
    E. MorrisGerald
    E. Morris

Director/s/  Amit
    N. PatelAmit
    N. Patel

Vice President, Finance and
    Controller 
    (Principal Accounting Officer)  40




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##### Table of Contents



Report of
    Independent Registered Public Accounting Firm  To the Board
    of Directors and
    Stockholders of Metal Management, Inc:
    Consolidated financial statements and financial statement
    schedule
    Internal control over financial reporting
  Internal Control  Integrated
    Framework Internal Control  Integrated
    Framework
 F-1




---



##### Table of Contents



F-2




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##### Table of Contents



METAL
    MANAGEMENT, INC.
    CONSOLIDATED STATEMENTS OF OPERATIONS(in
    thousands, except per share amounts) Years Ended March 31,2007


2006


2005Net sales

$
2,229,012


$
1,589,126


$
1,701,958Operating expenses:Cost of sales (excluding
    depreciation)


1,952,457



1,400,285



1,460,614General and administrative expense


91,309



81,576



79,816Depreciation and amortization
    expense


27,991



19,192



18,634Severance and other charges
    (Note 3)


857



1,306



0Operating income


156,398



86,767



142,894Income from joint ventures
    (Note 2)


3,087



9,716



14,200Interest expense


(1,369
)


(1,578
)


(3,298
)Interest and other income, net


2,841



1,891



257Gain on sale of joint venture
    interest


26,362



0



0Loss on debt extinguishment


0



0



(1,653
)Income before income taxes


187,319



96,796



152,400Provision for income taxes
    (Note 9)


70,914



36,532



60,150Net income

$
116,405


$
60,264


$
92,250Earnings per share:Basic

$
4.54


$
2.45


$
3.96Diluted

$
4.43


$
2.35


$
3.74Cash dividends declared per
    share

$
0.30


$
0.30


$
0.15Weighted average common shares
    outstanding:Basic


25,637



24,579



23,279Diluted


26,251



25,670



24,659    F-3




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##### Table of Contents



METAL
    MANAGEMENT, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except par and stated value amounts) March 31,ASSETS

2007


2006Current assets:Cash and cash equivalents

$
9,354


$
37,717Short-term investments


30



36,035Accounts receivable, net


227,397



168,025Inventories (Note 5)


191,301



100,683Deferred income taxes (Note 9)


5,544



4,842Prepaid expenses and other assets


12,102



7,848Total current assets


445,728



355,150Property and equipment, net
    (Note 5)


187,124



134,674Goodwill (Note 7)


14,766



2,078Intangible assets, net
    (Note 7)


13,267



5,376Deferred income taxes, net
    (Note 9)


10,437



10,306Investments in joint ventures
    (Note 2)


20,760



45,487Other assets


3,441



2,246Total assets

$
695,523


$
555,317LIABILITIES AND
    STOCKHOLDERS EQUITYCurrent liabilities:Current portion of long-term debt
    (Note 8)

$
46


$
1,164Accounts payable


177,747



119,477Income taxes payable


12,271



6,526Other accrued liabilities
    (Note 5)


35,482



37,037Total current
    liabilities


225,546



164,204Long-term debt, less current
    portion (Note 8)


160



2,084Other liabilities


4,987



5,140Total long-term
    liabilities


5,147



7,224Commitments and contingencies
    (Note 11)Stockholders equity
    (Note 12):Preferred stock, $.01 par value;
    $1,000 stated value; 2,000 shares authorized; none issued
    and outstanding at March 31, 2007 and 2006


0



0Common stock, $.01 par value,
    50,000 shares authorized; 27,129 shares
    issued and 25,613 shares outstanding at March 31,
    2007; and 25,987 shares issued and outstanding at
    March 31, 2006


271



260Series A Warrants


0



179Additional paid-in capital


201,577



183,529Deferred compensation


0



(5,045
)Accumulated other comprehensive
    loss


(2,008
)


(2,046
)Retained earnings


315,517



207,012Treasury stock, at cost
    (1,516 shares at March 31, 2007)


(50,527
)


0Total stockholders
    equity


464,830



383,889Total liabilities and
    stockholders equity

$
695,523


$
555,317    F-4




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##### Table of Contents



METAL
    MANAGEMENT, INC.
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (in thousands)
  Years Ended March 31,2007


2006


2005Cash flows from operating
    activities:Net income

$
116,405


$
60,264


$
92,250Adjustments to reconcile net income
    to cash flows from operating
    activities:Depreciation and amortization


27,991



19,192



18,634Deferred income taxes


(458
)


2,552



29,097Income from joint ventures


(3,087
)


(9,467
)


(14,200
)Gain on sale of joint venture
    interest


(26,362
)


0



0Distribution of earnings from joint
    ventures


9,098



4,360



0Stock-based compensation expense


6,586



7,230



4,823Non-cash severance and other
    charges (income)


(264
)


1,306



0(Gain) loss on sale of property and
    equipment


(734
)


93



747Tax benefit of stock options and
    warrants exercised


0



1,727



9,965Excess tax benefit from stock-based
    awards


(1,912
)


0



0Loss on debt extinguishment


0



0



1,653Other


2,178



1,672



2,610Changes in assets and liabilities,
    net of acquisitions:Accounts receivable


(55,636
)


(4,071
)


(8,054
)Inventories


(89,831
)


956



(16,217
)Other assets


(3,690
)


(3,093
)


(1,028
)Accounts payable


57,905



(11,221
)


(7,415
)Income taxes payable


9,079



1,160



922Other liabilities


2,610



(100
)


8,178Net cash provided by operating
    activities


49,878



72,560



121,965Cash flows from investing
    activities:Purchases of property and equipment


(69,294
)


(28,219
)


(15,574
)Proceeds from sale of property and
    equipment


4,084



1,124



1,329Purchases of short-term investments


(99,601
)


(159,635
)


0Proceeds from sale of short-term
    investments


135,606



123,600



0Distributions of capital from joint
    ventures


1,300



1,750



0Proceeds from sale of joint venture
    interest


46,005



0



0Investments in joint ventures


(2,500
)


(2,348
)


(14,990
)Acquisitions, net of cash acquired


(46,083
)


(24,271
)


(200
)Net cash used in investing
    activities


(30,483
)


(87,999
)


(29,435
)Cash flows from financing
    activities:Issuances of long-term debt


47,548



433,077



1,676,707Repayments of long-term debt


(50,609
)


(433,357
)


(1,718,473
)Proceeds from exercise of stock
    options and warrants


11,993



8,174



6,016Proceeds from issuance of stock
    under employee stock purchase plan


433



83



0Repurchases of common stock


(50,527
)


0



0Excess tax benefits from
    stock-based awards


1,912



0



0Cash dividends paid to stockholders


(7,900
)


(7,642
)


(3,667
)Fees paid to issue long term debt


(608
)


0



(1,447
)Net cash provided by (used in)
    financing activities


(47,758
)


335



(40,864
)Net increase (decrease) in cash and
    cash equivalents


(28,363
)


(15,104
)


51,666Cash and cash equivalents at
    beginning of period


37,717



52,821



1,155Cash and cash equivalents at end of
    period

$
9,354


$
37,717


$
52,821Supplemental disclosures of cash
    flow information:Cash interest paid

$
847


$
936


$
2,654Cash income taxes paid, net of
    refunds

$
62,294


$
31,038


$
18,402    F-5




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##### Table of Contents



METAL
    MANAGEMENT, INC.
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS
    EQUITY
 (in thousands)
 AccumulatedAdditional





OtherCommon Stock


Treasury Stock


Series A


Paid-in


Deferred


Comprehensive


RetainedShares


Amount


Shares


Amount


Warrants


Capital


Compensation


Loss


Earnings


TotalBalance at March 31,
    2004


23,355


$
234



0


$
0


$
427


$
146,969


$
(8,295
)

$
(2,303
)

$
65,807


$
202,839Net income


0



0



0



0



0



0



0



0



92,250



92,250Adjustment to pension liability,
    net of taxes






























390







390Total comprehensive income






































92,640Issuance of restricted stock


182



2



0



0



0



4,680



(4,682
)


0



0



0Exercise of stock options and
    warrants and related tax benefits


1,341



13



0



0



(32
)


16,000



0



0



0



15,981Cash dividends paid to stockholders


0



0



0



0



0



0



0



0



(3,667
)


(3,667
)Stock-based compensation expense


0



0



0



0



0



0



4,823



0



0



4,823Balance at March 31,
    2005


24,878



249



0



0



395



167,649



(8,154
)


(1,913
)


154,390



312,616Net income


0



0



0



0



0



0



0



0



60,264



60,264Adjustment to pension liability,
    net taxes






























(133
)






(133
)Total comprehensive income






































60,131Issuance of restricted stock, net
    of cancellations


201



2



0



0



0



4,119



(4,121
)


0



0



0Issuance of stock under employee
    stock purchase plan


4



0



0



0



0



83



0



0



0



83Exercise of stock options and
    warrants and related tax benefits


904



9



0



0



(216
)


10,108



0



0



0



9,901Cash dividends paid to stockholders


0



0



0



0



0



0



0



0



(7,642
)


(7,642
)Stock-based compensation expense


0



0



0



0



0



0



7,230



0



0



7,230Other


0



0



0



0



0



1,570



0



0



0



1,570Balance at March 31,
    2006


25,987



260



0



0



179



183,529



(5,045
)


(2,046
)


207,012



383,889Net income


0



0



0



0



0



0



0



0



116,405



116,405Adjustment to pension liability,
    net of taxes






























265







265Total comprehensive income






































116,670Adjustment to apply
    SFAS No. 158, net of taxes


0



0



0



0



0



0



0



(227
)


0



(227
)Reclassification of deferred
    stock-based compensation


0



0



0



0



0



(5,045
)


5,045



0



0



0Issuance of restricted stock, net
    of cancellations


233



2



0



0



0



0



0



0



0



2Issuance of stock under employee
    stock purchase plan


19







0



0



0



433



0



0



0



433Exercise of stock options and
    warrants and related tax benefits


890



9



0



0



(157
)


15,475



0



0



0



15,327Repurchase of common stock


0



0



(1,516
)


(50,527
)


0



0



0



0



0



(50,527
)Cash dividends paid to stockholders


0



0



0



0



0



0



0



0



(7,900
)


(7,900
)Stock-based compensation expense


0



0



0



0



0



6,765



0



0



0



6,765Other


0



0



0



0



(22
)


420



0



0



0



398Balance at March 31,
    2007


27,129


$
271



(1,516
)

$
(50,527
)

$
0


$
201,577


$
0


$
(2,008
)

$
315,517


$
464,830     F-6




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##### Table of Contents



METAL
    MANAGEMENT, INC.NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS
  NOTE 1 
    Significant Accounting Policies
  Business
   Basis of
    Presentation
     Uses of
    Estimates
   Reclassifications
   Revenue
    Recognition
    F-7




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##### Table of Contents



METAL
    MANAGEMENT, INC.
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Years Ended March 31,2007


2006


2005Ferrous metals

$
1,333,329


$
1,019,856


$
1,218,079Non-ferrous metals


746,086



484,748



406,864Brokerage  ferrous


121,985



55,953



54,080Brokerage  non-ferrous


8,792



6,507



3,350Other


18,820



22,062



19,585Net sales

$
2,229,012


$
1,589,126


$
1,701,958   Shipping
    and Handling Revenues and Costs
   Stock-Based
    Compensation
 paid-in paid-in
    Comprehensive
    Income
 gains/losses
 F-8




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##### Table of Contents



METAL
    MANAGEMENT, INC.
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Cash and
    Cash Equivalents
   Short-term
    Investments
 available-for-sale.
  Accounts
    Receivable
   Property
    and Equipment
   Derivatives
   Goodwill
  F-9




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##### Table of Contents



METAL
    MANAGEMENT, INC.
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Impairment
    of Long-Lived Assets
   Deferred
    Financing Costs
   Income
    Taxes
     Concentration
    of Credit Risk
    F-10




---



##### Table of Contents



METAL
    MANAGEMENT, INC.
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Fair
    Value of Financial Instruments
   Self-insured
    Accruals
   Recently
    Issued Accounting Pronouncements
 .
       F-11




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##### Table of Contents



METAL
    MANAGEMENT, INC.
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  NOTE 2 
    Equity Method Investments
        Years Ended March 31,2007


2006


2005Net sales

$
115,685


$
286,657


$
290,856Operating income


7,919



24,743



48,903Pre-tax income


7,334



30,492



48,787   March 31,2007


2006Current assets

$
21,181


$
90,609Noncurrent assets


33,285



51,973Current liabilities


11,198



20,745Noncurrent liabilities


1,597



3,376   NOTE 3  Severance
    and Other Charges
    Severance and


AssetOther
    Charges


Impairment


TotalReserve balances at April 1,
    2004

$
1,571


$
0


$
1,571Cash payments


(317
)


0



(317
)Reserve balances at March 31,
    2005


1,254



0



1,254Charge to expense


0



1,306



1,306Non-cash application


0



(1,306
)


(1,306
)Reserve balances at March 31,
    2006


1,254



0



1,254Charge to (income) expense


1,300



(443
)


857Cash payments


(2,314
)


0



(2,314
)Non-cash application


(179
)


443



264Reserve balances at March 31,
    2007

$
61


$
0


$
61   Severance
    and Other Charges
  F-12




---



##### Table of Contents



METAL
    MANAGEMENT, INC.
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Asset
    Impairment Charges
      NOTE 4 
    Earnings Per Share
    Years Ended March 31,2007


2006


2005Numerator:Net income

$
116,405


$
60,264


$
92,250Denominator:Weighted average common
    shares outstanding, basic


25,637



24,579



23,279Incremental common shares
    attributable to dilutive
    stock options and warrants


258



757



1,202Incremental common shares
    attributable to unvested restricted stock


356



334



178Weighted average common
    shares outstanding, diluted


26,251



25,670



24,659Basic income per share

$
4.54


$
2.45


$
3.96Diluted income per share

$
4.43


$
2.35


$
3.74    F-13




---



##### Table of Contents



METAL
    MANAGEMENT, INC.
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    NOTE 5 
    Balance Sheet Information
  Inventories
   2007


2006Ferrous metals

$
108,553


$
43,574Non-ferrous metals


82,538



56,841Other


210



268$
191,301


$
100,683   Property
    and Equipment
   2007


2006Land and improvements

$
52,646


$
34,069Buildings and improvements


29,679



26,524Operating machinery and equipment


151,296



126,322Automobiles and trucks


15,720



11,691Furniture, office equipment and
    software


6,408



3,232Construction in progress


27,154



7,469282,903



209,307Less  accumulated
    depreciation


(95,779
)


(74,633
)$
187,124


$
134,674     Other
    Accrued Liabilities
   2007


2006Accrued employee compensation and
    benefits

$
25,771


$
22,137Accrued insurance


5,186



5,118Accrued equipment purchase


0



4,000Other


4,525



5,782$
35,482


$
37,037   NOTE 6 
    Acquisitions
   F-14




---



##### Table of Contents



METAL
    MANAGEMENT, INC.
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          Years Ended March 31,2007


2006Cash acquired

$
45


$
178Other tangible assets acquired


22,850



29,953Amortizable intangible assets


9,565



4,666Goodwill


12,349



597Total assets acquired


44,809



35,394Liabilities assumed


(444
)


(9,581
)Total

$
44,365


$
25,813     NOTE 7 
    Goodwill and Intangible Assets
    Balance at April 1, 2005

$
1,280Acquisitions (see Note 6)


597Purchase accounting adjustments


201Balance at March 31, 2006


2,078Acquisitions (see Note 6)


12,349Purchase accounting adjustments


339Balance at March 31, 2007

$
14,766  F-15




---



##### Table of Contents



METAL
    MANAGEMENT, INC.
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2007


2006Gross





GrossCarrying


Accumulated


Carrying


AccumulatedAmount


Amortization


Amount


AmortizationAmortizable:Customer lists

$
10,350


$
(804
)

$
4,900


$
(313
)Non-compete agreements


4,824



(1,103
)


1,025



(240
)15,174



(1,907
)


5,925



(553
)Non-amortizable:Pension intangible


0



0



4



0$
15,174


$
(1,907
)

$
5,929


$
(553
)     Fiscal year ending
    March 31,2008

$
2,1392009


1,8802010


1,7782011


1,6892012


1,140   NOTE 8 
    Long-term Debt
    2007


2006Mortgage loan (interest rate of
    5.50%)

$
0


$
1,920Other debt, due 2010


206



1,328206



3,248Less  current portion
    of long-term debt


(46
)


(1,164
)$
160


$
2,084     Fiscal year ending
    March 31,2008

$
462009


492010


542011


572012


0Total

$
206   Credit
    Agreement
  F-16




---



##### Table of Contents



METAL
    MANAGEMENT, INC.
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Debt
    Extinguishment
   NOTE 9 
    Income Taxes
    Years Ended March 31,2007


2006


2005Federal:Current

$
62,273


$
29,748


$
23,419Deferred


(1,342
)


1,693



27,31260,931



31,441



50,731State:Current

$
9,099


$
4,232


$
7,477Deferred


884



859



1,9429,983



5,091



9,419Total tax provision

$
70,914


$
36,532


$
60,150     Years Ended March 31,2007


2006


2005Statutory federal income tax rate


35.0
%


35.0
%


35.0
%State income taxes, net of federal
    benefit


3.7



3.6



4.0Non-deductible employee
    compensation


0.6



1.7



1.4Domestic manufacturing deduction


(0.6
)


(0.5
)


-Export sales benefit


(0.7
)


(2.0
)


(1.1
)Other


(0.1
)


(0.1
)


0.2Effective income tax rate


37.9
%


37.7
%


39.5
%    F-17




---



##### Table of Contents



METAL
    MANAGEMENT, INC.
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        2007


2006Deferred tax assets:State net operating loss
    carryforward and tax credits

$
1,469


$
2,610Goodwill and other intangibles


21,668



25,108Employee benefit accruals


3,680



3,455Other


4,739



3,48031,556



34,653Deferred tax liabilities:Depreciation


(14,127
)


(16,698
)Joint ventures


(193
)


(1,149
)Other


(100
)


0(14,420
)


(17,847
)Net deferred tax asset before
    valuation allowance


17,136



16,806Valuation allowance


(1,155
)


(1,658
)Net deferred tax asset

$
15,981


$
15,148     NOTE 10 
    Employee Benefit Plans
  Pension
    Plans
    F-18




---



##### Table of Contents



METAL
    MANAGEMENT, INC.
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Prior to the


Effect of the


After theAdoption of


Adoption of


Adoption ofSFAS


SFAS


SFASNo. 158


No. 158


No. 158Intangible assets, net

$
13,271


$
(4
)

$
13,267Deferred income taxes, net
    (long-term)


10,292



145



10,437Other liabilities (long-term)


(4,619
)


(368
)


(4,987
)Accumulated other comprehensive
    loss, 
    net of tax


1,781



227



2,008       2007


2006Change in benefit
    obligation:Benefit obligation at beginning of
    year

$
13,283


$
12,479Service cost


175



166Interest cost


704



699Benefits paid


(664
)


(473
)Plan amendments


36



0Actuarial (gain) loss


(76
)


412Benefit obligation at end of year


13,458



13,283Change in fair value of plan
    assets:Fair value of plan assets at
    beginning of year

$
9,608


$
8,597Actual gain on plan assets


1,040



710Contributions


1,030



774Benefits paid


(664
)


(473
)Fair value of plan assets at end
    of year


11,014



9,608Funded status


(2,444
)


(3,675
)Unrecognized prior service cost


-



311Unrecognized net actuarial loss


-



3,695Contributions made after
    measurement date


212



0Net amount recognized

$
(2,232
)

$
331     2007


2006Intangible asset

$
0


$
4Accrued benefit liability


(2,232
)


(3,028
)Accumulated other comprehensive
    loss


0



3,355Net amount recognized

$
(2,232
)

$
331  F-19




---



##### Table of Contents



METAL
    MANAGEMENT, INC.
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Net actuarial loss

$
3,260Prior service costs


31Total amount recognized

$
3,291     2007


2006Projected benefit obligation

$
13,458


$
13,283Accumulated benefit obligation


13,117



12,637Fair value of plan assets


11,014



9,608     Years Ended March 31,2007


2006


2005Service cost

$
175


$
166


$
131Interest cost


704



699



695Expected return on plan assets


(735
)


(697
)


(630
)Amortization of prior service cost


10



94



94Recognized net actuarial loss


186



196



133Net periodic benefit cost

$
340


$
458


$
423       Years Ended March 31,2007


2006


2005Discount rate


5.50%



5.75%



6.25%Expected return on plan assets


8.00%



8.00%



8.00%Rate of compensation increase


5.00%



5.00%



5.00%     2007


2006Discount rate


5.75%



5.50%Rate of compensation increase


3.50%



5.00%    F-20




---



##### Table of Contents



METAL
    MANAGEMENT, INC.
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Pension AssetsPercentage of Plan AssetsTarget

at March 31,Range

2007


2006Equity securities

60% - 80%


67
%


65
%Debt securities

20% - 40%


31
%


31
%Fixed income and cash

0% - 15%


2
%


4
%Total




100
%


100
%     Fiscal year ending
    March 31,2008

$
5342009


5632010


6102011


6232012


653Thereafter


4,002   Multi-Employer
    Plans
   401(k)
    Plan
   Non-Qualified
    Deferred Compensation Plan
    F-21




---



##### Table of Contents



METAL
    MANAGEMENT, INC.
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   97-14,
    NOTE 11 
    Commitments and Contingencies
  Leases
   Fiscal year ending
    March 31,2008

$
14,5242009


12,1492010


9,2522011


5,9882012


4,098Thereafter


14,734   Letters
    of Credit
   Environmental
    and Labor Matters
    F-22




---



##### Table of Contents



METAL
    MANAGEMENT, INC.
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        and/or
  MM-Connecticut,
 F-23




---



##### Table of Contents



METAL
    MANAGEMENT, INC.
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          and/or and/or
   F-24




---



##### Table of Contents



METAL
    MANAGEMENT, INC.
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  and/or
    Legal
    Proceedings
      F-25




---



##### Table of Contents



METAL
    MANAGEMENT, INC.
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  NOTE 12 
    Stockholders Equity
    Stock
    Repurchase Program
   Series A
    Warrants
 debtor-in-possession
    NOTE 13 
    Stock-Based Compensation Plans
         F-26




---



##### Table of Contents



METAL
    MANAGEMENT, INC.
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Share-Based
    Compensation
   Year endedMarch 31,2007Cost of sales (excluding
    depreciation)

$
191General and administrative


6,395Severance and other charges (See
    Note 3)


179Stock-based compensation expense
    before income taxes


6,765Income tax benefit


(1,812
)Total stock-based compensation
    expense after income taxes

$
4,953            F-27




---



##### Table of Contents



METAL
    MANAGEMENT, INC.
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Years Ended March 31,2006


2005Net income, as reported

$
60,264


$
92,250Add: Stock-based compensation
    expense included in reported net income, net of related tax
    effects


4,501



2,918Deduct: Total stock-based
    compensation expense determined under the fair value method for
    all awards, net of related tax effects


(5,446
)


(4,523
)Pro forma net income

$
59,319


$
90,645Earnings per share:Basic  as reported

$
2.45


$
3.96Basic  pro forma

$
2.41


$
3.89Diluted  as reported

$
2.35


$
3.74Diluted  pro forma

$
2.30


$
3.67       Years Ended March 31,2007


2006


2005Expected life (years)


2



2



4Expected volatility


47.1
%


49.5
%


95.1
%Expected dividend yield


0.96
%


1.3
%


0.00
%Risk-free interest rate


4.93
%


3.52
%


2.68
%Grant date fair value per share

$
8.92


$
7.13


$
11.80     Years Ended March 31,2007


2006Expected life (years)


0.25



0.25Expected volatility


41.6



41.0Expected dividend yield


0.23
%


0.31
%Risk-free interest rate


4.94
%


3.83
%Grant date fair value per share

$
7.74


$
5.72    F-28




---



##### Table of Contents



METAL
    MANAGEMENT, INC.
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Stock
    Options and Employee Warrants
   WeightedaverageShares


exercise priceOptions outstanding at
    March 31, 2004


726,210


$
17.80Granted


135,000



18.22Exercised


(210,000
)


3.30Expired/forfeited


0



0.00Options outstanding at
    March 31, 2005


651,210



22.56Granted


120,000



23.00Exercised


0



0.00Expired/forfeited


0



0.00Options outstanding at
    March 31, 2006


771,210



22.63Granted


120,000



31.33Exercised


(362,878
)


17.91Expired/forfeited


0



0.00Options outstanding at
    March 31, 2007


528,332


$
27.84Exercisable at March 31, 2007


528,332


$
27.84Exercisable at March 31, 2006


712,212


$
22.35Exercisable at March 31, 2005


539,211


$
21.79   in-the-money
    WeightedaverageShares


exercise priceWarrants outstanding at
    March 31, 2004


1,251,000


$
4.04Granted


0



0.00Exercised


(1,024,000
)


4.09Expired/forfeited


0



0.00Warrants outstanding at
    March 31, 2005


227,000



3.80Granted


0



0.00Exercised


(202,000
)


3.62Expired/forfeited


0



0.00Warrants outstanding at
    March 31, 2006


25,000



5.18Granted


0



0.00Exercised


(16,000
)


4.71Expired/forfeited


0



0.00Warrants outstanding at
    March 31, 2007


9,000


$
6.00Exercisable at March 31, 2007


9,000


$
6.00Exercisable at March 31, 2006


25,000


$
5.18Exercisable at March 31, 2005


227,000


$
3.80  F-29




---



##### Table of Contents



METAL
    MANAGEMENT, INC.
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  in-the-money
      Options/Warrants OutstandingWeighted





Options/Warrants Exercisableaverage


Weighted





Weightedremaining


average





averagecontractual


exercise





ExerciseExercise prices

Shares


life (yrs)


price


Shares


Price$6.00  $22.00


90,666



4.79


$
14.48



90,666


$
14.48$22.01  $26.25


176,666



5.54


$
25.15



176,666


$
25.15$31.33  $31.33


120,000



4.02


$
31.33



120,000


$
31.33$35.00  $35.00


150,000



6.83


$
35.00



150,000


$
35.00537,332











537,332   Restricted
    Stock
  F-30




---



##### Table of Contents



METAL
    MANAGEMENT, INC.
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Weighted-AverageGrant DateShares


Fair ValueRestricted stock outstanding at
    March 31, 2004


518,938


$
17.62Granted


181,732



25.76Vested


(131,412
)


17.64Cancelled


0



0.00Restricted stock outstanding at
    March 31, 2005


569,258


$
20.22Granted


220,081



20.70Vested


(246,793
)


20.09Cancelled


(19,319
)


22.48Restricted stock outstanding at
    March 31, 2006


523,227


$
20.40Granted


241,391



29.05Vested


(261,767
)


20.31Cancelled


(8,044
)


27.40Restricted stock outstanding at
    March 31, 2007


494,807


$
24.55     Fiscal year
    ending March 31,2008


325,8682009


90,3472010


78,592Total


494,807   NOTE 14  Related
    Party Transactions
    NOTE 15  Selected
    Quarterly Financial Data (Unaudited)
    Fiscal 2007

June 30


Sept. 30


Dec. 31


Mar. 31Net sales

$
495,912


$
584,708


$
523,965


$
624,427Operating income


44,830



47,326



22,729



41,513Net income (b)


44,889



29,073



15,579



26,864Basic earnings per share (a)

$
1.76


$
1.11


$
0.61


$
1.06Diluted earnings per share (a)

$
1.70


$
1.09


$
0.60


$
1.04   F-31




---



##### Table of Contents



METAL
    MANAGEMENT, INC.
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Fiscal 2006

June 30


Sept. 30


Dec. 31


Mar. 31Net sales

$
381,634


$
378,301


$
395,090


$
434,101Operating income


6,895



26,394



22,751



30,727Net income


5,446



16,921



15,346



22,551Basic earnings per share (a)

$
0.22


$
0.69


$
0.63


$
0.90Diluted earnings per share (a)

$
0.22


$
0.66


$
0.60


$
0.86     (a)
    
    The sum of the quarterly per share
    amounts will not equal per share amounts reported for the
    year-to-date
    period due to the changes in the number of weighted-average
    shares outstanding for each period.(b)
    
    The quarter ended June 30,
    2006 includes a $26.4 million pre-tax gain
    ($16.3 million after tax) recognized on the sale of
    Southern.  NOTE 16  Subsequent
    Events
     F-32




---



##### Table of Contents



METAL
    MANAGEMENT, INC.
    Schedule II Valuation and Qualifying Accounts
    (in thousands)
   Balance at


Charged to


Charged to


Deductions,


Balance atBeginning


Costs and


Other


net of


End ofof Period


Expenses


Accounts


Recoveries


PeriodAllowance for doubtful
    accounts:Year Ended March 31, 2005

$
1,650


$
1,426


$
0


$
(399
)

$
2,677Year Ended March 31, 2006

$
2,677


$
378


$
203


$
(1,475
)

$
1,783Year Ended March 31, 2007

$
1,783


$
936


$
0


$
(228
)

$
2,491Tax valuation
    allowance:Year Ended March 31, 2005

$
1,516


$
0


$
(176
)

$
0


$
1,340Year Ended March 31, 2006

$
1,340


$
403


$
(85
)

$
0


$
1,658Year Ended March 31, 2007

$
1,658


$
(103
)

$
(400
)

$
0


$
1,155  F-33