##### Table of Contents



UNITED STATES
 SECURITIES AND EXCHANGE
    COMMISSION
 Washington, D.C.
    20549
      FORM 10-Q
  x

Quarterly Report Pursuant to Section 13 or 15(d) of the
    Securities Exchange Act of 1934For the quarterly period ended December 31, 2007o

Transition Report Pursuant to Section 13 or 15(d) of the
    Securities Exchange Act of 1934For 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
      x o
   Rule 12b-2
   Large
    accelerated
    filer x
    Accelerated
    filer o
    Non-accelerated
    filer o   Rule 12b-2 o x




---



##### 



INDEX
  PagePART I: FINANCIAL INFORMATIONItem 1.


Financial StatementsConsolidated Statements of Operations 
    three and nine months ended December 31, 2007 and 2006
    (unaudited)


1Consolidated Balance Sheets 
    December 31, 2007 and March 31, 2007 (unaudited)


2Consolidated Statements of Cash Flows 
    nine months ended December 31, 2007 and 2006 (unaudited)


3Consolidated Statement of Stockholders
    Equity  nine months ended December 31, 2007
    (unaudited)


4Notes to Consolidated Financial Statements
    (unaudited)


5Item 2.


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


18Item 3.


Quantitative and Qualitative Disclosures about
    Market Risk


27Item 4.


Controls and Procedures


27PART II: OTHER INFORMATIONItem 1.


Legal Proceedings


29Item 1A.


Risk Factors


30Item 6.


Exhibits


30Signatures


31CertificationCertificationCertification"Risk Factors"




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##### Table of Contents



PART I:
    FINANCIAL INFORMATION  Item 1.
    Financial
    Statements  METAL
    MANAGEMENT, INC.CONSOLIDATED STATEMENTS OF OPERATIONS (in
    thousands, except per share amounts)
 (unaudited)
  Three Months Ended


Nine Months EndedDecember 31,


December 31,


December 31,


December 31,2007


2006


2007


2006Net sales

$
582,096


$
523,965


$
1,951,304


$
1,604,585Operating expenses:Cost of sales (excluding depreciation)


534,471



471,702



1,761,396



1,401,886General and administrative


25,597



21,913



79,067



65,560Depreciation and amortization


10,071



7,131



27,802



21,322Merger expenses


747



0



3,335



0Severance and other charges


0



490



701



932Operating income


11,210



22,729



79,003



114,885Income from joint ventures


453



357



2,112



2,771Interest expense


(1,321
)


(373
)


(4,280
)


(979
)Interest and other income, net


75



969



334



1,913Gain on sale of joint venture interest


0



0



0



26,362Income before income taxes


10,417



23,682



77,169



144,952Provision for income taxes


4,272



8,103



30,522



55,411Net income

$
6,145


$
15,579


$
46,647


$
89,541Earnings per share:Basic

$
0.24


$
0.61


$
1.85


$
3.48Diluted

$
0.24


$
0.60


$
1.82


$
3.40Cash dividends declared per share

$
0.075


$
0.075


$
0.225


$
0.225Weighted average common shares outstanding:Basic


25,252



25,532



25,216



25,733Diluted


25,718



26,095



25,645



26,357    1




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##### Table of Contents



METAL
    MANAGEMENT, INC.CONSOLIDATED BALANCE SHEETS (in
    thousands)
 (unaudited)
  December 31,


March 31,2007


2007ASSETSCurrent assets:Cash and cash equivalents

$
12,604


$
9,354Accounts receivable, net


212,798



227,397Inventories


201,230



191,301Deferred income taxes


5,254



5,544Prepaid expenses and other assets


18,981



12,132Total current assets


450,867



445,728Property and equipment, net


221,099



187,124Goodwill


27,295



14,766Intangible assets, net


26,561



13,267Deferred income taxes, net


10,912



10,437Investments in joint ventures


23,181



20,760Other assets


2,926



3,441Total assets

$
762,841


$
695,523LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Current portion of long-term debt

$
548


$
46Accounts payable


138,990



177,747Income taxes payable


2,095



12,271Other accrued liabilities


34,945



35,482Total current liabilities


176,578



225,546Long-term debt, less current portion


60,446



160Other liabilities


10,052



4,987Total long-term liabilities


70,498



5,147Stockholders equity:Preferred stock


0



0Common stock


276



271Additional paid-in capital


212,355



201,577Accumulated other comprehensive loss


(1,931
)


(2,008
)Retained earnings


356,320



315,517Treasury stock, at cost


(51,255
)


(50,527
)Total stockholders equity


515,765



464,830Total liabilities and stockholders equity

$
762,841


$
695,523    2




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##### Table of Contents



METAL
    MANAGEMENT, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS (in
    thousands)
 (unaudited)
  Nine months endedDecember 31,


December 31,2007


2006Cash flows from operating activities:Net income

$
46,647


$
89,541Adjustments to reconcile net income to cash flows from operating
    activities:Depreciation and amortization


27,802



21,322Deferred income taxes


202



1,327Income from joint ventures


(2,112
)


(2,771
)Gain on sale of joint venture interest


0



(26,362
)Distribution of earnings from joint ventures


114



8,748Stock-based compensation expense


6,962



4,978Excess tax benefits from stock-based awards


(1,138
)


(759
)Other


106



949Changes in assets and liabilities, net of acquisitions:Accounts receivable


30,197



26,594Inventories


(2,585
)


(78,025
)Other assets


(6,464
)


(3,293
)Accounts payable


(43,676
)


33,899Income taxes payable


(4,331
)


7,229Other liabilities


(2,772
)


(2,781
)Net cash provided by operating activities


48,952



80,596Cash flows from investing activities:Purchases of property and equipment


(44,460
)


(48,073
)Proceeds from sale of property and equipment


744



1,658Acquisitions, net of cash acquired


(54,933
)


(28,591
)Purchases of short-term investments


0



(99,600
)Proceeds from sale of short-term investments


0



109,155Proceeds from sale of joint venture interest


0



46,005Other


(548
)


(1,200
)Net cash used in investing activities


(99,197
)


(20,646
)Cash flows from financing activities:Issuances of long-term debt


531,898



10,373Repayments of long-term debt


(475,332
)


(13,361
)Issuance of common stock


2,363



11,776Repurchase of common stock


(728
)


(20,831
)Excess tax benefits from stock-based awards


1,138



759Cash dividends paid to stockholders


(5,844
)


(5,965
)Fees paid to issue long-term debt


0



(608
)Net cash provided by (used in) financing activities


53,495



(17,857
)Net increase in cash and cash equivalents


3,250



42,093Cash and cash equivalents at beginning of period


9,354



37,717Cash and cash equivalents at end of period

$
12,604


$
79,810Supplemental disclosures of cash flow information:Cash interest paid

$
3,789


$
646Cash income taxes paid, net of refunds

$
40,194


$
46,855    3




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##### Table of Contents



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


OtherCommon Stock


Treasury Stock


Paid-in


Comprehensive


RetainedShares


Amount


Shares


Amount


Capital


Loss


Earnings


TotalBalance at March 31, 2007


27,129


$
271



(1,516
)

$
(50,527
)

$
201,577


$
(2,008
)

$
315,517


$
464,830Net income


0



0



0



0



0



0



46,647



46,647Amortization of pension costs, net of tax


0



0



0



0



0



77



0



77Total comprehensive income






























46,724Exercise of stock options and warrants


89



1



0



0



1,894



0



0



1,895Issuance of restricted stock, net of cancellations


409



4



0



0



(4
)


0



0



0Issuance of stock under employee stock purchase plan


13



0



0



0



468



0



0



468Tax benefit related to equity compensation


0



0



0



0



1,431



0



0



1,431Stock-based compensation expense


0



0



0



0



6,962



0



0



6,962Repurchase of common stock


0



0



(15
)


(728
)


0



0



0



(728
)Cash dividends paid to stockholders


0



0



0



0



0



0



(5,844
)


(5,844
)Other


0



0



0



0



27



0



0



27Balance at December 31, 2007


27,640


$
276



(1,531
)

$
(51,255
)

$
212,355


$
(1,931
)

$
356,320


$
515,765    4




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##### Table of Contents



METAL
    MANAGEMENT, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (unaudited)
  NOTE 1 
    Accounting
    Policies  Business
     Basis of
    Presentation
   Form 10-K
  Revenue
    Recognition
    5




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##### Table of Contents



METAL
    MANAGEMENT, INC.
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Three Months Ended


Nine Months EndedDecember 31,


December 31,


December 31,


December 31,2007


2006


2007


2006Ferrous metals

$
395,759


$
300,432


$
1,288,605


$
946,543Non-ferrous metals


163,065



182,680



548,016



558,704Brokerage  ferrous


17,617



35,116



97,201



78,020Brokerage  non-ferrous


1,664



1,391



4,462



6,865Other


3,991



4,346



13,020



14,453Net sales

$
582,096


$
523,965


$
1,951,304


$
1,604,585   Recently
    Issued Accounting Pronouncements
         NOTE 2 
    Merger
    Transaction   6




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##### Table of Contents



METAL
    MANAGEMENT, INC.
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Hart-Scott-Rodino Form F-4
      NOTE 3 
    Earnings
    Per Share   7




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##### Table of Contents



METAL
    MANAGEMENT, INC.
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Three months ended


Nine months endedDecember 31,


December 31,


December 31,


December 31,2007


2006


2007


2006Numerator:Net income

$
6,145


$
15,579


$
46,647


$
89,541Denominator:Weighted average common shares outstanding, basic


25,252



25,532



25,216



25,733Incremental common shares attributable to dilutive stock options
    and warrants


177



170



173



286Incremental common shares attributable to unvested restricted
    stock


289



393



256



338Weighted average common shares outstanding, diluted


25,718



26,095



25,645



26,357Basic income per share

$
0.24


$
0.61


$
1.85


$
3.48Diluted income per share

$
0.24


$
0.60


$
1.82


$
3.40     NOTE 4 
    Balance
    Sheet Information  Inventories
   December 31,


March 31,2007


2007Ferrous metals

$
105,157


$
108,553Non-ferrous metals


95,848



82,538Other


225



210$
201,230


$
191,301  8




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##### Table of Contents



METAL
    MANAGEMENT, INC.
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Property
    and Equipment
   December 31,


March 31,2007


2007Land and improvements

$
64,459


$
52,646Buildings and improvements


36,819



29,679Operating machinery and equipment


201,112



151,296Automobiles and trucks


19,777



15,720Furniture, office equipment and software


7,643



6,408Construction in progress


10,118



27,154339,928



282,903Less  accumulated depreciation


(118,829
)


(95,779
)$
221,099


$
187,124   Other
    Accrued Liabilities
   December 31,


March 31,2007


2007Accrued employee compensation and benefits

$
20,283


$
25,771Accrued insurance


6,868



5,186Other


7,794



4,525$
34,945


$
35,482   Accrued
    Severance and Other Charges
       NOTE 5 
    Acquisitions   9




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##### Table of Contents



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

$
2,860Inventories


865Property and equipment


5,531Amortizable intangible assets


2,122Goodwill


1,535Accounts payable and accrued liabilities


(118
)$
12,795       Accounts receivable

$
12,740Inventories


6,479Property and equipment


9,442Other assets


317Amortizable intangible assets


13,706Goodwill


10,822Accounts payable and accrued liabilities


(6,668
)Long-term debt


(4,212
)$
42,626     NOTE 6 
    Goodwill
    and Intangible Assets    Balance at March 31, 2007

$
14,766Purchase accounting adjustments


172Acquisitions (see Note 5)


12,357Balance at December 31, 2007

$
27,295  10




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##### Table of Contents



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


March 31, 2007Gross





GrossCarrying


Accumulated


Carrying


AccumulatedAmount


Amortization


Amount


AmortizationCustomer relationships

$
23,699


$
(2,716
)

$
10,350


$
(804
)Non-compete agreements


7,438



(1,860
)


4,824



(1,103
)$
31,137


$
(4,576
)

$
15,174


$
(1,907
)     Remainder of fiscal 2008

$
979Fiscal 2009


3,743Fiscal 2010


3,592Fiscal 2011


3,460Fiscal 2012


2,865Thereafter


11,922   NOTE 7 
    Long-term
    Debt    December 31,


March 31,2007


2007Credit Agreement

$
59,573


$
0Other debt (including capital leases) due 2008 to 2010


1,421



20660,994



206Less  current portion of long-term debt


(548
)


(46
)$
60,446


$
160   Credit
    Agreement
     Other
    Debt
  11




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##### Table of Contents



METAL
    MANAGEMENT, INC.
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  NOTE 8 
    Employee
    Benefit Plans    Three Months Ended


Nine Months EndedDecember 31,


December 31,


December 31,


December 31,2007


2006


2007


2006Service cost

$
43


$
44


$
128


$
131Interest cost


186



176



563



529Expected return on plan assets


(208
)


(184
)


(626
)


(552
)Amortization of prior service cost


3



2



7



7Amortization of net actuarial loss


39



47



116



141Net periodic benefit cost

$
63


$
85


$
188


$
256     Multi-Employer
    Plans
   Non-Qualified
    Deferred Compensation Plan
     No. 97-14,
  NOTE 9 
    Income
    Taxes   12




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##### Table of Contents



METAL
    MANAGEMENT, INC.
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          NOTE 10 
    Commitments
    and Contingencies  Legal
    Proceedings
 and/or
   13




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##### Table of Contents



METAL
    MANAGEMENT, INC.
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Environmental
    and Labor Matters
      14




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##### Table of Contents



METAL
    MANAGEMENT, INC.
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    and/or
       15




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##### Table of Contents



METAL
    MANAGEMENT, INC.
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      and/or and/or
  and/or
   16




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##### Table of Contents



METAL
    MANAGEMENT, INC.
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    NOTE 11 
    Stockholders
    Equity    Stock
    Repurchase Program
   Other
    Repurchases of Common Stock
   Stock-Based
    Compensation
     NOTE 12 
    Investments
    in Joint Ventures     17




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##### Table of Contents



This
    Form 10-Q
    includes certain statements that may be deemed to be
    forward-looking statements within the meaning of the
    Private Securities Litigation Reform Act of 1995. Statements in
    this
    Form 10-Q
    which address activities, events or developments that Metal
    Management, Inc. (herein, Metal Management, the
    Company, we, us,
    our or other similar terms) expects or anticipates
    will or may occur in the future, including such things as the
    ability to consummate the Sims merger or the failure to realize
    the anticipated benefits of the merger, future acquisitions
    (including the amount and nature thereof), business strategy,
    expansion and growth of our business and operations, general
    economic and market conditions and other such matters are
    forward-looking statements. Although we believe the expectations
    expressed in such forward-looking statements are based on
    reasonable assumptions within the bounds of our knowledge of our
    business, a number of factors could cause actual results to
    differ materially from those expressed in any forward-looking
    statements. These and other risks, uncertainties and other
    factors are discussed under Risk Factors appearing
    in our Annual Report on
    Form 10-K
    for the year ended March 31, 2007 and Item 1A.
    Risk Factors of Part II of this Report, as the
    same may be amended from time to time
  Item 2.
    Managements Discussion and Analysis of Financial Condition
    and Results of Operations  Form 10-K
  Overview
    and Industry
        18




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##### Table of Contents



and/or
  Merger
    Agreement with Sims
 Hart-Scott-Rodino Form F-4
    Recent
    Events
       Results
    of Operations
  19




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##### Table of Contents



Consolidated
    Statements of Operations ($ in thousands):
  Three Months Ended December 31,


Nine Months Ended December 31,2007


%


2006


%


2007


%


2006


%Sales by commodity:Ferrous metals

$
395,759



68.0


$
300,432



57.3


$
1,288,605



66.0


$
946,543



59.0Non-ferrous metals


163,065



28.0



182,680



34.9



548,016



28.1



558,704



34.8Brokerage  ferrous


17,617



3.0



35,116



6.7



97,201



5.0



78,020



4.9Brokerage  non-ferrous


1,664



0.3



1,391



0.3



4,462



0.2



6,865



0.4Other


3,991



0.7



4,346



0.8



13,020



0.7



14,453



0.9Net sales


582,096



100.0
%


523,965



100.0
%


1,951,304



100.0
%


1,604,585



100.0
%Cost of sales (excluding depreciation)


534,471



91.8



471,702



90.0



1,761,396



90.3



1,401,886



87.4General and administrative expense


25,597



4.5



21,913



4.2



79,067



4.1



65,560



4.1Depreciation and amortization expense


10,071



1.7



7,131



1.4



27,802



1.4



21,322



1.3Merger expenses


747



0.1



0



0.0



3,335



0.2



0



0.0Severance and other charges


0



0.0



490



0.1



701



0.0



932



0.1Operating income


11,210



1.9



22,729



4.3



79,003



4.0



114,885



7.1Income from joint ventures


453



0.1



357



0.1



2,112



0.1



2,771



0.2Interest expense


(1,321
)


0.2



(373
)


0.1



(4,280
)


0.2



(979
)


0.0Interest and other income, net


75



0.0



969



0.2



334



0.1



1,913



0.1Gain on sale of joint venture interest


0



0.0



0



0.0



0



0.0



26,362



1.6Pre-tax income


10,417



1.8



23,682



4.5



77,169



4.0



144,952



9.0Provision for income taxes


4,272



0.7



8,103



1.5



30,522



1.6



55,411



3.4Net income

$
6,145



1.1
%

$
15,579



3.0
%

$
46,647



2.4
%

$
89,541



5.6
%   20




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##### Table of Contents



Three Months Ended December 31,


Nine Months Ended December 31,2007


2006


2007


2006Sales volume by
    commodity
    (In thousands):Ferrous metals (tons)


1,301



1,176



4,124



3,514Non-ferrous metals (lbs.)


117,286



126,712



362,501



392,024Brokerage  ferrous (tons)


64



146



333



312Brokerage  non-ferrous (lbs.)


1,021



969



2,679



3,882   Net
    Sales
   Ferrous
    Sales
       Non-ferrous
    Sales
    21




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##### Table of Contents



Brokerage
    Sales
     Other
    Sales
   Cost
    of Sales (excluding depreciation)
  22




---



##### Table of Contents



General
    and Administrative Expense
     Depreciation
    and Amortization Expense
     Merger
    Expenses
   Severance
    and Other Charges
     Income
    from Joint Ventures
  23




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##### Table of Contents



Interest
    Expense
   Interest
    and Other Income
   Gain
    on Sale of Joint Venture Interest
   Income
    Taxes
   Net
    Income
   Liquidity
    and Capital Resources
    24




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##### Table of Contents



Cash
    Flows
   Nine Months EndedDecember 31,


December 31,2007


2006Net cash provided by operating activities

$
48,952


$
80,596Net cash used in investing activities

$
(99,197
)

$
(20,646
)Net cash provided by (used in) financing activities

$
53,495


$
(17,857
)   Operating
    Activities
   Investing
    Activities
   Financing
    Activities
   Off-Balance
    Sheet Arrangements, Contractual Obligations and Other
    Commitments
  Off-Balance
    Sheet Arrangements
  25




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##### Table of Contents



Contractual
    Obligations
   Other
    Commitments
     Critical
    Accounting Policies
     Income
    Taxes
   Recent
    Accounting Pronouncements
    26




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##### Table of Contents



Item 3.
    Quantitative and Qualitative Disclosures about Market
    Risk   Item 4.
    Controls and Procedures  Evaluation
    of our Disclosure Controls and Procedures.
 Rules 13a-15(e) 15d-15(e)
      CEO and
    CFO Certifications.
  27




---



##### Table of Contents



Limitations
    on the Effectiveness of Controls.
  28




---



##### Table of Contents



PART II:
    OTHER INFORMATION Item 1.
    Legal Proceedings  and/or
       29




---



##### Table of Contents



Item 1A.
    Risk Factors.  Form 10-K Form F-4 No. 333-147659) Form 10-Q.
  Risks
    associated with our pending merger with Sims
  In the
    event our merger with Sims is not consummated, the price of our
    stock may be affected.
     Item 6.
    Exhibits  2
.1

Agreement and Plan of Merger, dated as of September 24,
    2007, by and among Sims Group Limited, MMI Acquisition
    Corporation, and Metal Management, Inc. (incorporated by
    reference to Exhibit 2.1 of the Companys Current
    Report on
    Form 8-K
    dated September 24, 2007).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).31
.1

Certification of Daniel W. Dienst pursuant to
    Section 240.13a-14(a)
    and
    Section 240.15d-14(a)
    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(a)
    and
    Section 240.15d-14(a)
    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 and 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

Risk Factors incorporated by reference to pages
    15-28 of
    Sims Group Limiteds Amendment No. 1 to Registration
    Statement on
    Form F-4
    (Registration
    No. 333-147659)
    filed with the SEC on January 17, 2008.  30




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##### Table of Contents



SIGNATURES    METAL MANAGEMENT, INC.
   By:
    /s/  Daniel
    W. Dienst        By:
    /s/  Robert
    C. Larry        By:
    /s/  Amit
    N. Patel        31