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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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Form 10-Q



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|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------

For the quarterly period ended June 30, 2007

OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934
|- | -------------------------------------------------------------------------------

For the transition period from  to

Commission file number:



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WISE METALS GROUP LLC

(Exact name of Registrant as specified in its charter)



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|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 52-2160047                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)

857 Elkridge Road, Suite 600

Linthicum, Maryland 21090

(Address of principal executive offices and zip
code)

(410) 636-6500

(Registrants telephone number, including area code)



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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer (as defined in Rule 12b-2 of
the Exchange Act).

Large accelerated filer ̈Accelerated filer ̈Non-accelerated
filer  x

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).    Yes ̈No  x



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|                              |  |          |  |                                                                                                                     |  |   
|----------------------------- |  | -------- |  | ------------------------------------------------------------------------------------------------------------------- |  | --
|Part I. FINANCIAL INFORMATION |  |         
|                              |  |          | 
|                              |  | Item 1.  |  | Financial Statements                                                                                                |  | 5 
|                              |  |          | 
|                              |  |          |  | Condensed Consolidated Balance Sheets at June 30, 2007 and December 31, 2006                                        |  | 5 
|                              |  |          | 
|                              |  |          |  | Condensed Consolidated Statements of Operations for the three and six months ended June 30 , 2007 and June 30, 2006 |  | 6 
|                              |  |          | 
|                              |  |          |  | Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2007 and June 30, 2006            |  | 7 
|                              |  |          | 
|                              |  |          |  | Notes to Condensed Consolidated Financial Statements                                                                |  | 8 
|                              |  |          | 
|                              |  | Item 2.  |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                               |  | 15
|                              |  |          | 
|                              |  | Item 3 . |  | Quantitative and Qualitative Disclosures About Market Risk                                                          |  | 18
|                              |  |          | 
|                              |  | Item 4 . |  | Controls and Procedures                                                                                             |  | 18
|                              | 
|Part II. OTHER INFORMATION    |  |         
|                              |  |          | 
|                              |  | Item 1 . |  | Legal Proceedings                                                                                                   |  | 19
|                              |  |          | 
|                              |  | Item 1A. |  | Risk Factors                                                                                                        |  | 19
|                              |  |          | 
|                              |  | Item 2 . |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                         |  | 20
|                              |  |          | 
|                              |  | Item 3.  |  | Defaults Upon Senior Securities                                                                                     |  | 20
|                              |  |          | 
|                              |  | Item 4 . |  | Submission of Matters to a Vote of Security Holders                                                                 |  | 20
|                              |  |          | 
|                              |  | Item 5 . |  | Other Information                                                                                                   |  | 20
|                              |  |          | 
|                              |  | Item 6.  |  | Exhibits                                                                                                            |  | 20
|                              | 
|SIGNATURES                    |  | 21      



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FORWARD-LOOKING STATEMENTS

Certain of the matters discussed in this report, including, without limitation, matters discussed under Item 2, Managements Discussion and Analysis of Financial Condition and Results of Operations, may constitute
forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Certain of these forward-looking statements can be identified by the use of forward-looking terminology such as
believes, expects, may, will, should, seeks, approximately, intends, plans, estimates, or anticipates or the negative
of these terms or other comparable terminology, or by discussions of strategy, plans or intention. Statements contained in this report that are not historical facts are forward-looking statements. Without limiting the generality of the preceding
statement, all statements in this report concerning or relating to estimated and projected earnings, margins, costs, expenditures, cash flows, growth rates and financial results are forward-looking statements. In addition, through the Companys
senior management, forward-looking statements are made concerning expected future operations, performance and other developments. Such forward-looking statements are necessary estimates reflecting managements best judgment based upon current
information and involve a number of risks and uncertainties. Other factors may affect the accuracy of these forward-looking statements and actual results may differ materially from the results anticipated in these forward-looking statements. While
it is impossible to identify all such factors, factors that could cause actual results to differ materially from those estimated include, but are not limited to, those factors or conditions described under Item 2, Managements
Discussion and Analysis of Financial Condition and Results of Operations.



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PART I. FINANCIAL INFORMATION



|ITEM 1. | FINANCIAL STATEMENTS
|------- | --------------------

Wise Metals Group LLC

Condensed Consolidated Balance Sheets

(In thousands)



|                                                                                              |  |               |          |   |                  |   |          |  
|--------------------------------------------------------------------------------------------- |  | ------------- | -------- | - | ---------------- | - | -------- | -
|                                                                                              |  | June 30, 2007 |          |   | December 31,2006 |  
|                                                                                              |  | (Unaudited)   |          |   |                  |  
|Assets                                                                                        |  |               |          |   |                  |   |          |  
|Current assets:                                                                               |  |               |          |   |                  |   |          |  
|Cash and cash equivalents                                                                     |  | $             | 4,071    |   |                  | $ | 2,280    |  
|Restricted cash                                                                               |  |               | 1,479    |   |                  |   | 7,889    |  
|Accounts receivable, less allowance for doubtful accounts ($2,718 in 2007 and $1,359 in 2006) |  |               | 117,173  |   |                  |   | 104,096  |  
|Inventories                                                                                   |  |               | 148,949  |   |                  |   | 120,565  |  
|Other current assets                                                                          |  |               | 7,884    |   |                  |   | 9,830    |  
|                                                                                              |  |               |          |   |                  |   |          |  
|Total current assets                                                                          |  |               | 279,556  |   |                  |   | 244,660  |  
|Non-current assets:                                                                           |  |               |          |   |                  |   |          |  
|Property and equipment, net                                                                   |  |               | 86,222   |   |                  |   | 84,589   |  
|Other assets                                                                                  |  |               | 8,686    |   |                  |   | 8,724    |  
|Goodwill                                                                                      |  |               | 283      |   |                  |   | 283      |  
|                                                                                              |  |               |          |   |                  |   |          |  
|Total non-current assets                                                                      |  |               | 95,191   |   |                  |   | 93,596   |  
|                                                                                              |  |               |          |   |                  |   |          |  
|Total assets                                                                                  |  | $             | 374,747  |   |                  | $ | 338,256  |  
|                                                                                              |  |               |          |   |                  |   |          |  
|Liabilities and members deficit                                                              |  |               |          |   |                  |   |          |  
|Current liabilities:                                                                          |  |               |          |   |                  |   |          |  
|Accounts payable                                                                              |  | $             | 90,509   |   |                  | $ | 71,131   |  
|Current portion of long-term debt                                                             |  |               | 3,097    |   |                  |   | 1,759    |  
|Borrowings under revolving credit facility                                                    |  |               | 192,540  |   |                  |   | 177,187  |  
|Accrued expenses, payroll and other                                                           |  |               | 13,604   |   |                  |   | 24,838   |  
|                                                                                              |  |               |          |   |                  |   |          |  
|Total current liabilities                                                                     |  |               | 299,750  |   |                  |   | 274,915  |  
|Non-current liabilities:                                                                      |  |               |          |   |                  |   |          |  
|Term loans, less current portion                                                              |  |               | 27,966   |   |                  |   | 15,854   |  
|Senior notes                                                                                  |  |               | 150,000  |   |                  |   | 150,000  |  
|Other liabilities                                                                             |  |               | 13,887   |   |                  |   | 12,969   |  
|                                                                                              |  |               |          |   |                  |   |          |  
|Total non-current liabilities                                                                 |  |               | 191,853  |   |                  |   | 178,823  |  
|Members deficit                                                                              |  |               | (116,856 | ) |                  |   | (115,482 | )
|                                                                                              |  |               |          |   |                  |   |          |  
|Total liabilities and members deficit                                                        |  | $             | 374,747  |   |                  | $ | 338,256  |  
|                                                                                              |  |               |          |   |                  |   |          |  

See accompanying notes.



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Wise Metals Group LLC

Condensed Consolidated Statements of Operations

(In thousands)

(Unaudited)



|                                                 |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |         |  
|------------------------------------------------ |  | -------------------------- | ------- | - | ------------------------ | - | ------- | ---- |  | - | ------- | - |  | - | ------- | -
|                                                 |  | Three months endedJune 30, |         |   | Six months endedJune 30, |  
|                                                 |  | 2007                       |         |   | 2006                     |   |         | 2007 |  |   | 2006    |  
|Sales                                            |  | $                          | 277,800 |   |                          | $ | 283,254 |      |  | $ | 525,016 |   |  | $ | 499,530 |  
|Cost of sales                                    |  |                            | 266,676 |   |                          |   | 284,908 |      |  |   | 507,728 |   |  |   | 492,302 |  
|                                                 |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |         |  
|Gross margin (deficit)                           |  |                            | 11,124  |   |                          |   | (1,654  | )    |  |   | 17,288  |   |  |   | 7,228   |  
|Operating expenses:                              |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |         |  
|Selling, general, and administrative             |  |                            | 3,419   |   |                          |   | 2,906   |      |  |   | 7,931   |   |  |   | 5,879   |  
|                                                 |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |         |  
|Operating income (loss)                          |  |                            | 7,705   |   |                          |   | (4,560  | )    |  |   | 9,357   |   |  |   | 1,349   |  
|Other (expense) income:                          |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |         |  
|Interest expense and fees, net                   |  |                            | (9,308  | ) |                          |   | (8,444  | )    |  |   | (18,414 | ) |  |   | (15,564 | )
|Unrealized (loss) gain on derivative instruments |  |                            | (3,336  | ) |                          |   | (3,456  | )    |  |   | 7,683   |   |  |   | 1,255   |  
|                                                 |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |         |  
|Net loss                                         |  | $                          | (4,939  | ) |                          | $ | (16,460 | )    |  | $ | (1,374  | ) |  | $ | (12,960 | )
|                                                 |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |         |  

See accompanying notes.



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Wise Metals Group LLC

Condensed Consolidated Statements of Cash Flows

(In Thousands)

(Unaudited)



|                                                                            |  |                          |         |   |      |   |         |  
|--------------------------------------------------------------------------- |  | ------------------------ | ------- | - | ---- | - | ------- | -
|                                                                            |  | Six months endedJune 30, |        
|                                                                            |  | 2007                     |         |   | 2006 |  
|Cash flows from operating activities                                        |  |                          |         |   |      |   |         |  
|Net loss                                                                    |  | $                        | (1,374  | ) |      | $ | (12,960 | )
|Adjustments to reconcile net loss to net cash used in operating activities: |  |                          |         |   |      |   |         |  
|Depreciation and amortization                                               |  |                          | 6,551   |   |      |   | 6,221   |  
|Amortization of deferred financing fees                                     |  |                          | 984     |   |      |   | 778     |  
|Bad debt expense                                                            |  |                          | 2,449   |   |      |   |        |  
|Unrealized gains on derivative instruments                                  |  |                          | (7,683  | ) |      |   | (1,255  | )
|Changes in operating assets and liabilities:                                |  |                          |         |   |      |   |         |  
|Restricted cash                                                             |  |                          | 6,410   |   |      |   | (2,909  | )
|Accounts receivable                                                         |  |                          | (15,526 | ) |      |   | (8,127  | )
|Inventories                                                                 |  |                          | (28,384 | ) |      |   | (51,965 | )
|Other current assets                                                        |  |                          | 22      |   |      |   | 1,785   |  
|Accounts payable                                                            |  |                          | 19,378  |   |      |   | 27,401  |  
|Accrued expenses, payroll and other                                         |  |                          | (1,655  | ) |      |   | 158     |  
|                                                                            |  |                          |         |   |      |   |         |  
|Net cash used in operating activities                                       |  |                          | (18,828 | ) |      |   | (40,873 | )
|Cash flows from investing activities                                        |  |                          |         |   |      |   |         |  
|Purchase of equipment                                                       |  |                          | (8,184  | ) |      |   | (6,493  | )
|                                                                            |  |                          |         |   |      |   |         |  
|Net cash used in investing activities                                       |  |                          | (8,184  | ) |      |   | (6,493  | )
|Cash flows from financing activities                                        |  |                          |         |   |      |   |         |  
|Net issuance of short-term borrowings                                       |  |                          | 15,353  |   |      |   | 43,322  |  
|Proceeds from sale-leaseback transaction                                    |  |                          | 14,950  |   |      |   |        |  
|Payments on long-term obligations                                           |  |                          | (1,500  | ) |      |   | (106    | )
|Issuance of long-term borrowings                                            |  |                          |        |   |      |   | 693     |  
|                                                                            |  |                          |         |   |      |   |         |  
|Net cash provided by financing activities                                   |  |                          | 28,803  |   |      |   | 43,909  |  
|                                                                            |  |                          |         |   |      |   |         |  
|Net increase (decrease) in cash and cash equivalents                        |  |                          | 1,791   |   |      |   | (3,457  | )
|Cash and cash equivalents at beginning of period                            |  |                          | 2,280   |   |      |   | 6,456   |  
|                                                                            |  |                          |         |   |      |   |         |  
|Cash and cash equivalents at end of period                                  |  | $                        | 4,071   |   |      | $ | 2,999   |  
|                                                                            |  |                          |         |   |      |   |         |  

See accompanying notes.



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Wise Metals Group LLC

Notes to Condensed Consolidated Financial Statements

June 30, 2007

(Unaudited)

(Dollars in thousands)

1.
Organization

Wise Metals Group LLC is a holding company formed for the purpose of managing the operations of Wise Alloys LLC, Wise Recycling LLC and
Listerhill Total Maintenance Company LLC (collectively, the Company). Wise Alloys LLC (Alloys) principally manufactures and sells aluminum can sheet to aluminum can producers and also serves the transportation and building and construction markets.
Wise Recycling LLC (Recycling) is engaged in the recycling and sale of scrap aluminum and other metals. Listerhill Total Maintenance Company LLC (TMC) specializes in providing maintenance, repairs and fabrication to manufacturing and industrial
plants all over the world ranging from small onsite repairs to complete turn-key maintenance.

2. Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed
consolidated financial statements are presented in accordance with generally accepted accounting principles for interim financial information and with the requirements of Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include
all the disclosures normally required by accounting principles generally accepted in the United States of America for complete financial statements. The condensed consolidated financial statements have been prepared in accordance with the
Companys customary accounting practices and, in the opinion of management, all adjustments necessary to fairly present the financial position, results of operations and cash flows for the reported interim periods have been made and were of a
normal recurring nature. Operating results for the three and six month periods ended June 30, 2007 are not necessarily indicative of the results that may be expected for the year ending December 31, 2007. For further information, refer to
the consolidated financial statements and notes included in the Companys Annual Report on Form 10-K for the year ended December 31, 2006. The accompanying condensed consolidated financial statements include the accounts of Wise Metals
Group LLC and its subsidiaries. Intercompany transactions have been eliminated in consolidation.

Restricted Cash

Restricted cash generally consists of cash on deposit with brokers to support lines of credit associated with the Companys derivative and hedging activity. At
June 30, 2007 and December 31, 2006 substantially all restricted cash was on deposit with brokers associated with derivative and hedging activity as more fully described below.

Derivatives and Hedging Activity

The Company has entered into long-term contracts to supply can sheet to its largest
customers. To reduce the risk of changing prices for purchases and sales of metal, including firm commitments under these supply contracts, the Company uses commodity futures and option contracts. In addition, the Company uses natural gas futures
and option contracts.

In June 1998, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 133
(SFAS No. 133), Accounting for Derivative Instruments and Hedging Activity. The Statement requires companies to recognize all derivative instruments as either assets or liabilities on the balance sheet at fair value. Derivatives that are
not hedges must be adjusted to fair value through the statement of operations. The Company has elected not to designate any of its derivative instruments as hedges under SFAS No. 133.

In determining fair value, the Company uses market quotes for contracts of similar maturity. The market quotes for the aluminum futures and options are adjusted for
premiums/discounts for various product grades, locations, and the closing times for various terminal markets.



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A summary of the fair value of the Companys derivative instruments is as follows:



|                                     |  |                            |       |   |                                |   |        |  
|------------------------------------ |  | -------------------------- | ----- | - | ------------------------------ | - | ------ | -
|Description of Derivative Instrument |  | Fair value atJune 30, 2007 |       |   | Fair value atDecember 31, 2006 |  
|Aluminum futures and options         |  | $                          | 1,886 |   |                                | $ | (2,837 | )
|Natural gas futures and options      |  |                            | (421  | ) |                                |   | (3,578 | )
|                                     |  |                            |       |   |                                |   |        |  
|                                     |  | $                          | 1,465 |   |                                | $ | (6,415 | )
|                                     |  |                            |       |   |                                |   |        |  

Unrealized gain (loss) amounts recorded were as follows:



|                                     |  |                          |       |      |   |        |  
|------------------------------------ |  | ------------------------ | ----- | ---- | - | ------ | -
|                                     |  | Six monthsended June 30, |      
|Description of Derivative Instrument |  | 2007                     |       | 2006 |  
|Aluminum futures and options         |  | $                        | 4,526 |      | $ | 4,086  |  
|Natural gas futures and options      |  |                          | 3,157 |      |   | (2,831 | )
|                                     |  |                          |       |      |   |        |  
|                                     |  | $                        | 7,683 |      | $ | 1,255  |  
|                                     |  |                          |       |      |   |        |  

In connection with the Companys futures activity, the Company maintains lines of credit with brokers to
cover unrealized losses on futures contracts and uses options to manage price exposure with respect to firm commitments to purchase or sell aluminum.

Inventories

Inventories consisted of the following:



|                                |  |              |         |   |                  |   |         |  
|------------------------------- |  | ------------ | ------- | - | ---------------- | - | ------- | -
|                                |  | June 30,2007 |         |   | December 31,2006 |  
|Manufacturing inventories:      |  |              |         |   |                  |   |         |  
|Raw materials                   |  | $            | 80,927  |   |                  | $ | 66,743  |  
|Work in progress                |  |              | 57,408  |   |                  |   | 65,832  |  
|Finished goods                  |  |              | 62,160  |   |                  |   | 39,384  |  
|LIFO reserve                    |  |              | (69,454 | ) |                  |   | (69,454 | )
|                                |  |              |         |   |                  |   |         |  
|Total manufacturing inventories |  |              | 131,041 |   |                  |   | 102,505 |  
|Supplies inventory              |  |              | 17,908  |   |                  |   | 18,060  |  
|                                |  |              |         |   |                  |   |         |  
|Total inventories               |  | $            | 148,949 |   |                  | $ | 120,565 |  
|                                |  |              |         |   |                  |   |         |  

Manufacturing inventories are stated at lower of cost or market based on the last-in, first-out (LIFO) method. An
actual valuation of inventory under the LIFO method can be made only at the end of each year based on the inventory levels and costs at that time. Interim LIFO calculations must necessarily be based on managements estimates of expected
year-end inventory levels and costs dependent upon prevailing aluminum costs and other factors which are beyond managements control. Accordingly, managements estimates of the effects of LIFO calculations on inventories and costs of sales
are subject to change prior to the year-end calculation.



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Long-Lived Assets

The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison
of the carrying amount of the assets to the future net cash flows expected to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the
assets exceeds their fair value. Judgments made by us related to the expected useful lives of long-lived assets and the ability to realize any undiscounted cash flows in excess of the carrying amounts of such assets are affected by factors such as
the ongoing maintenance and improvements of the assets, changes in the expected use of the assets, changes in economic conditions, changes in operating performance and anticipated future cash flows.

New Accounting Pronouncements

In September 2006, the FASB issued
SFAS No. 157 (SFAS No. 157), Fair Value Measurements. This statement defines fair value and provides guidance for measuring fair value and the necessary disclosures. This statement does not require any new fair value measurements and applies
to all other accounting pronouncements that require or permit fair value measurements. SFAS No. 157 will be effective for the Companys fiscal year ending December 31, 2008. The Company has not yet determined the impact from adoption of this
new accounting pronouncement on the Companys financial position.

In September 2006, the FASB issued SFAS No. 158 (SFAS No. 158), Employers
Accounting for Defined Benefitand Other Postretirement Plansanamendment of FASB Statements No. 87,88,106, and 132 (R). SFAS No. 158 requires companies to recognize a net liability or asset and an offsetting
adjustment to accumulated other comprehensive income to report the funded status of defined benefit pension and other postretirement benefit plans. SFAS No. 158 requires prospective application, and the recognition and disclosure requirements are
effective for the Companys fiscal year ending December 31, 2007. In addition, SFAS No. 158 requires companies to measure plan assets and obligations at their year-end balance sheet date. This requirement is effective for the Companys
fiscal year ending December 31, 2008. Management is currently evaluating the impact of the adoption of SFAS No. 158 on the Companys financial statements.

3. Financing Arrangements

Debt consists of the following at:



|                                      |  |               |          |   |                   |   |          |  
|------------------------------------- |  | ------------- | -------- | - | ----------------- | - | -------- | -
|                                      |  | June 30, 2007 |          |   | December 31, 2006 |  
|Revolving and secured credit facility |  | $             | 192,540  |   |                   | $ | 177,187  |  
|Senior secured 10.25% notes due 2012  |  |               | 150,000  |   |                   |   | 150,000  |  
|Other notes payable                   |  |               | 31,063   |   |                   |   | 17,613   |  
|                                      |  |               |          |   |                   |   |          |  
|                                      |  |               | 373,603  |   |                   |   | 344,800  |  
|Less current portion                  |  |               | (195,637 | ) |                   |   | (178,946 | )
|                                      |  |               |          |   |                   |   |          |  
|                                      |  | $             | 177,966  |   |                   | $ | 165,854  |  
|                                      |  |               |          |   |                   |   |          |  

Effective December 31, 2006, the Company completed an amendment to its revolving credit facility. The
amendment reset certain covenant levels based on the Companys most recent results and projections. Pursuant to the amendment, as of and subsequent to December 31, 2006, the Company must either meet the minimum Adjusted EBITDA levels
(which represents EBITDA, defined as net income (loss) before income taxes, interest expense and fees, net, and depreciation and amortization, adjusted to exclude early extinguishment of debt, income from affiliate, nonrecurring charges, severance
charges and credits, LIFO adjustments, cumulative effect of change in accounting principle and mark-to-market adjustment for contracts under SFAS No. 133) or the Adjusted Excess Availability as defined within the credit agreement must be equal
to or greater than $20,000,000 for each of the ten (10) consecutive days immediately preceding the last day of the month. As of June 30, 2007 the Company was in compliance with the debt covenants under this agreement, as amended. See
Item 2, Managements Discussion and Analysis of Financial Condition and Results of Operation  Liquidity and Capital Resources for further discussion.

Effective March 31, 2006 the Company executed an asset sale agreement with a financial institution that allows the Company to sell certain accounts receivable up to $17 million on a non-recourse basis. This
agreement was due to expire on December 31, 2006. On December 31, 2006 the agreement was renewed and extended to June 15, 2007, and allowed the Company to sell certain accounts receivable up to $10 million on a non-recourse basis. The
agreement was further amended on April 9, 2007 to increase the facility to a total of $20 million and extend the term of the agreement to June 29, 2007. Under the terms of the agreement, the Company agreed to sell on an ongoing basis and
without recourse, a designated customers accounts receivable. The Company has not renewed the agreement which had been extended to June 29, 2007 and therefore as of June 30, 2007, the Company had no sales of accounts receivable
under this agreement. At June 30, 2007, the Company also has $1.7 million of outstanding letters of credit with a financial institution. Substantially all the assets of the Company are pledged as collateral for its financing arrangements.



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4. Pension and Post-Retirement Benefits

The Companys pension and other post retirement benefit plans are more fully disclosed in Note 8 of the Notes to Consolidated Financial Statements included in Item 8 of the Companys Annual Report on
Form 10-K for the year ended December 31, 2006. Effective April 1, 1999, the Company established a defined benefit pension plan that covers essentially all union employees. The plan provides certain levels of benefits based on years of
service and wage levels, but does not provide benefits for any prior service. In addition, defined contribution plans for both union and nonunion employees were established.

In 2003 the Company agreed to defined contributions, for certain union employees, to multi-employer union pension plans. This was done in exchange for freezing service time and the pension factor in the aforementioned
defined benefit plan as of the first quarter of 2004 and eliminating post-retirement benefits for affected employees.

The Company also established
post-retirement benefit plans for all hourly and salaried employees effective April 1, 1999. The union employees who become eligible to retire under the defined benefit plan, and are not a part of the unions that have elected the multi-employer
option, will retain health benefits and certain other benefits for life. Salaried employees who retire after age 60 with a combined 10 years service with Wise Alloys LLC and the previous owner of the Wise Alloys facilities will be eligible for
medical benefits until age 65.

The Companys funding policy for these plans is to contribute negotiated amounts to the multi-employer funds and
amounts necessary to meet minimum funding requirements of the Employee Retirement Income Security Act for the defined benefit plans but not to exceed the maximum deductible amount allowed by the Internal Revenue Code. The Company contributed $1,644
to the multi-employer plans during 2006. Contributions to the defined benefit plan are expected to be $2,710 during 2007.

The 2007 and 2006 amounts shown
below reflect the defined benefit pension and other postretirement benefit expense for the three and six month periods ended June 30 for each year:



|                                   |  |                            |      |   |                               |   |      |                  |  |   |                               |   |  |      |     |   |      |   |      |      |  |   |      |   |  |   |     |   |  |   |     |  
|---------------------------------- |  | -------------------------- | ---- | - | ----------------------------- | - | ---- | ---------------- |  | - | ----------------------------- | - |  | ---- | --- | - | ---- | - | ---- | ---- |  | - | ---- | - |  | - | --- | - |  | - | --- | -
|                                   |  | Three months ended June 30 |      |   | Six months ended June 30      |  
|                                   |  | Pension Benefits           |      |   | Other PostRetirement Benefits |   |      | Pension Benefits |  |   | Other PostRetirement Benefits |  
|                                   |  | 2007                       |      |   | 2006                          |   |      | 2007             |  |   | 2006                          |   |  | 2007 |     |   | 2006 |   |      | 2007 |  |   | 2006 |  
|Service cost                       |  | $                          | 344  |   |                               | $ | 325  |                  |  | $ | 356                           |   |  | $    | 385 |   |      | $ | 689  |      |  | $ | 650  |   |  | $ | 711 |   |  | $ | 771 |  
|                                   |  |                            |      |   |                               |   |      |                 
|Interest cost                      |  |                            | 281  |   |                               |   | 237  |                  |  |   | 142                           |   |  |      | 115 |   |      |   | 562  |      |  |   | 474  |   |  |   | 283 |   |  |   | 229 |  
|                                   |  |                            |      |   |                               |   |      |                 
|Expected return on plan assets     |  |                            | (273 | ) |                               |   | (175 | )                |  |   |                              |   |  |      |    |   |      |   | (547 | )    |  |   | (350 | ) |  |   |    |   |  |   |    |  
|                                   |  |                            |      |   |                               |   |      |                 
|Amortization of prior service cost |  |                            | 9    |   |                               |   | 9    |                  |  |   |                              |   |  |      |    |   |      |   | 18   |      |  |   | 18   |   |  |   |    |   |  |   |    |  
|                                   |  |                            |      |   |                               |   |      |                 
|Net loss (gain) recognition        |  |                            | 11   |   |                               |   | 7    |                  |  |   | (29                           | ) |  |      | (31 | ) |      |   | 22   |      |  |   | 14   |   |  |   | (59 | ) |  |   | (61 | )
|                                   |  |                            |      |   |                               |   |      |                  |  |   |                               |   |  |      |     |   |      |   |      |      |  |   |      |   |  |   |     |   |  |   |     |  
|Net periodic benefit cost          |  | $                          | 372  |   |                               | $ | 403  |                  |  | $ | 469                           |   |  | $    | 469 |   |      | $ | 744  |      |  | $ | 806  |   |  | $ | 935 |   |  | $ | 939 |  
|                                   |  |                            |      |   |                               |   |      |                  |  |   |                               |   |  |      |     |   |      |   |      |      |  |   |      |   |  |   |     |   |  |   |     |  

5. Contingencies

The Company is a defendant in an action brought by Merrill Lynch, Pierce, Fenner & Smith Incorporated pending in the New York Supreme Court, County of New York. In this action, Merrill Lynch seeks $0.9 million for out-of-pocket
costs and expenses allegedly incurred pursuant to a letter agreement between Wise Metals and Merrill Lynch dated January 31, 2002, in which Merrill Lynch alleges that Wise Metals agreed to reimburse Merrill Lynch for such costs and expenses.
Wise Metals has hired counsel and is vigorously contesting this lawsuit and believes it has meritorious defenses. Wise Metals has filed an answer to the complaint denying the material allegations and alleging several affirmative defenses and
counterclaims which exceed in amount the sum sought by Merrill Lynch. Merrill Lynch moved to dismiss the Wise Metals counterclaims and by an order dated December 30, 2004, the Court granted this motion, dismissed the counterclaims and
permitted Wise Metals to replead two of the counterclaims. Wise Metals appealed, which resulted in a reversal reinstating the dismissed counterclaims. Merrill Lynch has replied to the counterclaims. The action is proceeding and is presently in the
discovery stages. The Company



---

believes that it is not currently possible to estimate the ultimate outcome of this litigation. As a result, no expense for any potential adverse outcome of
this matter has been recorded in the consolidated financial statements.

The Company was a defendant in an action brought by a former executive seeking
compensatory damages previously pending in Delaware State Court. The plaintiff alleged that certain transactions between Wise Metals Group members violated the Companys Limited Liability Company Agreement because other members were not
afforded the opportunity to participate on equal terms, breach of fiduciary duty and conversion of a portion of the plaintiffs equity interest in the Company. On June 25, 2007, the parties reached a settlement whereby in exchange for $2
million, the plaintiff would surrender his equity interest in the Company, forgo any claim for a $1 million severance that plaintiff alleges would otherwise come due on his 62nd birthday and provide the Company with a general release of any existing
or potential claims. This settlement was approved by the court and the action was dismissed on June 25, 2007.

On August 11, 2006 the Company filed a
lawsuit against Crown Cork and Seal (USA), Inc. in state court in Alabama (Alabama Action) for breach of contract and seeking a declaratory judgment on our beverage can sheet and food sheet contracts. The lawsuit alleges damages because
of breaches by Crown of the beverage can sheet contract, and asks the court to interpret certain pricing provisions of the food contract. On January 26, 2007, Crown entered a counterclaim asserting breach of contract and seeking declaratory
judgments on our beverage can sheet and food container contracts.

On September 8, 2006, Crown filed a lawsuit against the Company in state court in
Pennsylvania (Pennsylvania Action) for breach of contract and seeking declaratory judgments on our beverage can sheet and food container contracts. The Pennsylvania Action has been stayed upon the Companys motion pending resolution
of the Alabama Action.

The Company intends to vigorously contest the Pennsylvania Action and the counterclaim in the Alabama Action and at this time is
unable to determine the reasonable likely outcome of both the Companys and Crowns claims. In the opinion of management, amounts accrued for exposures relating to the aforementioned contingencies, and other legal proceedings are adequate
and, accordingly, the ultimate resolution of these matters is not expected to have a material adverse effect on the Companys consolidated financial statements.

The Company is a party to certain claims and litigation associated with employment related matters for which management believes that the ultimate resolution will not have a material adverse impact on the
Companys financial position.

Future environmental regulations, including those under the Clean Air Act and Clean Water Act, or more aggressive
enforcement of existing regulations, may result in stricter compliance requirements for the Company and for the aluminum industry in general.

In
connection with our acquisition of the Listerhill facility in 1999, a consultant performed a soil and groundwater investigation (Phase II Report) to identify any environmental issues at the various plants that comprise the Listerhill
facility. That Phase II Report identified certain on-site environmental areas of concern that may potentially require investigation or remediation and provided a then-present value estimate of approximately $18 million to address them. Pursuant to
the Listerhill facility purchase agreement, the prior owner of the Listerhill facility, Reynolds, now Alcoa, is required to perform the work necessary and to indemnify the Company against the environmental matters required by applicable law to be
addressed that are identified in the Phase II Report and any other such environmental liabilities attributable to Reynolds that were identified on or before March 31, 2004 subject to certain limitations. Alcoa disagrees with the cost estimates
contained in the Phase II Report and has stated that it estimates that the environmental issues identified in the Phase II Report will cost less than $18 million to remediate. Although Alcoa has conducted some on-site environmental investigations
and sampling and has submitted reports to the Alabama Department of Environmental Management (ADEM) regarding most of the on-site areas of concern, it has not yet commenced cleanup activities with respect to many of the areas of concern.

The Company is also party to an Environmental Cooperation Agreement, or ECA, with Alcoa, which is Reynolds successor. The ECA addresses, among other things, the
use of a surface water ditch system by both us and Alcoa, the use of process water retention ponds on Alcoas property and certain surface drainage easements across our property. The ECA expires in December 2009, with automatic two year renewal
periods unless either party elects to terminate, in which event the ECA will terminate one year following such election. Under the ECA, each party defends and indemnifies the other against claims arising from its own violations of any applicable
environmental laws, its handling, use, or disposal of hazardous materials at the Listerhill facility, a breach of any warranties, representations or covenants in the agreement, or damage or loss to property and injury to or death of any persons.

In November 2006 the Company received notice from the Environmental Protection Agency (EPA) regarding certain violations of the Clean Air Act.
The Company disputes some of the alleged violations and has initiated actions to come into compliance with the relevant requirements. The EPA has indicated its intent to resolve the violations through a judicial consent-decree, including the payment
of civil penalties by the Company. Discussions with the EPA are ongoing. The ultimate outcome cannot be reasonably estimated at this time and thus no expense has been recorded in the Companys consolidated financial statements.



---

6. Business Segment Information

A reportable segment is a component of an enterprise in which the operating results are regularly reviewed by the enterprises chief operating decision maker to make decisions about resources to be allocated to
the segment and assess its performance, and for which discrete financial information is available. The Company has two reportable segments under SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information:
Alloys and Recycling.

Wise Alloys: Alloys principally manufactures and sells aluminum can sheet to aluminum can producers and also serves the
transportation, building, and construction markets. Beverage can stock is aluminum sheet specifically designed and engineered for use in the production of aluminum beverage cans and represents the Companys primary product. Can stock customers
include Ball Corporation, Crown Holdings, Inc. and Rexam PLC, the three largest beverage can manufacturers in the world. In addition, Alloys produces food can stock and semi-fabricated aluminum sheet for building and construction, transportation and
other markets.

Wise Recycling: Recycling is engaged in the recycling and sale of scrap aluminum and other non-ferrous metals for use by Alloys as
well as for sale to third parties. Recycling provides the Company with an effective, profitable infrastructure to obtain a portion of Alloys scrap requirements. Recycling has developed a collection process that utilizes both direct
acquisitions from scrap dealers and industrial accounts, as well as off-the-street from the actual consumer. Furthermore, Recycling collects other forms of non-ferrous scrap, primarily non-UBC aluminum, copper and brass, for sale in the
merchant market. The Company is currently expanding the business of Recycling to include warehousing operations in order to provide regional shipping centers for our scrap collection and to enhance the ability to provide a vendor managed inventory
program for Alloys customers.

Substantially all revenues and assets are attributed to or are located in the United States. The Company evaluates segment
performance based on profit or loss from operations excluding corporate general and administrative expenses, LIFO adjustments, and derivative gains or losses included in cost of sales. The accounting policies of the segments are the same as those
described in the significant accounting policies.

We have concluded that TMC is not a reportable segment because it is not significant to our consolidated
operations and represents less that 10% of our revenues in each of the past three years ended December 31, 2006, 2005 and 2004. Financial information about TMC is included in the Other caption in the tables below.

The following table sets forth information on the Companys reportable segments:



|                                                        |  |                    |         |   |                  |   |         |               |  |   |               |   |  |   |         |  
|------------------------------------------------------- |  | ------------------ | ------- | - | ---------------- | - | ------- | ------------- |  | - | ------------- | - |  | - | ------- | -
|                                                        |  | Three Months Ended |         |   | Six Months Ended |  
|($ in thousands)                                        |  | June 30, 2007      |         |   | June 30, 2006    |   |         | June 30, 2007 |  |   | June 30, 2006 |  
|Net Sales                                               |  |                    |         |   |                  |   |         |               |  |   |               |   |  |   |         |  
|Alloys                                                  |  | $                  | 234,105 |   |                  | $ | 245,283 |               |  | $ | 452,333       |   |  | $ | 437,556 |  
|Recycling  (Note 1)                                    |  |                    | 43,069  |   |                  |   | 37,584  |               |  |   | 71,479        |   |  |   | 61,216  |  
|Other                                                   |  |                    | 626     |   |                  |   | 387     |               |  |   | 1,204         |   |  |   | 758     |  
|                                                        |  |                    |         |   |                  |   |         |               |  |   |               |   |  |   |         |  
|Net sales                                               |  | $                  | 277,800 |   |                  | $ | 283,254 |               |  | $ | 525,016       |   |  | $ | 499,530 |  
|                                                        |  |                    |         |   |                  |   |         |               |  |   |               |   |  |   |         |  
|                                                        |  |                    |         |  
|Segment (loss) profit                                   |  |                    |         |   |                  |   |         |               |  |   |               |   |  |   |         |  
|Alloys                                                  |  | $                  | 2,799   |   |                  | $ | (16,135 | )             |  | $ | 11,083        |   |  | $ | (16,749 | )
|Recycling  (Note 1)                                    |  |                    | 3,307   |   |                  |   | 4,969   |               |  |   | 5,247         |   |  |   | 7,339   |  
|                                                        |  |                    |         |   |                  |   |         |               |  |   |               |   |  |   |         |  
|Segment (loss) profit                                   |  |                    | 6,106   |   |                  |   | (11,166 | )             |  |   | 16,330        |   |  |   | (9,410  | )
|LIFO adjustments                                        |  |                    |        |   |                  |   |        |               |  |   |              |   |  |   |        |  
|Mark-to-market adjustments for contracts under SFAS 133 |  |                    | (3,336  | ) |                  |   | (3,456  | )             |  |   | 7,683         |   |  |   | 1,256   |  
|Corporate and other undistributed expenses, net         |  |                    | (7,709  | ) |                  |   | (1,838  | )             |  |   | (25,387       | ) |  |   | (4,806  | )
|                                                        |  |                    |         |   |                  |   |         |               |  |   |               |   |  |   |         |  
|Net (loss) income                                       |  | $                  | (4,939  | ) |                  | $ | (16,460 | )             |  | $ | (1,374        | ) |  | $ | (12,960 | )
|                                                        |  |                    |         |   |                  |   |         |               |  |   |               |   |  |   |         |  



---

---

Note 1: The Company has eliminated all intercompany sales
and cost of sales associated with transfers of recycled aluminum from Recycling to Alloys. Recycling transfers aluminum to Alloys at market value and recognizes profit only when the sale to the end consumer is completed. Recycling transferred
aluminum with a cost of $36,350, $23,663, $61,935 and $43,440 to Alloys for the three and six months ended June 30, 2007 and 2006, respectively.



|                    |  |               |         |                   |   |        
|------------------- |  | ------------- | ------- | ----------------- | - | -------
|                    |  | As of        
|                    |  | June 30, 2007 |         | December 31, 2006
|Total Assets        |  |               |         |                   |   |        
|Alloys              |  | $             | 303,139 |                   | $ | 297,754
|Recycling           |  |               | 45,801  |                   |   | 31,409 
|Corporate and other |  |               | 25,807  |                   |   | 9,093  
|                    |  |               |         |                   |   |        
|Total assets        |  | $             | 374,747 |                   | $ | 338,256
|                    |  |               |         |                   |   |        



|                                    |  |                |       |      |   |      
|----------------------------------- |  | -------------- | ----- | ---- | - | -----
|                                    |  | As of June 30,
|                                    |  | 2007           |       | 2006
|Depreciation and Amortization       |  |                |       |      |   |      
|Alloys                              |  | $              | 6,205 |      | $ | 5,854
|Recycling                           |  |                | 342   |      |   | 283  
|Corporate and other                 |  |                | 4     |      |   | 84   
|                                    |  |                |       |      |   |      
|Total depreciation and amortization |  | $              | 6,551 |      | $ | 6,221
|                                    |  |                |       |      |   |      



|                           |  |                |       |      |   |      
|-------------------------- |  | -------------- | ----- | ---- | - | -----
|                           |  | As of June 30,
|                           |  | 2007           |       | 2006
|Capital Expenditures       |  |                |       |      |   |      
|Alloys                     |  | $              | 7,913 |      | $ | 5,852
|Recycling                  |  |                | 193   |      |   | 641  
|Corporate and other        |  |                | 78    |      |   |     
|                           |  |                |       |      |   |      
|Total capital expenditures |  | $              | 8,184 |      | $ | 6,493



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|ITEM 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- | -------------------------------------------------------------------------------------

Overview

We are the third largest producer of aluminum beverage can sheet in the world and one of
the largest aluminum scrap recyclers in the United States. Beverage can sheet is aluminum sheet specifically designed and engineered for the production of aluminum beverage cans. Our customers include Ball, Crown, and Rexam. These customers produce
aluminum cans for the largest brewers and carbonated soft drink makers in North America. In addition, we provide food container stock and semi-fabricated aluminum sheet for the transportation and other common alloy markets. In 2006, we supplied an
estimated 14% of the North American market for aluminum beverage can sheet as measured by volume and we own one of only five beverage can sheet facilities in North America, providing valuable capacity to a consolidated industry. We further estimate
that our market share for 2007 will remain consistent, while also increasing our market presence in the common alloy markets.

Unlike some
of our principal competitors, we do not manufacture aluminum from bauxite. Instead, we process aluminum scrap and prime aluminum manufactured by third parties. As a result, we do not have the capital requirements and high fixed costs associated with
the production of prime aluminum. Historically, prices of our aluminum can sheet and other products have been directly correlated to the prices of our metal costs due to the standard industry practice of passing through metal costs to customers,
subject to the impacts of metal ceiling or price caps. The Company expects to have no impact from metal ceilings in 2007.

Quarterly
Information

Our quarterly revenues tend to fluctuate period to period based in large part on changes in aluminum prices. These changes
generally do not affect our cash flow because we seek to match our hedging positions to our contractually-obligated sales agreements. We also pass aluminum cost increases to customers through an indexed pricing mechanism and/or by fixing the cost of
metal through forward contracts on the London Metals Exchange (LME). Our net income may also fluctuate period to period based on the mark to market adjustments for derivatives we hold to hedge aluminum and natural gas. Because we do not designate
our forward contracts as hedges under Statement of Financial Accounting Standards No. 133 (FAS 133), Accounting for Derivative Instruments and Hedging Activity, we are required to recognize the non-cash mark to market adjustment in our
current earnings and these adjustments may be material.

Critical Accounting Policies

We have prepared our financial statements in conformity with accounting principles generally accepted in the United States. These statements include some
amounts that are based on informed judgments and estimates of management. Our critical accounting policies are discussed in Item 7, Managements Discussion and Analysis of Financial Condition and Results of Operations  Critical
Accounting Policies in our Annual Report on Form 10-K for the year ended December 31, 2006. Since the date of our 2006 Form 10-K, there have been no changes to our critical accounting policies or the methodologies and assumptions applied
under them.

Operating Results

Three months ended June 30, 2007 and 2006

Sales.Consolidated sales decreased from $283.3 million in the
three months ended June 30, 2006, to $277.8 million in the comparable period in 2007, a decrease of $5.5 million or 2%. The decrease was a result of lower shipments decreasing from 207.4 million pounds in the three months ended
June 30, 2006 to 201.4 million pounds in the second quarter of 2007.

Wise Alloys sales decreased from $245.3 million in the
three months ended June 30, 2006 to $234.1 million in the comparable period in 2007, a decrease of $11.2 million or 5%. Second quarter shipments were lower due mostly to can sheet customers reducing inventory quantities from year-end
levels combined with the effect of slightly lower contractual volumes which resulted from negotiations to improve pricing. Shipment volumes decreased from 176.5 million pounds in the three months ended June 30, 2006 to 154.0 million
pounds in the second quarter of 2007, a decrease of 22.5 million pounds or 13%. Offsetting the decrease in shipment volumes were price increases that were effective on January 1, 2007.



---

Wise Recycling sales to third parties increased from $37.6 million in the three months ended
June 30, 2006 to $43.1 million in the comparable period in 2007, an increase of $5.5 million or 15%. Shipments by Wise Recycling to third parties increased approximately 53% for the second quarter of 2007 over the second quarter of 2006
due to higher recycling activity and an increased presence in the ferrous market.

Cost of Sales. Consolidated cost of sales
decreased from $284.9 million in the three months ended June 30, 2006, to $266.7 million in the three months ended June 30, 2007, a decrease of $18.2 million or 6%. The decrease in consolidated cost of sales was primarily due to
the decrease in shipments.

Wise Alloys cost of sales decreased from $261.3 million in the three months ended June 30, 2006 to $231.2
million in the three months ended June 30, 2007, a decrease of $30.1 million or 12%. Metal costs, representing 75% of Alloys cost of sales in the second quarter of 2006 and 74% in the second quarter of 2007, decreased from $196.1 million in the
second quarter of 2006 to $171.7 million in the second quarter of 2007, a decrease of $24.4 million or 12%. The decrease is attributable to the 13% decrease in Alloys shipments offset by higher metal prices. This was partially offset by a 9%
decrease in natural gas cost from $8.95 per mmBTUs for the three months ended June 30, 2006 to $8.10 per mmBTUs for the comparable period in 2007.

Wise Recycling cost of sales associated with third party sales increased from $32.1 million in the three months ended June 30, 2006 to $39.2 million in the three months ended June 30, 2007, an increase of
22%. The increase can be attributed to the increased volumes at Recycling.

Selling, General and Administrative. Selling, general
and administrative expense increased from $2.9 million in the second quarter of 2006 to $3.4 million in the second quarter of 2007 resulting in part from a $1.0 million increase in the Companys bad debt expense due to a specific
customer reserve. The Company remains in dispute with one of its larger customers over interpretation of a contract clause that affects a pricing formula used to derive the final sales price. The $1.0 million increase in selling, general and
administrative expenses is a direct result of this dispute.

Interest Expense and Fees. Interest expense and fees increased from
$8.4 million in the second quarter of 2006 to $9.3 million in the second quarter of 2007 due to higher outstanding amounts on our line of credit which increased from $181.1 million at June 30, 2006, to $192.5 million at June 30,
2007. The increase was due to higher working capital needs caused by higher metal prices.

Mark-to-Market for Contracts under SFAS
No. 133.This expense represents the non-cash gain or loss we recognized from changes in the value of our derivative financial instruments. The unrealized gains were primarily a result of forward contracts entered into to hedge the cost of
natural gas and aluminum. The fair value decrease during the second quarter of 2006 was $3.5 million compared to a decrease of $3.3 million during the second quarter of 2007.

Six months ended June 30, 2007 and 2006

Sales.Consolidated sales increased from $499.5 million in the six months ended June 30, 2006, to $525.0 million in the comparable period in 2007, an increase of $25.5 million or 5%. The increase was a result of higher
prices driven primarily by higher metal cost pass-through while shipments decreased from 377.3 million pounds in the first six months of 2006 to 370.6 million pounds in 2007.

Wise Alloys sales increased from $437.6 million in the six months ended June 30, 2006 to $452.3 million in the comparable period in 2007, an
increase of $13.5 million or 3%. First half shipments were lower due mostly to can sheet customers reducing inventory quantities from year-end levels combined with the effect of slightly lower contractual volumes which resulted from negotiations to
improve pricing. Shipment volumes decreased from 320.5 million pounds in the six months ended June 30, 2006 to 291.2 million pounds in the first six months of 2007, a decrease of 29.3 million pounds or 9%. Offsetting the
decrease in shipment volumes were price increases that were effective on January 1, 2007.

Wise Recycling sales to third parties
increased from $61.2 million in the six months ended June 30, 2006 to $71.5 million in the comparable period in 2007, an increase of $10.3 million or 17%.



---

Shipments by Wise Recycling to third parties increased approximately 40% for the first six months of 2007over the first six months of 2006 due to higher
recycling activity and an increased presence in the ferrous market.

Cost of Sales. Consolidated cost of sales increased from $492.3
million in the six months ended June 30, 2006, to $507.7 million in the six months ended June 30, 2007, an increase of $15.4 million or 3%.

Wise Alloys cost of sales decreased from $454.0 million in the six months ended June 30, 2006 to $439.7 million in the six months ended June 30, 2007, a decrease of $14.3 million or 3%. Metal costs,
representing 73% of Alloys cost of sales in the first six months of 2006 and 73% in the first six months of 2007, decreased from $333.4 million in 2006 to $322.2 million in 2007, a decrease of $11.1 million or 3%. The decrease is attributable to the
9% decrease in Alloys shipments partially offset by higher metal prices and a 19% decrease in natural gas cost from $10.70 per mmBTUs for the six months ended June 30, 2006 to $8.69 per mmBTUs for the comparable period in
2007.

Wise Recycling cost of sales associated with third party sales increased from $53.2 million in the six months ended June 30,
2006 to $65.2 million in the six months ended June 30, 2007, an increase of 23%. The increase can be attributed to the increased volumes at Recycling.

Selling, General and Administrative. Selling, general and administrative expense increased from $5.9 million in the first six months of 2006 to $7.9 million in the first six months of 2007 resulting in
part from a $2.5 million increase in the Companys bad debt expense due to a specific customer reserve. The Company remains in dispute with one of its larger customers over interpretation of a contract clause that affects a pricing formula
used to derive the final sales price. The $2.5 million increase in selling, general and administrative expenses is a direct result of this dispute.

Interest Expense and Fees. Interest expense and fees increased from $15.6 million in the first six months of 2006 to $18.4 million in the first six months of 2007 due to higher outstanding amounts on our line of credit which
increased from $181.1 million at June 30, 2006, to $192.5 million at June 30, 2007. The increase was due to higher working capital needs caused by higher metal prices.

Mark-to-Market for Contracts under SFAS No. 133.This income represents the non-cash gain we recognized from changes in the value of our
derivative financial instruments. The unrealized gains were primarily a result of forward contracts entered into to hedge the cost of natural gas and aluminum. The fair value increase during the first six months of 2006 was $1.3 million
compared to an increase of $7.7 million during the first six months of 2007.

Liquidity and Capital Resources

The following discusses material changes in our liquidity and capital resources in the six months ended June 30, 2007. For a more complete
discussion, refer to our Annual Report on Form 10-K for the year ended December 31, 2006.

As of June 30, 2007, the outstanding
balance on our revolving line of credit facility was $192.5 million. In addition, we had approximately $1.7 million of outstanding letters of credit against our $207.5 million revolving credit line. The termination date on the
facility is May 5, 2009. The terms of the credit facility permit us to enter into various forms of additional financing with varying amounts. As of June 30, 2007, the Company was in compliance with the debt covenants under this agreement.
See Note 5 of the Notes to the Condensed Consolidated Financial Statements above for further discussion. Furthermore, we frequently offer cash discounts for early payment against receivables from our major can sheet customers which can also decrease
outstanding debt and increase overall liquidity.

Our liquidity has been directly impacted by aluminum prices which have increased steadily
and dramatically since 2002. Average aluminum prices in 2002 were 65.4 cents per pound and have risen over 87% to average $1.22 per pound in 2006 and risen still further to average $1.29 per pound for the six months ended June 30, 2007. These
price increases have impacted and are continuing to impact our working capital requirements resulting in higher outstanding debt supported by higher levels of receivables



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and inventory. Our net liquidity is determined based on a standard borrowing base formula which accounts for the collateral value of inventory and
receivables on a basis approximating the lower of current cost (on a FIFO basis) or fair market value. This borrowing base is then compared to the outstanding loan balance including outstanding letters of credit to determine a net amount available
for additional borrowings. Our liquidity could also be hampered if we incurred significant unexpected increases in necessary capital expenditures. Significant increases in volumes could also impact our liquidity. See Item 1A, Risk
Factors in our annual report on Form 10-K for the year ended December 31, 2006 for certain circumstances that could adversely affect our liquidity. Decreased sales or lower margins could have a material adverse effect on our liquidity. While
the metal price ceilings materially impacted sales in 2004, 2005 and 2006, the Company expects to have no impact from metal price ceilings in 2007.

If we do not comply with these or other covenants and restrictions contained in our senior secured credit facility, the indenture and other agreements governing our indebtedness, we could be in default under those agreements, and the debt
under those instruments, together with accrued interest, could then be declared immediately due and payable. If we default under our senior secured credit facility, the lenders could cause all of our outstanding debt obligations under our senior
secured credit facility to become due and payable, require us to apply all of our cash to repay the indebtedness or prevent us from making debt service payments on any other indebtedness we owe. In addition, any default under our senior secured
credit facility or agreements governing our other indebtedness could lead to an acceleration of debt under other debt instruments that contain cross-acceleration or cross-default provisions. If the indebtedness under our senior secured credit
facility and indenture is accelerated, we may have to seek other sources of financing or otherwise may not have sufficient assets to repay amounts due under our senior secured credit facility, our senior secured notes or under other debt securities
then outstanding. Our ability to comply with these provisions of our senior secured credit facility, the indenture and other agreements governing our other indebtedness may be affected by changes in economic or business conditions or other events
beyond our control.

Six months ended June 30, 2007 and 2006.

Operating Activities. During the six months ended June 30, 2007, net cash used in operating activities was $18.8 million, compared to
$40.9 million during the six months ended June 30, 2006. Fluctuations in cash used in and provided by operating activities are subject to changing working capital requirements especially for accounts receivable and inventory. During the six
months ended June 30, 2006, accounts receivable increased from $73.3 million at December 31, 2005, to $81.5 million at June 30, 2006, representing an increase of $8.2 million. In the six months ended June 30, 2007,
receivables increased from $104.1 million at December 31, 2006, to $117.2 million at June 30, 2007, an increase of $13.1 million. The receivables at December 31, 2006, were relatively high as a result of a significant
can sheet customer who had increased its order rate significantly at the end of the year leading to an increase in accounts receivable and a corresponding decrease in inventory levels. This also contributed to a $28.3 million increase in
inventory from December 31, 2006 to June 30, 2007. This was somewhat offset by aluminum prices, which decreased from an average of $1.31 per pound in December to an average of $1.24 per pound in June 2007.

Effective June 30, 2006 the Company executed an asset sale agreement with a financial institution that allows the Company to sell certain accounts
receivable up to $17 million on a non-recourse basis. This agreement was due to expire on December 31, 2006. On December 31, 2006 the agreement was renewed and extended to June 29, 2007, and allowed the Company to sell certain
accounts receivable up to $10 million on a non-recourse basis. The agreement was further amended on April 9, 2007 to increase the facility to a total of $20 million and extend the term of the agreement to June 29, 2007. The Company
has not renewed the agreement which had been extended to June 29, 2007 and therefore as of June 30, 2007, the Company had no sales of accounts receivable under this agreement.

Investing Activities. In the six months ended June 30, 2007, our capital expenditures were $8.2 million, compared to $6.5 million
during the same period in 2006. Both six month periods included some significant projects leading to relatively higher expenditures. Projects in the first six months of 2006 included expansion of one of our recycling facilities and a major project
to upgrade one of our furnaces. Projects in the first six months of 2007 included a significant furnace rebuild. The Company is continuing the next step in a program to further diversify industry product offerings by adding increased width to its
aluminum can-stock capabilities. The results of this phase will extend the width of Wise Alloys can stock from 60 inches to 72 inches by the end of 2008. This project will allow Wise Alloys can-sheet product to become also available to
beverage-can producers that use 14 and 15 out extended-width cupping presses in their manufacturing process.

Financing
Activities. Net cash provided by financing activities was $28.8 million in the six months ended June 30, 2007, compared to $43.9 million in the first six months of 2006. Net cash provided by financing activities was related to
increased borrowings under the revolving line of credit to fund increased working capital needs due to an increase in inventories in 2007 and primarily due to higher aluminum prices in 2006 and capital expenditures.

In 2006 the Company executed a sale-leaseback agreement on certain pieces of production equipment with The Employees Retirement System of Alabama
in the amount of $29.9 million. The agreement executed on November 13, 2006 provided the Company with an initial funding of $14.95 million followed by an additional $14.95 million which the Company drew down on January 3, 2007. The
agreement qualifies as a capital lease and has a three-year term with a fixed interest rate of 10.7%.



|ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|------- | ----------------------------------------------------------

See Item 7A of the Companys Annual Report on Form 10-K for the year ended December 31, 2006.



|ITEM 4. | CONTROLS AND PROCEDURES
|------- | -----------------------

(a) Disclosure Controls
and Procedures



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As of June 30, 2007, our management, including our Chief Executive Officer (CEO) and Chief Financial
Officer (CFO), has conducted an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Securities Exchange Act Rule 13a-15(e), as amended). Based on the evaluation, our CEO and CFO concluded that our disclosure
controls and procedures as of June 30, 2007 were not effective because of a material weakness in internal control over financial reporting described below.

(b) Changes in Internal Control Over Financial Reporting

We conducted an evaluation of the effectiveness of
our internal control over financial reporting as of December 31, 2006. Based on our evaluation of internal control over financial reporting, management identified the following material weakness as of December 31, 2006:

The Company has not maintained sufficient staff with appropriate training in US GAAP and SEC financial rules and regulations. These deficiencies
result in the potential for material misstatements and/or inadequate disclosures in the Companys financial statements.

The Company
has evaluated its resource requirements to ensure the timely and effective review and management of its reporting processes. The Company has formed a Finance Committee consisting of various financial and accounting personnel to regularly review the
effectiveness of internal controls over reporting and is evaluating staffing requirements to ensure the preparation of financial statements in accordance with GAAP. It has also added and is continuing to add additional financial staff, and has
reviewed and updated scheduling and planning protocols in place to ensure continued timely compliance with SEC reporting deadlines. Furthermore, the Company developed a process and has begun to execute a plan to evaluate and engage an external
consulting firm to assist in a review of its internal control policies and to develop a plan to test those controls and assist management in any required remediation activity.

Despite making progress during the fist half of 2007, the remedial action described above is ongoing and is not yet complete. Therefore, the
Companys internal control over financial reporting was not effective as of June 30, 2007.

PART II. OTHER INFORMATION



|ITEM 1. | LEGAL PROCEEDINGS
|------- | -----------------

We are a defendant from time to
time in various legal actions arising in the normal course of business, the outcomes of which, in the opinion of management, neither individually nor in the aggregate are likely to result in a material adverse effect on our business, results of
operations or financial condition. The following describes material developments in the second quarter of 2007 with respect to those proceedings reported in our Annual Report on Form 10-K for the year ended December 31, 2006.

The Company was a defendant in an action brought by a former executive seeking compensatory damages previously pending in Delaware State Court. The
plaintiff alleged that certain transactions between Wise Metals Group members violated the Companys Limited Liability Company Agreement because other members were not afforded the opportunity to participate on equal terms, breach of fiduciary
duty and conversion of a portion of the plaintiffs equity interest in the Company. On June 25, 2007 the parties reached a settlement whereby in exchange for $2 million, the plaintiff would surrender his equity interest in the Company,
forgo any claim for a $1 million severance that plaintiff alleges would otherwise come due on his 62nd birthday and provide the Company with a general release of any existing or potential claims. This settlement was approved by the court and the
action was dismissed on June 25, 2007.

On August 11, 2006 the Company filed a lawsuit against Crown Cork and Seal (USA), Inc. in
state court in Alabama (Alabama Action) for breach of contract and seeking a declaratory judgment on our beverage can sheet and food sheet contracts. The lawsuit alleges damages because of breaches by Crown of the beverage can sheet
contract, and asks the court to interpret certain pricing provisions of the food contract. On January 26, 2007, Crown entered a counterclaim asserting breach of contract and seeking declaratory judgments on our beverage can sheet and food container
contracts.

On September 8, 2006, Crown filed a lawsuit against the Company in state court in Pennsylvania (Pennsylvania
Action) for breach of contract and seeking declaratory judgments on our beverage can sheet and food container contracts. The Pennsylvania Action has been stayed upon the Companys motion pending resolution of the Alabama Action.

The Company intends to vigorously contest the Pennsylvania Action and the counterclaim in the Alabama Action and at this time is unable to
determine the reasonable likely outcome of both the Companys and Crowns claims. In the opinion of management, amounts accrued for exposures relating to the aforementioned contingencies, and other legal proceedings are adequate and,
accordingly, the ultimate resolution of these matters is not expected to have a material adverse effect on the Companys consolidated financial statements.



|ITEM 1A. | RISK FACTORS
|-------- | ------------

There were no material changes from
the risk factors as previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2006.



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|ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|------- | -----------------------------------------------------------

None.



|ITEM 3. | DEFAULTS UPON SENIOR SECURITIES
|------- | -------------------------------

None.



|ITEM 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
|------- | ---------------------------------------------------

None.



|ITEM 5. | OTHER INFORMATION
|------- | -----------------

None.



|ITEM 6. | EXHIBITS
|------- | --------



|     |  |                                                                                                         
|---- |  | --------------------------------------------------------------------------------------------------------
|31.1 |  | Certification of Chief Executive Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934.
|     | 
|31.2 |  | Certification of Chief Financial Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934.
|     | 
|32.1 |  | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.     
|     | 
|32.2 |  | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.     



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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



|                       |  |  |  |                                     
|---------------------- |  |  |  | ------------------------------------
|                       |  |  |  | WISE METALS GROUP LLC               
|                       |  | 
|Dated: August 14, 2007 |  |  |  | /s/ David DAddario                 
|                       |  |  |  | David DAddario                     
|                       |  |  |  | Chairman and Chief Executive Officer
|                       |  | 
|                       |  |  |  | /s/ Kenneth Stastny                 
|                       |  |  |  | Kenneth Stastny                     
|                       |  |  |  | Chief Financial Officer