<PAGE>

                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

(MARK ONE)

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

                  For the quarterly period ended June 30, 2003

                                       OR

[_]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

         For the transition period from ______________ to ______________

                            METALLURG HOLDINGS, INC.
             (Exact name of registrant as specified in its charter)

              Delaware                                     23-2967577
      (State of organization)               (I.R.S. Employer Identification No.)

              Building 400                               (610) 293-0838
          435 Devon Park Drive                   (Registrant's telephone number,
        Wayne, Pennsylvania 19087                     including area code)
(Address of principal executive offices)

     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 an accelerated filer (as
defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes [_] No [X]

     There are no common equity securities of the registrant outstanding. At
August 11, 2003, the outstanding capital of Metallurg Holdings, Inc. was
comprised of 5,202.335 shares of Series A Voting Convertible Preferred Stock and
4,524 shares of Series B Non-Voting Convertible Preferred Stock, $.01 par value.





<PAGE>

             METALLURG HOLDINGS, INC. AND CONSOLIDATED SUBSIDIARIES

                                      INDEX

<TABLE>
<CAPTION>
                                                                              Page No.
                                                                              --------
<S>                                                                             <C>
Part I. FINANCIAL INFORMATION:

        Item 1 - Financial Statements (Unaudited)

                 Condensed Statements of Consolidated Operations for the
                    Quarters and the Two Quarters Ended June 30, 2003 and
                    2002...................................................         2

                 Condensed Consolidated Balance Sheets at June 30,
                    2003 and December 31, 2002.............................         3

                 Condensed Statements of Consolidated Cash Flows for the
                    Two Quarters Ended June 30, 2003 and 2002..............         4

                 Notes to Condensed Unaudited Consolidated Financial
                    Statements.............................................      5-13

        Item 2 - Management's Discussion and Analysis of Financial
                    Condition and Results of Operations....................     14-22

        Item 3 - Quantitative and Qualitative Disclosure of Market Risk....        23

        Item 4 - Controls and Procedures...................................        23

Part II. OTHER INFORMATION:

        Item 6 - Exhibits and Reports on Form 8-K..........................        23

        Signature Page.....................................................        24
</TABLE>


                                       1





<PAGE>

                         PART I - FINANCIAL INFORMATION

                          ITEM 1 - FINANCIAL STATEMENTS

             METALLURG HOLDINGS, INC. AND CONSOLIDATED SUBSIDIARIES

           CONDENSED STATEMENTS OF CONSOLIDATED OPERATIONS (UNAUDITED)
                                 (In thousands)

<TABLE>
<CAPTION>
                                                     Quarters Ended June 30,   Two Quarters Ended June 30,
                                                     -----------------------   ---------------------------
                                                         2003      2002              2003       2002
                                                        -------   -------          --------   --------
<S>                                                     <C>       <C>              <C>        <C>
Sales.............................................      $90,569   $86,291          $180,064   $163,796
Commission income.................................          102       159               241        334
                                                        -------   -------          --------   --------
   Total revenue..................................       90,671    86,450           180,305    164,130
                                                        -------   -------          --------   --------

Operating costs and expenses:
   Cost of sales..................................       82,141    79,739           161,869    150,577
   Selling, general and administrative expenses...        9,738     9,626            18,836     19,274
   Environmental expense recovery.................           --        --                --     (3,000)
   Restructuring charges, net.....................           --     1,361                --      1,361
                                                        -------   -------          --------   --------
   Total operating costs and expenses.............       91,879    90,726           180,705    168,212
                                                        -------   -------          --------   --------
   Operating loss.................................       (1,208)   (4,276)             (400)    (4,082)

Other income (expense):
   Other income, net..............................           40        61                80        118
   Interest expense, net..........................       (4,570)   (4,509)           (9,121)    (8,998)
                                                        -------   -------          --------   --------
   Loss before income tax benefit and minority
      interest....................................       (5,738)   (8,724)           (9,441)   (12,962)
Income tax benefit................................         (468)     (269)              (25)      (142)
                                                        -------   -------          --------   --------
   Loss before minority interest..................       (5,270)   (8,455)           (9,416)   (12,820)
Minority interest.................................          (16)      (12)              (48)       (21)
                                                        -------   -------          --------   --------
   Net loss.......................................       (5,286)   (8,467)           (9,464)   (12,841)

Other comprehensive income (loss):
   Foreign currency translation adjustment........        1,820     4,200             2,114      3,437
   Deferred gain (loss) on derivatives, net.......           66      (119)               77        (74)
                                                        -------   -------          --------   --------
   Comprehensive loss.............................      $(3,400)  $(4,386)         $ (7,273)  $ (9,478)
                                                        =======   =======          ========   ========
</TABLE>

       See notes to condensed unaudited consolidated financial statements.


                                       2





<PAGE>

             METALLURG HOLDINGS, INC. AND CONSOLIDATED SUBSIDIARIES

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                June 30,     December 31,
                                                                  2003          2002
                                                               -----------   ------------
                                                               (Unaudited)
<S>                                                             <C>            <C>
ASSETS
Current Assets:
   Cash and cash equivalents ...............................    $ 18,256       $ 29,443
   Accounts receivable, net ................................      54,384         51,786
   Inventories .............................................      74,102         65,741
   Prepaid expenses and other current assets ...............      12,263          9,776
                                                                --------       --------
      Total current assets .................................     159,005        156,746
Goodwill ...................................................      43,646         43,555
Property, plant and equipment, net .........................      65,358         66,522
Other assets ...............................................      24,626         22,981
                                                                --------       --------
      Total ................................................    $292,635       $289,804
                                                                ========       ========

LIABILITIES AND SHAREHOLDERS' DEFICIT
Current Liabilities:
   Short-term debt and current portion of long-term debt ...    $  7,588       $  6,272
   Accounts payable ........................................      40,242         37,125
   Accrued expenses ........................................      15,085         18,593
   Other current liabilities ...............................       2,442          2,067
                                                                --------       --------
      Total current liabilities ............................      65,357         64,057
                                                                --------       --------

Long-term Liabilities:
   Long-term debt ..........................................     161,672        158,743
   Accrued pension liabilities .............................      52,028         47,509
   Environmental liabilities, net ..........................      27,485         26,285
   Other liabilities .......................................       1,436          1,394
                                                                --------       --------
      Total long-term liabilities ..........................     242,621        233,931
                                                                --------       --------
      Total liabilities ....................................     307,978        297,988
                                                                --------       --------

Minority Interest ..........................................         511            462
                                                                --------       --------

Shareholders' Deficit:
   Additional paid-in capital ..............................      71,782         71,717
   Accumulated other comprehensive loss ....................     (36,027)       (38,218)
   Retained deficit ........................................     (51,609)       (42,145)
                                                                --------       --------
      Total shareholders' deficit ..........................     (15,854)        (8,646)
                                                                --------       --------
      Total ................................................    $292,635       $289,804
                                                                ========       ========
</TABLE>

       See notes to condensed unaudited consolidated financial statements.


                                       3





<PAGE>

             METALLURG HOLDINGS, INC. AND CONSOLIDATED SUBSIDIARIES

           CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS (UNAUDITED)
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                               Two Quarters Ended
                                                                                    June 30,
                                                                              -------------------
                                                                                2003       2002
                                                                              --------   --------
<S>                                                                           <C>        <C>
Cash Flows from Operating Activities:
Net loss ..................................................................   $ (9,464)  $(12,841)
Adjustments to reconcile net loss to net cash used in operating activities:
   Depreciation and amortization ..........................................      4,419      4,024
   Interest accretion on the Senior Discount Notes ........................      2,409      2,366
   Deferred income taxes ..................................................     (1,208)      (500)
   Restructuring charges, net .............................................         --      1,361
   Change in operating assets and liabilities:
      (Increase) decrease in accounts receivable ..........................       (127)     1,713
      (Increase) decrease in inventories ..................................     (6,232)     1,623
      Increase in other current assets ....................................     (1,877)      (598)
      (Decrease) increase in accounts payable and accrued expenses ........        (75)       142
      Environmental payments ..............................................     (1,247)    (1,031)
      Restructuring payments ..............................................       (750)      (454)
      Other assets and liabilities, net ...................................      2,179        432
                                                                              --------   --------
         Net cash used in operating activities ............................    (11,973)    (3,763)
                                                                              --------   --------

Cash Flows from Investing Activities:
Additions to property, plant and equipment ................................     (1,995)    (7,722)
Repayment of loan by former subsidiary ....................................      1,000      4,000
Other, net ................................................................         57       (292)
                                                                              --------   --------
         Net cash used in investing activities ............................       (938)    (4,014)
                                                                              --------   --------

Cash Flows from Financing Activities:
Repayment of long-term debt, net ..........................................        (64)      (116)
Short-term borrowings, net ................................................      1,202        162
Capital contributions .....................................................         --        260
                                                                              --------   --------
         Net cash provided by financing activities ........................      1,138        306
                                                                              --------   --------

Effects of exchange rate changes on cash and cash equivalents .............        586        779
                                                                              --------   --------

Net decrease in cash and cash equivalents .................................    (11,187)    (6,692)
Cash and cash equivalents - beginning of period ...........................     29,443     31,857
                                                                              --------   --------
Cash and cash equivalents - end of period .................................   $ 18,256   $ 25,165
                                                                              ========   ========
</TABLE>

       See notes to condensed unaudited consolidated financial statements.


                                       4





<PAGE>

             METALLURG HOLDINGS, INC. AND CONSOLIDATED SUBSIDIARIES

         NOTES TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation

     The accompanying condensed unaudited consolidated financial statements
include the accounts of Metallurg Holdings, Inc. ("Metallurg Holdings") and its
majority-owned subsidiaries (collectively, the "Company"). These financial
statements have been prepared in accordance with generally accepted accounting
principles for interim financial information pursuant to Accounting Principles
Board Opinion No. 28. Accordingly, these financial statements do not include all
of the information and footnotes required by generally accepted accounting
principles for complete financial statements. The condensed consolidated balance
sheet as of December 31, 2002 was derived from audited financial statements. In
the opinion of management, all adjustments (consisting of normal recurring
adjustments) considered necessary for a fair presentation have been included.
Operating results for the interim periods presented are not necessarily
indicative of the results to be expected for a full year. These financial
statements should be read in conjunction with the audited consolidated financial
statements included in the Company's annual report on Form 10-K for the year
ended December 31, 2002.

     The Company is wholly owned by a group of investors led by and including
Safeguard International Fund, L.P. ("Safeguard International"), an international
private equity fund that invests primarily in equity securities of companies in
process industries.

     Metallurg Holdings' balance sheet is comprised primarily of its investment
in Metallurg, Inc. and its 12 3/4% Senior Discount Notes due 2008 (the "Senior
Discount Notes").

     The Company has restated its financial statements for all prior periods to
reflect a new reporting entity that excludes certain subsidiaries sold to
related parties on December 31, 2002. The Company received repayment of loans to
one of these former subsidiaries of $1,000,000 and $4,000,000 in the two
quarters ended June 30, 2003 and 2002, respectively.

     The Company believes that existing cash balances and other sources
available may not be sufficient to fund the current and anticipated requirements
of debt service, working capital, capital expenditures, pension benefits and
environmental expenditures for the next twelve months. The Company's long-term
debt agreements contain numerous covenants and prohibitions that limit the
financial activities of the Company, including requirements that the Company
satisfy certain financial ratios and limitations on additional indebtedness and
maintain a minimum liquidity level. While the Company is in compliance with all
such covenants at June 30, 2003, the ability of the Company to meet its debt
service requirements and to comply with such covenants will be dependent upon
future operating performance and financial results of the Company, which will be
subject to financial, economic, political, competitive and other factors
affecting the Company, many of which are beyond its control.

     The Company anticipates it will be difficult to maintain adequate levels of
liquidity and is pursuing activities to supplement its liquidity in the event
its operations continue to consume cash. There can, however, be no assurance
that the Company will be able to secure additional funding in sufficient amounts
or by the time required to meet existing obligations. Metallurg, Inc. would be
prohibited from making the $5,500,000 interest payment due December 1, 2003 on
its 11% Senior Notes due 2007 (the "Senior Notes") unless it can maintain
compliance with its minimum liquidity covenant or, otherwise, obtain the consent
of its lenders. Minimum liquidity is defined in the relevant debt agreement, at
a $10,000,000 level. Liquidity, as defined in such agreement, was $12,877,000 at
June 30, 2003.

     Currently, Metallurg Holdings does not have sufficient cash on hand to make
the interest payment due in January 2004 on the Senior Discount Notes. While
Metallurg, Inc. is permitted under the terms of its Senior Notes indenture to
distribute cash to Metallurg Holdings for the purpose of making the January 2004
interest payment, Metallurg, Inc. could be prohibited from making cash
distributions at such time under the restrictive covenants of its revolving
credit facility. All of Metallurg, Inc.'s outstanding common stock has been
pledged as collateral for Metallurg Holdings' obligations under the Senior
Discount Notes. If Metallurg Holdings were unable to make its interest payment
when due, it could lead to a foreclosure on its assets, principally the equity
of Metallurg, Inc., and create a default under the terms of Metallurg, Inc.'s
Senior Notes indenture.


                                       5





<PAGE>

             METALLURG HOLDINGS, INC. AND CONSOLIDATED SUBSIDIARIES

                    NOTES TO CONDENSED UNAUDITED CONSOLIDATED
                       FINANCIAL STATEMENTS - (Continued)

2. Stock-Based Compensation

     The Company accounts for Metallurg, Inc.'s stock-based compensation plan
using the intrinsic value method in accordance with Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees" and related
interpretations. Accordingly, no compensation cost is reflected in net income,
as all options granted under this plan had an exercise price at least equal to
the estimated market value of the underlying common stock on the date of grant.
The following table illustrates the effect on net income if the Company had
applied the fair value measurement and recognition methods prescribed by
Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting for
Stock-Based Compensation" to record expense for stock option compensation (in
thousands):

<TABLE>
<CAPTION>
                                                             Two Quarters Ended
                                                                  June 30,
                                                             ------------------
                                                               2003      2002
                                                             -------   --------
<S>                                                          <C>       <C>
Net loss, as reported ....................................   $(9,464)  $(12,841)
Less:  compensation  expense for option awards
   determined by the fair value based method,
   net of related tax effects ............................        28        131
                                                             -------   --------
      Pro forma net loss .................................   $(9,492)  $(12,972)
                                                             =======   ========
</TABLE>

3. Segments and Related Information

     The Company operates in one significant industry segment, the manufacture
and sale of performance-enhancing additives mainly for the metallurgical
industry. The Company is organized around its major production facilities in the
U.K., the U.S., Brazil and Germany, which are supported by an established
worldwide sales network. In addition to its own products, the Company
distributes complementary products manufactured by third parties.

Reportable Segments

     London & Scandinavian Metallurgical Co Limited and its subsidiaries
(collectively, "LSM") - This unit is comprised mainly of three production
facilities in the U.K. and another in Norway which manufacture and sell aluminum
alloy grain refiners and alloying tablets for the aluminum industry, chromium
metal and specialty ferroalloys for the steel and superalloy industries and
aluminum powder for various metal powder-consuming industries.

     Shieldalloy Metallurgical Corporation ("SMC") - This unit is comprised of
two production facilities in the U.S. The Ohio plant manufactures and sells
ferrovanadium and vanadium-based chemicals used mostly in the steel and
petrochemical industries. The New Jersey plant currently manufactures and sells
alloying tablets for the aluminum industry and metal powders for the welding
industry.

     Companhia Industrial Fluminense ("CIF") - This unit is comprised mainly of
two production facilities in Brazil. The Sao Joao del Rei plant manufactures and
sells aluminum alloy grain refiners and alloying tablets for the aluminum
industry and metal oxides used in the telecommunications, superalloy and
specialty metal industries. The Nazareno mine extracts and concentrates ores
containing tantalum and niobium that are processed, along with other raw
materials, into metal oxides at the Sao Joao del Rei plant.


                                       6





<PAGE>

             METALLURG HOLDINGS, INC. AND CONSOLIDATED SUBSIDIARIES

                    NOTES TO CONDENSED UNAUDITED CONSOLIDATED
                       FINANCIAL STATEMENTS - (Continued)

3. Segments and Related Information - (Continued)

     Elektrowerk Weisweiler GmbH ("EWW") - This production unit, located in
Germany, produces various grades of low carbon ferrochrome used in the
superalloy, welding and steel industries.

     In addition to their manufacturing operations, LSM and SMC import and
distribute complementary products manufactured by affiliates and third parties.

     Summarized financial information concerning the Company's reportable
segments is shown in the following table (in thousands). Each segment records
direct expenses related to its employees and operations. The "Other" column
includes corporate-related items and results of subsidiaries not meeting the
quantitative thresholds as prescribed by applicable accounting rules for
determining reportable segments. The Company does not allocate general corporate
overhead expenses to operating segments. The accounting policies of the segments
are the same as those for the consolidated group. Transactions among segments
are established based on negotiation among the parties.

<TABLE>
<CAPTION>
                                                                                         Intersegment   Consolidated
                                         LSM       SMC      CIF      EWW        Other    Eliminations      Totals
                                       -------   -------   ------   -------   --------   ------------   ------------
<S>                                    <C>       <C>       <C>      <C>       <C>          <C>            <C>
Quarter Ended June 30, 2003
Revenue from external customers ....   $34,990   $24,517   $3,533   $ 6,685   $ 20,946                    $ 90,671
Intergroup revenue .................     6,716     1,055    4,227     3,070      1,235     $(16,303)            --
Income tax provision (benefit) .....        34      (767)    (127)     (514)       906           --           (468)
Net loss ...........................        (2)      (85)    (339)     (112)    (3,943)        (805)        (5,286)

Quarter Ended June 30, 2002
Revenue from external customers ....   $31,674   $22,891   $4,759   $ 5,102   $ 22,024                    $ 86,450
Intergroup revenue .................     7,997     1,675    3,834       900        655     $(15,061)            --
Income tax (benefit) provision .....      (325)   (1,448)     (10)     (207)     1,721           --           (269)
Net (loss) income ..................      (802)   (1,507)     280      (215)    (8,049)       1,826         (8,467)

Two Quarters Ended June 30, 2003
Revenue from external customers ....   $73,478   $45,901   $7,627   $13,523   $ 39,776                    $180,305
Intergroup revenue .................    13,927     1,624    7,216     6,195      2,875     $(31,837)            --
Income tax provision (benefit) .....       151      (760)      --      (612)     1,196           --            (25)
Net income (loss) ..................       188      (349)     (42)      (23)    (6,087)      (3,151)        (9,464)

Two Quarters Ended June 30, 2002
Revenue from external customers ....   $59,461   $44,795   $8,789   $10,039   $ 41,046                    $164,130
Intergroup revenue .................    14,439     2,500    7,901     4,091      1,534     $(30,465)            --
Income tax (benefit) provision .....      (591)   (1,697)      47      (117)     2,216           --           (142)
Net (loss) income ..................    (1,602)   (1,735)     549       (95)   (11,196)       1,238        (12,841)
</TABLE>


                                       7





<PAGE>

             METALLURG HOLDINGS, INC. AND CONSOLIDATED SUBSIDIARIES

                    NOTES TO CONDENSED UNAUDITED CONSOLIDATED
                       FINANCIAL STATEMENTS - (Continued)

4. Inventories

     Inventories consist of the following (in thousands):

<TABLE>
<CAPTION>
                                                         June 30,   December 31,
                                                           2003        2002
                                                         --------   ------------
<S>                                                      <C>          <C>
Raw materials ........................................   $12,458      $12,727
Work in process ......................................       697          998
Finished goods .......................................    58,244       49,528
Other ................................................     2,703        2,488
                                                         -------      -------
   Total .............................................   $74,102      $65,741
                                                         =======      =======
</TABLE>

5. Contingent Liabilities

     The Company defends, from time to time, various claims and legal actions
arising in the normal course of business, including those relating to
environmental matters. Management believes, based on the advice of counsel, that
the outcome of such matters will not have a material adverse effect on the
Company's consolidated financial position, results of operations or liquidity.
There can be no assurance, however, that future litigation or proceedings will
not result in an adverse judgment against the Company that could have a material
adverse effect on the Company's future results of operations or cash flows.

6. Environmental Expense Recovery

     SMC realized an environmental expense recovery of $3,000,000 in 2002 upon
receipt of a settlement with insurance companies relating to coverage for
certain environmental claims.

7. Earnings Per Share

     Earnings per share is not presented since Metallurg Holdings is wholly
owned by a group of private investors led by and including Safeguard
International.


                                       8





<PAGE>

             METALLURG HOLDINGS, INC. AND CONSOLIDATED SUBSIDIARIES

                    NOTES TO CONDENSED UNAUDITED CONSOLIDATED
                       FINANCIAL STATEMENTS - (Continued)

8. Recent Accounting Pronouncements

     Effective January 1, 2003, the Company adopted SFAS No. 143, "Accounting
for Asset Retirement Obligations". This statement covers all legally enforceable
obligations associated with the retirement of tangible long-lived assets and
provides the accounting and reporting requirements for such obligations. The
adoption of SFAS No. 143 did not have a material impact on the Company's
consolidated financial statements.

     Effective January 1, 2003, the Company adopted SFAS No. 145, "Rescission of
FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and
Technical Corrections". SFAS No. 145, in rescinding SFAS No. 4, requires that
only unusual or infrequent gains and losses from extinguishment of debt be
classified as extraordinary items, consistent with Accounting Principles Board
Opinion No. 30. The adoption of SFAS No. 145 did not have a material effect on
the Company's financial statements.

     Effective January 1, 2003, the Company adopted SFAS No. 146, "Accounting
for Costs Associated with Exit or Disposal Activities". This statement nullifies
Emerging Issues Task Force Issue No. 94-3, "Liability Recognition for Certain
Employee Termination Benefits and Other Costs to Exit an Activity", under which
a liability for an exit cost was recognized at the date of an entity's
commitment to an exit plan. SFAS No. 146 requires that a liability for a cost
associated with an exit or disposal activity be recognized at fair value only
once the liability is incurred. The adoption of SFAS No. 146 did not have a
material impact on the Company's consolidated financial statements.

     In April 2003, SFAS No. 149, "Amendment of Statement 133 on Derivative
Instruments and Hedging Activities" was issued. The standard amends and
clarifies financial reporting for derivative instruments and for hedging
activities accounted for under SFAS No. 133 and is effective for contracts
entered into or modified, and for hedges designated, after June 30, 2003.
Adoption of SFAS 149 is not expected to have a material impact on the Company's
consolidated financial statements.

     In November 2002, the Financial Accounting Standards Board ("FASB") issued
Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of Others" ("FIN 45").
FIN 45 requires the initial recognition and initial measurement, on a
prospective basis only, of guarantees issued or modified after December 31,
2002. Additionally, certain disclosure requirements are effective for financial
statements ending after December 15, 2002. The adoption of FIN 45 did not have a
material impact on the Company's consolidated financial statements.

     In January 2003, the FASB issued Interpretation No. 46, "Consolidation of
Variable Interest Entities" ("FIN 46"), which changes the criteria for including
certain non-controlled affiliates, defined as variable interest entities
("VIE"), in a company's consolidated financial statements. FIN 46 requires
consolidation of a VIE if the company is subject to a majority of the risk of
loss or entitled to receive a majority of the residual returns of the VIE. The
Company does not expect its non-controlled affiliates to require consolidation
under FIN 46.


                                       9





<PAGE>

             METALLURG HOLDINGS, INC. AND CONSOLIDATED SUBSIDIARIES

                    NOTES TO CONDENSED UNAUDITED CONSOLIDATED
                       FINANCIAL STATEMENTS - (Continued)

9. Supplemental Guarantor Information

     In November 1997, Metallurg, Inc. issued $100 million principal amount of
its Senior Notes. Under the terms of the Senior Notes, SMC, Metallurg Holdings
Corporation, Metallurg Services, Inc., Metallurg International Resources, LLC
and MIR (China), Inc. (collectively, the "Guarantors"), wholly owned
subsidiaries of Metallurg, Inc., have fully and unconditionally guaranteed on a
joint and several basis Metallurg, Inc.'s obligations to pay principal, premium
and interest relative to the Senior Notes. Management has determined that
separate, full financial statements of the Guarantors would not be material to
potential investors and, accordingly, such financial statements are not
provided. Supplemental financial information of the Guarantors is presented
below.

                Metallurg, Inc. and its Consolidated Subsidiaries
           Condensed Consolidating Statement of Operations (Unaudited)
                           Quarter Ended June 30, 2003
                                (In thousands)

<TABLE>
<CAPTION>
                                                                                    Combined
                                                                     Combined         Non-
                                                      Metallurg,     Guarantor      Guarantor
                                                         Inc.      Subsidiaries   Subsidiaries   Eliminations   Consolidated
                                                      ----------   ------------   ------------   ------------   ------------
<S>                                                     <C>           <C>           <C>            <C>             <C>
Total revenue .....................................                   $28,448        $75,014       $(12,791)       $90,671
                                                                      -------        -------       --------        -------
Operating costs and expenses:
   Cost of sales ..................................                    27,192         67,856        (12,907)        82,141
   Selling, general and administrative expenses ...     $ 1,134         1,979          6,601             --          9,714
                                                        -------       -------        -------       --------        -------
   Total operating costs and expenses .............       1,134        29,171         74,457        (12,907)        91,855
                                                        -------       -------        -------       --------        -------
   Operating (loss) income ........................      (1,134)         (723)           557            116         (1,184)

Other income (expense):
   Other income, net ..............................          --            --             40             --             40
   Interest (expense) income, net .................      (2,581)          260         (1,010)            --         (3,331)
   Equity in earnings of subsidiaries .............         530           159            232           (921)            --
                                                        -------       -------        -------       --------        -------
   Loss before income tax provision
      (benefit) and minority interest .............      (3,185)         (304)          (181)          (805)        (4,475)
Income tax provision (benefit) ....................         836          (796)          (510)            --           (470)
                                                        -------       -------        -------       --------        -------
   (Loss) income before minority interest .........      (4,021)          492            329           (805)        (4,005)
Minority interest .................................          --            --            (16)            --            (16)
                                                        -------       -------        -------       --------        -------
   Net (loss) income ..............................      (4,021)          492            313           (805)        (4,021)

Other comprehensive income:
   Foreign currency translation adjustment ........       1,820         1,790          3,146         (4,936)         1,820
   Deferred gain on derivatives, net ..............          66            66            132           (198)            66
                                                        -------       -------        -------       --------        -------
   Comprehensive (loss) income ....................     $(2,135)      $ 2,348        $ 3,591       $ (5,939)       $(2,135)
                                                        =======       =======        =======       ========        =======
</TABLE>


                                       10





<PAGE>

             METALLURG HOLDINGS, INC. AND CONSOLIDATED SUBSIDIARIES

                    NOTES TO CONDENSED UNAUDITED CONSOLIDATED
                       FINANCIAL STATEMENTS - (Continued)

9.  Supplemental Guarantor Information - (Continued)

                Metallurg, Inc. and its Consolidated Subsidiaries
           Condensed Consolidating Statement of Operations (Unaudited)
                        Two Quarters Ended June 30, 2003
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                                    Combined
                                                                     Combined         Non-
                                                      Metallurg,     Guarantor      Guarantor
                                                         Inc.      Subsidiaries   Subsidiaries   Eliminations   Consolidated
                                                      ----------   ------------   ------------   ------------   ------------
<S>                                                     <C>          <C>            <C>            <C>            <C>
Total revenue .....................................                  $51,970        $152,213       $(23,878)      $180,305
                                                                     -------        --------       --------       --------
Operating costs and expenses:
   Cost of sales ..................................                   49,071         136,689        (23,891)       161,869
   Selling, general and administrative expenses ...     $ 2,302        3,812          12,677             --         18,791
                                                        -------      -------        --------       --------       --------
   Total operating costs and expenses .............       2,302       52,883         149,366        (23,891)       180,660
                                                        -------      -------        --------       --------       --------
   Operating (loss) income ........................      (2,302)        (913)          2,847             13           (355)

Other income (expense):
   Other income, net ..............................          --           --              80             --             80
   Interest (expense) income, net .................      (5,208)         616          (2,063)            --         (6,655)
   Equity in earnings of subsidiaries .............       1,133          825           1,206         (3,164)            --
                                                        -------      -------        --------       --------       --------
   (Loss) income before income tax provision
      (benefit) and minority interest .............      (6,377)         528           2,070         (3,151)        (6,930)
Income tax provision (benefit) ....................         574         (536)            (65)            --            (27)
                                                        -------      -------        --------       --------       --------
   (Loss) income before minority interest .........      (6,951)       1,064           2,135         (3,151)        (6,903)
Minority interest .................................          --           --             (48)            --            (48)
                                                        -------      -------        --------       --------       --------
   Net (loss) income ..............................      (6,951)       1,064           2,087         (3,151)        (6,951)

Other comprehensive income:
   Foreign currency translation adjustment ........       2,114        2,065           3,429         (5,494)         2,114
   Deferred gain on derivatives, net ..............          77           75             116           (191)            77
                                                        -------      -------        --------       --------       --------
   Comprehensive (loss) income ....................     $(4,760)     $ 3,204        $  5,632       $ (8,836)      $ (4,760)
                                                        =======      =======        ========       ========       ========
</TABLE>


                                       11





<PAGE>

             METALLURG HOLDINGS, INC. AND CONSOLIDATED SUBSIDIARIES

                    NOTES TO CONDENSED UNAUDITED CONSOLIDATED
                       FINANCIAL STATEMENTS - (Continued)

9. Supplemental Guarantor Information - (Continued)

                Metallurg, Inc. and its Consolidated Subsidiaries
                Condensed Consolidating Balance Sheet (Unaudited)
                                  June 30, 2003
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                                    Combined
                                                                     Combined         Non-
                                                      Metallurg,    Guarantor       Guarantor
                                                         Inc.      Subsidiaries   Subsidiaries   Eliminations   Consolidated
                                                      ----------   ------------   ------------   ------------   ------------
<S>                                                    <C>           <C>            <C>           <C>            <C>
ASSETS
Current Assets:
   Cash and cash equivalents ......................    $  2,765      $    679       $ 14,486                     $ 17,930
   Accounts receivable, net .......................      31,469        18,256         53,789      $ (49,100)       54,414
   Inventories ....................................          --        28,191         47,264         (1,353)       74,102
   Prepaid expenses and other current assets ......         790         8,398         10,988         (8,029)       12,147
                                                       --------      --------       --------      ---------      --------
         Total current assets .....................      35,024        55,524        126,527        (58,482)      158,593
Investments - intergroup ..........................      69,290        13,215         39,748       (122,253)           --
Property, plant and equipment, net ................         558        22,068         42,732             --        65,358
Other assets ......................................      11,002        57,786         16,266        (58,238)       26,816
                                                       --------      --------       --------      ---------      --------
         Total ....................................    $115,874      $148,593       $225,273      $(238,973)     $250,767
                                                       ========      ========       ========      =========      ========

LIABILITIES AND SHAREHOLDER'S
   (DEFICIT) EQUITY
Current Liabilities:
   Short-term debt and current portion of
      long-term debt ..............................                                 $  7,588                     $  7,588
   Accounts payable ...............................    $  2,115      $ 49,328         37,863      $ (49,100)       40,206
   Accrued expenses ...............................       2,586         4,096          8,037             --        14,719
   Other current liabilities ......................       4,223         3,806          2,436         (8,029)        2,436
                                                       --------      --------       --------      ---------      --------
         Total current liabilities ................       8,924        57,230         55,924        (57,129)       64,949
                                                       --------      --------       --------      ---------      --------
Long-term Liabilities:
   Long-term debt .................................     100,000            --         21,539             --       121,539
   Accrued pension liabilities ....................       6,255           527         45,246             --        52,028
   Environmental liabilities, net .................          --        24,799          2,686             --        27,485
   Other liabilities ..............................      17,876            --         41,798        (58,238)        1,436
                                                       --------      --------       --------      ---------      --------
         Total long-term liabilities ..............     124,131        25,326        111,269        (58,238)      202,488
                                                       --------      --------       --------      ---------      --------
         Total liabilities ........................     133,055        82,556        167,193       (115,367)      267,437
                                                       --------      --------       --------      ---------      --------

Minority Interest .................................          --            --            511             --           511
                                                       --------      --------       --------      ---------      --------

Shareholder's (Deficit) Equity:
   Common stock ...................................          50         1,217        118,103       (119,320)           50
   Due from parent company ........................     (21,715)           --             --             --       (21,715)
   Additional paid-in capital .....................      72,579       128,351          7,076       (135,427)       72,579
   Accumulated other comprehensive loss ...........     (36,430)      (28,997)       (55,205)        84,202       (36,430)
   Retained deficit ...............................     (31,665)      (34,534)       (12,405)        46,939       (31,665)
                                                       --------      --------       --------      ---------      --------
         Total shareholder's (deficit) equity......     (17,181)       66,037         57,569       (123,606)      (17,181)
                                                       --------      --------       --------      ---------      --------
         Total ....................................    $115,874      $148,593       $225,273      $(238,973)     $250,767
                                                       ========      ========       ========      =========      ========
</TABLE>


                                       12





<PAGE>

             METALLURG HOLDINGS, INC. AND CONSOLIDATED SUBSIDIARIES

                    NOTES TO CONDENSED UNAUDITED CONSOLIDATED
                       FINANCIAL STATEMENTS - (Continued)

9. Supplemental Guarantor Information - (Continued)

                Metallurg, Inc. and its Consolidated Subsidiaries
           Condensed Consolidating Statement of Cash Flows (Unaudited)
                        Two Quarters Ended June 30, 2003
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                                              Combined
                                                                               Combined         Non-
                                                                Metallurg,     Guarantor      Guarantor
                                                                   Inc.      Subsidiaries   Subsidiaries   Consolidated
                                                                ----------   ------------   ------------   ------------
<S>                                                              <C>           <C>            <C>            <C>
Cash Flows from Operating Activities ........................    $ (7,804)     $(6,224)       $ 1,734        $(12,294)
                                                                 --------      -------        -------        --------

Cash Flows from Investing Activities:
   Additions to property, plant and equipment ...............         (39)        (425)        (1,531)         (1,995)
   Repayment of loan by related party .......................       1,000           --             --           1,000
   Other, net ...............................................          15           --             42              57
                                                                 --------      -------        -------        --------
      Net cash provided by (used in) investing activities ...         976         (425)        (1,489)           (938)
                                                                 --------      -------        -------        --------

Cash Flows from Financing Activities:
   Intergroup (repayments) borrowings .......................      (7,109)       9,422         (2,313)             --
   Repayment of long-term debt, net .........................          --           --            (64)            (64)
   Short-term borrowings, net ...............................          --           --          1,202           1,202
   Dividends received (paid) ................................       3,400       (3,148)          (252)             --
                                                                 --------      -------        -------        --------
      Net cash (used in) provided by
         financing activities ...............................      (3,709)       6,274         (1,427)          1,138
                                                                 --------      -------        -------        --------
Effects of exchange rate changes on cash and
   cash equivalents .........................................          --           --            586             586
                                                                 --------      -------        -------        --------
Net decrease in cash and cash equivalents ...................     (10,537)        (375)          (596)        (11,508)

Cash and cash equivalents -
   beginning of period ......................................      13,302        1,054         15,082          29,438
                                                                 --------      -------        -------        --------
Cash and cash equivalents -
   end of period ............................................    $  2,765      $   679        $14,486        $ 17,930
                                                                 ========      =======        =======        ========
</TABLE>

10. Related Party Transactions

     During the quarter ended June 30, 2003, a group of equity investors of
Metallurg Holdings purchased approximately $9 million face amount of Metallurg,
Inc.'s Senior Notes on the open market.


                                       13





<PAGE>

    ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                              RESULTS OF OPERATIONS

Forward-Looking Statements

     Certain matters discussed under the caption "Management's Discussion and
Analysis of Financial Condition and Results of Operations" in this Form 10-Q may
constitute forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements may be identified by
the use of words such as "plans", "expect", "believe", "should", "could",
"anticipate", "intend" and other expressions that indicate future events or
trends. All statements that address expectations or projections about the
future, including statements about the Company's strategy for growth, product
development, market position, expenditures and financial results are
forward-looking statements and as such may involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
and achievements of the Company to be materially different from future results,
performance or achievements expressed or implied by such forward-looking
statements.

     Factors which may cause the Company's results to be materially different
include:

          o    The cyclical nature of the Company's business.

          o    The Company's dependence on foreign customers. The Company
               operates throughout the world and derives a significant amount of
               its revenues from outside of the U.S.

          o    The impact of changes in foreign exchange rates and foreign trade
               regulations on the Company's competitive standing. Revenues and
               earnings from outside the U.S. could be materially affected by
               exchange rate fluctuations.

          o    The availability of raw materials, particularly
               vanadium-containing materials.

          o    Labor relations.

          o    The impact of worldwide competition.

          o    The economic strength of the Company's markets generally and
               particularly the strength of the demand for aluminum,
               superalloys, titanium alloys, iron and steel in those markets.

          o    The accuracy of the Company's estimates of the costs of
               environmental remediation.

          o    The extension or expiration of existing anti-dumping duties.

          o    The performance of world financial markets and the resulting
               effect on pension expense of the Company's defined benefit plans.

          o    The ability to meet debt service and financial covenant
               requirements.

          o    The adequacy of capital resources to fund operations and growth.

          o    The possible disruption of business or increases in the cost of
               doing business resulting from terrorist activities or global
               conflicts.

          o    Changes in tax laws, including changes related to taxation of
               foreign earnings.

          o    Changes in accounting standards.

Critical Accounting Estimates

     For a discussion of the critical accounting estimates affecting the
Company, see "Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Critical Accounting Estimates" beginning
on page 22 of the Company's annual report on Form 10-K for the year ended
December 31, 2002. The critical accounting estimates affecting the Company have
not changed since December 31, 2002.

Overview

     Metallurg Holdings was formed on June 10, 1998 and is wholly owned by a
group of investors led by and including Safeguard International, an
international private equity fund that invests primarily in equity securities of
companies in process industries.

     The Company is a leading international producer and seller of high-quality
specialty metals and metal alloys which are essential to the production of
high-performance aluminum and titanium alloys, superalloys, specialty steels and
certain non-metallic materials for various applications in the aerospace, power
supply, automotive, petrochemical processing, capital equipment and construction
industries. The Company operates production facilities in the United Kingdom,
Germany, Brazil, Turkey and the United States. The Company's products are
primarily sold to one of three major market sectors: the


                                       14





<PAGE>

aluminum industry, the superalloy industry and the steel industry. Conditions in
each of these sectors have remained quite challenging for several quarters and
this trend is expected to continue for the foreseeable future. Below is a
general overview of each of the major market sectors:

     Overall, the aluminum market is seeing relatively low demand from customers
due to subdued worldwide economic growth, especially in the United States. On
the supply side, there exists a significant amount of excess, as well as idle,
capacity in the industry waiting to be restarted when demand increases. This has
resulted in a weak pricing environment for aluminum producers and processors in
general and contributed to a decline in the selling price of products supplied
by the Company to the aluminum industry. The Company has implemented significant
cost reduction initiatives to partially offset the price declines that have been
experienced. The Company believes it is well positioned to benefit from such
initiatives when markets recover.

     The superalloy industry has been hit hard by the downturn in the commercial
aerospace industry as well as a reduction in power generation projects and
services (i.e. land-based turbines). Commercial production build rates for
aerospace are significantly below forecasts, especially in the United States.
Due to the long lead times in this market, excess inventory has been a factor
leading to lower prices and volumes for products supplied to this industry. The
Company does not expect the superalloy sector to show signs of recovery this
year.

     The domestic steel industry is operating at moderate levels of production.
However, prices have weakened from the peak levels experienced in the third
quarter of 2002. Industry fundamentals for the steel sector have improved from
the difficult conditions seen over the past few years, particularly as a result
of lower imports following the introduction of protective tariffs and the
consolidation of a number of producers within the industry. In the first half of
2003, following a reduction in worldwide supply, ferrovanadium prices rebounded
from the very low levels that have been experienced over the last few years.
However, due to a shortage of raw materials, the Company was unable to take full
advantage of increased selling prices. Efforts are being made to secure
additional economic sources of raw materials to further reduce production costs
and enhance profitability.

Results of Operations - The Quarter Ended June 30, 2003 Compared to the Quarter
Ended June 30, 2002

     The Company operates in one significant industry segment, the manufacture
and sale of performance-enhancing additives mainly for the metallurgical
industry. The Company is organized around its major production facilities in the
U.K., the U.S., Brazil and Germany. In addition to its own products, the Company
distributes products manufactured by third parties.

     Summarized financial information concerning the Company's reportable
segments is shown in the following table (in thousands). Each segment records
direct expenses related to its employees and operations. The "Other" column
includes corporate related items and results of subsidiaries not meeting the
quantitative thresholds as prescribed by applicable accounting rules for
determining reportable segments. The Company does not allocate general corporate
overhead expenses to operating segments. The accounting policies of the segments
are the same as those of the consolidated group. Transactions among segments are
established based on negotiation among the parties. There have been no material
changes in segment assets from the amounts disclosed in the last annual report.

<TABLE>
<CAPTION>
                                                                                     Intersegment
(In thousands)                         LSM       SMC      CIF      EWW      Other    Eliminations   Consolidated
                                     -------   -------   ------   ------   -------   ------------   ------------
<S>                                  <C>       <C>       <C>      <C>      <C>         <C>            <C>
Quarter Ended June 30, 2003
Total revenue ....................   $41,706   $25,572   $7,760   $9,755   $22,181     $(16,303)      $90,671
Gross profit .....................     4,188     1,073      228      (10)    2,935          116         8,530
SG&A .............................     3,744     1,805      496      638     3,055           --         9,738
Operating income (loss) ..........       444      (732)    (268)    (648)     (120)         116        (1,208)
Interest (expense) income, net....      (415)     (120)    (198)      22    (3,859)          --        (4,570)
Income tax provision (benefit)....        34      (767)    (127)    (514)      906           --          (468)
Net loss .........................        (2)      (85)    (339)    (112)   (3,943)        (805)       (5,286)
</TABLE>


                                       15





<PAGE>

<TABLE>
<CAPTION>
                                                                                     Intersegment
(In thousands)                        LSM        SMC      CIF      EWW      Other    Eliminations   Consolidated
                                     -------   -------   ------   ------   -------   ------------   ------------
<S>                                  <C>       <C>       <C>      <C>      <C>         <C>            <C>
Quarter Ended June 30, 2002
Total revenue ....................   $39,671   $24,566   $8,593   $6,002   $22,679     $(15,061)      $86,450
Gross profit .....................     3,177      (249)     865     (158)    2,543          533         6,711
SG&A .............................     3,606     2,332      438      431     2,819           --         9,626
Restructuring charges, net .......       350       273       --     (137)      875           --         1,361
Operating (loss) income ..........      (779)   (2,854)     427     (452)   (1,151)         533        (4,276)
Interest (expense) income, net....      (356)     (101)    (157)      30    (3,925)          --        (4,509)
Income tax (benefit) provision....      (325)   (1,448)     (10)    (207)    1,721           --          (269)
Net (loss) income ................      (802)   (1,507)     280     (215)   (8,049)       1,826        (8,467)
</TABLE>

Total Revenue

     Consolidated total revenue increased by $4.2 million (5%) in the quarter
ended June 30, 2003.

     LSM revenue was $2.0 million (5%) higher than the quarter ended June 30,
2002. Sales of aluminum master alloys and compacted products increased by $2.0
million, primarily as a result of a 12% increase in volume. Sales of
ferrotitanium were $0.7 million higher, due to a 21% increase in average unit
selling prices. Sales of aluminum powder rose by $0.7 million, despite an 11%
drop in volume, due to an improved product mix which resulted in higher average
selling prices. Sales of chrome products, primarily chrome metal, fell by $1.0
million, due to a drop in shipments. Sales of metal powders rose by $0.5 million
as a result of increases in both volumes and average selling prices.

     SMC revenue was $1.0 million (4%) higher than the quarter ended June 30,
2002. Sales of chrome products increased by $1.3 million, due to an increase in
sales volume. Sales of compacted aluminum products increased by $1.2 million,
despite a small drop in average selling prices, as a result of an increase of
over 50% in shipments. Sales of vanadium products increased by $0.6 million, as
a result of an increase in average selling prices, despite a 25% drop in volume
due to limited availability of raw materials. Sales of niobium products fell by
$1.4 million, primarily as a result of a drop in shipments of ferroniobium to
the steel industry.

     CIF revenue was $0.8 million (10%) lower than the quarter ended June 30,
2002, due primarily to a decrease in shipments of a low margin aluminum product
sold to the steel industry.

     EWW revenue was $3.8 million (63%) higher than the quarter ended June 30,
2002, due to increased shipments of ferrochrome, particularly special grades,
primarily to SMC.

Gross Profit

     Consolidated gross profit increased to $8.5 million (9.4% of total revenue)
for the quarter ended June 30, 2003 from $6.7 million (7.8% of total revenue)
for the quarter ended June 30, 2002.

     LSM gross profit was $1.0 million (32%) higher than the quarter ended June
30, 2002, primarily due to improved volumes of aluminum master alloys and
compacted aluminum products.

     SMC gross profit was $1.1 million in the quarter ended June 30, 2003,
compared to a loss of $0.2 million in the quarter ended June 30, 2002. Gross
profit from aluminum products rose by $2.0 million, due to the reduction of
production costs resulting from the relocation of master alloy melting
operations during the second quarter of 2002. Gross profit from vanadium
products decreased by $0.4 million as a result of a drop in sales volume.

     CIF gross profit was $0.6 million (74%) lower than the quarter ended June
30, 2002, due primarily to lower selling prices and increased production costs
of niobium products.

     EWW gross profit was nil in the quarter ended June 30, 2003, compared to a
loss of $0.2 million in the quarter ended June 30, 2002. The improvement was due
to increased shipments of ferrochrome, particularly special grades.


                                       16





<PAGE>

Selling, General and Administrative Expenses ("SG&A")

     SG&A was virtually unchanged at $9.7 million for the quarter ended June 30,
2003 compared to $9.6 million for the quarter ended June 30, 2002. For the
quarter ended June 30, 2003, SG&A represented 10.7% of total revenue compared to
11.1% for the quarter ended June 30, 2002.

Operating Loss

     The Company's consolidated operating loss was $1.2 million for the quarter
ended June 30, 2003 compared to $4.3 million for the quarter ended June 30,
2002. The improvement was primarily due to the increase in gross profit,
discussed above. The quarter ended June 30, 2002 included restructuring charges,
net, of $1.4 million.

Interest Expense, Net

     Interest expense, net, was as follows (in thousands):

<TABLE>
<CAPTION>
                                          Quarters Ended June 30,
                                          -----------------------
                                              2003      2002
                                             -------   -------
<S>                                          <C>       <C>
Interest income .......................      $   330   $   220
Interest expense ......................       (4,900)   (4,729)
                                             -------   -------
   Interest expense, net ..............      $(4,570)  $(4,509)
                                             =======   =======
</TABLE>

Income Tax Benefit, Net

     Income tax benefit, net of tax provisions, was as follows (in thousands):

<TABLE>
<CAPTION>
                                          Quarters Ended June 30,
                                          -----------------------
                                               2003    2002
                                              -----   -----
<S>                                           <C>     <C>
Total current .........................       $ 289   $ 129
Total deferred ........................        (757)   (398)
                                              -----   -----
   Income tax benefit, net ............       $(468)  $(269)
                                              =====   =====
</TABLE>

     The difference between the statutory federal income tax rate and the
Company's effective rate for the quarter ended June 30, 2003 is principally due
to: (i) certain deductible temporary differences, principally domestic net
operating losses, which in other circumstances would have generated a deferred
tax benefit, have been fully provided for in a valuation allowance; (ii) taxes
paid on foreign dividends; and (iii) the excess of foreign tax rates over the
statutory federal income tax rate.

Net Loss

     The Company had a net loss of $5.3 million for the quarter ended June 30,
2003 compared to a net loss of $8.5 million for the quarter ended June 30, 2002.
The improvement was due primarily to the decrease in operating loss discussed
above.


                                       17





<PAGE>

Results of Operations - The Two Quarters Ended June 30, 2003 Compared to the Two
Quarters Ended June 30, 2002

<TABLE>
<CAPTION>
                                                                                          Intersegment
(In thousands)                          LSM       SMC       CIF       EWW      Other      Eliminations   Consolidated
                                      -------   -------   -------   -------   --------    ------------   ------------
<S>                                   <C>       <C>       <C>       <C>       <C>           <C>            <C>
Two Quarters Ended June 30, 2003
Total revenue .....................   $87,405   $47,525   $14,843   $19,718   $ 42,651      $(31,837)      $180,305
Gross profit ......................     8,626     2,543     1,244       531      5,479            13         18,436
SG&A ..............................     7,489     3,453       884     1,198      5,812            --         18,836
Operating income (loss) ...........     1,137      (910)      360      (667)      (333)           13           (400)
Interest (expense) income, net ....      (807)     (199)     (402)       32     (7,745)           --         (9,121)
Income tax provision (benefit) ....       151      (760)       --      (612)     1,196            --            (25)
Net income (loss) .................       188      (349)      (42)      (23)    (6,087)       (3,151)        (9,464)

Two Quarters Ended June 30, 2002

Total revenue .....................   $73,900   $47,295   $16,690   $14,130   $ 42,580      $(30,465)      $164,130
Gross profit ......................     5,321      (634)    1,773       429      5,682           982         13,553
SG&A ..............................     6,497     5,362       889       856      5,670            --         19,274
Environmental expense recovery ....        --     3,000        --        --         --            --          3,000
Restructuring charges, net ........       350       273        --      (137)       875            --          1,361
Operating (loss) income ...........    (1,526)   (3,269)      884      (290)      (863)          982         (4,082)
Interest (expense) income, net.....      (707)     (163)     (288)       78     (7,918)           --         (8,998)
Income tax (benefit) provision.....      (591)   (1,697)       47      (117)     2,216            --           (142)
Net (loss) income .................    (1,602)   (1,735)      549       (95)   (11,196)        1,238        (12,841)
</TABLE>

Total Revenue

     Consolidated total revenue increased by $16.2 million (10%) in the two
quarters ended June 30, 2003.

     LSM revenue was $13.5 million (18%) higher than the two quarters ended June
30, 2002. Sales of aluminum master alloys and compacted products increased by
$6.1 million, primarily as a result of an 18% increase in volume. Sales of
aluminum powder rose by $2.5 million, due to an improved product mix which
resulted in higher average selling price. Sales of ferrotitanium were $2.9
million higher, due to a 27% increase in average unit selling prices and an 11%
increase in sales volumes. Sales of metal powders rose by $1.9 million as a
result of increases in both volumes and average selling prices.

     SMC revenue was $0.2 million higher than the two quarters ended June 30,
2002. Sales of compacted aluminum products increased by $2.4 million, despite a
drop in average selling prices, as a result of an increase of 50% in shipments.
Sales of vanadium products, produced in SMC's Ohio plant, increased by $1.0
million, despite a drop in volume, as a result of an increase in average selling
prices. Sales of niobium products fell by $3.3 million, primarily as a result of
a drop in shipments of ferroniobium to the steel industry.

     CIF revenue was $1.8 million (11%) lower than the two quarters ended June
30, 2002. Sales of tantalum and niobium products decreased by $1.2 million, due
to decreased demand and lower selling prices. Sales of low margin aluminum
products to the steel industry also decreased during the period.

     EWW revenue was $5.6 million (40%) higher than the two quarters ended June
30, 2002, due to increased shipments of both normal and special grades of
ferrochrome, primarily to SMC.

Gross Profit

     Consolidated gross profit increased to $18.4 million (10.2% of total
revenue) for the two quarters ended June 30, 2003 from $13.6 million (8.3% of
total revenue) for the two quarters ended June 30, 2002.


                                       18





<PAGE>

     LSM gross profit was $3.3 million (62%) higher than the two quarters ended
June 30, 2002. Gross profits from aluminum master alloys and compacted aluminum
products increased by $1.8 million, due to increased volumes and lower plant
costs following the restructuring of operations in 2002. Aluminum powder gross
profits increased by $1.0 million as a result of the improved product mix
referred to above.

     SMC gross profit was $2.5 million in the two quarters ended June 30, 2003,
compared to a loss of $0.6 million in the two quarters ended June 30, 2002.
Gross profit from aluminum products rose by $2.5 million, due to increased
shipments and lower costs resulting from the restructuring of operations during
2002. Gross profit from chrome products rose by $0.4 million, due to improved
volume and selling prices, particularly from lower grade products sold to the
steel industry. Gross profit from vanadium products improved by $0.3 million,
despite a drop in volume, as a result of an increase in average selling prices.

     CIF gross profit was $0.5 million (30%) lower than the two quarters ended
June 30, 2002, due to lower selling prices, decreased volumes and higher
production costs of niobium products.

     EWW gross profit was $0.1 million (24%) higher than the two quarters ended
June 30, 2002, due to increased shipments of ferrochrome.

Selling, General and Administrative Expenses

     SG&A decreased to $18.8 million for the two quarters ended June 30, 2003
from $19.3 million for the two quarters ended June 30, 2002, a decrease of 2%.
An increase in pension expense, primarily $1.1 million at LSM, due to decreases
in plan asset values resulting from declines in equity markets and interest
rates, was more than offset by reductions in compensation and other expenses
resulting from restructuring programs and lower bad debt expense. For the two
quarters ended June 30, 2003, SG&A represented 10.4% of total revenue compared
to 11.7% for the two quarters ended June 30, 2002.

Operating Loss

     The Company's consolidated operating loss was $0.4 million for the two
quarters ended June 30, 2003 compared to $4.1 million for the two quarters ended
June 30, 2002. The improvement was primarily due to the increase in gross
profit, discussed above. The two quarters ended June 30, 2002 included an
environmental expense recovery of $3.0 million recognized by SMC and
restructuring charges, net, of $1.4 million.

Interest Expense, Net

     Interest expense, net, was as follows (in thousands):

<TABLE>
<CAPTION>
                                Two Quarters Ended June 30,
                                ---------------------------
                                       2003      2002
                                     -------   -------
<S>                                  <C>       <C>
Interest income .............        $   643   $   407
Interest expense ............         (9,764)   (9,405)
                                     -------   -------
   Interest expense, net ....        $(9,121)  $(8,998)
                                     =======   =======
</TABLE>

Income Tax Benefit, Net

     Income tax benefit, net of tax provisions, was as follows (in thousands):

<TABLE>
<CAPTION>
                                Two Quarters Ended June 30,
                                ---------------------------
                                        2003     2002
                                      -------   -----
<S>                                   <C>       <C>
Total current................         $ 1,183   $ 358
Total deferred...............          (1,208)   (500)
                                      -------   -----
   Income tax benefit, net...         $   (25)  $(142)
                                      =======   =====
</TABLE>

     The difference between the statutory federal income tax rate and the
Company's effective rate for the two quarters ended June 30, 2003 is principally
due to: (i) certain deductible temporary differences, principally domestic net
operating losses,


                                       19





<PAGE>

which in other circumstances would have generated a deferred tax benefit, have
been fully provided for in a valuation allowance; (ii) taxes paid on foreign
dividends; and (iii) the excess of foreign tax rates over the statutory federal
income tax rate.

Net Loss

     The Company had a net loss of $9.5 million for the two quarters ended June
30, 2003 compared to a net loss of $12.8 million for the two quarters ended June
30, 2002. The improvement was due primarily to the decrease in operating loss,
discussed above.

Liquidity and Financial Resources

General

     The Company's sources of liquidity include cash and cash equivalents, cash
from operations and amounts available under credit facilities. At June 30, 2003,
the Company had $18.3 million in cash and cash equivalents and working capital
of $93.6 million as compared to $29.4 million and $92.7 million, respectively,
at December 31, 2002.

     The Company believes that existing cash balances and the sources discussed
below may not be sufficient to fund the current and anticipated future
requirements of debt service, working capital, capital expenditures, pension
benefits and environmental expenditures for the next twelve months. The
Company's long-term debt agreements contain numerous covenants and prohibitions
that limit the financial activities of Metallurg, Inc., including requirements
that Metallurg, Inc. satisfy certain financial ratios and limitations on
additional indebtedness and maintain a minimum liquidity level. While the
Company is in compliance with all such covenants at June 30, 2003, the ability
of the Company to meet its debt service requirements and to comply with such
covenants will be dependent upon future operating performance and financial
results of the Company, which will be subject to financial, economic, political,
competitive and other factors affecting the Company, many of which are beyond
its control.

     The Company anticipates it will be difficult to maintain adequate levels of
liquidity and is pursuing activities to supplement its liquidity in the event
its operations continue to consume cash. There can, however, be no assurance
that the Company will be able to secure additional funding in sufficient amounts
or by the time required to meet existing obligations. Metallurg, Inc. would be
prohibited from making the $5.5 million interest payment due December 1, 2003 on
its Senior Notes unless it can maintain compliance with its minimum liquidity
covenant or, otherwise, obtain the consent of its lenders.

     Currently, Metallurg Holdings does not have sufficient cash on hand to make
the interest payment due in January 2004 on its Senior Discount Notes. While
Metallurg, Inc. is permitted under the terms of its senior note indenture to
distribute cash to Metallurg Holdings for the purpose of making the January 2004
interest payment, Metallurg, Inc. could be prohibited from making cash
distributions at such time under the restrictive covenants of its revolving
credit facility with Fleet National Bank. All of Metallurg, Inc.'s outstanding
common stock has been pledged as collateral for Metallurg Holdings' obligations
under the Senior Discount Notes. If Metallurg Holdings were unable to make its
interest payment when due, it could lead to a foreclosure on its assets,
principally the equity of Metallurg, Inc., and create a default under the terms
of Metallurg, Inc.'s senior note indenture.

Cash Flow Information

     Cash Flows from Operating Activities - Cash used in operating activities
was $12.0 million for the two quarters ended June 30, 2003, compared to $3.8
million for the two quarters ended June 30, 2002. In 2003, the net loss and an
increase in working capital contributed to the cash used in operating
activities. In 2002, SMC realized an environmental expense recovery and receipt
of $3.0 million upon a settlement with an insurance company relating to coverage
for certain environmental claims.

     Cash Flows from Investing Activities - Cash used in investing activities
was $0.9 million for the two quarters ended June 30, 2003, compared to $4.0
million for the two quarters ended June 30, 2002. While capital expenditures
were $5.7 million lower in 2003, there were loan repayments made to the Company
by a former subsidiary of $1.0 million in 2003 compared to $4.0 million in 2002.


                                       20





<PAGE>

     Cash Flows from Financing Activities - Cash provided by financing
activities was $1.1 million for the two quarters ended June 30, 2003, compared
to $0.3 million for the two quarters ended June 30, 2002. The Company's foreign
subsidiaries had net borrowings of $1.2 million of short-term debt in 2003.

Credit Facilities and Other Financing Arrangements

     On October 29, 1999, Metallurg, Inc., SMC and certain of Metallurg, Inc.'s
other subsidiaries (the "Borrowers") renewed their existing credit facility with
certain financial institutions led by Fleet National Bank as agent (the
"Revolving Credit Facility") for a term of five years. This facility, as
subsequently amended, provides the Borrowers with up to $30.0 million for
working capital requirements and general corporate purposes. Interest is charged
at a rate per annum equal to (i) LIBOR, plus 2.0% - 2.5% or (ii) Prime, plus up
to 1.0%, based on the performance of Metallurg, Inc. and certain of its
subsidiaries (the "North American Group"), as defined in the Revolving Credit
Facility. Interest rates on amounts borrowed are adjusted quarterly, based on
the North American Group's fixed charge coverage ratio. The Borrowers are
required to pay a fee of 0.375% per annum on the unused portion of the facility.
The total amount the Borrowers may borrow at any time is limited to a borrowing
base calculation that is based on eligible accounts receivable, inventory and
certain fixed assets. At June 30, 2003, there were no borrowings under this
facility; however, outstanding letters of credit totaled $21.2 million. The
Borrowers had unused borrowing capacity of $7.4 million under this facility. The
Revolving Credit Facility continues to prohibit Metallurg, Inc. from paying
dividends prior to 2004 and requires the Borrowers and certain subsidiaries to
comply with various covenants, including the maintenance of minimum liquidity,
as defined in the agreement, at a $10.0 million level. Liquidity, as defined,
was $12.9 million at June 30, 2003.

     LSM has revolving credit facilities with Barclays Bank plc ("Barclays") and
HSBC Bank plc ("HSBC") that provide LSM with up to 'L'7.5 million ($12.4
million) of borrowings, 'L'43.3 million ($71.7 million) of foreign exchange
contracts and options and 'L'4.0 million ($6.6 million) for other ancillary
banking arrangements, including bank guarantees. Borrowings under these
facilities are unsecured and payable on demand. Outstanding loans under this
facility bear interest at a rate of 1.0% over the lender's base rate. At June
30, 2003, there were no borrowings under these facilities.

     LSM also has four revolving term loan facilities with Barclays and HSBC
that provide for borrowings up to 'L'12.0 million ($19.9 million) at an
interest rate of LIBOR plus 1.75%, all of which were outstanding at June 30,
2003. Two of the facilities expire during the second quarter of 2004 but, as LSM
intends to renew these facilities and believes it has the ability to do so,
amounts outstanding continue to be included in the balance sheet in long-term
liabilities rather than current liabilities. The other two facilities expire
during the second quarter of 2006. These term loan facilities are unsecured and
require LSM to comply with various covenants, including the maintenance of
minimum net worth and interest coverage.

     LSM's Norwegian facility has an unsecured overdraft facility of NOK 15.0
million ($2.1 million). Borrowings under this facility bear interest at a rate
of NIBOR plus 1.25%. At June 30, 2003, there was NOK 8.8 million ($1.2 million)
outstanding under this facility. The Norwegian facility also has an unsecured
term loan with a remaining balance of NOK 7.3 million ($1.0 million). Repayments
continue until 2010 in equal monthly installments plus interest at NIBOR plus
1.25%.

     EWW has committed lines of credit with several banks in the aggregate
amount of 'E'1.6 million ($1.9 million). The credit agreements require EWW to
pledge certain assets, which include accounts receivable, inventory and fixed
assets. At June 30, 2003, there were no borrowings under these facilities. EWW
also has a term loan with a remaining balance of 'E'0.5 million ($0.5
million). Repayments continue until 2008 in equal monthly installments plus
interest at 4.25%.

     The Company's other foreign subsidiaries maintain short-term secured and
unsecured borrowing arrangements, generally in local currencies, with various
banks totaling $11.0 million. Borrowings under these arrangements aggregated
$6.1 million at June 30, 2003 at a weighted-average interest rate of 10.8%.

Capital Expenditures

     The Company invested $2.0 million in capital projects during the two
quarters ended June 30, 2003. The Company's capital expenditures include
projects related to improving the Company's operations, productivity
improvements, replacement projects and ongoing environmental requirements (which
are in addition to expenditures discussed in "Environmental Remediation Costs"
below). Capital expenditures are projected to total approximately $5 million for
the year ended December 31, 2003, approximately half of which the Company
believes will result in decreased costs of production, improved efficiency and
expanded production capacities. The remaining capital expenditures planned are
primarily for replacement and repairs of existing facilities. Although the
Company has projected these items for the year ended December 31, 2003, the


                                       21





<PAGE>

Company has not committed purchases to vendors for all of these projects, as
some projects remain contingent on final approvals and other conditions and the
actual timing of expenditures may extend into 2004. The Company believes that
these projects will be funded through existing and future internally generated
cash and credit lines.

Environmental Remediation Costs

     Losses associated with environmental remediation obligations are accrued
when such losses are deemed probable and reasonably estimable. Such accruals
generally are recognized no later than the completion of the remedial
feasibility study and are adjusted as further information develops or
circumstances change. Costs of future expenditures for environmental remediation
obligations are generally not discounted to their present value. During the two
quarters ended June 30, 2003, the Company expended $1.2 million for
environmental remediation.

     In 1997, SMC entered into settlement agreements with various environmental
regulatory authorities with regard to all of the significant environmental
remediation liabilities of which it is aware. Pursuant to these agreements, SMC
has agreed to perform environmental remediation, which, as of June 30, 2003, had
an estimated net cost of completion of $26.7 million. Of this amount, $1.0
million is expected to be expended in the remaining two quarters of 2003, $3.9
million in 2004 and $1.7 million in 2005. In addition, the Company estimates it
will make expenditures of $0.7 million with respect to environmental remediation
at its foreign facilities over the next three years. These amounts have been
accrued for in prior years and are reflected in the Company's balance sheet
liabilities.

Other

     SMC's collective bargaining agreement with the United Steelworkers of
America (USW, Local 4836-02), which covered 69 employees at the Cambridge, Ohio
plant, expired on June 6, 2003. Following negotiations, SMC and the union
reached an impasse on June 15, 2003. The union employees are currently working
under the terms of SMC's last offer for a proposed new contract. The Company
does not believe that this dispute will have a material, adverse effect on its
financial statements.


                                       22





<PAGE>

         ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURE OF MARKET RISK

     Refer to the Market Risk section of Management's Discussion and Analysis of
Financial Condition and Results of Operations included in the Company's annual
report on Form 10-K for the year ended December 31, 2002, which is incorporated
by reference herein.

                        ITEM 4 - CONTROLS AND PROCEDURES

     As of the end of the period covered by this report, the Company carried out
an evaluation, under the supervision of its Chief Executive Officer and Chief
Financial Officer, of the effectiveness of the design and operation of its
disclosure controls and procedures pursuant to Exchange Act Rule 13a-14. Based
upon that evaluation, the Chief Executive Officer and Chief Financial Officer
concluded that the Company's disclosure controls and procedures are effective in
timely alerting them to material information relating to the Company (including
its consolidated subsidiaries) required to be included in its Exchange Act
filings.

     There have been no significant changes in the Company's internal control
over financial reporting during the quarter covered by this report that have
materially affected, or are reasonable likely to materially affect, the
Company's control over financial reporting.

                           PART II - OTHER INFORMATION

                    ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

     (a)  EXHIBITS

          31.1 Certification of Chief Executive Officer pursuant to Section 302
               of the Sarbanes-Oxley Act of 2002.

          31.2 Certification of Chief Financial Officer pursuant to Section 302
               of the Sarbanes-Oxley Act of 2002.

          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.

     (b)  REPORTS ON FORM 8-K

          None


                                       23





<PAGE>

                                   SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on August 11, 2003 on its
behalf by the undersigned thereunto duly authorized.

                                              METALLURG HOLDINGS, INC.


                                              By: /s/ Arthur R. Spector
                                                  ------------------------------
                                              Arthur R. Spector
                                              Executive Vice President
                                              (Principal Financial Officer and
                                              Principal Accounting Officer)


                                       24



                             STATEMENT OF DIFFERENCES

The British pound sterling sign shall be expressed as........................'L'
The Euro sign shall be expressed as..........................................'E'