<PAGE>   1

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                                 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 October 31, 1999

                                       OR

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

             For the transition period from           to
                            ------------------------
                                METALLURG, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
        <S>                                        <C>
                         DELAWARE                                  13-1661467
             (State or Other Jurisdiction of                    (I.R.S. Employer
              Incorporation or Organization)                  Identification No.)

          6 EAST 43RD STREET, NEW YORK, NEW YORK                     10017
         (Address of Principal Executive Offices)                  (Zip Code)
</TABLE>

       Registrant's Telephone Number, Including Area Code: (212) 835-0200
                            ------------------------

     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 has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.  Yes [X]     No [ ]

     The number of shares of common stock, $0.01 par value, issued and
outstanding as of December 10, 1999 was 5,000,000.

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>   2

                 METALLURG, 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
      Quarter and the Three Quarters Ended October 31, 1999
      and 1998..............................................        3
     Condensed Consolidated Balance Sheets at October 31,
      1999 and January 31, 1999.............................        4
     Condensed Statements of Consolidated Cash Flows for the
      Three Quarters Ended October 31, 1999 and 1998........        5
     Notes to Condensed Consolidated Financial Statements...   6 - 12
  Item 2 -- Management's Discussion and Analysis of
     Financial Condition and Results of Operations..........  13 - 20
  Item 3 -- Quantitative and Qualitative Disclosure of
     Market Risk............................................       20
Part II. OTHER INFORMATION
  Item 5.   OTHER INFORMATION...............................       21
  Item 6.(a) EXHIBITS.......................................       21
  Item 6.(b) REPORT ON FORM 8-K.............................       21
  Signature Page............................................       22
</TABLE>

                                        2
<PAGE>   3

                                    PART I.

                             FINANCIAL INFORMATION

                 METALLURG, INC. AND CONSOLIDATED SUBSIDIARIES

                         ITEM 1 -- FINANCIAL STATEMENTS

                CONDENSED STATEMENTS OF CONSOLIDATED OPERATIONS
                                  (UNAUDITED)
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                        QUARTER ENDED      THREE QUARTERS ENDED
                                                         OCTOBER 31,            OCTOBER 31,
                                                     -------------------   ---------------------
                                                       1999       1998       1999        1998
                                                     --------   --------   ---------   ---------
<S>                                                  <C>        <C>        <C>         <C>
Sales.............................................   $113,103   $142,522   $346,679    $479,951
Commission income.................................        155        186        444         600
                                                     --------   --------   --------    --------
     Total revenue................................    113,258    142,708    347,123     480,551
                                                     --------   --------   --------    --------
Operating costs and expenses:
     Cost of sales................................     99,570    124,401    308,374     406,080
     Selling, general and administrative
       expenses...................................     13,656     15,587     42,130      45,495
     Environmental expense recovery...............         --         --     (5,501)         --
     Restructuring charges........................         --         --      4,386          --
     Merger-related costs.........................         --      2,607         --       7,023
                                                     --------   --------   --------    --------
     Total operating costs and expenses...........    113,226    142,595    349,389     458,598
                                                     --------   --------   --------    --------
Operating income (loss)...........................         32        113     (2,266)     21,953
Other income (expense):
     Other (expense) income, net..................        (16)     1,487        (11)      2,032
     Interest expense, net........................     (2,298)    (2,303)    (8,158)     (6,919)
                                                     --------   --------   --------    --------
(Loss) income before income tax provision
  (benefit).......................................     (2,282)      (703)   (10,435)     17,066
Income tax provision (benefit)....................        743       (741)     3,488       8,740
                                                     --------   --------   --------    --------
Net (loss) income.................................     (3,025)        38    (13,923)      8,326
Other comprehensive income (loss):
     Foreign currency translation adjustment......      2,048      1,356       (373)        280
                                                     --------   --------   --------    --------
     Comprehensive (loss) income..................   $   (977)  $  1,394   $(14,296)   $  8,606
                                                     ========   ========   ========    ========
</TABLE>

      See notes to condensed unaudited consolidated financial statements.

                                        3
<PAGE>   4

                 METALLURG, INC. AND CONSOLIDATED SUBSIDIARIES

                         ITEM 1 -- FINANCIAL STATEMENTS

                     CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                OCTOBER 31,     JANUARY 31,
                                                                    1999           1999
                                                                ------------    -----------
                                                                (UNAUDITED)
<S>                                                             <C>             <C>
ASSETS
Current Assets:
     Cash and cash equivalents..............................      $ 48,425       $ 37,293
     Accounts receivable, net...............................        69,330         63,680
     Inventories............................................        98,341        120,658
     Other assets...........................................        12,974         16,759
                                                                  --------       --------
          Total current assets..............................       229,070        238,390
Property, plant and equipment, net..........................        50,893         49,018
Other assets................................................        22,835         23,709
                                                                  --------       --------
          Total.............................................      $302,798       $311,117
                                                                  ========       ========
LIABILITIES
Current Liabilities:
     Short-term debt and current portion of long-term
      debt..................................................      $  1,548       $  4,945
     Trade payables.........................................        46,023         37,460
     Accrued expenses.......................................        34,300         25,801
     Other current liabilities..............................         2,315          3,955
                                                                  --------       --------
          Total current liabilities.........................        84,186         72,161
                                                                  --------       --------
Long-term debt..............................................       107,666        109,185
Accrued pension liabilities.................................        37,818         41,062
Environmental liabilities, net..............................        32,733         35,463
Other liabilities...........................................         6,276          5,556
                                                                  --------       --------
          Total long-term liabilities.......................       184,493        191,266
                                                                  --------       --------
          Total liabilities.................................       268,679        263,427
                                                                  --------       --------
SHAREHOLDERS' EQUITY
Common stock................................................            50             50
Additional paid-in capital..................................        45,982         45,257
Accumulated other comprehensive loss........................          (761)          (388)
Retained (deficit) earnings.................................       (11,152)         2,771
                                                                  --------       --------
          Total shareholders' equity........................        34,119         47,690
                                                                  --------       --------
          Total.............................................      $302,798       $311,117
                                                                  ========       ========
</TABLE>

      See notes to condensed unaudited consolidated financial statements.

                                        4
<PAGE>   5

                 METALLURG, INC. AND CONSOLIDATED SUBSIDIARIES

                         ITEM 1 -- FINANCIAL STATEMENTS

                CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
                                  (UNAUDITED)
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                THREE QUARTERS ENDED
                                                                    OCTOBER 31,
                                                                --------------------
                                                                  1999        1998
                                                                --------    --------
<S>                                                             <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net income.............................................    $(13,923)   $  8,326
     Adjustments to reconcile net income to net cash
      provided by operating activities:
          Amortization of executive stock awards............          --         750
          Depreciation and amortization.....................       6,190       6,234
          Loss (gain) on sale of assets.....................          16        (622)
          Deferred income taxes.............................       1,306       2,481
          Provision for doubtful accounts...................         374         550
          Provision for restructuring costs.................       4,386          --
          Other, net........................................       5,778       6,546
                                                                --------    --------
               Total........................................       4,127      24,265
     Change in operating assets and liabilities:
          (Increase) decrease in trade receivables..........      (6,461)      7,954
          Decrease (increase) in inventories................      21,112     (19,983)
          Decrease (increase) in other current assets.......       2,419      (4,985)
          Increase in trade payables and accrued expenses...      13,414       6,974
          Payments for environmental remediation............      (2,132)     (1,718)
          Other assets and liabilities, net.................      (9,068)     (8,714)
                                                                --------    --------
               Net cash provided by operating activities....      23,411       3,793
                                                                --------    --------
CASH FLOWS FROM INVESTING ACTIVITIES:
          Additions to property, plant and equipment........      (9,373)    (11,576)
          Proceeds from asset sales.........................          42       1,337
          Other, net........................................         (61)     (2,406)
                                                                --------    --------
               Net cash used in investing activities........      (9,392)    (12,645)
                                                                --------    --------
CASH FLOWS FROM FINANCING ACTIVITIES:
          Net short-term borrowings (repayments)............      (1,680)     (1,968)
          Repayment of long-term debt.......................        (874)       (975)
          Capital contribution from Safeguard
            International...................................          --       3,541
          Proceeds from long-term debt, net.................          --       5,569
                                                                --------    --------
               Net cash (used in) provided by financing
                 activities.................................      (2,554)      6,167
                                                                --------    --------
Effects of exchange rate changes on cash and cash
  equivalents...............................................        (333)        197
                                                                --------    --------
Net increase (decrease) in cash and cash equivalents........      11,132      (2,488)
Cash and cash equivalents - beginning of period.............      37,293      43,003
                                                                --------    --------
Cash and cash equivalents - end of period...................    $ 48,425    $ 40,515
                                                                ========    ========
</TABLE>

      See notes to condensed unaudited consolidated financial statements.

                                        5
<PAGE>   6

                 METALLURG, 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, Inc. ("Metallurg") 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, they 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 January 31, 1999 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.

     The Company is a wholly owned subsidiary of Metallurg Holdings, Inc.
("Metallurg Holdings") since the acquisition date of July 13, 1998. The
financial statements do not reflect the pushdown of purchase accounting
adjustments recorded by Metallurg Holdings.

     For further information, see the financial statements and footnotes thereto
included in the Company's audited consolidated financial statements for the year
ended January 31, 1999.

     The Company reports the results of its operating subsidiaries on a
one-month lag. Accordingly, the three quarters ended October 31, 1999 and 1998
include operating results of Metallurg, Inc., the parent holding company, for
the nine months ended October 31, 1999 and 1998 and results of its operating
subsidiaries for the nine months ended September 30, 1999 and 1998. Balance
sheet data at October 31, 1999 reflect the financial position of Metallurg, Inc.
at October 31, 1999 and of its operating subsidiaries at September 30, 1999.
Balance sheet data at January 31, 1999 reflect the financial position of
Metallurg, Inc. at January 31, 1999 and of its operating subsidiaries at
December 31, 1998.

     Amounts reflected in prior quarters' condensed statements of consolidated
operations have been reclassed to conform to the current period's disclosure.

2.  INVENTORIES

     Inventories, net of reserves, consist of the following (in thousands):

<TABLE>
<CAPTION>
                                                                OCTOBER 31,    JANUARY 31,
                                                                   1999           1999
                                                                -----------    -----------
<S>                                                             <C>            <C>
Raw materials...............................................      $19,774       $ 29,096
Work in process.............................................        3,260          3,249
Finished goods..............................................       71,660         83,116
Other.......................................................        3,647          5,197
                                                                  -------       --------
     Total..................................................      $98,341       $120,658
                                                                  =======       ========
</TABLE>

3.  COMMITMENTS AND CONTINGENCIES

     The Company continues defending 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 litigation 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 existing or future litigation will not result in
an adverse judgment against the Company which could have a material adverse
effect on the Company's future results of operations or cash flows.

                                        6
<PAGE>   7
                 METALLURG, INC. AND CONSOLIDATED SUBSIDIARIES

                   NOTES TO CONDENSED UNAUDITED CONSOLIDATED
                      FINANCIAL STATEMENTS -- (CONTINUED)

4.  EARNINGS PER COMMON SHARE

     Earnings per share is not presented since the Company is a wholly owned
subsidiary of Metallurg Holdings.

5.  RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

     In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities". SFAS No. 133 establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. It requires
that an entity recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at fair value.
SFAS No. 133, as amended, is effective for all fiscal quarters of fiscal years
beginning after June 15, 2000. The Company is currently evaluating the impact
SFAS No. 133 will have on its financial statements.

6.  SEGMENTS AND RELATED INFORMATION

     The Company adopted SFAS No. 131, "Disclosures About Segments of an
Enterprise and Related Information" in the year ended January 31, 1999 which
changes the way the Company reports information about its reportable segments.
Information for prior periods presented have been restated in order to conform
to the current year presentation.

     The Company operates in one significant industry segment, the manufacture
and sale of ferrous and non-ferrous metals and alloys. The Company is organized
geographically, having established a worldwide sales network built around the
Company's core production facilities in the United States, the United Kingdom
and Germany. In addition to selling products manufactured by the Company, the
Company distributes complementary products manufactured by third parties.

     Reportable Segments

     Shieldalloy Metallurgical Corporation ("Shieldalloy"): This unit is
comprised of two production facilities in the U.S. The New Jersey plant
manufactures and sells aluminum alloy grain refiners and alloying tablets for
the aluminum industry, metal powders for the welding industry and specialty
ferroalloys for the superalloy and steel industries.

     The Ohio plant manufactures and sells ferrovanadium and vanadium based
chemicals used mostly in the steel and petrochemical industries. In addition to
its manufacturing operations, Shieldalloy imports and distributes complementary
products manufactured by affiliates and third parties.

     London & Scandinavian Metallurgical Co., Ltd. ("LSM"): This unit is
comprised mainly of three production facilities in the UK 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.

     Gesellschaft fur Elektrometallurgie mbH ("GfE"):  This unit is comprised of
two production facilities and a sales office in Germany. The Nuremburg plant
manufactures and sells a wide variety of specialty products, including vanadium
based chemicals and sophisticated metals, alloys and powders used in the
titanium, superalloy, electronics, steel, biomedical and optics industries. The
Morsdorf plant produces medical prostheses, implants and surgical instruments
for orthopedic applications.

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

                                        7
<PAGE>   8
                 METALLURG, INC. AND CONSOLIDATED SUBSIDIARIES

                   NOTES TO CONDENSED UNAUDITED CONSOLIDATED
                      FINANCIAL STATEMENTS -- (CONTINUED)

6.  SEGMENTS AND RELATED INFORMATION -- (CONTINUED)
     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, fresh start adjustments and results of
subsidiaries not meeting the quantitative thresholds as prescribed by applicable
accounting rules. The Company does not allocate general corporate overhead
expenses to operating segments.

<TABLE>
<CAPTION>
                                                                                                INTERSEGMENT   CONSOLIDATED
                                         SHIELDALLOY     LSM       GFE       EWW      OTHER     ELIMINATIONS      TOTALS
                                         -----------   -------   -------   -------   --------   ------------   ------------
<S>                                      <C>           <C>       <C>       <C>       <C>        <C>            <C>
QUARTER ENDED OCTOBER 31,
1999
Revenue from external customers........   $ 29,978     $25,685   $16,959   $ 2,779   $ 37,857                    $113,258
Intergroup revenue.....................      1,387       7,135     2,252     3,862      6,010    $ (20,646)            --
Income tax provision (benefit).........        403        (145)       11      (115)       589           --            743
Net income (loss)......................        598        (340)      290      (116)    (3,316)        (141)        (3,025)
1998
Revenue from external customers........   $ 43,283     $26,419   $27,034   $ 3,955   $ 42,017                    $142,708
Intergroup revenue.....................      1,383      12,837     8,974     8,565     12,638    $ (44,397)            --
Merger costs...........................         --          --        --        --      2,607           --          2,607
Income tax provision (benefit).........        340         386       924      (947)    (1,444)          --           (741)
Net income (loss)......................      2,826         870       343      (863)       608       (3,746)            38
</TABLE>

<TABLE>
<CAPTION>
                                                                                                INTERSEGMENT   CONSOLIDATED
                                         SHIELDALLOY     LSM       GFE       EWW      OTHER     ELIMINATIONS      TOTALS
                                         -----------   -------   -------   -------   --------   ------------   ------------
<S>                                      <C>           <C>       <C>       <C>       <C>        <C>            <C>
THREE QUARTERS ENDED OCTOBER 31,
1999
Revenue from external customers........   $ 89,396     $79,140   $53,502   $ 9,027   $116,058                    $347,123
Intergroup revenue.....................      3,455      25,416    10,274    14,413     27,247    $ (80,805)            --
Environmental expense recovery.........     (5,501)         --        --        --         --           --         (5,501)
Restructuring charges                           --          --     3,385     1,001         --           --          4,386
Income tax provision...................        969         362       283       334      1,540           --          3,488
Net income (loss)......................      2,230         904    (5,627)     (893)   (13,741)       3,204        (13,923)
1998
Revenue from external customers........   $153,245     $88,460   $87,080   $13,948   $137,818                    $480,551
Intergroup revenue.....................      4,114      42,845    16,244    25,967     41,202    $(130,372)            --
Merger costs...........................         --          --        --        --      7,023           --          7,023
Income tax provision (benefit).........      6,515       1,557     2,084       334     (1,750)          --          8,740
Net income.............................     11,572       3,558     1,991       271     10,963      (20,029)         8,326
</TABLE>

                                        8
<PAGE>   9
                 METALLURG, INC. AND CONSOLIDATED SUBSIDIARIES

                   NOTES TO CONDENSED UNAUDITED CONSOLIDATED
                      FINANCIAL STATEMENTS -- (CONTINUED)

7.  SUPPLEMENTAL GUARANTOR INFORMATION

     In November 1997, Metallurg issued $100 million principal amount of its 11%
Senior Notes due 2007. Under the terms of the Senior Notes, Shieldalloy
Metallurgical Corporation, Metallurg Holdings Corporation, Metallurg Services,
Inc., Metallurg International Resources, Inc. ("MIR, Inc.") and MIR (China),
Inc. (collectively, the "Guarantors"), wholly owned subsidiaries of the Company,
have fully and unconditionally guaranteed on a joint and several basis the
Company's obligations to pay principal, premium and interest relative to the
Senior Notes. During the second quarter of 1999, Metallurg established MIR, Inc.
as a wholly owned subsidiary and a guarantor of the Senior Notes. Certain
commercial activities previously carried out by Metallurg, Inc. are now being
carried out by MIR, Inc. 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.

          CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS (UNAUDITED)
                     FOR THE QUARTER ENDED OCTOBER 31, 1999
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                   METALLURG, INC.     COMBINED       COMBINED
                                      ("PARENT        GUARANTOR     NON-GUARANTOR
                                      COMPANY")      SUBSIDIARIES   SUBSIDIARIES    ELIMINATIONS   CONSOLIDATED
                                   ---------------   ------------   -------------   ------------   ------------
<S>                                <C>               <C>            <C>             <C>            <C>
Sales............................                      $37,856         $87,388        $(12,141)      $113,103
Commission income................                           32             213             (90)           155
                                       -------         -------         -------        --------       --------
  Total revenue..................                       37,888          87,601         (12,231)       113,258
                                       -------         -------         -------        --------       --------
Operating costs and expenses:
  Cost of sales..................      $   331          34,677          77,596         (13,034)        99,570
  Selling, general and
     administrative expenses.....        1,350           2,221          10,085              --         13,656
                                       -------         -------         -------        --------       --------
  Total operating costs and
     expenses....................        1,681          36,898          87,681         (13,034)       113,226
                                       -------         -------         -------        --------       --------
Operating (loss) income..........       (1,681)            990             (80)            803             32
Other income (expense):
  Other expense, net.............           --              (1)            (15)             --            (16)
  Interest (expense) income,
     net.........................       (2,689)            524            (133)             --         (2,298)
  Equity in earnings of
     subsidiaries................          944             369              --          (1,313)            --
                                       -------         -------         -------        --------       --------
(Loss) income before income tax
  (benefit) provision............       (3,426)          1,882            (228)           (510)        (2,282)
Income tax (benefit) provision...         (401)            874             270              --            743
                                       -------         -------         -------        --------       --------
Net (loss) income................       (3,025)          1,008            (498)           (510)        (3,025)
Other comprehensive income:
  Foreign currency translation
     adjustment..................        2,048             839           2,048          (2,887)         2,048
                                       -------         -------         -------        --------       --------
Comprehensive (loss) income......      $  (977)        $ 1,847         $ 1,550        $ (3,397)      $   (977)
                                       =======         =======         =======        ========       ========
</TABLE>

                                        9
<PAGE>   10
                 METALLURG, INC. AND CONSOLIDATED SUBSIDIARIES

                   NOTES TO CONDENSED UNAUDITED CONSOLIDATED
                      FINANCIAL STATEMENTS -- (CONTINUED)

7.  SUPPLEMENTAL GUARANTOR INFORMATION -- (CONTINUED)
          CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS (UNAUDITED)
                 FOR THE THREE QUARTERS ENDED OCTOBER 31, 1999
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                   METALLURG, INC.     COMBINED       COMBINED
                                      ("PARENT        GUARANTOR     NON-GUARANTOR
                                      COMPANY")      SUBSIDIARIES   SUBSIDIARIES    ELIMINATIONS   CONSOLIDATED
                                   ---------------   ------------   -------------   ------------   ------------
<S>                                <C>               <C>            <C>             <C>            <C>
Sales............................     $  7,297         $110,201       $278,769        $(49,588)      $346,679
Commission income................           --               53            592            (201)           444
                                      --------         --------       --------        --------       --------
  Total revenue..................        7,297          110,254        279,361         (49,789)       347,123
                                      --------         --------       --------        --------       --------
Operating costs and expenses:
  Cost of sales..................        6,904          106,011        246,551         (51,092)       308,374
  Selling, general and
     administrative expenses.....        4,621            7,026         30,483              --         42,130
  Environmental expense
     recovery....................           --           (5,501)            --              --         (5,501)
  Restructuring charges..........           --               --          4,386              --          4,386
                                      --------         --------       --------        --------       --------
  Total operating costs and
     expenses....................       11,525          107,536        281,420         (51,092)       349,389
                                      --------         --------       --------        --------       --------
Operating (loss) income..........       (4,228)           2,718         (2,059)          1,303         (2,266)
Other income (expense):
  Other income (expense), net....            2              (10)            (3)             --            (11)
  Interest (expense) income,
     net.........................       (8,414)           1,295         (1,039)             --         (8,158)
  Equity in losses of
     subsidiaries................       (1,901)          (3,677)            --           5,578             --
                                      --------         --------       --------        --------       --------
(Loss) income before income tax
  (benefit) provision............      (14,541)             326         (3,101)          6,881        (10,435)
Income tax (benefit) provision...         (618)           1,556          2,550              --          3,488
                                      --------         --------       --------        --------       --------
Net loss.........................      (13,923)          (1,230)        (5,651)          6,881        (13,923)
Other comprehensive (loss)
  income:
  Foreign currency translation
     adjustment..................         (373)             763           (371)           (392)          (373)
                                      --------         --------       --------        --------       --------
Comprehensive loss...............     $(14,296)        $   (467)      $ (6,022)       $  6,489       $(14,296)
                                      ========         ========       ========        ========       ========
</TABLE>

                                       10
<PAGE>   11
                 METALLURG, INC. AND CONSOLIDATED SUBSIDIARIES

                   NOTES TO CONDENSED UNAUDITED CONSOLIDATED
                      FINANCIAL STATEMENTS -- (CONTINUED)

7.  SUPPLEMENTAL GUARANTOR INFORMATION -- (CONTINUED)
           CONDENSED CONSOLIDATING BALANCE SHEET AT OCTOBER 31, 1999
                                  (UNAUDITED)
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                   METALLURG, INC.     COMBINED       COMBINED
                                      ("PARENT        GUARANTOR     NON-GUARANTOR
                                      COMPANY")      SUBSIDIARIES   SUBSIDIARIES    ELIMINATIONS   CONSOLIDATED
                                   ---------------   ------------   -------------   ------------   ------------
<S>                                <C>               <C>            <C>             <C>            <C>
ASSETS
Current assets:
  Cash and cash equivalents......     $ 43,753         $    781       $ 11,836       $  (7,945)      $ 48,425
  Accounts, notes and loans
     receivable, net.............       20,525           46,681         53,304         (51,180)        69,330
  Inventories....................           --           30,312         69,844          (1,815)        98,341
  Other assets...................        5,449              316         10,894          (3,685)        12,974
                                      --------         --------       --------       ---------       --------
          Total current assets...       69,727           78,090        145,878         (64,625)       229,070
Investments - intergroup.........      101,215           49,517             --        (150,732)            --
Property, plant and equipment,
  net............................          980            9,990         39,923              --         50,893
Other assets.....................        9,161           20,379         14,709         (21,414)        22,835
                                      --------         --------       --------       ---------       --------
          Total..................     $181,083         $157,976       $200,510       $(236,771)      $302,798
                                      ========         ========       ========       =========       ========
LIABILITIES
Current liabilities:
  Short-term debt and current
     portion of long-term debt...                                     $  9,493       $  (7,945)      $  1,548
  Accounts and loans payable.....     $ 21,620         $ 25,291         60,292         (61,180)        46,023
  Accrued expenses...............        6,642            8,857         18,801              --         34,300
  Other current liabilities......           --            3,685          2,315          (3,685)         2,315
                                      --------         --------       --------       ---------       --------
          Total current
            liabilities..........       28,262           37,833         90,901         (72,810)        84,186
                                      --------         --------       --------       ---------       --------
Long-term liabilities:
  Long-term debt.................      100,000               --          7,666              --        107,666
  Accrued pension liabilities....          131            1,680         36,007              --         37,818
  Environmental liabilities,
     net.........................           --           30,616          2,117              --         32,733
  Other liabilities..............       18,571               --          9,119         (21,414)         6,276
                                      --------         --------       --------       ---------       --------
          Total long-term
            liabilities..........      118,702           32,296         54,909         (21,414)       184,493
                                      --------         --------       --------       ---------       --------
          Total liabilities......      146,964           70,129        145,810         (94,224)       268,679
                                      --------         --------       --------       ---------       --------
SHAREHOLDERS' EQUITY:
  Common stock outstanding.......           50            1,227         52,191         (53,418)            50
  Additional paid-in capital.....       45,982           94,460          1,014         (95,474)        45,982
  Accumulated other comprehensive
     (loss) income...............         (761)            (165)        20,974         (20,809)          (761)
  Retained deficit...............      (11,152)          (7,675)       (19,479)         27,154        (11,152)
                                      --------         --------       --------       ---------       --------
          Shareholders' equity...       34,119           87,847         54,700        (142,547)        34,119
                                      --------         --------       --------       ---------       --------
          Total..................     $181,083         $157,976       $200,510       $(236,771)      $302,798
                                      ========         ========       ========       =========       ========
</TABLE>

                                       11
<PAGE>   12
                 METALLURG, INC. AND CONSOLIDATED SUBSIDIARIES

                   NOTES TO CONDENSED UNAUDITED CONSOLIDATED
                      FINANCIAL STATEMENTS -- (CONTINUED)

7.  SUPPLEMENTAL GUARANTOR INFORMATION -- (CONTINUED)
                CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
                                  (UNAUDITED)
                 FOR THE THREE QUARTERS ENDED OCTOBER 31, 1999
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                   METALLURG, INC.     COMBINED       COMBINED
                                      ("PARENT        GUARANTOR     NON-GUARANTOR
                                      COMPANY")      SUBSIDIARIES   SUBSIDIARIES    ELIMINATIONS   CONSOLIDATED
                                   ---------------   ------------   -------------   ------------   ------------
<S>                                <C>               <C>            <C>             <C>            <C>
NET CASH FLOWS FROM OPERATING
ACTIVITIES.......................      $(3,953)        $ 21,398        $ 5,869        $    97        $23,411
                                       -------         --------        -------        -------        -------
CASH FLOWS FROM INVESTING
  ACTIVITIES:
  Additions to property, plant
     and equipment...............         (167)          (3,164)        (6,042)            --         (9,373)
  Proceeds from asset sales......           --               15             27             --             42
  Other, net.....................         (279)          (2,761)         2,979             --            (61)
                                       -------         --------        -------        -------        -------
Net cash used in investing
  activities.....................         (446)          (5,910)        (3,036)            --         (9,392)
                                       -------         --------        -------        -------        -------
CASH FLOWS FROM FINANCING
  ACTIVITIES:
  Intergroup borrowings
     (repayments)................       16,449          (15,802)          (550)           (97)            --
  Net short-term borrowings......           --               --            187         (1,867)        (1,680)
  Repayment of long-term debt....           --               --           (874)            --           (874)
  Dividends received (paid)......        6,090               --         (6,090)            --             --
                                       -------         --------        -------        -------        -------
Net cash provided by (used in)
  financing activities...........       22,539          (15,802)        (7,327)        (1,964)        (2,554)
                                       -------         --------        -------        -------        -------
Effects of exchange rate changes
  on cash and cash equivalents...           --               --           (333)            --           (333)
                                       -------         --------        -------        -------        -------
Net increase (decrease) in cash
  and cash equivalents...........       18,140             (314)        (4,827)        (1,867)        11,132
Cash and cash equivalents --
  beginning of period............       25,613            1,095         16,663         (6,078)        37,293
                                       -------         --------        -------        -------        -------
Cash and cash equivalents -- end
  of period......................      $43,753         $    781        $11,836        $(7,945)       $48,425
                                       =======         ========        =======        =======        =======
</TABLE>

                                       12
<PAGE>   13

                 METALLURG, INC. AND CONSOLIDATED SUBSIDIARIES

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 for purposes of Section 21E of the
Securities Exchange Act of 1934, as amended, 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 the cyclical nature of the Company's business, the
Company's dependence on foreign customers (particularly customers in Europe),
the economic strength of the Company's markets generally and particularly the
strength of the demand for iron, steel, aluminum and superalloys and titanium
alloy industries in those markets, the accuracy of the Company's estimates of
the costs of environmental remediation and the extension or expiration of
existing anti-dumping duties.

OVERVIEW

     The Company is a leading international producer and seller of high quality
metal alloys and specialty metals used by manufacturers of steel, aluminum,
superalloys, titanium, chemicals and other metal consuming industries. The
industries that the Company supplies are cyclical. Throughout 1997 and into
1998, market conditions for most of the Company's products were favorable.
However, sales prices and demand for several of the Company's major products
declined during the second half of 1998 and into 1999. The Company believes that
the price declines were the result of economic turmoil seen in Asia, Latin
America and Russia in 1997 and 1998. In the steel industry, this led to lower
production almost everywhere except in the U.S. during the first half of 1998.
In the second half of 1998, Japan, Russia, Brazil and some other Asian countries
exported large volumes of steel to the U.S., causing domestic production to be
drastically curtailed in the latter months of 1998. In 1999, the domestic steel
production rate has increased steadily each quarter, and by the end of the third
quarter, had returned close to the level seen in the same quarter of 1998. In
the aerospace sector, civilian airliner deliveries for 1998 fell substantially
below the level previously forecast by one major producer and the production
plans for subsequent years were scaled back in response to order postponements
and cancellations as trans-Pacific and Asian air passenger volumes contracted
sharply. Furthermore, Asian demand for corrosion resistant materials for major
capital projects also fell sharply due to the economic and financial
difficulties in the region. These factors contributed to lower sales of the
Company's products to the superalloy and titanium alloy industries, which
continue to hold excessive inventories, particularly of their aerospace related
products. The aluminum industry had sustained satisfactory levels of demand for
the Company's products throughout 1998, and this has continued with some growth
in 1999.

RESULTS OF OPERATIONS

     The Company operates in one significant industry segment, the manufacture
and sale of ferrous and non-ferrous metals and alloys. The Company is organized
geographically, with its core production facilities in the United States, the
United Kingdom and Germany supported by a worldwide sales network.

     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, fresh-start adjustments and results of
subsidiaries not meeting the quantitative thresholds as prescribed by applicable
accounting rules. The Company does not allocate general corporate overhead
expenses to operating segments. There have been no material changes in segment
assets from the amounts disclosed in the last annual report.

                                       13
<PAGE>   14

RESULTS OF OPERATIONS -- THE QUARTER ENDED OCTOBER 31, 1999
COMPARED TO THE QUARTER ENDED OCTOBER 31, 1998

<TABLE>
<CAPTION>
                                                                                                     INTERSEGMENT   CONSOLIDATED
                                 SHIELDALLOY       LSM            GFE            EWW        OTHER    ELIMINATIONS      TOTALS
                                 -----------   ------------   ------------   -----------   -------   ------------   ------------
<S>                              <C>           <C>            <C>            <C>           <C>       <C>            <C>
QUARTER ENDED OCTOBER 31,
1999
Revenue from external
  customers....................    $29,978       $25,685        $16,959        $2,779      $37,857                    $113,258
Intergroup revenue.............      1,387         7,135          2,252         3,862        6,010     $(20,646)            --
Income tax provision
  (benefit)....................        403          (145)            11          (115)         589           --            743
Net income (loss)..............        598          (340)           290          (116)      (3,316)        (141)        (3,025)
1998
Revenue from external
  customers....................    $43,283       $26,419        $27,034        $3,955      $42,017                    $142,708
Intergroup revenue.............      1,383        12,837          8,974         8,565       12,638     $(44,397)            --
Merger costs...................         --            --             --            --        2,607           --          2,607
Income tax provision
  (benefit)....................        340           386            924          (947)      (1,444)          --           (741)
Net income (loss)..............      2,826           870            343          (863)         608       (3,746)            38
</TABLE>

     TOTAL REVENUE

     Shieldalloy revenues decreased $13.3 million, or 30%, below the third
quarter of 1998. The partial recovery of domestic steel production during 1999
meant that ferrovanadium volume rose to about 90% of the third quarter 1998
volume, but with market prices only 40% of a year ago, revenues for this product
fell by $9 million. The remainder of the decline is largely attributable to
lower volume and selling prices of ferrosilicon, chrome metal and low carbon
ferrochrome resulting from lower demand from the steel and superalloy
industries.

     Excess superalloy and titanium alloy inventories in the aerospace supply
chain continued to impact negatively on both price and particularly volume of
EWW's specialty low carbon ferrochrome, LSM's chromium and GfE's vanadium
aluminum and titanium masteralloy products. Continuing weakness in the European
steel sector contributed to low prices and volumes of LSM's ferrotitanium, EWW's
normal grade ferrochrome and GfE's ferrovanadium and ferroniobium. As a result,
EWW's revenues fell $5.9 million, or 47%, below the third quarter of 1998 and
GfE, with heavy dependence on the titanium industry, saw revenues fall $16.8
million, or 47% below the third quarter of 1998. Although LSM's revenues fell by
$6.4 million, or 16%, for reasons noted above, the fall was mitigated by sales
to the aluminum industry remaining strong.

     GROSS MARGINS

     Gross margins decreased from $18.3 million in the quarter ended October 31,
1998 to $13.7 million in the quarter ended October 31, 1999, a decrease of
25.2%, due principally to price and volume decreases in ferrovanadium, low
carbon ferrochrome, vanadium aluminum, ferrotitanium and chromium. In aluminum
master alloys and compacted products, improvements in product mix and cost
reductions more than offset a decrease in selling price.

     SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

     Selling, general and administrative expenses ("SG&A") decreased from $15.6
million in the quarter ended October 31, 1998 to $13.7 million in the quarter
ended October 31, 1999, a decrease of 12.4%, due principally to lower
compensation costs following reductions in general and administrative staff. For
the quarter ended October 31, 1998, SG&A represented 10.9% of the Company's
sales compared to 12.1% for the quarter ended October 31, 1999, as a result of
decreased revenue.

     OPERATING INCOME (LOSS)

     Operating income in the quarter ended October 31, 1999 was approximately
breakeven. This was very similar to the quarter ended October 31, 1998, which
result, however, included merger-related costs of $2.6 million.

                                       14
<PAGE>   15

     OTHER (EXPENSE) INCOME, NET

     In the quarter ended October 31, 1998, one of the Company's German
subsidiaries was successful in recovering approximately $1.4 million of
additional proceeds from a government-owned insurance agency representing final
settlement for claims under the company's political risk insurance policy
related to an investment in Zaire.

     INTEREST EXPENSE, NET

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

<TABLE>
<CAPTION>
                                                              QUARTER ENDED
                                                               OCTOBER 31,
                                                            -----------------
                                                             1999      1998
                                                            -------   -------
<S>                                                         <C>       <C>
Interest income...........................................  $   788   $   995
Interest expense..........................................   (3,086)   (3,298)
                                                            -------   -------
     Income expense, net..................................  $(2,298)  $(2,303)
                                                            =======   =======
</TABLE>

     Interest expense was essentially unchanged in the quarter ended October 31,
1999 from the previous period.

     INCOME TAX PROVISION (BENEFIT)

     Income tax provision, net of tax benefits, is as follows (in thousands):

<TABLE>
<CAPTION>
                                                              QUARTER ENDED
                                                               OCTOBER 31,
                                                            -----------------
                                                             1999      1998
                                                            -------   -------
<S>                                                         <C>       <C>
Total current.............................................  $   537   $  (943)
Total deferred............................................      206       202
                                                            -------   -------
     Income tax provision (benefit), net..................  $   743   $  (741)
                                                            =======   =======
</TABLE>

     The differences between the statutory Federal income tax rate and the
Company's effective rate result primarily because of: (i) the U.S. taxability of
foreign dividends; (ii) the excess of foreign tax rates over the statutory
Federal income tax rate; (iii) certain deductible temporary differences which,
in other circumstances would have generated a deferred tax benefit, have been
fully provided for in a valuation allowance; (iv) the deferred tax effects of
certain tax assets, primarily foreign net operating losses, for which the
benefit had been previously recognized was reduced by $0.1 million in the
quarter ended October 31, 1999; and (v) the deferred tax effects of certain
deferred tax assets for which a corresponding credit has been recorded to
"Additional paid-in capital" approximating $0.2 million in the quarter ended
October 31, 1999. The deferred tax expenses referred to in items (iv) and (v)
above will not result in cash payments in future periods.

     NET (LOSS) INCOME

     The net loss of $3.0 million for the quarter ended October 31, 1999
compared to a breakeven result for the quarter ended October 31, 1998. The
increase in net loss was due primarily to reduced gross margins and the other
items, discussed above.

                                       15
<PAGE>   16

RESULTS OF OPERATIONS -- THE THREE QUARTERS ENDED
OCTOBER 31, 1999 COMPARED TO THE THREE QUARTERS ENDED OCTOBER 31, 1998

<TABLE>
<CAPTION>
                                                                                                INTERSEGMENT   CONSOLIDATED
                                         SHIELDALLOY     LSM       GFE       EWW      OTHER     ELIMINATIONS      TOTALS
                                         -----------   -------   -------   -------   --------   ------------   ------------
<S>                                      <C>           <C>       <C>       <C>       <C>        <C>            <C>
THREE QUARTERS ENDED OCTOBER 31,
1999
Revenue from external customers........   $ 89,396     $79,140   $53,502   $ 9,027   $116,058                    $347,123
Intergroup revenue.....................      3,455      25,416    10,274    14,413     27,247    $ (80,805)            --
Environmental expense recovery.........     (5,501)         --        --        --         --           --         (5,501)
Restructuring charges..................         --          --     3,385     1,001         --           --          4,386
Income tax provision...................        969         362       283       334      1,540           --          3,488
Net income (loss)......................      2,230         904    (5,627)     (893)   (13,741)       3,204        (13,923)
1998
Revenue from external customers........   $153,245     $88,460   $87,080   $13,948   $137,818                    $480,551
Intergroup revenue.....................      4,114      42,845    16,244    25,967     41,202    $(130,372)            --
Merger costs...........................         --          --        --        --      7,023           --          7,023
Income tax provision (benefit).........      6,515       1,557     2,084       334     (1,750)          --          8,740
Net income.............................     11,572       3,558     1,991       271     10,963      (20,029)         8,326
</TABLE>

     TOTAL REVENUE

     Shieldalloy revenues decreased $64.5 million, or 41%, below the first three
quarters of 1998. As a result of the lower total year-to-date output of the U.S.
steel industry, reduced volume and selling prices of ferrovanadium during the
first three quarters of 1999 resulted in a decrease in revenues of approximately
$28 million. The majority of the remaining decline is attributable to lower
volume and selling prices of ferrosilicon, chrome metal and low carbon
ferrochrome resulting from lower demand from the steel and superalloys
industries.

     The Company's European units were all affected negatively by oversupply of
materials in the aerospace industry supply chain discussed earlier and weak
production levels in the European steel industry. LSM revenues were $26.7
million, or 20%, below the first three quarters of 1998 due primarily to
decreased volume of ferrotitanium and chromium metal sales. GfE revenues were
$39.5 million, or 38%, below 1998 due primarily to decreased selling prices and
volumes of vanadium aluminum, titanium masteralloys, ferroniobium and
ferrovanadium. Revenues of EWW were $16.5 million, or 41%, below the first three
quarters of 1998 due primarily to reduced demand for low carbon ferrochrome.

     GROSS MARGINS

     Gross margins decreased from $74.5 million in the three quarters ended
October 31, 1998 to $38.7 million in the three quarters ended October 31, 1999,
a decrease of 48.0%, due principally to price and volume decreases in
ferrovanadium, ferrotitanium, chromium and low carbon ferrochrome. In addition,
Shieldalloy recognized a lower of cost or market adjustment of $3.6 million
relating to ferrovanadium in the first quarter of 1999. In aluminum master
alloys and compacted products, improvements in product mix and cost reductions
more than offset a decrease in selling price.

     SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

     SG&A decreased from $45.5 million in the three quarters ended October 31,
1998 to $42.1 million in the three quarters ended October 31, 1999, a decrease
of 7.4%, due principally to lower compensation costs, professional fees and
other general and administrative overhead expenses. For the three quarters ended
October 31, 1998, SG&A represented 9.5% of the Company's sales compared to 12.2%
for the three quarters ended October 31, 1999, as a result of decreased revenue.

                                       16
<PAGE>   17

     ENVIRONMENTAL EXPENSE RECOVERY

     In June 1999, the Company recognized income in the amount of $5.5 million
upon settlement with an insurance company relating to coverage for certain
environmental claims stemming from the 1960's and forward. These claims relate
mostly to the historical costs of remedial activities at the Company's Newfield,
New Jersey site.

     RESTRUCTURING CHARGES

     During the second quarter of 1999, the Company initiated a restructuring
program. The restructuring is intended to reduce the Company's cost structure,
to streamline management and production technical functions and focus resources
in support of higher margin products at core production units. The restructuring
plan includes the discontinuation of certain production activities, termination
of employees, a facility closing and the write-down of certain redundant plant
and equipment and related spare parts and supplies. The restructuring
predominantly affects the Company's operations in Europe.

     In June 1999, a charge of $4.4 million was recorded with respect to the
restructuring of the Company's German operations (GfE and EWW). Approximately
100 employees were notified of terminations as operations were curtailed in line
with current demands for the Company's products. The terminations will take
effect through the end of 2000 and a provision for severance and other employee
costs of $2.9 million was recorded. Such costs shall be substantially disbursed
in 2000. Additional costs of $1.5 million were recorded for the write-down of
redundant fixed assets and related spare parts and supplies. During the third
quarter 27 employees terminated service pursuant to the restructuring plan and
payments totalling $0.6 million were made in respect of severance and other
accrued benefits. Additionally, fixed assets and spare parts with an aggregate
net book value of $1.0 million were taken out of service.

     During July 1999, management approved a restructuring plan relating to its
U.K. operations (LSM). LSM is completing the solicitation of voluntary
terminations in its plan to simplify its organization and reduce costs by
restructuring its businesses into fewer operating divisions and relocating
administrative functions to its Rotherham plant site from its London office,
which will be closed. The restructuring is to be completed during 2000 and
provisions for its costs, which are not determinable at this time, will be
recorded during the fourth quarter of 1999.

     OPERATING INCOME (LOSS)

     Operating income decreased from $22.0 million in the three quarters ended
October 31, 1998 to a loss of $2.3 million in the three quarters ended October
31, 1999, due primarily to the decrease in gross margin and the other items,
discussed above. Merger-related costs of $7.0 million, consisting primarily of
(i) $3.5 million for payments to cancel compensatory options; (ii) $2.1 million
for payments made pursuant to existing employment agreements with Metallurg
management; and (iii) $1.4 million of other merger-related costs, were recorded
in the three quarters ended October 31, 1998.

     OTHER (EXPENSE) INCOME, NET

     In the three quarters ended October 31, 1998, one of the Company's German
subsidiaries was successful in recovering approximately $1.4 million of
additional proceeds from a government-owned insurance agency, as previously
discussed.

                                       17
<PAGE>   18

     INTEREST EXPENSE, NET

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

<TABLE>
<CAPTION>
                                                           THREE QUARTERS ENDED
                                                               OCTOBER 31,
                                                           --------------------
                                                             1999        1998
                                                           ---------   --------
<S>                                                        <C>         <C>
Interest income..........................................  $  1,999    $ 2,643
Interest expense.........................................   (10,157)    (9,562)
                                                           --------    -------
     Income expense, net.................................  $ (8,158)   $(6,919)
                                                           ========    =======
</TABLE>

     Interest expense increased $1.2 million in the three quarters ended October
31, 1999 reflecting primarily higher effective interest rates and increased
external borrowing levels of GfE during the current period.

     INCOME TAX PROVISION (BENEFIT)

     Income tax provision, net of tax benefits, is as follows (in thousands):

<TABLE>
<CAPTION>
                                                           THREE QUARTERS ENDED
                                                                OCTOBER 31,
                                                           ---------------------
                                                            1999          1998
                                                           -------       -------
<S>                                                        <C>           <C>
Total current............................................  $2,182        $6,259
Total deferred...........................................   1,306         2,481
                                                           ------        ------
     Income tax provision, net...........................  $3,488        $8,740
                                                           ======        ======
</TABLE>

     The differences between the statutory Federal income tax rate and the
Company's effective rate result primarily because of: (i) the U.S. taxability of
foreign dividends; (ii) the excess of foreign tax rates over the statutory
Federal income tax rate; (iii) certain deductible temporary differences which,
in other circumstances would have generated a deferred tax benefit, have been
fully provided for in a valuation allowance; (iv) the deferred tax effects of
certain tax assets, primarily foreign net operating losses, for which the
benefit had been previously recognized approximating $0.4 million in the three
quarters ended October 31, 1999; and (v) the deferred tax effects of certain
deferred tax assets for which a corresponding credit has been recorded to
"Additional paid-in capital" approximating $0.7 million in the three quarters
ended October 31, 1999. The deferred tax expenses referred to in items (iv) and
(v) above will not result in cash payments in future periods.

     NET (LOSS) INCOME

     Net income decreased from $8.3 million for the three quarters ended October
31, 1998 to a loss of $13.9 million for the three quarters ended October 31,
1999. The decrease in 1999 results primarily from reduced gross margins and the
other items discussed above.

LIQUIDITY AND FINANCIAL RESOURCES

     GENERAL

     The Company's sources of liquidity include cash from operations and amounts
available under credit facilities. In addition, the Company has $48.4 million of
cash and cash equivalents at October 31, 1999. The Company believes that these
sources are sufficient to fund the current and anticipated future requirements
of working capital, capital expenditures, pension benefits, potential
acquisitions and environmental expenditures through at least January 31, 2001.

     At October 31, 1999, the Company had working capital of $144.9 million, as
compared to $166.2 million at January 31, 1999. For the first three quarters of
1999, the Company generated $23.4 million in cash from operations, including
substantial reductions in inventories resulting from reduced levels of business
and increased operational focus on working capital reductions.

                                       18
<PAGE>   19

  CREDIT FACILITIES AND OTHER FINANCING ARRANGEMENTS

     On October 29, 1999, the Company renewed its existing credit facility with
certain financial institutions led by BankBoston, N.A. as agent (the "Revolving
Credit Facility") for a term of five years. This facility provides Metallurg,
Shieldalloy and certain of their subsidiaries (the "Borrowers") with up to $50.0
million of financing resources at a rate per annum equal to (i) LIBOR, plus
2.0% - 2.5% or (ii) Prime, plus 0.0% - 1.0% based on the Borrowers' performance.
Interest rates on amounts borrowed will be adjusted quarterly, commencing in the
second quarter of 2000, based on the Borrowers' fixed charge coverage ratio. The
Revolving Credit Facility permits borrowings of up to $50.0 million for working
capital requirements and general corporate purposes, up to $35.0 million of
which may be used for letters of credit. The Revolving Credit Facility continues
to prohibit Metallurg, Inc. from making dividends 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 million level. At
October 31, 1999, there were no outstanding loans and $23.4 million of letters
of credit outstanding in the U.S. under the Revolving Credit Facility.
Furthermore, BankBoston, N.A., through its London office, makes available up to
DM 20.5 million (approximately $11.2 million) of financing to certain of the
Company's German subsidiaries (the "German Subfacility"), which is guaranteed by
Metallurg and the other U.S. borrowers under the Revolving Credit Facility. At
October 31, 1999, immaterial amounts were outstanding in Germany under the
German Subfacility.

     In addition, certain foreign subsidiaries of Metallurg have credit facility
arrangements with local banking institutions to provide funds for working
capital and general corporate purposes. These local credit facilities contain
restrictions that vary from company to company. At October 31, 1999, there were
$0.7 million of outstanding loans under these local credit facilities.

CAPITAL EXPENDITURES

     The Company invested $9.4 million in capital expenditures during the first
three quarters of 1999. Capital expenditures are expected to total approximately
$25.0 million over the next five quarters. Although the Company has projected
these items in 1999 and 2000, the Company has not committed purchases to vendors
for all of these projects, as some remain contingent on local management
approval and other conditions. The Company believes that these projects will be
funded through internally generated cash, borrowings under the Revolving Credit
Facility and local credit facilities.

ENVIRONMENTAL REMEDIATION COSTS

     AICPA Statement of Position 96-1, "Environmental Remediation Liabilities",
states that 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
first three quarters of 1999, the Company expended $2.1 million for
environmental remediation.

     In 1997, Shieldalloy 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, Shieldalloy has agreed to perform environmental remediation, which
as of October 31, 1999, had an estimated cost of completion of $35.6 million. Of
this amount, approximately $0.6 million is expected to be expended in the fourth
quarter of 1999, $3.3 million in 2000 and $5.6 million in 2001. In addition, the
Company estimates it will make expenditures of $3.9 million with respect to
environmental remediation at its foreign facilities. Of this amount,
approximately $0.1 million is expected to be expended in the fourth quarter of
1999, $0.8 million in 2000 and $0.6 million in 2001.

YEAR 2000 READINESS

     Metallurg has completed an internal review of its and its subsidiaries'
information technology systems in connection with its assessment of Year 2000
readiness and has completed the replacement or modifications of the management
and accounting systems at its subsidiaries to upgrade them generally and to make
them Year
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<PAGE>   20

2000 ready. Metallurg has completed its assessment of whether any of its core
non-information technology will need to be modified to become Year 2000 ready
and has substantially completed the replacement or modification, as necessary.

     Metallurg has not received written assurances from its significant
suppliers and customers to determine the state of their readiness with regard to
Year 2000. The Company believes that they will be prepared for Year 2000 based
on its normal interactions with its customers and suppliers and because of the
wide attention that the issue has received. Metallurg has not yet seen the need
for contingency plans for the Year 2000 issue, but this need will continue to be
monitored as it obtains more information about the state of readiness of its
suppliers and customers.

     Metallurg presently believes that the Year 2000 issue will not pose
significant operational problems for its business systems as it believes that
substantially all needed modifications and conversions have been completed. If
any of Metallurg's suppliers or customers do not successfully deal with the Year
2000 issue or if unforeseen difficulties are encountered by Metallurg with
respect to its own systems, the Company could experience operational delays or
difficulties. The severity of these possible problems would depend on the nature
of the problem and how quickly it could be corrected or an alternative
implemented, which is unknown at this time. Some risks of the Year 2000 issue
are beyond the control of Metallurg and its suppliers and customers. In
particular, Metallurg cannot predict the effect that the Year 2000 issue will
have on the general economy.

ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURE OF MARKET RISK

     Refer to the Market Risk and Risk Management Policies 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 January 31, 1999.

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                                    PART II

                               OTHER INFORMATION

ITEM 5.  Other Information

     On November 19, 1999, Alan D. Ewart, President and Chief Executive Officer
of Metallurg, Inc., was elected to its Board of Directors.

ITEM 6.  (a) Exhibits

<TABLE>
<C>   <S>
 10.1 Amended and Restated Loan Agreement, dated October 29, 1999,
      by and among Metallurg, Inc., Shieldalloy Metallurgical
      Corporation and Metallurg International Resources, Inc., as
      Borrowers, Metallurg Services, Inc. MIR (China), Inc. and
      Metallurg Holdings Corporation, as Guarantors, and
      BankBoston, N.A. as Agent for the lending institutions
      listed therein.
 10.2 Third Amendment, dated as of October 29, 1999, to German
      Loan Agreement, dated as of October 20, 1997, by and among
      GfE Gesellschaft fur Elektrometallurgie mbH, GfE
      Umwelttecknik GmbH, GfE Giesserei-und Stahlwerksbedarf GmbH,
      GfE Metalle und Materialien GmbH, Keramed Medizintechnik
      GmbH and BankBoston, N.A., London Branch.
 27.  Financial Data Schedule.
</TABLE>

    6.  (b) Report on Form 8-K

     None

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                                   SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on December 10, 1999 on its
behalf by the undersigned thereunto duly authorized.

                                                     METALLURG, INC.

                                                   /s/ BARRY C. NUSS
                                          --------------------------------------
                                                      Barry C. Nuss
                                                 Chief Financial Officer
                                             (Principal Financial Officer and
                                              Principal Accounting Officer)

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