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

                Delaware                                 13-1661467
         (State of organization)            (I.R.S. Employer Identification No.)

           6 East 43rd Street                          (212) 835-0200
        New York, New York 10017               (Registrant's telephone number,
(Address of principal executive offices)            including area code)

     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]

     The number of shares of common stock, $0.01 par value, issued and
outstanding as of August 11, 2003 was 5,000,000.




<PAGE>

                  METALLURG, INC. AND CONSOLIDATED SUBSIDIARIES

                                      INDEX

<TABLE>
<CAPTION>
                                                                                      Page No.
                                                                                      --------
<S>        <C>                                                                          <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, 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 ...........        9,714     9,596            18,791     19,221
   Environmental expense recovery .........................           --        --                --     (3,000)
   Restructuring charges, net .............................           --     1,361                --      1,361
                                                                 -------   -------          --------   --------
   Total operating costs and expenses .....................       91,855    90,696           180,660    168,159
                                                                 -------   -------          --------   --------
   Operating loss .........................................       (1,184)   (4,246)             (355)    (4,029)

Other income (expense):
   Other income, net ......................................           40        61                80        118
   Interest expense, net ..................................       (3,331)   (3,288)           (6,655)    (6,571)
                                                                 -------   -------          --------   --------
   Loss before income tax benefit and minority interest ...       (4,475)   (7,473)           (6,930)   (10,482)
Income tax benefit ........................................         (470)     (271)              (27)      (145)
                                                                 -------   -------          --------   --------
   Loss before minority interest ..........................       (4,005)   (7,202)           (6,903)   (10,337)
Minority interest .........................................          (16)      (12)              (48)       (21)
                                                                 -------   -------          --------   --------
   Net loss ...............................................       (4,021)   (7,214)           (6,951)   (10,358)

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 .....................................      $(2,135)  $(3,133)         $ (4,760)  $ (6,995)
                                                                 =======   =======          ========   ========
</TABLE>

       See notes to condensed unaudited consolidated financial statements.


                                        2




<PAGE>

                  METALLURG, 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 ...............................     $ 17,930      $ 29,438
   Accounts receivable, net ................................       54,414        51,786
   Inventories .............................................       74,102        65,741
   Prepaid expenses and other current assets ...............       12,147         9,656
                                                                 --------      --------
      Total current assets .................................      158,593       156,621
Property, plant and equipment, net .........................       65,358        66,522
Other assets ...............................................       26,816        25,022
                                                                 --------      --------
      Total ................................................     $250,767      $248,165
                                                                 ========      ========

LIABILITIES AND SHAREHOLDER'S DEFICIT
Current Liabilities:
   Short-term debt and current portion of long-term debt ...     $  7,588      $  6,272
   Accounts payable ........................................       40,206        37,129
   Accrued expenses ........................................       14,719        18,533
   Other current liabilities ...............................        2,436         2,048
                                                                 --------      --------
      Total current liabilities ............................       64,949        63,982
                                                                 --------      --------

Long-term Liabilities:
   Long-term debt ..........................................      121,539       121,019
   Accrued pension liabilities .............................       52,028        47,509
   Environmental liabilities, net ..........................       27,485        26,285
   Other liabilities .......................................        1,436         1,394
                                                                 --------      --------
      Total long-term liabilities ..........................      202,488       196,207
                                                                 --------      --------

      Total liabilities ....................................      267,437       260,189
                                                                 --------      --------

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

Shareholder's Deficit:
   Common stock ............................................           50            50
   Due from parent company .................................      (21,715)      (21,715)
   Additional paid-in capital ..............................       72,579        72,514
   Accumulated other comprehensive loss ....................      (36,430)      (38,621)
   Retained deficit ........................................      (31,665)      (24,714)
                                                                 --------      --------
      Total shareholder's deficit ..........................      (17,181)      (12,486)
                                                                 --------      --------

      Total ................................................     $250,767      $248,165
                                                                 ========      ========
</TABLE>

       See notes to condensed unaudited consolidated financial statements.


                                        3




<PAGE>

                  METALLURG, 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 ......................................................................   $ (6,951)  $(10,358)
Adjustments to reconcile net loss to net cash used in operating activities:
   Depreciation and amortization ..............................................      4,361      3,960
   Deferred income taxes ......................................................     (1,208)      (500)
   Restructuring charges, net .................................................         --      1,361
   Change in operating assets and liabilities:
      (Increase) decrease in accounts receivable ..............................       (161)     1,775
      (Increase) decrease in inventories ......................................     (6,232)     1,623
      Increase in other current assets ........................................     (1,881)      (649)
      (Decrease) increase in accounts payable and accrued expenses ............       (404)       161
      Environmental payments ..................................................     (1,247)    (1,031)
      Restructuring payments ..................................................       (750)      (454)
      Other assets and liabilities, net .......................................      2,179        432
                                                                                  --------   --------
         Net cash used in operating activities ................................    (12,294)    (3,680)
                                                                                  --------   --------

Cash Flows from Investing Activities:
Additions to property, plant and equipment ....................................     (1,995)    (7,722)
Repayments 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 .....................................    (11,508)    (6,609)
Cash and cash equivalents - beginning of period ...............................     29,438     31,772
                                                                                  --------   --------
Cash and cash equivalents - end of period .....................................   $ 17,930   $ 25,163
                                                                                  ========   ========
</TABLE>

       See notes to condensed unaudited consolidated financial statements.


                                        4




<PAGE>

                  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. and its majority-owned subsidiaries
(collectively, "Metallurg"). 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 Metallurg's annual
report on Form 10-K for the year ended December 31, 2002.

     Metallurg 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.

     Metallurg 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. Metallurg 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.

     Metallurg 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. Metallurg's long-term
debt agreements contain numerous covenants and prohibitions that limit the
financial activities of Metallurg, including requirements that Metallurg satisfy
certain financial ratios and limitations on additional indebtedness and maintain
a minimum liquidity level. While Metallurg is in compliance with all such
covenants at June 30, 2003, the ability of Metallurg to meet its debt service
requirements and to comply with such covenants will be dependent upon future
operating performance and financial results of Metallurg, which will be subject
to financial, economic, political, competitive and other factors affecting
Metallurg, many of which are beyond its control.

     Metallurg 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 Metallurg will be able to secure additional funding in sufficient amounts
or by the time required to meet existing obligations. Metallurg would be
prohibited from making the $5,500,000 interest payment due December 1, 2003 on
its 11% Senior Notes due 2007 ("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, Metallurg, Inc.'s parent, does not have
sufficient cash on hand to make the interest payment due in January 2004 on its
12 3/4% Senior Discount Notes due 2008 (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, INC. AND CONSOLIDATED SUBSIDIARIES

                    NOTES TO CONDENSED UNAUDITED CONSOLIDATED
                       FINANCIAL STATEMENTS - (Continued)

2. Stock-Based Compensation

     Metallurg accounts for its 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 Metallurg 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 ...............................................   $ (6,951)  $(10,358)
Less: compensation  expense for option awards  determined by the
   fair value based method, net of related tax effects ..............         28        131
                                                                        --------   --------
   Pro forma net loss ...............................................   $ (6,979)  $(10,489)
                                                                        ========   ========
</TABLE>

3. Segments and Related Information

     Metallurg operates in one significant industry segment, the manufacture and
sale of performance-enhancing additives mainly for the metallurgical industry.
Metallurg 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, Metallurg 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, 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 Metallurg'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. Metallurg 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)      904           --           (470)
Net loss .................................        (2)      (85)    (339)     (112)   (2,678)        (805)        (4,021)

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)    1,719           --           (271)
Net (loss) income ........................      (802)   (1,507)     280      (215)   (6,796)       1,826         (7,214)

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)    1,194           --            (27)
Net income (loss) ........................       188      (349)     (42)      (23)   (3,574)      (3,151)        (6,951)

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)    2,213           --           (145)
Net (loss) income ........................    (1,602)   (1,735)     549       (95)   (8,713)       1,238        (10,358)
</TABLE>


                                        7




<PAGE>

                  METALLURG, 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

     Metallurg 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
Metallurg'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 Metallurg that could have a material
adverse effect on Metallurg'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 an insurance company relating to coverage for
certain environmental claims.

7. Earnings Per Share

     Earnings per share is not presented since Metallurg, Inc. is a wholly owned
subsidiary of Metallurg Holdings.


                                        8




<PAGE>

                  METALLURG, INC. AND CONSOLIDATED SUBSIDIARIES

                    NOTES TO CONDENSED UNAUDITED CONSOLIDATED
                       FINANCIAL STATEMENTS - (Continued)

8. Recent Accounting Pronouncements

     Effective January 1, 2003, Metallurg 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 Metallurg's
consolidated financial statements.

     Effective January 1, 2003, Metallurg 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 Metallurg'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 Metallurg'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 Metallurg'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.
Metallurg does not expect its non-controlled affiliates to require consolidation
under FIN 46.


                                        9




<PAGE>

                  METALLURG, 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.

           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, INC. AND CONSOLIDATED SUBSIDIARIES

                    NOTES TO CONDENSED UNAUDITED CONSOLIDATED
                       FINANCIAL STATEMENTS - (Continued)

9. Supplemental Guarantor Information - (Continued)

           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, INC. AND CONSOLIDATED SUBSIDIARIES

                    NOTES TO CONDENSED UNAUDITED CONSOLIDATED
                       FINANCIAL STATEMENTS - (Continued)

9. Supplemental Guarantor Information - (Continued)

                Condensed Consolidating Balance Sheet (Unaudited)
                                  June 30, 2003
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                   Combined       Combined
                                                    Metallurg,     Guarantor    Non-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, INC. AND CONSOLIDATED SUBSIDIARIES

                    NOTES TO CONDENSED UNAUDITED CONSOLIDATED
                       FINANCIAL STATEMENTS - (Continued)

9. Supplemental Guarantor Information - (Continued)

           Condensed Consolidating Statement of Cash Flows (Unaudited)
                        Two Quarters Ended June 30, 2003
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                   Combined       Combined
                                                    Metallurg,     Guarantor    Non-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 former subsidiary .......       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, the parent company, purchased approximately $9 million face
amount of the 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 Metallurg'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 Metallurg to be materially different from future results,
performance or achievements expressed or implied by such forward-looking
statements.

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

          o    The cyclical nature of Metallurg's business.

          o    Metallurg's dependence on foreign customers. Metallurg 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 Metallurg'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 Metallurg'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 Metallurg'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 Metallurg'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 Metallurg,
see "Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Critical Accounting Estimates" beginning on page 21 of
Metallurg's annual report on Form 10-K for the year ended December 31, 2002. The
critical accounting estimates affecting Metallurg have not changed since
December 31, 2002.

Overview

     Metallurg 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. Metallurg operates production facilities in the United Kingdom,
Germany, Brazil, Turkey, and the United States. Metallurg products are primarily
sold to one of three major market sectors: the 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:


                                       14




<PAGE>

     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 Metallurg to the aluminum industry. Metallurg has implemented significant
cost reduction initiatives to partially offset the price declines that have been
experienced. Metallurg 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.
Metallurg 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, Metallurg 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

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

     Summarized financial information concerning Metallurg'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. Metallurg 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     3,031           --         9,714
Operating income (loss)..........       444      (732)    (268)    (648)      (96)         116        (1,184)
Interest (expense) income, net...      (415)     (120)    (198)      22    (2,620)          --        (3,331)
Income tax provision (benefit)...        34      (767)    (127)    (514)      904           --          (470)
Net loss.........................        (2)      (85)    (339)    (112)   (2,678)        (805)       (4,021)
</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     2,789           --          9,596
Restructuring charges, net.......       350       273       --     (137)      875           --          1,361
Operating (loss) income..........      (779)   (2,854)     427     (452)   (1,121)         533         (4,246)
Interest (expense) income, net...      (356)     (101)    (157)      30    (2,704)          --         (3,288)
Income tax (benefit) provision...      (325)   (1,448)     (10)    (207)    1,719           --           (271)
Net (loss) income................      (802)   (1,507)     280     (215)   (6,796)       1,826         (7,214)
</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.


                                       16




<PAGE>

     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.

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

     Metallurg's consolidated operating loss was $1.2 million for the quarter
ended June 30, 2003 compared to $4.2 million for the quarter ended June 30,
2002, 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 ......................................      $   329   $   220
Interest expense .....................................       (3,660)   (3,508)
                                                            -------   -------
   Interest expense, net .............................      $(3,331)  $(3,288)
                                                            =======   =======
</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 ........................................       $ 287     $ 127
Total deferred .......................................        (757)     (398)
                                                             -----     -----
   Income tax benefit, net ...........................       $(470)    $(271)
                                                             =====     =====
</TABLE>

     The difference between the statutory federal income tax rate and
Metallurg'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

     Metallurg had a net loss of $4.0 million for the quarter ended June 30,
2003 compared to a net loss of $7.2 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     5,767           --         18,791
Operating income (loss) ...........     1,137      (910)      360      (667)     (288)          13           (355)
Interest (expense) income, net ....      (807)     (199)     (402)       32    (5,279)          --         (6,655)
Income tax provision (benefit) ....       151      (760)       --      (612)    1,194           --            (27)
Net income (loss) .................       188      (349)      (42)      (23)   (3,574)      (3,151)        (6,951)

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     5,617           --         19,221
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)     (810)         982         (4,029)
Interest (expense) income, net ....      (707)     (163)     (288)       78    (5,491)          --         (6,571)
Income tax (benefit) provision ....      (591)   (1,697)       47      (117)    2,213           --           (145)
Net (loss) income .................    (1,602)   (1,735)      549       (95)   (8,713)       1,238        (10,358)
</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.


                                       18




<PAGE>

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.

     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 $19.2 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

     Metallurg's consolidated operating loss was $0.4 million for the two
quarters ended June 30, 2003 compared to $4.0 million for the two quarters ended
June 30, 2002, due primarily 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 ..................................        $   642   $   404
Interest expense .................................         (7,297)   (6,975)
                                                          -------   -------
   Interest expense, net .........................        $(6,655)  $(6,571)
                                                          =======   =======
</TABLE>


                                       19




<PAGE>

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 ....................................         $ 1,181   $ 355
Total deferred ...................................          (1,208)   (500)
                                                           -------   -----
   Income tax benefit, net .......................         $   (27)  $(145)
                                                           =======   =====
</TABLE>

     The difference between the statutory federal income tax rate and
Metallurg'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, 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

     Metallurg had a net loss of $7.0 million for the two quarters ended June
30, 2003 compared to a net loss of $10.4 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

     Metallurg's sources of liquidity include cash and cash equivalents, cash
from operations and amounts available under credit facilities. At June 30, 2003,
Metallurg had $17.9 million in cash and cash equivalents and working capital of
$93.6 million as compared to $29.4 million and $92.6 million, respectively, at
December 31, 2002.

     Metallurg 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. Metallurg's
long-term debt agreements contain numerous covenants and prohibitions that limit
the financial activities of Metallurg, including requirements that Metallurg
satisfy certain financial ratios and limitations on additional indebtedness and
maintain a minimum liquidity level. While Metallurg is in compliance with all
such covenants at June 30, 2003, the ability of Metallurg to meet its debt
service requirements and to comply with such covenants will be dependent upon
future operating performance and financial results of Metallurg, which will be
subject to financial, economic, political, competitive and other factors
affecting Metallurg, many of which are beyond its control.

     Metallurg 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 Metallurg will be able to secure additional funding in sufficient amounts
or by the time required to meet existing obligations. Metallurg 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.

Cash Flow Information

     Cash Flows from Operating Activities - Cash used in operating activities
was $12.3 million for the two quarters ended June 30, 2003, compared to $3.7
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.


                                       20




<PAGE>

     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 Metallurg by
a former subsidiary of $1.0 million in 2003 compared to $4.0 million in 2002.

     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 for the two quarters ended June 30, 2002. Metallurg'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%.

     Metallurg, Inc.'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%.


                                       21




<PAGE>

Capital Expenditures

     Metallurg invested $2.0 million in capital projects during the two quarters
ended June 30, 2003. Metallurg's capital expenditures include projects related
to improving Metallurg'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 Metallurg believes will result in
decreased costs of production, improved efficiency and expanded production
capacities. The remaining planned capital expenditures are primarily for
replacement and repairs of existing facilities. Although Metallurg has projected
these items for the year ended December 31, 2003, Metallurg 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. Metallurg 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, Metallurg 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, Metallurg 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 Metallurg's balance sheet
liabilities.

Other

     Currently, Metallurg Holdings, Metallurg, Inc.'s parent, 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 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.

     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. Metallurg 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 Metallurg'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, Metallurg 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 Metallurg's disclosure controls and procedures are effective in
timely alerting them to material information relating to Metallurg (including
its consolidated subsidiaries) required to be included in its Exchange Act
filings.

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


                               By: /s/ Barry C. Nuss
                                   ---------------------------------------------
                               Barry C. Nuss
                               Senior Vice President and Chief Financial Officer


                                       24


                          STATEMENT OF DIFFERENCES

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