<PAGE>

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

           [X] Annual Report Pursuant to Section 13 or 15(d) of the
                        Securities Exchange Act of 1934

                  For the Fiscal Year Ended December 31, 1999

         [_] Transition Report Pursuant to Section 13 or 15(d) of the
                        Securities Exchange Act of 1934

                          Commission File No. 1-7170

                              IMCO Recycling Inc.
            (Exact name of registrant as specified in its charter)

                                   Delaware
        (State or other jurisdiction of incorporation or organization)

                                  75-2008280
                     (I.R.S. Employer Identification No.)

                     5215 North O'Connor Blvd., Suite 940
                       Central Tower at Williams Square
                              Irving, Texas 75039
                   (Address of principal executive offices)

                                (972) 401-7200
             (Registrant's telephone number, including area code)


SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

Title of Each Class                        Exchange on Which Registered
-------------------                        ----------------------------
Common Stock, $0.10 Par Value              New York Stock Exchange

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE

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 if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

As of March 1, 2000, the aggregate market value of voting and non-voting common
equity held by nonaffiliates of the Registrant was $118,262,723.

Indicate the number of shares outstanding of each of the Registrant's classes of
common stock, as of March 1, 2000.

                   Common Stock, $0.10 par value, 15,270,028
                   -----------------------------------------

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant's definitive proxy statement relating to its 2000
Annual Meeting of Stockholders are incorporated by reference into Part III
hereof.
<PAGE>

<TABLE>
<CAPTION>
ITEM                                                                                 PAGE
----                                                                                 ----
<S>                                                                                  <C>
PART I
------
Item 1.      Business                                                                   3

Item 2.      Properties                                                                20

Item 3.      Legal Proceedings                                                         22

Item 4.      Submission of Matters to a Vote of Security Holders                       23

Item 4A.     Executive Officers of the Registrant                                      23

PART II
-------
Item 5.      Market for Registrant's Common Equity and Related
             Stockholder Matters                                                       25

Item 6.      Selected Financial Data                                                   26

Item 7.      Management's Discussion and Analysis of Financial
             Condition and Results of Operations                                       26

Item 7A.     Quantitative and Qualitative Disclosures About Market Risk                40

Item 8.      Financial Statements and Supplementary Data                               42

Item 9.      Changes in and Disagreements With Accountants on
             Accounting and Financial Disclosure                                       66

PART III
--------
Item 10.     Directors and Executive Officers of the Registrant                        67

Item 11.     Executive Compensation                                                    67

Item 12.     Security Ownership of Certain Beneficial Owners and
             Management                                                                67

Item 13.     Certain Relationships and Related Transactions                            67


PART IV
-------
Item 14.     Exhibits, Financial Statement Schedules and Reports on
             Form 8-K                                                                  68


Signatures                                                                             71
</TABLE>
<PAGE>

PART I

This Annual Report on Form 10-K contains forward-looking statements as defined
by the Private Securities Litigation Reform Act of 1995. Forward-looking
statements should be read in conjunction with the cautionary statements and
other important factors included in this Form 10-K. See ITEM 7. "MANAGEMENT'S
                                                        ------
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS--
CAUTIONARY STATEMENT FOR PURPOSES OF FORWARD-LOOKING STATEMENTS" for a
description of important factors which could cause actual results to differ
materially from those contained in the forward-looking statements.
Forward-looking statements include statements about plans, objectives, goals,
strategies, future events or performance and assumptions underlying those
statements. These forward-looking statements may be identified by words such as
"anticipates," "estimates," "expects," "intends," "plans," "predicts,"
"projects," and similar expressions. The Company's expectations, beliefs and
projections are expressed in good faith and the Company believes they have a
reasonable basis, through management's examination of historical operating
trends, data contained in the Company's records and other data available from
third parties, but there can be no assurance that management's expectations,
beliefs or projections will result or be achieved or accomplished.

ITEM 1.   BUSINESS
-------

GENERAL

IMCO Recycling Inc. recycles aluminum and zinc. It is the largest aluminum
recycler in the United States and believes that it is the largest aluminum
recycler in the world. The Company's processing of aluminum includes used
aluminum beverage cans ("UBCs"), scrap and dross (a by-product of aluminum
production). The Company converts UBCs, scrap and dross into molten metal in
furnaces at facilities owned and/or operated by the Company. While the aluminum
is in molten form, the Company may blend in other metals to prepare a precise
aluminum alloy mixture. The Company then delivers the processed aluminum to
customers in molten form or ingots. The Company recovers magnesium in a similar
process.

With the acquisition of U.S. Zinc Corporation in July 1998 (see "GROWTH OF
BUSINESS" below), the Company believes that it is now the largest recycler of
zinc secondaries in the United States. U.S. Zinc uses furnaces to convert zinc
scrap and dross into various value-added zinc products, such as zinc oxides,
dust and metal.

Most of the Company's processing capacity is utilized to recycle customer-owned
materials, for which the Company charges a fee (a service called "tolling").
During 1999, approximately 61% of the Company's total pounds of metal melted
involved tolling. The balance of the Company's business involves the purchase of
scrap and dross for processing and recycling by the Company for subsequent
resale ("product sales" business). Except where the context otherwise requires,
the term "Company" as used herein refers to IMCO Recycling Inc. and its
subsidiaries.

The Company's business has benefited from the trend to include recycled
materials in finished products, the growth in the production and recycling of
UBCs and the increasing utilization of aluminum in automotive components.
According to The Aluminum Association, over the past 20 years, U.S. production
of recycled aluminum has more than doubled to 7.6 billion pounds from 3.3
billion pounds. In addition, recycled aluminum in the U.S. currently represents

                                       3
<PAGE>

approximately 33% of the total domestic aluminum supply, compared with 22% in
1978. The U.S. is the world's leading consumer of zinc, currently consuming
about one-sixth of the world's production. However, the U.S. is only the fifth
largest producer, and consequently is also the largest importer of refined zinc.
Over the past several years, U.S. zinc recycling has grown at three times the
rate of primary zinc metal production and now accounts for about 40 percent of
domestic zinc supply. Worldwide, about 80% of zinc resources available
for recycling are recovered. This accounts for some 36% of world zinc
supply.

The Company's aluminum customers include some of the world's major aluminum
producers and aluminum fabricators, diecasters, extruders, automotive companies
and other processors. Most of the aluminum metal processed by the Company is
used to produce products for the transportation, packaging and construction
industries, which constitute the three largest aluminum markets. Due to the
increasing use of aluminum in automotive components, much of the Company's
recent growth has been directed toward serving the transportation sector, which
has been the largest and fastest-growing aluminum market in recent years. The
Company's principal aluminum customers include Aluminum Company of America
("Alcoa"), Commonwealth Aluminum Corporation ("Commonwealth"), Kaiser Aluminum
Corporation ("Kaiser"), Ford Motor Company ("Ford"), Ravenswood Aluminum
Corporation ("Ravenswood"), General Motors Corporation ("GM"), Toyota Tsusho
America, Inc., Nelson Metals and Wise Metals Company ("Wise Metals").

The Company's zinc customers include some of the world's major tire and rubber
producers and galvanizers, steel companies and other processors, including
Goodyear Tire & Rubber Co., Michelin Tire, Bethlehem Steel and Dow Agrosciences.

STRATEGY

The Company's strategy is to participate in sectors of the nonferrous metals
recycling industry in which it believes it can provide customers with a
technology-based, value-added service and in which it can develop significant
market share. The Company believes that it has been successful in
differentiating its aluminum recycling services from those of its competitors
through:
     .    operating technologies that are designed to produce higher metal
          recovery yields,
     .    the strategic location of facilities in close proximity to customers,
          providing for both stronger customer ties and greater convenience and
          accessibility for its customers,
     .    the ability to deliver recycled aluminum in molten form for just-in-
          time delivery, thereby saving customers the expense of remelting
          aluminum ingots, and
     .    its environmental technologies and practices, including dedicated
          disposal facilities and a proprietary process developed by the Company
          used to recover aluminum from by-products of the recycling process.

The Company believes that it has been successful in differentiating its zinc
value-added products from those of its competitors through:
     .    operating technologies that are designed to produce lower cost, higher
          quality products,
     .    the strategic location of facilities in close proximity to
          customers, and
     .    customized packaging that meets customers' specifications.

To achieve its objectives, the Company focuses on internal expansion as well as
growth through strategic acquisitions, vertical integration of its operations
and services, and operational efficiencies through technological innovation.

                                       4
<PAGE>

Expansion. Since 1993, the Company has increased its number of facilities and
---------
capacity through acquisitions of existing facilities, construction of new
facilities and expansion of existing facilities. As of March 31, 1993, the
Company owned and operated five recycling plants, which had an aggregate annual
processing capacity of 735 million pounds of aluminum and 50 million pounds of
other metals. As of December 31, 1999, the Company owned and operated 24
recycling and processing plants, which have an aggregate annual melting capacity
of approximately 2.9 billion pounds of aluminum and 290 million pounds of zinc,
for a total annual processing capacity of 3.2 billion pounds.

In February 1999, the Company acquired substantially all the assets of an
aluminum alloying facility in Shelbyville, Tennessee, which has an annual
capacity of 140 million pounds, and a zinc oxide facility in Clarksville,
Tennessee, which has an annual capacity of approximately 40 million pounds.
Additionally, in March 1999, the Company announced plans to construct an
aluminum alloying facility near Saginaw, Michigan to supply molten aluminum to
GM under a new long-term supply agreement. In addition, the Company owns a 50%
interest in an aluminum recycling joint venture in Germany, VAW-IMCO Gu(beta)
and Recycling GmbH ("VAW-IMCO"), which has an annual melting capacity of 480
million pounds, and an aluminum recycling facility in Swansea, Wales, which has
an annual melting capacity of 100 million pounds. The Company expects that
planned expansions will add approximately 200 million pounds of annual
processing capacity during 2000 and 2001. See "GROWTH OF BUSINESS" below.

Expansion of the Company's network of facilities in the U.S. enables the Company
to allocate processing work among its facilities, thereby maximizing utilization
of capacity and absorbing excess demand. The Company intends to continue
expanding its business by targeting growing markets, such as the automotive
market, constructing additional recycling facilities, expanding and improving
its existing facilities and acquiring or partnering with similar recycling
businesses or other metals processors. In addition, the Company plans to
continue seeking foreign sites for its recycling facilities where market
conditions warrant.

Vertical Integration. The Company also seeks business opportunities that combine
--------------------
its traditional recycling services with downstream processing operations that
more directly serve manufacturers and other end-users. The Company's subsidiary,
Alchem Aluminum, Inc., manufactures and sells specification aluminum alloy
products for automotive equipment manufacturers. The Company's Shelbyville,
Tennessee acquisition in February 1999 expanded the Company's capacity to serve
this market. Further expansion will occur with the construction of the new
aluminum alloying facility near Saginaw, Michigan.

Technological Innovation. The Company's facilities and equipment are continually
------------------------
improved and updated through plant modernization programs, including
technological advancements designed to improve operational efficiencies. Between
January 1, 1992 and December 31, 1999, the Company made capital expenditures and
joint venture investments totaling $169 million in new plant and equipment
(excluding acquisitions of existing companies or facilities). These investments
have increased the Company's productivity, market share and total processing
capacity.

                                       5
<PAGE>

Customer Service. The Company is dedicated to maintaining customer satisfaction
----------------
and seeks to develop new methods and processes to better serve its customers.
The Company emphasizes a strong commitment to customer service by offering:
     .    high metal recovery rates,
     .    high quality of metal recovered,
     .    more precise specifications for alloyed metals,
     .    advanced environmental technology and practices,
     .    facilities conveniently located near its customers, and
     .    customized packaging.

Through long-term relationships with primary producers and other customers, the
Company maximizes its production capabilities while providing customers with a
reliable source for their product requirements.

Handling of By-Products. Much of the salt cake (a by-product of aluminum
-----------------------
recycling that is not classified as hazardous) generated by the Company's
operations is brought to a processing facility at the Morgantown, Kentucky plant
site where aluminum is recovered through materials separation technology. After
processing, the salt cake residue is placed in a Company-owned, synthetically
lined landfill that is built to hazardous waste standards. Disposal of salt cake
in this manner helps protect customers from the possibility of a future cleanup
liability. The Company also recycles salt cake with a patented wet-milling
process employed at both its Goodyear, Arizona facility and its Solar Aluminum
Technology Services ("SALTS") joint venture in Wendover, Utah. All other salt
cake generated by the Company's operations and airborne contaminants captured by
environmental equipment are disposed of in permitted landfills. See "THE
RECYCLING/MANUFACTURING PROCESS."

The zinc manufacturing process generates two by-products: zinc oxides and zinc
fines. These are either sold to third parties or melted in another process in
the zinc manufacturing cycle. Thus, there is no significant disposal issue in
the zinc process.

                                       6
<PAGE>

GROWTH OF BUSINESS

Since its inception, the Company has increased its number of facilities and
capacity through acquisitions, construction of new facilities and expansion of
existing facilities. See ITEM 2. "PROPERTIES." Beginning in 1995, this growth
                         ------
strategy was accelerated, as evidenced by the following table:

<TABLE>
<CAPTION>
  YEAR                      ACQUISITION                               CONSTRUCTION/EXPANSION
--------    -------------------------------------------     -----------------------------------------
<S>         <C>                                             <C>
1995        Formation of VAW-IMCO joint venture (IMCO
            owns a 50% interest)

            Acquisition of an aluminum recycling
            facility in Bedford, Indiana

            Acquisition of Metal Mark, Inc. (aluminum
            recycling plants in Illinois and Missouri)

1996                                                        Construction of a salt cake processing
                                                            facility in Morgantown, Kentucky

                                                            Construction of Coldwater, Michigan
                                                            aluminum recycling facility

1997        Acquisition of IMSAMET, Inc. (aluminum          Construction of Swansea, Wales aluminum
            recycling plants in Idaho, Arizona and          recycling facility
            Utah and a 50% interest in SALTS, a salt
            cake processing facility)                       Expansion of capacity at Sapulpa,
                                                            Oklahoma facility
            Acquisition of Rock Creek Aluminum, Inc.
            (2 Ohio facilities processing aluminum
            dross and scrap into aluminum
            metallurgical products used in steel
            making)

            Acquisition of Alchem Aluminum, Inc. (a
            Michigan facility producing specification
            aluminum alloys for automotive
            manufacturers and suppliers)

1998        Acquisition of U.S. Zinc Corporation (5         Expansion of capacity at Grevenbroich,
            zinc recycling and value-added zinc             Germany facility
            products facilities in Texas, Illinois
            and Tennessee)

1999        Acquisition of an aluminum alloying             Expansion of capacity at Uhrichsville,
            facility in Shelbyville, Tennessee and          Ohio facility
            a zinc oxide production facility in
            Clarksville, Tennessee

2000                                                        Construction scheduled to begin on
                                                            Saginaw, Michigan aluminum alloying plant
                                                            (to serve nearby GM metal casting plant)
                                                            scheduled to begin operations in late 2000

                                                            Planned expansion of Goodyear, Arizona,
                                                            Clarksville, Tennessee and Millington,
                                                            Tennessee facilities
</TABLE>

                                       7
<PAGE>

CERTAIN FACTORS

For descriptions of certain factors affecting the Company, including commitments
and contingencies which subject the Company to certain continuing risks, see (i)
"ENVIRONMENTAL MATTERS" below, (ii) ITEM 3. "LEGAL PROCEEDINGS," (iii) ITEM 7.
                                    ------                             ------
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS--CAUTIONARY STATEMENT FOR PURPOSES OF FORWARD-LOOKING STATEMENTS" and
(iv) NOTE K--"OPERATIONS" of Notes to Consolidated Financial Statements.

SEGMENT REPORTING

With the acquisition of U.S. Zinc in July 1998, the Company has two business
segments that meet the reporting requirements of Statement of Financial
Accounting Standards No. 131, "Disclosures about Segments of an Enterprise and
Related Information." See NOTE L--"SEGMENT INFORMATION" of Notes to Consolidated
Financial Statements. The aluminum segment represents all of the Company's
aluminum melting, processing, alloying, brokering and salt cake activities. In
addition, this segment includes the Company's magnesium melting activities,
which represent less than 1% of consolidated revenues and production. The
Company's zinc segment represents all of the Company's zinc melting, processing
and brokering activities.

PRODUCTS AND SERVICES

Aluminum. The Company recycles aluminum and delivers the recycled metal to
--------
customers as molten aluminum or ingots. The Company's customers include most of
the major United States aluminum producers and aluminum diecasters, extruders,
automotive companies and other processors of aluminum products. A principal
element of the Company's strategic plan calls for expanding the Company's
activities in the rapidly growing aluminum automotive components market.

The Company's metal alloying plant in Coldwater, Michigan manufactures
specification aluminum alloy products for automotive equipment manufacturers and
their suppliers. The acquisition of the Shelbyville, Tennessee facility and the
new facility near Saginaw, Michigan strengthens the Company's ability to serve
this market.

The Company's Rock Creek and Elyria, Ohio facilities manufacture a variety of
aluminum products that are ultimately used as metallurgical additions in the
steel making process, such as slag conditioners, deoxidizers, steel
desulfurizers and hot topping compounds. These facilities utilize milling,
shredding, blending, testing and packaging equipment to process various types of
raw materials, including aluminum dross and scrap, into aluminum products for
the steel industry. In addition, these facilities manufacture a wide range of
proprietary briquetted products and offer toll briquetting services.

The Company's aluminum business has benefited from the trend to include recycled
materials in finished products, and during its early years, from the growth in
the use and recycling of aluminum beverage containers. The recycling of UBCs in
the United States has increased because of numerous economic, legislative and
environmental factors. According to industry estimates, the number of aluminum
beverage cans produced has increased from 29.3 billion in

                                       8
<PAGE>

1978 to an annual average of approximately 100 billion in each of the past five
years. The number of UBCs recycled increased from 8.0 billion in 1978 to
approximately 64 billion in 1998.

The major force behind increased demand for recycled aluminum in recent years
has been its greater use in auto and truck components, including body
structures. This trend has made the transportation sector the largest and
fastest-growing aluminum market. The total amount of aluminum shipped to the
North American auto market has more than doubled since 1992 to about 4.2 billion
pounds per year.

The average amount of aluminum used per vehicle produced in North America
increased to 248 pounds in 1999, some 50% above the 165 pound average in
1990. Major auto makers estimate that this average will rise to 350 pounds or
more by 2005. Some 65% of the aluminum contained in cars and trucks is
recycled metal, but this percentage is expected to move higher in future years
as more usable scrap becomes available.

The Company also recycles magnesium dross for primary magnesium producers. In
addition, it produces a line of magnesium anodes that are recycled from
post-consumer scrap and sold to end-users and independent distributors for
corrosion protection of steel structures.

Zinc. Zinc is used in diecastings, in brass-making as an alloying metal with
----
copper and in chemical compounds to produce rubber, ceramics, paints and
fertilizer. However, its most unique quality is its natural ability to
metallurgically bond with iron and steel and protect these metals from
corrosion. The Company manufactures three main value-added zinc products:
oxides, dust and metal.

Zinc oxide is used predominantly in the tire and rubber industries and by the
----------
specialty chemical, motor oil and ceramics industries. The Company produces two
types of zinc dust: extra low lead dust, which is used in the industrial paint
         ---------
industry, and regular dust, which is used in paints, specialty chemical and
mining applications. Zinc metal recovered by the Company is used to galvanize
                     ----------
steel, and by-products generated in the zinc metal recycling process, called
fines, serve the zinc sulfate industry as fertilizer additives.

The Company's zinc business has benefited from the growth of secondary zinc
refining, which in recent years has increased at three times the rate of primary
zinc production. According to published industry reports, it is estimated that
secondary zinc now accounts for about 36% of the world's refined zinc output,
and it is estimated that the consumption of recycled zinc will account for more
than 40% of total worldwide zinc consumption by 2005.

Foreign Opportunities. The Company continues to evaluate expansion opportunities
---------------------
in foreign countries where market conditions warrant. General political and
economic conditions in foreign countries could affect the business prospects and
financial condition of the Company. Foreign operations are generally subject to
risks, including foreign currency exchange rate fluctuations, environmental
regulations, changes in the methods and amounts of taxation, foreign exchange
controls and government restrictions on the repatriation of hard currency.

                                       9
<PAGE>

SALES AND LONG-TERM CONTRACTS

Aluminum-General. The Company's principal aluminum customers (see "GENERAL"
----------------
above) use recycled aluminum to produce can sheet, building, automotive and
other products. The Company provides products and services to a number of
primary and fabricating facilities of Alcoa. During 1999, 1998 and 1997, Alcoa
accounted for approximately 7%, 7% and 9%, respectively, of the Company's
consolidated revenues, and Ford and its affiliates accounted for approximately
8%, 10% and 2% of the Company's consolidated revenues in 1999, 1998 and 1997,
respectively. The Company does not have any long-term commitments with Ford. The
loss of Alcoa or Ford as customers would have a material adverse effect upon the
business of the Company and its future operating results.

Customarily, agreements with customers in the aluminum recycling industry have
been short-term. These usually result from a bidding process where aluminum
producers and metal traders offer to sell materials or to have materials tolled.
Consequently, the Company historically has maintained no significant backlog of
orders.

Aluminum-Long-Term Contracts. The Company has secured long-term commitments for
----------------------------
its recycling services with Alcoa, Commonwealth, Aluminum Norf GmbH ("AluNorf"),
Kaiser, Wise Metals, PBR Automotive USA LLC ("PBR"), Ravenswood, Reynolds Metals
Company ("Reynolds") and GM. For the year ended December 31, 1999 the Company
melted 1.3 billion pounds of aluminum pursuant to multi-year contracts with its
customers, which represented approximately 45% of the Company's total 1999
aluminum melting volume. The following table describes these multi-year
contracts. See ITEM 2. "PROPERTIES--RECYCLING AND PROCESSING FACILITIES" for
               ------
more information about these contracts.

                                       10
<PAGE>

<TABLE>
<CAPTION>
                          IMCO               LENGTH OF             TERMINATION              TYPE OF
     CUSTOMER           PLANT(S)             CONTRACT                 DATE                 CONTRACT
-----------------    ---------------  -----------------------  --------------------  ----------------------
<S>                  <C>              <C>                      <C>                   <C>
Alcoa - Tennessee    Rockwood,        3 years with automatic   December 2002        Secondary aluminum
                     Tennessee and    2-year renewals                                processing
                     Loudon,
                     Tennessee

Alcoa - Wales        Swansea, Wales   5 year primary term      December 2002        Secondary aluminum
                                      with automatic 3-year                          processing
                                      extensions

AluNorf              VAW-IMCO         5 years                  December 2003        22,000 metric tons of
                     (German                                                         dross processing per
                     plants)                                                         year

Wise Metals          Morgantown,      5 1/2 years              January 2003         10 million pounds of
                     Kentucky                                                        aluminum per month

Commonwealth         Uhrichsville,    10 years                 April 2009           Process all of
                     Ohio                                                            Commonwealth's
                                                                                     Uhrichsville plant
                                                                                     scrap, UBCs and
                                                                                     dross

Kaiser               Post Falls,      4 years                  September 2001        Toll molten and
                     Idaho                                                           ingot aluminum

PBR                  Loudon,          5 years                  January 2003         Secondary aluminum
                     Tennessee                                                       processing

Ravenswood           Uhrichsville,    5 years                  September 2000        Secondary aluminum
                     Ohio                                                            processing

Reynolds             Coldwater,       Volume dependent         Volume dependent      Specialty alloy
                     Michigan,                                                       processing
                     Bedford,
                     Indiana and
                     Shelbyville
                     and Loudon,
                     Tennessee

General Motors       Saginaw,         12 years                 December 2011         Provide alloyed
                     Michigan                                                        molten and ingot
                     (plant under                                                    aluminum to GM's
                     construction)                                                   metal casting facility
</TABLE>

Many of these agreements contain cross-indemnity provisions, including
provisions obligating the Company to indemnify the customer for certain
environmental liabilities that the customer may incur in connection with the
transactions contemplated by the agreements.

                                       11
<PAGE>

The Company may seek similar dedicated long-term arrangements with customers in
the future. Increased emphasis on dedicated facilities and dedicated contracts
with customers carries the inherent risk of increased dependence on a single or
few customers with respect to a particular Company facility. In such cases, the
loss of such a customer could have a material adverse effect on the Company's
financial condition and results of operation, and any timely replacement of
volumes attributable to such a customer could prove difficult.

Zinc. The Company's principal zinc customers use zinc to make tires and other
----
rubber products, industrial paints, fertilizers, specialty chemicals, motor oil
and ceramics. Zinc products are also used in the mining and steel galvanizing
industries. Most of the Company's zinc products are sold directly to end-users.
No single zinc customer accounted for more than 10% of the Company's
consolidated revenues in 1999. Most of the Company's contracts with zinc
customers are for a term of one year or less. The Company historically has
maintained no significant backlog of orders for zinc products.

General. The primary metals industry and the metals recycling industry are
-------
subject to cyclical fluctuations, depending upon the availability and price of
unprocessed scrap metal and the level of demand in the metal consuming
industries. Temporary reductions in can stock production by aluminum customers
have adversely affected the Company's results of operations from time to time,
and no assurances can be given that such conditions will not recur. See ITEM 7.
                                                                        ------
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS."

The Company sells to both domestic and international customers. Sales to
customers in foreign locations accounted for approximately 14% and 13% of
consolidated revenues in 1999 and 1998 respectively, and aluminum shipments to
customers located in Canada accounted for approximately 8% and 9% of
consolidated revenues for 1999 and 1998, respectively. Foreign sales in 1997
were immaterial (less than 3%). See ITEM 7. "MANAGEMENT'S DISCUSSION AND
                                    ------
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS--CAUTIONARY STATEMENT
FOR PURPOSES OF FORWARD-LOOKING STATEMENTS" and "NOTE L -- SEGMENT INFORMATION"
of Notes to Consolidated Financial Statements.

THE RECYCLING/MANUFACTURING PROCESS

Aluminum. The Company uses two types of furnace technology, rotary and
--------
reverberatory. Rotary or barrel-like furnaces are able to pour a batch of melted
aluminum from dross and then immediately switch to other types of scrap; they
provide high recovery and excellent product quality. Reverberatory furnaces are
stationary and use both radiation and convection heating to melt the material
being processed. Reverberatory furnaces provide better recovery from shredded
material than a rotary furnace and can take advantage of the heat energy
contained in delacquered shreds.

After the aluminum is melted, the recovered metal is poured directly into an
ingot mold or hot metal crucible for delivery to customers. Magnesium is
recycled by the same method in a rotary furnace at the Sapulpa, Oklahoma plant.
Some of the Company's plants deliver molten aluminum in crucibles directly to
their customers' manufacturing facilities. As of December 31, 1999, the Company
had the capacity to provide approximately 74% of its processed aluminum in
molten form. The molten aluminum is poured directly into the customer's furnace,
saving the

                                       12
<PAGE>

customer the time and expense of remelting aluminum ingots. The Company normally
charges an additional fee for transportation and handling of molten aluminum.
The Sapulpa, Oklahoma, Goodyear, Arizona, Wendover, Utah, Chicago Heights,
Illinois and Sikeston, Missouri facilities are restricted to delivering aluminum
in ingot form, due to the geographical locations of their customers. See ITEM 2.
                                                                         ------
"PROPERTIES."

Alloying. At the Company's metal alloying facilities in Coldwater, Michigan, and
--------
Shelbyville, Tennessee, additional materials are blended with molten aluminum to
produce a metal alloy. The alloyed aluminum is shipped in either molten or ingot
form to its customers. The Coldwater, Michigan alloying facility generates
dross, which is recycled at the Company's adjacent aluminum recycling plant.

By-products. The aluminum recycling process from the Company's rotary furnaces
-----------
produces a by-product called "salt cake," which is formed from the contaminants
and coatings on aluminum scrap and dross and the salts added during the aluminum
recycling process. Salt cake is composed of salts, metallic aluminum, aluminum
oxide and small amounts of other materials. The by-product of processing
materials through the reverberatory furnaces is dross, which is then sent to the
Company's rotary furnaces for processing.

The Company disposes of its salt cake and certain airborne contaminants
("baghouse dust") in landfills that are used exclusively by the Company or that
are permitted specifically to handle the types of materials generated by the
Company. Salt cake is not listed as a "hazardous waste" under the Resource
Conservation and Recovery Act of 1976 ("RCRA") or as a "hazardous substance"
under the Comprehensive Environmental Response, Compensation and Liability Act
of 1980 ("CERCLA"). The Company built and operates a lined landfill at its
Morgantown, Kentucky facility, the design of which exceeds current requirements
for disposal of salt cake and meets RCRA Subchapter "C" hazardous waste
standards.

In 1996, the Company completed the construction of a facility adjacent to its
Morgantown, Kentucky plant to further process salt cake through the use of a
patented materials separation process, and extract additional aluminum that is
left after the melting process. The facility's process involves crushing the
salt cake and separating the aluminum out of the salt cake. The residual product
is then landfilled in the Company's Morgantown, Kentucky landfill. See
"ENVIRONMENTAL MATTERS."

Certain of the Company's facilities also recycle salt cake and other by-products
from the aluminum recycling process. The Goodyear, Arizona facility processes
aluminum scrap and turnings and recycles concentrates from purchased dross and
salt cake. These concentrates are first treated in the facility's patented wet
milling process, which reduces the volume of material handled, thus allowing for
more efficient utilization of capacity. Aluminum oxide, a by-product of the wet
milling process, is treated further and sold for use in the production of
cement.

Located near the Bonneville Salt Flats, the Company's Wendover, Utah facility
processes aluminum concentrates from the adjacent 50%-owned SALTS joint venture
and produces aluminum ingots. The SALTS facility recycles salt cake from the
Company's Post Falls, Idaho and Wendover, Utah plants into aluminum
concentrates, aluminum oxide and salt brine. The clear brine is delivered to the
venture's partner, where its chemical content is recycled for multiple uses,
including reuse as a flux.

                                       13
<PAGE>

Zinc. Zinc oxide is produced by melting top dross, a low iron-content zinc
----  ----------
by-product of continuous galvanizing, and re-melt die cast, a high zinc-content
alloy, in a sweat or premelt furnace. The sweat furnace separates the zinc from
other metals contained in the raw material. The molten zinc is then transferred
to a muffle furnace, which uses radiant heat to transform the molten zinc into a
vapor. The vaporized zinc is sent to a vapor chamber where, upon contact with
air, it condenses to zinc oxide. The final manufacturing step is to send the
completed product through a vertical cooler to a bag collector where the zinc
oxide is collected and custom packaged for shipment.

Zinc Dust. The Company manufactures two types of zinc dust: extra low lead and
---------
regular. Zinc dust with extra low lead content, which is preferred by the
domestic industrial paint industry, is produced by converting primary zinc into
a molten form using an electro thermal furnace. The Company manufactures regular
zinc dust by melting bottom dross, an iron-bearing zinc residue, created during
the galvanizing process, and re-melt die cast in a pot or ladle. Next, the
molten zinc is fed into a zinc dust retort furnace where the molten metal is
vaporized and condensed into raw zinc dust. Finally, the raw zinc dust is
processed in a dust mill, where it is screened, sent through a ball mill and
then packaged into custom-sized containers.

Zinc metal at the Houston, Texas facility is produced by placing pieces of
----------
oxidized zinc-bearing metals (skimmings) into a ball mill, where the Company
separates the oxidic zinc (zinc fines), which are sold as fertilizer additives.
After the ball mill process, the metallic zinc-bearing material is melted in an
electric induction furnace and is then transferred to a holding furnace for
additional refining. Finally, the molten zinc is poured into molds and shipped
to galvanizers.

In the Company's Coldwater, Michigan zinc recycling process, continuous
galvanizers' top dross is first melted in an electric induction furnace and then
transferred to a reactor which removes the impurities (iron and zinc oxide,
which are sold as by-products). The remaining molten zinc is poured into a
reverberatory holding furnace from which it is blended and cast into ingots,
which are returned to the customer.

OPERATIONS

Aluminum. In its aluminum tolling operations, the Company accepts UBCs; dross
--------
and scrap owned by its customers and processes this material for a tolling
charge per pound of incoming weight. In order to retain control of their metal
supplies, customers have often desired to toll, rather than sell, their scrap
materials. Tolling requires no metal inventory to be purchased or held by the
Company. In addition, tolling limits the Company's exposure to the risk of
fluctuating metal prices since the Company does not own the material being
processed. For the year ended December 31, 1999, approximately 66% of the
Company's total pounds of aluminum processed involved tolling. Unlike tolling
transactions, product sales transactions increase the Company's exposure to the
risk of fluctuating metal prices and working capital requirements. See ITEM 7.
                                                                       ------
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS" and ITEM 7A. "QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
                -------
RISK."

Zinc. The Company's zinc operations primarily consist of product sales
----
transactions. The Company's product sales from zinc operations represent
approximately 95% of its total zinc production.

                                       14
<PAGE>

General. The Company's production network of plants have generally achieved high
-------
overall operating rates due to strong demand for the Company's services and
products and due to the strategic location of many of the Company's plants near
major customers' production facilities. Expansion of the Company's network of
facilities in the U.S. has enabled the Company to allocate processing work among
its facilities, thereby maximizing utilization of available capacity and taking
advantage of excess demand.

The Company believes that its advanced scrap preparation equipment and recycling
technologies have also increased the demand for its services by producing higher
recovery rates and better quality recycled aluminum and zinc products than many
of its competitors.

The Company constantly seeks improvements in operational efficiencies at its
existing plants and at its acquired facilities through technological
advancements, automation of its operational procedures, and modifications in
processing and material throughput methods.

In addition to its increased emphasis on the product sales business, the Company
has also entered into an increasing amount of metal brokerage transactions
pursuant to which the Company buys metal from primary and other producers and
then sells the metal to end users. These transactions involve buying and selling
metal without ever processing it. Additionally, in order to facilitate acquiring
metal for its production process, the Company occasionally enters into metal
"swap" transactions whereby the Company agrees to exchange its recycled finished
goods for scrap raw materials.

When purchasing metals in the open market for its product sales business, the
Company attempts to reduce the risk of fluctuating metal prices by hedging
anticipated sales of aluminum and zinc and by avoiding large inventories, except
to the extent necessary to allow its plants to operate without interruption. See
ITEM 7A. "QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK."
-------

COMPETITION

General.  The aluminum and zinc recycling industries are fragmented and highly
-------
competitive.  The Company believes that its position as the largest U.S.
recycler of secondary aluminum and zinc is a positive competitive factor.

Aluminum.  The principal factors of competition in the aluminum segment are
--------
price, recovery rates, environmental and safety regulatory compliance, and
services (e.g., the ability to deliver molten aluminum). Freight costs also
limit the geographic areas in which the Company can compete effectively.

The major aluminum producers, some of which are the Company's largest customers,
have generally discontinued processing dross, instead focusing their resources
on other aspects of aluminum production. UBCs and other scrap are processed by
both the secondary recycling industry and the major producers. The Company
competes both with other secondary recyclers and their customers when purchasing
and processing scrap for the product sales business.

The amount of the Company's aluminum tolling business can vary depending upon
the extent that the major aluminum producers' used metal materials are
internally recycled. The aluminum producers generally vary their rate of
internal recycling depending upon furnace availability,

                                       15
<PAGE>

inventory levels, the price of aluminum and their own internal demand for metal.
The major aluminum producers are larger and have greater financial resources
than the Company. A decision by these producers to expand their recycling
operations could reduce demand for certain of the Company's products and
services.

Zinc.  The principal factors of competition in the zinc segment are price,
----
customer service and delivery schedules. Competition is generally regionally
focused due to high freight costs.

For zinc oxide, the Company's major competitors are Zinc Corporation of America,
a subsidiary of Horsehead Industries, Inc. and Zochem, a subsidiary of Hudson
Bay Mining & Smelting, Ltd. The Company believes its strong customer
relationships, low cost production capabilities and geographic coverage allow it
to compete effectively in the zinc oxide market.

For zinc dust, the Company's major competitors are Purity Zinc Metals Company,
Ltd. and Meadowbrook Company, a subsidiary of T.L. Diamond Company, Inc. The
Company's Houston, Texas facility is believed to be the largest zinc dust
facility in the world, based on volume.

For zinc metal, the Company considers primary and secondary zinc producers to be
competitors. However, the Company believes that only a minimal threat exists
from galvanizers recycling their own by-products, since relatively large capital
expenditures, technology costs and internally generated raw material volume
represent effective barriers to entry into this market.

SOURCE AND AVAILABILITY OF RAW MATERIALS AND ENERGY

Aluminum. The Company does not anticipate having difficulties in obtaining raw
--------
materials for its aluminum operations. However, over the last several years
certain locations have experienced from time to time sporadic availability of
can sheet and related materials. In the case of product sales business, the
primary sources of aluminum and magnesium for recycling and alloying are dross
and scrap, which are purchased from both the major aluminum producers and metal
traders. Many of the Company's aluminum suppliers are also customers of the
Company.

Zinc. As the largest worldwide purchaser of zinc-bearing secondaries, the
----
Company provides its customers an outlet to sell the by-products of their
manufacturing processes. A significant portion of the Company's zinc products is
produced from secondary materials provided by the galvanizing and scrap metals
industries. Secondary zinc-bearing materials consist of top dross generated by
continuous galvanizers, bottom dross and skimmings generated by "hot dip"
galvanizers, and die cast scrap generated by scrap dealers or remelters. The
Company purchases approximately 100,000 tons of these materials each year. The
Company also purchases primary zinc to produce high-grade zinc oxide at its
Hillsboro, Illinois facility and for metals brokerage purposes.

The Company purchases zinc raw materials from numerous suppliers. Many of the
"hot dip" galvanizers, which supply approximately 40% of the aggregate zinc raw
materials, are also customers of the Company. This supplier-customer
relationship is beneficial since the Company competes with other zinc recyclers
for raw materials. The Company's zinc brokerage unit also procures raw materials
for use in the Company's zinc manufacturing operations. The availability of zinc
dross is dependent upon the demand for galvanized steel, which has historically

                                       16
<PAGE>

paralleled fluctuations in customer demand in the automotive, appliance and
construction industries.

General. The Company's operations are fueled by natural gas, which represents
-------
the second largest component of operating costs. In an effort to acquire the
most favorable natural gas costs, the Company has secured some of its natural
gas at fixed price commitments for its requirements. Occasionally, when deemed
necessary, the Company purchases its natural gas on a spot-market basis. Most of
the Company's long-term supply contracts with its customers contain provisions
to reflect fluctuations in natural gas prices. See ITEM 7A. "QUANTITATIVE AND
                                                   -------
QUALITATIVE DISCLOSURES ABOUT MARKET RISK." The Company believes it will
continue to have access to adequate energy supplies to meet its needs for the
foreseeable future.

SEASONALITY

Aluminum. UBC collections have historically been highest in the summer months
--------
and lowest in the winter months. Therefore, the Company has, at times,
experienced lower volumes at certain facilities during the winter. In recent
years, however, the Company's total processing volumes have fluctuated mostly
due to the startup of additional capacity rather than the seasonality of UBC
collections.

A portion of the Company's business that serves the automotive industry has
historically experienced a decline in molten metal deliveries during periods
when its automotive customers stop production to perform new model changeovers
and during the holidays in December.

Zinc. Historically, demand for the Company's zinc products used in the painting
----
industry is somewhat lower in the winter months, while demand for zinc products
used in fertilizers is lower in the summer months.

TRANSPORTATION

The Company receives incoming metal by rail and truck. Most of the Company's
plants own their own rail siding or have access to rail lines nearby. The
Company owns and leases various trucks and trailers to support its business.
Customarily, the transportation costs of scrap materials to be tolled are paid
by the Company's customers, while the transportation costs of metal purchased
and sold by the Company may be paid by either customers or the Company. The
Company contracts with third-party transportation firms for hauling some of its
solid waste for disposal.

                                       17
<PAGE>

EMPLOYEES

As of January 31, 2000, the Company had 1,960 employees, consisting of 485
employees engaged in administrative and supervisory activities and 1,475
employees engaged in production and maintenance. Labor relations with employees
have been satisfactory. The production and maintenance employees at the
following Company facilities are represented by the collective bargaining groups
set forth below:

<TABLE>
<CAPTION>
                                                                             CONTRACT
   FACILITY                        REPRESENTATIVE                             EXPIRES
--------------      -----------------------------------------------        -------------
<S>                 <C>                                                    <C>
Bedford, IN         International Brotherhood of Electrical Workers        April 2000
Rockwood, TN        United Steelworkers of America                         August 2000
Hillsboro, IL       Laborer's International Union of North America         August 2000
Uhrichsville, OH    United Mine Workers of America                         December 2001
Chicago, IL         United Auto Workers                                    June 2002
</TABLE>

ENVIRONMENTAL MATTERS

General. The Company's operations, like those of other basic industries, are
-------
subject to federal, state, local and foreign laws, regulations and ordinances.
These laws and regulations (1) govern activities or operations that may have
adverse environmental effects, such as discharges to air and water, as well as
handling and disposal practices for solid and hazardous wastes and (2) impose
liability for costs of cleaning up, and certain damages resulting from past
spills, disposals or other releases of hazardous substances. It can be
anticipated that more rigorous environmental laws will be enacted that could
require the Company to make substantial expenditures in addition to those
described in this Form 10-K, including future regulations which are expected to
impose stricter emission requirements on the aluminum industry. While the
Company believes that current pollution control measures at most of the emission
sources at its facilities will meet these anticipated future requirements,
additional measures at some of the Company's facilities may be required.

The Company's operations may generate certain discharges and emissions,
including in some cases off-site dust and odors, which are subject to the
Federal Clean Air Act and other environmental laws. From time to time,
operations of the Company have resulted or may result in certain noncompliance
with applicable requirements under environmental laws. The Company may also
incur liabilities for off-site disposals of salt cake and other materials. In
addition, historical or current operations at, or in the vicinity of, the
Company's facilities, may have resulted in soil or groundwater contamination.
However, based on environmental investigations conducted by the Company and its
consultants and certain indemnities associated with the Company's acquisitions,
the Company believes that any such noncompliance or liability under current
environmental laws would not have a material adverse effect on the Company's
financial position. See ITEM 3. "LEGAL PROCEEDINGS."
                        ------

Due to relatively high costs and limited coverage, the Company does not carry
environmental impairment liability insurance. The Company made capital
expenditures for environmental control facilities of approximately $5,309,000 in
1999, most of which was for air pollution control equipment and landfill
capacity additions. Environmental expenditures for 2000 and

                                       18
<PAGE>

2001, which primarily relate to the Company's landfills and air pollution
control equipment, are currently estimated to be approximately $3,480,000 and
$5,000,000, respectively.

Aluminum. The processing of UBCs, dross and scrap generates solid waste in the
--------
form of salt cake and baghouse dust. Currently, such material is either disposed
of at off-site landfills or at the Company's permitted Sapulpa, Oklahoma and
Morgantown, Kentucky disposal sites. For example, the Rockwood and Loudon,
Tennessee, Bedford, Indiana and Sikeston, Missouri plants currently dispose of
the majority of their solid waste by transporting it to the Morgantown, Kentucky
plant, where the Company operates a salt cake processing facility which prepares
salt cake for landfilling. See ITEM 2. "PROPERTIES--SOLID WASTE DISPOSAL." At
                               ------
the Uhrichsville, Ohio plant, under the Company's supply agreement with
Commonwealth, the disposal of all salt cake generated by the Company as a result
of its processing for Commonwealth is the responsibility of Commonwealth. Salt
cake from all other material processed at the Uhrichsville, Ohio plant is either
shipped to the Morgantown, Kentucky plant for disposal or landfilled with a
local solid waste management firm. The Goodyear, Arizona facility recycles its
own salt cake and sells the by-products to third parties, and the Sapulpa,
Oklahoma, Wendover, Utah and Post Falls, Idaho facilities ship their salt cake
to the 50%-owned SALTS joint venture for further processing. See "THE
RECYCLING/MANUFACTURING PROCESS."

If salt cake were ever classified as a hazardous waste or substance under RCRA
or CERCLA, the Company's handling and disposal of salt cake would be required to
be modified. To dispose of its salt cake, the Company may then be required to
take other actions including obtaining a RCRA Subchapter "C" permit for its
Morgantown, Kentucky landfill, obtaining other permits (including transportation
permits), and landfilling additional amounts of salt cake with third parties not
under the Company's direct control. Based on current annual processing volumes,
planned utilization rates and remaining landfill capacity, the estimated
remaining life of the landfill at the Sapulpa, Oklahoma plant is four years. The
Company has constructed a second landfill cell at its Morgantown, Kentucky
plant, which was expanded in 1998, and estimates its remaining useful life to be
approximately four years. A planned second expansion is expected to provide an
additional seven years of useful life. Landfill closure costs for the
Company-owned landfills are currently estimated to be approximately $9,000,000.
The Company is currently providing for this expenditure by accruing, on a
current basis, these estimated costs as the landfills are used. See ITEM 2.
                                                                    -------
"PROPERTIES."

Zinc. Several of the zinc manufacturing processes create various by-products
----
which are either sold to downstream processors or re-used internally. Because
there are virtually no remaining by-products requiring disposal, the zinc
manufacturing process is essentially a "closed loop" process.

                                       19
<PAGE>

ITEM 2.   PROPERTIES
-------

RECYCLING AND PROCESSING FACILITIES

During 1999, the Company owned and/or operated the following facilities as
described below:

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------

                                             Estimated    Estimated
                                  Number      Melting     Processing                                      Molten
                       Owned        of       Capacity      Capacity      Year     Year      Materials    Delivery
       Plant          Acreage    Furnaces  (million lbs) (million lbs)   Built   Acquired   Processed    Capability
--------------------------------------------------------------------------------------------------------------------
      ALUMINUM SEGMENT:
--------------------------------------------------------------------------------------------------------------------
<S>                   <C>        <C>       <C>           <C>             <C>     <C>        <C>          <C>
Sapulpa, OK             64           7         210           --           1962      --        Alum/Mag        No
--------------------------------------------------------------------------------------------------------------------
Rockwood, TN           238           6         220           --           1985      --          Alum          Yes
--------------------------------------------------------------------------------------------------------------------
Morgantown, KY         552 (a)       7         360           --           1989      --          Alum          Yes
--------------------------------------------------------------------------------------------------------------------
Uhrichsville, OH (g)    42          10         530           --           1992      --          Alum          Yes
--------------------------------------------------------------------------------------------------------------------
Loudon, TN             173           4         220           --            --      1994         Alum          Yes
--------------------------------------------------------------------------------------------------------------------
Bedford, IN             19           4         210           --            --      1995         Alum          Yes
--------------------------------------------------------------------------------------------------------------------
Chicago Hts., IL         9           2         100           --            --      1995         Alum          No
--------------------------------------------------------------------------------------------------------------------
Sikeston, MO            31           2          60           --            --      1995         Alum          No
--------------------------------------------------------------------------------------------------------------------
Morgantown, KY          (a)        (b)          (b)         400           1996      --        Salt Cake       (b)
--------------------------------------------------------------------------------------------------------------------
Post Falls, ID          49           4         280           --            --      1997         Alum          Yes
--------------------------------------------------------------------------------------------------------------------
Goodyear, AZ            40 (c)       4          70 (d)      168            --      1997     Al/Salt Cake      No
--------------------------------------------------------------------------------------------------------------------
Wendover, UT           160 (c)       2          70           --            --      1997         Alum          No
--------------------------------------------------------------------------------------------------------------------
Elyria, OH              12          (e)         (e)          50            --      1997         Alum          (e)
--------------------------------------------------------------------------------------------------------------------
Rock Creek, OH          11          (e)         (e)         100            --      1997         Alum          (e)
--------------------------------------------------------------------------------------------------------------------
Coldwater, MI           75           3         180           --           1997      --          Alum          Yes
--------------------------------------------------------------------------------------------------------------------
Swansea, Wales           5 (c)       2         100           --           1997      --          Alum          Yes
--------------------------------------------------------------------------------------------------------------------
Coldwater, MI (alloys)  47           3         200           --            --      1997         Alum          Yes
--------------------------------------------------------------------------------------------------------------------
Shelbyville, TN         46           2         140           --            --      1999         Alum          No
--------------------------------------------------------------------------------------------------------------------
TOTAL ALUM.                                  2,950          718
--------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
         ZINC SEGMENT:
--------------------------------------------------------------------------------------------------------------------
Coldwater, MI           27           2          40           --            --      1992      Zinc Metal       No
--------------------------------------------------------------------------------------------------------------------
Houston, TX              4          22          50           --            --      1998       Zinc Dust       No
--------------------------------------------------------------------------------------------------------------------
Houston, TX              7           1          20           --            --      1998      Zinc Metal       No
--------------------------------------------------------------------------------------------------------------------
Chicago, IL              2           6          40           --            --      1998      Zinc Oxide       No
--------------------------------------------------------------------------------------------------------------------
Hillsboro, TN            5           3          50           --            --      1998      Zinc Oxide       No
--------------------------------------------------------------------------------------------------------------------
Millington, TN          17           3          50           --            --      1998      Zinc Oxide       No
--------------------------------------------------------------------------------------------------------------------
Clarksville, TN         15           3          40           --            --      1999      Zinc Oxide       No
--------------------------------------------------------------------------------------------------------------------
TOTAL ZINC                                     290           --
--------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
Consolidated Capacity                        3,240          718
--------------------------------------------------------------------------------------------------------------------
50% Owned Facilities (Aluminum):
--------------------------------------------------------------------------------------------------------------------
  VAW-IMCO, Germany     29          13         480 (f)       --            --      1996         Alum          Yes
--------------------------------------------------------------------------------------------------------------------
  SALTS, Wendover, UT   40          (b)         (b)         168            --      1997       Salt Cake       (b)
--------------------------------------------------------------------------------------------------------------------
 TOTAL CAPACITY                              3,720          886
--------------------------------------------------------------------------------------------------------------------
</TABLE>

                                       20
<PAGE>

NOTES:
-----

(a)  The acreage in Morgantown, Kentucky includes both the aluminum and salt
     cake processing facilities as well as landfill cells.

(b)  These facilities process salt cake only.

(c)  This acreage is leased.

(d)  Represents 100% of the capacity of this facility--the facility is 70% owned
     by the Company.

(e)  These facilities process aluminum products for use in the steel industry.

(f)  Represents 100% of the capacity of the two VAW-IMCO facilities located in
     Grevenbroich and Toging, Germany.

(g)  Subject to option and right of first refusal as described below.

The average operating rates for all of the Company's facilities for 1999, 1998
and 1997 were 96%, 97% and 95%, respectively, of stated capacity. See ITEM 7.
                                                                      ------
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS."

In 1996, the Company began its 50% participation in its VAW-IMCO joint venture
in Germany. The joint venture owns and operates two recycling and foundry alloy
facilities located at Grevenbroich and Toging, Germany. Aggregate annual melting
capacity for these two plants is approximately 480 million pounds.

The Company also has five zinc brokerage offices located in California, Texas,
Pennsylvania, Canada and Germany.

Under the Company's new Supply Agreement with Commonwealth dated April 1, 1999,
the Company granted Commonwealth an option to purchase the Uhrichsville, Ohio
facility, exercisable 90 days before the end of the ninth contract year under
the contract (presently, between January 1 and March 30, 2008). In the event of
a "change of control" of the Company (as defined in the Supply Agreement), the
exercise date of this option would be accelerated to a date before the change of
control event. The exercise price is based on varying multiples of EBITDA for
the facility (five times EBITDA in the case of a non-change of control
exercise). In addition, the Company granted Commonwealth a right of first
refusal in the event the Company desires to sell the facility in a non-change of
control situation. In the event of a "change of control" of Commonwealth, then
Commonwealth's option and right of first refusal would automatically terminate.
These potential purchase prices may be above or below the fair value of the
Uhrichsville, Ohio plant. Should Commonwealth exercise these rights, there can
be no assurance that the production or earnings attributable to the
Uhrichsville, Ohio facility could be replaced, and the Company's cash flows and
net earnings could be adversely affected.

                                       21
<PAGE>

SOLID WASTE DISPOSAL

The Company completed a new landfill cell adjacent to its plant in Morgantown,
Kentucky in 1996. All of the waste generated from the salt cake processing
facility at the Morgantown site is deposited in this landfill. Management
anticipates that this new landfill cell, which was expanded during 1998 and is
designed to be expanded again, will serve the Company's landfilling needs for
the majority of the salt cake generated by facilities currently owned by the
Company in the Eastern United States for the next 11 years, based on current
utilization. The Company also owns a landfill at its Sapulpa, Oklahoma plant,
which is estimated to have four years' useful life remaining, based on planned
utilization. The Goodyear, Arizona facility recycles its own salt cake and sells
the by-products to third parties, and the Sapulpa, Oklahoma, Wendover, Utah and
Post Falls, Idaho facilities ship their salt cake to the 50%-owned SALTS joint
venture for further processing. See ITEM 1. "BUSINESS--ENVIRONMENTAL MATTERS."
                                    -------

ADMINISTRATIVE

In Irving, Texas, the Company leases approximately 39,866 square feet of office
space for certain of its executive, financial and management functions. This
lease expires in January 2007. In Houston, Texas, the Company owns approximately
30,000 square feet of office space for certain of its financial and management
functions for its zinc operations.

The Company believes that its plants and equipment are maintained in good
operating condition. Properties and improvements at the Company's Rockwood and
Loudon, Tennessee, Sapulpa, Oklahoma, Morgantown, Kentucky, Bedford, Indiana,
Chicago Heights, Illinois and Post Falls, Idaho plants are mortgaged to secure
senior indebtedness. See ITEM 7. "MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                         -------
FINANCIAL CONDITION AND RESULTS OF OPERATIONS--LIQUIDITY AND CAPITAL RESOURCES"
and NOTE F--"LONG-TERM DEBT AND EXTRAORDINARY LOSS ON EARLY DEBT RETIREMENT" of
Notes to Consolidated Financial Statements.


ITEM 3.  LEGAL PROCEEDINGS
-------

In 1997, the Illinois Environmental Protection Agency ("IEPA") notified the
Company that two of the Company's zinc subsidiaries are potentially responsible
parties ("PRP") pursuant to the Illinois Environmental Protection Act for the
cleanup of contamination at a site in Marion County, Illinois to which these
subsidiaries, among others, in the past sent zinc oxide for processing and
resale. These subsidiaries have joined a group of PRPs that is planning to
negotiate with the IEPA regarding the cleanup of the site. Although the site has
not been fully investigated and final cleanup costs have not yet been
determined, based on current cost estimates and information regarding the amount
and type of materials sent to the site by the subsidiaries, the Company does not
believe, while there can be no assurance, that its liability at this site will
have a material adverse effect on its financial position or its results of
operations.

The Company is also a party from time to time to what it believes are routine
litigation and proceedings considered part of the ordinary course of its
business. The Company believes that the outcome of such proceedings would not
have a material adverse effect on the Company's financial position or results of
operations.

                                       22
<PAGE>

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

No matters were submitted to a vote of security holders of the Company during
the quarter ended December 31, 1999.


ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT
--------

The executive officers of the Company are listed below, together with brief
accounts of their experience and certain other information. Executive officers
are appointed by the Board of Directors.

<TABLE>
<CAPTION>
Name                 Age     Position
----                 ---     --------
<S>                  <C>     <C>
Don V. Ingram         64     Chairman of the Board and Chief Executive Officer

Richard L. Kerr       57     President and Chief Operating Officer

Paul V. Dufour        60     Executive Vice President, Chief Financial Officer

Denis W. Ray          51     Executive Vice President, Domestic Aluminum
                             Operations

Thomas W. Rogers      53     Senior Vice President, Sales and Marketing,
                             Aluminum Recycling Division

C. Lee Newton         56     Senior Vice President, Technology, Engineering and
                             Environmental

Robert R. Holian      47     Senior Vice President, Controller and Chief
                             Accounting Officer

James B. Walburg      46     Senior Vice President, Finance and Administration
                             and Treasurer

M. Russ Robinson      42     President, U.S. Zinc Corporation
</TABLE>

Don V. Ingram has served as a director of the Company since 1988 and as Chairman
of the Board since 1994. He was elected Chief Executive Officer of the Company
in February 1997. Mr. Ingram played a major role in the formation of the Company
in 1986.

Richard L. Kerr was elected President of the Company in February 1997.
Previously, he served as Executive Vice President and has been Chief Operating
Officer since 1991. In 1994, he became President of the Company's Metals
Division. Mr. Kerr joined International Metal Co., a predecessor of the Company,
in April 1984.

                                       23
<PAGE>

Paul V. Dufour has served as Vice President, Chief Financial Officer and
Secretary of the Company since March 1987. He was promoted to Senior Vice
President in May 1988 and to Executive Vice President in October 1994.

Denis W. Ray has served as Senior Vice President of the Company since March
1998. He was promoted to Executive Vice President in July 1999. Previously, Mr.
Ray served as President of Reynolds Architectural Products at Reynolds Metals
Company from 1997 to 1998, President of Reynolds (Europe) Ltd. in Switzerland
from 1995 to 1997 and Vice President, Operations of Reynolds (Europe) Ltd. from
1994 to 1995. Prior to his employment with Reynolds Metals Company and its
affiliates, Mr. Ray was employed by Alcoa in various capacities for 24 years.

Thomas W. Rogers has served as Senior Vice President of Sales and Marketing
since July 1988. Mr. Rogers was employed as Plant Manager of the Sapulpa,
Oklahoma plant in October 1986.

C. Lee Newton has served as Senior Vice President of the Company since 1993. Mr.
Newton was named Vice President in 1990 and was the General Manager of the
Morgantown, Kentucky plant from 1989 to 1993. He was originally employed by the
Company as Plant Manager of its Rockwood, Tennessee plant in 1987.

Robert R. Holian has served as Vice President and Controller since 1994. He
joined the Company in 1990 and was named Controller in 1992. He was promoted to
Senior Vice President and Chief Accounting Officer in 1999.

James B. Walburg has served as Vice President and Treasurer of the Company since
September 1994. He was promoted to Senior Vice President, Finance and
Administration in 1999. Prior to this, Mr. Walburg was employed by NTS, Inc., a
transportation service company headquartered in Ft. Worth, Texas, as Vice
President, Client Service and Operations and previously as Vice President,
Finance.

M. Russ Robinson has served as President, U.S. Zinc Corporation since May 1999.
Previously, Mr. Robinson served as President and Chief Executive Officer of U.S.
Zinc, which was acquired by the Company in 1998.

                                       24
<PAGE>

PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
-------

The Company's Common Stock trades on the New York Stock Exchange (trading
symbol: IMR). The following table sets forth, for the fiscal quarters indicated,
the high and low sales prices for the Company's Common Stock, as reported on the
New York Stock Exchange composite tape from January 1, 1998 through December 31,
1999, and the dividends declared per share during the periods indicated.

<TABLE>
<CAPTION>
      CALENDAR                   PRICE RANGE            DIVIDENDS
                          ------------------------
        YEAR                HIGH            LOW         DECLARED
---------------------     --------       ---------     ----------
<S>                       <C>            <C>           <C>
1998
----
  FIRST QUARTER           $ 18  1/2      $ 14  1/4       $   0.05
  SECOND QUARTER          $ 20           $ 15  1/2       $   0.05
  THIRD QUARTER           $ 18  5/8      $ 10  1/4       $   0.05
  FOURTH QUARTER          $ 15 13/16     $ 12  3/16      $   0.06

1999
----
  FIRST QUARTER           $ 15  7/8      $ 10 13/16      $   0.06
  SECOND QUARTER          $ 18           $ 12  7/8       $   0.06
  THIRD QUARTER           $ 17  7/8      $ 14  7/16      $   0.06
  FOURTH QUARTER          $ 15  1/16     $ 10  1/4       $   0.06
</TABLE>

Dividends as may be determined by the Board of Directors may be declared and
paid on the Common Stock from time to time out of legally available funds. The
Company's Second Amended and Restated Credit Agreement contains limitations on
the Company's ability to declare and pay dividends in cash or property; however,
if there is no default under this agreement, then the Company is permitted to
make cash dividend payments in an aggregate amount of up to $6,000,000 in 1999
and 2000, and $8,000,000 in each year thereafter. See ITEM 7. "MANAGEMENT'S
                                                      ------
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS."

No assurances can be given as to future levels of dividends, if any, which may
be declared and paid. The Company intends to continue paying dividends on its
Common Stock, although future dividend declarations are at the discretion of the
Company's Board of Directors and will be based upon the Company's level of
earnings, cash flow, financial requirements, and economic and business
conditions then prevailing, as well as other relevant factors, including the
restrictions contained in the Company's long-term debt instruments.

On March 1, 2000, the outstanding shares of Common Stock were held of record by
455 stockholders.

During the fourth quarter of 1999, the Company made no unregistered sales of its
equity securities.

                                       25
<PAGE>

ITEM 6.  SELECTED FINANCIAL DATA
-------

(In thousands, except per share data)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------
                                                            For the Year Ended December 31,
                                               ---------------------------------------------------------
                                                  1999        1998       1997        1996       1995
                                               ---------------------------------------------------------
<S>                                              <C>        <C>         <C>        <C>         <C>
Revenues                                         $ 764,831  $ 562,093   $ 337,377  $ 210,871   $ 141,167
Earnings before extraordinary item               $  20,796  $  19,590   $  14,127  $   6,720   $  12,470
Earnings per common share before
   extraordinary item:
      Basic                                      $    1.26  $    1.18   $    1.08  $    0.57   $    1.08
      Diluted                                    $    1.26  $    1.17   $    1.06  $    0.55   $    1.05
Total assets                                     $ 543,637  $ 456,558   $ 332,536  $ 164,707   $ 139,877
Long-term debt (excluding current maturities)    $ 214,993  $ 168,700   $ 109,194  $  48,202   $  29,754
Dividends declared per common share              $   0.240  $   0.210   $   0.200  $   0.200   $   0.105
--------------------------------------------------------------------------------------------------------
</TABLE>

The Company's results of operations and financial position have been affected by
acquisitions of existing facilities and companies during the periods presented.
See NOTE B-- "ACQUISITIONS" of Notes to Consolidated Financial Statements. See
also ITEM 7. "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
     -------
RESULTS OF OPERATIONS."


ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
-------
         OF OPERATIONS

GENERAL

Most of the Company's processing consists of aluminum and magnesium tolled for
its customers. Tolling revenues reflect only the processing cost and the
Company's profit margin. The Company's processing activities also consist of the
processing, recovery and specialty alloying of aluminum and zinc metal and the
production of other value-added zinc products for sale by the Company. The
revenues from these sales transactions include the cost of the metal, as well as
the processing cost and the Company's profit margin. Accordingly, tolling
business produces lower revenues and costs of sales than does the product sales
business. Variations in the mix between these two types of transactions could
cause revenue amounts to change significantly from period to period while not
significantly affecting gross profit. As a result, the Company considers
processing volume to be a more important determinant of performance than
revenues.

The facilities recently acquired by the Company (see "ACQUISITIONS" below) are
primarily engaged in product sales activities as opposed to tolling; therefore,
the Company has experienced higher levels of product sales relative to tolling
in 1999 than in prior periods. This higher level of sales has also increased the
Company's working capital requirements and, as a result, will subject the
Company to the additional risks associated with price fluctuations in the zinc
and aluminum commodity markets.

                                       26
<PAGE>

During the 1990's, aluminum inventories on the worldwide commodity exchanges
fluctuated from severe excesses to relatively balanced positions. In times of
excess, aluminum prices declined, negatively impacting the profitability of the
Company's product sales business and the profitability of the major aluminum
producers who are some of the Company's largest customers. Environments of low
profitability for the Company's customers have inhibited, during those times,
the Company's ability to pass cost increases through to its customers. It is not
possible to predict the future price of aluminum or zinc, or the level of
worldwide inventories of these metals and whether, or to what extent, such
factors will affect the Company's future business.

The following table shows total pounds processed, the percentage of total pounds
processed represented by tolled metals, total revenues and total gross profits
(in thousands, except percentages):

<TABLE>
<CAPTION>
                                          For the Year Ended December 31,
                                  ----------------------------------------------
                                     1999              1998            1997
                                  ----------------------------------------------
<S>                               <C>              <C>             <C>
Pounds processed                   2,832,969        2,516,752       1,988,796
Percent of pounds tolled                  61%              68%             82%
Revenues                          $  764,831       $  562,093      $  337,377
Gross Profits                     $   70,638       $   58,891      $   47,320
</TABLE>

In addition to its increased emphasis on the product sales business, the Company
also entered into an increasing amount of metal brokerage transactions each year
pursuant to which the Company buys metal from primary and other producers and
then sells the metal to end-users. These transactions involve buying and selling
metal without ever processing it. Additionally, in order to facilitate acquiring
metal for its production process, the Company occasionally enters into metal
"swap" transactions whereby the Company agrees to exchange its recycled finished
goods for scrap raw materials. As with the product sales business, the brokerage
business also increases the Company's working capital requirements and subjects
the Company to greater price risk associated with fluctuations in the metals
commodity markets. See ITEM 7A. "QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
                       --------
MARKET RISK."

                                       27
<PAGE>

The following table sets forth, for the periods indicated, aluminum and zinc
segment information for pounds processed, revenues, income and assets (in
thousands, except percentages):

<TABLE>
<CAPTION>
                                                               For the Year Ended December 31,
                                                          -------------------------------------------
                                                             1999            1998             1997
                                                          ----------      ----------       ----------
<S>                                                       <C>             <C>              <C>
Pounds Processed:
   Aluminum                                                2,575,284       2,375,200        1,951,432
   Zinc                                                      257,685         141,552           37,364
                                                          ----------      ----------       ----------
Total Pounds Processed                                     2,832,969       2,516,752        1,988,796

Percentage Tolled:
   Aluminum                                                       66%             71%              83%
   Zinc                                                            5%             15%              50%
Total Percentage Tolled                                           61%             68%              82%

Revenues:
   Aluminum revenues from external customers              $  568,327      $  470,722       $  324,598
   Zinc revenues from external customers                     196,504          91,371           12,779
                                                          ----------      ----------       ----------
Consolidated revenues                                     $  764,831      $  562,093       $  337,377
                                                          ==========      ==========       ==========

Income:
   Aluminum income                                        $   52,974      $   52,897       $   43,411
   Zinc income                                                12,788           4,218            1,127
   Unallocated general and administrative expenses           (21,775)        (17,360)         (14,114)
   Unallocated interest expense                              (12,478)         (9,197)          (7,331)
   Unallocated interest and other income                         795             585              413
                                                          ----------      ----------       ----------
Net earnings before provision for income taxes,
   minority interests and extraordinary item              $   32,304      $   31,143       $   23,506
                                                          ==========      ==========       ==========

Assets:
   Aluminum                                               $  415,614      $  328,891       $  314,377
   Zinc                                                      109,377         109,398            9,235
   Other unallocated assets                                   18,646          18,269            8,924
                                                          ----------      ----------       ----------
Consolidated assets                                       $  543,637      $  456,558       $  332,536
                                                          ==========      ==========       ==========
</TABLE>

The accounting policies of the reportable segments are the same as those
described in NOTE A--"SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES" of Notes to
Consolidated Financial Statements. The Company evaluates performance based on
gross profit or loss from operations, net of selling expenses. Provision for
income taxes, interest, corporate general and administrative costs, including
depreciation of corporate assets and amortization of capitalized debt costs, are
not allocated to the reportable segments. Intersegment sales and transfers are
recorded at market value; net profits on intersegment sales and transfers were
immaterial for the periods presented. Consolidated cash, net capitalized debt
costs, net current deferred tax assets

                                       28
<PAGE>

and assets located at the Company's headquarters office in Irving, Texas are not
allocated to the reportable segments. Also, see NOTE L--"SEGMENT INFORMATION" of
Notes to Consolidated Financial Statements for additional segment disclosures.

ACQUISITIONS

In July 1998, the Company completed the acquisition of U.S. Zinc for an
aggregate purchase price of approximately $72,000,000.

In February 1999, the Company acquired substantially all of the assets of an
aluminum alloying facility located in Shelbyville, Tennessee from Alcan Aluminum
Corporation for approximately $11,000,000 in cash (not including acquisition
costs). Also in February 1999, the Company acquired, through its wholly owned
subsidiary, Midwest Zinc Corporation, substantially all of the assets of a zinc
oxide production facility located in Clarksville, Tennessee from North American
Oxide, LLC for approximately $11,000,000 in cash (not including acquisition
costs). Both acquisitions were accounted for using the purchase method of
accounting, and their results of operations are included herein since their
dates of acquisition.

RESULTS OF OPERATIONS

Fiscal Year 1999 vs. Fiscal Year 1998
-------------------------------------

PRODUCTION. During 1999, the Company melted 2.83 billion pounds, 13% more metal
-----------
compared to 2.52 billion pounds in 1998. The aluminum and zinc segments
accounted for 63% and 37%, respectively, of the overall production increase for
1999. Tolling activity in 1999 represented 61% of total pounds processed
compared to 68% in 1998. The Company currently believes the percentage of
tolling business in 1999 will more accurately reflect the levels which can be
expected in future periods.

The following table shows the total pounds processed and the percentage tolled
for the aluminum and zinc segments (in thousands, except percentages):

<TABLE>
<CAPTION>
                                               For the year ended
                                                   December 31,
                                            -------------------------
                                              1999            1998
                                            ---------       ---------
<S>                                         <C>             <C>
Pounds Processed:
    Aluminum                                2,575,284       2,375,200
    Zinc                                      257,685         141,552
                                            ---------       ---------
Total Pounds Processed                      2,832,969       2,516,752
                                            =========       =========

Percentage Tolled:
    Aluminum                                       66%             71%
    Zinc                                            5%             15%
Total Percentage Tolled                            61%             68%
</TABLE>

ALUMINUM PRODUCTION: During 1999, the Company melted 8% more aluminum than it
did during 1998. The increase in aluminum production for the year was primarily
due to the

                                       29
<PAGE>

following: (1) a significant increase in production at the Company's Morgantown,
Kentucky facility (which was expanded late in the third quarter of 1998), (2)
processing from the Shelbyville, Tennessee facility (acquired in February 1999),
(3) higher production at the Swansea, Wales facility (which is now operating
near its capacity after beginning processing in late 1997) and (4) increases in
production at the Post Falls, Idaho and Wendover, Utah facilities due to an
increase in scrap supply. These increases in aluminum production were partially
offset by lower volumes at the Rockwood and Loudon, Tennessee facilities due to
a lack of supply of material for recycling from a large tolling customer. The
decrease in aluminum percentage tolled is primarily due to the acquisition of
the Shelbyville, Tennessee facility, the production of which is dedicated
primarily for product sales serving the transportation market.

ZINC PRODUCTION: During 1999, the Company melted 82% more zinc than it did
during 1998. The February 1999 acquisition of the Clarksville, Tennessee
facility and a full year of processing from U.S. Zinc, which was acquired in
July 1998, accounted for virtually all of the increase in zinc production. The
decrease in zinc percentage tolled is primarily due to these acquisitions which
are virtually 100% involved in product sales.

REVENUES. During 1999, the Company's consolidated revenues increased 36% to
--------
$764,831,000 compared to revenues of $562,093,000 in 1998. The aluminum and zinc
segments accounted for 48% and 52%, respectively, of the overall increase of
revenues.

Increased product sales relative to tolling transactions expose the Company to a
greater degree of market risk because of fluctuations in the price of scrap
metal which the Company must buy as raw material, and fluctuations in the
then-prevailing aluminum and zinc market prices at which the Company sells the
resulting processed metal. The Company's aluminum specialty alloying activities,
which serve the transportation market, and the Company's zinc segment primarily
consist of product sales business. Tolling activity represented 61% of the
Company's total pounds melted during 1999 as compared to 68% in 1998. Due to the
reasons discussed above, the increase in product sales activity in 1999 compared
to 1998 resulted in higher inventory, accounts receivable and accounts payable
levels at December 31, 1999 compared to December 31, 1998.

The following table shows the total revenues for the aluminum and zinc segments
(in thousands):

<TABLE>
<CAPTION>
                            For the year ended
                               December 31,
                         -------------------------
                            1999            1998
                         ---------       ---------
<S>                      <C>             <C>
Revenues:
    Aluminum             $ 568,327       $ 470,722
    Zinc                   196,504          91,371
                         ---------       ---------
Total Revenues           $ 764,831       $ 562,093
                         =========       =========
</TABLE>

ALUMINUM REVENUES: During 1999, the Company's aluminum revenues increased 21%
compared to 1998. Aluminum revenues increased due to the combination of (1)
higher aluminum product sale prices, (2) higher aluminum production volumes as a
result of facility expansions and the Shelbyville, Tennessee acquisition and (3)
a decrease in the proportion of

                                       30
<PAGE>

volumes from tolling versus product sales (see "ALUMINUM PRODUCTION" above). As
discussed earlier, increased product sales generally result in a greater
increase in revenues than a similar increase in tolling business.

ZINC REVENUES: During 1999, the Company's zinc revenues increased 115% compared
to 1998. Zinc revenues increased primarily due to the combination of higher zinc
production volumes, as a result of the 1998 and 1999 acquisitions (see "ZINC
PRODUCTION" above), and higher zinc product sale prices.

GROSS PROFITS. During 1999, the Company's consolidated gross profits increased
-------------
20% to $70,638,000 compared to gross profits of $58,891,000 in 1998. The
aluminum and zinc segments accounted for 12% and 88%, respectively, of the
overall increase of segment income.

The following table shows the total income for the aluminum and zinc segments
and a reconciliation of segment income to the Company's consolidated gross
profits (in thousands):

<TABLE>
<CAPTION>
                                             For the year ended
                                                December 31,
                                          -----------------------
                                            1999           1998
                                          --------       --------
<S>                                       <C>            <C>
Segment Income:
    Aluminum                              $ 52,974       $ 52,897
    Zinc                                    12,788          4,218
                                          --------       --------
Total segment income                        65,762         57,115

Items not included in gross profits:
    Plant selling expense                    2,168            867
    Management SG&A costs                    5,613          3,050
    Equity in earnings of affiliates        (2,265)        (1,750)
    Other income                              (640)          (391)
                                          --------       --------
Gross Profits                             $ 70,638       $ 58,891
                                          ========       ========
</TABLE>

ALUMINUM INCOME: During 1999, the Company's aluminum income increased 2%
compared to 1998. The increase was primarily due to higher overall aluminum
production volumes (see "ALUMINUM PRODUCTION" above). This increase in
production was partially offset by lower operating rates at certain facilities
(those principally serving the packaging market) and by narrowing spreads
between primary aluminum prices and certain scrap aluminum prices which
negatively affected the aluminum product sales.

ZINC INCOME: During 1999, the Company's zinc income increased 181% compared to
1998. The increase was primarily due to a full year's operation of U.S. Zinc,
which led to higher overall zinc production volumes (see "ZINC PRODUCTION"
above). In addition, the relative increase in zinc income was greater than the
increase in zinc processing volumes due to higher zinc product sale prices and
benefits from integrating the Company's previously owned zinc business with the
acquired U.S. Zinc and Clarksville, Tennessee facilities.

                                       31
<PAGE>

SG&A EXPENSES. Selling, general and administrative expenses in 1999 increased
-------------
41% to $24,924,000 compared to $17,714,000 in 1998. The increase is primarily
due to more production facilities and higher employee costs attributable to the
acquisitions of the U.S. Zinc and the Shelbyville and Clarksville, Tennessee
facilities, and the development and installation of a new management information
system. In addition, selling expenses will be higher as product sales increase
because more marketing effort is required with this activity compared to
tolling.

AMORTIZATION EXPENSE. Amortization expense in 1999 increased 24% to $4,653,000
--------------------
compared to $3,748,000 in 1998. The increase is due almost entirely to
amortization of goodwill recorded as a result of the Shelbyville and
Clarksville, Tennessee acquisitions (see "ACQUISITIONS" above) and from a full
year's amortization of U.S. Zinc, which was acquired in July 1998.

INTEREST EXPENSE. Interest expense in 1999 increased 36% to $12,478,000 compared
----------------
to $9,197,000 in 1998. The increase is the result of increased interest rates
and higher amounts of debt outstanding in 1999 compared to 1998, primarily
resulting from the 1998 and 1999 acquisitions (see "LIQUIDITY AND CAPITAL
RESOURCES" below).

NET EARNINGS. Net earnings increased 6% to $20,796,000 in 1999 compared to
------------
$19,590,000 in 1998. The increase was primarily the result of improved
performance by the zinc segment as well as increased processing volume provided
by new plant construction, expansions and acquisitions completed in 1998 and
1999. Partially offsetting the volume increase was an increase in interest
expense, amortization expense and selling, general and administration expense
due to a higher level of borrowing, the effects of recent acquisitions and the
operation of more production facilities. The Company recorded a slight decrease
in its effective tax rate from 36% in 1998 to 35% in 1999 primarily due to
foreign earnings that are considered permanently reinvested.

Fiscal Year 1998 vs. Fiscal Year 1997
-------------------------------------

PRODUCTION. During 1998, the pounds of metal processed by the Company increased
----------
27% to 2.52 billion pounds compared to 2.0 billion pounds processed in 1997.
Aluminum processing at the Company's newest plants in Coldwater, Michigan (which
began production in the first quarter of 1997) and Swansea, Wales (which began
production in the fourth quarter of 1997) and the acquisitions of the Alchem
Aluminum, Inc. aluminum alloying facility (which was acquired in November 1997)
and U.S. Zinc facilities (which were acquired in July 1998) accounted for 74% of
the increase in production for 1998. The increase in production was partially
offset by lower production at the Bedford, Indiana facility due to a
reconfiguration of the furnaces and a work force reorganization at that
facility. In addition, the Company's June and July 1998 production was
negatively impacted by a strike at several of the facilities of GM, a customer
of the Company.

                                       32
<PAGE>

Production by segment is as follows (in thousands):

<TABLE>
<CAPTION>
                                             For the year ended
                                                December 31,
                                        ------------------------------
                                            1998            1997
                                        --------------  --------------
<S>                                     <C>             <C>
Pounds Processed:
    Aluminum                                2,375,200       1,951,432
    Zinc                                      141,552          37,364
                                        --------------  --------------
Total Pounds Processed                      2,516,752       1,988,796
                                        ==============  ==============
</TABLE>

Aluminum processing at the Company's newest plants in Coldwater, Michigan,
Swansea, Wales and the Alchem facility accounted for 68% of the increase in
production for the aluminum segment. Zinc processing at the Company's U.S. Zinc
facilities accounted for 96% of the increase in production for the zinc segment.

REVENUES. During 1998, revenues increased 67% to $562,093,000 compared to
---------
revenues of $337,377,000 in 1997. The acquisitions of Alchem and U.S. Zinc and
operations at the new Coldwater, Michigan and Swansea, Wales plants principally
accounted for this increase; however, this increase was partially offset by
lower aluminum selling prices prevailing during 1998. The percentage increase in
revenues was greater than the relative increase in volumes processed due to
higher levels of product sales business during 1998 as compared to 1997. The
product sales business increased to 32% of total processing for 1998 compared to
18% for 1997. As discussed above, an increase in product sales business
generally results in a much higher increase in revenue than would be generated
by a similar increase in tolling business. The increased levels of product sales
business were principally attributable to the acquisitions of Alchem and U.S.
Zinc. Prior to November 1997, materials processed for Alchem at the Company's
Coldwater, Michigan facility were classified as tolling business, but because
the Company acquired Alchem in November 1997, these pounds are now classified as
product sales business. The increase in product sales activity in 1998 also
resulted in higher inventory, accounts receivable and accounts payable levels.

Sales at the Company's plants in Coldwater, Michigan, Swansea, Wales and the
Alchem facility accounted for 114% of the increase in revenues for the aluminum
segment, which was partially offset by a decrease in aluminum selling prices.
Sales from the Company's U.S. Zinc facilities acquired in 1998 accounted for
virtually all of the increase in revenues for the zinc segment.

GROSS PROFITS. During 1998, gross profits increased 25% to $58,891,000 compared
--------------
to gross profits of $47,320,000 in 1997. The acquisitions of Alchem and U.S.
Zinc and operations at the new Coldwater, Michigan plant accounted for virtually
all of the increase in total gross profits and virtually all of the increase in
profits by each segment. However, falling aluminum and zinc selling prices
reduced the gross margin per pound of metal sold.

SG&A EXPENSES.  During 1998, selling, general and administrative costs increased
--------------
22% to $17,714,000 compared to $14,497,000 in 1997. This increase was due
principally to higher employee and selling expenses, principally associated with
the acquisitions of Alchem and U.S. Zinc.

                                       33
<PAGE>

AMORTIZATION EXPENSE. Amortization expense in 1998 increased 49% to $3,748,000
---------------------
compared to $2,520,000 in 1997. The increase is due almost entirely to
amortization of additional goodwill recorded as a result of the U.S. Zinc
acquisition (see "ACQUISITIONS" above) and the Alchem acquisition in November
1997.

INTEREST. During 1998, interest expense increased 25% to $9,197,000 compared to
---------
interest expense of $7,331,000 in 1997. The increase in interest expense was
primarily related to higher levels of borrowings outstanding to fund the cash
portion of the U.S. Zinc acquisition ($46,500,000) and to repay $16,000,000 of
U.S. Zinc's outstanding debt.

EXTRAORDINARY ITEM. In connection with the Company's acquisitions made in
-------------------
January 1997, the Company borrowed funds under a new long-term credit facility.
A portion of the funds borrowed under this credit facility was used to retire
substantially all of the Company's then-outstanding indebtedness prior to its
stated maturity. This early debt retirement generated an extraordinary loss of
$1,318,000 (net of income tax benefit of $878,000) for the first quarter of
1997. There was no extraordinary item in 1998.

NET EARNINGS. During 1998, the Company's earnings before provision for income
-------------
taxes, minority interests and extraordinary item increased 32% to $31,143,000
compared to $23,506,000 in 1997. The increase was primarily the result of higher
gross profits, due mainly to the Alchem and U.S. Zinc acquisitions, which were
in turn partially offset by the increases in selling, general and administrative
expenses and interest expense (also attributable to these and other recent
acquisitions). The Company's higher earnings before income taxes caused the tax
provision to increase to $11,275,000 in 1998, compared to $9,086,000 in 1997.
The effective tax rate was approximately 36% in 1998 compared to 39% in 1997
primarily due to lower state taxes provided during 1998. During 1998, net
earnings increased 53% to $19,590,000, compared to $12,809,000 in 1997.

LIQUIDITY AND CAPITAL RESOURCES

The Company has historically financed its operations and capital expenditures
from internally generated cash and its working capital credit facilities and has
financed its acquisitions and capacity expansions from a combination of funds
from long-term borrowings and stock issuances.

CASH FLOWS FROM OPERATIONS. During 1999, operations provided cash of $18,233,000
---------------------------
compared to $53,198,000 in 1998. Changes in operating assets and liabilities
utilized $33,075,000 in cash during 1999 compared to providing $11,386,000 in
cash during 1998. The change in net operating assets and liabilities resulting
in a net usage of cash was primarily due to the increase in revenues in 1999, as
discussed above, and the increase in the percentage of product sales compared to
tolling transactions, which resulted in increases in receivables and
inventories. The 1999 acquired businesses are primarily engaged in the product
sales business. This change in net operating assets and liabilities was
partially offset by higher net earnings in 1999 of $20,796,000 compared to
$19,590,000 for 1998, higher depreciation and amortization of $27,038,000
compared to $22,828,000 in 1998, and a provision for deferred income taxes of
$3,369,000 compared to a benefit of $674,000 in 1998. As of December 31, 1999,
the relationship of current assets to current liabilities, or current ratio,
increased to 1.98, compared to 1.93 as of December 31, 1998.

                                       34
<PAGE>

CASH FLOWS FROM INVESTING ACTIVITIES. During 1999, net cash used by investing
-------------------------------------
activities was $54,139,000 compared to $93,873,000 in 1998. During the first
quarter of 1999, the Company spent approximately $21,600,000 (net of cash
acquired) on the acquisitions of the Shelbyville and Clarksville, Tennessee
facilities. During the third quarter of 1998, the Company spent approximately
$59,500,000 (net of cash acquired) on the acquisition of the U.S. Zinc business
(see "ACQUISITIONS" above). In addition, the Company's total payments for
property, plant and equipment in 1999 decreased to $30,856,000 compared to
$35,199,000 spent in 1998. Major 1999 projects included the acquisition of
software, development and first phase implementation of an Enterprise Resource
Planning (ERP) system, installation of new furnaces at the Uhrichsville, Ohio
facility and the initial construction of a new aluminum alloying facility near
Saginaw, Michigan. The Company expects that capital expenditures for property,
plant and equipment in 2000 will total approximately $44,000,000.  Major 2000
projects include the construction of the new aluminum alloying facility near
Saginaw, Michigan, continued implementation of the ERP system, the replacement
of furnaces at two zinc facilities and environmental upgrades.

CASH FLOWS FROM FINANCING ACTIVITIES. Net cash provided by financing activities
-------------------------------------
was $32,405,000 for 1999, compared to $46,326,000 for 1998. In 1999, the Company
borrowed $44,377,000 under its revolving credit facility, a significant portion
of which was used in the acquisitions of the Shelbyville and Clarksville,
Tennessee facilities (see "ACQUISITIONS" above), and the remainder was used to
finance additional working capital requirements. In 1998 the Company had net
borrowings of $55,775,000 under its long-term revolving credit facility, the
majority of which was used to fund the cash portion of the acquisition of U.S.
Zinc and to repay a portion of U.S. Zinc's outstanding indebtedness under its
working capital line of credit facility. At December 31, 1999, the Company had
$200,000,000 in indebtedness outstanding under its long-term revolving credit
facility and had approximately $48,631,000 available for borrowing. In addition,
there were standby letters of credit outstanding with several banks totaling
$2,415,000. As of March 10, 2000, the Company had borrowed an additional
$35,000,000 under the credit facility, leaving $13,631,000 available for
additional borrowings. While the Company believes it has sufficient sources to
fund its current needs, securing additional financing sources or increasing its
revolving credit facility (see Credit Facilities below) may be necessary to
maintain its recent rate of growth. Management is currently reviewing
alternative sources of funding for these activities.

Financing activities also included cash payments of $3,931,000 in dividends for
1999 compared to $3,503,000 for 1998.

Equity Purchases and Sales. In September 1998, the Company's Board of Directors
---------------------------
authorized an aggregate maximum amount of $15,000,000 to be expended for the
repurchase of its common stock in open market or privately-negotiated
transactions, resulting in the repurchase of 488,900 shares in 1998. During
1999, the Company repurchased 576,500 shares at an aggregate purchase price of
$7,080,000. In January 2000, the Company's Board of Directors authorized an
increase in the aggregate maximum amount to be expended by the Company under its
share repurchase program, to $35,000,000. Determinations to purchase Company
common stock will be made from time to time, subject to prevailing market
conditions. Shares repurchased are to be held as treasury shares to be used for
the Company's stock option and other equity plans and for general corporate
purposes.

Credit Facilities. On October 25, 1999, the Company amended and restated the
------------------
terms of its long-term credit facility with its lenders. The Second Amended and
Restated Credit Agreement provides for a credit facility of up to $250,000,000.
The Company has the option to request

                                       35
<PAGE>

increases to the revolving credit commitment of up to $50,000,000 in the
aggregate, and these additional commitments could increase the revolving credit
facility to $300,000,000. The credit agreement allows the Company to issue up to
$125,000,000 in convertible subordinated debt, subject to certain terms and
conditions. The Company has no current plans, but reserves the right in the
future, to issue convertible subordinate debt. In addition, up to $12,000,000
available under the amended credit facility may be used by the Company for
letters of credit. The entire balance of debt outstanding under the amended
credit facility will mature in December 2003. Indebtedness under the amended
credit facility bears interest, at the Company's option, at fluctuating interest
rates based upon an alternate base rate (which may be the prime rate), or a rate
based upon the applicable LIBOR rate plus a credit margin which is based upon
the Company's ratio of total debt to total capitalization. In addition, the
Company must pay a commitment fee for unborrowed amounts available under the
revolving credit facility at a rate based upon the Company's ratio of debt to
total capitalization.

The Second Amended and Restated Credit Agreement imposes certain restrictions on
the Company, including: (i) a prohibition against incurring certain additional
indebtedness, (ii) maintenance of certain financial ratios, (iii) limitations on
dividends on and repurchases of shares of capital stock, and (iv) limitations on
capital expenditures, investments and acquisitions, except for mergers,
consolidations and acquisitions in any fiscal year having an aggregate
consideration of up to $75,000,000. The annual limitations for cash dividends on
capital stock are as follows: $6,000,000 per year for 1999 and 2000, and
$8,000,000 for each year after 2000. The credit agreement authorizes repurchases
of the Company's common stock not to exceed an aggregate purchase price of
$35,000,000. The indebtedness under the amended credit facility is secured by
substantially all of the Company's personal property (including inventories,
accounts receivable and equipment) and a first lien mortgage on certain real
property at seven of the Company's operating plants, as well as a pledge of the
capital stock of substantially all of the Company's subsidiaries.

While the Company believes that its cash on hand, the availability of funds
under its credit facility and its anticipated internally generated funds will be
sufficient to fund its current needs, including its expected capital spending
plans, additional financing may be necessary for the Company to continue its
recent growth rate. The Company has experienced and expects to continue to
experience substantial capital funding requirements for its new facilities,
potential acquisitions and capital and environmental improvement programs.

IMPACT OF RECENTLY ISSUED FINANCIAL ACCOUNTING STANDARDS

In July 1999, the Financial Accounting Standards Board delayed the effective
date of Statement No. 133, "Accounting for Derivative Instruments and Hedging
Activities," for one year to fiscal years beginning after June 15, 2000. The
Company plans to adopt the statement effective January 1, 2001. The Company has
evaluated the impact of Statement No. 133 and believes the impact will not have
a material adverse effect upon the Company's future operating results.

IMPACT OF YEAR 2000

In prior years, the Company implemented a comprehensive plan to address
potential Year 2000 compliance problems. In late 1999, the Company completed its
remediation and testing of systems. As a result of those efforts, the Company
experienced no significant disruptions in mission critical information
technology and non-information technology systems and believes those systems
successfully responded to the Year 2000 date change. The Company's Year 2000

                                       36
<PAGE>

project expenditures were immaterial during 1999 and prior years. The Company is
not aware of any material problems resulting from Year 2000 issues, either with
its products, its internal systems, or the products and services of third
parties. The Company will continue to monitor its critical computer applications
and those of its third parties throughout the year 2000 to ensure that any
latent Year 2000 matters that may arise are addressed promptly.

ENVIRONMENTAL

The Company's operations, like those of other basic industries, are subject to
federal, state, local and foreign laws, regulations and ordinances. These laws
and regulations (1) govern activities or operations that may have adverse
environmental effects, such as discharges to air and water, as well as handling
and disposal practices for solid and hazardous wastes and (2) impose liability
for costs of cleaning up, and certain damages resulting from past spills,
disposals or other releases of hazardous substances. It can be anticipated that
more rigorous environmental laws will be enacted that could require the Company
to make substantial expenditures in addition to those described in this Form
10-K.

From time to time, operations of the Company have resulted, or may result, in
certain noncompliance with applicable requirements under such environmental
laws. However, the Company believes that any such noncompliance under such
environmental laws would not have a material adverse effect on the Company's
financial position or results of operations.

In 1997, the Illinois Environmental Protection Agency ("IEPA") notified the
Company that two of the Company's zinc subsidiaries are potentially responsible
parties ("PRP") pursuant to the Illinois Environmental Protection Act for the
cleanup of contamination at a site in Marion County, Illinois to which these
subsidiaries, among others, in the past sent zinc oxide for processing and
resale. These subsidiaries have joined a group of PRPs that is planning to
negotiate with the IEPA regarding the cleanup of the site. Although the site has
not been fully investigated and final cleanup costs have not yet been
determined, based on current cost estimates and information regarding the amount
and type of materials sent to the site by the subsidiaries, the Company does not
believe, while there can be no assurance, that its liability at this site will
have a material adverse effect on its financial position or results of
operations. Also, see NOTE K--"OPERATIONS" of Notes to Consolidated Financial
Statements.

CONVERSION TO THE EURO CURRENCY

On January 1, 1999, certain members of the European Union established fixed
conversion rates between their existing currencies and the European Union's
common currency (the "euro"). The Company conducts business through a joint
venture in one European Union country. The transition period for the
introduction of the euro is between January 1, 1999 and June 30, 2002. The
Company is addressing the issues involved with the introduction of the euro. The
more important issues facing the Company include: converting information
technology systems, reassessing currency risk, and processing tax and accounting
records.

Based on progress to date, the Company believes that use of the euro will not
have a significant impact on the manner in which it conducts its business
affairs and processes its business and accounting records. Accordingly,
conversion to the euro is not expected to have a material adverse effect on the
Company's financial condition or results of operations.

                                       37
<PAGE>

CAUTIONARY STATEMENT FOR PURPOSES OF FORWARD-LOOKING STATEMENTS

Certain information contained in ITEM 1. "BUSINESS;" ITEM 3. "LEGAL PROCEEDINGS"
                                 -------             -------
and ITEM 7. "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
    -------
RESULTS OF OPERATIONS" (as well as certain oral statements made by or on behalf
of the Company) may be deemed to be forward-looking statements within the
meaning of The Private Securities Litigation Reform Act of 1995 and are subject
to the "Safe Harbor" provisions in that enacted legislation. This information
includes, without limitation, statements concerning future capacity, volumes,
revenues, earnings, costs, margins and expenses; the ability of the Company to
be able to continue to grow its domestic and foreign business through expansion,
acquisition or partnering; the expected effects of strikes, work stoppages or
production shutdowns at Company or customer facilities; future acquisitions or
corporate combinations; expected effects of recent acquisitions; future prices
for metals; projected completion dates and anticipated technological advances;
future (or extensions of existing) long-term supply contracts with its
customers; anticipated environmental control measures; the outcome of and any
liabilities resulting from any claims, investigations or proceedings against the
Company or its subsidiaries; access to adequate energy supplies at commercial
rates; future levels of dividends (if any); potential affects of the Company's
metals brokerage activities; the future mix of business (product sales vs.
tolling); future costs and asset recoveries; future operations, demand and
industry conditions; future capital expenditures and future financial condition.
When used in or incorporated by reference into this Annual Report on Form 10-K,
the words "anticipate," "estimate," "expect," "may," "project" and similar
expressions are intended to be among the statements that identify
forward-looking statements.

These forward-looking statements are based on current expectations and involve a
number of risks and uncertainties. Although the Company believes that the
expectations reflected in such forward-looking statements are reasonable, it can
give no assurance that such expectations will prove to be correct. Important
factors that could affect the Company's actual results and cause actual results
to differ materially from those results that might be projected, forecasted,
estimated or budgeted by the Company in these forward-looking statements
include, but are not limited to, the following: fluctuations in operating levels
at the Company's facilities, the mix of product sales business as opposed to
tolling business, retention and financial condition of major customers, effects
of future costs, collectibility of receivables, the inherent unpredictability of
adversarial or administrative proceedings, effects of environmental and other
governmental regulations, currency exchange rate fluctuations, trends in the
Company's key markets, the price of and supply and demand for aluminum and zinc
(and their derivatives) on world markets, the effects of shortages in used
aluminum beverage containers and can scrap at facilities, any continuation of
reduced spreads between primary aluminum prices and aluminum scrap prices,
business conditions and growth in the aluminum and zinc industries and recycling
industries, and future levels and timing of capital expenditures.

These statements are further qualified by the following:

* Any estimates of future operating rates at the Company's plants are based on
  current expectations by management of the Company of future levels of volumes
  and prices for the Company's services or metal, and are subject to
  fluctuations in customer demand for the Company's services and prevailing
  conditions in the metal markets, as well as certain components of the
  Company's cost of operations, including energy and labor costs.

                                       38
<PAGE>

  Many of the factors affecting revenues and costs are outside of the control of
  the Company, including weather conditions, general economic and financial
  market conditions; work stoppages, maintenance programs and other production
  shutdowns at customer facilities; and governmental regulation and factors
  involved in administrative and other proceedings. The future mix of product
  sales vs. tolling business is dependent on customers' needs and overall
  demand, world and U.S. market conditions then prevailing in the respective
  metal markets, and the operating levels at the Company's various facilities at
  the relevant time.

* The price of primary aluminum, zinc and other metals is subject to worldwide
  market forces of supply and demand and other influences. Prices can be
  volatile, which could affect the Company's product sales business. The
  Company's use of contractual arrangements, including long-term agreements and
  forward contracts, may reduce the Company's exposure to this volatility but
  does not eliminate it. Lower market prices for primary metals may adversely
  affect the demand for the Company's recycling services and recycled metals.

* The markets for most aluminum and zinc products are highly competitive. The
  major primary aluminum producers are larger than the Company in terms of total
  assets and operations and have greater financial resources. In addition,
  aluminum competes with other materials such as steel, vinyl, plastics and
  glass, among others, for various applications in the Company's key markets.
  Unanticipated actions or developments by or affecting the Company's
  competitors and/or willingness of customers to accept substitutions for
  aluminum products could affect the Company's financial position and results of
  operations.

* Fluctuations in the costs of fuels, raw materials and labor can affect the
  Company's financial position and results of operations.

* The Company's key transportation market is cyclical, and sales within that
  market in particular can be influenced by economic conditions. Strikes and
  work stoppages by automotive customers of the Company may have a material
  adverse effect on the Company's financial condition and results of operations.

* The Company spends substantial capital and operating sums on an ongoing basis
  to comply with environmental laws. In addition, the Company is involved in
  certain investigations and actions in connection with environmental compliance
  and past disposals of solid waste. Estimating future environmental compliance
  and remediation costs is imprecise due to the continuing evolution of
  environmental laws and regulatory requirements and uncertainties about their
  application to the Company's operations, the availability and applicability of
  technology and the allocation of costs among principally responsible parties.
  Unanticipated material legal proceedings or investigations could affect the
  Company's financial position and results of operations.

                                       39
<PAGE>

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
--------

In the ordinary course of business, the Company is exposed to potential losses
arising from changes in the price of aluminum, zinc and natural gas, and the
level of interest rates. The Company uses derivative instruments, such as
futures, options, swaps and interest rate caps to manage the effect of such
changes. See NOTE A--"SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES" of Notes to
Consolidated Financial Statements.

Risk Management. All derivative contracts are held for purposes other than
----------------
trading, and are used primarily to mitigate uncertainty and volatility, and
cover underlying exposures. The Company's commodity and derivative activities
are subject to the management, direction and control of the Company's Risk
Management Committee, which is composed of the chief executive officer, the
chief operating officer, the chief financial officer, the treasurer and other
officers and employees that the chief executive officer designates. The Risk
Management Committee reports to the Company's Board of Directors, which has
supervisory authority over all of its activities.

Counter-parties. The Company is exposed to losses in the event of
----------------
non-performance by the counter-parties to the derivative contracts discussed
below; however, while no assurances can be made, the Company currently does not
anticipate any non-performance by the counter-parties. Counter-parties are
evaluated for creditworthiness and risk assessment prior to the Company
initiating trading activities. The counter-parties' creditworthiness is
monitored on an ongoing basis, and credit levels are reviewed to ensure that
there is not an inappropriate concentration of credit outstanding to any
particular counter-party.

Metal Commodity Price Risk. Aluminum and zinc ingots are internationally
---------------------------
produced, priced, and traded commodities, with their principal trading market
being the London Metal Exchange ("LME"). In order to preserve margins, the
Company enters into futures and options contracts.

Aluminum. The Company enters into futures sales contracts with metal brokers to
---------
fix the margin on a portion of the aluminum generated by the Company's salt cake
processing facility in Morgantown, Kentucky and some of the aluminum generated
from the processing of other scrap metal. These futures sales contracts are
settled in the month of shipment. Estimated 2000 total production covered under
these futures sales contracts as of December 31, 1999 was 3,230 metric tonnes
(mt). The impact of a 10% change in the December 31, 1999 LME price of aluminum
ingot would not be material to the Company's gross profit for the year ended
December 31, 2000.

Zinc. In the normal course of business, the Company enters into fixed-price
-----
forward sales contracts with a number of its zinc customers. At December 31,
1999, such contracts had metal deliveries committed during 2000 of 1,078 mt. The
Company may enter into similar arrangements in the future. In order to hedge the
risk of higher metal prices the Company enters into long positions, principally
using future purchase contracts. These contracts are settled in the month of the
corresponding shipment. At December 31, 1999, the contracts hedging 2000
deliveries totaled 1,078 mt. The impact of a 10% change in the December 31, 1999
LME price of zinc ingot would not be material to the Company's gross profit for
the year ended December 31, 2000.

                                       40
<PAGE>

Natural Gas. The Company's earnings are affected by changes in the price and
------------
availability of natural gas, which is the Company's second largest cost
component. In an attempt to acquire the most favorable natural gas costs, the
Company is utilizing natural gas swap contracts. Under the terms of the swap
contracts, the Company has fixed the price for approximately 28% of its expected
2000 natural gas requirements. The Company makes or receives payments based on
the difference between the month-end closing price on the New York Mercantile
Exchange ("NYMEX") and the fixed price agreed to in the swap contracts. The
impact of a 10% change in the December 31, 1999 NYMEX closing price would not be
material to the Company's gross profit for the year ended December 31, 2000.

Interest. Approximately 93% of the Company's outstanding long-term debt as of
---------
December 31, 1999 bears interest at floating rates related to LIBOR plus a
margin. In order to limit the risk associated with a potentially significant
increase in the LIBOR rates, the Company entered into an interest rate cap
transaction, which expires on March 30, 2001. Under the terms of this rate cap
transaction, the Company's interest rate will not exceed 8% per annum for
$29,600,000 (the notional amount as of December 31, 1999) of the Company's
outstanding floating-rate debt. The notional amount covered under the rate cap
transaction reduces quarterly until the amount of the cap reaches $22,800,000
upon its expiration. The counter-party to the rate cap transaction is a major
commercial bank, and management believes that losses related to the credit risk
are remote.

The Company's earnings are affected by changes in interest rates due to the
impact those changes have on its interest expense from variable-rate debt
instruments. If interest rates increased 10% from the floating rates as of
December 31, 1999, interest expense for the year ended December 31, 2000 would
increase by approximately $1,469,000. These amounts are determined by
considering the impact of hypothetical interest rates on the Company's
variable-rate long-term debt, as of December 31, 1999, adjusted for known cash
commitments during 2000.

Market risk for fixed-rate long-term debt is estimated as the potential increase
in fair value resulting from a hypothetical decrease in market interest rates.
With respect to the Company's fixed-rate long-term debt outstanding at December
31, 1999, a 10% decline in market interest rates would result in an increase to
the fair value of the Company's fixed-rate long-term debt of approximately
$1,129,000. The fair values of the Company's long-term debt were estimated using
discounted future cash flows based on the Company's incremental borrowing rates
for similar types of borrowing arrangements.

                                       41
<PAGE>

ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
-------

INDEX OF FINANCIAL STATEMENTS OF IMCO RECYCLING INC. AND SUBSIDIARIES


                                                                          PAGE
                                                                          ----
Report of Ernst & Young LLP, Independent Auditors                           43

Consolidated Balance Sheets at December 31, 1999 and 1998                   44

Consolidated Statements of Earnings for the three years ended
  December 31, 1999                                                         45

Consolidated Statements of Cash Flows for the three years ended
  December 31, 1999                                                         46

Consolidated Statements of Changes in Stockholders' Equity for the
  three years ended December 31, 1999                                       47

Notes to Consolidated Financial Statements                                  48




All schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable and therefore have been omitted.

                                       42
<PAGE>

               REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS


Stockholders and
Board of Directors
IMCO Recycling Inc.


We have audited the accompanying consolidated balance sheets of IMCO Recycling
Inc. and subsidiaries as of December 31, 1999 and 1998, and the related
consolidated statements of earnings, stockholders' equity, and cash flows for
each of the three years in the period ended December 31, 1999. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of IMCO
Recycling Inc. and subsidiaries at December 31, 1999 and 1998, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1999, in conformity with accounting
principles generally accepted in the United States.



                                                  /s/ ERNST & YOUNG LLP


Dallas, Texas
January 31, 2000

                                       43
<PAGE>

                     IMCO RECYCLING INC. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
                       (in thousands, except share data)


<TABLE>
<CAPTION>
                                                                                 December 31,
                                                                       ---------------------------------
                                                                           1999               1998
                                                                       --------------     --------------
<S>                                                                    <C>                <C>
ASSETS
Current Assets
     Cash and cash equivalents                                             $   2,578          $   6,075
     Accounts receivable (net of allowance of $1,950 and $1,616
         at December 31, 1999 and 1998, respectively)                        125,917             84,446
     Inventories                                                              74,568             50,921
     Deferred income taxes                                                     3,008              4,093
     Other current assets                                                      9,228              6,302
                                                                       -------------      -------------
        Total Current Assets                                                 215,299            151,837
Property and equipment, net                                                  189,987            168,505
Excess of acquisition cost over the fair value of net assets
     acquired, net of accumulated amortization of $11,149 and
     $7,156 at December 31, 1999 and 1998, respectively                      117,861            112,559
Investments in joint ventures                                                 13,901             14,502
Other assets, net                                                              6,589              9,155
                                                                       -------------      -------------
                                                                          $  543,637          $ 456,558
                                                                       =============      =============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
     Accounts payable                                                     $  101,458          $  67,089
     Accrued liabilities                                                       7,164             10,365
     Current maturities of long-term debt                                        181              1,415
                                                                       -------------      -------------
        Total Current Liabilities                                            108,803             78,869
Long-term debt                                                               214,993            168,700
Deferred income taxes                                                         15,104             12,820
Other long-term liabilities                                                    9,081              8,861

STOCKHOLDERS' EQUITY
Preferred stock; par value $.10; 8,000,000 shares
     authorized; none issued                                                       -                  -

Commonstock; par value $.10; 40,000,000 shares authorized;
      17,110,620 issued at December 31, 1999; 17,048,585
     issued at December 31, 1998                                               1,711              1,705
Additional paid-in capital                                                   106,549            106,046
Retained earnings                                                            104,079             87,214
Accumulated other comprehensive loss from foreign currency
     translation adjustments                                                  (3,131)              (902)
Treasury stock, at cost; 1,083,406 shares at December 31, 1999;
     530,539 shares at December 31, 1998                                     (13,552)            (6,755)
                                                                       -------------      -------------
        Total Stockholders' Equity                                           195,656            187,308
                                                                       -------------      -------------
                                                                          $  543,637          $ 456,558
                                                                       ==============     ==============
</TABLE>

See Notes to Consolidated Financial Statements.

                                       44
<PAGE>

                     IMCO RECYCLING INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF EARNINGS
                     (in thousands, except per share data)


<TABLE>
<CAPTION>
                                                                     For the Year Ended December 31,
                                                                -------------------------------------------
                                                                   1999            1998           1997
                                                                ------------    ------------   ------------
<S>                                                             <C>             <C>            <C>
Revenues                                                           $764,831        $562,093       $337,377
Cost of sales                                                       694,193         503,202        290,057
                                                                -----------     -----------    -----------
Gross profits                                                        70,638          58,891         47,320
Selling, general and administrative expense                          24,924          17,714         14,497
Amortization expense                                                  4,653           3,748          2,520
Interest expense                                                     12,478           9,197          7,331
Interest and other income                                            (1,456)         (1,161)          (352)
Equity in earnings of affiliates                                     (2,265)         (1,750)          (182)
                                                                -----------     -----------    -----------
Earnings before provision for income taxes, minority
    interests and extraordinary item                                 32,304          31,143         23,506
Provision for income taxes                                           11,162          11,275          9,086
                                                                -----------     -----------    -----------
Earnings before minority interests and extraordinary item            21,142          19,868         14,420
Minority interests, net of provision for income taxes                   346             278            293
                                                                -----------     -----------    -----------
Earnings before extraordinary item                                   20,796          19,590         14,127
Extraordinary item, net                                                   -               -         (1,318)
                                                                -----------     -----------    -----------
Net earnings                                                       $ 20,796        $ 19,590       $ 12,809
                                                                ===========     ===========    ===========


Net earnings per common share:
    Basic:
    ------
      Earnings before extraordinary item                           $   1.26        $   1.18       $   1.08
      Extraordinary item                                                  -               -          (0.10)
                                                                -----------     -----------    -----------
      Net earnings                                                 $   1.26        $   1.18       $   0.98
                                                                ===========     ===========    ===========

    Diluted:
    -------
      Earnings before extraordinary item                           $   1.26        $   1.17       $   1.06
      Extraordinary item                                                  -               -          (0.10)
                                                                -----------     -----------    -----------
      Net earnings                                                 $   1.26        $   1.17       $   0.96
                                                                ===========     ===========    ===========

Weighted average shares outstanding:
    Basic                                                            16,448          16,670         13,066
    Diluted                                                          16,555          16,802         13,293

Dividends declared per common share                                $   0.24        $   0.21       $   0.20
</TABLE>

See Notes to Consolidated Financial Statements.

                                       45
<PAGE>

                     IMCO RECYCLING INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (in thousands)


<TABLE>
<CAPTION>
                                                                        For the Year Ended December 31,
                                                                     --------------------------------------
                                                                        1999         1998          1997
                                                                     -----------  -----------   -----------
<S>                                                                  <C>          <C>           <C>
OPERATING ACTIVITIES
Earnings before extraordinary item                                    $  20,796    $  19,590     $  14,127
Depreciation and amortization                                            27,038       22,828        16,511
Provision for (benefit of) deferred income taxes                          3,369         (674)        1,516
Equity in earnings of affiliates                                         (2,265)      (1,750)         (182)
Other noncash charges                                                     2,370        1,818         1,228
Changes in operating assets and liabilities:
    Accounts receivable                                                 (39,588)      (9,504)       12,256
    Inventories                                                         (20,962)      (6,505)        2,594
    Other current assets                                                   (129)        (531)          379
    Accounts payable and accrued liabilities                             27,604       27,926       (18,061)
                                                                     ----------   ----------   -----------
Net cash from operating activities                                       18,233       53,198        30,368

INVESTING ACTIVITIES
Payments for property and equipment                                     (30,856)     (35,199)      (37,159)
Acquisition of U.S. Zinc Corporation, net of cash acquired                    -      (59,497)            -
Acquisition of IMSAMET, Inc., net of cash acquired                            -            -       (59,882)
Acquisition of Alchem Aluminum, Inc., net of cash acquired                    -            -       (25,430)
Acquisitions of other businesses and investments in joint ventures      (21,480)        (700)          163
Other                                                                    (1,803)       1,523        (2,153)
                                                                     ----------   ----------   -----------
Net cash used by investing activities                                   (54,139)     (93,873)     (124,461)

FINANCING ACTIVITIES
Net proceeds from long-term revolving credit facility                    44,377       55,775        96,225
Net repayments of short-term borrowings                                       -            -        (8,351)
Net proceeds from issuance (repayments) of long-term debt                   679          705       (41,072)
Net proceeds (costs) from public stock offering                               -          (65)       44,799
Debt issuance costs                                                      (1,041)        (158)       (3,180)
Dividends paid                                                           (3,931)      (3,503)       (2,702)
Purchases of treasury stock                                              (7,080)      (6,377)            -

Other                                                                      (599)         (51)        3,715
                                                                     ----------   ----------   -----------
Net cash from financing activities                                       32,405       46,326        89,434

Effect of exchange rate differences on cash and cash equivalents              4           19            (6)
                                                                     ----------   ----------   -----------


Net increase (decrease) in cash and cash equivalents                     (3,497)       5,670        (4,665)
Cash and cash equivalents at January 1                                    6,075          405         5,070
                                                                     ----------   ----------    ----------
Cash and cash equivalents at December 31                              $   2,578    $   6,075     $     405
                                                                     ==========   ==========    ==========

SUPPLEMENTARY INFORMATION
Cash payments for interest                                            $  13,417    $   9,098     $   9,087
Cash payments for income taxes                                        $   9,825    $  10,152     $   5,940
Fair value of the shares and warrants issued in the acquisition
    of U.S. Zinc Corporation                                                  -    $   8,500             -
Fair value of the shares issued in the acquisition of Alchem
    Aluminum, Inc.                                                            -            -     $  17,250
Fair value of the shares issued in the acquisition of Rock
    Creek Aluminum, Inc.                                                      -            -     $   7,125
</TABLE>

See Notes to Consolidated Financial Statements.

                                       46
<PAGE>

                     IMCO RECYCLING INC. AND SUBSIDIARIES
          CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                     (in thousands, except share amounts)

<TABLE>
<CAPTION>
                                                              ADDITIONAL
                                          COMMON STOCK          PAID-IN       RETAINED       TREASURY STOCK       TOTAL
                                      ----------------------                              ---------------------
                                        SHARES     AMOUNT       CAPITAL       EARNINGS     SHARES     AMOUNT     DOLLARS
                                      ----------- ---------- -------------- ------------- ---------- ---------- -----------
<S>                                   <C>         <C>        <C>            <C>           <C>        <C>        <C>
BALANCE AT DECEMBER 31, 1996          12,017,914   $  1,202    $    27,553    $   61,021   (118,551) $  (1,441)  $  88,335
Comprehensive income:
    Net earnings                               -          -              -        12,809          -          -      12,809
    Other comprehensive loss, net
     of tax:
     Foreign currency translation
      adjustments                              -          -              -           (32)         -          -         (32)
                                                                                                                -----------
Net comprehensive income                                                                                            12,777
                                                                                                                -----------
Cash dividend                                  -          -              -        (2,702)         -          -      (2,702)
Net proceeds from public stock
  offering                             2,645,000        264         44,535             -          -          -      44,799
Purchase of Rock Creek Aluminum          618,137         62          7,063             -          -          -       7,125
Purchase of Alchem Aluminum            1,208,339        121         17,129             -          -          -      17,250
Issuance of common stock for
  services                                 7,493          1            127             -          -          -         128
Exercise of stock options
                                          18,867          2           (212)            -     79,197      1,098         888
Tax benefit from the exercise of non-
  qualified stock options                      -          -            324             -          -          -         324
                                      ----------- ---------- -------------- ------------- ---------- ---------- -----------
BALANCE AT DECEMBER 31, 1997          16,515,750      1,652         96,519        71,096    (39,354)      (343)    168,924
Comprehensive income:
    Net earnings                               -          -              -        19,590          -          -      19,590
    Other comprehensive loss, net
     of tax:
     Foreign currency translation
      adjustments                              -          -              -          (871)         -          -        (871)
                                                                                                                -----------
Net comprehensive income                                                                                            18,719
                                                                                                                -----------
Cash dividend                                  -          -              -        (3,503)         -          -      (3,503)
Public stock offering costs                    -          -            (65)            -          -          -         (65)
Purchase of U.S. Zinc Corporation        298,010         30          8,470             -          -          -       8,500
Issuance of common stock for services      7,625          1            123             -          -          -         124
Exercise of stock options                227,200         22          1,554             -     (2,285)       (35)      1,541

Executive option exercise loan
  program                                      -          -         (1,360)            -          -          -      (1,360)
Tax benefit from the exercise of non-
  qualified stock options                      -          -            994             -          -          -         994
Common stock repurchased                       -          -              -             -   (488,900)    (6,377)     (6,377)
Other                                          -          -           (189)            -          -          -        (189)
                                      ----------- ---------- -------------- ------------- ---------- ---------- -----------
BALANCE AT DECEMBER 31, 1998          17,048,585      1,705        106,046        86,312   (530,539)    (6,755)    187,308

Comprehensive income:
    Net earnings                               -          -              -        20,796          -          -      20,796
    Other comprehensive loss, net
     of tax:
     Foreign currency translation
      adjustments                              -          -              -        (2,229)         -          -      (2,229)
                                                                                                                -----------
Net comprehensive income                                                                                            18,567
                                                                                                                -----------
Cash dividend                                  -          -              -        (3,931)         -          -      (3,931)
Purchase of B&F Metals, Inc.              17,890          2            268             -          -          -         270
Issuance of common stock for services      7,945          1            122             -      4,000         51         174
Exercise of stock options                 36,200          3            165             -     21,120        252         420
Executive option exercise loan
  program                                      -          -           (264)            -          -          -        (264)
Tax benefit from the exercise of non-
  qualified stock options                      -          -            218             -          -          -         218
Common stock repurchased                       -          -              -             -    (576,500)   (7,080)     (7,080)
Other                                          -          -             (6)            -      (1,487)      (20)        (26)
                                      -------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1999          17,110,620   $  1,711    $   106,549    $  100,948  (1,083,406) $(13,552)   $195,656
                                      -------------------------------------------------------------------------------------
</TABLE>

See Notes to Consolidated Financial Statements.

                                       47
<PAGE>

                     IMCO RECYCLING INC. AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               DECEMBER 31, 1999
          (dollars in tables are in thousands, except per share data)


NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Consolidation:
----------------------

The accompanying consolidated financial statements include the accounts of IMCO
Recycling Inc. and all of its majority owned subsidiaries (the "Company"). All
significant intercompany accounts and transactions have been eliminated upon
consolidation. Investments in affiliated companies, owned 50% or less, are
accounted for using the equity method.

The Company's principal business involves the ownership and operation of
aluminum recycling and alloying facilities and zinc manufacturing facilities.
Aluminum scrap material is recycled for a fee and then the material is returned
to its customers, some of whom are the world's largest aluminum and automotive
companies. Aluminum and zinc scrap is also purchased on the open market,
recycled and sold.

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, the disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

Cash Equivalents:
----------------

All highly liquid investments with a maturity of three months or less when
purchased are considered cash equivalents. The carrying amount approximates fair
value because of the short maturity of those instruments.

Inventories:
-----------

Inventories are stated at the lower of cost or market. Cost is determined using
the specific identification method and includes an allocation of average
manufacturing labor and overhead costs to finished goods.

Credit Risk:
-----------

The majority of the Company's accounts receivable are due from companies in the
aluminum, zinc and automotive industries. Credit is extended based on evaluation
of the customers' financial condition and, generally, collateral is not
required. Accounts receivable are net of a valuation reserve that represents an
estimate of amounts considered uncollectible. Expense for such uncollectible
amounts was $1,602,000, $1,325,000 and $670,000 in 1999, 1998 and 1997,
respectively.

                                       48
<PAGE>

Property and Equipment:
----------------------

Property and equipment are stated at cost. Major renewals and improvements are
capitalized, while maintenance and repairs are expensed when incurred.
Depreciation is computed using the straight-line method over the estimated
useful lives of the related assets.

Landfill closure costs are currently estimated to be approximately $9,000,000
and are being accrued as space in the landfills is used. The construction costs
of the landfills are depreciated as space in the landfills is used.

The Company reviews its property and equipment for impairment when changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. Impairment is measured as the amount by which the carrying amount
of the asset exceeds the estimated fair value of the asset less disposal costs.

Interest is capitalized in connection with the construction of major facilities.
Capitalized interest costs for 1999, 1998 and 1997 were $520,000, $339,000 and
$1,386,000, respectively.

Amortization of Intangibles:
---------------------------

The excess of original acquisition cost over the fair value of net assets
acquired (goodwill) is amortized on a straight-line basis over the expected
life, currently from 15-40 years. Management regularly reviews the remaining
goodwill with consideration toward recovery through future operating results.
Goodwill is evaluated for recovery on an undiscounted basis. Deferred debt
issuance costs, included in other assets, are being amortized over the term of
the long-term debt.

Revenue Recognition:
-------------------

Revenues are recognized when products are shipped or when services are performed
for customers.

Stock-Based Compensation:
------------------------

The Company follows Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees" ("APB 25") and related interpretations in accounting
for its employee stock options. Under APB 25, if the exercise price of employee
stock options equals the market price of the underlying stock on the date of
grant, no compensation expense is recorded.

Market Risk Management Using Financial Instruments:
--------------------------------------------------

In order to reduce the floating interest rate risk on its long-term debt, the
Company entered into an interest rate cap transaction in 1997 (see NOTE F). The
cost of the rate cap is included in other long-term assets and is being
amortized as interest expense over the term of the agreement.

In order to manage its price exposure for natural gas purchases, the Company has
fixed the future price of a portion of its natural gas requirements by entering
into financial hedge agreements. Under these agreements, payments are made or
received based on the differential between the monthly closing price on the New
York Mercantile Exchange, ("NYMEX") and the actual hedge

                                       49
<PAGE>

price. These contracts are accounted for as hedges, with all gains and losses
recognized in cost of sales when the gas is consumed. In addition, the Company
has cost escalators included in some of its long-term supply contracts with its
customers, which limit the Company's exposure to natural gas price risk. At
December 31, 1999, the Company had outstanding swap agreements to hedge its
anticipated domestic natural gas requirements on approximately 1,650,000 Mmbtus
of natural gas, which represents approximately 28% of its expected 2000 fuel
needs.

The Company has entered into futures contracts and a series of put and call
option contracts with metal brokers to cover the future selling prices on a
portion of the aluminum generated by the Company's salt cake processing facility
in Morgantown, Kentucky and some of the aluminum generated from the processing
of other scrap metal. At December 31, 1999, estimated 2000 total production
covered under these futures sales contracts was 3,230 metric tonnes (mt), which
represents approximately 14% of its expected 2000 production. In conjunction
with these futures sales contracts, the Company has also entered into options
contracts covering 1,200 mt. In addition, the Company has entered into futures
contracts with metal brokers to cover the future selling prices of zinc recycled
for certain zinc customers under fixed-price contracts. At December 31, 1999,
such contracts had metal deliveries committed during 2000 of 1,078 mt, which
represents less than 1% of its expected 2000 production. In conjunction with
these futures sales contracts, the Company has also entered into options
contracts covering 4,133 mt. These contracts are settled in the month of the
corresponding production and/or shipment, with all gains and losses recognized
in revenues.

The Company is exposed to losses in the event of non-performance by the
counter-parties to the financial hedge agreements and futures contracts
discussed above; however, the Company does not anticipate non-performance by the
counter-parties. The counter-parties are evaluated for creditworthiness and risk
assessment prior to initiating trading activities with the brokers. The Company
does not require collateral to support broker transactions.

The fair value of the Company's financial hedging agreements at December 31,
1999, representing the amount the Company would pay to terminate the agreements,
totaled $507,000.

Foreign Currency Translation:
----------------------------

The Company's foreign subsidiaries in the U.K., Germany, Netherlands, and its
equity investee in Germany use the local currency as their functional currency.
Adjustments resulting from the translation into U.S. dollars are reflected as a
separate component of stockholders' equity, and foreign currency transaction
gains and losses are reflected in the Statements of Earnings. The gains and
losses on foreign currency exchange rate fluctuations and the translation
adjustments for the three years ended 1999 were immaterial. As of December 31,
1999, the Company's accumulated foreign currency translation adjustment totaled
$3,131,000 and the annual change is included in other comprehensive income in
the Statements of Changes in Stockholders' Equity.

New Accounting Standards:
------------------------

In July 1999, the Financial Accounting Standards Board delayed the effective
date of Statement No. 133, "Accounting for Derivative Instruments and Hedging
Activities," for one year to fiscal years beginning after June 15, 2000. The
Company plans to adopt the statement effective January 1, 2001. The Company has
evaluated the impact of Statement No. 133 and believes the impact will not have
a material adverse effect upon the Company's future operating results.

                                       50
<PAGE>

Prior Year Reclassifications:
----------------------------

Certain reclassifications have been made to prior year statements to conform to
the current year presentation. Freight out expenses, which had previously been
included in cost of sales, are now included as a reduction in revenues.
Miscellaneous income was reclassified from revenues to interest and other
income. Also, certain plant selling, general and administrative expenses were
reclassified from selling, general and administrative expense to cost of sales.
In addition, the Company elected to classify the zinc brokerage facilities'
operating costs to cost of sales. These costs were previously included in
selling, general and administrative expense. Certain other amounts reported in
1998 and 1997 have been reclassified to conform with the 1999 presentation. All
of these reclassifications had no effect on net income for either period. The
effects of the reclassifications are as follows:

<TABLE>
<CAPTION>
                                                  As Previously            As Currently
                                                      Filed                 Presented
                                                ------------------       -----------------
<S>                                             <C>                      <C>
For the year ended December 31, 1998:
Revenues                                                $ 568,514               $ 562,093
Cost of sales                                           $ 506,994               $ 503,202
Selling, general and administrative expense             $  20,036               $  17,714
Amortization expense                                    $   3,669               $   3,748
Interest and other income                               $    (775)              $  (1,161)

For the year ended December 31, 1997:
Revenues                                                $ 339,381               $ 337,377
Cost of sales                                           $ 291,527               $ 290,057
Selling, general and administrative expense             $  15,171               $  14,497
Amortization expense                                    $   2,441               $   2,520
Interest and other income                               $    (413)              $    (352)
</TABLE>

NOTE B--ACQUISITIONS

In February 1999, the Company acquired substantially all of the assets of an
aluminum alloying facility located in Shelbyville, Tennessee from Alcan Aluminum
Corporation for approximately $11,000,000 in cash (not including acquisition
costs). Also in February 1999, the Company acquired, through its wholly owned
subsidiary, Midwest Zinc Corporation, substantially all of the assets of a zinc
oxide production facility located in Clarksville, Tennessee from North American
Oxide, LLC for approximately $11,000,000 in cash (not including acquisition
costs). Both acquisitions were accounted for using the purchase method of
accounting, and their results of operations are included herein since their
dates of acquisitions. Pro forma results from these acquisitions would not vary
significantly from actual results for 1999 and 1998.

On July 21, 1998, the Company acquired all of the capital stock of U.S. Zinc
Corporation ("U.S. Zinc") for a total purchase price of approximately
$72,000,000, consisting of (i) $46,500,000 in cash, (ii) the assumption of
approximately $17,000,000 in long-term debt, (iii) the issuance of 298,010
shares of the Company's common stock, and (iv) the issuance of four-year
warrants to purchase up to 1,500,000 shares of the Company's common stock at an
exercise price of $19.04 per share. The former U.S. Zinc shareholders have
certain registration rights with respect to the shares of common stock, and the
warrants that were issued to the former U.S. Zinc shareholders

                                       51
<PAGE>

are contractually restricted from exercise for periods of up to four years. In
addition, the transaction provides for future contingent payments (which will be
expensed as earned) to certain former U.S. Zinc shareholders, dependent upon the
future earnings performance of U.S. Zinc and the Company's other zinc-related
operations through June 30, 2002 and continued employment with the Company. The
acquisition was accounted for using the purchase method of accounting and its
results of operations are included herein since the date of acquisition. The
excess of the purchase price over the fair value of net assets acquired is
approximately $39,180,000 and is being amortized over thirty years on a
straight-line basis.

U.S. Zinc, headquartered in Houston, Texas, and its subsidiaries operated five
production facilities located in Illinois, Texas and Tennessee which convert
zinc scrap into various value-added zinc products such as zinc dust, oxides,
ingots and other zinc by-products. These facilities have an aggregate annual
processing capacity of approximately 200 million pounds of zinc-bearing
materials.

The allocation of the purchase price of U.S. Zinc is as follows:

<TABLE>
    <S>                                        <C>
    Working capital                            $ 20,105
    Property and equipment                       14,335
    Goodwill                                     39,180
    Other noncurrent assets                         540
    Noncurrent liabilities                      (19,291)
                                               --------
    Total                                      $ 54,869
                                               ========
</TABLE>

The following table sets forth unaudited pro forma results of operations of the
Company and U.S. Zinc for the year ended December 31, 1998, assuming the
acquisition had been consummated on January 1 of that year. The pro forma
combined information is presented for comparative purposes only and does not
purport to represent the actual results which would have occurred had the
acquisition been consummated on such date or of future results of the combined
companies under the ownership and management of the Company:

<TABLE>
<CAPTION>
                                                                 1998
                                                             -------------
                                                             (unaudited)
<S>                                                          <C>
Revenues                                                        $ 650,561
Gross profit                                                    $  67,576
Earnings before extraordinary item                              $  20,248
Net earnings                                                    $  20,248
Earnings per common share before extraordinary item:
    Basic                                                       $    1.20
    Diluted                                                     $    1.19
Net earnings per common share:
    Basic                                                       $    1.20
    Diluted                                                     $    1.19
</TABLE>

The table above reflects certain pro forma adjustments including additional
depreciation expense as a result of the increased basis of the fixed assets
acquired, additional amortization expense related to the goodwill recorded, a
reduction in general and administrative expenses for the

                                       52
<PAGE>

elimination of duplicate management costs, additional interest expense related
to debt incurred on the acquisition and adjustments for related income taxes
and minority interests.

In November 1997, the Company acquired all of the capital stock of Alchem
Aluminum, Inc. in exchange for approximately $26,000,000 cash, the assumption of
debt and 1,208,339 shares of the Company's common stock. In January 1997, the
Company acquired all of the capital stock of IMSAMET, Inc., a wholly owned
subsidiary of EnviroSource, Inc., for approximately $58,000,000 in cash, not
including acquisition costs. Also in January 1997, the Company acquired all of
the capital stock of Rock Creek Aluminum, Inc. in exchange for 618,137 shares of
the Company's common stock. These acquisitions were accounted for using the
purchase method of accounting.


NOTE C--INVENTORIES

The components of inventories are:

<TABLE>
<CAPTION>
                                 December 31,
                            -----------------------
                               1999         1998
                            ----------    ---------
<S>                         <C>           <C>
Finished goods                $ 35,130     $ 26,668
Raw materials                   36,768       23,012
Supplies                         2,670        1,241
                            ----------    ---------
                              $ 74,568     $ 50,921
                            ==========    =========
</TABLE>


NOTE D--PROPERTY AND EQUIPMENT

The components of property and equipment are:

<TABLE>
<CAPTION>
                                                     December 31,
                                               -----------------------
                                                  1999         1998
                                               ----------   ----------
<S>                                            <C>          <C>
Land, buildings and improvements                $ 140,530    $ 113,709
Production equipment and machinery                129,745      117,861
Office furniture, equipment and other              13,086        8,876
                                               ----------   ----------
                                                  283,361      240,446
Accumulated depreciation                          (93,374)     (71,941)
                                               ----------   ----------
                                                $ 189,987    $ 168,505
                                               ==========   ==========
</TABLE>

Depreciation expense for 1999, 1998 and 1997 was $22,405,000, $19,074,000 and
$14,007,000, respectively.

Estimated useful lives for buildings and improvements range from 15 to 39 years,
machinery and equipment range from 3 to 20 years and office furniture and
equipment range from 3 to 10 years.

                                       53
<PAGE>

NOTE E--INCOME TAXES

 The provision for income taxes was as follows:

<TABLE>
<CAPTION>
                                For the Year Ended December 31,
                               ---------------------------------
                                  1999        1998       1997
                               ---------   ---------   ---------
<S>                            <C>         <C>         <C>
Current:
    Federal                     $  7,293    $ 11,498    $  6,035
    State                            500         451       1,535
                               ---------   ---------   ---------
                                   7,793      11,949       7,570

Deferred:
    Federal                        3,221         (45)      2,028
    State                            577        (211)       (512)
    Foreign                         (429)       (418)         -
                               ---------   ---------   ---------
                                   3,369        (674)      1,516


                               ---------   ---------   ---------
                                $ 11,162    $ 11,275    $  9,086
                               =========   =========   =========
</TABLE>

The income tax expense, computed by applying the federal statutory tax rate to
earnings before income taxes, differed from the provision for income taxes as
follows:

<TABLE>
<CAPTION>
                                                  For the Year Ended December 31,
                                                 ---------------------------------
                                                    1999        1998        1997
                                                 ---------   ---------   ---------
<S>                                              <C>         <C>         <C>
Income taxes at the federal statutory rate        $ 11,231    $ 11,854    $  8,227
Foreign taxes at the statutory rate                     67        (845)          -

Goodwill amortization, nondeductible                   807         453         196
State income taxes, net                                693         150         651
Foreign loss                                          (871)       (593)          -
Other, net                                            (765)        256          12
                                                 ---------   ---------   ---------
Provision for income taxes                        $ 11,162    $ 11,275    $  9,086
                                                 =========   =========   =========
</TABLE>

                                       54
<PAGE>

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax liabilities and assets are as follows:

<TABLE>
<CAPTION>
                                                        December 31,
                                                 --------------------------
                                                     1999          1998
                                                 ------------  ------------
<S>                                              <C>           <C>
Deferred tax liabilities:
------------------------
  Accelerated depreciation and amortization         $ 18,270      $ 15,250
  Federal effect of state income taxes                   918           969
  Other                                                  460         1,016
                                                 ------------  ------------
Total deferred tax liabilities                        19,648        17,235

Deferred tax assets:
-------------------
  Net operating loss carryforwards                     1,798         1,591
  Tax credit carryforwards                             1,958         2,074
  Expenses not currently deductible                    3,653         5,288
  Federal effect of state income taxes                 1,038           896
                                                 ------------  ------------
Total deferred tax assets                              8,447         9,849
Valuation allowance                                     (895)       (1,341)
                                                 ------------- ------------
Net deferred tax assets                                7,552         8,508

                                                 ------------  ------------
Net deferred tax liability                          $ 12,096       $ 8,727
                                                 ============  ============
</TABLE>

At December 31, 1999, the Company had a $895,000 valuation allowance to reduce
certain deferred tax assets to amounts that are more than likely not to be
realized. The majority of the valuation allowance relates to the Company's
potential inability to utilize state recycling credits.

At December 31, 1999, the Company had approximately $2,729,000 of unused net
operating loss carryforwards for foreign tax purposes, which do not expire, and
had approximately $13,603,000 for state purposes which expire in 2008 to 2014.
The majority of the net operating loss carryforwards were generated by the
Loudon, Tennessee, Bedford, Indiana and Houston, Texas facilities.

At December 31, 1999, the Company had $1,937,000 of unused state tax credit
carryforwards, $126,000 of which expire in 2004 to 2014, and $1,811,000 of which
do not expire.

Undistributed earnings of the Company's non-United States investment in a joint
venture amounted to approximately $2,429,000 at December 31, 1999. These
earnings are considered permanently reinvested and, accordingly, no additional
United States income taxes or non-U.S. withholding taxes have been provided.
Determination of the amount of additional taxes that would be payable if such
earnings were not considered indefinitely reinvested is not practical.

                                       55
<PAGE>

NOTE F--LONG-TERM DEBT AND EXTRAORDINARY LOSS ON EARLY DEBT RETIREMENT

Long-term debt is summarized as follows:

<TABLE>
<CAPTION>
                                                                        December 31,
                                                              ------------------------------
                                                                  1999            1998
                                                              --------------  --------------
<S>                                                           <C>             <C>
Revolving credit loans                                           $  200,000      $  152,000
7.65% Morgantown, Kentucky Solid Waste
     Disposal Facilities Revenue Bonds-1996 Series                    5,693           5,690
7.45% Morgantown, Kentucky Solid Waste
     Disposal Facilities Revenue Bonds-1997 Series                    4,600           4,600
6.00% Morgantown, Kentucky Solid Waste
     Disposal Facilities Revenue Bonds-1998 Series                    4,100           3,421
Other                                                                   781           4,404
                                                              --------------  --------------
Subtotal                                                            215,174         170,115
Less current maturities                                                 181           1,415
                                                              --------------  --------------
Total                                                            $  214,993      $  168,700
                                                              ==============  ==============
</TABLE>

On October 25, 1999, the Company amended and restated the terms of its long-term
credit facility with its lenders (the "Second Amended and Restated Credit
Agreement"). The Second Amended and Restated Credit Agreement provides for a
credit facility of up to $250,000,000. The Company has the option to request
increases to the revolving credit commitment of up to $50,000,000 in the
aggregate, and these additional commitments could increase the revolving credit
facility to $300,000,000. The Second Amended and Restated Credit Agreement
allows the Company to issue up to $125,000,000 in convertible subordinated debt,
subject to certain terms and conditions. In addition, up to $12,000,000
available under the Second and Restated Credit Agreement may be used by the
Company for letters of credit. The entire balance of debt outstanding under the
Second Amended and Restated Credit Agreement will mature in December 2003.
Indebtedness under the Second Amended and Restated Credit Agreement bears
interest, at the Company's option, at fluctuating interest rates based upon an
alternate base rate (which may be the prime rate), or a rate based upon the
applicable LIBOR rate plus a credit margin which is based upon the Company's
ratio of total debt to total capitalization. In addition, the Company must pay a
commitment fee for unborrowed amounts available under the revolving credit
facility at a rate based upon the Company's ratio of debt to total
capitalization. As of December 31, 1999, the Company had $200,000,000 of
indebtedness outstanding under the Second Amended and Restated Credit Agreement
and had approximately $48,631,000 available for borrowing.

The Second Amended and Restated Credit Agreement imposes certain restrictions on
the Company, including: (i) a prohibition against incurring certain additional
indebtedness, (ii) maintenance of certain financial ratios, (iii) limitations on
dividends on and repurchases of shares of capital stock, and (iv) limitations on
capital expenditures, investments and acquisitions, except for mergers,
consolidations and acquisitions in any fiscal year having an aggregate
consideration of up to $75,000,000. The annual limitations for cash dividends on
capital stock are as follows: $6,000,000 per year for 1999 and 2000, and
$8,000,000 for each year after 2000.

                                       56
<PAGE>

In addition, during January 2000, the Second Amended and Restated Credit
Agreement was amended to increase the aggregate maximum amount to be expended by
the Company for repurchases of its common stock to $35,000,000. The indebtedness
under the Second Amended and Restated Credit Agreement is secured by
substantially all of the Company's personal property (including inventories,
accounts receivable and equipment) and a first lien mortgage on certain real
property at seven of the Company's operating plants, as well as a pledge of the
capital stock of substantially all of the Company's subsidiaries.

In order to reduce the fluctuating interest rate exposure on the term loan, the
Company entered into an interest rate cap transaction agreement ("Rate Cap
Transaction") with the primary lender in April 1997. The cost associated with
this Rate Cap Transaction is being amortized as interest expense over the
four-year term of the agreement. Under the terms of this Rate Cap Transaction,
the Company's interest rate will not exceed 8% per annum for $29,600,000 (the
notional amount as of December 31, 1999) of the Company's outstanding
floating-rate debt. The notional amount covered under the Rate Cap Transaction
reduces quarterly until the amount of the cap reaches $22,800,000. As of
December 31, 1999, the floating interest rate was capped at 8% per annum for 15%
of the total borrowings under the credit agreement.

At December 31, 1999, the Company had standby letters of credit outstanding in
the aggregate amount of $2,415,000.

Early debt retirement generated an extraordinary loss of $1,318,000 in the first
quarter of 1997, which consisted of early payment penalties of $1,953,000,
write-off of old debt costs of $243,000 and an income tax benefit of $878,000.

The fair value of the Company's outstanding indebtedness under the Second
Amended and Restated Credit Agreement approximates its carrying value due to its
recent issuance, floating rate and relatively short maturity. The fair value of
the Company's fixed rate Revenue Bonds based on discounted cash flows and
incremental borrowing rates totals approximately $15,200,000.

Scheduled maturities of long-term debt subsequent to December 31, 1999 are as
follows:

<TABLE>
<S>                                               <C>
2000                                              $     181
2001                                                    110
2002                                                    110
2003                                                200,110
2004                                                    105
After 2004                                           14,558
                                                  ---------
Total                                             $ 215,174
                                                  =========
</TABLE>

                                       57
<PAGE>

NOTE G--NET EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per
share:

<TABLE>
<CAPTION>
                                                               1999             1998            1997
                                                           -------------   --------------  -------------
<S>                                                        <C>             <C>             <C>
Numerators for basic and diluted earnings per share:
    Net earnings before extraordinary item                 $     20,796    $      19,590   $     14,127
    Extraordinary item                                                -                -         (1,318)
                                                           -------------   --------------  -------------
    Net earnings                                           $     20,796    $      19,590   $     12,809
                                                           =============   ==============  =============

Denominator:
    Denominator for basic earnings per share--
      weighted-average shares                                16,447,949       16,669,768     13,066,006
    Dilutive potential common shares--stock options             106,740          132,300        226,698
                                                           -------------   --------------  -------------
    Denominator for diluted earnings per share               16,554,689       16,802,068     13,292,704
                                                           =============   ==============  =============

Basic net earnings per share:
    Net earnings before extraordinary item                 $       1.26    $        1.18   $       1.08
    Extraordinary item                                                -                -          (0.10)
                                                           -------------   --------------  -------------
    Net earnings                                           $       1.26    $        1.18   $       0.98
                                                           =============   ==============  =============

Diluted net earnings per share:
    Net earnings before extraordinary item                 $       1.26    $        1.17   $       1.06
    Extraordinary item                                                -                -          (0.10)
                                                           -------------   --------------  -------------
    Net earnings                                           $       1.26    $        1.17   $       0.96
                                                           =============   ==============  =============
</TABLE>

The following stock options were excluded from the computation of diluted
earnings per share because the effect would have been anti-dilutive, as the
options' exercise price was greater than the average market price of the common
stock:

<TABLE>
<CAPTION>
                                                                 1999          1998            1997
                                                           --------------  --------------  --------------
<S>                                                        <C>             <C>             <C>
Anti-dilutive stock options as of December 31                 2,099,996       1,098,856         225,829
</TABLE>

NOTE H--EMPLOYEE BENEFIT PLANS

With the exception of the employees at the Company's U.S. Zinc facilities, the
Company's profit-sharing retirement plan covers most of its employees who meet
defined service requirements. Contributions are determined annually by the Board
of Directors and may be as much as 15% of covered salaries. Contributions for
1999, 1998 and 1997 were $2,302,000, $1,994,000 and $1,524,000, respectively.
The Company paid the 1999 and 1998 contributions in January 2000 and 1999,
respectively.

Subject to certain dollar limits, employees may contribute a percentage of their
salaries to this plan, and the Company matches a portion of the employees'
contributions. The Company's

                                       58
<PAGE>

match of employee contributions totaled $876,000, $707,000 and $582,000 for
1999, 1998 and 1997, respectively.

NOTE I--STOCK OPTION PLANS

In 1990, the Company adopted an Amended and Restated Stock Option Plan. This
plan expired in 1997, and no further grants of options may be made under the
plan. This plan provided for the granting of nonqualified and incentive stock
options. The number of shares of common stock authorized for issuance under the
plan was 1,200,000 shares. Options granted under the plan had various vesting
periods and are exercisable for a period of 10 years from the date of grant,
although options may expire earlier because of termination of employment.

In 1992, the Company adopted the 1992 Stock Option Plan, which provides for the
granting of nonqualified and incentive stock options to employees, officers,
consultants and nonemployee members of the Board of Directors. Options granted
to employees under this plan have various vesting periods. Annually, nonemployee
directors will be granted nonqualified stock options exercisable after six
months from the date of grant, equal to the number of shares determined by
dividing the annual director fee amount by the fair market value of a share of
common stock as of the date of grant. All options granted under this plan, once
vested, are exercisable for a period of up to 10 years from the date of grant,
although options may expire earlier because of termination of employment or
service.

In 1996, the Company adopted the Annual Incentive Program, which provides
certain of the Company's key employees with annual incentive compensation tied
to the achievement of pre-established and objective performance goals. This plan
provides for the granting of stock options to key management employees on a
discretionary basis. Nonqualified and incentive stock options may be granted,
and the terms of the plan concerning the stock options are substantially the
same as the corresponding terms of the 1992 Stock Option Plan.

The 1992 Stock Option Plan and the 1996 Annual Incentive Program allow for the
payment of all or a portion of the exercise price and tax withholding
obligations in shares of the Company's common stock delivered and/or withheld.
Such payment or withholding will be valued at fair market value as of the date
of exercise. Participants making use of this feature will automatically be
granted a reload stock option to purchase a number of shares equal to the number
of shares delivered and/or withheld. When a reload stock option is granted, a
portion of the shares issued to the participant will be designated as restricted
stock for a period of five years, although the restriction may be removed
earlier under certain circumstances. Reload stock options have an exercise price
equal to the fair market value as of the date of exercise of the original
options and will expire on the same date as the original options.

In March 1998, the Company adopted the Executive Option Exercise Loan Program in
order to encourage option exercises and share retention by management employees
holding certain options under the Company's Amended and Restated Stock Option
Plan and to provide such management employees with a long-term capital
accumulation opportunity. This program provides loans to permit the exercise of
certain Company stock options under the Amended and Restated Stock Option Plan
and to pay federal and state taxes realized upon such exercises. Under this loan
program 35,000 and 196,800 shares were exercised in 1999 and 1998, respectively.
As of December 31, 1999, the Company had extended $2,266,000 in executive loans
to these

                                       59
<PAGE>

individuals ($1,624,000 of which represented a reduction to additional paid-in
capital and $642,000 of which was included in other long-term assets) and
recorded $38,000 in interest income.

Transactions under the option plans are as follows:

<TABLE>
<CAPTION>
                                                1999                   1998                   1997
                                        --------------------- ----------------------- ---------------------
                                                     Weighted                Weighted              Weighted
                                                     Average                 Average               Average
                                                     Exercise                Exercise              Exercise
                                         Options      Price     Options       Price    Options      Price
                                        --------------------- ----------------------- ---------------------
<S>                                     <C>        <C>        <C>         <C>         <C>        <C>
Options outstanding Jan. 1              2,240,363    $ 14.71   1,868,433     $ 14.25  1,541,959    $ 13.65
Options granted                           214,832    $ 11.49     627,696     $ 13.36    584,714    $ 15.84
Options exercised                         (62,647)   $  8.05    (227,200)    $  6.94   (117,767)   $ 10.63
Options forfeited                         (50,520)   $ 16.34     (28,566)    $ 16.79   (140,473)   $ 17.30
                                        ----------            -----------             ----------
Options outstanding Dec. 31             2,342,028    $ 14.56   2,240,363     $ 14.71  1,868,433    $ 14.25
                                        ==========            ===========             ==========
Options exercisable Dec. 31             1,571,098    $ 15.17   1,131,961     $ 15.11    958,285    $ 12.62
                                        ==========            ===========             ==========
</TABLE>

Information related to options outstanding at December 31, 1999, is summarized
below:

<TABLE>
<CAPTION>
                                     Options Outstanding                   Options Exercisable
                        ----------------------------------------------  --------------------------
                                           Weighted
                                            Average         Weighted                    Weighted
                                           Remaining        Average                     Average
       Range of                           Contractual       Exercise                    Exercise
    Exercise Prices        Options           Life            Price        Options        Price
--------------------------------------  ---------------  -------------  ------------  ------------
<S>                     <C>             <C>              <C>            <C>           <C>
$  4.89  -  $  7.55            59,200     1.2 Years           $  7.55        59,200       $  7.55
$ 10.00  -  $ 13.75         1,191,139     7.2 Years           $ 12.83       662,643       $ 13.27
$ 14.25  -  $ 19.00           940,074     5.7 Years           $ 15.87       697,640       $ 15.97
$ 22.75  -  $ 23.38           151,615     5.6 Years           $ 22.75       151,615       $ 22.75
                        --------------                                  ------------
                            2,342,028                                     1,571,098
                        ==============                                  ============
</TABLE>

The fair value of the Company's outstanding stock options was estimated at the
date of grant using a Black-Scholes option pricing model with the following
weighted average assumptions:

<TABLE>
<CAPTION>
                                               1999        1998       1997
                                             ---------   ---------  ---------
     <S>                                     <C>         <C>        <C>
     Expected option life in years               3.9         4.0        3.4
     Risk-free interest rate                    5.94%       4.58%      6.13%
     Volatility factor                         0.329       0.312      0.293
     Dividend yield                             2.11%       1.80%      1.28%
</TABLE>

The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options which have no vesting restrictions and are fully
transferable. In addition, option

                                       60
<PAGE>

valuation models require the input of highly subjective assumptions including
the expected stock price volatility. Because the Company's employee stock
options have characteristics significantly different from those of traded
options, and because changes in the subjective input assumptions can materially
affect the fair value estimate, in management's opinion, the existing models do
not necessarily provide a reliable single measure of the fair value of its
employee stock options. For purposes of pro forma disclosures, the estimated
fair value of the options is amortized to expense over the options' vesting
period. In addition, because Statement of Financial Accounting Standards No. 123
("SFAS No. 123") is applicable only to options granted subsequent to December
31, 1994, the pro forma information does not reflect the pro forma effect of all
previous stock option grants of the Company. Therefore, the pro forma
information is not necessarily indicative of future amounts unless SFAS No. 123
is applied to all outstanding stock options.

The Company's pro forma information is as follows:

<TABLE>
<CAPTION>
                                                                                 December 31,
                                                                    ---------------------------------------
                                                                       1999          1998         1997
                                                                    ------------  -----------  ------------
<S>                                                                 <C>           <C>          <C>
Net earnings before extraordinary item:
    As reported                                                         $20,796      $19,590       $14,127
    Pro forma                                                           $19,629      $18,528       $13,446

Net earnings per common share before extraordinary item:
    As reported--basic                                                  $  1.26      $  1.18       $  1.08
    As reported--diluted                                                $  1.26      $  1.17       $  1.06

    Pro forma--basic                                                    $  1.19      $  1.11       $  1.03
    Pro forma--diluted                                                  $  1.19      $  1.10       $  1.01

Weighted-average fair value of options granted during the year          $  3.25      $  3.56       $  4.15
</TABLE>

NOTE J--EMPLOYEE STOCK PURCHASE PLAN

Effective July 1, 1999 the Company adopted a qualified, non-compensatory
employee stock purchase plan, which allows employees to acquire shares of common
stock through payroll deductions over a six-month period. The purchase price is
equal to 85% of the fair market value of the common stock on either the first or
last day of the offering period, whichever is lower. Purchases under the plan
are limited to 15% of an employee's eligible compensation. A total of 800,000
shares are available for purchase under the plan. For 1999, the Company issued
24,860 shares under the plan in January 2000.


NOTE K--OPERATIONS

The Company's operations, like those of other basic industries, are subject to
federal, state, local and foreign laws, regulations and ordinances. These laws
and regulations (1) govern activities or operations that may have adverse
environmental effects, such as discharges to air and water, as

                                       61
<PAGE>

well as handling and disposal practices for solid and hazardous wastes and (2)
impose liability for costs of cleaning up, and certain damages resulting from
past spills, disposals or other releases of hazardous substances. It can be
anticipated that more rigorous environmental laws will be enacted that could
require the Company to make substantial expenditures in addition to those
described in this Form 10-K.

From time to time, operations of the Company have resulted, or may result, in
certain noncompliance with applicable requirements under environmental laws.
However, the Company believes that any such noncompliance under such
environmental laws would not have a material adverse effect on the Company's
financial position or results of operations.

In 1997, the Illinois Environmental Protection Agency ("IEPA") notified the
Company that two of the Company's zinc subsidiaries are potentially responsible
parties ("PRP") pursuant to the Illinois Environmental Protection Act for the
cleanup of contamination at a site in Marion County, Illinois to which these
subsidiaries, among others, in the past sent zinc oxide for processing and
resale. These subsidiaries have joined a group of PRPs that is planning to
negotiate with the IEPA regarding the cleanup of the site. Although the site has
not been fully investigated and final cleanup costs have not yet been
determined, based on current cost estimates and information regarding the amount
and type of materials sent to the site by the subsidiaries, the Company does not
believe, while there can be no assurance, that its liability at this site will
have a material adverse effect on its financial position or results of
operations.

The Company is also a party from time to time to what it believes are routine
litigation and proceedings considered part of the ordinary course of its
business. The Company believes that the outcome of such proceedings would not
have a material adverse effect on the Company's financial position or results of
operations.


NOTE L--SEGMENT INFORMATION

Description of the Types of Products and Services from which Each Reportable
----------------------------------------------------------------------------
Segment Derives its Revenues:
----------------------------
The Company has two reportable segments: aluminum and zinc. The aluminum segment
represents all of the Company's aluminum melting, processing, alloying,
brokering and salt cake recovery activities, including investment in joint
ventures. The Company delivers aluminum in molten and ingot form to aluminum
producers, diecasters, extruders, steel and automotive companies and other
aluminum customers in the packaging, construction and transportation industries.
In addition, this segment includes magnesium melting activities, which represent
less than 1% of consolidated revenues and production. The Company's zinc segment
represents all of the Company's zinc melting, processing and brokering
activities. The Company sells zinc dust, oxides and metal to customers in the
tire and rubber, industrial paint, specialty chemical, mining and steel
galvanizing industries.

Measurement of Segment Profit or Loss and Segment Assets:
--------------------------------------------------------
The accounting policies of the reportable segments are the same as those
described in NOTE A. The Company evaluates performance based on gross profit or
loss from operations, net of selling expenses. Provision for income taxes,
interest, corporate general and administrative costs, including depreciation of
corporate assets and amortization of capitalized debt costs, are not allocated
to the reportable segments. Intersegment sales and transfers are recorded at
market

                                       62
<PAGE>

value; net profits on intersegment sales and transfers were immaterial for the
periods presented. Consolidated cash, net capitalized debt costs, net current
deferred tax assets and assets located at the Company's headquarters office in
Irving, Texas are not allocated to the reportable segments.

Factors Management Used to Identify the Company's Reportable Segments:
---------------------------------------------------------------------
The Company's reportable segments are business units that offer different types
of metal products and services. The reportable segments are each managed
separately, because they produce distinct products and services and sell to
different types of customers.

Reportable Segment Information:
------------------------------
Selected reportable segment disclosures for the three years ended December 31,
1999 are as follows:

<TABLE>
<CAPTION>
                                                  ALUMINUM           ZINC           TOTALS
                                              ----------------  ---------------  --------------
<S>                                           <C>               <C>              <C>
1999
----
Revenues from external customers                   $  568,327       $  196,504      $  764,831
Segment income                                     $   52,974       $   12,788      $   65,762
Depreciation and amortization expense              $   20,718       $    4,615      $   25,333
Equity in earnings of affiliates                   $    2,265                -      $    2,265
Segment assets                                     $  415,614       $  109,377      $  524,991
Equity investments in joint ventures               $   13,901                -      $   13,901
Payments for plant and equipment                   $   19,612       $    3,670      $   23,282

1998
----
Revenues from external customers                   $  470,722       $   91,371      $  562,093
Segment income                                     $   52,897       $    4,218      $   57,115
Depreciation and amortization expense              $   19,155       $    2,402      $   21,557
Equity in earnings of affiliates                   $    1,750                -      $    1,750
Segment assets                                     $  328,891       $  109,398      $  438,289
Equity investments in joint ventures               $   14,502                -      $   14,502
Payments for plant and equipment                   $   30,507       $    1,518      $   32,025

1997
----
Revenues from external customers                   $  324,598       $   12,779      $  337,377
Segment income                                     $   43,411       $    1,127      $   44,538
Depreciation and amortization expense              $   15,162       $      304      $   15,466
Equity in earnings of affiliates                   $      182                -      $      182
Segment assets                                     $  314,377       $    9,235      $  323,612
Equity investments in joint ventures               $   14,271                -      $   14,271
Payments for plant and equipment                   $   32,623       $    3,532      $   36,155
</TABLE>

                                       63
<PAGE>

Reconciliations of total reportable segment disclosures to the Company's
consolidated financial statements are as follows:

<TABLE>
<CAPTION>
                                                                     1999          1998          1997
                                                                  ------------  ------------  ------------
<S>                                                               <C>           <C>           <C>
PROFITS
-------
Total profits for reportable segments                                $ 65,762      $ 57,115      $ 44,538
Unallocated amounts:
    General and administrative expense                                (21,775)      (17,360)      (14,114)
    Interest expense                                                  (12,478)       (9,197)       (7,331)
    Interest and other income                                             795           585           413
                                                                  ------------  ------------  ------------
Income before provision for income taxes, minority interests
    and extraordinary item                                           $ 32,304      $ 31,143      $ 23,506
                                                                  ============  ============  ============

DEPRECIATION AND AMORTIZATION EXPENSE
-------------------------------------
Total depreciation and amortization expense for reportable
    segments                                                         $ 25,333      $ 21,557      $ 15,466
Other depreciation and amortization expense                             1,705         1,271         1,045
                                                                  ------------  ------------  ------------
Total consolidated depreciation and amortization expense             $ 27,038      $ 22,828      $ 16,511
                                                                  ============  ============  ============

ASSETS
------
Total assets for reportable segments                                $ 524,991     $ 438,289     $ 323,612
Other assets                                                           18,646        18,269         8,924
                                                                  ------------  ------------  ------------
Total consolidated assets                                           $ 543,637     $ 456,558     $ 332,536
                                                                  ============  ============  ============

PAYMENTS FOR PLANT AND EQUIPMENT
--------------------------------
Total payments for plant and equipment for reportable segments       $ 23,282      $ 32,025      $ 36,155
Other payments for plant and equipment                                  7,574         3,174         1,004
                                                                  ------------  ------------  ------------
Total consolidated payments for plant and equipment                  $ 30,856      $ 35,199      $ 37,159
                                                                  ============  ============  ============
</TABLE>

Geographic Information:
----------------------
The following table sets forth the geographic breakout of revenues (based on
customer location) and property and equipment (net of accumulated depreciation):

<TABLE>
<CAPTION>
                                           1999          1998         1997
                                        ----------    ----------    ----------
<S>                                     <C>           <C>           <C>
REVENUES
--------
Domestic                                 $ 658,261     $ 488,253     $ 327,933
Foreign                                    106,570        73,840         9,444
                                        ----------    ----------    ----------
Consolidated total                       $ 764,831     $ 562,093     $ 337,377
                                        ==========    ==========    ==========

PROPERTY AND EQUIPMENT
----------------------
Domestic                                 $ 180,342     $ 157,844     $ 135,716
Foreign                                      9,645        10,661         6,384
                                        ----------    ----------    ----------
Consolidated total                       $ 189,987     $ 168,505     $ 142,100
                                        ==========    ==========    ==========
</TABLE>

Aluminum shipments to customers located in Canada accounted for approximately 8%
of consolidated revenues for 1999. Substantially all of the Company's foreign
property and equipment are located at the Company's aluminum facility in
Swansea, Wales.

                                       64
<PAGE>

Major Customers:
---------------
During 1999 and 1997, no single customer accounted for more than 10% of
consolidated revenues. During 1998, aluminum sales to Ford Motor Company
("Ford") accounted for 10% of consolidated revenues. The loss of Ford as a
customer would have a material adverse effect upon the business of the Company
and its future operating results.


NOTE M--QUARTERLY FINANCIAL DATA (Unaudited)

<TABLE>
<CAPTION>
                                          First       Second         Third       Fourth        Total
                                         Quarter      Quarter       Quarter      Quarter       Year
                                       ------------ ------------  ------------ ------------ ------------
<S>                                    <C>          <C>           <C>          <C>          <C>
1999:
----
Revenues                                $  172,778   $  182,301    $  196,347   $  213,405   $  764,831
Gross profits                           $   17,198   $   17,680    $   18,200   $   17,560   $   70,638
Net earnings                            $    5,141   $    5,473    $    5,645   $    4,537   $   20,796
Net earnings per common share:
   Basic                                $     0.31   $     0.33    $     0.34   $     0.28   $     1.26
   Diluted                              $     0.31   $     0.33    $     0.34   $     0.28   $     1.26

1998:
----
Revenues                                $  126,364   $  123,324    $  151,406   $  160,999   $  562,093
Gross profits                           $   13,187   $   13,724    $   15,584   $   16,396   $   58,891
Net earnings                            $    4,611   $    5,011    $    4,968   $    5,000   $   19,590
Net earnings per common share:
   Basic                                $     0.28   $     0.30    $     0.29   $     0.30   $     1.18
   Diluted                              $     0.28   $     0.30    $     0.29   $     0.30   $     1.17
</TABLE>

NOTE N--RELATED PARTY TRANSACTION

The Company has entered into an agreement with one of the Company's executive
officers and his brother, both former stockholders of the U.S. Zinc Corporation,
under which the Company sold real property for $2,450,000 in exchange for cash
and a secured promissory note. The Company believes the sale price of the
property is equivalent to sale prices for comparable properties in the area. The
$2,440,000 note, due on June 30, 2002, bears interest at a rate of 8% per annum,
is payable in monthly installments, and is secured by a first lien mortgage on
the property. The transaction resulted in an after tax gain of approximately
$295,000.

NOTE O--COMMITMENTS
-------------------

The Company has entered into an aluminum supply agreement with General Motors
Corporation to supply certain volumes of aluminum to their plant in Saginaw,
Michigan. As a result, the Company will spend approximately $15,300,000 to
construct a new plant facility near Saginaw, Michigan. Under the terms of the
agreement metal is expected to be delivered in late 2000.


                                       65
<PAGE>

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
------
         FINANCIAL DISCLOSURE

Not applicable.

                                       66
<PAGE>

PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
--------

The information required by this item with respect to directors and nominees for
director of the Company appears under the captions "Election of Directors" and
"Remuneration of Directors and Officers -- Compliance with Section 16(a)" in the
definitive Proxy Statement (herein so called) of the Company relating to the
Company's 2000 Annual Meeting of Stockholders, to be filed with the Securities
and Exchange Commission (the "Commission") pursuant to Regulation 14A of the
Securities Exchange Act of 1934, which information is incorporated herein by
reference. It is currently anticipated that the Proxy Statement will be publicly
available and mailed to stockholders in early to mid-April 2000. Certain
information as to executive officers is included herein under PART I, ITEM 4A.
"EXECUTIVE OFFICERS OF THE REGISTRANT."

ITEM 11.  EXECUTIVE COMPENSATION
--------

The information required by this item appears under the caption "Remuneration of
Directors and Officers" in the definitive Proxy Statement, which information is
incorporated herein by reference.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
--------

The information required by this item appears under the caption "Voting and
Principal Stockholders" in the definitive Proxy Statement, which information is
incorporated herein by reference.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
--------
The information required by this item appears under the captions "Remuneration
of Directors and Officers--Option Exercises and Holdings" and "--Certain
Transactions" and "Compensation Committee Report to Stockholders -- Compensation
Committee Interlocks and Insider Participation" in the definitive Proxy
Statement, which information is incorporated herein by reference.

                                       67
<PAGE>

PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
--------

  (a)    The following documents are filed as part of this Annual Report on Form
         10-K:

     1.  Consolidated Financial Statements: See index to Consolidated Financial
         Statements and Financial Statement Schedules on Page 42 hereof.

     2.  Consolidated Financial Statement Schedules: See index to Consolidated
         Financial Statements and Financial Statement Schedules on Page 42
         hereof.

     3.  Exhibits:
         --------

     3.1       Certificate of Incorporation of IMCO Recycling Inc., as amended
               May 13, 1998, filed as Exhibit 3.1 to the Company's Quarterly
               Report on Form 10-Q for the quarterly period ended June 30, 1998,
               and incorporated herein by reference.

    *3.2       By-laws of IMCO Recycling Inc., as amended, effective as of March
               24, 1999.

     10.1      IMCO Recycling Inc. Amended and Restated Stock Option Plan, filed
               as Exhibit 10.4 to the Company's Annual Report on Form 10-K for
               the year ended December 31, 1997, and incorporated herein by
               reference.

     10.2      Specimen Split-Dollar Life Insurance Agreement, filed as Exhibit
               10.7 to the Company's Annual Report on Form 10-K for the year
               ended December 31, 1998, and incorporated herein by reference.
               This agreement is virtually identical to agreements between the
               Company and Richard L. Kerr, Paul V. Dufour, Denis W. Ray, Thomas
               W. Rogers, C. Lee Newton, Robert R. Holian, and James B. Walburg.

     10.3      Supply Agreement between Commonwealth Aluminum Corporation and
               the Company, dated April 1, 1999, filed as Exhibit 10.1 to the
               Company's Quarterly Report on Form 10-Q for the quarterly period
               ended March 31, 1999, and incorporated herein by reference.

     10.4      Agreement, effective as of January 1, 1994, between IMCO
               Recycling Inc. and Aluminum Company of America, filed as Exhibit
               10.11 to the Company's Annual Report on Form 10-K for the year
               ended December 31, 1998, and incorporated herein by reference.

     10.5      First Amendment to processing agreement by and among the Rigid
               Packaging division of Aluminum Company of America, the Company
               and Metal Resources Inc., filed as Exhibit 10.2 to the Company's
               Quarterly Report on Form 10-Q for the quarterly period ended June
               30, 1995, and incorporated herein by reference.

     10.6      IMCO Recycling Inc. 1992 Stock Option Plan, as amended December
               15, 1994, February 28, 1996, February 25, 1997, May 13, 1997 and
               May 13, 1998, filed as

                                       68
<PAGE>

               Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for
               the quarterly period ended June 30, 1998, and incorporated herein
               by reference.

     10.7      IMCO Recycling Inc. Annual Incentive Program, as amended February
               25, 1997, April 1, 1997, May 13, 1997 and May 13, 1998, filed as
               Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for
               the quarterly period ended June 30, 1998, and incorporated herein
               by reference.

     10.8      Registration Rights Agreement dated as of November 14, 1997 among
               IMCO Recycling Inc. and the former shareholders of Alchem
               Aluminum, Inc., filed as Exhibit 10.4 to the Company's Current
               Report on Form 8-K/A-2 dated September 18, 1997, and incorporated
               herein by reference.

     10.9      Executive Option Exercise Loan Program, dated March 10, 1998,
               filed as Exhibit 10.1 to the Company's Quarterly Report for the
               quarterly period ended March 31, 1998, and incorporated herein by
               reference.

     10.10     Memorandum of Purchase and Sale Agreement by and among IMCO
               Recycling Inc., The Minette and Jerome Robinson Community
               Property Trust, The Minette and Jerome Robinson Foundation, The
               Minette and Jerome Robinson Charitable Remainder Trust, M. Russ
               Robinson, Howard Robinson and Mindy Robinson Brown, dated July
               21, 1998, filed as Exhibit 2.1 to the Company's Current Report on
               Form 8-K, dated August 4, 1998, and incorporated herein by
               reference.

     10.11     Form of Common Stock Purchase Warrant, dated July 21, 1998, filed
               as Exhibit 2.2 to the Company's Current Report on Form 8-K, dated
               August 4, 1998, and incorporated herein by reference.

     10.12     Second Amended and Restated Credit Agreement, by and among the
               Company; Subsidiary Guarantors named therein; the Lenders
               thereunder; Bank of America, N.A.; PNC Bank, National Association
               and Chase Bank of Texas National Association dated October 25,
               1999, filed as Exhibit 10.1 to the Company's Quarterly Report on
               Form 10-Q for the quarterly period ended September 30, 1999, and
               incorporated herein by reference.

    *10.13     First Amendment dated January 5, 2000, to the Second Amended and
               Restated Credit Agreement, by and among the Company; Subsidiary
               Guarantors named therein; the Lenders thereunder; Bank of
               America, N.A.; PNC Bank, National Association and Chase Bank of
               Texas National Association dated October 25, 1999.

     10.14     IMCO Recycling Inc. Annual Incentive Compensation Plan, filed as
               Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for
               the quarterly period ended June 30, 1999, and incorporated herein
               by reference.

     10.15     Employee Stock Purchase Plan, filed as Exhibit 4.4 to the
               Company's Form S-8 dated June 30, 1999, and incorporated herein
               by reference.

    *10.16     Registration Rights Agreement dated as of July 21, 1998 among
               IMCO Recycling Inc. and the former shareholders of U.S. Zinc
               Corporation.

                                       69
<PAGE>

     *10.17    Split-Dollar Life Insurance Agreement.

     *10.18    IMCO Recycling Inc. Performance Share Unit Plan.

     *21       Subsidiaries of IMCO Recycling Inc. as of March 1, 2000.

     *23       Consent of Ernst & Young LLP.

     *27.1     Financial Data Schedule.

     *27.2     Restated Financial Data Schedule.

_________________
*  Filed herewith.

   (b)    Reports on Form 8-K filed in fourth quarter 1999:  None.

   (c)    See sub-item (a) above.

   (d)    See sub-item (a) above.

                                       70
<PAGE>

SIGNATURES

Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange
Act of 1934, the registrant has caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.

Dated:         March 10, 2000      IMCO Recycling Inc.


                                      /s/ ROBERT R. HOLIAN
                                   By:___________________________
                                      Robert R. Holian, Senior Vice President,
                                      Controller and Chief Accounting Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated:

<TABLE>
<CAPTION>
          Signature                                     Title                             Date
----------------------------------      --------------------------------------       --------------
<S>                                     <C>                                          <C>
                                        Director, Chairman of the Board, Chief
/s/ DON V. INGRAM                       Executive Officer                            March 10, 2000
----------------------------------
Don V. Ingram

/s/ JOHN J. FLEMING                     Director                                     March 10, 2000
----------------------------------
John J. Fleming

/s/ DON NAVARRO                         Director                                     March 10, 2000
----------------------------------
Don Navarro

/s/ STEVE BARTLETT                      Director                                     March 10, 2000
----------------------------------
Steve Bartlett

/s/ JEB HENSARLING                      Director                                     March 10, 2000
----------------------------------
Jeb Hensarling

/s/ WILLIAM WARSHAUER                   Director                                     March 10, 2000
----------------------------------
William Warshauer

/s/ HUGH G. ROBINSON                    Director                                     March 10, 2000
----------------------------------
Hugh G. Robinson

                                        Executive Vice President, Chief
/s/ PAUL V. DUFOUR                      Financial Officer and Secretary              March 10, 2000
----------------------------------
Paul V. Dufour

                                        Senior Vice President, Controller
/s/ ROBERT R. HOLIAN                    and Chief Accounting Officer                 March 10, 2000
----------------------------------
Robert R. Holian
</TABLE>

                                       71