##### Table of Contents





SECURITIES AND EXCHANGE
COMMISSION

Washington, D.C. 20549





FORM 10-Q







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

For the Quarter Ended March 31, 2010



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

For the transition period from              to

Commission file number 333-150749





AGY HOLDING CORP.

(Exact name of registrant as specified in its charter)







|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 20-0420637                          
|(State or other jurisdiction of
incorporation or organization) |  | (I.R.S. Employer
Identification No.)

2556 Wagener Road

Aiken, South Carolina 29801

(Address of principal executive offices) (Zip Code)

(888) 434-0945

(Registrants telephone number, including area code)





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

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File
required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such
files).    Yes   ̈    No   ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
See definitions of large accelerated filer, accelerated filer, and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):



|                        |  |   |  |                           |  |  
|----------------------- |  | - |  | ------------------------- |  | -
|Large Accelerated Filer |  |  ̈ |  | Accelerated Filer         |  |  ̈
|                        |  |   | 
|Non-Accelerated Filer   |  | x |  | Smaller Reporting Company |  |  ̈

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

There is no established trading market for the Common Stock of the registrant. As of May 13, 2010, there were 1,291,667 shares of common stock
outstanding.









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##### Table of Contents

TABLE OF CONTENTS



|                              |  |                                                                                                 |  |     
|----------------------------- |  | ----------------------------------------------------------------------------------------------- |  | ----
|                              |  |                                                                                                 |  | Page
|Part I. FINANCIAL INFORMATION |  |                                                                                                
|                              |  |                                                                                                
|ITEM 1.                       |  | Consolidated Financial Statements (Unaudited)                                                   |  |     
|                              |  |                                                                                                
|                              |  |      Consolidated Balance Sheets as of March 
31, 2010 and December 31, 2009                   |  | 3   
|                              |  |                                                                                                
|                              |  |      
Consolidated Statements of Operations for the three months ended March 31, 2010 and 2009 |  | 4   
|                              |  |                                                                                                
|                              |  |      
Consolidated Statements of Cash Flows for the three months ended March 31, 2010 and 2009 |  | 5   
|                              |  |                                                                                                
|                              |  |      Notes to the Consolidated Financial Statements                                            |  | 6   
|                              |  |                                                                                                
|ITEM 2.                       |  | Managements Discussion and Analysis of Financial Condition and Results of Operations           |  | 21  
|                              |  |                                                                                                
|ITEM 3.                       |  | Quantitative and Qualitative Disclosure about Market Risk                                       |  | 32  
|                              |  |                                                                                                
|ITEM 4T.                      |  | Controls and Procedures                                                                         |  | 32  
|                              | 
|Part II. OTHER INFORMATION    |  |                                                                                                
|                              |  |                                                                                                
|ITEM 1A.                      |  | Risk Factors                                                                                    |  | 33  
|                              |  |                                                                                                
|ITEM 6.                       |  | Exhibits                                                                                        |  | 33  
|                              | 
|SIGNATURES                    |  | 34                                                                                             
|                              | 
|EXHIBIT INDEX                 |  | 35                                                                                             



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##### Table of Contents

PART I  FINANCIAL INFORMATION

ITEM 1.  Consolidated Financial Statements

AGY Holding Corp. and Subsidiaries

Consolidated Balance Sheets

(Dollars in thousands except share and per share data)



|                                                                                                                      |  |               |          |   |                  |   |         |  
|--------------------------------------------------------------------------------------------------------------------- |  | ------------- | -------- | - | ---------------- | - | ------- | -
|                                                                                                                      |  | March 31,2010 |          |   | December 31,2009 |  
|                                                                                                                      |  | (Unaudited)   |          |   |                  |  
|Assets                                                                                                                |  |               |          |   |                  |   |         |  
|Current assets:                                                                                                       |  |               |          |   |                  |   |         |  
|Cash                                                                                                                  |  | $             | 3,763    |   |                  | $ | 3,439   |  
|Trade accounts receivable, less allowances of $2,782 and $2,558 at March 31, 2010 and December 31, 2009, respectively |  |               | 25,374   |   |                  |   | 18,682  |  
|Inventories, net                                                                                                      |  |               | 29,237   |   |                  |   | 29,734  |  
|Deferred tax assets                                                                                                   |  |               | 6,356    |   |                  |   | 6,382   |  
|Other current assets                                                                                                  |  |               | 3,681    |   |                  |   | 2,560   |  
|                                                                                                                      |  |               |          |   |                  |   |         |  
|Total current assets                                                                                                  |  |               | 68,411   |   |                  |   | 60,797  |  
|Property, plant and equipment, and alloy metals, net                                                                  |  |               | 238,622  |   |                  |   | 249,096 |  
|Intangible assets, net                                                                                                |  |               | 19,238   |   |                  |   | 19,667  |  
|Other assets                                                                                                          |  |               | 1,355    |   |                  |   | 1,306   |  
|                                                                                                                      |  |               |          |   |                  |   |         |  
|TOTAL                                                                                                                 |  | $             | 327,626  |   |                  | $ | 330,866 |  
|                                                                                                                      |  |               |          |   |                  |   |         |  
|                                                                                                                      |  |              
|Liabilities, Obligation Under Put/Call for Noncontrolling Interest and Shareholders Equity                           |  |               |          |   |                  |   |         |  
|Current liabilities:                                                                                                  |  |               |          |   |                  |   |         |  
|Accounts payable                                                                                                      |  | $             | 10,976   |   |                  | $ | 13,718  |  
|Accrued liabilities                                                                                                   |  |               | 21,152   |   |                  |   | 17,563  |  
|Short-term borrowings                                                                                                 |  |               | 7,127    |   |                  |   | 5,661   |  
|Current portion of long-term debt                                                                                     |  |               | 5,142    |   |                  |   | 5,142   |  
|                                                                                                                      |  |               |          |   |                  |   |         |  
|Total current liabilities                                                                                             |  |               | 44,397   |   |                  |   | 42,084  |  
|Long-term debt                                                                                                        |  |               | 223,289  |   |                  |   | 221,666 |  
|Pension and other employee benefit plans                                                                              |  |               | 12,313   |   |                  |   | 12,052  |  
|Other liabilities                                                                                                     |  |               | 4,578    |   |                  |   | 4,465   |  
|Deferred tax liabilities                                                                                              |  |               | 11,314   |   |                  |   | 13,768  |  
|                                                                                                                      |  |               |          |   |                  |   |         |  
|Total liabilities                                                                                                     |  |               | 295,891  |   |                  |   | 294,035 |  
|                                                                                                                      |  |               |          |   |                  |   |         |  
|Commitments and contingencies                                                                                         |  |               |          |   |                  |   |         |  
|Obligation under put/call for noncontrolling interest                                                                 |  |               | 11,038   |   |                  |   | 11,320  |  
|                                                                                                                      |  |               |          |   |                  |   |         |  
|Shareholders equity:                                                                                                 |  |               |          |   |                  |   |         |  
|Common stock, $.0001 par value per share; 5,000,000 shares authorized; 1,291,667 shares issued and outstanding        |  |               |         |   |                  |   |        |  
|Additional paid-in capital                                                                                            |  |               | 122,164  |   |                  |   | 122,144 |  
|Accumulated deficit                                                                                                   |  |               | (101,220 | ) |                  |   | (96,440 | )
|Accumulated other comprehensive deficit                                                                               |  |               | (247     | ) |                  |   | (193    | )
|                                                                                                                      |  |               |          |   |                  |   |         |  
|Total shareholders equity                                                                                            |  |               | 20,697   |   |                  |   | 25,511  |  
|                                                                                                                      |  |               |          |   |                  |   |         |  
|TOTAL                                                                                                                 |  | $             | 327,626  |   |                  | $ | 330,866 |  
|                                                                                                                      |  |               |          |   |                  |   |         |  

The accompanying notes are an integral part of the unaudited consolidated financial statements.



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AGY Holding Corp. and Subsidiaries

Consolidated Statements of Operations

(Dollars in thousands, unless otherwise noted)



|                                                           |  |                             |         |   |      |   |         |  
|---------------------------------------------------------- |  | --------------------------- | ------- | - | ---- | - | ------- | -
|                                                           |  | (Unaudited)                 |        
|                                                           |  | Three Months EndedMarch 31, |        
|                                                           |  | 2010                        |         |   | 2009 |  
|Net sales                                                  |  | $                           | 45,573  |   |      | $ | 39,614  |  
|Cost of goods sold                                         |  |                             | (40,965 | ) |      |   | (32,619 | )
|                                                           |  |                             |         |   |      |   |         |  
|Gross profit                                               |  |                             | 4,608   |   |      |   | 6,995   |  
|Selling, general and administrative expenses               |  |                             | (3,896  | ) |      |   | (4,254  | )
|Restructuring charges                                      |  |                             | (328    | ) |      |   | (518    | )
|Amortization of intangible assets                          |  |                             | (251    | ) |      |   | (251    | )
|Other operating expense                                    |  |                             | (1,701  | ) |      |   | (1,690  | )
|                                                           |  |                             |         |   |      |   |         |  
|Income (loss) from operations                              |  |                             | (1,568  | ) |      |   | 282     |  
|Other non-operating (expense) income:                      |  |                             |         |   |      |   |         |  
|Interest expense                                           |  |                             | (5,877  | ) |      |   | (5,131  | )
|Other income, net                                          |  |                             | 21      |   |      |   | 1,104   |  
|                                                           |  |                             |         |   |      |   |         |  
|Loss before income tax benefit                             |  |                             | (7,424  | ) |      |   | (3,745  | )
|Income tax benefit                                         |  |                             | 2,359   |   |      |   | 1,068   |  
|                                                           |  |                             |         |   |      |   |         |  
|Net loss                                                   |  |                             | (5,065  | ) |      |   | (2,677  | )
|Less: Net loss attributable to the noncontrolling interest |  |                             | (285    | ) |      |   |        |  
|                                                           |  |                             |         |   |      |   |         |  
|Net loss attributable to AGY Holding Corp.                 |  | $                           | (4,780  | ) |      | $ | (2,677  | )
|                                                           |  |                             |         |   |      |   |         |  

The accompanying notes are an integral part of the unaudited consolidated financial statements.



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AGY Holding Corp. and Subsidiaries

Consolidated Statements of Cash Flows

(Dollars in thousands, unless otherwise noted)



|                                                                                                             |  |                             |         |   |      |   |         |  
|------------------------------------------------------------------------------------------------------------ |  | --------------------------- | ------- | - | ---- | - | ------- | -
|                                                                                                             |  | (Unaudited)                 |        
|                                                                                                             |  | Three Months EndedMarch 31, |        
|                                                                                                             |  | 2010                        |         |   | 2009 |  
|Cash flow from operating activities:                                                                         |  |                             |         |   |      |   |         |  
|Net loss                                                                                                     |  | $                           | (5,065  | ) |      | $ | (2,677  | )
|Adjustments to reconcile net loss to net cash used in operating activities:                                  |  |                             |         |   |      |   |         |  
|Depreciation                                                                                                 |  |                             | 3,750   |   |      |   | 2,415   |  
|Alloy metals depletion, net                                                                                  |  |                             | 3,280   |   |      |   | 3,042   |  
|Amortization of debt issuance costs                                                                          |  |                             | 178     |   |      |   | 180     |  
|Amortization of intangibles with definite lives                                                              |  |                             | 251     |   |      |   | 251     |  
|Loss on sale, disposal or exchange of property and equipment and alloy metals                                |  |                             | 1,924   |   |      |   | 38      |  
|Gain on early extinguishment of debt                                                                         |  |                             |        |   |      |   | (1,138  | )
|Effect of adopting ASC 805 for acquisition-related costs                                                     |  |                             |        |   |      |   | 1,098   |  
|Stock compensation                                                                                           |  |                             | 20      |   |      |   | 447     |  
|Deferred income tax benefit                                                                                  |  |                             | (2,395  | ) |      |   | (1,125  | )
|Changes in assets and liabilities (net of effect of assets acquired and liabilities assumed in acquisition): |  |                             |         |   |      |   |         |  
|Trade accounts receivable                                                                                    |  |                             | (6,692  | ) |      |   | 4,659   |  
|Inventories                                                                                                  |  |                             | 497     |   |      |   | (8,058  | )
|Other assets                                                                                                 |  |                             | (1,056  | ) |      |   | (443    | )
|Accounts payable                                                                                             |  |                             | (2,613  | ) |      |   | 341     |  
|Accrued liabilities                                                                                          |  |                             | 3,590   |   |      |   | 904     |  
|Pension and other employee benefit plans                                                                     |  |                             | 170     |   |      |   | (24     | )
|                                                                                                             |  |                             |         |   |      |   |         |  
|Net cash used in operating activities                                                                        |  |                             | (4,161  | ) |      |   | (90     | )
|                                                                                                             |  |                             |         |   |      |   |         |  
|Cash flows from investing activities:                                                                        |  |                             |         |   |      |   |         |  
|Purchases of property and equipment and alloy metals                                                         |  |                             | (2,273  | ) |      |   | (4,538  | )
|Proceeds from the sale of property and equipment and alloy metals                                            |  |                             | 3,663   |   |      |   |        |  
|Increase in restricted cash                                                                                  |  |                             |        |   |      |   | (1      | )
|                                                                                                             |  |                             |         |   |      |   |         |  
|Net cash provided by (used in) investing activities                                                          |  |                             | 1,390   |   |      |   | (4,539  | )
|                                                                                                             |  |                             |         |   |      |   |         |  
|Cash flows from financing activities:                                                                        |  |                             |         |   |      |   |         |  
|Proceeds from Revolving Credit Facility borrowings                                                           |  |                             | 14,750  |   |      |   | 18,550  |  
|Payments on Revolving Credit Facility borrowings                                                             |  |                             | (14,600 | ) |      |   | (14,250 | )
|Purchases of Senior Secured Notes                                                                            |  |                             |        |   |      |   | (1,793  | )
|Proceeds from AGY Asia Credit Facility borrowings                                                            |  |                             | 2,938   |   |      |   |        |  
|                                                                                                             |  |                             |         |   |      |   |         |  
|Net cash provided by financing activities                                                                    |  |                             | 3,088   |   |      |   | 2,507   |  
|                                                                                                             |  |                             |         |   |      |   |         |  
|Effect of exchange rate changes on cash                                                                      |  |                             | 7       |   |      |   | 1       |  
|Net increase (decrease) in cash                                                                              |  |                             | 324     |   |      |   | (2,121  | )
|Cash, beginning of period                                                                                    |  |                             | 3,439   |   |      |   | 4,760   |  
|                                                                                                             |  |                             |         |   |      |   |         |  
|Cash, end of period                                                                                          |  | $                           | 3,763   |   |      | $ | 2,639   |  
|                                                                                                             |  |                             |         |   |      |   |         |  
|Supplemental disclosures of cash flow information:                                                           |  |                             |         |   |      |   |         |  
|Cash paid for interest                                                                                       |  | $                           | 754     |   |      | $ | 214     |  
|                                                                                                             |  |                             |         |   |      |   |         |  
|Cash paid for income taxes                                                                                   |  | $                           | 10      |   |      | $ | 37      |  
|                                                                                                             |  |                             |         |   |      |   |         |  
|Supplemental disclosures of non cash financing/investing activities:                                         |  |                             |         |   |      |   |         |  
|Increase (decrease) in minimum pension liability adjustment                                                  |  | $                           | 59      |   |      | $ |        |  
|                                                                                                             |  |                             |         |   |      |   |         |  
|Construction in-progress included in accounts payable                                                        |  | $                           | 528     |   |      | $ | 1, 644  |  
|                                                                                                             |  |                             |         |   |      |   |         |  

The accompanying notes are an integral part of the unaudited consolidated financial statements.



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AGY HOLDING CORP. AND
SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED
FINANCIAL STATEMENTS

(Dollars in thousands, unless otherwise noted)

1. GENERAL

As used in this Form 10-Q
and in these notes, the terms AGY, the Company, we, us, or our mean AGY Holding Corp. and subsidiary companies. The accompanying unaudited interim consolidated financial statements are
those of AGY Holding Corp. and subsidiary companies. Refer to Note 2 to the consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2009 (the 2009 Form 10-K) for a discussion
of our significant accounting policies.

AGY Holding Corp. is a Delaware corporation with its headquarters in South Carolina. KAGY Holding
Company, Inc. (Holdings) is the sole shareholder. AGY is a leading manufacturer of advanced glass fibers that are used as reinforcing materials in numerous diverse, high-value applications, including aircraft laminates, ballistic armor,
pressure vessels, roofing membranes, insect screening, architectural fabrics, and specialty electronics. AGY is focused on serving end-markets that require glass fibers for applications with demanding performance criteria, such as the aerospace,
defense, construction, electronics, automotive, and industrial end-markets.

On June 10, 2009, the Company acquired a 70% interest in a
foreign company, whose results of operations since the acquisition date are included in the accompanying consolidated financial statements. Since this acquisition, the Company operates as two reportable segments (each a single operating segment)
consisting of AGY U.S. manufacturing operations (AGY US) and AGY Asian manufacturing operations (AGY Asia).

Basis of Consolidation and Presentation

The accompanying unaudited interim consolidated financial statements and related notes have been prepared in accordance with accounting principles
generally accepted in the United States of America (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes
required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of items of a normal recurring nature) considered necessary for a fair statement of financial condition and results of operations have been
included. Interim operating results are not necessarily indicative of the results to be expected for any other interim period or for the full year.

The Companys business is conducted through AGY Holding Corp., its two wholly owned domestic subsidiaries, AGY Aiken LLC and AGY Huntingdon LLC and
its wholly owned foreign subsidiaries, AGY Europe SARL (France) and AGY Cayman LLC (Cayman Islands). AGY Cayman LLC (Cayman Islands) is the holding company of the 70% controlling ownership in AGY Hong Kong Ltd. (formerly Main Union Industrial Ltd.)
and its subsidiaries since June 10, 2009. All significant intercompany accounts and transactions have been eliminated in consolidation.

The information included in this Form 10-Q should be read in conjunction with Managements Discussion and Analysis of Financial Condition and
Results of Operations and the consolidated financial statements and notes thereto included in our 2009 Form 10-K. The December 31, 2009 balances are derived from the audited financial statements in the 2009 Form 10-K.

The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates and are
subject to risks and uncertainties, including those identified in the Risk Factors section of our 2009 Form 10-K. Changes in facts and circumstances may have a significant impact on the resulting financial statements.

Adoption of new accounting standards

In June 2009, the Financial Accounting Standards Board (FASB) issued revised authoritative guidance that amends the consolidation
guidance applicable to variable interest entities, as well as requires additional disclosures. The revised guidance is effective as of the beginning of the first fiscal year that begins after November 15, 2009, which is January 1,
2010 for the Company. As the consolidation of variable entities does not apply to the Company, the adoption of this authoritative guidance had no impact on the Companys consolidated financial statements or disclosures.



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AGY HOLDING CORP. AND
SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED
FINANCIAL STATEMENTS(Continued)

(Dollars in thousands, unless otherwise noted)



In June 2009, the FASB issued ASC 860 regarding the Accounting for Transfers of Financial Assets.
ASC 860 requires additional disclosures about the transfer and derecognition of financial assets, eliminates the concept of qualifying special-purpose entities, creates more stringent conditions for reporting a transfer of a portion of a financial
asset as a sale, clarifies other sale-accounting criteria, and changes the initial measurement of a transferors interest in transferred financial assets. ASC 860 is effective for fiscal years beginning after November 15, 2009. The
adoption of ASC 860 had no material impact on the Companys results of operations, cash flows, or financial position.

Effective
January 1, 2009, the Company adopted the provisions of ASC 805 (formerly FSP FAS No. 141 (revised 2007), Business Combinations (SFAS No. 141(R)), which became effective on a prospective basis for all business
combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. Among other things, ASC 805 requires that all acquisition-related costs be expensed as
incurred. At December 31, 2008, under the prior guidance of SFAS No. 141(R), the Company had deferred $1,098 of acquisition-related costs associated with its proposed acquisition of a majority interest in a Chinese company. In adopting
this new accounting standard as of January 1, 2009, the Company expensed (classified as other operating expense in the statement of operations) the $1,098 of acquisition-related costs. The Company also expensed $556 and $1,627 of
incremental advisory, legal and accounting fees that it incurred during the three months ended March 31, 2009 and during the year ended December 31, 2009, respectively in connection with this transaction. The previously described business
combination was consummated on June 10, 2009, and as discussed in Note 2, the Company applied the other provisions of ASC 805 to the accounting for this acquisition.

Recently issued accounting standards

In October 2009, the FASB issued new authoritative guidance regarding Revenue Recognition(Topic 605): Multiple-Deliverable Revenue
Arrangements  a Consensus of the FASB Emerging Issues Task Force, which amends ASC 605. This update establishes a selling price hierarchy, whereby vendor-specific objective evidence (VSOE), if available, should be
utilized. If VSOE is not available, then third party evidence should be utilized; if third party evidence is not available, then an entity should use the estimated selling price for the good or service. This update eliminates the residual method and
requires allocation at the inception of the contractual arrangement and additional disclosures surrounding multiple-deliverable revenue arrangements. This update is effective, on a prospective basis, for revenue arrangements entered into after
June 15, 2010, with early adoption permitted. We are currently evaluating the impact the adoption of this update will have on the Companys results of operations, cash flows, or financial position.

2. 2009 Chinese Business Combination

On
June 10, 2009, pursuant to the terms of the Sale and Purchase Agreement dated March 12, 2009 (the AGY Asia Purchase Agreement), by and among AGY Cayman, Grace Technology Investment Co., Ltd. and Grace THW Holding Limited
(together with Grace Technology Investment Co., Ltd., Grace), AGY Cayman, a company incorporated in the Cayman Islands and a wholly-owned subsidiary of the Company, completed its acquisition of 70% of the outstanding shares of Main Union
Industrial Ltd. (renamed AGY Hong Kong Ltd.), a company incorporated in Hong Kong and a previously wholly-owned subsidiary of Grace Technology Investment Co., Ltd., a company incorporated in the British Virgin Islands and a wholly-owned subsidiary
of Grace THW Holding Limited. AGY Hong Kong Ltd. owns 100% controlling interest in Shanghai Grace Technology Co., Ltd (renamed AGY Shanghai Technology Co., Ltd. (AGY Shanghai)), a company incorporated in China, which is also a glassfiber
yarns manufacturer. This acquisition expands AGYs geographic, manufacturing, and servicing capabilities in the Asia-Pacific region relative to the electronics and industrial end-markets.

In connection with the execution of the AGY Asia Purchase Agreement, the parties entered into several other agreements, including: (1) an option
agreement, pursuant to which Grace granted AGY Cayman a call option, and AGY Cayman granted Grace a put option, in respect to the 30% interest held by Grace in AGY Hong Kong Ltd., (2) a supply agreement, pursuant to which Grace will purchase
certain fiberglass yarn products from AGY, which will have an initial term through December 31, 2013, (3) an intellectual property license agreement pursuant to which AGY Holding Corp. grants to AGY Hong Kong Ltd. a non exclusive,
royalty-free, non-transferable know-how and trademarks license for the production and the sale of certain products for specific territories, and (4) a technical service agreement pursuant to which AGY provides certain technical and
manufacturing support services to AGY Shanghai.



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AGY HOLDING CORP. AND
SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED
FINANCIAL STATEMENTS(Continued)

(Dollars in thousands, unless otherwise noted)



3. Inventories, net

Inventories, net of reserves for excess, obsolete, and write-downs to lower of cost or market adjustments of $3,130 and $2,618 as of March 31, 2010
and December 31, 2009, respectively, consist of the following:



|                                   |  |               |        |                   |   |       
|---------------------------------- |  | ------------- | ------ | ----------------- | - | ------
|                                   |  | March 31,2010 |        | December 
31,2009
|Finished goods and work in process |  | $             | 20,810 |                   | $ | 20,544
|Materials and supplies             |  |               | 8,427  |                   |   | 9,190 
|                                   |  |               |        |                   |   |       
|                                   |  | $             | 29,237 |                   | $ | 29,734
|                                   |  |               |        |                   |   |       

4. Property, Plant and Equipment and Alloy Metals

Property, plant and equipment and alloy metals consist of the following:



|                                     |  |               |         |   |                  |   |         |  
|------------------------------------ |  | ------------- | ------- | - | ---------------- | - | ------- | -
|                                     |  | March 31,2010 |         |   | December 31,2009 |  
|Land and land use rights             |  | $             | 11,561  |   |                  | $ | 11,561  |  
|Buildings and leasehold improvements |  |               | 37,492  |   |                  |   | 37,492  |  
|Machinery and equipment              |  |               | 131,608 |   |                  |   | 131,596 |  
|Alloy metals (net of depletion)      |  |               | 99,098  |   |                  |   | 107,601 |  
|                                     |  |               |         |   |                  |   |         |  
|                                     |  |               | 279,759 |   |                  |   | 288,250 |  
|Less  Accumulated depreciation      |  |               | (49,275 | ) |                  |   | (45,525 | )
|                                     |  |               |         |   |                  |   |         |  
|                                     |  |               | 230,484 |   |                  |   | 242,725 |  
|Construction-in-progress             |  |               | 8,138   |   |                  |   | 6,371   |  
|                                     |  |               |         |   |                  |   |         |  
|                                     |  | $             | 238,622 |   |                  | $ | 249,096 |  
|                                     |  |               |         |   |                  |   |         |  

Depreciation expense was $3,750 and $2,415 in the three months ended March 31, 2010 and 2009, respectively.

Depletion of alloy metals was $3,280 and $3,042 (net of recoveries and excluding expense to process such recoveries), in the three months ended
March 31, 2010 and 2009, respectively.

During the first three months of 2010, the Company sold alloy metals and recognized a loss of
$1,924, classified as other operating expense.



8



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##### Table of Contents

AGY HOLDING CORP. AND
SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED
FINANCIAL STATEMENTS(Continued)

(Dollars in thousands, unless otherwise noted)



5. Intangible Assets

Intangible assets subject to amortization and trademarks, which are not amortized, consist of the following:



|                                           |  |               |        |   |                  |   |        |                       |  |             
|------------------------------------------ |  | ------------- | ------ | - | ---------------- | - | ------ | --------------------- |  | ------------
|                                           |  | March 31,2010 |        |   | December 31,2009 |   |        | Estimated UsefulLives
|Intangible assets subject to amortization: |  |               |        |   |                  |   |        |                       |  |             
|Customer relationships  U.S.              |  | $             | 4,800  |   |                  | $ | 4,800  |                       |  | 11 years    
|Process technology                         |  |               | 10,200 |   |                  |   | 10,200 |                       |  | 18 years    
|Deferred financing fees                    |  |               | 5,075  |   |                  |   | 5,075  |                       |  | 5 to 8 years
|                                           |  |               |        |   |                  |   |        |                       |  |             
|Sub-Total                                  |  |               | 20,075 |   |                  |   | 20,075 |                       |  |             
|Less  Accumulated amortization            |  |               | (6,450 | ) |                  |   | (6,021 | )                     |  |             
|                                           |  |               |        |   |                  |   |        |                       |  |             
|                                           |  |               | 13,625 |   |                  |   | 14,054 |                       |  |             
|Trademarks  not amortized                 |  |               | 5,613  |   |                  |   | 5,613  |                       |  |             
|                                           |  |               |        |   |                  |   |        |                       |  |             
|Net intangible assets                      |  | $             | 19,238 |   |                  | $ | 19,667 |                       |  |             
|                                           |  |               |        |   |                  |   |        |                       |  |             

Deferred financing fees are amortized by the straight-line method, which approximates the effective interest
method.

The Companys process technology consists of several patents that relate to the design, application or manufacturing for key
products, and its estimated useful life is based on the average legal life of the patents and the Companys estimated economic life of the processes.

During the first quarter of 2009, the Company purchased $3,000 (face amount) of its 11% senior secured second lien notes (Notes) (see Note
8). The allocable portion of debt issuance costs related to these Notes of $70 was netted against the gain on the repurchase of the Notes in other non-operating income.

6. Restructuring Initiatives

2010 Cost Reduction Actions

As part of the Companys continuing review and improvement of its cost structure, actions were taken in the first quarter of 2010 to further optimize
the AGY US segment manufacturing footprint. The Company is flexing certain manufacturing facilities in the U.S. to improve profitability and better adjust its production capacity to projected future worldwide market demand. In conjunction with these
actions, the Company recorded $328 in restructuring charges during the first three months of 2010 that related primarily to the relocation of certain manufacturing equipment. The cost related to these actions was incurred and paid during the same
period.

The Company continues to evaluate its global manufacturing footprint to ensure the optimization of its production capacity and its
overhead cost structure. As a result of this evaluation, similar activities are anticipated to continue throughout 2010 and could result in additional cash payments and accelerated depreciation expense.

2009 Cost Reduction Actions

During the three months ended March 31, 2009, the Company recorded $518 in restructuring charges that related primarily to severance and outplacement
cost for salaried positions that the Company eliminated within the AGY US segment.

These 2009 cost reduction actions and their payment were
completed in 2009.



9



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##### Table of Contents

AGY HOLDING CORP. AND
SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED
FINANCIAL STATEMENTS(Continued)

(Dollars in thousands, unless otherwise noted)



7. Accrued Liabilities

Accrued liabilities consist of the following:



|                                                          |  |               |        |                  |   |       
|--------------------------------------------------------- |  | ------------- | ------ | ---------------- | - | ------
|                                                          |  | March 31,2010 |        | December 31,2009
|Vacation                                                  |  | $             | 2,087  |                  | $ | 2,057 
|Real and personal property taxes,(excluding pre-petition) |  |               | 5,590  |                  |   | 5,382 
|Payroll and benefits                                      |  |               | 1,562  |                  |   | 1,302 
|Interest                                                  |  |               | 7,205  |                  |   | 2,470 
|AGY Asia supply agreement                                 |  |               | 1,856  |                  |   | 3,810 
|Current portion of pension and other employee benefits    |  |               | 1,012  |                  |   | 1,012 
|Accrued non refundable PRC value added tax                |  |               | 990    |                  |   | 937   
|Other                                                     |  |               | 850    |                  |   | 593   
|                                                          |  |               |        |                  |   |       
|Total accrued liabilities                                 |  | $             | 21,152 |                  | $ | 17,563
|                                                          |  |               |        |                  |   |       

8. Debt

Principal amounts of indebtedness outstanding under the Companys financing arrangements consist of the following:



|                                         |  |               |         |                  |   |        
|---------------------------------------- |  | ------------- | ------- | ---------------- | - | -------
|                                         |  | March 31,2010 |         | December 31,2009
|Senior secured notes                     |  | $             | 172,000 |                  | $ | 172,000
|Senior secured revolving credit facility |  |               | 19,400  |                  |   | 19,250 
|AGY Asia credit facility  non-recourse  |  |               | 44,158  |                  |   | 41,219 
|                                         |  |               |         |                  |   |        
|Total debt                               |  |               | 235,558 |                  |   | 232,469
|Less  Current portion AGY Asia          |  |               | 12,269  |                  |   | 10,803 
|                                         |  |               |         |                  |   |        
|Total long-term debt                     |  | $             | 223,289 |                  | $ | 221,666
|                                         |  |               |         |                  |   |        

Senior Secured Revolving Credit Facility

The Companys $40,000 Senior Secured Revolving Credit Facility (Credit Facility) matures in October 2011 and includes
a $20,000 sublimit for the issuance of letters of credit and a $5,000 sublimit for swing line loans. The borrowing base for the Credit Facility is equal to the sum of: (i) an advance rate against eligible accounts receivable of up to 90%, plus
(ii) the lesser of (A) 65% of the book value of eligible inventory (valued at the lower of cost or market) and (B) 85% of the net orderly liquidation value for eligible inventory, plus (iii) up to $32,500 of eligible alloy
inventory, minus (iv) 100% of market-to-market risk on certain interest hedging arrangements, minus (v) a reserve of $7,500. As amended in connection with its acquisition of a 70% interest in AGY Asia, certain provisions of the credit
agreement were modified or added, including the following: the availability reserve in the borrowing base calculation increased from $7,500 to $10,000; the foreign subsidiary indebtedness of AGY Asia or its subsidiaries is permitted provided that it
is non-recourse indebtedness; the investment associated with the purchase of the remaining 30% is permitted provided that the Companys excess availability under the facility is at least $10,000 for 60 days prior to the consummation date and
$12,500 immediately following such consummation; and it is an event of default under the credit agreement if the Company defaults under its obligations regarding the acquisition of the remaining 30% of AGY Asia. In addition, the applicable margin
for any utilization of the revolver in excess of $25,000 increased from 1.75% to 3.0% for Eurodollar loans and from 0.75% to 2.0% for base rate loans. No other material terms of the credit agreement were modified under the amendment.

At the Companys option, loans under the Credit Facility bear interest based on either the eurodollar rate or base rate (a rate equal to the greater
of the corporate base rate of interest established by the administrative agent under the Credit Facility from time to time, and the federal funds effective rate plus 0.50%) plus, in each case, an applicable margin of 1.75% in the case of eurodollar
rate loans and 0.75% in the case of base rate loans.



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##### Table of Contents

AGY HOLDING CORP. AND
SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED
FINANCIAL STATEMENTS(Continued)

(Dollars in thousands, unless otherwise noted)



In addition, there are customary commitment and letter of credit fees under the Credit Facility. All
obligations under the Credit Facility are guaranteed by the Company and all of its existing and future direct and indirect domestic subsidiaries. The Companys obligations under the Credit Facility are secured, subject to permitted liens and
other agreed upon exceptions, by a first-priority security interest in substantially all of the Companys assets.

At March 31, 2010
and December 31, 2009, we had $19,400 and $19,250 borrowings, respectively, outstanding under the Credit Facility. The weighted average interest rate for cash borrowings outstanding as of March 31, 2010, was 2.23%. At March 31, 2010
and December 31, 2009, we also had issued approximately $2,293 of standby letters of credit primarily for collateral required for utilities, fixed-rate natural gas purchases and workers compensation obligations. Borrowing availability at
March 31, 2010 and December 31, 2009, was approximately $18,300 and $18,450, respectively.

The Credit Facility does not contain any
financial maintenance covenants. Under certain events of default and other conditions, including failure to pay indebtedness under the senior secured second lien notes, payment of the outstanding principal and interest could be accelerated.

The Credit Facility contains customary representations and warranties and customary affirmative and negative covenants, including, among
other things, restrictions on indebtedness, liens, investments, mergers and consolidations, dividends and other payments in respect to capital stock, transactions with affiliates, and optional payments and modifications of subordinated and other
debt instruments. The Credit Facility also includes customary events of default, including a default upon a change of control. The Company was in compliance with all such covenants at March 31, 2010 and December 31, 2009.

Senior Secured Notes

Interest on our Notes due in 2014 is payable semi-annually on May 15 and November 15 of each year beginning May 15, 2007. Our obligations
under the Notes are fully and unconditionally guaranteed, jointly and severally, on a second-priority basis, by each of our existing and future domestic subsidiaries, other than immaterial subsidiaries, that guarantee the indebtedness of the
Company, including the Credit Facility, or the indebtedness of any restricted subsidiaries.

In February 2009, we repurchased $3,000 face
amount of Notes for $1,792 plus accrued interest of $92 and commission of $8, resulting in a net gain on extinguishment of debt of $1,138 (net of $70 of deferred financing fees written off), classified as other non-operating income.

At any time prior to November 15, 2010, we may redeem all or a part of the Notes at a redemption price equal to 100% of the principal
amount of Notes redeemed plus an applicable make-whole payment. Currently, we do not expect to utilize the remaining optional redemption provision.

As of March 31, 2010 and December 31, 2009, the estimated fair value of the Notes was $148,780 and $140,610, respectively, compared to a
recorded book value of $172,000 for both periods. The fair value of the Notes is estimated on the basis of quoted market prices; however, trading in these securities is limited and may not reflect fair value. The fair value is subject to
fluctuations based on, among other things, the Companys performance, its credit rating and changes in interest rates for debt securities with similar terms.

The indenture governing the notes contains a Fixed Charge Coverage Ratio (calculated based on Consolidated Cash Flow (as defined)), which is
used to determine our ability to make restricted payments, incur additional indebtedness, issue preferred stock and enter into mergers or consolidations or sales of substantially all assets. The indenture does not allow us to pay dividends or
distributions on our outstanding capital stock (including to our parent) and limits or restricts our ability to incur debt, repurchase securities, make certain prohibited investments, create liens, transfer or sell assets, enter into transactions
with affiliates, issue or sell stock of a subsidiary or merge or consolidate. The indenture does not contain any financial maintenance covenants.

Under certain events of default, including defaults under the Credit Facility, payment of the outstanding principal and interest could be accelerated.



11



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##### Table of Contents

AGY HOLDING CORP. AND
SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED
FINANCIAL STATEMENTS(Continued)

(Dollars in thousands, unless otherwise noted)



AGY Asia Credit Facility- Non-recourse

The indebtedness of $38,967 assumed in the acquisition of AGY Asia was refinanced as discussed below. On July 10, 2009, AGY Asia entered into a
financing arrangement with the Bank of Shanghai (AGY Asia Credit Facility). The arrangement consists of a five-year term loan in the aggregate amount of approximately $40,500 (consisting of a loan denominated in local currency of RMB
208,500, or approximately $30,500 converted at an exchange rate of RMB 6.83 to 1 U.S. dollar, and a U.S.-dollar-denominated loan of $10,000), a one-year working capital loan in the aggregate amount of approximately $11,700 (consisting of a local
currency loan of RMB 45,750, or approximately $6,700 converted at an exchange rate of RMB 6.83 to 1 U.S. dollar, and a U.S.-dollar-denominated loan of $5,000), and a one-year letter of credit facility in the amount of $2,000. As discussed above,
proceeds from the loans were used principally to repay the $37,568 outstanding at the time of the refinancing under AGY Asias prior credit agreements.

The term loan is secured by AGY Asias building, alloy metals and equipment and bears interest annually at the rate of either the five-year lending
rate as published by the Peoples Bank of China, plus a margin, or six-month LIBOR plus 3.0%. Term loan borrowings may be made in both local currency and US dollars, up to certain limits. At March 31, 2010 and December 31, 2009, AGY
Shanghai had approximately $37,031 and $35,558 of borrowings outstanding under the term loan, respectively, consisting of a local currency loan of RMB 205,000 and RMB 195,000, respectively, or approximately $30,031 and $28,558, respectively,
converted at an exchange rate of RMB 6.83 to 1 U.S. dollar, and a U.S.-dollar-denominated loan of $7,000 at the end of both periods. The weighted average interest rate for cash borrowings outstanding as of March 31, 2010, was 5.79%.

Principal on the term loan is due semi-annually beginning April 2010, in accordance with the following amortization schedule (when the term loan is fully
drawn):



|     |  |   |       
|---- |  | - | ------
|2010 |  | $ | 5,100 
|2011 |  |   | 8,100 
|2012 |  |   | 9,900 
|2013 |  |   | 11,300
|2014 |  |   | 6,100 
|     |  |   |       
|     |  | $ | 40,500
|     |  |   |       

The working capital loan facility is secured by future equipment and
assets acquired by AGY Shanghai and bears interest annually at the rate of either the one-year lending rate as published by the Peoples Bank of China, or three-month LIBOR plus 3.0%. Working capital loan borrowings may be made in both local
currency and U.S. Dollars, up to certain limits.

At March 31, 2010 and December 31, 2009, the Company had approximately $7,127 and
$5,661 borrowings, respectively, outstanding under the working capital loan consisting of a local currency loan of RMB 35,000 and RMB 25,000, respectively, or approximately $5,127 and $3,661, respectively, converted at an exchange rate of RMB 6.83
to 1 U.S. dollar, and a U.S.-dollar-denominated loan of $2,000 at the end of each period. The weighted average interest rate for cash borrowings outstanding as of March 31, 2010, was 4.73%.

The letter of credit facility is a one-year facility for the issuance of documentary letters of credit up to a maximum term of 120 days. A 15% deposit is
required upon issuance with the balance due upon settlement of the underlying obligation.

The loan agreements contain customary
representations and warranties and customary affirmative and negative covenants, including, among other things, interest coverage, restrictions on indebtedness, liens, investments, mergers and consolidations, dividends and other payments in respect
to capital stock, and transactions with affiliates. The loan agreements also include customary events of default, including a default upon a change of control. AGY Shanghai was in compliance with all such covenants at March 31, 2010 and
December 31, 2009.

All amounts borrowed under the AGY Asia Credit Facility are non-recourse to AGY Holding Corp. or any other domestic
subsidiary of AGY Holding Corp.



12



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##### Table of Contents

AGY HOLDING CORP. AND
SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED
FINANCIAL STATEMENTS(Continued)

(Dollars in thousands, unless otherwise noted)



Maturities of Long-Term Debt

Maturities of long-term debt at March 31, 2010 consist of the following:



|     |  |              |         |                      |   |        |  |   |        
|---- |  | ------------ | ------- | -------------------- | - | ------ |  | - | -------
|     |  | NorthAmerica |         | China Non- recourse |   | Total 
|2011 |  |              | 19,400  |                      |   | 8,153  |  |   | 27,553 
|2012 |  |              |        |                      |   | 9,911  |  |   | 9,911  
|2013 |  |              |        |                      |   | 9,790  |  |   | 9,790  
|2014 |  |              | 172,000 |                      |   | 4,035  |  |   | 176,035
|     |  |              |         |                      |   |        |  |   |        
|     |  | $            | 191,400 |                      | $ | 31,889 |  | $ | 223,289
|     |  |              |         |                      |   |        |  |   |        

9. Capital Stock and Equity

The authorized capital consists of a total of 5,000,000 shares of common stock with a par value of $0.0001 per share. All 1,291,667 outstanding shares of
the Company have been owned by Holdings since the Acquisition on April 7, 2006. The holder of each share has the right to one vote for each share of common stock held and no shareholder has special voting rights other than those afforded all
shareholders generally under Delaware law. Shareholders will share ratably, based on the number of shares held, in any and all dividends the Company may declare. As indicated in Note 8, the payment of dividends is restricted by the Credit
Facility and no dividends were paid in either the three months ended March 31, 2010 or in 2009.

10. Employee Benefits

Pension and Other Post-retirement Benefits

Pension BenefitsAs described more fully in our 2009 Form 10-K, we have a reimbursement obligation to Owens Corning (OC) under
OCs defined benefit pension plan covering certain of our employees. Our obligation to OC is unfunded. We do not have a defined benefit pension plan.

Other Post-retirement BenefitsWe have a post-retirement benefit plan that covers substantially all of our domestic employees. Upon the
attainment of age sixty-two and the completion of ten years of continuous service, an employee may elect to retire. Employees eligible to retire may receive limited postretirement health and life insurance benefits. We also have an unfunded
reimbursement obligation to OC for certain of our retirees who retired under OCs retiree medical plan.

Net periodic benefit costs for
the three ended March 31, 2010 and 2009, are as follows:



|                                   |  |                                      |     |                         |   |      |  |   |      |   |  |   |     |  
|---------------------------------- |  | ------------------------------------ | --- | ----------------------- | - | ---- |  | - | ---- | - |  | - | --- | -
|                                   |  | For the Three Months Ended March 31, |    
|                                   |  | PensionBenefits                      |     | Post-RetirementBenefits |  
|                                   |  | 2010                                 |     | 2009                    |   | 2010 |  |   | 2009 |  
|Service cost                       |  | $                                    |    |                         | $ |     |  | $ | 112  |   |  | $ | 112 |  
|Interest cost                      |  |                                      | 63  |                         |   | 68   |  |   | 109  |   |  |   | 109 |  
|Settlement                         |  |                                      | 53  |                         |   |     |  |   |     |   |  |   |    |  
|Amortization of unrecognized gains |  |                                      |    |                         |   |     |  |   | (3   | ) |  |   | (3  | )
|                                   |  |                                      |     |                         |   |      |  |   |      |   |  |   |     |  
|Total net periodic benefit cost    |  | $                                    | 116 |                         | $ | 68   |  | $ | 218  |   |  | $ | 218 |  
|                                   |  |                                      |     |                         |   |      |  |   |      |   |  |   |     |  

Expected net employer contributions for the defined benefit plan for the year ending December 31, 2010 are $544.
Expected net employer contributions for the postretirement benefit plan for the year ending December 31, 2010 are $468.



13



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##### Table of Contents

AGY HOLDING CORP. AND
SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED
FINANCIAL STATEMENTS(Continued)

(Dollars in thousands, unless otherwise noted)



Defined Contribution Plan

The Company has a defined contribution 401(k) plan that allows qualifying employees to contribute up to 30% of their annual pretax or after-tax
compensation subject to Internal Revenue Service (IRS) limitations. Effective January 1, 2007, AGY may provide a voluntary matching employer contribution of 50% on up to 6% of each participants before-tax salary deferral. In addition, AGY
may make an employer contribution to the plan based on the Companys annual financial performance. For the three months ended March 31, 2010 and 2009, the Company contributed $163 and $186, respectively.

11. Stock-based Compensation

Our
stock-based compensation includes stock options and restricted stock as described in our 2009 Form 10-K. Total stock-based compensation was $20 and $447 for the three months ended March 31, 2010 and 2009, respectively. No additional stock
options or restricted stock were granted, exercised, forfeited or expired during the three months ended March 31, 2010.

12.
Comprehensive Loss

Comprehensive loss represents net loss and other gains and losses affecting shareholders equity that are not
reflected in our consolidated statements of operations. The components of comprehensive loss were as follows:



|                                                                              |  |                             |        |   |      |   |        |  
|----------------------------------------------------------------------------- |  | --------------------------- | ------ | - | ---- | - | ------ | -
|                                                                              |  | Three Months EndedMarch 31, |       
|                                                                              |  | 2010                        |        |   | 2009 |  
|Net loss attributable to AGY Holding Corp.                                    |  | $                           | (4,780 | ) |      | $ | (2,677 | )
|Pension & Other OPEB Adjustments                                              |  |                             | (59    | ) |      |   |       |  
|Currency translation adjustments                                              |  |                             | 5      |   |      |   |       |  
|                                                                              |  |                             |        |   |      |   |        |  
|Comprehensive (loss) income attributable to AGY Holding Corp.                 |  | $                           | (4,834 | ) |      | $ | (2,677 | )
|                                                                              |  |                             |        |   |      |   |        |  
|                                                                              |  |                            
|Net loss attributable to noncontrolling interest                              |  | $                           | (285   | ) |      | $ |       |  
|Currency translation adjustments                                              |  |                             | 3      |   |      |   |       |  
|                                                                              |  |                             |        |   |      |   |        |  
|Comprehensive loss attributable to noncontrolling interest                    |  | $                           | (282   | ) |      | $ |       |  
|                                                                              |  |                             |        |   |      |   |        |  
|                                                                              |  |                            
|Net (loss) income                                                             |  | $                           | (5,065 | ) |      | $ | (2,677 | )
|Pension and Other OPEB Adjustments                                            |  |                             | (59    | ) |      |   |       |  
|Currency translation adjustments                                              |  |                             | 8      |   |      |   |       |  
|                                                                              |  |                             |        |   |      |   |        |  
|Comprehensive loss, including portion attributable to noncontrolling interest |  | $                           | (5,116 | ) |      | $ | (2,677 | )
|                                                                              |  |                             |        |   |      |   |        |  

13. Derivative Instruments and Hedging Activities

We periodically enter into fixed-price agreements for the natural gas commodity requirements of our AGY US segment to reduce the variability of the cash
flows associated with forecasted purchases of natural gas. Although these contracts are considered derivative instruments, they typically meet the normal purchases exclusion contained in ASC 815, and are therefore exempted from the related
accounting requirements. At March 31, 2010, we had existing contracts for physical delivery of natural gas at our Aiken, SC facility that fix the commodity cost of natural gas for approximately 70% of our 2010 AGY US segment estimated natural
gas purchase requirements.

We also use, on occasion, foreign currency derivatives to manage the risk associated with fluctuations in foreign
exchange rates. At March 31, 2010 and December 31, 2009, we had no foreign currency hedging agreements in effect.

14. Alloy
Metals Leases

We lease under short-term operating facilities (generally with lease terms from one to twelve months) a significant portion
of the alloy metals needed to support our manufacturing operations. During the three months ended March 31, 2010 and 2009, total lease costs of alloy metals were approximately $900 and $1,070, respectively, and were classified as a component of
cost of goods sold.



14



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##### Table of Contents

AGY HOLDING CORP. AND
SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED
FINANCIAL STATEMENTS(Continued)

(Dollars in thousands, unless otherwise noted)



We have leased alloy metals under the following two agreements during the three months ended
March 31, 2010 and in 2009:

Metal Consignment FacilityFrom August 2005 to October 2009, AGY had a
consignment agreement in place with Bank of Nova Scotia, as assignee of Bank of America, N.A., which was assignee of Fleet Precious Metals Inc., to lease platinum, one of the alloy metals used in our manufacturing operations. In March 2008, as a
result of the increase in platinum market prices, the prior consignment limit was amended to provide up to the lesser of: a) $69,600; b) the value of 32,000 ounces of platinum; or c) $42,000 plus two times the then-available undrawn face amount of
letters of credit securing the agreement. Lease payments were payable monthly and, at the Companys election, based on either (i) a floating fee calculated and specified by Bank of Nova Scotia from time to time and initially set at
7.5% per annum or (ii) a fixed fee equal to the precious metals rate, which was the fixed market-based lease rate for the applicable lease period, plus a 2.0% margin. At March 31, 2009, we leased 27,400 ounces of platinum under the
facility, with a notional value of approximately $21,000 as calculated under the facility. Unused availability at March 31, 2009, was approximately 4,600 ounces of platinum with a notional value of $38,800. If the market value of the leased
platinum exceeded $69,600 or 32,000 ounces, the Company was required to purchase or otherwise provide sufficient platinum to reduce the lease balance. At March 31, 2009, there were no outstanding letters of credit securing the agreement.
Effective October 7, 2009, the Company terminated the Metal Consignment Facility with Bank of Nova Scotia and entered into a new master lease agreement with Deutsche Bank as discussed below.

Deutsche Bank Master Lease Agreement  Simultaneously with the termination of the OC master lease agreement in October 2008, we
entered into a new master lease agreement (the Master Lease Agreement) with DB Energy Trading LLC (DB) for the purpose of leasing precious metals. The Master Lease Agreement described the lease terms and conditions enabling
AGY to lease up to 19,057 ounces of platinum and 3,308 ounces of rhodium. The Master Lease Agreement had a three-year term and allowed AGY to enter into leases of alloy metals with terms of one to twelve months. Lease costs were determined by the
quantity of metal leased, multiplied by a benchmark value of the applicable precious metal and a margin above the lease rate index based on DBs daily precious metal rates.

At March 31, 2009, we leased approximately 17,800 ounces of platinum and 3,100 ounces of rhodium under the Master Lease Agreement, with a notional
value of approximately $20,700.

In connection with the termination of the Metal Consignment Facility with Bank of Nova Scotia on
October 7, 2009, the Master Lease Agreement was also terminated and we entered into a new master lease agreement (the New Master Lease Agreement) with DB. The New Master Lease Agreement has a three-year term and allows AGY to enter
into leases of alloy metals, up to 51,057 ounces of platinum and up to 3,308 ounces of rhodium, with terms of one to twelve months. Lease costs are determined by the quantity of metal leased, multiplied by a benchmark value of the applicable
precious metal and a margin above the lease rate index based on DBs daily precious metal rates. The New Master Lease Agreement is secured by a security interest in rhodium up to a value that is the lesser of 35% of the leased platinum or
$24,400. The New Master Lease Agreement contains customary events of default, including, without limitation, nonpayment of lease payments, inaccuracy of representations and warranties in any material respect and a cross-default provision with any
credit facility or leasing facility greater than $0.5 million, including the Credit Facility and the Notes. There are no financial maintenance covenants included in the New Master Lease Agreement.

At March 31, 2010, we leased approximately 39,100 ounces of platinum and 2,200 ounces of rhodium under the New Master Lease Agreement, with a
notional value of approximately $55,350 and $5,400, respectively. All of the leases outstanding at March 31, 2010 had initial terms of two to twelve months, maturing no later than October 12, 2010 (with future minimum rentals of
approximately $924 until maturity in October 2010).

15. Fair Value Measurements

The Company utilized the valuation hierarchy provided in ASC 820-10 to determine the fair value of assets measured on a non-recurring basis in periods
subsequent to the initial adoption of ASC 820-10:



| |  |  | Level 1: Observable inputs such as quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities.
The fair value hierarchy gives the highest priority to Level 1 inputs.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly based on inputs not quoted on
active markets, but corroborated by market data.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Level 3: Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------



15



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##### Table of Contents

AGY HOLDING CORP. AND
SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED
FINANCIAL STATEMENTS(Continued)

(Dollars in thousands, unless otherwise noted)



In determining fair value, the Company utilizes valuation techniques that maximize the use of observable
inputs and minimize the use of unobservable inputs to the extent possible.

At March 31, 2010, there were no assets or liabilities
required to be measured at fair value in periods subsequent to their initial recognition.

16. Noncontrolling Interest

As discussed in Note 2, on June 10, 2009 the Company purchased a 70% controlling interest in AGY Asia. The 30% noncontrolling interest
(NCI) was recorded at the acquisition date at a fair value of $12,431, which was derived from an option agreement, pursuant to which the Company has the right to purchase the remaining 30% NCI at a stipulated multiple of earnings before
interest, taxes, depreciation and amortization if certain financial performances are achieved. Grace has the right to put their remaining 30% ownership to the Company after the one-year anniversary of the execution of the AGY Asia Purchase Agreement
at a stipulated multiple of earnings before interest, taxes, depreciation and amortization. The put option becomes exercisable upon the first anniversary of the completion date of the AGY Asia acquisition, June 10, 2010.

We assessed the option agreement under the guidance of ASC 815 and ASC 480-10 and considered it was not a freestanding financial instrument but a
redeemable equity interest, which is not solely within the control of the Company. Therefore, at the acquisition date, the fair value of the redeemable portion of the NCI was reclassified as temporary, or mezzanine, equity presented in the
accompanying consolidated balance sheet between total liabilities and shareholders equity.

At March 31, 2010 and December 31,
2009, the Company recorded the attribution of the NCI net loss and other comprehensive income according to ASC 810-10-65 and performed a subsequent measurement of the probable redemption amount per ASC 480-10-S99. As the present value of the
probable redemption price was below the initial carrying value of the NCI and as the redemption was still probable, we concluded that the mezzanine classification was still appropriate as of March 31, 2010 and December 31, 2009.

Changes in noncontrolling interest are set forth below:



|                                                          |  |   |        |  
|--------------------------------------------------------- |  | - | ------ | -
|Balance as of January 1, 2009                             |  | $ |       |  
|Noncontrolling interest in AGY Asia on June 10, 2009      |  |   | 12,431 |  
|Net (loss) attributable to NCI  AGY Asia                 |  |   | (1,119 | )
|Other comprehensive income attributable to NCI  AGY Asia |  |   | 8      |  
|                                                          |  |   |        |  
|Balance as of December 31, 2009                           |  | $ | 11,320 |  
|                                                          |  |   |        |  
|                                                          | 
|Balance as of January 1, 2010                             |  | $ | 11,320 |  
|Net (loss) attributable to NCI  AGY Asia                 |  |   | (285   | )
|Other comprehensive income attributable to NCI  AGY Asia |  |   | 3      |  
|                                                          |  |   |        |  
|Balance as of March 31, 2010                              |  | $ | 11,038 |  
|                                                          |  |   |        |  

17. Income Taxes

During the first quarter of 2010, the Companys effective tax was a benefit of 31.8%. This rate varied from the statutory rate of 34% due primarily
to losses on foreign subsidiaries with no tax benefit, change in valuation allowance, and foreign rate differential, which benefits were partially offset by state taxes.

During the first quarter of 2009, the Companys effective tax was a benefit of 28.5%. This rate varied from the statutory rate of 34% due primarily
to higher pre-tax losses recognized in the first quarter of 2009 and transactional costs that were expensed during 2009 but not deductible for tax, which benefits were partially offset by state taxes.

18. Commitments and Contingencies

We
are not a party to any significant litigation or claims, other than routine matters incidental to the operation of the Company. We do not expect that the outcome of any pending claims will have a material adverse effect on the Companys
consolidated financial position, results of operations, or cash flows.



16



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##### Table of Contents

AGY HOLDING CORP. AND
SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED
FINANCIAL STATEMENTS(Continued)

(Dollars in thousands, unless otherwise noted)



There may be insignificant levels of asbestos in certain manufacturing facilities, however, the Company
does not expect to incur costs (which are undeterminable) in the foreseeable future to remediate any such asbestos, which may be present in the facilities. Accordingly, management did not record a conditional asset retirement obligation related to
such asbestos remediation because, in accordance with the guidance of ASC 410, the Company does not have sufficient information to estimate the fair value of the asset retirement obligation.

In addition to the alloy metal leases discussed in Note 14, we also lease other equipment and property under operating leases. Total rent expense
for the three months ended March 31, 2010 and 2009, was approximately $430 and $520, respectively. We are obligated to make approximately $3,100 minimum purchases of marbles from domestic and Chinese marble producers during the remainder of
2010.

19. Segment Information

Since the acquisition of AGY Asia on June 10, 2009, the Company has two reportable segments, each a separate operating segment. The AGY US segment
includes the US manufacturing operations and its sale of advanced glass fibers that are used worldwide as reinforcing materials in numerous high-value applications and end-markets through AGY Holding Corp., its wholly owned domestic and French
subsidiaries. The AGY Asia segment includes the manufacturing operations of the Companys 70% controlling interest in AGY Hong Kong Limited and its sale of advanced glass fibers that are used primarily in the Asian electronics markets. The
Companys operating segments are managed separately based on differences in their manufacturing and technology capabilities, products and services and their end-markets as well as their distinct financing agreements. The financial results for
our operating segments are prepared using a management approach, which is consistent with the basis and manner in which we internally segregate financial information for the purpose of making internal operating decisions. We evaluate the
performance of our operating segments based on operating profit. Corporate and certain other expenses are not allocated to the operating segments, except to the extent that the expense can be directly attributable to the operating segment.

Because the Company operated as one business segment until June 10, 2009, the operating results by business segment and other financial
data are only presented below for the three months ended March 31, 2010:



|                                                     |  |        |         |          |   |         |                    |  |   |        |   |  |   |         |  
|---------------------------------------------------- |  | ------ | ------- | -------- | - | ------- | ------------------ |  | - | ------ | - |  | - | ------- | -
|Three Months Ended March 31, 2010                    |  | AGY US |         | AGY Asia |   |         | Corporateand Other |  |   | Total  |  
|Total net sales                                      |  | $      | 40,828  |          | $ | 5,443   |                    |  | $ | (698   | ) |  | $ | 45,573  |  
|Operating income (loss) (i)                          |  |        | 1,054   |          |   | (204    | )                  |  |   | (2,418 | ) |  |   | (1,568  | )
|Depreciation and amortization                        |  |        | 2,642   |          |   | 1,359   |                    |  |   |       |   |  |   | 4,001   |  
|Alloy metals depletion, net                          |  |        | 3,117   |          |   | 163     |                    |  |   |       |   |  |   | 3,280   |  
|Property, plant and equipment, and alloy metals, net |  |        | 149,827 |          |   | 88,795  |                    |  |   |       |   |  |   | 238,622 |  
|Carrying amount of intangible assets                 |  |        | 19,238  |          |   |        |                    |  |   |       |   |  |   | 19,238  |  
|Total assets                                         |  | $      | 224,926 |          | $ | 102,700 |                    |  | $ |       |   |  | $ | 327,626 |  



|(i) | Operating loss for the three months ended March 31, 2010 within the corporate and other segment includes primarily, $328 of restructuring expense (discussed in
Note 6), stock compensation expense, the management fees payable to our sponsor, and $1,924 of loss recorded on the sale of assets.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



17



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##### Table of Contents

AGY HOLDING CORP. AND
SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED
FINANCIAL STATEMENTS(Continued)

(Dollars in thousands, unless otherwise noted)



20. Condensed Consolidating Financial Statements

As described in Note 8, in 2006 the Company issued $175,000 aggregate principal amount of the Old Notes, which were exchanged for the Notes through a
registration statement in 2008. As of March 31, 2010, $172,000 of Notes remain outstanding. The Notes are guaranteed, fully, unconditionally and jointly and severally, by each of AGY Holding Corp.s existing and future wholly-owned
domestic subsidiaries, other than immaterial subsidiaries (collectively, the Combined Guarantor Subsidiaries).

For the purpose of
the following footnote:



| |  |  | AGY Holding Corp. is referred to as Parent;
| | - |  | ---------------------------------------------



| |  |  | The Combined Guarantor Subsidiaries represent all subsidiaries other than the Combined Nonguarantor subsidiaries defined below; and
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------



| |  |  | The Combined Non-Guarantor Subsidiaries as of March 31, 2010 include only the subsidiaries forming AGY Asia: AGY Cayman LLC, AGY Hong
Kong Ltd and AGY Shanghai.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------

All the Parents subsidiaries were domestic guarantors of the Notes through June 10,
2009, when the Company acquired the entities comprising AGY Asia, which became the only Non-Guarantor Subsidiaries. The following supplemental condensed consolidating financial information is presented on the equity method and reflects the
Parents separate accounts, the accounts of the Combined Guarantor Subsidiaries, the accounts of the Non-Guarantor Subsidiaries, the consolidating adjustments and eliminations and the total consolidated accounts for the dates and periods
indicated. The required condensed consolidating information for the period ended March 31, 2009 is not presented as such information is not deemed material to the consolidated financial statements.

Condensed Consolidating Balance Sheet



|                                                                                            |  |                      |         |   |                               |   |                                   |  |   |              |   |  |              |          |   |  |   |        
|------------------------------------------------------------------------------------------- |  | -------------------- | ------- | - | ----------------------------- | - | --------------------------------- |  | - | ------------ | - |  | ------------ | -------- | - |  | - | -------
|                                                                                            |  | As of March 31, 2010
|                                                                                            |  | Parent               |         |   | CombinedGuarantorSubsidiaries |   | CombinedNon-GuarantorSubsidiaries |  |   | Eliminations |   |  | Consolidated
|ASSETS                                                                                      |  |                      |         |   |                               |   |                                   |  |   |              |   |  |              |          |   |  |   |        
|Total current assets                                                                        |  | $                    | 2,381   |   |                               | $ | 51,223                            |  | $ | 14,807       |   |  | $            |         |   |  | $ | 68,411 
|Due from (to) affiliates                                                                    |  |                      | (17,140 | ) |                               |   | 19,156                            |  |   | (2,016       | ) |  |              |         |   |  |   |       
|Property, plant and equipment, net                                                          |  |                      | 90,018  |   |                               |   | 59,809                            |  |   | 88,795       |   |  |              |         |   |  |   | 238,622
|Intangible assets, net                                                                      |  |                      | 2,616   |   |                               |   | 16,622                            |  |   |             |   |  |              |         |   |  |   | 19,238 
|Investment in unconsolidated entities                                                       |  |                      | 145,713 |   |                               |   |                                  |  |   |             |   |  |              | (145,713 | ) |  |   |       
|Other assets                                                                                |  |                      | 20      |   |                               |   | 221                               |  |   | 1,114        |   |  |              |         |   |  |   | 1,355  
|                                                                                            |  |                      |         |   |                               |   |                                   |  |   |              |   |  |              |          |   |  |   |        
|Total                                                                                       |  | $                    | 223,608 |   |                               | $ | 147,031                           |  | $ | 102,700      |   |  | $            | (145,713 | ) |  | $ | 327,626
|                                                                                            |  |                      |         |   |                               |   |                                   |  |   |              |   |  |              |          |   |  |   |        
|                                                                                            |  |                      |        
|LIABILITIES, OBLIGATION UNDER PUT/CALL FOR NONCONTROLLING INTEREST AND SHAREHOLDERS
EQUITY |  |                      |         |   |                               |   |                                   |  |   |              |  
|Total current liabilities                                                                   |  | $                    | 11,511  |   |                               | $ | 15,291                            |  | $ | 17,595       |   |  | $            |         |   |  | $ | 44,397 
|Long-term debt                                                                              |  |                      | 191,400 |   |                               |   |                                  |  |   | 31,889       |   |  |              |         |   |  |   | 223,289
|Other long-term liabilities                                                                 |  |                      |        |   |                               |   | 23,153                            |  |   | 5,052        |   |  |              |         |   |  |   | 28,205 
|Obligation under put/call for noncontrolling interest                                       |  |                      |        |   |                               |   |                                  |  |   | 11,038       |   |  |              |         |   |  |   | 11,038 
|Parents shareholders equity                                                               |  |                      | 20,697  |   |                               |   | 108,587                           |  |   | 37,126       |   |  |              | (145,713 | ) |  |   | 20,697 
|                                                                                            |  |                      |         |   |                               |   |                                   |  |   |              |   |  |              |          |   |  |   |        
|Total                                                                                       |  | $                    | 223,608 |   |                               | $ | 147,032                           |  | $ | 102,700      |   |  | $            | (145,713 | ) |  | $ | 327,626
|                                                                                            |  |                      |         |   |                               |   |                                   |  |   |              |   |  |              |          |   |  |   |        



18



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##### Table of Contents

AGY HOLDING CORP. AND
SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED
FINANCIAL STATEMENTS(Continued)

(Dollars in thousands, unless otherwise noted)



Condensed Consolidating Statements of Operations



|                                                           |  |                                   |        |   |                               |   |         |                                   |  |   |              |   |  |              |      |   |  |   |         |  
|---------------------------------------------------------- |  | --------------------------------- | ------ | - | ----------------------------- | - | ------- | --------------------------------- |  | - | ------------ | - |  | ------------ | ---- | - |  | - | ------- | -
|                                                           |  | Three Months Ended March 31, 2010 |       
|                                                           |  | Parent                            |        |   | CombinedGuarantorSubsidiaries |   |         | CombinedNon-GuarantorSubsidiaries |  |   | Eliminations |   |  | Consolidated |     
|Net sales                                                  |  | $                                 |       |   |                               | $ | 40,828  |                                   |  | $ | 5,443        |   |  | $            | (698 | ) |  | $ | 45,573  |  
|Cost of goods sold                                         |  |                                   |       |   |                               |   | (36,611 | )                                 |  |   | (5,055       | ) |  |              | 701  |   |  |   | (40,965 | )
|                                                           |  |                                   |        |   |                               |   |         |                                   |  |   |              |   |  |              |      |   |  |   |         |  
|Gross profit (loss)                                        |  |                                   |       |   |                               |   | 4,217   |                                   |  |   | 388          |   |  |              | 3    |   |  |   | 4,608   |  
|                                                           |  |                                   |        |   |                               |   |         |                                   |  |   |              |   |  |              |      |   |  |   |         |  
|Selling, general and administrative expenses               |  |                                   | (208   | ) |                               |   | (3,159  | )                                 |  |   | (592         | ) |  |              | 63   |   |  |   | (3,896  | )
|Restructuring charges                                      |  |                                   |       |   |                               |   | (328    | )                                 |  |   |             |   |  |              |     |   |  |   | (328    | )
|Amortization of intangible assets                          |  |                                   |       |   |                               |   | (251    | )                                 |  |   |             |   |  |              |     |   |  |   | (251    | )
|Other operating (expense) income                           |  |                                   | (1,924 | ) |                               |   | 289     |                                   |  |   |             |   |  |              | (66  | ) |  |   | (1,701  | )
|                                                           |  |                                   |        |   |                               |   |         |                                   |  |   |              |   |  |              |      |   |  |   |         |  
|Income (loss) from operations                              |  |                                   | (2,132 | ) |                               |   | 768     |                                   |  |   | (204         | ) |  |              |     |   |  |   | (1,568  | )
|                                                           |  |                                   |        |   |                               |   |         |                                   |  |   |              |   |  |              |      |   |  |   |         |  
|Interest expense                                           |  |                                   | (5,097 | ) |                               |   |        |                                   |  |   | (780         | ) |  |              |     |   |  |   | (5,877  | )
|Equity losses (earnings) in unconsolidated entities        |  |                                   | (583   | ) |                               |   |        |                                   |  |   |             |   |  |              | 583  |   |  |   |        |  
|Other income (expense), net                                |  |                                   |       |   |                               |   | (14     | )                                 |  |   | 35           |   |  |              |     |   |  |   | 21      |  
|                                                           |  |                                   |        |   |                               |   |         |                                   |  |   |              |   |  |              |      |   |  |   |         |  
|Income (loss) before income tax benefit (expense)          |  |                                   | (7,812 | ) |                               |   | 754     |                                   |  |   | (949         | ) |  |              | 583  |   |  |   | (7,424  | )
|Income tax benefit (expense)                               |  |                                   | 2,747  |   |                               |   | (388    | )                                 |  |   |             |   |  |              |     |   |  |   | 2,359   |  
|                                                           |  |                                   |        |   |                               |   |         |                                   |  |   |              |   |  |              |      |   |  |   |         |  
|Net income (loss)                                          |  |                                   | (5,065 | ) |                               |   | 366     |                                   |  |   | (949         | ) |  |              | 583  |   |  |   | (5,065  | )
|                                                           |  |                                   |        |   |                               |   |         |                                   |  |   |              |   |  |              |      |   |  |   |         |  
|Less: Net loss attributable to the noncontrolling interest |  |                                   | (285   | ) |                               |   |        |                                   |  |   | (285         | ) |  |              | 285  |   |  |   | (285    | )
|                                                           |  |                                   |        |   |                               |   |         |                                   |  |   |              |   |  |              |      |   |  |   |         |  
|Net (loss) income attributable to AGY Holding Corp.        |  | $                                 | (4,780 | ) |                               | $ | 366     |                                   |  | $ | (664         | ) |  | $            | 298  |   |  | $ | (4,780  | )
|                                                           |  |                                   |        |   |                               |   |         |                                   |  |   |              |   |  |              |      |   |  |   |         |  



19



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##### Table of Contents

AGY HOLDING CORP. AND
SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED
FINANCIAL STATEMENTS(Continued)

(Dollars in thousands, unless otherwise noted)



Condensed Consolidating Statements of Cash Flows



|                                                                                                   |  |                                   |        |   |                               |   |        |                                   |  |   |              |   |  |              |      |   |  |   |        |  
|-------------------------------------------------------------------------------------------------- |  | --------------------------------- | ------ | - | ----------------------------- | - | ------ | --------------------------------- |  | - | ------------ | - |  | ------------ | ---- | - |  | - | ------ | -
|                                                                                                   |  | Three Months Ended March 31, 2010 |       
|                                                                                                   |  | Parent                            |        |   | CombinedGuarantorSubsidiaries |   |        | CombinedNon-GuarantorSubsidiaries |  |   | Eliminations |   |  | Consolidated |     
|Cash flows from operating activities:                                                              |  |                                   |        |   |                               |   |        |                                   |  |   |              |   |  |              |      |   |  |   |        |  
|Net (loss) income                                                                                  |  | $                                 | (5,065 | ) |                               | $ | 366    |                                   |  | $ | (949         | ) |  | $            | 583  |   |  | $ | (5,065 | )
|Equity (earnings) losses in unconsolidated entities                                                |  |                                   | 583    |   |                               |   |       |                                   |  |   |             |   |  |              | (583 | ) |  |   |       |  
|Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities: |  |                                   |        |   |                               |   |        |                                   |  |   |              |   |  |              |      |   |  |   |        |  
|Depreciation, alloy metals depletion and amortization                                              |  |                                   | 178    |   |                               |   | 5,759  |                                   |  |   | 1,522        |   |  |              |     |   |  |   | 7,459  |  
|Gain on sale, disposal of assets or exchange of property and equipment and alloy metals            |  |                                   | 1,924  |   |                               |   |       |                                   |  |   |             |   |  |              |     |   |  |   | 1,924  |  
|Stock compensation                                                                                 |  |                                   | 20     |   |                               |   |       |                                   |  |   |             |   |  |              |     |   |  |   | 20     |  
|Deferred income tax (benefit) expense                                                              |  |                                   | (2,747 | ) |                               |   | 352    |                                   |  |   |             |   |  |              |     |   |  |   | (2,395 | )
|Change in assets and liabilities                                                                   |  |                                   | (2,051 | ) |                               |   | (322   | )                                 |  |   | (3,837       | ) |  |              | 106  |   |  |   | (6,104 | )
|Parents loans and advances                                                                         |  |                                   | 3,234  |   |                               |   | (4,569 | )                                 |  |   | 1,441        |   |  |              | (106 | ) |  |   |       |  
|                                                                                                   |  |                                   |        |   |                               |   |        |                                   |  |   |              |   |  |              |      |   |  |   |        |  
|Net cash (used in) provided by operating activities                                                |  |                                   | (3,924 | ) |                               |   | 1,586  |                                   |  |   | (1,823       | ) |  |              | 106  |   |  |   | (4,161 | )
|                                                                                                   |  |                                   |        |   |                               |   |        |                                   |  |   |              |   |  |              |      |   |  |   |        |  
|                                                                                                   |  |                                   |        |   |                              
|Cash flows from investing activities:                                                              |  |                                   |        |   |                               |   |        |                                   |  |   |              |   |  |              |      |   |  |   |        |  
|Purchase of property, plant and equipment and alloy metals                                         |  |                                   |       |   |                               |   | (1,586 | )                                 |  |   | (687         | ) |  |              |     |   |  |   | (2,273 | )
|Proceeds from the sale of property and equipment and alloy metals                                  |  |                                   | 3,663  |   |                               |   |       |                                   |  |   |             |   |  |              |     |   |  |   | 3,663  |  
|                                                                                                   |  |                                   |        |   |                               |   |        |                                   |  |   |              |   |  |              |      |   |  |   |        |  
|Net cash (used in) provided by investing activities                                                |  |                                   | 3,663  |   |                               |   | (1,586 | )                                 |  |   | (687         | ) |  |              |     |   |  |   | 1,390  |  
|                                                                                                   |  |                                   |        |   |                               |   |        |                                   |  |   |              |   |  |              |      |   |  |   |        |  
|Cash flows from financing activities:                                                              |  |                                   |        |   |                               |   |        |                                   |  |   |              |   |  |              |      |   |  |   |        |  
|Net proceeds from Revolving Credit Facility                                                        |  |                                   | 150    |   |                               |   |       |                                   |  |   |             |   |  |              |     |   |  |   | 150    |  
|Net proceeds from Asia Credit Facility                                                             |  |                                   |       |   |                               |   |       |                                   |  |   | 2,938        |   |  |              |     |   |  |   | 2,938  |  
|                                                                                                   |  |                                   |        |   |                               |   |        |                                   |  |   |              |   |  |              |      |   |  |   |        |  
|Net cash provided by financing activities                                                          |  |                                   | 150    |   |                               |   |       |                                   |  |   | 2,938        |   |  |              |     |   |  |   | 3,088  |  
|                                                                                                   |  |                                   |        |   |                               |   |        |                                   |  |   |              |   |  |              |      |   |  |   |        |  
|Effect of exchange rate changes on cash                                                            |  |                                   | (3     | ) |                               |   |       |                                   |  |   | 10           |   |  |              |     |   |  |   | 7      |  
|                                                                                                   |  |                                   |        |   |                               |   |        |                                   |  |   |              |   |  |              |      |   |  |   |        |  
|Net (decrease) increase in cash                                                                    |  |                                   | (114   | ) |                               |   |       |                                   |  |   | 438          |   |  |              |     |   |  |   | 324    |  
|                                                                                                   |  |                                   |        |   |                               |   |        |                                   |  |   |              |   |  |              |      |   |  |   |        |  
|Cash, beginning of period                                                                          |  |                                   | 783    |   |                               |   |       |                                   |  |   | 2,656        |   |  |              |     |   |  |   | 3,439  |  
|                                                                                                   |  |                                   |        |   |                               |   |        |                                   |  |   |              |   |  |              |      |   |  |   |        |  
|Cash, end of period                                                                                |  | $                                 | 669    |   |                               | $ |       |                                   |  | $ | 3,094        |   |  | $            |     |   |  | $ | 3,763  |  
|                                                                                                   |  |                                   |        |   |                               |   |        |                                   |  |   |              |   |  |              |      |   |  |   |        |  



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ITEM 2.  Managements Discussion and Analysis of Financial
Condition and Results of Operations

This Quarterly Report contains forward-looking statements with respect to our operations, industry,
financial condition and liquidity. These statements reflect our managements assessment of a number of risks and uncertainties. Our actual results could differ materially from the results anticipated in these forward-looking statements as a
result of certain factors identified in this Quarterly Report. An additional statement made pursuant to the Private Securities Litigation Reform Act of 1995 and summarizing certain of the principal risks and uncertainties inherent in our business is
included herein under the caption Disclosure Regarding Forward-Looking Statements. You are encouraged to read this statement carefully.

You should read the following discussion and analysis in conjunction with the accompanying financial statements and related notes, and with the
consolidated financial statements and notes thereto included in our 2009 Annual Report on Form 10-K (the 2009 Form 10-K) filed with the Securities and Exchange Commission.

Unless the context requires otherwise, the terms AGY, the Company, we and our in this report refer to AGY
Holding Corp. and its subsidiaries.

GENERAL

We are a leading manufacturer of advanced glass fibers that are used as reinforcing materials in numerous diverse high-value applications, including
aircraft laminates, ballistic armor, pressure vessels, roofing membranes, insect screening, architectural fabrics and specialty electronics. We are focused on serving end-markets that require glass fibers for applications with demanding performance
criteria, such as the aerospace, defense, construction, electronics, automotive and industrial end-markets.

Since the acquisition of AGY Asia
on June 10, 2009 as discussed further below, the Company has two reportable segments, each a separate operating segment. The AGY US segment includes the U.S. manufacturing operations and its sale of advanced glass fibers that are used worldwide
as reinforcing materials in numerous high-value applications and end-markets through AGY Holding Corp. and its wholly-owned domestic and French subsidiaries. The AGY Asia segment includes the manufacturing operations of the Companys 70%
controlling interest in AGY Hong Kong Limited and its sale of advanced glass fibers that are used primarily in the Asian electronics markets. The Companys operating segments are managed separately based on differences in their manufacturing
and technology capabilities, products and services and their end-markets as well as their distinct financing agreements. AGY Holding Corp. is a Delaware corporation and is a wholly-owned subsidiary of KAGY Holding Company, Inc.
(Holdings). Holdings acquired all of our outstanding stock in April 2006 (the Acquisition). Our principal executive office is located at 2556 Wagener Road, Aiken, South Carolina 29801 and our telephone number is
(888) 434-0945. Our website address is http://www.agy.com.

BUSINESS
COMBINATION

On June 10, 2009, AGY Cayman, a company incorporated in the Cayman Islands and a wholly-owned
subsidiary of the Company, completed its acquisition of 70% of the outstanding shares of Main Union Industrial Ltd. (renamed AGY Hong Kong Ltd.), a company incorporated in Hong Kong with a 100% controlling interest in Shanghai Grace Technology Co.,
Ltd. (renamed AGY Shanghai Technology Co., Ltd. (AGY Shanghai)), a company incorporated in the Peoples Republic of China (PRC), which is a glassfiber yarns manufacturer. This acquisition expands AGYs geographic,
manufacturing, and servicing capabilities in the Asia-Pacific region relative to the electronics and industrial end-markets.

The Company paid
$20 million in cash for the 70% controlling interest in Main Union Industrial Ltd and its subsidiaries (AGY Asia) and financed this consideration through the sale of additional equity to the Companys private equity sponsors.

The details of this business combination, accounted for under the purchase method of accounting, the allocation of the purchase price and the
impact of AGY Asia, which has been included in our consolidated financial statements since June 10, 2009, are presented in Note 2 to the accompanying unaudited interim consolidated financial statements.



21



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CRITICAL ACCOUNTING POLICIES

The accompanying unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally
accepted in the United States (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for
complete financial statements. In preparing our financial statements, we are required to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses included in the financial statements. Estimates
are based on historical experience and other information then currently available, the results of which form the basis of such estimates. While we believe our estimation processes are reasonable, actual results could differ from our estimates. The
critical accounting policies that affect the Companys more complex judgments and estimates are described in our 2009 Form 10-K. There were no significant changes in our accounting policies and estimates since the end of fiscal 2009.

Adoption of new accounting standards

New accounting pronouncements that have been recently adopted are included in Note 1, General to the accompanying unaudited interim
consolidated financial statements.



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##### Table of Contents

Results of Operations

The following tables summarize our results of operations in dollars and as a percentage of net sales for the three months ended March 31, 2010 and
2009 (dollars in thousands):



|                                                       |  |                             |         |   |      |   |         |  
|------------------------------------------------------ |  | --------------------------- | ------- | - | ---- | - | ------- | -
|                                                       |  | Three Months EndedMarch 31, |        
|                                                       |  | 2010                        |         |   | 2009 |  
|Net Sales                                              |  |                             |         |   |      |   |         |  
|AGY US                                                 |  | $                           | 40,828  |   |      | $ | 39,614  |  
|AGY Asia                                               |  |                             | 5,443   |   |      |   |        |  
|                                                       |  |                             |         |   |      |   |         |  
|                                                       |  |                             | 46,271  |   |      |   | 39,614  |  
|Intersegment sales                                     |  |                             | (698    | ) |      |   |        |  
|                                                       |  |                             |         |   |      |   |         |  
|Total net sales                                        |  |                             | 45,573  |   |      |   | 39,614  |  
|Cost of goods sold                                     |  |                             | (40,965 | ) |      |   | (32,619 | )
|                                                       |  |                             |         |   |      |   |         |  
|Gross profit                                           |  |                             | 4,608   |   |      |   | 6,995   |  
|Selling, general and administrative expenses           |  |                             | (3,896  | ) |      |   | (4,254  | )
|Restructuring charges                                  |  |                             | (328    | ) |      |   | (518    | )
|Amortization of intangible assets                      |  |                             | (251    | ) |      |   | (251    | )
|Other operating expense, net                           |  |                             | (1,701  | ) |      |   | (1,690  | )
|                                                       |  |                             |         |   |      |   |         |  
|(Loss) Income from operations                          |  |                             | (1,568  | ) |      |   | 282     |  
|Other non-operating income, net                        |  |                             | 21      |   |      |   | 1,104   |  
|Interest expense                                       |  |                             | (5,877  | ) |      |   | (5,131  | )
|                                                       |  |                             |         |   |      |   |         |  
|Loss before income taxes                               |  |                             | (7,424  | ) |      |   | (3,745  | )
|Income tax benefit                                     |  |                             | 2,359   |   |      |   | 1,068   |  
|                                                       |  |                             |         |   |      |   |         |  
|Net loss                                               |  |                             | (5,065  | ) |      |   | (2,677  | )
|Less: Net loss attributable to noncontrolling interest |  |                             | (285    | ) |      |   |        |  
|                                                       |  |                             |         |   |      |   |         |  
|Net loss income attributable to AGY Holding Corp.      |  | $                           | (4,780  | ) |      | $ | (2,677  | )
|                                                       |  |                             |         |   |      |   |         |  



|                                                       |  |                             |    |  |       |   
|------------------------------------------------------ |  | --------------------------- | -- |  | ----- | --
|                                                       |  | Three Months EndedMarch 31, |   
|                                                       |  | 2010                        |    |  | 2009  |   
|Net Sales                                              |  |                             |    |  |       |   
|AGY US                                                 |  | 89.6                        | %  |  | 100.0 | % 
|AGY Asia                                               |  | 11.9                        | %  |  |      | % 
|                                                       |  |                             |    |  |       |   
|                                                       |  | 101.5                       | %  |  | 100.0 | % 
|Intersegment sales                                     |  | (1.5                        | )% |  |      | % 
|                                                       |  |                             |    |  |       |   
|Total net sales                                        |  | 100.0                       | %  |  | 100.0 | % 
|Cost of goods sold                                     |  | (89.7                       | )% |  | (82.3 | )%
|                                                       |  |                             |    |  |       |   
|Gross profit                                           |  | 10.1                        | %  |  | 17.7  | % 
|Selling, general and administrative expenses           |  | (8.5                        | )% |  | (10.8 | )%
|Restructuring charges                                  |  | (0.7                        | )% |  | (1.3  | )%
|Amortization of intangible assets                      |  | (0.6                        | )% |  | (0.6  | )%
|Other operating expense, net                           |  | (3.7                        | )% |  | (4.3  | )%
|                                                       |  |                             |    |  |       |   
|(Loss) Income from operations                          |  | (3.4                        | )% |  | 0.7   | % 
|Other non-operating income, net                        |  | 0                           | %  |  | 2.8   | % 
|Interest expense                                       |  | (12.9                       | )% |  | (12.9 | )%
|                                                       |  |                             |    |  |       |   
|Loss before income taxes                               |  | (16.3                       | )% |  | (9.4  | )%
|Income tax benefit                                     |  | 5.2                         | %  |  | 2.7   | % 
|                                                       |  |                             |    |  |       |   
|Net loss                                               |  | (11.1                       | )% |  | (6.7  | )%
|Less: Net loss attributable to noncontrolling interest |  | (0.6                        | )% |  |      | % 
|                                                       |  |                             |    |  |       |   
|Net loss income attributable to AGY Holding Corp.      |  | (10.5                       | )% |  | (6.7  | )%
|                                                       |  |                             |    |  |       |   



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As further discussed below, we use EBITDA and Adjusted EBITDA, which are non-GAAP financial measures, to
measure our operating performance.

EBITDA and Adjusted EBITDA (which are defined below) are reconciled from net income (loss) determined
under GAAP as follows (dollars in thousands):



|                              |  |                             |        |   |      |   |        |  
|----------------------------- |  | --------------------------- | ------ | - | ---- | - | ------ | -
|                              |  | Three Months EndedMarch 31, |       
|                              |  | 2010                        |        |   | 2009 |  
|                              |  |                            
|Statement of operations data: |  |                             |        |   |      |   |        |  
|Net loss                      |  | $                           | (5,065 | ) |      | $ | (2,677 | )
|Interest expense              |  |                             | 5,877  |   |      |   | 5,131  |  
|Income tax benefit            |  |                             | (2,359 | ) |      |   | (1,068 | )
|Depreciation and amortization |  |                             | 4,001  |   |      |   | 2,666  |  
|                              |  |                             |        |   |      |   |        |  
|EBITDA                        |  | $                           | 2,454  |   |      | $ | 4,052  |  
|                              |  |                             |        |   |      |   |        |  



|                                                                  |  |                             |       |   |      |   |        |  
|----------------------------------------------------------------- |  | --------------------------- | ----- | - | ---- | - | ------ | -
|                                                                  |  | Three Months EndedMarch 31, |      
|                                                                  |  | 2010                        |       |   | 2009 |  
|                                                                  |  |                            
|EBITDA                                                            |  | $                           | 2,454 |   |      | $ | 4,052  |  
|Adjustments to EBITDA:                                            |  |                             |       |   |      |   |        |  
|Alloy depletion charge, net (a)                                   |  |                             | 3,280 |   |      |   | 3,042  |  
|Non-cash compensation charges (b)                                 |  |                             | 20    |   |      |   | 447    |  
|Management fees (c)                                               |  |                             | 188   |   |      |   | 188    |  
|Acquisition-related costs expensed in accordance with ASC 805 (d) |  |                             |      |   |      |   | 1,654  |  
|Gain on early extinguishment of debt (e)                          |  |                             |      |   |      |   | (1,138 | )
|Restructuring charges (f)                                         |  |                             | 328   |   |      |   | 518    |  
|Loss on disposition of assets & others (g)                        |  |                             | 1,850 |   |      |   | 38     |  
|                                                                  |  |                             |       |   |      |   |        |  
|Adjusted EBITDA                                                   |  |                             | 8,120 |   |      |   | 8,801  |  
|Less: Adjusted EBITDA attributable to the noncontrolling interest |  |                             | (396  | ) |      |   |       |  
|                                                                  |  |                             |       |   |      |   |        |  
|Adjusted EBITDA attributable to AGY Holding Corp.                 |  | $                           | 7,724 |   |      | $ | 8,801  |  
|                                                                  |  |                             |       |   |      |   |        |  



|                                                                  |  |                              |       |      |   |      
|----------------------------------------------------------------- |  | ---------------------------- | ----- | ---- | - | -----
|                                                                  |  | Three Months EndedMarch 
31,
|                                                                  |  | 2010                         |       | 2009
|Adjusted EBITDA allocated to AGY Holding Corp. segment breakdown: |  |                              |       |      |   |      
|AGY US and Corporate                                              |  | $                            | 6,799 |      | $ | 8,801
|AGY Asia                                                          |  |                              | 925   |      |   |     
|                                                                  |  |                              |       |      |   |      
|                                                                  |  | $                            | 7,724 |      | $ | 8,801
|                                                                  |  |                              |       |      |   |      



|(a) | We purchase or lease alloy metals that are used in our manufacturing process. During the manufacturing process a small portion of the alloy metal is physically
consumed. When the metal is actually consumed we recognize a non-cash charge. This expense is recorded net of the amount of metal that can be recovered after some specific treatment and net of the charges associated with such recovery treatment.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(b) | Reflects non-cash compensation expenses related to awards under Holdings 2006 Stock Option Plan and Holdings restricted stock granted to certain members of
management.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(c) | Reflects the elimination of the management fee payable to our sponsor, Kohlberg & Company, LLC, pursuant to a management agreement entered into in connection
with the Acquisition.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(d) | Reflects the elimination of the transactional costs associated with AGY Asia business combination that was consummated on June 10, 2009. Costs incurred and
deferred at December 31, 2008 of $1,098 were expensed in 2009 as a result of adopting the provisions of ASC 805; the remainder, or $556, constitutes incremental acquisition-related costs incurred and expensed during the three months ended
March 31, 2009.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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|(e) | Reflects the elimination of the net gain on early extinguishment of debt associated with the $3,000 (face value) 11% senior secured second lien notes repurchase made by
the Company in February 2009.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(f) | Reflects the elimination of the restructuring charges associated with reductions in our salaried workforce in 2009 and the relocation of some manufacturing equipment in
2010 to reduce our cost structure, streamline processes and optimize AGY US manufacturing footprint.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(g) | Reflects primarily the elimination of the gain (loss) recorded versus historical book value on the sale or exchange of some non-operating assets.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------

EBITDA is defined as earnings before interest, taxes, depreciation and amortization. EBITDA is a measure used by management to
measure operating performance. EBITDA is not a recognized term under GAAP and does not purport to be an alternative (a) to net income as a measure of operating performance or (b) to cash flows from operating activities as a measure of
liquidity. Additionally, EBITDA is not intended to be a measure of free cash flow available for managements discretionary use, as it does not consider certain cash requirements such as interest payments, tax payments and debt service
requirements. Management believes EBITDA is helpful in highlighting trends because EBITDA excludes the results of decisions that are outside the control of operating management and can differ significantly from company to company depending on
long-term strategic decisions regarding capital structure, the tax jurisdictions in which companies operate and capital investments. In addition, management believes that EBITDA provides more comparability between our historical results and our
recent results that reflect purchase accounting and changes in our capital structure. Management compensates for the limitations of using non-GAAP financial measures by using them to supplement GAAP results to provide a more complete understanding
of the factors and trends affecting the business than GAAP results alone. Because not all companies use identical calculations, these presentations of EBITDA may not be comparable to other similarly titled measures of other companies.

Adjusted EBITDA is a non-GAAP financial measure which is defined as EBITDA further adjusted to exclude unusual items and other adjustments permitted in
calculating covenant compliance and calculated in the same manner as Consolidated Cash Flow under the indenture governing our Notes, which is used by management in calculating our fixed charge coverage ratio under the indenture governing
our Notes. We believe that the inclusion of supplementary adjustments to EBITDA applied in presenting Adjusted EBITDA is appropriate to provide additional information to investors.

Three Months Ended March 31, 2010 Compared to Three Months Ended March 31, 2009

Net sales. Net sales increased $6.0 million, or 15.0%, to $45.6 million for the three months ended
March 31, 2010, compared to $39.6 million during the comparable quarter of 2009. AGY Asia, which was acquired in June 2009 contributed $4.8 million of additional revenue (after accounting for the elimination of $0.6 million of intercompany
sales). The remaining $1.2 million, or 3.0% net increase in sales generated by AGY US in the first quarter of 2010, compared to the first quarter of 2009 was primarily due to $7.5 million of higher sale volumes, while an unfavorable product mix and
competitive pricing pressures accounted for a decrease in sales of $6.3 million. We believe that the increased demand in all the markets that we serve except defense results primarily from the return to more normal historical inventory levels held
by several of our customers as market and global economic conditions stabilized and steadily improved over the last six months. The electronics, industrial and construction market revenues of the U.S. operating segment increased approximately $3.7
million, $3.2 million and $1.9 million, respectively, compared to the same period in 2009. Aerospace sales increased by $2.4 million compared to the first quarter of 2009 and returned to 2008 average demand levels, reflecting increased aircraft
retrofit and new build activity and inventory restocking in the supply chain. Defense revenue decreased $10.0 million in the first quarter of 2010, compared to the same period of 2009 as the result of the conclusion of the Mine Resistant Ambush
Protected (MRAP) program during the first quarter of 2009.

Gross profit. We
reported a consolidated gross profit of $4.6 million, or 10.1% of net sales for the three months ended March 31, 2010, compared to a gross profit of $7.0 million, or 17.7% of net sales for the three months ended March 31, 2009. The $2.4
million decrease in profitability was driven largely by our AGY US segment, while AGY Asia contributed $0.4 million of the total gross profit in the first quarter of 2010. The profitability of our AGY US segment benefited from $3.4 million of margin
on increased sales but was negatively impacted $5.7 million from an unfavorable product mix associated with lower shipments to defense and competitive pricing pressure in certain markets. Additionally, the AGY US segment results were negatively
impacted by approximately $1.6 million of costs including the change in overhead absorption associated with lower inventory levels and inflationary pressure, which were partially offset by $1.1 million of cost reductions related primarily to lower
labor costs and discretionary spending.



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##### Table of Contents

Selling, general and administrative expenses. Selling, general and administrative costs
decreased from $4.3 million during the first quarter of 2009 to $3.9 million during the quarter ended March 31, 2010. This decrease reflects (i) $0.9 million of lower expenses for our AGY US operating segment including a reduction in the
salaried workforce, a decrease in non-cash stock compensation expense, lower discretionary spending, in part offset by higher accounting professional fees and (ii) $0.5 million incremental expenses associated with the AGY Asia acquisition
compared to the first quarter of 2009. Selling, general and administrative costs decreased from 10.8% of net sales for the three months ended March 31, 2009 to 8.5% of net sales for the three months ended March 31, 2010.

Restructuring charges. For the three months ended March 31, 2009, we recorded $0.5 million in
restructuring charges primarily related to severance and outplacement costs for headcount reductions in connection with our structural cost reduction initiatives. In conjunction with additional actions taken in the first quarter of 2010 to further
optimize the AGY US manufacturing footprint and improve profitability, we recorded $0.3 million in restructuring charges in the three months ended March 31, 2010 that related primarily to the relocation of manufacturing equipment.

Other operating expense.During the three months ended March 31, 2009, other operating expense of $1.7 million was primarily due to
AGY Asia acquisition-related costs, including $1.1 million of costs incurred and deferred at December 31, 2008 that were subsequently expensed on January 1, 2009 as a result of adopting ASC 805. During the three months ended March 31,
2010, other non-operating expense of $1.7 million consisted primarily of a net $1.9 million loss recognized on the sale of alloy metals.

Other non-operating income. During the three months ended March 31, 2009, other non-operating income consisted primarily of the net
$1.1 million gain on the early extinguishment of debt associated with the purchase of $3 million (face value) of our Notes. During the three months ended March 31, 2010, other non-operating income was not significant.

Interest expense. Interest expense increased $0.7 million from $5.1 million the three months ended March 31, 2009 to $5.9 million
for the three months ended March 31, 2010. The increase was primarily due to $0.8 million of incremental interest expense associated with the AGY Asia acquisition.

Income tax benefit. Income tax benefit increased $1.3 million from a $1.1 million tax benefit for the three months ended
March 31, 2009 to a $2.4 million tax benefit for the three months ended March 31, 2010, due to the higher pre-tax loss recognized in the first quarter of 2010. During the first quarter of 2010, our effective tax rate was a benefit of
31.8%. This rate varied from the statutory rate of 34% due primarily to losses on foreign subsidiaries with no tax benefit, change in valuation allowance, and foreign rate differential, which benefits were partially offset by state taxes. During the
first quarter of 2009, our effective tax rate was a benefit of 28.5%. This rate varied from the statutory rate of 34% due primarily to higher pre-tax losses recognized in the first quarter of 2009 and transactional costs that were expensed during
2009 but not deductible for tax, which benefits were partially offset by state taxes.

Net loss.As a result of the
aforementioned factors, we reported a net loss attributable to AGY Holding Corp. of $4.8 million for the three months ended March 31, 2010, compared to a net loss of $2.7 million for the three months ended March 31, 2009. The net loss
attributable to the 30% noncontrolling interest in AGY Asia not owned by us was $0.3 million for the first quarter of 2010.

LIQUIDITY AND CAPITAL RESOURCES

AGY Holding Corp. and its Domestic Subsidiaries Liquidity

In the first quarter of 2010 our domestic principal sources of liquidity were borrowings under our financing arrangements, proceeds from monetization of
our excess alloy metals and our cash on hand. Our domestic need for liquidity will arise primarily from interest payments on the outstanding $172.0 million principal amount of our Notes, interest and principal payments on our senior secured
revolving credit facility (Credit Facility), the funding of capital expenditures, alloy metals, strategic initiatives, normal recurring operating expenses and working capital requirements and the financing of the consideration to be paid
pursuant to the put/call agreement for our 30% noncontrolling interest in AGY Asia not owned by us. There are no mandatory payments of principal on the Credit Facility or on the Notes scheduled prior to their maturity in October 2011 and November
2014, respectively.

At March 31, 2010, AGY US had total liquidity of $19.0 million, consisting of $0.7 million in unrestricted cash and
approximately $18.3 million of borrowing availability under the Credit Facility.



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##### Table of Contents

AGY Asias Liquidity

AGY Asias sources of liquidity have been, since the Acquisition, borrowings under approximately $52.2 million of non-recourse financing arrangements
with the Bank of Shanghai (AGY Asia Credit Facility), which consists of an $11.7 million one-year working capital loan and a $40.5 million five-year term loan. AGY Asias need for liquidity will arise primarily from interest and
principal payments on the AGY Asia Credit Facility and the funding of capital expenditures, alloy metals, strategic initiatives, normal recurring operating expenses and working capital requirements. There are no mandatory payments of principal on
the working capital loan prior to its maturity in June 2010. The extension or refinancing of the working capital loan commitment for AGY Asia is currently in progress. There are semi-annual mandatory payments of principal on the term loan borrowings
in the amounts described below under Financial Obligations and Commitments, beginning in April 2010.

At March 31, 2010, AGY
Asia had total liquidity of $11.0 million, consisting of $3.0 million of unrestricted cash and approximately $8.1 million of borrowing availability under the AGY Asia Credit Facility.

Based upon our current and anticipated levels of operations, we believe, but cannot guarantee, that our cash flows from operations and from the
monetization of excess alloy metals, together with availability under our credit facilities for our US and Asian segments, will be adequate to meet our liquidity needs for the next twelve months. However, this forward-looking statement is subject to
risks and uncertainties. See Forward-Looking Statements and Item 1A. Risk Factors in our 2009 Form 10-K.

Working
capital.

Working capital is defined as total current assets, excluding unrestricted cash, less total current liabilities, including the
short-term borrowings and current portion of long-term debt. Working capital was $20.3 million and $15.3 million on March 31, 2010 and December 31, 2009, respectively. The $5.0 million increase was primarily due to a $6.7 million increase
in trade receivables resulting mostly from a change in the geographic distribution of receivables and product mix, a $1.1 million increase in other current assets primarily from prepayment on certain manufacturing equipment in AGY Asia. Further, we
made a $2.7 million decrease in trade payables primarily from reductions in cash spending and accrued capital spending, offset by a $3.6 million increase in accrued liabilities related mainly to accrued interest on our Notes, a $1.5 million increase
in AGY Asia short-term borrowings to support working capital, and a $0.5 million reduction in inventories.

Other balance-sheet items.

Net Property, Plant and Equipment and Alloy Metals. Net property, plant and equipment and alloy metals decreased $10.5 million from
December 31, 2009 to March 31, 2010, primarily due to $7.0 million of depreciation and alloy metals depletion expenses. We sold $5.6 million of excess alloy metals at book value for proceeds of $3.7 million. We made $2.0 million of capital
expenditures, including accrued construction in progress.

Long Term Debt.Long-term debt increased $1.6 million from December 31,
2009 to March 31, 2010 as a result of a $1.5 million increase in debt attributable to AGY Asia and a $0.1 million increase in borrowings under our AGY US operating segment Credit Facility.

Three months ended March 31, 2010 compared to three months ended March 31, 2009.

Cash flows from operating activities

Cash used by operating activities was $4.2 million for the three months ended March 31, 2010, compared to cash used by operating activities of $0.1
million for the three months ended March 31, 2009.

AGY Asia operating activities used $1.9 million of cash in the first quarter of 2010
as the result of the prepayment of some manufacturing equipment and higher accounts receivables due to the change in their geographic mix.

Cash used by operating activities in our AGY US segment was $2.3 million for the first quarter of 2010, compared to $0.1 million for the first quarter of
2009. The $2.3 million decrease in operating cash flows during the three months ended March 31, 2010 was driven largely by the $1.4 million decrease in net earnings (as adjusted for non-cash items) during the comparable periods, as well as an
overall $1.1 million decrease in operating cash flows from working capital changes, including a $10.5 million decrease in cash flows from receivables due mainly to an increase in days sales outstanding as previously discussed, partly offset by a
$9.1 million increase in cash flows from inventory depletion initiatives and increased demand.



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Cash flow from investing activities

Cash provided by investing activities was $1.4 million for the three months ended March 31, 2010, compared to cash used in investing activities of
$4.5 million for the three months ended March 31, 2009. The $5.9 million decrease in investing cash used was primarily due to activities at our AGY US segment, including (i) the sale of $3.7 million of excess alloy for the three months
ended March 31, 2010 and (ii) a $3.0 million decrease in capital spending in the comparable quarters, partly offset by (iii) $0.7 million in capital expenditures incurred by AGY Asia.

Cash flow from financing activities

Cash provided by financing activities was $3.1 million for the three months ended March 31, 2010, compared to $2.5 million for the three months ended
March 31, 2009. The $0.6 million increase was primarily attributable to a $2.9 million increase in AGY Asia bank loans, partly offset by a net $2.3 million decrease in cash from financing activities in AGY US due to (i) a $4.2 million
decrease in AGY US revolver borrowings for the three months ended March 31, 2010 compared to the same period of 2009 and (ii) the $1.8 million cash outflow for the repurchase of $3.0 million of Notes (face value) in the first quarter of
2009 that was not recurring in the first quarter of 2010.

Indebtedness

AGY US

Our $40 million Credit
Facility has a term of 60 months (maturing October 2011) and includes sub-limits for the issuance of letters of credit and swing line loans. The borrowing base for our Credit Facility is equal to the sum of: (i) an advance rate against eligible
accounts receivable of up to 90%, plus (ii) the lesser of (A) 65% of the book value of our eligible inventory (valued at the lower of cost or market) and (B) 85% of the net orderly liquidation value for our eligible inventory, plus
(iii) up to $32.5 million of our eligible alloy inventory, minus (iv) 100% of mark-to-market risk on certain interest hedging arrangements, minus (v) a reserve of $10.0 million.

At our option, loans under our Credit Facility bear interest based on either the Eurodollar rate or base rate (a rate equal to the greater of the
corporate base rate of interest established by the administrative agent from time to time, and the federal funds effective rate plus 0.50%) plus, in each case, an applicable margin. Generally, the applicable margin is expected to be 1.75% in the
case of Eurodollar rate loans and 0.75% in the case of base rate loans. The interest rate for borrowings over $25.0 million is 3.0% for Eurodollar rate loans and 2.0% for base rate loans.

In addition, we pay customary commitment fees and letter of credit fees under the Credit Facility. All obligations under the Credit Facility are
guaranteed by Holdings and all of our existing and future direct and indirect domestic subsidiaries. We may enter into swap agreements from time to time to reduce the risk of greater interest expense because of interest-rate fluctuations. Our and
the guarantors obligations under the Credit Facility are secured, subject to permitted liens and other agreed upon exceptions, by a first-priority perfected (subject to customary exceptions) security interest in substantially all of our and
the guarantors assets.

The Credit Facility contains customary representations and warranties and customary affirmative and negative
covenants, including, among other things, restrictions on indebtedness, liens, investments, mergers and consolidations, dividends and other payments in respect to capital stock, transactions with affiliates, and optional payments and modifications
of subordinated and other debt instruments. The Credit Facility does not contain any financial maintenance covenants. The Credit Facility also includes customary events of default, including a default upon a change of control. The Company was in
compliance with all such covenants at March 31, 2010.

The agreement governing the Credit Facility permits the lenders to accelerate
payment of the outstanding principal and accrued and unpaid interest and/or to terminate their commitment to lend any additional amounts upon certain events of default, including failure to make required payments of principal and interest when due,
violations of the material covenants under the agreement, a change of control of the Company, certain defaults with respect to the collateral securing the credit facility or if the Company fails to pay indebtedness owing to other parties, or lenders
under other agreements accelerate payment of the indebtedness owing, in an aggregate amount of $7.5 million or more.

As of March 31,
2010, we had utilized approximately $2.3 million of the Credit Facility for the issuance of standby letters of credit and had $19.4 million cash borrowings outstanding, leaving $18.3 million available for additional borrowings.



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In connection with our acquisition of a 70% interest in AGY Hong Kong Ltd., as described in our 2009 Form
10-K, we amended our credit agreement to obtain the necessary approval of the revolving credit lenders. In the amendment, certain provisions of the credit agreement were modified or added including provisions providing that: the availability reserve
in the borrowing base calculation increased from $7.5 million to $10 million; the foreign subsidiary indebtedness of AGY Hong Kong Ltd. or its subsidiaries is permitted provided that it is non-recourse indebtedness; the investment associated with
the purchase of the remaining 30% is permitted provided that our excess availability under the facility is at least $10 million for 60 days prior to the consummation date and $12.5 million immediately following such consummation; and it is an event
of default under the credit agreement if we default under our obligations regarding the acquisition of the remaining 30% of AGY Hong Kong Ltd. In addition, the applicable margin for any utilization of the revolver in excess of $25 million increased
from 1.75% to 3.0% for Eurodollar loans and from 0.75% to 2.0% for base rate loans. No other material terms of the credit agreement were modified under the amendment.

In connection with our refinancing on October 25, 2006, we issued $175.0 million aggregate principal amount of 11% senior second lien notes
(Old Notes) to an initial purchaser, which were subsequently resold to qualified institutional buyers and non-U.S. persons in reliance upon Rule 144A and Regulation S under the Securities Act of 1933, as amended. We consummated an
exchange offer of the Old Notes for the Notes in June 2008. Interest on the Notes is payable semi-annually on May 15 and November 15 of each year. Our obligations under the Notes are fully and unconditionally guaranteed, jointly and
severally, on a second-priority basis, by each of our existing and future domestic subsidiaries, other than immaterial subsidiaries, that guarantee our indebtedness, including our new Credit Facility, or the indebtedness of any of our restricted
subsidiaries. The indenture does not allow us to pay dividends or distributions on our outstanding capital stock (including to our parent) and limits or restricts our ability to incur additional debt, repurchase securities, make certain prohibited
investments, create liens, transfer or sell assets, enter into transactions with affiliates, issue or sell stock of a subsidiary or merge or consolidate. The indenture permits the trustee or the holders of 25% or more of the Notes to accelerate
payment of the outstanding principal and accrued and unpaid interest upon certain events of default, including failure to make required payments of principal and interest when due, uncured violations of the material covenants under the indenture or
if lenders accelerate payment of the outstanding principal and accrued and unpaid interest due to an event of default with respect to at least $15.0 million of our other debt, such as our Credit Facility.

The indenture does not contain any financial maintenance covenants.

In February 2009, we repurchased $3.0 million face amount of Notes for $1.8 million plus accrued interest and commissions, resulting in a net gain on
extinguishment of debt of approximately $1.1 million (net of deferred financing fees written off), classified as other non-operating income.

As of March 31, 2010, the estimated fair value of the Notes was $148.8 million compared to a recorded book value of $172 million.

AGY Asia

The bank debt of
approximately $39.0 million assumed in the acquisition of AGY Asia was refinanced as discussed below. On July 10, 2009, AGY Asia entered into the AGY Asia Credit Facility. The arrangement consists of a five-year term loan in the aggregate
amount of approximately $40.5 million (consisting of a loan denominated in local currency of RMB 208,500,000, or approximately $30.5 million converted at an exchange rate of 6.83 RMB to 1 U.S. dollar, and a U.S.-dollar-denominated loan of $10.0
million), a one-year working capital loan in the aggregate amount of approximately $11.7 million (consisting of a local currency loan of RMB 45,750,000, or approximately $6.7 million converted at an exchange rate of RMB 6.83 to 1 U.S. dollar, and a
U.S.-dollar-denominated loan of $5.0 million), and a one-year letter of credit facility in the amount of $2.0 million.

The term loan is
secured by AGY Asias building, alloy metals and equipment and bears interest annually at the rate of either the five-year lending rate as published by the Peoples Bank of China, plus a margin, or six-month LIBOR plus 3.0%. Term loan
borrowings may be made in both local currency and U.S. dollars, up to certain limits. At March 31, 2010, the Company had approximately $37.0 million borrowings outstanding under the term loan, consisting of a local currency loan of RMB
205,000,000, or approximately $30.0 million converted at an exchange rate of 6.83 RMB to 1 U.S. dollar, and a U.S.-dollar-denominated loan of $7.0 million.

The working capital loan facility is secured by future equipment, assets and alloy metals acquired by AGY Asia and bears interest annually at the rate of
either the one-year lending rate as published by the Peoples Bank of China, or three-month LIBOR plus 3.0%. Working capital loan borrowings may be made in both local currency and U.S. Dollars, up to certain limits.



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At March 31, 2010, we had approximately $7.1 million borrowings outstanding under the working capital
loan consisting of a local currency loan of RMB 35,000,000, or approximately $5.1 million converted at an exchange rate of 6.83 RMB to 1 U.S. dollar, and a U.S.-dollar-denominated loan of $2.0 million.

The letter of credit facility is a one-year facility for the issuance of documentary letters of credit up to a maximum term of 120 days. A 15% deposit is
required upon issuance with the balance due upon settlement of the underlying obligation.

The loan agreements contain customary
representations and warranties and customary affirmative and negative covenants, including, among other things, interest coverage, restrictions on indebtedness, liens, investments, mergers and consolidations, dividends and other payments in respect
to capital stock, and transactions with affiliates. The loan agreements also include customary events of default, including a default upon a change of control. AGY Asia was in compliance with all such covenants at March 31, 2010 and
December 31, 2009.

The refinancing or extension of the working capital loan and of the letter of credit facilities is currently under
progress.

All amounts borrowed under the AGY Asia Credit Facility are non-recourse to AGY and its domestic subsidiaries.

FINANCIAL OBLIGATIONS AND COMMITMENTS

There are no mandatory payments of principal on the Credit Facility or on the Notes scheduled prior to their maturity in October 2011 and November 2014,
respectively.

The AGY Asia Credit Facility, which is a non-recourse debt to AGY Holding Corp., includes an $11.7 million working capital loan
facility when fully drawn that matures in June 2010 and a five-year term loan with principal payments due semi-annually beginning April 2010 in accordance with the following amortization schedule when the term loan is fully drawn (in $ millions):



|     |  |   |     
|---- |  | - | ----
|2010 |  | $ | 5.1 
|2011 |  |   | 8.1 
|2012 |  |   | 9.9 
|2013 |  |   | 11.3
|2014 |  |   | 6.1 
|     |  |   |     
|     |  | $ | 40.5
|     |  |   |     

We are obligated to make approximately $3.1 million minimum purchases
of marbles from a domestic and Chinese marble producers during the remainder of 2010.

We also have several short-term operating leases for
alloy metals. At March 31, 2010, we leased in our AGY US segment approximately 39,100 ounces of platinum and 2,200 ounces of rhodium under the Deutsche Bank Master Lease Agreement, with a notional value of approximately $55,350 and $5,400,
respectively. All of the leases outstanding at March 31, 2010 had initial terms of two to twelve months, maturing no later than October 12, 2010 (with future minimum rentals of approximately $924 until maturity in October 2010).

We also have various operating leases for certain manufacturing equipment, personal and real property.

As discussed in Note 2 to the accompanying unaudited interim consolidated financial statements, in connection with the purchase of AGY Asia, we entered
into an option agreement with Grace pursuant to which Grace granted AGY a call option and AGY granted Grace a put option in respect of the 30% interest held by Grace in AGY Asia, in each case until December 31, 2013, unless mutually extended.
The option price is determined by a formula outlined in the agreement. The exercise of the call option requires certain minimum financial performance levels to be reached by AGY Asia and the put option first becomes exercisable only upon the first
anniversary of the acquisition in June 2010. Based on these provisions and the financial projections of the PRC affiliate, the Company believes that either the call option or the put option will be exercised in 2011. If the acquisition of the
noncontrolling interest is consummated, the Company intends to finance the consideration paid pursuant to the agreement through the sale of additional equity to its private equity sponsor, if available, or other available liquidity.

IMPACT OF INFLATION AND ECONOMIC TRENDS

Historically, inflation has not had a material effect on our results of operations, as we have been able to offset most of the impact
of inflation through price increases for our products. However, we cannot guarantee that we will be able to offset these costs through price increases to our customers.



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DISCLOSURE REGARDING FORWARD-LOOKING
STATEMENTS

This managements discussion and analysis of financial condition and results of operations includes or
may include forward-looking statements. All statements included herein, other than statements of historical fact, may constitute forward-looking statements. Although we believe that the expectations reflected in such forward-looking
statements are reasonable, we can give no assurance that such expectations will prove to be correct. Important factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements include,
among others, the following factors: competition from other suppliers of glass fibers, as well as suppliers of competing products; the cyclical nature of certain of the end-markets for our products; adverse macroeconomic and business conditions,
continued disruption in credit markets and government policy generally leading to global market downturn; an inability to develop product innovations and improve our production technology and expertise; the loss of a large customer or end-user
application; a decision by an end-user to modify or discontinue production of an end-product that has specified the use of our product; an inability to protect our intellectual property rights; liability for damages based on product liability
claims; increases in energy costs and other raw materials or in the cost of acquiring or leasing alloy metals required for the production of glass fibers; labor disputes or increases in labor costs; difficulties and delays in manufacturing; a
reliance on Owens Corning for our bushing fabrication and technical support for our operations; an inability to successfully implement our cost reduction initiatives relating to efficiency, throughput and process technology developments; an
inability to successfully integrate future acquisitions including AGY Asia; our inability to successfully implement our cost reduction initiatives; interest rate and foreign exchange rate fluctuations; business risks associated with doing business
internationally; an inability to refinance the working capital loan of AGY Asia; an inability to finance the consideration to be paid pursuant to the put/call agreement for the 30% noncontrolling interest in AGY Asia; the loss of key members of our
management; an inability to comply with environmental, health or safety laws; our limited history of profitable operations since our emergence from Chapter 11 protection on April 2, 2004; our substantial indebtedness; and certain covenants in
our debt documents.

We do not have any intention or obligation to update forward-looking statements included in this managements
discussion and analysis of financial condition and results of operations.



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ITEM 3.  Quantitative and Qualitative Disclosure About Market Risk

INTEREST RATE RISK

We are subject to interest rate risk in connection with our short- and long-term debt. Our principal interest rate exposures relate to the AGY US $40
million senior secured revolving credit facility and our AGY Asia credit facility. Assuming the AGY US revolver is fully drawn, each 100 basis point change in interest rates would result in approximately a $0.4 million change in annual interest
expense on our revolving credit facility. Assuming the AGY Asia credit facility is fully drawn, each 100 basis point change in interest rates would result in approximately a $0.5 million change in annual interest expense for AGY Asia.

NATURAL GAS COMMODITY RISK AND
PLATINUM/RHODIUM RISK

Due to the nature of our manufacturing operations, we are exposed
to risks due to changes in natural gas commodity prices. We may utilize derivative financial instruments in order to reduce some of the variability of the cash flows associated with our forecasted purchases of natural gas. In addition, because we
use bushings made with a platinum-rhodium alloy as part of our manufacturing process, we are exposed to risks due to changes in the prices and lease rates of these metals.

At March 31, 2010, we had existing contracts for physical delivery of natural gas at our Aiken, SC facility that fix the commodity cost of natural
gas for approximately 70 percent of our 2010 AGY segment estimated natural gas purchase requirements. Although these contracts are considered derivative instruments, they meet the normal purchases exclusion contained in ASC 815, and are therefore
exempted from the related accounting requirements.

FOREIGN EXCHANGE RISK

We are subject to inherent risks attributed to operating in a global economy. For AGY US, all of our debt and most of our costs are
denominated in US dollars. Approximately 4% percent of our sales are denominated in currencies other than the US dollar. Although our level of foreign currency exposure is limited, we may utilize derivative financial instruments to manage foreign
currency exchange rate risks.

Approximately 20% of the debt of our subsidiary, AGY Asia, is denominated in U.S. dollars, with the balance
denominated in Chinese RMB. In addition, approximately 90% of the sales of AGY Asia are denominated in U.S. dollars, while approximately 80% of its costs are denominated in Chinese RMB.

At March 31, 2010, we had no foreign currency hedging agreements in effect.

We may be exposed to credit loss in the event of non-performance by the other parties to the derivative financial instruments. We mitigate this risk by
entering into agreements directly with counterparties that meet our credit standards and that we expect to fully satisfy their contractual obligations. We view derivative financial instruments purely as a risk management tool and, therefore, do not
use them for speculative trading purposes.

ITEM 4T.  Controls and Procedures

As of the end of the period covered by this Quarterly Report, the Companys Principal Executive Officer and Principal Financial Officer have
conducted an evaluation of the Companys disclosure controls and procedures. Based on their evaluation, the Companys Principal Executive Officer and Principal Financial Officer have concluded that the Companys disclosure controls
and procedures are effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Securities Exchange Act of 1934 is (i) recorded, processed, summarized and reported within the time
periods specified in the applicable Securities and Exchange Commission rules and forms and (ii) accumulated and communicated to the Companys management, including the Companys Principal Executive Officer and the Companys
Principal Financial Officer, as appropriate to allow timely decisions regarding required disclosure.



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As required by Rule 13a-15(d) of the Exchange Act, the Companys management, including the principal
executive officer and the principal financial officer, conducted an evaluation of the internal control over financial reporting to determine whether any changes occurred during the period covered by this Quarterly Report on Form 10-Q that have
materially affected, or are reasonably likely to materially affect, the Companys internal control over financial reporting. Based on that evaluation, the principal executive officer and the principal financial officer concluded no such changes
during the quarter ended March 31, 2010 materially affected, or were reasonably likely to materially affect, the Companys internal control over financial reporting.

PART II  OTHER INFORMATION

ITEM 1A. Risk Factors

As of May 14, 2010, there have been no material changes to the risk factors disclosed under the heading Risk Factors in our 2009 Form
10-K. These factors could materially affect our business, financial condition or future results. In addition, future uncertainties may increase the magnitude of these adverse affects or give rise to additional material risks not now contemplated.

ITEM 6  Exhibits



|              |  |                                                                                                                            
|------------- |  | ---------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description                                                                                                                
|              | 
|31.1          |  | Rule 13a-14(a) and 15d-14(a) Certification of Principal Executive Officer (filed herewith)                                 
|              | 
|31.2          |  | Rule 13a-14(a) and 15d-14(a) Certification of Principal Financial Officer and Principal Accounting Officer (filed herewith)
|              | 
|32.1          |  | Section 1350 Certification of Principal Executive Officer (filed herewith)                                                 
|              | 
|32.2          |  | Section 1350 Certification of Principal Financial Officer and Principal Accounting Officer (filed herewith)                



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SIGNATURES

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



|                   |  |  |  |                   |  |                                              
|------------------ |  |  |  | ----------------- |  | ---------------------------------------------
|                   |  |  |  | AGY Holding Corp.
|                   |  |  | 
|Date: May 14, 2010 |  |  |  | By:               |  | /S/    DOUGLAS J.
MATTSCHECK                 
|                   |  |  |  |                   |  | Douglas J. Mattscheck
Chief Executive Officer



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EXHIBIT INDEX



|              |  |                                                                                                             
|------------- |  | ------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description                                                                                                 
|              | 
|31.1          |  | Rule 13a-14(a) and 15d-14(a) Certification of Principal Executive Officer +                                 
|              | 
|31.2          |  | Rule 13a-14(a) and 15d-14(a) Certification of Principal Financial Officer and Principal Accounting Officer +
|              | 
|32.1          |  | Section 1350 Certification of Principal Executive Officer +                                                 
|              | 
|32.2          |  | Section 1350 Certification of Principal Financial Officer and Principal Accounting Officer+                 



|+ | Filed herewith.
|- | ---------------



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