##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2009
  o
    
    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: 001-33658
 Horsehead Holding Corp.
  
 Delaware
(State or other jurisdiction of 
incorporation or organization)
    
    20-0447377
(I.R.S. Employer
Identification No.)4955 Steubenville Pike, Suite 405
Pittsburgh, Pennsylvania 15205
(Address of Principal Executive Offices, including Zip Code)
    
    (724) 774-1020
(Registrants Telephone Number, Including Area Code)
 
 þ o
 o o
  Large accelerated filer oAccelerated filer þNon-accelerated filer o(Do not check if a smaller reporting company)Smaller reporting company o  o þ




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##### 



TABLE OF CONTENTS
 PART I  Financial InformationItem 1.
    
    Financial StatementsConsolidated Balance Sheets as of March 31, 2009 (Unaudited) and December 31, 2008
    
    
    1Consolidated Statements of Operations (Unaudited) for the three months ended March
31, 2009 and 2008
    
    
    2Consolidated Statement of Stockholders Equity (Unaudited) for the three months
ended March 31, 2009
    
    
    3Consolidated Statements of Cash Flows (Unaudited) for the three months ended March
31, 2009 and March 31, 2008
    
    
    4Notes to Consolidated Financial Statements (Unaudited) March 31, 2009
    
    
    5Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    11Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    19Item 4.
    
    Controls and Procedures
    
    
    19PART II  Other InformationItem 1.
    
    Legal Proceedings
    
    
    21Item 1A
    
    Risk Factors
    
    
    21Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    21Item 3
    
    Defaults Upon Senior Securities
    
    
    21Item 4
    
    Submission of Matters to a Vote of Security Holders
    
    
    21Item 5.
    
    Other Information
    
    
    21Item 6.
    
    Exhibits
    
    
    21
  CAUTIONARY STATEMENT FOR PURPOSES OF THE SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995
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PART IFINANCIAL INFORMATION
 
 Item 1. Financial Statements.
 
 CONSOLIDATED BALANCE SHEETS   (Amounts in thousands, except per share amounts)
 March 31,
    
    
    December 31,2009
    
    
    2008(Unaudited)ASSETSCurrent assetsCash and cash equivalents
    
    $
    96,214
    
    
    $
    122,768Accounts receivable, net of allowance of $780 and $750, respectively
    
    
    20,228
    
    
    
    30,446Inventories
    
    
    40,605
    
    
    
    47,209Prepaid expenses and other current assets
    
    
    15,236
    
    
    
    15,842Deferred income taxes
    
    
    5,152
    
    
    
    4,925Total current assets
    
    
    177,435
    
    
    
    221,190Property, plant and equipment, net
    
    
    149,010
    
    
    
    136,141Other assetsDeferred financing costs, net of amortization of $1,366 and $1,200, respectively
    
    
    833
    
    
    
    999Deposits and other
    
    
    147
    
    
    
    148Total other assets
    
    
    980
    
    
    
    1,147Total assets
    
    $
    327,425
    
    
    $
    358,478LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilitiesCurrent maturities of long-term debt
    
    $
    62
    
    
    $
    62Accounts payable
    
    
    26,135
    
    
    
    35,285Accrued expenses
    
    
    16,180
    
    
    
    24,931Total current liabilities
    
    
    42,377
    
    
    
    60,278Long-term debt, less current maturities
    
    
    43
    
    
    
    58Other long-term liabilities
    
    
    11,363
    
    
    
    10,257Deferred income taxes
    
    
    1,326
    
    
    
    1,326Commitments and contingenciesStockholders equityCommon stock, par value $0.01 per share; 100,000 shares authorized; 35,253 and
35,253 shares issued and outstanding in 2009 and 2008, respectively
    
    
    352
    
    
    
    352Preferred stock, par value $0.01 per share; 10,000 shares authorized; no shares
issued or outstanding
    
    
    
    
    
    
    Additional paid-in capital
    
    
    130,307
    
    
    
    129,741Retained earnings
    
    
    141,657
    
    
    
    156,466Total stockholders equity
    
    
    272,316
    
    
    
    286,559Total liabilities and stockholders equity
    
    $
    327,425
    
    
    $
    358,478
 The accompanying notes to financial statements are an integral part of these statements.
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CONSOLIDATED STATEMENTS OF OPERATIONS    (Amounts in thousands except per share amounts)
 2009
    
    
    2008Net sales of zinc material and other goods
    
    $
    32,062
    
    
    $
    100,869EAF dust service fees
    
    
    7,746
    
    
    
    13,579Net sales
    
    
    39,808
    
    
    
    114,448Cost of sales of zinc material and other goods (excluding depreciation)
    
    
    52,908
    
    
    
    89,623Cost of EAF dust services
    
    
    2,487
    
    
    
    3,147Cost of sales (excluding depreciation)
    
    
    55,395
    
    
    
    92,770Depreciation
    
    
    3,560
    
    
    
    2,881Selling, general and administrative expenses
    
    
    3,703
    
    
    
    3,645Total costs and expenses
    
    
    62,658
    
    
    
    99,296Income (loss) from operations
    
    
    (22,850
    )
    
    
    15,152Other income (expense)Interest expense
    
    
    (347
    )
    
    
    (349
    )Interest and other income
    
    
    166
    
    
    
    658(181
    )
    
    
    309Income (loss) before income taxes
    
    
    (23,031
    )
    
    
    15,461Income tax provision (benefit)
    
    
    (8,222
    )
    
    
    5,591NET INCOME (LOSS)
    
    $
    (14,809
    )
    
    $
    9,870Earnings (losses) per common share:Basic
    
    $
    (0.42
    )
    
    $
    0.28Diluted
    
    $
    (0.42
    )
    
    $
    0.28Weighted average shares outstanding:Basic
    
    
    35,254
    
    
    
    34,820Diluted
    
    
    35,254
    
    
    
    35,165
 The accompanying notes to financial statements are an integral part of these statements.
 2




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CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY    (Amounts in thousands)
 AdditionalCommon Stock
    
    
    Paid-In
    
    
    RetainedShares
    
    
    Amount
    
    
    Capital
    
    
    Earnings
    
    
    TotalBalance at January 1, 2009
    
    
    35,253
    
    
    $
    352
    
    
    $
    129,741
    
    
    $
    156,466
    
    
    $
    286,559Stock compensation expense
    
    
    
    
    
    
    
    
    
    
    566
    
    
    
    
    
    
    
    566Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14,809
    )
    
    
    (14,809
    )Balance at March 31, 2009
    
    
    35,253
    
    
    $
    352
    
    
    $
    130,307
    
    
    $
    141,657
    
    
    $
    272,316
 The accompanying notes to financial statements are an integral part of these statements
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CONSOLIDATED STATEMENTS OF CASH FLOWS    (Amounts in thousands)
 2009
    
    
    2008Cash Flows from Operating Activities:Net income (loss)
    
    $
    (14,809
    )
    
    $
    9,870Adjustments to reconcile net income (loss) to net cash (used in) provided by operating
activities:Depreciation and amortization
    
    
    3,726
    
    
    
    3,048Deferred income tax benefit
    
    
    (227
    )
    
    
    (97
    )Losses on derivative financial instruments
    
    
    4,263
    
    
    
    836Non-cash compensation expense
    
    
    566
    
    
    
    397Changes in operating assets and liabilities:Decrease (increase) in accounts receivable
    
    
    10,218
    
    
    
    (4,596
    )Decrease in inventories
    
    
    6,604
    
    
    
    3,393Increase in prepaid expenses and other current assets
    
    
    (6,216
    )
    
    
    (6,424
    )Decrease (increase) in other assets
    
    
    1
    
    
    
    (1
    )(Decrease) increase in accounts payable
    
    
    (9,150
    )
    
    
    962(Decrease) increase in accrued expenses net of tax benefit of stock option exercise
    
    
    (6,192
    )
    
    
    3,891Increase (decrease) in other non-current liabilities
    
    
    1,106
    
    
    
    (739
    )Net cash (used in) provided by operating activities
    
    
    (10,110
    )
    
    
    10,540Cash Flows from Investing Activities:Purchase of property, plant and equipment
    
    
    (16,429
    )
    
    
    (8,841
    )Net cash used in investing activities
    
    
    (16,429
    )
    
    
    (8,841
    )Cash Flows from Financing Activities:Proceeds from exercise of options
    
    
    
    
    
    
    400Tax benefit of stock option exercise
    
    
    
    
    
    
    625Payments on notes payable and long-term debt
    
    
    (15
    )
    
    
    (16
    )Net cash (used in) provided by financing activities
    
    
    (15
    )
    
    
    1,009Net (Decrease) Increase In Cash And Cash Equivalents
    
    
    (26,554
    )
    
    
    2,708Cash and cash equivalents at beginning of period
    
    
    122,768
    
    
    
    76,169Cash and cash equivalents at end of period
    
    $
    96,214
    
    
    $
    78,877
 The accompanying notes to financial statements are an integral part of these statements.
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NOTE ABASIS OF PRESENTATION
   NOTE BCASH AND CASH EQUIVALENTS
  March 31,
    
    December 31,2009
    
    2008Cash in bank
    
    $
    46,236
    
    
    $
    82,789Commercial paper
    
    
    49,978
    
    
    
    39,979$
    96,214
    
    
    $
    122,768
  NOTE CINVENTORIES
  March 31,
    
    
    December 31,2009
    
    
    2008Raw materials
    
    $
    12,122
    
    
    $
    15,885Work-in-process
    
    
    3,130
    
    
    
    4,394Finished goods
    
    
    12,801
    
    
    
    13,969Supplies and spare parts
    
    
    12,552
    
    
    
    12,961$
    40,605
    
    
    $
    47,209
  5




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NOTE DPROPERTY, PLANT AND EQUIPMENT
  March 31,
    
    
    December 31,2009
    
    
    2008Land and land improvements
    
    $
    8,494
    
    
    $
    8,494Buildings and building improvements
    
    
    23,264
    
    
    
    23,228Machinery and equipment
    
    
    114,296
    
    
    
    113,444Construction in progress
    
    
    50,419
    
    
    
    34,878196,473
    
    
    
    180,044Less accumulated depreciation
    
    
    (47,463
    )
    
    
    (43,903
    )$
    149,010
    
    
    $
    136,141
 NOTE ENOTES PAYABLE AND DEBT
    NOTE FACCRUED EXPENSES
  March 31,
    
    
    December 31,2009
    
    
    2008Employee related costs
    
    $
    6,175
    
    
    $
    9,915Accrued hedge contracts
    
    
    1,428
    
    
    
    3,986Insurance claim liabilities
    
    
    2,800
    
    
    
    2,800Other
    
    
    5,777
    
    
    
    8,230$
    16,180
    
    
    $
    24,931
 NOTE GINCOME TAXES
  6




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NOTE HSTOCK-BASED COMPENSATION
       NOTE IACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
  7




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Three months ended March 31,2009
    
    2008Gains (losses) included in net sales:Put options
    
    
    ($4,647
    )
    
    $
    222Swaps
    
    
    28
    
    
    
    (1,623
    )($4,619
    )
    
    
    ($1,401
    )
  8




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Fair Value Measurements Using Significant Other Observable Inputs (Level 2)
 March 31, 2009
    
    
    December 31, 2008Put options and swaps included in Prepaid expenses and other assets
    
    $
    5,779
    
    
    $
    12,601Swaps included in Accrued expenses
    
    $
    1,428
    
    
    $
    3,987
   NOTE JCONTINGENCIES
   NOTE KEARNINGS PER SHARE
   Three months ended March 31,2009
    
    
    2008Basic earnings (loss) per share:Net income (loss)
    
    $
    (14,809
    )
    
    $
    9,870Weighted average shares outstandingbasic
    
    
    35,254
    
    
    
    34,820Basic earnings (loss) per share
    
    $
    (0.42
    )
    
    $
    0.28Diluted earnings (loss) per share:Net income (loss)
    
    $
    (14,809
    )
    
    $
    9,870Weighted average shares outstandingdiluted
    
    
    35,254
    
    
    
    35,165
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Three months ended March 31,2009
    
    
    2008Diluted earnings (loss) per share
    
    $
    (0.42
    )
    
    $
    0.28Reconciliation of average shares
outstanding  basic to average shares
outstandingdiluted:Weighted average shares outstandingbasic
    
    
    35,254
    
    
    
    34,820Effect of dilutive securities:Options
    
    
    
    
    
    
    345Weighted average shares outstandingdiluted
    
    
    35,254
    
    
    
    35,165
  NOTE L  SUBSEQUENT EVENTS
  10




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
 General
  Overview
 Our History
   Economic Conditions and Outlook
  Factors Affecting Our Operating Results
 Market Price for Zinc
  Demand for Zinc-Based Products
 11




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Production/EAF Dust Processed
    
    Shipments/EAF Dust Receipts
    
    Revenue/TonThree Months Ended March 31,
    
    Year Ended December 31,
    
    Three Months Ended March 31,
    
    Year Ended December31,
    
    Three Months Ended March 31,
    
    Year Ended December31,2009
    
    2008
    
    2008
    
    2007
    
    2009
    
    2008
    
    2008
    
    2007
    
    2009
    
    2008
    
    2008
    
    2007(Tons, in thousands)
    
    (Tons, in thousands)
    
    (In U.S. dollars)Product:Zinc Products
    
    
    24
    
    
    
    38
    
    
    
    137
    
    
    
    140
    
    
    
    28
    
    
    
    41
    
    
    
    154
    
    
    
    153
    
    
    $
    1,195
    
    
    $
    2,269
    
    
    
    
    
    
    $
    1,932
    
    
    $
    3,104EAF Dust
    
    
    104
    
    
    
    134
    
    
    
    519
    
    
    
    492
    
    
    
    80
    
    
    
    139
    
    
    
    507
    
    
    
    458
    
    
    $
    96
    
    
    $
    98
    
    
    
    
    
    
    $
    97
    
    
    $
    99
 Cost of Sales (excluding depreciation)
  Selling, General and Administrative Expenses
 Trends Affecting Our Business
  
    
    LME price of zinc;
    
    changes in cost of energy and fuels;
    
    gain and loss of customers;
    
    pricing pressures from competitors, including new entrants into the EAF dust
recycling market;
    
    decline in use of zinc products;
    
    expansions into new products and expansion of our capacity, which requires us to
incur costs prior to generating revenues;
    
    expenditures required to comply with environmental and other operational
regulations;
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
    
    access to credit by our customers; and
    
    our operational efficiency improvement programs.
      Summary of Critical Accounting Policies and Estimates
  Inventories
   13




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Financial Instruments
      Impairment
  Results of Operations
  Three months ended March 31,2009
    

2008Net sales
    
    
    100.0
    %
    
    
    100.0
    %Cost of sales (excluding depreciation)
    
    
    139.2
    
    
    
    81.1Depreciation
    
    
    8.9
    
    
    
    2.5Selling, general and administrative expenses
    
    
    9.3
    
    
    
    3.2Income (loss) from operations
    
    
    (57.4
    )
    
    
    13.2Interest expense
    
    
    0.9
    
    
    
    0.3Interest and other income
    
    
    0.4
    
    
    
    0.6Income (loss) before income taxes
    
    
    (57.9
    )
    
    
    13.5Income tax provision (benefit)
    
    
    (20.7
    )
    
    
    4.9Net income (loss)
    
    
    (37.2
    %)
    
    
    8.6
    %
 14




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Put Options2008
    
    2009
    
    Swaps
    
    TotalFair value December 31, 2007
    
    
    9,871
    
    
    
    
    
    
    
    (757
    )
    
    
    9,114Purchases
    
    
    
    
    
    
    7,008
    
    
    
    
    
    
    
    7,008Settlements of closed positions
    
    
    
    
    
    
    
    
    
    
    566
    
    
    
    566Gain (loss) on settlements of
closed positions
    
    
    (3,322
    )
    
    
    
    
    
    
    (182
    )
    
    
    (3,504
    )Mark to market adjustment on
open positions
    
    
    2,612
    
    
    
    932
    
    
    
    (1,441
    )
    
    
    2,103Fair value March 31, 2008
    
    
    9,161
    
    
    
    7,940
    
    
    
    (1,814
    )
    
    
    15,287Purchases
    
    
    
    
    
    
    7,208
    
    
    
    
    
    
    
    7,208Settlements of closed positions
    
    
    (2,267
    )
    
    
    
    
    
    
    827
    
    
    
    (1,440
    )Gain (loss) on settlements of
closed positions
    
    
    736
    
    
    
    
    
    
    
    (60
    )
    
    
    676Mark to market adjustment on
open positions
    
    
    5,730
    
    
    
    7,233
    
    
    
    4,522
    
    
    
    17,485Fair value June 30, 2008
    
    
    13,360
    
    
    
    22,381
    
    
    
    3,475
    
    
    
    39,216Purchases
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Settlements of closed positions
    
    
    (8,866
    )
    
    
    
    
    
    
    175
    
    
    
    (8,691
    )Gain (loss) on settlements of
closed positions
    
    
    2,601
    
    
    
    
    
    
    
    (358
    )
    
    
    2,243Mark to market adjustment on
open positions
    
    
    3,926
    
    
    
    11,553
    
    
    
    (655
    )
    
    
    14,824Fair value September 30, 2008
    
    
    11,021
    
    
    
    33,934
    
    
    
    2,637
    
    
    
    47,592Sales
    
    
    
    
    
    
    (33,934
    )
    
    
    
    
    
    
    (33,934
    )Purchases
    
    
    
    
    
    
    10,472
    
    
    
    
    
    
    
    10,472Settlements of closed positions
    
    
    (20,806
    )
    
    
    
    
    
    
    907
    
    
    
    (19,899
    )Gain (loss) on settlements of
closed positions
    
    
    9,785
    
    
    
    
    
    
    
    (1,086
    )
    
    
    8,699Mark to market adjustment on
open positions
    
    
    
    
    
    
    (3,626
    )
    
    
    (690
    )
    
    
    (4,316
    )Fair value December 31, 2008
    
    
    
    
    
    
    6,846
    
    
    
    1,768
    
    
    
    8,614Settlements of closed positions
    
    
    
    
    
    
    
    
    
    
    356
    
    
    
    356Gain (loss) on settlements of
closed positions
    
    
    
    
    
    
    (744
    )
    
    
    (256
    )
    
    
    (1,000
    )Mark to market adjustment on
open positions
    
    
    
    
    
    
    (3,903
    )
    
    
    284
    
    
    
    (3,619
    )Fair value March 31, 2009
    
    $
    
    
    
    $
    2,199
    
    
    $
    2,152
    
    
    $
    4,351
  2007
    
    2008
    
    2009Average LME zinc price
    
    December 31
    
    March 31
    
    December 31
    
    March 31Three months ended
    
    $
    1.19
    
    
    $
    1.10
    
    
    $
    0.54
    
    
    $
    0.53Year-to-date
    
    $
    1.47
    
    
    $
    1.10
    
    
    $
    0.85
    
    
    $
    0.53
 Three Months Ended March 31, 2009 Compared with Three Months Ended March 31, 2008
 Net sales.
 15




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Cost of sales (excluding depreciation).
  16




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Depreciation
 Selling, general and administrative expenses.
 Interest and other income.
 Income tax (benefit) provision.
 Net income (loss).
 Liquidity and Capital Resources
  March 31, 2009
  17




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Cash Flows from Operating Activities
    Cash Flows from Investing Activities
   Off-Balance Sheet Arrangements
  Available Information
  18




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Item 3. Quantitative and Qualitative Disclosures About Market Risk.
   Interest Rate Risk
  Commodity Price Risk
    
 Item 4. Controls and Procedures.
  19




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Changes in Internal Control over Financial Reporting
  20




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PART IIOTHER INFORMATION
 
 Item 1. Legal Proceedings.
  
 Item 1A. Risk Factors.
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
  
 Item 3. Defaults Upon Senior Securities.
  
 Item 4. Submission of Matters to a Vote of Security Holders.
  
 Item 5. Other Information.
  
 Item 6. Exhibits.
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Exhibit No.
    
    Description31.1
    
    Certification by James M. Hensler, Chief Executive Officer
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Robert D. Scherich, Chief Financial Officer
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification Pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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##### Table of Contents



SIGNATURES
  HORSHEAD HOLDING CORP./s/ James M. HenslerBy:
    James M. HenslerIts:
    President and Chief Executive Officer  SIGNATURE
    
    TITLE
    
    DATE/s/ James M. Hensler

James M. Hensler
    
    Principal Executive Officer
    
    May 11, 2009/s/ Robert D. Scherich

Robert D. Scherich
    
    Principal Financial and
Accounting Officer
    
    May 11, 2009
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