##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2008
 OR
 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
    
    20-0447377(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer
Identification No.)4955 Steubenville Pike, Suite 405
Pittsburgh, Pennsylvania 15205
    
    (724) 774-1020(Address of Principal Executive Offices, including Zip Code)
    
    (Registrants Telephone Number, Including Area Code)
 
  þ o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ(Do not check if a smaller reporting company)
    
    Smaller reporting company o
  o þ




---



##### 



TABLE OF CONTENTS
 PART I  Financial InformationItem 1.
    
    Financial StatementsConsolidated Balance Sheets as of March 31, 2008 (Unaudited) and December 31, 2007
    
    
    1Consolidated Statements of Income (Unaudited) for the three months ended March 31, 2008 and 2007
    
    
    2Consolidated Statement of Stockholders Equity (Unaudited) for the three months ended March 31, 2008
    
    
    3Consolidated Statements of Cash Flows (Unaudited) for the three months ended March 31, 2008 and March 31, 2007
    
    
    4Notes to Consolidated Financial Statements (Unaudited) March 31, 2008
    
    
    5Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    11Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    17Item 4T.
    
    Controls and Procedures
    
    
    18PART II  Other InformationItem 1.
    
    Legal Proceedings
    
    
    19Item 1A
    
    Risk Factors
    
    
    19Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    19Item 3
    
    Defaults Upon Senior Securities
    
    
    19Item 4
    
    Submission of Matters to a Vote of Security Holders
    
    
    19Item 5.
    
    Other Information
    
    
    19Item 6.
    
    Exhibits
    
    
    19
    CAUTIONARY STATEMENT FOR PURPOSES OF THE SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995
    i




---



##### Table of Contents



ii




---



##### Table of Contents



PART IFINANCIAL INFORMATION
 
 Item 1. Financial Statements.
  
 CONSOLIDATED BALANCE SHEETS   (Amounts in thousands, except per share amounts)
 March 31, 2008
    
    
    December 31, 2007(Unaudited)
    
    
    (Audited)ASSETSCurrent assetsCash and cash equivalents
    
    $
    78,877
    
    
    $
    76,169Accounts receivable, net of allowance of $224 and $459, respectively
    
    
    56,069
    
    
    
    51,473Inventories
    
    
    66,525
    
    
    
    69,918Prepaid expenses and other current assets
    
    
    18,692
    
    
    
    12,047Deferred income taxes
    
    
    561
    
    
    
    464Total current assets
    
    
    220,724
    
    
    
    210,071Property, plant and equipment, net
    
    
    104,892
    
    
    
    98,932Other assetsDeferred financing costs, net of amortization of $701 and $534, respectively
    
    
    1,498
    
    
    
    1,665Deferred income taxes
    
    
    3,905
    
    
    
    3,905Deposits and other
    
    
    232
    
    
    
    231Total other assets
    
    
    5,635
    
    
    
    5,801Total assets
    
    $
    331,251
    
    
    $
    314,804LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilitiesCurrent maturities of long-term debt
    
    $
    60
    
    
    $
    60Accounts payable
    
    
    38,420
    
    
    
    37,458Accrued expenses
    
    
    27,483
    
    
    
    22,535Total current liabilities
    
    
    65,963
    
    
    
    60,053Long-term debt, less current maturities
    
    
    105
    
    
    
    121Other long-term liabilities
    
    
    11,837
    
    
    
    12,576Commitments and contingenciesStockholders equityCommon stock, par value $.01 per share; 100,000 shares authorized; 34,918 and 34,775
shares issued and outstanding in 2008 and 2007, respectively
    
    
    349
    
    
    
    348Preferred stock, par value $.01 per share; 10,000 shares authorized; no shares
issued or outstanding
    
    
    
    
    
    
    Additional paid-in capital
    
    
    126,103
    
    
    
    124,682Retained earnings
    
    
    126,894
    
    
    
    117,024Total stockholders equity
    
    
    253,346
    
    
    
    242,054Total liabilities and stockholders equity
    
    $
    331,251
    
    
    $
    314,804
 The accompanying notes to financial statements are an integral part of these statements.
 1




---



##### Table of Contents



CONSOLIDATED STATEMENTS OF INCOME    (Amounts in thousands except per share amounts)
 2008
    
    
    2007Net sales of zinc material and other goods
    
    $
    100,869
    
    
    $
    136,549EAF dust service fees
    
    
    13,579
    
    
    
    11,273Net sales
    
    
    114,448
    
    
    
    147,822Cost of sales of zinc material and other goods (excluding depreciation)
    
    
    89,623
    
    
    
    95,393Cost of EAF dust services
    
    
    3,147
    
    
    
    1,539Cost of sales (excluding depreciation)
    
    
    92,770
    
    
    
    96,932Depreciation
    
    
    2,881
    
    
    
    2,563Selling, general and administrative expenses
    
    
    3,645
    
    
    
    3,410Total costs and expenses
    
    
    99,296
    
    
    
    102,905Income from operations
    
    
    15,152
    
    
    
    44,917Other income (expense)Interest expense
    
    
    (349
    )
    
    
    (2,617
    )Interest and other income
    
    
    658
    
    
    
    40309
    
    
    
    (2,577
    )Income before income taxes
    
    
    15,461
    
    
    
    42,340Income tax provision
    
    
    5,591
    
    
    
    15,437NET INCOME
    
    $
    9,870
    
    
    $
    26,903Earnings per common share:Basic
    
    $
    0.28
    
    
    $
    1.22Diluted
    
    $
    0.28
    
    
    $
    0.93Weighted average shares outstanding:Basic
    
    
    34,820
    
    
    
    22,026Diluted
    
    
    35,165
    
    
    
    28,855
 The accompanying notes to financial statements are an integral part of these statements.
 2




---



##### Table of Contents



CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY    (Amounts in thousands)
 AdditionalCommon Stock
    
    
    Paid-In
    
    
    RetainedShares
    
    
    Amount
    
    
    Capital
    
    
    Earnings
    
    
    TotalBalance at January 1, 2008
    
    
    34,775
    
    
    $
    348
    
    
    $
    124,682
    
    
    $
    117,024
    
    
    $
    242,054Stock option exercise
    
    
    143
    
    
    
    1
    
    
    
    399
    
    
    
    
    
    
    
    400Restricted stock
compensation expense
    
    
    
    
    
    
    
    
    
    
    62
    
    
    
    
    
    
    
    62Stock option compensation
expense
    
    
    
    
    
    
    
    
    
    
    335
    
    
    
    
    
    
    
    335Tax benefit of stock
option exercise
    
    
    
    
    
    
    
    
    
    
    625
    
    
    
    
    
    
    
    625Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,870
    
    
    
    9,870Balance at March 31, 2008
    
    
    34,918
    
    
    $
    349
    
    
    $
    126,103
    
    
    $
    126,894
    
    
    $
    253,346
 The accompanying notes to financial statements are an integral part of these statements
 3




---



##### Table of Contents



CONSOLIDATED STATEMENTS OF CASH FLOWS    (Amounts in thousands)
 2008
    
    
    2007Cash Flows from Operating Activities:Net income
    
    $
    9,870
    
    
    $
    26,903Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization
    
    
    3,048
    
    
    
    2,860Deferred income tax (benefit)
    
    
    (97
    )
    
    
    Deferred interest payable
    
    
    
    
    
    
    144Losses on derivative financial instruments
    
    
    836
    
    
    
    453Non-cash compensation expense
    
    
    397
    
    
    
    170Changes in operating assets and liabilities:(Increase) decrease in accounts receivable
    
    
    (4,596
    )
    
    
    3,226Decrease (increase) in inventories
    
    
    3,393
    
    
    
    (11,801
    )(Increase) decrease in prepaid expenses and other current assets
    
    
    (6,424
    )
    
    
    653(Increase) in other assets
    
    
    (1
    )
    
    
    Increase (decrease) in accounts payable
    
    
    962
    
    
    
    (202
    )Increase in accrued expenses net of tax benefit of stock option exercise
    
    
    3,891
    
    
    
    10,213(Decrease) increase in other non-current liabilities
    
    
    (739
    )
    
    
    6Net cash provided by operating activities
    
    
    10,540
    
    
    
    32,625Cash Flows from Investing Activities:Purchase of property, plant and equipment
    
    
    (8,841
    )
    
    
    (5,782
    )Net cash (used in) investing activities
    
    
    (8,841
    )
    
    
    (5,782
    )Cash Flows from Financing Activities:Proceeds from exercise of options
    
    
    400
    
    
    
    Tax benefit
of stock option exercise
    
    
    625Net (payments on) proceeds from revolving credit facility
    
    
    
    
    
    
    (14,398
    )Payments on notes payable and long-term debt
    
    
    (16
    )
    
    
    (1,764
    )Net cash provided by (used in)financing activities
    
    
    1,009
    
    
    
    (16,162
    )Net Increase In Cash And Cash Equivalents
    
    
    2,708
    
    
    
    10,681Cash and cash equivalents at beginning of period
    
    
    76,169
    
    
    
    958Cash and cash equivalents at end of period
    
    $
    78,877
    
    
    $
    11,639
 The accompanying notes to financial statements are an integral part of these statements.
 4




---



##### Table of Contents



NOTE ABASIS OF PRESENTATION
   NOTE BRECENTLY ISSUED ACCOUNTING STANDARDS
 Disclosures about Derivative Instruments and Hedging Activitiesan amendment of FASB Statement No.
133
 NOTE CINVENTORIES
  March 31,
    
    
    December 31,2008
    
    
    2007Raw materials
    
    $
    23,008
    
    
    $
    28,095Work-in-process
    
    
    1,452
    
    
    
    1,258Finished goods
    
    
    31,697
    
    
    
    30,866Supplies and spare parts
    
    
    10,368
    
    
    
    9,699$
    66,525
    
    
    $
    69,918
  NOTE DPROPERTY, PLANT AND EQUIPMENT
  5




---



##### Table of Contents



March 31,
    
    
    December 31,2008
    
    
    2007Land and land improvements
    
    $
    7,927
    
    
    $
    7,598Buildings and building improvements
    
    
    21,627
    
    
    
    21,357Machinery and equipment
    
    
    97,194
    
    
    
    62,326Construction in progress
    
    
    13,279
    
    
    
    39,905140,027
    
    
    
    131,186Less accumulated depreciation
    
    
    (35,135
    )
    
    
    (32,254
    )$
    104,892
    
    
    $
    98,932
 NOTE ENOTES PAYABLE AND LONG-TERM DEBT
    NOTE FACCRUED EXPENSES
  March 31,
    
    
    December 31,2008
    
    
    2007Employee related costs
    
    $
    10,246
    
    
    $
    8,900Insurance claim liabilities
    
    
    2,800
    
    
    
    2,800Other
    
    
    14,437
    
    
    
    10,835$
    27,483
    
    
    $
    22,535
 NOTE GINCOME TAXES
   6




---



##### Table of Contents



NOTE HSTOCK-BASED COMPENSATION
   Weighted
    
    
    
    
    
    Weighted AverageAverage
    
    
    
    
    
    RemainingExercise Price
    
    Number of Shares
    
    Contractual Life$1.01
    
    
    412
    
    
    
    6.4$2.36
    
    
    56
    
    
    
    6.4$7.39
    
    
    30
    
    
    
    6.4$1.54
    
    
    498
    
    
    
    6.4
      NOTE IACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
 7




---



##### Table of Contents



Fair Value Measurements Using Significant Other Observable Inputs (Level 2)
 Description
    
    March 31, 2008
    
    
    December 31, 2007Put options included in Prepaid expenses and other assets
    
    $
    17,101
    
    
    $
    9,871Swaps included in Accrued expenses
    
    $
    1,814
    
    
    $
    757
  NOTE JCONTINGENCIES
   8




---



##### Table of Contents



NOTE KEARNINGS PER SHARE
   Three months ended March 31,2008
    
    
    2007Basic earnings per share:Net income
    
    $
    9,870
    
    
    $
    26,903Weighted average shares outstandingbasic
    
    
    34,820
    
    
    
    22,026Basic earnings per share
    
    $
    0.28
    
    
    $
    1.22Diluted earnings per share:Net income
    
    $
    9,870
    
    
    $
    26,903Weighted average shares outstandingdiluted
    
    
    35,165
    
    
    
    28,855Diluted earnings per share
    
    $
    0.28
    
    
    $
    0.93Reconciliation of average shares
outstanding  basic to average shares
outstandingdiluted:Weighted average shares outstandingbasic
    
    
    34,820
    
    
    
    22,026Effect of dilutive securities:Options
    
    
    345
    
    
    
    895Warrants
    
    
    
    
    
    
    5,934Weighted average shares outstandingdiluted
    
    
    35,165
    
    
    
    28,855
 9




---



##### Table of Contents



10




---



##### Table of Contents



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




---



##### Table of Contents



Volumes
    
    U.S. Sales/Unit2007
    
    2006
    
    2005
    
    2007
    
    2006
    
    2005(Tons, in thousands)
    
    (In whole dollars)Product:Zinc Products
    
    
    153
    
    
    
    158
    
    
    
    165
    
    
    $
    3,104
    
    
    $
    2,750
    
    
    $
    1,284EAF Dust
    
    
    458
    
    
    
    504
    
    
    
    498
    
    
    $
    99
    
    
    $
    101
    
    
    $
    94
 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;
    
    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; and
    
    our operational efficiency improvement programs.
  12




---



##### Table of Contents



Summary of Critical Accounting Policies and Estimates
  Inventories
   Financial Instruments
   13




---



##### Table of Contents



Recently Issued Accounting Pronouncements
 Disclosures about Derivative Instruments and Hedging Activitiesan amendment of FASB Statement No.
133
 Results of Operations
  Three months ended March 31,2008
    
    2007Net sales
    
    
    100.0
    %
    
    
    100.0
    %Cost of sales (excluding depreciation)
    
    
    81.1
    
    
    
    65.6Depreciation
    
    
    2.5
    
    
    
    1.7Selling, general and administrative expenses
    
    
    3.2
    
    
    
    2.3Income from operations
    
    
    13.2
    
    
    
    30.4Interest expense
    
    
    0.3
    
    
    
    1.8Interest and other income
    
    
    0.6
    
    
    
    Income before income taxes
    
    
    13.5
    
    
    
    28.6Income tax provision
    
    
    4.9
    
    
    
    10.4Net income
    
    
    8.6
    %
    
    
    18.2
    %
  2006
    
    2007
    
    2008Fiscal quarter ended
    
    Fiscal quarter ended
    
    Fiscal quarter endedAverage LME zinc price
    
    December 31
    
    March 31
    
    December 31
    
    March 31Quarter
    
    $
    1.91
    
    
    $
    1.57
    
    
    $
    1.19
    
    
    $
    1.10Year-to-date
    
    $
    1.49
    
    
    $
    1.57
    
    
    $
    1.47
    
    
    $
    1.10
 14




---



##### Table of Contents



Three Months Ended March 31, 2008 Compared with Three Months Ended March 31, 2007
 Net sales.
      Cost of sales (excluding depreciation).
 Depreciation
 15




---



##### Table of Contents



Selling, general and administrative expenses.
 Interest expense.
  Income tax provision.
 Net income.
 Liquidity and Capital Resources
  Cash Flows from Operating Activities
   Cash Flows from Investing Activities
  16




---



##### Table of Contents



Cash Flows from Financing Activities
  Off-Balance Sheet Arrangements
  Available Information
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk.
   Interest Rate Risk
  Commodity Price Risk
  17




---



##### Table of Contents



Item 4T. Controls and Procedures.
   Changes in Internal Control over Financial Reporting
  18




---



##### Table of Contents



PART IIOTHER INFORMATION
 
 Item 1. Legal Proceedings.
  
 Item 1A. Risk Factors.
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
 Change in Securities.
 a. Recent Sales of Unregistered Securities:
  Use of Proceeds from Registered Securities.
  
 Item 3. Defaults Upon Senior Securities.
  
 Item 4. Submission of Matters to a Vote of Security Holders.
  
 Item 5. Other Information.
  
 Item 6. Exhibits.
 19




---



##### Table of Contents



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.
 20




---



##### 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 15, 2008/s/ Robert D. Scherich
Robert D. Scherich
    
    Principal Financial and Accounting Officer
    
    May 15, 2008
 21