##### 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 September 30, 2005
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from   to
 Metalico, Inc.
   Delaware
    
    001-32453
    
    52-2169780(State or other jurisdiction of
incorporation or organization)
    
    (Commission file number)
    
    (I.R.S. Employer Identification No.)
 186 North Avenue East
Cranford, NJ
    
    07016
    
    (908) 497-9610(Address of Principal Executive Offices)
    
    (Zip Code)
    
    (Registrants Telephone Number)
 þ o
 o þ
 o þ




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METALICO, INC.
Form 10-Q Quarterly Report
Table of Contents
 PART IItem 1. Unaudited Condensed Consolidated Financial Statements.
    
    Page 2Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
    
    Page 11Item 3. Quantitative and Qualitative Disclosures About Market Risk.
    
    Page 19Item 4. Controls and Procedures.
    
    Page 20PART IIItem 1. Legal Proceedings.
    
    Page 20Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
    
    Page 21Item 3. Defaults Upon Senior Securities.
    
    Page 21Item 4. Submission of Matters to a Vote of Security Holders.
    
    Page 21Item 5. Other Information.
    
    Page 21Item 6. Exhibits.
    
    Page 21Certification of Chief Executive OfficerCertification of Chief Financial OfficerCertification of Chief Executive OfficerCertification of Chief Financial Officer
  1




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1. Unaudited Condensed Consolidated Financial Statements
 METALICO, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
As of September 30, 2005 and December 31, 2004
 September 30,
    
    
    December 31,2005
    
    2004(Unaudited)($ thousands)ASSETSCurrent AssetsCash and cash equivalents
    
    $
    1,528
    
    
    $
    734Trade receivables, net
    
    
    22,196
    
    
    
    17,481Inventories
    
    
    12,491
    
    
    
    13,683Prepaid expenses and other
    
    
    1,164
    
    
    
    632Deferred income taxes
    
    
    531
    
    
    
    646Total Current Assets
    
    
    37,910
    
    
    
    33,176Property and Equipment, net
    
    
    27,979
    
    
    
    25,269Goodwill
    
    
    27,669
    
    
    
    27,530Other Intangibles and Other Assets, net
    
    
    4,314
    
    
    
    4,562Property Actively Marketed for Sale, net
    
    
    823
    
    
    
    2,426Total Assets
    
    $
    98,695
    
    
    $
    92,963LIABILITIES AND STOCKHOLDERS EQUITYCurrent LiabilitiesShort-term debt due related parties
    
    $
    1,600
    
    
    $
    1,600Other short-term debt
    
    
    2,232
    
    
    
    2,535Current maturities of long-term debt
    
    
    1,899
    
    
    
    2,529Accounts payable
    
    
    9,557
    
    
    
    7,276Accrued expenses
    
    
    4,272
    
    
    
    4,647Income taxes payable
    
    
    1,005
    
    
    
    405Total Current Liabilities
    
    
    20,565
    
    
    
    18,992Long-Term LiabilitiesLong-term debt due related parties
    
    
    1,027
    
    
    
    2,705Other long-term debt, less current maturities
    
    
    18,672
    
    
    
    22,466Accrued and other
    
    
    1,574
    
    
    
    1,574Deferred income taxes
    
    
    1,706
    
    
    
    526Total Long-Term Liabilities
    
    
    22,979
    
    
    
    27,271Total Liabilities
    
    
    43,544
    
    
    
    46,263Redeemable Common Stock
    
    
    1,100
    
    
    
    1,200Stockholders EquityCapital StockPreferred
    
    
    39,132
    
    
    
    39,132Common
    
    
    8
    
    
    
    6Additional paid-in capital
    
    
    15,243
    
    
    
    11,328Retained earnings (deficit)
    
    
    97
    
    
    
    (4,537
    )Accumulated other comprehensive income (loss)  unrecognized pension costs
    
    
    (429
    )
    
    
    (429
    )54,051
    
    
    
    45,500Total Liabilities and Stockholders Equity
    
    $
    98,695
    
    
    $
    92,963
  2




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##### Table of Contents



METALICO, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three and Nine Months ended September 30, 2005 and 2004
 Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004(Unaudited)($ thousands, except per share data)RevenueProduct sales
    
    $
    40,598
    
    
    $
    26,098
    
    
    $
    119,828
    
    
    $
    72,040Tolling services
    
    
    948
    
    
    
    1,264
    
    
    
    2,914
    
    
    
    3,94841,546
    
    
    
    27,362
    
    
    
    122,742
    
    
    
    75,988Costs and expensesOperating expenses  product sales
    
    
    32,662
    
    
    
    20,569
    
    
    
    97,319
    
    
    
    57,682Operating expenses  tolling services
    
    
    1,103
    
    
    
    1,160
    
    
    
    3,523
    
    
    
    3,071Selling, general, and administrative expenses
    
    
    3,079
    
    
    
    1,894
    
    
    
    9,172
    
    
    
    5,521Depreciation and amortization
    
    
    1,094
    
    
    
    642
    
    
    
    3,316
    
    
    
    1,85237,938
    
    
    
    24,265
    
    
    
    113,330
    
    
    
    68,126Operating income
    
    
    3,608
    
    
    
    3,097
    
    
    
    9,412
    
    
    
    7,862Financial and other income (expense)Interest expense
    
    
    (537
    )
    
    
    (307
    )
    
    
    (2,005
    )
    
    
    (891
    )Equity in net income of joint venture investee
    
    
    
    
    
    
    521
    
    
    
    
    
    
    
    1,124Net gain (loss) on sale of property and equipment
    
    
    (70
    )
    
    
    
    
    
    
    349
    
    
    
    Other
    
    
    4
    
    
    
    (6
    )
    
    
    12
    
    
    
    44(603
    )
    
    
    208
    
    
    
    (1,644
    )
    
    
    277Income from continuing operations
before income taxes
    
    
    3,005
    
    
    
    3,305
    
    
    
    7,768
    
    
    
    8,139Provision for federal and state income taxes
    
    
    1,138
    
    
    
    1,256
    
    
    
    2,847
    
    
    
    3,188Income from continuing operations
    
    
    1,867
    
    
    
    2,049
    
    
    
    4,921
    
    
    
    4,951Discontinued operations, net
    
    
    (42
    )
    
    
    (125
    )
    
    
    (287
    )
    
    
    (123
    )Net income
    
    
    1,825
    
    
    
    1,924
    
    
    
    4,634
    
    
    
    4,828Preferred stock dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    734Income available to common stockholders
    
    $
    1,825
    
    
    $
    1,924
    
    
    $
    4,634
    
    
    $
    4,094Earnings (loss) per common share:Basic:Income from continuing operations
    
    $
    0.08
    
    
    $
    0.09
    
    
    $
    0.20
    
    
    $
    0.31Discontinued operations, net
    
    
    (0.00
    )
    
    
    (0.01
    )
    
    
    (0.01
    )
    
    
    (0.01
    )Net income
    
    $
    0.08
    
    
    $
    0.08
    
    
    $
    0.19
    
    
    $
    0.30Diluted:Income from continuing operations
    
    $
    0.07
    
    
    $
    0.09
    
    
    $
    0.20
    
    
    $
    0.22Discontinued operations, net
    
    
    (0.00
    )
    
    
    (0.01
    )
    
    
    (0.01
    )
    
    
    (0.01
    )Net income
    
    $
    0.07
    
    
    $
    0.08
    
    
    $
    0.19
    
    
    $
    0.21Weighted Average Common Shares Outstanding:Basic
    
    
    24,473,051
    
    
    
    22,704,878
    
    
    
    24,015,891
    
    
    
    13,683,222Diluted
    
    
    26,043,791
    
    
    
    22,945,293
    
    
    
    24,206,005
    
    
    
    22,064,992
  3




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METALICO, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended September 30, 2005 and 2004
 2005
    
    2004(Unaudited)($ thousands)Cash Flows from Operating ActivitiesNet income
    
    $
    4,634
    
    
    $
    4,828Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization
    
    
    3,316
    
    
    
    1,852Amortization of notes payable discounts
    
    
    319
    
    
    
    Deferred income taxes
    
    
    1,295
    
    
    
    2,657Equity in net income of joint venture investee, in excess of distributions
    
    
    
    
    
    
    (569
    )Provision for doubtful accounts receivable
    
    
    43
    
    
    
    Net (gain) loss on sale of property and equipment
    
    
    (349
    )
    
    
    Stock options and warrants issued
    
    
    55
    
    
    
    Change in assets and liabilities, net of acquisitions:(Increase) decrease in:Receivables
    
    
    (4,758
    )
    
    
    (6,713
    )Inventories
    
    
    1,192
    
    
    
    (261
    )Prepaid expenses and other
    
    
    (532
    )
    
    
    (287
    )Increase (decrease) in:Accounts payable, accrued expenses, and income taxes payable
    
    
    2,506
    
    
    
    (48
    )Net cash provided by operating activities
    
    
    7,721
    
    
    
    1,459Cash Flows from Investing ActivitiesProceeds from sale of property and equipment
    
    
    2,292
    
    
    
    Purchase of property and equipment
    
    
    (6,039
    )
    
    
    (3,088
    )(Increase) decrease in other assets
    
    
    (129
    )
    
    
    50Cash paid for business acquisitions
    
    
    (89
    )
    
    
    (9,176
    )Net cash used in investing activities
    
    
    (3,965
    )
    
    
    (12,214
    )Cash Flows from Financing ActivitiesNet borrowings (payments) under revolving lines-of-credit
    
    
    (1,512
    )
    
    
    7,547Proceeds from other borrowings
    
    
    3,166
    
    
    
    8,970Principal payments on other borrowings
    
    
    (4,528
    )
    
    
    (3,014
    )Proceeds from exercise of stock options
    
    
    12
    
    
    
    Issuance of common stock
    
    
    
    
    
    
    139Redemption of redeemable common stock
    
    
    (100
    )
    
    
    Redemption of common stock warrants
    
    
    
    
    
    
    (151
    )Net cash provided by (used in) financing activities
    
    
    (2,962
    )
    
    
    13,491Net increase in cash and cash equivalents
    
    
    794
    
    
    
    2,736Cash and cash equivalents:Beginning
    
    
    734
    
    
    
    631Ending
    
    $
    1,528
    
    
    $
    3,367
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METALICO, INC. AND SUBSIDIARIES
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
($ thousands, except share data)
(Unaudited)
 Note 1  General
 Business
  Basis of Presentation
   Note 2  Inventories
  September 30,
    
    
    December 31,2005
    
    
    2004Raw materials
    
    $
    5,400
    
    
    $
    5,052Finished goods and work in progress
    
    
    2,477
    
    
    
    1,976Ferrous scrap metal
    
    
    1,343
    
    
    
    1,813Non-ferrous scrap metal
    
    
    3,271
    
    
    
    4,842$
    12,491
    
    
    $
    13,683
 Note 3  Short and Long-Term Debt
   5




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Note 4  Stock Options and Stock Based Compensation
      Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Net income:As reported
    
    $
    1,825
    
    
    $
    1,924
    
    
    $
    4,634
    
    
    $
    4,828Pro forma
    
    $
    1,789
    
    
    $
    1,866
    
    
    $
    4,552
    
    
    $
    4,664Earnings per
share on income
from continuing
operations
available to common
stockholders:As reportedBasic
    
    $
    0.08
    
    
    $
    0.09
    
    
    $
    0.20
    
    
    $
    0.31Diluted
    
    $
    0.07
    
    
    $
    0.09
    
    
    $
    0.20
    
    
    $
    0.22ProformaBasic
    
    $
    0.08
    
    
    $
    0.09
    
    
    $
    0.20
    
    
    $
    0.30Diluted
    
    $
    0.07
    
    
    $
    0.09
    
    
    $
    0.20
    
    
    $
    0.22
  Note 5  Earnings Per Share
  6




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Three Months Ended
    
    
    Three Months EndedSeptember 30, 2005
    
    
    September 30, 2004Income
    
    
    Shares
    
    
    Per Share
    
    
    Income
    
    
    Shares
    
    
    Per Share(Numerator)
    
    
    (Denominator)
    
    
    Amount
    
    
    (Numerator)
    
    
    (Denominator)
    
    
    AmountBasic EPSIncome available to common stockholders
    
    $
    1,867
    
    
    
    24,473,051
    
    
    $
    0.08
    
    
    $
    2,049
    
    
    
    22,704,878
    
    
    $
    0.09Effect of Dilutive SecuritiesCommon stock warrants
    
    
    
    
    
    
    94,348
    
    
    
    
    
    
    
    
    
    
    
    89,600Options and rights
    
    
    
    
    
    
    115,661
    
    
    
    
    
    
    
    
    
    
    
    135,598Convertible notes
    
    
    62
    
    
    
    1,360,731
    
    
    
    
    
    
    
    
    
    
    
    15,217Diluted EPSIncome from continuing operations
available to common stockholders plus
assumed conversions
    
    $
    1,929
    
    
    
    26,043,791
    
    
    $
    0.07
    
    
    $
    2,049
    
    
    
    22,945,293
    
    
    $
    0.09
 Nine Months Ended
    
    
    Nine Months EndedSeptember 30, 2005
    
    
    September 30, 2004Income
    
    
    Shares
    
    
    Per Share
    
    
    Income
    
    
    Shares
    
    
    Per Share(Numerator)
    
    
    (Denominator)
    
    
    Amount
    
    
    (Numerator)
    
    
    (Denominator)
    
    
    AmountIncome from continuing operations
    
    $
    4,921
    
    
    
    
    
    
    
    
    
    
    $
    4,951Less preferred stock dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (734
    )Basic EPSIncome available to common stockholders
    
    
    4,921
    
    
    
    24,015,891
    
    
    $
    0.20
    
    
    
    4,217
    
    
    
    13,683,222
    
    
    $
    0.31Effect of Dilutive SecuritiesCommon stock warrants
    
    
    
    
    
    
    90,500
    
    
    
    
    
    
    
    
    
    
    
    138,698Options and rights
    
    
    
    
    
    
    99,614
    
    
    
    
    
    
    
    
    
    
    
    104,754Dividends payable
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,524,443Convertible notes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,109Convertible preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    734
    
    
    
    6,608,766Diluted EPSIncome from continuing operations
available to common stockholders plus
assumed conversions
    
    $
    4,921
    
    
    
    24,206,005
    
    
    $
    0.20
    
    
    $
    4,951
    
    
    
    22,064,992
    
    
    $
    0.22
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Note 6  Commitments and Contingencies
 Environmental Remediation Matters
 nd
     8




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Other Matters
  Note 7  Segment Reporting
  9




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LeadScrap Metal
    
    
    Fabrication
    
    
    CorporateRecycling
    
    
    and Recycling
    
    
    and Other
    
    
    ConsolidatedThree months ended September 30, 2005Revenues from external customers
    
    $
    22,001
    
    
    $
    19,545
    
    
    $
    
    
    
    $
    41,546Operating income (loss)
    
    
    2,645
    
    
    
    2,048
    
    
    
    (1,085
    )
    
    
    3,608Three months ended September 30, 2004Revenues from external customers
    
    $
    20,110
    
    
    $
    7,252
    
    
    $
    
    
    
    $
    27,362Operating income (loss)
    
    
    3,542
    
    
    
    361
    
    
    
    (806
    )
    
    
    3,097Nine months ended September 30, 2005Revenues from external customers
    
    $
    66,264
    
    
    $
    56,478
    
    
    $
    
    
    
    $
    122,742Operating income (loss)
    
    
    7,061
    
    
    
    5,308
    
    
    
    (2,957
    )
    
    
    9,412Total assets
    
    
    49,982
    
    
    
    46,166
    
    
    
    2,547
    
    
    
    98,695Nine months ended September 30, 2004Revenues from external customers
    
    $
    55,585
    
    
    $
    20,403
    
    
    $
    
    
    
    $
    75,988Operating income (loss)
    
    
    8,835
    
    
    
    1,157
    
    
    
    (2,130
    )
    
    
    7,862Total assets
    
    
    39,419
    
    
    
    44,687
    
    
    
    3,409
    
    
    
    87,515
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This Form 10-Q includes certain statements that may be deemed to be forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements
in this Form 10-Q which address activities, events or developments that Metalico, Inc. (herein,
Metalico, the Company, we, us, our or other similar terms) expects or anticipates will or
may occur in the future, including such things as future acquisitions (including the amount and
nature thereof), business strategy, expansion and growth of our business and operations, general
economic and market conditions and other such matters are forward-looking statements. Although we
believe the expectations expressed in such forward-looking statements are based on reasonable
assumptions within the bounds of our knowledge of our business, a number of factors could cause
actual results to differ materially from those expressed in any forward-looking statements. These
and other risks, uncertainties and other factors are discussed under Risk Factors appearing in
our Annual Report on Form 10-K for the year ended December 31, 2004, as the same may be amended
from time to time.
 
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
(Unaudited)
 The following discussion should be read in conjunction with the unaudited condensed
consolidated financial statements and notes thereto included under Item 1 of this Report. In
addition, reference should be made to the audited consolidated financial statements and notes
thereto and related Managements Discussion and Analysis of Financial Condition and Results of
Operations included in our Annual Report on Form 10-K for the year ended December 31, 2004 (Annual
Report).
 General
   Critical Accounting Policies
   Contingencies
  Valuation of Long-lived Assets and Goodwill
  11




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Revenue Recognition
  Accounts Receivable and Allowance for Uncollectible Accounts Receivable
   Inventory
  Recent Developments
  RESULTS OF OPERATIONS
   12




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RevenueThree Months Ended
    
    
    Three Months Ended
    
    
    Nine Months Ended
    
    
    Nine Months EndedSeptember 30, 2005
    
    
    September 30, 2004
    
    
    September 30, 2005
    
    
    September 30, 2004Net
    
    
    
    
    
    
    
    
    
    
    Net
    
    
    
    
    
    
    
    
    
    
    Net
    
    
    
    
    
    
    
    
    
    
    NetWeight
    
    
    Sales
    
    
    %
    
    
    Weight
    
    
    Sales
    
    
    %
    
    
    Weight
    
    
    Sales
    
    
    %
    
    
    Weight
    
    
    Sales
    
    
    %Scrap Metal RecyclingFerrous metals (tons)
    
    
    45.4
    
    
    $
    8,330
    
    
    
    20.1
    
    
    
    37.0
    
    
    $
    8,872
    
    
    
    32.4
    
    
    
    128.2
    
    
    $
    23,932
    
    
    
    19.5
    
    
    
    108.4
    
    
    $
    22,894
    
    
    
    30.1Non-ferrous metals (lbs.)
    
    
    17,516
    
    
    
    13,087
    
    
    
    31.5
    
    
    
    15,169
    
    
    
    10,120
    
    
    
    37.0
    
    
    
    52,627
    
    
    
    40,401
    
    
    
    32.9
    
    
    
    43,589
    
    
    
    30,315
    
    
    
    39.9Scrap Handling
    
    
    
    
    
    
    584
    
    
    
    1.4
    
    
    
    
    
    
    
    1,118
    
    
    
    4.1
    
    
    
    
    
    
    
    1,931
    
    
    
    1.6
    
    
    
    
    
    
    
    2,376
    
    
    
    3.1Total Scrap Metal Recycling
    
    
    
    
    
    
    22,001
    
    
    
    53.0
    
    
    
    
    
    
    
    20,110
    
    
    
    73.5
    
    
    
    
    
    
    
    66,264
    
    
    
    54.0
    
    
    
    
    
    
    
    55,585
    
    
    
    73.1Lead Fabrication and
RecyclingFabricating (lbs.)
    
    
    20,082
    
    
    
    17,341
    
    
    
    41.7
    
    
    
    6,129
    
    
    
    4,076
    
    
    
    14.9
    
    
    
    57,133
    
    
    
    50,754
    
    
    
    41.3
    
    
    
    18,432
    
    
    
    11,470
    
    
    
    15.1Smelting (lbs.)
    
    
    2,665
    
    
    
    1,256
    
    
    
    3.0
    
    
    
    3,645
    
    
    
    1,912
    
    
    
    7.0
    
    
    
    5,813
    
    
    
    2,810
    
    
    
    2.3
    
    
    
    11,182
    
    
    
    4,985
    
    
    
    6.6Tolling (lbs.)
    
    
    5,143
    
    
    
    948
    
    
    
    2.3
    
    
    
    5,996
    
    
    
    1,264
    
    
    
    4.6
    
    
    
    15,529
    
    
    
    2,914
    
    
    
    2.4
    
    
    
    20,028
    
    
    
    3,948
    
    
    
    5.2Total Lead Fabrication and
Recycling
    
    
    27,890
    
    
    
    19,545
    
    
    
    47.0
    
    
    
    15,770
    
    
    
    7,252
    
    
    
    26.5
    
    
    
    78,475
    
    
    
    56,478
    
    
    
    46.0
    
    
    
    49,642
    
    
    
    20,403
    
    
    
    26.9Total Revenue
    
    
    
    
    
    $
    41,546
    
    
    
    100.0
    
    
    
    
    
    
    $
    27,362
    
    
    
    100.0
    
    
    
    
    
    
    $
    122,742
    
    
    
    100.0
    
    
    
    
    
    
    $
    75,988
    
    
    
    100.0
  Average
    
    
    Average
    
    
    AverageFerrous Price per
    
    
    Non-Ferrous Price
    
    
    LeadFor the quarter ending:
    
    ton
    
    
    per lb.
    
    
    Price per lb.September 30, 2005
    
    $
    183
    
    
    $
    0.75
    
    
    $
    0.70June 30, 2005
    
    $
    162
    
    
    $
    0.78
    
    
    $
    0.71March 31, 2005
    
    $
    217
    
    
    $
    0.77
    
    
    $
    0.75December 31, 2004
    
    $
    271
    
    
    $
    0.65
    
    
    $
    0.86September 30, 2004
    
    $
    240
    
    
    $
    0.67
    
    
    $
    0.35
 Three Months Ended September 30, 2005 Compared to Three Months Ended September 30, 2004
  Scrap Metal Recycling
 Ferrous Sales
  13




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##### Table of Contents



Non-Ferrous Sales
  Lead Fabrication and Recycling
  Lead Fabrication
  Lead Smelting
  Lead Tolling
  Operating Expenses
  14




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##### Table of Contents



Selling, General and Administrative
  Depreciation and Amortization
  Operating Income
  Financial
and Other Income/Expense
   Income from Joint Venture
  Income Taxes
  15




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##### Table of Contents



Discontinued Operations
  Nine Months Ended September 30, 2005 Compared to Nine Months Ended September 30, 2004
  Scrap Metal Recycling
 Ferrous Sales
  Non-Ferrous Sales
  Lead Fabrication and Recycling
  Lead Fabrication
  16




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##### Table of Contents



Lead Smelting
  Lead Tolling
  Operating Expenses
  Selling, General and Administrative
  Depreciation and Amortization
  Operating Income
  17




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##### Table of Contents



Financial and Other Income/Expense
   Income from Joint Venture
  Income Taxes
  Discontinued Operations
  LIQUIDITY AND CAPITAL RESOURCES
 Cash Flows
  18




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##### Table of Contents



Future Capital Requirements
  Conversion of Debt to Equity
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
  Interest rate risk
  19




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##### Table of Contents



Commodity price risk
  Foreign currency risk
  
 Item 4. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
 (a) Evaluation of disclosure controls and procedures.
  (b) Changes in internal controls over financial reporting.
  
 PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
   20




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##### Table of Contents



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.
  31.1
    
    Certification of Chief Executive Officer of Metalico, Inc. pursuant
to Rule 13a-14(a) promulgated under the Securities Exchange Act of
1934, as amended31.2
    
    Certification of Chief Financial Officer of Metalico, Inc. pursuant
to Rule 13a-14(a) promulgated under the Securities Exchange Act of
1934, as amended32.1
    
    Certification of Chief Executive Officer of Metalico, Inc. pursuant
to Rule 13a-14(a) promulgated under the Securities Exchange Act of
1934, as amended, and Section 1350 of Chapter 63 of Title 18 of the
United States Code32.2
    
    Certification of Chief Financial Officer of Metalico, Inc. pursuant
to Rule 13a-14(a) promulgated under the Securities Exchange Act of
1934, as amended, and Section 1350 of Chapter 63 of Title 18 of the
United States Code
 21




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##### Table of Contents



SIGNATURES
  METALICO, INC.
(Registrant)Date: November 2, 2005
    By:
    /s/ CARLOS E. AGÜEROCarlos E. AgüeroChairman, President and Chief
Executive Officer Date:  November 2, 2005
    By:
    /s/ ERIC W. FINLAYSONEric W. FinlaysonSenior Vice President and Chief
Financial Officer 22