##### 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
 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
    
    (Commission file number)
    
    (I.R.S. Employer Identification No.)incorporation or organization)186 North Avenue East
    
    07016
    
    (908) 497-9610Cranford, NJ
    
    (Zip Code)
    
    (Registrants Telephone Number)(Address of Principal Executive Offices)
 þ o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
(Do not check if a smaller reporting company)
    
    Smaller reporting company o
 o þ
 o o




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##### 



METALICO, INC.
Form 10-Q Quarterly Report
Table of Contents
 PART IItem 1. Financial Statements
    
    Page 2Item 2. Managements Discussion and Analysis of Financial Condition
and Results of Operation
    
    Page 19Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    Page 30Item 4. Controls and Procedures
    
    Page 30PART IIItem 1. Legal Proceedings
    
    Page 31Item 1A. Risk Factors
    
    Page 31Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    Page 31Item 6. Exhibits
    
    Page 31EX-31.1EX-31.2EX-32.1EX-32.2
  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 March 31, 2009 and December 31, 2008
 March 31,
    
    
    December 31,2009
    
    
    2008(unaudited)
    
    
    (Note 1)($ thousands)ASSETSCurrent AssetsCash and cash equivalents
    
    $
    46,168
    
    
    $
    62,933Trade receivables, less allowance for doubtful accounts 2009 $1,761; 2008 $1,896
    
    
    21,193
    
    
    
    20,503Inventories
    
    
    28,036
    
    
    
    31,772Prepaid expenses and other
    
    
    2,468
    
    
    
    3,413Income taxes receivable
    
    
    8,723
    
    
    
    11,112Deferred income taxes
    
    
    3,626
    
    
    
    3,626Total current assets
    
    
    110,214
    
    
    
    133,359Property and Equipment, net
    
    
    78,164
    
    
    
    80,083Goodwill
    
    
    69,451
    
    
    
    69,451Other Intangibles, net
    
    
    42,864
    
    
    
    43,604Other Assets, net
    
    
    14,115
    
    
    
    13,796$
    314,808
    
    
    $
    340,293LIABILITIES AND STOCKHOLDERS EQUITYCurrent LiabilitiesShort-term debt
    
    $
    286
    
    
    $
    Current maturities of other long-term debt
    
    
    14,777
    
    
    
    30,897Accounts payable
    
    
    6,568
    
    
    
    10,875Accrued expenses and other liabilities
    
    
    21,550
    
    
    
    24,779Total current liabilities
    
    
    43,181
    
    
    
    66,551Long-Term LiabilitiesSenior unsecured convertible notes payable
    
    
    98,423
    
    
    
    98,403Other long-term debt, less current maturities
    
    
    55,987
    
    
    
    55,409Accrued expenses and other
    
    
    3,200
    
    
    
    2,958Total long-term liabilities
    
    
    157,610
    
    
    
    156,770Total liabilities
    
    
    200,791
    
    
    
    223,321Redeemable common stock
    
    
    4,000
    
    
    
    4,000Stockholders EquityCapital StockPreferred  $.001 par value; 2009 and 2008 Authorized: 10,000,000;
no shares issued and outstanding
    
    
    
    
    
    
    Common  $.001 par value; 2009 and 2008 Authorized: 100,000,000 
2009 issued and outstanding 36,426,654 
2008 issued and outstanding 36,428,154
    
    
    36
    
    
    
    36Additional paid-in capital
    
    
    131,847
    
    
    
    131,248Accumulated deficit
    
    
    (21,078
    )
    
    
    (17,527
    )Accumulated other comprehensive loss
    
    
    (788
    )
    
    
    (785
    )110,017
    
    
    
    112,972$
    314,808
    
    
    $
    340,293
  2




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##### Table of Contents



METALICO, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended March 31, 2009 and 2008
 2009
    
    
    2008(Unaudited)($ thousands, except share data)Revenue
    
    $
    53,284
    
    
    $
    170,548Costs and expensesOperating expenses
    
    
    43,473
    
    
    
    148,248Selling, general, and administrative expenses
    
    
    6,309
    
    
    
    7,154Depreciation and amortization
    
    
    3,287
    
    
    
    2,02753,069
    
    
    
    157,429Operating income
    
    
    215
    
    
    
    13,119Financial and other income (expense)Interest expense
    
    
    (4,657
    )
    
    
    (3,217
    )Financial instruments fair value adjustment
    
    
    (530
    )
    
    
    Equity in loss of unconsolidated investee
    
    
    (446
    )
    
    
    Other
    
    
    152
    
    
    
    124(5,481
    )
    
    
    (3,093
    )Income (Loss) from continuing
operations before income taxes
    
    
    (5,266
    )
    
    
    10,026(Benefit) Provision for federal and state income taxes
    
    
    (1,556
    )
    
    
    3,710Income (Loss) from continuing operations
    
    
    (3,710
    )
    
    
    6,316Discontinued operations, net
    
    
    158
    
    
    
    (405
    )Net income (loss)
    
    
    (3,552
    )
    
    
    5,911Noncontrolling interest in net loss of subsidiaries
    
    
    1
    
    
    
    158Net
income (loss) attributable to Company
    
    $
    (3,551
    )
    
    $
    6,069Amounts attributable to common shareholders:Income (Loss) from continuing operations
    
    $
    (3,709
    )
    
    $
    6,474Income (Loss) from discontinued operations
    
    
    158
    
    
    
    (405
    )Net income
(loss)
    
    $
    (3,551
    )
    
    $
    6,069Earnings (loss) per common share:Basic:Income (Loss) from continuing operations
    
    $
    (0.10
    )
    
    $
    0.20Discontinued operations, net
    
    
    
    
    
    
    (.01
    )Net income (loss)
    
    $
    (0.10
    )
    
    $
    0.19Diluted:Income (Loss) from continuing operations
    
    $
    (0.10
    )
    
    $
    0.20Discontinued operations, net
    
    
    
    
    
    
    (.01
    )Net income (loss)
    
    $
    (0.10
    )
    
    $
    0.19Weighted Average Common Shares Outstanding:Basic
    
    
    36,427,913
    
    
    
    32,339,468Diluted
    
    
    36,427,913
    
    
    
    32,787,293
  3




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METALICO, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended March 31, 2009 and 2008
 2009
    
    
    2008(Unaudited)($ thousands)Cash Flows from Operating ActivitiesNet (loss) income attributable to Company
    
    $
    (3,551
    )
    
    $
    6,069Adjustments to reconcile net (loss) income
attributable to Company to net cash provided by (used in) operating activities:Depreciation and amortization
    
    
    3,644
    
    
    
    2,349Deferred income taxes
    
    
    
    
    
    
    (226
    )Provision for doubtful accounts receivable
    
    
    (3
    )
    
    
    129Provision for loss on vendor advances
    
    
    21
    
    
    
    Net loss attributable to noncontrolling interest
    
    
    1
    
    
    
    (158
    )Compensation expense on restricted stock, stock options and warrants issued
    
    
    599
    
    
    
    332Deferred financing costs expensed
    
    
    253
    
    
    
    Financial instruments fair value adjustment
    
    
    530
    
    
    
    Equity in loss of unconsolidated investee
    
    
    446
    
    
    
    Change in operating assets and liabilities,
net of effects of aquisitions:(Increase) decrease in:Receivables
    
    
    (687
    )
    
    
    (16,880
    )Inventories
    
    
    3,736
    
    
    
    (5,281
    )Prepaid expenses and other
    
    
    3,313
    
    
    
    (3,416
    )Increase (decrease) in:Accounts payable, accrued expenses, and income taxes payable
    
    
    (7,956
    )
    
    
    774Net cash provided by (used in) operating activities
    
    
    346
    
    
    
    (16,308
    )Cash Flows from Investing ActivitiesProceeds from sale of property and equipment
    
    
    6
    
    
    
    Purchase of property and equipment
    
    
    (633
    )
    
    
    (2,300
    )Investment in unconsolidated subsidiary
    
    
    
    
    
    
    (600
    )Cash paid for business acquisitions, less cash acquired
    
    
    
    
    
    
    (27,132
    )Increase in other assets
    
    
    (244
    )
    
    
    (2,004
    )Cash restricted for investment
    
    
    
    
    
    
    3,562Net cash used in investing activities
    
    
    (871
    )
    
    
    (28,474
    )Cash Flows from Financing ActivitiesNet borrowings under revolving lines-of-credit
    
    
    1,430
    
    
    
    6,626Proceeds from other borrowings
    
    
    
    
    
    
    18,001Principal payments on other borrowings
    
    
    (16,686
    )
    
    
    (1,957
    )Proceeds from issuance of common stock
    
    
    
    
    
    
    23,495Debt issue costs
    
    
    (984
    )
    
    
    Proceeds from issuance of common stock on exercised warrants and options
    
    
    
    
    
    
    150Net cash (used in) provided by financing activities
    
    
    (16,240
    )
    
    
    46,315Net (decrease) increase in cash and cash equivalents
    
    
    (16,765
    )
    
    
    1,533Cash and cash equivalents:Beginning
    
    
    62,933
    
    
    
    3,309Ending
    
    $
    46,168
    
    
    $
    4,842
  4




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##### Table of Contents



METALICO, INC. AND SUBSIDIARIES
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
($ thousands, except share data)
(Unaudited)
 Note 1  General
 Business
  Basis of Presentation
   Recent Accounting Pronouncements
  Note 2  Business Acquisitions
  5




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Three MonthsEndedMarch 31, 2008Revenues
    
    $
    206,172Net Income
    
    $
    9,900Earnings Per ShareBasic
    
    $
    0.30Diluted
    
    $
    0.27
    Three MonthsEndedMarch 31, 2008Revenues
    
    $
    184,781Net Income
    
    $
    6,673Earnings Per ShareBasic
    
    $
    0.21Diluted
    
    $
    0.20
 6




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Note 3  Major Customer
  Net Revenues to Customer as a percentage ofTotal Revenues
    
    Trade Receivable Balance as ofThree Months Ended
    
    Three Months Ended
    
    March 31,
    
    December 31,March 31, 2009
    
    March 31, 2008
    
    2009
    
    2008Customer A
    
    
    10
    %
    
    
    34
    %
    
    $
    1,299
    
    
    $
    347
 Note 4  Inventories
  March 31,
    
    
    December 31,2009
    
    
    2008Raw materials
    
    $
    1,916
    
    
    $
    5,240Finished goods
    
    
    5,790
    
    
    
    7,909Work-in-process
    
    
    1,215
    
    
    
    534Ferrous scrap metal
    
    
    10,501
    
    
    
    8,241Non-ferrous scrap metal
    
    
    8,614
    
    
    
    9,848$
    28,036
    
    
    $
    31,772
 Note 5  Investment in Beacon Energy Holdings Inc.
   Three MonthsEndedMarch 31, 2009Revenues
    
    $
    1,042Loss from continuing operations
    
    $
    (1,214
    )Net loss
    
    $
    (1,217
    )
 Note 6  Goodwill and Other Intangibles
   Gross
    
    
    
    
    
    
    
    
    
    
    NetCarrying
    
    
    Accumulated
    
    
    Impairment
    
    
    CarryingAmount
    
    
    Amortization
    
    
    Charges
    
    
    AmountMarch 31, 2009Covenants not-to-compete
    
    $
    4,261
    
    
    $
    (2,031
    )
    
    $
    
    
    
    $
    2,230Trademarks & tradenames
    
    
    6,075
    
    
    
    
    
    
    
    
    
    
    
    6,075Customer relationships
    
    
    1,055
    
    
    
    (896
    )
    
    
    
    
    
    
    159Supplier relationships
    
    
    36,600
    
    
    
    (2,683
    )
    
    
    
    
    
    
    33,917Know how
    
    
    397
    
    
    
    
    
    
    
    
    
    
    
    397Patents & databases
    
    
    94
    
    
    
    (8
    )
    
    
    
    
    
    
    86$
    48,482
    
    
    $
    (5,618
    )
    
    $
    
    
    
    $
    42,864December 31, 2008Covenants not-to-compete
    
    $
    6,731
    
    
    $
    (2,194
    )
    
    $
    (2,129
    )
    
    $
    2,408Trademarks & tradenames
    
    
    18,275
    
    
    
    
    
    
    
    (12,200
    )
    
    
    6,075Customer relationships
    
    
    2,605
    
    
    
    (986
    )
    
    
    (1,408
    )
    
    
    211Supplier relationships
    
    
    44,440
    
    
    
    (2,990
    )
    
    
    (7,031
    )
    
    
    34,419Know how
    
    
    397
    
    
    
    
    
    
    
    
    
    
    
    397Patents & databases
    
    
    113
    
    
    
    (4
    )
    
    
    (15
    )
    
    
    94$
    72,561
    
    
    $
    (6,174
    )
    
    $
    (22,783
    )
    
    $
    43,604
 7




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Years Ending December 31:
    
    Amount2009
    
    $
    3,0252010
    
    
    2,7402011
    
    
    2,4222012
    
    
    2,3712013
    
    
    2,647Thereafter
    
    
    23,927$
    37,132
 Note 7  Accrued Expenses and Other Liabilities
  March 31, 2009
    
    
    December 31, 2008Current
    
    
    Long-Term
    
    
    Total
    
    
    Current
    
    
    Long-Term
    
    
    TotalEnvironmental remediation costs
    
    $
    113
    
    
    $
    1,518
    
    
    $
    1,631
    
    
    $
    115
    
    
    $
    1,518
    
    
    $
    1,633Payroll and employee benefits
    
    
    1,898
    
    
    
    
    
    
    
    1,898
    
    
    
    3,572
    
    
    
    
    
    
    
    3,572Interest, bank fees and interest rate swap
    
    
    1,983
    
    
    
    1,100
    
    
    
    3,083
    
    
    
    1,887
    
    
    
    1,028
    
    
    
    2,915Obligations under purchase commitments
    
    
    816
    
    
    
    
    
    
    
    816
    
    
    
    1,973
    
    
    
    
    
    
    
    1,973Obligations under put options
    
    
    6,609
    
    
    
    
    
    
    
    6,609
    
    
    
    6,481
    
    
    
    
    
    
    
    6,481Obligations under make-whole agreements (see Note 16)
    
    
    2,442
    
    
    
    
    
    
    
    2,442
    
    
    
    3,546
    
    
    
    
    
    
    
    3,546Obligations under earnout agreements
    
    
    5,250
    
    
    
    
    
    
    
    5,250
    
    
    
    5,250
    
    
    
    
    
    
    
    5,250Other
    
    
    2,439
    
    
    
    582
    
    
    
    3,021
    
    
    
    1,955
    
    
    
    412
    
    
    
    2,367$
    21,550
    
    
    $
    3,200
    
    
    $
    24,750
    
    
    $
    24,779
    
    
    $
    2,958
    
    
    $
    27,737
 Note 8  Stock Options and Stock Based Compensation
   Note 9  Short and Long-Term Debt
    Covenant
    
    $
    31,430Actual
    
    $
    32,917
  Covenant
    
    
    0.473:1.00Actual
    
    
    0.99:1.00
  Covenant
    
    $
    6,325Actual
    
    $
    633
 8




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Covenant
    
    
    2.19:1.00Actual
    
    
    2.11:1.00
  Covenant
    
    
    0.473:1.00Actual
    
    
    0.97:1.00
  Covenant
    
    $
    31,430Actual
    
    $
    32,146
  Covenant
    
    $
    6,325Actual
    
    $
    633
  Covenant
    
    $
    79,065Actual
    
    $
    95,397
   9




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##### Table of Contents



Periods Ending March 31:
    
    Amount2010
    
    $
    15,0632011
    
    
    1,3592012
    
    
    8212013
    
    
    3382014
    
    
    53,313Thereafter
    
    
    98,579$
    169,473
 Note 10  Stockholders Equity
  AccumulatedOther
    
    
    TotalCommon
    
    
    Additional
    
    
    Accumulated
    
    
    Comprehensive
    
    
    StockholdersStock
    
    
    Paid in Capital
    
    
    Deficit
    
    
    Loss
    
    
    EquityBalance December 31, 2008
    
    $
    36
    
    
    $
    131,248
    
    
    $
    (17,527
    )
    
    $
    (785
    )
    
    $
    112,972Net loss attributable to Company
    
    
    
    
    
    
    
    
    
    
    (3,552
    )
    
    
    
    
    
    
    (3,552
    )Loss distributable to noncontrolling interest
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    1Stock based compensation expense
    
    
    
    
    
    
    599
    
    
    
    
    
    
    
    
    
    
    
    599Unrealized loss on interest rate swap
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3
    )
    
    
    (3
    )Balance March 31, 2009
    
    $
    36
    
    
    $
    131,847
    
    
    $
    (21,078
    )
    
    $
    (788
    )
    
    $
    110,017
  Note 11  Earnings Per Share
 10




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Three Months Ended March 31, 2009Loss
    
    
    Shares
    
    
    Per Share(Numerator)
    
    
    (Denominator)
    
    
    AmountBasic EPSLoss from continuing operations
    
    $
    (3,551
    )
    
    
    36,427,913
    
    
    $
    (0.10
    )
 Three Months Ended March 31, 2008Income
    
    
    Shares
    
    
    Per Share(Numerator)
    
    
    (Denominator)
    
    
    AmountBasic EPSIncome from continuing operations
    
    $
    6,474
    
    
    
    32,339,468
    
    
    $
    0.20Effect of Dilutive SecuritiesCommon stock warrants
    
    
    
    
    
    
    88,627Options and rights
    
    
    
    
    
    
    359,198Diluted EPSIncome from continuing
operations plus assumed
conversions
    
    $
    6,474
    
    
    
    32,787,293
    
    
    $
    0.20
   11




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Note 12  Commitments and Contingencies
 Environmental Remediation Matters
      12




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Pending Litigation
  .
 Other Matters
 13




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##### Table of Contents



Note 13  Segment Reporting
  Scrap Metal
    
    Lead
    
    CorporateRecycling
    
    Fabrication
    
    and Other
    
    ConsolidatedMarch 31, 2009Revenues from external customers
    
    $
    38,585
    
    
    $
    14,699
    
    
    $
    
    
    
    $
    53,284Operating income (loss)
    
    
    (854
    )
    
    
    239
    
    
    
    830
    
    
    
    215Total assets
    
    
    206,367
    
    
    
    36,635
    
    
    
    71,806
    
    
    
    314,808March 31, 2008Revenues from external customers
    
    $
    143,489
    
    
    $
    27,059
    
    
    $
    
    
    
    $
    170,548Operating income (loss)
    
    
    16,330
    
    
    
    (2,268
    )
    
    
    (943
    )
    
    
    13,119Total assets
    
    
    249,921
    
    
    
    57,921
    
    
    
    28,595
    
    
    
    336,437
 Note 14  Income Taxes
  Note 15  Discontinued Operations
   Note 16  Financial Instruments Liabilities
 Accounting for Certain Financial Instruments with Characteristics of Both Liabilities
and Equity
  14




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Note 17  Fair Value Disclosure
 Disclosures about Fair Value of Financial Instruments ,
  Cash and cash equivalents, trade receivables, accounts payable and accrued liabilities:
 Notes payable and long-term debt:
 Seller Put obligations:
 Interest
Rate Swap and obligations under purchase contracts:
 Put Warrants:
 15




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##### Table of Contents



Obligations under make-whole agreements:
  Fair Value Measurements
  
    
    Level 1  Unadjusted quoted prices in active markets that are
accessible at the measurement date for identical, unrestricted assets.
    
    Level 2  Significant other observable inputs other than Level 1
prices such as quoted prices in markets that are not active, quoted
prices for similar assets, or other inputs that are observable, either
directly or indirectly, for substantially the full term of the asset.
    
    Level 3  Prices or valuation techniques that require inputs that are
both significant to the fair value measurement and unobservable (i.e.,
supported by little or no market activity).
  Liabilities
    
    Level 1
    
    Level 2
    
    Level 3
    
    TotalPut warrants
    
    
    
    
    
    
    
    
    
    $
    582
    
    
    $
    582Obligations under purchase contracts
    
    
    
    
    
    $
    816
    
    
    
    
    
    
    $
    816Obligations under make-whole agreements
    
    
    
    
    
    
    
    
    
    $
    2,442
    
    
    $
    2,442Interest rate swaps
    
    
    
    
    
    $
    1,100
    
    
    
    
    
    
    $
    1,100
  Put Warrants:
 Obligations under purchase contracts:
 Obligations under make-whole agreements:
 Interest Rate Swaps:
  16




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##### Table of Contents



Fair Value MeasurementsUsing Significant UnobservableInputs (Level 3)ObligationsunderPut
    
    
    make-wholeWarrants
    
    
    agreements
    
    
    TotalBeginning balance
    
    $
    412
    
    
    $
    3,546
    
    
    $
    3,958Purchases, issuances, and settlements
    
    
    
    
    
    
    
    
    
    
    Total (gains) or losses (realized/unrealized)Included in earnings
    
    
    170
    
    
    
    360
    
    
    
    530Included in other comprehensive income
    
    
    
    
    
    
    
    
    
    
    Payments, conversions,
redemptions and additional issued shares
    
    
    
    
    
    
    (1,464
    )
    
    
    (1,464
    )Ending balance
    
    $
    582
    
    
    $
    2,442
    
    
    $
    3,024The amount of total (gains) or losses for the period included in
earnings attributable to the change in unrealized gains or losses
relating to assets still held at the reporting date
    
    $
    (170
    )
    
    $
    (360
    )
    
    $
    (530
    )
 Note 18  Derivative Instruments and Hedging Activities
  Asset
    
    
    LiabilityDerivatives
    
    
    DerivativesFair Value at
    
    
    Fair Value at
    
    
    Fair Value at
    
    
    Fair Value atDerivatives designated as hedging
    
    Balance Sheet
    
    March 31,
    
    
    December 31,
    
    
    March 31,
    
    
    December 31,instruments under SFAS No. 133
    
    Location
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Commodity purchase contracts
    
    Other Current Liabilities
    
    
    
    
    
    
    
    
    
    $
    816
    
    
    $
    1,973Interest Rate Swap
    
    Other Non-current Liabilities
    
    
    
    
    
    
    
    
    
    $
    1,100
    
    
    $
    1,028
 Cash Flow Hedges
  Amount of (Loss)
    
    
    
    
    Amount of (Loss)Recognized in
    
    
    
    
    Recognized in Income onOCI on Derivatives
    
    
    Location of (Loss)
    
    Derivatives (Ineffective(Effective Portion)
    
    
    Recognized in Income on
    
    Portion)Three Months ended
    
    
    Derivatives (Ineffective
    
    Three Months endedDerivatives designated as Cash Flow
    
    March 31
    
    
    Portion)
    
    March 31hedging instruments under SFAS No. 133
    
    2009
    
    
    2008
    
    
    
    
    2009
    
    
    2008Interest Rate Swap
    
    $
    (3
    )
    
    $
    (385
    )
    
    Interest expense
    
    $
    (55
    )
    
    $
    
 17




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##### Table of Contents



Fair Value Hedges
  Amount of gain or (loss)Location of gain or
    
    recognized in income on(loss) recognized in
    
    derivativeDerivatives designated as Fair Value
    
    income of
    
    March 31,
    
    
    March 31,hedging instruments under SFAS No. 133
    
    derivative
    
    2009
    
    
    2008Commodity purchase contracts
    
    Operating expenses
    
    $
    517
    
    
    $
    (60
    )
  Note 19  Subsequent Events
    18




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19




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##### Table of Contents



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, 2008, as the same may be amended
from time to time.
 
 tem 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 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, 2008 (Annual
Report). Amounts reported in the following discussions are not reported in thousands unless
otherwise specified.
 General
   Critical Accounting Policies and Use of Estimates
  Goodwill:
 Goodwill and Other Intangible Assets,
   20




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##### Table of Contents



Intangible
Assets and Other Long-Lived Assets:
  Accounting for the Impairment or Disposal of Long-Lived
Assets,
 Financial Instrument Liabilities:
   21




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##### Table of Contents



Stock-based Compensation:
 Share-Based Payment
 Revenue Recognition
  Accounts Receivable and Allowance for Uncollectible Accounts Receivable
   Inventory
  Contingencies
  Derivative financial instruments
   22




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##### Table of Contents



RESULTS OF OPERATIONS
   RevenuesMarch 31, 2009
    
    
    March 31, 2008($, pounds and tons in thousands)Net
    
    
    
    
    
    
    
    
    
    
    NetWeight
    
    
    Sales
    
    
    %
    
    
    Weight
    
    
    Sales
    
    
    %Scrap Metal RecyclingFerrous metals (weight in tons)
    
    
    67.0
    
    
    $
    16,880
    
    
    
    31.7
    
    
    
    85.1
    
    
    $
    31,993
    
    
    
    18.8Non-ferrous metals (weight in lbs.)
    
    
    20,644
    
    
    
    14,119
    
    
    
    26.5
    
    
    
    33,473
    
    
    
    46,366
    
    
    
    27.2Platinum group metals (weight in lbs.)
    
    
    436
    
    
    
    7,586
    
    
    
    14.2
    
    
    
    1,469
    
    
    
    65,130
    
    
    
    38.1Total Scrap Metal Recycling
    
    
    
    
    
    
    38,585
    
    
    
    72.4
    
    
    
    
    
    
    
    143,489
    
    
    
    84.1Lead Fabrication (lbs.)
    
    
    15,521
    
    
    
    14,699
    
    
    
    27.6
    
    
    
    15,219
    
    
    
    27,059
    
    
    
    15.9Total Revenue
    
    
    
    
    
    $
    53,284
    
    
    
    100.0
    
    
    
    
    
    
    $
    170,548
    
    
    
    100.0
  Average
    
    Average
    
    Average
    
    AverageFerrous
    
    Non-Ferrous
    
    PGM
    
    LeadFor the quarter ending:
    
    Price per ton
    
    Price per lb.
    
    Price per lb
    
    Price per lb.March 31, 2009
    
    $
    252
    
    
    $
    0.68
    
    
    $
    17.38
    
    
    $
    0.95December 31, 2008
    
    $
    329
    
    
    $
    1.11
    
    
    $
    20.92
    
    
    $
    1.34September 30, 2008
    
    $
    536
    
    
    $
    1.36
    
    
    $
    39.32
    
    
    $
    1.53June 30, 2008
    
    $
    555
    
    
    $
    1.41
    
    
    $
    50.51
    
    
    $
    1.73March 31, 2008
    
    $
    376
    
    
    $
    1.39
    
    
    $
    44.35
    
    
    $
    1.78
 Three Months Ended March 31, 2009 Compared to Three Months Ended March 31, 2008
 23




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##### Table of Contents



Scrap Metal Recycling
 Ferrous Sales
  Non-Ferrous Sales
  Platinum Group Metals
  Lead Fabrication
  Operating Expenses
  24




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##### Table of Contents



Selling, General, and Administrative
  Depreciation and Amortization
  Operating Income
  Financial and Other Income/(Expense)
     Accounting for Certain Financial Instruments with Characteristics of
Both Liabilities and Equity.
 Income Taxes
 25




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##### Table of Contents



Noncontrolling Interests
  Discontinued Operations
   LIQUIDITY AND CAPITAL RESOURCES
 Cash Flows
    26




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##### Table of Contents



27




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##### Table of Contents



Future Capital Requirements
    Off-Balance Sheet Arrangements
  28




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##### Table of Contents



Beacon Energy Investment
   29




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures About Market Risk
  Interest rate risk
  Commodity price risk
  Foreign currency risk
  
 Item 4. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
 (a) Evaluation of disclosure controls and procedures.
  30




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##### Table of Contents



(b) Changes in internal controls over financial reporting.
  
 PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
 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
 31




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##### Table of Contents



SIGNATURES
  METALICO, INC.
(Registrant)Date:  May 11, 2009
    By:
    /s/ CARLOS E. AGÜEROCarlos E. AgüeroChairman, President and Chief
Executive Officer Date:  May 11, 2009
    By:
    /s/ ERIC W. FINLAYSONEric W. FinlaysonSenior Vice President and Chief
Financial Officer (Principal
Financial  Officer and Principal
Accounting Officer) 32




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##### Table of Contents



INDEX TO 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
 33