(Mark One)
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þ
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended June 30, 2010
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OR
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from to
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Delaware
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20-2055624
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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Title of Each Class
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Name of Each Exchange on Which Registered
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Common stock, $0.0001 par value |
The NASDAQ Global Select Market
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Large accelerated filer
o
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Accelerated filer
o
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Non-accelerated filer
þ
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Smaller reporting company
o
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Page
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||||||
No.
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||||||
PART I
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||||||
Special Note Regarding Forward-Looking Statements
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1
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|||||
1
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Business
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1
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||||
1A
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Risk Factors
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7
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||||
1B
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Unresolved Staff Comments
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11
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2
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Properties
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11
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||||
3
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Legal Proceedings
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11
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4
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[Reserved]
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11
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||||
PART II
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||||||
5
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Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
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12
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||||
6
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Selected Financial Data
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13
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||||
7
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
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14
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||||
7A
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Quantitative and Qualitative Disclosures About Market Risk
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25
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||||
8
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Financial Statements and Supplementary Data
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26
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9
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Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
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26
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||||
9A
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Controls and Procedures
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26
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9B
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Other Information
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26
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||||
PART III
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||||||
10
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Directors, Executive Officers and Corporate Governance
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27
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||||
11
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Executive Compensation
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27
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||||
12
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Security Ownership of Certain Beneficial Owners and Managers and Related Stockholder Matters
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27
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||||
13
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Certain Relationships and Related Transactions and Director Independence
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27
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||||
14
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Principal Accountant Fees and Services
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27
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||||
PART IV
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||||||
15
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Exhibits and Financial Statement Schedules
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28
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||||
Signatures
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29
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•
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the anticipated benefits and risks associated with our business strategy;
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•
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our future operating results and the future value of our common stock;
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•
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the anticipated size or trends of the markets in which we compete and the anticipated competition in those markets;
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•
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our ability to attract customers in a cost-efficient manner;
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•
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our ability to attract and retain qualified management personnel;
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•
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our future capital requirements and our ability to satisfy our capital needs;
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•
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the potential for additional issuances of our securities; and
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•
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the possibility of future acquisitions of businesses or assets.
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•
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the historic cyclicality of the metals industry and the attendant swings in market price and demand;
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•
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increases in energy costs and the effect on our cost of production;
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•
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disruptions in the supply of power;
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•
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availability of raw materials or transportation;
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•
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cost of raw material inputs and our ability to pass along those costs to customers;
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•
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the concentration of our sales to a limited number of customers and the potential loss of a portion of sales to those customers;
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•
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changes in laws protecting U.S. companies from foreign competition;
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•
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integration and development of prior and future acquisitions; and
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•
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other risks described from time to time in our filings with the United States Securities and Exchange Commission (SEC), including the risks discussed under the heading “Risk Factors” in this Annual Report.
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·
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On November 5, 2009, we closed two transactions with Dow Corning Corporation (Dow Corning), which provided us with approximately $135,000,000 of net after-tax proceeds that we intend to use to fund future acquisitions and other business development opportunities. We sold our Brazilian manufacturing operations (Globe Metais) to Dow Corning for net after-tax proceeds of approximately $65,000,000. We acquired these manufacturing operations in January 2007 and operated them profitably for three years. However, in the second half of calendar year 2009, operating costs had risen significantly as a result of the weakening of the U.S. dollar and higher local power rates, and we expected these unfavorable trends to continue. The sale of the Brazilian manufacturing operations eliminated the risk of declining future profits in Brazil and provided capital to continue our growth strategy. Also on November 5, 2009, we entered into a manufacturing joint venture with Dow Corning at our Alloy, West Virginia plant, which generated net after-tax proceeds for us of approximately $70,000,000. Under this joint venture agreement, Dow Corning acquired a 49% equity interest in WVA Manufacturing LLC (WVA LLC), the subsidiary that owns our Alloy plant. As we retained a controlling financial interest in WVA LLC, no gain has been recognized in net income on the sale of the 49% membership interest. This interest entitles Dow Corning to receive 49% of the plant’s production at cost. The tonnage that Dow Corning will receive under the joint venture agreement is approximately equal to the volume they received from us under an existing long-term supply agreement, which was set to expire at the end of calendar 2010. By entering into this joint venture agreement, we effectively monetized the existing long-term supply agreement with Dow Corning and secured a permanent commitment for production for the plant. The Alloy plant is our largest production facility and achieves significant cost benefits when consistently operating at full capacity.
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·
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During the quarter ended December 31, 2009, we reopened our Niagara Falls, New York plant and began the process of reopening our Selma, Alabama plant. The Niagara Falls plant had been closed for six years and was reopened with a long-term power contract from the New York Power Authority. During fiscal year 2010, we incurred start-up costs of approximately $6,600,000 as the plant was being restarted and operations were being stabilized. We expect to incur additional start-up costs at this plant in the quarter ending September 30, 2010. The Selma plant was idled in April 2009 as a result of the global economic recession. We successfully renegotiated a power rate at the Selma plant comparable with our other domestic plants, which reduced the cost of production and made it more comparable with our other domestic plants. During fiscal year 2010, we incurred start-up costs of approximately $3,100,000 as the plant was being restarted and operations were being stabilized. We do not expect to incur any additional start-up costs at this plant.
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·
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On April 1, 2010, we purchased all of the ownership interests in Core Metals Group Holdings LLC (Core Metals), for approximately $52,000,000 in cash, including $15,329,000 borrowed under our senior revolving credit facility. Core Metals is a leading producer, marketer and distributor of ferrosilicon for the North American steel industry. The acquisition was made at an attractive valuation to strengthen our growing ferrosilicon business and expand the line of products we offer to the steel industry. On April 7, 2010, we sold Masterloy Products Company, an ancillary business included in the Core Metals acquisition, for $3,000,000.
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(a)
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Shipments and average selling price exclude silica fume, other by-products and electrodes.
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•
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Leading Market Positions.
We hold leading market shares in a majority of our products. Our silicon metal capacity of approximately 100,000 MT annually (excluding Dow Corning’s portion of the capacity of our Alloy, West Virginia plant), represents approximately 9% total Western World capacity, including 41% capacity in North America. We estimate that we have approximately 20% Western World capacity for magnesium ferrosilicon, including 50% capacity in North America and are one of only six suppliers of calcium silicon in the Western World (with estimated 18% capacity).
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•
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Low Cost Producer.
We have been recognized by CRU as the lowest average operating cost large silicon metal producer in the Western World. Currently, CRU lists our four silicon metal manufacturing facilities as being among CRU’s five most cost efficient silicon metal manufacturing facilities in the Western World, including the three lowest cost facilities. Our Niagara Falls, New York plant is included in the CRU analysis at its normalized expected production costs.
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•
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Highly Variable Cost Structure.
We operate with a largely variable cost of production and have the ability to rapidly turn furnaces on and off to react to changes in customer demand. During the global economic recession, we were able to quickly idle certain furnaces as demand declined and then quickly re-start them at minimal cost as demand returned.
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•
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Long-Term Power Contracts.
We also believe that we have a cost advantage in our long-term power supply contracts, which provide a significant portion of our power needs. These power supply contracts result in stable, favorably priced, long-term commitments of power at reasonable rates.
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•
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Stable Raw Material Supply Through Captive Mines.
We have quartz mining operations, located in Billingsley, Alabama, for which we currently possess long-term lease mining rights. These mines supply our U.S. plants with a majority of our requirements for quartzite, the principal raw material used in the manufacturing of our products. We believe that these mines, taken together with additional leasing opportunities in the vicinity should cover our needs well into the future. We have also obtained a captive supply of electrodes, an important input in our manufacturing process, through our ownership in Yonvey.
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•
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Efficient and Environmentally Sensitive By-Product Usage.
We utilize or sell most of our manufacturing processes’ by-products, which reduces costs and limits environmental impact.
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•
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Diverse Products and Markets.
We sell our products to a wide variety of industries and to companies in over 30 countries. We believe that our diverse product and geographic end-market profile provides us with numerous growth opportunities and should help insulate us from economic downturns occurring in any individual industry or geographic region, however global macroeconomic factors will impact the effectiveness of our industrial and geographical diversity strategy. See note 24 (Operating Segments) to our June 30, 2010 consolidated financial statements for additional information.
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•
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Experienced, Highly Qualified Management Team.
We have assembled a highly qualified management team with over 50 years of combined experience in the metals industry among our top four executives. Alan Kestenbaum, our Executive Chairman, Jeff Bradley, our Chief Executive Officer, Malcolm Appelbaum, our Chief Financial Officer, and Stephen Lebowitz, our Chief Legal Officer, have over 20, 25, 5 and 7 years of experience, respectively, in metals industries. We believe that our management team has the operational and technical skill to continue to operate our business at world class levels of efficiency and to consistently produce silicon metal and silicon-based alloys.
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•
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Focus on Core Businesses.
We differentiate ourselves on the basis of our technical expertise and high product quality and use these capabilities to retain existing accounts and cultivate new business. As part of this strategy, we are focusing our production and sales efforts on our silicon metals and silicon-based alloys to end markets where we may achieve the highest profitability. We continue to evaluate our core business strategy and may divest certain non-core and lower margin businesses to improve our financial and operational results.
|
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•
|
Continue to Rationalize Costs to Meet Current Levels of Demand.
We are focused on operating in a cost effective manner and continue to focus on cost control in order to improve our profitability. Our largely variable cost of production should allow us to remain profitable during periods of reduced demand.
|
|
•
|
Capitalize on Market Conditions.
In fiscal year 2010, we reopened our Niagara Falls, New York and Selma, Alabama plants and are currently running all furnaces at full capacity, other than planned maintenance outages. We remain focused on improving furnace uptime and production output.
|
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•
|
Maintain Low Cost Position While Controlling Inputs.
We intend to maintain our position as one of the most cost-efficient producers of silicon metal in the world by continuing to control the cost of the process inputs through our captive sources and long-term supply contracts. We continue to focus on reducing our fixed costs in order to reduce costs per MT of silicon metal and silicon-based alloy sold.
|
|
•
|
Continue Pursuing Strategic Acquisition Opportunities.
We continue to pursue complementary acquisitions at appropriate valuations. We are actively reviewing several possible transactions to expand our strategic capabilities and leverage our products and operations. We intend to build on our history of successful acquisitions by continuing to evaluate attractive acquisition opportunities for the purpose of increasing our capacity, increasing our access to raw materials and other inputs and acquiring further refined products for our customers. Our focus is on investing globally in companies, technologies or products that complement and/or diversify our business or product offerings. In particular, we will consider acquisitions or investments that will enable us to leverage our expertise in silicon metal and silicon-based alloy products and to grow in these markets, as well as enable us to enter new markets or sell new products. We believe our overall metallurgical expertise and skills in lean production technologies position us well for future growth.
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•
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Leverage Flexible Manufacturing and Expand Other Lines of Business.
We will leverage our flexible manufacturing capabilities to optimize the product mix produced while expanding the products we offer. Additionally, we can leverage our broad geographic manufacturing reach to ensure that production of specific metals is in the most appropriate facility/region. Besides our principal silicon metal products, we have the capability to produce silicon-based alloys, such as ferrosilicon and silicomanganese, using the same facilities. Our business philosophy is to allocate our furnace capacity to the products which we expect will improve profitability.
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•
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Leverage Synergies Among Units.
According to CRU, we currently have the three lowest cost, and four of the five lowest cost silicon metal manufacturing facilities in the Western World. Additionally, according to CRU, the average operating cost of our four silicon metal production facilities is approximately 16.8% lower than the Western World weighted average cost. Our Niagara Falls, New York plant is included in the CRU analysis at its normalized expected production costs. We seek to leverage each of our facilities’ best practices and apply them across our system.
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Item 1A.
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Risk Factors
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•
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operating a significantly larger combined organization;
|
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•
|
coordinating geographically disparate organizations, systems and facilities;
|
•
|
consolidating corporate technological and administrative functions;
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|
•
|
integrating internal controls and other corporate governance matters;
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•
|
the diversion of management’s attention from other business concerns;
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•
|
unexpected customer or key employee loss from the acquired businesses;
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•
|
hiring additional management and other critical personnel;
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•
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negotiating with labor unions;
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•
|
a significant increase in our indebtedness; and
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|
•
|
potential environmental or regulatory liabilities and title problems.
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•
|
computerized technology that monitors and controls production furnaces;
|
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•
|
production software that monitors the introduction of additives to alloys, allowing the precise formulation of the chemical composition of products; and
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|
•
|
flowcaster equipment, which maintains certain characteristics of silicon-based alloys as they are cast.
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•
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we may not have sufficient funds to develop new technology and to implement effectively our technologies as competitors improve their processes;
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•
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if implemented, our technologies may not work as planned; and
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•
|
our proprietary technologies may be challenged and we may not be able to protect our rights to these technologies.
|
|
•
|
adding new production capacity to an existing silicon plant to produce approximately 14,000 MT of metallurgical grade silicon would cost approximately $25,000,000 per smelting furnace and take at least 12 to 18 months to complete;
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|
•
|
a greenfield development project would take at least three to five years to complete and would require significant capital expenditure and environmental compliance costs; and
|
|
•
|
obtaining sufficient and dependable power at competitive rates near areas with the required natural resources is difficult to accomplish.
|
|
•
|
technical challenges, including further improving Solsil’s proprietary metallurgical process;
|
|
•
|
increasing the size and scale of our operations on a cost-effective basis;
|
|
•
|
capitalizing on market demands and potentially rapid market supply and demand fluctuations;
|
|
•
|
continued acceptance by the market of our current and future products, including the use of UMG in the photovoltaic (solar) market;
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|
•
|
a rapidly growing competitive environment with more new players entering the photovoltaic (solar) market;
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•
|
achieving the objectives and responsibilities under our joint development and supply agreement with BP Solar International;
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|
•
|
alternative competing technologies; and
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|
•
|
responding to rapid technological changes.
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|
•
|
tariffs and trade barriers;
|
|
•
|
currency fluctuations, which could decrease our revenues or increase our costs in U.S. dollars;
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|
•
|
regulations related to customs and import/export matters;
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•
|
tax issues, such as tax law changes and variations in tax laws;
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•
|
limited access to qualified staff;
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|
•
|
inadequate infrastructure;
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|
•
|
cultural and language differences;
|
|
•
|
inadequate banking systems;
|
|
•
|
different and/or more stringent environmental laws and regulations;
|
|
•
|
restrictions on the repatriation of profits or payment of dividends;
|
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•
|
crime, strikes, riots, civil disturbances, terrorist attacks or wars;
|
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•
|
nationalization or expropriation of property;
|
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•
|
law enforcement authorities and courts that are weak or inexperienced in commercial matters; and
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•
|
deterioration of political relations among countries.
|
|
•
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the success of competitive products or technologies;
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|
•
|
regulatory developments in the United States and foreign countries;
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•
|
developments or disputes concerning patents or other proprietary rights;
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•
|
the recruitment or departure of key personnel;
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•
|
quarterly or annual variations in our financial results or those of companies that are perceived to be similar to us;
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•
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market conditions in the industries in which we compete and issuance of new or changed securities analysts’ reports or recommendations;
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•
|
the failure of securities analysts to cover our common stock or changes in financial estimates by analysts;
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•
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the inability to meet the financial estimates of analysts who follow our common stock;
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•
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investor perception of our company and of the industry in which we compete; and
|
|
•
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general economic, political and market conditions.
|
Item 1B.
|
Unresolved Staff Comments
|
Item 2.
|
Properties
|
Square
|
Number of
|
Business
|
||||||||||||||||
Location of Facility
|
Purpose
|
Footage
|
Furnaces
|
Own/Lease
|
Segment Served
|
|||||||||||||
New York, New York
|
Office
|
13,958
|
—
|
Lease
|
Corporate
|
|||||||||||||
Beverly, Ohio
|
Manufacturing and other
|
273,377
|
5
|
*
|
Own
|
GMI
|
||||||||||||
Selma, Alabama
|
Manufacturing and other
|
126,207
|
2
|
Own
|
GMI
|
|||||||||||||
Alloy, West Virginia
|
Manufacturing and other
|
1,063,032
|
5
|
Own
|
GMI
|
|||||||||||||
Niagara Falls, New York
|
Manufacturing and other
|
227,732
|
2
|
Own
|
GMI
|
|||||||||||||
Bridgeport, Alabama
|
Manufacturing and other
|
155,100
|
1
|
Own
|
GMI
|
|||||||||||||
Mendoza, Argentina
|
Manufacturing and other
|
138,500
|
2
|
Own
|
Globe Metales
|
|||||||||||||
San Luis, Argentina
|
Manufacturing and other
|
59,200
|
—
|
Own
|
Globe Metales
|
|||||||||||||
Police, Poland
|
Manufacturing and other
|
43,951
|
—
|
Own
|
Other
|
|||||||||||||
Shizuishan, China
|
Manufacturing and other
|
227,192
|
—
|
**
|
Other
|
*
|
Excludes Solsil’s seven smaller furnaces used to produce UMG for solar cell applications.
|
**
|
We own the long-term land use rights for the land on which this facility is located. We own the building and equipment forming part of this facility.
|
Business
|
||||||
Location of Mine
|
Product
|
Own/Lease
|
Segment Served
|
|||
Billingsley, Alabama
|
Quartzite
|
Lease
|
GMI
|
Item 4.
|
[Reserved]
|
Item 5.
|
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|
|
Fourth Quarter
|
|
Third Quarter
|
|
Second Quarter
|
|
First Quarter
|
|||||
Fiscal year 2010 price range per common share
|
|
$
|
12.74 - $9.59
|
|
$
|
11.40 - $9.20
|
|
$
|
9.98 - $7.60
|
|
$
|
9.22 - $6.81
|
Plan Category
|
Number of securities to be issued upon exercise of outstanding options, warrants and rights
(a)
|
Weighted-average exercise price of outstanding options, warrants and rights
(b)
|
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
(c)
|
Equity compensation plans approved by security holders
|
4,266,442
|
$5.18
|
631,919
|
Equity compensation plans not approved by security holders
|
-
|
-
|
-
|
Total
|
4,266,442
|
$5.18
|
631,919
|
Item 6.
|
Selected Financial Data
|
Successor
|
Predecessor
|
|||||||||||
|
Period from
|
|||||||||||
July 1 to
|
Year Ended
|
|||||||||||
Year Ended June 30,
|
November 12,
|
June 30,
|
||||||||||
2010
|
2009
|
2008
|
2007
|
2006
|
2006
|
|||||||
(Dollars in thousands, except per share data)
|
||||||||||||
Statement of operations data:
|
||||||||||||
Net sales
|
$472,658
|
426,291
|
452,639
|
221,928
|
$73,173
|
173,008
|
||||||
Cost of goods sold
|
390,093
|
330,036
|
351,918
|
187,630
|
68,804
|
151,687
|
||||||
Selling, general and administrative expenses
|
47,875
|
56,322
|
42,857
|
15,033
|
5,288
|
10,256
|
||||||
Research and development
|
200
|
1,394
|
901
|
120
|
-
|
-
|
||||||
Restructuring charges
|
(81)
|
1,711
|
-
|
-
|
-
|
-
|
||||||
Gain on sale of business
|
(19,715)
|
-
|
-
|
-
|
-
|
-
|
||||||
Goodwill and intangible asset impairment
|
-
|
69,704
|
-
|
-
|
-
|
-
|
||||||
Operating income (loss)
|
54,286
|
(32,876)
|
56,963
|
19,145
|
(919)
|
11,065
|
||||||
Interest and other income (expense)
|
521
|
(899)
|
(5,285)
|
504
|
(7,579)
|
(6,010)
|
||||||
Income (loss) before income taxes and deferred interest subject to redemption
|
54,807
|
(33,775)
|
51,678
|
19,649
|
(8,498)
|
5,055
|
||||||
Provision for (benefit from) income taxes
|
20,539
|
11,609
|
15,936
|
7,047
|
(2,800)
|
1,914
|
||||||
Net income (loss) before deferred interest subject to redemption
|
34,268
|
(45,384)
|
35,742
|
12,602
|
(5,698)
|
3,141
|
||||||
Deferred interest subject to redemption
|
-
|
-
|
-
|
(768)
|
-
|
-
|
||||||
(Income) losses attributable to noncontrolling interest, net of tax
|
(167)
|
3,403
|
721
|
-
|
-
|
-
|
||||||
Net income (loss) attributable to Globe Specialty Metals, Inc.
|
$34,101
|
(41,981)
|
36,463
|
11,834
|
$(5,698)
|
3,141
|
||||||
Earnings (loss) per common share - basic
|
$0.46
|
(0.65)
|
0.62
|
0.25
|
$(2,947.26)
|
2,067.04
|
||||||
Earnings (loss) per common share - diluted
|
$0.46
|
(0.65)
|
0.50
|
0.24
|
$(2,947.26)
|
2,067.04
|
||||||
Cash dividends declared per common share
|
$ -
|
-
|
-
|
0.07
|
$ -
|
-
|
Successor
|
Predecessor
|
||||||||||
June 30,
|
June 30,
|
June 30,
|
June 30,
|
June 30,
|
|||||||
2010
|
2009
|
2008
|
2007
|
2006
|
|||||||
(Dollars in thousands)
|
|||||||||||
Balance sheet data: | |||||||||||
Cash and cash equivalents
|
$157,029
|
61,876
|
73,994
|
67,741
|
$ -
|
||||||
Total assets
|
607,145
|
473,280
|
548,174
|
389,343
|
140,572
|
||||||
Total debt, including current portion
|
41,079
|
59,613
|
89,205
|
75,877
|
50,431
|
||||||
Total stockholders' equity
|
458,829
|
311,352
|
346,237
|
222,621
|
58,425
|
Item 7.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
|
•
|
GMI —
a manufacturer of silicon metal and silicon-based alloys located in the United States with plants in Beverly, Ohio, Alloy, West Virginia, Niagara Falls, New York, Selma, Alabama and Bridgeport, Alabama;
|
|
•
|
Globe Metais —
a distributor of silicon metal manufactured in Brazil. This segment includes the historical Brazilian manufacturing operations, previously comprised of a manufacturing plant in Breu Branco and mining operations and forest reserves, which were all sold on November 5, 2009;
|
|
•
|
Globe Metales —
a manufacturer of silicon-based alloys located in Argentina with a silicon-based alloys plant in Mendoza and a cored-wire fabrication facility in San Luis;
|
|
•
|
Solsil —
a developer and manufacturer of upgraded metallurgical grade silicon metal located in the United States with operations in Beverly, Ohio;
|
|
•
|
Corporate —
a corporate office including general expenses, investments, and related investment income; and
|
|
•
|
Other —
includes an electrode production operation in China and a cored-wire production facility located in Poland. These operations do not fit into the above reportable segments, and are immaterial for purposes of separate disclosure.
|
Years Ended
|
||||||||
June 30,
|
Increase
|
Percentage
|
||||||
2010
|
2009
|
(Decrease)
|
Change
|
|||||
(Dollars in thousands)
|
||||||||
Results of Operations
|
||||||||
Net sales
|
$472,658
|
426,291
|
46,367
|
10.9%
|
||||
Cost of goods sold
|
390,093
|
330,036
|
60,057
|
18.2%
|
||||
Selling, general and administrative expenses
|
47,875
|
56,322
|
(8,447)
|
(15.0%)
|
||||
Research and development
|
200
|
1,394
|
(1,194)
|
(85.7%)
|
||||
Restructuring charges
|
(81)
|
1,711
|
(1,792)
|
(104.7%)
|
||||
Gain on sale of business
|
(19,715)
|
-
|
(19,715)
|
NA
|
||||
Goodwill and intangible asset impairment
|
-
|
69,704
|
(69,704)
|
NA
|
||||
Operating income (loss)
|
54,286
|
(32,876)
|
87,162
|
(265.1%)
|
||||
Interest expense, net
|
(4,054)
|
(6,218)
|
2,164
|
(34.8%)
|
||||
Other income
|
4,575
|
5,319
|
(744)
|
(14.0%)
|
||||
Income (loss) before provision for income taxes
|
54,807
|
(33,775)
|
88,582
|
(262.3%)
|
||||
Provision for income taxes
|
20,539
|
11,609
|
8,930
|
76.9%
|
||||
Net income (loss)
|
34,268
|
(45,384)
|
79,652
|
(175.5%)
|
||||
(Income) losses attributable to noncontrolling interest, net of tax
|
(167)
|
3,403
|
(3,570)
|
(104.9%)
|
||||
Net income (loss) attributable to Globe Specialty Metals, Inc.
|
$34,101
|
(41,981)
|
76,082
|
(181.2%)
|
Year Ended June 30, 2010
|
Year Ended June 30, 2009
|
||||||||||
Net Sales
|
Net Sales
|
||||||||||
$ (in 000s)
|
MT
|
$/MT
|
$ (in 000s)
|
MT
|
$/MT
|
||||||
Silicon metal
|
$296,763
|
118,327
|
$2,508
|
$257,571
|
100,461
|
$2,564
|
|||||
Silicon-based alloys
|
148,092
|
76,144
|
1,945
|
141,356
|
59,554
|
2,374
|
|||||
Silicon metal and silicon-based alloys
|
444,855
|
194,471
|
2,288
|
398,927
|
160,015
|
2,493
|
|||||
Silica fume and other
|
27,803
|
27,364
|
|||||||||
Total net sales
|
$472,658
|
$426,291
|
Years Ended
|
||||||||
June 30,
|
Increase
|
Percentage
|
||||||
2010
|
2009
|
(Decrease)
|
Change
|
|||||
(Dollars in thousands)
|
||||||||
Results of Operations
|
||||||||
Net sales
|
$358,279
|
277,466
|
80,813
|
29.1%
|
||||
Cost of goods sold
|
296,122
|
212,213
|
83,909
|
39.5%
|
||||
Selling, general and administrative expenses
|
21,112
|
17,625
|
3,487
|
19.8%
|
||||
Restructuring charges
|
(81)
|
281
|
(362)
|
(128.8%)
|
||||
Operating income
|
$41,126
|
47,347
|
(6,221)
|
(13.1%)
|
Years Ended
|
||||||||
June 30,
|
Increase
|
Percentage
|
||||||
2010
|
2009
|
(Decrease)
|
Change
|
|||||
(Dollars in thousands)
|
||||||||
Results of Operations
|
||||||||
Net sales
|
$62,126
|
95,096
|
(32,970)
|
(34.7%)
|
||||
Cost of goods sold
|
53,091
|
71,164
|
(18,073)
|
(25.4%)
|
||||
Selling, general and administrative expenses
|
2,564
|
8,800
|
(6,236)
|
(70.9%)
|
||||
Research and development
|
11
|
130
|
(119)
|
(91.5%)
|
||||
Restructuring charges
|
-
|
400
|
(400)
|
NA
|
||||
Gain on sale of business
|
1,197
|
-
|
1,197
|
NA
|
||||
Operating income
|
$5,263
|
14,602
|
(9,339)
|
(64.0%)
|
Years Ended
|
||||||||
June 30,
|
Increase
|
Percentage
|
||||||
2010
|
2009
|
(Decrease)
|
Change
|
|||||
(Dollars in thousands)
|
||||||||
Results of Operations
|
||||||||
Net sales
|
$48,959
|
50,731
|
(1,772)
|
(3.5%)
|
||||
Cost of goods sold
|
35,635
|
31,544
|
4,091
|
13.0%
|
||||
Selling, general and administrative expenses
|
3,251
|
3,560
|
(309)
|
(8.7%)
|
||||
Restructuring charges
|
-
|
678
|
(678)
|
NA
|
||||
Operating income
|
$10,073
|
14,949
|
(4,876)
|
(32.6%)
|
Years Ended
|
||||||||
June 30,
|
Increase
|
Percentage
|
||||||
2010
|
2009
|
(Decrease)
|
Change
|
|||||
(Dollars in thousands)
|
||||||||
Results of Operations
|
||||||||
Net sales
|
$20
|
2,202
|
(2,182)
|
(99.1%)
|
||||
Cost of goods sold
|
823
|
9,808
|
(8,985)
|
(91.6%)
|
||||
Selling, general and administrative expenses
|
385
|
1,183
|
(798)
|
(67.5%)
|
||||
Research and development
|
187
|
1,117
|
(930)
|
(83.3%)
|
||||
Restructuring charges
|
-
|
187
|
(187)
|
NA
|
||||
Goodwill and intangible asset impairment
|
-
|
69,704
|
(69,704)
|
NA
|
||||
Operating loss
|
($1,375)
|
(79,797)
|
78,422
|
(98.3%)
|
Years Ended
|
||||||||
June 30,
|
Increase
|
Percentage
|
||||||
2010
|
2009
|
(Decrease)
|
Change
|
|||||
(Dollars in thousands)
|
||||||||
Results of Operations
|
||||||||
Selling, general and administrative expenses
|
$18,422
|
21,302
|
(2,880)
|
(13.5%)
|
||||
Restructuring charges
|
-
|
95
|
(95)
|
NA
|
||||
Gain on sale of business
|
(21,237)
|
-
|
(21,237)
|
NA
|
||||
Operating income (loss)
|
$2,815
|
(21,397)
|
24,212
|
(113.2%)
|
Years Ended
|
||||||||
June 30,
|
Increase
|
Percentage
|
||||||
2009
|
2008
|
(Decrease)
|
Change
|
|||||
(Dollars in thousands)
|
||||||||
Results of Operations
|
||||||||
Net sales
|
$426,291
|
452,639
|
(26,348)
|
(5.8%)
|
||||
Cost of goods sold
|
330,036
|
351,918
|
(21,882)
|
(6.2%)
|
||||
Selling, general and administrative expenses
|
56,322
|
42,857
|
13,465
|
31.4%
|
||||
Research and development
|
1,394
|
901
|
493
|
54.7%
|
||||
Restructuring charges
|
69,704
|
-
|
69,704
|
NA
|
||||
Goodwill and intangible asset impairment
|
1,711
|
-
|
1,711
|
NA
|
||||
Operating (loss) income
|
(32,876)
|
56,963
|
(89,839)
|
(157.7%)
|
||||
Interest expense, net
|
(6,218)
|
(7,026)
|
808
|
(11.5%)
|
||||
Other income
|
5,319
|
1,741
|
3,578
|
205.5%
|
||||
(Loss) income before provision for income taxes
|
(33,775)
|
51,678
|
(85,453)
|
(165.4%)
|
||||
Provision for income taxes
|
11,609
|
15,936
|
(4,327)
|
(27.2%)
|
||||
Net (loss) income
|
(45,384)
|
35,742
|
(81,126)
|
(227.0%)
|
||||
Losses attributable to noncontrolling interest, net of tax
|
3,403
|
721
|
2,682
|
372.0%
|
||||
Net (loss) income attributable to Globe Specialty Metals, Inc.
|
($41,981)
|
36,463
|
(78,444)
|
(215.1%)
|
Year Ended June 30, 2009
|
Year Ended June 30, 2008
|
||||||||||
Net Sales
|
Net Sales
|
||||||||||
$ (in 000s)
|
MT
|
$/MT
|
$ (in 000s)
|
MT
|
$/MT
|
||||||
Silicon metal
|
$257,571
|
100,461
|
$2,564
|
$329,278
|
145,675
|
$2,260
|
|||||
Silicon-based alloys
|
141,356
|
59,554
|
2,374
|
105,327
|
68,731
|
1,532
|
|||||
Silicon metal and silicon-based alloys
|
398,927
|
160,015
|
2,493
|
434,605
|
214,406
|
2,027
|
|||||
Silica fume and other
|
27,364
|
18,034
|
|||||||||
Total net sales
|
$426,291
|
$452,639
|
Years Ended
|
||||||||
June 30,
|
Increase
|
Percentage
|
||||||
2009
|
2008
|
(Decrease)
|
Change
|
|||||
(Dollars in thousands)
|
||||||||
Results of Operations
|
||||||||
Net sales
|
$277,466
|
308,074
|
(30,608)
|
(9.9%)
|
||||
Cost of goods sold
|
212,213
|
246,719
|
(34,506)
|
(14.0%)
|
||||
Selling, general and administrative expenses
|
17,625
|
16,011
|
1,614
|
10.1%
|
||||
Restructuring charges
|
281
|
-
|
281
|
NA
|
||||
Operating income
|
$47,347
|
45,344
|
2,003
|
4.4%
|
Years Ended
|
||||||||
June 30,
|
Increase
|
Percentage
|
||||||
2009
|
2008
|
(Decrease)
|
Change
|
|||||
(Dollars in thousands)
|
||||||||
Results of Operations
|
||||||||
Net sales
|
$95,096
|
108,218
|
(13,122)
|
(12.1%)
|
||||
Cost of goods sold
|
71,164
|
74,552
|
(3,388)
|
(4.5%)
|
||||
Selling, general and administrative expenses
|
8,800
|
9,817
|
(1,017)
|
(10.4%)
|
||||
Research and development
|
130
|
463
|
(333)
|
(71.9%)
|
||||
Restructuring charges
|
400
|
-
|
400
|
NA
|
||||
Operating income
|
$14,602
|
23,386
|
(8,784)
|
(37.6%)
|
Years Ended
|
||||||||
June 30,
|
Increase
|
Percentage
|
||||||
2009
|
2008
|
(Decrease)
|
Change
|
|||||
(Dollars in thousands)
|
||||||||
Results of Operations
|
||||||||
Net sales
|
$50,731
|
42,090
|
8,641
|
20.5%
|
||||
Cost of goods sold
|
31,544
|
34,440
|
(2,896)
|
(8.4%)
|
||||
Selling, general and administrative expenses
|
3,560
|
2,680
|
880
|
32.8%
|
||||
Restructuring charges
|
678
|
-
|
678
|
NA
|
||||
Operating income
|
$14,949
|
4,970
|
9,979
|
200.8%
|
Years Ended
|
||||||||
June 30,
|
Increase
|
Percentage
|
||||||
2009
|
2008
|
(Decrease)
|
Change
|
|||||
(Dollars in thousands)
|
||||||||
Results of Operations
|
||||||||
Net sales
|
$2,202
|
1,532
|
670
|
43.7%
|
||||
Cost of goods sold
|
9,808
|
3,333
|
6,475
|
194.3%
|
||||
Selling, general and administrative expenses
|
1,183
|
614
|
569
|
92.7%
|
||||
Research and development
|
1,117
|
438
|
679
|
155.0%
|
||||
Restructuring charges
|
187
|
-
|
187
|
NA
|
||||
Goodwill and intangible asset impairment
|
69,704
|
-
|
69,704
|
NA
|
||||
Operating loss
|
($79,797)
|
(2,853)
|
(76,944)
|
2,697.0%
|
Years Ended
|
||||||||
June 30,
|
Increase
|
Percentage
|
||||||
2009
|
2008
|
(Decrease)
|
Change
|
|||||
(Dollars in thousands)
|
||||||||
Results of Operations
|
||||||||
Selling, general and administrative expenses
|
$21,302
|
12,760
|
8,542
|
66.9%
|
||||
Restructuring charges
|
95
|
-
|
95
|
NA
|
||||
Operating loss
|
($21,397)
|
(12,760)
|
(8,637)
|
67.7%
|
Year Ended June 30,
|
||||||||
2010
|
2009
|
2008
|
||||||
(Dollars in thousands)
|
||||||||
Cash and cash equivalents at beginning of period
|
$
|
61,876
|
73,994
|
67,741
|
||||
Cash flows (used in) provided by operating activities
|
(19,255)
|
64,014
|
32,206
|
|||||
Cash flows (used in) investing activities
|
(16,159)
|
(48,185)
|
(26,608)
|
|||||
Cash flows provided by (used in) financing activities
|
130,560
|
(27,954)
|
605
|
|||||
Effect of exchange rate changes on cash
|
7
|
7
|
50
|
|||||
Cash and cash equivalents at end of period
|
$
|
157,029
|
61,876
|
73,994
|
Contractual Obligations (as of June 30, 2010)
|
Less than
|
One to
|
Three to
|
More than
|
|||||||
|
Total
|
One Year
|
Three Years
|
Five Years
|
5 Years
|
||||||
(Dollars in thousands)
|
|||||||||||
Long-term debt obligations(1)
|
$
|
17,012
|
10,092
|
6,920
|
—
|
—
|
|||||
Interest on long-term debt(2)
|
427
|
331
|
96
|
—
|
—
|
||||||
Operating lease obligations(3)
|
8,919
|
2,444
|
4,164
|
2,130
|
181
|
||||||
Purchase obligations(4)
|
134,198
|
28,705
|
47,770
|
45,905
|
11,818
|
||||||
Total
|
$
|
160,556
|
41,572
|
58,950
|
48,035
|
11,999
|
|
(1)
|
Long-term debt obligations relate primarily to our senior term loan. All outstanding debt instruments are assumed to remain outstanding until their respective due dates. See our June 30, 2010 consolidated financial statements for further details.
|
|
(2)
|
Estimated interest payments on our long-term debt assuming that all outstanding debt instruments will remain outstanding until their respective due dates. A portion of our interest is variable rate so actual payments will vary with changes in LIBOR and prime. This balance excludes interest from our revolving credit agreements. See our June 30, 2010 consolidated financial statements for further details.
|
|
(3)
|
Represents minimum rental commitments under noncancelable leases for machinery and equipment, automobiles, rail cars and office space.
|
|
(4)
|
Purchase obligations include contractual commitments under various long and short-term take or pay arrangements with suppliers. These obligations include commitments to purchase raw materials used in our manufacturing process, which specify a minimum purchase quantity through calendar year 2015.
|
2010
|
2009
|
|||||||||
(Dollars in thousands)
|
||||||||||
Senior term loan
|
$
|
16,916
|
33,684
|
|||||||
Export prepayment financing
|
—
|
17,000
|
||||||||
Other
|
96
|
2,241
|
||||||||
Total
|
17,012
|
52,925
|
||||||||
Less current portion of long-term debt
|
(10,092)
|
(16,561)
|
||||||||
Long-term debt, net of current portion
|
$
|
6,920
|
36,364
|
Item 7A.
|
Quantitative and Qualitative Disclosures About Market Risk
|
|
•
|
commodity prices,
|
|
•
|
interest rates, and
|
|
•
|
foreign exchange rates.
|
Item 8.
|
Financial Statements and Supplementary Data
|
Item 9A.
|
Controls and Procedures
|
Item 9B.
|
Other Information
|
Name
|
Age
|
Position
|
||||
Alan Kestenbaum
|
48
|
Executive Chairman and Director
|
||||
Jeff Bradley
|
50
|
Chief Executive Officer
|
||||
Malcolm Appelbaum
|
49
|
Chief Financial Officer
|
||||
Stephen Lebowitz
|
45
|
Chief Legal Officer
|
Item 15.
|
Exhibits and Financial Statement Schedules
|
(1)
|
Financial Statements
|
Reports of Independent Registered Public Accounting Firm
|
|
31
|
||
Consolidated Balance Sheets at June 30, 2010 and 2009
|
33
|
|||
Consolidated Statements of Operations for the years ended June 30, 2010, 2009, and 2008
|
34
|
|||
Consolidated Statements of Changes in Stockholders’ Equity for the years ended June 30, 2010, 2009, and 2008
|
35
|
|||
Consolidated Statements of Cash Flows for the years ended June 30, 2010, 2009, and 2008
|
36
|
|||
Notes to Consolidated Financial Statements
|
37
|
(2)
|
Financial Statement Schedules
|
(3)
|
Exhibits
|
Exhibit
|
||||
Number
|
Description of Document
|
|||
2
|
.1
|
Agreement and Plan of Merger, dated as of January 8, 2008, by and among GSM, Solsil Acquisition Corp. and Solsil**
|
||
2
|
.2
|
Amendment to Agreement and Plan of Merger, dated as of February 29, 2008, by and among GSM, Solsil Acquisition Corp., Solsil and the Representatives named therein**
|
||
2
|
.3
|
Purchase Agreement, dated as of November 5, 2009, by and between Dow Corning Corporation and GSM*****
|
||
2
|
.4
|
Purchase and Sale Agreement dated as of March 26, 2010, by and among Globe Metals Enterprises, Inc., Core Metals Group Holdings LLC and each of the Sellers named therein******
|
||
3
|
.1
|
Amended and Restated Certificate of Incorporation*
|
||
3
|
.2
|
Certificate of Amendment to the Amended and Restated Certificate of Incorporation*
|
||
3
|
.3
|
Amended and Restated Bylaws**
|
||
4
|
.1
|
Second Amended and Restated Credit Agreement dated as of September 18, 2008, by and among GMI, Alabama Sand and Gravel, Inc., Laurel Ford Resources, Inc., West Virginia Alloys, Inc., as subsidiary guarantors, GSM, as Parent, the lender parties thereto, and Societe Generale, as Sole Arranger, Administrative Agent, Issuing Bank, Swingline Lender and Collateral Agent**
|
||
10
|
.1
|
2006 Employee, Director and Consultant Stock Option Plan*
|
||
10
|
.2
|
Employment Agreement, dated May 26, 2008, between GSM and Jeff Bradley*
|
||
10
|
.3
|
Employment Agreement, dated November 13, 2006, between GSM and Alan Kestenbaum*
|
||
10
|
.4
|
Employment Agreement, dated May 31, 2006, between Solsil and Alan Kestenbaum*
|
||
10
|
.5
|
Employment Agreement, dated November 13, 2006, between GSM and Arden Sims*
|
||
10
|
.6
|
Employment Agreement, dated May 31, 2006, between Solsil and Arden Sims*
|
||
10
|
.7
|
Employment Agreement, dated November 13, 2006, between GSM and Theodore A. Heilman, Jr.*
|
||
10
|
.8
|
Employment Agreement, dated June 8, 2007, between GSM and Daniel Krofcheck*
|
||
10
|
.9
|
Employment Agreement, dated June 20, 2008, between GSM and Stephen Lebowitz*
|
||
10
|
.10
|
Solsil Secured Promissory Note made on October 24, 2007 and issued to Plainfield Direct Inc.**
|
||
10
|
.11
|
Solsil Secured Promissory Note made on October 24, 2007 and issued to Plainfield Direct Inc.***
|
||
10
|
.12
|
Employment Agreement, dated September 21, 2008, between GSM and Malcolm Appelbaum****
|
||
10
|
.13
|
Amended and Restated Limited Liability Company Agreement of WVA Manufacturing, LLC, dated as of November 5, 2009, by and among WVA Manufacturing, LLC, GSM, GSM Alloys I, Inc., GSM Alloys II, Inc., Dow Corning Enterprises, Inc. and Dow Corning Corporation.*****
|
||
10
|
.14
|
Output and Supply Agreement, dated as of November 5, 2009, by and among WVA Manufacturing, LLC, Dow Corning Corporation, Globe Metallurgical Inc., and GSM.*****
|
||
10 | .15 | 2010 Annual Executive Bonus Plan† | ||
21
|
.1
|
Subsidiaries†
|
||
31
|
.1
|
Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002†
|
||
31
|
.2
|
Certification of the Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002†
|
||
32
|
.1
|
Certification of the Principal Executive Officers and Principal Financial Officer Pursuant to 18 U.S.C. 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002†
|
†
|
Filed herewith.
|
*
|
Incorporated by reference to the exhibit with the same designation filed with the Company’s registration statement on Form S-1 (Registration No. 333-152513) filed on July 25, 2008.
|
**
|
Incorporated by reference to the exhibit with the same designation filed with Amendment No. 1 to the Company’s registration statement on Form S-1 (Registration No. 333-152513) filed on November 4, 2008.
|
***
|
Incorporated by reference to the exhibit with the same designation filed with Amendment No. 2 to the Company’s registration statement on Form S-1 (Registration No. 333-152513) filed on June 9, 2009.
|
****
|
Incorporated by reference to the exhibit with the same designation filed with Amendment No. 3 to the Company’s registration statement Form S-1 (Registration Statement No. 333-152513) filed on July 16, 2009.
|
*****
|
Incorporated by reference to the exhibit with the same designation filed with the Company’s Form 8-K filed on November 12, 2009.
|
******
|
Incorporated by reference to the exhibit with the same designation filed with the Company’s Form 8-K filed on April 1, 2010.
|
Globe Specialty Metals, Inc.
(Registrant)
|
|||
By:
|
/s/ Malcolm Appelbaum
|
||
Malcolm Appelbaum
Chief Financial Officer
|
Signature
|
Title
|
Date
|
||||
/s/ Alan Kestenbaum
|
Executive Chairman and Director
|
September 28, 2010
|
||||
Alan Kestenbaum
|
||||||
/s/ Jeff Bradley
|
Chief Executive Officer and
Principal Executive Officer
|
September 28, 2010
|
||||
Jeff Bradley
|
|
|||||
/s/ Malcolm Appelbaum
|
Chief Financial Officer,
Principal Financial Officer and
Principal Accounting Officer
|
September 28, 2010
|
||||
Malcolm Appelbaum
|
|
|||||
/s/ Stuart E. Eizenstat
|
Director
|
September 28, 2010
|
||||
Stuart E. Eizenstat
|
||||||
/s/ Franklin Lavin
|
Director
|
September 28, 2010
|
||||
Franklin Lavin
|
||||||
/s/ Donald Barger
|
Director
|
September 28, 2010
|
||||
Donald Barger
|
||||||
/s/ Thomas Danjczek
|
Director
|
September 28, 2010
|
||||
Thomas Danjczek
|
Page
|
||||
Reports of Independent Registered Public Accounting Firm
|
31
|
|||
Consolidated Balance Sheets — June 30, 2010 and 2009
|
33
|
|||
Consolidated Statements of Operations — Years ended June 30, 2010, 2009, and 2008
|
34
|
|||
Consolidated Statements of Changes in Stockholders’ Equity — Years ended June 30, 2010, 2009, and 2008
|
35
|
|||
Consolidated Statements of Cash Flows — Years ended June 30, 2010, 2009, and 2008
|
36
|
|||
Notes to Consolidated Financial Statements
|
37
|
GLOBE SPECIALTY METALS, INC. AND SUBSIDIARY COMPANIES
|
|||||||||||
Consolidated Statements of Operations
|
|||||||||||
Years ended June 30, 2010, 2009, and 2008
|
|||||||||||
(In thousands, except per share amounts)
|
|||||||||||
2010
|
2009
|
2008
|
|||||||||
Net sales
|
$
|
472,658
|
426,291
|
452,639
|
|||||||
Cost of goods sold
|
390,093
|
330,036
|
351,918
|
||||||||
Selling, general, and administrative expenses
|
47,875
|
56,322
|
42,857
|
||||||||
Research and development
|
200
|
1,394
|
901
|
||||||||
Restructuring charges
|
(81)
|
1,711
|
-
|
||||||||
Gain on sale of business
|
(19,715)
|
-
|
-
|
||||||||
Goodwill and intangible asset impairment
|
-
|
69,704
|
-
|
||||||||
Operating income (loss)
|
54,286
|
(32,876)
|
56,963
|
||||||||
Other income (expense):
|
|||||||||||
Interest income
|
318
|
729
|
2,626
|
||||||||
Interest expense, net of capitalized interest
|
(4,372)
|
(6,947)
|
(9,652)
|
||||||||
Foreign exchange gain
|
3,811
|
2,202
|
642
|
||||||||
Other income
|
764
|
3,117
|
1,099
|
||||||||
Income (loss) before provision for income taxes
|
54,807
|
(33,775)
|
51,678
|
||||||||
Provision for income taxes
|
20,539
|
11,609
|
15,936
|
||||||||
Net income (loss)
|
34,268
|
(45,384)
|
35,742
|
||||||||
(Income) losses attributable to noncontrolling interest, net of tax
|
(167)
|
3,403
|
721
|
||||||||
Net income (loss) attributable to Globe Specialty Metals, Inc.
|
$
|
34,101
|
(41,981)
|
36,463
|
|||||||
Weighted average shares outstanding:
|
|||||||||||
Basic
|
73,512
|
64,362
|
58,982
|
||||||||
Diluted
|
74,770
|
64,362
|
72,954
|
||||||||
Earnings (loss) per common share:
|
|||||||||||
Basic
|
$
|
0.46
|
(0.65)
|
0.62
|
|||||||
Diluted
|
0.46
|
(0.65)
|
0.50
|
GLOBE SPECIALTY METALS, INC. AND SUBSIDIARY COMPANIES
|
||||||||||||
Consolidated Statements of Cash Flows
|
||||||||||||
Years ended June 30, 2010, 2009, and 2008
|
||||||||||||
(In thousands)
|
||||||||||||
2010
|
2009
|
2008
|
||||||||||
Cash flows from operating activities:
|
||||||||||||
Net income (loss)
|
$
|
34,268
|
(45,384)
|
35,742
|
||||||||
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:
|
||||||||||||
Depreciation and amortization
|
20,672
|
19,807
|
19,339
|
|||||||||
Share-based compensation
|
5,712
|
6,395
|
8,176
|
|||||||||
Gain on sale of business
|
(19,715)
|
-
|
-
|
|||||||||
Goodwill and intangible asset impairment
|
-
|
69,704
|
-
|
|||||||||
Deferred taxes
|
(8,123)
|
4,735
|
2,265
|
|||||||||
Changes in operating assets and liabilities:
|
||||||||||||
Accounts receivable, net
|
(29,029)
|
29,449
|
(18,173)
|
|||||||||
Inventories
|
(16,326)
|
(6,463)
|
(17,730)
|
|||||||||
Prepaid expenses and other current assets
|
6,984
|
(6,889)
|
(5,993)
|
|||||||||
Accounts payable
|
28,290
|
(20,499)
|
(2,381)
|
|||||||||
Accrued expenses and other current liabilities
|
(13,438)
|
18,487
|
8,930
|
|||||||||
Other
|
(28,550)
|
(5,328)
|
2,031
|
|||||||||
Net cash (used in) provided by operating activities
|
(19,255)
|
64,014
|
32,206
|
|||||||||
Cash flows from investing activities:
|
||||||||||||
Capital expenditures
|
(22,901)
|
(51,437)
|
(22,357)
|
|||||||||
Sale of businesses, net of cash disposed of $17,132, $0, and $0 during the years ended June 30, 2010, 2009, and 2008, respectively |
60,559
|
-
|
-
|
|||||||||
Acquisition of businesses, net of cash acquired of $1,873, $0, and $1,319 during the years ended June 30, 2010, 2009, and 2008, respectively |
(53,084)
|
(74)
|
246
|
|||||||||
Held-to-maturity treasury securities
|
-
|
2,987
|
(2,987)
|
|||||||||
Other investing activities
|
(733)
|
339
|
(1,510)
|
|||||||||
Net cash used in investing activities
|
(16,159)
|
(48,185)
|
(26,608)
|
|||||||||
Cash flows from financing activities:
|
||||||||||||
Sale of noncontrolling interest
|
97,917
|
-
|
-
|
|||||||||
Proceeds from warrants exercised
|
1,287
|
833
|
3,497
|
|||||||||
Proceeds from UPOs exercised
|
210
|
-
|
-
|
|||||||||
Proceeds from stock option exercises
|
616
|
-
|
-
|
|||||||||
Net (payments) borrowings of long-term debt
|
(21,917)
|
(16,163)
|
13,722
|
|||||||||
Net borrowings (payments) of short-term debt
|
1,378
|
(11,878)
|
(15,247)
|
|||||||||
Net borrowings on revolving credit agreements
|
16,000
|
-
|
-
|
|||||||||
Sale of common stock
|
36,456
|
-
|
-
|
|||||||||
Solsil, Inc. common share issuance
|
-
|
1,570
|
509
|
|||||||||
Other financing activities
|
(1,387)
|
(2,316)
|
(1,876)
|
|||||||||
Net cash provided by (used in) financing activities
|
130,560
|
(27,954)
|
605
|
|||||||||
Effect of exchange rate changes on cash and cash equivalents
|
7
|
7
|
50
|
|||||||||
Net increase (decrease) in cash and cash equivalents
|
95,153
|
(12,118)
|
6,253
|
|||||||||
Cash and cash equivalents at beginning of year
|
61,876
|
73,994
|
67,741
|
|||||||||
Cash and cash equivalents at end of year
|
$
|
157,029
|
61,876
|
73,994
|
||||||||
Supplemental disclosures of cash flow information:
|
||||||||||||
Cash paid for interest, net of capitalized interest
|
$
|
2,494
|
5,964
|
6,836
|
||||||||
Cash paid for income taxes, net of refunds totaling $2,729, $0 and $0 during the years ended June 30, 2010, 2009, and 2008, respectively |
51,709
|
10,785
|
13,833
|
(1)
|
Organization and Business Operations
|
(2)
|
Summary of Significant Accounting Policies
|
Range of
|
||||
Useful Lives
|
||||
Asset type:
|
||||
Land improvements and land use rights
|
20 to 36 years
|
|||
Buildings
|
35 to 40 years
|
|||
Manufacturing equipment
|
5 to 25 years
|
|||
Furnaces
|
10 to 20 years
|
|||
Other
|
2 to 5 years
|
Range of
|
||||
Useful Lives
|
||||
Asset type:
|
||||
Electricity contracts
|
3 to 11 years
|
|||
Unpatented technology
|
10 years
|
|||
Supplier contracts
|
2 years
|
|||
Customer relationships
|
1 year
|
|||
Software
|
1 year
|
|
(3)
|
Business Combinations and Divestitures
|
|
•
|
Earned $3,287 under an operating and lease agreement in which Solsil was provided administrative and operating support, plus facility space;
|
|
•
|
Sold $2,580 of metallurgical grade silicon to Solsil;
|
|
•
|
Purchased $1,798 of silicon from Solsil; and
|
|
•
|
Provided a $1,500 loan to Solsil on October 24, 2007. The note accrued interest at LIBOR plus 3.0%, through February 29, 2008, with interest payable in kind and capitalized as principal outstanding at the end of each quarter in lieu of payment in cash. The note, including accrued interest, was repayable in full on October 24, 2008. As a result of the acquisition of Solsil, this note was eliminated in consolidation at June 30, 2008 and was converted to equity during the year ended June 30, 2009, as further discussed below.
|
(5)
|
Restructuring Charges
|
(6)
|
Treasury Securities
|
(7)
|
Inventories
|
2010
|
2009
|
|||||
Finished goods
|
$
|
19,655
|
23,867
|
|||
Work in process
|
2,860
|
3,462
|
||||
Raw materials
|
54,988
|
31,323
|
||||
Parts and supplies
|
9,660
|
8,742
|
||||
Total
|
$
|
87,163
|
67,394
|
(8)
|
Prepaid Expenses and Other Current Assets
|
2010
|
2009
|
|||||
Deferred taxes
|
$
|
3,224
|
4,276
|
|||
Income tax receivables
|
5,251
|
8,227
|
||||
Value added and other non-income tax receivables
|
2,695
|
4,374
|
||||
Deferred registration costs
|
—
|
302
|
||||
Foreign exchange forward contracts
|
—
|
3,243
|
||||
Other
|
12,639
|
4,253
|
||||
Total
|
$
|
23,809
|
24,675
|
(9)
|
Property, Plant, and Equipment
|
2010
|
2009
|
|||||||||
Land, land improvements, and land use rights
|
$
|
6,080
|
13,835
|
|||||||
Building and improvements
|
41,262
|
24,176
|
||||||||
Machinery and equipment
|
78,370
|
56,912
|
||||||||
Furnaces
|
124,898
|
99,429
|
||||||||
Other
|
3,640
|
15,728
|
||||||||
Construction in progress
|
17,824
|
47,257
|
||||||||
Property, plant, and equipment, gross
|
272,074
|
257,337
|
||||||||
Less accumulated depreciation and amortization
|
(52,807)
|
(39,830)
|
||||||||
Property, plant, and equipment, net of accumulated depreciation and amortization
|
$
|
219,267
|
217,507
|
(10)
|
Goodwill and Other Intangibles
|
2010 | ||||||||||||
Globe
|
||||||||||||
GMI
|
Metales
|
Other
|
Total
|
|||||||||
Balance at beginning of year
|
$
|
30,255
|
14,313
|
7,260
|
51,828
|
|||||||
Core Metals acquisition
|
150
|
—
|
—
|
150
|
||||||||
Foreign exchange rate changes
|
—
|
—
|
47
|
47
|
||||||||
Balance at end of year
|
$
|
30,405
|
14,313
|
7,307
|
52,025
|
|||||||
2009 | ||||||||||||
Globe
|
||||||||||||
GMI
|
Metales
|
Solsil
|
Other
|
Total
|
||||||||
Balance at beginning of year
|
$
|
31,355
|
14,313
|
57,512
|
4,077
|
107,257
|
||||||
Yonvey capital increase
|
—
|
—
|
—
|
3,479
|
3,479
|
|||||||
Solsil goodwill impairment (see note 4)
|
—
|
—
|
(57,656)
|
—
|
(57,656)
|
|||||||
Tax valuation allowance adjustments
|
(1,100)
|
—
|
—
|
—
|
(1,100)
|
|||||||
Purchase accounting adjustments
|
—
|
—
|
144
|
(296)
|
(152)
|
|||||||
Balance at end of year
|
$
|
30,255
|
14,313
|
—
|
7,260
|
51,828
|
Electricity
|
Unpatented
|
|||||||||||
Contracts
|
Technology
|
Other
|
||||||||||
Cost:
|
||||||||||||
Balance at June 30, 2008
|
$
|
9,368
|
13,143
|
323
|
||||||||
Purchase price allocation adjustments
|
190
|
—
|
—
|
|||||||||
Tax valuation allowance adjustments (see note 17)
|
(1,653)
|
—
|
—
|
|||||||||
Solsil intangible asset impairment (see note 4)
|
—
|
(13,143)
|
—
|
|||||||||
Balance at June 30, 2009
|
7,905
|
—
|
323
|
|||||||||
Sale of Globe Metais (see note 3)
|
(5,073)
|
—
|
(78)
|
|||||||||
Balance at June 30, 2010
|
$
|
2,832
|
—
|
245
|
||||||||
Accumulated amortization:
|
||||||||||||
Balance at June 30, 2008
|
$
|
5,666
|
438
|
323
|
||||||||
Amortization expense
|
1,485
|
657
|
—
|
|||||||||
Solsil intangible asset impairment (see note 4)
|
—
|
(1,095)
|
—
|
|||||||||
Balance at June 30, 2009
|
7,151
|
—
|
323
|
|||||||||
Sale of Globe Metais (see note 3)
|
(4,629)
|
—
|
(78)
|
|||||||||
Amortization expense
|
310
|
—
|
—
|
|||||||||
Balance at June 30, 2010
|
2,832
|
—
|
245
|
|||||||||
Net balance at June 30, 2010
|
$
|
—
|
—
|
—
|
Weighted
|
||||||||||||
Outstanding
|
Average
|
Unused
|
||||||||||
Balance
|
Interest Rate
|
Credit Line
|
||||||||||
June 30, 2010:
|
||||||||||||
Type debt:
|
||||||||||||
Export financing
|
—
|
—
|
7,041
|
|||||||||
Other
|
8,067
|
3.42%
|
446
|
|||||||||
Total
|
$
|
8,067
|
$
|
7,487
|
||||||||
June 30, 2009:
|
||||||||||||
Type debt:
|
||||||||||||
Export financing
|
—
|
—
|
7,400
|
|||||||||
Other
|
6,688
|
6.69%
|
—
|
|||||||||
Total
|
$
|
6,688
|
$
|
7,400
|
Weighted
|
||||||||||||||
Outstanding
|
Average
|
Unused
|
Total
|
|||||||||||
Balance
|
Interest Rate
|
Commitment
|
Commitment
|
|||||||||||
Senior credit facility
|
$
|
16,000
|
2.59%
|
9,750
|
28,000
|
2010
|
2009
|
|||||||||
Senior term loan
|
$
|
16,916
|
33,684
|
|||||||
Export prepayment financing
|
—
|
17,000
|
||||||||
Other
|
96
|
2,241
|
||||||||
Total
|
17,012
|
52,925
|
||||||||
Less current portion of long-term debt
|
(10,092)
|
(16,561)
|
||||||||
Long-term debt, net of current portion
|
$
|
6,920
|
36,364
|
2011
|
2012
|
2013
|
2014
|
2015
|
Total
|
||||||
$
|
10,092
|
6,920
|
—
|
—
|
—
|
17,012
|
2010
|
2009
|
|||||||||||
Accrued income taxes
|
$
|
3,030
|
6,562
|
|||||||||
Accrued insurance
|
717
|
1,104
|
||||||||||
Accrued professional fees
|
959
|
905
|
||||||||||
Accrued property taxes
|
1,181
|
963
|
||||||||||
Accrued wages, bonuses, and benefits
|
7,668
|
9,068
|
||||||||||
Customer advances
|
10,768
|
14,062
|
||||||||||
Deferred revenue
|
—
|
9,580
|
||||||||||
Deferred taxes
|
35
|
1,048
|
||||||||||
Current portion of retained acquisition contingencies
|
5,348
|
51
|
||||||||||
Accrued purchase obligations
|
1,153
|
570
|
||||||||||
Accrued restructuring charges
|
—
|
227
|
||||||||||
Other
|
4,973
|
2,585
|
||||||||||
Total
|
$
|
35,832
|
46,725
|
2010
|
2009
|
|||||||||||
Accrued pension liability
|
$
|
9,118
|
6,957
|
|||||||||
Retained acquisition contingencies
|
4,583
|
5,252
|
||||||||||
Other
|
3,761
|
3,150
|
||||||||||
Total
|
$
|
17,462
|
15,359
|
(Loss) Gain Recognized
|
||||||||||||||
During
|
||||||||||||||
the Years Ended June 30
|
Location
|
|||||||||||||
2010
|
2009
|
2008
|
of (Loss) Gain
|
|||||||||||
Interest rate derivatives
|
$
|
(1,231)
|
(840)
|
(481)
|
Interest expense
|
|||||||||
Foreign exchange forward contracts
|
772
|
4,789
|
—
|
Foreign exchange gain
|
||||||||||
Power hedge
|
(243)
|
—
|
—
|
Cost of goods sold
|
2010
|
2009
|
|||||||||
Change in benefit obligations:
|
||||||||||
Benefit obligations at beginning of year
|
$
|
19,984
|
18,533
|
|||||||
Acquisition of business
|
5,400
|
—
|
||||||||
Interest cost
|
1,285
|
1,224
|
||||||||
Service cost
|
26
|
—
|
||||||||
Actuarial loss
|
2,848
|
1,301
|
||||||||
Benefits paid
|
(1,176)
|
(1,074)
|
||||||||
Benefit obligations at end of year
|
$
|
28,367
|
19,984
|
|||||||
Change in plan assets:
|
||||||||||
Fair value of plan assets at beginning of year
|
$
|
13,027
|
16,424
|
|||||||
Acquisition of business
|
4,445
|
—
|
||||||||
Actual gain (loss) on plan assets
|
1,945
|
(2,737)
|
||||||||
Employer contributions
|
1,008
|
414
|
||||||||
Benefits paid
|
(1,176)
|
(1,074)
|
||||||||
Fair value of plan assets at end of year
|
$
|
19,249
|
13,027
|
|||||||
Funded status at end of year:
|
||||||||||
Fair value of plan assets
|
$
|
19,249
|
13,027
|
|||||||
Benefit obligations
|
28,367
|
19,984
|
||||||||
Funded status
|
$
|
(9,118)
|
(6,957)
|
|||||||
Amounts recognized in the consolidated balance sheet consist of:
|
||||||||||
Noncurrent liability
|
$
|
(9,118)
|
(6,957)
|
|||||||
Accumulated other comprehensive loss
|
7,422
|
6,020
|
2010
|
2009
|
2008
|
||||
Interest cost
|
$
|
1,285
|
1,224
|
1,181
|
||
Service cost
|
26
|
—
|
—
|
|||
Expected return on plan assets
|
(1,075)
|
(1,236)
|
(1,460)
|
|||
Amortization of net loss
|
572
|
229
|
74
|
|||
Net periodic pension expense (benefit)
|
$
|
808
|
217
|
(205)
|
2010
|
2009
|
|||||||||||
Discount rate
|
5.25%
|
6.25%
|
2010
|
2009
|
2008
|
||||||||||||
Discount rate
|
5.85% - 6.25%
|
|
6.75%
|
6.25%
|
||||||||||
Expected return on plan assets
|
8.00 - 8.50
|
8.50
|
8.50
|
2011
|
$
|
1,509
|
2012
|
1,583
|
|
2013
|
1,641
|
|
2014
|
1,646
|
|
2015
|
1,680
|
|
Years 2016-2020
|
9,483
|
Equity securities
|
55 - 70%
|
Fixed income securities
|
30 - 40
|
Real estate
|
5 - 10
|
2010
|
2009
|
2008
|
||||||||||
U.S. operations
|
$
|
21,865
|
(55,448)
|
28,061
|
||||||||
Non-U.S. operations
|
32,942
|
21,673
|
23,617
|
|||||||||
Total
|
$
|
54,807
|
(33,775)
|
51,678
|
2010
|
2009
|
2008
|
||||||||||
Current:
|
||||||||||||
Federal
|
$
|
10,471
|
(43)
|
9,038
|
||||||||
State
|
2,686
|
1,407
|
1,677
|
|||||||||
Foreign
|
14,446
|
6,710
|
2,798
|
|||||||||
Total current
|
27,603
|
8,074
|
13,513
|
|||||||||
Deferred:
|
||||||||||||
Federal
|
(3,745)
|
(311)
|
(106)
|
|||||||||
State
|
(3,315)
|
1,556
|
109
|
|||||||||
Foreign
|
(4)
|
2,290
|
2,420
|
|||||||||
Total deferred
|
(7,064)
|
3,535
|
2,423
|
|||||||||
Total provision for income taxes
|
$
|
20,539
|
11,609
|
15,936
|
2010
|
2009
|
2008
|
||||||||||
Federal statutory rate
|
35.0%
|
35.0%
|
35.0%
|
|||||||||
State taxes, net of federal benefit
|
(3.6)
|
(5.7)
|
2.3
|
|||||||||
Goodwill impairment
|
—
|
(59.7)
|
—
|
|||||||||
Foreign tax holiday and rate differential
|
2.3
|
3.5
|
(6.3)
|
|||||||||
Change in valuation allowance
|
5.5
|
(6.7)
|
—
|
|||||||||
Other items
|
(1.7)
|
(0.8)
|
(0.2)
|
|||||||||
Effective tax rate
|
37.5%
|
(34.4)%
|
30.8%
|
2010
|
2009
|
|||||||||
Deferred tax assets:
|
||||||||||
Inventories
|
$
|
2,418
|
834
|
|||||||
Accounts receivable
|
470
|
695
|
||||||||
Accruals
|
5,434
|
6,184
|
||||||||
Deferred Revenue
|
3,857
|
3,857
|
||||||||
Net operating losses and other carryforwards
|
23,369
|
46,854
|
||||||||
Other assets
|
443
|
795
|
||||||||
Share-based compensation
|
7,465
|
5,378
|
||||||||
Gross deferred tax assets
|
43,456
|
64,597
|
||||||||
Valuation allowance
|
(13,497)
|
(41,302)
|
||||||||
Net deferred tax assets
|
29,959
|
23,295
|
||||||||
Deferred tax liabilities:
|
||||||||||
Fixed assets
|
(31,772)
|
(35,734)
|
||||||||
Prepaid expenses
|
(850)
|
(683)
|
||||||||
Intangibles
|
(722)
|
(301)
|
||||||||
Investments
|
—
|
(641)
|
||||||||
Total deferred tax liabilities
|
(33,344)
|
(37,359)
|
||||||||
Net deferred tax liabilities
|
$
|
(3,385)
|
(14,064)
|
Amount
|
Expires
|
|||||||||||
Federal
|
$
|
31,352
|
2024 through 2028
|
|||||||||
State
|
163,468
|
2011 through 2030
|
||||||||||
Foreign
|
21,072
|
2011 through 2019
|
2010
|
2009
|
|||||||||||
Federal NOLs
|
$
|
3,848
|
3,848
|
|||||||||
State NOLs
|
1,055
|
2,819
|
||||||||||
Foreign NOLs
|
5,781
|
34,083
|
||||||||||
Federal credits
|
463
|
461
|
||||||||||
State credits
|
2,350
|
—
|
||||||||||
Capital loss carryover
|
—
|
91
|
2010
|
2009
|
|||||||||||
Balance at the beginning of the year
|
$
|
—
|
—
|
|||||||||
Additions for prior year tax positions
|
2,039
|
—
|
||||||||||
Balance at the end of the year
|
$
|
2,039
|
—
|
Facility
|
Supplier
|
Terms
|
Price Structure
|
Capacity
|
||||
Alloy, West Virginia
|
Appalachian Power
|
Through October 30, 2012, 1-year termination notice
|
Published tariff rate
|
110 MW interruptible
|
||||
Alloy, West Virginia
|
Brookfield Power
|
Through December 31, 2021
|
Fixed rate
|
100 MW (hydro power)
|
||||
Beverly, Ohio
|
American Electric Power
|
Evergreen, 1-year termination notice
|
Published tariff rate
|
2.5 MW firm
85 MW interruptible
|
||||
Niagara Falls, New York
|
Niagara Mohawk Power Corp.
|
Five years from date of initial delivery
|
Based on the EP and RP commodity agreement
|
32.6 MW replacement
7.3 MW expansion
|
||||
Selma, Alabama
|
Alabama Power
|
Evergreen, 1-year termination notice
|
Published tariff rate
|
2.15 MW firm
40.85 MW interruptible
|
||||
Mendoza, Argentina
|
EDEMSA
|
Through October 31, 2009
|
Specified discount from established price
|
24 MW firm
2.5 MW interruptible
|
||||
Bridgeport, Alabama
|
Tennessee Valley Authority
|
Through April 30, 2020, 2-year termination notice
|
Fixed rate, reset annually
|
10MW firm
30MW interruptible
|
2011
|
2012
|
2013
|
2014
|
2015
|
Thereafter
|
||||||
$
|
2,444
|
2,208
|
1,956
|
1,371
|
759
|
181
|
2011
|
2012
|
2013
|
2014
|
2015
|
Thereafter
|
||||||
$
|
28,705
|
25,815
|
21,955
|
22,613
|
23,292
|
11,818
|
2010
|
2009
|
2008
|
||||||||||
Basic earnings (loss) per share computation
|
||||||||||||
Numerator:
|
||||||||||||
Net income (loss) attributable to Globe Specialty Metals, Inc.
|
$
|
34,101
|
(41,981)
|
36,463
|
||||||||
Denominator:
|
||||||||||||
Weighted average basic shares outstanding
|
73,511,696
|
64,361,828
|
58,982,325
|
|||||||||
Basic earnings (loss) per common share
|
$
|
0.46
|
(0.65)
|
0.62
|
||||||||
Diluted earnings (loss) per share computation
|
||||||||||||
Numerator:
|
||||||||||||
Net income (loss) attributable to Globe Specialty Metals, Inc.
|
$
|
34,101
|
(41,981)
|
36,463
|
||||||||
Denominator:
|
||||||||||||
Weighted average basic shares outstanding
|
73,511,696
|
64,361,828
|
58,982,325
|
|||||||||
Effect of dilutive securities
|
1,258,451
|
—
|
13,971,532
|
|||||||||
Weighted average diluted shares outstanding
|
74,770,147
|
64,361,828
|
72,953,857
|
|||||||||
Diluted earnings (loss) per common share
|
$
|
0.46
|
(0.65)
|
0.50
|
2010
|
2009
|
2008
|
||||
Stock options
|
160,000
|
4,315,000
|
295,000
|
|||
Warrants
|
—
|
201,453
|
—
|
|||
UPOs
|
—
|
3,976,242
|
—
|
|||
Total
|
160,000
|
8,492,695
|
295,000
|
Weighted-
|
||||||||||||||
Average
|
||||||||||||||
Weighted-
|
Remaining
|
Aggregate
|
||||||||||||
Number of
|
Average
|
Contractual
|
Intrinsic
|
|||||||||||
Options
|
Exercise Price
|
Term in Years
|
Value
|
|||||||||||
Outstanding as of June 30, 2007
|
1,220,000
|
$
|
7.88
|
|||||||||||
Granted
|
415,000
|
29.86
|
||||||||||||
Exercised
|
—
|
—
|
||||||||||||
Forfeited and expired
|
—
|
—
|
||||||||||||
Outstanding as of June 30, 2008
|
1,635,000
|
$
|
13.46
|
5.52
|
$
|
30,305
|
||||||||
Outstanding as of June 30, 2008
|
1,635,000
|
$
|
13.46
|
|||||||||||
Granted
|
2,746,000
|
5.10
|
||||||||||||
Exercised
|
—
|
—
|
||||||||||||
Forfeited and expired
|
(66,000)
|
20.84
|
||||||||||||
Outstanding as of June 30, 2009
|
4,315,000
|
$
|
5.12
|
4.83
|
$
|
5,095
|
||||||||
Outstanding as of June 30, 2009
|
4,315,000
|
$
|
5.12
|
|||||||||||
Granted
|
60,000
|
11.40
|
||||||||||||
Exercised
|
(98,558)
|
6.25
|
||||||||||||
Forfeited and expired
|
(10,000)
|
4.00
|
||||||||||||
Outstanding as of June 30, 2010
|
4,266,442
|
$
|
5.18
|
3.89
|
$
|
23,509
|
||||||||
Exercisable as of June 30, 2010
|
2,408,775
|
$
|
5.30
|
3.81
|
$
|
12,486
|
Weighted-Average
|
||||||||||
Number of
|
Grant-Date Fair
|
|||||||||
Options
|
Value, as Modified
|
|||||||||
Nonvested as of June 30, 2009
|
3,785,001
|
$
|
1.63
|
|||||||
Granted
|
60,000
|
4.46
|
||||||||
Vested
|
(1,977,334)
|
1.61
|
||||||||
Forfeited and expired
|
(10,000)
|
1.48
|
||||||||
Nonvested as of June 30, 2010
|
1,857,667
|
$
|
1.74
|
2010
|
2009
|
2008
|
||||
Risk-free interest rate
|
1.26% to 1.54%
|
1.37% to 3.47%
|
2.87% to 3.87%
|
|||
Expected dividend yield
|
—
|
—
|
—
|
|||
Expected volatility
|
69.10 to 75.20
|
50.00 to 67.70
|
43.00
|
|||
Expected forfeiture rate
|
—
|
—
|
—
|
|||
Expected term (years)
|
2.50 to 3.43
|
3.13 to 6.25
|
4.00 to 6.50
|
Risk-free interest rate
|
1.45%
|
Expected dividend yield
|
—
|
Expected volatility
|
67.40%
|
Expected forfeiture rate
|
—
|
Expected term (years)
|
3.13
|
2011
|
2012
|
2013
|
2014
|
2015
|
||||||
Share-based compensation (pretax)
|
$
|
4,102
|
113
|
2
|
—
|
—
|
Total
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||
Interest rate derivatives
|
$
|
476
|
—
|
476
|
—
|
|||||||||
Foreign exchange forward contracts
|
77
|
—
|
77
|
—
|
||||||||||
Power hedge
|
243
|
—
|
243
|
—
|
||||||||||
Total
|
$
|
796
|
—
|
796
|
—
|
Total
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||
Assets
|
||||||||||||||
Foreign exchange forward contracts
|
$
|
3,243
|
—
|
3,243
|
—
|
|||||||||
Available-for-sale securities
|
273
|
273
|
—
|
—
|
||||||||||
Total
|
$
|
3,516
|
273
|
3,243
|
—
|
|||||||||
Liabilities
|
||||||||||||||
Interest rate derivatives
|
$
|
227
|
—
|
227
|
—
|
|||||||||
Yonvey call option
|
1,072
|
—
|
—
|
1,072
|
||||||||||
Total
|
$
|
1,299
|
—
|
227
|
1,072
|
|
•
|
Paid Marco Realty $166, $207, and $160, respectively, to rent office space for its corporate headquarters in New York City, New York.
|
|
•
|
Entered into agreements with Marco International to purchase graphitized carbon electrodes. Marco International billed $21,962, $0, and $9,133, respectively, under these agreements. At June 30, 2010 and 2009, payables to Marco International under these agreements totaled $8,162 and $0, respectively.
|
|
•
|
Entered into an agreement to sell ferrosilicon to Marco International. Net sales were $590, $1,286, and $0, respectively, under this agreement.
|
|
•
|
Entered into agreements to purchase sodium carbonate from Marco International. Purchases under this agreement totaled $0, $126, and $0, respectively.
|
|
•
|
Entered into agreements to sell calcium silicon powder to Marco International. Under certain agreements, Marco International agreed to pay 80% of the price in advance in return for interest at LIBOR plus 5.0%. Interest was payable until Marco International was paid by its customer. Sales under these agreements totaled $0, $0, and $1,152, respectively.
|
|
•
|
GMI —
a manufacturer of silicon metal and silicon-based alloys located in the United States.
|
|
•
|
Globe Metais —
a distributor of silicon metal manufactured in Brazil. This segment includes the historical Brazilian manufacturing operations, comprised of a manufacturing plant in Breu Branco, mining operations, and forest reserves, which were sold on November 5, 2009.
|
|
•
|
Globe Metales —
a manufacturer of silicon-based alloys located in Argentina.
|
|
•
|
Solsil —
a manufacturer of upgraded metallurgical grade silicon metal located in the United States.
|
|
•
|
Corporate —
general corporate expenses, investments, and related investment income.
|
|
•
|
Other —
operations that do not fit into the above reportable segments and are immaterial for purposes of separate disclosure. The operating segments include Yonvey’s electrode production operations and certain other distribution operations for the sale of silicon metal and silicon-based alloys.
|
2010
|
2009
|
2008
|
||||
Silicon metal
|
$
|
296,763
|
257,571
|
329,279
|
||
Silicon-based alloys
|
148,092
|
141,356
|
105,326
|
|||
Other, primarily by-products
|
27,803
|
27,364
|
18,034
|
|||
Total
|
$
|
472,658
|
426,291
|
452,639
|
2010
|
||||||||||||||||
Net Sales
|
Depreciation and Amortization
|
Operating Income (Loss)
|
Interest Income
|
Interest Expense (1)
|
Income (Loss) Before Income Taxes
|
Total Assets
|
Capital Expenditures
|
|||||||||
GMI
|
$
|
358,279
|
15,812
|
41,126
|
42
|
2,368
|
39,107
|
324,680
|
18,971
|
|||||||
Globe Metais
|
62,126
|
776
|
5,263
|
178
|
525
|
8,579
|
8,192
|
208
|
||||||||
Globe Metales
|
48,959
|
1,820
|
10,073
|
-
|
1,090
|
10,069
|
71,790
|
996
|
||||||||
Solsil
|
20
|
508
|
(1,375)
|
-
|
30
|
(1,405)
|
30,526
|
(1,410)
|
||||||||
Corporate
|
-
|
122
|
2,815
|
619
|
317
|
2,836
|
415,184
|
1,273
|
||||||||
Other
|
12,557
|
1,634
|
(4,273)
|
6
|
569
|
(5,036)
|
41,508
|
2,863
|
||||||||
Eliminations
|
(9,283)
|
-
|
657
|
(527)
|
(527)
|
657
|
(284,735)
|
-
|
||||||||
$
|
472,658
|
20,672
|
54,286
|
318
|
4,372
|
54,807
|
607,145
|
22,901
|
2009
|
||||||||||||||||
Net Sales
|
Depreciation and Amortization
|
Operating Income (Loss)
|
Interest Income
|
Interest Expense (1)
|
Income (Loss) Before Income Taxes
|
Total Assets
|
Capital Expenditures
|
|||||||||
GMI
|
$
|
277,466
|
12,300
|
47,347
|
60
|
2,688
|
46,627
|
230,463
|
29,424
|
|||||||
Globe Metais
|
95,096
|
2,588
|
14,602
|
470
|
2,061
|
15,065
|
74,975
|
3,466
|
||||||||
Globe Metales
|
50,731
|
2,401
|
14,949
|
-
|
1,456
|
13,998
|
64,064
|
481
|
||||||||
Solsil
|
2,202
|
1,171
|
(79,797)
|
-
|
(154)
|
(79,643)
|
31,834
|
11,244
|
||||||||
Corporate
|
-
|
38
|
(21,397)
|
477
|
334
|
(20,771)
|
287,995
|
138
|
||||||||
Other
|
18,140
|
1,309
|
(6,386)
|
3
|
843
|
(6,857)
|
39,844
|
6,684
|
||||||||
Eliminations
|
(17,344)
|
-
|
(2,194)
|
(281)
|
(281)
|
(2,194)
|
(255,895)
|
-
|
||||||||
$
|
426,291
|
19,807
|
(32,876)
|
729
|
6,947
|
(33,775)
|
473,280
|
51,437
|
2008
|
||||||||||||||||
Net Sales
|
Depreciation and Amortization
|
Operating Income (Loss)
|
Interest Income
|
Interest Expense (1)
|
Income (Loss) Before Income Taxes
|
Total Assets
|
Capital Expenditures
|
|||||||||
GMI
|
$
|
308,074
|
11,881
|
45,344
|
15
|
5,428
|
41,277
|
208,616
|
11,152
|
|||||||
Globe Metais
|
108,218
|
4,530
|
23,386
|
600
|
3,825
|
21,664
|
85,558
|
3,737
|
||||||||
Globe Metales
|
42,090
|
2,110
|
4,970
|
6
|
1,634
|
2,974
|
61,066
|
3,177
|
||||||||
Solsil
|
1,532
|
599
|
(2,853)
|
22
|
64
|
(2,895)
|
99,122
|
3,491
|
||||||||
Corporate
|
-
|
-
|
(12,760)
|
3,975
|
481
|
(10,014)
|
295,498
|
72
|
||||||||
Other
|
7,071
|
219
|
(697)
|
2
|
214
|
(901)
|
29,472
|
728
|
||||||||
Eliminations
|
(14,346)
|
-
|
(427)
|
(1,994)
|
(1,994)
|
(427)
|
(231,158)
|
-
|
||||||||
$
|
452,639
|
19,339
|
56,963
|
2,626
|
9,652
|
51,678
|
548,174
|
22,357
|
2010
|
2009
|
2008
|
||||||
United States
|
$
|
407,455
|
331,095
|
361,127
|
||||
Argentina
|
42,101
|
41,045
|
35,281
|
|||||
Brazil
|
12,820
|
42,923
|
49,497
|
|||||
China
|
592
|
3,602
|
569
|
|||||
Poland
|
9,690
|
7,626
|
6,165
|
|||||
Total
|
$
|
472,658
|
426,291
|
452,639
|
2010
|
2009
|
2008
|
||||||
United States
|
$
|
211,876
|
180,392
|
221,854
|
||||
Argentina
|
31,665
|
32,515
|
34,435
|
|||||
Brazil
|
-
|
29,760
|
29,679
|
|||||
China
|
27,428
|
27,060
|
17,996
|
|||||
Poland
|
800
|
839
|
836
|
|||||
Total
|
$
|
271,769
|
270,566
|
304,800
|
2010
|
2009
|
2008
|
|||
Dow Corning
|
30%
|
18%
|
15%
|
||
Wacker Chemie AG
|
13
|
11
|
9
|
||
All other customers
|
57
|
71
|
76
|
||
Total
|
100%
|
100%
|
100%
|
GLOBE SPECIALTY METALS, INC.
|
||||||||
(Parent Company Only)
|
||||||||
Condensed Balance Sheets
|
||||||||
June 30, 2010 and 2009
|
||||||||
2010
|
2009
|
|||||||
Assets
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
72,491
|
29,588
|
|||||
Due from affiliates
|
13,470
|
2,444
|
||||||
Prepaid expenses and other current assets
|
14,670
|
9,823
|
||||||
Total current assets
|
100,631
|
41,855
|
||||||
Property, plant, and equipment, net of accumulated depreciation and amortization
|
1,370
|
172
|
||||||
Investments in affiliates
|
359,719
|
278,105
|
||||||
Deferred tax assets
|
7,657
|
5,404
|
||||||
Due from affliliates
|
11,568
|
-
|
||||||
Other assets
|
520
|
1,008
|
||||||
Total assets
|
$
|
481,465
|
326,544
|
|||||
Liabilities and Stockholders’ Equity
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$
|
281
|
64
|
|||||
Due to affiliates
|
11,501
|
8,378
|
||||||
Accrued expenses and other current liabilities
|
6,893
|
3,391
|
||||||
Total current liabilities
|
18,675
|
11,833
|
||||||
Long-term liabilities:
|
||||||||
Other long-term liabilities
|
3,961
|
3,359
|
||||||
Total liabilities
|
22,636
|
15,192
|
||||||
Stockholders’ equity:
|
||||||||
Common stock, $0.0001 par value. Authorized, 150,000,000 shares; issued, 74,421,826 and 66,944,254 shares at June 30, 2010 and 2009, respectively |
7
|
7
|
||||||
Additional paid-in capital
|
390,354
|
303,364
|
||||||
Retained earnings
|
38,761
|
4,660
|
||||||
Accumulated other comprehensive loss
|
(4,438)
|
(3,644)
|
||||||
Treasury stock at cost, 1,000 shares at both June 30, 2010 and 2009
|
(4)
|
(4)
|
||||||
Total Globe Specialty Metals, Inc. stockholders' equity
|
424,680
|
304,383
|
||||||
Noncontrolling interest
|
34,149
|
6,969
|
||||||
Total stockholders’ equity
|
458,829
|
311,352
|
||||||
Total liabilities and stockholders’ equity
|
$
|
481,465
|
326,544
|
GLOBE SPECIALTY METALS, INC.
|
|||||||||||
(Parent Company Only)
|
|||||||||||
Condensed Statements of Operations
|
|||||||||||
Years ended June 30, 2010, 2009, and 2008
|
|||||||||||
2010
|
2009
|
2008
|
|||||||||
Equity in income (loss) from operating subsidiaries, net of tax
|
$
|
50,929
|
(43,842)
|
46,961
|
|||||||
Dividend income from operating subsidiaries
|
5,895
|
12,769
|
-
|
||||||||
Selling, general, and administrative expenses
|
(18,393)
|
(22,786)
|
(17,588)
|
||||||||
Restructuring charges
|
-
|
(95)
|
-
|
||||||||
Interest income
|
540
|
224
|
2,012
|
||||||||
Interest expense
|
(317)
|
(334)
|
(481)
|
||||||||
Foreign exchange (loss) gain
|
(284)
|
644
|
(767)
|
||||||||
Other income
|
33
|
18
|
-
|
||||||||
Income (loss) before (provision for) benefit from income taxes
|
38,403
|
(53,402)
|
30,137
|
||||||||
(Provision for) benefit from income taxes
|
(4,135)
|
8,018
|
5,605
|
||||||||
Net income (loss)
|
34,268
|
(45,384)
|
35,742
|
||||||||
(Income) losses attributable to noncontrolling interest, net of tax
|
(167)
|
3,403
|
721
|
||||||||
Net income (loss) attributable to Globe Specialty Metals, Inc.
|
$
|
34,101
|
(41,981)
|
36,463
|
GLOBE SPECIALTY METALS, INC.
|
||||||||||||
(Parent Company Only)
|
||||||||||||
Condensed Statements of Cash Flows
|
||||||||||||
Years ended June 30, 2010, 2009, and 2008
|
||||||||||||
2010
|
2009
|
2008
|
||||||||||
Cash flows from operating activities:
|
||||||||||||
Net income (loss)
|
$
|
34,268
|
(45,384)
|
35,742
|
||||||||
Adjustments to reconcile net income (loss) income to net cash (used in) provided by operating activities:
|
||||||||||||
Equity in (income) loss from operating subsidiaries
|
(50,929)
|
43,842
|
(46,961)
|
|||||||||
Depreciation and amortization
|
122
|
38
|
-
|
|||||||||
Share-based compensation
|
5,712
|
6,395
|
8,176
|
|||||||||
Deferred taxes
|
(1,188)
|
(3,174)
|
(3,099)
|
|||||||||
Changes in operating assets and liabilities:
|
||||||||||||
Due from affiliates
|
(11,474)
|
(2,392)
|
19,610
|
|||||||||
Prepaid expenses and other current assets
|
(3,028)
|
(5,336)
|
(3,040)
|
|||||||||
Accounts payable
|
157
|
(937)
|
990
|
|||||||||
Due to affiliates
|
3,123
|
4,443
|
3,745
|
|||||||||
Accrued expenses and other current liabilities
|
(661)
|
1,315
|
861
|
|||||||||
Other operating cash flows
|
(28,757)
|
2,142
|
1,087
|
|||||||||
Net cash (used in) provided by operating activities
|
(52,655)
|
952
|
17,111
|
|||||||||
Cash flows from investing activities:
|
||||||||||||
Capital expenditures
|
(1,273)
|
(138)
|
(72)
|
|||||||||
Sale of businesses
|
77,691
|
-
|
-
|
|||||||||
Acquisition of businesses
|
(54,957)
|
-
|
(3,742)
|
|||||||||
Held-to-maturity treasury securities
|
-
|
2,987
|
(2,987)
|
|||||||||
Net investments in operating subsidiaries
|
(49,882)
|
(32,466)
|
(4,302)
|
|||||||||
Loans to operating subsidiaries
|
(11,120)
|
-
|
-
|
|||||||||
Notes receivable from Solsil, Inc.
|
-
|
-
|
(1,500)
|
|||||||||
Other investing activities
|
-
|
-
|
(34)
|
|||||||||
Net cash used in investing activities
|
(39,541)
|
(29,617)
|
(12,637)
|
|||||||||
Cash flows from financing activities:
|
||||||||||||
Sale of noncontrolling interest
|
97,917
|
-
|
-
|
|||||||||
Sale of common stock
|
36,456
|
-
|
-
|
|||||||||
Proceeds from warrants exercised
|
1,287
|
833
|
3,497
|
|||||||||
Proceeds from UPOs exercised
|
210
|
-
|
-
|
|||||||||
Proceeds from stock option exercises
|
616
|
-
|
-
|
|||||||||
Other financing activities
|
(1,387)
|
(1,185)
|
(1,393)
|
|||||||||
Net cash provided by (used in) financing activities
|
135,099
|
(352)
|
2,104
|
|||||||||
Net increase (decrease) in cash and cash equivalents
|
42,903
|
(29,017)
|
6,578
|
|||||||||
Cash and cash equivalents at beginning of year
|
29,588
|
58,605
|
52,027
|
|||||||||
Cash and cash equivalents at end of year
|
$
|
72,491
|
29,588
|
58,605
|
(26)
|
Subsequent Events
|
(27)
|
Unaudited Quarterly Results
|
First
|
Second
|
Third
|
Fourth
|
|||||||||||
Quarter
|
Quarter
|
Quarter
|
Quarter
|
|||||||||||
(Unaudited)
|
||||||||||||||
2010:
|
||||||||||||||
Net sales
|
$
|
105,458
|
108,278
|
112,486
|
146,436
|
|||||||||
Operating income
|
12,326
|
30,466
|
3,307
|
8,187
|
||||||||||
Net income attributable to Globe Specialty Metals, Inc.
|
8,442
|
18,534
|
516
|
6,609
|
||||||||||
Basic earnings per common share
|
0.12
|
0.25
|
0.01
|
0.09
|
||||||||||
Diluted earnings per common share
|
0.12
|
0.25
|
0.01
|
0.09
|
||||||||||
2009:
|
||||||||||||||
Net sales
|
$
|
149,157
|
119,307
|
76,146
|
81,681
|
|||||||||
Operating income (loss)
|
27,394
|
(62,161)
|
975
|
916
|
||||||||||
Net income (loss) attributable to Globe Specialty Metals, Inc.
|
16,965
|
(61,521)
|
937
|
1,638
|
||||||||||
Basic earnings (loss) per common share
|
0.27
|
(0.97)
|
0.01
|
0.02
|
||||||||||
Diluted earnings (loss) per common share
|
0.20
|
(0.97)
|
0.01
|
0.02
|
Exhibit
|
||||
Number
|
Description of Document
|
|||
2
|
.1
|
Agreement and Plan of Merger, dated as of January 8, 2008, by and among GSM, Solsil Acquisition Corp. and Solsil**
|
||
2
|
.2
|
Amendment to Agreement and Plan of Merger, dated as of February 29, 2008, by and among GSM, Solsil Acquisition Corp., Solsil and the Representatives named therein**
|
||
2
|
.3
|
Purchase Agreement, dated as of November 5, 2009, by and between Dow Corning Corporation and GSM*****
|
||
2
|
.4
|
Purchase and Sale Agreement dated as of March 26, 2010, by and among Globe Metals Enterprises, Inc., Core Metals Group Holdings LLC and each of the Sellers named therein******
|
||
3
|
.1
|
Amended and Restated Certificate of Incorporation*
|
||
3
|
.2
|
Certificate of Amendment to the Amended and Restated Certificate of Incorporation*
|
||
3
|
.3
|
Amended and Restated Bylaws**
|
||
4
|
.1
|
Second Amended and Restated Credit Agreement dated as of September 18, 2008, by and among GMI, Alabama Sand and Gravel, Inc., Laurel Ford Resources, Inc., West Virginia Alloys, Inc., as subsidiary guarantors, GSM, as Parent, the lender parties thereto, and Societe Generale, as Sole Arranger, Administrative Agent, Issuing Bank, Swingline Lender and Collateral Agent**
|
||
10
|
.1
|
2006 Employee, Director and Consultant Stock Option Plan*
|
||
10
|
.2
|
Employment Agreement, dated May 26, 2008, between GSM and Jeff Bradley*
|
||
10
|
.3
|
Employment Agreement, dated November 13, 2006, between GSM and Alan Kestenbaum*
|
||
10
|
.4
|
Employment Agreement, dated May 31, 2006, between Solsil and Alan Kestenbaum*
|
||
10
|
.5
|
Employment Agreement, dated November 13, 2006, between GSM and Arden Sims*
|
||
10
|
.6
|
Employment Agreement, dated May 31, 2006, between Solsil and Arden Sims*
|
||
10
|
.7
|
Employment Agreement, dated November 13, 2006, between GSM and Theodore A. Heilman, Jr.*
|
||
10
|
.8
|
Employment Agreement, dated June 8, 2007, between GSM and Daniel Krofcheck*
|
||
10
|
.9
|
Employment Agreement, dated June 20, 2008, between GSM and Stephen Lebowitz*
|
||
10
|
.10
|
Solsil Secured Promissory Note made on October 24, 2007 and issued to Plainfield Direct Inc.**
|
||
10
|
.11
|
Solsil Secured Promissory Note made on October 24, 2007 and issued to Plainfield Direct Inc.***
|
||
10
|
.12
|
Employment Agreement, dated September 21, 2008, between GSM and Malcolm Appelbaum****
|
||
10
|
.13
|
Amended and Restated Limited Liability Company Agreement of WVA Manufacturing, LLC, dated as of November 5, 2009, by and among WVA Manufacturing, LLC, GSM, GSM Alloys I, Inc., GSM Alloys II, Inc., Dow Corning Enterprises, Inc. and Dow Corning Corporation.*****
|
||
10
|
.14
|
Output and Supply Agreement, dated as of November 5, 2009, by and among WVA Manufacturing, LLC, Dow Corning Corporation, Globe Metallurgical Inc., and GSM.*****
|
||
10 | .15 | 2010 Annual Executive Bonus Plan† | ||
21
|
.1
|
Subsidiaries†
|
||
31
|
.1
|
Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002†
|
||
31
|
.2
|
Certification of the Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002†
|
||
32
|
.1
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Certification of the Principal Executive Officers and Principal Financial Officer Pursuant to 18 U.S.C. 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002†
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†
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Filed herewith.
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*
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Incorporated by reference to the exhibit with the same designation filed with the Company’s registration statement on Form S-1 (Registration No. 333-152513) filed on July 25, 2008.
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**
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Incorporated by reference to the exhibit with the same designation filed with Amendment No. 1 to the Company’s registration statement on Form S-1 (Registration No. 333-152513) filed on November 4, 2008.
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***
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Incorporated by reference to the exhibit with the same designation filed with Amendment No. 2 to the Company’s registration statement on Form S-1 (Registration No. 333-152513) filed on June 9, 2009.
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****
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Incorporated by reference to the exhibit with the same designation filed with Amendment No. 3 to the Company’s registration statement Form S-1 (Registration Statement No. 333-152513) filed on July 16, 2009.
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*****
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Incorporated by reference to the exhibit with the same designation filed with the Company’s Form 8-K filed on November 12, 2009.
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******
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Incorporated by reference to the exhibit with the same designation filed with the Company’s Form 8-K filed on April 1, 2010.
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1.
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The bonus pool is calculated as the sum of 8% of “modified EBITDA” and 2% of “modified free cash flow” (using the same definitions as used in the 2009 plan). A detailed description of modified EBITDA and modified free cash flow are set forth in Exhibit A.
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2.
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All calculations under the Plan are to be based upon the results for the calendar year 2010.
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3.
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The results of acquisitions will be included in making the calculations of modified EBITDA and modified free cash flow.
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4.
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“One time costs” will be excluded in making the calculations of modified EBITDA and modified free cash flow. The definition of one-time costs is set forth in Exhibit B. The Compensation Committee may elect, in its judgment, not to exclude certain one-time costs that otherwise would be excluded as a result of the definition.
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5.
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The bonus pool is capped at $20,000,000.
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2.
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Payouts will be made in accordance with the deferral plan set forth in Exhibit C.
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3.
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Deferred payments will be made in Restricted Stock Units (RSUs) that proportionally vest over three years but are not delivered until the end of the third year. (The departure of either will not increase the amount available to the other.)
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1.
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Additional voluntary deferral will be available for the portion of the bonus not subject to mandatory deferral, as provided in Exhibit D.
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1.
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The accrual of any bonus under the bonus pool is subject to the Company meeting a threshold performance requirement that the fraction determined by dividing modified EBITDA (including the appropriate bonus accrual) for the year ending December 31, 2010 by average Committed Capital exceed 0.2. A detailed description of “Committed Capital” is set forth in Exhibit A. Average Committed Capital will be calculated as the 13 point monthly average of Committed Capital for calendar year 2010, starting with Committed Capital as of 12/31/2009. Committed Capital will exclude the impact of one-time costs defined in Exhibit B. The Compensation Committee may elect, in its judgment, not to exclude certain one-time costs that otherwise would be excluded as a result of the definition.
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2.
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The Committee may exercise negative judgment as noted below in
Framework for 2010 relative performance measures
attached as Exhibit E.
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3.
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The Plan includes a claw back provision which provides that if the Board determines that there was executive misconduct in a prior period in the preparation of the financial results for that period, the Compensation Committee will determine whether the restatement was material and was a result of executive misconduct in preparation of the financial information, and if so, to what extent “covered payments” should be returned to the company to the extent that such payments were overstated as a result of the change in financial condition. Covered payments include cash incentives paid to the executive found to have actively participated in the executive misconduct for performance during the fiscal year(s).
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·
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Restructuring charges
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·
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Non-recurring items
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·
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Impairment charges
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·
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Start-up or shut down expenses for plants or business lines
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·
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Transaction expenses related to acquisitions or dispositions
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·
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Inventory write-offs
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·
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Penalties or charges related to prior periods
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·
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Litigation awards, charges or professional fees related to litigation or threatened litigation
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·
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Fixed asset write-offs
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i.
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$ 0 - $ 2 mm 0% deferred
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ii.
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$ 2 - $ 5 mm 20% deferred
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iii.
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$ 5 - $ 8 mm 30% deferred
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iv.
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$ 8- $ 10 mm 40% deferred
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v.
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$ 10 - $12 mm 50% deferred
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vi.
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$ 12 - $15 mm 75% deferred
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vii.
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$15 - $20 mm 100% deferred
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a.
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Limit deferral to 50% of salary
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b.
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Limit deferral to 50% of Bonus up to $1,000,000. Deferral must be below the mandatory deferral limits.
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c.
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If deferred into RSUs, then 20% match is granted in form of RSUs
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d.
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Deferred compensation that is deferred into RSUs is fully vested.
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e.
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Matching RSUs vest over 3 years (33% a year) but are delivered in year 3
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f.
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Subsequent deferrals are offered subject to Code Section 409A rules (minimum 5 year re-deferral)
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g.
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If deferred into mutual funds, the deferral will be funded.
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h.
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Standard termination provisions apply to the matched RSUs. These would include: Change in control, termination for other than cause, death, disability and retirement. Voluntary termination would not trigger vesting of the matched RSUs. For the avoidance of doubt, this provision applies only to the 20% match and not to the base amount deferred, which shall be payable even if terminated for cause.
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1.
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Peer Group
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2.
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Reference Group
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3.
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S&P Small Cap Index
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4.
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S&P Metals Index
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5.
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The Committee may add other “groups” or delete “groups” at any time, including after the plan period, but before a final decision on bonuses is made.
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1.
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TSR
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2.
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ROE
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3.
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Net operating profit after tax (NOPAT)/Committed Capital (CC)
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4.
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EBITDA growth
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5.
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NOPAT growth
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6.
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The Committee may add other performance measures or delete performance measures at any time, including after the plan period, but before a final decision on bonuses is made.
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7.
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The Committee may adjust any measure in its judgment to insure a valid comparison.
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Name
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State or Jurisdiction of Incorporation
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Alabama Sand and Gravel, Inc.
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Delaware
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Globe Metales S.A.
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Argentina
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Globe Metallurgical, Inc.
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Delaware
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LF Resources, Inc.
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Delaware
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Ningxia Yongvey Coal Industrial Co., Ltd.
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China
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Solsil, Inc.
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Delaware
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Ultracore Energy S.A.
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Argentina
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Ultra Core Corporation
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Illinois
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West Virginia Alloys, Inc.
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Delaware
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GSM Alloys I, Inc. | Delaware | |
GSM Alloys II, Inc. | Delaware | |
WVA Manufacturing, LLC | Delaware | |
Globe Metals Enterprises, Inc. | Delaware | |
Core Metals Group Holdings LLC | Delaware | |
Core Metals Group LLC | Delaware | |
Tennessee Alloys Company, LLC | Delaware |
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1.
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I have reviewed this annual report on Form 10-K of Globe Specialty Metals, Inc., a Delaware corporation (the “registrant”);
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a.
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designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b.
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designed such internal controls over financial reporting, or caused such internal controls over financial reporting to be designed under our supervision, to provide reasonable assurances regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c.
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evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and
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d.
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disclosed in this report any change in the registrants internal controls over financial reporting that occurred during the most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors:
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a.
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all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b.
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any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date: September 28, 2010
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By:
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/s/ Jeff Bradley
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Jeff Bradley
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Chief Executive Officer
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(Principal Executive Officer)
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1.
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I have reviewed this annual report on Form 10-K of Globe Specialty Metals, Inc., a Delaware corporation (the “registrant”);
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a.
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designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b.
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designed such internal controls over financial reporting, or caused such internal controls over financial reporting to be designed under our supervision, to provide reasonable assurances regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c.
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evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and
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d.
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disclosed in this report any change in the registrants internal controls over financial reporting that occurred during the most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors:
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a.
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all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b.
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any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date: September 28, 2010
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By:
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/s/ Malcolm Appelbaum
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Malcolm Appelbaum
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Chief Financial Officer
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(Principal Financial Officer)
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Date: September 28, 2010
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By:
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/s/ Jeff Bradley
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Jeff Bradley
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Chief Executive Officer
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(Principal Executive Officer)
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Date: September 28, 2010
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By:
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/s/ Malcolm Appelbaum
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Malcolm Appelbaum
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Chief Financial Officer
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(Principal Financial Officer)
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