<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NO. 1-7170
IMCO Recycling Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
75-2008280
(I.R.S. Employer Identification No.)
5215 North O'Connor Blvd.
Suite 940
Central Tower at Williams Square
Irving, Texas 75039
(Address of principal executive offices)
(214) 869-6575
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
----- ----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of July 31, 1996.
COMMON STOCK, $0.10 PAR VALUE, 11,888,552
<PAGE>
PART 1 - FINANCIAL INFORMATION
ITEM 1. - FINANCIAL STATEMENTS
IMCO RECYCLING INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share)
June December
30, 31,
1996 1995
---- ----
ASSETS (Unaudited)
CURRENT ASSETS
Cash and cash equivalents $ 9,075 $ 8,678
Accounts receivable 28,147 27,442
Inventories 15,808 9,146
Deferred income tax 1,227 1,298
Other current assets 1,647 1,353
--------- ---------
TOTAL CURRENT ASSETS 55,904 47,917
PROPERTY AND EQUIPMENT, NET 77,935 78,769
INTANGIBLE ASSETS
Excess acquisition cost over the fair value of net
assets acquired, net of amortization of $4,316
and $3,866, respectively. 10,564 10,968
Patents 202 233
--------- ---------
TOTAL INTANGIBLE ASSETS 10,766 11,201
INVESTMENTS IN JOINT VENTURES 14,474 ----
OTHER ASSETS, NET 797 1,990
--------- ---------
$ 159,876 $ 139,877
--------- ---------
--------- ---------
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 9,256 $ 10,691
Accrued liabilities 4,070 7,059
Current maturities of long-term debt 2,154 2,169
--------- ---------
TOTAL CURRENT LIABILITIES 15,480 19,919
LONG-TERM DEBT 49,185 29,754
OTHER LONG-TERM LIABILITIES 1,126 1,412
DEFERRED INCOME TAX 5,893 5,516
STOCKHOLDERS' EQUITY
Preferred Stock; par value $.10; 8,000 shares
authorized; none issued -- --
Common Stock; par value $.10; 20,000 shares
authorized; 12,015 issued at June 30, 1996
11,965 at December 31, 1995 1,201 1,196
Additional paid in capital 27,558 27,282
Retained earnings 61,050 56,672
Treasury stock, at cost; 134 shares at June
30, 1996; 208 shares at December 31, 1995 (1,617) (1,874)
--------- ---------
88,192 83,276
--------- ---------
$ 159,876 $ 139,877
--------- ---------
--------- ---------
<PAGE>
<TABLE>
<CAPTION>
IMCO RECYCLING INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
(in thousands, except per share)
For the three months ended June 30, For the six months ended June 30,
----------------------------------- ---------------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES $ 50,465 $ 29,725 $ 101,183 $ 60,471
Cost of sales 42,658 22,410 85,486 45,721
------ ------ ------ ------
GROSS PROFIT 7,807 7,315 15,697 14,750
Selling, general and
administrative expense 2,888 2,252 5,869 4,647
Interest expense 980 233 1,590 513
Interest income (238) (103) (382) (167)
Equity earnings of joint
ventures (116) -- (423) --
----- ----- ----- -----
INCOME BEFORE
PROVISION FOR
INCOME TAXES 4,293 4,933 9,043 9,757
Provision for income taxes 1,695 1,974 3,482 3,904
----- ----- ----- -----
NET EARNINGS $ 2,598 $ 2,959 $ 5,561 $ 5,853
-------- -------- -------- --------
-------- -------- -------- --------
Net earnings per common
share $ 0.21 $ 0.25 $ 0.45 $ 0.49
-------- -------- -------- --------
-------- -------- -------- --------
Dividends declared per
common share $ .05 $ .035 $ .10 $ .035
-------- -------- -------- --------
-------- -------- -------- --------
Weighted average common
and common equivalent
shares outstanding 12,377 12,014 12,387 11,966
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
<PAGE>
IMCO RECYCLING INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
For the six months ended
------------------------
June 30,
--------
1996 1995
---- ----
<S> <C> <C>
OPERATING ACTIVITIES:
Net earnings $ 5,561 $ 5,853
Depreciation and amortization 5,673 4,484
Provision for deferred income taxes 448 821
Equity earnings from joint ventures (423) ---
Other noncash charges 661 471
Loss on sale of property and equipment 7 2
Changes in noncash components of working
capital (excluding investing and financing
transactions)
Accounts receivable (721) 1,896
Inventories (6,661) (632)
Other current assets (294) (606)
Accounts payable and accrued liabilities (4,424) (170)
------ ----
NET CASH (USED BY) FROM OPERATING
ACTIVITIES (173) 12,119
INVESTING ACTIVITIES:
Purchase of property and equipment (4,480) (4,373)
Proceeds from sale of property and equipment 510 67
Investment in joint ventures (13,240) ---
Other (989) (218)
---- ----
NET CASH (USED BY) INVESTING ACTIVITIES (18,199) (4,524)
FINANCING ACTIVITIES:
Proceeds from long-term debt 20,475 --
Principal payments of long-term debt (1,061) (705)
Dividends paid (1,183) (1,554)
Tax benefit from the exercise of stock options 731 156
Other (193) 85
--- --
NET CASH FROM (USED BY) FINANCING
ACTIVITIES 18,769 (2,018)
------ ------
Net increase (decrease) in Cash and Cash
Equivalents 397 5,577
Cash and Cash Equivalents at January 1 8,678 2,854
----- -----
Cash and Cash Equivalents at June 30 $ 9,075 $ 8,431
---------- -----------
---------- -----------
SUPPLEMENTARY INFORMATION:
Cash payments for interest $ 1,355 $ 625
---------- ----------
---------- ----------
Cash payments for income taxes $ 6,398 $ 3,610
---------- ----------
---------- ----------
</TABLE>
<PAGE>
IMCO RECYCLING INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 1996
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the six-month period ended June 30, 1996
are not necessarily indicative of the results that may be expected for the year
ending December 31, 1996. The accompanying financial statements include the
accounts of IMCO Recycling Inc. and all of its subsidiaries (the "Company").
All significant intercompany accounts and transactions have been eliminated.
For further information, refer to the consolidated financial statements and
footnotes thereto included in the Company's annual report on Form 10-K for the
year ended December 31, 1995.
NOTE B - INVENTORIES
The components of inventories are:
(dollars in thousands)
June 30, December 31,
1996 1995
---- ----
Finished goods $ 11,357 $ 6,839
Raw materials 4,185 1,986
Supplies 266 321
--- ---
$ 15,808 $ 9,146
--------- --------
--------- --------
NOTE C - LONG-TERM DEBT
The Company's total capital spending in the first half of 1996 was $4,480,000.
Capital expenditures for all of 1996 are expected to be approximately
$20,000,000. The majority of this spending will be in connection with the new
aluminum recycling facility the Company is constructing at Coldwater, Michigan.
The Company will own 75% of this facility which will principally serve the
automotive markets. Construction is expected to be completed in early 1997.
In April 1996 the Company borrowed $15,000,000 under terms previously negotiated
with The Mutual Life Insurance Company of New York. Terms of this unsecured
borrowing include interest of 7.41% and mandatory prepayments of $3,000,000
scheduled for each October 31 beginning in 2003. These notes mature on October
31, 2007. In May 1996 most of these proceeds were used to fund the Company's
initial investment in an equity joint venture with VAW aluminium AG ("VAW"), the
largest aluminum company in Germany. The joint venture, VAW-IMCO Gus und
Recycling GmbH ("VAW-IMCO"), currently has the capacity to process 220 million
pounds of aluminum
<PAGE>
annually. Income from this joint venture is recorded on the Company's books as
equity income.
In addition, on May 8, 1996, the Company borrowed the net proceeds of
approximately $5,569,000 from the issuance of $5,740,000 principal amount of
Solid Waste Disposal Facilities Revenue Bonds by the City of Morgantown,
Kentucky. These bonds, which are due on May 1, 2016 and carry an interest rate
of 7.65%, were issued in connection with the Company's construction of its salt
cake processing plant at Morgantown which was completed in January 1996. See
"RESULTS OF OPERATIONS".
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The Company is in the resource recovery industry and provides recycling services
for primary manufacturers of metal. The Company's principal activity involves
the recycling of aluminum and aluminum scrap and by-products. The Company also
recycles magnesium and zinc. The Company's financial performance has
historically been largely determined by the volume of metal it processes. In
recent periods the Company's financial results have also been impacted by the
change in the price of aluminum. The largest portion of the Company's business
is the processing of customer-owned material for a fee (a service called
"tolling"). In addition to tolling, the Company to a lesser extent also
purchases material for processing and resale ("buy/sell business"). Both the
Company's tolling fees per pound recycled and the selling price of metal it
owns, recycles and sells for its own account are included in revenues.
Variations in the mix between these two types of transactions can cause revenue
amounts to change significantly from period to period while generally not
significantly affecting total gross profit, because both types of transactions
have historically had approximately the same gross profit value per pound of
metal processed.
The following table shows the total pounds of metal processed, the percentage of
total pounds processed represented by tolled metal, total revenues and total
gross profit in the three and six month periods ended June 30:
<TABLE>
<CAPTION>
-----------------------------------------------------------
Three months Six Months
-----------------------------------------------------------
Ended June 30, Ended June 30,
-----------------------------------------------------------
1996 1995 1996 1995
-----------------------------------------------------------
(In thousands, except percentages)
<S> <C> <C> <C> <C>
Pounds of Metal Processed 372,080 314,998 739,045 619,529
Percentage of Pounds Tolled 81% 96% 84% 96%
Revenues $ 50,465 $ 29,725 $ 101,183 $ 60,471
Gross Profit $ 7,807 $ 7,315 $ 15,697 $ 14,750
- ------------------------------------------------------------------------------------------------------
</TABLE>
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1996 COMPARED TO THREE MONTHS ENDED JUNE 30, 1995
AND SIX MONTHS ENDED JUNE 30, 1996 COMPARED TO SIX MONTHS ENDED JUNE 30, 1995
The Company processed 18% more metal for the three month period and 19% more
metal in the six month period, both ending June 30, 1996 than it did in the
same periods
<PAGE>
of 1995. Aluminum processing at the Company's newest facilities in Bedford,
Indiana, Sikeston, Missouri, and Chicago Heights, Illinois which were all
purchased at the beginning of the fourth quarter 1995, was the major reason for
these increases. The Loudon, Tennessee plant processing also increased
significantly in these periods and contributed to the gains mentioned above.
Partially offsetting these increases, however, were the results from the Corona,
California plant, where year-to-date processing was more than 42% lower than in
the comparable period of 1995 due to unfavorable market conditions on the U.S.
West Coast for recycling used beverage containers (UBC's). The Company's other
aluminum plants processed approximately the same amount of material in both the
three and six month periods ending June 30, 1996 as they did in the same
periods of 1995.
Revenues increased 70% in 1996's second quarter ending June 30, 1996 compared
to 1995's second quarter and increased 67% for the six month period ending the
same date. These increases in revenues are higher than the increases in
processing volumes discussed above because most of the increased processing
volume was due to buy/sell business. As discussed previously, increases in
buy/sell business will generally result in a much higher increase in revenue
than would an increase in tolling. The Company's buy/sell business revenues
include the cost of the metal, the processing cost, and the Company's profit
margin in the selling price, whereas, revenues associated with tolling only
include the processing cost and the Company's profit margin. In 1996 the
Company is expected to generate a higher level of buy/sell business and a
correspondingly higher amount of revenues because of the acquisition of its
Chicago Heights, Illinois and Sikeston, Missouri plants in 1995 which have
historically had approximately 50% of their business in buy/sell transactions.
In addition to increases in buy/sell business, it is expected that the Company,
in 1996 and beyond, will have additional metal for sale due to operation of its
salt cake processing facility which was completed in January 1996. This
facility, which is located adjacent to the Company's Morgantown, Kentucky plant,
will process much of the Company's salt cake generated from its aluminum
recycling plants and recover additional amounts of aluminum for resale. Tolling
activity represented 81% and 84% of the Company's processing for the three and
six month periods ending June 30, 1996, compared to 96% for both the comparable
three and six month periods of 1995. The Company currently believes that the
ratio of tolling to buy/sell business in 1996 will more accurately reflect the
levels which can be expected in future periods.
Magnesium revenues and volumes processed were about 45% and 19% higher,
respectively for the first six months of 1996 than for the corresponding period
of 1995. This was due to a higher level of anode production and to higher
prices for the anodes sold in 1996 compared to 1995. Zinc revenues increased
about 23% while volume decreased 5% for the first half ending June 30, 1996
compared to 1995. The decrease in zinc processing volumes was not unexpected
due to a record year in 1995 and did not reflect any major change in
profitability. The increases in zinc revenues were due to increases in
buy/sell business. Some customers which were previously tolling their
material opted to change to a buy/sell basis, and this has the effect of
increasing revenues as discussed above.
Gross profit increased to $7,807,000 for the three months and $15,697,000 for
the six months ending June 30, 1996. Compared to $7,315,000 and $14,750,000,
these represented 7% and 6% increases, respectively, for the same periods of
1995. These increased profits did not match the increases in processing volumes
due to higher costs of operations, particularly natural gas costs and because
the Corona and Bedford plants experienced lower operating rates than
anticipated. The Bedford operating rate improved in the second quarter, and is
expected to improve further in the third quarter; however, the operating rate at
the Corona plant is not expected to increase significantly
<PAGE>
for the immediate future. In addition, gross profit was negatively impacted in
the first half of 1996 by falling prices for aluminum. As discussed above, the
Company has more buy/sell pounds in its product mix and declining aluminum
prices will tend to decrease the level of revenues and gross profits the
Company receives for the metal it owns, processes and sells.
Selling, general and administrative expenses were $2,888,000 for the three month
period and $5,869,000 for the six month period ending June 30, 1996. These
compared to $2,252,000 and $4,647,000 for the same periods of 1995. Increased
employee costs due mostly to the fourth quarter 1995 acquisitions were the
principal contributors to this increase.
Equity earnings of joint ventures of $116,000 for the second quarter of 1996
and $423,000 for the first six months of 1996 represent earnings from the
Company's joint venture in Germany and its investment in Marport Smelting,
acquired in late 1995. There were no comparable amounts in 1995.
Net Interest was an expense of $742,000 for the second quarter and $1,208,000
year-to-date 1996. This compares to interest expense of $130,000 and $346,000
respectively for the same periods of 1995. Interest was higher due to higher
amounts of debt outstanding in 1996 than in 1995. See "LIQUIDITY AND CAPITAL
RESOURCES".
Income before the provision for tax of $4,293,000 in 1996's second quarter was
13% or $640,000 below 1995's second quarter, while for the first six months of
1996 income before tax of $9,043,000 was $714,000 or 7% below 1995's amounts.
The Company's effective income tax rate is about 39% for 1996 which was about 1%
lower than for similar periods in 1995.
As a result of all of the above, the Company reported net earnings of
$2,598,000 for the second quarter of 1996, and $5,561,000 year-to-date 1996, or
12% and 5% respectively, lower, than the comparable 1995 periods.
LIQUIDITY AND CAPITAL RESOURCES
Operations used cash of $173,000 during the first half of 1996, compared to
providing cash of $12,119,000 in the same period of 1995. Changes in working
capital account for virtually all of the difference. In 1996 working capital
items other than cash used $12,100,000 of cash while in 1995 working capital
provided cash of $488,000. The change in usage of working capital was due to
the increases in buy/sell activity as described previously.
The Company's total capital spending for property, plant and equipment in the
first half of 1996 was $4,480,000, compared to $4,373,000 spent in the first
half of 1995. In addition, the Company spent over $13,000,000 for the purchase
of a 50% interest in a joint venture with VAW. See NOTE C - LONG-TERM DEBT.
Capital expenditures for 1996 are expected to be approximately $20,000,000. The
majority of this spending will be in connection with the new aluminum recycling
facility the Company is constructing at Coldwater, Michigan. The Company will
own 75% of this facility which will principally serve the automotive markets.
Construction is expected to be completed in early 1997. Early in May 1996 the
Company funded its portion of the equity joint venture with VAW. The joint
venture, VAW-IMCO, has the capacity to process 220 million pounds of aluminum
annually. Income from this joint venture is recorded on the Company's books as
equity income. On April 1, 1996 the Company borrowed $15,000,000 under terms
previously negotiated with The Mutual Life Insurance Company of New York. Most
of
<PAGE>
these proceeds were used to fund the Company's portion of the VAW-IMCO joint
venture.
On May 8, 1996, the Company borrowed the net proceeds of approximately
$5,569,000 from the issuance of $5,740,000 principal amount of Solid Waste
Disposal Facilities Revenue Bonds by the City of Morgantown, Kentucky. These
bonds were issued in connection with the Company's construction of its salt cake
processing plant at Morgantown, which was completed in January 1996. See
"RESULTS OF OPERATIONS".
Financing activities in the first half of 1996 also included the repayment of
$1,061,000 in long-term debt and the payment of $1,183,000 in dividends.
The Company feels that its cash on hand, the availability of funds under its
lines of credit and its anticipated internally generated funds will be
sufficient to fund its current needs and meet its obligations for the
foreseeable future.
At June 30, 1996, the relationship of current assets to current liabilities, or
current ratio, was 3.61 to 1, compared to 2.41 to 1 at December 31, 1995.
Working capital will fluctuate as the mix of buy/sell business and tolling
business changes relative to the total business, for the reasons discussed
above.
Certain information contained herein may be deemed to be forward-looking
statements within the meaning of The Private Securities Litigation Reform Act of
1995, including without limitation, any statements concerning expectations of
operating levels at the Company's Bedford, Indiana and Corona, California
facilities, expectations of the future mix of buy/sell business as opposed to
tolling business and future levels and timing of capital expenditures. Actual
results could differ materially from those expectations expressed in such
forward-looking statements. Such statements are qualified by the following
disclaimers:
Estimates of future operating rates at the Company's plants are based on current
expectations by management of the Company of future levels of volumes and prices
for the Company's services or metal, and are subject to fluctuations in customer
demand for the Company's services and prevailing conditions in the metal
markets, as well as certain components of the Company's cost of operations,
including energy costs. Many of the factors affecting revenues and costs are
outside of the control of the Company, including weather conditions such as that
prevailed in the first quarter of 1996. The future mix of buy/sell vs. tolling
business is dependent on customers' needs and overall demand, world and U.S.
market conditions then prevailing in the respective metal markets, and the
operating levels at the Company's various facilities at the relevant time.
REVIEW BY INDEPENDENT ACCOUNTANTS
The Company's independent accountants, Ernst & Young LLP, have reviewed the
Company's consolidated financial statements at June 30, 1996, and for the six
months then ended prior to filing and their report is included herein.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
<PAGE>
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The annual meeting of the Stockholders of the Company was held on May
14, 1996, at which the election of three Class III directors, the appointment
of Ernst & Young LLP as the Company's independent accountants for 1996,
amendments to the Company's 1992 Stock Option Plan and the adoption of the
Company's Annual Incentive Program were voted on. Jack M. Brundrett was re-
elected as a director , and received 8,699,854 votes for his election with
69,955 votes withheld. Ralph L. Cheek was re-elected as a director, and
received 8,718,644 votes for his election with 51,165 votes withheld. Jack C.
Page was re-elected as a director, and received 8,700,254 votes for his election
with 69,555 votes withheld. Ernst & Young was ratified as independent
accountants for 1996 with 8,736,413 votes for their ratification, 8,481 votes
against and 24,915 votes abstaining. The amendments to the Company's 1992 Stock
Option Plan were approved with 8,059,809 votes approving, 234,029 against, and
66,507 votes abstaining. The Company's Annual Incentive Program was approved
with 6,809,751 votes approving, 1,488,486 against, and 62,108 votes abstaining.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) The following exhibits are included herein:
10.1 Amendment to the Company's 1992 Stock Option Plan as
amended December 15, 1994
10.2 The Company's Annual Incentive Program, filed as
Exhibit 4.2 to the Company's registration statement on Form S-8 (No. 333-07091)
dated June 28, 1996 and incorporated herein by reference.
15.1 Acknowledgment letter regarding unaudited financial
information from Ernst & Young LLP.
27 Financial Data Schedule
(b) Reports on Form 8-K - None.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
IMCO Recycling Inc.
Date: August 13, 1996 By: /s/ Robert R. Holian
---------------------------------
Robert R. Holian
Vice President and Controller
(Principal Accounting Officer)
<PAGE>
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
Stockholders and
Board of Directors
IMCO Recycling Inc.
We have reviewed the accompanying consolidated balance sheet of IMCO
Recycling Inc. as of June 30, 1996, and the related consolidated statements
of earnings for the three-month and six-month periods ended June 30, 1996 and
1995, and the consolidated statements of cash flows for the six-month periods
ended June 30, 1996 and 1995. These financial statements are the
responsibility of the Company's management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data, and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, which
will be performed for the full year with the objective of expressing an
opinion regarding the financial statements taken as a whole. Accordingly, we
do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that
should be made to the accompanying consolidated financial statements referred
to above for them to be in conformity with generally accepted accounting
principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of IMCO Recycling Inc. as of
December 31, 1996 and the related consolidated statements of earnings,
stockholders' equity, and cash flows for the year then ended (not presented
herein), and in our report dated February 5, 1996, we expressed an
unqualified opinion on those consolidated financial statements. In our
opinion, the information set forth in the accompanying consolidated condensed
balance sheet as of December 31, 1995, is fairly stated, in all material
respects, in relation to the consolidated balance sheet from which it has
been derived.
Dallas, Texas
July 29, 1996
<PAGE>
Stockholders and
Board of Directors
IMCO Recycling Inc.
We are aware of the incorporation by reference in the Registration Statement
(Form S-8 No. 33-26641) pertaining to the Nonqualified Stock Option Plan of
IMCO Recycling Inc. and the related prospectus, in the Registration Statement
(Form S-8 No. 33-34745) pertaining to the IMCO Recycling Amended and Restated
Stock Option Plan, in the Registration Statement (Form S-8 No. 33-76780)
pertaining to the IMCO Recycling Inc. 1992 Stock Option Plan, in the
Registration Statement (Form S-8 No. 333-00075) pertaining to the IMCO
Recycling Inc. Amended and Restated 1992 Stock Option Plan, and the in the
Registration Statement (Form S-8 No. 333-07091) pertaining to the IMCO
Recycling Inc. Annual Incentive Plan of our report dated July 29, 1996
relating to the unaudited condensed consolidated interim financial statements
of IMCO Recycling Inc. which are included in its Form 10-Q for the quarter
ended June 30, 1996.
Pursuant to Rule 346(c) of the Securities Act of 1933, our report is not a
part of the Registration statements prepared or certified by accountants
within the meaning of Section 7 or 11 of the Securities Act of 1933.
August 13, 1996
Dallas, Texas
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 9,075
<SECURITIES> 0
<RECEIVABLES> 28,147
<ALLOWANCES> 0
<INVENTORY> 15,808
<CURRENT-ASSETS> 55,904
<PP&E> 115,978
<DEPRECIATION> (38,043)
<TOTAL-ASSETS> 159,876
<CURRENT-LIABILITIES> 15,480
<BONDS> 49,185
0
0
<COMMON> 1,201
<OTHER-SE> 86,991
<TOTAL-LIABILITY-AND-EQUITY> 159,876
<SALES> 101,183
<TOTAL-REVENUES> 101,183
<CGS> 85,486
<TOTAL-COSTS> 85,486
<OTHER-EXPENSES> 5,869
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,590
<INCOME-PRETAX> 9,043
<INCOME-TAX> 3,482
<INCOME-CONTINUING> 5,561
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,561
<EPS-PRIMARY> .45
<EPS-DILUTED> .45
</TABLE>
