<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 September 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)
(972) 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 October 31, 1996.
Common Stock, $0.10 par value, 11,890,513
-----------------------------------------
<PAGE>
PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
IMCO RECYCLING INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
September 30, December 31,
1996 1995
------------- ------------
(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 6,900 $ 8,678
Accounts receivable 30,330 27,442
Inventories 16,077 9,146
Deferred income tax 1,210 1,298
Other current assets 1,505 1,353
-------- --------
TOTAL CURRENT ASSETS 56,022 47,917
PROPERTY AND EQUIPMENT, NET 78,971 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. 9,658 10,968
Patents 187 233
-------- --------
9,845 11,201
INVESTMENTS IN JOINT VENTURES 14,386 -
OTHER ASSETS, NET 745 1,990
-------- --------
$159,969 $139,877
-------- --------
-------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 10,044 $ 10,691
Accrued liabilities 4,738 7,059
Current maturities of long-term debt 2,152 2,169
-------- --------
TOTAL CURRENT LIABILITIES 16,934 19,919
LONG-TERM DEBT 48,658 29,754
OTHER LONG-TERM LIABILITIES 1,462 1,412
DEFERRED INCOME TAX 6,059 5,516
STOCKHOLDERS' EQUITY
Preferred stock; par value $.10; 8,000 shares
authorized; none issued - -
Common stock; par value $.10; 20,000 shares
authorized; 12,016 issued at September 30,
1996 11,965 at December 31, 1995 1,202 1,196
Additional paid-in capital 27,550 27,282
Retained earnings 59,657 56,672
Treasury stock, at cost; 128 shares at
September 30, 1996; 208 shares at
December 31, 1995 (1,553) (1,874)
-------- --------
86,856 83,276
-------- --------
$159,969 $139,877
-------- --------
-------- --------
<PAGE>
IMCO RECYCLING INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
(In thousands, except per share data)
<TABLE>
For the three months For the nine months
ended September 30, ended September 30,
-------------------- --------------------
<S> <C> <C> <C> <C>
1996 1995 1996 1995
------- ------- -------- -------
REVENUES $53,689 $32,105 $154,872 $92,576
Cost of sales 51,064 24,322 136,550 70,043
------- ------- -------- -------
GROSS PROFIT 2,625 7,783 18,322 22,533
Selling, general and
administrative expense 2,695 2,221 8,564 6,868
Interest expense 969 158 2,559 671
Interest income (137) (139) (519) (306)
Equity in (earnings) loss of joint ventures 103 - (320) -
------- ------- -------- -------
INCOME (LOSS) BEFORE PROVISION FOR
INCOME TAXES (1,005) 5,543 8,038 15,300
Provision (benefit) for income taxes (207) 2,216 3,275 6,120
------- ------- -------- -------
NET EARNINGS (LOSS) $ (798) $ 3,327 $ 4,763 $ 9,180
------- ------- -------- -------
------- ------- -------- -------
Net earnings (loss) per common share ($0.07) $ 0.27 $ 0.39 $ 0.76
------- ------- -------- -------
------- ------- -------- -------
Dividends declared per common share $ 0.05 $ 0.035 $ 0.15 $ 0.07
------- ------- -------- -------
------- ------- -------- -------
Weighted average common and common
equivalent shares outstanding 12,009 12,129 12,335 12,020
------- ------- -------- -------
------- ------- -------- -------
</TABLE>
<PAGE>
IMCO RECYCLING INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
For the nine months
ended September 30,
---------------------
1996 1995
-------- --------
OPERATING ACTIVITIES:
Net earnings $ 4,763 $ 9,180
Depreciation and amortization 8,591 6,769
Provision for deferred income taxes 631 1,364
Equity in earnings (loss) of joint ventures (320) -
Other noncash charges 1,473 624
Provision for plant closure 3,577 -
Loss on sale of property and equipment 4 2
Changes in noncash components of working capital
(excluding investing and financing transactions)
Accounts receivable (2,911) 395
Inventories (7,957) (356)
Other current assets (152) (425)
Accounts payable and accrued liabilities (3,793) 4,535
-------- --------
NET CASH FROM OPERATING ACTIVITIES 3,906 22,088
INVESTING ACTIVITIES:
Purchase of property and equipment (9,105) (10,847)
Proceeds from sale of property and equipment 153 68
Acquisitions of businesses and investments in
joint ventures (13,301) (8,559)
Other (1,379) (748)
-------- --------
NET CASH USED BY INVESTING ACTIVITIES (23,632) (20,086)
FINANCING ACTIVITIES:
Net proceeds from short-term borrowings - 3,500
Proceeds from long-term debt 20,475 5,000
Principal payments of long-term debt (1,593) (955)
Dividends paid (1,778) (1,959)
Tax benefit from the exercise of stock options 782 165
Other 62 123
-------- --------
NET CASH FROM FINANCING ACTIVITIES 17,948 5,874
Net increase (decrease) in cash and cash -------- --------
equivalents (1,778) 7,876
Cash and cash equivalents at January 1 8,678 2,854
-------- --------
Cash and cash equivalents at September 30 $ 6,900 $ 10,730
-------- --------
-------- --------
SUPPLEMENTARY INFORMATION:
Cash payments for interest $ 1,466 $ 701
Cash payments for income taxes $ 7,440 $ 4,740
<PAGE>
IMCO RECYCLING INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
SEPTEMBER 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 nine-month period ended September 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:
(In thousands)
September 30 December 31,
1996 1995
------------ ------------
Finished goods $ 11,946 $ 6,839
Raw materials 3,876 1,986
Supplies 255 321
--------- --------
$ 16,077 $ 9,146
--------- --------
--------- --------
NOTE C - LONG-TERM DEBT
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 fixed interest at the rate of 7.41% per annum 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 a 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
annually. Income from this joint venture is recorded on the Company's books
as equity in earnings (loss) of joint ventures.
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 "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS."
<PAGE>
NOTE D - PROVISION FOR PLANT CLOSURE
During the third quarter of 1996, the Company recorded a charge in cost of
sales totaling $3,577,000 resulting from management's decision to shut down
the Company's Corona, California aluminum recycling plant. The California
facility had operated far below its capacity and had recorded losses
throughout 1996. Furthermore, while operating efficiency had improved, demand
for aluminum from the Far East, the plant's largest market, virtually
disappeared.
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. However, 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 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 nine month periods ended September 30:
Three months ended Nine months ended
September 30, September 30,
-------------------- ----------------------
1996 1995 1996 1995
-------- -------- ---------- --------
(In thousands, except percentages)
Pounds of Metal Processed 365,387 322,332 1,104,431 941,861
Percentage of Pounds Tolled 82% 95% 84% 96%
Revenues $ 53,689 $ 32,105 $ 154,872 $ 92,576
Gross Profit $ 2,625 $ 7,783 $ 18,322 $ 22,533
<PAGE>
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO THREE MONTHS ENDED
SEPTEMBER 30, 1995 AND NINE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO NINE
MONTHS ENDED SEPTEMBER 30, 1995
The Company processed 13% more metal for the three month period and 17% more
metal in the nine month period, both ending September 30, 1996 than it did
in the same periods 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. Partially offsetting these
increases, however, were the results from the Corona, California plant, where
year-to-date processing was 50% lower than in the comparable period of 1995,
and third quarter volumes were 62% below last year's total, both due to
unfavorable market conditions on the U.S. West Coast for recycling used
beverage containers (UBC's). As a result of these conditions, which the
Company viewed as permanent in nature, the Company decided in the third
quarter to permanently close the Corona plant and cease all recycling
activities there. See the gross profit discussion below. In addition, the
Company's Rockwood facility was 11% and 6% below last year's processing
results for the three and nine month periods ending September 30, 1996,
respectively. The reduction at Rockwood was due to a decline in demand from
the U.S. can sheet markets, this plant's principal market. The Company's
other aluminum plants processed approximately the same amount of material in
both the three and nine month periods ending September 30, 1996 as they did
in the same periods of 1995.
Revenues increased 67% in both the three and nine month periods ending
September 30, 1996 compared to the same periods of 1995. These increases in
revenues are higher than the increases in processing volumes discussed above,
because most of the increased processing volume was due to a relative
increase in 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. Increased
buy-sell business exposes the Company to a greater degree of market risk
because of fluctuations in prices for the scrap metals the Company buys for
its raw material and the then-prevailing aluminum market prices the Company
can obtain in selling the processed aluminum.
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 1995
acquisitions of its Chicago Heights, Illinois and Sikeston, Missouri plants,
both of 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 82% and 84% of
the Company's processing for the respective three and nine month periods
ending September 30, 1996, compared to 95% and 96% for the corresponding
three and nine 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.
<PAGE>
Magnesium revenues and volumes processed were about 29% and 18% higher,
respectively, for the first nine 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 anodes sold in 1996 compared to 1995. Zinc revenues
increased about 25% while volume increased 2% for the first nine months
ending September 30, 1996 compared to the corresponding period for 1995. 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, which had the effect of increasing revenues as discussed
above.
Gross profit was $2,625,000 for the three months and $18,322,000 for the nine
months ended September 30, 1996, compared to $7,783,000 and $22,533,000
respectively, during the same periods of 1995. During the third quarter of
1996, the Company recorded charges in cost of sales totaling $4,177,000.
These third quarter charges resulted from management decisions to shut down
the Company's Corona, California aluminum recycling plant and to accelerate
the closure of the first cell of a company-owned landfill in Morgantown,
Kentucky. The California facility had operated far below its capacity and had
recorded losses throughout 1996. Furthermore, while operating efficiency had
improved, demand for aluminum from the Far East, the plant's largest market,
virtually disappeared. Before these third quarter charges to cost of sales,
gross profit for the three month period ending September 30, 1996 was
$6,802,000 or about 13% lower than 1995's third quarter gross profits, and
$22,499,000 for the nine month period ended on the same date which was
slightly lower than 1995's nine month period. The decline in gross profits
was due to higher costs of operations and because the Corona and Bedford
plants experienced lower operating rates than anticipated. In addition, gross
profit was negatively impacted in the first nine months of 1996 by declining
market prices for aluminum. As discussed above, the Company currently 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 $2,695,000 for the three
month period and $8,564,000 for the nine month period ending September 30,
1996. These compared to $2,221,000 and $6,868,000 for the same periods of
1995. Increased employee costs were primarily due to higher headcount,
resulting principally from the fourth quarter 1995 acquisitions.
Net interest was an expense of $832,000 for the third quarter and $2,040,000
year-to-date 1996. This compares to net interest expense of $19,000 and
$365,000 respectively for the same periods of 1995. Net interest expense was
higher due to higher amounts of debt outstanding in 1996 than in 1995. See
"LIQUIDITY AND CAPITAL RESOURCES."
The special pre-tax charges discussed above of $4,177,000 caused a $1,005,000
net loss before the provision for taxes in the third quarter of 1996 and
reduced the year-to-date 1996 profit before tax to $8,038,000. Before such
charges, net income before taxes was $3,172,000 and $12,215,000,
respectively, for the three and nine months ended September 30, 1996.
Compared to the same periods in 1995, net income before the provision for
taxes declined 43% for the third quarter and declined 20% for the nine month
period.
Due to the factors discussed above, the Company reported a net loss of
$798,000 and net earnings of $4,763,000 for the three and nine months ended
September 30, 1996, respectively. Before the third quarter charges discussed
above, net earnings were $1,912,000 for the three month period and $7,473,000
for the nine month period ending September 30, 1996. This represents
decreases of 43% and 19%, respectively, compared to net earnings of
$3,327,000 and $9,180,000 for the corresponding 1995 periods.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Operations provided cash of $3,906,000 during the first nine months of 1996,
compared to providing cash of $22,088,000 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 $14,813,000 of cash, while
in 1995, working capital provided cash of $4,149,000. The change in usage of
working capital was due to the increases in buy/sell transactions which
results in increases in receivables and inventories. As discussed above, net
earnings for the nine months ended September 30, 1996 was $4,763,000 which
was approximately half of 1995's earnings of $9,180,000, which also caused a
reduction in cash provided from operating activities, but offsetting this
decline was an increase in noncash charges, most of which related to closing
the Corona, California plant and accelerating the write-off of the Kentucky
landfill cell.
The Company's total capital spending for property, plant and equipment in the
first nine months of 1996 was $9,105,000, compared to $10,847,000 spent in
the first nine months 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 $17,000,000. The majority of this spending will be in
connection with the new aluminum recycling facility the Company is
constructing in 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 the second quarter of 1996,
the Company funded its portion of a 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 in earnings (loss) of joint ventures. Also in the second quarter
of 1996, the Company borrowed $15,000,000 under terms previously negotiated
with The Mutual Life Insurance Company of New York. Most of these proceeds
were used to fund the Company's portion of the VAW-IMCO joint venture.
On May 8, 1996, the Company borrowed 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."
The Company has a $12,000,000 working capital line of credit which expires
May 31, 1997. At September 30, 1996, there were no outstanding borrowings
under this working capital line of credit.
Financing activities in the first nine months of 1996 also included the
repayment of $1,593,000 in long-term debt and the payment of $1,778,000 in
dividends.
At September 30, 1996, the relationship of current assets to current
liabilities, or current ratio, was 3.31 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.
The Company believes 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.
<PAGE>
CAUTIONARY STATEMENT FOR PURPOSES OF FORWARD-LOOKING STATEMENTS
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 facilities, expectations of the future
mix of buy/sell business as opposed to tolling business, discussions about
future costs, the price of aluminum on world markets 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
those that prevailed in the first quarter of 1996, and general
economic and financial market conditions. 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 September 30, 1996, and for
the nine months then ended prior to filing and their report is included
herein.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) The following exhibits are included herein:
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: November 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 September 30, 1996, and the related consolidated
statements of earnings for the three-month and nine-month periods ended
September 30, 1996, and 1995, and the consolidated statements of cash flows
for the nine-month periods ended September 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, 1995, and the related consolidated statements of earnings,
stockholders' equity, and cash flows for the year ended December 31, 1995,
(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 condensed
consolidated 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
October 31, 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 Inc. Amended and
Restated Stock Option Plan, and 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 in the
Registration Statement (Form S-8 No. 333-07091) pertaining to the IMCO
Recycling Inc. Annual Incentive Plan of our report dated October 31, 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 September 30, 1996.
Pursuant to Rule 436(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.
November 12, 1996
Dallas, Texas
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CIK> 0000202890
<NAME> IMCO RECYCLING INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 6,900
<SECURITIES> 0
<RECEIVABLES> 30,330
<ALLOWANCES> 0
<INVENTORY> 16,077
<CURRENT-ASSETS> 56,022
<PP&E> 119,206
<DEPRECIATION> (40,235)
<TOTAL-ASSETS> 159,969
<CURRENT-LIABILITIES> 16,934
<BONDS> 48,658
0
0
<COMMON> 1,202
<OTHER-SE> 85,654
<TOTAL-LIABILITY-AND-EQUITY> 159,969
<SALES> 154,872
<TOTAL-REVENUES> 154,872
<CGS> 136,550
<TOTAL-COSTS> 136,550
<OTHER-EXPENSES> 8,564
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,559
<INCOME-PRETAX> 8,038
<INCOME-TAX> 3,275
<INCOME-CONTINUING> 4,763
<DISCONTINUED> 0
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<CHANGES> 0
<NET-INCOME> 4,763
<EPS-PRIMARY> .39
<EPS-DILUTED> .39
</TABLE>
