Guarantor Information

3 Months Ended

Mar. 31, 2015

Guarantor Information

On November 20, 2012, GrafTech International Ltd. (the “Parent”) issued $300 million aggregate principal amount of Senior Notes. The Senior Notes mature on November 15, 2020 and bear interest at a rate of 6.375% per year, payable semi-annually in arrears on May 15 and November 15 of each year. The Senior Notes have been guaranteed on a senior basis by the following wholly-owned direct and indirect subsidiaries of the Parent: GrafTech Finance Inc., GrafTech Holdings Inc., GrafTech USA LLC, Seadrift Coke LLP, Fiber Materials, Inc., Intermat, GrafTech Global Enterprises Inc., GrafTech International Holdings Inc., GrafTech DE LLC, GrafTech Seadrift Holding Corp, GrafTech International Trading Inc., GrafTech Technology LLC, GrafTech NY Inc., and Graphite Electrode Network LLC.

The guarantors of the Senior Notes, solely in their respective capacities as such, are collectively called the “Guarantors.” Our other subsidiaries, which are not guarantors of the Senior Notes, are called the “Non-Guarantors.”

All of the guarantees are unsecured. All of the guarantees are full, unconditional (subject to limited exceptions described below) and joint and several. Each of the Guarantors are 100% owned, directly or indirectly, by the Parent. All of the guarantees of the Senior Notes continue until the Senior Notes have been paid in full, and payment under such guarantees could be required immediately upon the occurrence of an event of default under the Senior Notes. If a Guarantor makes a payment under its guarantee of the Senior Notes, it would have the right under certain circumstances to seek contribution from the other Guarantors.

The Guarantors will be released from the guarantees upon the occurrence of certain events, including the following: the unconditional release or discharge of any guarantee or indebtedness that resulted in the creation of the guarantee of the Senior Notes by such Guarantor; the sale or other disposition, including by way of merger or consolidation or the sale of its capital stock, following which such Guarantor is no longer a subsidiary of the Parent; or the Parent's exercise of its legal defeasance option or its covenant defeasance option as described in the indenture applicable to the Senior Notes. If any Guarantor is released, no holder of the Senior Notes will have a claim as a creditor against such Guarantor. The indebtedness and other liabilities, including trade payables and preferred stock, if any, of each Guarantor are effectively senior to the claim of any holders of the Senior Notes.

Investments in subsidiaries are recorded on the equity basis.

The following tables set forth condensed consolidating balance sheets as of December 31, 2014 and March 31, 2015 and condensed consolidating statements of operations and comprehensive income for the three months ended March 31, 2014 and 2015 and condensed consolidating statements of cash flows for the three months ended March 31, 2014 and 2015 of the Parent Guarantors and the Non-Guarantors.



CONDENSED CONSOLIDATING BALANCE SHEETS
As of December 31, 2014
(in thousands)

							Consolidating
					Non-		Entries and
	Parent		Guarantors		Guarantors		Eliminations			Consolidated
ASSETS
Current Assets:
Cash and cash equivalents	$	—	$	5,503	$	12,047	$	—		$	17,550
Accounts receivable - affiliates	40,474		35,618		40,185		(116,277		)	—
Accounts receivable - trade	—		45,861		117,058		—			162,919
Inventories	—		148,080		234,823		—			382,903
Prepaid and other current assets	—		17,336		64,287		—			81,623
Total current assets	40,474		252,398		468,400		(116,277		)	644,995

Investment in affiliates	1,414,278		762,251		—		(2,176,529		)	—
Property, plant and equipment	—		431,602		222,438		—			654,040
Deferred income taxes	—		—		16,819		—			16,819
Goodwill	—		217,099		203,030		—			420,129
Notes receivable - affiliate	35,722		7,413		—		(43,135		)	—
Other assets	4,110		45,617		48,095		—			97,822
Total Assets	$	1,494,584	$	1,716,380	$	958,782	$	(2,335,941	)	$	1,833,805

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable - affiliate	$	—	$	80,659	$	35,618	$	(116,277	)	$	—
Accounts payable - trade	47		35,435		50,927		—			86,409
Short-term debt	187,973		131		—		—			188,104
Accrued income and other taxes	344		3,380		20,782		—			24,506
Rationalizations	—		7,538		2,025		—			9,563
Supply chain financing liability	—		—		—		—			—
Other accrued liabilities	2,444		15,252		25,623		—			43,319
Total current liabilities	190,808		142,395		134,975		(116,277		)	351,901

Long-term debt - affiliate	—		35,722		7,413		(43,135		)	—
Long-term debt - third party	300,000		40,393		1,222		—			341,615
Other long-term obligations	—		77,724		29,842		—			107,566
Deferred income taxes	—		5,118		23,079		—			28,197
Stockholders' equity	1,003,776		1,415,028		762,251		(2,176,529		)	1,004,526
Total Liabilities and Stockholders' Equity	$	1,494,584	$	1,716,380	$	958,782	$	(2,335,941	)	$	1,833,805



CONDENSED CONSOLIDATING BALANCE SHEETS
As of March 31, 2015
(in thousands)

							Consolidating
					Non-		Entries and
	Parent		Guarantors		Guarantors		Eliminations			Consolidated
ASSETS
Current Assets:
Cash and cash equivalents	$	—	$	1,837	$	9,124	$	—		$	10,961
Accounts receivable - affiliates	41,988		18,786		30,911		(91,685		)	—
Accounts receivable - trade	—		36,890		118,218		—			155,108
Inventories	—		145,506		218,646		—			364,152
Prepaid and other current assets	—		13,091		57,384		—			70,475
Total current assets	41,988		216,110		434,283		(91,685		)	600,696

Investment in affiliates	1,338,408		735,037		—		(2,073,445		)	—
Property, plant and equipment	—		427,681		205,658		—			633,339
Deferred income taxes	—		—		14,819		—			14,819
Goodwill	—		181,718		202,718		—			384,436
Notes receivable - affiliate	36,817		7,413		—		(44,230		)	—
Other assets	3,985		44,190		44,198		—			92,373
Total Assets	$	1,421,198	$	1,612,149	$	901,676	$	(2,209,360	)	$	1,725,663

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable - affiliate	$	—	$	72,904	$	18,781	$	(91,685	)	$	—
Accounts payable - trade	43		33,527		46,186		—			79,756
Short-term debt	191,179		132		135		—			191,446
Accrued income and other taxes	—		2,070		15,251		—			17,321
Rationalizations	—		5,820		2,812		—			8,632
Supply chain financing liability	—		—		—		—			—
Other accrued liabilities	7,225		10,930		23,791		—			41,946
Total current liabilities	198,447		125,383		106,956		(91,685		)	339,101

Long-term debt - affiliate	—		36,817		7,413		(44,230		)	—
Long-term debt - third party	300,000		35,360		961		—			336,321
Other long-term obligations	—		71,051		29,932		—			100,983
Deferred income taxes	—		5,130		21,377		—			26,507
Stockholders' equity	922,751		1,338,408		735,037		(2,073,445		)	922,751
Total Liabilities and Stockholders' Equity	$	1,421,198	$	1,612,149	$	901,676	$	(2,209,360	)	$	1,725,663



CONDENSED CONSOLIDATING STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
For the three months ended March 31, 2014
(in thousands)

										Consolidating
							Non-			Entries and
	Parent			Guarantors			Guarantors			Eliminations				Consolidated

Sales - affiliates	$	—		$	70,357		$	35,207		$	(105,564	)		$	—
Sales - third party	—			111,124			169,667			—				280,791
Net sales	—			181,481			204,874			(105,564		)		280,791
Cost of sales	—			157,029			203,632			(105,564		)		255,097
Gross profit	—			24,452			1,242			—				25,694

Research and development	—			2,770			—			—				2,770
Selling and administrative expenses	—			9,867			20,040			—				29,907
Rationalizations	—			36			50			—				86
Operating income (loss)	—			11,779			(18,848		)	—				(7,069		)

Other (income) expense, net	—			824			(30		)	—				794
Interest expense - affiliate	—			226			—			(226		)		—
Interest expense - third party	7,952			740			307			—				8,999
Interest income - affiliate	(226		)	—			—			226				—
Interest income - third party	—			—			(58		)	—				(58		)
Income (loss) before income taxes	(7,726		)	9,989			(19,067		)	—			`	(16,804		)

Provision for income taxes	(2,781		)	4,552			(7,058		)	—				(5,287		)
Equity in earnings of subsidiary	(6,572		)	(12,009		)	—			18,581				—
Net (loss) income	$	(11,517	)	$	(6,572	)	$	(12,009	)	$	18,581			$	(11,517	)

Statements of Comprehensive Income

Net (loss) income	$	(11,517	)	$	(6,572	)	$	(12,009	)	$	18,581			$	(11,517	)
Other comprehensive income (loss)	2,072			2,072			2,477			(4,549		)		2,072
Comprehensive (loss) income	$	(9,445	)	$	(4,500	)	$	(9,532	)	$	14,032			$	(9,445	)



CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
For the three months ended March 31, 2015
(in thousands)

										Consolidating
							Non-			Entries and
	Parent			Guarantors			Guarantors			Eliminations				Consolidated

Sales - affiliates	$	—		$	51,184		$	26,775		$	(77,959	)		$	—
Sales - third party	—			72,021			135,190			—				207,211
Net sales	—			123,205			161,965			(77,959		)		207,211
Cost of sales	—			116,589			147,818			(77,959		)		186,448
Gross profit	—			6,616			14,147			—				20,763

Research and development	—			2,431			—			—				2,431
Selling and administrative expenses	—			14,441			11,849			—				26,290
Impairments	—			35,381			—			—				35,381
Rationalizations	—			326			2,168			—				2,494
Operating loss	—			(45,963		)	130			—				(45,833		)

Other expense (income), net	—			309			84			—				393
Interest expense - affiliate	—			160			—			(160		)		—
Interest expense - third party	8,162			665			94			—				8,921
Interest income - affiliate	(160		)	—			—			160				—
Interest income - third party	—			—			(73		)	—				(73		)
Loss before income taxes	(8,002		)	(47,097		)	25			—			`	(55,074		)

(Benefit from) provision for income taxes	—			351			183			—				534
Equity in losses of subsidiary	(47,606		)	(158		)	—			47,764				—
Net (loss) income	$	(55,608	)	$	(47,606	)	$	(158	)	$	47,764			$	(55,608	)

Statements of Comprehensive Income

Net (loss) income	$	(55,608	)	$	(47,606	)	$	(158	)	$	47,764			$	(55,608	)
Other comprehensive income (loss)	(28,766		)	(28,766		)	(28,830		)	57,596				(28,766		)
Comprehensive (loss) income	$	(84,374	)	$	(76,372	)	$	(28,988	)	$	105,360			$	(84,374	)



CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
For the three months ended March 31, 2014
(in thousands)
										Consolidating
							Non-			Entries and
	Parent			Guarantors			Guarantors			Eliminations			Consolidated
Net cash provided by (used in) operating activities:	$	496		$	31,748		$	(10,154	)	$	—		$	22,090

Cash flow from investing activities:
(Loans to) repayments from affiliates	(1,355		)	—			—			1,355			—
Capital expenditures	—			(16,486		)	(5,242		)	—			(21,728		)
Proceeds from derivative instruments	—			(258		)	(109		)	—			(367		)
Proceeds from sale of fixed assets				714			1,181						1,895
Insurance recoveries	—			—			3,057			—			3,057
Net cash (used in) provided by investing activities	(1,355		)	(16,030		)	(1,113		)	1,355			(17,143		)

Cash flow from financing activities:
Loans from (repayments to) affiliates	—			1,355			—			(1,355		)	—
Short-term debt borrowings	—			(11		)	(983		)	—			(994		)
Revolving Facility borrowings	—			30,000			45,000			—			75,000
Revolving Facility reductions	—			(46,000		)	(19,000		)	—			(65,000		)
Principal payments on long term debt	—			(32		)	(60		)	—			(92		)
Supply chain financing	—			—			(9,455		)	—			(9,455		)
Proceeds from exercise of stock options	82			—			—			—			82
Purchase of treasury shares	(141		)	—			—			—			(141		)
Other	918			—			—			—			918
Net cash provided by (used in) financing activities	859			(14,688		)	15,502			(1,355		)	318

Net increase in cash and cash equivalents	—			1,030			4,235			—			5,265
Effect of exchange rate changes on cash and cash equivalents	—			—			171			—			171
Cash and cash equivalents at beginning of period	—			4,752			7,136			—			11,888
Cash and cash equivalents at end of period	$	—		$	5,782		$	11,542		$	—		$	17,324



CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
For the three months ended March 31, 2015
(in thousands)
										Consolidating
							Non-			Entries and
	Parent			Guarantors			Guarantors			Eliminations			Consolidated
Net cash (used in) provided by operating activities:	$	1,136		$	17,731		$	3,851		$	—		$	22,718

Cash flow from investing activities:
Repayments from affiliates	(1,095		)	—			—			1,095			—
Capital expenditures	—			(8,777		)	(4,824		)	—			(13,601		)
Payments for (proceeds from) derivatives	—			(6,776		)	(827		)	—			(7,603		)
Proceeds from sale of assets	—			394			127			—			521
Insurance recoveries	—			—			—			—			—
Net cash provided by (used in) investing activities	(1,095		)	(15,159		)	(5,524		)	1,095			(20,683		)

Cash flow from financing activities:
Repayments to affiliates	—			1,095			—			(1,095		)	—
Short-term debt borrowings	—			1			—			—			1
Revolving Facility borrowings	—			27,000			—			—			27,000
Revolving Facility reductions	—			(32,000		)	—			—			(32,000		)
Principal payments on long term debt	—			(33		)	—			—			(33		)
Supply chain financing	—			—			—			—			—
Proceeds from exercise of stock options	—			—			—			—			—
Purchase of treasury shares	(41		)	—			—			—			(41		)
Revolver facility refinancing	—			(2,247		)	—			—			(2,247		)
Other	—			(54		)	—			—			(54		)
Net cash provided by (used in) financing activities	(41		)	(6,238		)	—			(1,095		)	(7,374		)

Net increase in cash and cash equivalents	—			(3,666		)	(1,673		)	—			(5,339		)
Effect of exchange rate changes on cash and cash equivalents	—			—			(1,250		)	—			(1,250		)
Cash and cash equivalents at beginning of period	—			5,503			12,047			—			17,550
Cash and cash equivalents at end of period	$	—		$	1,837		$	9,124		$	—		$	10,961