10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2016

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File Number: 001-33658

Horsehead Holding Corp.

(Exact Name of Registrant as Specified in Its Charter)

Delaware	20-0447377
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
4955 Steubenville Pike, Suite 405 Pittsburgh, Pennsylvania 15205	(724) 774-1020
(Address of Principal Executive Offices, including Zip Code)	(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  ¨    No  x

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ¨    No  x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (Check one).

Large accelerated Filer	x	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

The number of shares outstanding of the issuer’s common stock as of September 29, 2016 was 60,352,479.

TABLE OF CONTENTS

PART I – Financial Information
Item 1.	Financial Statements
	Consolidated Balance Sheets as of June 30, 2016 (Unaudited) and December 31, 2015	1
	Consolidated Statements of Operations (Unaudited) for the three and six months ended June 30, 2016 and 2015	2
	Consolidated Statements of Comprehensive Loss (Unaudited) for the three and six months ended June 30, 2016 and 2015	3
	Consolidated Statement of Stockholders’ Equity (Unaudited) for the six months ended June 30, 2016	4
	Consolidated Statements of Cash Flows (Unaudited) for the six months ended June 30, 2016 and 2015	5
	Notes to Consolidated Financial Statements (Unaudited)	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	48
Item 4.	Controls and Procedures	49
PART II – Other Information
Item 1.	Legal Proceedings	50
Item 1A.	Risk Factors	50
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	50
Item 3.	Defaults Upon Senior Securities	50
Item 4.	Mine Safety Disclosures	50
Item 5.	Other Information	50
Item 6.	Exhibits	51

i

CAUTIONARY STATEMENT FOR PURPOSES OF THE SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

This report contains forward-looking statements within the meaning of the federal securities laws. These statements relate to analyses and other information, which are based on forecasts of future results and estimates of amounts not yet determinable. These statements also relate to our future prospects, developments and business strategies.

These forward looking statements are identified by the use of terms and phrases such as “anticipate”, “believe”, “could”, “estimate”, “expect”, “intend”, “may”, “plan”, “predict”, “project”, and similar terms and phrases, including references to assumptions. However, these words are not the exclusive means of identifying such statements. These statements are contained in many sections of this report (including “Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations”). Although we believe that our plans, intentions and expectations reflected in or suggested by such forward-looking statements are reasonable, we cannot assure you that we will achieve those plans, intentions or expectations. We believe that the following factors, among others (including those described in “Part II, Item 1A. Risk Factors”), could affect our future performance and cause our actual results to differ materially from those expressed or implied by forward-looking statements made by us or on our behalf: our filing of voluntary petitions for relief under the Bankruptcy Code and the attendant difficulties of operating our business while attempting to reorganize in bankruptcy; our ability to maintain sufficient financing sources to fund our business and meet obligations during the Chapter 11 Cases; our ability to emerge from bankruptcy; our ability to continue as a going concern and the uncertainty regarding the eventual outcome of our restructuring; our ability to implement our business plan and financial restructuring strategy successfully; declines in the prices of zinc and nickel-based products; our ability to resolve the operational issues at our idled Mooresboro facility if it resumes operations and if it becomes fully operational; our ability to produce Special High Grade zinc; our ability to reduce certain operating costs; the cyclical nature of the metals industry; and competition from global zinc and nickel manufacturers.

There may be other factors that may cause our actual results to differ materially from the forward-looking statements. Our actual results, performance or achievements could differ materially from those expressed in, or implied by, the forward-looking statements. We can give no assurances that any of the events anticipated by the forward-looking statements will occur or, if any of them does, what impact they will have on our results of operations and financial condition. You should carefully read the factors described in the “Risk Factors” section of our Annual Report on Form 10-K for the fiscal year ended December 31, 2015, which was filed with the SEC on September 29, 2016, for a description of certain risks that could, among other things, cause our actual results to differ from these forward-looking statements.

All forward-looking statements are qualified in their entirety by this cautionary statement, and we undertake no obligation to revise or update this Quarterly Report on Form 10-Q to reflect events or circumstances after the date hereof.

ii

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Horsehead Holding Corp. and Subsidiaries

DEBTOR-IN-POSSESSION

CONSOLIDATED BALANCE SHEETS

June 30, 2016 (Unaudited) and December 31, 2015

(Amounts in thousands, except per share amounts)

	June 30, 2016			December 31, 2015
ASSETS
Current assets
Cash	$	16,844		$	25,675
Accounts receivable, net of allowance of $432 and $555, respectively		40,982			42,044
Inventories		25,205			40,491
Prepaid expenses and other current assets		8,978			10,115
Total current assets		92,009			118,325
Property, plant and equipment, net		197,768			254,841
Other assets
Intangible assets, net		9,082			9,451
Restricted cash		7,939			7,939
Other assets		1,945			1,496
Total other assets		18,966			18,886
Total assets	$	308,743		$	392,052
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities—Not Subject to Compromise
Current maturities of long-term debt	$	26,888		$	433,079
Debtor-in-possession financing		57,500			—
Accounts payable		24,837			64,098
Accrued expenses		31,141			24,830
Total current liabilities		140,366			522,007
Liabilities Subject to Compromise		429,465			—
Other long-term liabilities		15,233			15,505
Deferred income taxes		3,113			3,113
Commitments and contingencies
Stockholders’ deficit
Common stock, par value $0.01 per share; 100,000 shares authorized; 60,352 and 60,174 shares issued and outstanding in 2016 and 2015, respectively		602			602
Preferred stock, par value $0.01 per share; 10,000 shares authorized; no shares issued or outstanding		—			—
Additional paid-in capital		402,409			396,750
Retained deficit		(682,690	)		(550,011	)
Accumulated other comprehensive income		245			247
Total stockholders’ deficit before noncontrolling interest		(279,434	)		(152,412	)
Noncontrolling interest		—			3,839
Total stockholders’ deficit		(279,434	)		(148,573	)
Total liabilities and stockholders’ deficit	$	308,743		$	392,052

The accompanying notes to financial statements are an integral part of these statements.

1

Horsehead Holding Corp. and Subsidiaries

DEBTOR-IN-POSSESSION

CONSOLIDATED STATEMENTS OF OPERATIONS

For the three and six months ended June 30, 2016 and 2015

(Unaudited)

(Amounts in thousands except per share amounts)

	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
Net sales of zinc material and other goods	$	64,581		$	99,239		$	125,066		$	181,907
Net sales of nickel-based material and other services		7,563			14,422			16,587			24,531
EAF dust service fees		9,803			9,137			19,397			18,504
Net sales		81,947			122,798			161,050			224,942
Cost of sales of zinc material and other goods		67,458			92,014			143,273			183,194
Cost of sales of nickel-based material and other services		5,947			8,621			13,339			16,242
Cost of EAF dust services		7,506			7,525			14,263			14,847
Cost of sales (excluding depreciation and amortization)		80,911			108,160			170,875			214,283
Gain on asset dispositions		—			(12,152	)		—			(11,873	)
Impairment loss		—			—			54,266			—
Depreciation and amortization		5,716			15,149			11,858			26,990
Selling, general and administrative expenses		5,378			6,796			12,925			13,574
Total costs and expenses		92,005			117,953			249,924			242,974
Income (Loss) from operations		(10,058	)		4,845			(88,874	)		(18,032	)
Other income (expense):
Interest expense		(3,328	)		(9,114	)		(15,109	)		(18,228	)
Interest and other income		(97	)		103			2,097			712
Total other income (expense)		(3,425	)		(9,011	)		(13,012	)		(17,516	)
Reorganization items, net		(15,689	)		—			(31,081	)		—
Loss before income taxes		(29,172	)		(4,166	)		(132,967	)		(35,548	)
Income tax benefit		(62	)		(547	)		(288	)		(13,435	)
NET LOSS	$	(29,110	)	$	(3,619	)	$	(132,679	)	$	(22,113	)
Loss per common share:
Basic and diluted	$	(0.48	)	$	(0.06	)	$	(2.20	)	$	(0.40	)
Weighted average shares outstanding:
Basic and diluted		60,352			56,661			60,345			55,756

The accompanying notes to financial statements are an integral part of these statements.

2

Horsehead Holding Corp. and Subsidiaries

DEBTOR-IN-POSSESSION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

For the three and six months ended June 30, 2016 and 2015

(Unaudited)

(Amounts in thousands except per share amounts)

	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
Net loss	$	(29,110	)	$	(3,619	)	$	(132,679	)	$	(22,113	)
Other comprehensive loss, net of tax:
Net pension adjustment		(1	)		(1	)		(2	)		(3	)
Comprehensive loss	$	(29,111	)	$	(3,620	)	$	(132,681	)	$	(22,116	)

The accompanying notes to financial statements are an integral part of these statements.

3

Horsehead Holding Corp. and Subsidiaries

DEBTOR-IN-POSSESSION

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT

For the six months ended June 30, 2016

(Unaudited)

(Amounts in thousands)

											Accumulated Other Comprehensive (Loss) Income
	Common Stock				Additional Paid-In Capital			Retained Deficit						Noncontrolling interest			Total
	Shares		Amount
Balance at December 31, 2015		60,174	$	602	$	396,750		$	(550,011	)	$	247		$	3,839		$	(148,573	)
Restricted stock vesting		178		—		—			—			—			—			—
Stock compensation expense		—		—		2,047			—			—			—			2,047
Distribution to noncontrolling interests		—		—		—			—			—			(170	)		(170	)
Reclass of noncontrolling interest		—		—		3,669			—			—			(3,669	)		—
Restricted stock withheld for taxes		—		—		(57	)		—			—			—			(57	)
Comprehensive loss, net of tax		—		—		—			(132,679	)		(2	)		—			(132,681	)
Balance at June 30, 2016		60,352	$	602	$	402,409		$	(682,690	)	$	245		$	—		$	(279,434	)

The accompanying notes to financial statements are an integral part of these statements

4

Horsehead Holding Corp. and Subsidiaries

DEBTOR-IN-POSSESSION

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the six months ended June 30, 2016 and 2015

(Unaudited)

(Amounts in thousands)

	2016			2015
Cash Flows from Operating Activities:
Net loss	$	(132,679	)	$	(22,113	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		11,858			26,990
Deferred income tax benefit		—			(14,508	)
Accretion on debt		357			1,889
Accretion of deferred purchase obligation		200			207
Amortization of deferred finance costs		459			1,570
Impairment loss		54,266			0
Gain on asset dispositions		—			(11,873	)
Loss on writedown of inventory supplies		1,212			—
Losses (gains) on derivative financial instruments		(21	)		(9,766	)
Lower of cost or market adjustment to inventories		—			3,627
Stock compensation expense		2,047			2,747
Capitalization of interest		—			(1,495	)
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable, net		1,062			(3,775	)
(Increase) decrease in inventories, net		14,074			(7,023	)
Decrease (increase) in prepaid expenses and other current assets		(3,568	)		1,045
Decrease (increase) in other assets		(455	)		179
(Decrease) increase in accounts payable		28,632			(7,074	)
(Decrease) increase in accrued expenses		11,281			(5,468	)
(Decrease) increase in other long-term liabilities		(472	)		(1,125	)
Net cash used in operating activities		(11,747	)		(45,966	)
Cash Flows from Investing Activities:
Purchase of property, plant and equipment		(8,679	)		(15,100	)
Proceeds related to the sale of land		—			9,000
Net cash used in investing activities		(8,679	)		(6,100	)
Cash Flows from Financing Activities:
Net proceeds from the issuance of stock		—			69,622
Proceeds from DIP financing		57,500			—
Proceeds from issuance of debt		5,000			—
Distributions to noncontrolling interest equity holders		(170	)		(113	)
Borrowings on the Credit Facilities		8,431			42,300
Repayments on the Credit Facilities		(58,494	)		(38,130	)
Debt issuance costs		—			(10	)
Borrowings on the Credit Agreement		—			381
Repayments on the Credit Agreement		—			(1,521	)
Proceeds from the exercise of stock options		—			33
Tax effect of share based compensation award exercise and vesting		—			276
Restricted stock withheld for taxes		(57	)		(441	)
Exercise of New Market Tax Credit Purchase Option		(360	)		—
Other		(255	)		—
Net cash provided by financing activities		11,595			72,397
Net increase (decrease) in cash and cash equivalents		(8,831	)		20,331
Cash at beginning of period		25,675			30,714
Cash at end of period	$	16,844		$	51,045
Noncash adjustments:
Reclass Debt to Liabilities subject to compromise		356,984			—
Reclass Accounts Payable to Liabilities subject to compromise		67,893			—
Reclass other Liabilities to Liabilities subject to compromise		4,588			—
Reclass of Noncontrolling Interest		3,669			—

The accompanying notes to financial statements are an integral part of these statements.

5

HORSEHEAD HOLDING CORP. AND SUBSIDIARIES

DEBTOR-IN-POSSESSION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands except per share amounts)

NOTE A—BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements of Horsehead Holding Corp. and its subsidiaries as of June 30, 2016 and for the three and six months ended June 30, 2016 and 2015 have been prepared pursuant to the applicable rules and regulations of the Securities and Exchange Commission (“SEC”). 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 three and six months ended June 30, 2016 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2016. The accompanying financial statements include the accounts of Horsehead Holding Corp. and all of its subsidiaries (collectively referred to as the “Company”, “we”, “us” or “our” or similar terms). All 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 fiscal year ended December 31, 2015.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The more significant items requiring the use of management estimates and assumptions relate to inventory reserves, bad debt reserves, environmental and asset retirement obligations, workers’ compensation liabilities, reserves for contingencies and litigation and fair value of financial instruments and business acquisitions. Management bases its estimates on the Company’s historical experience and its expectations of the future and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from those estimates.

Chapter 11 Bankruptcy Filings

On February 2, 2016, the Company and certain of its subsidiaries (the “Debtors”) filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”) in the U.S. Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”). The Debtors continue to operate their businesses as debtors-in-possession subject to the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. The commencement of the Debtors’ Chapter 11 cases constituted events of default that rendered the financial obligations under the Company’s series of notes automatically and immediately due and payable, subject to the imposition of the automatic stay arising pursuant to Section 362 of the Bankruptcy Code. As a result of the Chapter 11 cases, the Company has reclassified all related debt as current at December 31, 2015. See Footnote B – Voluntary Reorganization Under Chapter 11, Footnote E—Long-Term Debt and Footnote Q—Subsequent Events for additional information on the Debtors’ Chapter 11 petitions and notices of default.

The Company received notices of default in January 2016, under certain of the Company’s credit facilities, as of November 30, 2015 and December 31, 2015. The notices of default rendered the financial obligations under the credit facilities immediately due and payable and the Company, therefore, has reclassified all debt under the credit facilities as current at December 31, 2015 and has written off the remaining deferred finance costs related to debt under the credit facilities as of December 31, 2015.

As a result of the filing of the Bankruptcy Petitions, we have applied the FASB Accounting Standards Codification (“ASC”) 852 Reorganizations in preparing our interim financial statements. ASC 852 requires that financial statements distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. Accordingly, certain expenses, realized gains and losses and provisions for losses that are realized or incurred in the bankruptcy proceedings have been recorded in a reorganization line item in our consolidated statements of operations. In addition, the pre-petition obligations that may be impacted by the bankruptcy reorganization process have been classified on the balance sheet as liabilities subject to compromise. These liabilities are reported as the amounts expected to be allowed by the Bankruptcy Court, even if they may be settled for lesser amounts.

Liquidity and Going Concern

As a result of the Chapter 11 cases and various other factors, including working capital deficits, losses from continuing operations, and defaults and cross-defaults under various credit agreements, there is substantial doubt about the Company’s ability to continue as a going concern. The Company’s financial statements are prepared using accounting principles generally accepted in the United States applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The accompanying historical consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

The Company’s ability to continue as a going concern is dependent on many factors, including the Company’s ability to maintain adequate cash on hand and generate cash from operations for the duration of the Chapter 11 cases, the completion of the Chapter 11 plan of reorganization in a timely manner, and the Company’s ability to achieve profitability following emergence from bankruptcy.

6

HORSEHEAD HOLDING CORP. AND SUBSIDIARIES

DEBTOR-IN-POSSESSION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands except per share amounts)

Fair Value

Fair value is measured using inputs from the three levels of the fair value hierarchy. Classification within the hierarchy is determined based on the lowest level of input that is significant to the fair value measurement.

The three levels are described as follows:

• Level 1—Unadjusted quoted prices in active markets for identical assets and liabilities. Cash and cash equivalents including the money market demand account, accounts receivable, accounts payable, and certain accrued expenses are considered to be in Level 1 of the fair value hierarchy as they approximate their fair value due to the short-term nature of these instruments.

• Level 2—Inputs other than quoted prices included in Level 1 that are observable for the determination of the fair value of the asset or liability, either directly or indirectly. The financial swap and financial option instruments are carried at fair value and are considered to be in Level 2 of the fair value hierarchy. These derivatives are not designated as cash flow hedges and we recognize changes in fair value within the consolidated statements of operations as they occur (see Note L—Accounting for Derivative Instruments and Hedging Activities in our Consolidated Financial Statements). Borrowings under our credit facilities are considered to be in Level 2 of the fair value hierarchy (see Note E—Long Term Debt). The pension assets, which are primarily invested in the Manulife Monthly High Income GIF Fund, are carried at fair value and are considered to be in Level 2 of the fair value hierarchy.

• Level 3—Unobservable inputs that are significant to the determination of fair value of the asset or liability. The Convertible Notes, issued on July 27, 2011, were initially valued at fair value and subsequently are carried at amortized cost. The fair value is considered to be in Level 3 of the fair value hierarchy (see Note E—Long Term Debt). The Senior Secured Notes issued on July 26, 2012, June 3, 2013 and July 29, 2014 were initially valued at fair value and subsequently are carried at amortized cost. The Unsecured Notes issued on July 29, 2014 were issued and are valued at par value. The fair value of these debt issuances are considered to be in Level 3 of the fair value hierarchy (see Note E—Long-Term Debt in our Consolidated Financial Statements). Level 3 inputs are also used in the determination for impairment testing on long-lived assets. Due to the Bankruptcy filing and defaults the debt is impractical to value.

When developing the fair value measurements, we use quoted market prices whenever available or seek to maximize the use of observable inputs and minimize the use of unobservable inputs when quoted market prices are not available.

Recent Accounting Pronouncements

Issued

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326). The pronouncement was issued to provide more decision-useful information about the expected credit losses on financial instruments and changes the loss impairment methodology. This pronouncement is effective for reporting periods beginning after December 15, 2019 using a modified retrospective adoption method. A prospective transition approach is required for debt securities for which an other-than-temporary impairment had been recognized before the effective date. The adoption of ASU 2016-13 is not expected to have a significant impact on the Company’s consolidated financial position or results of operations.

In March 2016 the FASB issued ASU No. 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”). ASU No. 2016-09 affects all entities that issue share-based payment awards to their employees and simplifies several aspects of the accounting for share-based payment transactions, including income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows, including recognizing all excess tax benefits and tax deficiencies as income tax expense or benefit in the income statement rather than in additional paid-in capital. ASU No. 2016-09 is effective for financial statements issued for annual reporting periods beginning after December 15, 2016 and interim periods within those years. Earlier application is permitted. The impact from adoption of the new requirements of ASU No. 2016-09 on the Company’s consolidated financial position or results of operations has not yet been determined.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”). ASU No. 2016-02 affects any entity that enters into a lease (as that term is defined in the ASU) and its guidance supersedes Topic 840, Leases. ASU No. 2016-02 requires lessees to recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, in the statement of financial position. For finance leases, lessees are required to recognize interest on the lease liability separately from amortization of the right-of-use asset in the statement of operations and classify repayments of the principal portion of the lease liability within financing activities and payments of interest on the lease liability and variable lease payments within operating activities in the statement of cash flows. For operating leases, lessees are required to recognize a single lease cost, calculated so that the cost of the lease is allocated over the lease term on a generally straight-line basis and classify all cash payments within operating activities in the statement of cash flows. In transition, lessees are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. ASU No. 2016-02 is effective for financial statements issued for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Earlier application is permitted. The impact from adoption of the new requirements of ASU No. 2016-02 on the Company’s consolidated financial position or results of operations has not yet been determined.

In July 2015, the FASB issued ASU No. 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory (“ASU 2015-11”). ASU No. 2015-11 requires entities to measure inventory at the lower of cost and net realizable value and is effective for financial statements issued for annual reporting periods beginning after December 15, 2016 and interim periods within those years. Earlier application is permitted. Application of the new requirements of ASU No. 2015-11 is not expected to have a material impact on the Company’s consolidated financial position or results of operations.

7

HORSEHEAD HOLDING CORP. AND SUBSIDIARIES

DEBTOR-IN-POSSESSION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands except per share amounts)

In April 2015, the FASB issued ASU 2015-03, Interest—Imputation of Interest (Topic 835) (“ASU 2015-03”) which changes the presentation of debt issuance costs in financial statements to present such costs as a direct deduction from the related debt liability rather than as an asset. ASU 2015-03 is effective for public companies during interim and annual reporting periods beginning after December 15, 2015. Early adoption is permitted. The adoption of this guidance does not have any material impact on the Company’s results of operations but does require the Company to present any capitalized deferred finance fees as a reduction of the related debt on the consolidated balance sheet. In August 2015, the FASB issued ASU 2015-15, Presentation and Subsequent Measurement of Debt Issuance Cost Associated with Line-of-Credit Arrangements (Topic 835) (“ASU 2015-15”) since the guidance under ASU No. 2015-03, did not address presentation or subsequent measurement of debt issuance costs related to line-of-credit arrangements. ASU 2015-15 allows entities to defer and present debt issuance costs related to line-of-credit arrangements as an asset and subsequently amortize the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. The Company adopted this pronouncement during the Quarter ended March 31, 2016.

In February 2015, The FASB issued ASU No. 2015-02, Consolidation (Topic 810) (“ASU 2015-02”) which updates the considerations on whether an entity should consolidate certain legal entities. The update changes the way that entities evaluate limited partnerships and fees paid to service providers in the consolidation determination. ASU 2015-02 will become effective for public companies during interim and annual reporting periods beginning after December 15, 2015. Early adoption is permitted. The Company does not expect the adoption of ASU 2015-02 to have a material impact on its Consolidated Financial Statements.

In May 2014, the FASB and the International Accounting Standards Board (“IASB”) jointly issued ASU No. 2014-9, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), which clarifies the principles for recognizing revenue and develops a common revenue standard for GAAP and International Financial Reporting Standards (“IFRS”). The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. ASU 2014-09 was to be effective for public entities for annual and interim periods beginning after December 15, 2016; however, in August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606) and delayed the effective date of the new revenue standard by one year. Reporting entities may choose to adopt the standard as of the original effective date. The Company is currently evaluating the impact of adopting this guidance on its financial position and results of operations.

There have been no other recently issued accounting updates that had or may have a material impact on the Company’s Consolidated Financial Statements.

8

HORSEHEAD HOLDING CORP. AND SUBSIDIARIES

DEBTOR-IN-POSSESSION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands except per share amounts)

NOTE B—VOLUNTARY REORGANIZATION UNDER CHAPTER 11

Events of Default Under Debt Obligations

During 2015, the Company’s results of operations and liquidity were impacted by (i) the dramatic decline in zinc, nickel and other commodity prices, (ii) continuing issues that delayed the ramp-up of the Mooresboro zinc facility, and (iii) lower EAF dust receipts reflecting weaker steel production.

As a result, the Company concluded on January 2, 2016, that it would not make the required interest payment on the 3.80% Convertible Senior Notes due 2017 (the “Convertible Notes”) on its scheduled due date of January 4, 2016 exercising a 30-day grace period under the indenture governing such notes.

On January 6, 2016 and January 13, 2016, the Company received notices of default, effective November 30, 2015 and December 31, 2015, from PNC Bank related to failure to comply with the required fixed charge coverage ratio under Zochem Inc.s’ (“Zochem”) $20,000 revolving credit facility (the “2014 Zochem Credit Facility”) following transfers of funds to Horsehead in 2015. The notice sent on January 13, 2016, demanded immediate payment of all outstanding obligations under the 2014 Zochem Credit Facility. On January 14, 2016, Zochem and the Company entered into a forbearance agreement with PNC Bank. In consideration for the forbearance, Zochem agreed, among other things, to pay a forbearance fee to PNC Bank of $1,000 due and payable on February 1, 2016 and provide a mortgage on Zochem’s currently unencumbered property in Ontario, Canada. The forbearance remained effective until February 1, 2016.

On January 5, 2016, the Company received a notice of default from Macquarie Bank Limited (“Macquarie”), as administrative agent and sole arranger under our $80,000 secured revolving credit facility (the “Macquarie Credit Facility”). The notice of default related to, among other things, insufficient borrowing base availability under the Macquarie Credit Facility as of December 31, 2015. On January 15, 2016, Horsehead Corporation (“Horsehead”), The International Metals Reclamation Company, LLC (“INMETCO”) and Horsehead Metal Products, LLC (“HMP”) entered into a forbearance agreement with Macquarie. Pursuant to the forbearance agreement, cash held in certain of the Debtors’ third-party bank accounts was transferred to accounts controlled by Macquarie. Disbursements of funds from the controlled accounts were subject to a budget as specified in the forbearance agreement. Pursuant to the forbearance agreement, the Company agreed, among other things, (i) to pay down to $40,000 outstanding borrowings under the Macquarie Credit Facility and (ii) to pay a restructuring fee in an amount ranging from $1,000 to $2,500 in the event the obligations under the Macquarie Credit Facility are not paid in full by February 1, 2016, with the amount of such fee increasing over time from February 1, 2016 through April 30, 2016. The forbearance remained effective until February 1, 2016.

Before the expiration of the grace period under the Convertible Notes indenture and at the expiration of the forbearance agreements, on February 2, 2016, the Debtors filed voluntary petitions for relief pursuant to Chapter 11 of the Bankruptcy Code in the Bankruptcy Court. On the same date, Zochem, as foreign representative of the Debtors, commenced a proceeding in the Ontario Superior Court of Justice (Commercial List) to recognize the Debtors Chapter 11 cases as a foreign main proceeding. The Debtors operate their businesses as debtors-in-possession subject to the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. The filing of the Chapter 11 petitions constituted an event of default under the Debtors’ various credit facilities and series of notes and rendered the financial obligations under certain such instruments automatically and immediately due and payable. See Note E- Long-Term Debt.

On April 13, 2016, the Debtors filed a Joint Plan of Reorganization pursuant to Chapter 11 of the Bankruptcy Code with the Bankruptcy Court and on April 14, 2016, a related Disclosure Statement. On July 11, 2016, the Debtors filed a Second Amended Joint Plan of Reorganization (the “Plan”) pursuant to Chapter 11 of the Bankruptcy Code with the Bankruptcy Court and a related Disclosure Statement. On the same date, the Bankruptcy Court entered an order approving the Disclosure Statement, and on July 12, 2016, the Canadian Court recognized and gave effect to such order in Canada. On or about July 18, 2016, the Debtors commenced solicitation of the Plan.

On September 9, 2016, the Bankruptcy Court confirmed and approved the Plan, which, among other things, resolved the Debtors’ pre-petition obligations, set forth the revised capital structure of the newly reorganized entity, and provided for corporate governance subsequent to exit from bankruptcy. The Plan was recognized by the Ontario Superior Court of Justice (Commercial List) on September 12, 2016. The effective date of the Plan is anticipated to be September 30, 2016 (the “Effective Date”).

9

HORSEHEAD HOLDING CORP. AND SUBSIDIARIES

DEBTOR-IN-POSSESSION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands except per share amounts)

Default under and subsequent termination of the New Market Tax Credit (the “NMTC”) loans

On January 22, 2016, the minority equity holders, as lenders, issued Notices of Non-Payment to the Company as a result of annual payments not made in accordance with various loan agreements existing under the NMTC program. These notices resulted in events of default under the NMTC loan agreements. The NMTC loan agreements were fully paid on June 24, 2016. See Note E – Long-Term Debt for further discussion.

Temporary Idling of Mooresboro Facility

On January 22, 2016, the Company temporarily idled the Mooresboro facility in the face of severe liquidity constraints and the Company’s determination that the facility was incapable of generating positive cash flow in the future without significant additional capital investment and/or a recovery in commodity prices. A small workforce has been retained to manage the facility during this period. See Note F of our Annual Report on Form 10-K for the fiscal year ended December 31, 2015 and Note D – Property, Plant and Equipment for further information regarding asset impairment.

Entry into Debtor-in-Possession Credit Agreement

On February 8, 2016, the Debtors entered into a Senior Secured Superpriority Debtor-in-Possession Credit, Security and Guaranty Agreement (the “DIP Credit Agreement”), with certain holders of the Company’s Senior Secured Notes, as lenders (the “DIP Lenders”), and Cantor Fitzgerald Securities, as administrative agent (the “DIP Agent”). The entry into the DIP Credit Agreement was approved by the Bankruptcy Court. The DIP Credit Agreement was amended on March 3, 2016, May 16, 2016, June 23, 2016, August 1, 2016 and September 15, 2016. See Note F – Debtor In Possession Financing.

Entry into Unit Purchase and Support Agreement

On July 11, 2016, the Company, on behalf of the Debtors, entered into a Unit Purchase and Support Agreement (the “UPA”) with certain holders of claims against the Debtors that are listed therein as plan sponsors (collectively, the “Plan Sponsors”). The UPA was entered into in connection with the Debtors’ Plan filed with the Bankruptcy Court.

Pursuant to the UPA, and subject to approvals, terms, and conditions set forth therein, upon emergence from Chapter 11, (i) the Company will issue units of limited liability company interests of the reorganized Company to the Plan Sponsors who will purchase such Plan Sponsor’s respective percentage of an aggregate amount equal to $160,000 (the “Emergence Equity Units”), and (ii) the Plan Sponsors had the right to elect, on or prior to July 29, 2016, to commit to purchase up to an additional $100,000 units of limited liability company interests of the reorganized Company (the “Additional Capital Commitment Units”) with such commitment being exercisable at the election of the reorganized Company’s board of directors pursuant to the terms and subject to the conditions of the UPA, following the effectiveness of the Plan. The additional capital commitment was fully subscribed.

The UPA provides for the payment by the Company to the Plan Sponsors of a termination fee equal to $7,500 in the event the UPA is terminated under certain conditions set forth therein, including the failure to meet specific milestones. The Debtors have also agreed to pay certain fees and expenses of the Plan Sponsors.

Pursuant to the UPA and subject to the conditions set forth therein, the Company and the other Debtors and the Plan Sponsors have agreed to support and, in the case of the Plan Sponsors, vote their claims in favor of the Plan and to cooperate in completing the documentation of and effectuating the Plan. The Company and the other Debtors have further agreed not to solicit or engage in any discussions with third parties regarding an Alternative Transaction (as defined in the UPA), provided that, as more fully set forth therein, the UPA permits the Company’s board of directors to negotiate unsolicited proposals for an Alternative Transaction that constitutes, or is reasonably likely to lead to or result in, a Superior Proposal (as defined in the UPA); provided that such agreements are subject in all respects to the Company’s and the Debtors’ rights and obligations pursuant to the Order (I) Extending the Debtors Exclusive Periods to File a Chapter 11 Plan and Solicit Acceptances Thereof Pursuant to Section 1121 of the Bankruptcy Code and (II) Granting Related Relief entered on July 11, 2016 [Docket No. 1273] (the “Exclusivity Order”), including with respect to the Debtors’ rights to engage with any party that expresses an interest to acquire some, all, or substantially all of the Debtors’ assets and/or to fund a plan of reorganization, including any party directed to the Debtors by the Equity Committee and the Creditors’ Committee (each as defined in the Exclusivity Order).

10

HORSEHEAD HOLDING CORP. AND SUBSIDIARIES

DEBTOR-IN-POSSESSION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands except per share amounts)

Pursuant to the UPA and subject to the conditions set forth therein, the Company and the other Debtors have agreed to, jointly and severally, indemnify and hold harmless each Plan Sponsor and certain related parties from and against losses, claims, damages, liabilities and costs and expenses arising out of or in connection with the UPA, the Plan, the Chapter 11 proceedings, the recognition proceedings in Canada, and the transactions contemplated thereby. The UPA also includes customary representations of the parties; provided that pursuant to the UPA, Zochem, Inc., a Debtor, will have no liability to any person under or relating to the UPA.

The Debtors sought Bankruptcy Court approval of the UPA, which was confirmed and approved on September 9, 2016 and on September 12, 2016, the Canadian Court recognized and gave effect to such order in Canada.

The UPA was amended on August 30, 2016, to, among other things, (i) add an additional Plan Sponsor as a signatory to the UPA and correspondingly amends the respective schedules and purchase commitments to reflect such addition, (ii) allow the reorganized Company to call up to $15 million of Additional Capital Commitment Units for working capital needs and other general purposes, and (iii) amend various provisions of the UPA to reflect, among other milestone changes, that the effective date of the plan of reorganization shall occur by 5:00 PM, New York City time, on September 30, 2016.

The Emergence Equity Units and the Additional Capital Commitment Units, if issued, will not be registered under the Securities Act of 1933, as amended (the “Securities Act”), and will not be transferable unless subsequently registered under the Securities Act or an exemption from registration is available. The Company does not intend to register the Emergence Equity Units and the Additional Capital Commitment Units. Moreover, the Emergence Equity Units and the Additional Capital Commitment Units, if any, will be subject to, and each holder thereof will be a party to, the Limited Liability Company Agreement of the reorganized Company to be entered into and effective immediately following the effectiveness of the Plan.

Notice of Delisting from NASDAQ

On February 2, 2016, we received notice from The NASDAQ Stock Market LLC (“NASDAQ”) that trading of our common stock was to be suspended at the opening of business on February 11, 2016. NASDAQ’s decision to delist our common stock was a result of our filing of the Bankruptcy Petitions. On February 23, 2016, NASDAQ filed a Form 25, “Notification of Removal from Listing Under Section 12(b) of the Securities Exchange Act of 1934,” with respect to our common stock. Our common stock currently trades in the over-the-counter (“OTC”) market under the symbol ZINCQ.

Liabilities Subject to Compromise

Liabilities subject to compromise represent liabilities incurred prior to the commencement of the bankruptcy proceedings, which will be settled as part of the Chapter 11 process. Pre-petition liabilities subject to compromise are required to be reported at the amount expected to be allowed as a claim by the Bankruptcy Court, regardless of whether they may be settled for lesser amounts and remain subject to future adjustments based on negotiated settlements with claimants, actions of the Bankruptcy Court, rejection of executory contracts, proofs of claims or other events. The amounts included in the table below represent the Company’s allowed claims and its best estimate of claims expected to be allowed in the bankruptcy proceedings. The amounts recorded in liabilities subject to compromise require the use of estimates and assumptions that affect the reported amounts. The Company continues the process of reconciling claims and may ask the Bankruptcy Court to disallow claims that the Company believes are duplicative, have been later amended or superseded, are without merit, are overstated or should be disallowed for other reasons.

Liabilities subject to compromise consist of the following:

	June 30, 2016
Debt	$	356,984
Accounts payable		67,893
Other liabilities		4,588
	$	429,465

Interest Expense

The Debtors have discontinued recording interest on unsecured or under secured liabilities subject to compromise on the Petition Date. Contractual interest on liabilities subject to compromise not reflected in the consolidated statements of operations was approximately $7,404 and $12,255, representing interest expense from the Petition Date through the three and six months ended June 30, 2016, respectively.

Contracts

Under the Bankruptcy Code, the Debtors have the right to assume or reject certain contracts, subject to the approval of the Bankruptcy Court and certain other conditions. Generally, the assumption of a contract requires a debtor to satisfy pre-petition obligations under the contract, which may include payment of pre-petition liabilities in whole or in part. Rejection of a contract is typically treated as a breach occurring as of the moment immediately preceding the Chapter 11 filing. Subject to certain exceptions, this rejection relieves the debtor from performing its future obligations under the contract but entitles the counterparty to assert a pre-petition general unsecured claim for damages. Parties to contracts rejected by a debtor may file proofs of claim against that debtor’s estate for damages.

11

HORSEHEAD HOLDING CORP. AND SUBSIDIARIES

DEBTOR-IN-POSSESSION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands except per share amounts)

In connection with approval of the Debtors’ Disclosure Statement, the Bankruptcy Court approved procedures for assuming or rejecting the Debtors’ contracts. On August 9, 2016, the Debtors filed an initial supplement to the Plan that included a schedule of assumed contracts and a schedule of rejected contracts. Since that date, the Debtors have filed additional supplements to the Plan including additional schedules of assumed and rejected contracts. Through the contract assumption and rejection process, the Debtors were able to successfully negotiate approximately a dozen midstream and downstream contracts. The Debtors continue to review and analyze their contractual obligations and retain the right, until forty-five days following the Effective Date, to amend or supplement the schedules of assumed and rejected contracts

Reorganization Items

Reorganization items represent the direct and incremental costs associated with the Chapter 11 proceedings, such as professional fees, pre-petition liability claim adjustments and losses related to terminated contracts that are probable and can be estimated. Unamortized deferred financing costs, premiums, and discounts associated with debt classified as liabilities subject to compromise are expensed to reorganization items in order to reflect the expected amounts of the probable allowed claims. Interest expense includes forbearance fees, early termination fees and fees associated with obtaining debtor-in-possession financing. Reorganization items consist of the following for the three and six months ended June 30, 2016:

	Three months ended June 30, 2016		Six months ended June 30, 2016
Professional fees	$	15,564	$	26,761
Interest expense		125		4,320
	$	15,689	$	31,081

NOTE C—INVENTORIES

Inventories consisted of the following at June 30, 2016 and December 31, 2015.

	June 30, 2016			December 31, 2015
Raw materials	$	4,767		$	12,230
Work-in-process		2,808			2,776
Finished goods		12,349			19,545
Supplies and spare parts		11,010			10,458
		30,934			45,009
Excess and obsolete inventory reserves		(5,729	)		(4,518	)
	$	25,205		$	40,491

The provision for slow moving inventory was $5,608 at June 30, 2016 and $4,070 at December 31, 2015.

The Company recorded $1,267 in lower of cost or market (“LCM”) adjustments to its finished goods inventories at June 30, 2015 and recorded total LCM adjustments during the six months ended June 30, 2015 of $3,627. The Company recorded total LCM adjustments to its finished goods inventories of $4,389 during 2015. The LCM adjustments were the result of the low London Metal Exchange (“LME”) zinc price and the incurrence of higher than normal production costs in 2015 at the Mooresboro zinc facility, which operated at inefficient levels during start up. No LCM adjustments were made during the six months ended June 30, 2016.

12

HORSEHEAD HOLDING CORP. AND SUBSIDIARIES

DEBTOR-IN-POSSESSION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands except per share amounts)

NOTE D—PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consisted of the following at June 30, 2016 and December 31, 2015.

	June 30, 2016			December 31, 2015
Land and land improvements	$	25,050		$	24,437
Buildings and building improvements		41,103			41,083
Machinery and equipment		247,997			299,009
Construction in progress		12,675			8,847
		326,825			373,376
Less accumulated depreciation		(129,057	)		(118,535	)
	$	197,768		$	254,841

The Company capitalized $747 and $1,495 of interest expense during the three and six months ended June 30, 2015, respectively. The interest expense capitalized related to the construction of the Mooresboro zinc facility, which began operations in May 2014. Through December 31, 2015, the Company had capitalized a total of $58,383 of interest expense related to Mooresboro facility. In January 2016, the facility was temporarily idled. On December 31, 2015 the Company recorded an impairment charge on the Mooresboro facility of $527,621. For further information refer to Note F of our Annual Report on Form 10-K for the fiscal year ended December 31, 2015.

On February 2, 2016, the Company filed voluntary petitions for relief pursuant to Chapter 11 of the Bankruptcy Code in Bankruptcy Court. At that time, the Company did not have the capacity to raise additional capital. The Company concluded that additional expenditures upwards of $117,000 were required to bring the Mooresboro facility back online and make needed improvements to cure the identified operational issues. This information along with the filing for bankruptcy protection resulted in the Company determining a triggering event had occurred to further test impairment of the long-lived assets at the Mooresboro facility. The Company was unable to estimate future cash flows as the property was idled and there was no certainty as to whether funds were available to cure the operational defect. As such the Company proceeded to step 2 of the impairment test where we compared the implied fair value of operating invested capital of Horsehead to the fair value of our operating segments and determined the fair value of the Mooresboro facility to be essentially the liquidation value. The significant assumption in the analysis was that the Mooresboro facility would remain idle indefinitely until suitable funds were available to cure the significant operational defects. As a result of the analysis, we recorded a non-cash, pre-tax long-lived asset impairment loss of $54,266 for the Mooresboro asset group. The total amount of this write-down is included in Loss from Operations in the Consolidated Statement of Operations for the six months ended June 30, 2016. Following the write-down of the asset group, the remaining book value of the Mooresboro facility is $31,284 at March 31, 2016.

On November 7, 2014, the Company announced that Shell had exercised its option to purchase the Company’s Monaca, Pennsylvania site, under the Amended and Restated Option and Purchase Agreement. The only remaining asset of the Monaca facility was land which had a net book value of approximately $1,200. Sale of the site was completed in June 2015 and the Company recognized a gain of approximately $12,200. The gain on the sale of the site was previously recorded in Interest and other income of the Consolidated Statement of Operations for the three and six months ended June 30, 2015, filed on August 7, 2015 on Form 10-Q. The prior year amount has been reclassified to Gain on asset disposition for the three and six months ended June 30, 2015. This reclassification had no impact on total assets, equity, cash flows or net loss previously reported.

NOTE E—LONG –TERM DEBT

Long-term debt consisted of the following at June 30, 2016 and December 31, 2015:

	June 30,		December 31,
	2016		2015
Loan Payable, related to New Market Tax Credit program	$	—	$	255
3.80% Convertible Senior Notes due July 2017, net of debt discount in 2015		—		93,403
10.50% Senior Secured Notes due June 2017, including the debt premium in 2015		—		205,081
9.00% Senior Unsecured Notes due July 2017		—		40,000
Zochem Credit Facility, interest payable at variable rates		—		17,500
Macquarie Credit Facility, interest payable at variable rates		26,888		59,451
Credit Agreement, interest payable at variable rates		—		17,389
		26,888		433,079
Less portion currently payable		26,888		433,079
	$	—	$	—

NMTC Loans

The loans payable associated with the NMTC program were interest only loan with principal due in June 2016. On January 22, 2016, the minority equity holders, as lenders, issued Notices of Non-Payment to the Company as a result of annual payments not made in accordance with the loan agreements. These notices resulted in events of default under the NMTC loan agreements. On June 16, 2016, Horsehead Zinc Recycling (“HZR”), Horsehead and the Company, as guarantor, entered into Forbearance Agreements (the “Forbearances”) with the lenders. In consideration for the Forbearances, HZR, Horsehead and the Company agreed, among other things, to pay forbearance fees to each Lender of $100 upon execution of the Forbearances. On June 24, 2016, HZR repaid in full an aggregate amount of $878 outstanding under the NMTC loan agreements. The NMTC loan agreements terminated by their terms upon repayment. This payment represented the loan payable of $255, dividends paid to the equity holders of $170 and $360 paid to exercise a purchase option. Upon exercise of the purchase option, the minority interest was eliminated via a reclassification adjustment totaling $3,669 to additional paid in capital and this amount was treated as a noncash adjustment on the Consolidated Statement of Cash Flows for the six months ended June 30, 2016.

13

HORSEHEAD HOLDING CORP. AND SUBSIDIARIES

DEBTOR-IN-POSSESSION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands except per share amounts)

Convertible Senior Notes

On July 27, 2011, the Company issued $100,000 of the Convertible Notes in a private placement. The Company received proceeds of $100,000 and recognized $3,481 in issuance costs in connection with the offering. The Company used the proceeds from the offering for the initial stages of construction for the Mooresboro zinc facility and for general corporate purposes, including working capital needs, investment in business initiatives, capital expenditures and acquisitions.

The commencement of the Debtors’ Chapter 11 cases filed on February 2, 2016 constituted an event of default that rendered the financial obligations under the Convertible Notes automatically and immediately due and payable. As a result, the Company reclassified the Convertible Notes to Current maturities of long-term debt in the Consolidated Balance Sheet at December 31, 2015 and as Liabilities Subject to Compromise in the Consolidated Balance Sheet at June 30, 2016. See Note B – Voluntary Reorganization Under Chapter 11 for additional information regarding the reclassification of debt subject to compromise. In February 2016, in connection with the Chapter 11 proceedings, Delaware Trust Company was appointed as trustee under the indenture governing the Convertible Notes.

In accordance with the guidance under ASC 815-15 Embedded Derivatives and ASC 470-20 Debt with Conversion and other Options, at issuance, the Company separately accounted for the liability and equity components of the Convertible Notes to reflect the Company’s nonconvertible borrowing rate when interest cost was recognized in subsequent periods. The fair value of the liability component of the Convertible Notes was calculated to be $78,174, at issuance, and was determined by measuring the fair value of a similar liability that does not have an associated equity component. The nonconvertible rate was determined by the Company to be 8.5%. The carrying amount of the embedded conversion option (the debt discount) of $21,826 was determined by deducting the fair value of the liability component from the initial proceeds of the Convertible Notes and was recorded, net of deferred taxes of $8,805, as additional paid-in capital. The Company had been accreting the long-term debt balance to par value over the term of the notes using the interest method as required by ASC 835-30 Imputation of Interest.

Costs of $3,481 associated with the issuance were allocated to the liability and equity components in proportion to the allocation of the fair value of the Convertible Notes. As such, $2,721 were accounted for as debt issuance costs attributable to the liability component of the Convertible Notes and were capitalized as a component of other assets. These costs were to be amortized to interest expense over the term of the Convertible Notes and are included as a component of interest expense. Due to the filing of relief under Chapter 11 of the Bankruptcy Code, all remaining debt issuance costs were reclassified to current and are included in Prepaid expenses and other current assets in the Consolidated Balance Sheet at December 31, 2015. The remaining issuance costs of $760 were accounted for as equity issuance costs and were recorded in additional-paid in capital in 2011. On the date of the bankruptcy filing, the Company reclassified the remaining deferred finance costs of $652 related to the Convertible Notes. This amount is included in Liabilities Subject to Compromise as an offset to the par value of the Convertible Notes in the Consolidated Balance Sheet at June 30, 2016.

ABL Facility

On September 28, 2011, the Company’s subsidiary Horsehead entered into an ABL Facility (the “ABL Facility”), as borrower, with PNC Bank, as agent and lender, to support liquidity needs for the Company’s Mooresboro zinc facility and to allow for the availability of previously restricted cash. Horsehead Holding Corp. also entered into the ABL Facility, as guarantor of Horsehead’s obligations. The ABL Facility provided for a five-year senior secured revolving credit facility in an aggregate principal amount of up to $60,000.

The ABL Facility was terminated on July 6, 2015 when an $80,000 secured revolving credit facility became effective among Horsehead, HMP, INMETCO and Macquarie, as administrative agent and sole arranger . The Macquarie Credit Facility replaced both the $20,000 INMETCO Facility (as defined below) and the $60,000 ABL Facility.

14

HORSEHEAD HOLDING CORP. AND SUBSIDIARIES

DEBTOR-IN-POSSESSION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands except per share amounts)

Senior Secured Notes

On July 26, 2012, June 3, 2013 and July 29, 2014, the Company completed private placements to issue an aggregate of $205,000 in principal amount of 10.50% Senior Secured Notes due 2017 (the “Secured Notes”). The Company received total proceeds of $204,429 and recognized approximately $8,415 in issuance costs in connection with the offerings. The total net proceeds from the offerings were $196,014. The Company used the proceeds from the Secured Notes to pay for the completion of the construction of the Company’s Mooresboro zinc facility and the remainder for general corporate purposes, including working capital needs, investment in other business initiatives and other capital expenditures. The Company recorded an initial debt carrying value of $204,429 (net of the debt discount and debt premiums) and was accreting the long-term debt balance to par value over the term of the Secured Notes using the interest method as required by ASC 835-30 Imputation of Interest.

The commencement of the Debtors’ Chapter 11 cases filed on February 2, 2016 constituted an event of default that rendered the financial obligations under the Senior Secured Notes automatically and immediately due and payable. As a result, the Company reclassified the Senior Secured Notes to Current maturities of Long-term debt in the Consolidated Balance Sheet at December 31, 2015. On the date of the bankruptcy filing, the remaining net premium of $75 was written off and the Senior Secured Notes were recorded at their par value of $205,000.

Costs of $8,415 associated with the issuance of the Senior Secured Notes were capitalized as a component of other assets. These costs were to be amortized to interest expense over the term of the Senior Secured Notes. Due to the filing of relief under Chapter 11 of the Bankruptcy Code, all remaining debt issuance costs were reclassified to current and are included in Prepaid expenses and other current assets in the Consolidated Balance Sheet at December 31, 2015. On the date of the bankruptcy filing, the Company reclassified the remaining deferred finance costs of $2,106 related to the Senior Secured Notes. This amount is included in Liabilities Subject to Compromise as an offset to the par value of the Senior Secured Notes in the Consolidated Balance Sheet at June 30, 2016.

Credit Agreement

On August 28, 2012, Horsehead and HHC entered into a Credit Agreement (the “Credit Agreement”) with Banco Bilbao Vizcaya Argentaria, S.A., a Spanish bank. The Credit Agreement provided for the financing of up to €18,583 (approximately $25,805) for purchases under the contracts between Horsehead and Tecnicas Reunidas (“TR”), S.A., a Spanish corporation providing equipment and related products and services for the Mooresboro zinc facility and additional financing of $968 for the premium for the insurance on such loan which was issued by Compania Espanola de Seguros de Credito a la Exportacion. The facility became effective on November 14, 2012.

The commencement of the Debtors’ Chapter 11 cases filed on February 2, 2016 constituted an event of default that rendered the financial obligations under the Credit Agreement automatically and immediately due and payable. As a result, the Company has reclassified all remaining obligations under the Credit Agreement to Current maturities of Long-term debt in the Consolidated Balance Sheet at December 31, 2015 and the outstanding amount of $17,389 was reclassified to Liabilities Subject to Compromise in the Consolidated Balance Sheet at June 30, 2016. See Note B –  Voluntary Reorganization Under Chapter 11 for additional information regarding the reclassification of debt.

The Company incurred issuance costs of $1,248 in connection with the Credit Agreement. These costs were capitalized in the Company’s Consolidated Balance Sheet as a component of other assets. The issuance costs were to be amortized to interest expense over the term of the Credit Agreement. Due to the filing of relief under Chapter 11 of the Bankruptcy Code, all remaining debt issuance costs were reclassified to current and are included in Prepaid expenses and other current assets in the Consolidated Balance Sheet at December 31, 2015. On the date of the bankruptcy filing, the Company wrote off all remaining deferred finance costs of $789 related to the Credit Agreement. This amount is included in Liabilities Subject to Compromise as an offset to the amount outstanding in the Consolidated Balance Sheet at June 30, 2016.

Zochem Revolving Credit and Security Agreement

On April 29, 2014, Zochem entered into, as borrower, a $20,000 revolving credit facility with PNC Bank, as agent and lender. The Company also entered into the 2014 Zochem Facility as a guarantor of Zochem’s obligations.

The 2014 Zochem Facility provided for a twenty-nine month senior secured revolving credit facility in an aggregate principal amount of up to $20,000. At December 31, 2015, the Company had $17,500 in outstanding borrowings under the 2014 Zochem Facility. There was no undrawn availability at December 31, 2015. The carrying amount of the debt approximated fair value at December 31, 2015.

15

HORSEHEAD HOLDING CORP. AND SUBSIDIARIES

DEBTOR-IN-POSSESSION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands except per share amounts)

On January 6, 2016 and January 13, 2016, the Company received notices of default, effective November 30, 2015 and December 31, 2015, from PNC Bank related to failure to comply with the required fixed charge coverage ratio under the 2014 Zochem Credit Facility following transfers of funds to Horsehead in 2015. The notice sent on January 13, 2016, demanded immediate payment of all outstanding obligations under the 2014 Zochem Credit Facility. On January 14, 2016, Zochem and the Company entered into a forbearance agreement with PNC Bank. In consideration for the forbearance, Zochem agreed, among other things, to pay a forbearance fee to PNC Bank of $1,000 due and payable on February 1, 2016 and provide a mortgage on Zochem’s currently unencumbered property in Ontario, Canada. The forbearance remained effective until February 1, 2016. The forbearance fee is included in interest expense in the Consolidated Statement of Operations for the six months ended June 30, 2016. See Note B – Voluntary Reorganization Under Chapter 11 for further information on Reorganization Items.

The Company incurred total issuance costs of $201 in connection with the 2014 Zochem Facility. These costs were capitalized in the Company’s Consolidated Balance Sheet as a component of other assets. The issuance costs were to be amortized to interest expense over the remaining term of the 2014 Zochem Facility, however, based upon the notices of default, which stated defaults as of November 30, 2015 and December 31, 2015, the remaining deferred finance costs were written off in December 2015.

On February 8, 2016, the Debtors entered into the DIP Credit Agreement and used initial proceeds therefrom , among other things, to repay in full and terminate all obligations under the 2014 Zochem Facility, pay fees and expenses incurred through the closing date of the DIP Facility and pay other amounts permitted in the budget (including any permitted variances) and for general corporate purposes. See Note F – Debtor In Possession Financing for further information on the DIP Facility. The additional fees and expenses incurred through the payoff date of February 2, 2016 are included in Reorganization Items, net in the Consolidated Statement of Operations for the six months ended June 30, 2016.

INMETCO Senior Secured Revolving Credit Agreement

On June 24, 2013, INMETCO entered into a Senior Secured Revolving Credit Agreement (the “INMETCO Facility”), as borrower, with Wells Fargo Bank, N.A., as lender. The Company entered into a guaranty of INMETCO’s obligations under the INMETCO Facility. INMETCO entered into the INMETCO Facility to support working capital requirements and for general corporate purposes. On March 31, 2014, the Company entered into the First Amendment to the Credit Agreement which amended certain provisions of the Credit Agreement including the increase of the maximum advances allowed from $15,000 to $20,000.

The INMETCO Facility was terminated on July 6, 2015 when a new $80,000 secured revolving credit facility became effective among Horsehead, HMP and INMETCO and Macquarie, as administrative agent and sole arranger. The Macquarie Credit Facility replaced both the $20,000 INMETCO Facility and the $60,000 ABL Facility.

INMETCO incurred issuance costs of $151 in connection with the INMETCO Facility. These costs were capitalized in the Company’s Consolidated Balance Sheet as a component of other assets. The issuance costs were being amortized to interest expense over the term of the INMETCO Facility. The remaining unamortized issuance costs related to the INMETCO Facility were written off to interest expense during the third quarter of 2015.

Senior Unsecured Notes

On July 29, 2014, the Company completed the private placement of $40,000 aggregate principal amount of 9.00% Senior Notes due 2017 (the “Unsecured Notes”). The Company received net proceeds of $38,686 after deducting approximately $1,314 in issuance costs in connection with the offering.

The Unsecured Notes were issued pursuant to an indenture, dated as of July 29, 2014, among the Company, the Guarantors and U.S. Bank National Association, as trustee. In February 2016, in connection with the Chapter 11 cases, Wilmington Trust, National Association, was appointed as trustee under the indenture governing the Unsecured Notes.

The commencement of the Debtors’ Chapter 11 cases constituted an event of default that rendered the financial obligations under the Senior Unsecured Notes automatically and immediately due and payable. As a result, the Company reclassified the Senior Unsecured Notes to Current maturities of Long-term debt in the Consolidated Balance Sheet at December 31, 2015 and as Liabilities Subject to Compromise in the Consolidated Balance Sheet at June 30, 2016. See Note B – Voluntary Reorganization Under Chapter 11 for additional information regarding the reclassification of debt.

16

HORSEHEAD HOLDING CORP. AND SUBSIDIARIES

DEBTOR-IN-POSSESSION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands except per share amounts)

Costs of $1,314 associated with the issuance of the Unsecured Notes were capitalized as a component of other assets. These costs were being amortized to interest expense over the term of the Unsecured Notes. Due to the filing of relief under Chapter 11 of the Bankruptcy Code, all remaining debt issuance costs were reclassified to current and are included in Prepaid expenses and other current assets in the Consolidated Balance Sheet at December 31, 2015. On the date of the bankruptcy filing, the Company reclassified remaining deferred finance costs of $618 related to the Unsecured Notes. This amount is included in Liabilities Subject to Compromise as an offset to the aggregate principal amount of the Senior Unsecured Note in the Consolidated Balance Sheet at June 30, 2016.

Macquarie Revolving Credit Facility

On June 30, 2015, the Company’s wholly owned direct and indirect subsidiaries, INMETCO, Horsehead and HMP, entered into the Macquarie Credit Facility with Macquarie, which became effective on July 6, 2015 and had a maturity date of May 15, 2017. The new $80,000 facility replaced both the ABL Facility and the INMETCO Facility. The Company had $59,451 in outstanding borrowings at December 31, 2015 and no remaining availability. The carrying amount of the debt approximated fair value at December 31, 2015.

On January 5, 2016, the Company received a notice of default, as of December 31, 2015, from Macquarie related to, among other things, insufficient borrowing base availability under the Macquarie Credit Facility. As a result of receiving this notice, the Company reclassified indebtedness outstanding under the Macquarie Credit Facility to Current maturities of long-term debt in the Consolidated Balance Sheet at December 31, 2015. On January 15, 2016, Horsehead, INMETCO and HMP entered into a forbearance agreement with Macquarie. Pursuant to the forbearance agreement, cash held in certain of the Debtors’ third-party bank accounts was transferred to accounts controlled by Macquarie. Disbursements of funds from the controlled accounts were subject to a budget as specified in the forbearance agreement. Pursuant to the forbearance agreement, the Company agreed, among other things, (i) to pay down to $40,000 outstanding borrowings under the Macquarie Credit Facility and (ii) to pay a restructuring fee in an amount ranging from $1,000 to $2,500 in the event the obligations under the Macquarie Credit Facility are not paid in full by February 1, 2016, with the amount of such fee increasing over time from February 1, 2016 through April 30, 2016. The forbearance remained effective until February 1, 2016. The obligations under the Macquarie Credit Agreement were not paid in full by February 1^st and the Company recorded $5,057 in early termination and other fees as required by the forbearance agreement. This amount is recorded in interest expense in the Consolidated Statement of Operations for the six months ended June 30, 2016. The amount outstanding under the Macquarie Credit Facility was $26,888 at March 31, 2016. In March 2016, Macquarie assigned the debt to various other lenders. No terms were modified between the Company and the new lenders.

The Company incurred total issuance costs of $1,635 in connection with the Macquarie Credit Facility. These costs were initially capitalized in the Company’s Consolidated Balance Sheet as a component of other assets and were to be amortized to interest expense over the remaining term, however, based upon the notice of default as of December 31, 2015, all deferred finance costs were written off at December 31, 2015.

Tecnicas Reunidas, S.A. Settlement

In January 2016, Horsehead Corporation reached a settlement agreement with one of the primary contractors for work associated with the construction of portions of the Mooresboro facility, TR. The agreement settled all known claims and disputes between Horsehead Corporation and TR relating to the construction of the Mooresboro facility. As a result, in 2016, the Company recorded a net settlement amount of approximately $7,200, of which $5,000 was received in cash and recorded as a loan payable to TR. The loan payable was subsequently reclassified to Liabilities Subject to Compromise.

Other

At June 30, 2016, the Company had a total of $7,939 in letters of credit that are cash collateralized and recorded as Restricted cash in the Company’s Consolidated Balance Sheet at June 30, 2016. The restricted cash will be used to collateralize self-insured claims for workers’ compensation and other general insurance claims. The letter of credit outstanding on the Zochem Facility was canceled on June 22, 2016.

At December 31, 2015, the Company had a total of $364 in letters of credit outstanding under the 2014 Zochem Facility and $7,939 in letters of credit that are cash collateralized and recorded as Restricted Cash in the Company’s Consolidated Balance Sheet at December 31, 2015. The letters of credit and restricted cash will be used to collateralize self-insured claims for workers’ compensation and other general insurance claims.

17

HORSEHEAD HOLDING CORP. AND SUBSIDIARIES

DEBTOR-IN-POSSESSION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands except per share amounts)

NOTE F—DEBTOR IN POSSESSION FINANCING

On February 8, 2016, the Debtors entered into a DIP Credit Agreement, with certain holders of the Company’s Senior Secured Notes, as lenders, and Cantor Fitzgerald Securities, as administrative agent. The entry into the DIP Credit Agreement was approved by the Bankruptcy Court. The DIP Credit Agreement was amended on March 3, 2016, May 16, 2016, June 23, 2016, August 1, 2016 and September 15, 2016.

The DIP Credit Agreement provides for a senior secured super priority credit facility in the aggregate principal amount of up to $90,000 (the “DIP Facility”). Initial proceeds from the DIP Facility were used, among other things, to repay in full and terminate all obligations under the 2014 Zochem Facility, pay fees and expenses incurred through the closing date of the DIP Facility and pay other amounts permitted in the budget (including any permitted variances) and for general corporate purposes. At June 30, 2016, outstanding amounts under the DIP Facility were $57,500. The DIP Credit Agreement required origination fees of 4.5% or $4,050 which were paid with the initial draw and are included in Reorganization items, net in the Consolidated Statement of Operations for the six months ended June 30, 2016.

Interest on the outstanding principal amount of loans under the DIP Facility is payable monthly in arrears at a per annum rate equal to 14.0%. Upon an event of default under the DIP Facility, all obligations under the DIP Credit Agreement bear interest at a rate equal to the standard interest rate plus an additional 2.0% per annum. The Debtors were required to pay commitment fees and are required to pay unused commitment fees.

With certain exceptions, the obligations under the DIP Credit Agreement are secured by a “priming,” first-priority lien on substantially all of the Debtors’ assets. The liens securing the DIP Facility prime the liens securing the Senior Secured Notes and include a first priority priming lien on the equity interests of non-debtor subsidiaries of the Debtors, including Horsehead Zinc Recycling, LLC.

The DIP Facility matures on the earlier of (a) February 8, 2017, (b) the earlier of (i) the date of the substantial consummation of the plan of reorganization that is confirmed pursuant to an order of the Bankruptcy Court and recognized by an order of the Canadian Court, (ii) the consummation of a sale of all or substantially all of the assets of the Debtors pursuant to Section 363 of the Bankruptcy Code, and (iii) the date any outstanding extensions of credit under the DIP Facility become due and payable in accordance with the terms of the loan documents, whether by acceleration or otherwise.

Pursuant to the DIP Credit Agreement, the Debtors must meet certain financial requirements and covenants, including a minimum restructuring EBITDA covenant with respect to each of INMETCO and Zochem (“EBITDA-R Covenant”). On March 22, 2016, the Company delivered a notice of default to the DIP Agent relating to the Company’s failure to meet the Zochem EBITDA-R Covenant for the period ended February 29, 2016. The Company amended the DIP Credit Agreement on May 16, 2016 for the EBITDA-R Covenant for Zochem. The Company was subject to default interest on outstanding borrowings until an agreement was reached.

The Company expects to repay the DIP Facility in full upon emergence from bankruptcy.

18

HORSEHEAD HOLDING CORP. AND SUBSIDIARIES

DEBTOR-IN-POSSESSION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands except per share amounts)

NOTE G—ACCRUED EXPENSES

Accrued expenses at June 30, 2016 and December 31, 2015 consisted of the following.

	June 30, 2016		December 31, 2015
Employee related costs	$	4,228	$	5,868
EAF dust processing reserve		5,142		3,336
Workers’ compensation insurance claim liabilities		1,500		1,500
Unearned tolling revenue		2,095		1,305
Accrued sales tax		2,653		2,291
Accrued interest		9,940		4,534
Environmental reserve		1,301		712
Accrued hedge contracts		6		1,275
Accrued insurance		363		1,749
Other		3,913		2,260
	$	31,141	$	24,830

NOTE H—OTHER LONG-TERM LIABILITIES

Other long-term liabilities at June 30, 2016 and December 31, 2015 consisted of the following.

	June 30, 2016		December 31, 2015
Environmental obligations	$	550	$	567
Insurance claim liabilities		5,158		5,603
Asset retirement obligations		5,312		5,123
Deferred purchase price obligation		3,739		3,538
Other		474		674
	$	15,233	$	15,505

NOTE I—INCOME TAXES

The Company’s effective tax rates were 0.2% and 13.1% for the three months ended June 30, 2016 and 2015, respectively, and 0.2 % and 37.8% for the six months ended June 30, 2016 and 2015, respectively. Income tax expense (benefit) differs from the amount computed by applying the U.S. statutory federal income tax rate of 35% to income before income taxes, due to state income taxes, a lower income tax rate on Canadian income and the domestic entities being in a loss position creating a full valuation allowance on the deferred balances.

The effective tax rate for the six months ended June 30, 2016 decreased when compared to the six months ended June 30, 2015 due to the domestic entities being in a loss position creating a full valuation allowance on the deferred balances.

The Company and its subsidiaries file income tax returns in the U.S., Canada and various state jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. The tax years that remain subject to examination are 2010 through 2015.

19

HORSEHEAD HOLDING CORP. AND SUBSIDIARIES

DEBTOR-IN-POSSESSION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands except per share amounts)

NOTE J—ACCUMULATED OTHER COMPREHENSIVE INCOME

Components of accumulated other comprehensive income are as follows:

	June 30, 2016		December 31, 2015
Cumulative translation adjustments	$	30	$	30
Net pension adjustment		215		217
Accumulated other comprehensive income	$	245	$	247

NOTE K—SHARE-BASED COMPENSATION

In 2006, the Company adopted the Horsehead Holding Corp. 2006 Long-Term Equity Incentive Plan (the “2006 Plan”), which was amended and restated on June 11, 2007, and provided for grants of stock options, stock appreciation rights, restricted stock, restricted stock units, deferred stock units and other equity-based awards. Directors, officers and other employees of the Company, as well as others performing services for the Company, were eligible for grants under the 2006 Plan. The 2006 Plan is administered by the compensation committee of the Company’s Board of Directors (the “Compensation Committee”).

On January 16, 2007, the Board authorized the issuance of options to purchase 1,085 shares of the Company’s common stock to certain officers and employees of the Company under the terms of the 2006 Plan. The options have a term of ten years and vest ratably over a five-year period from date of grant. No stock options were exercised during the six months ended June 30, 2016, . At June 30, 2016, there were 580 options still outstanding; all were fully vested and exercisable, each with an exercise price of $13.00 per share and 0.54 years of remaining contractual life. The options outstanding under the 2006 Plan had no intrinsic value at June 30, 2016. All compensation expense had been recognized as of December 31, 2012.

The Company had a total of 218 restricted stock units at a weighted average grant date fair value of $10.96 per unit outstanding under the 2006 Plan at December 31, 2015. During the six months ended June 30, 2016, 143 restricted stock units vested having an intrinsic value of $274. At June 30, 2016, there were 74 restricted stock units outstanding and the remaining contractual life ranged from 0.50 years to 1.25 years. The related compensation expense for the three months ended June 30, 2016 and 2015 was $95 and $254, respectively. The related compensation expense for the six months ended June 30, 2016 and 2015 was $206 and $538, respectively. Unrecognized compensation expense as of June 30, 2016 was $228.

On May 17, 2012, the Company adopted the Horsehead Holding Corp. 2012 Incentive Compensation Plan (the “2012 Plan”), after it was approved by the Company’s stockholders at the 2012 Annual Meeting of Stockholders. The 2012 Plan replaced the 2006 Plan, and no further awards, stock options or other grants will be issued under the 2006 Plan. The 2012 Plan provides for grants of stock options, stock appreciation rights, restricted stock, restricted stock units and other cash or equity-based awards. Directors, officers and other employees of the Company, as well as others performing consulting or advisory services for the Company, are eligible for grants under the 2012 Plan. The 2012 Plan is administered by the Compensation Committee. A total of 2,700 shares of the Company’s common stock were initially authorized for issuance under the 2012 Plan. The number of shares available for issuance under the 2012 Plan is subject to adjustment in the event of a reorganization, stock split, merger or similar change in the corporate structure or the number of outstanding shares of common stock. In the event of any of these occurrences, the Compensation Committee may make any adjustments considered appropriate to, among other things, the number and kind of shares, options or other property available for issuance under the 2012 Plan or covered by grants previously made under the 2012 Plan. The shares available for issuance under the 2012 Plan may be, in whole or in part, authorized and unissued or held as treasury shares. If awards under the 2012 Plan are for any reason canceled, or expire or terminate unexercised, the shares covered by such awards may again be available for the grant of awards under the 2012 Plan.

The Company had a total of 611 restricted stock units at a weighted average grant date fair value of $18.15 per unit outstanding under the 2012 Plan at December 31, 2015. During the six months ended June 30, 2016, the Company granted 634 service based restricted stock units with an average grant date fair value of $1.83 per unit. The restricted stock units vest over a one or five-year service period. During the six months ended June 30, 2016, 79 restricted stock units vested having an intrinsic value of $40.

During the six months ended June 30, 2016, the Company granted 538 restricted stock units to management based on the future achievement of a predefined level of total shareholder return compared to a group of global metals companies. The fair value at the date of grant for these restricted stock units was $2.51 per unit, as estimated by a third party on the date of grant, using a valuation model based on commonly accepted economic theory which is used for all valuations of awards with market conditions.

20

HORSEHEAD HOLDING CORP. AND SUBSIDIARIES

DEBTOR-IN-POSSESSION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands except per share amounts)

This economic theory is also used as the basis for the Black-Scholes and Monte Carlo valuations. The significant assumptions were a risk free rate of 1.32%, expected volatility of the Company and each comparator company, no expected dividends and a forfeiture rate of zero. A vesting percentage was then estimated based on the Company’s rank within the comparator group. Upon vesting and the achievement of the required shareholder return, these restricted stock units would have been issued for par value however, it is expected that vesting will not occur as it is expected that the Company will emerge from bankruptcy prior to the vesting requirements being met and all common stock and securities convertible or exchangeable for common stock will be cancelled upon emergence from bankruptcy.

The related compensation expense for all 2012 Plan restricted stock units for the three months ended June 30, 2016 and 2015 was $872 and $1,106, respectively. The related compensation expense for all 2012 Plan restricted stock units for the six months ended June 30, 2016 and 2015 was $1,841 and $2,209, respectively. At June 30, 2016, there were 1,683 restricted stock units outstanding and the remaining contractual life ranged from 0.50 years to 4.00 years. Unrecognized compensation expense as of June 30, 2016 was $6,177.

Upon emergence from Chapter 11, the contracts underlying the awards will be rejected and the 2012 Plan will be terminated. The shares of the Company will be cancelled including those issued under the 2006 Plan and the 2012 Plan.

NOTE L—ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

The Company’s business consists principally of the sale of zinc and nickel-based products. As a result, its results of operations are subject to risk of fluctuations in the market prices of these metals. While the Company’s finished products are generally priced based on a spread to the price of zinc or nickel on the LME, its revenues are impacted significantly by changes in the market prices of these metals. The Company pursues various hedging strategies as described below to reduce its exposure to movements in the prices of zinc and nickel.

The Company’s marketing strategy includes a metal hedging program that allows customers to secure a firm price for future deliveries under a sales contract. Hedges are entered into based on firm sales contracts to deliver specified quantities of product on a monthly basis for terms generally not exceeding one year. A portion of the Company’s raw material purchases related to such firm price contracts are at varying zinc prices based on the LME. In order to protect its cash flow related to firm price sales contracts, the Company enters into fixed-to-variable swap contracts to convert the LME-based fixed sales price back to variable. Thus, if raw material costs increase as a result of LME zinc price increases, the related sales value and related cash flows will also increase. As of December 31, 2015, the fixed portions of these zinc contracts ranged from a monthly average of $0.71 to $0.93 per pound for zinc.

The Company hedged approximately 15.7 tons of zinc with fixed-to-variable future swap contracts at December 31, 2015, all of which settle at various dates up to and including December 2016.

The Company also enters into fixed to variable swap contracts as a financial hedge of a portion of its exposure to the movements in the LME prices of nickel. As of December 31, 2015, the Company had a minimal amount of nickel fixed-to-variable swap contracts outstanding.

At December 31, 2015, the Company had 4.5 tons of fixed price swaps in place at a strike price of $0.83 per pound for the first quarter of 2016. In January 2016, the broker holding our fixed price swap contracts required a margin call that the Company could not meet, as a result, all of the fixed price swap contracts in effect at December 31, 2015 were liquidated.

Due to the Company’s deteriorating financial condition, in January 2016, several brokers required margin calls that the Company could not meet, as a result, most of the zinc fixed-to-variable swap contracts, all outstanding nickel fixed-to-variable contracts and all outstanding fixed price swap contracts in effect at December 31, 2015 were liquidated. The total amount related to the margin calls that could not be met was $1,325 of which $1,389 of this amount is in Net Sales of zinc material and other goods. The remaining $64 is included in cost of sales of nickel-based material and other services in the Consolidation Statement of Operations for the six months ended June 30, 2016.

Zochem still maintains a minimal amount of zinc fixed-to-variable swaps contracts that were in effect at June 30, 2016. The Company has no nickel fixed-to-variable swap contracts nor fixed rate swap contracts outstanding at June 30, 2016.

21

HORSEHEAD HOLDING CORP. AND SUBSIDIARIES

DEBTOR-IN-POSSESSION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands except per share amounts)

The gains and losses resulting from the Company’s hedging activities are recorded in the Consolidated Statements of Operations as indicated in the table below:

	Three months ended June 30, 2016		Three months ended June 30, 2015		Six months ended June 30, 2016		Six months ended June 30, 2015
Gains included in net sales:
Swaps	$	77	$	9,230	$	154	$	8,525

The fair value of the swap contracts and put options at June 30, 2016 and December 31, 2015 are listed in the table below.

Fair Value Measurements Using Significant Other Observable Inputs (Level 2)	June 30, 2016		December 31, 2015
Swaps included in Accrued expenses	$	6	$	1,275

The fair values of derivative instruments are based upon a comparison of third party counterparties valuations to ensure that there is an acceptable level of consistency among them. The swap valuations are based on the official LME closing valuations at the end of the trading day on December 31, 2015, using the mid-point of the closing bid and ask prices on all open swap positions regardless of the holder. The closing prices are supervised by the London Clearing House and are regulated by the Financial Services Authority, the financial regulatory body in the United Kingdom.

The Company is exposed to credit loss in cases where counterparties with which they have entered into derivative transactions are unable to pay the Company when they owe the Company funds as a result of agreements with them. The Company does not require collateral and does not enter into master netting arrangements.

NOTE M—CONTINGENCIES

The Company is subject to federal, state and local laws designed to protect the environment and believes that as a general matter, its policies, practices and procedures are properly designed to minimize risk of environmental damage and financial liability to the Company.

The Company is party to various litigation, claims and disputes, including labor regulation claims and Occupational Safety and Health Act and environmental regulation violations, some of which are for substantial amounts, arising in the ordinary course of business. While the ultimate effect of such actions cannot be predicted with certainty, the Company expects that the outcome of these matters will not result in a material adverse effect on its business, financial condition or results of operations.

NOTE N—LOSS PER SHARE

Basic earnings (loss) per common share (“EPS”) is computed by dividing net income or loss by the weighted average number of common shares outstanding for the period. Diluted earnings per share are computed similarly to basic earnings per share except that the denominator is increased to include the number of shares that would have been outstanding if the potentially dilutive common shares had been issued. The Company uses the treasury stock method when calculating the dilutive effect in basic EPS.

Diluted EPS for periods with a net loss is calculated by dividing the net loss by the weighted average number of basic shares outstanding.

The information used to compute basic and diluted earnings (loss) per share is as follows:

	Three months ended June 30,						Six months ended June 30
	2016			2015			2016			2015
Basic loss per share:
Net loss	$	(29,110	)	$	(3,619	)	$	(132,679	)	$	(22,113	)
Weighted average shares outstanding—basic		60,352			56,661			60,345			55,756
Basic loss per share	$	(0.48	)	$	(0.06	)	$	(2.20	)	$	(0.40	)
Diluted loss per share:
Net loss	$	(29,110	)	$	(3,619	)	$	(132,679	)	$	(22,113	)
Weighted average shares outstanding—diluted		60,352			56,661			60,345			55,756
Diluted loss per share	$	(0.48	)	$	(0.06	)	$	(2.20	)	$	(0.40	)

22

HORSEHEAD HOLDING CORP. AND SUBSIDIARIES

DEBTOR-IN-POSSESSION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands except per share amounts)

	Exercise Price		Three months ended June 30,				Six months ended June 30,
			2016		2015		2016		2015
Anti-dilutive shares excluded from earnings per share calculation
Options	$	13.00		580		580		580		582
Convertible Notes	$	15.00		—		—		—		—
Restricted Stock Units				1,765		1,009		1,767		1,020
Total				2,345		1,589		2,347		1,602

On July 27, 2011, the Company issued $100,000 of Convertible Notes. The Convertible Notes are convertible at a conversion price of approximately $15.00 per share into cash, shares or a combination of both at the Company’s election. According to guidance under ASC 260 Earnings Per Share, if an entity issues a contract that may be settled in common stock or cash at the election of the entity or holder, then it is presumed that the contract will be settled in shares unless past experience or a stated policy provides a reasonable basis to believe that the contract will be paid partially or wholly in cash and the “if converted” method shall not be used. At June 30, 2016, the Company utilized the modified treasury stock method and assumes dilution if the average stock price for the quarter exceeds the conversion price. The share dilution is calculated by dividing the conversion spread value by the average share price for the quarter. During the three and six months ended June 30, 2016, and June 30, 2015, the average share price for the quarter was lower than the exercise price for the Convertible Notes and therefore no conversion spread was realized and no dilution assumed.

NOTE O—SEGMENT INFORMATION

The Company reports three segments, Horsehead, Zochem and INMETCO. The Horsehead segment processes EAF dust and other zinc-bearing material to produce and sell zinc and other metals. The Zochem segment produces and sells zinc oxide. The INMETCO segment processes a variety of metal-bearing waste material generated primarily by the specialty steel industry, provides tolling services and produces and sells nickel-chromium-molybdenum-iron remelt alloy to the stainless and specialty steel industries.

The Company records in the Corporate, eliminations and other column of the table below, eliminations related to the exclusion of revenue resulting from EAF dust service fees charged by its Horsehead segment to its INMETCO segment and sales of zinc metal from its Horsehead segment to its Zochem segment, interest expense recorded on debt which is not allocated to its segments and selling, general and administrative expenses related to its corporate division.

23

HORSEHEAD HOLDING CORP. AND SUBSIDIARIES

DEBTOR-IN-POSSESSION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands except per share amounts)

The following table presents information regarding the Company’s segment presentation:

Three months ended June 30, 2016	Horsehead			Zochem			INMETCO			Corporate, eliminations and other			Total
Net sales	$	42,620		$	31,998		$	7,563		$	(234	)	$	81,947
Depreciation and amortization		4,388			573			755			—			5,716
Cost of sales (excluding depreciation and amortization)		45,380			29,584			6,181			(234	)		80,911
Selling, general and administrative expenses		4,095			454			580			249			5,378
Interest expense		2,719			822			113			(326	)		3,328
Reorganization items, net		(37	)		(1,095	)		—			(14,557	)		(15,689	)
Loss before income taxes		(13,990	)		(648	)		(54	)		(14,480	)		(29,172	)
Three months ended June 30, 2015	Horsehead			Zochem			INMETCO			Corporate, eliminations and other			Total
Net sales	$	76,259		$	33,228		$	14,422		$	(1,111	)	$	122,798
Depreciation and amortization		13,758			620			771			—			15,149
Cost of sales (excluding depreciation and amortization)		70,832			29,449			8,990			(1,111	)		108,160
Gain on asset dispositions		(12,152	)		—			—			—			(12,152	)
Selling, general and administrative expenses		5,171			573			684			368			6,796
Interest expense		906			147			180			7,881			9,114
(Loss) income before income taxes		(2,352	)		2,465			3,964			(8,243	)		(4,166	)
Six months ended June 30, 2016	Horsehead			Zochem			INMETCO			Corporate, eliminations and other			Total
Net sales	$	85,135		$	59,752		$	16,587		$	(424	)	$	161,050
Depreciation and amortization		9,215			1,134			1,509			—			11,858
Cost of sales (excluding depreciation and amortization)		101,642			55,792			13,865			(424	)		170,875
Selling, general and administrative expenses		8,052			974			1,136			2,763			12,925
Interest expense		9,702			2,485			224			2,698			15,109
Reorganization items, net		(4,175	)		(2,111	)		—			(24,795	)		(31,081	)
Loss before income taxes		(99,745	)		(2,934	)		(31	)		(30,257	)		(132,967	)
Six months ended June 30, 2015	Horsehead			Zochem			INMETCO			Corporate, eliminations and other			Total
Net sales	$	133,386		$	68,392		$	24,531		$	(1,367	)	$	224,942
Depreciation and amortization		24,236			1,254			1,500						26,990
Cost of sales (excluding depreciation and amortization)		137,699			61,084			16,867			(1,367	)		214,283
(Gain) loss on asset dispositions		(12,020	)		—			147			—			(11,873	)
Selling, general and administrative expenses		10,370			1,180			1,255			769			13,574
Interest expense		1,857			272			358			15,741			18,228
(Loss) income before income taxes		(28,320	)		4,540			4,727			(16,495	)		(35,548	)

24

HORSEHEAD HOLDING CORP. AND SUBSIDIARIES

DEBTOR-IN-POSSESSION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands except per share amounts)

June 30, 2016	Horsehead		Zochem		INMETCO		Corporate, eliminations and other			Total
Property, plant and equipment	$	140,831	$	24,036	$	32,901	$	—		$	197,768
Capital expenditures		5,318		422		2,939		—			8,679
Total assets		197,905		60,221		52,199		(1,582	)		308,743
December 31, 2015	Horsehead		Zochem		INMETCO		Corporate, eliminations and other			Total
Property, plant and equipment	$	198,696	$	24,746	$	31,399	$	—		$	254,841
Capital expenditures		29,491		815		3,387		—			33,693
Total assets		275,681		70,005		49,655		(3,289	)		392,052

25

HORSEHEAD HOLDING CORP. AND SUBSIDIARIES

DEBTOR-IN-POSSESSION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands except per share amounts)

NOTE P—EQUITY OFFERINGS

On January 28, 2015, the Company completed an underwritten public offering of 5,750 shares of its common stock, including 750 shares sold pursuant to the underwriters’ exercise of their option to purchase additional shares. At the public offering price of $12.75 per share of common stock, the aggregate gross proceeds from the common stock sold by the Company were $73,313. The net proceeds realized by the Company from the offering, after $3,299 in underwriting discounts and commissions and $392 in expenses relating to the offering were $69,622. The net proceeds were available for general corporate purposes, which may include capital expenditures, acquisitions, working capital and liquidity for operational contingencies.

The shares were offered under a shelf registration statement filed with the SEC on Form S-3, which was declared effective on October 3, 2013.

On October 23, 2015, the Company entered into an at-the-market equity offering (“ATM”) sales agreement pursuant to which the Company could offer and sell, from time to time, shares of its common stock having an aggregate offering price of up to $50,000, through its sales agent. Subject to the terms and conditions of the sales agreement, the sales agent used commercially reasonable efforts to sell shares of the Company’s common stock in such number, at such times and at such prices as the Company determined. Sales of the shares of the Company’s common stock were made by any method deemed to be an “at-the-market offering” as defined in Rule 415 under the Securities Act of 1933, as amended, including, sales made directly on or through the NASDAQ Global Select Market or sales made to or through a market maker other than on an exchange, in negotiated transactions at market prices prevailing at the time of sale or at prices related to such prevailing market prices. The offering was made under the Company’s registration statement on Form S-3. From October 23, 2015 to December 2, 2015, the Company sold 3,507 shares at an average price of $2.60 per share of common stock. The aggregate gross proceeds from the ATM offering were $9,109. The net proceeds realized by the Company from the ATM offering, after deducting $300 in underwriting discounts and commissions and $402 in expenses related to the offering were $8,407. The Company used the net proceeds from the sale of the shares of its common stock for general corporate purposes, which included liquidity for operational contingencies, working capital and capital expenditures. Sales of equity under the ATM program were suspended by the Company on December 2, 2015.

26

HORSEHEAD HOLDING CORP. AND SUBSIDIARIES

DEBTOR-IN-POSSESSION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands except per share amounts)

NOTE Q—SUBSEQUENT EVENTS

Bankruptcy Proceedings

The Debtors filed the Plan and related Disclosure Statement with the Bankruptcy Court on July 11, 2016. On that same date, the Bankruptcy Court entered an order approving the Disclosure Statement, and on July 12, 2016, the Canadian Court recognized and gave effect to such order in Canada. On or about July 18, 2016, the Debtors commenced solicitation of the Plan. On September 9, 2016, the Bankruptcy Court entered an order confirming the Plan. The Plan was recognized by the Ontario Superior Court of Justice (Commercial List) on September 12, 2016.

Entry into Unit Purchase and Support Agreement

On July 11, 2016, the Company, on behalf of the Debtors, entered into the UPA with certain holders of claims against the Debtors that are listed therein as plan sponsors. The UPA was entered into in connection with the Debtors’ Plan filed with the Bankruptcy Court. The UPA was approved by the Bankruptcy Court on September 9, 2016. See Note B – Voluntary Reorganization Under Chapter 11 for more details.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

General

This discussion should be read in conjunction with the Consolidated Financial Statements and Notes thereto included herein and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015, which was filed with the SEC on September 29, 2016.

Overview

Our Business

Through the operations of our subsidiary, Horsehead Corporation, we produced zinc metal in the United States until early 2016 and, we believe we are the largest North American recycler of EAF dust, a hazardous waste produced by the carbon steel mini-mill manufacturing process. We also believe that, through the operations of our subsidiary, Zochem, we are the largest single-site producer of zinc oxide in North America. Through the operations of our subsidiary, INMETCO, we believe we are a leading recycler of nickel-bearing waste generated by the stainless and specialty steel producers and a leading recycler of nickel-cadmium batteries and other types of batteries in North America. Horsehead is also the parent company of Horsehead Metal Products, LLC, which owns our idled zinc facility in Mooresboro, North Carolina.

We currently have production and/or recycling operations at five facilities (excluding the Mooresboro facility) located in four states in the United States. Zochem operates from one facility located in Canada. Our products are used in a wide variety of applications, including for use in zinc smelters operated by third parties, as components in rubber tires, alkaline batteries, paint, chemicals and pharmaceuticals and as a remelt alloy in the production of stainless steel. Products from our idled zinc facility in Mooresboro, North Carolina were used in the galvanizing of sheet and fabricated steel products.

We, together with the companies from which Horsehead Corporation acquired most of its assets, have been operating in the zinc industry for more than 150 years and in the nickel-bearing waste industry for more than 30 years. On January 22, 2016, we announced the idling of our Mooresboro, North Carolina zinc production facility. The decision to idle the Mooresboro facility was the result of many factors, including a depressed zinc price and our liquidity situation. A small workforce has been retained to manage the facility. To date, the Mooresboro facility remains in an idled state.

On February 2, 2016, we and certain of our subsidiaries filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware. We continue to operate our businesses as debtors-in-possession subject to the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. As a result of the Chapter 11 Cases and various other factors, including working capital deficits, losses from continuing operations, and defaults and cross-defaults under various credit agreements, there is substantial doubt about the Company’s ability to continue as a going concern.

27

Operations

We operate as three business segments, Horsehead, Zochem and INMETCO and operate in three distinct, but related, lines of business: (a) the processing of EAF dust and other zinc-bearing material to produce and sell zinc calcine, waelz oxides and zinc and other metals undertaken by Horsehead Corporation; (b) the production and sale of zinc oxide undertaken by Zochem; and (c) the processing of a variety of metal-bearing waste materials and the production of nickel-bearing alloys undertaken by INMETCO.

Horsehead Corporation

Horsehead Corporation was a producer of zinc products, including zinc metal, used in the galvanizing of steel, in zinc die castings, and zinc-bearing alloys in the United States. Prior to the Petition Date, Horsehead Corporation conducted its zinc production (as opposed to recycling) operations from its facility located in Mooresboro, North Carolina, which we began constructing in September 2011 to replace our former zinc smelter located in Monaca, Pennsylvania. We permanently shut down the Monaca facility in April 2014 and subsequently demolished it, and sold the land in June 2015, although we retain ownership of a non-hazardous captive landfill located at that site. The Mooresboro facility was idled on January 22, 2016.

Horsehead Corporation produces WOX and zinc calcine for sale to other zinc producers. Prior to the idling of the Mooresboro facility, Horsehead Corporation used WOX, the primary product of its recycling operations, as a low-cost, raw material feedstock in the production of zinc metal and value-added zinc products, which yielded a competitive cost advantage. Our EAF dust recycling operations provided us with a reliable, cost-effective source of recycled feedstock without relying on third-party sellers.

Since operations began at the Mooresboro facility in May 2014, we experienced a number of significant operational, production, and equipment issues associated with the attempted ramp-up of the Mooresboro facility. For example, it was discovered that the bleed treatment section of the facility was undersized causing a bottleneck to production, electrolyte quality deteriorated causing significant corrosion to electrodes in the cell house due, in part, to poor control of solids carryover into the solvent extraction units combined with equipment issues related to faulty organic filters and the HCl regeneration units, and several pumps and lines were improperly designed for the intended application. The Mooresboro facility was operating at approximately 25% of capacity during the fourth quarter of 2015. While we ultimately expected to realize substantial operating efficiencies from the Mooresboro facility once it became fully operational, we have publicly identified ongoing challenges with respect to the Mooresboro facility on numerous occasions. In total, we have invested approximately $575.0 million in the construction and development of the Mooresboro facility, excluding capitalized interest and internal labor, as of the Petition Date. On January 22, 2016, due to financial constraints, we issued notices to our employees at the Mooresboro facility under the Worker Adjustment and Retraining Notification Act and publicly announced our intention to transition the Mooresboro facility from fully operational status to operating on a “care and maintenance level” only by February 8, 2016. To date, the Mooresboro facility remains in an idled state.

Zochem

Our Zochem facility, which we acquired on November 1, 2011, is located in Brampton, Ontario, Canada and produces zinc oxide. We believe Zochem is the largest single-site producer of zinc oxide in North America. The production process uses special high grade (“SHG”) zinc as raw material which is added to the melting section of the furnaces. The melted zinc is then boiled and the zinc vapor is combusted as it enters an oxidation chamber. The zinc oxide is then collected and packaged for shipment. The Zochem facility has the capacity to produce approximately 72,000 tons of zinc oxide a year. Zinc oxide is used as an additive in various materials and products, including plastics, ceramics, glass, rubbers, cement, lubricants, pigments, sealants, ointments, fire retardants, and batteries.

INMETCO

INMETCO is a leading recycler of nickel-bearing waste generated by the stainless and specialty steel producers, and a leading recycler of nickel-cadmium and other types of batteries in North America. INMETCO operates out of a facility located in Ellwood City, Pennsylvania, which produces nickel-bearing products by using 100% recycled materials. Additionally, INMETCO collects and recycles batteries through its own collection programs and Call2Recycle, which was founded in 1994 by five major rechargeable battery makers. INMETCO also provides environmental services to generators of nickel-containing waste products, such as filter cake, spent pickle liquor, grinding swarf, and mill scale.

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Factors Affecting Our Operating Results

Sales. We generate the substantial majority of our net sales from the sale of zinc-based products and to a much lesser extent from the sales of nickel-based products, our operating results therefore, depend heavily on the prevailing market price for zinc and nickel. Our principal raw materials when we produced zinc metal were zinc extracted from recycled EAF dust, for which we receive revenue from the carbon steel mini-mill companies, and other zinc-bearing secondary materials (“purchased feedstock”) that we purchase from third parties. Costs to acquire and recycle EAF dust are not impacted significantly by fluctuations in the market price of zinc on the LME. Until it was idled on January 22, 2016, our Mooresboro facility utilized zinc recycled from EAF dust for a substantial majority of its raw materials. The cost for the remaining portion of our raw materials is not directly impacted by changes in the market price of zinc. Our Zochem facility relies entirely on SHG metal that is dependent on the LME zinc price. The price of our finished products is impacted directly by changes in the market price of zinc and nickel, which can result in rapid and significant changes in our monthly revenues.

Average monthly, daily and yearly LME zinc prices for the years 2006 through 2015 and the six months ended June 30, 2016 were as follows:

LME Zinc Prices	2006		2007		2008		2009		2010		2011		2012		2013		2014		2015		Six Months Ended June 30, 2016
Monthly Average
High	$	2.00	$	1.74	$	1.14	$	1.08	$	1.10	$	1.12	$	0.93	$	0.97	$	1.06	$	1.04	$	0.92
Low	$	0.95	$	1.07	$	0.50	$	0.50	$	0.79	$	0.84	$	0.82	$	0.83	$	0.91	$	0.69	$	0.69
Daily High	$	2.08	$	1.93	$	1.28	$	1.17	$	1.20	$	1.15	$	0.99	$	0.99	$	1.10	$	1.09	$	0.95
Daily Low	$	0.87	$	1.00	$	0.47	$	0.48	$	0.72	$	0.79	$	0.80	$	0.81	$	0.88	$	0.66	$	0.66
Average	$	1.48	$	1.47	$	0.85	$	0.75	$	0.98	$	0.99	$	0.88	$	0.87	$	0.98	$	0.87	$	0.82

We entered into fixed price zinc swaps which were put in place to reduce volatility during the completion of construction and ramp-up of production at the now-idled Mooresboro facility. We paid cash of $0.8 million and $0.7 million, respectively, from the settlement of fixed price zinc swaps for the three and six months ended June 30, 2015.

At December 31, 2015, we had 4,500 tons of fixed price zinc swaps in place at a strike price of $0.83 per pound for the first quarter of 2016. In January 2016, the broker holding our fixed price swap contracts required a margin call that we could not meet. As a result, all of the fixed price zinc swap contracts in effect at December 31, 2015 were liquidated in early January 2016.

Daily high, low and yearly average LME nickel prices for the years 2010 through 2015 and the six months ended June 30 , 2015 and the six months ended June 30, 2016 were as follows:

LME Nickel Prices	2011		2012		2013		2014		2015		Six Months Ended June 30, 2015		Six Months Ended June 30, 2016
Daily High	$	13.17	$	9.90	$	8.44	$	9.62	$	7.01	$	7.01	$	4.33
Daily Low	$	7.68	$	6.89	$	5.97	$	6.06	$	3.70	$	5.30	$	3.50
Average	$	10.36	$	7.97	$	6.81	$	7.65	$	5.36	$	6.21	$	3.93

Weekly steel industry capacity utilization remained in the low to mid 70% range in 2011 through the second quarter of 2012. During the third quarter of 2012, weekly steel industry capacity began to decline and dipped in the fourth quarter of 2012 to its lowest quarterly level since 2010. During 2013 and 2014, weekly steel industry capacity increased back to the mid to high 70% range. The weekly steel industry capacity decreased to the low 70% range during the first nine months of 2015 and dipped during the fourth quarter of 2015 to its lowest level since the end of 2010. It rebounded to the low 70% range during the first six months of 2016.

29

The table below illustrates historical sales volumes and revenues for zinc and nickel-based products and EAF dust:

	Shipments/EAF Dust Receipts								Revenue/Ton
	Six months ended June 30,				Year Ended December 31,				Six months ended June 30,				Year Ended December 31,
	2016		2015		2015		2014		2016		2015		2015		2014
	(Tons, in thousands)								(In U.S. dollars)
Product:
Zinc Products		43		62		121		129	$	1,726	$	2,146	$	2,010	$	2,125
EAF Dust		264		261		510		580	$	74	$	71	$	71	$	70
Nickel-based products		14		14		30		29	$	1,228	$	1,540	$	1,350	$	1,677

Cost of Sales (excluding depreciation and amortization). Our cost of producing zinc and nickel products consists principally of purchased feedstock, energy, maintenance and labor costs. Purchased feedstock related costs, when we were producing zinc metal, were driven by the percentage of purchased feed used in the feed mix, the average LME zinc price and the price paid for the purchased feed expressed as a percentage of the LME average zinc price. Purchased feedstock sells at a discount to the LME price of zinc.

Raw material costs at our Zochem facility, which comprised 89% of production costs for the six months ended June 30, 2016, consisted entirely of purchased SHG zinc metal. The price of these metal blocks is based on the LME zinc price. Conversion related costs represented 11% of our production costs at our Zochem facility for the six months ended June 30, 2016.

Certain components of our conversion costs do not change proportionally with changes in production volume. Consequently, as volume changes, a portion of our conversion cost per ton changes inversely. Other components of cost of sales include transportation costs, as well as other manufacturing expenses. The main factors that influence our cost of sales as a percentage of net sales are fluctuations in zinc and nickel prices, production and shipment volumes, efficiencies, energy costs and our ability to implement cost control measures aimed at improving productivity.

We value the majority of our inventories using the weighted average actual cost method. Under this method, the cost of our purchased feedstock generally takes three to four months to flow through our cost of sales. In an environment of declining LME average zinc prices, our inventory cost can exceed the market value of our finished goods. As a result, lower-of-cost-or-market (“LCM”) adjustments can occur. We recorded LCM adjustments totaling $3.6 million during the six months ended June 30, 2015. The LCM adjustments were the result of the declining LME zinc price, and the incurrence of higher than normal production costs in 2015 at the zinc facility in Mooresboro, North Carolina as it operated at inefficient levels during startup. Zochem values its inventory using the first in-first out method and therefore the majority of the cost of its purchased feedstock generally flows through cost of sales during the same month it is purchased. No LCM adjustment was recorded during the six months ended June 30, 2016.

Selling, General and Administrative Expenses. Our selling, general and administrative expenses consist of all sales and marketing expenditures, as well as administrative overhead costs, such as salary and benefit costs for sales personnel and administrative staff, expenses related to the use and maintenance of administrative offices, costs associated with acquisitions, other administrative expenses, including expenses relating to logistics and information systems and legal and accounting expense, and other selling expenses, including travel costs. Salary and benefit costs historically have comprised the largest single component of our selling, general and administrative expenses. Selling, general and administrative expenses as a percent of net sales historically have been impacted by changes in salary and benefit costs, as well as by changes in selling prices.

Fire at our INMETCO facility on November 8, 2015

On November 8, 2015, a fire damaged a battery storage building at our INMETCO facility located in Ellwood City, Pennsylvania. The fire did not affect the facility’s primary operations.

The Company is pursuing recovery of the cost of repairs and other related expenses during the rebuilding period, subject to deductibles, under the Company’s property insurance program. As of June 30, the Company has estimated that approximately $15 million in costs will be incurred to rebuild the facilities damaged in the fire and pay other related costs. The Company has not yet reached agreement with the insurers on the final claim amount. To date, the Company has received $3.0 million in recoveries from its insurance companies and recorded that amount as a reduction to cost of sales. See Footnote AA—Insurance Recoveries in our Audited Consolidated Financial Statements in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015, which was filed with the SEC on September 29, 2016 for further information.

30

Trends Affecting Our Business

Our operating results are and will be influenced by a variety of factors, including:

• production levels at our facilities;

• the supply of EAF dust for our recycling operations;

• LME price of zinc and nickel;

• changes in cost of energy and fuels;

• changes in the cost of additives and process chemicals;

• gain and loss of customers;

• pricing pressures from competitors, including new entrants into the zinc product markets, or the EAF dust or nickel-bearing waste recycling markets;

• production levels in the domestic steel industry;

• increases and decreases in the use of zinc and nickel-based products;

• expansions into new products and expansion of our capacity, which requires us to incur costs prior to generating revenues;

• expenditures required to comply with environmental and other operational regulations;

• access to credit by our customers; and

• our operational efficiency improvement programs.

We have experienced fluctuations in our sales and operating profits in recent years due to fluctuations in zinc, energy and fuel prices. Historically, zinc prices have been extremely volatile, and we expect that volatility to continue. For example, since May 2015, the price of zinc fell approximately 39%, reaching a six-year low in December 2015. The monthly average price of zinc rose 33% throughout the first six months of 2016 from the December 2015 monthly average. The price of nickel fell approximately 59% from May 2014 to December 2015. The monthly average price of nickel rose 2.6% throughout the first six months of 2016 from the December 2015 monthly average. Changes in zinc pricing have impacted our sales revenues since the prices of the products we sell are based primarily on LME zinc prices, and they have impacted our costs of production, since the purchase prices of some of our feedstocks are based on LME zinc prices. Therefore, since a large portion of our sales and a portion of our costs are affected by the LME zinc price, we expect that changing zinc prices will continue to impact our operations and financial results in the future and any significant drop in zinc prices will negatively impact our results of operations.

Energy is one of our most significant costs. Our processes rely primarily on electricity and natural gas to operate. Our freight operations depend heavily on diesel fuel. Energy prices have been volatile in recent years and currently exceed long-term historical averages. These fluctuations impact our manufacturing costs and contribute to earnings volatility.

Several additives and process chemicals, including but not limited to coke, and when the Mooresboro facility was operating, limestone, sulfuric acid and manganese were used in our operations. Changes in price and availability have a direct impact on our manufacturing costs.

Zinc based products that were produced at our Mooresboro facility compete with other materials in many of their applications. For example, PW zinc is used by steel fabricators in the hot dip galvanizing process, in which steel is coated with zinc in order to protect it from corrosion. Demand for zinc as a galvanizing material may shift depending on how customers view the respective merits of hot dip galvanizing and paint. In addition, SHG zinc and continuous galvanizing grade (“CGG”) zinc are used by continuous galvanizers to produce galvanized flat-rolled sheet steel for the automotive market. There have been recent plans by some automotive companies to begin to use lightweight aluminum sheet to replace galvanized steel. Any such shifts in industry uses could affect sales of our products.

Our nickel-based products are used in the stainless steel industry. Demand for our products and services may decline if demand for stainless steel lessens. Nickel-bearing stainless steel faces competition from stainless steel containing a lower level of nickel or no nickel.

Our ability to anticipate shifts in product usage and to produce new products to meet our current and future customers’ needs will significantly impact our operating results. We also face intense competition from regional, national and global providers of zinc and nickel based products, and the growth of any of those competitors could reduce our market share and negatively impact our operating results.

Our business is subject to a wide variety of environmental and other regulations and our operations expose us to a wide variety of potential liabilities. Our total cost of environmental compliance at any time depends on a variety of regulatory, technical and factual issues, some of which cannot be anticipated. Changes in regulations and/or our failure to comply with existing regulations can result in significant capital expenditure requirements or penalties.

31

Summary of Critical Accounting Policies and Estimates

Our Consolidated Financial Statements and the notes thereto for the fiscal year ended December 31, 2015, which were included in our Annual Report on Form 10-K filed with the SEC on September 29, 2016, contain a summary of significant accounting policies followed by us in the preparation of our consolidated financial statements. These policies were also followed in preparing the consolidated financial statements as of June 30, 2016 and for the three and six months ended June 30, 2016 and 2015. Certain of these accounting policies are described below.

Revenue Recognition

We recognize revenue from the sale of finished goods when persuasive evidence of a sales arrangement exists which includes a fixed or determinable price, when passage of title or risk of loss has occurred (which is generally at the time of shipment) and when collectability is reasonably assured.

We recognize service fee revenue when persuasive evidence of a sales arrangement exists which includes a fixed or determinable price, when passage of title or risk of loss has occurred (which is generally recognized at the time of receipt of EAF dust that the Company collects from steel mini-mill operators) and when collectability is reasonably assured.

Inventories

Inventories, which consist primarily of zinc and nickel-bearing materials, chemical reagents and supplies and spare parts are valued at the lower-of-cost-or-market using a weighted average actual cost method. Zochem values its inventory using the first-in first-out method. Raw materials are purchased, as well as produced, from the processing of EAF dust. Supplies and spare parts inventory used in the production process are purchased and depending on the type of supply or spare part are either classified as long-term supplies, capitalized until consumption, or expensed immediately. Work-in-process and finished goods inventories are valued based on the costs of raw materials plus applicable conversion costs, including depreciation and overhead costs relating to associated process facilities.

Zinc and nickel are traded as commodities on the LME and, accordingly, product inventories are subject to price fluctuations. When reviewing inventory for the lower of cost or market adjustments, we consider the forward metal prices as quoted on the LME as of the reporting date in determining our estimate of net realizable value and to determine if an adjustment is required. Our product revenues are based on the current or prior months’ LME average prices. The LME average price upon which our product revenue is based has been reasonably correlated with the forward LME prices that we use to determine the lower of cost or market adjustments.

Supplies are adjusted based on obsolescence and slow moving reviews. We record an estimate for slow moving and obsolete inventory (“inventory reserve”) based upon our product knowledge, physical inventory observation, future demand, market conditions and an aging analysis of the inventory on hand. For “convenience,” we reduce inventory cost through a contra asset rather than through a new cost basis.

Insurance Claim Liabilities

We accrue for costs associated with self-insured retention under certain insurance policies (primarily workers’ compensation) based on estimates of claims, including projected development, from information provided by the third party administrator and a third party actuarial firm. Accruals for estimated costs are undiscounted and are subject to change based on development of such claims. Changes in the estimates of the reserves are included in net income in the period determined. Amounts estimated to be paid within one year have been classified as current liabilities, with the remainder included in non-current liabilities in the Consolidated Balance Sheets.

Share-Based Compensation

We have a share-based compensation plan. Employee stock options are expensed over the requisite service period, based on the estimated fair value of the award on the date of the grant using the Black-Scholes option-pricing model. Restricted stock unit service or performance related grants are expensed over the vesting period, with the expense based on the stock price on the grant-date multiplied by the number of restricted stock units granted. Restricted stock unit market based grants are expensed over the

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vesting period, with the expense determined using a valuation model based on commonly accepted economic theory which is used for all valuations of awards with market conditions. This economic theory is also used as a basis for the Black Scholes and Monte Carlo valuations.

Fair Value

Fair value is measured using inputs from the three levels of the fair value hierarchy. Classification within the hierarchy is determined based on the lowest level of input that is significant to the fair value measurement.

The three levels are described as follows:

• Level 1—Unadjusted quoted prices in active markets for identical assets and liabilities. Cash and cash equivalents including the money market demand account, accounts receivable, accounts payable, and certain accrued expenses are considered to be in Level 1 of the fair value hierarchy as they approximate their fair value due to the short-term nature of these instruments.

• Level 2—Inputs other than quoted prices included in Level 1 that are observable for the determination of the fair value of the asset or liability, either directly or indirectly. The financial swap and financial option instruments are carried at fair value and are considered to be in Level 2 of the fair value hierarchy. These derivatives are not designated as cash flow hedges and we recognize changes in fair value within the consolidated statements of operations as they occur (see Note L—Accounting for Derivative Instruments and Hedging Activities in our Consolidated Financial Statements). Borrowings under our credit facilities are considered to be in Level 2 of the fair value hierarchy (see Note E—Long Term Debt). The pension assets, which are primarily invested in the Manulife Monthly High Income GIF Fund, are carried at fair value and are considered to be in Level 2 of the fair value hierarchy.

• Level 3—Unobservable inputs that are significant to the determination of fair value of the asset or liability. The Convertible Notes, issued on July 27, 2011, were initially valued at fair value and subsequently are carried at amortized cost. The fair value is considered to be in Level 3 of the fair value hierarchy (see Note E—Long Term Debt). The Senior Secured Notes issued on July 26, 2012, June 3, 2013 and July 29, 2014 were initially valued at fair value and subsequently are carried at amortized cost. The Unsecured Notes issued on July 29, 2014 were issued and are valued at par value. The fair value of these debt issuances are considered to be in Level 3 of the fair value hierarchy (see Note E—Long-Term Debt in our Consolidated Financial Statements). Level 3 inputs are also used in the determination for impairment testing on long-lived assets. Due to the Bankruptcy filing and defaults the debt is impractical to value.

When developing the fair value measurements, we use quoted market prices whenever available or seek to maximize the use of observable inputs and minimize the use of unobservable inputs when quoted market prices are not available.

Derivatives

We do not enter into derivative financial instruments unless we have an existing asset or obligation or anticipate a future activity that could result in exposing us to market risk. We use various strategies to manage our market risk, including the use of derivative instruments to limit, offset or reduce such risk. Derivative financial instruments are used to manage well-defined commodity price risks from our primary business activity.

We record derivative instruments in current assets or current liabilities in the Consolidated Balance Sheets at fair value. These derivatives are not designated as cash flow hedges and we recognize changes in fair value within the Consolidated Statements of Operations as they occur. The fair values of derivative instruments are based upon a comparison of third party counterparties valuations, with whom the Company has entered into substantially identical derivative contracts, to ensure that there is an acceptable level of consistency among them. The valuations utilize forward pricing and an implied volatility of the underlying commodity as well as interest rate forwards and are therefore subject to fluctuation based on the movements of the commodity markets. Cash flows from derivatives are recognized in the Consolidated Statements of Cash Flows in a manner consistent with the underlying transactions.

We are exposed to credit loss should counter-parties or clearing agents with which we have entered into derivative transactions become unable to satisfy their obligations in accordance with the underlying agreements. To reduce the risk of such losses, at points in time, we utilize LME-registered contracts entered into with the London Clearing House for some of our contracts. In addition, we minimize credit loss by utilizing four different brokers for our derivative contracts. (See Note L—Accounting for Derivative Instruments and Hedging Activities in our Consolidated Financial Statements).

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Impairment

Long lived assets, which include property, plant and equipment as well as definite life intangible assets, are reviewed for impairment when events and circumstances indicate that the carrying amount of an asset may not be recoverable. Our policy is to record an impairment loss when it is determined that the carrying amount of the asset exceeds the sum of the expected undiscounted future cash flows resulting from use of the asset, and its eventual disposition. Impairment losses are measured as the amount by which the carrying amount of the asset exceeds its fair value, normally as determined in either open market transactions or through the use of a discounted cash flow model. Long lived assets to be disposed of are reported at the lower of the carrying amount or fair value less cost to sell.

In assessing the recoverability of our long-lived assets, management may be required to make assumptions regarding estimated future cash flows and other factors to determine the fair value of the respective assets. This process is subjective and requires judgment at many points throughout the analysis. If such estimates or their related assumptions change in subsequent periods or if actual cash flows or other market measures are below management’s estimates, we may be required to record impairment charges for these assets not previously recorded or additional impairments on assets already recorded.

We recorded an impairment loss on the Mooresboro facility in December 2015 and an additional loss in March 2016. See Footnote F-Asset Write-Downs and Disposals in the Audited Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015 and Note D – Property, Plant and Equipment in the Consolidated Financial Statements for the three and six months ended June 30, 2016 for additional information on the impairment losses on the Mooresboro facility.

We have no goodwill or indefinite life intangible assets.

Acquisitions

We recognize the assets acquired and the liabilities assumed at their fair values as of the acquisition date. Contingent purchase consideration is recorded at fair value at the date of acquisition. Measuring assets and liabilities at fair value requires us to determine the price that would be paid by a third party market participant based on the highest and best use of the assets or interest acquired. The excess of the purchase price over the fair value of the net assets acquired is recorded as goodwill. The excess of the fair value of the net assets acquired over the purchase price is recorded as a bargain purchase gain. Acquisition costs are expensed as incurred.

Variable Interest Entities

Investments in other entities are accounted for using the consolidation, equity or cost basis method depending upon the Company’s level of ownership, ability to exercise significant influence over the operating and financial policies of the investee and whether the Company is determined to be the primary beneficiary of a variable interest in an entity.

In December 2013, HMP entered into a joint venture known as ThirtyOx, LLC (“ThirtyOx”) with Imperial Acquisitions LLC for the acquisition and processing of zinc bearing secondary materials. The processing operation is located in North Carolina near the Company’s zinc facility in Mooresboro, North Carolina. When the zinc facility resumes operations and if it achieves better production levels than prior to idling, we expect that the majority of the feedstock for the zinc facility will be supplied by Horsehead’s EAF dust recycling plants. ThirtyOx is expected to supply a portion of the incremental zinc feed required by the zinc facility by recovering secondary zinc oxides from the residues generated by galvanizers, die casters and other users of zinc metal. The ThirtyOx facility became operational in August 2014.

ThirtyOx was determined to be a variable interest entity as its significant activities are directed by a management agreement and not the equity group. HMP has determined that although it does have influence on ThirtyOx, it is not the primary beneficiary of the variable interest. HMP accounts for its investment in ThirtyOx utilizing the equity method of accounting as it does not own over 50% of the joint venture. HMP has recorded its cash contributions to ThirtyOx as an investment which is increased or decreased by its respective share of ThirtyOx pretax income or loss.

The Company has determined that HMP’s interest in ThirtyOx is not individually significant to its consolidated balance sheet and income statement and therefore is not required to provide additional disclosures regarding its involvement with this joint venture.

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Results of Operations

The following table sets forth the percentages of sales that certain items of operating data constitute for the periods indicated.

	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
Net sales		100.0	%		100.0	%		100.0	%		100.0	%
Cost of sales (excluding depreciation and amortization)		98.7	%		88.1	%		106.1	%		95.3	%
(Gain) loss on asset dispositions		—			(9.9	)%		—			(5.3	)%
Impairment loss		—			—			33.7	%
Depreciation and amortization		7.0	%		12.3	%		7.4	%		12.0	%
Selling, general and administrative expenses		6.6	%		5.5	%		8.0	%		6.0	%
Income (Loss) from operations		(12.3	)%		4.0	%		(55.2	)%		(8.0	)%
Interest expense		4.1	%		7.4	%		9.4	%		8.1	%
Interest and other income		(0.1	)%		0.1	%		1.3	%		0.3	%
Reorganization items, net		(19.1	)%		—			(19.3	)%
Loss before income taxes		(35.6	)%		(3.3	)%		(82.6	)%		(15.8	)%
Income tax benefit		(0.1	)%		(0.4	)%		(0.2	)%		(6.0	)%
Net loss		(35.5	)%		(2.9	)%		(82.4	)%		(9.8	)%

A significant portion of our zinc oxide, WOX and zinc calcine shipments are priced based on prior months’ LME average zinc price. Consequently, changes in the LME average zinc price are not fully realized until subsequent periods.

The LME average zinc prices for the most recent eight quarters and the average LME zinc prices for the year to date as of the end of each quarter are listed in the table below:

	2014				2015								2016
Average LME zinc price	September 30		December 31		March 31		June 30		September 30		December 31		March 31		June 30
Quarter	$	1.05	$	1.01	$	0.94	$	0.99	$	0.84	$	0.73	$	0.76	$	0.87
Year-to-date	$	0.97	$	0.98	$	0.94	$	0.97	$	0.92	$	0.87	$	0.76	$	0.82

Segment Disclosure

We currently report three segments, Horsehead, Zochem and INMETCO. The Horsehead segment processes EAF dust and other zinc-bearing material to produce and sell zinc and other metals. The Zochem segment produces and sells zinc oxide. The INMETCO segment processes a variety of metal-bearing waste material generated primarily by the specialty steel industry, provides tolling services and produces and sells nickel-chromium-molybdenum-iron to the stainless and specialty steel industries.

Eliminations related to the exclusion of revenue resulting from EAF dust service fees charged by our Horsehead segment to our INMETCO segment and sales of zinc metal from our Horsehead segment to our Zochem segment, interest expense recorded on debt which is not allocated to our segments and selling, general and administrative expenses related to our corporate division are not recorded within our three segments.

Three Months Ended June 30, 2016 Compared with Three Months Ended June 30, 2015

Consolidated net sales.

Consolidated net sales decreased $40.9 million, or 33.3%, to $81.9 million for the three months ended June 30, 2016, compared to $122.8 million for the three months ended June 30, 2015.

Change in consolidated net sales	(in millions)
Horsehead	$	(33.6	)
Zochem		(1.2	)
INMETCO		(6.9	)
Eliminations		0.8
Total change in consolidated net sales	$	(40.9	)

See separate segment discussion.

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Consolidated cost of sales (excluding depreciation and amortization).

Consolidated cost of sales decreased $27.3 million, or 25.2%, to $80.9 million for the three months ended June 30, 2016, compared to $108.2 million for the three months ended June 30, 2015.

Change in consolidated cost of sales (excluding depreciation and amortization)	(in millions)
Horsehead	$	(25.5	)
Zochem		0.1
INMETCO		(2.8	)
Eliminations		0.9
Total change in consolidated cost of sales (excluding depreciation and amortization)	$	(27.3	)

See separate segment discussion.

Gain on asset disposition

Gain on asset disposition decreased $12.2 million to $0.0 million for the three months ended June 30, 2016. The Company completed the sale of the Monaca facility to Shell in June 2015 which resulted in a gain.

Consolidated depreciation and amortization.

Consolidated depreciation and amortization decreased $9.4 million, or 62.3%, to $5.7 million for the three months ended June 30, 2016, compared to $15.1 million for the three months ended June 30, 2015.

Change in consolidated depreciation and amortization	(in millions)
Decrease in depreciation associated with the Mooresboro facility	$	(9.1	)
Other		(0.3	)
Total change in consolidated depreciation and amortization	$	(9.4	)

• The decrease in depreciation is due to the reduced book value of the Mooresboro facility as a result of the impairment charge recorded at December 31, 2015.

Consolidated selling, general and administrative expenses.

Consolidated selling, general and administrative expenses decreased $1.4 million, or 20.6%, to $5.4 million for the three months ended June 30, 2016, compared to $6.8 million for the three months ended June 30, 2015. The decrease is a result of an overall decrease in non-reorganization expenses, particularly in travel expenses and non-cash compensation.

Consolidated other income (expense).

Net consolidated other income (expense) was $(3.4) million for the three months ended June 30, 2016, compared to $(9.0) million for the three months ended June 30, 2015.

Reorganization items.

Professional advisory fees and other costs directly associated with our reorganization are reported separately as reorganization items pursuant to ASC 852-10. Reorganization items for the three months ended June 30, 2016 were $15.7 million.

Horsehead reorganization items	(in millions)
Professional fees	$	15.6
Interest expense		0.1
Total reorganization related items	$	15.7

• Professional fees include legal and other advisory fees related to the bankruptcy proceedings.

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Consolidated income tax benefit.

	Three Months Ended June 30, 2016			Three Months Ended June 30, 2015
Income tax benefit (in millions)	$	(0.1	)	$	(0.5	)
Effective tax rate		0.2	%		13.1	%

• The effective tax rate for the three months ended June 30, 2016 decreased when compared to the three months ended June 30, 2015 due to the domestic entities being in a loss position creating a full valuation allowance on the deferred balances.

Consolidated net loss.

For the reasons stated above, net loss for the three months ended June 30, 2016 was $29.1 million compared to $3.6 million for the three months ended June 30, 2015.

Business Segments

Horsehead

Net sales.

Net sales decreased $33.6 million, or 44.1%, to $42.6 million for the three months ended June 30, 2016 compared to $76.2 million for the three months ended June 30, 2015.

Change in Horsehead net sales	(in millions)
Volume decrease due to zinc finished products and services		(31.6	)
Price realization decrease due to zinc finished products and services		(0.1	)
WOX/zinc calcine sales increase		9.0
Decrease in unrealized hedge adjustments		(10.2	)
Miscellaneous and other sales increase		(0.7	)
Total change in Horsehead net sales	$	(33.6	)

• The zinc products volume reduction was primarily due to idling the Mooresboro facility in January 2016. The facility was ramping-up production through the second quarter of 2015.

• The decrease in price realization during the three months ended June 30, 2016 primarily resulted from a 12.5% lower average LME zinc price for the three months ended June 30, 2016 compared to the three months ended June 30, 2015.

• WOX and zinc calcine were sold to third parties during both the three months ended June 30, 2016 and June 30, 2015 and will continue to be sold until the new zinc facility is operating at close to capacity.

Horsehead zinc product shipments—in tons	Three Months Ended June 30, 2016		Three Months Ended June 30, 2015
Zinc finished product shipments		1,891		16,803
WOX/calcine shipments		45,007		27,886
Total zinc product shipments on a zinc contained basis		29,976		34,203
Average sales price realization on a zinc contained basis	$	0.53	$	0.80

• The decrease in the average sales price realization reflects the 12.5% lower average LME zinc price during the three months ended June 30, 2016 compared to the three months ended June 30, 2015 and the increase in lower-priced WOX/calcine shipments as a percentage of total shipments. Shipments increased to third parties as the Mooresboro plant was idled in January 2016.

Net sales of zinc metal decreased $32.4 million, or 91.0%, to $3.2 million for the three months ended June 30, 2016, compared to $35.6 million for the three months ended June 30, 2015.

Change in Horsehead zinc metal net sales	(in millions)
Decrease in volume	$	(32.1	)
Decrease in price realization		(0.3	)
Total change in Horsehead zinc metal net sales	$	(32.4	)

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• The decrease in volume relates to a reduction in shipments due to the idling of the Mooresboro facility in January 2016. Mooresboro was ramping-up production through the second quarter of 2015.

• The decrease in price realization was a result of a decrease in the average price per ton on zinc metal sold and a decrease of 12.5% in the average LME zinc price.

Net sales of zinc-based powders increased $0.2 million to $1.1million for the three months ended June 30, 2016 compared to $0.9 million for the three months ended June 30, 2015. The increase was primarily due to an increase in shipments.

Revenues from EAF dust recycling increased $0.5 million, or 5.3%, to $10.0 million for the three months ended June 30, 2016, compared to $9.5 million for the three months ended June 30, 2015.

Change in Horsehead EAF Dust recycling net sales	(in millions)
Increase in volume	$	0.2
Increase in price realization		0.3
Total change in Horsehead EAF Dust recycling net sales	$	0.5

• EAF dust receipts for the three months ended June 30, 2016 were 136,982 tons compared to 134,511 tons for the three months ended June 30, 2015.

Cost of sales (excluding depreciation and amortization).

Cost of sales decreased $25.4 million, or 35.9%, to $45.4 million for the three months ended June 30, 2016, compared to $70.8 million for the three months ended June 30, 2015.

	Three Months Ended June 30, 2016			Three Months Ended June 30, 2015
Cost of sales as a % of net sales		106.5	%		108.8	%
Unrealized non-cash losses (gains) related to hedging	$	—		$	(10.2	)

The cost of zinc material and other products sold for the three months ended June 30, 2016, decreased $25.6 million, or 40.4%, to $37.7 million, compared to $63.3 million for the three months ended June 30, 2015.

Change in Horsehead cost of zinc material and other products sold	(in millions)
Decrease due to a reduction in the volume of zinc finished products shipped		(38.8	)
Decrease in cost of zinc finished products shipped		(1.5	)
Increase in recycling and other costs		5.3
Increase in cost of sales relating to WOX and zinc calcine products produced		9.4
Total change in Horsehead cost of zinc metal and other products sold	$	(25.6	)

• Volume decrease due to idling of the Mooresboro facility in January of 2016.

• The cost of zinc material includes a $1.3 million of LCM inventory adjustment during the three months ended June 30, 2015. The 2015 LCM adjustment was the result of higher than normal production costs at the Mooresboro facility which operated at inefficient levels during its continued ramp-up.

Conversion costs for the Mooresboro facility were $5.5 million and $20.1 million for the three months ended June 30, 2016 and June 30, 2015, respectively, and consisted primarily of labor, maintenance, services, utilities, supplies and chemical additives. The reduction reflects the idling of the facility in January 2016.

Conversion costs for the recycling facilities that process EAF dust decreased approximately $0.2 million to $23.0 million for the three months ended June 30, 2016 from $23.2 million for the three months ended June 30, 2015.

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Change in Horsehead recycling conversion costs	(in millions)
Labor	$	0.2
Operating supplies		(0.2	)
Maintenance related costs		(0.5	)
Services		0.7
Electricity		(0.1	)
Other		(0.3	)
Total change in Horsehead conversion costs	$	(0.2	)

• Production decreased 4.7% for the second quarter of 2016 as compared to the second quarter of 2015.

• Conversion cost per ton increased 3.9% for the second quarter of 2016 compared to the second quarter of 2015.

The cost of EAF dust services decreased $0.1 million, or 1.3% to $7.4 million for the three months ended June 30, 2016, compared to $7.5 million for the three months ended June 30, 2015. The decrease was due to a slight increase in customers’ volume offset by a slight decrease in cost. EAF dust tons processed decreased 7.8% for the three months ended June 30, 2016 compared to the three months ended June 30, 2015.

Zochem

Net sales.

Net sales decreased $1.2 million, or 3.6%, to $32.0 million for the three months ended June 30, 2016, compared to $33.2 million for the three months ended June 30, 2015.

Change in Zochem net sales	(in millions)
Higher shipment volume	$	5.1
Decrease in price realization		(6.3	)
Total change in Zochem net sales	$	(1.2	)

• Higher shipment volume due to an increase in tons shipped of 15.2% for the three months ended June 30, 2016 compared to the three months ended June 30, 2015.

• Price realization per pound decreased16.8% partially as a result of a decrease in the average LME zinc price of 12.5% for the three months ended June 30, 2016 compared to the three months ended June 30, 2015.

Cost of sales (excluding depreciation and amortization).

Cost of sales were approximately $29.5 million for the three months ended June 30, 2016, and for the three months ended June 30, 2015.

Change in Zochem cost of sales (excluding depreciation and amortization)	(in millions)
Decrease in cost of products shipped	$	(4.4	)
Increase due to higher shipment volume		4.4
Total change in Zochem cost of sales (excluding depreciation and amortization)	$	—

• The decrease in the cost of products shipped was primarily the result of the 12.5% decrease in the average LME zinc price for the three months ended June 30, 2016 compared to the three months ended June 30, 2015.

• Shipment volume increased 15.2% for the three months ended June 30, 2016 compared to the three months ended June 30, 2015.

INMETCO

Net sales.

Net sales decreased $6.9 million, or 47.9%, to $7.5 million for the three months ended June 30, 2016, compared to $14.4 million for the three months ended June 30, 2015.

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Change in INMETCO net sales	(in millions)
Decrease in shipment volume		(3.8	)
Decrease in price realization		(2.7	)
Decrease in other and miscellaneous sales		(0.4	)
Total change in INMETCO net sales	$	(6.9	)

• Decrease in shipment volume as a result of the planned annual maintenance shutdown that occurred in April 2016. The 2015 shutdown occurred in January.

• Decrease in price realization resulted from a 32.2% lower LME average nickel price and lower price realization on tolling return shipments.

Cost of sales (excluding depreciation and amortization).

Cost of sales decreased $2.8 million, or 31.1%, to $6.2 million for the three months ended June 30, 2016 compared to $9.0 million for the three months ended June 30, 2015.

Change in INMETCO cost of sales (excluding depreciation and amortization)	(in millions)
Lower shipment volume	$	(2.6	)
Higher cost of product shipped		0.4
Net fire related insurance recovery		(0.6	)
Total change in INMETCO cost of sales (excluding depreciation and amortization)	$	(2.8	)

• Lower shipment volume and higher cost of product shipped resulted from the planned annual maintenance shutdown that occurred in April 2016. The 2015 annual shutdown occurred in January.

Income/(loss) before income taxes.

For the reasons stated above, our income/(loss) before income taxes was $(0.05) million for the three months ended June 30, 2016 compared to $4.0 million for the three months ended June 30, 2015.

Other

Corporate, eliminations and other

Net sales.

Eliminations of net sales were $0.2 million for the three months ended June 30, 2016 compared to $1.1 million for the three months ended June 30, 2015. Eliminations relate to the exclusion of revenue resulting from EAF dust service fees charged by our Horsehead segment to our INMETCO segment.

Loss before income taxes.

Loss before income taxes increased $6.3 million to $14.5 million for the three months ended June 30, 2016 compared to $8.2 million for the three months ended June 30, 2015. The increase in loss before income taxes was primarily attributable to reorganization items of $14.6 million for the three month ended June 30, 2016 partially offset by a $8.2 million decrease in interest on debt recorded in our corporate division.

Six Months Ended June 30, 2016 Compared with Six Months Ended June 30, 2015

Consolidated net sales.

Consolidated net sales decreased $63.8 million, or 28.4%, to $161.1 million for the six months ended June 30, 2016, compared to $224.9 million for the six months ended June 30, 2015.

Change in consolidated net sales	(in millions)
Horsehead	$	(48.2	)
Zochem		(8.6	)
INMETCO		(7.9	)
Eliminations		0.9
Total change in consolidated net sales	$	(63.8	)

See separate segment discussion following.

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Consolidated cost of sales (excluding depreciation and amortization).

Consolidated cost of sales decreased $43.4 million, or 20.5%, to $170.9 million for the six months ended June 30, 2016, compared to $214.3 million for the six months ended June 30, 2015.

Change in consolidated cost of sales (excluding depreciation and amortization)	(in millions)
Horsehead	$	(36.1	)
Zochem		(5.2	)
INMETCO		(3.0	)
Eliminations		0.9
Total change in consolidated cost of sales (excluding depreciation and amortization)	$	(43.4	)

See separate segment discussion following.

Gain on asset disposition

Gain on asset disposition decreased $11.9 million for the six months ended June 30, 2016. The Company completed the sale of the Monaca facility to Shell in June 2015 which resulted in a gain.

Consolidated impairment loss

On February 2, 2016, the Company filed voluntary petitions for relief pursuant to Chapter 11 of the Bankruptcy Code in Bankruptcy Court. At that time, the Company did not have the capacity to raise additional capital. The Company concluded that additional expenditures upwards of $117.0 million were required to bring the Mooresboro facility back online and make needed improvements to cure the identified operational issues. This information along with the filing for bankruptcy protection resulted in the Company determining a triggering event had occurred to further test impairment of the long-lived assets at the Mooresboro facility. The Company was unable to estimate future cash flows as the property was idled and there was no certainty as to whether funds were available to cure the operational defect. As such the Company proceeded to step 2 of the impairment test where we compared the implied fair value of operating invested capital of Horsehead to the fair value of our operating segments and determined the fair value of the Mooresboro facility to be essentially the liquidation value. The significant assumption in the analysis was that the Mooresboro facility would remain idle indefinitely until suitable funds were available to cure the significant operational defects. As a result of the analysis, we recorded a non-cash, pre-tax long-lived asset impairment loss of $54.3 million for the Mooresboro asset group. The total amount of this write-down is included in Loss from Operations in the Consolidated Statement of Operations for the six months ended June 30, 2016. Following the write-down of the asset group, the remaining book value of the Mooresboro facility is $31.3 million at March 31, 2016.

Consolidated depreciation and amortization.

Consolidated depreciation and amortization decreased $15.0 million, or 55.8%, to $11.9 million for the six months ended June 30, 2016, compared to $26.9 million for the six months ended June 30, 2015.

Change in consolidated depreciation and amortization	(in millions)
Decrease in depreciation associated with the Mooresboro facility	$	(14.8	)
Other		(0.2	)
Total change in consolidated depreciation and amortization	$	(15.0	)

• The decrease in depreciation is due to the reduced book value of the Mooresboro facility as a result of the impairment charge recorded at December 31, 2015.

Consolidated selling, general and administrative expenses.

Consolidated selling, general and administrative expenses decreased $0.7 million, or 5.2%, to $12.9 million for the six months ended June 30, 2016, compared to $13.6 million for the six months ended June 30, 2015. The decrease is a result of an overall decrease in non-reorganization expenses, particularly in travel expenses and stock compensation.

Consolidated other income (expense).

Net consolidated other income (expense) was $(13.0) million for the six months ended June 30, 2016, compared to $(17.5) million for the six months ended June 30, 2015. The reduction is primarily the result of income of $3.0 million recorded related to the settlement with TR, one of the primary design firms for work associated with the construction of portions of the Mooresboro facility. The settlement was recorded in January 2016.

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Reorganization items.

Professional advisory fees and other costs directly associated with our reorganization are reported separately as reorganization items pursuant to ASC 852-10. Reorganization items for the six months ended June 30, 2016 were $31.1 million.

Horsehead reorganization items	(in millions)
Professional fees	$	26.8
Interest expense		4.3
Total reorganization related items	$	31.1

• Professional fees include legal and other advisory fees related to the bankruptcy proceedings.

• Interest expense includes forbearance fees, early termination fees and adjustments to deferred finance charges associated with our debt and credit agreements. It also includes fees associated with obtaining debtor-in-possession financing.

Consolidated income tax (benefit) expense.

	Six Months Ended June 30, 2016			Six Months Ended June 30, 2015
Income tax (benefit) expense (in millions)	$	(0.3	)	$	(13.4	)
Effective tax rate		0.2	%		37.8	%

• The effective tax rate for the six months ended June 30, 2016 decreased when compared to the six months ended June 30, 2015 due to the domestic entities being in a loss position creating a full valuation allowance on the deferred balances.

Consolidated net loss.

For the reasons stated above, the net loss for the six months ended June 30, 2016 was $89.9 million compared to $22.1 million for the six months ended June 30, 2015.

Business Segments

Horsehead

Net sales.

Net sales decreased $48.3 million, or 36.2%, to $85.1 million for the six months ended June 30, 2016 compared to $133.4 million for the six months ended June 30, 2015.

Change in Horsehead net sales	(in millions)
Volume decrease due to zinc finished products and services		(49.0	)
Price realization decrease due to zinc finished products and services		(2.4	)
WOX/zinc calcine sales increase		15.3
Decrease in unrealized hedge adjustments		(9.9	)
Miscellaneous and other sales decrease		(2.3	)
Total change in Horsehead net sales	$	(48.3	)

• The zinc products volume reduction was primarily due to idling the Mooresboro facility in January 2016. The facility was ramping-up production through the second quarter of 2015.

• The decrease in price realization during the six months ended June 30, 2016 primarily resulted from a 15.7% lower average LME zinc price for the six months ended June 30, 2016 compared to the six months ended June 30, 2015.

• WOX and zinc calcine were sold to third parties during both the six months ended June 30, 2016 and June 30, 2015 and will continue to be sold until the new zinc facility is operating at close to capacity.

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Horsehead zinc product shipments—in tons	Six Months Ended June 30, 2016		Six Months Ended June 30, 2015
Zinc finished product shipments		7,531		31,088
WOX/calcine shipments		85,062		51,069
Total zinc product shipments on a zinc contained basis		61,148		63,265
Average sales price realization on a zinc contained basis	$	0.52	$	0.80

• The decrease in the average sales price realization reflects the 15.7% lower average LME zinc price during the six months ended June 30, 2016 compared to the six months ended June 30, 2015 and the increase in lower-priced WOX/calcine shipments as a percentage of total shipments.

Net sales of zinc metal decreased $52.5 million, or 81.1%, to $12.2 million for the six months ended June 30, 2016, compared to $64.7 million for the six months ended June 30, 2015.

Change in Horsehead zinc metal net sales	(in millions)
Decrease in volume	$	(49.7	)
Decrease in price realization		(2.8	)
Total change in Horsehead zinc metal net sales	$	(52.5	)

• The decrease in volume relates to a reduction in shipments due to the idling of the Mooresboro facility in January 2016. Mooresboro was ramping-up production through the second quarter of 2015.

• The decrease in price realization was a result of a decrease in the average price per ton on zinc metal sold and a decrease of 15.7% in the average LME zinc price.

Net sales of zinc-based powders increased $0.3 million to $1.9 million for the six months ended June 30, 2016 compared to $1.6 million for the six months ended June 30, 2015. The increase was primarily due to an increase in shipments.

Revenues from EAF dust recycling increased $0.8 million, or 4.2%, to $19.9 million for the six months ended June 30, 2016, compared to $19.1 million for the six months ended June 30, 2015.

Change in Horsehead EAF Dust recycling net sales	(in millions)
Increase in volume	$	0.2
Increase in price realization		0.6
Total change in Horsehead EAF Dust recycling net sales	$	0.8

Cost of sales (excluding depreciation and amortization).

Cost of sales decreased $36.1 million, or 26.2%, to $101.6 million for the six months ended June 30, 2016, compared to $137.7 million for the six months ended June 30, 2015.

	Six Months Ended June 30, 2016			Six Months Ended June 30, 2015
Cost of sales as a % of net sales		119.4	%		103.2	%
Unrealized non-cash losses (gains) related to hedging	$	—		$	(9.9	)

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The cost of zinc material and other products sold for the six months ended June 30, 2016, decreased $35.7 million, or 29.1%, to $87.2 million, compared to $122.9 million for the six months ended June 30, 2015.

Change in Horsehead cost of zinc material and other products sold	(in millions)
Decrease due to a reduction in the volume of zinc finished products shipped		(66.3	)
Increase in cost of zinc finished products shipped		3.3
Increase in recycling and other costs		8.5
Increase in cost of sales relating to WOX and zinc calcine products produced		18.8
Total change in Horsehead cost of zinc metal and other products sold	$	(35.7	)

• Volume decrease due to idling of the Mooresboro facility in January of 2016.

• The cost of zinc material includes $3.6 million of LCM inventory adjustments during the six months ended June 30, 2015 The 2015 LCM adjustment was the result of higher than normal production costs at the Mooresboro facility which operated at inefficient levels during its continued ramp-up.

Conversion costs for the Mooresboro facility were $18.1 million and $42.4 million for the six months ended June 30, 2016 and June 30, 2015, respectively, and consisted primarily of labor, maintenance, services, utilities, supplies and chemical additives. The reduction reflects the idling of the facility in January 2016.

Conversion costs for the recycling facilities that process EAF dust decreased approximately $2.9 million to $43.9 million for the six months ended June 30, 2016 from $46.8 million for the six months ended June 30, 2015.

Change in Horsehead recycling conversion costs	(in millions)
Labor	$	0.2
Operating supplies		(0.8	)
Fuels and additives		(0.6	)
Maintenance related costs		(1.8	)
Services		0.8
Electricity		(0.2	)
Other		(0.5	)
Total change in Horsehead conversion costs	$	(2.9	)

• Production decreased 7.1% for the six months ended June 30, 2016 as compared to the six months ended June 30, 2015.

• Conversion cost per ton increased 0.8% for the six months ended June 30, 2016 compared to the six months ended June 30, 2015.

The cost of EAF dust services decreased $0.6 million, or 4.1% to $14.2 million for the six months ended June 30, 2016, compared to $14.8 million for the six months ended June 30, 2015. The decrease was due primarily to decrease in transportation cost. EAF dust tons processed decreased 8.3% for the six months ended June 30, 2016 compared to the six months ended June 30, 2015.

Zochem

Net sales.

Net sales decreased $8.6 million, or 12.6%, to $59.8 million for the six months ended June 30, 2016, compared to $68.4 million for the six months ended June 30, 2015.

Change in Zochem net sales	(in millions)
Higher shipment volume	$	7.5
Decrease in price realization		(16.1	)
Total change in Zochem net sales	$	(8.6	)

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• Higher shipment volume due to an increase in tons shipped of 11.0% for the six months ended June 30, 2016 compared to the six months ended June 30, 2015.

• Price realization per pound decreased 21.4% partially as a result of a decrease in the average LME zinc price of 15.7% for the six months ended June 30, 2016 compared to the six months ended June 30, 2015.

Cost of sales (excluding depreciation and amortization).

Cost of sales decreased $5.3 million or 8.7% to $55.8 million for the six months ended June 30, 2016, compared to $61.1 million and for the six months ended June 30, 2015.

Change in Zochem cost of sales (excluding depreciation and amortization)	(in millions)
Decrease in cost of products shipped	$	(12.0	)
Increase due to higher shipment volume		6.7
Total change in Zochem cost of sales (excluding depreciation and amortization)	$	(5.3	)

• The decrease in the cost of products shipped was primarily the result of the 15.7% decrease in the average LME zinc price for the six months ended June 30, 2016 compared to the six months ended June 30, 2015.

• Shipment volume increased 11.0% for the six months ended June 30, 2016 compared to the six months ended June 30, 2015.

INMETCO

Net sales.

Net sales decreased $7.9 million, or 32.2%, to $16.6 million for the six months ended June 30, 2016, compared to $24.5 million for the six months ended June 30, 2015.

Change in INMETCO net sales	(in millions)
Decrease in shipment volume		(0.3	)
Decrease in price realization		(7.2	)
Decrease in other and miscellaneous sales		(0.4	)
Total change in INMETCO net sales	$	(7.9	)

• Decrease in price realization resulted from a 36.7% lower LME average nickel price and lower price realization on tolling return shipments.

Cost of sales (excluding depreciation and amortization).

Cost of sales decreased $3.0 million, or 17.8%, to $13.9 million for the six months ended June 30, 2016 compared to $16.9 million for the six months ended June 30, 2015.

Change in INMETCO cost of sales (excluding depreciation and amortization)	(in millions)
Lower shipment volume	$	(0.4	)
Lower cost of product shipped		(2.6	)
Total change in INMETCO cost of sales (excluding depreciation and amortization)	$	(3.0	)

• The decrease in the cost of product shipped was predominately due to lower maintenance, oxygen and raw material costs.

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Other

Corporate, eliminations and other

Net sales.

Eliminations of net sales were $0.4 million for the six months ended June 30, 2016 compared to $1.4 million for the six months ended June 30, 2015. Eliminations relate to the exclusion of revenue resulting from EAF dust service fees charged by our Horsehead segment to our INMETCO segment.

Loss before income taxes.

Loss before income taxes increased $13.8 million to $30.3 million for the six months ended June 30, 2016 compared to $16.5 million for the six months ended June 30, 2015. The increase in loss before income taxes was primarily attributable to reorganization items of $24.8 million for the six months ended June 30, 2016 partially offset by a $12.9 million decrease in interest on debt recorded in our corporate division.

Liquidity and Capital Resources

Liquidity

During 2015, our results of operations and liquidity were impacted by (i) the dramatic decline in zinc, nickel and other commodity prices, (ii) continuing issues that delayed the ramp-up of the Mooresboro zinc facility and led to its idling in January 2016, (iii) lower EAF dust receipts reflecting weaker steel production and (iv) the reduction by Macquarie Bank of our borrowing base under the Macquarie Credit Facility.

As a result, we concluded on January 2, 2016, that we would not make the required interest payment on the Convertible Notes on its scheduled due date of January 4, 2016 exercising a 30-day grace period under the indenture governing such notes.

We received notices of default in January 2016, under our 2014 Zochem Facility and under our Macquarie Credit Facility, as of November 30, 2015 and December 31, 2015, respectively. The notices of default rendered the financial obligations under the credit facilities immediately due and payable and we, therefore, reclassified all debt under the credit facilities as current at December 31, 2015.

On February 2, 2016, the Debtors filed Bankruptcy Petitions for reorganization under Chapter 11 of the United States Bankruptcy Code in the Bankruptcy Court. On the same date, Zochem, as foreign representative of the Debtors, commenced a proceeding in Canadian Court to recognize the Debtors’ Chapter 11 Cases as a Canadian Proceeding. The Chapter 11 Cases are being jointly administered by the Bankruptcy Court. The Debtors entered Chapter 11 to protect their assets and to formulate a balance sheet restructuring and deleveraging of the Debtors’ current capital structure. The Debtors continue to operate as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court.

The commencement of the Debtors’ Chapter 11 Cases constituted events of default that rendered the financial obligations under our series of notes automatically and immediately due and payable, subject to the imposition of the automatic stay arising pursuant to Section 362 of the Bankruptcy Code. As a result of the Chapter 11 Cases, we reclassified all related debt as current at December 31, 2015.

On February 8, 2016, the Debtors entered into the DIP Credit Agreement with the DIP Lenders, and Cantor Fitzgerald Securities as administrative agent. The entry into the DIP Credit Agreement was approved by the Bankruptcy Court. The DIP Credit Agreement was amended on March 3, 2016, May 16, 2016, June 23, 2016, August 1, 2016 and September 15, 2016.

The DIP Credit Agreement provides for a senior secured super priority credit facility in the aggregate principal amount of up to $90.0 million. Initial proceeds from the DIP Facility were used, among other things, to repay in full and terminate all obligations under the 2014 Zochem Facility, pay fees and expenses incurred through the closing date of the DIP Facility and pay other amounts permitted in the budget (including any permitted variances) and for general corporate purposes.

Interest on the outstanding principal amount of loans under the DIP Facility is payable monthly in arrears at a per annum rate equal to 14.0%. Upon an event of default under the DIP Facility, all obligations under the DIP Credit Agreement bear interest at a rate equal to the standard interest rate plus an additional 2.0% per annum. The Debtors were required to pay commitment fees and are required to pay unused commitment fees.

With certain exceptions, the obligations under the DIP Credit Agreement are secured by a “priming,” first-priority lien on substantially all of the Debtors’ assets. The liens securing the DIP Facility prime the liens securing the Senior Secured Notes and include a first priority priming lien on the equity interests of non-debtor subsidiaries of the Debtors, including Horsehead Zinc Recycling, LLC.

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The DIP Facility matures on the earlier of (a) February 8, 2017 or (b) the earlier of (i) the date of the substantial consummation of the plan of reorganization that is confirmed pursuant to an order of the Bankruptcy Court and recognized by an order of the Canadian Court, (ii) the consummation of a sale of all or substantially all of the assets of the Debtors pursuant to Section 363 of the Bankruptcy Code, and (iii) the date any outstanding extensions of credit under the DIP Facility become due and payable in accordance with the terms of the loan documents, whether by acceleration or otherwise.

Pursuant to the DIP Credit Agreement, the Debtors must meet certain financial requirements and covenants, including a minimum restructuring EBITDA covenant with respect to each of INMETCO and Zochem (“EBITDA-R Covenant”). On March 22, 2016, we delivered a notice of default to the DIP Agent relating to our failure to meet the Zochem EBITDA-R Covenant for the period ended February 29, 2016. We amended the DIP Credit Agreement on May 16, 2016 for the EBITDA-R Covenant for Zochem. We were subject to default interest on outstanding borrowings until an agreement was reached.

The Debtors filed a proposed Plan (as may be amended, modified or supplemented from time to time) and a related proposed Disclosure Statement (as may be amended, modified or supplemented from time to time) with the Bankruptcy Court. On July 11, 2016, the Bankruptcy Court entered an order approving the Disclosure Statement, and on July 12, 2016, the Canadian Court recognized and gave effect to such order in Canada. On or about July 18, 2016, the Debtors commenced solicitation of the Plan. The Plan was approved and confirmed by the Bankruptcy Court on September 9, 2016.

As of June 30, 2016, we expected that our primary sources of liquidity would continue to be cash on hand, cash flows from operations and borrowings under the DIP Facility. The Company expects to repay the DIP Facility in full upon emergence from bankruptcy. Upon emergence from bankruptcy, we expect that our primary sources of liquidity will continue to be cash on hand and cash flows from operations.

In addition to the cash requirements necessary to fund ongoing operations, we have incurred and continue to incur significant professional fees and other costs in connection with preparation and handling of the Chapter 11 Cases. We anticipate that we will continue to incur significant professional fees and costs during the pendency of the Chapter 11 Cases.

Although, we believe our cash on hand, cash flow from operating activities and borrowings under the DIP Facility up to the time when we emerge from bankruptcy, will be adequate to meet the short-term liquidity requirements of our existing business, we cannot assure that such amounts will be sufficient to fund our operations. Our long-term liquidity requirements and the adequacy of our capital resources are difficult to predict at this time.

For further discussion of liquidity risks and risks associated with the Chapter 11 Cases, see “Item 1A. Risk Factors” In our Annual Report on Form 10-K.

Going Concern

As a result of the Chapter 11 Cases and various other factors, including working capital deficits, losses from continuing operations, and defaults and cross-defaults under various credit agreements, there is substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern is dependent on many factors, including the our ability to maintain adequate cash on hand and generate cash from operations for the duration of the Chapter 11 Cases, the completion of the Chapter 11 plan of reorganization in a timely manner, and our ability to achieve profitability following emergence from bankruptcy.

Cash Flows from Operating Activities

Our operations used a net $11.7 million of cash for the six months ended June 30, 2016. Noncash items included in our net loss of $132.7 million were a $54.3 million impairment charge on our Mooresboro facility and depreciation and amortization of $11.9 million which were partially offset by sources of cash due to $14.1 million of net decreases in inventories.

Cash Flows from Investing Activities

Capital expenditures were $8.7 million for the six months ended June 30, 2016.

Cash Flows from Financing Activities

Net cash provided by financing activities totaled $11.6 million and consisted primarily of net proceeds of $57.5 million from our DIP financing, $5.0 million in cash received from notes payable and $8.4 million in borrowings under our credit facilities partially offset by repayments of $58.5 million on our credit facilities.

47

Off-Balance Sheet Arrangements

Our off-balance sheet arrangements include operating leases, letters of credit and surety bonds. As of June 30, 2016, we had letters of credit outstanding in the amount of $7.9 million to collateralize self-insured claims for workers’ compensation and other general insurance claims. These letters of credit are recorded as Restricted Cash in our Consolidated Balance sheet at June 30, 2016. We also have three surety bonds outstanding in the amount of $11.2 million to collateralize closure bonds for the Company’s three facilities located in Pennsylvania.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

In the ordinary course of our business, we are exposed to potential losses arising from changes in interest rates and the prices of zinc, nickel, lead and natural gas. We have historically used derivative instruments, such as swaps, put options and forward purchase contracts to manage the effect of these changes. When we use forward contract hedging instruments to reduce our exposure to rising energy prices, we are limited in our ability to take advantage of future reductions in energy prices, because we are required to exercise the hedging instrument at the settlement date regardless of the market price at the time. We have also used put options to reduce our exposure to future declines in zinc prices.

Our risk management policy seeks to meet our overall goal of managing our exposure to market price risk, particularly risks related to changing zinc and nickel prices. All derivative contracts are held for purposes other than trading and are used primarily to mitigate uncertainty and volatility of expected cash flow and cover underlying exposures. We are exposed to credit loss in cases where counter-parties or clearing agents with which we have entered into derivative transactions become unable to satisfy their obligations in accordance with the underlying agreements.

Interest Rate Risk

We are subject to interest rate risk in connection with our $80.0 million Macquarie Credit Facility entered into on July 6, 2015, our $25.8 million Credit Agreement entered into on November 14, 2012, our $20.0 million 2014 Zochem Facility entered into on April 29, 2014, all of which bear interest at variable rates. Assuming that our two credit facilities and Credit Agreement are fully drawn and holding other variables constant, each one percentage point change in interest rates would be expected to have an impact on pre-tax earnings and cash flows for the next year of approximately $1.3 million.

On February 2, 2016, the Debtors filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court. The Debtors continue to operate their businesses as debtors-in-possession subject to the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. We received notices of default in January 2016, under our 2014 Zochem Facility and under our Macquarie Credit Facility, as of November 30, 2015 and December 31, 2015, respectively. The notices of default rendered the financial obligations under the credit facilities immediately due and payable and we, therefore, have reclassified all debt under the credit facilities as current at December 31, 2015. Default interest charges and other penalties and fees were assessed by the lenders during 2016 as a result of the notices of default received. See Footnote E –Long-Term Debt for further information on defaults under our two credit facilities.

Commodity Price Risk

Our business consists principally of the sale of zinc and nickel-based products. As a result, our results of operations are subject to risk of fluctuations in the market prices of zinc and nickel. While our finished products are generally priced based on a spread to the price of zinc or nickel on the LME, our revenues are impacted significantly by changes in the market prices of these metals. Changes in zinc prices will also impact our ability to generate revenue from our EAF recycling operations as well as our ability to procure raw materials. Additionally, energy is one of our most significant costs. Our processes rely primarily on electricity and natural gas to operate. Our freight operations depend heavily on diesel fuel. Energy prices have been volatile in recent years and currently exceed long-term historical averages. These fluctuations impact our manufacturing costs and contribute to earnings volatility.

Several additives and process chemicals, including but not limited to coke, are, and when the Mooresboro facility was operating, limestone, sulfuric acid and manganese were, used in our operations. Changes in price and availability have a direct impact on our manufacturing costs.

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At December 31, 2015, we had 4,500 tons of fixed price zinc swaps in place at a strike price of $0.83 per pound for the first quarter of 2016. In January 2016, the broker holding our fixed price swap contracts required a margin call that we could not meet, as a result, all of the fixed price zinc swap contracts in effect at December 31, 2015 were liquidated in early January 2016.

At December 31, 2015, we were a party to raw material supply agreements through 2016. The agreements require us to purchase approximately 41,400 tons of SHG metal for 2016 at a variable price based on the monthly average LME zinc price plus a premium. Based on the June 2016 average LME zinc price, the remaining balance of this purchase commitment is estimated to be approximately $43.8 million for 2016.

Each year, we enter into contracts for the forward purchase of natural gas to cover the majority of natural gas requirements in order to reduce our exposure to the volatility of natural gas prices.

Exchange Rate Sensitivity Analysis

Our exchange rate exposures result from our acquisition of Zochem on November 1, 2011. Effective August 1, 2012, we changed Zochem’s functional currency reporting basis from the Canadian Dollar to the U.S. Dollar. Zochem sales are predominately in U.S. Dollars, however a portion of its sales and certain other costs remain in the Canadian Dollar and are converted to U.S. Dollars at month end. Holding other variables constant, a 10% reduction in all relevant exchange rates, would have had relatively no effect on pretax earnings and cash flows for the next year.

Item 4. Controls and Procedures.

(a) Evaluation of Disclosure Controls and Procedures

Our management evaluated, with the participation of our principal executive officer and principal financial officer, the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as of and for the six months ended June 30, 2016.

Based on this evaluation, our principal executive officer and principal financial officer have concluded that, because of the material weaknesses in internal control over financial reporting described in our Annual Report on Form 10-K for the year ended December 31, 2015, as filed on September 29, 2016, our disclosure controls and procedures were not effective as of and for the six months ended June 30, 2016.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

In our Annual Report on Form 10-K for the year ended December 31, 2015 as filed on September 29, 2016, we identified and reported material weaknesses in the Company’s internal control over financial reporting, some of which still exist as of and for the six months ended June 30, 2016. In response to the identified material weaknesses, our management has dedicated resources to improve our control environment and to remedy the identified material weaknesses of disclosure controls and procedures. The key disclosure controls and procedures that ensure financial statement accuracy are currently operating effectively, however until all material weaknesses described in our Annual Report on Form 10-K filed for the year ended December 31, 2015, as filed on September 29, 2016, have been remediated the disclosure controls and procedures continue to be deemed ineffective.

(b) Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934), as of and for the six months ended June 30, 2016 that has materially affected, or is reasonably likely to materially affect the Company’s internal control over financial reporting.

With respect to the material weaknesses that were identified in the Annual Report on Form 10-K for the year ended December 31, 2015, there have been no significant changes in our internal control over financial reporting.

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PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

We are party to various litigation, claims and disputes, including labor regulation claims and U.S. Occupational Safety and Health Act and environmental regulation violations, some of which are for substantial amounts, arising in the ordinary course of business. While the ultimate effect of such actions cannot be predicted with certainty, we expect that the outcome of these matters will not result in a material adverse effect on our business, financial condition or results of operations.

For further information refer to our Annual Report on Form 10-K for the fiscal year ended December 31, 2015, which was filed with the SEC on September  29, 2016.

Item 1A. Risk Factors.

There have been no material changes in our Risk Factors from those discussed in our Annual Report on Form 10-K for the year ended December 31, 2015, which was filed with the SEC on September 29, 2016.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

[None]

Item 3. Defaults Upon Senior Securities.

[None]

Item 4. Mine Safety Disclosures

[None]

Item 5. Other Information.

[None]

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Item 6. Exhibits.

EXHIBIT INDEX

Exhibit No.	Description
10.1	Amendment No. 2 and Waiver to the Senior Secured Superpriority Debtor-in-Possession Credit, Security and Guaranty Agreement, dated as of May 16, 2016, by and among Horsehead Holding Corp., Horsehead Corporation, Horsehead Metal Products, LLC, The International Metals Reclamation Company, LLC and Zochem Inc., as borrowers, the lenders party thereto from time to time, and Cantor Fitzgerald Securities, as administrative agent (incorporated by reference from Exhibit 4.1 to Current Report on Form 8-K filed with the SEC on May 18, 2016).
10.2	Amendment No. 3 and Waiver to the Senior Secured Superpriority Debtor-in-Possession Credit, Security and Guaranty Agreement, dated as of June 23, 2016, by and among Horsehead Holding Corp., Horsehead Corporation, Horsehead Metal Products, LLC, The International Metals Reclamation Company, LLC and Zochem Inc., as borrowers, the lenders party thereto from time to time, and Cantor Fitzgerald Securities, as administrative agent (incorporated by reference from Exhibit 4.1 to Current Report on Form 8-K filed with the SEC on June 27, 2016).
31.1	Certification by James M. Hensler, Chief Executive Officer (principal executive officer) pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Ryan J. Hutchison, Controller and Chief Accounting Officer (principal financial officer) pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	Instance Document
101.SCH	Schema Document
101.CAL	Calculation Linkbase Document
101.LAB	Labels Linkbase Document
101.PRE	Presentation Linkbase Document
101.DEF	Definition Linkbase Document

51

SIGNATURES

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.

HORSEHEAD HOLDING CORP.
	/s/ James M. Hensler
By:	James M. Hensler
Its:	President and Chief Executive Officer

This report has been signed by the following persons in the capacities indicated on September 29, 2016.

SIGNATURE	TITLE	DATE
/s/ James M. Hensler		September 29, 2016
James M. Hensler	Principal Executive Officer
/s/ Ryan J. Hutchison	Principal Financial and	September 29, 2016
Ryan J. Hutchison	Accounting Officer

52

EX-31.1

Exhibit 31.1

Certification

I, James M. Hensler, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Horsehead Holding Corp.;

2. 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;

3. 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;

4. The registrant’s other certifying officer(s) 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 control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) 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;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) 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

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s 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

5. The registrant’s other certifying officer(s) 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 the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) 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.

Date: September 29, 2016

/s/ James M. Hensler

James M. Hensler

Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification

I, Ryan J. Hutchison, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Horsehead Holding Corp.;

2. 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;

3. 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;

4. The registrant’s other certifying officer(s) 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 control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) 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;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) 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

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s 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

5. The registrant’s other certifying officer(s) 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 the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) 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.

Date: September 29, 2016

/s/ Ryan J. Hutchison

Ryan J. Hutchison

Vice President, Controller and Chief Accounting Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Horsehead Holding Corp. (the “Company”) for the quarter ended June 30, 2016, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned principal executive officer and principal financial officer of the Company, certifies, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ James M. Hensler		/s/ Ryan J. Hutchison
James M. Hensler		Ryan J. Hutchison
Chief Executive Officer		Vice President, Controller and Chief Accounting Officer
Date:	September 29, 2016	Date:	September 29, 2016

A signed original of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2016	Sep. 29, 2016
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q2
Trading Symbol	ZINCQ
Entity Registrant Name	HORSEHEAD HOLDING CORP
Entity Central Index Key	0001385544
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		60,352,479

XML

Debtor-In-Possession Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Current assets
Cash	$ 16,844	$ 25,675
Accounts receivable, net of allowance of $432 and $555, respectively	40,982	42,044
Inventories	25,205	40,491
Prepaid expenses and other current assets	8,978	10,115
Total current assets	92,009	118,325
Property, plant and equipment, net	197,768	254,841
Other assets
Intangible assets, net	9,082	9,451
Restricted cash	7,939	7,939
Other assets	1,945	1,496
Total other assets	18,966	18,886
Total assets	308,743	392,052
Current liabilities - Not Subject to Compromise
Current maturities of long-term debt	26,888	433,079
Debtor-in-possession financing	57,500
Accounts payable	24,837	64,098
Accrued expenses	31,141	24,830
Total current liabilities	140,366	522,007
Liabilities Subject to Compromise	429,465
Other long-term liabilities	15,233	15,505
Deferred income taxes	3,113	3,113
Commitments and contingencies
Stockholders' deficit
Common stock, par value $0.01 per share; 100,000 shares authorized; 60,352 and 60,174 shares issued and outstanding in 2016 and 2015, respectively	602	602
Preferred stock, par value $0.01 per share; 10,000 shares authorized; no shares issued or outstanding
Additional paid-in capital	402,409	396,750
Retained deficit	(682,690)	(550,011)
Accumulated other comprehensive income	245	247
Total stockholders' deficit before noncontrolling interest	(279,434)	(152,412)
Noncontrolling interest		3,839
Total stockholders' deficit	(279,434)	(148,573)
Total liabilities and stockholders' deficit	$ 308,743	$ 392,052

XML

Debtor-In-Possession Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Statement of Financial Position [Abstract]
Allowance for accounts receivable	$ 432	$ 555
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	60,352,000	60,174,000
Common stock, shares outstanding	60,352,000	60,174,000
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0

XML

Debtor-In-Possession Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Income Statement [Abstract]
Net sales of zinc material and other goods	$ 64,581	$ 99,239	$ 125,066	$ 181,907
Net sales of nickel-based material and other services	7,563	14,422	16,587	24,531
EAF dust service fees	9,803	9,137	19,397	18,504
Net sales	81,947	122,798	161,050	224,942
Cost of sales of zinc material and other goods	67,458	92,014	143,273	183,194
Cost of sales of nickel-based material and other services	5,947	8,621	13,339	16,242
Cost of EAF dust services	7,506	7,525	14,263	14,847
Cost of sales (excluding depreciation and amortization)	80,911	108,160	170,875	214,283
Gain on asset dispositions		(12,152)		(11,873)
Impairment loss			54,266	0
Depreciation and amortization	5,716	15,149	11,858	26,990
Selling, general and administrative expenses	5,378	6,796	12,925	13,574
Total costs and expenses	92,005	117,953	249,924	242,974
Income (Loss) from operations	(10,058)	4,845	(88,874)	(18,032)
Other income (expense):
Interest expense	(3,328)	(9,114)	(15,109)	(18,228)
Interest and other income	(97)	103	2,097	712
Total other income (expense)	(3,425)	(9,011)	(13,012)	(17,516)
Reorganization items, net	(15,689)		(31,081)
Loss before income taxes	(29,172)	(4,166)	(132,967)	(35,548)
Income tax benefit	(62)	(547)	(288)	(13,435)
NET LOSS	$ (29,110)	$ (3,619)	$ (132,679)	$ (22,113)
Loss per common share:
Basic and diluted	$ (0.48)	$ (0.06)	$ (2.20)	$ (0.40)
Weighted average shares outstanding:
Basic and diluted	60,352	56,661	60,345	55,756

XML

Debtor-In-Possession Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Statement of Comprehensive Income [Abstract]
Net loss	$ (29,110)	$ (3,619)	$ (132,679)	$ (22,113)
Other comprehensive loss, net of tax:
Net pension adjustment	(1)	(1)	(2)	(3)
Comprehensive loss	$ (29,111)	$ (3,620)	$ (132,681)	$ (22,116)

XML

Debtor-In-Possession Consolidated Statement of Stockholders' Deficit - 6 months ended Jun. 30, 2016 - USD ($) $ in Thousands	Total	Common Stock [Member]	Additional Paid-In Capital [Member]	Retained Deficit [Member]	Accumulated Other Comprehensive (Loss) Income [Member]	Noncontrolling Interest [Member]
Beginning Balance at Dec. 31, 2015	$ (148,573)	$ 602	$ 396,750	$ (550,011)	$ 247	$ 3,839
Beginning Balance, (in shares) at Dec. 31, 2015	60,174,000	60,174,000
Restricted stock vesting	$ 0	$ 0	0	0	0	0
Restricted stock vesting, (in shares)		178,000
Stock compensation expense	2,047		2,047
Distribution to noncontrolling interests	(170)					(170)
Reclass of noncontrolling interest			3,669			$ (3,669)
Restricted stock withheld for taxes	(57)		(57)
Comprehensive loss, net of tax	(132,681)			(132,679)	(2)
Ending Balance at Jun. 30, 2016	$ (279,434)	$ 602	$ 402,409	$ (682,690)	$ 245
Ending Balance, (in shares) at Jun. 30, 2016	60,352,000	60,352,000

XML

Debtor-In-Possession Consolidated Statements of Cash Flows - USD ($)	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Cash Flows from Operating Activities:
Net loss	$ (132,679,000)	$ (22,113,000)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	11,858,000	26,990,000
Deferred income tax benefit		(14,508,000)
Accretion on debt	357,000	1,889,000
Accretion of deferred purchase obligation	200,000	207,000
Amortization of deferred finance costs	459,000	1,570,000
Impairment loss	54,266,000	0
Gain on asset dispositions		(11,873,000)
Loss on writedown of inventory supplies	1,212,000
Losses (gains) on derivative financial instruments	(21,000)	(9,766,000)
Lower of cost or market adjustment to inventories	0	3,627,000
Stock compensation expense	2,047,000	2,747,000
Capitalization of interest		(1,495,000)
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable, net	1,062,000	(3,775,000)
(Increase) decrease in inventories, net	14,074,000	(7,023,000)
Decrease (increase) in prepaid expenses and other current assets	(3,568,000)	1,045,000
Decrease (increase) in other assets	(455,000)	179,000
(Decrease) increase in accounts payable	28,632,000	(7,074,000)
(Decrease) increase in accrued expenses	11,281,000	(5,468,000)
(Decrease) increase in other long-term liabilities	(472,000)	(1,125,000)
Net cash used in operating activities	(11,747,000)	(45,966,000)
Cash Flows from Investing Activities:
Purchase of property, plant and equipment	(8,679,000)	(15,100,000)
Proceeds related to the sale of land		9,000,000
Net cash used in investing activities	(8,679,000)	(6,100,000)
Cash Flows from Financing Activities:
Net proceeds from the issuance of stock		69,622,000
Proceeds from DIP financing	57,500,000
Proceeds from issuance of debt	5,000,000
Distributions to noncontrolling interest equity holders	(170,000)	(113,000)
Borrowings on the Credit Facilities	8,431,000	42,300,000
Repayments on the Credit Facilities	(58,494,000)	(38,130,000)
Debt issuance costs		(10,000)
Borrowings on the Credit Agreement		381,000
Repayments on the Credit Agreement		(1,521,000)
Proceeds from the exercise of stock options		33,000
Tax effect of share based compensation award exercise and vesting		276,000
Restricted stock withheld for taxes	(57,000)	(441,000)
Exercise of New Market Tax Credit Purchase Option	(360,000)
Other	(255,000)
Net cash provided by financing activities	11,595,000	72,397,000
Net increase (decrease) in cash and cash equivalents	(8,831,000)	20,331,000
Cash at beginning of period	25,675,000	30,714,000
Cash at end of period	16,844,000	$ 51,045,000
Noncash adjustments:
Reclass Debt to Liabilities subject to compromise	356,984,000
Reclass Accounts Payable to Liabilities subject to compromise	67,893,000
Reclass other Liabilities to Liabilities subject to compromise	4,588,000
Reclass of Noncontrolling Interest	$ 3,669,000

XML

Basis of Presentation

6 Months Ended

Jun. 30, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

NOTE A—BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements of Horsehead Holding Corp. and its subsidiaries as of June 30, 2016 and for the three and six months ended June 30, 2016 and 2015 have been prepared pursuant to the applicable rules and regulations of the Securities and Exchange Commission (“SEC”). 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 three and six months ended June 30, 2016 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2016. The accompanying financial statements include the accounts of Horsehead Holding Corp. and all of its subsidiaries (collectively referred to as the “Company”, “we”, “us” or “our” or similar terms). All 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 fiscal year ended December 31, 2015.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The more significant items requiring the use of management estimates and assumptions relate to inventory reserves, bad debt reserves, environmental and asset retirement obligations, workers’ compensation liabilities, reserves for contingencies and litigation and fair value of financial instruments and business acquisitions. Management bases its estimates on the Company’s historical experience and its expectations of the future and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from those estimates.

Chapter 11 Bankruptcy Filings

On February 2, 2016, the Company and certain of its subsidiaries (the “Debtors”) filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”) in the U.S. Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”). The Debtors continue to operate their businesses as debtors-in-possession subject to the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. The commencement of the Debtors’ Chapter 11 cases constituted events of default that rendered the financial obligations under the Company’s series of notes automatically and immediately due and payable, subject to the imposition of the automatic stay arising pursuant to Section 362 of the Bankruptcy Code. As a result of the Chapter 11 cases, the Company has reclassified all related debt as current at December 31, 2015. See Footnote B – Voluntary Reorganization Under Chapter 11, Footnote E—Long-Term Debt and Footnote Q—Subsequent Events for additional information on the Debtors’ Chapter 11 petitions and notices of default.

The Company received notices of default in January 2016, under certain of the Company’s credit facilities, as of November 30, 2015 and December 31, 2015. The notices of default rendered the financial obligations under the credit facilities immediately due and payable and the Company, therefore, has reclassified all debt under the credit facilities as current at December 31, 2015 and has written off the remaining deferred finance costs related to debt under the credit facilities as of December 31, 2015.

As a result of the filing of the Bankruptcy Petitions, we have applied the FASB Accounting Standards Codification (“ASC”) 852 Reorganizations in preparing our interim financial statements. ASC 852 requires that financial statements distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. Accordingly, certain expenses, realized gains and losses and provisions for losses that are realized or incurred in the bankruptcy proceedings have been recorded in a reorganization line item in our consolidated statements of operations. In addition, the pre-petition obligations that may be impacted by the bankruptcy reorganization process have been classified on the balance sheet as liabilities subject to compromise. These liabilities are reported as the amounts expected to be allowed by the Bankruptcy Court, even if they may be settled for lesser amounts.

Liquidity and Going Concern

As a result of the Chapter 11 cases and various other factors, including working capital deficits, losses from continuing operations, and defaults and cross-defaults under various credit agreements, there is substantial doubt about the Company’s ability to continue as a going concern. The Company’s financial statements are prepared using accounting principles generally accepted in the United States applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The accompanying historical consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

The Company’s ability to continue as a going concern is dependent on many factors, including the Company’s ability to maintain adequate cash on hand and generate cash from operations for the duration of the Chapter 11 cases, the completion of the Chapter 11 plan of reorganization in a timely manner, and the Company’s ability to achieve profitability following emergence from bankruptcy.

Fair Value

Fair value is measured using inputs from the three levels of the fair value hierarchy. Classification within the hierarchy is determined based on the lowest level of input that is significant to the fair value measurement.

The three levels are described as follows:

• Level 1—Unadjusted quoted prices in active markets for identical assets and liabilities. Cash and cash equivalents including the money market demand account, accounts receivable, accounts payable, and certain accrued expenses are considered to be in Level 1 of the fair value hierarchy as they approximate their fair value due to the short-term nature of these instruments.

• Level 2—Inputs other than quoted prices included in Level 1 that are observable for the determination of the fair value of the asset or liability, either directly or indirectly. The financial swap and financial option instruments are carried at fair value and are considered to be in Level 2 of the fair value hierarchy. These derivatives are not designated as cash flow hedges and we recognize changes in fair value within the consolidated statements of operations as they occur (see Note L—Accounting for Derivative Instruments and Hedging Activities in our Consolidated Financial Statements). Borrowings under our credit facilities are considered to be in Level 2 of the fair value hierarchy (see Note E—Long Term Debt). The pension assets, which are primarily invested in the Manulife Monthly High Income GIF Fund, are carried at fair value and are considered to be in Level 2 of the fair value hierarchy.

• Level 3—Unobservable inputs that are significant to the determination of fair value of the asset or liability. The Convertible Notes, issued on July 27, 2011, were initially valued at fair value and subsequently are carried at amortized cost. The fair value is considered to be in Level 3 of the fair value hierarchy (see Note E—Long Term Debt). The Senior Secured Notes issued on July 26, 2012, June 3, 2013 and July 29, 2014 were initially valued at fair value and subsequently are carried at amortized cost. The Unsecured Notes issued on July 29, 2014 were issued and are valued at par value. The fair value of these debt issuances are considered to be in Level 3 of the fair value hierarchy (see Note E—Long-Term Debt in our Consolidated Financial Statements). Level 3 inputs are also used in the determination for impairment testing on long-lived assets. Due to the Bankruptcy filing and defaults the debt is impractical to value.

When developing the fair value measurements, we use quoted market prices whenever available or seek to maximize the use of observable inputs and minimize the use of unobservable inputs when quoted market prices are not available.

Recent Accounting Pronouncements

Issued

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326). The pronouncement was issued to provide more decision-useful information about the expected credit losses on financial instruments and changes the loss impairment methodology. This pronouncement is effective for reporting periods beginning after December 15, 2019 using a modified retrospective adoption method. A prospective transition approach is required for debt securities for which an other-than-temporary impairment had been recognized before the effective date. The adoption of ASU 2016-13 is not expected to have a significant impact on the Company’s consolidated financial position or results of operations.

In March 2016 the FASB issued ASU No. 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”). ASU No. 2016-09 affects all entities that issue share-based payment awards to their employees and simplifies several aspects of the accounting for share-based payment transactions, including income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows, including recognizing all excess tax benefits and tax deficiencies as income tax expense or benefit in the income statement rather than in additional paid-in capital. ASU No. 2016-09 is effective for financial statements issued for annual reporting periods beginning after December 15, 2016 and interim periods within those years. Earlier application is permitted. The impact from adoption of the new requirements of ASU No. 2016-09 on the Company’s consolidated financial position or results of operations has not yet been determined.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”). ASU No. 2016-02 affects any entity that enters into a lease (as that term is defined in the ASU) and its guidance supersedes Topic 840, Leases. ASU No. 2016-02 requires lessees to recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, in the statement of financial position. For finance leases, lessees are required to recognize interest on the lease liability separately from amortization of the right-of-use asset in the statement of operations and classify repayments of the principal portion of the lease liability within financing activities and payments of interest on the lease liability and variable lease payments within operating activities in the statement of cash flows. For operating leases, lessees are required to recognize a single lease cost, calculated so that the cost of the lease is allocated over the lease term on a generally straight-line basis and classify all cash payments within operating activities in the statement of cash flows. In transition, lessees are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. ASU No. 2016-02 is effective for financial statements issued for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Earlier application is permitted. The impact from adoption of the new requirements of ASU No. 2016-02 on the Company’s consolidated financial position or results of operations has not yet been determined.

In July 2015, the FASB issued ASU No. 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory (“ASU 2015-11”). ASU No. 2015-11 requires entities to measure inventory at the lower of cost and net realizable value and is effective for financial statements issued for annual reporting periods beginning after December 15, 2016 and interim periods within those years. Earlier application is permitted. Application of the new requirements of ASU No. 2015-11 is not expected to have a material impact on the Company’s consolidated financial position or results of operations.

In April 2015, the FASB issued ASU 2015-03, Interest—Imputation of Interest (Topic 835) (“ASU 2015-03”) which changes the presentation of debt issuance costs in financial statements to present such costs as a direct deduction from the related debt liability rather than as an asset. ASU 2015-03 is effective for public companies during interim and annual reporting periods beginning after December 15, 2015. Early adoption is permitted. The adoption of this guidance does not have any material impact on the Company’s results of operations but does require the Company to present any capitalized deferred finance fees as a reduction of the related debt on the consolidated balance sheet. In August 2015, the FASB issued ASU 2015-15, Presentation and Subsequent Measurement of Debt Issuance Cost Associated with Line-of-Credit Arrangements (Topic 835) (“ASU 2015-15”) since the guidance under ASU No. 2015-03, did not address presentation or subsequent measurement of debt issuance costs related to line-of-credit arrangements. ASU 2015-15 allows entities to defer and present debt issuance costs related to line-of-credit arrangements as an asset and subsequently amortize the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. The Company adopted this pronouncement during the Quarter ended March 31, 2016.

In February 2015, The FASB issued ASU No. 2015-02, Consolidation (Topic 810) (“ASU 2015-02”) which updates the considerations on whether an entity should consolidate certain legal entities. The update changes the way that entities evaluate limited partnerships and fees paid to service providers in the consolidation determination. ASU 2015-02 will become effective for public companies during interim and annual reporting periods beginning after December 15, 2015. Early adoption is permitted. The Company does not expect the adoption of ASU 2015-02 to have a material impact on its Consolidated Financial Statements.

In May 2014, the FASB and the International Accounting Standards Board (“IASB”) jointly issued ASU No. 2014-9, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), which clarifies the principles for recognizing revenue and develops a common revenue standard for GAAP and International Financial Reporting Standards (“IFRS”). The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. ASU 2014-09 was to be effective for public entities for annual and interim periods beginning after December 15, 2016; however, in August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606) and delayed the effective date of the new revenue standard by one year. Reporting entities may choose to adopt the standard as of the original effective date. The Company is currently evaluating the impact of adopting this guidance on its financial position and results of operations.

There have been no other recently issued accounting updates that had or may have a material impact on the Company’s Consolidated Financial Statements.

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Voluntary Reorganization Under Chapter 11

6 Months Ended

Jun. 30, 2016

Reorganizations [Abstract]

Voluntary Reorganization Under Chapter 11

NOTE B—VOLUNTARY REORGANIZATION UNDER CHAPTER 11

Events of Default Under Debt Obligations

During 2015, the Company’s results of operations and liquidity were impacted by (i) the dramatic decline in zinc, nickel and other commodity prices, (ii) continuing issues that delayed the ramp-up of the Mooresboro zinc facility, and (iii) lower EAF dust receipts reflecting weaker steel production.

As a result, the Company concluded on January 2, 2016, that it would not make the required interest payment on the 3.80% Convertible Senior Notes due 2017 (the “Convertible Notes”) on its scheduled due date of January 4, 2016 exercising a 30-day grace period under the indenture governing such notes.

On January 6, 2016 and January 13, 2016, the Company received notices of default, effective November 30, 2015 and December 31, 2015, from PNC Bank related to failure to comply with the required fixed charge coverage ratio under Zochem Inc.s’ (“Zochem”) $20,000 revolving credit facility (the “2014 Zochem Credit Facility”) following transfers of funds to Horsehead in 2015. The notice sent on January 13, 2016, demanded immediate payment of all outstanding obligations under the 2014 Zochem Credit Facility. On January 14, 2016, Zochem and the Company entered into a forbearance agreement with PNC Bank. In consideration for the forbearance, Zochem agreed, among other things, to pay a forbearance fee to PNC Bank of $1,000 due and payable on February 1, 2016 and provide a mortgage on Zochem’s currently unencumbered property in Ontario, Canada. The forbearance remained effective until February 1, 2016.

On January 5, 2016, the Company received a notice of default from Macquarie Bank Limited (“Macquarie”), as administrative agent and sole arranger under our $80,000 secured revolving credit facility (the “Macquarie Credit Facility”). The notice of default related to, among other things, insufficient borrowing base availability under the Macquarie Credit Facility as of December 31, 2015. On January 15, 2016, Horsehead Corporation (“Horsehead”), The International Metals Reclamation Company, LLC (“INMETCO”) and Horsehead Metal Products, LLC (“HMP”) entered into a forbearance agreement with Macquarie. Pursuant to the forbearance agreement, cash held in certain of the Debtors’ third-party bank accounts was transferred to accounts controlled by Macquarie. Disbursements of funds from the controlled accounts were subject to a budget as specified in the forbearance agreement. Pursuant to the forbearance agreement, the Company agreed, among other things, (i) to pay down to $40,000 outstanding borrowings under the Macquarie Credit Facility and (ii) to pay a restructuring fee in an amount ranging from $1,000 to $2,500 in the event the obligations under the Macquarie Credit Facility are not paid in full by February 1, 2016, with the amount of such fee increasing over time from February 1, 2016 through April 30, 2016. The forbearance remained effective until February 1, 2016.

Before the expiration of the grace period under the Convertible Notes indenture and at the expiration of the forbearance agreements, on February 2, 2016, the Debtors filed voluntary petitions for relief pursuant to Chapter 11 of the Bankruptcy Code in the Bankruptcy Court. On the same date, Zochem, as foreign representative of the Debtors, commenced a proceeding in the Ontario Superior Court of Justice (Commercial List) to recognize the Debtors Chapter 11 cases as a foreign main proceeding. The Debtors operate their businesses as debtors-in-possession subject to the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. The filing of the Chapter 11 petitions constituted an event of default under the Debtors’ various credit facilities and series of notes and rendered the financial obligations under certain such instruments automatically and immediately due and payable. See Note E- Long-Term Debt.

On April 13, 2016, the Debtors filed a Joint Plan of Reorganization pursuant to Chapter 11 of the Bankruptcy Code with the Bankruptcy Court and on April 14, 2016, a related Disclosure Statement. On July 11, 2016, the Debtors filed a Second Amended Joint Plan of Reorganization (the “Plan”) pursuant to Chapter 11 of the Bankruptcy Code with the Bankruptcy Court and a related Disclosure Statement. On the same date, the Bankruptcy Court entered an order approving the Disclosure Statement, and on July 12, 2016, the Canadian Court recognized and gave effect to such order in Canada. On or about July 18, 2016, the Debtors commenced solicitation of the Plan.

On September 9, 2016, the Bankruptcy Court confirmed and approved the Plan, which, among other things, resolved the Debtors’ pre-petition obligations, set forth the revised capital structure of the newly reorganized entity, and provided for corporate governance subsequent to exit from bankruptcy. The Plan was recognized by the Ontario Superior Court of Justice (Commercial List) on September 12, 2016. The effective date of the Plan is anticipated to be September 30, 2016 (the “Effective Date”).

Default under and subsequent termination of the New Market Tax Credit (the “NMTC”) loans

On January 22, 2016, the minority equity holders, as lenders, issued Notices of Non-Payment to the Company as a result of annual payments not made in accordance with various loan agreements existing under the NMTC program. These notices resulted in events of default under the NMTC loan agreements. The NMTC loan agreements were fully paid on June 24, 2016. See Note E – Long-Term Debt for further discussion.

Temporary Idling of Mooresboro Facility

On January 22, 2016, the Company temporarily idled the Mooresboro facility in the face of severe liquidity constraints and the Company’s determination that the facility was incapable of generating positive cash flow in the future without significant additional capital investment and/or a recovery in commodity prices. A small workforce has been retained to manage the facility during this period. See Note F of our Annual Report on Form 10-K for the fiscal year ended December 31, 2015 and Note D – Property, Plant and Equipment for further information regarding asset impairment.

Entry into Debtor-in-Possession Credit Agreement

On February 8, 2016, the Debtors entered into a Senior Secured Superpriority Debtor-in-Possession Credit, Security and Guaranty Agreement (the “DIP Credit Agreement”), with certain holders of the Company’s Senior Secured Notes, as lenders (the “DIP Lenders”), and Cantor Fitzgerald Securities, as administrative agent (the “DIP Agent”). The entry into the DIP Credit Agreement was approved by the Bankruptcy Court. The DIP Credit Agreement was amended on March 3, 2016, May 16, 2016, June 23, 2016, August 1, 2016 and September 15, 2016. See Note F – Debtor In Possession Financing.

Entry into Unit Purchase and Support Agreement

On July 11, 2016, the Company, on behalf of the Debtors, entered into a Unit Purchase and Support Agreement (the “UPA”) with certain holders of claims against the Debtors that are listed therein as plan sponsors (collectively, the “Plan Sponsors”). The UPA was entered into in connection with the Debtors’ Plan filed with the Bankruptcy Court.

Pursuant to the UPA, and subject to approvals, terms, and conditions set forth therein, upon emergence from Chapter 11, (i) the Company will issue units of limited liability company interests of the reorganized Company to the Plan Sponsors who will purchase such Plan Sponsor’s respective percentage of an aggregate amount equal to $160,000 (the “Emergence Equity Units”), and (ii) the Plan Sponsors had the right to elect, on or prior to July 29, 2016, to commit to purchase up to an additional $100,000 units of limited liability company interests of the reorganized Company (the “Additional Capital Commitment Units”) with such commitment being exercisable at the election of the reorganized Company’s board of directors pursuant to the terms and subject to the conditions of the UPA, following the effectiveness of the Plan. The additional capital commitment was fully subscribed.

The UPA provides for the payment by the Company to the Plan Sponsors of a termination fee equal to $7,500 in the event the UPA is terminated under certain conditions set forth therein, including the failure to meet specific milestones. The Debtors have also agreed to pay certain fees and expenses of the Plan Sponsors.

Pursuant to the UPA and subject to the conditions set forth therein, the Company and the other Debtors and the Plan Sponsors have agreed to support and, in the case of the Plan Sponsors, vote their claims in favor of the Plan and to cooperate in completing the documentation of and effectuating the Plan. The Company and the other Debtors have further agreed not to solicit or engage in any discussions with third parties regarding an Alternative Transaction (as defined in the UPA), provided that, as more fully set forth therein, the UPA permits the Company’s board of directors to negotiate unsolicited proposals for an Alternative Transaction that constitutes, or is reasonably likely to lead to or result in, a Superior Proposal (as defined in the UPA); provided that such agreements are subject in all respects to the Company’s and the Debtors’ rights and obligations pursuant to the Order (I) Extending the Debtors Exclusive Periods to File a Chapter 11 Plan and Solicit Acceptances Thereof Pursuant to Section 1121 of the Bankruptcy Code and (II) Granting Related Relief entered on July 11, 2016 [Docket No. 1273] (the “Exclusivity Order”), including with respect to the Debtors’ rights to engage with any party that expresses an interest to acquire some, all, or substantially all of the Debtors’ assets and/or to fund a plan of reorganization, including any party directed to the Debtors by the Equity Committee and the Creditors’ Committee (each as defined in the Exclusivity Order).

Pursuant to the UPA and subject to the conditions set forth therein, the Company and the other Debtors have agreed to, jointly and severally, indemnify and hold harmless each Plan Sponsor and certain related parties from and against losses, claims, damages, liabilities and costs and expenses arising out of or in connection with the UPA, the Plan, the Chapter 11 proceedings, the recognition proceedings in Canada, and the transactions contemplated thereby. The UPA also includes customary representations of the parties; provided that pursuant to the UPA, Zochem, Inc., a Debtor, will have no liability to any person under or relating to the UPA.

The Debtors sought Bankruptcy Court approval of the UPA, which was confirmed and approved on September 9, 2016 and on September 12, 2016, the Canadian Court recognized and gave effect to such order in Canada.

The UPA was amended on August 30, 2016, to, among other things, (i) add an additional Plan Sponsor as a signatory to the UPA and correspondingly amends the respective schedules and purchase commitments to reflect such addition, (ii) allow the reorganized Company to call up to $15 million of Additional Capital Commitment Units for working capital needs and other general purposes, and (iii) amend various provisions of the UPA to reflect, among other milestone changes, that the effective date of the plan of reorganization shall occur by 5:00 PM, New York City time, on September 30, 2016.

The Emergence Equity Units and the Additional Capital Commitment Units, if issued, will not be registered under the Securities Act of 1933, as amended (the “Securities Act”), and will not be transferable unless subsequently registered under the Securities Act or an exemption from registration is available. The Company does not intend to register the Emergence Equity Units and the Additional Capital Commitment Units. Moreover, the Emergence Equity Units and the Additional Capital Commitment Units, if any, will be subject to, and each holder thereof will be a party to, the Limited Liability Company Agreement of the reorganized Company to be entered into and effective immediately following the effectiveness of the Plan.

Notice of Delisting from NASDAQ

On February 2, 2016, we received notice from The NASDAQ Stock Market LLC (“NASDAQ”) that trading of our common stock was to be suspended at the opening of business on February 11, 2016. NASDAQ’s decision to delist our common stock was a result of our filing of the Bankruptcy Petitions. On February 23, 2016, NASDAQ filed a Form 25, “Notification of Removal from Listing Under Section 12(b) of the Securities Exchange Act of 1934,” with respect to our common stock. Our common stock currently trades in the over-the-counter (“OTC”) market under the symbol ZINCQ.

Liabilities Subject to Compromise

Liabilities subject to compromise represent liabilities incurred prior to the commencement of the bankruptcy proceedings, which will be settled as part of the Chapter 11 process. Pre-petition liabilities subject to compromise are required to be reported at the amount expected to be allowed as a claim by the Bankruptcy Court, regardless of whether they may be settled for lesser amounts and remain subject to future adjustments based on negotiated settlements with claimants, actions of the Bankruptcy Court, rejection of executory contracts, proofs of claims or other events. The amounts included in the table below represent the Company’s allowed claims and its best estimate of claims expected to be allowed in the bankruptcy proceedings. The amounts recorded in liabilities subject to compromise require the use of estimates and assumptions that affect the reported amounts. The Company continues the process of reconciling claims and may ask the Bankruptcy Court to disallow claims that the Company believes are duplicative, have been later amended or superseded, are without merit, are overstated or should be disallowed for other reasons.

Liabilities subject to compromise consist of the following:

	June 30, 2016
Debt	$	356,984
Accounts payable		67,893
Other liabilities		4,588
	$	429,465

Interest Expense

The Debtors have discontinued recording interest on unsecured or under secured liabilities subject to compromise on the Petition Date. Contractual interest on liabilities subject to compromise not reflected in the consolidated statements of operations was approximately $7,404 and $12,255, representing interest expense from the Petition Date through the three and six months ended June 30, 2016, respectively.

Contracts

Under the Bankruptcy Code, the Debtors have the right to assume or reject certain contracts, subject to the approval of the Bankruptcy Court and certain other conditions. Generally, the assumption of a contract requires a debtor to satisfy pre-petition obligations under the contract, which may include payment of pre-petition liabilities in whole or in part. Rejection of a contract is typically treated as a breach occurring as of the moment immediately preceding the Chapter 11 filing. Subject to certain exceptions, this rejection relieves the debtor from performing its future obligations under the contract but entitles the counterparty to assert a pre-petition general unsecured claim for damages. Parties to contracts rejected by a debtor may file proofs of claim against that debtor’s estate for damages.

In connection with approval of the Debtors’ Disclosure Statement, the Bankruptcy Court approved procedures for assuming or rejecting the Debtors’ contracts. On August 9, 2016, the Debtors filed an initial supplement to the Plan that included a schedule of assumed contracts and a schedule of rejected contracts. Since that date, the Debtors have filed additional supplements to the Plan including additional schedules of assumed and rejected contracts. Through the contract assumption and rejection process, the Debtors were able to successfully negotiate approximately a dozen midstream and downstream contracts. The Debtors continue to review and analyze their contractual obligations and retain the right, until forty-five days following the Effective Date, to amend or supplement the schedules of assumed and rejected contracts

Reorganization Items

Reorganization items represent the direct and incremental costs associated with the Chapter 11 proceedings, such as professional fees, pre-petition liability claim adjustments and losses related to terminated contracts that are probable and can be estimated. Unamortized deferred financing costs, premiums, and discounts associated with debt classified as liabilities subject to compromise are expensed to reorganization items in order to reflect the expected amounts of the probable allowed claims. Interest expense includes forbearance fees, early termination fees and fees associated with obtaining debtor-in-possession financing. Reorganization items consist of the following for the three and six months ended June 30, 2016:

	Three months ended June 30, 2016		Six months ended June 30, 2016
Professional fees	$	15,564	$	26,761
Interest expense		125		4,320
	$	15,689	$	31,081

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Inventories

6 Months Ended

Jun. 30, 2016

Inventory Disclosure [Abstract]

Inventories

NOTE C—INVENTORIES

Inventories consisted of the following at June 30, 2016 and December 31, 2015.

	June 30, 2016			December 31, 2015
Raw materials	$	4,767		$	12,230
Work-in-process		2,808			2,776
Finished goods		12,349			19,545
Supplies and spare parts		11,010			10,458
		30,934			45,009
Excess and obsolete inventory reserves		(5,729	)		(4,518	)
	$	25,205		$	40,491

The provision for slow moving inventory was $5,608 at June 30, 2016 and $4,070 at December 31, 2015.

The Company recorded $1,267 in lower of cost or market (“LCM”) adjustments to its finished goods inventories at June 30, 2015 and recorded total LCM adjustments during the six months ended June 30, 2015 of $3,627. The Company recorded total LCM adjustments to its finished goods inventories of $4,389 during 2015. The LCM adjustments were the result of the low London Metal Exchange (“LME”) zinc price and the incurrence of higher than normal production costs in 2015 at the Mooresboro zinc facility, which operated at inefficient levels during start up. No LCM adjustments were made during the six months ended June 30, 2016.

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Property, Plant and Equipment

6 Months Ended

Jun. 30, 2016

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment

NOTE D—PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consisted of the following at June 30, 2016 and December 31, 2015.

	June 30, 2016			December 31, 2015
Land and land improvements	$	25,050		$	24,437
Buildings and building improvements		41,103			41,083
Machinery and equipment		247,997			299,009
Construction in progress		12,675			8,847
		326,825			373,376
Less accumulated depreciation		(129,057	)		(118,535	)
	$	197,768		$	254,841

The Company capitalized $747 and $1,495 of interest expense during the three and six months ended June 30, 2015, respectively. The interest expense capitalized related to the construction of the Mooresboro zinc facility, which began operations in May 2014. Through December 31, 2015, the Company had capitalized a total of $58,383 of interest expense related to Mooresboro facility. In January 2016, the facility was temporarily idled. On December 31, 2015 the Company recorded an impairment charge on the Mooresboro facility of $527,621. For further information refer to Note F of our Annual Report on Form 10-K for the fiscal year ended December 31, 2015.

On February 2, 2016, the Company filed voluntary petitions for relief pursuant to Chapter 11 of the Bankruptcy Code in Bankruptcy Court. At that time, the Company did not have the capacity to raise additional capital. The Company concluded that additional expenditures upwards of $117,000 were required to bring the Mooresboro facility back online and make needed improvements to cure the identified operational issues. This information along with the filing for bankruptcy protection resulted in the Company determining a triggering event had occurred to further test impairment of the long-lived assets at the Mooresboro facility. The Company was unable to estimate future cash flows as the property was idled and there was no certainty as to whether funds were available to cure the operational defect. As such the Company proceeded to step 2 of the impairment test where we compared the implied fair value of operating invested capital of Horsehead to the fair value of our operating segments and determined the fair value of the Mooresboro facility to be essentially the liquidation value. The significant assumption in the analysis was that the Mooresboro facility would remain idle indefinitely until suitable funds were available to cure the significant operational defects. As a result of the analysis, we recorded a non-cash, pre-tax long-lived asset impairment loss of $54,266 for the Mooresboro asset group. The total amount of this write-down is included in Loss from Operations in the Consolidated Statement of Operations for the six months ended June 30, 2016. Following the write-down of the asset group, the remaining book value of the Mooresboro facility is $31,284 at March 31, 2016.

On November 7, 2014, the Company announced that Shell had exercised its option to purchase the Company’s Monaca, Pennsylvania site, under the Amended and Restated Option and Purchase Agreement. The only remaining asset of the Monaca facility was land which had a net book value of approximately $1,200. Sale of the site was completed in June 2015 and the Company recognized a gain of approximately $12,200. The gain on the sale of the site was previously recorded in Interest and other income of the Consolidated Statement of Operations for the three and six months ended June 30, 2015, filed on August 7, 2015 on Form 10-Q. The prior year amount has been reclassified to Gain on asset disposition for the three and six months ended June 30, 2015. This reclassification had no impact on total assets, equity, cash flows or net loss previously reported.

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Long -Term Debt

6 Months Ended

Jun. 30, 2016

Debt Disclosure [Abstract]

Long -Term Debt

NOTE E—LONG –TERM DEBT

Long-term debt consisted of the following at June 30, 2016 and December 31, 2015:

	June 30,		December 31,
	2016		2015
Loan Payable, related to New Market Tax Credit program	$	—	$	255
3.80% Convertible Senior Notes due July 2017, net of debt discount in 2015		—		93,403
10.50% Senior Secured Notes due June 2017, including the debt premium in 2015		—		205,081
9.00% Senior Unsecured Notes due July 2017		—		40,000
Zochem Credit Facility, interest payable at variable rates		—		17,500
Macquarie Credit Facility, interest payable at variable rates		26,888		59,451
Credit Agreement, interest payable at variable rates		—		17,389
		26,888		433,079
Less portion currently payable		26,888		433,079
	$	—	$	—

NMTC Loans

The loans payable associated with the NMTC program were interest only loan with principal due in June 2016. On January 22, 2016, the minority equity holders, as lenders, issued Notices of Non-Payment to the Company as a result of annual payments not made in accordance with the loan agreements. These notices resulted in events of default under the NMTC loan agreements. On June 16, 2016, Horsehead Zinc Recycling (“HZR”), Horsehead and the Company, as guarantor, entered into Forbearance Agreements (the “Forbearances”) with the lenders. In consideration for the Forbearances, HZR, Horsehead and the Company agreed, among other things, to pay forbearance fees to each Lender of $100 upon execution of the Forbearances. On June 24, 2016, HZR repaid in full an aggregate amount of $878 outstanding under the NMTC loan agreements. The NMTC loan agreements terminated by their terms upon repayment. This payment represented the loan payable of $255, dividends paid to the equity holders of $170 and $360 paid to exercise a purchase option. Upon exercise of the purchase option, the minority interest was eliminated via a reclassification adjustment totaling $3,669 to additional paid in capital and this amount was treated as a noncash adjustment on the Consolidated Statement of Cash Flows for the six months ended June 30, 2016.

Convertible Senior Notes

On July 27, 2011, the Company issued $100,000 of the Convertible Notes in a private placement. The Company received proceeds of $100,000 and recognized $3,481 in issuance costs in connection with the offering. The Company used the proceeds from the offering for the initial stages of construction for the Mooresboro zinc facility and for general corporate purposes, including working capital needs, investment in business initiatives, capital expenditures and acquisitions.

The commencement of the Debtors’ Chapter 11 cases filed on February 2, 2016 constituted an event of default that rendered the financial obligations under the Convertible Notes automatically and immediately due and payable. As a result, the Company reclassified the Convertible Notes to Current maturities of long-term debt in the Consolidated Balance Sheet at December 31, 2015 and as Liabilities Subject to Compromise in the Consolidated Balance Sheet at June 30, 2016. See Note B – Voluntary Reorganization Under Chapter 11 for additional information regarding the reclassification of debt subject to compromise. In February 2016, in connection with the Chapter 11 proceedings, Delaware Trust Company was appointed as trustee under the indenture governing the Convertible Notes.

In accordance with the guidance under ASC 815-15 Embedded Derivatives and ASC 470-20 Debt with Conversion and other Options, at issuance, the Company separately accounted for the liability and equity components of the Convertible Notes to reflect the Company’s nonconvertible borrowing rate when interest cost was recognized in subsequent periods. The fair value of the liability component of the Convertible Notes was calculated to be $78,174, at issuance, and was determined by measuring the fair value of a similar liability that does not have an associated equity component. The nonconvertible rate was determined by the Company to be 8.5%. The carrying amount of the embedded conversion option (the debt discount) of $21,826 was determined by deducting the fair value of the liability component from the initial proceeds of the Convertible Notes and was recorded, net of deferred taxes of $8,805, as additional paid-in capital. The Company had been accreting the long-term debt balance to par value over the term of the notes using the interest method as required by ASC 835-30 Imputation of Interest.

Costs of $3,481 associated with the issuance were allocated to the liability and equity components in proportion to the allocation of the fair value of the Convertible Notes. As such, $2,721 were accounted for as debt issuance costs attributable to the liability component of the Convertible Notes and were capitalized as a component of other assets. These costs were to be amortized to interest expense over the term of the Convertible Notes and are included as a component of interest expense. Due to the filing of relief under Chapter 11 of the Bankruptcy Code, all remaining debt issuance costs were reclassified to current and are included in Prepaid expenses and other current assets in the Consolidated Balance Sheet at December 31, 2015. The remaining issuance costs of $760 were accounted for as equity issuance costs and were recorded in additional-paid in capital in 2011. On the date of the bankruptcy filing, the Company reclassified the remaining deferred finance costs of $652 related to the Convertible Notes. This amount is included in Liabilities Subject to Compromise as an offset to the par value of the Convertible Notes in the Consolidated Balance Sheet at June 30, 2016.

ABL Facility

On September 28, 2011, the Company’s subsidiary Horsehead entered into an ABL Facility (the “ABL Facility”), as borrower, with PNC Bank, as agent and lender, to support liquidity needs for the Company’s Mooresboro zinc facility and to allow for the availability of previously restricted cash. Horsehead Holding Corp. also entered into the ABL Facility, as guarantor of Horsehead’s obligations. The ABL Facility provided for a five-year senior secured revolving credit facility in an aggregate principal amount of up to $60,000.

The ABL Facility was terminated on July 6, 2015 when an $80,000 secured revolving credit facility became effective among Horsehead, HMP, INMETCO and Macquarie, as administrative agent and sole arranger . The Macquarie Credit Facility replaced both the $20,000 INMETCO Facility (as defined below) and the $60,000 ABL Facility.

Senior Secured Notes

On July 26, 2012, June 3, 2013 and July 29, 2014, the Company completed private placements to issue an aggregate of $205,000 in principal amount of 10.50% Senior Secured Notes due 2017 (the “Secured Notes”). The Company received total proceeds of $204,429 and recognized approximately $8,415 in issuance costs in connection with the offerings. The total net proceeds from the offerings were $196,014. The Company used the proceeds from the Secured Notes to pay for the completion of the construction of the Company’s Mooresboro zinc facility and the remainder for general corporate purposes, including working capital needs, investment in other business initiatives and other capital expenditures. The Company recorded an initial debt carrying value of $204,429 (net of the debt discount and debt premiums) and was accreting the long-term debt balance to par value over the term of the Secured Notes using the interest method as required by ASC 835-30 Imputation of Interest.

The commencement of the Debtors’ Chapter 11 cases filed on February 2, 2016 constituted an event of default that rendered the financial obligations under the Senior Secured Notes automatically and immediately due and payable. As a result, the Company reclassified the Senior Secured Notes to Current maturities of Long-term debt in the Consolidated Balance Sheet at December 31, 2015. On the date of the bankruptcy filing, the remaining net premium of $75 was written off and the Senior Secured Notes were recorded at their par value of $205,000.

Costs of $8,415 associated with the issuance of the Senior Secured Notes were capitalized as a component of other assets. These costs were to be amortized to interest expense over the term of the Senior Secured Notes. Due to the filing of relief under Chapter 11 of the Bankruptcy Code, all remaining debt issuance costs were reclassified to current and are included in Prepaid expenses and other current assets in the Consolidated Balance Sheet at December 31, 2015. On the date of the bankruptcy filing, the Company reclassified the remaining deferred finance costs of $2,106 related to the Senior Secured Notes. This amount is included in Liabilities Subject to Compromise as an offset to the par value of the Senior Secured Notes in the Consolidated Balance Sheet at June 30, 2016.

Credit Agreement

On August 28, 2012, Horsehead and HHC entered into a Credit Agreement (the “Credit Agreement”) with Banco Bilbao Vizcaya Argentaria, S.A., a Spanish bank. The Credit Agreement provided for the financing of up to €18,583 (approximately $25,805) for purchases under the contracts between Horsehead and Tecnicas Reunidas (“TR”), S.A., a Spanish corporation providing equipment and related products and services for the Mooresboro zinc facility and additional financing of $968 for the premium for the insurance on such loan which was issued by Compania Espanola de Seguros de Credito a la Exportacion. The facility became effective on November 14, 2012.

The commencement of the Debtors’ Chapter 11 cases filed on February 2, 2016 constituted an event of default that rendered the financial obligations under the Credit Agreement automatically and immediately due and payable. As a result, the Company has reclassified all remaining obligations under the Credit Agreement to Current maturities of Long-term debt in the Consolidated Balance Sheet at December 31, 2015 and the outstanding amount of $17,389 was reclassified to Liabilities Subject to Compromise in the Consolidated Balance Sheet at June 30, 2016. See Note B –  Voluntary Reorganization Under Chapter 11 for additional information regarding the reclassification of debt.

The Company incurred issuance costs of $1,248 in connection with the Credit Agreement. These costs were capitalized in the Company’s Consolidated Balance Sheet as a component of other assets. The issuance costs were to be amortized to interest expense over the term of the Credit Agreement. Due to the filing of relief under Chapter 11 of the Bankruptcy Code, all remaining debt issuance costs were reclassified to current and are included in Prepaid expenses and other current assets in the Consolidated Balance Sheet at December 31, 2015. On the date of the bankruptcy filing, the Company wrote off all remaining deferred finance costs of $789 related to the Credit Agreement. This amount is included in Liabilities Subject to Compromise as an offset to the amount outstanding in the Consolidated Balance Sheet at June 30, 2016.

Zochem Revolving Credit and Security Agreement

On April 29, 2014, Zochem entered into, as borrower, a $20,000 revolving credit facility with PNC Bank, as agent and lender. The Company also entered into the 2014 Zochem Facility as a guarantor of Zochem’s obligations.

The 2014 Zochem Facility provided for a twenty-nine month senior secured revolving credit facility in an aggregate principal amount of up to $20,000. At December 31, 2015, the Company had $17,500 in outstanding borrowings under the 2014 Zochem Facility. There was no undrawn availability at December 31, 2015. The carrying amount of the debt approximated fair value at December 31, 2015.

On January 6, 2016 and January 13, 2016, the Company received notices of default, effective November 30, 2015 and December 31, 2015, from PNC Bank related to failure to comply with the required fixed charge coverage ratio under the 2014 Zochem Credit Facility following transfers of funds to Horsehead in 2015. The notice sent on January 13, 2016, demanded immediate payment of all outstanding obligations under the 2014 Zochem Credit Facility. On January 14, 2016, Zochem and the Company entered into a forbearance agreement with PNC Bank. In consideration for the forbearance, Zochem agreed, among other things, to pay a forbearance fee to PNC Bank of $1,000 due and payable on February 1, 2016 and provide a mortgage on Zochem’s currently unencumbered property in Ontario, Canada. The forbearance remained effective until February 1, 2016. The forbearance fee is included in interest expense in the Consolidated Statement of Operations for the six months ended June 30, 2016. See Note B – Voluntary Reorganization Under Chapter 11 for further information on Reorganization Items.

The Company incurred total issuance costs of $201 in connection with the 2014 Zochem Facility. These costs were capitalized in the Company’s Consolidated Balance Sheet as a component of other assets. The issuance costs were to be amortized to interest expense over the remaining term of the 2014 Zochem Facility, however, based upon the notices of default, which stated defaults as of November 30, 2015 and December 31, 2015, the remaining deferred finance costs were written off in December 2015.

On February 8, 2016, the Debtors entered into the DIP Credit Agreement and used initial proceeds therefrom , among other things, to repay in full and terminate all obligations under the 2014 Zochem Facility, pay fees and expenses incurred through the closing date of the DIP Facility and pay other amounts permitted in the budget (including any permitted variances) and for general corporate purposes. See Note F – Debtor In Possession Financing for further information on the DIP Facility. The additional fees and expenses incurred through the payoff date of February 2, 2016 are included in Reorganization Items, net in the Consolidated Statement of Operations for the six months ended June 30, 2016.

INMETCO Senior Secured Revolving Credit Agreement

On June 24, 2013, INMETCO entered into a Senior Secured Revolving Credit Agreement (the “INMETCO Facility”), as borrower, with Wells Fargo Bank, N.A., as lender. The Company entered into a guaranty of INMETCO’s obligations under the INMETCO Facility. INMETCO entered into the INMETCO Facility to support working capital requirements and for general corporate purposes. On March 31, 2014, the Company entered into the First Amendment to the Credit Agreement which amended certain provisions of the Credit Agreement including the increase of the maximum advances allowed from $15,000 to $20,000.

The INMETCO Facility was terminated on July 6, 2015 when a new $80,000 secured revolving credit facility became effective among Horsehead, HMP and INMETCO and Macquarie, as administrative agent and sole arranger. The Macquarie Credit Facility replaced both the $20,000 INMETCO Facility and the $60,000 ABL Facility.

INMETCO incurred issuance costs of $151 in connection with the INMETCO Facility. These costs were capitalized in the Company’s Consolidated Balance Sheet as a component of other assets. The issuance costs were being amortized to interest expense over the term of the INMETCO Facility. The remaining unamortized issuance costs related to the INMETCO Facility were written off to interest expense during the third quarter of 2015.

Senior Unsecured Notes

On July 29, 2014, the Company completed the private placement of $40,000 aggregate principal amount of 9.00% Senior Notes due 2017 (the “Unsecured Notes”). The Company received net proceeds of $38,686 after deducting approximately $1,314 in issuance costs in connection with the offering.

The Unsecured Notes were issued pursuant to an indenture, dated as of July 29, 2014, among the Company, the Guarantors and U.S. Bank National Association, as trustee. In February 2016, in connection with the Chapter 11 cases, Wilmington Trust, National Association, was appointed as trustee under the indenture governing the Unsecured Notes.

The commencement of the Debtors’ Chapter 11 cases constituted an event of default that rendered the financial obligations under the Senior Unsecured Notes automatically and immediately due and payable. As a result, the Company reclassified the Senior Unsecured Notes to Current maturities of Long-term debt in the Consolidated Balance Sheet at December 31, 2015 and as Liabilities Subject to Compromise in the Consolidated Balance Sheet at June 30, 2016. See Note B – Voluntary Reorganization Under Chapter 11 for additional information regarding the reclassification of debt.

Costs of $1,314 associated with the issuance of the Unsecured Notes were capitalized as a component of other assets. These costs were being amortized to interest expense over the term of the Unsecured Notes. Due to the filing of relief under Chapter 11 of the Bankruptcy Code, all remaining debt issuance costs were reclassified to current and are included in Prepaid expenses and other current assets in the Consolidated Balance Sheet at December 31, 2015. On the date of the bankruptcy filing, the Company reclassified remaining deferred finance costs of $618 related to the Unsecured Notes. This amount is included in Liabilities Subject to Compromise as an offset to the aggregate principal amount of the Senior Unsecured Note in the Consolidated Balance Sheet at June 30, 2016.

Macquarie Revolving Credit Facility

On June 30, 2015, the Company’s wholly owned direct and indirect subsidiaries, INMETCO, Horsehead and HMP, entered into the Macquarie Credit Facility with Macquarie, which became effective on July 6, 2015 and had a maturity date of May 15, 2017. The new $80,000 facility replaced both the ABL Facility and the INMETCO Facility. The Company had $59,451 in outstanding borrowings at December 31, 2015 and no remaining availability. The carrying amount of the debt approximated fair value at December 31, 2015.

On January 5, 2016, the Company received a notice of default, as of December 31, 2015, from Macquarie related to, among other things, insufficient borrowing base availability under the Macquarie Credit Facility. As a result of receiving this notice, the Company reclassified indebtedness outstanding under the Macquarie Credit Facility to Current maturities of long-term debt in the Consolidated Balance Sheet at December 31, 2015. On January 15, 2016, Horsehead, INMETCO and HMP entered into a forbearance agreement with Macquarie. Pursuant to the forbearance agreement, cash held in certain of the Debtors’ third-party bank accounts was transferred to accounts controlled by Macquarie. Disbursements of funds from the controlled accounts were subject to a budget as specified in the forbearance agreement. Pursuant to the forbearance agreement, the Company agreed, among other things, (i) to pay down to $40,000 outstanding borrowings under the Macquarie Credit Facility and (ii) to pay a restructuring fee in an amount ranging from $1,000 to $2,500 in the event the obligations under the Macquarie Credit Facility are not paid in full by February 1, 2016, with the amount of such fee increasing over time from February 1, 2016 through April 30, 2016. The forbearance remained effective until February 1, 2016. The obligations under the Macquarie Credit Agreement were not paid in full by February 1^st and the Company recorded $5,057 in early termination and other fees as required by the forbearance agreement. This amount is recorded in interest expense in the Consolidated Statement of Operations for the six months ended June 30, 2016. The amount outstanding under the Macquarie Credit Facility was $26,888 at March 31, 2016. In March 2016, Macquarie assigned the debt to various other lenders. No terms were modified between the Company and the new lenders.

The Company incurred total issuance costs of $1,635 in connection with the Macquarie Credit Facility. These costs were initially capitalized in the Company’s Consolidated Balance Sheet as a component of other assets and were to be amortized to interest expense over the remaining term, however, based upon the notice of default as of December 31, 2015, all deferred finance costs were written off at December 31, 2015.

Tecnicas Reunidas, S.A. Settlement

In January 2016, Horsehead Corporation reached a settlement agreement with one of the primary contractors for work associated with the construction of portions of the Mooresboro facility, TR. The agreement settled all known claims and disputes between Horsehead Corporation and TR relating to the construction of the Mooresboro facility. As a result, in 2016, the Company recorded a net settlement amount of approximately $7,200, of which $5,000 was received in cash and recorded as a loan payable to TR. The loan payable was subsequently reclassified to Liabilities Subject to Compromise.

Other

At June 30, 2016, the Company had a total of $7,939 in letters of credit that are cash collateralized and recorded as Restricted cash in the Company’s Consolidated Balance Sheet at June 30, 2016. The restricted cash will be used to collateralize self-insured claims for workers’ compensation and other general insurance claims. The letter of credit outstanding on the Zochem Facility was canceled on June 22, 2016.

At December 31, 2015, the Company had a total of $364 in letters of credit outstanding under the 2014 Zochem Facility and $7,939 in letters of credit that are cash collateralized and recorded as Restricted Cash in the Company’s Consolidated Balance Sheet at December 31, 2015. The letters of credit and restricted cash will be used to collateralize self-insured claims for workers’ compensation and other general insurance claims.

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Debtor In Possession Financing

6 Months Ended

Jun. 30, 2016

Text Block [Abstract]

Debtor In Possession Financing

NOTE F—DEBTOR IN POSSESSION FINANCING

On February 8, 2016, the Debtors entered into a DIP Credit Agreement, with certain holders of the Company’s Senior Secured Notes, as lenders, and Cantor Fitzgerald Securities, as administrative agent. The entry into the DIP Credit Agreement was approved by the Bankruptcy Court. The DIP Credit Agreement was amended on March 3, 2016, May 16, 2016, June 23, 2016, August 1, 2016 and September 15, 2016.

The DIP Credit Agreement provides for a senior secured super priority credit facility in the aggregate principal amount of up to $90,000 (the “DIP Facility”). Initial proceeds from the DIP Facility were used, among other things, to repay in full and terminate all obligations under the 2014 Zochem Facility, pay fees and expenses incurred through the closing date of the DIP Facility and pay other amounts permitted in the budget (including any permitted variances) and for general corporate purposes. At June 30, 2016, outstanding amounts under the DIP Facility were $57,500. The DIP Credit Agreement required origination fees of 4.5% or $4,050 which were paid with the initial draw and are included in Reorganization items, net in the Consolidated Statement of Operations for the six months ended June 30, 2016.

Interest on the outstanding principal amount of loans under the DIP Facility is payable monthly in arrears at a per annum rate equal to 14.0%. Upon an event of default under the DIP Facility, all obligations under the DIP Credit Agreement bear interest at a rate equal to the standard interest rate plus an additional 2.0% per annum. The Debtors were required to pay commitment fees and are required to pay unused commitment fees.

With certain exceptions, the obligations under the DIP Credit Agreement are secured by a “priming,” first-priority lien on substantially all of the Debtors’ assets. The liens securing the DIP Facility prime the liens securing the Senior Secured Notes and include a first priority priming lien on the equity interests of non-debtor subsidiaries of the Debtors, including Horsehead Zinc Recycling, LLC.

The DIP Facility matures on the earlier of (a) February 8, 2017, (b) the earlier of (i) the date of the substantial consummation of the plan of reorganization that is confirmed pursuant to an order of the Bankruptcy Court and recognized by an order of the Canadian Court, (ii) the consummation of a sale of all or substantially all of the assets of the Debtors pursuant to Section 363 of the Bankruptcy Code, and (iii) the date any outstanding extensions of credit under the DIP Facility become due and payable in accordance with the terms of the loan documents, whether by acceleration or otherwise.

Pursuant to the DIP Credit Agreement, the Debtors must meet certain financial requirements and covenants, including a minimum restructuring EBITDA covenant with respect to each of INMETCO and Zochem (“EBITDA-R Covenant”). On March 22, 2016, the Company delivered a notice of default to the DIP Agent relating to the Company’s failure to meet the Zochem EBITDA-R Covenant for the period ended February 29, 2016. The Company amended the DIP Credit Agreement on May 16, 2016 for the EBITDA-R Covenant for Zochem. The Company was subject to default interest on outstanding borrowings until an agreement was reached.

The Company expects to repay the DIP Facility in full upon emergence from bankruptcy.

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Accrued Expenses

6 Months Ended

Jun. 30, 2016

Payables and Accruals [Abstract]

Accrued Expenses

NOTE G—ACCRUED EXPENSES

Accrued expenses at June 30, 2016 and December 31, 2015 consisted of the following.

	June 30, 2016		December 31, 2015
Employee related costs	$	4,228	$	5,868
EAF dust processing reserve		5,142		3,336
Workers’ compensation insurance claim liabilities		1,500		1,500
Unearned tolling revenue		2,095		1,305
Accrued sales tax		2,653		2,291
Accrued interest		9,940		4,534
Environmental reserve		1,301		712
Accrued hedge contracts		6		1,275
Accrued insurance		363		1,749
Other		3,913		2,260
	$	31,141	$	24,830

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Other Long-Term Liabilities

6 Months Ended

Jun. 30, 2016

Other Liabilities Disclosure [Abstract]

Other Long-Term Liabilities

NOTE H—OTHER LONG-TERM LIABILITIES

Other long-term liabilities at June 30, 2016 and December 31, 2015 consisted of the following.

	June 30, 2016		December 31, 2015
Environmental obligations	$	550	$	567
Insurance claim liabilities		5,158		5,603
Asset retirement obligations		5,312		5,123
Deferred purchase price obligation		3,739		3,538
Other		474		674
	$	15,233	$	15,505

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Income Taxes

6 Months Ended

Jun. 30, 2016

Income Tax Disclosure [Abstract]

Income Taxes

NOTE I—INCOME TAXES

The Company’s effective tax rates were 0.2% and 13.1% for the three months ended June 30, 2016 and 2015, respectively, and 0.2 % and 37.8% for the six months ended June 30, 2016 and 2015, respectively. Income tax expense (benefit) differs from the amount computed by applying the U.S. statutory federal income tax rate of 35% to income before income taxes, due to state income taxes, a lower income tax rate on Canadian income and the domestic entities being in a loss position creating a full valuation allowance on the deferred balances.

The effective tax rate for the six months ended June 30, 2016 decreased when compared to the six months ended June 30, 2015 due to the domestic entities being in a loss position creating a full valuation allowance on the deferred balances.

The Company and its subsidiaries file income tax returns in the U.S., Canada and various state jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. The tax years that remain subject to examination are 2010 through 2015.

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Accumulated Other Comprehensive Income

6 Months Ended

Jun. 30, 2016

Equity [Abstract]

Accumulated Other Comprehensive Income

NOTE J—ACCUMULATED OTHER COMPREHENSIVE INCOME

Components of accumulated other comprehensive income are as follows:

	June 30, 2016		December 31, 2015
Cumulative translation adjustments	$	30	$	30
Net pension adjustment		215		217
Accumulated other comprehensive income	$	245	$	247

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Share-Based Compensation

6 Months Ended

Jun. 30, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-Based Compensation

NOTE K—SHARE-BASED COMPENSATION

In 2006, the Company adopted the Horsehead Holding Corp. 2006 Long-Term Equity Incentive Plan (the “2006 Plan”), which was amended and restated on June 11, 2007, and provided for grants of stock options, stock appreciation rights, restricted stock, restricted stock units, deferred stock units and other equity-based awards. Directors, officers and other employees of the Company, as well as others performing services for the Company, were eligible for grants under the 2006 Plan. The 2006 Plan is administered by the compensation committee of the Company’s Board of Directors (the “Compensation Committee”).

On January 16, 2007, the Board authorized the issuance of options to purchase 1,085 shares of the Company’s common stock to certain officers and employees of the Company under the terms of the 2006 Plan. The options have a term of ten years and vest ratably over a five-year period from date of grant. No stock options were exercised during the six months ended June 30, 2016, . At June 30, 2016, there were 580 options still outstanding; all were fully vested and exercisable, each with an exercise price of $13.00 per share and 0.54 years of remaining contractual life. The options outstanding under the 2006 Plan had no intrinsic value at June 30, 2016. All compensation expense had been recognized as of December 31, 2012.

The Company had a total of 218 restricted stock units at a weighted average grant date fair value of $10.96 per unit outstanding under the 2006 Plan at December 31, 2015. During the six months ended June 30, 2016, 143 restricted stock units vested having an intrinsic value of $274. At June 30, 2016, there were 74 restricted stock units outstanding and the remaining contractual life ranged from 0.50 years to 1.25 years. The related compensation expense for the three months ended June 30, 2016 and 2015 was $95 and $254, respectively. The related compensation expense for the six months ended June 30, 2016 and 2015 was $206 and $538, respectively. Unrecognized compensation expense as of June 30, 2016 was $228.

On May 17, 2012, the Company adopted the Horsehead Holding Corp. 2012 Incentive Compensation Plan (the “2012 Plan”), after it was approved by the Company’s stockholders at the 2012 Annual Meeting of Stockholders. The 2012 Plan replaced the 2006 Plan, and no further awards, stock options or other grants will be issued under the 2006 Plan. The 2012 Plan provides for grants of stock options, stock appreciation rights, restricted stock, restricted stock units and other cash or equity-based awards. Directors, officers and other employees of the Company, as well as others performing consulting or advisory services for the Company, are eligible for grants under the 2012 Plan. The 2012 Plan is administered by the Compensation Committee. A total of 2,700 shares of the Company’s common stock were initially authorized for issuance under the 2012 Plan. The number of shares available for issuance under the 2012 Plan is subject to adjustment in the event of a reorganization, stock split, merger or similar change in the corporate structure or the number of outstanding shares of common stock. In the event of any of these occurrences, the Compensation Committee may make any adjustments considered appropriate to, among other things, the number and kind of shares, options or other property available for issuance under the 2012 Plan or covered by grants previously made under the 2012 Plan. The shares available for issuance under the 2012 Plan may be, in whole or in part, authorized and unissued or held as treasury shares. If awards under the 2012 Plan are for any reason canceled, or expire or terminate unexercised, the shares covered by such awards may again be available for the grant of awards under the 2012 Plan.

The Company had a total of 611 restricted stock units at a weighted average grant date fair value of $18.15 per unit outstanding under the 2012 Plan at December 31, 2015. During the six months ended June 30, 2016, the Company granted 634 service based restricted stock units with an average grant date fair value of $1.83 per unit. The restricted stock units vest over a one or five-year service period. During the six months ended June 30, 2016, 79 restricted stock units vested having an intrinsic value of $40.

During the six months ended June 30, 2016, the Company granted 538 restricted stock units to management based on the future achievement of a predefined level of total shareholder return compared to a group of global metals companies. The fair value at the date of grant for these restricted stock units was $2.51 per unit, as estimated by a third party on the date of grant, using a valuation model based on commonly accepted economic theory which is used for all valuations of awards with market conditions. This economic theory is also used as the basis for the Black-Scholes and Monte Carlo valuations. The significant assumptions were a risk free rate of 1.32%, expected volatility of the Company and each comparator company, no expected dividends and a forfeiture rate of zero. A vesting percentage was then estimated based on the Company’s rank within the comparator group. Upon vesting and the achievement of the required shareholder return, these restricted stock units would have been issued for par value however, it is expected that vesting will not occur as it is expected that the Company will emerge from bankruptcy prior to the vesting requirements being met and all common stock and securities convertible or exchangeable for common stock will be cancelled upon emergence from bankruptcy.

The related compensation expense for all 2012 Plan restricted stock units for the three months ended June 30, 2016 and 2015 was $872 and $1,106, respectively. The related compensation expense for all 2012 Plan restricted stock units for the six months ended June 30, 2016 and 2015 was $1,841 and $2,209, respectively. At June 30, 2016, there were 1,683 restricted stock units outstanding and the remaining contractual life ranged from 0.50 years to 4.00 years. Unrecognized compensation expense as of June 30, 2016 was $6,177.

Upon emergence from Chapter 11, the contracts underlying the awards will be rejected and the 2012 Plan will be terminated. The shares of the Company will be cancelled including those issued under the 2006 Plan and the 2012 Plan.

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Accounting for Derivative Instruments and Hedging Activities

6 Months Ended

Jun. 30, 2016

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Accounting for Derivative Instruments and Hedging Activities

NOTE L—ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

The Company’s business consists principally of the sale of zinc and nickel-based products. As a result, its results of operations are subject to risk of fluctuations in the market prices of these metals. While the Company’s finished products are generally priced based on a spread to the price of zinc or nickel on the LME, its revenues are impacted significantly by changes in the market prices of these metals. The Company pursues various hedging strategies as described below to reduce its exposure to movements in the prices of zinc and nickel.

The Company’s marketing strategy includes a metal hedging program that allows customers to secure a firm price for future deliveries under a sales contract. Hedges are entered into based on firm sales contracts to deliver specified quantities of product on a monthly basis for terms generally not exceeding one year. A portion of the Company’s raw material purchases related to such firm price contracts are at varying zinc prices based on the LME. In order to protect its cash flow related to firm price sales contracts, the Company enters into fixed-to-variable swap contracts to convert the LME-based fixed sales price back to variable. Thus, if raw material costs increase as a result of LME zinc price increases, the related sales value and related cash flows will also increase. As of December 31, 2015, the fixed portions of these zinc contracts ranged from a monthly average of $0.71 to $0.93 per pound for zinc.

The Company hedged approximately 15.7 tons of zinc with fixed-to-variable future swap contracts at December 31, 2015, all of which settle at various dates up to and including December 2016.

The Company also enters into fixed to variable swap contracts as a financial hedge of a portion of its exposure to the movements in the LME prices of nickel. As of December 31, 2015, the Company had a minimal amount of nickel fixed-to-variable swap contracts outstanding.

At December 31, 2015, the Company had 4.5 tons of fixed price swaps in place at a strike price of $0.83 per pound for the first quarter of 2016. In January 2016, the broker holding our fixed price swap contracts required a margin call that the Company could not meet, as a result, all of the fixed price swap contracts in effect at December 31, 2015 were liquidated.

Due to the Company’s deteriorating financial condition, in January 2016, several brokers required margin calls that the Company could not meet, as a result, most of the zinc fixed-to-variable swap contracts, all outstanding nickel fixed-to-variable contracts and all outstanding fixed price swap contracts in effect at December 31, 2015 were liquidated. The total amount related to the margin calls that could not be met was $1,325 of which $1,389 of this amount is in Net Sales of zinc material and other goods. The remaining $64 is included in cost of sales of nickel-based material and other services in the Consolidation Statement of Operations for the six months ended June 30, 2016.

Zochem still maintains a minimal amount of zinc fixed-to-variable swaps contracts that were in effect at June 30, 2016. The Company has no nickel fixed-to-variable swap contracts nor fixed rate swap contracts outstanding at June 30, 2016.

The gains and losses resulting from the Company’s hedging activities are recorded in the Consolidated Statements of Operations as indicated in the table below:

	Three months ended June 30, 2016		Three months ended June 30, 2015		Six months ended June 30, 2016		Six months ended June 30, 2015
Gains included in net sales:
Swaps	$	77	$	9,230	$	154	$	8,525

The fair value of the swap contracts and put options at June 30, 2016 and December 31, 2015 are listed in the table below.

Fair Value Measurements Using Significant Other Observable Inputs (Level 2)	June 30, 2016		December 31, 2015
Swaps included in Accrued expenses	$	6	$	1,275

The fair values of derivative instruments are based upon a comparison of third party counterparties valuations to ensure that there is an acceptable level of consistency among them. The swap valuations are based on the official LME closing valuations at the end of the trading day on December 31, 2015, using the mid-point of the closing bid and ask prices on all open swap positions regardless of the holder. The closing prices are supervised by the London Clearing House and are regulated by the Financial Services Authority, the financial regulatory body in the United Kingdom.

The Company is exposed to credit loss in cases where counterparties with which they have entered into derivative transactions are unable to pay the Company when they owe the Company funds as a result of agreements with them. The Company does not require collateral and does not enter into master netting arrangements.

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Contingencies

6 Months Ended

Jun. 30, 2016

Commitments and Contingencies Disclosure [Abstract]

Contingencies

NOTE M—CONTINGENCIES

The Company is subject to federal, state and local laws designed to protect the environment and believes that as a general matter, its policies, practices and procedures are properly designed to minimize risk of environmental damage and financial liability to the Company.

The Company is party to various litigation, claims and disputes, including labor regulation claims and Occupational Safety and Health Act and environmental regulation violations, some of which are for substantial amounts, arising in the ordinary course of business. While the ultimate effect of such actions cannot be predicted with certainty, the Company expects that the outcome of these matters will not result in a material adverse effect on its business, financial condition or results of operations.

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Loss Per Share

6 Months Ended

Jun. 30, 2016

Earnings Per Share [Abstract]

Loss Per Share

NOTE N—LOSS PER SHARE

Basic earnings (loss) per common share (“EPS”) is computed by dividing net income or loss by the weighted average number of common shares outstanding for the period. Diluted earnings per share are computed similarly to basic earnings per share except that the denominator is increased to include the number of shares that would have been outstanding if the potentially dilutive common shares had been issued. The Company uses the treasury stock method when calculating the dilutive effect in basic EPS.

Diluted EPS for periods with a net loss is calculated by dividing the net loss by the weighted average number of basic shares outstanding.

The information used to compute basic and diluted earnings (loss) per share is as follows:

	Three months ended June 30,						Six months ended June 30
	2016			2015			2016			2015
Basic loss per share:
Net loss	$	(29,110	)	$	(3,619	)	$	(132,679	)	$	(22,113	)
Weighted average shares outstanding—basic		60,352			56,661			60,345			55,756
Basic loss per share	$	(0.48	)	$	(0.06	)	$	(2.20	)	$	(0.40	)
Diluted loss per share:
Net loss	$	(29,110	)	$	(3,619	)	$	(132,679	)	$	(22,113	)
Weighted average shares outstanding—diluted		60,352			56,661			60,345			55,756
Diluted loss per share	$	(0.48	)	$	(0.06	)	$	(2.20	)	$	(0.40	)

	Exercise Price		Three months ended June 30,				Six months ended June 30,
			2016		2015		2016		2015
Anti-dilutive shares excluded from earnings per share calculation
Options	$	13.00		580		580		580		582
Convertible Notes	$	15.00		—		—		—		—
Restricted Stock Units				1,765		1,009		1,767		1,020
Total				2,345		1,589		2,347		1,602

On July 27, 2011, the Company issued $100,000 of Convertible Notes. The Convertible Notes are convertible at a conversion price of approximately $15.00 per share into cash, shares or a combination of both at the Company’s election. According to guidance under ASC 260 Earnings Per Share, if an entity issues a contract that may be settled in common stock or cash at the election of the entity or holder, then it is presumed that the contract will be settled in shares unless past experience or a stated policy provides a reasonable basis to believe that the contract will be paid partially or wholly in cash and the “if converted” method shall not be used. At June 30, 2016, the Company utilized the modified treasury stock method and assumes dilution if the average stock price for the quarter exceeds the conversion price. The share dilution is calculated by dividing the conversion spread value by the average share price for the quarter. During the three and six months ended June 30, 2016, and June 30, 2015, the average share price for the quarter was lower than the exercise price for the Convertible Notes and therefore no conversion spread was realized and no dilution assumed.

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Segment Information

6 Months Ended

Jun. 30, 2016

Segment Reporting [Abstract]

Segment Information

NOTE O—SEGMENT INFORMATION

The Company reports three segments, Horsehead, Zochem and INMETCO. The Horsehead segment processes EAF dust and other zinc-bearing material to produce and sell zinc and other metals. The Zochem segment produces and sells zinc oxide. The INMETCO segment processes a variety of metal-bearing waste material generated primarily by the specialty steel industry, provides tolling services and produces and sells nickel-chromium-molybdenum-iron remelt alloy to the stainless and specialty steel industries.

The Company records in the Corporate, eliminations and other column of the table below, eliminations related to the exclusion of revenue resulting from EAF dust service fees charged by its Horsehead segment to its INMETCO segment and sales of zinc metal from its Horsehead segment to its Zochem segment, interest expense recorded on debt which is not allocated to its segments and selling, general and administrative expenses related to its corporate division.

The following table presents information regarding the Company’s segment presentation:

Three months ended June 30, 2016	Horsehead			Zochem			INMETCO			Corporate, eliminations and other			Total
Net sales	$	42,620		$	31,998		$	7,563		$	(234	)	$	81,947
Depreciation and amortization		4,388			573			755			—			5,716
Cost of sales (excluding depreciation and amortization)		45,380			29,584			6,181			(234	)		80,911
Selling, general and administrative expenses		4,095			454			580			249			5,378
Interest expense		2,719			822			113			(326	)		3,328
Reorganization items, net		(37	)		(1,095	)		—			(14,557	)		(15,689	)
Loss before income taxes		(13,990	)		(648	)		(54	)		(14,480	)		(29,172	)
Three months ended June 30, 2015	Horsehead			Zochem			INMETCO			Corporate, eliminations and other			Total
Net sales	$	76,259		$	33,228		$	14,422		$	(1,111	)	$	122,798
Depreciation and amortization		13,758			620			771			—			15,149
Cost of sales (excluding depreciation and amortization)		70,832			29,449			8,990			(1,111	)		108,160
Gain on asset dispositions		(12,152	)		—			—			—			(12,152	)
Selling, general and administrative expenses		5,171			573			684			368			6,796
Interest expense		906			147			180			7,881			9,114
(Loss) income before income taxes		(2,352	)		2,465			3,964			(8,243	)		(4,166	)
Six months ended June 30, 2016	Horsehead			Zochem			INMETCO			Corporate, eliminations and other			Total
Net sales	$	85,135		$	59,752		$	16,587		$	(424	)	$	161,050
Depreciation and amortization		9,215			1,134			1,509			—			11,858
Cost of sales (excluding depreciation and amortization)		101,642			55,792			13,865			(424	)		170,875
Selling, general and administrative expenses		8,052			974			1,136			2,763			12,925
Interest expense		9,702			2,485			224			2,698			15,109
Reorganization items, net		(4,175	)		(2,111	)		—			(24,795	)		(31,081	)
Loss before income taxes		(99,745	)		(2,934	)		(31	)		(30,257	)		(132,967	)
Six months ended June 30, 2015	Horsehead			Zochem			INMETCO			Corporate, eliminations and other			Total
Net sales	$	133,386		$	68,392		$	24,531		$	(1,367	)	$	224,942
Depreciation and amortization		24,236			1,254			1,500						26,990
Cost of sales (excluding depreciation and amortization)		137,699			61,084			16,867			(1,367	)		214,283
(Gain) loss on asset dispositions		(12,020	)		—			147			—			(11,873	)
Selling, general and administrative expenses		10,370			1,180			1,255			769			13,574
Interest expense		1,857			272			358			15,741			18,228
(Loss) income before income taxes		(28,320	)		4,540			4,727			(16,495	)		(35,548	)

June 30, 2016	Horsehead		Zochem		INMETCO		Corporate, eliminations and other			Total
Property, plant and equipment	$	140,831	$	24,036	$	32,901	$	—		$	197,768
Capital expenditures		5,318		422		2,939		—			8,679
Total assets		197,905		60,221		52,199		(1,582	)		308,743
December 31, 2015	Horsehead		Zochem		INMETCO		Corporate, eliminations and other			Total
Property, plant and equipment	$	198,696	$	24,746	$	31,399	$	—		$	254,841
Capital expenditures		29,491		815		3,387		—			33,693
Total assets		275,681		70,005		49,655		(3,289	)		392,052

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Equity Offerings

6 Months Ended

Jun. 30, 2016

Equity [Abstract]

Equity Offerings

NOTE P—EQUITY OFFERINGS

On January 28, 2015, the Company completed an underwritten public offering of 5,750 shares of its common stock, including 750 shares sold pursuant to the underwriters’ exercise of their option to purchase additional shares. At the public offering price of $12.75 per share of common stock, the aggregate gross proceeds from the common stock sold by the Company were $73,313. The net proceeds realized by the Company from the offering, after $3,299 in underwriting discounts and commissions and $392 in expenses relating to the offering were $69,622. The net proceeds were available for general corporate purposes, which may include capital expenditures, acquisitions, working capital and liquidity for operational contingencies.

The shares were offered under a shelf registration statement filed with the SEC on Form S-3, which was declared effective on October 3, 2013.

On October 23, 2015, the Company entered into an at-the-market equity offering (“ATM”) sales agreement pursuant to which the Company could offer and sell, from time to time, shares of its common stock having an aggregate offering price of up to $50,000, through its sales agent. Subject to the terms and conditions of the sales agreement, the sales agent used commercially reasonable efforts to sell shares of the Company’s common stock in such number, at such times and at such prices as the Company determined. Sales of the shares of the Company’s common stock were made by any method deemed to be an “at-the-market offering” as defined in Rule 415 under the Securities Act of 1933, as amended, including, sales made directly on or through the NASDAQ Global Select Market or sales made to or through a market maker other than on an exchange, in negotiated transactions at market prices prevailing at the time of sale or at prices related to such prevailing market prices. The offering was made under the Company’s registration statement on Form S-3. From October 23, 2015 to December 2, 2015, the Company sold 3,507 shares at an average price of $2.60 per share of common stock. The aggregate gross proceeds from the ATM offering were $9,109. The net proceeds realized by the Company from the ATM offering, after deducting $300 in underwriting discounts and commissions and $402 in expenses related to the offering were $8,407. The Company used the net proceeds from the sale of the shares of its common stock for general corporate purposes, which included liquidity for operational contingencies, working capital and capital expenditures. Sales of equity under the ATM program were suspended by the Company on December 2, 2015.

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Subsequent Events

6 Months Ended

Jun. 30, 2016

Subsequent Events [Abstract]

Subsequent Events

NOTE Q—SUBSEQUENT EVENTS

Bankruptcy Proceedings

The Debtors filed the Plan and related Disclosure Statement with the Bankruptcy Court on July 11, 2016. On that same date, the Bankruptcy Court entered an order approving the Disclosure Statement, and on July 12, 2016, the Canadian Court recognized and gave effect to such order in Canada. On or about July 18, 2016, the Debtors commenced solicitation of the Plan. On September 9, 2016, the Bankruptcy Court entered an order confirming the Plan. The Plan was recognized by the Ontario Superior Court of Justice (Commercial List) on September 12, 2016.

Entry into Unit Purchase and Support Agreement

On July 11, 2016, the Company, on behalf of the Debtors, entered into the UPA with certain holders of claims against the Debtors that are listed therein as plan sponsors. The UPA was entered into in connection with the Debtors’ Plan filed with the Bankruptcy Court. The UPA was approved by the Bankruptcy Court on September 9, 2016. See Note B – Voluntary Reorganization Under Chapter 11 for more details.

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Basis of Presentation (Policies)

6 Months Ended

Jun. 30, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Fair Value

Fair Value

Fair value is measured using inputs from the three levels of the fair value hierarchy. Classification within the hierarchy is determined based on the lowest level of input that is significant to the fair value measurement.

The three levels are described as follows:

• Level 1—Unadjusted quoted prices in active markets for identical assets and liabilities. Cash and cash equivalents including the money market demand account, accounts receivable, accounts payable, and certain accrued expenses are considered to be in Level 1 of the fair value hierarchy as they approximate their fair value due to the short-term nature of these instruments.

• Level 2—Inputs other than quoted prices included in Level 1 that are observable for the determination of the fair value of the asset or liability, either directly or indirectly. The financial swap and financial option instruments are carried at fair value and are considered to be in Level 2 of the fair value hierarchy. These derivatives are not designated as cash flow hedges and we recognize changes in fair value within the consolidated statements of operations as they occur (see Note L—Accounting for Derivative Instruments and Hedging Activities in our Consolidated Financial Statements). Borrowings under our credit facilities are considered to be in Level 2 of the fair value hierarchy (see Note E—Long Term Debt). The pension assets, which are primarily invested in the Manulife Monthly High Income GIF Fund, are carried at fair value and are considered to be in Level 2 of the fair value hierarchy.

• Level 3—Unobservable inputs that are significant to the determination of fair value of the asset or liability. The Convertible Notes, issued on July 27, 2011, were initially valued at fair value and subsequently are carried at amortized cost. The fair value is considered to be in Level 3 of the fair value hierarchy (see Note E—Long Term Debt). The Senior Secured Notes issued on July 26, 2012, June 3, 2013 and July 29, 2014 were initially valued at fair value and subsequently are carried at amortized cost. The Unsecured Notes issued on July 29, 2014 were issued and are valued at par value. The fair value of these debt issuances are considered to be in Level 3 of the fair value hierarchy (see Note E—Long-Term Debt in our Consolidated Financial Statements). Level 3 inputs are also used in the determination for impairment testing on long-lived assets. Due to the Bankruptcy filing and defaults the debt is impractical to value.

When developing the fair value measurements, we use quoted market prices whenever available or seek to maximize the use of observable inputs and minimize the use of unobservable inputs when quoted market prices are not available.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

Issued

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326). The pronouncement was issued to provide more decision-useful information about the expected credit losses on financial instruments and changes the loss impairment methodology. This pronouncement is effective for reporting periods beginning after December 15, 2019 using a modified retrospective adoption method. A prospective transition approach is required for debt securities for which an other-than-temporary impairment had been recognized before the effective date. The adoption of ASU 2016-13 is not expected to have a significant impact on the Company’s consolidated financial position or results of operations.

In March 2016 the FASB issued ASU No. 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”). ASU No. 2016-09 affects all entities that issue share-based payment awards to their employees and simplifies several aspects of the accounting for share-based payment transactions, including income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows, including recognizing all excess tax benefits and tax deficiencies as income tax expense or benefit in the income statement rather than in additional paid-in capital. ASU No. 2016-09 is effective for financial statements issued for annual reporting periods beginning after December 15, 2016 and interim periods within those years. Earlier application is permitted. The impact from adoption of the new requirements of ASU No. 2016-09 on the Company’s consolidated financial position or results of operations has not yet been determined.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”). ASU No. 2016-02 affects any entity that enters into a lease (as that term is defined in the ASU) and its guidance supersedes Topic 840, Leases. ASU No. 2016-02 requires lessees to recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, in the statement of financial position. For finance leases, lessees are required to recognize interest on the lease liability separately from amortization of the right-of-use asset in the statement of operations and classify repayments of the principal portion of the lease liability within financing activities and payments of interest on the lease liability and variable lease payments within operating activities in the statement of cash flows. For operating leases, lessees are required to recognize a single lease cost, calculated so that the cost of the lease is allocated over the lease term on a generally straight-line basis and classify all cash payments within operating activities in the statement of cash flows. In transition, lessees are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. ASU No. 2016-02 is effective for financial statements issued for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Earlier application is permitted. The impact from adoption of the new requirements of ASU No. 2016-02 on the Company’s consolidated financial position or results of operations has not yet been determined.

In July 2015, the FASB issued ASU No. 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory (“ASU 2015-11”). ASU No. 2015-11 requires entities to measure inventory at the lower of cost and net realizable value and is effective for financial statements issued for annual reporting periods beginning after December 15, 2016 and interim periods within those years. Earlier application is permitted. Application of the new requirements of ASU No. 2015-11 is not expected to have a material impact on the Company’s consolidated financial position or results of operations.

In April 2015, the FASB issued ASU 2015-03, Interest—Imputation of Interest (Topic 835) (“ASU 2015-03”) which changes the presentation of debt issuance costs in financial statements to present such costs as a direct deduction from the related debt liability rather than as an asset. ASU 2015-03 is effective for public companies during interim and annual reporting periods beginning after December 15, 2015. Early adoption is permitted. The adoption of this guidance does not have any material impact on the Company’s results of operations but does require the Company to present any capitalized deferred finance fees as a reduction of the related debt on the consolidated balance sheet. In August 2015, the FASB issued ASU 2015-15, Presentation and Subsequent Measurement of Debt Issuance Cost Associated with Line-of-Credit Arrangements (Topic 835) (“ASU 2015-15”) since the guidance under ASU No. 2015-03, did not address presentation or subsequent measurement of debt issuance costs related to line-of-credit arrangements. ASU 2015-15 allows entities to defer and present debt issuance costs related to line-of-credit arrangements as an asset and subsequently amortize the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. The Company adopted this pronouncement during the Quarter ended March 31, 2016.

In February 2015, The FASB issued ASU No. 2015-02, Consolidation (Topic 810) (“ASU 2015-02”) which updates the considerations on whether an entity should consolidate certain legal entities. The update changes the way that entities evaluate limited partnerships and fees paid to service providers in the consolidation determination. ASU 2015-02 will become effective for public companies during interim and annual reporting periods beginning after December 15, 2015. Early adoption is permitted. The Company does not expect the adoption of ASU 2015-02 to have a material impact on its Consolidated Financial Statements.

In May 2014, the FASB and the International Accounting Standards Board (“IASB”) jointly issued ASU No. 2014-9, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), which clarifies the principles for recognizing revenue and develops a common revenue standard for GAAP and International Financial Reporting Standards (“IFRS”). The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. ASU 2014-09 was to be effective for public entities for annual and interim periods beginning after December 15, 2016; however, in August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606) and delayed the effective date of the new revenue standard by one year. Reporting entities may choose to adopt the standard as of the original effective date. The Company is currently evaluating the impact of adopting this guidance on its financial position and results of operations.

There have been no other recently issued accounting updates that had or may have a material impact on the Company’s Consolidated Financial Statements.

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Voluntary Reorganization Under Chapter 11 (Tables)

6 Months Ended

Jun. 30, 2016

Reorganizations [Abstract]

Schedule of Liabilities Subject to Compromise

Liabilities subject to compromise consist of the following:

	June 30, 2016
Debt	$	356,984
Accounts payable		67,893
Other liabilities		4,588
	$	429,465

Schedule of Reorganization Items

Reorganization items consist of the following for the three and six months ended June 30, 2016:

	Three months ended June 30, 2016		Six months ended June 30, 2016
Professional fees	$	15,564	$	26,761
Interest expense		125		4,320
	$	15,689	$	31,081

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Inventories (Tables)

6 Months Ended

Jun. 30, 2016

Inventory Disclosure [Abstract]

Schedule of Inventories

Inventories consisted of the following at June 30, 2016 and December 31, 2015.

	June 30, 2016			December 31, 2015
Raw materials	$	4,767		$	12,230
Work-in-process		2,808			2,776
Finished goods		12,349			19,545
Supplies and spare parts		11,010			10,458
		30,934			45,009
Excess and obsolete inventory reserves		(5,729	)		(4,518	)
	$	25,205		$	40,491

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Property, Plant and Equipment (Tables)

6 Months Ended

Jun. 30, 2016

Property, Plant and Equipment [Abstract]

Schedule of Property, Plant and Equipment

Property, plant and equipment consisted of the following at June 30, 2016 and December 31, 2015.

	June 30, 2016			December 31, 2015
Land and land improvements	$	25,050		$	24,437
Buildings and building improvements		41,103			41,083
Machinery and equipment		247,997			299,009
Construction in progress		12,675			8,847
		326,825			373,376
Less accumulated depreciation		(129,057	)		(118,535	)
	$	197,768		$	254,841

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Long -Term Debt (Tables)

6 Months Ended

Jun. 30, 2016

Debt Disclosure [Abstract]

Schedule of Long-Term Debt

Long-term debt consisted of the following at June 30, 2016 and December 31, 2015:

	June 30,		December 31,
	2016		2015
Loan Payable, related to New Market Tax Credit program	$	—	$	255
3.80% Convertible Senior Notes due July 2017, net of debt discount in 2015		—		93,403
10.50% Senior Secured Notes due June 2017, including the debt premium in 2015		—		205,081
9.00% Senior Unsecured Notes due July 2017		—		40,000
Zochem Credit Facility, interest payable at variable rates		—		17,500
Macquarie Credit Facility, interest payable at variable rates		26,888		59,451
Credit Agreement, interest payable at variable rates		—		17,389
		26,888		433,079
Less portion currently payable		26,888		433,079
	$	—	$	—

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Accrued Expenses (Tables)

6 Months Ended

Jun. 30, 2016

Payables and Accruals [Abstract]

Schedule of Accrued Expenses

Accrued expenses at June 30, 2016 and December 31, 2015 consisted of the following.

	June 30, 2016		December 31, 2015
Employee related costs	$	4,228	$	5,868
EAF dust processing reserve		5,142		3,336
Workers’ compensation insurance claim liabilities		1,500		1,500
Unearned tolling revenue		2,095		1,305
Accrued sales tax		2,653		2,291
Accrued interest		9,940		4,534
Environmental reserve		1,301		712
Accrued hedge contracts		6		1,275
Accrued insurance		363		1,749
Other		3,913		2,260
	$	31,141	$	24,830

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Other Long-Term Liabilities (Tables)

6 Months Ended

Jun. 30, 2016

Other Liabilities Disclosure [Abstract]

Schedule of Other Long-Term Liabilities

Other long-term liabilities at June 30, 2016 and December 31, 2015 consisted of the following.

	June 30, 2016		December 31, 2015
Environmental obligations	$	550	$	567
Insurance claim liabilities		5,158		5,603
Asset retirement obligations		5,312		5,123
Deferred purchase price obligation		3,739		3,538
Other		474		674
	$	15,233	$	15,505

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Accumulated Other Comprehensive Income (Tables)

6 Months Ended

Jun. 30, 2016

Equity [Abstract]

Components of Accumulated Other Comprehensive Income

Components of accumulated other comprehensive income are as follows:

	June 30, 2016		December 31, 2015
Cumulative translation adjustments	$	30	$	30
Net pension adjustment		215		217
Accumulated other comprehensive income	$	245	$	247

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Accounting for Derivative Instruments and Hedging Activities (Tables)

6 Months Ended

Jun. 30, 2016

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Gains and Losses Resulting from Company's Hedging Activities

The gains and losses resulting from the Company’s hedging activities are recorded in the Consolidated Statements of Operations as indicated in the table below:

	Three months ended June 30, 2016		Three months ended June 30, 2015		Six months ended June 30, 2016		Six months ended June 30, 2015
Gains included in net sales:
Swaps	$	77	$	9,230	$	154	$	8,525

Schedule of Fair Value of Swap Contracts and Put Options

The fair value of the swap contracts and put options at June 30, 2016 and December 31, 2015 are listed in the table below.

Fair Value Measurements Using Significant Other Observable Inputs (Level 2)	June 30, 2016		December 31, 2015
Swaps included in Accrued expenses	$	6	$	1,275

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Loss Per Share (Tables)

6 Months Ended

Jun. 30, 2016

Earnings Per Share [Abstract]

Schedule of Information Used to Compute Basic and Diluted Earnings (Loss) Per Share

The information used to compute basic and diluted earnings (loss) per share is as follows:

	Three months ended June 30,						Six months ended June 30
	2016			2015			2016			2015
Basic loss per share:
Net loss	$	(29,110	)	$	(3,619	)	$	(132,679	)	$	(22,113	)
Weighted average shares outstanding—basic		60,352			56,661			60,345			55,756
Basic loss per share	$	(0.48	)	$	(0.06	)	$	(2.20	)	$	(0.40	)
Diluted loss per share:
Net loss	$	(29,110	)	$	(3,619	)	$	(132,679	)	$	(22,113	)
Weighted average shares outstanding—diluted		60,352			56,661			60,345			55,756
Diluted loss per share	$	(0.48	)	$	(0.06	)	$	(2.20	)	$	(0.40	)

Schedule of Anti-dilutive Shares Excluded from Earnings Per Share Calculation

	Exercise Price		Three months ended June 30,				Six months ended June 30,
			2016		2015		2016		2015
Anti-dilutive shares excluded from earnings per share calculation
Options	$	13.00		580		580		580		582
Convertible Notes	$	15.00		—		—		—		—
Restricted Stock Units				1,765		1,009		1,767		1,020
Total				2,345		1,589		2,347		1,602

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Segment Information (Tables)

6 Months Ended

Jun. 30, 2016

Segment Reporting [Abstract]

Schedule of Segment Information

The following table presents information regarding the Company’s segment presentation:

Three months ended June 30, 2016	Horsehead			Zochem			INMETCO			Corporate, eliminations and other			Total
Net sales	$	42,620		$	31,998		$	7,563		$	(234	)	$	81,947
Depreciation and amortization		4,388			573			755			—			5,716
Cost of sales (excluding depreciation and amortization)		45,380			29,584			6,181			(234	)		80,911
Selling, general and administrative expenses		4,095			454			580			249			5,378
Interest expense		2,719			822			113			(326	)		3,328
Reorganization items, net		(37	)		(1,095	)		—			(14,557	)		(15,689	)
Loss before income taxes		(13,990	)		(648	)		(54	)		(14,480	)		(29,172	)
Three months ended June 30, 2015	Horsehead			Zochem			INMETCO			Corporate, eliminations and other			Total
Net sales	$	76,259		$	33,228		$	14,422		$	(1,111	)	$	122,798
Depreciation and amortization		13,758			620			771			—			15,149
Cost of sales (excluding depreciation and amortization)		70,832			29,449			8,990			(1,111	)		108,160
Gain on asset dispositions		(12,152	)		—			—			—			(12,152	)
Selling, general and administrative expenses		5,171			573			684			368			6,796
Interest expense		906			147			180			7,881			9,114
(Loss) income before income taxes		(2,352	)		2,465			3,964			(8,243	)		(4,166	)
Six months ended June 30, 2016	Horsehead			Zochem			INMETCO			Corporate, eliminations and other			Total
Net sales	$	85,135		$	59,752		$	16,587		$	(424	)	$	161,050
Depreciation and amortization		9,215			1,134			1,509			—			11,858
Cost of sales (excluding depreciation and amortization)		101,642			55,792			13,865			(424	)		170,875
Selling, general and administrative expenses		8,052			974			1,136			2,763			12,925
Interest expense		9,702			2,485			224			2,698			15,109
Reorganization items, net		(4,175	)		(2,111	)		—			(24,795	)		(31,081	)
Loss before income taxes		(99,745	)		(2,934	)		(31	)		(30,257	)		(132,967	)
Six months ended June 30, 2015	Horsehead			Zochem			INMETCO			Corporate, eliminations and other			Total
Net sales	$	133,386		$	68,392		$	24,531		$	(1,367	)	$	224,942
Depreciation and amortization		24,236			1,254			1,500						26,990
Cost of sales (excluding depreciation and amortization)		137,699			61,084			16,867			(1,367	)		214,283
(Gain) loss on asset dispositions		(12,020	)		—			147			—			(11,873	)
Selling, general and administrative expenses		10,370			1,180			1,255			769			13,574
Interest expense		1,857			272			358			15,741			18,228
(Loss) income before income taxes		(28,320	)		4,540			4,727			(16,495	)		(35,548	)

June 30, 2016	Horsehead		Zochem		INMETCO		Corporate, eliminations and other			Total
Property, plant and equipment	$	140,831	$	24,036	$	32,901	$	—		$	197,768
Capital expenditures		5,318		422		2,939		—			8,679
Total assets		197,905		60,221		52,199		(1,582	)		308,743
December 31, 2015	Horsehead		Zochem		INMETCO		Corporate, eliminations and other			Total
Property, plant and equipment	$	198,696	$	24,746	$	31,399	$	—		$	254,841
Capital expenditures		29,491		815		3,387		—			33,693
Total assets		275,681		70,005		49,655		(3,289	)		392,052

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Voluntary Reorganization Under Chapter 11 - Additional Information (Detail) shares in Thousands			3 Months Ended	6 Months Ended
	Jun. 24, 2016 USD ($)	Feb. 01, 2016 USD ($)	Jun. 30, 2016 USD ($) shares	Jun. 30, 2016 USD ($) shares	Jan. 15, 2016 USD ($)	Jan. 06, 2016 USD ($)	Jan. 05, 2016 USD ($)	Jan. 02, 2016	Dec. 31, 2015	Jul. 06, 2015 USD ($)	Apr. 29, 2014 USD ($)	Apr. 29, 2014 CAD
Reorganization Items [Line Items]
Debt default, event of default				On January 5, 2016, the Company received a notice of default from Macquarie related to, among other things, insufficient borrowing base availability under the Macquarie Credit Facility as of December 31, 2015.
Debt default, description of notice				On January 15, 2016, Horsehead, INMETCO and HMP entered into a forbearance agreement with Macquarie. Pursuant to the forbearance agreement, cash held in certain of the Debtors’ third-party bank accounts was transferred to accounts controlled by Macquarie. Disbursements of funds from the controlled accounts were subject to a budget as specified in the forbearance agreement. Pursuant to the forbearance agreement, the Company agreed, among other things, (i) to pay down to $40,000 outstanding borrowings under the Macquarie Credit Facility and (ii) to pay a restructuring fee in an amount ranging from $1,000 to $2,500 in the event the obligations under the Macquarie Credit Facility are not paid in full by February 1, 2016, with the amount of such fee increasing over time from February 1, 2016 through April 30, 2016. The forbearance remained effective until February 1, 2016.
Forbearance fee	$ 100,000
Bankruptcy, voluntary petitions filing date				Feb. 02, 2016
Bankruptcy, court where petitions filed				United States District Court for the District of Delaware
Joint plan of reorganization, filed date				Apr. 13, 2016
Units of limited liability company interests of reorganized Company | shares			100,000	100,000
Contractual interest on liabilities subject to compromise			$ 7,404,000	$ 12,255,000
Unit Purchase and Support Agreement [Member]
Reorganization Items [Line Items]
Termination fee				$ 7,500,000
Debt instrument amendment date				Aug. 30, 2016
Additional capital commitment units for working capital needs and other general purposes				$ 15,000,000
Emergence Equity Units [Member]
Reorganization Items [Line Items]
Percentage amount of limited liability company interests of the reorganized Company			$ 160,000,000	$ 160,000,000
Zochem Credit Facility [Member]
Reorganization Items [Line Items]
Debt default, event of default				On January 6, 2016 and January 13, 2016, the Company received notices of default, effective November 30, 2015 and December 31, 2015, from PNC Bank related to failure to comply with the required fixed charge coverage ratio under the 2014 Zochem Credit Facility following transfers of funds to Horsehead in 2015.
Debt default, description of notice				The notice sent on January 13, 2016, demanded immediate payment of all outstanding obligations under the 2014 Zochem Credit Facility. On January 14, 2016, Zochem and the Company entered into a forbearance agreement with PNC Bank. In consideration for the forbearance, Zochem agreed, among other things, to pay a forbearance fee to PNC Bank of $1,000 due and payable on February 1, 2016 and provide a mortgage on Zochem’s currently unencumbered property in Ontario, Canada. The forbearance remained effective until February 1, 2016.
Forbearance fee		$ 1,000,000
Senior secured revolving credit facility aggregate principal amount						$ 20,000,000					$ 20,000,000	CAD 20,000,000
Macquarie Credit Facility [Member]
Reorganization Items [Line Items]
Debt default, event of default				On January 5, 2016, the Company received a notice of default from Macquarie Bank Limited (“Macquarie”), as administrative agent and sole arranger under our $80,000 secured revolving credit facility (the “Macquarie Credit Facility”). The notice of default related to, among other things, insufficient borrowing base availability under the Macquarie Credit Facility as of December 31, 2015.
Debt default, description of notice				On January 15, 2016, Horsehead Corporation (“Horsehead”), The International Metals Reclamation Company, LLC (“INMETCO”) and Horsehead Metal Products, LLC (“HMP”) entered into a forbearance agreement with Macquarie. Pursuant to the forbearance agreement, cash held in certain of the Debtors’ third-party bank accounts was transferred to accounts controlled by Macquarie. Disbursements of funds from the controlled accounts were subject to a budget as specified in the forbearance agreement. Pursuant to the forbearance agreement, the Company agreed, among other things, (i) to pay down to $40,000 outstanding borrowings under the Macquarie Credit Facility and (ii) to pay a restructuring fee in an amount ranging from $1,000 to $2,500 in the event the obligations under the Macquarie Credit Facility are not paid in full by February 1, 2016, with the amount of such fee increasing over time from February 1, 2016 through April 30, 2016. The forbearance remained effective until February 1, 2016.
Senior secured revolving credit facility aggregate principal amount							$ 80,000,000			$ 80,000,000
Pay down required under forebearance agreement					$ 40,000,000
Macquarie Credit Facility [Member] | Minimum [Member]
Reorganization Items [Line Items]
Restructuring fee		1,000,000
Macquarie Credit Facility [Member] | Maximum [Member]
Reorganization Items [Line Items]
Restructuring fee		$ 2,500,000
Convertible Senior Notes [Member]
Reorganization Items [Line Items]
Debt interest rate			3.80%	3.80%				3.80%	3.80%

XML

Voluntary Reorganization Under Chapter 11 - Schedule of Liabilities Subject to Compromise (Detail) $ in Thousands	Jun. 30, 2016 USD ($)
Liabilities Subject to Compromise [Abstract]
Debt	$ 356,984
Accounts payable	67,893
Other liabilities	4,588
Total liabilities subject to compromise	$ 429,465

XML

Voluntary Reorganization Under Chapter 11 - Schedule of Reorganization Items (Detail) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2016
Reorganization Items [Abstract]
Professional fees	$ 15,564	$ 26,761
Interest expense	125	4,320
Reorganization items, net	$ 15,689	$ 31,081

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Inventories - Schedule of Inventories (Detail) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
Inventory Disclosure [Abstract]
Raw materials	$ 4,767	$ 12,230
Work-in-process	2,808	2,776
Finished goods	12,349	19,545
Supplies and spare parts	11,010	10,458
Inventory Gross	30,934	45,009
Excess and obsolete inventory reserves	(5,729)	(4,518)
Total Inventories	$ 25,205	$ 40,491

XML

Inventories - Additional Information (Detail) - USD ($)	6 Months Ended		12 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Inventory [Line Items]
Provision for slow moving inventory	$ 5,608,000		$ 4,070,000
Lower of cost or market adjustment to inventories	$ 0	$ 3,627,000	$ 4,389,000
Lower of Cost or Market (LCM) [Member]
Inventory [Line Items]
Lower of cost or market adjustment to inventories		$ 1,267,000

XML

Property, Plant and Equipment - Schedule of Property, Plant and Equipment (Detail) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Property, Plant and Equipment [Abstract]
Land and land improvements	$ 25,050	$ 24,437
Buildings and building improvements	41,103	41,083
Machinery and equipment	247,997	299,009
Construction in progress	12,675	8,847
Property, plant and equipment, Gross	326,825	373,376
Less accumulated depreciation	(129,057)	(118,535)
Property, plant and equipment, Net	$ 197,768	$ 254,841

XML

Property, Plant and Equipment - Additional Information (Detail) - USD ($) $ in Thousands		1 Months Ended	3 Months Ended	6 Months Ended		12 Months Ended
	Feb. 02, 2016	Jun. 30, 2015	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015	Mar. 31, 2016	Nov. 07, 2014
Mooresboro Facility [Member]
Depreciation and Amortization Expenses for Property Plant and Equipment [Line Items]
Interest costs capitalized			$ 747		$ 1,495
Net capitalized interest expense				$ 58,383
Bankruptcy claims, amount of claims filed	$ 117,000
Impairment charges				$ 54,266		$ 527,621
Net book value of asset							$ 31,284
Monaca Pennsylvania facility [Member]
Depreciation and Amortization Expenses for Property Plant and Equipment [Line Items]
Net book value of asset								$ 1,200
Gain (loss) on disposition of property plant equipment		$ 12,200

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Long-Term Debt - Schedule of Long-Term Debt (Detail) - USD ($)	Jun. 30, 2016	Mar. 31, 2016	Feb. 02, 2016	Dec. 31, 2015	Jul. 29, 2014	Jun. 03, 2013	Jul. 26, 2012	Jul. 27, 2011
Debt Instrument [Line Items]
Loan Payable, related to New Market Tax Credit program	$ 255,000			$ 255,000
Long-term debt	26,888,000			433,079,000
Long-term debt	26,888,000			433,079,000
Less portion currently payable	26,888,000			433,079,000
Long-term debt, less current maturities	0			0
Convertible Senior Notes [Member]
Debt Instrument [Line Items]
3.80% Convertible Senior Notes due July 2017, net of debt discount in 2015				93,403,000
9.00% Senior Unsecured Notes due July 2017								$ 100,000,000
10.50% Senior Secured Notes due June 2017 [Member]
Debt Instrument [Line Items]
10.50% Senior Secured Notes due June 2017, including the debt premium in 2015				205,081,000
9.00% Senior Unsecured Notes due July 2017					$ 205,000,000	$ 205,000,000	$ 205,000,000
Long-term debt			$ 205,000,000
Long-term debt			$ 205,000,000
9.00% Senior Unsecured Notes due 2017 [Member]
Debt Instrument [Line Items]
9.00% Senior Unsecured Notes due July 2017				40,000,000	$ 40,000,000
Zochem Credit Facility [Member]
Debt Instrument [Line Items]
Long-term line of credit				17,500,000
Macquarie Credit Facility [Member]
Debt Instrument [Line Items]
Long-term line of credit	$ 26,888,000	$ 26,888,000		59,451,000
Credit Agreement [Member]
Debt Instrument [Line Items]
Long-term line of credit				$ 17,389,000

XML

Long-Term Debt - Schedule of Long-Term Debt (Parenthetical) (Detail)	6 Months Ended
	Jun. 30, 2016	Jan. 02, 2016	Dec. 31, 2015	Jul. 29, 2014	Jun. 03, 2013	Jul. 26, 2012
Convertible Senior Notes [Member]
Debt Instrument [Line Items]
Maturity date of convertible note	Jul. 01, 2017
Debt interest rate	3.80%	3.80%	3.80%
10.50% Senior Secured Notes due June 2017 [Member]
Debt Instrument [Line Items]
Maturity of senior secured notes	Jun. 01, 2017
Debt interest rate	10.50%		10.50%	10.50%	10.50%	10.50%
9.00% Senior Unsecured Notes due 2017 [Member]
Debt Instrument [Line Items]
Maturity of senior secured notes	Jul. 01, 2017
Debt interest rate	9.00%		9.00%	9.00%

XML

Long-Term Debt - NMTC Loans - Additional Information (Detail) - USD ($) $ in Thousands		6 Months Ended
	Jun. 24, 2016	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Debt Disclosure [Abstract]
Forbearance fee	$ 100
Repayment of loan	$ 878		$ 1,521
Loan payable		$ 255		$ 255
Dividends paid to the equity holders		170
Payment for exercise of purchase option		360
Reclassification adjustment to additional paid in capital		$ 3,669

XML

Long-Term Debt - Convertible Senior Notes - Additional Information (Detail) - Convertible Senior Notes [Member] - USD ($)	Feb. 02, 2016	Jul. 27, 2011
Debt Instrument [Line Items]
Convertible notes issued		$ 100,000,000
Proceeds from the issuance of convertible notes		100,000,000
Issuance cost		3,481,000
Fair value of the liability component of the convertible notes		$ 78,174,000
Nonconvertible rate		8.50%
Carrying amount of the embedded conversion option		$ 21,826,000
Embedded conversion options, deferred taxes		8,805,000
Deferred finance costs		2,721,000
Remaining issuance costs accounted for as equity issuance		$ 760,000
Amount of deferred finance costs wrote off	$ 652,000

XML

Long-Term Debt - ABL Facility - Additional Information (Detail) - USD ($)	Sep. 28, 2011	Jun. 30, 2016	Jan. 05, 2016	Jul. 06, 2015	Mar. 31, 2014	Jun. 24, 2013
ABL Facility [Member]
Debt Instrument [Line Items]
Debt term	5 years
Senior secured revolving credit facility aggregate principal amount	$ 60,000,000	$ 60,000,000
Macquarie Credit Facility [Member]
Debt Instrument [Line Items]
Senior secured revolving credit facility aggregate principal amount			$ 80,000,000	$ 80,000,000
INMETCO Credit Facility [Member]
Debt Instrument [Line Items]
Senior secured revolving credit facility aggregate principal amount		$ 20,000,000			$ 20,000,000	$ 15,000,000

XML

Long-Term Debt - Senior Secured Notes - Additional Information (Detail) - USD ($)					6 Months Ended
	Feb. 02, 2016	Jul. 29, 2014	Jun. 03, 2013	Jul. 26, 2012	Jun. 30, 2016	Dec. 31, 2015
Debt Instrument [Line Items]
Long-term debt					$ 26,888,000	$ 433,079,000
10.50% Senior Secured Notes due June 2017 [Member]
Debt Instrument [Line Items]
Face amount of debt		$ 205,000,000	$ 205,000,000	$ 205,000,000
Debt interest rate		10.50%	10.50%	10.50%	10.50%	10.50%
Received proceeds from the offering		$ 204,429,000	$ 204,429,000	$ 204,429,000
Issuance cost		8,415,000	8,415,000	8,415,000	$ 8,415,000
Proceeds from the issuance of debt		$ 196,014,000	$ 196,014,000	$ 196,014,000
Long-term debt	$ 205,000,000
Write off of debt premium	75,000
Amount of deferred finance costs wrote off	$ 2,106,000

XML

Long-Term Debt - Credit Agreement - Additional Information (Detail) € in Thousands, $ in Thousands	Feb. 02, 2016 USD ($)	Aug. 28, 2012 USD ($)	Jun. 30, 2016 USD ($)	Aug. 28, 2012 EUR (€)	Aug. 28, 2012 USD ($)
Debt Instrument [Line Items]
Credit agreement outstanding amount reclassified to liabilities subject to compromise			$ 429,465
Credit Agreement [Member]
Debt Instrument [Line Items]
Credit agreement remaining borrowing capacity				€ 18,583	$ 25,805
Payment for the premium of the insurance		$ 968
Issuance cost		$ 1,248
Amount of deferred finance costs wrote off	$ 789
Credit Agreement [Member] | Reclassification [Member]
Debt Instrument [Line Items]
Credit agreement outstanding amount reclassified to liabilities subject to compromise			$ 17,389

XML

Long-Term Debt - Zochem Revolving Credit and Security Agreement - Additional Information (Detail)				6 Months Ended
	Jun. 24, 2016 USD ($)	Feb. 01, 2016 USD ($)	Apr. 29, 2014 USD ($)	Jun. 30, 2016	Jan. 06, 2016 USD ($)	Dec. 31, 2015 USD ($)	Apr. 29, 2014 CAD
Debt Instrument [Line Items]
Forbearance fee	$ 100,000
Debt default, event of default				On January 5, 2016, the Company received a notice of default from Macquarie related to, among other things, insufficient borrowing base availability under the Macquarie Credit Facility as of December 31, 2015.
Debt default, description of notice				On January 15, 2016, Horsehead, INMETCO and HMP entered into a forbearance agreement with Macquarie. Pursuant to the forbearance agreement, cash held in certain of the Debtors’ third-party bank accounts was transferred to accounts controlled by Macquarie. Disbursements of funds from the controlled accounts were subject to a budget as specified in the forbearance agreement. Pursuant to the forbearance agreement, the Company agreed, among other things, (i) to pay down to $40,000 outstanding borrowings under the Macquarie Credit Facility and (ii) to pay a restructuring fee in an amount ranging from $1,000 to $2,500 in the event the obligations under the Macquarie Credit Facility are not paid in full by February 1, 2016, with the amount of such fee increasing over time from February 1, 2016 through April 30, 2016. The forbearance remained effective until February 1, 2016.
Zochem Credit Facility [Member]
Debt Instrument [Line Items]
Senior secured revolving credit facility aggregate principal amount			$ 20,000,000		$ 20,000,000		CAD 20,000,000
Senior secured revolving credit facility period			29 months
Outstanding borrowings under the revolving credit agreement						$ 17,500,000
Remaining borrowing capacity						$ 0
Forbearance fee		$ 1,000,000
Debt default, event of default				On January 6, 2016 and January 13, 2016, the Company received notices of default, effective November 30, 2015 and December 31, 2015, from PNC Bank related to failure to comply with the required fixed charge coverage ratio under the 2014 Zochem Credit Facility following transfers of funds to Horsehead in 2015.
Debt default, description of notice				The notice sent on January 13, 2016, demanded immediate payment of all outstanding obligations under the 2014 Zochem Credit Facility. On January 14, 2016, Zochem and the Company entered into a forbearance agreement with PNC Bank. In consideration for the forbearance, Zochem agreed, among other things, to pay a forbearance fee to PNC Bank of $1,000 due and payable on February 1, 2016 and provide a mortgage on Zochem’s currently unencumbered property in Ontario, Canada. The forbearance remained effective until February 1, 2016.
Issuance cost			$ 201,000

XML

Long-Term Debt - INMETCO Senior Secured Revolving Credit Agreement - Additional Information (Detail) - USD ($)	Jul. 06, 2015	Jun. 24, 2013	Jun. 30, 2016	Jan. 05, 2016	Mar. 31, 2014	Sep. 28, 2011
INMETCO Credit Facility [Member]
Debt Instrument [Line Items]
Senior secured revolving credit facility aggregate principal amount		$ 15,000,000	$ 20,000,000		$ 20,000,000
Issuance cost		$ 151,000
Macquarie Credit Facility [Member]
Debt Instrument [Line Items]
Senior secured revolving credit facility aggregate principal amount	$ 80,000,000			$ 80,000,000
Issuance cost	$ 1,635,000
ABL Facility [Member]
Debt Instrument [Line Items]
Senior secured revolving credit facility aggregate principal amount			$ 60,000,000			$ 60,000,000

XML

Long-Term Debt - Senior Unsecured Notes - Additional Information (Detail) - 9.00% Senior Unsecured Notes due 2017 [Member] - USD ($)	Feb. 02, 2016	Jul. 29, 2014	Jun. 30, 2016	Dec. 31, 2015
Debt Instrument [Line Items]
Face amount of debt		$ 40,000,000		$ 40,000,000
Debt interest rate		9.00%	9.00%	9.00%
Proceeds from the issuance of debt		$ 38,686,000
Issuance cost		$ 1,314,000
Amount of deferred finance costs wrote off	$ 618,000

XML

Long-Term Debt - Macquarie Revolving Credit Facility - Additional Information (Detail) - USD ($)			6 Months Ended
	Feb. 01, 2016	Jul. 06, 2015	Jun. 30, 2016	Mar. 31, 2016	Jan. 15, 2016	Jan. 05, 2016	Dec. 31, 2015
Debt Instrument [Line Items]
Debt default, event of default			On January 5, 2016, the Company received a notice of default from Macquarie related to, among other things, insufficient borrowing base availability under the Macquarie Credit Facility as of December 31, 2015.
Debt default, description of notice			On January 15, 2016, Horsehead, INMETCO and HMP entered into a forbearance agreement with Macquarie. Pursuant to the forbearance agreement, cash held in certain of the Debtors’ third-party bank accounts was transferred to accounts controlled by Macquarie. Disbursements of funds from the controlled accounts were subject to a budget as specified in the forbearance agreement. Pursuant to the forbearance agreement, the Company agreed, among other things, (i) to pay down to $40,000 outstanding borrowings under the Macquarie Credit Facility and (ii) to pay a restructuring fee in an amount ranging from $1,000 to $2,500 in the event the obligations under the Macquarie Credit Facility are not paid in full by February 1, 2016, with the amount of such fee increasing over time from February 1, 2016 through April 30, 2016. The forbearance remained effective until February 1, 2016.
Macquarie Credit Facility [Member]
Debt Instrument [Line Items]
Senior secured revolving credit facility aggregate principal amount		$ 80,000,000				$ 80,000,000
Outstanding borrowings under the revolving credit agreement			$ 26,888,000	$ 26,888,000			$ 59,451,000
Debt default, event of default			On January 5, 2016, the Company received a notice of default from Macquarie Bank Limited (“Macquarie”), as administrative agent and sole arranger under our $80,000 secured revolving credit facility (the “Macquarie Credit Facility”). The notice of default related to, among other things, insufficient borrowing base availability under the Macquarie Credit Facility as of December 31, 2015.
Debt default, description of notice			On January 15, 2016, Horsehead Corporation (“Horsehead”), The International Metals Reclamation Company, LLC (“INMETCO”) and Horsehead Metal Products, LLC (“HMP”) entered into a forbearance agreement with Macquarie. Pursuant to the forbearance agreement, cash held in certain of the Debtors’ third-party bank accounts was transferred to accounts controlled by Macquarie. Disbursements of funds from the controlled accounts were subject to a budget as specified in the forbearance agreement. Pursuant to the forbearance agreement, the Company agreed, among other things, (i) to pay down to $40,000 outstanding borrowings under the Macquarie Credit Facility and (ii) to pay a restructuring fee in an amount ranging from $1,000 to $2,500 in the event the obligations under the Macquarie Credit Facility are not paid in full by February 1, 2016, with the amount of such fee increasing over time from February 1, 2016 through April 30, 2016. The forbearance remained effective until February 1, 2016.
Pay down required under forebearance agreement					$ 40,000,000
Early termination fees			$ 5,057,000
Issuance cost		$ 1,635,000
Macquarie Credit Facility [Member] | Minimum [Member]
Debt Instrument [Line Items]
Restructuring fee	$ 1,000,000
Macquarie Credit Facility [Member] | Maximum [Member]
Debt Instrument [Line Items]
Restructuring fee	$ 2,500,000

XML

Long-Term Debt - Tecnicas Reunidas, S.A. Settlement - Additional Information (Detail) - USD ($) $ in Thousands		1 Months Ended	6 Months Ended
	Jun. 24, 2016	Jan. 31, 2016	Jun. 30, 2015
Debt Instrument [Line Items]
Repayment of loan	$ 878		$ 1,521
Tecnicas Reunidas [Member]
Debt Instrument [Line Items]
Net settlement amount		$ 7,200
Repayment of loan		$ 5,000

XML

Long-Term Debt - Other - Additional Information (Detail) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Debt Instrument [Line Items]
Letters of credit outstanding under the revolving credit agreement	$ 7,939	$ 7,939
Zochem Credit Facility [Member]
Debt Instrument [Line Items]
Letters of credit outstanding under the revolving credit agreement		$ 364

XML

Debtor In Possession Financing - Additional Information (Detail) - USD ($)		6 Months Ended
	Feb. 08, 2016	Jun. 30, 2016
Debtor In Possession Financings [Line Items]
Debtor-in-possession outstanding amounts		$ 57,500,000
DIP Facility [Member]
Debtor In Possession Financings [Line Items]
Senior secured super priority credit facility aggregate principal amount	$ 90,000,000
Debtor-in-possession outstanding amounts		$ 57,500,000
Origination fees percentage		4.50%
Origination fees paid		$ 4,050,000
Interest rate under credit facility	14.00%
Additional interest up on occurrence of default	2.00%
Credit facility maturity date description		The DIP Facility matures on the earlier of (a) February 8, 2017, (b) the earlier of (i) the date of the substantial consummation of the plan of reorganization that is confirmed pursuant to an order of the Bankruptcy Court and recognized by an order of the Canadian Court, (ii) the consummation of a sale of all or substantially all of the assets of the Debtors pursuant to Section 363 of the Bankruptcy Code, and (iii) the date any outstanding extensions of credit under the DIP Facility become due and payable in accordance with the terms of the loan documents, whether by acceleration or otherwise.

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Accrued Expenses - Schedule of Accrued Expenses (Detail) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Payables and Accruals [Abstract]
Employee related costs	$ 4,228	$ 5,868
EAF dust processing reserve	5,142	3,336
Workers' compensation insurance claim liabilities	1,500	1,500
Unearned tolling revenue	2,095	1,305
Accrued sales tax	2,653	2,291
Accrued interest	9,940	4,534
Environmental reserve	1,301	712
Accrued hedge contracts	6	1,275
Accrued insurance	363	1,749
Other	3,913	2,260
Total accrued expenses	$ 31,141	$ 24,830

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Other Long-Term Liabilities - Schedule of Other Long-Term Liabilities (Detail) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Other Liabilities Disclosure [Abstract]
Environmental obligations	$ 550	$ 567
Insurance claim liabilities	5,158	5,603
Asset retirement obligations	5,312	5,123
Deferred purchase price obligation	3,739	3,538
Other	474	674
Total other long term liabilities	$ 15,233	$ 15,505

XML

Income Taxes - Additional Information (Detail)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Income Tax Disclosure [Abstract]
Effective tax rates	0.20%	13.10%	0.20%	37.80%
Statutory federal income tax rate			35.00%

XML

Accumulated Other Comprehensive Income - Components of Accumulated Other Comprehensive Income (Detail) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Equity [Abstract]
Cumulative translation adjustments	$ 30	$ 30
Net pension adjustment	215	217
Accumulated other comprehensive income	$ 245	$ 247

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Share-Based Compensation - Additional Information (Detail) - USD ($)		3 Months Ended		6 Months Ended
	Jan. 16, 2007	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015	May 17, 2012
Restricted Stock Units (RSUs) [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average remaining contractual term of outstanding restricted stock units				6 months
Restricted Stock Units (RSUs) [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average remaining contractual term of outstanding restricted stock units				1 year 3 months
2006 Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of restricted stock unit granted	1,085,000
Stock option expiration period	10 years
Stock option vesting period	5 years
Stock option exercise				0
Number of options vested and exercisable		580,000		580,000
Issuance of stock option exercise price		$ 13.00		$ 13.00
Stock option remaining contractual life				6 months 15 days
Aggregate intrinsic value of options outstanding		$ 0		$ 0
2006 Plan [Member] | Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted stock units outstanding		74,000		74,000		218,000
Weighted average grant date fair value						$ 10.96
Number of restricted stock vested				143,000
Restricted stock vested intrinsic value				$ 274,000
Share based compensation expenses		$ 95,000	$ 254,000	206,000	$ 538,000
Unrecognized compensation expense		228,000		$ 228,000
2012 Plan [Member] | Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted stock units outstanding						611,000
Weighted average grant date fair value						$ 18.15
Number of restricted stock vested				79,000
Restricted stock vested intrinsic value				$ 40,000
Share based compensation expenses		872,000	$ 1,106,000	1,841,000	$ 2,209,000
Unrecognized compensation expense		$ 6,177,000		$ 6,177,000
Common stock, capital shares reserved for future issuance							2,700,000
Management based restricted stock				634,000
Share based compensation number of restricted stock average grant date fair value				$ 1.83
Risk free interest rate				1.32%
2012 Plan [Member] | Restricted Stock Units (RSUs) [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock option vesting period				1 year
Stock option remaining contractual life				6 months
2012 Plan [Member] | Restricted Stock Units (RSUs) [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock option vesting period				5 years
Stock option remaining contractual life				4 years
2012 Plan [Member] | Restricted Stock Units (RSUs) [Member] | Management [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Management based restricted stock				538,000
Share based compensation number of restricted stock average grant date fair value				$ 2.51

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Accounting for Derivative Instruments and Hedging Activities - Additional Information (Detail) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016 USD ($) Contract	Jun. 30, 2015 USD ($)	Jun. 30, 2016 USD ($) Contract	Jun. 30, 2015 USD ($)	Dec. 31, 2015 T $ / lb $ / Pounds
Derivatives, Fair Value [Line Items]
Maximum period of deliver quantities of product (years)			1 year
Reorganization items, net	$ 15,689		$ 31,081
Net sales of zinc material and other goods	64,581	$ 99,239	125,066	$ 181,907
Cost of sales of zinc material and other goods	$ 67,458	$ 92,014	143,273	$ 183,194
Fixed Price Swaps [Member]
Derivatives, Fair Value [Line Items]
Variable to fixed future swap contracts | T					4,500
Strike price | $ / Pounds					830
Margin Calls [Member]
Derivatives, Fair Value [Line Items]
Reorganization items, net			1,325
Margin Calls [Member] | Zinc Material and Other Goods [Member]
Derivatives, Fair Value [Line Items]
Net sales of zinc material and other goods			1,389
Margin Calls [Member] | Nickel-based Material and Other Services [Member]
Derivatives, Fair Value [Line Items]
Cost of sales of zinc material and other goods			$ 64
Fixed-to-Variable Swap Contracts [Member]
Derivatives, Fair Value [Line Items]
Number of swap contracts | Contract	0		0
Fixed Rate Swap Contracts [Member]
Derivatives, Fair Value [Line Items]
Number of swap contracts | Contract	0		0
Swaps [Member]
Derivatives, Fair Value [Line Items]
Zinc fixed to variable future swap contracts | T					15,700
Minimum [Member]
Derivatives, Fair Value [Line Items]
Fixed portion of fixed to variable swap contracts | $ / lb					0.71
Maximum [Member]
Derivatives, Fair Value [Line Items]
Fixed portion of fixed to variable swap contracts | $ / lb					0.93

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Accounting for Derivative Instruments and Hedging Activities - Schedule of Gains and Losses Resulting from Company's Hedging Activities (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Swaps [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Derivative, gains on derivative, net	$ 77	$ 9,230	$ 154	$ 8,525

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Accounting for Derivative Instruments and Hedging Activities - Schedule of Fair Value of Swap Contracts and Put Options (Detail) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Derivatives, Fair Value [Line Items]
Swaps included in Accrued expenses	$ 6	$ 1,275
Level 2 [Member] | Swaps [Member]
Derivatives, Fair Value [Line Items]
Swaps included in Accrued expenses	$ 6	$ 1,275

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Loss Per Share - Schedule of Information Used to Compute Basic and Diluted Earnings (Loss) Per Share (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Basic loss per share:
Net loss	$ (29,110)	$ (3,619)	$ (132,679)	$ (22,113)
Weighted average shares outstanding-basic	60,352	56,661	60,345	55,756
Basic loss per share	$ (0.48)	$ (0.06)	$ (2.20)	$ (0.40)
Diluted loss per share:
Net loss	$ (29,110)	$ (3,619)	$ (132,679)	$ (22,113)
Weighted average shares outstanding-diluted	60,352	56,661	60,345	55,756
Diluted loss per share	$ (0.48)	$ (0.06)	$ (2.20)	$ (0.40)

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Loss Per Share - Schedule of Anti-dilutive Shares Excluded from Earnings Per Share Calculation (Detail) - $ / shares shares in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Anti-Dilutive Shares Excluded From Earnings Per Share Calculation [Line Items]
Total	2,345	1,589	2,347	1,602
Options [Member]
Anti-Dilutive Shares Excluded From Earnings Per Share Calculation [Line Items]
Exercise Price			$ 13.00
Total	580	580	580	582
Convertible Notes [Member]
Anti-Dilutive Shares Excluded From Earnings Per Share Calculation [Line Items]
Exercise Price			$ 15.00
Restricted Stock Units [Member]
Anti-Dilutive Shares Excluded From Earnings Per Share Calculation [Line Items]
Total	1,765	1,009	1,767	1,020

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Loss Per Share - Additional Information (Detail) - Convertible Senior Notes [Member]	Jul. 27, 2011 USD ($) $ / shares
Debt Instrument [Line Items]
Face amount of debt | $	$ 100,000,000
Conversion price of Convertible Notes | $ / shares	$ 15.00

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Segment Information - Additional Information (Detail)	6 Months Ended
	Jun. 30, 2016 Segment
Segment Reporting [Abstract]
Number of segments	3

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Segment Information - Schedule of Segment Information (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Revenue from External Customer [Line Items]
Net sales	$ 81,947	$ 122,798	$ 161,050	$ 224,942
Depreciation and amortization	5,716	15,149	11,858	26,990
Cost of sales (excluding depreciation and amortization)	80,911	108,160	170,875	214,283
(Gain) loss on asset dispositions		(12,152)		(11,873)
Selling, general and administrative expenses	5,378	6,796	12,925	13,574
Interest expense	3,328	9,114	15,109	18,228
Reorganization items, net	(15,689)		(31,081)
(Loss) income before income taxes	(29,172)	(4,166)	(132,967)	(35,548)
Property, plant and equipment	197,768		197,768		$ 254,841
Capital expenditures			8,679		33,693
Total assets	308,743		308,743		392,052
Eliminations [Member]
Revenue from External Customer [Line Items]
Net sales	(234)	(1,111)	(424)	(1,367)
Cost of sales (excluding depreciation and amortization)	(234)	(1,111)	(424)	(1,367)
Selling, general and administrative expenses	249	368	2,763	769
Interest expense	(326)	7,881	2,698	15,741
Reorganization items, net	(14,557)		(24,795)
(Loss) income before income taxes	(14,480)	(8,243)	(30,257)	(16,495)
Total assets	(1,582)		(1,582)		(3,289)
Horsehead [Member] | Operating Segments [Member]
Revenue from External Customer [Line Items]
Net sales	42,620	76,259	85,135	133,386
Depreciation and amortization	4,388	13,758	9,215	24,236
Cost of sales (excluding depreciation and amortization)	45,380	70,832	101,642	137,699
(Gain) loss on asset dispositions		(12,152)		(12,020)
Selling, general and administrative expenses	4,095	5,171	8,052	10,370
Interest expense	2,719	906	9,702	1,857
Reorganization items, net	(37)		(4,175)
(Loss) income before income taxes	(13,990)	(2,352)	(99,745)	(28,320)
Property, plant and equipment	140,831		140,831		198,696
Capital expenditures			5,318		29,491
Total assets	197,905		197,905		275,681
Zochem [Member] | Operating Segments [Member]
Revenue from External Customer [Line Items]
Net sales	31,998	33,228	59,752	68,392
Depreciation and amortization	573	620	1,134	1,254
Cost of sales (excluding depreciation and amortization)	29,584	29,449	55,792	61,084
Selling, general and administrative expenses	454	573	974	1,180
Interest expense	822	147	2,485	272
Reorganization items, net	(1,095)		(2,111)
(Loss) income before income taxes	(648)	2,465	(2,934)	4,540
Property, plant and equipment	24,036		24,036		24,746
Capital expenditures			422		815
Total assets	60,221		60,221		70,005
INMETCO [Member] | Operating Segments [Member]
Revenue from External Customer [Line Items]
Net sales	7,563	14,422	16,587	24,531
Depreciation and amortization	755	771	1,509	1,500
Cost of sales (excluding depreciation and amortization)	6,181	8,990	13,865	16,867
(Gain) loss on asset dispositions				147
Selling, general and administrative expenses	580	684	1,136	1,255
Interest expense	113	180	224	358
(Loss) income before income taxes	(54)	$ 3,964	(31)	$ 4,727
Property, plant and equipment	32,901		32,901		31,399
Capital expenditures			2,939		3,387
Total assets	$ 52,199		$ 52,199		$ 49,655

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Equity Offerings - Additional Information (Detail) - USD ($) $ / shares in Units, shares in Thousands		1 Months Ended	6 Months Ended
	Jan. 28, 2015	Dec. 02, 2015	Jun. 30, 2015	Oct. 23, 2015
Stockholders Equity [Line Items]
Shares issued in public offering	5,750
Stock issued during period, shares, new issues, underwriter option	750
Share issue price	$ 12.75
Net proceeds from equity offering	$ 73,313,000
Stock issuance cost, underwriting discounts and fees	3,299,000
Stock issuance cost, offering cost	392,000
Net proceeds from the issuance of stock	$ 69,622,000		$ 69,622,000
ATM Offering [Member]
Stockholders Equity [Line Items]
Shares issued in public offering		3,507
Net proceeds from the issuance of stock		$ 8,407,000
ATM maximum equity issuance				$ 50,000,000
Common stock average price per share		$ 2.60
Shares issued in public offering, value		$ 9,109,000
Underwriting discounts and commissions		300,000
Expenses related to offering		$ 402,000
ATM program suspension date		Dec. 02, 2015