Guarantor Information

9 Months Ended

Sep. 30, 2015

Guarantor Information

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

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

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

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

Investments in subsidiaries are recorded on the equity basis.

The following tables set forth condensed consolidating balance sheets as of December 31, 2014 and September 30, 2015 and condensed consolidating statements of operations and comprehensive income for the three and nine months ended September 30, 2014 and the periods July 1 and January 1 through August 14, 2015 (Predecessor) and the period August 15 through September 30, 2015 (Successor) and condensed consolidating statements of cash flows for the nine months ended September 30, 2014 and and the period January 1 through August 14, 2015 (Predecessor) and the period August 15 through September 30, 2015 (Successor) of the Parent Guarantors and the Non-Guarantors.



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

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

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

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

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



CONDENSED CONSOLIDATING BALANCE SHEETS
As of September 30, 2015
(in thousands)

							Consolidating
					Non-		Entries and
	Parent		Guarantors		Guarantors		Eliminations			Consolidated
ASSETS
Current Assets:
Cash and cash equivalents	$	—	$	155	$	13,306	$	—		$	13,461
Accounts receivable - affiliates	51,659		25,121		17,270		(94,050		)	—
Accounts receivable - trade	—		24,336		86,688		—			111,024
Inventories	—		126,971		195,297		—			322,268
Prepaid and other current assets	—		18,701		47,861		—			66,562
Total current assets	51,659		195,284		360,422		(94,050		)	513,315

Investment in affiliates	1,091,835		678,931		—		(1,770,766		)	—
Property, plant and equipment	—		293,879		356,469		—			650,348
Deferred income taxes	—		172		13,674		—			13,846
Goodwill	—		72,458		97,563		—			170,021
Notes receivable - affiliate	—		36,508		—		(36,508		)	—
Other assets	—		97,374		65,100		—			162,474
Total Assets	$	1,143,494	$	1,374,606	$	893,228	$	(1,901,324	)	$	1,510,004

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable - affiliate	$	70	$	68,946	$	25,034	$	(94,050	)	$	—
Accounts payable - trade	—		24,070		37,917		—			61,987
Short-term debt	—		9,434		166		—			9,600
Accrued income and other taxes	—		5,222		12,528		—			17,750
Rationalizations	—		1,687		3,576		—			5,263
Other accrued liabilities	7,225		7,740		22,107		—			37,072
Total current liabilities	7,295		117,099		101,328		(94,050		)	131,672

Long-term debt - affiliate	29,095		—		7,413		(36,508		)	—
Long-term debt - third party	266,273		91,293		11,023		—			368,589
Other long-term obligations	—		61,523		28,120		—			89,643
Deferred income taxes	—		12,856		66,413		—			79,269
Stockholders' equity	840,831		1,091,835		678,931		(1,770,766		)	840,831
Total Liabilities and Stockholders' Equity	$	1,143,494	$	1,374,606	$	893,228	$	(1,901,324	)	$	1,510,004



CONDENSED CONSOLIDATING STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
For the nine months ended September 30, 2014 (Predecessor)
(in thousands)

										Consolidating
							Non-			Entries and
	Parent			Guarantors			Guarantors			Eliminations				Consolidated

Sales - affiliates	$	—		$	192,740		$	106,742		$	(299,482	)		$	—
Sales - third party	—			315,387			510,046			—				825,433
Net sales	—			508,127			616,788			(299,482		)		825,433
Cost of sales	—			472,202			591,422			(299,482		)		764,142
Gross profit	—			35,925			25,366			—				61,291

Research and development	—			8,544			—			—				8,544
Selling and administrative expenses	—			35,479			53,545			—				89,024
Impairments	—			121,570			—			—				121,570
Rationalizations	—			(1,540		)	13,301			—				11,761
Operating loss	—			(128,128		)	(41,480		)	—				(169,608		)

Other expense (income), net	—			1,281			621			—				1,902
Interest expense - affiliate	—			629			—			(629		)		—
Interest expense - third party	24,010			2,529			684			—				27,223
Interest income - affiliate	(629		)	—			—			629				—
Interest income - third party	—			—			(257		)	—				(257		)
Loss before income taxes	(23,381		)	(132,567		)	(42,528		)	—			`	(198,476		)

Provision for income taxes	(8,417		)	17,712			(5,878		)	—				3,417
Equity in earnings of subsidiary	(186,929		)	(36,650		)	—			223,579				—
Net (loss) income	$	(201,893	)	$	(186,929	)	$	(36,650	)	$	223,579			$	(201,893	)

Statements of Comprehensive Income

Net (loss) income	$	(201,893	)	$	(186,929	)	$	(36,650	)	$	223,579			$	(201,893	)
Other comprehensive (loss) income	(20,936		)	(20,936		)	(19,474		)	40,410				(20,936		)
Comprehensive (loss) income	$	(222,829	)	$	(207,865	)	$	(56,124	)	$	263,989			$	(222,829	)



CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
For the Period January 1 through August 14, 2015 (Predecessor)
(in thousands)

										Consolidating
							Non-			Entries and
	Parent			Guarantors			Guarantors			Eliminations				Consolidated

Sales - affiliates	$	—		$	124,489		$	52,794		$	(177,283	)		$	—
Sales - third party	—			160,761			277,170			—				437,931
Net sales	—			285,250			329,964			(177,283		)		437,931
Cost of sales	—			266,369			310,731			(177,283		)		399,817
Gross profit	—			18,881			19,233			—				38,114

Research and development	—			5,556			—			—				5,556
Selling and administrative expenses	6,750			44,507			29,890			—				81,147
Impairments	—			35,381			—			—				35,381
Rationalizations	—			(374		)	4,881			—				4,507
Operating loss	(6,750		)	(66,189		)	(15,538		)	—				(88,477		)

Other expense (income), net	—			804			531			—				1,335
Interest expense - affiliate	3			372			—			(375		)		—
Interest expense - third party	24,366			2,481			271			—				27,118
Interest income - affiliate	(372		)	(3		)	—			375				—
Interest income - third party	—			(5		)	(362		)	—				(367		)
Loss before income taxes	(30,747		)	(69,838		)	(15,978		)	—			`	(116,563		)

(Benefit from) provision for income taxes	—			385			3,701			—				4,086
Equity in losses of subsidiary	(89,902		)	(19,679		)	—			109,581				—
Net (loss) income	$	(120,649	)	$	(89,902	)	$	(19,679	)	$	109,581			$	(120,649	)

Statements of Comprehensive Income

Net (loss) income	$	(120,649	)	$	(89,902	)	$	(19,679	)	$	109,581			$	(120,649	)
Other comprehensive income (loss)	(26,674		)	(26,674		)	(28,041		)	54,715				(26,674		)
Comprehensive (loss) income	$	(147,323	)	$	(116,576	)	$	(47,720	)	$	164,296			$	(147,323	)



CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
For the nine months ended September 30, 2014 (Predecessor)
(in thousands)
										Consolidating
							Non-			Entries and
	Parent			Guarantors			Guarantors			Eliminations			Consolidated
Net cash provided by (used in) operating activities:	$	(10,274	)	$	50,298		$	42,865		$	—		$	82,889

Cash flow from investing activities:
Repayments from (loans to) affiliates	7,070			—			—			(7,070		)	—
Capital expenditures	—			(49,756		)	(19,558		)	—			(69,314		)
Payments for derivative instruments	—			(51		)	(522		)	—			(573		)
Proceeds from sale of fixed assets	—			1,706			2,373						4,079
Insurance recoveries	—			—			2,834			—			2,834
Net cash provided by (used in) investing activities	7,070			(48,101		)	(14,873		)	(7,070		)	(62,974		)

Cash flow from financing activities:
(Repayments to) loans from affiliates	—			(7,070		)	—			7,070			—
Short-term debt borrowings	—			965			(982		)	—			(17		)
Revolving Facility borrowings	—			151,000			78,000			—			229,000
Revolving Facility reductions	—			(148,000		)	(92,000		)	—			(240,000		)
Principal payments on long term debt	—			(98		)	(60		)	—			(158		)
Supply chain financing	—			—			(9,455		)	—			(9,455		)
Proceeds from exercise of stock options	2,813			—			—			—			2,813
Purchase of treasury shares	(620		)	—			—			—			(620		)
Revolver facility refinancing	—			(2,384		)	(357		)	—			(2,741		)
Other	1,011			—			—			—			1,011
Net cash provided by (used in) financing activities	3,204			(5,587		)	(24,854		)	7,070			(20,167		)

Net (decrease) increase in cash and cash equivalents	—			(3,390		)	3,138			—			(252		)
Effect of exchange rate changes on cash and cash equivalents	—			—			(758		)	—			(758		)
Cash and cash equivalents at beginning of period	—			4,752			7,136			—			11,888
Cash and cash equivalents at end of period	$	—		$	1,362		$	9,516		$	—		$	10,878



CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
For the Period January 1 through August 14, 2015 (Predecessor)
(in thousands)
										Consolidating
							Non-			Entries and
	Parent			Guarantors			Guarantors			Eliminations			Consolidated
Net cash (used in) provided by operating activities:	$	(4,017	)	$	34,418		$	25,632		$	(27,710	)	$	28,323

Cash flow from investing activities:
Loans from (repayments to) affiliates	36,204			(21,343		)	—			(14,861		)	—
Capital expenditures	—			(20,572		)	(11,729		)	—			(32,301		)
Payments for derivative instruments	—			(7,595		)	(668		)	—			(8,263		)
Proceeds from sale of assets	—			397			249			—			646
Insurance recoveries	—			—			—			—			—
Net cash provided by (used in) investing activities	36,204			(49,113		)	(12,148		)	(14,861		)	(39,918		)

Cash flow from financing activities:
Loans from (repayments to) affiliates	21,343			(36,204		)	—			14,861			—
Dividends to affiliates	—			—			(27,710		)	27,710
Short-term debt, net	—			14,002			4,509			—			18,511
Revolving Facility borrowings	—			126,000			34,000			—			160,000
Revolving Facility reductions	—			(87,000		)	(12,000		)	—			(99,000		)
Repayment of Senior Subordinated Notes	(200,000		)	—			—			—			(200,000		)
Issuance of Preferred Shares	150,000			—			—			—			150,000
Principal payments on long term debt	—			(89		)	—			—			(89		)
Supply chain financing	—			—			—			—			—
Proceeds from exercise of stock options	32			—			—			—			32
Purchase of treasury shares	(63		)	—			—			—			(63		)
Revolver facility refinancing	—			(5,037		)	(31		)	—			(5,068		)
Other	(3,499		)	—			—			—			(3,499		)
Net cash (used in) provided by financing activities	(32,187		)	11,672			(1,232		)	42,571			20,824

Net (decrease) increase in cash and cash equivalents	—			(3,023		)	12,252			—			9,229
Effect of exchange rate changes on cash and cash equivalents	—			—			(1,746		)	—			(1,746		)
Cash and cash equivalents at beginning of period	—			5,503			12,047			—			17,550
Cash and cash equivalents at end of period	$	—		$	2,480		$	22,553		$	—		$	25,033