Guarantor Information

6 Months Ended

Jun. 30, 2016

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, 2015 and June 30, 2016 and condensed consolidating statements of operations and comprehensive income and statements of cash flows for the three months ended March 31, 2015 (Predecessor) and 2016 (Successor) of the Parent Guarantors and the Non-Guarantors.



CONDENSED CONSOLIDATING BALANCE SHEETS
As of December 31, 2015
(in thousands)
							Consolidating
					Non-		Entries and
	Parent		Guarantors		Guarantors		Eliminations			Consolidated
ASSETS
Current Assets:
Cash and cash equivalents	$	—	$	646	$	6,281	$	—		$	6,927
Accounts receivable - affiliates	51,592		9,803		19,505		(80,900		)	—
Accounts receivable - trade	—		7,599		74,791		—			82,390
Inventories	—		54,613		163,517		—			218,130
Prepaid and other current assets	—		7,913		13,244		—			21,157
Current assets of discontinued operations	—		81,638		17,520		(877		)	98,281
Total current assets	51,592		162,212		294,858		(81,777		)	426,885

Investment in affiliates	1,068,027		668,113		—		(1,736,140		)	—
Property, plant and equipment	—		209,633		341,530		—			551,163
Deferred income taxes	—		—		15,326		—			15,326
Goodwill	—		72,399		99,660		—			172,059
Notes receivable - affiliate	—		46,074		—		(46,074		)	—
Other assets	—		79,367		73,246		—			152,613
Long-term assets of discontinued operations	—		99,457		4,518		—			103,975
Total Assets	$	1,119,619	$	1,337,255	$	829,138	$	(1,863,991	)	$	1,422,021

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable - affiliate	$	159	$	71,099	$	9,642	$	(80,900	)	$	—
Accounts payable - trade	—		11,191		28,956		—			40,147
Short-term debt	—		4,636		136		—			4,772
Accrued income and other taxes	—		2,824		3,109		—			5,933
Rationalizations	—		995		200		—			1,195
Other accrued liabilities	2,444		4,847		13,703		—			20,994
Short-term liabilities of discontinued operations	—		18,384		5,575		(877		)	23,082
Total current liabilities	2,603		113,976		61,321		(81,777		)	96,123

Long-term debt - affiliate	38,661		—		7,413		(46,074		)	—
Long-term debt - third party	267,827		93,758		870		—			362,455
Other long-term obligations	—		60,508		33,810		—			94,318
Deferred income taxes	—		248		57,182		—			57,430
Long-term liabilities of discontinued operations	—		738		429		—			1,167
Stockholders' equity	810,528		1,068,027		668,113		(1,736,140		)	810,528
Total Liabilities and Stockholders' Equity	$	1,119,619	$	1,337,255	$	829,138	$	(1,863,991	)	$	1,422,021



CONDENSED CONSOLIDATING BALANCE SHEETS
As of June 30, 2016
(in thousands)
							Consolidating
					Non-		Entries and
	Parent		Guarantors		Guarantors		Eliminations			Consolidated
ASSETS
Current Assets:
Cash and cash equivalents	$	—	$	737	$	12,672	$	—		$	13,409
Accounts receivable - affiliates	51,592		3,657		12,696		(67,945		)	—
Accounts receivable - trade	—		8,642		71,817		—			80,459
Inventories	—		44,003		143,237		—			187,240
Prepaid and other current assets	—		8,146		15,488		—			23,634
Current assets of discontinued operations	—		79,908		18,008		(5,043		)	92,873
Total current assets	51,592		145,093		273,918		(72,988		)	397,615

Investment in affiliates	928,091		632,784		—		(1,560,875		)	—
Property, plant and equipment	—		201,677		335,621		—			537,298
Deferred income taxes	—		—		18,476		—			18,476
Goodwill	—		70,399		100,718		—			171,117
Notes receivable - affiliate	—		55,999		—		(55,999		)	—
Other assets	—		75,300		72,467		—			147,767
Total Assets	$	979,683	$	1,181,252	$	801,200	$	(1,689,862	)	$	1,272,273

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable - affiliate	$	236	$	64,294	$	3,415	$	(67,945	)	$	—
Accounts payable - trade	—		8,178		37,055		—			45,233
Short-term debt	—		11,341		5,141		—			16,482
Accrued income and other taxes	—		1,109		4,453		—			5,562
Rationalizations	—		384		17		—			401
Other accrued liabilities	2,444		6,190		16,429		—			25,063
Liabilities of discontinued operations	—		17,006		7,352		(5,043		)	19,315
Total current liabilities	2,680		108,502		73,862		(72,988		)	112,056

Long-term debt - affiliate	48,586		—		7,413		(55,999		)	—
Long-term debt - third party	270,961		87,105		5,909		—			363,975
Other long-term obligations	—		57,305		33,872		—			91,177
Deferred income taxes	—		249		47,360		—			47,609
Stockholders' equity	657,456		928,091		632,784		(1,560,875		)	657,456
Total Liabilities and Stockholders' Equity	$	979,683	$	1,181,252	$	801,200	$	(1,689,862	)	$	1,272,273



CONDENSED CONSOLIDATING STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
For the Six Months ended June 30, 2015 (Predecessor)
(in thousands)

										Consolidating
							Non-			Entries and
	Parent			Guarantors			Guarantors			Eliminations				Consolidated

Sales - affiliates	$	—		$	97,324		$	42,278		$	(139,602	)		$	—
Sales - third party	—			64,538			223,765			—				288,303
Net sales	—			161,862			266,043			(139,602		)		288,303
Cost of sales	—			148,325			248,870			(139,602		)		257,593
Gross profit	—			13,537			17,173			—				30,710

Research and development	—			2,667			—			—				2,667
Selling and administrative expenses	—			18,094			21,704			—				39,798
Impairments	—			35,381			—			—				35,381
Rationalizations	—			(29		)	82			—				53
Operating income (loss)	—			(42,576		)	(4,613		)	—				(47,189		)

Other expense (income), net	—			791			360			—				1,151
Interest expense - affiliate	—			305			—			(305		)		—
Interest expense - third party	16,382			828			211			—				17,421
Interest income - affiliate	(305		)	—			—			305				—
Interest income - third party	—			—			(341		)	—				(341		)
Loss from continuing operations before provision for income taxes	(16,077		)	(44,500		)	(4,843		)	—			`	(65,420		)

Provision for income taxes	—			(3,692		)	4,911			—				1,219
Equity in loss from continuing operations of subsidiary	(50,562		)	(9,754		)	—			60,316				—
Net (loss) income from continuing operations	(66,639		)	(50,562		)	(9,754		)	60,316				(66,639		)

Loss from discontinued operations, net of tax	—			(5,644		)	(6,142		)	—				(11,786		)
Equity in loss from discontinued operations of subsidiary	(11,786		)	(6,142		)				17,928				—
Net (loss) income from discontinued operations	(11,786		)	(11,786		)	(6,142		)	17,928				(11,786		)

Net loss	$	(78,425	)	$	(62,348	)	$	(15,896	)	$	78,244			$	(78,425	)


Statements of Comprehensive Income

Net (loss) income	$	(78,425	)	$	(62,348	)	$	(15,896	)	$	78,244			$	(78,425	)
Other comprehensive (loss) income	(21,209		)	(21,209		)	(22,207		)	43,416				(21,209		)
Comprehensive (loss) income	$	(99,634	)	$	(83,557	)	$	(38,103	)	$	121,660			$	(99,634	)



CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 2015 (Predecessor)
(in thousands)
										Consolidating
							Non-			Entries and
	Parent			Guarantors			Guarantors			Eliminations			Consolidated
Net cash provided by (used in) operating activities:	$	(7,355	)	$	22,992		$	36,293		$	(27,710	)	$	24,220

Cash flow from investing activities:
Repayments from (loans to) affiliates	7,418			—			—			(7,418		)	—
Capital expenditures	—			(16,994		)	(8,626		)	—			(25,620		)
Payments for derivative instruments	—			(7,595		)	(209		)	—			(7,804		)
Proceeds from sale of fixed assets	—			397			241						638
Net cash provided by (used in) investing activities	7,418			(24,192		)	(8,594		)	(7,418		)	(32,786		)

Cash flow from financing activities:
(Repayments to) loans from affiliates	—			(7,418		)	—			7,418			—
Dividends to affiliates	—			—			(27,710		)	27,710			—
Short-term debt borrowings	—			2,001			2,505			—			4,506
Revolving Facility borrowings	—			62,000			12,000			—			74,000
Revolving Facility reductions	—			(54,000		)	(12,000		)	—			(66,000		)
Principal payments on long term debt	—			(67		)	—			—			(67		)
Purchase of treasury shares	(63		)	—			—			—			(63		)
Revolver facility refinancing	—			(2,691		)	(31		)	—			(2,722		)
Other	—			(2,850		)	—			—			(2,850		)
Net cash provided by (used in) financing activities	(63		)	(3,025		)	(25,236		)	35,128			6,804

Net change in cash and cash equivalents	—			(4,225		)	2,463			—			(1,762		)
Effect of exchange rate changes on cash and cash equivalents	—			—			(1,283		)	—			(1,283		)
Cash and cash equivalents at beginning of period	—			5,503			12,047			—			17,550
Cash and cash equivalents at end of period	$	—		$	1,278		$	13,227		$	—		$	14,505