Guarantor Information

9 Months Ended

Sep. 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 September 30, 2016 and condensed consolidating statements of operations and comprehensive income for the periods January 1 and July 1 through August 14, 2015(Predecessor), the period August 15 through September 30, 2015 (Successor), and the three and nine months ended September 30, 2016 (Successor) and condensed consolidating statements of cashflows for the periods January 1 through August 14, 2015 (Predecessor), August 15 through September 30, 2015 and the nine months ended September 30, 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 September 30, 2016
(in thousands)
								Consolidating
					Non-			Entries and
	Parent		Guarantors		Guarantors			Eliminations				Consolidated
ASSETS
Current Assets:
Cash and cash equivalents	$	—	$	1,266	$	10,881		$	—			$	12,147
Accounts receivable - affiliates	51,592		1,729		19,372			(72,693		)		—
Accounts receivable - trade	—		7,579		67,034			—				74,613
Inventories	—		46,972		119,711			—				166,683
Prepaid and other current assets	—		9,155		13,637			—				22,792
Current assets of discontinued operations	—		82,738		18,068			(5,920		)		94,886
Total current assets	51,592		149,439		248,703			(78,613		)		371,121

Investment in affiliates	914,173		623,611		—			(1,537,784		)		—
Property, plant and equipment	—		198,577		334,340			—				532,917
Deferred income taxes	—		—		20,324			—				20,324
Goodwill	—		70,399		100,718			—				171,117
Notes receivable - affiliate	—		56,235		—			(56,235		)		—
Other assets	—		71,126		72,005			—				143,131
Total Assets	$	965,765	$	1,169,387	$	776,090		$	(1,672,632	)		$	1,238,610

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable - affiliate	$	269	$	70,960	$	1,464		$	(72,693	)		$	—
Accounts payable - trade	—		8,711		33,271			—				41,982
Short-term debt	—		5,824		641			—				6,465
Accrued income and other taxes	—		1,467		4,110			—				5,577
Rationalizations	—		195		15			—				210
Other accrued liabilities	7,225		5,879		16,365			—				29,469
Liabilities of discontinued operations	—		15,504		7,369			(5,920		)		16,953
Total current liabilities	7,494		108,540		63,235			(78,613		)		100,656

Long-term debt - affiliate	48,822		—		7,413			(56,235		)		—
Long-term debt - third party	272,542		90,656		934			—				364,132
Other long-term obligations	—		55,091		34,090			—				89,181
Deferred income taxes	—		249		46,618			—				46,867
Long-term liabilities of discontinued operations	—		678		189		—	—			—	867
Stockholders' equity	636,907		914,173		623,611			(1,537,784		)		636,907
Total Liabilities and Stockholders' Equity	$	965,765	$	1,169,387	$	776,090		$	(1,672,632	)		$	1,238,610



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

										Consolidating
							Non-			Entries and
	Parent			Guarantors			Guarantors			Eliminations				Consolidated

Sales - affiliates	$	—		$	117,366		$	52,683		$	(170,049	)		$	—
Sales - third party	—			80,243			259,664			—				339,907
Net sales	—			197,609			312,347			(170,049		)		339,907
Cost of sales	—			180,983			294,067			(170,049		)		305,001
Gross profit	—			16,626			18,280			—				34,906

Research and development	—			3,377			—			—				3,377
Selling and administrative expenses	6,750			31,513			26,120			—				64,383
Impairments	—			35,381			—			—				35,381
Rationalizations	—			(68		)	82			—				14
Operating income (loss)	(6,750		)	(53,577		)	(7,922		)	—				(68,249		)

Other expense (income), net	—			889			532			—				1,421
Interest expense - affiliate	3			372			—			(375		)		—
Interest expense - third party	24,366			1,574			271			—				26,211
Interest income - affiliate	(372		)	(3		)	—			375				—
Interest income - third party	—			—			(363		)	—				(363		)
Loss from continuing operations before provision for income taxes	(30,747		)	(56,409		)	(8,362		)	—			`	(95,518		)

Provision for income taxes	—			384			6,068			—				6,452
Equity in loss from continuing operations of subsidiary	(71,223		)	(14,430		)	—			85,653				—
Net (loss) income from continuing operations	(101,970		)	(71,223		)	(14,430		)	85,653				(101,970		)

Loss from discontinued operations, net of tax	—			(13,430		)	(5,249		)	—				(18,679		)
Equity in loss from discontinued operations of subsidiary	(18,679		)	(5,249		)	—			23,928				—
Net (loss) income from discontinued operations	(18,679		)	(18,679		)	(5,249		)	23,928				(18,679		)

Net loss	$	(120,649	)	$	(89,902	)	$	(19,679	)	$	109,581			$	(120,649	)


Statements of Comprehensive Income (Loss)

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



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:
Repayments from (loans 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 fixed assets	—			397			249			—			646
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		)
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 change 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