On September 26, 2002, the Company and certain of its subsidiaries extended their trade receivables securitization facility with a financial institution for 182 days (until March 25, 2003) with a commitment of $50.0 million (the previous commitment, which expired on September 27, 2002, was for a $65.0 million 364 day facility). The new facility lowered the base amount of accounts receivables which can be sold and increased the discount rate by 65 basis points. As of September 30, 2002 the Company sold $41.0 million (had sold $41.0 million at December 31, 2001 and $53.7 million at September 30, 2001 under its then existing facility) under the facility. This sale is reflected as a reduction in "Accounts receivable, net" in the Condensed Balance Sheets and the incremental amount of the increase in the sale is reflected as "Sale of accounts receivable" in the Condensed Statements of Cash Flows. Funding under the facility is limited to the lesser of a base amount comprised of eligibl e receivables or $50.0 million. The maximum which could be funded at September 30, 2002 was $46.9 million, leaving an additional $5.9 million available for future working capital needs. The discount expense on the sale of the receivables is reported as "Discount on sale of accounts receivable" in the Comparative Condensed Statements of Operations.

The current provider of this facility has informed the Company that they will not offer a renewal upon its expiration on March 25, 2003. The Company is currently negotiating for a replacement facility and has received bids and term sheets from three financial institutions. The Company currently expects to have a new multi-year program in place before the expiration of the current facility. (See Liquidity and Capital Resources.)

On May 1, 2002 the Company purchased its joint venture partner's 40 percent interest in Metal Express which serves the small order needs of tool and die shops, universities and other research facilities as well as the maintenance, engineering and non-manufacturing needs of its traditional customer base. Prior to May 1, 2002 the Company did not have a controlling voting interest in Metal Express and recorded it as a joint venture. As of the date of purchase, Metal Express became a wholly owned subsidiary at which time it was consolidated into Castle's financial statements. The purchase price for this 40 percent remaining interest was $1.0 million.

The Company has a buy/sell provision with one of its joint venture partners. This provision would allow either joint venture partner to effect the sale or purchase of the interests of the other partner by providing notice of their intention to buy or sell its interest. Once notice is given to the opposite joint venture partner, that partner has the option of accepting the original offer or to take the opposite position (buy/sell) for the purchase price specified in the original offer. This provision within the joint venture agreement effectively expires on April 30, 2003.

On either April 30, 2003 or 2004, the joint venture partner has an option to sell its interest to the Company for an amount determined as a multiple of the joint venture's average EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) for a two-year period less the debt outstanding at the end of the current fiscal period. On May 1, 2005, the Company must purchase its joint venture partner's interest at a price determined using the same formula as described above. Due to the uncertainty of the joint venture's future operating results, and the timing of the exercise of the option, the Company cannot determine the potential purchase price for the remaining ownership interest. Based upon current performance, if the option could have been exercised on April 2002, the purchase price to the Company would be approximately $8.0 million. However due to market conditions in the future, the purchase price could be higher or lower.

Inventory determination under the LIFO method can only be made at the end of each fiscal year based on the inventory levels and costs at that time. Accordingly, interim LIFO determinations, including those at September 30, 2002 and September 30, 2001, must necessarily be based on management's estimates of inventory levels and costs. Since future estimates of inventory levels and costs are subject to certain forces beyond the control of management, interim financial results are subject to fiscal year-end LIFO inventory valuations.

Current replacement cost of inventories exceeds book value by $39.5 million and $42.9 million at September 30,2002 and September 30, 2001, respectively. Taxes on income would become payable on any realization of this excess from reductions in the level of inventories.

On October 25, 2002 the Company signed a term sheet agreement (subject to execution of definitive agreements) with its largest shareholder for a $12.0 million equity investment. The shareholder agreed to purchase a private placement of eight percent cumulative convertible preferred stock. The preferred stock will have an initial conversion price of $6.69 per share which is 102% of the average closing price of the Company's common stock during the ten trading days prior to the signing of the term sheet. The shareholder, on an as-converted basis, would increase its holdings and voting power in the Company by approximately 5%. The terms of the preferred stock will include: the participation in dividends on the common stock, subject to a minimum eight percent dividend; voting rights on an as-converted basis; and customary anti-dilution and preemptive rights.

In conjunction with the above, the Company has renegotiated its loan covenants with its major long-term lenders. Signed term sheets (subject to execution of definitive agreements) have been obtained from these lenders. The debt amendments expand certain financial covenants in order to provide greater financial and operating flexibility in exchange for a 200 basis point increase in rates. As part of the debt amendments, the Company will grant to all of its lenders secured interests in the Company's and its subsidiaries' assets and provide subsidiary guarantees. The interest rate increase can be reduced by 150 basis points and the collateral positions released when the Company's balance sheet reaches an investment grade credit rating.

The Company has also entered into negotiations with its three lender banks to amend their financial covenants to be consistent with those of its long-term lenders. The Company believes these negotiations will be completed successfully.

On May 1, 2002 Castle acquired its joint venture partner's remaining interest in Metal Express. The results of this entity, now a wholly owed subsidiary, have been consolidated into Castle's financial statements as of the date of acquisition.

For the quarter ended September 30, 2002 Castle reported total sales of $136.6 million, down 1.5 percent from $138.7 million a year ago. Gross profit declined 1.6 percent to $40.0 million compared with $40.7 million in the third quarter of 2001. Gross margin was 29.3 percent of sales, equal to the prior year's rate. Excluding the effects of Metal Express, the decrease in sales and gross profit were 3.8 percent and 5.3 percent respectively, and gross margin was 28.9 percent of sales for the third quarter of 2002. While sales declined 3.8 percent, physical activity as measured by both tons sold and line count rose 6.4 percent and 3.6 percent, respectively. Real productivity increases were substantially better than what the reported results would indicate. Third quarter operating expenses, as compared to the prior year, included a $1.5 million increase due to the consolidation of Metal Express and $0.8 million of expenses associated with severance, bad debts, and write-offs of non-performing software. A djusting for these items comparable operating expenses were 2.4 percent below prior year's levels in spite of the 3.6% increase in activity levels. For the current quarter, on an after-tax basis, losses increased to $2.7 million, or 18 cents per share, compared to $2.2 million, or 16 cents per share in the prior year.

For the nine months ended September 30, 2002, sales volume totalled $413.9 million, down 12.3 percent from $471.8 million a year ago. Gross profit for the nine months fell 12.8 percent to $123.4 million from $141.5 million. On a year-to-date basis, physical activity as measured by tons and line count fell by 6.8 and 4.0 percent, respectively. Sales and gross profit declined faster than physical activity due to lower material cost levels and a shift away from the Company's higher priced aerospace materials paralleling the decline in aviation markets. Operating expenses declined 8.3 percent to $117.6 million compared with $128.2 million in 2001. Adjusting for the same items that impacted third quarter operating results, expenses dropped 10.5 percent as improvements in productivity and reductions in costs outpaced the decline in physical activity levels. Pre-taxes losses increased to $6.5 million from $2.0 million a year ago while after tax losses from continuing operations rose to $4.1 million from $1 .4 million in 2001. After tax losses including losses from the sale of the Company's United Kingdom operation totalled $4.9 million, or 33 cents per share compared to $1.2 million, or 9 cents per share, in 2001.

Declining mill price levels, product mix changes and material margin compression reduced gross profit by $5.1 million for the third quarter and $12.5 million for the nine months period compared with prior year results. During the last two years the Company has reduced total employment in its metals business by over 27 percent, substantially outpacing the decline in both sales revenues and physical activity. As a result, the Company has improved its sales per employee and tons sold per employee by over 5 percent and its lines shipped per employee by over 14 percent.

Results of operations included non-cash income from pension investments in accordance with FASB No. 87. For the third quarter of 2002, this income totalled $0.7 million as compared with $0.6 million for the same period last year. For the nine months ended September 30, 2002, the income totalled $2.0 million as compared to $1.8 million in the prior year.

The 2001 third quarter and nine-month depreciation and amortization expense included $0.2 million and $0.7 million of amortization of goodwill, respectively. Due to changes in generally accepted accounting principles effective January 1, 2002, goodwill is no longer being amortized. Depreciation for both the quarter and nine- months are up slightly mainly due to Metal Express depreciation.

During the third quarter of 2001, the outstanding domestic revolving debt was fully paid down with funds generated from the accounts receivable securitization facility, which has become the Company's primary source for working capital funds. This is the main reason for the reduction in net interest expense from quarter to quarter. The discount amount on the securitization facility is recorded as "Discount on accounts receivable". The overall reduction of interest and discount expense of $1.1 million in the third quarter of 2002 and $2.0 million for the first nine-months of 2002 is the result of the reduction in general interest rates, more favorable rates for the securitization facility than the domestic revolving debt which was outstanding during most of the third quarter of last year, a one-time $0.9 million charge in September of 2001 when the initial securitization was put in place, and an overall reduction in average month-end borrowings (long-term debt plus the receivables sold) of $7.8 m illion and $13.1 million in the third quarter and first nine-months of the year, respectively.

In the third quarter of 2001, the Company entered into an Accounts Receivable Securitization Program ("Securitization Program") and paid down its domestic revolver credit debt. This program is currently the primary source of funds for working capital. The previous facility which expired on September 26, 2002, has been extended for 182 days at a reduced commitment of $50.0 million (see Note 3). The Company is currently negotiating a replacement facility and has received bids and term sheets from three financial institutions. The Company currently expects to have a new multi-year program in place before the March 25, 2003 expiration date of the current facility.

The Company is pursuing several courses of action to further strengthen its capital structure. Actions to improve operating efficiency and reduce structural expense levels continue in response to the weak demand in the market place. Inventory reduction programs have successfully been instituted which are reflected in the reduction of inventory by $9.7 million in the third quarter. No further major reductions are anticipated during the balance of the year. The Company continues to seek strategic purchasers for its non-synergistic or under-performing business units to generate cash for further debt reduction. (The United Kingdom facility was sold during the second quarter of 2002).

In addition to those initiatives, the Company is evaluating other options for strengthening its capital base through the reconfiguration of some parts of its metal distribution network and the sale of non-strategic business units. The Company is also studying the possible restructuring or re-capitalization of one or more of its joint ventures.

On October 25, 2002 the Company signed a term sheet agreement (subject to execution of definitive agreements) with its largest shareholder for a $12.0 million equity investment (see Note 8). Management believes that this investment reaffirms the shareholder's confidence that the steps outlined above will position the Company to realize significant earnings leverage when demand in its markets return to pre-recession levels.

Working capital totalled $95.5 million at September 30, 2002 as compared to $106.4 million at September 30, 2001. Accounts receivable increased $4.4 million primarily due to lower sales of accounts receivables under the securitization agreement of $12.7 million (from $53.7 million at September 30, 2001 to $41.0 million at September 30, 2002), offset by lower sales volume and more aggressive collections (DSO decreased to 46.1 days in 2002 from 49.9 days in 2001). Inventories decreased by $9.6 million as a result of continuing programs instituted by the Company to reduce inventory investment in order to improve cash flow. During the first quarter of 2002, the Company received a $4.7 million loss carry-back income tax refund which was reflected as income tax receivable on the December 31, 2001 Balance Sheet. An additional $2.2 million was received in the second quarter representing an additional loss carry-back from 2001 as a result of legislation signed on March 8, 2002 temporarily increasing the loss ca rry-back period from two years to five years. The $7.1 million income tax receivable at the end of the current quarter was mainly generated from operating losses and the tax deductibility of the common stock pension contribution. This receivable will be realized either as an offset against taxes that would otherwise be payable in 2002 due to earnings or as additional loss carry-back during 2003.

During the second quarter of 2002 the Company received $2.5 million in cash from the sale of the United Kingdom subsidiary (an additional $0.9 million is anticipated to be received subject to a final accounting), along with $3.2 million to settle amounts owed by the subsidiary. Also during the second quarter, $1.0 million was expended on the purchase of the remaining 40 percent joint venture interest in Metal Express.

The Company's financial agreements require it to maintain certain funded debt-to-capital ratios, working capital-to-debt ratios and minimum equity values. At September 30, 2002, the Company was in compliance with all restrictive covenants. In order to provide additional flexibility in the management of the business during the current economic downturn, the Company has renegotiated its loan covenants with its long-term lenders. Signed term sheets (subject to execution of definitive agreements) have been obtained from these lenders. The debt amendments expand certain financial covenants in order to provide greater financial and operating flexibility in exchange for a 200 basis point increase in rates. As part of the debt amendments, the Company will grant its lenders security interests in the Company's and its subsidiaries' assets and will provide for subsidiary guarantees. The interest rate increase can be reduced by 150 basis points and the collateral positions released when the Company's balance sh eet reaches an investment grade credit rating. The Company is also negotiating with its three lender banks to amend their financial covenants to be consistent with those of its long-term lenders.

The initial increases in interest rates provided for by these amendments will raise the Company's annual interest expense by approximately $2.1 million. As discussed previously, the Company is taking action on several fronts to reduce its total debt which, if successful, will mitigate a portion of this increased expense.

The Company's primary source of short-term funds is the accounts receivable securitization facility of which $41.0 million was utilized at September 30, 2002. There remains $5.9 million of immediately available funds under this facility along with $0.4 million of other committed lines of credit. Management believes that funds generated from future operations, the existing $6.3 million of cash availability, and proceeds from the issuance of preferred stock should provide adequate funding for current business operations.

There have been no changes in the Company's major accounting policies as described in the Company's Annual Report on Form 10-K for the year ended December 31, 2001.

The Company is exposed to various interest rate and metal price risks that arise in the normal course of business. The Company finances its operations with fixed and variable rate borrowings and the Accounts Receivable Securitization facility. Market risk arises from changes in variable interest rates. An increase of 1% in interest rates payable on the Company's variable rate indebtedness and Accounts Receivable Securitization facility would increase the Company's annual interest expense and discount on sale of accounts receivable by approximately $0.5 million. The Company's raw material costs are comprised primarily of engineered steels and highly specialized metals. Market risk arises from changes in the price of steel and other metals. Although average selling prices generally increase or decrease as the price of steel and other metals increases or decreases, the impact of a change in the price of steel
and other metals is more immediately reflected in the Company's raw material cost than in the Company's selling prices.

Part II. OTHER INFORMATION

Item 1  Legal Proceedings

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.

2.  Based on my knowledge, this quarterly 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 quarterly report:

3.  Based on my knowledge, the financial statements, and other financial information included in this quarterly 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 quarterly report;

4.  The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

5.  The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

6.  The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

2.  Based on my knowledge, this quarterly 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 quarterly report:

3.  Based on my knowledge, the financial statements, and other financial information included in this quarterly 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 quarterly report;

4.  The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

5.  The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):