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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

Registrant's telephone, including area code 847/455-7111

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.

Indicate by check mark whether the registrant is an accelerated filer (as deigned in Rule 12b-2 of the Exchange Act).

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

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A. M. CASTLE & CO.

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1. Comparative Financial Statements

   The comparative financial statements included herein are unaudited. The balance sheet at December 31, 2003 is derived from the audited financial statements at that date. The Company believes that the disclosures are adequate to make the information not misleading. However, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of management, the unaudited statements, included herein, contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the financial position, the cash flows, and the results of operations for the periods then ended. It is suggested that these condensed financial statements be read in conjunction with the financial statements and the notes thereto included in the Company’s latest annual report on Form 10-K. The 20 04 interim results reported herein may not necessarily be indicative of the results of operations for the full year.

2. New Accounting Standards

   In compliance with Statement of Financial Accounting Standards ("SFAS") No. 132 (revised 2003) "Employees’ Disclosures About Pensions and Other Post Retirement Benefits", the Company has disclosed the interim information required as Footnote 11 herein.

3. Earnings Per Share

   Earnings per common share are computed by dividing net income by the weighted average number of shares of common stock (basic) plus common stock equivalents (diluted) outstanding during the year. Common stock equivalents consist of stock options, restricted stock awards and preferred stock shares and have been included in the calculation of weighted average shares outstanding using the treasury stock method. In accordance with SFAS No. 128 "Earnings per Share", the following table is a reconciliation of the basic and fully diluted earnings per share calculations for the periods reported.

6.  Acquisitions

Effective January 1, 2004 the Company purchased the remaining joint venture partner's interest in Castle de Mexico, S.A. de C.V. for $1.6 million. Castle de Mexico is a distribution company, which targets a wide range of businesses within the durable goods sector throughout Mexico. The results of this entity, now a wholly owned subsidiary, have been consolidated in the Company's financial statements as of the effective date of the acquisition.

On March 31, 2004 Total Plastics Inc. (TPI) purchased the remaining 40% interest in its Paramont Machine Company subsidiary for $0.4 million. Paramont is a manufacturer of plastic parts and components which sells to a variety of businesses basically in the Midwest. Beginning on March 31, 2004 the results of the entity were reported as a wholly owned subsidiary (the minority interest was previously eliminated from reported results). The acquisition has been reported based on a preliminary allocation of the purchase price.

7.  LIFO

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 June 30, 2004 and 2003, 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 $65.1 million and $39.0 million at June 30, 2004 and June 30, 2003 respectively. Taxes on income would become payable on any realization of this excess from reductions in the level of inventories.

8.  Stock Options

Valuation Assumptions – As required, the Company has adopted the disclosure provisions of SFAS No. 148, "Accounting for Stock-Based Compensation – Transition and Disclosure", for the periods ended June 30, 2004 and 2003. The following table summaries on a pro-forma basis the effects on the Company's net loss had compensation been recognized. The fair value of the options granted had been estimated using the Black Scholes option pricing model with the

following assumptions: risk free interest rate of 3.1% to 4.5%, expected dividend yield of zero, option life of 10 years, and expected volatility from 30.0% to 50.0%. There were no employee options granted in the first half of 2004.

9.  Segment Reporting

The Company distributes and performs first stage processing on both metals and plastics. Although the distribution process is similar, different products are offered and different customers are served by each of these businesses and, therefore, they are considered segments according to SFAS No. 131 "Disclosures about Segments of an Enterprise and Related Information".

The accounting policies of all segments are as described in the summary of significant accounting policies. Management evaluates performance of its business segments based on operating income. The Company does not maintain separate standalone financial statements prepared in accordance with generally accepted accounting principles for each of its operating segments.

The following is the segment information for the quarters ended June 30, 2004 and 2003:

"Other" — Operating loss includes costs of executive and legal departments and other corporate activities which support both operating segments of the Company.

The following is the segment information for the six-months ended June 30, 2004 and 2003:

"Other" — Operating loss includes costs of executive and legal departments and other corporate activities which support both operating segments of the Company.

The segment information for total assets at June 30, 2004, December 31, 2003 was as follows:

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

This discussion should be read in conjunction with the information contained in the Consolidated Financial Statements and Notes for A. M. Castle & Co. (the "Company").

Strong market and pricing trends continued throughout the second quarter of 2004. Global shortages of the basic raw materials for steel making are stretching mill lead times and have resulted in accelerated metal prices since the fall of 2003. During this same time period, economic activity in the durable goods manufacturing sector has surged above prior year levels, resulting in higher tonnage requirements. The Purchaser’s Managers Index ("PMI") provided by the Institute of Supply Managers (see Table 1 below), shows this favorable trend beginning in the third quarter of 2003 and its continuation through the second quarter of 2004. Generally speaking, an index above 50.0 indicates growth in the manufacturing sector of the U.S. economy.

Total tons shipped in the metals business are up 13.2% and 15.2% versus the second quarter and six-month periods of 2003, respectively. Additionally, management estimates that mill prices are up 21.9% versus the second quarter of last year and 15.4% versus the corresponding six-month period of 2003. Lines sold, a measurement of individual items handled, shipped and invoiced to customers increased .6% in the second quarter of 2004 and 5.0% year-to-date compared to the corresponding periods of 2003. Lines drive the Company’s variable expenses, not tons sold or dollar sales which can be affected by product mix and pricing fluctuations. As a result of larger order sizes, structural cost base reductions (largely due to the 2003 shedding of non-profitable business units and other permanent fixed cost reductions) and improved productivity, operating expenses have been held to minimal increases of 6.5% and 6.3% for the second quarter and year-to-date periods, providing strong earnings leverage on incremental sales.

As of this filing, there are no immediate signs of demand softening and in the near-term, metal availability is expected to remain tight. As a result, mill pricing will likely remain near its current levels, through the balance of 2004. The Company’s efforts in 2003 and earlier to lower its operating cost structure along with the sale or disposal of under-performing business units, has positioned it to leverage earnings favorably as sales increased. Incremental operating expense for the second quarter of 2004 was held to 5.0% of the $54.2 million increase in sales over the same period last year. For the six-months ended June 2004, incremental operating expense was only 6.1% of the $88.2 million additional sales versus 2003. The integration of Castle’s Mexico operations generated $4.6 million of added sales in the second quarter and $6.8 million year-to-date, contributing operating profit margin of 10% for both the second quarter and year-to-date periods. The Company’s plastic subsidiary, TP I (Total Plastics, Inc.) continues to report double-digit year-over-year sales and earnings growth, driven by improved demand and geographic market expansion into Florida in 2003. Unlike the metals segment, the plastic business has not experienced dramatic raw material price increases from its supplier base. In summary, the Company has enjoyed a strong first half of 2004 in both sales and earnings performance.

As part of its current financing agreements with its various lenders, the Company has specific principal payments required over the next few years as summarized below in Table 2 (dollars in millions):

In addition, the Company’s principal source of operating cash is derived from its Accounts Receivable Securitization Agreement, which expires in December 2005.

Despite an upswing in the manufacturing sector of the economy, there can be no guarantee as to its magnitude or duration. Additionally, the Company’s ability to continue to pass-through supplier-driven material cost increases to its customer base is also critical to meeting required debt service requirements and remaining in compliance with its debt covenants. Should the economic and market recovery turn out to be short term in length, management could pursue further options to ensure it generates enough cash to facilitate the required payments of principal as outlined in its agreements with its primary lenders. These options could include, but not necessarily be limited to, further operating cost reductions and organizational restructuring, further working capital improvements, deferral of non-critical capital projects, sale of assets or business units, refinancing of the Company through additional equity or debt infusions, or renegotiating existing loans outstanding. Management cannot guarantee tha t any of these options will be available if needed. None of these options are under consideration at this time, other than the ongoing analysis and review of operating expense and levels of working capital required in the business.

All current business conditions lead management to believe it will continue to be able to generate sufficient cash from operations and planned working capital improvements, to fund its ongoing capital expenditure program and to meet its debt obligations.

Consolidated results by business segment are summarized in Table 3 for the quarter ended June 30, 2004 and 2003. The table includes impairment and other restructuring related charges the Company recorded in the second quarter of 2003. Please refer to Footnote 10 within the Consolidated Financial Statements for more details on the nature of these charges.