The Company

Handy & Harman Ltd. (formerly named WHX Corporation prior to January 3, 2011) ("HNH") is a diversified manufacturer of engineered niche industrial products with leading market positions in many of the markets it serves. Through its operating subsidiaries, HNH focuses on high margin products and innovative technology and serves customers across a wide range of end markets. HNH's diverse product offerings are marketed throughout the United States and internationally. HNH owns Handy & Harman Group Ltd. ("H&H Group"), which owns Handy & Harman ("H&H") and Bairnco Corporation. HNH manages its group of businesses on a decentralized basis with operations principally in North America. HNH's business units encompass the following segments: Precious Metal, Tubing, Engineered Materials, Arlon Electronic Materials ("Arlon") and Kasco Blades and Route Repair Services ("Kasco"). All references herein to "we," "our" or the "Company" refer to HNH together with all of its subsidiaries. Precious Metal segment primarily fabricates precious metals and their alloys into brazing alloys. Brazing alloys are used to join similar and dissimilar metals as well as specialty metals and some ceramics with strong, hermetic joints. Precious Metal segment offers these metal joining products in a wide variety of alloys including gold, silver, palladium, copper, nickel, aluminum and tin. These brazing alloys are fabricated into a variety of engineered forms and are used in many industries including electrical, appliance, transportation, construction and general industrial, where dissimilar material and metal-joining applications are required. Operating income from precious metal products is principally derived from the ''value added'' of processing and fabricating and not from the purchase and resale of precious metal. Precious Metal segment has limited exposure to the prices of precious metals due to the Company's hedging and pricing models. We believe that the business unit that comprises our Precious Metal segment is the North American market leader in many of the markets that it serves.
Tubing segment manufactures a wide variety of steel tubing products. We believe that our Stainless Steel Tubing Group manufactures the world's longest continuous seamless stainless steel tubing coils, in excess of 5,000 feet, serving the petrochemical infrastructure and shipbuilding markets. We also believe it is the number one supplier of small diameter (<3mm) coil tubing to industry leading specifications serving the aerospace, defense and semiconductor fabrication markets. Our Specialty Tubing unit manufactures welded carbon steel tubing in coiled and straight lengths with a primary focus on products for the consumer and commercial refrigeration, automotive, heating, ventilation and cooling (HVAC) and oil and gas industries. In addition to producing bulk tubing, it produces value added fabrications for several of these industries. Engineered Materials segment manufactures and supplies products primarily to the commercial construction and building industries. It manufactures fasteners and fastening systems for the U.S. commercial low slope roofing industry, which are sold to building and roofing material wholesalers, roofing contractors and private label roofing system manufacturers; a line of engineered specialty fasteners for the building products industry for fastening applications in the remodeling and construction of homes, decking and landscaping; plastic and steel fittings and connectors for natural gas, propane and water distribution service lines along with exothermic welding products for electrical grounding, cathodic protection and lightning protection; and electro-galvanized and painted cold rolled sheet steel products primarily for the construction, entry door, container and appliance industries. We believe that our primary business unit in the Engineered Materials segment is the market leader in fasteners and accessories for commercial low-slope roofing applications and that the majority of the net sales for the segment are for the commercial construction repair and replacement market.
Arlon provides high performance materials for the printed circuit board ("PCB") industry and silicone rubber-based insulation materials used in a broad range of industrial, military/aerospace, consumer and commercial markets. It also supplies high technology circuit substrate laminate materials to the PCB industry. Arlon products are marketed principally to original equipment manufacturers (OEMs), distributors and PCB manufacturers globally. Arlon also manufactures a line of market leading silicone rubber materials used in a broad range of military, consumer, industrial and commercial products.

Kasco provides meat-room blade products, repair services and resale products for the meat and deli departments of supermarkets, restaurants, meat and fish processing plants and for distributors of electrical saws and cutting equipment principally in North America and Europe. Kasco also provides wood cutting blade products for the pallet manufacturing, pallet recycler and portable saw mill industries in North America.
Management has determined that certain operating companies should be aggregated and presented within a single segment on the basis that such operating companies have similar economic characteristics and share other qualitative characteristics. Management reviews sales, gross profit, operating income, capital expenditures, working capital and free-cash flow to evaluate segment performance. Operating income for the segments includes the costs of shared corporate headquarters functions such as finance, auditing, treasury, legal, benefits administration and certain executive functions, but excludes other unallocated general corporate expenses. Other income and expense, interest expense and income taxes are not presented by segment since they are excluded from the measure of segment profitability reviewed by the Company's management.

Results from Continuing Operations

The operating results for the three and nine months ended September 30, 2012 and
2011 are summarized in the following table:
                                          Three Months Ended             Nine Months Ended
                                             September 30,                 September 30,
(in thousands)                            2012           2011           2012           2011

Net sales                             $  165,419     $  177,989     $  516,768     $  518,770
Gross profit                              46,726         46,487        145,459        133,386
Gross profit margin                         28.2 %         26.1 %         28.1 %         25.7 %
Selling, general and administrative
expenses                                  30,636         27,636         95,165         86,425
Pension expense                            1,220          2,487          2,483          4,737
Asset impairment charge                        -              -              -            700
Operating income                          14,870         16,364         47,811         41,524
Other:
Interest expense                           3,709          3,802         11,907         11,428
Realized and unrealized loss (gain)
on derivatives                             1,340          1,488         (1,170 )          633
Other expense                                490          1,335            686          1,329
Income from continuing operations
before tax                                 9,331          9,739         36,388         28,134
Tax provision                              3,401          1,921         14,410          4,455
Income from continuing operations,
net of tax                            $    5,930     $    7,818     $   21,978     $   23,679



Net Sales
(in thousands)                  Three Months Ended      Nine Months Ended
                                 September 30, 2012     September 30, 2012

Net sales, prior period         $         177,989      $          518,770
Components of change in sales:
Effect of precious metal prices            (5,381 )               (11,679 )
Organic sales change                       (7,189 )                 9,677
Net sales, current period       $         165,419      $          516,768

Net Sales

Net sales for the three months ended September 30, 2012 decreased by $12.6 million, or 7.1%, to $165.4 million, as compared to $178.0 million for the same period in 2011. Organic sales decreased by $7.2 million on lower volume, primarily in the Precious Metal and Tubing segments, and the impact of lower average precious metal prices was $5.4 million, principally due

to silver. The average silver market price was approximately $29.96 per troy ounce in the third quarter of 2012, as compared to $38.90 per troy ounce during the same period of 2011.

Net sales for the nine months ended September 30, 2012 decreased by $2.0 million, or 0.4%, to $516.8 million, as compared to $518.8 million for the nine months ended September 30, 2011. Organic sales for the nine months ended September 30, 2012 increased $9.7 million driven by higher demand for our products, primarily in the Engineered Materials segment. Lower average precious metal prices had a negative effect of $11.7 million on net sales for the nine months ended September 30, 2012, principally due to silver. The average silver price was approximately $30.73 per troy ounce, as compared to $36.46 per troy ounce for the nine months ended September 30, 2011.

Gross Profit

Gross profit for the three months ended September 30, 2012 increased to $46.7 million as compared to $46.5 million for the same quarter of 2011, and as a percentage of net sales, increased to 28.2% as compared to 26.1% in the third quarter last year. For the nine months ended September 30, 2012, gross profit increased to $145.5 million as compared to $133.4 million for the same period of 2011, and as a percentage of sales, increased to 28.1% as compared to 25.7% for the same nine-month period of 2011. The gross margin improvements of 2.1% and 2.4%, respectively, in the three- and nine-month periods ended September 30, 2012, were principally due to favorable product mix, effective cost control and improved operating efficiency at our manufacturing plants across all segments. In addition, lower average precious metal prices, principally silver, also contributed to the increase in gross margin by 0.8% and 0.6%, respectively, in the three- and nine-month periods ended September 30, 2012. Since the Company's precious metal inventory is hedged and the cost of silver is passed-through to the customer principally at market, lower silver prices generally result in increases in the Precious Metal segment's gross profit margin as a percentage of net sales.

Selling, general & administrative ("SG&A") expenses for the three months ended September 30, 2012 were $30.6 million or 18.5% of sales as compared to $27.6 million or 15.5% of sales for the same period a year ago. For the nine months ended September 30, 2012, SG&A was $95.2 million or 18.4% of sales as compared to $86.4 million or 16.7% of sales for the nine months ended September 30, 2011. The increases in SG&A as a percentage of net sales in both the three- and nine-month periods of 2012 were primarily due to higher selling and promotion costs related to product sales of the Engineered Materials segment, higher 2012 restricted stock awards and higher self-insured employee medical claim costs compared to the same periods of 2011. Also, the lower average precious metal prices had a negative impact on SG&A as a percentage of net sales as compared to the prior year.
Pension Expense

Non-cash pension expense was $1.2 million for the three months ended September 30, 2012, which was $1.3 million lower than the three months ended September 30, 2011. For the nine months ended September 30, 2012, pension expense was $2.5 million, which was $2.3 million lower than the nine months ended September 30, 2011. The reduction in non-cash pension expense was primarily due to a change in the amortization period for actuarial losses to reflect the average future lifetime of the participants, which is expected to be approximately 21 years, a longer period than the average future service years of active participants, which was previously used. The Company believes that use of the future lifetime of the participants is more appropriate because the WHX Corporation Pension Plan is now completely inactive. In the third quarter of 2012, the Company changed its estimate of pension expense for 2012 based on the most recent actuarial valuation of its plans. As a result, an additional $0.6 million of expense was recorded in the third quarter of 2012 as compared to each of the first and second quarters of 2012. We currently expect non-cash pension expense to be approximately $3.3 million in 2012, as compared to $6.4 million in 2011.

Asset Impairment Charge
A non-cash asset impairment charge of $0.7 million was recorded for the nine months ended September 30, 2011. The non-cash asset impairment charge was related to vacant land owned by the Company's Arlon segment located in Rancho Cucamonga, California. The Company reduced this property's carrying value by $0.7 million to reflect its lower fair market value. Operating Income

Operating income for the three months ended September 30, 2012 was $14.9 million as compared to $16.4 million for the same period of 2011. The lower operating income in the 2012 quarter was principally driven by lower sales volume and higher SG&A expenses, which were partially offset by improved gross profit margin in all segments and lower non-cash pension expense as compared to the third quarter of 2011.

Operating income for the nine months ended September 30, 2012 was $47.8 million as compared to $41.5 million for the same period of 2011. The higher operating income in the 2012 nine-month period was principally driven by improved gross profit margin in all segments along with lower non-cash pension expense and the absence of a non-cash asset impairment charge, partially offset by higher SG&A expenses.

Interest Expense

Interest expense for the three months ended September 30, 2012 was $3.7 million as compared to $3.8 million for the same period of 2011 and, for the nine months ended September 30, 2012, was $11.9 million as compared to $11.4 million for the same period of 2011. As a result of certain Subordinated Note repurchases during the nine-month period of both 2012 and 2011, interest expense included a $0.6 million loss in the nine months ended September 30, 2012 and a $0.8 million gain in the nine months ended September 30, 2011 related to such repurchases. Interest expense also declined in the 2012 periods due to a lower average amount of borrowings outstanding and lower amortization of deferred financing costs.

Realized and Unrealized (Loss) Gain on Derivatives

Realized and unrealized (loss) gain on derivatives for the three and nine months
ended September 30, 2012 and September 30, 2011 were as follows:
(in thousands)                       Three Months Ended                 Nine Months Ended
                                       September 30,                      September 30,
        Derivative                 2012              2011             2012              2011
Commodity contracts           $      (1,036 )   $        164     $        (284 )   $     (1,254 )
Derivative features of
Subordinated Notes                     (304 )         (1,652 )           1,454              621
Total realized and
unrealized (loss) gain on
derivatives                   $      (1,340 )   $     (1,488 )   $       1,170     $       (633 )

H&H utilizes precious metal forward and future contracts to economically hedge its precious metal inventory against price fluctuations. The factors that affect the gain or loss on these derivative instruments are changes in the price of precious metals and the amount of ounces hedged. The $1.0 million loss in the three months ended September 30, 2012 was primarily driven by a 25.4% silver price increase during the period. While decreasing the use of hedging contracts with brokers, the Company has entered into more fixed-price sales agreements with its customers; thereby hedging silver prices in that manner. If there is an increase in silver prices, it could reasonably be expected to cause a loss on H&H's silver derivative contracts when silver prices increase significantly. The market price of silver on September 30, 2012 was $34.53 per troy ounce. In addition, the Company's Subordinated Notes have embedded call premiums and warrants associated with them. The Company has treated the fair value of these features together as both a discount on the debt and a derivative liability at inception of the loan agreement. The discount is being amortized over the 7-year life of the notes as an adjustment to interest expense, and the derivative is marked to market at each balance sheet date. Interest rates and the market price of HNH's stock are significant factors that influence the valuation of the derivative.

Income Taxes
For the three months ended September 30, 2012 and 2011, tax provisions from continuing operations of $3.4 million and $1.9 million were recorded, respectively. For the nine months ended September 30, 2012 and 2011, tax provisions from continuing operations of $14.4 million and $4.5 million were recorded, respectively. The increase in the tax provision in the three and nine months ended September 30, 2012 as compared to the same periods of 2011 was due to a higher federal tax provision resulting principally from the recording of the benefit of the Company's federal net operating loss carryforwards ("NOLs") in the fourth quarter of 2011 as further described below.
HNH had NOLs of approximately $185 million as of December 31, 2010 and had established a full valuation allowance against its related federal deferred tax assets. As earnings were recorded in the first nine months of 2011, HNH recognized the benefit from the utilization of its NOLs, thereby reducing tax expense and resulting in an effective tax rate of 19.7% and 15.8% for the three- and nine-month periods ended September 30, 2011, respectively. In the fourth quarter of 2011, the Company changed its judgment regarding the realizability of its deferred tax assets, and, as of December 31, 2011, reversed most of its remaining deferred tax valuation allowance and recorded a tax benefit of the future NOLs at that time. As of December 31, 2011, HNH had federal NOLs of approximately $183 million and had recorded a related deferred tax asset of $64.1 million.

In the first nine months of 2012, there was no benefit from the utilization of NOLs recorded since the benefit had been recognized in the fourth quarter of 2011, and the non-cash federal tax expense resulting from the 2012 earnings was recorded in the tax provision in the consolidated income statement. The effective tax rates in the three- and nine-month periods ended September 30, 2012 were 36.4% and 39.6%, respectively. These rates include a non-recurring benefit of $0.3 million (0.9%) from the reversal of a valuation allowance on the deferred state tax asset of one of the Company's subsidiaries. Discontinued Operations
For the nine months ended September 30, 2011, the Company recorded net income from discontinued operations of $4.9 million, or $0.39 per share. See segment discussion that follows for more specific information on the discontinued operations.
Net Income
Net income for the three months ended September 30, 2012 was $5.9 million, or $0.45 per share, as compared to $7.0 million, or $0.55 per share, for the three months ended September 30, 2011. Net income for the nine months ended September 30, 2012 was $22.0 million, or $1.69 per share, as compared to $28.6 million, or $2.28 per share, for the nine months ended September 30, 2011. Segment Analysis

Segment sales and operating income data for the three and nine months ended September 30, 2012 and 2011 are shown in the following table:

                              Three Months Ended September 30,              Nine Months Ended September 30,
(in thousands)                                               %                                             %
                               2012           2011        Change            2012            2011        Change
Net sales:
Precious Metal            $     40,304     $  51,791      (22.2 )%     $     137,718     $ 150,488       (8.5 )%
Tubing                          23,081        25,188       (8.4 )%            74,778        74,061        1.0  %
Engineered Materials            68,367        69,170       (1.2 )%           202,493       192,732        5.1  %
Arlon                           20,584        18,800        9.5  %            62,292        62,642       (0.6 )%
Kasco                           13,083        13,040        0.3  %            39,487        38,847        1.6  %
Total net sales           $    165,419     $ 177,989       (7.1 )%     $     516,768     $ 518,770       (0.4 )%
Segment operating
income:
Precious Metal                   4,811         7,180      (33.0 )%            18,228        17,294        5.4  %
Tubing                           3,764         3,798       (0.9 )%            11,883        11,371        4.5  %
Engineered Materials             8,376         8,761       (4.4 )%            23,320        20,950       11.3  %
Arlon                            3,168         1,802       75.8  %             9,666         6,451       49.8  %
Kasco                            1,072         1,025        4.6  %             3,080         3,095       (0.5 )%
Total segment operating
income                    $     21,191     $  22,566       (6.1 )%     $      66,177     $  59,161       11.9  %

The comments that follow compare net sales and operating income by segment for the three and nine months ended September 30, 2012 and 2011.

Precious Metal

For the three months ended September 30, 2012, the Precious Metal segment net sales decreased by $11.5 million, or 22.2%, to $40.3 million, as compared to net sales of $51.8 million for the same period of 2011. The decrease in net sales was driven by lower sales volume and a decrease of approximately $8.94 per troy ounce in the average market price of silver during the third quarter of 2012 as compared to the same period of 2011. The effect of lower average precious metal prices reduced net sales by $5.4 million on a quarter versus prior year's quarter basis. Lower organic sales volume was primarily driven by lower demand from mining and exploration industries as a result of slow growth of the global economy.

Segment operating income for the third quarter of 2012 decreased by $2.4 million to $4.8 million, as compared to $7.2 million during the third quarter of 2011. The decreased segment operating income during the 2012 period was primarily driven by the lower sales volume, partially offset by favorable product mix.

For the nine months ended September 30, 2012, the Precious Metal segment net sales decreased by $12.8 million, or 8.5%, to $137.7 million, as compared to net sales of $150.5 million for the same period of 2011. The decrease in net sales was primarily driven by a decrease of approximately $5.73 per troy ounce in the average market price of silver during the nine-month period of 2012 as compared to the same period of 2011. The effect of lower average precious metal prices reduced net sales by $11.7 million for the nine-month period of 2012 as compared to the same period of 2011. Increased sales volume of non-precious metal products made from aluminum and copper for the nine months ended September 30, 2012 partially offset the effect of lower silver prices as compared to the same period of 2011.

For the nine months ended September 30, 2012, segment operating income increased by $0.9 million to $18.2 million, as compared to $17.3 million during the same period of 2011. The increased segment operating income was primarily driven by improved gross profit margin as a result of a favorable product mix in non-precious metal products.

Tubing

For the three months ended September 30, 2012, the Tubing segment net sales decreased by $2.1 million, or 8.4%, to $23.1 million, as compared to $25.2 million in the third quarter of 2011. The decrease was principally from the home refrigeration market served by the Specialty Tubing Group and unfavorable product mix in the Stainless Steel Tubing Group, which was partially offset by higher sales from new markets served by the Specialty Tubing Group.

Segment operating income was $3.8 million for both the third quarter of 2012 and 2011. Gross profit margin improvement was offset by reduced sales volume.

For the nine months ended September 30, 2012, the Tubing segment net sales increased by $0.7 million, or 1.0%, to $74.8 million, as compared to $74.1 million for the same period of 2011. The increase was attributable to higher sales for oil and gas projects by the Stainless Steel Tubing Group and new heat exchanger and oil and gas markets served by the Specialty Tubing Group, which was partially offset by lower home refrigeration market sales served by the Specialty Tubing Group.

For the nine months ended September 30, 2012, segment operating income increased by $0.5 million to $11.9 million, as compared to $11.4 million for the same period of 2011. Higher operating income was principally driven by higher sales volume from the Stainless Steel Tubing Group and higher gross profit margin from the Specialty Tubing Group due to favorable product mix.

Engineered Materials

For the three months ended September 30, 2012, the Engineered Materials segment net sales decreased by $0.8 million, or 1.2% to $68.4 million, as compared to $69.2 million for the same period of 2011. The reduction in net sales was primarily the result of lower sales of commercial roofing products, which were partially offset by higher sales of fasteners for the home-center market and gas connectors for the gas utility, plumbing and propane markets during the third quarter of 2012.

Segment operating income decreased by $0.4 million to $8.4 million for the three months ended September 30, 2012, as compared to $8.8 million for the same period of 2011. Gross profit margin for the three months ended September 30, 2012 was higher compared to the three months ended September 30, 2011 primarily due to increased sales of high margin branded fasteners and gas connectors in 2012 as compared to the third quarter of 2011. However, these improvements were more than offset by lower sales volume and higher selling and promotional costs related to the commercial roofing business in the 2012 quarter.

For the nine months ended September 30, 2012, the Engineered Materials segment net sales increased by $9.8 million, or 5.1% to $202.5 million, as compared to $192.7 million for the same period of 2011. The incremental sales were driven by higher volume of branded fasteners and gas connectors, partially offset by lower sales volume in its commercial roofing business as a result of lower demand.

Segment operating income increased by $2.4 million to $23.3 million for the nine months ended September 30, 2012, as compared to $21.0 million for the same period of 2011. The increase in operating income was principally the result of the higher sales volume. Gross profit margin for the nine months ended September 30, 2012 was higher compared to the nine months ended September 30, 2011 primarily due to increased sales of higher-margin branded fasteners and gas connector products during the nine-month period of 2012 as compared to the same . . .