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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

For the fiscal year ended December 31, 2012

For the transition period from                      to                     

Commission File Number 333-150749

AGY HOLDING CORP.

(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction of incorporation or organization)

20-0420637

(IRS Employer Identification Number)

2556 Wagener Road

Aiken, South Carolina 29801

(Address of Principal Executive Offices) (Zip Code)

Registrant’s telephone number, including area code: (888) 434-0945

Securities registered pursuant to Section 12(b) of the Act: NONE

Securities registered pursuant to Section 12(g) of the Act: NONE

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ¨    No  x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.    Yes  x    No  ¨

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.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

The registrant is privately held. There is no trading in its common equity, and therefore an aggregate market value of common stock of the registrant based on sales or bid and ask prices is not determinable.

The total number of shares of the registrant’s common stock, par value $0.01 per share, outstanding as of March 31, 2013 was 100.

Documents incorporated by reference: None

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AGY HOLDING CORP.

INDEX

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Forward-Looking Statements

This Annual Report on Form 10-K, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 of Part II of this Annual Report, includes or may include “forward-looking statements.” All statements included herein, other than statements of historical fact, may constitute forward-looking statements. In some cases you can identify forward-looking statements by terminology such as “may,” “should” or “could.” Generally, the words “anticipates,” “believes,” “expects,” “intends,” “estimates,” “projects,” “plans” and similar expressions identify forward-looking statements. Although AGY Holding Corp. believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. Important factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements include, among others, the items discussed in “Risk Factors” in Item 1A of Part I of this Annual Report, and that are otherwise described from time to time in AGY’s Securities and Exchange Commission filings after this Annual Report. AGY assumes no obligation and does not intend to update these forward-looking statements.

PART I

Overview

AGY Holding Corp. is a Delaware corporation, incorporated in 2004 following emergence from Chapter 11 bankruptcy protection, with its headquarters in South Carolina. The core business has been in existence for over 50 years. AGY Holding Corp. and its subsidiaries are referred to herein as “AGY” or the “Company.” AGY is a leading manufacturer of advanced glass fibers that are used as reinforcing materials in numerous diverse, high-value applications, including aircraft laminates, ballistic armor, pressure vessels, architectural roofing, mattress fire protection and architectural fabrics, and specialty electronics. AGY is focused on serving end-markets that require glass fibers for applications with demanding performance criteria, such as the aerospace, defense, construction, electronics, automotive, and industrial end-markets. We are able to leverage our flexible manufacturing capabilities to target new specialty end-use applications and to shift production rapidly to meet changing market demand.

The Company was acquired by KAGY Holding Company, Inc. (“Holdings”) on April 7, 2006 pursuant to the terms of an agreement of merger dated February 23, 2006. In October 2006, we repaid all outstanding borrowings under our then-existing senior secured credit facilities as part of the refinancing of our indebtedness through our new $40 million credit facility, the issuance of $175 million in aggregate principal amount of 11% senior second lien notes due 2014 (the “Notes”) and our cash on hand.

The Company has two manufacturing facilities in the United States and one in the People’s Republic of China (“PRC” or “China”) since the acquisition of the 70% controlling ownership in AGY Hong Kong Ltd. (formerly Main Union Industrial Ltd.) and its subsidiaries in June 2009. We operate as two reportable segments (each a single operating segment) consisting of AGY U.S. manufacturing operations (“AGY US”) and AGY’s Asian manufacturing operations (“AGY Asia”).

As described more fully in Note 1 to the Consolidated Financial Statements, the Company is pursuing divestiture of AGY Asia and of certain non-core business lines (including Continuous Filament Mat (“CFM”), wound products and conductive roving) and the assets located in its Huntingdon, Pennsylvania manufacturing facilities. We do not expect any possible transaction related to AGY Asia to impact the AGY US reporting segment, as only approximately 1.1% of the reported revenue for AGY US was derived from products produced by AGY Asia over the last 12 months. Further, the long-term borrowings and other obligations of AGY Asia are not guaranteed by AGY US. Additionally, AGY US expects to maintain its commercial presence and sales channels for glass fibers produced in North America but sold to the Asian market, primarily for specialty electronics applications. We also believe that the re-alignment of our product portfolio following completion of the non-core asset divestiture will allow AGY to return to its core capabilities, focus on its specialty materials products and reduce our financial leverage.

The following table summarizes our net sales by geographic region. Customer sales are attributed to geographic region based upon the location to which the product is shipped to the external customer.

Our Products

Glass Fiber Products. We are a leader in the design, development, manufacturing, and marketing of specialty glass fibers used in diverse, high value applications. We produce high-quality fine filament glass fibers, which provide customers with enhanced strength-to-weight ratios and improved fabric quality and flexibility properties. Glass fibers are differentiated from one another in three ways:

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(i) glass chemistry, (ii) diameter of the filaments and (iii) sizing chemistry (a coating applied to the filament). Glass fiber is produced by passing molten glass through bushings, producing thin glass filaments, which are spooled and then twisted into fibers or bundled into untwisted heavy weight fibers called rovings. We produce hundreds of different glass fiber types. Glass fiber types are broadly segmented into two categories: E Glass and advanced materials, including primarily S-2 Glass.

E Glass is a natural, lustrous, white continuous fiber made of highly stable and durable glass filaments. Within E Glass, we focus on “technical” fibers. Our technical fibers include filaments with a diameter of seven microns or less and fibers with specialized and proprietary sizing compositions. As a result of their complexity, technical fibers are manufactured by only a few suppliers. We generally compete with a small number of alternative suppliers for the vast majority of our technical products. Where our technical fibers are specified-in and offer significant value to our customers, we are able to command a price and margin premium.

S-2 Glass is a proprietary product that is technically more complex than conventional E Glass fibers, providing it with advanced performance characteristics. Compared to other alternatives, such as carbon fiber, aramid fibers and steel, S-2 Glass delivers a better ratio of performance to cost in many applications. S-2 Glass has more than three times the percentage strain to failure of carbon fiber and performs three times better than aramid fibers in fire tests. S-2 Glass is also approximately one-third the weight of steel.

We differentiate our S-2 Glass advanced materials from E Glass by its different glass chemistry, which yields a proprietary product with superior performance characteristics making it suitable for applications with demanding performance criteria, such as ballistic armor, aircraft flooring and fuselage, helicopter blades, firefighter oxygen tanks, automotive timing belts and ceramic appliance insulation. Historically, we have demonstrated our ability to increase S-2 Glass capacity significantly due to the nature of our manufacturing platform. In addition, we have introduced other unique advanced material product line extensions to targeted applications that have different performance characteristics and price points within multiple end markets, including wind energy, electronics and thermoplastics. While we are the sole supplier of S-2 Glass, some competitors are now manufacturing or developing high-strength glasses in order to compete with S-2 Glass for high-volume applications.

CFM Products. CFM is a unique glass fiber reinforcement product used as an input in the production of flat sheet laminates, marine parts and accessories, and other products where its strength and durability make it the most cost-effective material to use. CFM increases the mechanical performance of products, such as stiffness and strength, as well as improves their resistance to chemicals. In CFM, AGY has a capacity of 12,000 metric tons over three manufacturing lines in Huntingdon, Pennsylvania, capable of producing many differentiated products from 0.6 oz. to 3.0 oz. weight serving a wide variety of markets and applications, such as ladder rails, electrical insulation, heavy truck bodies and oil rig decking.

All of our manufacturing processes require the use of bushings made of platinum-rhodium alloy. As a result, our ability to fully utilize or increase our production capacity for glass fiber and CFM products is subject to our ability to obtain and maintain sufficient amounts of alloy metals to support our operations through outright purchase, leasing or through technology improvements that reduce the alloy intensity of our manufacturing processes.

Segment Information

As indicated above, since 2009, the Company operates its business as two reportable units, each a separate operating segment: AGY US and AGY Asia. The Company’s operating segments are managed separately based on differences in their manufacturing and technology capabilities, products and services and their end-markets as well as their distinct financing agreements. For financial information with respect to our business segments, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and Note 23 to our Consolidated Financial Statements.

AGY US

The AGY US segment includes our US manufacturing operations and sale of advanced glass fibers that are used worldwide as reinforcing materials in numerous high-value applications through AGY and its wholly-owned domestic and French subsidiaries. The AGY US segment manufactures and sells the full suite of the products described above but is heavily focused on serving end-markets that require glass fibers for applications with demanding performance criteria.

The respective share of end-market sales for this segment for the years ended December 31, 2012 and 2011 are as follows:

The AGY US segment serves over 250 direct customers worldwide, including most major global weavers and a diverse group of other domestic and international commercial and industrial users of fibers. While supply chains vary by product, application and end-user,

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there are generally multiple links in the value chain between our fibers and corresponding end-products. Direct customers weave our fibers into glass fiber fabric. Through our working relationships with downstream customers, we are often able to have our fibers specified-in end-products and, therefore, influence end-user demand and increase leverage with our direct customers.

Our direct customer relationships generally are stable and long-term. In order to qualify a new supplier, a customer may need to modify its own weaving loom set-ups and fabric specifications and also qualify the new fiber suppliers with downstream manufacturers and original equipment manufacturers. Although glass fibers are only a portion of the final end-product’s overall manufacturing cost, defects can be costly and can have a major impact throughout the value chain. Consequently, customers demand high-quality, reliable fibers from their suppliers, and we have established a reputation with our customers for meeting these demands. We believe these factors have allowed us to maintain strong relationships with each of our key customers. The average length of the relationships with our top ten customers is more than 20 years.

Depending on the end-application, we compete with glass yarn manufacturers or other composite fiber producers worldwide. We compete in the areas of technology innovation, quality, ratio of performance to cost and customer service for our specialty advanced glass fibers and technical fibers.

AGY Asia

The AGY Asia segment includes the manufacturing operations of the Company’s 70% controlling ownership of AGY Asia and its sale of E Glass fibers that at present are used primarily in the Asian electronics market. AGY Asia serves a smaller base of less than 20 customers, who are primarily weavers for the Asia Pacific electronics markets. Significant competitors include other global glass yarn producers primarily based in China, but such competitors are usually vertically integrated and therefore also compete within the weaver segment of the industry supply chain. AGY Asia is one of a limited number of independent non-integrated yarn producers in Asia, and we stress this independence in our efforts to secure supply positions with our weaving customers.

Our AGY US and AGY Asia segments accounted for approximately 85% and 15% of our total net sales, respectively, in 2012.

Our AGY US and AGY Asia segments accounted for approximately 78% and 22% of our total assets, respectively, in 2012.

Summary of our End-Markets and Key Applications by Segment

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Industry Overview

We supply glass fibers to (i) the global composites industry and (ii) other applications where glass fibers, sometimes coated, largely constitute a complete fabric system. Examples of composites applications include thermoplastic-glass fiber reinforced composites for ballistic armor, aluminum-glass fiber reinforced composites for aircraft interior and exterior panels and specialty electronics printed circuit boards. Sales into other applications, principally in the construction and selected industrial end-markets, represented the remainder of our sales for the year ended December 31, 2012. Examples of these applications include architectural roofing and mattress fire protection fabrics.

Customers

We sell to a majority of our customers on open account after an extensive credit review and approval process. From those customers that do not qualify for credit terms, we require cash in advance or a letter of credit. We provide consigned inventory at the customer’s location on a limited basis.

Due to the proximity of our manufacturing plants in relation to many of our top customers, we are able to provide strong customer service. This proximity allows same-day trucking and responsive technical service which enables our customers to manage their inventory more efficiently. Our three largest customers, Porcher Industries Group, Glotech Industrial Corp. and JPS Glass accounted for approximately 16%, 8% and 7%, respectively, of our consolidated net sales for 2012. AGY Asia’s customer concentration is high. Approximately 64% of the AGY Asia segment’s external net sales in 2012 were generated from two customers, Glotech Industrial Corp. and Grace Fabric, a subsidiary of AGY Asia’s predecessor owner (“Grace”).

Backlog

Contracted backlog is not material to the Company’s business taken as a whole and, on average, is less than one month of sales.

Intellectual Property

As part of the transaction when we were spun out of Owens Corning in 1998, Owens Corning assigned to us various patents, know-how, trademarks and other business information. Owens Corning also licensed additional intellectual property assets and rights to us. Under this agreement, Owens Corning granted us a worldwide, paid-up and royalty-free license to make, have made, use, sell, offer to sell and import glass yarn fiber products and S-2 Glass. The agreement covers the life of the licensed patents and is perpetual for know-how. In connection with our purchase of Owens Corning’s CFM business in October 2007, Owens Corning assigned and licensed to us additional intellectual property and rights related to the CFM business.

AGY aggressively manages its patent portfolio, both in terms of seeking patent protection for new technologies and also in pruning patents that no longer have business value. We have a valuable portfolio of U.S. patents and related foreign patents as well as pending U.S. and foreign applications and we intend to defend our intellectual property rights vigorously when necessary. This portfolio covers a wide spectrum from glass composition to fiber and mat process technology, from sizing and binder chemistry to product design. Management does not believe the expiration of any of our patents will have a material impact on our operations or financial performance. In addition to patents, we also have know-how, in particular related to manufacturing extra-fine denier filaments, S-2 Glass fiber products and CFM products, which we protect as trade secrets.

Science and Technology

Our science and technology organization is responsible for creating new products and new applications for existing products. The team is composed of 15 glass technology professionals who have over 350 years of combined experience in translating customer requirements into specifications for new products and tailoring existing products to more rigorous end-user specifications. Our scientists collaborate with our sales, marketing and new business development people to drive growth through new application development and partnership with key customers and end-users.

Through this collaboration, over the last three years we have successfully introduced new products into existing as well as new applications and end-markets. In addition, we have identified a number of additional growth opportunities in applications such as ballistic protection against new threats, high-output wind turbines, high-speed and high-performance circuit boards, and thermoplastic composite reinforcement.

The Company’s research and development expense during each of the last three years is presented in the table below (in millions):

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Environmental Matters

We are subject to a wide range of federal, state and local and general and industry-specific environmental, health and safety laws and regulations, including those relating to air emissions, wastewater discharges, solid and hazardous waste management and disposal and site remediation. Certain of our operations require environmental permits or other approvals from governmental authorities, and certain of these permits and approvals are subject to expiration, denial, revocation or modification under various circumstances. We are also subject to inspections and monitoring by government enforcement authorities.

As part of the transaction when we were spun out of Owens Corning, Owens Corning agreed to retain all liability, if any, resulting from the presence of potentially hazardous substances at or migrating from our then-existing sites as well as all liabilities resulting from the transportation or arrangements made by Owens Corning for the treatment, storage or disposal of hazardous substances to any off-site location prior to September 30, 1998. In addition, Owens Corning agreed to indemnify us against any losses and damages, if any, arising out of the environmental liabilities retained by Owens Corning. However, given the amount of time that has elapsed since the 1998 transaction, as well as the interim bankruptcy proceedings involving Owens Corning, we may have difficulty successfully enforcing our indemnification rights if we suffer any losses resulting from environmental liabilities associated with such sites. See “Risk Factors – Risks Related to Our Business – Owens Corning may fail to comply with its indemnification and other obligations related to our spin off from Owens Corning.”

There may be insignificant levels of asbestos in certain manufacturing facilities. However, we do not expect to incur costs (which are undeterminable) in the foreseeable future to remediate any such asbestos.

Suppliers

The major raw materials used in the production of glass fibers are pre-melted glass marbles or a range of minerals including silica and borates. We utilize our own marble making process in the Aiken, South Carolina facility to supply a significant portion of the raw material marbles necessary to satisfy our indirect melting processes for yarn and a portion of CFM production. In addition, we have established a relationship with an outside supplier to fulfill additional marble demand as required. We believe that the cost of producing marbles in Aiken is not materially different from the cost of sourcing marbles from other sources we have identified. Silica is readily available and is provided by a number of local suppliers. Borates are sourced from a supplier in Turkey.

We use bushings, heat-resistant trays made of platinum-rhodium alloy with holes through which molten glass is extruded into filaments, as part of our manufacturing process. We have bushing fabrication capabilities in our alloy shop facility located in Aiken, South Carolina. In addition, AGY US continues to use a single external supplier to fabricate bushings in order to protect confidentiality, due to the proprietary nature of our bushing designs (although other sources of supply are available).

Natural gas and electricity are a significant portion of our cost of production due to the amount of energy needed to melt raw materials for manufacturing into glass fibers. Energy costs represented approximately 16% and 14.5% of total cost of goods sold for each of the years ended December 31, 2012 and 2011, respectively.

In addition, we purchase bobbins, forming tubes and other packaging materials. These materials are reusable and are replaced if damaged during manufacturing or shipping.

Employees

As of December 31, 2012, we employed approximately 1,053 people throughout our operations, all of which are full-time employees and of which 695 are subject to collective bargaining agreements.

Available Information

Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to reports filed or furnished pursuant to Sections 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) are available on our website at http://www.agy.com/investor/index.htm as soon as reasonably practicable after AGY electronically files such reports with, or furnishes those reports to, the Securities and Exchange Commission (“SEC”). The public may read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, District of Columbia 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-(800)-SEC-0330. The SEC also maintains an Internet site at http://www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.

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Set forth below and elsewhere in this Annual Report and in other documents we have filed and will file with the SEC are risks and uncertainties that could cause our actual results to differ materially from the results contemplated by the forward-looking statements contained in this Annual Report. The risks described below are not the only risks facing us. Additional risks and uncertainties not currently known to us or those we currently view to be immaterial may also materially and adversely affect our business, financial condition or results of operations. Any of the following risks could materially and adversely affect our business, financial condition or results of operations.

Risks Related to Our Business

We face competition from other suppliers of glass fibers, as well as from suppliers of competing products that have resources far in excess of ours, which may harm our financial performance and growth prospects.

For technical fibers and continuous filament mat products, we generally compete with a few alternate suppliers for each application. Although we are the sole supplier of S-2 Glass, we compete with companies that produce alternative products including other high-strength glasses, carbon fiber and aramid fiber products that we do not offer. In addition, other competitors are manufacturing or developing high -strength glasses in an effort to compete with S-2 Glass. We compete principally on the basis of fiber performance, breadth of product offering, product quality, product innovation, customer service, price and availability. Many of our competitors are large, well-established companies with financial and other resources far in excess of ours. As a result of the foregoing factors, there can be no assurance that we will be able to compete successfully against our competitors and we may lose customers or be forced to reduce prices, which could have a material adverse effect on our business, financial condition, operating results and cash flows.

Most of our major competitors focus on high-volume commodity or semi-technical products. We focus on the supply of highly technical glass fibers to specialty niche markets. Only one of our major competitors currently targets some of the same [niche] markets that we target. Additional competitors may shift their focus to the highly technical products required by these niche markets. Also, our competitors may elect to produce and supply a competing product to S-2 Glass, as the process for producing this product has been off patent since the mid-1990’s. There can be no assurance that we will be able to compete successfully against competitors that elect to move into the end-markets we currently supply and, as a result, we may lose customers or be forced to reduce prices, which could have a material adverse effect on our business, financial condition, operating results and cash flows.

We face pricing pressures from competitors, creating potentially substantial price fluctuations for our products, which could have a material adverse effect on our business, financial condition, operating results and cash flows.

Although a significant amount of our business is specified at the end-user, especially in the Aerospace industry, we participate in some highly competitive markets and applications that can be subject to the risk of declining average selling prices and shifts in market share, both of which could impact our pricing leverage. The prices for our products may fluctuate substantially in the future, and any competitive pressures or downturns in market conditions could have a material adverse effect on our business, financial condition, operating results and cash flows.

Adverse macroeconomic and business conditions, as well as continued disruption in credit markets and government policy changes, may significantly and negatively affect our revenues, profitability and financial condition.

Deterioration in economic conditions in the United States and in foreign markets in which we operate could substantially affect our sales and profitability. Volatility and disruption in credit and capital markets may impede access to business credit and tighten liquidity.

Changes in governmental banking, monetary and fiscal policies to restore liquidity and increase credit availability may not be effective. It is difficult to determine the extent of the economic and financial market problems and the many ways in which they may affect our suppliers, customers and our business in general. Continuation or further deterioration of these financial and macroeconomic conditions could have a significant adverse effect on our business, financial condition, operating results and cash flows, including as follows:

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The cyclical and uncertain nature of the end-use markets for our products could have a material adverse effect on our business, financial condition, operating results and cash flows.

Many of the end-markets for our products, including aerospace, defense, electronics and construction, are cyclical and sensitive to changes in general business conditions, industry capacity, consumer preferences, technology advances and other factors and have historically experienced downturns. We have no control over these factors and they can heavily influence our financial performance. For example, the global economic downturn in 2011 prompted many customers in our supply chain to move to leaner inventory holdings, which contributed to weaker demand for our products.

In addition, the demand for new commercial aircraft and aerospace refurbishment activity is cyclical and any reduction could result in reduced sales for our commercial aerospace products and could reduce our operating results. Approximately 29% of our AGY US sales for the year ended December 31, 2012 were derived from sales to the aerospace end-market. Reductions in demand for commercial aircraft, or a delay in deliveries could result from many factors, including a terrorist attack similar to that which occurred on September 11, 2001 and any subsequent military response, changes in the propensity for the general public to travel by air, the rise in the cost of aviation fuel, consolidation and liquidation of airlines and slower macroeconomic growth. A downturn in the aerospace end-market could occur at any time, and in the event of a downturn, we have no way of knowing if, when and to what extent there might be a recovery.

Further, the production level of military equipment and vehicles that has occurred in recent years has not been sustained due to reduced military budgets and spending. The production level of military equipment and vehicles depends upon the U.S. and other non-U.S. defense budgets and the related demand for defense and related equipment. Advanced glass fibers are not always the preferred reinforcement material for certain defense applications, depending on threat levels and cost performance criteria. As a result, the defense end-market contribution to the AGY US sales declined materially from approximately 24% in 2008 to an average of approximately 7% during the last three years. The U.S. government prepares its budget on an annual basis under significant cost pressures and budgetary approval can be subject to the unpredictability of the political process.

Also, delays in the initiation of construction projects and in the roll out of new or modified products by our customers may result in reductions in sales or delays in the receipt of revenue, contributing to volatility in our quarter-to-quarter financial results.

If we are unable to develop product innovations and improve our production technology and expertise, we could lose customers or market share.

The end-markets for our products are subject to technological change and our success may depend on our ability to adapt to such technological changes and to continue to introduce new products and applications. In some of the end-markets to which we sell our glass fiber, such as electronics, products become obsolete rapidly. In addition, our customers may pursue alternative technology that could eliminate the need for our products. If we are unable to timely develop and introduce new products, or enhance existing products, in response to changing market conditions or customer requirements or demands, then we could lose customers or market share, which could have a material adverse effect on our business, financial condition, operating results and cash flows.

We are dependent upon continued demand from our large customers.

Sales to our three largest customers represented approximately 16%, 8% and 7%, respectively, of our consolidated net sales for the year ended December 31, 2012. Approximately 64% of the AGY Asia segment’s net sales in 2012 were generated from two customers, including Glotech Industrial Corp. and Grace Fabric, a subsidiary of AGY Asia’s predecessor owner. The level of purchases by our customers is often affected by events beyond their control, including general economic conditions, demand for their products, business disruptions, disruptions in deliveries, changes in ownership, strikes and other factors. The loss or significant reduction of orders from any of our large customers could result in us having excess capacity and reduced sales if we are unable to replace that customer. As a result, our business, financial condition, operating results and cash flow could suffer.

The decision by an end-user to modify or discontinue the production of an end-product that has our product specified-in could have a material adverse effect on our business, financial condition, operating results and cash flows.

A significant portion of our sales and gross profit is related to end-products in which our products are specified-in by the end-users. The majority of these sales were to applications in the aerospace and defense end-markets. For example, E Glass and S-2 Glass are specified-in to most Boeing commercial aircraft. However, changing market conditions and related changes to end-products may result in our products no longer being specified-in the applicable end-product. Such decisions by end-users to modify or terminate the production of certain end-products that have our products specified-in could have a material adverse effect on our business, financial condition, operating results and cash flows.

Our intellectual property rights may not provide meaningful commercial protection for our products or brands, which could adversely impact our business.

We rely upon a combination of trade secrets and contractual arrangements, and, to a lesser extent, patent and trademark laws to protect our intellectual property rights. The steps we take in this regard may not be adequate to prevent or deter the duplication of our technology, and we may not be able to detect unauthorized use of our technology or take appropriate and timely steps to enforce our intellectual property rights. In addition, we cannot be certain that our processes and products do not or will not infringe or otherwise

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violate the intellectual property rights of others. Infringement or other violation of intellectual property rights could cause us to incur significant costs and prevent us from selling our products and could have a material adverse effect on our business, financial condition, operating results and cash flows.

We may be liable for damages based on product liability claims brought against us and our customers.

The sale of our products involves the risk of product liability claims. Certain of our products provide critical performance functions to our customers’ end-products. Some of our products are used in and around aerospace applications, construction sites and industrial locations, among others, where personal injury or property damage may occur. There can be no assurance that our products will not be the subject of product liability claims or suits. In addition, if a person brings a product liability claim or suit against one of our customers, this customer may attempt to seek a contribution from us. A successful product liability claim or series of claims against us in excess of our insurance coverage for payments for which we are not otherwise indemnified could have a material adverse effect on our business, financial condition, operating results and cash flows.

Our business and financial performance may be harmed by future increases in the cost of certain alloy metals or our inability to access these metals.

Our business requires the use of bushings as part of the manufacturing process. Bushings are trays made with a heat-resistant platinum-rhodium alloy. As of December 31, 2012, platinum and rhodium together represented the largest asset on our balance sheet. Additionally, we are currently leasing a significant portion of the alloy metals needed to support our manufacturing operations in the United States under a master lease agreement that we entered into with DB Energy Trading LLC (“DB”) in October 2009 (the “Original Master Lease Agreement”), the maturity date of which was extended in 2012 to May 31, 2013 (the “Amended Master Lease Agreement”). The agreement allows AGY to enter into leases for up to 51,057 ounces of platinum and up to 3,308 ounces of rhodium, with terms of one to twelve months. At December 31, 2012, we leased approximately 49,800 ounces of platinum and 3,300 ounces of rhodium under the lease. Lease costs are determined by the quantity of metal leased, multiplied by a benchmark value of the applicable precious metal and a margin above the lease rate index.

The costs of the precious metals and the related alloy lease costs are subject to market fluctuations that are beyond our control. Although increases in platinum and rhodium prices favorably impact the Company’s ability to borrow money, pursuant to the terms of our senior secured notes (the “Amended Credit Facility”), which is tied to a borrowing base calculation supported in part by the market price of our owned alloy metals, it also unfavorably impacts our alloy lease costs reported in our financial results. We generally seek to offset the impact of rising material costs through selling price increases; however, future market conditions and the terms of our contracts with customers may prevent us from passing material cost increases to our customers. In addition, we may not be able to achieve manufacturing productivity gains or other cost reductions to offset the impact of cost increases. As a result, higher platinum and rhodium alloy costs may have a material adverse effect on our business, financial condition, operating results and cash flows.

Based on the mix of products that we produced and the alloy metals consumed during the year ended December 31, 2012, approximately 4.6% of total alloy metals in use were depleted in the manufacturing process during that period. As a result of these on-going metal losses and of our historical alloy sales, our owned metal in ounces has declined as a percentage of our total metal pool. If we are unable to replenish depleted metal in the future through outright purchase, leasing or improvements in overall metal usage, we may have insufficient alloy metals for our manufacturing operation which could adversely affect our business, financial performance and operating results.

Our inability to obtain certain necessary raw materials and key components or an increase in cost of raw materials could disrupt the manufacture of our products and result in a material decline in our profitability.

Certain raw materials, including glass marbles and a range of minerals including silica and borates, and other key components necessary for the manufacture of our products, are obtained from a limited group of suppliers, or occasionally a single supplier. Any restrictions on the supply, or an increase in the cost, of our raw materials could significantly reduce our profit margins. If we are unable to procure necessary raw materials and key components from our suppliers, we may not have readily available alternatives. As a result, our ability to manufacture products could be disrupted, and our business, financial condition, operating results and cash flows may be materially adversely affected. Efforts to mitigate restrictions on the supply or price increases of these raw materials by long-term purchase agreements, productivity improvements or by passing cost increases to our customers may not be successful.

Our energy costs may be higher than we anticipated.

Energy costs, including electricity and natural gas, represented approximately 16% and 14.5% of our total cost of goods sold for the years ended December 31, 2012 and 2011, respectively. Accurately predicting trends in energy costs is difficult to achieve as energy costs are, to a large extent, subject to factors beyond our control, such as political conditions in oil producing regions. If future energy costs are greater than anticipated, and we are unable to offset these cost increases with higher prices to our customers, our business, financial condition, operating results and cash flows may be materially adversely affected.

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Our hedging activities to address energy price fluctuations may not be successful in offsetting increases in those costs or may reduce or eliminate the benefits of any decreases in those costs.

In order to mitigate short-term variation in our operating results due to commodity price fluctuations, we from time to time hedge a portion of our near-term exposure to the cost of natural gas and electricity. The results of our hedging practices could be positive, neutral or negative in any period depending on price changes of the hedged exposures.

Our hedging activities are not designed to mitigate long-term commodity price fluctuations and will not protect us from long-term commodity price increases. In addition, in the future our hedging positions may not correlate to our actual energy costs, which would cause acceleration in the recognition of unrealized gains and losses on our hedging positions in our operating results.

We are required to file tax returns on which we may be challenged in the future for tax calculations, valuations or positions taken.

We are subject to income, sales and property taxes in the U.S. and foreign jurisdictions. In the ordinary course of our business, there may be transactions, calculations or valuations where the ultimate tax determination is uncertain. It is possible that a taxing authority may not agree with our calculation, valuation or position taken. The results of an audit or litigation could have an adverse effect on our cash flow or on our financial statements in the period or periods for which that determination is made.

Labor disputes or increased labor costs could have a material adverse effect on our business, financial condition, operating results and cash flows.

Production, maintenance, warehouse and shipping employees at our Aiken, South Carolina manufacturing facility are represented by the Teamsters union. Our manufacturing footprint optimization program has resulted in all U.S. manufacturing, except for continuous filament mat production, to be concentrated in our Aiken location. We renegotiated the current labor agreement with the Teamsters union in the second quarter of 2010, reaching a three-year agreement with a one-year optional extension with our Aiken employees, which expires on May 1, 2013. On March 25, 2013, the Company received notification from the Teamsters that their members voted in favor of a one-year extension of the current labor agreement, or until May 1, 2014. The production, maintenance, warehouse and shipping employees at our Huntingdon, Pennsylvania manufacturing facility, where we manufacture our continuous filament mat product, are represented by the Workers Unite union. We negotiated a three-year labor agreement with our Huntingdon employees in 2011, which expires in October 2014.

Although the current labor agreement has a no-strike provision, if we experience a work stoppage at the Aiken facility, we have no alternative production capability for our technical and advanced materials product lines. Our failure to offset increases in labor costs with continued efficiency gains and cost reduction, or any significant work stoppage in the future could have a material adverse effect on our business, financial condition, operating results and cash flows.

Our operations could expose us to significant regulations and compliance expenditures as a result of environmental, health and safety laws.

Our business is subject to a wide range of federal, state and local and general and industry-specific environmental, health and safety laws and regulations, including those relating to air emissions, wastewater discharges, solid and hazardous waste management and disposal and site remediation. Certain of our operations require environmental permits or other approvals from governmental authorities, and certain of these permits and approvals are subject to expiration, denial, revocation or modification under various circumstances. We are also subject to inspections and monitoring by government enforcement authorities. Our failure to comply with applicable environmental laws and regulations or permit or approval requirements could result in substantial civil or criminal fines or penalties or enforcement actions, including regulatory or judicial orders enjoining or curtailing operations or requiring remedial or corrective measures, installation of pollution control equipment or other actions, which could have a material adverse effect on our business, financial condition, operating results and cash flows.

In addition, as an owner and operator of real estate, we may be responsible under environmental laws and regulations for the investigation, remediation and monitoring, as well as associated costs, expenses and third-party damages, including tort liability and natural resource damages, relating to past or present releases of hazardous substances on or from our properties. Liability under these laws may be imposed without regard to whether we knew of or were responsible for the presence of those substances on our property, may be joint and several, meaning that the entire liability may be imposed on prior and current owners of real estate without regard to contribution, and retroactive and may not be limited to the value of the property. In addition, we or others may discover new material environmental liabilities, including liabilities related to third-party owned properties that we or our predecessors formerly owned or operated, or at which we or our predecessors have disposed of, or arranged for the disposal of, certain materials. We may be involved in administrative or judicial proceedings and inquiries in the future relating to such environmental matters, which could have a material adverse effect on our business, financial condition, operating results and cash flows.

New environmental laws or regulations (or changes in existing laws or regulations or their enforcement) may be enacted that require significant expenditures by us. If the resulting expenses significantly exceed our expectations, our business, financial condition, operating results and cash flows could be materially adversely affected.

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There may be asbestos in certain manufacturing facilities; however, we do not expect to incur costs (the costs of which are undeterminable) in the foreseeable future to remediate any such asbestos, which may be present in the facilities.

We are also subject to various federal, state and local requirements concerning safety and health conditions at our manufacturing facilities. We may also be subject to material financial penalties or liabilities for noncompliance with those safety and health requirements, as well as potential business disruption, if any of our manufacturing facilities or a portion of any manufacturing facility is required to be temporarily closed as a result of any noncompliance with those requirements.

Owens Corning may fail to comply with its indemnification and other obligations related to our spin off from Owens Corning.

As part of the transaction in which we were spun out of Owens Corning, Owens Corning agreed to retain all liability, if any, resulting from the potential presence of hazardous substances at or migrating from our sites as well as all liabilities resulting from the transportation or arrangements made by Owens Corning for the treatment, storage or disposal of hazardous substances to any off-site location prior to September 30, 1998. In addition, Owens Corning agreed to indemnify us against any losses and damages, if any, arising out of the environmental liabilities retained by Owens Corning.

If the potential matters for which we are entitled to receive indemnification from Owens Corning result in significant liabilities for us, and for any reason Owens Corning and/or its affiliates are unable or unwilling to honor these indemnification obligations (or we are unable to prove that such liabilities relate to matters existing prior to September 30, 1998), we could be required to pay for these liabilities ourselves, which could have a material adverse effect on our business, financial condition, operating results and cash flows, our ability to fund or expand our operations and our ability to repay our existing and future indebtedness.

We rely on Owens Corning for the provision of certain products and services.

We have an agreement with Owens Corning regarding bushings fabrication that expires in December 2013. If for any reason Owens Corning is unable or unwilling to renew the bushing fabrication agreement, is unable or unwilling to honor its obligations under this agreement (or its renewal), or this agreement (or its renewal) is terminated, we may not be able to enter into a new agreement on comparable terms, if at all. Although we believe this risk has been partially mitigated by the establishment of our own alloy shop facilities, our business, financial condition, operating results and cash flows may be materially adversely affected if we are not able to enter into a new agreement on comparable terms with Owens Corning.

We have incurred net losses and have a limited history of profitability and may incur net losses in the future.

Since our emergence from Chapter 11 protection on April 2, 2004, we repositioned ourselves as a supplier of highly technical fibers to specialty high-margin applications.

As a result of a global economic downturn, which was prevalent through 2009, lower inventory levels held by several of our customers, and the conclusion of some defense programs, we experienced in 2009 a sharp decline in sales and in profitability resulting in the write off of the goodwill associated with our AGY US segment.

We cannot assure you that we will operate profitably in the future. In addition, we may experience significant quarter-to-quarter variations in operating results and cash flows.

If we are unable to successfully implement our cost reduction initiatives, our business, financial condition, operating results and cash flows could be materially adversely affected.

We are focused on cost reduction initiatives that relate to the optimization of our manufacturing footprint, as well as efficiency, throughput and process technology developments. Efficiency initiatives include managing assets to reduce lost machine time and focusing on quality assurance. Throughput initiatives involve reducing the frequency and duration of filament breaks, minimizing retooling duration and optimizing fiber manufacturing performance. Process technology developments involve lowering energy costs and capital intensity, reducing the need for platinum and rhodium alloy and developing the ability to quickly change glass compositions. We may be unable to successfully implement our cost reduction initiatives within expected time frames, which could have a material adverse effect on our business, financial condition, operating results and cash flows.

Our business operates with a high degree of operating leverage, resulting from substantial capital requirements in our manufacturing operations, leading to high levels of fixed costs that will be incurred regardless of our level of business activity.

Our business is capital intensive, and regularly requires capital expenditures to maintain equipment, expand operations, increase operating efficiency and comply with environmental laws. A substantial capital requirement in our business is related to the fundamental nature of our manufacturing process which utilizes glass melting furnaces, which have a finite useful life, and which require regularly scheduled rebuilding and refurbishment and the consumption of platinum and rhodium in the manufacturing process. Because much of our equipment has been in operation for a significant period of time, in addition to anticipated rebuilding and refurbishment requirements for the furnaces, we could face unanticipated mechanical or other failures, and, in turn, increased expenses associated with repairing or replacing such equipment.

Our capital intensity and operating cost structure leads to certain semi-variable direct costs and high fixed costs, including depreciation expense, and results in a high degree of operating leverage, which magnifies the financial impact of volume changes in our business. In response to reduced demand for our products,

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we may experience negative leverage effects in that we are limited in our ability to reduce fixed costs quickly and these fixed costs may not be fully absorbed, resulting in higher average unit costs and lower gross margins if we are not able to offset this higher unit cost with price increases. Alternatively, in response to increased demand for our products, provided that we have readily available capacity to produce, we may experience positive operating leverage effects in that our fixed cost levels may not increase significantly, thus lowering our unit costs. However, in response to unanticipated increased demand for our products, for which we do not have readily available capacity to produce, we may be limited in our ability to quickly respond due to longer lead times for capital equipment, alloy, and labor requirements to increase output, which could result in an inability to satisfy demand for our products and loss of market share.

A significant disruption or disaster at one of our three manufacturing facilities could have a material adverse effect on our business, financial condition, operating results and cash flows.

We currently own and operate three manufacturing facilities located in Aiken, South Carolina, Huntingdon, Pennsylvania and Shanghai, China. Each facility contains complex and sophisticated machines that are used in the respective manufacturing processes. Each manufacturing process could be affected by operational problems that could impair our production capability. Disruptions or shut downs at our facilities could be caused by:

We are dependent upon the continued safe operation of these manufacturing facilities. Physical damage at any facility, such as damage caused by fires, floods, earthquakes or other catastrophic disasters, may also disrupt the manufacturing process and/or cause a facility shut down. Such damage may not be covered by, or may be in excess of, our industry standard insurance coverage. Any prolonged or permanent disruption in operations at our facilities could cause significant lost production, which would have a material adverse effect on our business, financial condition, operating results and cash flows.

We may incur additional healthcare costs arising from federal healthcare reform legislation.

In March 2010, the federal government enacted the Patient Protection and Affordable Care Act and the Health Care and Education Affordability Reconciliation Act of 2010. The changes to our health insurance plans required by this legislation could cause us to incur additional healthcare and other costs, with the most significant increases anticipated in 2014, when certain requirements under the law take effect. The ultimate extent and cost of these changes cannot be determined at this time, and if the ultimate costs of these changes are material, it could have a material adverse effect on our business, results of operations and financial condition.

The timing and amount of payments to Owens Corning for early-retirement pension benefits to which certain of our employees are entitled may differ materially from the actuarial estimates included in our audited consolidated financial statements for the fiscal year ended December 31, 2012.

Prior to 1998, employees of the Company participated in defined benefit plans maintained by Owens Corning, a predecessor owner of the Company. Under the plans, early retirement pension subsidies were generally based on an employee’s pay and number of years of service. In September 1998, as part of a predecessor owner’s acquisition of the Company from Owens Corning, all employees of Owens Corning who were transferred to the Company as of October 1, 1998 remained eligible to receive the same early-retirement pension subsidy offered by Owens Corning, which created an obligation of the Company to Owens Corning to fund this pension subsidy for these employees. The Company’s obligation to Owens Corning is unfunded. The actual timing and amount of payments to Owens Corning pursuant to this Company obligation may differ materially from the actuarial estimates included in our audited consolidated financial statements for the fiscal year ended December 31, 2012, and any material increase in the amount or acceleration of the timing of any such payments could have a material adverse effect on our business, results of operations and financial condition.

Exposure to foreign currency exchange rate volatility could affect our operating results.

Fluctuations in foreign currency exchange rates may influence the profitability and cash flows of our business. For example, the sales of our AGY Asia subsidiary are denominated primarily in the U.S. Dollar, while its costs are primarily denominated in local currency, the Chinese renminbi (“RMB”). As a result, the local currency margins of goods manufactured with costs denominated in local currency, yet sold in U.S. Dollars, will vary with fluctuations in currency exchange rates, reducing when the U.S. Dollar weakens against the RMB. In addition, the reported U.S. Dollar value of the local currency financial statements of our AGY Asia subsidiary will vary with fluctuations in currency exchange rates.

While a significant percentage, approximately 37% for the year ended December 31, 2012, of the sales of AGY US are to customers in foreign countries, only 2% of AGY US sales are denominated in currencies other than the U.S. Dollar. Although the level of foreign currency exposure is limited for AGY US, we may be adversely affected by unfavorable fluctuations in foreign currency exchange rates. As of December 31, 2012, we did not have any foreign currency hedging agreements in place. While we may enter hedging agreements from time to time to mitigate these types of fluctuations, we cannot remove all fluctuations or hedge all exposures, and our earnings may be impacted by changes in currency exchange rates.

An adverse change in the interest rates for our borrowings could adversely affect our financial condition.

We pay interest on outstanding borrowings under our revolving credit facilities and certain other long-term debt obligations at interest rates that fluctuate based upon changes in various base interest rates. An adverse change in the base rates upon which our interest rates are determined could have a material adverse effect on our financial position, results of operations and cash flows.

We conduct a significant amount of our sales activities outside of the U.S., which subjects us to additional business risks that may cause our profitability to decline.

Because we operate and sell our products in a number of foreign countries, we are subject to risks associated with doing business internationally. Sales outside of the United States accounted for approximately 47%, 37% and 100% of our total consolidated sales, AGY US sales and AGY Asia sales, respectively for the year ended December 31, 2012, and will continue to account for a material portion of our sales for the foreseeable future. We may continue to pursue international growth opportunities, which could increase our exposure to risks associated with international sales and operations.

Our international operations are, and will continue to be subject to numerous risks, including:

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Any one of the above could have a material adverse effect on our business, financial condition, operating results and cash flows.

Our divestitures could disrupt our ongoing business and harm our results of operations.

In pursuing our business strategy when we decide to sell assets or a business, we may encounter difficulty in finding or completing divestiture opportunities or alternative exit strategies on acceptable terms in a timely manner, and the agreed terms and financing arrangements could be renegotiated due to changes in business or market conditions. These circumstances could delay the accomplishment of our strategic objectives or cause us to incur additional expenses with respect to businesses that we want to dispose of, or we may dispose of a business at a price or on terms that are less favorable than we had anticipated, resulting in a loss on the transaction.

If we do enter into agreements with respect to divestitures, we may fail to complete them due to:

Further, divestitures require substantial management resources and have the potential to divert our attention from our existing business. These factors could harm our business and results of operations.

Our business may suffer if we are unable to attract and retain key personnel.

We depend on the members of our senior management team and other key personnel. These employees have industry experience and relationships that we rely on to successfully implement our business plan. The loss of the services of our senior management team and other key personnel or the lack of success in attracting and retaining new and/or replacement management personnel could have a material adverse effect on our business, financial condition, operating results and cash flows.

If selling, general and administrative costs rise significantly from their current level, our business, financial condition, operating results and cash flows could be materially adversely affected.

We are actively managing our selling, general and administrative expense by offsetting increasing costs, including restructuring costs, with a reduction in discretionary and other administrative expenses. If we are unable to continue managing selling, general and administrative costs to their current level and selling, general and administrative costs increase significantly, it could have a material adverse effect on our business, financial condition, operating results and cash flows.

Our Sponsor controls us and may have conflicts of interest with other holders of our securities.

On April 7, 2006, all of the outstanding stock of AGY was acquired by Holdings, which we refer to in this Annual Report as the “Acquisition.” Investment funds associated with Kohlberg & Company, L.L.C. (the “Sponsor”) control us through their ownership of substantially all of the equity of Holdings. As a result, our Sponsor, which controls substantially all of the voting power of Holdings, is able to control the voting power with respect to all matters and has significant influence on our overall operations and strategy. The interests of Holdings, our Sponsor or any of their affiliates may not in all cases coincide with the interests of other holders of our securities, including our Notes. To the extent that conflicts of interest arise, Holdings, our Sponsor or any of their affiliates may resolve those conflicts in a manner adverse to us or to other holders of our securities. For example, our Sponsor and its affiliates could cause us to make acquisitions that increase the amount of the indebtedness that is secured or sell revenue-generating assets, impairing our ability to make payments under our securities. Additionally, our Sponsor and its affiliates are in the business of making investments in companies and may from time to time acquire and hold interests in businesses that compete directly or indirectly with us. Accordingly, our Sponsor and its affiliates may also pursue acquisition opportunities that may be complementary to our business, and as a result, those acquisition opportunities may not be available to us. In addition, our Sponsor and its affiliates may have an interest in pursuing acquisitions, divestitures and other transactions that, in their judgment, could enhance their equity investment, even though such transactions might involve risks to other holders of our securities.

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Risks Related to Our Indebtedness

AGY US

Our significant indebtedness and the restrictive covenants under the indenture governing our Notes, and our ability to make upcoming interest payments due under the Notes, could affect our financial health and may limit our ability to expand or pursue our business strategy.

We have a significant amount of debt. At December 31, 2012, excluding the indebtedness related to AGY Asia, which is non-recourse to AGY or any other domestic subsidiary of AGY, our total debt was $214.2 million (consisting of $42.2 million of senior secured borrowings and $172.0 million of the Notes) and we had approximately $10.4 million of additional secured borrowing capacity under our senior secured revolving credit facility for our North America operations. Our level of indebtedness could:

In addition, the indenture governing our Notes contains restrictive covenants that limit our ability to engage in activities that may be in our long-term best interests. Our failure to comply with those covenants could result in an event of default, which, if not cured or waived, could result in the acceleration of all of our debts. The covenants restrict our ability to take certain actions to some extent, including our ability to:

There can be no assurance that our leverage and such restrictions will not adversely affect our ability to finance our future operations or capital needs or to engage in other business activities. In 2013, interest payments of approximately $19.0 million will be due under the Notes. We may be unable to make the interest payments without one or more of the following occurrences: an amendment to our Amended Credit Facility, sale of assets, or other financing arrangements. Our ability to pay principal and interest on our indebtedness and to satisfy our other debt obligations will depend upon our future operating performance, which will be affected by prevailing economic conditions and financial, business and other factors, certain of which are beyond our control.

We may not be able to satisfy the new financial covenants contained in the Amended Credit Facility and Amended Master Lease Agreement, which would result in default under these agreements and may result in default under our other loan agreements, which would have a material adverse effect on our business and financial condition.

The Amended Credit Facility and the Amended Master Lease Agreement signed in July 2012 added a minimum Fully Adjusted EBITDA (as defined in the Amended Master Lease Agreement) financial covenant for AGY US, which is required to be tested on a quarterly basis. The Company was in compliance with the minimum Fully Adjusted EBITDA covenant as of December 31, 2012. However, there is no assurance that we will be able to satisfy this financial covenant in the future, which would result in an event of default under these two agreements. Any acceleration action taken by our lenders as a result of this or any other event of default could result in cross-acceleration default triggers under the Notes, ultimately causing the Notes, Amended Credit Facility and

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Amended Master Lease Agreement to immediately become due and payable. If the acceleration of any of the Amended Credit Facility, Notes, or the Amended Master Lease Agreement were to occur, we would not be able to repay such amounts when due, which would have a material adverse effect on our business, liquidity and financial condition, and there is no assurance that we would be able to obtain replacement financing on terms acceptable to us, or at all.

If our available borrowing capacity declines below $6.25 million, a springing financial covenant would be triggered under our Amended Credit Facility, which would result in an event of default under the Amended Credit Facility and, if the amounts due under the Amended Credit Facility are accelerated as a result, could trigger defaults under our Notes and our alloy metals lease agreement, which would have a material adverse effect on our business and financial condition.

Pursuant to the Amended Credit Facility, the Company is required to maintain an available borrowing capacity of greater than $6.25 million. Although our undrawn availability as of December 31, 2012 was approximately $10.4 million, declines in the market price of the alloy metals securing the Amended Credit Facility or reductions in our eligible accounts receivable or inventory, or an increase in the required borrowing base reserves (as determined by the lender in its permitted discretion) could cause our available borrowing capacity to fall below $6.25 million. While we do not currently expect to borrow additional amounts under the Amended Credit Facility that would result in our available borrowing capacity falling below $6.25 million, we cannot be certain that these and other factors will not result in a reduction in our available borrowing capacity below $6.25 million.

If our available borrowing capacity falls below $6.25 million, we would become subject to the springing financial maintenance covenant, which requires a minimum “Fixed Charge Coverage Ratio (as defined in the Amended Credit Facility) of 1.0 to 1.0. Based on our current financial condition, we would not satisfy this covenant as this ratio, as of December 31, 2012, was 0.8 to 1.0. Our inability to satisfy this covenant would result in an event of default under the Amended Credit Facility, which could result in all of the amounts coming due under the Amended Credit Facility. Any acceleration actions taken by our lenders as a result of this or any other event of default could result in cross-acceleration default triggers under the Notes and the Amended Master Lease Agreement, ultimately causing both to immediately become due and payable. If the acceleration of any of our Amended Credit Facility, Notes, or the Amended Master Lease Agreement were to occur, we would not be able to repay such amounts when due, which would have a material adverse effect on our business, liquidity and financial condition, and there is no assurance that we would be able to obtain replacement financing on terms acceptable to us or at all.

We may be unable to refinance our alloy metals lease facility, which may result in default under our other loan agreements and an inability to access critical precious metals for our manufacturing requirements.

Our alloy metals lease facility expires in May 2013. Although we are currently in discussions with our metals lessor to extend the facility, there is no assurance that we will be able to obtain replacement financing on terms acceptable to us or at all. If we are unable to refinance the facility by May 31, 2013, in a manner acceptable to our senior secured revolving lenders, then we will be in default under that agreement and the lenders may accelerate amounts due under that facility, which could then trigger a default under the Notes.

Our borrowing capacity is directly tied, in part, to fluctuations in the market price of alloy metals that secure the Amended Credit Facility. Declines in these asset values could significantly reduce our borrowing base, further impair our liquidity, and could have a material adverse effect on our business and financial condition.

The Company’s ability to borrow money under the Amended Credit Facility is tied to a borrowing base calculation, which is supported by the market price of our owned alloy metals, the book value of eligible accounts receivable, and the book value of eligible inventory. Fluctuations in the market prices of these alloy metals cause borrowing base volatility, which could adversely affect our borrowing capacity. At December 31, 2012, the market price per ounce of platinum was $1,524 and rhodium was $1,080. For every $100 reduction in the market price per ounce of platinum and rhodium, our ability to borrow under the Amended Credit Facility would be reduced by approximately $1.9 million. In addition, deterioration in our operating performance could reduce the amount of our eligible accounts receivable and inventory, which would reduce our ability to borrow. Further, our lender has the right, using its permitted discretion, to increase the required reserves specified in the borrowing base formula. Any such reserve modifications would have an adverse effect on our borrowing base and liquidity, and secondarily, may result in the application of the springing financial maintenance covenant under the Amended Credit Facility, either of which could materially and adversely affect our business and financial condition.

AGY Asia

We may be unable to refinance the AGY Asia working capital loan and get a waiver for the breach of the maximum debt-to-assets ratio covenant. In addition, we will not be able to pay the AGY Asia 2013 mandatory term loan payments, if the lender does not agree to revise the term loan amortization schedule. As a result, AGY Asia will be in default under the AGY Asia term loan agreement and the lender may accelerate amounts due under these facilities.

After several amendments of the term loan amortization negotiated in 2012, AGY Asia has mandatory repayment obligations of $23.0 million in 2013, of which $16.9 million is due in April and $6.1 million is due in October. The lender retains the right to accelerate the loan repayment at any time if the lender deems that no substantial progress on AGY Asia refinancing, recapitalization or change of control is being made. There is no assurance that we will be able to permanently revise the term loan amortization schedule on terms acceptable to us or at all. If AGY Asia is unable to reach agreement with its lender to modify the term loan amortization

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schedule beyond April 2013, then AGY Asia will not be able to pay the 2013 mandatory term loan payments. As a result of this default under its term loan agreement, the total outstanding debt of approximately $27.4 million may be accelerated. Therefore, all the outstanding borrowings under the term loan were classified as current liabilities as of December 31, 2012.

In addition, the working capital loan of AGY Asia in the aggregate amount of approximately $11.6 million matures in April 2013. If AGY Asia is unable to obtain an extension of the commitment or refinance the working capital loan prior to maturity, or if the commitment amount of any refinancing should be decreased, AGY Asia’s ability to finance its current operations and meet its short-term obligations could be adversely affected.

Furthermore at December 31, 2012, AGY Asia was not in compliance with its debt-to-assets ratio that exceeded the 60% limit set in the covenants. This technical default can be cured under the working capital loan agreements by an additional capital contribution if made by the stockholders within three months. We have requested a waiver of this requirement from the lender, but we cannot guarantee that this request will be granted. Given the potential sale transaction in progress, the stockholders of AGY Asia do not expect to have to make any additional capital contribution; however, we cannot guarantee that we would be able to make such additional capital contribution to AGY Asia to cure this default in the event that this covenant requirement is not waived and if we are unable to complete a transaction resulting in a change of control of AGY Asia, which could then trigger the acceleration of the outstanding debt under the working capital loan .

While the loans to AGY Asia are non-recourse to AGY US, any default by AGY Asia could impact our ability to raise additional capital or refinance our indebtedness at AGY US or operate with a global footprint, any of which could have an adverse effect on our business, financial condition, operating results and cash flows.

Not applicable.

We are headquartered in Aiken, South Carolina and have currently three primary manufacturing facilities in two states within the U.S. and one in China. The following table outlines the location, type of facility and business segment of our administrative and manufacturing facilities, along with whether we own or lease each, as of December 31, 2012:

All owned property in the U.S. is subject to a security interest under our AGY US senior secured revolving credit agreement and our Notes. The owned property in Shanghai is subject to a security interest under our AGY Asia term loan agreement. We believe that our existing properties are in good condition and are suitable for the conduct of our business.

We are subject to various claims and legal actions that arise in the ordinary course of our business. We do not believe that we are currently party to any proceeding that, if determined adversely, would have a material adverse effect on our financial condition, results of operations or cash flows.

Not applicable.

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PART II

Market and other information

We are a privately-owned company with no established public trading market for our common stock.

Holders

We are a wholly-owned subsidiary of Holdings, which holds all of our outstanding common stock. See “Item 12 – Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” for additional information about the ownership of Holdings’ common stock.

Dividends

We are currently restricted in our ability to pay dividends under various covenants of our debt agreements, including our senior secured credit facilities and the indenture governing our senior notes. We do not expect for the foreseeable future to pay dividends on our common stock. Any future determination to pay dividends will depend upon, among other factors, our results of operations, financial condition, capital requirements, any contractual restrictions and any other considerations our Board of Directors (“Board” or “Board of Directors”) deems relevant.

The following table sets forth certain selected historical condensed consolidated financial information derived from our audited financial statements for the five-year period ended December 31, 2012 at the dates and for the periods indicated.

The selected historical financial information should be read in conjunction with Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our Consolidated Financial Statements and the accompanying notes thereto included in Item 8, “Financial Statements and Supplementary Data,” which are included elsewhere in this Annual Report on Form 10-K. Historical results are not necessarily indicative of results to be expected for future periods. All amounts are presented in thousands.

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You should read the following discussion of our financial condition and results of operations with “Selected Financial Data” and the audited historical Consolidated Financial Statements and related notes included elsewhere in this Annual Report. This discussion contains forward-looking statements about our markets, the demand for our products and services and our future results. We based these statements on assumptions that we consider reasonable. Actual results may differ materially from those suggested by our forward-looking statements for various reasons, including those discussed in the “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” sections of this Annual Report. Those sections expressly qualify all subsequent oral and written forward-looking statements attributable to us or persons acting on our behalf. Except as required by applicable law, we do not have any intention to update any forward-looking statements included in this Annual Report.

OVERVIEW

We are a leading manufacturer of advanced glass fibers that are used as reinforcing materials in numerous diverse high-value applications, including aircraft laminates, ballistic armor, pressure vessels, roofing membranes, mattress protection and architectural fabrics and specialty electronics. We are focused on serving end-markets that require glass fibers for applications with demanding performance criteria, such as the aerospace, defense, construction, electronics, automotive and industrial end-markets.

Since the acquisition of AGY Asia on June 10, 2009 as discussed further below, the Company has two reportable segments, each a separate operating segment. The AGY US segment includes the U.S. manufacturing operations and its sale of advanced glass fibers that are used worldwide as reinforcing materials in numerous high-value applications and end-markets through AGY, its wholly -owned domestic and French subsidiaries. The AGY Asia segment includes the manufacturing operations of the Company’s 70% controlling ownership interest of AGY Hong Kong Limited and its sale of advanced glass fibers that are used primarily in the Asian electronics markets. The Company’s operating segments are managed separately based on differences in their manufacturing and technology capabilities, products and services and their end-markets as well as their distinct financing agreements.

Since 2011, we have been experiencing decreases in demand or in the profitability in some of our key end markets. Demand recovery in certain end markets in 2012 has been offset by restrictions on defense-related demand due to general reductions of U.S. and foreign government military vehicle and equipment procurements. In the midst of slower growth markets to achieve our corporate vision, our strategy includes the following initiatives:

In this context, as described more fully in Note 1 to the Consolidated Financial Statements, we are pursuing divestiture of AGY Asia and of certain non-core business lines (including CFM, wound products and conductive roving) and the assets located in our Huntingdon, Pennsylvania manufacturing facilities. We do not expect any possible transaction related to AGY Asia to impact the AGY US reporting segment as only approximately 1.1% of the reported revenue for AGY US was derived from products produced by AGY Asia over the last 12 months. Further, the long-term borrowings and other obligations of AGY Asia are not guaranteed by AGY US. Additionally, AGY US expects to maintain its commercial presence and sales channels for glass fibers produced in North America but sold to the Asian market, primarily for specialty electronics applications. We also believe that the re-alignment of our product portfolio following completion of the non-core asset divestiture will allow AGY to return to its core capabilities, focus on its specialty materials products and reduce our financial leverage.

We believe we are making progress in our AGY US segment to improve operating efficiency, to expand our specialty product offerings, our markets, and to manage more efficiently our working capital requirements. However, our free cash flow generation remained modest in 2012 as the benefit of these improvements was partly offset by the funding of our restructuring initiatives.

AGY Holding Corp. is a Delaware corporation and is a wholly owned subsidiary of KAGY Holding Company, Inc. (“Holdings”). Holdings acquired all of our outstanding stock in April 2006. Our principal executive office is located at 2556 Wagener Road, Aiken, South Carolina 29801 and our telephone number is (888) 434-0945. Our website address is http://www.agy.com.

Basis of Presentation

The accompanying financial data has been prepared by us pursuant to the rules and regulations of the SEC and is in conformity with U.S. generally accepted accounting principles (“GAAP”). Our fiscal year end is December 31. Unless otherwise stated, all years and dates refer to our fiscal year.

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Management is responsible for the fair presentation of the accompanying Consolidated Financial Statements, prepared in accordance with GAAP, and has full responsibility for their integrity and accuracy. In the opinion of management, the accompanying Consolidated Financial Statements contain all adjustments necessary to present fairly our consolidated balance sheet, statement of operations, statement of cash flows and statement of changes in stockholder’s equity for all periods presented.

The Acquisition

On April 7, 2006, our Company was acquired by Holdings pursuant to the terms of an agreement of merger dated February 23, 2006 (the “Acquisition”). In the Acquisition, all issued and outstanding shares of our common stock were converted into the right to receive cash. Total merger consideration was approximately $271 million (approximately $275.5 million including acquisition related costs and adjustments).

2011 and 2012 AGY Asia Long-lived assets impairment

As a result of various factors in the AGY Asia reporting segment, including (a) continued losses due to operational performance challenges, (b) decreased liquidity, and (c) pending debt service requirements, the Company believed that a triggering event for evaluating the possible impairment of the long-lived assets in the AGY Asia segment occurred. With assistance of independent valuation experts, the Company determined that the carrying amounts of long-lived assets of AGY Asia were not recoverable as they exceeded the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the assets. Accordingly, the Company determined the fair value of the AGY Asia long-lived assets and recognized an impairment of $37,898 at December 31, 2011.

As of September 30, 2012, the Company reevaluated the recoverability of the AGY Asia long-lived assets based on the progress of the sale process of this operating business unit, the final non-binding offers submitted by potential buyers and the estimated future cash flows expected through the completion of a transaction. The Company determined that the carrying value of the AGY Asia long-lived assets exceeded the fair value and recognized an additional impairment of $13,749 at September 30, 2012. The Company performed a similar evaluation at December 31, 2012 and concluded that the total recoverable cash flows of the long-lived assets group exceeded their carrying value and that no additional impairment was required. Please refer to Note 4 to the accompanying Consolidated Financial Statements for the year ended December 31, 2012 for additional discussion on the calculation of the impairment loss, and the adjustments by major category of long-lived assets.

2012 AGY US Trademarks impairment

As of December 31, 2012, the Company determined that the carrying value of the trademarks of AGY US exceeded their fair value and recognized a non-cash impairment charge of approximately $0.5 million, classified as a “loss from operations” for the year ended December 31, 2012.

CRITICAL ACCOUNTING POLICIES

Our Consolidated Financial Statements have been prepared in accordance with GAAP. In preparing our financial statements, we are required to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses included in the financial statements. Estimates are based on historical experience and other information then currently available, the results of which form the basis of such estimates. While we believe our estimation processes are reasonable, actual results could differ from our estimates. The following describes the estimates considered most critical to our operating performance and involve the most subjective and complex assumptions and assessments.

Revenue recognition. We recognize revenue when title and risk of loss pass to the customer. Most of our revenues are recognized upon shipment to customers or upon usage notification for customers on consignment. Provisions for discounts and rebates to customers, returns and other adjustments are provided in the same period that the related sales are recorded and are based on historical experience, current conditions and contractual obligations, as applicable. We perform ongoing credit evaluations of our customers’ financial condition and establish an allowance for losses on trade receivables based upon factors surrounding the credit risk of specific customers, historical trends and other information.

Alloy metals. Alloy metals are the primary component of the heat-resistant, glass-forming bushings in our glass-melting furnaces. Molten glass is passed through the bushings to form glass filaments. In addition, alloy metals are an integral part of our installed glass-melting furnaces and therefore are classified as property, plant and equipment on the balance sheet. During the manufacturing process, a small portion of the alloy metal is physically consumed. The portion of the alloy metal physically consumed is measured at the time a bushing is reconditioned and is charged to income. This expense is recorded net of the metal that is recovered periodically after some special treatment. The amount of metal loss and the service life of the bushings are dependent upon a number of factors, including the type of furnace and the product being produced. Our alloy depletion expense net of the recoveries is disclosed in “Selected Financial Data” and as a component of “Cost of Goods Sold” in the Consolidated Financial Statements.

Use of Estimates. The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of

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assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company’s most significant estimates include assessment of intangible and long-lived assets for impairment, estimates used in determining pension and postretirement medical obligations, estimates used in determining stock-based compensation, determination of the allowance for sales discounts and rebates and establishing the valuation allowance on deferred tax assets. Actual results could differ from those estimates.

Goodwill and intangible assets with indefinite lives. We account for goodwill and other intangible assets in accordance with the provisions of Accounting Standards Committee (“ASC”) 350, Intangibles – Goodwill and Others. Goodwill and intangible assets with indefinite lives are not amortized, but instead are subject to annual impairment testing.

In 2009, management concluded that the goodwill associated with the AGY US reporting segment was fully impaired and it was written off the books.

Other intangible assets are recorded at cost, or when acquired as part of a business combination, at their estimated fair value. These assets relate only to the AGY US reporting segment and include customer relationships, process technology, non-compete covenants, deferred financing fees and trademarks. The Company’s process technology consists of several patents that relate to the design, application or manufacturing for key products, and its estimated life is based on the average legal life of the patents and the Company’s estimated economic life of the processes. Intangibles with indefinite lives (trademarks) are subject to at least annual impairment testing, which compares the fair value of the intangible asset with its carrying amount. If the fair value is less than the carrying amount of the asset, an impairment loss is recognized for the difference.

Our intangibles with indefinite lives (trademarks) are subject to at least annual impairment testing, which compares their fair value with their carrying amount. As of December 31, 2012, the carrying value of the trademarks exceeded their estimated fair value. As a result, the Company recognized a non-cash impairment charge of approximately $0.5 million, classified as a “loss from operations” for the year ended December 31, 2012.

We continually monitor and evaluate current business performance and our business outlook in determining whether there are events or circumstances requiring us to re-evaluate intangible assets with indefinite lives for impairment. Significant changes in demand levels within the Company’s respective markets, changes in production costs including raw materials, metal alloy, energy and direct labor, may have a material impact on the results of future valuations, and if adverse, could cause us to recognize additional impairment.

Impairment of long-lived assets, including definite-lived intangible assets. Pursuant to ASC 360-10, we evaluate our long-lived assets, including our tangible assets consisting of property, plant and equipment, and alloy metals (which are an integral part of our installed glass-melting furnaces) and our definite-lived intangible assets, for impairment whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. A significant decrease in the spot market price of alloy precious metals is one of the factors we consider in determining the need to test this asset group for recoverability. However, we also take into account that the market price of the precious metals may be volatile over short periods of time. Accordingly, changes in the market price of alloy precious metals may not trigger impairment assessment because such changes may not significantly impact future cash flows expected from the use of the alloy metals on an ongoing basis.

An impairment loss is recognized when estimated undiscounted future cash flows expected to result from the use of the asset, plus net proceeds expected from the disposition of the asset (if any), are less than the related asset’s carrying amount. Estimating future cash flows requires us to make judgments regarding future economic conditions, product demand, and pricing. Although we believe our estimates are appropriate, significant differences in the actual performance of the asset or group of assets may materially affect the Company’s asset values and results of operations.

As a result of the first step of the annual goodwill impairment evaluation on October 31, 2009 for the AGY US reporting segment, we tested for impairment the remaining long-lived assets of this reporting segment. Based on our analysis, the total estimated cash flows of the long-lived assets group exceeded substantially its carrying value, and no impairment charge was recognized in 2009.

During the fourth quarter of 2011, our U.S. reporting segment continued to incur losses due to operational performance challenges, experienced a decrease in liquidity and there was a significant decline in precious metal market price. During 2012, the operating profitability of AGY US improved but the decrease in liquidity and continued volatility in precious metals market prices were considered by the Company as triggering circumstances for testing the long-lived assets group of this reporting segment for recoverability. Based on the analysis performed by management at the respective dates, the total recoverable cash flows of the long-lived assets group substantially exceeded its carrying value at December 31, 2011 and 2012. No impairment charge was recognized for the U.S. reporting segment.

As discussed in the Impairment Disclosure on page 19 and in Note 4 to the accompanying Consolidated Financial Statements for the year ended December 31, 2012, the Company performed a similar evaluation on the AGY Asia reporting segment, and recorded impairments of $13.7 million and $37.9 million as of December 31, 2012 and 2011, respectively.

Income taxes. We account for income taxes under the asset and liability method approach established by ASC 740, Income Taxes. Deferred income tax assets and liabilities reflect tax net operating loss and credit carry-forwards and the tax effects of temporary

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differences between the carrying amounts of assets and liabilities for financial reporting and income tax purposes. Deferred tax assets require a valuation allowance when it is more likely than not, based on the evaluation of positive and negative evidence, that some portion of the deferred tax assets may not be realized. When events and circumstances so dictate, we evaluate whether our deferred tax assets are realizable and the need for a valuation allowance, considering objective evidence such as reversal of our existing deferred tax liabilities, and forecasts of future taxable income. Accounting standards require that uncertain tax positions be sustainable under regulatory review by tax authorities assumed to have all relevant information. We recognize the largest amount of benefit that is more likely than not realizable upon settlement with tax authorities. The deferred tax liabilities relied upon in the Company’s assessment of the realizability of its deferred tax assets will reverse in the same period and jurisdiction and are of the same character as the temporary differences giving rise to the deferred tax assets.

We consider our foreign earnings in AGY Europe SARL and in AGY Asia to be permanently invested and, accordingly, we did not provide for U.S. income taxes on the undistributed earnings of our foreign subsidiaries.

Pension and Other Postretirement benefits. As discussed in Note 12 to the accompanying Consolidated Financial Statements for the year ended December 31, 2012, we have a reimbursement obligation to OC under OC’s defined benefit pension plan covering certain of our employees. We also have a postretirement benefit plan that covers substantially all of our domestic employees. Accounting for pensions and other postretirement benefits involves estimating the cost of benefits to be provided well into the future and attributing that cost over the time period each employee works. To accomplish this, we make extensive use of assumptions about discount rates, inflation, mortality, turnover and medical costs.

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RESULTS OF OPERATIONS

The following tables illustrate our results of operations in dollars and as a percentage of net sales for the years ended December 31, 2012, 2011 and 2010 (dollars in thousands):

As further discussed below, we use EBITDA and Adjusted EBITDA, which are non-GAAP financial measures, to measure our financial performance.

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EBITDA and Adjusted EBITDA (which are defined below) are reconciled from net income (loss) determined under GAAP as follows (dollars in thousands):

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EBITDA is defined as earnings before interest, taxes, depreciation and amortization. EBITDA is a measure used by management to measure operating performance. EBITDA is not a recognized term under GAAP and does not purport to be an alternative to (a) net income as a measure of operating performance or (b) cash flows from operating activities as a measure of liquidity. Additionally, EBITDA is not intended to be a measure of free cash flow available for management’s discretionary use, as it does not reflect certain cash requirements such as interest payments, tax payments and debt service requirements. Management believes EBITDA is helpful in highlighting trends because EBITDA excludes the results of decisions that are outside the control of operating management and can differ significantly from company to company depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which companies operate and capital investments. In addition, management believes that EBITDA provides more comparability between our historical results and our recent results that reflect purchase accounting and changes in our capital structure. Management compensates for the limitations of using non-GAAP financial measures by using them to supplement GAAP results to provide a more complete understanding of the factors and trends affecting the business than GAAP results alone. Because not all companies use identical calculations, these presentations of EBITDA may not be comparable to other similarly titled measures of other companies.

Adjusted EBITDA is a non-GAAP financial measure which is defined as EBITDA further adjusted to exclude unusual items and other adjustments permitted in calculating covenant compliance and calculated in the same manner as “Consolidated Cash Flow” under the indenture governing our Notes, which is used by management in calculating our Fixed Charge Coverage Ratio under the indenture governing our Notes. We believe that the inclusion of supplementary adjustments to EBITDA applied in presenting Adjusted EBITDA is appropriate to provide additional information to investors.

Year ended December 31, 2012 compared to year ended December 31, 2011

Net sales. Net sales decreased $10.9 million, or 6.0%, to $172.7 million for the year ended December 31, 2012, from $183.7 million during 2011. AGY US experienced a $9.2 million, or 5.9% net decrease in sales for the year ended December 31, 2012, compared to the same period of 2011, was primarily due to $19.5 million of lower sales volumes partly offset by $10.3 million of favorable product mix. Aerospace revenues were $41.8 million, or up 7% when compared to 2011, reflecting continued robust demand for both aircraft retrofit and new build activity with an ongoing bias toward lighter-weight interior materials. Defense revenues were $9.2 million, or down 15%, compared to prior year, as a result of fewer international structural armor programs in 2012. The electronics market revenues decreased $5.6 million to $25.9 million, or 18% compared to 2011, reflecting lower demand, competitive pressures and the benefit in the second quarter of 2011 from filling at a price premium product shortages in the Asia marketplace after the 2011 earthquake in Japan. The industrial market revenues of the U.S. operating segment decreased to $69.2 million, or 6% compared to the year ended December 31, 2011. This decrease reflects $1.9 million, $1.6 million and $1.2 million of lower construction, automotive and other miscellaneous industrial revenues, respectively, driven by product rationalization, mix enrichment actions and customer management of inventory levels, which started during the third quarter of 2011 due to a weak economic environment. AGY Asia’s contribution to consolidated net sales was $26.6 million, or a $1.7 million decrease in revenues compared to prior year (after accounting for the elimination of $0.5 and $1.3 million of intercompany sales in 2012 and 2011, respectively) due primarily to pricing pressure in the Asian electronics market.

Gross profit. Consolidated gross profit was $20.4 million, or 11.8% of net sales for the year ended December 31, 2012, compared to $11.9 million, or 6.5% of net sales, for the year ended December 31, 2011. Gross profit for AGY US increased $6.2 million during 2012 compared to the same period of 2011, due principally to (i) $9.3 million of lower manufacturing cash costs from the execution of operational improvement projects and cost control initiatives in a stable manufacturing environment, (ii) $5.5 million impact from improvements in average selling price and favorable product mix, (iii) $1.5 million decrease of cost of goods sold with higher margins due primarily to standard costs revaluations occurring during the first quarter of 2012, and (iv) $1.1 million lower depreciation expense. These gains were offset by (i) $9.0 million of decreased margin from lower annual sales volumes in 2012 compared to 2011 and (ii) a net increase of $2.2 million in non-cash costs resulting from (a) $1.1 million increase of cost of goods sold from the 2012 sale of inventory, manufactured in 2011 with larger efficiency losses, (b) $1.0 million increase of cost of goods sold from indirect cost absorption related to a larger inventory increase during the year 2011 when compared to 2012, and (c) $0.1 million of higher metal operating losses. AGY Asia segment gross profit increased $2.3 million as inflation in labor and energy costs was more than offset by $4.5 million of lower depreciation expense and alloy metal depletion. The decrease in depreciation and alloy metal resulted from the impairment of AGY Asia long-lived assets, which was recorded as of December 31, 2011 and as of September 30, 2012.

Selling, general and administrative expenses. Selling, general and administrative (“SG&A”) expenses decreased $0.3 million to $15.5 million during the year ended December 31, 2012 compared to $15.8 million during 2011. This primarily reflects a $0.25 million decrease of SG&A for AGY US resulting from the benefit of reduced headcount and overhead spending, partly offset by a $0.9 million variable compensation accrual recorded during the year ended December 31, 2012 when compared to the same period of 2011. AGY Asia SG&A decreased $0.05 million year over year. However given the net sales decrease year-over-year SG&A expenses increased from 8.6% of net sales for the year ended December 31, 2011 to 9.0% of net sales for the year ended December 31, 2012.

Restructuring charges. In the year ended December 31, 2012, we recorded $10.7 million in restructuring charges, of which (i) $9.0 million resulted from the actions we initiated in our AGY US segment during the last year to improve our organizational cost structure, operational efficiency, production stability, quality and liquidity

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position and reset the strategic direction, and (ii) $1.7 million were primarily in conjunction with the engagement of advisors in 2012 to assist with the refinancing or a possible combination of AGY Asia with another party. For both business segments, the restructuring charges related primarily to professional fees. In the year ended December 31, 2011, we recorded $1.4 million in restructuring charges in our AGY US segment that related primarily to severance and professional fees. See further disclosures in Note 7 to the accompanying Consolidated Financial Statements for the year ended December 31, 2012.

Long-lived assets and trademarks impairment charges. During 2011, the Company determined that the carrying value of AGY Asia long-lived assets exceeded their fair value and recognized an impairment of $37.9 million at December 31, 2011. Various factors in the AGY Asia reporting segment, including (a) continued lower than expected profitability and cash flows, (b) pending debt service requirements and (c) expected future cash flows derived from the non-binding offers received in connection with the contemplated change of control transaction, triggered management to reevaluate the potential impairment of the long-lived assets of this reporting segment. As a result, the Company concluded that the long-lived assets were impaired, and recorded an additional impairment charge of $13.7 million, classified in “loss from operations” in 2012. See further disclosures in Note 4 to the accompanying Consolidated Financial Statements for the year ended December 31, 2012. Additionally, as of December 31, 2012, the Company determined that the carrying value of the trademarks of AGY US exceeded their fair value and recognized a non-cash impairment charge of approximately $0.5 million, classified as a “loss from operations” for the year ended December 31, 2012.

Other operating (loss) income. During the year ended December 31, 2012, other operating loss of $0.1 million was not significant. During the year ended December 31, 2011, other operating income of $1.1 million consisted primarily of a $1.3 million gain recognized on sale of some precious metals.

Other non-operating income. During the years ended December 31, 2012 and 2011, other non-operating income of $0.2 million and $0.08 million, respectively, was not significant.

Interest expense. Interest expense increased $0.4 million from $23.7 million for the year ended December 31, 2011 to $24.1 million for the year ended December 31, 2012. The increase was primarily due to higher borrowing costs for AGY US in 2012 compared to 2011.

Income tax benefit (expense). Income tax benefit / (expense) changed from $0.1 million tax expense for the year ended December 31, 2011 to a $0.1 million tax benefit for the year ended December 31, 2012. During the year ended December 31, 2012, our effective tax rate was a benefit of 0.29%. This rate varied from the statutory rate of 34% due primarily to the change in the valuation allowance for domestic deferred tax assets, which are not more-likely-than-not to be realized, change in foreign valuation allowance, losses on domestic and foreign subsidiaries with no tax benefit, state taxes and foreign rate differential. Generally, the Company can recognize deferred tax assets for the losses incurred until such time that the aggregate deferred tax assets exceed aggregate deferred tax liabilities that do not relate to assets with an indefinite useful life. During the year ended December 31, 2011, our effective tax rate was an expense of (0.14%). This rate varied from the statutory rate of 34% due primarily to the change in the valuation allowance for domestic deferred tax assets, which are not more-likely-than-not to be realized, change in foreign valuation allowance, losses on domestic and foreign subsidiaries with no tax benefit, and foreign rate differential, which benefits were partially offset by state taxes.

Net loss. As a result of the aforementioned factors, including $10.7 million of restructuring costs that offset improved AGY US operating performances, a $13.7 million impairment charge on AGY Asia long-lived assets before noncontrolling interest, and a $0.5 million impairment charge on AGY US trademarks, we reported a net loss attributable to AGY Holding Corp. of $40.2 million for the year ended December 31, 2012, compared to a net loss attributable to AGY Holding Corp. of $54.5 million for the year ended December 31, 2011, which included $1.4 million of restructuring costs and a $37.9 million impairment charge on AGY Asia long-lived assets before noncontrolling interest . The net result attributable to the 30% noncontrolling interest in AGY Asia not owned by AGY Holding Corp. was a $4.7 million loss and a $12.2 million loss for the first year of 2012 and 2011, respectively.

Year ended December 31, 2011 compared to year ended December 31, 2010

Net sales. Net sales remained flat at $183.7 million for the years ended December 31, 2010 and 2011. AGY Asia contributed $3.2 million of additional revenue (after accounting for the elimination of $1.3 million and $3.0 million of intercompany sales in 2011 and 2010, respectively) due primarily to the stronger Asian electronics market and pricing momentum through the first half of 2011. The $3.2 million, or 2.0%, net decrease in sales generated by AGY US for the year ended December 31, 2011, compared to the same period of 2010 was primarily due to $22.8 million of lower sales volumes, while a favorable product mix and pricing increases accounted for an increase in sales of $19.6 million. Aerospace and defense revenues were $49.9 million, or up 10% when compared to the prior year. This increase reflects a record sales level for aerospace, which increased by 18% compared to the year ended December 31, 2010 as a result of continued robust demand for aircraft retrofit, new build activity and pricing actions, while defense sales were negatively impacted by delays in certain major international programs. The electronics market revenues increased to $31.5 million, or 12%, compared to the same period in 2010, reflecting pricing actions, plus increased demand for specialty electronics fibers, which also drove mix enrichment within this market during the year. The general and industrial (“G&I”) market revenues decreased globally to $73.9 million, or 13%. This $11.0 decrease was largely caused by our CFM business, which decreased $6.9 million, or 30%, to $16.4 million, when compared to the prior year as a result of market share loss at key accounts following late 2010 pricing actions. In addition, G&I revenues were negatively impacted by lower construction market revenues, which decreased $7.1

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million, or 34%, to $14.0 million for the year ended December 31, 2011, reflecting some capacity-constrained sales only in part offset by 2011 pricing actions. These decreases were partly offset by a $3.1 million increase in other industrial and automotive market revenues driven by pricing actions and mix enrichment compared to the prior year.

Gross profit/ loss. We reported a consolidated gross profit of $12.0 million, or 7% of net sales for the year ended December 31, 2011, compared to $14.7 million, or 8% of net sales, for the year ended December 31, 2010. AGY Asia segment profitability contribution decreased $1.6 million as increased margin from sales was more than offset by increased production costs due primarily to inflation in raw material, labor and energy costs and the appreciation of the Chinese currency compared to the U.S. Dollar. AGY US’s contribution to the total gross profit decreased $1.1 million during the year, when compared to 2010. The profitability of our AGY US segment benefited from $20.4 million of margin from a more favorable product mix and pricing actions executed over the last five quarters, but was negatively impacted by $8.8 million of lower shipments due to constrained sales and reduced demand in certain markets. The $11.6 million net gain resulting from sales, however, was offset by increased manufacturing costs and challenges we faced in operations where we experienced larger than expected manufacturing efficiency losses from the destabilizing effect of major capacity scale up in our Aiken, South Carolina plant during the first half of 2011. In 2010, the AGY US segment results were also negatively impacted by $4.1 million of accelerated depreciation expenses related to the 2010 restructuring initiatives to optimize the U.S. manufacturing footprint, which totaled only $0.2 million in 2011.

Selling, general and administrative expenses. SG&A expenses remained flat at $15.8 million, or 8.6% of net sales, for both of the years ended December 31, 2011 and 2010. The AGY US segment offset the negative impact of merit increases and payroll tax adjustments by reducing discretionary expenses and headcount, primarily during the fourth quarter of 2011.

Restructuring charges. In conjunction with the restructuring actions we initiated in our AGY US segment to improve our cost structure and mitigate the adverse impact of the decline in precious metals markets on our borrowings availability, we recorded $1.4 million in restructuring charges in the year ended December 31, 2011 that related primarily to severance and professional fees. For the year ended December 31, 2010, we recorded $2.7 million in restructuring charges in the AGY US segment, primarily related to the relocation of manufacturing equipment in conjunction with the structural cost reduction initiative to optimize the AGY US manufacturing footprint.

Long-lived assets impairment charge. Various factors in the AGY Asia reporting segment including (a) lower than expected operating profit and cash flows, (b) pending debt service requirements and (c) significant capital needs for the rebuilding of the furnace during 2012, triggered management to evaluate the potential impairment of the long-lived assets of this reporting segment at December 31, 2011. Accordingly, the Company concluded that certain of the long-lived assets were impaired and recorded an impairment charge of $37.9 million, classified in “loss from operations” in 2011. See further disclosures in Note 5 to the Consolidated Financial Statements for the year ended December 31, 2011.

Other operating income. During the year ended December 31, 2011, other operating income of $1.1 million consisted primarily of a $1.3 million gain recognized on sale of some precious metals. During the year ended December 31, 2010, other operating income of $6.4 million consisted primarily of a $6.3 million gain from the termination by AGY Asia, for breaches of covenants, of a supply agreement entered into in 2009 at the time of the acquisition.

Other non-operating income. During the years ended December 31, 2010 and 2011, other non-operating income of $0.19 million and $0.08 million, respectively, was not significant.

Interest expense. Interest expense increased $0.9 million from $22.8 million for the year ended December 31, 2010 to $23.7 million for the year ended December 31, 2011. The increase was primarily due to incremental interest expense associated with higher borrowings by AGY US and to the increase of the weighted average interest rate for AGY Asia.

Income tax benefit (expense). Income tax benefit / (expense) changed from $6.3 million tax benefit for the year ended December 31, 2010 to a $0.1 million tax expense for the year ended December 31, 2011 due to the limitation on recording tax benefits from net operating losses. During the year ended December 31, 2011, our effective tax rate was an expense of (0.14%). This rate varied from the statutory rate of 34%, due primarily to the change in the valuation allowance for domestic deferred tax assets, which are not more-likely-than-not to be realized, change in foreign valuation allowance, losses on domestic and foreign subsidiaries with no tax benefit, and foreign rate differential, which benefits were partially offset by state taxes. Generally, the Company can recognize deferred tax assets for the losses incurred until such time that the aggregate deferred tax assets exceed aggregate deferred tax liabilities that do not relate to assets with an indefinite useful life. During the year ended December 31, 2010, our effective tax rate was a benefit of 30.3%. This rate varied from the statutory rate of 34%, due primarily to establishment of valuation allowance during 2010 for domestic deferred tax assets, which are not more-likely-than-not to be realized, change in foreign valuation allowance, losses on domestic and foreign subsidiaries with no tax benefit, and foreign rate differential, which benefits were partially offset by state taxes.

Net income (loss). As a result of the aforementioned factors, including primarily (a) higher than expected manufacturing efficiency losses in AGY US, (b) higher production costs in AGY Asia and additional restructuring and impairment charges in 2011, (c) accelerated depreciation and restructuring charges for the AGY US segment and (d) gain on contract termination related to AGY Asia in 2010, we reported a net loss attributable to AGY of $54.5 million for the year ended December 31, 2011, compared to a net loss of $16.1 million for the year ended December 31, 2010. The net loss attributable to the 30% noncontrolling interest in AGY Asia for the year ended December 31, 2011 was $12.2 million compared to net income of $1.5 million for the year ended December 31, 2010.

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LIQUIDITY AND CAPITAL RESOURCES

AGY Holding Corp. and its Domestic Subsidiaries’ Liquidity

In 2012, our principal sources of domestic liquidity were cash on hand, cash from operations and borrowings from our revolving credit facility. Our domestic need for liquidity arises primarily from interest payments on the outstanding $172.0 million principal amount of our Notes, interest and principal payments on our Amended Credit Facility, the funding of capital expenditures, alloy metals, strategic initiatives, restructuring expenses, normal recurring operating expenses and working capital requirements. As of December 31, 2012, AGY US had total liquidity of $10.6 million, consisting of $0.2 million in unrestricted cash and approximately $10.4 million of borrowing availability under the Amended Credit Facility. If our borrowing availability under the Amended Credit Facility falls below $6.25 million, we will be subject to a springing financial maintenance covenant under which we would likely be in default. In the next 12 months, interest payments of approximately $19.0 million will be due under the Notes. In the event we are not able to meet those payments, we will seek one or more options to strengthen our liquidity, including a sale of assets or other financing arrangements. Please refer to “Risk Factors – Risks Related to our Indebtedness” for additional discussion regarding our liquidity.

There are no mandatory payments of principal on the Amended Credit Facility or on the Notes scheduled prior to their earliest maturity in August 2014 and November 2014, respectively.

AGY Asia’s Liquidity

AGY Asia’s cash requirements stem primarily from interest and principal payment, capital expenditures, alloy metals, strategic and restructuring initiatives, normal recurring operating expenses and working capital requirements and have been historically funded by cash on hand, cash from operations and borrowings under the AGY Asia financing arrangement (“AGY Asia Credit Facility”).

As of December 31, 2012, AGY Asia had total liquidity of $3.5 million, consisting of unrestricted cash. In April 2012, the remaining unused commitment of approximately $2.5 million under the term loan and the working capital loan was terminated by the AGY Asia lender. As a result, there are no amounts available to be borrowed under the AGY Asia Credit Facility. After several amendments of the term loan amortization negotiated in 2012, AGY Asia has mandatory repayment obligations of $23.0 million in 2013, of which $16.9 million is due in April and $6.1 million is due in October. The lender retains the right to accelerate the loan repayment at any time if the lender deems that no substantial progress on AGY Asia refinancing, recapitalization or change of control is being made. There is no assurance that we will be able to permanently revise the term loan amortization schedule on terms acceptable to us, or at all. If AGY Asia is unable to reach agreement with its lender to modify the term loan amortization schedule beyond April 2013, then AGY Asia may default under its loan agreement and the total outstanding debt of approximately $27.4 million may be accelerated. As a result, all the outstanding borrowings under the term loan were classified as current liabilities as of December 31, 2012.

In addition, the working capital loan of AGY Asia in the aggregate amount of approximately $11.6 million matures in April 2013. If AGY Asia is unable to obtain an extension of the commitment or refinance the working capital loan prior to maturity, or if the commitment amount of any refinancing should be decreased, AGY Asia’s ability to finance its current operations and meet its short-term obligations could be adversely affected.

Please refer to “Risk Factors – Risks Related to our Indebtedness” for additional discussion regarding the liquidity of AGY Asia.

Working Capital

We define working capital as total current assets, excluding unrestricted cash, less total current liabilities, including short-term borrowings and current portion of long-term debt. We reported a working capital deficiency of $15.6 million and $13.3 million on December 31, 2012 and 2011, respectively.

AGY US working capital was $20.3 million and $21.2 million as of December 31, 2012 and 2011, respectively. The $0.9 million decrease related to (a) a $2.9 million increase in accrued liabilities, due primarily to $1.5 million of variable compensation accrual and increase of accrued restructuring expenses, (b) a $2.3 million decrease in inventories, (c) a $0.9 million decrease in current deferred tax, offset by (d) a $1.3 million decrease in trade payables, and (e) increases of $2.8 million, $0.6 million and $0.5 million in AGY US trade receivables, current assets and restricted cash, respectively.

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AGY Asia reported a working capital deficiency of $35.9 million and $34.5 million on December 31, 2012 and 2011, respectively. The $1.4 million decrease related to (a) a $2.6 million decrease in trade receivables, (b) a $0.7 million decrease in inventories, (c) a $0.5 million increase in trade payables, offset by (d) a $0.7 million increase in restricted cash, (e) a $1.4 million decrease in short-term borrowings and current portion of long-term, and (e) a $0.3 million increase in current assets and current deferred tax.

Contractual Obligations

In the ordinary course of business, the Company enters into contractual obligations to make cash payments to third parties. The Company’s known contractual obligations as of December 31, 2012 were as follows (in thousands):