The ratings on GrafTech International Ltd. reflect its aggressive financial leverage, poor free cash flow generation, significant exposure to the cyclical steel industry, and raw-material cost pressure, particularly for needle coke. Somewhat offsetting these negative factors are the company's favorable cost position compared with its competitors, its good market position in graphite electrodes, and currently favorable industry conditions. GrafTech manufactures carbon-based materials throughout the world for use in various applications. Its primary product, graphite electrodes, accounted for 63% of sales for the 12 months ended March 31, 2005. Because graphite electrodes are primarily used in electric arc steel furnaces, the company is exposed to the cyclical steel industry, which is currently experiencing robust conditions. Indeed, GrafTech's average realized graphite electrode
