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. Somewhat offsetting these negative factors are the company's good market position in graphite electrodes, currently favorable industry conditions and its fair liquidity. 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 June 30, 2005. The balance of the company's sales are derived from cathodes, advanced synthetic graphite products and thermal interface products. Because graphite electrodes are primarily used in electric arc steel furnaces, the company is exposed to the cyclical steel industry, which can
