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, its relatively favorable industry conditions currently, and its fair liquidity. GrafTech manufactures carbon-based materials throughout the world for use in various applications. Its primary product, graphite electrodes, accounted for 65% of sales for the 12 months ended Sept. 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,
