FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the period ended March 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____ to ____
Commission File Number 0-13787
INTERMET CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Georgia 58-1563873
- ---------------------------- ----------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or Identification No.)
organization)
5445 Corporate Drive, Suite 200, Troy, Michigan 48098
------------------------------------------------------
(Address of principal executive offices and zip code)
(810) 952-2500
----------------------------------------------------
(Registrant's telephone number, including area code)
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
--- ---
Shares outstanding of each of the issuer's classes of common stock at
May 13, 1996: 25,077,874 shares of Common Stock, $0.10 par value
share.
<PAGE>
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
<TABLE>
<CAPTION>
Intermet Corporation
Interim Condensed Consolidated Balance Sheets
March 31, December
1996 31, 1995
-------------------------
(In thousands of dollars)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 10,746 $ 11,173
Accounts receivable:
Trade, less allowance for doubtful accounts of 64,107 49,814
$1,271 in 1996 and $1,267 in 1995
Other 4,961 5,298
---------------------
69,068 55,112
Inventories 30,214 29,155
Other current assets 2,635 7,632
Total current assets 112,663 103,072
Property, plant and equipment, at cost 344,622 344,288
Less:
Foreign industrial development grants, net of
amortization (5,217) (5,469)
Accumulated depreciation and amortization (194,606) (189,625)
---------------------
Net property, plant and equipment 144,799 149,194
Other noncurrent assets 19,845 21,805
---------------------
$ 277,307 $274,071
=====================
</TABLE>
See accompanying notes
1
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
March 31, December
1996 31, 1995
-------------------------
(In thousands of dollars)
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 30,990 $ 28,640
Income taxes 10,233 16,000
Accrued liabilities 43,402 43,949
Notes payable 182 13
Long-term debt due within one year 1,280 2,596
---------------------
Total current liabilities 86,087 91,198
Noncurrent liabilities:
Long-term debt due after one year 33,032 32,675
Retirement benefits 45,545 43,621
Other noncurrent liabilities 341 5,712
---------------------
Total noncurrent liabilities 78,918 82,008
Minority interest 2,837 2,837
Shareholders' equity:
Common stock 2,507 2,505
Capital in excess of par value 56,632 56,431
Retained earnings 45,935 37,125
Accumulated translation adjustments 6,189 3,765
Minimum pension liability adjustment (1,636) (1,636)
Unearned restricted stock (162) (162)
---------------------
Total shareholders' equity 109,465 98,028
---------------------
$277,307 $274,071
=====================
</TABLE>
See accompanying notes.
2
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Intermet Corporation
Interim Condensed Consolidated Statements of Income
Three months ended
-----------------------------------------------
March 31, April 2,
1996 1995
------------------------------------------------
(In thousands of dollars, except per share data)
<S> <C> <C>
Net sales $134,158 $153,278
Cost of sales 114,381 131,628
------------------------------------------------
Gross profit 19,777 21,650
Operating expenses:
Selling 881 1,316
General and administrative 4,248 6,427
------------------------------------------------
5,129 7,743
------------------------------------------------
Operating profit 14,648 13,907
Other income and expenses:
Interest income 171 30
Interest expense (779) (2,155)
Other, net (61) (61)
------------------------------------------------
(547) (2,186)
------------------------------------------------
Income before income taxes and
minority interest 14,101 11,721
Provision for income taxes 5,291 5,201
------------------------------------------------
Income before minority interest 8,810 6,520
Minority interest -- --
------------------------------------------------
Net Income $ 8,810 $ 6,520
=================================================
Earnings per share $ 0.35 $ 0.26
=================================================
</TABLE>
See accompanying notes.
3
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Intermet Corporation
Interim Condensed Consolidated Statements of Cash Flows
Three months ended
-------------------------
March 31, April 2,
1996 1995
-------------------------
(In thousands of dollars)
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 8,810 $ 6,520
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 7,228 8,081
Other 0 (693)
Changes in assets and liabilities:
Accounts receivable (14,362) (9,651)
Inventories (1,234) 1,271
Accounts payable 2,518 (5,518)
Other assets and liabilities 1,258 11,367
-------------------------
Net cash provided by operating activities 4,218 11,377
INVESTMENT ACTIVITIES
Additions to property, plant and equipment (3,315) (3,691)
Other 0 888
-------------------------
Net cash used in investing activities (3,315) (2,803)
FINANCIAL ACTIVITIES
Net reduction in borrowings (667) (9,516)
Issuance of common stock 203 97
Other (43) 0
-------------------------
Net cash used in financing activities (507) (9,419)
Effect of exchange rate changes on cash and cash (823) (169)
equivalents -------------------------
Net increase (decrease) in cash and cash equivalents (427) (1,014)
Cash and cash equivalents at beginning of period 11,173 13,718
-------------------------
Cash and cash equivalents at end of period $ 10,746 $ 12,704
=========================
</TABLE>
See accompanying notes.
4
<PAGE>
<PAGE>
Intermet Corporation
Notes to Interim Condensed Consolidated Financial Statements
March 31, 1996
1. The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally
accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by
generally accepted accounting principles for complete
financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been
included. Operating results for the three month periods
ended April 2, 1995 and March 31, 1996 are not necessarily
indicative of the results that may be expected for the year
ended December 31, 1996. For further information, refer to
the consolidated financial statements and footnotes thereto
included in the Registrant Company and Subsidiaries annual
report on Form 10-K for the year ended December 31, 1995.
2. Inventories consist of the following (in thousands of
dollars):
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
-------------------------------
<S> <C> <C>
Finished goods $ 5,605 $ 5,616
Work in process 5,180 3,989
Raw materials 3,856 3,975
Supplies and patterns 15,573 15,575
--------------------------------
$ 30,214 $ 29,155
================================
</TABLE>
3. Property, plant and equipment consist of the following (in thousands
of dollars):
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
---------------------------------
<S> <C> <C> <C> <C>
Land $ 3,578 $ 3,585
Buildings and improvements 77,033 77,649
Machinery and equipment 252,849 254,140
Construction in progress 11,162 8,914
---------------------------------
$ 344,622 $ 344,288
=================================
</TABLE>
5
<PAGE>
Intermet Corporation
Notes to Interim Condensed Consolidated Financial Statements
(continued)
4. Long-term debt consists of the following (in thousands of
dollars):
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
----------------------------------
<S> <C> <C>
Intermet $ 25,000 $ 25,000
Subsidiaries 9,312 10,271
-----------------------------------
Total long-term debt 34,312 35,271
Less amounts due within one year 1,280 2,596
Long-term debt due after one year $ 33,032 $ 32,675
</TABLE>
5. In March 1994, the Company entered negotiations with the
Ohio Attorney General s office concerning past violations of
Ohio water pollution laws and regulations at the Ironton
foundry. In November 1995, the Company agreed to pay the
State of Ohio a fine of $285,000 to settle this and all
other water discharge violations at Ironton. The Company
has accrued this liability at December 31, 1995 and March 31,
1996 and expects to pay this in 1996 on entry of a consent
decree by the court. In addition, the Company has submitted
a plan to the Ohio EPA to bring its facility into compliance
with all applicable air emission requirements, after that agency
had advised management of several violations of air pollution
regulations. It is not known whether the agency will
eventually demand the payment of civil penalties for these
past violations.
The Company is also engaged in various legal proceedings and
other matters incidental to its normal business activities.
The Company does not believe any of the above mentioned
proceedings or matters are material in relation to the
Company s consolidated financial position or results of
operations.
6
<PAGE>
Item 2 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Material Changes in Financial Condition
- ---------------------------------------
The Company's financial position continued to improve during the
first quarter. Although sales declined from prior year levels,
net earnings increased over 35 percent. Sales were $134.2
million for the three months and earnings were $8.8 million.
Long-term debt remained steady at $34 million, down from $93
million at the end of the first quarter 1995.
In the first quarter of 1996 and 1995 the Company charged a total
of $0.3 million and $1.3 million, respectively, against reserves
established in 1993 and 1994 for restructuring, severance and
retirement pay and related benefit costs. This activity will
continue throughout the balance of the year.
Material Changes in Results of Operations
- -----------------------------------------
Sales in the first quarter declined more than $19 million (12%)
from the first quarter of 1995. Domestic automobile production
fell significantly from prior year levels, exaggerated by an
unusually severe winter in the Eastern U. S. and the General
Motors strike in March. European sales remained strong. First
quarter sales were also impacted as a result of 1995 divestitures
($11.4 million). Second quarter sales are predicted to rebound
from low first quarter results as production rises to current
vehicle sales levels.
Gross profit improved to 14.7% of sales from 14.1% in the first
quarter 1995. Margins in Europe, Columbus Foundry and Archer
Creek were improved from prior year. Operating expenses
decreased more than $2.6 million from 1995 levels as a result of
reorganization and manpower reductions.
Interest expense declined significantly ($1.5 million) from 1995
as a result of much lower debt levels, $34 million in 1996
compared to $93 million in 1995, and reduced borrowing costs
associated with refinancing. Capital expenditures of $3.3
million were lower than forecast in the first quarter, but are
expected to increase in future quarters. A major expansion was
initiated at Alexander City, a newly acquired aluminum foundry.
The Company s effective tax rate was reduced in the first quarter
as a result of various tax planning efforts.
7
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
- ---------------------------
The Registrant has entered into negotiations with the Office
of the Ohio Attorney General with respect to certain past
violations by the Registrant's Ironton, Ohio foundry of Ohio
water pollution laws and regulations. The Attorney
General's Office advised the Registrant that the Registrant
could avoid litigation with respect to such violations by
entering into a consent order. In November 1995 the
Registrant agreed to pay the State of Ohio a fine of
$285,000 to settle the water pollution matter. The parties
have agreed to the language of the consent decree, and the
Registrant is waiting for the Office of Attorney General to
file the decree in Ohio State Court. On receipt of the
decree, the fee will be paid by the Registrant.
Effective April 24, 1996, a Stipulation of Dismissal Without
Prejudice was filed in the Superior Court of Fulton County,
State of Georgia terminating litigation filed on October 6,
1995 by Brickell Partners, a Florida partnership, against
the Registrant and each director of the Registrant except
George W. Mathews, Jr. The complaint was brought on behalf
of the plaintiff and, purportedly, public shareholders of
the Registrant, as a class. Neither the Registrant nor its
directors were required to pay any damages, legal fees, or
any other costs to the plaintiff. In addition, neither the
Registrant nor its directors have paid or have agreed to pay
any damages, legal fees, or other costs to the plaintiff.
8
<PAGE>
Item 2. Changes in Securities
---------------------
None
Item 3. Defaults Upon Senior Securities
-------------------------------
None
Item 4. Submission of Matters to a Vote of Securities Holders
-----------------------------------------------------
None
Item 5. Other Information
-----------------
On February 23, 1996 the Company amended and restated its
revolving credit agreement with its bank lending group. The
agreement provides for loans of up to $100 million. The
borrowing limit is reduced by certain standby letters of
credit issued by the Company. In addition to the revolving
credit agreement, the Company has a $10 million uncommitted
line of credit.
On March 21, 1996 the Company amended and restated its note
agreement with The Prudential Insurance Company of America.
The note amount did not change.
9
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) The following Exhibits are filed as of part of this
report:
Exhibit
Number Description
------ ----------------------------------------
11.1 Computation of Earnings per Common Share
27.1 Financial Data Schedule
(b) None
10
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
INTERMET CORPORATION
By: /s/Doretha J. Christoph
Doretha J. Christoph
Vice-President Finance
(Principal Financial Officer)
DATE: May 13, 1996
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
------- ---------------------
11.1 Computation of Earnings per Common Share
27.1 Financial Data Schedule
EXHIBIT 11.1
COMPUTATION OF EARNINGS PER COMMON SHARE
<TABLE>
<CAPTION>
Three months ended
-------------------------
March 31, April 2,
1996 1995
-------------------------
(In thousands of dollars)
<S> <C> <C>
Net income $8,810 $ 6,520
-------------------------
Weighted average number of shares outstanding 25,050 24,652
Dilutive effect of outstanding options 325 55
-------------------------
Weighted average number of shares and equivalent 25,375 24,707
shares outstanding
-------------------------
Earnings per share 0.35 0.26
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000745287
<NAME> INTERMET CORPORATION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 10,746
<SECURITIES> 65,378
<RECEIVABLES> 1,271
<ALLOWANCES> 30,214
<INVENTORY> 30,214
<CURRENT-ASSETS> 112,663
<PP&E> 344,622
<DEPRECIATION> 194,606
<TOTAL-ASSETS> 277,307
<CURRENT-LIABILITIES> 86,087
<BONDS> 0
0
0
<COMMON> 2,507
<OTHER-SE> 106,958
<TOTAL-LIABILITY-AND-EQUITY> 277,307
<SALES> 134,158
<TOTAL-REVENUES> 134,158
<CGS> 114,381
<TOTAL-COSTS> 119,510
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 779
<INCOME-PRETAX> 14,101
<INCOME-TAX> 5,291
<INCOME-CONTINUING> 8,810
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,810
<EPS-PRIMARY> 0.35
<EPS-DILUTED> 0.35
</TABLE>
