INTERMET CORP, S-3/A, 1997-08-06

INTERMET CORP
S-3/A, 1997-08-06
IRON & STEEL FOUNDRIES

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 6, 1997

REGISTRATION NO. 333-32707
================================================================================
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------

AMENDMENT NO. 1

FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------------

INTERMET CORPORATION
(Exact name of registrant as specified in its charter)

<TABLE>
<C> <C>
GEORGIA
(State or other jurisdiction of incorporation or 58-1563873
organization) (I.R.S. Employer Identification No.)
</TABLE>

5445 CORPORATION DRIVE, SUITE 200
TROY, MICHIGAN 48098-2683
(248) 952-2500
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
------------------------------

DORETHA J. CHRISTOPH
VICE PRESIDENT-FINANCE, CHIEF FINANCIAL OFFICER AND SECRETARY
INTERMET CORPORATION
5445 CORPORATE DRIVE, SUITE 200
TROY, MICHIGAN 48098-2683
(248) 952-2500
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------------

Copies to:

JEROME M. SCHWARTZ ROBERT F. WALL
DICKINSON, WRIGHT, MOON, VAN DUSEN & FREEMAN WINSTON & STRAWN
500 Woodward Avenue, Suite 4000 35 West Wacker Drive
Detroit, Michigan 48226 Chicago, Illinois 60601

Approximate date of proposed sale to the public: As soon as practicable
after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
------------------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A) OF THE
SECURITIES ACT OF 1933, MAY DETERMINE.

================================================================================
<PAGE> 2

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.

SUBJECT TO COMPLETION, DATED AUGUST 6, 1997

PROSPECTUS
AUGUST , 1997

3,000,000 SHARES

INTERMET LOGO

COMMON STOCK

All of the 3,000,000 shares of Common Stock of Intermet Corporation
("Intermet" or the "Company") offered hereby (the "Offering") are being sold by
the Selling Shareholders. See "Selling Shareholders." The Company will not
receive any of the proceeds from the Offering.

The Common Stock of the Company is traded on the Nasdaq National Market
under the symbol "INMT." On July 31, 1997, the last reported sale price of the
Common Stock on the Nasdaq National Market was $16 3/8 per share. See "Price
Range of Common Stock and Dividends."

------------------------------

SEE "RISK FACTORS" BEGINNING ON PAGE 7 FOR INFORMATION THAT SHOULD BE
CONSIDERED BY PROSPECTIVE INVESTORS.
------------------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
PRICE UNDERWRITING PROCEEDS TO
TO THE DISCOUNTS AND THE SELLING
PUBLIC COMMISSIONS(1) SHAREHOLDERS(2)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share................................ $ $ $
Total(3)................................. $ $ $
</TABLE>

- --------------------------------------------------------------------------------

(1) See "Underwriting" for indemnification arrangements with the Underwriters.

(2) The Company will bear all offering expenses other than underwriting
discounts and commissions, which will be borne by the Selling Shareholders.
The offering expenses are expected to be approximately $200,000.

(3) Certain of the Selling Shareholders have granted to the Underwriters a
30-day option to purchase up to an aggregate of 450,000 additional shares of
Common Stock, at the Price to the Public, less Underwriting Discounts and
Commissions, solely to cover over-allotments, if any. If such option is
exercised in full, the total Price to the Public, Underwriting Discounts and
Commissions and Proceeds to the Selling Shareholders will be $ ,
$ and $ , respectively. See "Underwriting."

The shares of Common Stock are offered by the several Underwriters subject
to prior sale, when, as and if delivered to and accepted by the Underwriters,
and subject to the right of the Underwriters to withdraw, cancel or modify such
offer and to reject orders in whole or in part. It is expected that delivery of
the shares of Common Stock will be made in New York, New York on or about
, 1997.

DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION

PRUDENTIAL SECURITIES INCORPORATED

INTERSTATE/JOHNSON LANE
CORPORATION
<PAGE> 3

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK.
SPECIFICALLY, THE UNDERWRITERS MAY OVERALLOT IN CONNECTION WITH THE OFFERING AND
MAY BID FOR AND PURCHASE SHARES OF THE COMMON STOCK IN THE OPEN MARKET. SEE
"UNDERWRITING."

IN CONNECTION WITH THE OFFERING, CERTAIN UNDERWRITERS MAY ENGAGE IN PASSIVE
MARKET MAKING TRANSACTIONS IN THE COMMON STOCK ON THE NASDAQ NATIONAL MARKET IN
ACCORDANCE WITH RULE 103 UNDER REGULATION M OF THE SECURITIES AND EXCHANGE
COMMISSION. SEE "UNDERWRITING."

-------------------------

INCORPORATION OF CERTAIN INFORMATION BY REFERENCE

The following documents heretofore filed by the Company with the Securities
and Exchange Commission (the "Commission") are hereby incorporated by reference:
(i) the Company's Annual Report on Form 10-K for the year ended December 31,
1996; (ii) the Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1997; (iii) the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1997; (iv) the Company's Form 8-K dated January 6, 1997,
as amended by the Company's 8-K/A dated February 21, 1997; and (v) the
description of the Company's Common Stock contained in the Company's
Registration of Securities on Form 8-A, effective August 6, 1985, filed pursuant
to the Securities and Exchange Act (the "Exchange Act"), Commission file number
0-13787.

All documents filed by the Company pursuant to Section 13(a), 13(c), 14, or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering of the shares of Common Stock covered by this
Prospectus shall be deemed to be incorporated by reference in this Prospectus
and to be a part hereof from the date of filing of such documents. Any statement
contained in a document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is incorporated or deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.

The Company hereby undertakes to provide without charge to each person to
whom this Prospectus is delivered, on the written or oral request of such
person, a copy of any and all the documents incorporated by reference in this
Prospectus (other than exhibits to such documents unless such exhibits are
specifically incorporated by reference into the documents that this Prospectus
incorporates). Written or oral requests for such copies should be directed to:
Corporate Secretary, Intermet Corporation, 5445 Corporate Drive, Suite 200,
Troy, Michigan 48098-2683, (248) 952-2500.

ADDITIONAL INFORMATION

The Company has filed with the Commission, a Form S-3 Registration
Statement under the Securities Act with respect to the Common Stock offered
hereby. This Prospectus does not contain all of the information set forth in the
Registration Statement, certain portions of which have been omitted as permitted
by the Rules and Regulations of the Commission. For further information
pertaining to the shares of Common Stock offered hereby and to the Company,
reference is made to the Registration Statement, including the Exhibits filed as
a part thereof, copies of which can be inspected at and copied at the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, and at the Commission's regional offices located at Northwestern Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661, and Room
1400, 75 Park Place, New York New York 10007. Copies of such materials can also
be obtained on the Commission's Web site at http://www.sec.gov and at prescribed
rates by writing to the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549.

2
<PAGE> 4

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by and should be read in
conjunction with the more detailed information and financial statements and
related notes appearing elsewhere or incorporated by reference in this
Prospectus. Unless otherwise indicated, all information in this summary and
elsewhere in this Prospectus assumes that the Underwriters' over-allotment
option has not been exercised. Unless the context indicates otherwise, as used
in this Prospectus the term "Company" refers to Intermet, its consolidated
subsidiaries and their respective predecessors. The Company acquired Sudbury,
Inc. ("Sudbury") on December 21, 1996. Such acquisition is sometimes referred to
herein as the "Sudbury Acquisition." Unless otherwise indicated, financial and
operating data presented herein for 1996 on a pro forma basis give effect to the
Sudbury Acquisition as if it had occurred on January 1, 1996.

THE COMPANY

GENERAL

The Company is the largest independent producer of ductile iron castings in
the world, specializing in the design and manufacture of complex,
precision-engineered ductile and gray iron and aluminum cast products for the
global light truck, passenger car and heavy duty vehicle markets. The Company's
products include cast components used in vehicle axles, chassis, engines and
transmissions. In addition, the Company provides a range of other products and
services, including machining, to the automotive, industrial and appliance
markets. In 1996, approximately 45% of the Company's pro forma sales were to the
North American light truck market, 29% to the North American passenger car
market, 11% to the European light and heavy duty vehicle markets and 15% to
other markets, including the industrial and appliance markets. The Company
provides cast products used by over 20 automobile original equipment
manufacturers ("OEMs") and their leading suppliers throughout the world,
including Chrysler, Ford, General Motors, BMW, Honda, ITT Automotive, Dana and
LucasVarity. The Company's net sales in 1996 were $534 million and, pro forma
with the Sudbury Acquisition, were $838 million. The Company's 1996 pro forma
sales to the light truck and passenger car markets were approximately 43% to
OEMs and 42% to Tier 1 OEM suppliers. In 1994, the Company launched efforts to
improve operating efficiencies, enhance customer service and reduce
administrative overhead, which contributed to a significant expansion of its
operating profit margin from 0.3% in 1994 to 10.5% in 1996.

The Company focuses on supplying precision cast products that require
advanced technological and engineering expertise to a broad array of automotive
and industrial customers. OEMs and, in turn, Tier 1 and Tier 2 OEM suppliers,
are increasingly relying on their suppliers to design and engineer parts based
on specific design parameters, including weight, size, cost and performance
criteria, and to solve problems arising in the design and manufacturing process.
The Company believes that it is well positioned to benefit from these trends by
leveraging its broad range of full-service capabilities, including advanced
design and engineering, casting, machining and sub-assembly.

With a total casting capacity of 620,000 tons per year, the Company is the
largest independent ductile iron foundry company in the world. The Company
believes that the market for ferrous and non-ferrous castings is highly
fragmented with approximately 3,000 suppliers in the United States alone. The
Company believes that its strong reputation in the industry and leadership in
its core markets position it to capitalize on domestic and international
consolidation and OEM outsourcing trends. These trends are driven in part by the
OEMs' strategy to lower costs and maintain quality by selectively awarding
contracts to suppliers that have full-service capabilities and a significant
global presence. Responding to these trends, the Company's Sudbury Acquisition
significantly increased its ferrous casting capacity and expanded its
capabilities by adding aluminum die casting. The Company's November 1996
investment in IWESA GmbH ("IWESA"), a German-based precision machining company,
further expanded its presence and machining capabilities in Europe.
3
<PAGE> 5

STRATEGY

The Company's strategy is to maximize shareholder value and enhance
profitability by leveraging its full-service capabilities, focus on value-added
cast products, advanced design and engineering expertise and efficient
manufacturing capabilities to meet customer needs in its core cast products
business. Key elements of the Company's operating and growth strategies include:

OPERATING STRATEGY

Full-Service Supplier with Broad Metallurgical Capabilities. The Company is
a full-service supplier at the component level with design, engineering,
casting, machining and assembly capabilities. The Company's capabilities allow
it to supply its customers with the full range of services that they may
require, from initial design and engineering of the casting to final delivery,
including machining and sub-assembly. In addition, the Company offers its
customers diverse metallurgical capabilities that are among the most advanced in
the industry, including ductile and gray iron casting, lost foam aluminum
casting and aluminum and zinc die casting. The Company's machining operations
offer CNC (computer-numerical-controlled) and dedicated/special machining
capabilities. The Company believes the breadth and diversity of its capabilities
distinguish the Company within its markets by positioning it to offer its
customers low cost, high quality casting solutions utilizing alternative
materials or processes. For example, the Company has developed customer
applications using higher strength ductile iron materials to cost effectively
convert certain forging applications to castings. Such development is supported
by the Company's dedicated research foundry in Lynchburg, Virginia, which
includes self-contained melting, molding and laboratory equipment and broad
metallurgical, physical and chemical testing capabilities.

Focus on Value-Added Cast Products. As part of its core business, the
Company focuses on high value-added cast products. Specifically, an estimated
85% of the Company's cast products are incorporated as critical elements to
axle, chassis, engine and transmission systems on vehicles. As such, the
majority of these castings require advanced design, engineering and
manufacturing expertise to ensure high-quality performance and reliability as
they are often critical to controlling key power and safety-related functions of
a vehicle. The Company believes that its focus on high value-added cast products
distinguishes it in the foundry industry.

Advanced Design and Engineering Capabilities. The Company believes it is
one of the few independent foundry companies fully capable of designing and
engineering products based on customer specifications. The Company's advanced
capabilities include finite element analysis, design optimization, prototyping,
modeling enhancements and testing. The Company uses three-dimensional solid
modeling software in conjunction with rapid prototype development, among other
advanced computer-aided design techniques, to assist its customers in the
initial stages of product design and prototype creation. These techniques
greatly enhance the Company's design flexibility and, depending on the
complexity of the products, can substantially reduce the time required to
produce sample castings. The Company's goal is to continually improve product
quality and performance and to reduce costs by offering new product solutions
that reduce weight, use alternative materials or incorporate more efficient
manufacturing processes. The Company's product and manufacturing process
development work has included the development of new products and processes that
can broaden the Company's overall product offerings and capabilities as well as
cost-effectively substitute for existing products and manufacturing processes.
The Company believes that its advanced design and engineering capabilities serve
as a significant competitive advantage as its customers continue to outsource
these critical activities to their suppliers.

The Company believes that it enjoys a reputation for quality products and
maintains high quality standards and procedures, including manufacturing control
plans, change management, problem solving and root cause analysis and advanced
product quality planning. The Company also uses advanced electronic equipment to
continuously test and monitor its manufacturing processes to maintain the
quality and performance of its products. As evidence of its commitment to
quality, nine of the Company's ten foundries that supply the automotive industry
are QS-9000 or ISO 9000 certified, with the remaining foundry scheduled to
complete the QS-9000 certification process by the end of 1997.

GROWTH STRATEGY

Internal Growth. The Company's internal growth strategy is focused on (i)
increasing customer and market penetration of its products by leveraging its
strong relationships with existing customers and (ii) continually seeking new
customers and markets while developing new product applications in its core cast
products business. The Company uses cross-functional teams, including
engineering, sales, quality assurance and manufacturing personnel, that focus on
specific customer requirements at all phases of the product development cycle,
from component design and development to manufacture and delivery. Through
collaborative relationships with its customers, the Company has been able to
identify new business opportunities as well as anticipate and react on a timely
basis to customer needs and problems. The Company believes these relationships,
combined with the trend among OEMs to downsize their in-house foundry operations
and increase outsourcing, have resulted in opportunities for growth.

Global Expansion Through Strategic Acquisitions and Alliances. Strategic
acquisitions and alliances have been, and management believes will continue to
be, an important element in the Company's worldwide growth and in its efforts to
capitalize on the consolidation and outsourcing trends in its markets.
Specifically, the Company will seek acquisitions and alliances that complement
its existing products and processes, strengthen its technological capabilities
and customer relationships and provide the Company with growth opportunities in
new product and geographic markets, as recently demonstrated by the Sudbury
Acquisition and the Company's investment in IWESA. The Company's goal is to
expand and enhance its manufacturing and support services while increasing
shareholder value by acquiring additional manufacturing facilities and by
entering into joint ventures and partnerships in North America, Europe, Latin
America and other international markets. In pursuing its acquisition strategy to
expand its presence in its core cast products business, the Company has
acquired, and expects it may acquire in the future, collateral non-core
businesses. The Company will continue to review non-core businesses for
strategic fit and possible divestiture.

THE OFFERING

<TABLE>
<S> <C>
Common Stock Offered by Selling Shareholders................ 3,000,000 shares(1)
Common Stock Outstanding Prior to the Offering.............. 25,238,374 shares(2)
Common Stock to be Outstanding after the Offering........... 25,238,374 shares(2)
Use of Proceeds............................................. The Company will not receive any of the
proceeds of the Offering.
Nasdaq National Market Symbol............................... INMT
</TABLE>

- -------------------------
(1) Does not include 450,000 shares of Common Stock subject to the Underwriters'
over-allotment option.

(2) Does not include 1,338,000 shares of Common Stock subject to stock options
outstanding as of July 31, 1997.

-------------------------

The Company is incorporated under the laws of the State of Georgia. The
principal executive offices of the Company are located at 5445 Corporate Drive,
Suite 200, Troy, Michigan 48098-2683, and its telephone number is (248)
952-2500.
5
<PAGE> 7

SUMMARY FINANCIAL DATA

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
----------------------------------------- ------------------------------
PRO PRO
FORMA FORMA
1994 1995 1996 1996(1) 1996 1996(1) 1997
-------- -------- -------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales.......................... $501,269 $541,749 $534,478 $837,880 $277,940 $430,335 $420,389
Operating profit (loss)............ 1,728 52,815 56,103 75,575 34,406 45,521 41,306
Net income (loss).................. (10,985) 25,395 43,153 47,326 19,624 23,199 22,086
Income (loss) per common share -
primary(2)....................... $ (0.45) $ 1.02 $ 1.69 $ 1.85 $ 0.77 $ 0.91 $ 0.86
Cash dividends per share........... -- -- $ 0.08 -- $ 0.08
Weighted average shares
outstanding...................... 24,591 24,893 25,467 25,467 25,483 25,483 25,640
OTHER DATA:
Expenditures for property, plant
and equipment.................... $ 24,873 $ 24,442 $ 26,025 $ 8,194 $ 18,672
Depreciation
and amortization................. 29,035 28,115 26,853 14,475 18,582
EBITDA(3).......................... 30,763 80,930 82,956 48,881 59,888
</TABLE>

<TABLE>
<CAPTION>
AS OF DECEMBER 31, AS OF
------------------------------ JUNE 30,
1994 1995 1996 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total assets....................... $306,264 $274,071 $526,312 $522,936
Long term debt..................... 99,715 35,271 162,153 181,518
Shareholders' equity............... 67,971 98,028 141,102 158,846
</TABLE>

(2) Income (loss) per common share - primary amounts are based on the weighted
average number of shares outstanding during the period, after giving effect
to the exercise of options and assuming the repurchase, at fair market
value, of shares using the proceeds from such exercise, unless the effect is
antidilutive.

(3) "EBITDA" represents operating profit (loss) plus depreciation and
amortization.
6
<PAGE> 8

RISK FACTORS

A potential investor should consider carefully all of the information
contained in this Prospectus before deciding whether to purchase the Common
Stock offered hereby and, in particular, should consider the following:

NATURE OF AUTOMOTIVE INDUSTRY

The Company's principal operations are directly related to domestic and
foreign automotive vehicle production. Automotive sales and production are
cyclical and somewhat seasonal and can be affected by the strength of a
country's general economy. In addition, automotive production and sales can be
affected by labor relations issues (including strikes and other work stoppages),
regulatory requirements, trade agreements, consumer spending trends and other
factors. For example, the Company's results of operations for the first six
months of 1997 were adversely affected by strikes at certain Chrysler and
General Motors' facilities. A decline in automotive sales and production could
result in a decline in the Company's results of operations or financial
condition. See "Business -- Cyclicality and Seasonality."

RELIANCE ON MAJOR CUSTOMERS AND CERTAIN MODELS

Two of the Company's customers, Chrysler and Ford, accounted for
approximately 20% and 18%, respectively, of the Company's pro forma sales for
the year ended December 31, 1996. Although the Company has purchase orders from
many of its customers, such purchase orders generally provide for supplying the
customer's annual requirements for a particular model or assembly plant,
renewable on a year-to-year basis, rather than for manufacturing a specific
quantity of products. The loss of any one of its major customers or a
significant decrease in demand for certain key models or a group of related
models sold by any of its major customers could have a material adverse effect
on the Company. There is substantial and continuing pressure from OEMs to reduce
costs, including the cost of products purchased from outside suppliers. Certain
of the Company's products are sold under agreements that require the Company to
provide annual cost reductions to such purchasers (directly through price
reductions or indirectly through suggestions regarding manufacturing
efficiencies or other cost savings) by certain percentages each year. There can
be no assurance that the Company will be able to generate such cost savings in
the future. If the Company were unable to generate sufficient cost savings in
the future to offset such price reductions, the Company's profit margins could
be adversely affected. See "Business -- Customers and Marketing."

RISKS ASSOCIATED WITH OBTAINING BUSINESS FOR NEW AND REDESIGNED MODEL
INTRODUCTIONS

The Company principally competes for new business both at the beginning of
the development of new models and upon the redesign of existing models by its
major customers. New model development generally begins two to five years prior
to the marketing of such models to the public, and existing business generally
lasts for the model life cycle. Due to previous capacity constraints, the
Company did not aggressively pursue new sales opportunities from 1993 through
early 1995 which has created a "selling gap." This selling gap has resulted in
the Company's current underutilization of capacity at certain of its foundries
and relatively flat sales since 1994. Although the Company believes it has
addressed the selling gap with aggressive sales efforts commencing in 1995, the
long development and sales cycle of new and redesigned models, combined with the
specialized nature of many of the Company's foundries, could lead to further
variances in capacity utilization at the Company's foundries. In addition, the
Company also frequently implements new technologies and manufacturing processes
when launching new products. In order to meet its customers' requirements, the
Company may be required to supply its customers regardless of cost and
consequently suffer an adverse impact to operating profit margins. The Company
is currently experiencing product launch difficulties at its lost foam aluminum
castings facility. Although management believes it has implemented corrective
actions, no assurance can be given such actions will resolve all of these
operational difficulties or that the Company will not encounter similar
difficulties when implementing new technologies in future product launches, any
of which could adversely affect the Company.

7
<PAGE> 9

RISKS ASSOCIATED WITH ACQUISITION STRATEGY

Acquiring businesses that complement the Company's existing business
continues to be an important element of the Company's strategy for achieving
profitable growth. There can be no assurance that suitable acquisition
candidates will be identified and acquired in the future, that financing for any
such acquisitions will be available on satisfactory terms, that the Company will
be able to accomplish its strategic objectives as a result of any such
acquisition or that any business or assets acquired by the Company will be
integrated successfully into the Company's operations. The Company continually
evaluates possible acquisitions and engages in discussions with acquisition
candidates from time to time.

ENVIRONMENTAL MATTERS

Companies in the foundry industry must comply with numerous federal, state
and local environmental laws and regulations. The chief environmental issues for
the Company's foundries are air emissions and solid waste disposal. The Company
has implemented recordkeeping, management procedures and practices for the
purpose of complying with environmental laws and regulations and the Company
believes it is in material compliance with these laws and regulations. However,
the Company's practices have, in certain instances, resulted in non-compliance
with the environmental laws and regulations and in fines and expenses related
thereto, and there can be no assurance that the Company will be able to comply
with all environmental laws and regulations in the future or that the costs and
expenses thereof or resulting from any non-compliance would not have a material
adverse effect on the Company's financial condition or results of operations.
See "Business -- Environmental Matters" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources."

CAUTIONARY STATEMENTS FOR PURPOSES OF THE "SAFE HARBOR"
PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

This Prospectus contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. When used in this
document, the words "anticipate," "believe," "estimate," and "expect" and
similar expressions are generally intended to identify forward-looking
statements. Prospective investors are cautioned that any forward-looking
statements, including statements regarding the intent, belief, or current
expectations of the Company or its management, are not guarantees of future
performance and involve risks and uncertainties, and that actual results may
differ materially from those in the forward-looking statements as a result of
various factors including, but not limited to: (i) general economic conditions
in the markets in which the Company operates; (ii) fluctuations in worldwide or
regional automobile and light and heavy truck production; (iii) labor disputes
involving the Company or its significant customers; (iv) changes in practices
and/or policies of the Company's significant customers toward outsourcing
automotive components and systems; (v) other risks detailed from time to time in
the Company's filings with the Commission; and (vi) those items identified under
"Risk Factors." The Company does not intend to update these forward-looking
statements.

8
<PAGE> 10

USE OF PROCEEDS

The shares of Common Stock offered hereby will be sold by the Selling
Shareholders. See "Selling Shareholders." The Company will not receive any of
the proceeds from the Offering.

CAPITALIZATION

The following table shows the capitalization of the Company as of June 30,
1997. This table should be read in conjunction with the Company's Interim
Condensed Consolidated Financial Statements and related Notes appearing
elsewhere in this Prospectus.

<TABLE>
<CAPTION>
AS OF JUNE 30, 1997
-------------------
(IN THOUSANDS)
<S> <C>
Long Term Debt:
Long term debt due within one year........................ $ 1,891
Long term debt due after one year......................... 179,627
--------
Total Long Term Debt................................... $181,518
Shareholders' Equity:
Preferred stock, 5,000,000 shares authorized; none
issued................................................. $ --
Common stock, $.10 par value, 50,000,000 shares
authorized; 25,225,374 shares issued and outstanding
(1).................................................... 2,523
Capital in excess of par value............................ 60,922
Retained earnings......................................... 98,337
Accumulated translation adjustments....................... (2,331)
Minimum pension liability adjustment...................... (485)
Unearned restricted stock................................. (120)
--------
Total Shareholders' Equity............................. $158,846
--------
Total Capitalization................................... $340,364
========
</TABLE>

- -------------------------
(1) Does not include 1,351,000 shares of Common Stock subject to outstanding
stock options as of June 30, 1997.

9
<PAGE> 11

PRICE RANGE OF COMMON STOCK AND DIVIDENDS

The Common Stock is quoted on the Nasdaq National Market under the symbol
"INMT." The following table shows, for the periods indicated, the range of high
and low reported sale prices per share for the Common Stock as quoted on the
Nasdaq National Market and the cash dividends declared per share.

<TABLE>
<CAPTION>
CASH
DIVIDENDS
HIGH LOW PER SHARE
-------- ------- ---------
CALENDAR 1995
Quarter ended:
<S> <C> <C> <C>
March 31, 1995............................................ $ 8.125 $ 6.250 --
June 30, 1995............................................. 9.750 7.625 --
September 30, 1995........................................ 12.625 9.500 --
December 31, 1995......................................... 14.125 9.500 --
CALENDAR 1996
Quarter ended:
March 31, 1996............................................ $ 13.375 $ 9.750 --
June 30, 1996............................................. 17.625 12.000 --
September 30, 1996........................................ 14.375 10.375 $0.04
December 31, 1996......................................... 16.250 10.125 0.04
CALENDAR 1997
Quarter ended:
March 31, 1997............................................ $ 17.250 $11.750 $0.04
June 30, 1997............................................. 16.625 11.125 0.04
September 30, 1997 (through July 31, 1997)................ 17.250 15.500 0.04
</TABLE>

On July 31, 1997, the last reported sale price of the Common Stock as
quoted on the Nasdaq National Market was $16 3/8. As of July 28, 1997, there
were approximately 557 holders of record of the Common Stock.

10
<PAGE> 12

SELECTED CONSOLIDATED FINANCIAL DATA

The following table sets forth selected financial data for the Company and
should be read in conjunction with the financial statements and related notes
appearing elsewhere in this Prospectus. The selected financial data as of and
for the five years ended December 31, 1996 have been derived from the Company's
Consolidated Financial Statements, which were audited by Ernst & Young LLP, the
Company's independent accountants. The financial data for the six months ended
June 30, 1996 and June 30, 1997 are derived from the unaudited Interim Condensed
Consolidated Financial Statements. The unaudited Interim Condensed Consolidated
Financial Statements include all adjustments, consisting only of normal
recurring accruals, which the Company considers necessary for a fair
presentation of the financial position and the results of operations for that
period. Operating results for the six months ended June 30, 1997 are not
necessarily indicative of the results that may be expected for the entire year
ending December 31, 1997.

The following table also sets forth the pro forma financial information for
the Company for the year ended December 31, 1996 and the six months ended June
30, 1996, giving effect to the Sudbury Acquisition as if it occurred on January
1, 1996. These results are not necessarily indicative of the financial results
of the combined entity in the future. The pro forma data presented below should
be read in conjunction with the financial statements and related notes appearing
elsewhere in this Prospectus.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
---------------------------------------------------------------- -------------------------------
PRO FORMA PRO FORMA
1992 1993 1994 1995 1996 1996(1) 1996 1996(1) 1997
-------- -------- -------- -------- -------- --------- -------- --------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:

Net sales.................. $401,951 $444,214 $501,269 $541,749 $534,478 $837,880 $277,940 $430,335 $420,389
Operating profit (loss).... 5,830 (23,486) 1,728 52,815 56,103 75,575 34,406 45,521 41,306
Interest expense, net...... (4,054) (5,490) (6,803) (6,079) (1,653) (12,876) (992) (6,618) (5,710)
Other, net................. 531 (159) (14) (1,216) (128) (303) (44) 83 (1,407)
-------- -------- -------- -------- -------- -------- -------- -------- --------
Income (loss) before income
taxes, minority interest
and cumulative effect of
accounting changes....... $ 2,307 $(29,135) $ (5,089) $ 45,520 $ 54,322 $ 62,396 $ 33,370 $ 38,986 $ 34,189
Provision (benefit) for
income taxes............. 4,310 (8,512) 5,896 20,125 11,169 15,070 13,746 15,787 12,103
Minority interest in loss
of subsidiary............ 488 119 -- -- -- -- -- -- --
-------- -------- -------- -------- -------- -------- -------- -------- --------
Income (loss) before
cumulative effect of
accounting changes....... $ (1,515) $(20,504) $(10,985) $ 25,395 $ 43,153 $ 47,326 $ 19,624 $ 23,199 $ 22,086
Cumulative effect on prior
years of changes in
accounting for:
Postretirement
benefits........... (34,544) -- -- -- -- -- -- -- --
Income taxes......... 6,123 -- -- -- -- -- -- -- --
-------- -------- -------- -------- -------- -------- -------- -------- --------
Net income (loss).......... $(29,936) $(20,504) $(10,985) $ 25,395 $ 43,153 $ 47,326 $ 19,624 $ 23,199 $ 22,086
======== ======== ======== ======== ======== ======== ======== ======== ========
Income (loss) per common
share(2):
Income (loss) before
cumulative effect of
accounting changes..... $ (0.06) $ (0.83) $ (0.45) $ 1.02 $ 1.69 $ 1.85 $ 0.77 $ 0.91 $ 0.86
Cumulative effect on
prior years of changes
in accounting for:
Postretirement
benefits........... (1.52) -- -- -- -- -- -- -- --
Income taxes......... 0.27 -- -- -- -- -- -- -- --
-------- -------- -------- -------- -------- -------- -------- -------- --------
Primary.................. $ (1.31) $ (0.83) $ (0.45) $ 1.02 $ 1.69 $ 1.85 $ 0.77 $ 0.91 $ 0.86
Cash dividends per
share.................. $ 0.16 $ 0.12 -- -- $ 0.08 -- $ 0.08
Weighted average shares
outstanding.............. 22,783 24,564 24,591 24,893 25,467 25,467 25,483 25,483 25,640
OTHER DATA:
Expenditures for property,
plant and equipment...... $ 51,783 $ 41,018 $ 24,873 $ 24,442 $ 26,025 $ 8,194 $ 18,672
Depreciation and
amortization............. 22,996 26,583 29,035 28,115 26,853 14,475 18,582
EBITDA(3).................. 28,826 3,097 30,763 80,930 82,956 48,881 59,888

<CAPTION>
AS OF DECEMBER 31, AS OF
---------------------------------------------------- JUNE 30,
1992 1993 1994 1995 1996 1997
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:

Current assets............. $ 89,265 $108,629 $122,617 $103,072 $189,294 $190,661
Total assets............... 274,457 307,458 306,264 274,071 526,312 522,936
Current liabilities........ 58,859 77,468 93,531 88,752 171,368 121,307
Long term debt............. 76,751 95,854 99,715 35,271 162,153 181,518
Shareholders' equity....... 101,054 75,532 67,971 98,028 141,102 158,846
</TABLE>

- -------------------------
(1) Gives effect to the Sudbury Acquisition as if it had occurred on January 1,
1996 and includes proforma adjustments for interest expense on debt incurred
to fund the Sudbury Acquisition, amortization of goodwill, depreciation for
adjustment to fair market of fixed assets and the related income tax
effects.
(2) Income (loss) per common share amounts are based on the weighted average
number of shares outstanding during the period, after giving effect to the
exercise of options and assuming the repurchase, at fair market value, of
shares using the proceeds from such exercise, unless the effect is
antidilutive.

(3) "EBITDA" represents operating profit (loss) plus depreciation and
amortization.

11
<PAGE> 13

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

The Company, through its operating subsidiaries in North America and
Europe, is the largest independent producer of ductile iron castings in the
world. The Company's cast products are used primarily in passenger cars and
light trucks, as well as heavy trucks and industrial applications.

The Company significantly expanded its operations in December 1996 with the
acquisition of Sudbury for $182.4 million. The transaction was accounted for as
a purchase and resulted in the Company recording $82.6 million of goodwill,
which is being amortized over 40 years. To fund the Sudbury Acquisition, the
Company borrowed approximately $154 million under its revolving credit facility.

Sudbury had approximately $300 million of sales in 1996 and manufactures
iron, aluminum and zinc castings, primarily for the automotive, appliance and
construction markets. Sudbury also provides custom coatings and precision
machining services and manufactures cranes, truck bodies and related equipment.
Because Sudbury was acquired in late 1996, it is fully reflected in the
Company's December 31, 1996 consolidated balance sheets. Sudbury's 1996 results
of operations from the date of acquisition (December 21, 1996) to year end were
not considered significant. The Company's 1997 results of operations reflect
Sudbury's operations from January 1, 1997, as well as increased interest expense
and goodwill amortization resulting from the acquisition.

The Company's 1996 net income was positively impacted by a one-time
adjustment for tax benefits of $11.5 million (or $0.45 per share) due to the
increased viability of realizing future tax benefits against future income. The
Company has additional unrecorded tax benefits the utilization of which are
subject to certain conditions and limitations and as a result, the Company does
not anticipate that its future earnings will receive a similar benefit of this
magnitude. See Note 10 to Notes to Consolidated Financial Statements appearing
elsewhere in this Prospectus.

FIRST SIX MONTHS OF 1997 COMPARED TO FIRST SIX MONTHS OF 1996

Sales for the six month period ending June 30, 1997 increased $142.4
million (or 51.3%) over the same period in 1996. This increase in sales relates
primarily to the Sudbury Acquisition in late December 1996. Domestic sales
during the six months ended June 30, 1997, excluding Sudbury, were approximately
$5.2 million (or 2.3%) lower than the comparable period in 1996. This is a
result of slower domestic light vehicle sales compounded by strikes at certain
Chrysler and General Motors plants. Sales at Wagner Castings (part of the
Sudbury Acquisition) for the six month period ended June 30, 1997 decreased
approximately $10.3 million from the same period in 1996. This decrease is a
result of Wagner Castings' decision to withdraw from the malleable iron
production business, without replacement, as some orders that were placed in
1996 were withdrawn in January 1997; and to a lesser extent, the effect of the
Chrysler strike. Sales at machining operations increased $9.3 million for the
six month period ended June 30, 1997 from the same period in 1996 due to the
launch of new products. European sales were up 0.4% for the year to date 1997
versus the same period for 1996. However, the negative effect of changes in the
exchange rates was $5.8 million (or 11%) for the six month period ended June 30,
1997, as compared to exchange rates in the same period in 1996.

12
<PAGE> 14

Gross profit for June 30, 1997 year to date was $55.9 million versus $44.1
million in 1996. This improvement was principally attributable to the
performance of the newly acquired Sudbury subsidiaries. Gross profit as a
percentage of sales for the six months ended June 30, 1997 was 13.3% compared to
15.9% for the corresponding period in 1996. This decrease is due primarily to
continued higher than anticipated costs associated with new product launches at
the Company's lost foam aluminum castings facility, the effect of the Chrysler
and General Motors strikes on capacity utilization and underutilized capacity at
certain other domestic foundries. In addition, the Sudbury subsidiaries in the
aggregate generate lower margins than pre-acquisition Intermet subsidiaries as a
whole. Gross margins for the second quarter of 1996 were higher because this
period was the last quarter before the significant production launch at the lost
foam aluminum plant and the last quarter in which the Ford F-150 I-beam program
was produced at the Ironton facility.

Selling, general and administrative expenses as a percentage of sales for
the six month periods ending June 30, 1997 and 1996 remained constant at 3.5%.

Interest expense increased to $6.1 million for the six months ended June
30, 1997 from $1.4 million for the same period in 1996. This was a result of an
increase in borrowings that were used principally to finance the Sudbury
Acquisition and, to a lesser extent, to fund accounts receivable.

1996 COMPARED TO 1995

Sales in 1996 were $7.3 million (1%) lower than in 1995 reflecting the loss
of sales from certain divested businesses (about $30 million), the phase out of
the Ford F-150 I-beam program without replacement and unfavorable foreign
exchange rates. Despite these adverse situations, sales increased by
approximately 6% for plants operating in both years as a result of the
relatively stable economic conditions in the automotive market and strong demand
on some of the platforms in that market. Sales of aluminum castings were lower
than expected with the high proportion of development products lowering the
productive capacity of the production line.

Gross profit decreased $6.6 million in 1996 over 1995 with a corresponding
decline in the consolidated gross margin from 15.6% of sales in 1995 to 14.6% in
1996. Margins remained constant or improved at most plants; however, a reduction
in gross margin was experienced at one plant due to the effect of high fixed
costs and the phase out of the F-150 I-beam program. Margin was further eroded
by the intense development efforts and building expansion at the Company's lost
foam aluminum castings facility.

Selling, general and administrative expenses of $21.8 million were reduced
by $9.8 million from 1995 levels as a result of the full year impact of
decentralization of corporate functions in 1995 as well as further cost
reductions and process improvements put in place in 1996. Additionally, 1995
also included a one-time charge for the relocation of the corporate offices from
Atlanta to Detroit.

Operating profit improved $3.3 million (6%) to $56.1 million in 1996 versus
$52.8 million in 1995. Amounts in 1996 include expenses related to acquisition
investigation of $0.6 million.

Interest expense for 1996 was less than half of the prior year levels due
to lower average borrowings. For most of the year the Company was in a net debt
free position having more cash on hand than outstanding fixed debt. In addition,
interest income in 1996 of $1.4 million was $1.0 million greater than in 1995.

The Company recorded a consolidated tax provision of $11.2 million in 1996.
This amount is the net of statutory provisions less reduction in deferred
valuation allowance and utilization of net operating losses ("NOLs") and credit
carry forwards. Management of the Company believed that a consistent record of
profitability had been established; and thus the Company recorded a reduction in
the deferred tax valuation allowance of $11.5 million in accordance with
generally accepted accounting principles. The Company was also able to utilize
$2.1 million of NOLs and credit carry forwards. Management continues to pursue
the strategies that would enable the Company to utilize deferred tax assets that
are fully reserved at December 31, 1996.

13
<PAGE> 15

1995 COMPARED TO 1994

Sales in 1995 were $40.5 million (8%) higher than in 1994 and reflected the
relatively strong economy in North America, the strengthening economy in Europe
and favorable exchange rate changes. The Company utilized the additional
capacity gained earlier in the year by going to three-shift foundry operation as
well as the new production line which had started up at the Company's New River
foundry in late 1994 to meet customer demand. This increase occurred despite the
decline in sales resulting from the sale of two businesses. Sales increased 13%
for plants operating in both years, although the automotive market was weaker in
1995 compared to 1994.

Gross profit increased $42.0 million in 1995 over 1994. The consolidated
gross margin also improved substantially, rising to 15.6% of sales in 1995 from
8.5% in 1994 (10.3% exclusive of fourth quarter 1994 adjustments of $8.9 million
for equipment write-downs and write-off of goodwill related to a 1992
acquisition). Margins improved at all foundry operations in the Company,
especially the Company's New River foundry in Virginia. This improvement stemmed
from operational improvements and focused cost reduction programs addressing
yield rates, scrap, and procurement procedures.

Selling, general and administrative expenses were $31.6 million in 1995
compared to $40.7 million in 1994. The majority of previously performed
corporate functions were decentralized or eliminated during 1995.

Expenses were lowered $5.8 million from reduction in staffing and targeted
corporate cost reduction programs despite the one-time expense of relocating the
corporate offices from Atlanta to Detroit. The remaining decline in operating
expense resulted from the fourth quarter 1994 charge of $7.3 million for
retirement payments for the Company's former Chairman and Vice-Chairman;
severance pay and benefits for planned terminations due to a reorganization; and
a joint venture write-off.

The reorganization efforts allowed the Company to post much stronger profit
levels in 1995. Operating profit improved to $52.8 million versus the 1994
operating profit of $1.7 million ($18 million before the adjustments described
above) despite the Company's purchasing and beginning operation of an aluminum
castings business in fourth quarter 1995 and the unexpected costs of handling
the proposed acquisition of the Company by G.W.M., Inc. and Kelso & Company, L.P
($0.6 million).

Interest expense for 1995 was $0.5 million less than in the prior year, due
to lower level of borrowings and decreasing interest rates toward the end of
1995. In addition, only $88,000 of interest was capitalized in 1995 versus the
$0.7 million in capitalized interest in 1994 related to the New River foundry
expansion.

The Company recorded a consolidated income tax provision of $20.1 million
in 1995, which reflects a return to profitable domestic operations after three
years of losses. The consolidated tax rate was higher than the domestic income
tax rates due to the higher foreign tax rates on related earnings. No United
States federal income tax benefit related to prior consolidated domestic losses
were recognized in 1994.

LIQUIDITY AND CAPITAL RESOURCES

For the first six months of 1997, net cash provided by operating activities
was $20.6 million compared to $31.1 million for the same period in 1996. This
difference is due primarily to a substantial increase in accounts receivable
caused by increased sales. The Company's investing activities substantially
increased and include a $36.0 million payment for costs related to the Sudbury
Acquisition, as well as a $10.5 million increase in additions to property, plant
and equipment. Financing activities also increased significantly, principally as
a result of the increase in borrowings used to fund accounts receivable, and to
finance additional Sudbury Acquisition costs.

Cash and cash equivalents decreased to $7.4 million at June 30, 1997 from
$23.5 million at December 31, 1996. The Company declared a cash dividend of
$0.04 per share ($1.0 million in aggregate) for the holders of record on June 1,
1997.

On December 21, 1996, the Company completed a cash tender offer for the
outstanding stock of Sudbury. With the Company effectively owning 95.2% of
Sudbury as of December 31, 1996, Sudbury was consolidated into the Company's
December 31, 1996 balance sheets. The acquisition did not materially effect

14
<PAGE> 16

Intermet's operations in 1996 and therefore was not consolidated into the
Company's statement of operations. For the purposes of the following discussion,
information will be segregated to illustrate the impact of the Sudbury
Acquisition. Listed below are summarized balance sheet information as of
December 31, 1996 for the Company (in millions of dollars).

<TABLE>
<CAPTION>
CONSOLIDATED
INTERMET -----------------------
PRE-SUDBURY SUDBURY ELIMINATIONS INTERMET
----------- ------- ------------ --------
<S> <C> <C> <C> <C>
Assets:
Current Assets.............................. $143.3 $ 86.6 $ (40.6) $189.3
Net Property, Plant and Equipment........... 142.7 80.1 -- 222.8
Other Assets................................ 28.5 85.7 -- 114.2
------ ------ ------- ------
Total.................................... $314.5 $252.4 $ (40.6) $526.3
====== ====== ======= ======
Liabilities & Equity:
Current Liabilities......................... $ 92.4 $ 80.4 $ (1.4) $171.4
Long Term Debt.............................. 30.8 0.3 118.4 149.5
Other Liabilities........................... 50.2 14.1 -- 64.3
Shareholders Equity......................... 141.1 157.6 (157.6) 141.1
------ ------ ------- ------
Total.................................... $314.5 $252.4 $ (40.6) $526.3
====== ====== ======= ======
</TABLE>

Certain additional balance sheet data is summarized below (in millions of
dollars):

<TABLE>
<CAPTION>
AS OF DECEMBER 31 AS OF DECEMBER 31, 1996
----------------------- --------------------------
INTERMET CONSOLIDATED
1993 1994 1995 PRE-SUDBURY INTERMET
------ ------ ----- ----------- ------------
<S> <C> <C> <C> <C> <C>
Funded debt............................ $106.6 $107.4 $35.3 $ 33.0 $162.0
Shareholders' equity................... 75.5 68.0 98.0 141.1 141.1
Net working capital.................... 31.2 29.1 14.3 50.9 18.0
</TABLE>

Outstanding debt was reduced throughout 1996 to a low of $33.0 million
before the Sudbury Acquisition. The Company through its improved operating
results was in a net zero debt position until the last week in December. In
November 1996, the Company made an investment in IWESA using internally
generated funds. Capital expenditures in 1996 were slightly less than the level
of depreciation. As a result, the Company improved its debt-to-capital ratio to
19% before rising to 53% at December 31, 1996 as a result of borrowing $118.0
million to fund a portion of the Sudbury Acquisition. An additional $36.0
million of borrowings were required in 1997 in connection with the acquisition.

Shareholders' equity increased $17.7 million from $141.1 million at
December 31, 1996 to $158.8 million at June 30, 1997, surpassing any previous
level attained by the Company. The Company reinstituted a quarterly dividend
mid-year at $0.04 per share.

At June 30, 1997 the Company and its subsidiaries had approximately $45.9
million of unused borrowing capacity under its revolving credit facility.

The Company also has recurring costs related to environmental concerns,
particularly the management and disposition of waste (principally non-hazardous
waste) generated as part of ongoing operations. In 1996 and 1995 such costs
totaled approximately $9.0 million in each year. Although the Company continues
to take various steps to control these costs, they are expected to increase in
the future. In addition, a portion of the Company's capital expenditures are
regularly incurred to limit or monitor pollution, principally for ventilation
and dust control equipment. Such expenditures were approximately $2.6 million in
1996 and $2.0 million in 1995. The Company expects to spend $5.8 million in
capital in this area in 1997. The forward looking statement will be influenced
by revenue increases and available engineering resources.

All operating locations acquired by Sudbury since 1984 operate in a variety
of locations where environmental situations could exist based on current or past
operations. Certain operating and non-operating

15
<PAGE> 17

subsidiaries of Sudbury have been named as potentially responsible parties
liable for cleanup of known environmental conditions. For known environmental
situations, Sudbury, with the assistance of environmental engineers and
consultants, has accrued $3.4 million to cover estimated future environmental
expenditures. Sudbury has initiated remedial action and/or preventative
environmental projects that are intended to provide for the safe and lawful
operation of its facilities. There could exist, however, more extensive or
unknown environmental situations at existing or previously owned businesses for
which the future cost is not known or accrued at June 30, 1997.

While the ultimate result of the above contingencies cannot be predicted
with certainty, management does not expect these matters to have a material
adverse effect on the consolidated financial position or results of operations
of the Company.

16
<PAGE> 18

BUSINESS

GENERAL

The Company is the largest independent producer of ductile iron castings in
the world, specializing in the design and manufacture of complex,
precision-engineered ductile and gray iron and aluminum cast products for the
global light truck, passenger car and heavy duty vehicle markets. The Company's
products include cast components used in vehicle axles, chassis, engines and
transmissions. In addition, the Company provides a range of other products and
services, including machining, to the automotive, industrial and appliance
markets. In 1996, approximately 45% of the Company's pro forma sales were to the
North American light truck market, 29% to the North American passenger car
market, 11% to the European light and heavy duty vehicle markets and 15% to
other markets, including the industrial and appliance markets. The Company
provides cast products used by over 20 automobile original equipment
manufacturers ("OEMs") and their leading suppliers throughout the world,
including Chrysler, Ford, General Motors, BMW, Honda, ITT Automotive, Dana and
Lucas/Varity. The Company's net sales in 1996 were $534 million and, pro forma
with the Sudbury Acquisition, were $838 million. The Company's 1996 pro forma
sales to the light truck and passenger car markets were approximately 43% to
OEMs and 42% to Tier 1 OEM suppliers. In 1994, the Company launched efforts to
improve operating efficiencies, enhance customer service and reduce
administrative overhead, which contributed to a significant expansion of its
operating profit margin from 0.3% in 1994 to 10.5% in 1996.

With a total casting capacity of 620,000 tons per year, the Company is the
largest independent ductile iron foundry company in the world. The Company
believes that the market for ferrous and non-ferrous castings is highly
fragmented with approximately 3,000 suppliers in the United States alone. The
Company believes that its strong reputation in the industry and leadership in
its core markets position it to capitalize on domestic and international
consolidation and OEM outsourcing trends. These trends are driven in part by the
OEMs' strategy to lower costs and maintain quality by selectively awarding
contracts to suppliers that have full-service capabilities and a significant
global presence. Responding to these trends, the Company's Sudbury Acquisition
significantly increased its ferrous casting capacity and expanded its
capabilities by adding aluminum die casting. The Company's November 1996
investment in IWESA, a German-based precision machining company, further
expanded its presence and machining capabilities in Europe.

INDUSTRY TRENDS

The Company believes that a number of industry trends have had a positive
impact on the cast products market generally and the ductile iron cast products
market in particular. These trends include the following:

Cast Products Market. The cast products market includes ductile, gray and
high-alloy iron, aluminum, steel and various other metal castings used in
numerous durable goods, each with different underlying properties. Casting parts
are utilized generally because of their strength, durability and structural
nature as a component part. The composition of the cast products market in the
United States has undergone significant change over the past several decades.
According to industry sources, while total ductile iron shipments have increased
from 2.8% of total metalcast shipments in 1965 to 28% in 1996, the percentage of
gray iron shipments has declined from 72.3% to 43% during the same period. The
growth in the ductile iron market has been attributed to increased use of
ductile iron as a result of its favorable properties which include its strength,
ductility, and resistance to stress and mechanical shock. In contrast, the gray
iron market has decreased because gray iron castings are being replaced by
ductile iron and aluminum cast products; primarily in the automotive light truck
and heavy truck markets. According to industry sources, the value of ductile
iron

17
<PAGE> 19

shipments in 1996 was $3.9 billion, up 7.7% over 1995, largely as a result of
the conversion of gray iron to ductile iron and growth in the automotive, light
truck and heavy truck markets. Sales of aluminum cast products have increased
similarly, driven by the need for lighter vehicle weight.

Outsourcing. In the early 1980s, Ford, General Motors and Chrysler produced
a substantial portion of their cast production requirements through captive
foundries. Over the last several years, OEMs have increasingly outsourced their
needs for cast products rather than producing those parts internally, often
relying on suppliers to assist in the design and development of, and to
manufacture, machine, assemble, test and deliver the component. Intermet and
other companies have had a opportunity to benefit from the trend among OEMs to
outsource cast parts.

Foundry Consolidation. The number of ferrous foundries (ductile iron, gray
iron, malleable iron and steel) in the United States has declined significantly
from the late 1970's to approximately 3,000 today. The Company believes that
consolidation will continue as smaller foundries find it more difficult to
compete with larger professionally managed and better capitalized companies due
to increased capital requirements and the cost of regulatory compliance.

Automotive Supplier Consolidation. The automotive supply industry is
experiencing a period of significant consolidation. To lower costs and improve
quality, OEMs are reducing their supplier base by awarding sole-source contracts
to full-service suppliers who are able to provide design, engineering and
program management capabilities and can meet cost, quality and delivery
requirements. For suppliers such as the Company, this new environment provides
an opportunity to grow by obtaining business previously provided by other
non-full service suppliers and by acquiring suppliers that enhance product,
manufacturing and service capabilities. OEMs rigorously evaluate suppliers on
the basis of product quality, cost control, reliability of delivery, product
design capability, financial strength, new technology implementation, quality
and condition of facilities and overall management. Suppliers that obtain
superior ratings are considered for sourcing new business. Although these new
supplier policies have already resulted in significant consolidation of
component suppliers in certain segments, the Company believes that consolidation
will continue to provide attractive opportunities to acquire high-quality
companies that complement its existing business.

Global Sourcing. Regions such as Asia, Latin America and Eastern Europe are
expected to experience significant growth in vehicle demand over the next ten
years. OEMs are positioning themselves to reach these emerging markets in a
cost-effective manner by seeking to design and produce "world cars" that can be
designed in one vehicle center to a single global standard but produced and sold
in different geographic markets, thereby allowing OEMs to reduce design costs,
take advantage of low-cost manufacturing locations and improve product quality
and consistency. OEMs increasingly are requiring their suppliers to have the
capability to design and manufacture their products in multiple geographic
markets.

System/Modular Sourcing. OEMs are increasingly seeking suppliers capable of
providing complete systems or modules rather than suppliers who only provide
separate component parts. A system is a group of component parts that operate
together to provide a specific engineering driven functionality whereas a module
is a group of systems and/or component parts representing a particular area
within the vehicle, which are assembled and shipped to the OEM for installation
in a vehicle as a unit. By outsourcing complete systems or modules, OEMs are
able to reduce their costs associated with the design and integration of
different components and improve quality by enabling their suppliers to assemble
and test major portions of the vehicle prior to beginning production.

STRATEGY

18
<PAGE> 20

efficient manufacturing capabilities to meet customer needs in its core cast
products business. Key elements of the Company's operating and growth strategies
include:

OPERATING STRATEGY

Efficient, High Quality Manufacturing. In response to OEMs' increasingly
stringent demands, the Company has implemented manufacturing practices designed
to maximize product quality and timeliness of delivery while reducing waste and
inefficiency. The Company continuously explores methods to improve its
manufacturing efficiencies by utilizing modern and cost efficient equipment,
manufacturing processes and castings support systems. The Company conducts
extensive development programs that focus on creating new manufacturing
processes designed to lower costs and improve quality. As a result of its
efforts to improve manufacturing efficiencies, the Company has reduced
break-even operating levels of its production casting facilities that the
Company has operated since 1994 by approximately 15% from that time to the
present. The Company believes that it enjoys a reputation for quality products
and maintains high quality standards and procedures, including manufacturing
control plans, change management, problem solving and root cause analysis and
advanced product quality planning. The Company also uses advanced electronic
equipment to continuously test and monitor its manufacturing processes to
maintain the quality and performance of its

19
<PAGE> 21

products. As evidence of its commitment to quality, nine of the Company's ten
foundries that supply the automotive industry are QS-9000 or ISO 9000 certified,
with the remaining foundry scheduled to complete the QS-9000 certification
process by the end of 1997.

GROWTH STRATEGY

In November 1996, the Company purchased a 49% minority interest in IWESA
and made certain capital contributions in IWESA. During the second quarter of
1997, the Company's ownership interest in IWESA increased from 49% to 72%. The
Company expects to make additional capital contributions to IWESA. Consistent
with the Company's desire to focus on its core cast products business, the
Company believes its majority control of IWESA is likely to be temporary and the
Company intends to return to a minority position.

In October 1996, the Company reached an agreement in principle to purchase
a 50% ownership interest in Polcast Sp. zo.o, a ferrous castings foundry located
in Poland that currently generates a volume of approximately 10,000 metric tons
annually. The Company and the existing shareholders of Polcast have not executed
definitive documentation regarding such proposed purchase, and there can be no
assurance that such definitive documentation will be executed or that, if
executed, the terms will be the same as those contemplated by the agreement in
principle.

PRODUCTS

The Company focuses on value-added cast products that it supplies to the
automotive, industrial and appliance markets. In 1996, approximately 85% of the
Company's pro forma sales were attributable to the automotive market. Within
this market its products generally fall into four major categories including:
(i) engine components such as aluminum intake manifolds, camshafts, crankshafts
and bedplates; (ii) transmission components such as differential cases, pump
bodies and drums; (iii) chassis components such as steering gear housings, brake
housings and supports, steering knuckles, spindle carriers, damper forks and
lower control arms; and (iv) axle components such as differential cases and
carriers, bearing caps, hubs, spring seats and driveline yolks. The Company also
manufactures a variety of products for the industrial and appliance markets. In
1996, approximately 15% of the Company's pro forma sales were attributable to
the industrial and appliance markets.

20
<PAGE> 22

CUSTOMERS AND MARKETING

During 1996, 1995 and 1994, direct sales to Chrysler accounted for 23%, 20%
and 23%, respectively, of the Company's sales; direct sales to Ford accounted
for 19%, 18% and 23%, respectively, of the Company's sales; and direct sales to
General Motors accounted for 12%, 18% and 14%, respectively, of the Company's
sales. The loss of any of these customers or a substantial reduction in their
purchases from the Company would have a material adverse effect on the Company.
The Company's six largest customers accounted for approximately 72%, 77% and 79%
of the Company's consolidated net sales during 1996, 1995 and 1994,
respectively.

The following table sets forth information regarding the percentage of
sales by the Company to customers in these markets during 1996, 1995 and 1994.

<TABLE>
<CAPTION>
PRO
FORMA
1994 1995 1996
---- ---- -----
<S> <C> <C> <C>
North American passenger cars and light trucks.............. 76% 76% 74%
North American industrial................................... 9 7 15
European passenger cars and light trucks.................... 15 17 11
--- --- ---
Total Sales............................................ 100% 100% 100%
=== === ===
</TABLE>

In 1996 reported sales of the Company included 458,000 tons of casting
shipments, compared to 445,000 tons in 1995 and 419,000 tons in 1994. The
Company's foundries operated at 87% of average annual capacity in 1996 compared
to 89% during 1995, and 99% during 1994. The Company's overall capacity varies
depending on shift configuration, manufacturing processes and other factors.
Since 1994, the Company has increasingly focused on maximizing its available
foundry capacity.

The Company, directly or through Tier 1 and Tier 2 suppliers, currently
supplies its cast products to over 20 automotive OEMs. As a result, the
Company's cast products are included on more than 200 vehicle models. The
following table presents an overview of certain key platforms for which the
Company supplies products:

<TABLE>
<CAPTION>
CUSTOMER/PLATFORM MODEL
----------------- -----
<S> <C>
Light Trucks/Vans
Chrysler NS-Van..... Chrysler Minivans
Ford ECONOLINE...... Econoline Van
Ford UN105.......... Explorer
Ford F-Series....... F-150, 250, 350
GM T400/S/T
Pickup........... GM 1500, 2500, S10
Chrysler ZJ/WJ...... Grand Cherokee
Chrysler T300....... Ram Pickup

Passenger Cars
Toyota
CAMRY/AVALON..... Camry/Avalon
Honda CIVIC......... Civic
Ford CDW27.......... Contour/Mystique
Opel................ Kadett/Astra
CRONOS/CAPELLA...... Mazda MX6/626
Chrysler PL......... Neon
GM W................ Regal/Lumina/Grand Prix
Chrysler JA......... Stratus/Cirrus/Breeze
Ford DN101.......... Taurus/Sable
</TABLE>

The Company primarily markets its products through its own sales and
customer service staff, except in Europe and certain locations in the United
States where it also uses independent sales representatives. The

21
<PAGE> 23

Company maintains its principal sales office in Michigan. The Company produces
principally to customer order and does not maintain any significant inventory of
finished goods not on order.

The Company provides production and technical training to its sales staff.
This technical background enables the sales staff to act as an effective liaison
between customers and the Company's production personnel and permits the Company
to offer customer assistance at the design stage of major casting programs. The
Company also employs quality assurance representatives and engineers who work
with customers' manufacturing personnel to detect and avoid potential problems
and to develop new product opportunities for the Company. In addition to working
with customer purchasing personnel, the Company's sales engineers frequently
work closely with design engineers and other technical staff.

The Company has had a long-standing quality assurance program and is
committed to maintaining its reputation for high quality products and timely
delivery. All but one of the Company's foundry facilities that supply the
automotive industry have QS-9000 certification or are ISO 9000 certified and the
remaining foundry is scheduled to complete the certification process by the end
of 1997. Many of the Company's facilities have received quality awards,
including Pentastar, Q-1 and Targets of Excellence.

DESIGN AND ENGINEERING SUPPORT

The Company believes it is one of the few independent foundry companies
fully capable of designing and engineering products based on customer
specifications. The Company's advanced capabilities include finite element
analysis, design optimization, prototyping, modeling enhancements and testing.
The Company uses three-dimensional solid modeling software in conjunction with
rapid prototype development, among other advanced computer-aided design
techniques, to assist its customers in the initial stages of product design and
prototype creation. These techniques greatly enhance the Company's design
flexibility and, depending on the complexity of the products, can substantially
reduce the time required to produce sample castings. The Company's goal is to
continually improve product quality and performance and to reduce costs by
offering new product solutions that reduce weight, use alternative materials or
incorporate more efficient manufacturing processes. The Company's product and
manufacturing process development work has included the development of new
products and processes that can broaden the Company's overall product offerings
and capabilities as well as cost-effectively substitute for existing products
and manufacturing processes. The Company believes that its advanced design and
engineering capabilities serve as a significant competitive advantage as its
customers continue to outsource these critical activities to their suppliers.

MANUFACTURING AND MACHINING

The Company produces ductile and gray iron castings, as well as aluminum
castings. Gray iron, the oldest and most widely used cast iron, is readily cast
into intricate shapes that are easily machinable and wear resistant. Ductile
iron has greater strength and elasticity than gray iron, and its use as a higher
strength substitute for gray iron and a lower-cost substitute for steel has
grown steadily, while aluminum brings a lower weight alternative. For the years
ended December 31, 1996, 1995 and 1994, sales of ductile iron castings
represented 87%, 92% and 89%, and sales of gray iron represented 10%, 8% and
11%, respectively, of the Company's total sales (in dollars) of castings, the
balance being aluminum castings in 1996. The Company's castings range in size
from small pieces weighing less than one pound to castings weighing up to 125
pounds.

The cast iron production process involves melting steel scrap and pig iron
in cupola or electric furnaces, adding various alloys and pouring the molten
metal into molds made primarily of sand. The molten metal solidifies and cools
in the molds, and the molds are broken and removed. The lost foam aluminum
casting process utilizes exact polystyrene foam replicas of the desired castings
which are embedded in sand. The foam is evaporated by the hot metal and the
casting is formed.

Customers usually specify the properties their castings are to embody, such
as hardness and strength, and the Company determines how best to meet those
specifications. Constant testing and monitoring of the manufacturing process is
necessary to maintain the quality and performance consistency of the castings.
Electronic testing and monitoring equipment, including x-ray, cobalt gamma-ray,
ultrasonic and magnetic-particle testing equipment, is used extensively in
grading scrap metal, analyzing molten metal and testing

22
<PAGE> 24

castings. The Company also uses its testing equipment and procedures to provide
particular tests requested by a customer for its castings.

Many castings require machining (which may include drilling, threading or
cutting operations) before they can be put to their ultimate use. Most customers
provide their own machining for castings or have them machined by third parties.
The Company operates a facility in Columbus, Georgia, where it machines castings
produced by the Company and by others. The Company also currently owns a 72%
interest in IWESA, a precision machining and engineering company in Saarbrucken,
Germany, and a 35% interest in General Products Delaware Corporation, a
machining and assembly company headquartered in Jackson, Michigan. The Company
also contracts with other companies to machine castings it produces before
shipment to customers.

As a result of the Sudbury Acquisition, the Company also produces zinc and
aluminum die castings, cantilevered and hydraulic articulating and telescoping
truck-mounted cranes, tire handling equipment, specialty service vehicle truck
bodies and precision machined components for the automotive, construction,
utilities, tire service, railroad, forestry and municipalities industries.
Sudbury's high volume precision machining operation principally produces small
diameter shafts, spindles and spindle assemblies for the electric motor,
electric hand tool and vehicular markets.

In addition, Sudbury serves the automotive and appliance industries through
the application of coatings to metal parts, components and other finished
products. Powder coatings are used to enhance appearance and improve corrosion
protection of parts and are applied with 95 - 98% efficiency. Powder coating's
use of a dry paint process gives it environmental advantages over liquid
painting processes by eliminating the use of solvents and the generation of air
emissions. Sudbury's powder coating facilities have nine powder coating lines.
These facilities also have the capability of cathodic electrodeposition coating
of parts which is used primarily for anti-corrosion purposes.

RESEARCH AND DEVELOPMENT

The Company conducts process and product development programs, principally
at a separate research and development foundry located adjacent to the Archer
Creek facility in Lynchburg, Virginia. Current research and testing projects
encompass both new manufacturing processes and product development. The research
foundry has a self-contained melting and molding facility with complete
metallurgical, physical and chemical testing capabilities. The work on new
manufacturing processes is focused on ways to lower costs and improve quality.
Product development work includes projects to enhance existing iron castings,
such as austempering, which enhances the strength of iron, as well as projects
to develop new products, such as the conversion of forging applications to
castings. Amounts directly expensed by Intermet for research and development
totaled $1.0 million, $0.9 million and $1.5 million in 1996, 1995 and 1994,
respectively.

COMPETITION

The Company competes with many other foundries, both domestically and
internationally. Some of these foundries are owned by major users of iron
castings. For example, the three largest domestic automobile manufacturers,
which are among the Company's largest customers, operate their own foundries and
have greater financial resources than the Company. However, they also purchase a
significant amount of castings from the Company and others, and there is a trend
toward increased outsourcing by the domestic OEMs. Castings produced by the
Company also compete to some degree with malleable iron castings, other metal
castings and steel forgings.

The machining industry is highly fragmented and competitive. As in the
foundry industry, large purchasers of machined components often have significant
in-house capabilities to perform their own machining work.

The Company competes primarily on the basis of product quality,
engineering, service and price. The Company emphasizes its ability to produce
complex, precision-engineered products in order to compete for value-added
castings that generally provide a higher profit margin.

23
<PAGE> 25

RAW MATERIALS

The primary raw material used by the Company to manufacture ferrous
castings is steel scrap. The Company purchases steel scrap from numerous
sources, generally regional scrap brokers, using a combination of spot market
purchases and contract commitments. The Company has no long-term contractual
commitments with any steel scrap supplier. The cost of steel scrap is subject to
fluctuations, although the Company has contractual arrangements with many of its
major customers allowing it to adjust its casting prices to reflect such
fluctuations. In periods of rapidly rising steel scrap prices, these adjustments
will lag the current market price for steel scrap. In producing aluminum
castings, the primary raw material used by the Company is aluminum ingot. The
cost of aluminum ingot is subject to fluctuations, but the Company does not
anticipate any difficulty in obtaining aluminum ingot in the foreseeable future.

The Company has contractual arrangements, which expire at various times
through 1998, for the purchase of various materials, other than steel scrap,
used in or during the manufacturing process. These contracts and the Company's
overall level of purchases provide some protection against price increases. In
most cases the Company does not have specific arrangements in place to adjust
its casting prices for fluctuations in the prices of alloys and other materials.

CYCLICALITY AND SEASONALITY

Although most of the Company's products are generally not affected by
year-to-year automotive style changes, model changes may have a significant
impact on sales. In addition, the inherent cyclicality of the automotive
industry has affected the Company's sales and earnings during periods of slow
economic growth or recession. The Company's third and fourth quarter sales are
usually somewhat lower than first and second quarter sales due to plant closings
by automakers for vacations and model changeovers. See "Risk Factors."

FACILITIES

The Company currently owns, operates or has an ownership interest in nine
operational ductile and gray iron foundries, one lost foam aluminum foundry, one
aluminum and zinc die cast foundry and two research foundries. Most castings can
be produced at more than one of the Company's foundries except that lost foam
aluminum castings must be produced at Alexander City Casting and die castings
must be produced at Cast-Matic. In addition, the Company machines and provides
assemblies at one facility, performs various powder coating services at seven
separate facilities, manufactures precision machined components at one facility
and manufactures cantilevered cranes and specialty service vehicle truck bodies
at another facility.

24
<PAGE> 26

The following table provides information about the manufacturing locations
of the Company and the types of products produced at each location:

<TABLE>
<CAPTION>
NAME LOCATION TYPE OF PRODUCTS
---- -------- ----------------
<S> <C> <C>
Alexander City............. Alexander City, Alabama Aluminum castings
Archer Creek............... Lynchburg, Virginia Ductile iron castings
Ironton Iron............... Ironton, Ohio Ductile iron castings
Columbus................... Columbus, Georgia Ductile iron castings
Radford Shell.............. Radford, Virginia Ductile and gray iron castings
Columbus Neunkirchen....... Neunkirchen, Germany Ductile iron castings
New River.................. Radford, Virginia Ductile iron castings
Northern Castings.......... Hibbing, Minnesota Ductile iron castings
Wagner - Decatur........... Decatur, Illinois Ductile iron castings
Wagner - Havana............ Havana, Illinois Ductile iron castings
Cast-Matic................. Stevensville, Michigan Aluminum and zinc die castings
Intermet Machining......... Columbus, Georgia Machined components and assemblies
Industrial Powder Norwalk, Ohio (4 locations) Custom powder coating
Coatings................. Louisville, Kentucky Custom powder coating
Shelbyville, Kentucky Custom powder coating
Monterrey, Mexico Electrodeposition coating
Frisby P.M.C. ............. Elk Grove Village, Illinois High precision machined components
Iowa Mold Tooling.......... Garner, Iowa Metal fabrication of truck mounted cranes
and specialty service vehicle truck
bodies
</TABLE>

The Company continually reviews the operation of its foundries and may from
time to time close one or more foundries on a permanent or temporary basis due
to its production needs and general business and economic conditions. A
significant number of the assets of the Company's Pennsylvania foundry, which
was idled in 1991, were transferred to other Company facilities or sold during
the first six months of 1997. The Lower Basin foundry stopped pouring iron in
1993 and was closed completely in 1994.

The Company's principal research foundry is located in Lynchburg, Virginia.
The Company also currently owns a 72% interest in IWESA, a precision machining
and engineering company in Saarbrucken, Germany; and a 35% interest in General
Products Delaware Corporation, a machining and assembly company with facilities
in Jackson, Michigan and Angola, Indiana.

In addition, the Company leases certain executive, sales, and other
administrative offices, located in Michigan, Georgia and Ontario, Canada.

The only property of the Company which secures long-term indebtedness is
the Neunkirchen, Germany foundry, which secures indebtedness with an aggregate
outstanding principal balance at December 31, 1996 of DM 3.8 million ($2.4
million at the December 31, 1996 exchange rate). See Note 6 of Notes to the
Consolidated Financial Statements appearing elsewhere in this Prospectus for
additional information on secured debt.

EMPLOYEES

At June 30, 1997, the Company employed approximately 6,400 persons,
including approximately 5,700 in the United States. Of the persons employed in
the United States, approximately 4,600 were hourly manufacturing personnel, and
the remainder were clerical, sales and management personnel. The Company
employed approximately 610 persons in Germany, approximately 520 of whom were
hourly manufacturing personnel. The Company employed approximately 50 persons in
Mexico, 40 of whom were hourly manufacturing personnel. The Company employed
three salaried sales personnel in Canada. Most of the manufacturing personnel
are represented by unions under collective bargaining agreements expiring at
various times through the year 2000. Collective bargaining agreements covering
approximately 1,000 hourly employees were ratified in 1997 prior to their
expiration. Other collective bargaining agreements covering approximately 310
hourly employees are scheduled to expire in 1997. The Company anticipates that
such collective bargaining agreements will be extended on or before the dates of
their expiry.

25
<PAGE> 27

From time to time, the Company adjusts the size of its work force to meet
fluctuations in production demands at various facilities and for other reasons.
For example, the Company significantly reduced its salaried work force during
1995. During the past ten years the Company has not experienced any strike or
work stoppage, other than a five-week strike by the 69 covered employees at the
Hibbing, Minnesota plant during 1992. The Company believes that its relationship
with its employees is satisfactory.

ENVIRONMENTAL MATTERS

The Company's operations are subject to various federal, state and local
laws and regulations relating to the protection of the environment. These laws
and regulations, which are implemented principally by the United States
Environmental Protection Agency and corresponding state agencies, govern the
management of solid and hazardous waste, the discharge of pollutants into the
air and into surface and ground waters, and the manufacture, treatment and
disposal of hazardous and non-hazardous substances.

Certain of the Company's operating units have been identified as
potentially responsible parties in legal proceedings or otherwise notified that
they may be liable for the cleanup of hazardous substances under federal
"Superfund" and other environmental protection legislation. In addition, the
Company and certain of its operating units are in the process of attempting to
resolve certain known environmental matters with various third parties,
including those arising in connection with the sale of certain business units by
the Company and its present and former subsidiaries.

The Company intends to utilize available legal defenses with respect to
these sites at which environmental proceedings may be involved, to minimize the
Company's financial exposure to such matters. The Company, with the assistance
of environmental engineers and consultants, accrued as of June 30, 1997 a $5.4
million aggregate reserve to cover estimated known environmental conditions,
including those arising from such proceedings. There could also exist, however,
more extensive or unknown environmental conditions, including those arising at
existing or previously owned business units.

The Company also incurs recurring costs related to environmental matters,
particularly the management and disposition of waste (principally non-hazardous)
generated as part of its ongoing operations. Such costs totaled approximately
$9.0 million in each of 1995 and 1996, and are expected to increase in 1997. In
addition, a portion of the Company's capital expenditures are regularly incurred
to limit or monitor pollution, principally for ventilation, dust control
equipment and air pollution control. Such expenditures totaled approximately
$2.0 million in 1995, $2.4 million in 1996 and are expected to total
approximately $5.8 million in 1997. Operating expenses and capital expenditures
for environmental and pollution control matters will be influenced by certain
factors, including revenue increases and engineering resources.

In addition to these recurring and anticipated expenditures, the 1990
amendments to the federal Clean Air Act are expected to have a major impact on
the compliance costs of many U.S. companies, including foundries of the type
owned by the Company. Until final regulations implementing those amendments are
adopted by the federal and state governments, it is not possible to estimate
such costs.

The Company currently does not anticipate any environmental costs or
liabilities that would have a material adverse effect on its operations.
However, it cannot be assured that the Company's activities will not give rise
to actions by governmental agencies or private parties which could cause the
Company to incur fines, penalties, operational shutdowns, damages, cleanup costs
or other similar expenses. Also, the Company's foundry capacity levels and
increases therein are dependent upon the Company's ability to maintain, or
obtain increases in such capacity levels in its permits for air emissions or
water discharges. In the event the Company desires to increase its foundry
capacity levels in the future, it cannot be assured that the Company will be
able to obtain approvals of such increases under its applicable permits.

Although the Company continues to assess the potential liability of its
operating units for pending and anticipated legal proceedings, the ultimate
liability for such environmental matters cannot be predicted with certainty and
could exceed the Company's estimates.

26
<PAGE> 28

LEGAL PROCEEDINGS

With respect to the Company's Sudbury subsidiary, the Minnesota Pollution
Control Agency ("MPCA") issued Metalcote Grease and Oil Company ("Metalcote"), a
division of Western Capital Corporation which is a non-operating subsidiary of
Sudbury, an order in April 1993 to investigate and take other corrective action
at property Metalcote owned in St. Paul, Minnesota. This property was
subsequently transferred to Randolph Capital Corporation, a subsidiary of
Western Capital Corporation. Although Randolph Capital is currently contesting
its responsibility for environmental conditions that allegedly exist at the
property, Randolph Capital is cooperating with the MPCA and has retained legal
counsel and environmental consultants to respond to the MPCA order. Such
consultants conducted certain subsurface investigation in the Fall of 1996, and
the results of such investigation were submitted to the MPCA. Randolph Capital
also has submitted a claim under Minnesota Petroleum Tank Release Cleanup Act
(the "Minnesota Act") for reimbursement of the costs of the investigation at the
property, and may submit a claim for any future investigation or cleanup costs
incurred at this property. Under the Minnesota Act, such claims are limited to
$1 million per release and $2 million per facility. The Company has estimated
the future costs related to this matter as part of its environmental reserves.
Randolph Capital submitted a claim under the Minnesota Act for reimbursement of
certain costs of investigation at this property incurred in 1996, which claim
was paid to Randolph Capital in 1997. Randolph Capital may submit claims for any
future investigation or cleanup costs incurred at the site, although it cannot
be assured that such claims, if filed, will be paid. The actual future costs of
such matters are uncertain and could differ from the Company's estimates. (See
Note 8 of Notes to the Consolidated Financial Statements included elsewhere in
this Prospectus and "Environmental Matters" above).

Consultants on behalf of Sudbury have also completed certain environmental
investigations with respect to former operations by Metalcote at an adjacent
site in St. Paul Minnesota. In 1995, a release of petroleum products was
identified at the site and reported to the MPCA. In connection with the sale of
this property to an unrelated third party, Randolph Capital removed all of the
aboveground storage/processing tanks at the site and the MPCA issued a Voluntary
Petroleum Investigation Cleanup liability protection letter to the buyer. In
April and September 1996, environmental consultants for Randolph Capital
completed certain further investigation with respect to former operations of the
property. The MPCA has reviewed the April 1996 investigation results and is
currently reviewing the September 1996 investigation results. The buyer of the
former Metalcote property has also requested certain other investigation or
remediation with respect to potential environmental issues at the property, and
Randolph Capital's consultants and legal counsel are evaluating whether any
additional investigation or remediation will be necessary. Randolph Capital may
submit claims for any future investigation or cleanup costs incurred at the
site, although it cannot be assured that such claims, if filed, will be paid.
The actual future costs of such matters are uncertain and could differ from the
Company's estimates (See Note 8 of Notes to the Consolidated Financial
Statements included elsewhere in this Prospectus, and "Environmental Matters"
above).

The Company has entered into a consent order with the Office of the Ohio
Attorney General, which was filed in Ohio State Court, with respect to certain
past violations of Ohio water pollution laws and regulations by the Company's
Ironton, Ohio foundry. The Attorney General's Office advised the Company that it
could avoid litigation with respect to such violations by entering into this
consent order. The consent order decrees that the Company reimburse the Attorney
General's Office $13,000 for the costs of investigating this case. These costs
were paid in July 1997. The Company expects to pay $272,103 in civil penalties
in August 1997. These amounts have been fully accrued since 1995.

The Company is also party to a number of other legal proceedings in the
ordinary course of its business. Management of the Company presently does not
believe there are any pending or threatened legal proceeding to which the
Company is a party or of which any of its property is subject which will have a
material adverse effect on the Company's consolidated financial position,
results of operations and liquidity, as a whole.

27
<PAGE> 29

MANAGEMENT

Set forth below is certain information regarding the executive officers of
the Company:

<TABLE>
<CAPTION>
NAME (AGE) PRINCIPAL POSITION(S)
---------- ---------------------
<S> <C>
John Doddridge (56)........... Chairman of the Board and Chief Executive Officer

Doretha J. Christoph (48)..... Vice President -- Finance, Treasurer, Chief Financial
Officer and Secretary

John C. Engeswick (63)........ Vice President -- Technical Services

Daryl R. Marsh (59)........... Group Vice President

David L. Neilson (52)......... Vice President -- Sales and Marketing

C. James Peterson (49)........ Vice President -- Foundry Operations
</TABLE>

Mr. Doddridge became Chairman of the Board and Chief Executive Officer in
1994. Mr. Doddridge was Vice Chairman and Chief Executive Officer of Magna
International, Inc., a supplier of motor vehicle parts, from November 1992 until
November 1994. From 1989 to 1992 he served as President of North American
Operations of Dana Corporation, a motor vehicle parts manufacturer, and prior to
that time he served as President of Hayes-Dana Inc., a subsidiary of Dana
Corporation.

Ms. Christoph became Vice President -- Finance in June 1995. In addition,
she was named Chief Financial Officer in March 1996 and Secretary in January
1997. Prior to that time she served as Vice President and Director of
Administration of LNP Engineering Plastics, a worldwide supplier of engineered
plastics and a subsidiary of Kawasaki Steel Corporation, from November 1991
until May 1995. From 1989 to 1991, she served as Director of Finance for the
Engineering Plastics Americas operation of ICI, plc.

Mr. Engeswick became Vice President -- Technical Services in February 1995.
Prior to that time he served as Vice President -- Quality Assurance for Intermet
Foundries, Inc. (IFI), a former subsidiary of the Company, from 1988.

Mr. Marsh became Group Vice President of the Company in January 1997. Prior
to that he served as Vice President -- Machining Services from 1993. From 1969
through July 1993, Mr. Marsh was employed by Simpson Industries, Inc., most
recently as Group Vice President, Transmission and Chassis Group.

Mr. Neilson joined the Company in January 1997 as Vice President -- Sales
and Marketing. He served as Vice President of Sales for North and South America
for ITT Automotive from June 1993 to January 1997. From September 1992 to June
1993, he was Vice President of Sales and Marketing at Takata, Inc. He served as
President of Sales at a subsidiary of Automotive Industries from December 1991
to June 1992.

Mr. Peterson became Vice President -- Foundry Operations in February 1995.
He served as Director of Manufacturing of IFI from 1993 to 1995. From 1985 to
1993, he was with Columbus Foundries, Inc., a subsidiary of the Company, most
recently as General Manager.

28
<PAGE> 30

DESCRIPTION OF COMMON STOCK

The Company is authorized to issue 50 million shares of Common Stock, par
value $0.10 per share. On June 30, 1997, the Company had issued and outstanding
25,225,374 shares of Common Stock and options to purchase 1,351,000 shares of
Common Stock.

COMMON STOCK

Dividends. The holders of Common Stock are entitled to dividends and other
distributions as and when declared out of assets legally available therefor,
subject to the dividend rights of any Preferred Stock that may be issued in the
future.

Voting Rights. The holders of Common Stock are entitled to one vote per
share and to vote for directors on a noncumulative basis.

Other Rights. Holders of Common Stock do not have preemptive or other
rights to subscribe for additional shares. Upon liquidation, the holders of
Common Stock are entitled to share equally in any distribution available to
holders of Common Stock, subject to any rights of holders of Preferred Stock
hereafter issued. The Common Stock is not subject to redemption. All outstanding
shares are, and all shares of Common Stock offered by the Company hereby will
be, duly authorized, validly issued, fully paid and nonassessable.

SELLING SHAREHOLDERS

The table set forth below identifies the shareholders of the Company whose
shares of Common Stock are included in the Offering (the "Selling
Shareholders"), the number of shares held by such Selling Shareholders which are
included in the Offering and the holdings of Common Stock of the Selling
Shareholders both before and after giving effect to the Offering (assuming that
the over-allotment option described below in "Underwriting" is not exercised and
based on shareholdings as of July 31, 1997):

<TABLE>
<CAPTION>
NUMBER OF NUMBER OF NUMBER OF
SHARES OF PERCENTAGE OF SHARES OF SHARES OF PERCENTAGE OF
COMMON STOCK COMMON STOCK COMMON STOCK COMMON STOCK COMMON STOCK
HELD BEFORE HELD BEFORE INCLUDED IN HELD AFTER HELD AFTER
OFFERING OFFERING OFFERING(1) OFFERING OFFERING
SELLING SHAREHOLDER ------------ ------------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C>
George W. Mathews, Jr. ............... 3,509,074 13.9% 1,850,000 1,659,074 6.6%
The George W. Mathews, Jr. Charitable
Remainder Trust created under
agreement dated July 30, 1997....... 350,000 1.4 350,000 0 0.0
The Jane K. Mathews Charitable
Remainder Trust created under
agreement dated July 30, 1997....... 350,000 1.4 350,000 0 0.0
George W. Mathews, III................ 533,550 2.1 225,000 308,550 1.2
Kathleen M. Hohlstein(2).............. 535,980 2.1 225,000 310,980 1.2
--------- --- --------- --------- --
Total:.......................... 5,278,604 20.9% 3,000,000 2,278,604 9.0%
========= === ========= ========= ==
</TABLE>

- -------------------------
(1) If the Underwriter's over-allotment option is exercised in full, each of the
following Selling Shareholders will sell that number of additional shares of
Common Stock as follows: George W. Mathews, Jr., 362,000; George W. Mathews
III, 44,000; Kathleen M. Hohlstein, 44,000.

(2) Does not include the 350,000 shares shown in the table as being owned by the
Charitable Remainder Trust of George W. Mathews, Jr., for which the trustee
is Mrs. Hohlstein's spouse, Christopher D. Hohlstein.

George W. Mathews, Jr. has been a director of the Company and its
predecessor since 1971, was the founder of the Company and served as its
Chairman of the Board, Chief Executive Officer and President from

29
<PAGE> 31

1971 until October 1994. Mr. Mathews retired as an officer and employee of the
Company in December 1994 but has remained on the Board of Directors of the
Company since that time.

In connection with this Offering, the Company and the Selling Shareholders
have agreed to indemnify each other against certain liabilities, including
liabilities under the Securities Act of 1933.

The other Selling Shareholders consist of Mr. Mathews' wife, son, daughter
and charitable remainder trusts established by Mr. Mathews and his wife.

In October 1995, G.W.M., Inc., a corporation controlled by George W.
Mathews, Jr., and Kelso & Company, L.P. made an unsolicited offer to purchase
all of the shares of Common Stock of the Company for $13.50 per share. Following
such offer, Brickell Partners, a Florida partnership, filed a Complaint on
October 6, 1995 in the Superior Court of Fulton County, Georgia against each
then-existing director of the Company other than George W. Mathews, Jr. This
complaint, brought on behalf of the plaintiff and purportedly the public
stockholders of the Company, as a class, among other things alleged that the
named directors breached their fiduciary duties by failing to properly consider
such offer. On April 24, 1996, a Stipulation of Dismissal Without Prejudice was
filed in connection with such litigation. Neither the Company nor its directors
were required to pay any damages, legal fees, or any other costs to the
plaintiff. In addition, neither the Company nor its directors have paid or
agreed to pay any damages, legal fees or other costs to the plaintiff.

30
<PAGE> 32

UNDERWRITING

The Underwriters named below, for whom Donaldson, Lufkin & Jenrette
Securities Corporation and Prudential Securities Incorporated are acting as
representatives (the "Representatives"), have severally agreed, subject to the
terms of an underwriting agreement (the "Underwriting Agreement"), to purchase
from the Selling Shareholders and the Selling Shareholders have agreed to sell
to the Underwriters, 3,000,000 shares of Common Stock. The number of shares of
Common Stock that each Underwriter has agreed to purchase is set forth opposite
its name below:

<TABLE>
<CAPTION>
UNDERWRITERS NUMBER OF SHARES
------------ ----------------
<S> <C>
Donaldson, Lufkin & Jenrette Securities Corporation.........
Prudential Securities Incorporated..........................
Interstate/Johnson Lane Corporation.........................
---------
Total.................................................. 3,000,000
=========
</TABLE>

The Underwriting Agreement provides that the obligations of the several
Underwriters to purchase the Shares of Common Stock are subject to approval of
certain legal matters by their counsel and to certain other conditions. If any
of the shares of Common Stock are purchased by the Underwriters pursuant to the
Underwriting Agreement, the Underwriters are obligated to purchase all of the
shares of Common Stock (other than those covered by the over-allotment option
described below).

The Company and the Selling Shareholders have been advised by the
Representatives that the Underwriters propose initially to offer the shares of
Common Stock to the Public at the Price to the Public set forth on the cover
page of this Prospectus and to certain dealers at such price less a concession
of $ per share of Common Stock. The Underwriters may allow, and such dealers
may reallow, a concession of $ per share of Common Stock to other
dealers, and the Price to the Public and their selling terms may be changed by
the Underwriters after the initial offering.

Pursuant to the Underwriting Agreement, certain of the Selling Shareholders
(excluding only the Selling Shareholders which are charitable remainder trusts)
have granted to the Underwriters an option, exercisable not later than 30
calendar days from the date of the Underwriting Agreement, to purchase up to an
aggregate of 450,000 additional shares of Common Stock at the initial offering
price set forth on the cover page of this Prospectus, less the underwriting
discounts and commissions, solely to cover over-allotments. See "Selling
Shareholders."

In the Underwriting Agreement, the Company, the Selling Shareholders and
the Underwriters have agreed to indemnify each other against certain
liabilities, including liabilities under the Securities Act of 1933.

The Company and each of its directors and executive officers and the
Selling Shareholders each have agreed that during the 90-day period after the
date of this Prospectus they will not, without the prior written consent of
Donaldson, Lufkin & Jenrette Securities Corporation, sell, offer to sell,
contract to sell, grant any options to purchase or otherwise dispose of any
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for shares of Common Stock, other than pursuant to this Prospectus,
with certain exceptions including that the Company may issue shares, options or
any securities convertible into, exercisable or exchangeable for shares of
Common Stock pursuant to the terms of its employee benefit plans existing as of
the date of this Prospectus.

In connection with this Offering, the Underwriters may engage in
transactions that stabilize, maintain or otherwise affect the price of the
Common Stock. Specifically, the Underwriters may overallot this offering,
creating a syndicate short position. Underwriters may bid for and purchase
shares of Common Stock in the open market to cover syndicate short positions. In
addition, the Underwriters may bid for and purchase shares of Common Stock in
the open market to stabilize the price of Common Stock. These activities may
stabilize or maintain the market price of the Common Stock above independent
market levels. The Underwriters are not required to engage in these activities,
and may end these activities at any time.

31
<PAGE> 33

The Underwriters and dealers may engage in passive market making
transactions in the Common Stock in accordance with Rule 103 of Regulation M
promulgated by the Commission. In general, a passive market maker may not bid
for or purchase the Common Stock at a price that exceeds the highest independent
bid. In addition, the net daily purchases made by any passive market maker
generally may not exceed 30% of its average daily trading volume in the Common
Stock during a specified two-month prior period, or 200 shares, whichever is
greater. A passive market maker must identify passive market making bids on the
Nasdaq electronic inter-dealer reporting system. Passive market making may
stabilize or maintain the market price of the Common Stock above independent
market levels. Underwriters and dealers are not required to engage in passive
market making and may end passive market making activities at any time.

John B. Ellis, a director of the Company, is a director of
Interstate/Johnson Lane, Inc., the parent company of Interstate/Johnson Lane
Corporation.

Prior to the Offering (based on shares held as of July 25, 1997), The
Prudential Insurance Company of America ("Prudential Insurance"), the sole owner
of Prudential Securities Incorporated, beneficially owned 2,517,813 shares
(10.0%) of the outstanding Common Stock of the Company.

In addition, Prudential Insurance has purchased and currently holds an
aggregate of $25,000,000 of 8.05% Senior Notes due December 11, 2002, issued by
the Company on December 11, 1992. Such Senior Notes are expected to remain
outstanding immediately following the Offering.

LEGAL MATTERS

Certain legal matters with respect to the validity of the Shares offered
hereby will be passed upon by Dickinson, Wright, Moon, Van Dusen & Freeman,
Detroit, Michigan. Certain legal matters in connection with the offering of the
Company's Common Stock will be passed upon for the Underwriters by Winston &
Strawn, Chicago, Illinois.

EXPERTS

The consolidated financial statements and financial statement schedule of
Intermet Corporation incorporated by reference and included in the Company's
Annual Report on Form 10-K for the year ended December 31, 1996, have been
audited by Ernst & Young LLP, independent auditors, as set forth in their
reports thereon incorporated by reference therein and incorporated herein by
reference. Such consolidated financial statements and financial statement
schedule are incorporated herein by reference in reliance upon such reports
given upon the authority of such firm as experts in accounting and auditing.

INDEMNIFICATION

The Company's Amended and Restated Articles of Incorporation provide that,
subject to Georgia law, a director shall not be personally liable to the
corporation or its shareholders or any other person for breach of any duty as a
director, whether as a fiduciary or otherwise. Georgia law permits the Articles
of Incorporation to include a provision eliminating the liability of a director
for monetary damages for breach of duty of care or any other duty owed to the
corporation as a director except for liability: (a) for any appropriation, in
violation of his duties, of any business opportunity of the corporation, (b) for
acts or omissions which involve intentional misconduct or a knowing violation of
law, (c) for unlawful corporate distributions or (d) for any transaction from
which the director received an improper benefit.

Articles VII of the Bylaws of the Company authorize indemnification of the
Company's officers and directors for any liability and expense incurred by them
in connection with or resulting from any threatened, pending or completed legal
action or other proceeding or investigation by reason of his being or having
been an officer or director. An officer or director may only be indemnified if
he acted in good faith and in a manner he reasonably believed to be in, or not
opposed to, the best interests of the Company, and, with respect to a criminal
matter, he did not have reasonable cause to believe that his conduct was
unlawful. No officer or director who has been adjudged liable for negligence or
misconduct in the performance of his corporate duties

32
<PAGE> 34

is entitled to indemnification, unless and except to the extent that the court
reaching such a determination of liability, in view of all the relevant
circumstances, shall also determine that despite such liability such person is
fairly and reasonably entitled to indemnification.

Any officer or director who has been wholly successful on the merits or
otherwise in an action or proceeding in his official capacity is entitled to
indemnification by the Company as of right. All other determinations in respect
of indemnification shall be made by any of the following: (a) if there are two
or more disinterested directors a majority vote of a quorum of disinterested
directors; (b) special legal counsel selected in accordance with Georgia law; or
(c) the shareholders, but shares owned by or voted under the control of a
director who at the time does not qualify as a disinterested director may not be
voted on the determination.

In the event any payments are made to an officer or director by way of
indemnity, other than by court order, action of the shareholders or by an
insurance carrier, the Company must notify the shareholders of the Company of
such payment and all relevant details not later than the next annual meeting of
the shareholders unless such meeting is within 3 months from the date of such
payment and in no event later than 15 months after the date of such payment.

The provisions of the Company's Bylaws on indemnification are consistent in
all material respects with the laws of the State of Georgia, which authorize
indemnification of corporate officers and directors.

The Company's directors and officers are insured against losses arising
from any claim against them as such for wrongful acts or omissions, subject to
certain limitations.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the Company
pursuant to the provisions discussed above under "Indemnification" above or
otherwise, the Company has been advised that in the opinion of the Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable.

33
<PAGE> 35

INDEX TO FINANCIAL STATEMENTS

INTERMET CORPORATION

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Auditors.............................. F-2
Consolidated Statements of Operations for the Three Years
Ended December 31, 1996................................... F-3
Consolidated Balance Sheets at December 31, 1996 and 1995... F-4
Consolidated Statements of Cash Flows for the Three Years
Ended December 31, 1996................................... F-5
Consolidated Statements of Shareholders' Equity for the
Three Years Ended December 31, 1996....................... F-6
Notes to Consolidated Financial Statements.................. F-7
INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Interim Condensed Consolidated Statements of Income for the
Three and Six Month Periods Ended June 30, 1997 and June
30, 1996.................................................. F-20
Interim Condensed Consolidated Balance Sheets at June 30,
1997 and December 31, 1996................................ F-21
Interim Condensed Consolidated Statements of Cash Flows for
the Three and Six Month Periods Ended June 30, 1997 and
June 30, 1996............................................. F-23
Notes to Interim Condensed Consolidated Financial
Statements................................................ F-24
</TABLE>

F-1
<PAGE> 36

REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Shareholders
Intermet Corporation

We have audited the accompanying consolidated balance sheets of Intermet
Corporation as of December 31, 1996 and 1995, and the related consolidated
statements of operations, shareholders' equity and cash flows for each of the
three years in the period ended December 31, 1996. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Intermet
Corporation at December 31, 1996 and 1995, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1996, in conformity with generally accepted accounting principles.

ERNST & YOUNG LLP

Detroit, Michigan
January 30, 1997

F-2
<PAGE> 37

INTERMET CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------
1996 1995 1994
-------- -------- --------
(IN THOUSANDS OF DOLLARS,
EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
Net sales................................................... $534,478 $541,749 $501,269
Cost of sales............................................... 456,618 457,337 458,823
-------- -------- --------
Gross profit................................................ 77,860 84,412 42,446
Operating expenses:
Selling................................................... 3,646 4,957 5,520
General and administrative................................ 18,111 26,640 35,198
-------- -------- --------
Operating profit............................................ 56,103 52,815 1,728
Other income and expenses:
Interest income........................................... 1,403 382 149
Interest expense.......................................... (3,056) (6,461) (6,952)
Other, net................................................ (128) (1,216) (14)
-------- -------- --------
(1,781) (7,295) (6,817)
-------- -------- --------
Income (loss) before income taxes........................... 54,322 45,520 (5,089)
Provision for income taxes.................................. 11,169 20,125 5,896
-------- -------- --------
Net income (loss)........................................... $ 43,153 $ 25,395 $(10,985)
======== ======== ========
Income (loss) per common share -- primary................... $ 1.69 $ 1.02 $ (.45)
======== ======== ========
</TABLE>

See accompanying notes.

F-3
<PAGE> 38

INTERMET CORPORATION

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1996 1995
--------- ---------
(IN THOUSANDS OF DOLLARS)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 23,485 $ 11,173
Accounts receivable:
Trade, less allowance for doubtful accounts of $949 in
1996 and $1,267 in 1995................................ 87,049 49,814
Other..................................................... 4,642 5,298
-------- --------
91,691 55,112
Inventories:
Finished goods............................................ 13,530 5,616
Work in process........................................... 13,408 3,989
Raw materials............................................. 11,679 3,975
Supplies and patterns..................................... 17,430 15,575
-------- --------
56,047 29,155
Deferred income tax....................................... 13,242 3,774
Other current assets...................................... 4,829 3,858
-------- --------
Total current assets............................... 189,294 103,072
Property, plant and equipment, at cost:
Land...................................................... 5,260 3,585
Buildings and improvements................................ 88,459 77,649
Machinery and equipment................................... 335,003 254,140
Construction in progress.................................. 7,982 8,914
-------- --------
436,704 344,288
Less:
Foreign industrial development grants, net of
amortization............................................ 4,804 5,469
Accumulated depreciation and amortization................. 209,118 189,625
-------- --------
Net property, plant and equipment......................... 222,782 149,194
Goodwill, net of amortization............................. 88,223 6,090
Other noncurrent assets................................... 26,013 15,715
-------- --------
$526,312 $274,071
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................................... $ 54,721 $ 28,640
Accrued wages, severance and benefits..................... 26,697 19,432
Accrued Sudbury acquisition costs......................... 37,299 --
Accrued restructuring costs............................... 3,402 7,334
Income taxes payable...................................... 15,198 16,000
Other accrued liabilities................................. 21,375 14,750
Long-term debt due within one year........................ 12,676 2,596
-------- --------
Total current liabilities.......................... 171,368 88,752
Noncurrent liabilities:
Long-term debt due after one year......................... 149,477 32,675
Retirement benefits....................................... 53,421 46,067
Other noncurrent liabilities.............................. 8,107 5,712
-------- --------
Total noncurrent liabilities....................... 211,005 84,454
Minority interest........................................... 2,837 2,837
Shareholders' equity:
Preferred stock; 5,000,000 shares authorized; none issued
Common stock, $.10 par value; 50,000,000 shares
authorized; 25,165,374 and 25,050,374 shares issued in
1996 and 1995, respectively............................. 2,517 2,505
Capital in excess of par value............................ 57,308 56,431
Retained earnings......................................... 78,267 37,125
Accumulated translation adjustments....................... 3,548 3,765
Minimum pension liability adjustment...................... (485) (1,636)
Unearned restricted stock................................. (53) (162)
-------- --------
Total shareholders' equity......................... 141,102 98,028
-------- --------
$526,312 $274,071
======== ========
</TABLE>

See accompanying notes.

F-4
<PAGE> 39

INTERMET CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------
1996 1995 1994
--------- -------- --------
(IN THOUSANDS OF DOLLARS)
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss)........................................... $ 43,153 $ 25,395 $(10,985)
Adjustments to reconcile net income (loss) to cash provided
by operating activities:
Depreciation and amortization............................. 26,853 28,115 29,035
Loss on sale of subsidiaries.............................. -- 1,272 --
Write down equipment and goodwill......................... -- -- 8,945
Write off investment in joint venture..................... -- -- 2,001
Loss on sale of assets, other............................. 552 219 26
Deferred income taxes..................................... (6,364) 3,234 (800)
Changes in operating assets and liabilities excluding the
effects of acquisitions and dispositions:
Accounts receivable.................................... 279 13,474 (18,877)
Inventories............................................ (5,225) 1,533 5,204
Accounts payable and accrued liabilities............... 5,133 (2,586) 12,521
Other assets and liabilities........................... 6,750 12,615 565
--------- -------- --------
Cash provided by operating activities....................... 71,131 83,271 27,635
INVESTING ACTIVITIES
Additions to property, plant and equipment.................. (26,025) (24,442) (24,873)
Purchase of Alexander City Castings......................... -- (2,704) --
Purchase of Sudbury, net of cash acquired................... (146,676) -- --
Purchase of minority interest in IWESA...................... (6,780) -- --
Proceeds from sales of plant, property & equipment.......... 3,516 4,462 965
Proceeds from sale of subsidiaries.......................... -- 9,750 --
Other, net.................................................. (105) (3,759) (833)
--------- -------- --------
Cash used in investing activities........................... (176,070) (16,693) (24,741)
FINANCING ACTIVITIES
Increase in revolving credit facility....................... 118,400 -- 5,203
Reduction in debt........................................... (2,337) (64,159) (5,197)
Issuance of common stock.................................... 889 903 127
Dividends paid.............................................. (2,011) -- --
Net decrease in note payable................................ -- (7,656) --
Other, net.................................................. -- -- (30)
--------- -------- --------
Cash provided by (used in) financing activities............. 114,941 (70,912) 103
Effect of exchange rate changes on cash..................... 2,310 1,789 (519)
--------- -------- --------
Net increase (decrease) in cash and cash equivalents........ 12,312 (2,545) 2,478
Cash and cash equivalents at beginning of year.............. 11,173 13,718 11,240
--------- -------- --------
Cash and cash equivalents at end of year.................... $ 23,485 $ 11,173 $ 13,718
========= ======== ========
</TABLE>

See accompanying notes.

F-5
<PAGE> 40

INTERMET CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------
1996 1995 1994
-------- ------- -------
(IN THOUSANDS OF DOLLARS)
<S> <C> <C> <C>
COMMON STOCK
Beginning balance........................................... $ 2,505 $ 2,464 $ 2,457
Exercise of options to purchase 114,500; 124,500 and 22,500
shares of common stock in 1996, 1995 and 1994,
respectively.............................................. 12 12 2
Exercise of options purchased with common stock............. -- (2) --
Issuance of 310,000 shares of common stock.................. -- 31 --
Issuance of 50,000 shares of common stock................... -- -- 5
-------- ------- -------
Ending balance.............................................. 2,517 2,505 2,464
CAPITAL IN EXCESS OF PAR VALUE
Beginning balance........................................... 56,431 52,150 51,742
Exercise of options to purchase 114,500; 124,500 and 22,500
shares of common stock in 1996, 1995 and 1994,
respectively.............................................. 877 891 125
Exercise of options purchased with common stock............. -- (265) --
Issuance of 310,000 shares of common stock.................. -- 3,655 --
Issuance of 50,000 shares of common stock................... -- -- 283
-------- ------- -------
Ending balance.............................................. 57,308 56,431 52,150
RETAINED EARNINGS
Beginning balance........................................... 37,125 11,730 22,715
Net income (loss)........................................... 43,153 25,395 (10,985)
Cash dividends.............................................. (2,011) -- --
-------- ------- -------
Ending balance.............................................. 78,267 37,125 11,730
ACCUMULATED TRANSLATION ADJUSTMENTS
Beginning balance........................................... 3,765 2,959 1,499
Translation adjustments..................................... (344) 1,321 2,640
Related income tax effect................................... 127 (515) (1,180)
-------- ------- -------
Ending balance.............................................. 3,548 3,765 2,959
MINIMUM PENSION LIABILITY ADJUSTMENT
Beginning balance........................................... (1,636) (1,164) (2,881)
Adjustment.................................................. 1,887 (774) 2,815
Related income tax effect................................... (736) 302 (1,098)
-------- ------- -------
Ending balance.............................................. (485) (1,636) (1,164)
UNEARNED RESTRICTED STOCK
Beginning balance........................................... (162) (168) --
Issuance of 10,000 and 50,000 shares of common stock in 1995
and 1994, respectively.................................... -- (86) (173)
Amortization................................................ 109 92 5
-------- ------- -------
Ending balance.............................................. (53) (162) (168)
-------- ------- -------
Total shareholders' equity.................................. $141,102 $98,028 $67,971
======== ======= =======
</TABLE>

See accompanying notes.

F-6
<PAGE> 41

INTERMET CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying consolidated financial statements, presented in conformity
with generally accepted accounting principles (GAAP), include the accounts of
Intermet Corporation ("Intermet") and its subsidiaries (collectively, the
"Company"). All significant intercompany transactions and balances have been
eliminated in consolidation.

Use of Estimates

The preparation of the financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the amounts
reported in the financial statements and accompanying notes. Actual results
could differ from those estimates.

Inventories

Inventories are stated at the lower of cost or market. Cost is determined
on the last-in, first-out (LIFO) method as to 40% and 17% of the December 31,
1996 and 1995 inventories, respectively. Certain raw materials and supplies
inventories are valued on a weighted average cost basis; average production cost
is used for certain work in process and finished goods inventories and other
inventories are valued by the first-in, first-out (FIFO) method. The specific
identification method is used for pattern inventories. If LIFO inventories were
valued using the same cost methods used for other inventories, their carrying
values would have increased by $1,310,000 and $1,504,000 at December 31, 1996
and 1995, respectively.

Property, Plant and Equipment

The provision for depreciation and amortization of property, plant and
equipment is determined on the basis of estimated useful lives using the
straight-line method. Certain industrial development grants provided by the
federal and state governments of Germany are included as reductions of property,
plant and equipment and are being amortized over the period the related assets
are being depreciated.

Intangible Assets

Intangible assets consist principally of costs in excess of net assets
acquired of $88,223,000 and $6,090,000 (net of accumulated amortization of
$1,837,000 and $1,372,000) at December 31, 1996 and 1995, respectively. Such
costs are being amortized using the straight-line method over periods ranging
from ten to forty years.

Fair Value of Financial Instruments

The carrying amounts reported in the consolidated balance sheets for cash
and cash equivalents, accounts receivable, accounts payable and current portion
of long-term debt approximate fair values. The fair value of the Company's
long-term debt approximates the reported amounts in the accompanying 1996
consolidated balance sheet as their respective interest rates approximate the
December 31, 1996 market rates for similar debt instruments.

Income (Loss) Per Common Share

Net income (loss) per common share amounts are based on the weighted
average number of shares outstanding during the period, after giving effect to
the exercise of options (see Note 7) and assuming the

F-7
<PAGE> 42

INTERMET CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

repurchase, at fair market value, of shares using the proceeds from such
exercise, unless the effect is antidilutive.

Stock-Based Compensation

The Company grants stock options for a fixed number of shares to employees
and directors with an exercise price equal to the fair value of the shares at
the date of grant. The Company accounts for stock option grants in accordance
with APB Opinion No. 25, Accounting for Stock Issued to Employees, and,
accordingly, recognizes no compensation expense for the stock option grants.

2. ACQUISITIONS AND DISPOSITIONS

In December, 1996, the Company acquired for cash substantially all of the
outstanding stock of Sudbury, Inc. for $182,434,000, including cost of
$5,277,000 directly related to the acquisition. The accompanying balance sheet
includes as a current liability accrued acquisition costs of $37,299,000 which
principally represents the purchase cost of employee stock options and
participation certificates. The transaction has been accounted for as a
purchase, and, accordingly, the purchase price has been allocated to the assets
purchased and the liabilities assumed based upon the fair values at the date of
acquisition. The excess of the purchase price over the fair values of tangible
net assets acquired was $82,598,000 and has been recorded as goodwill, which is
being amortized on a straight-line basis over 40 years. The results of
operations of Sudbury from the date of acquisition to December 31, 1996, were
not significant. Sudbury, Inc. and its subsidiaries manufacture high-quality
industrial products. The products are used primarily in the automotive,
appliance and construction markets providing iron, aluminum and zinc castings;
applications of custom coatings; cranes, truck bodies and related equipment; and
precision machined components.

In November, 1996, the Company purchased for cash a minority interest in
IWESA GmbH, for 4,000,000 DM. The Company also purchased a newly issued share
from IWESA for 374,000 DM bringing its share interest to 49% and contributed
6,000,000 DM to the capital reserves of IWESA in support of new capital
expansion projects. The Company's total investment in IWESA amounts to
10,374,000 DM ($6,780,000 at then current exchange rates) and is accounted for
on the equity method. The results of operations of IWESA since acquisition have
not been significant. IWESA is a precision machining and engineering company
located in Saarbrucken, Germany, producing parts for the commercial motor
vehicle and industrial markets.

In November, 1995, the Company acquired certain operating assets and the
aluminum foundry businesses of Bodine Robinson and Robinson Foundry, Inc. The
aggregate purchase price of $6,304,000 was funded by a cash payment of
$2,704,000 and 300,000 shares of Intermet common stock. These assets form the
base of the Company's wholly-owned subsidiary, Alexander City Castings, Inc.
("Alexander City"). This transaction has been accounted for as a purchase. The
consolidated financial statements include the results of operations of Alexander
City since the date of acquisition.

In September and October 1995 the Company sold substantially all the
operating assets of its subsidiaries, PBM Industries, Inc. ("PBM") and
InterMotive Technologies, Inc. ("InterMotive"), respectively, in exchange for an
aggregate of $9,750,000 in cash and a $2,500,000 note and recognized a pre-tax
loss of $1,432,000.

F-8
<PAGE> 43

INTERMET CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The following represents the unaudited pro forma consolidated results of
operations for the Company for the years ended December 31, 1996 and 1995,
assuming the acquisitions and dispositions described throughout Note 2 occurred
on January 1, 1995 (in thousands of dollars, except for per share data):

<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Net sales................................................... $837,880 $848,790
Net income.................................................. $ 47,326 $ 35,072
Income per common share..................................... $ 1.85 $ 1.41
</TABLE>

These pro forma results are presented for comparative purposes only. They
are not necessarily indicative of what would have occurred had the acquisitions
actually been made on January 1, 1995, or of future results of operations.

3. RESTRUCTURING

In August 1993 the Company decided to close its oldest plant, the Lower
Basin foundry in Virginia. The Lower Basin foundry incurred operating losses
prior to its closing in 1994 of approximately $3,700,000 which were charged
against an accrual established for restructuring. Most of the foundry equipment
and supplies inventories were removed and disposed of during 1995. Demolition
and sales of the buildings continued in 1996. The restructuring liabilities
include $3,402,000, and $7,334,000 in current liabilities at December 31, 1996
and 1995, respectively. The restructuring liability at December 31, 1996 relates
principally to environmental matters and at December 31, 1995 amounts are also
provided for severance and demolition cost.

4. JOINT VENTURE AND MINORITY INTEREST

The Company and an Australian company had, through subsidiaries, formed a
joint venture, ICA Castings ("ICA"). ICA constructed a pilot casting line in
Kentucky for the manufacture of aluminum automotive castings. The Company
accounted for its 50% interest in ICA under the equity method which was written
off in 1994. The charge to earnings of $2,001,000 is included in general and
administrative expenses in the 1994 consolidated statements of operations.
During 1995 the Company transferred its interest in ICA to the other partner in
the joint venture in exchange for $750,000 in cash.

In 1988, the Company purchased all of the common stock of Ironton Iron,
Inc. ("Ironton"), a foundry company in Ohio. As a part of the transaction, the
previous common stockholders of Ironton received an equivalent number of shares
of Ironton's new 5% cumulative preferred stock with an aggregated par value of
$2,337,000. The preferred shares are to be retired at par value from net income
of Ironton, if available. No shares have been retired and no dividends have been
accrued or paid to date since Ironton has incurred a cumulative net loss since
1988. The preferred shares are included in minority interest in the consolidated
balance sheet.

F-9
<PAGE> 44

INTERMET CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

5. CASH FLOW INFORMATION

All short-term investments with original maturities of less than 90 days
are deemed to be cash equivalents for purposes of the statements of cash flows.
There were no noncash investing and financing activities in 1994. Such
activities in 1996 and 1995 were as follows (in thousands of dollars):

<TABLE>
<CAPTION>
1996 1995
-------- ------
<S> <C> <C>
Fair value of assets acquired............................... $175,687 $3,625
Costs in excess of net assets acquired...................... 82,598 2,736
Less:
Liabilities assumed....................................... 100,687 57
Common stock of the Company............................... -- 3,600
Cash acquired in acquisition.............................. 10,922 --
-------- ------
Net cash paid for acquisition............................... $146,676 $2,704
======== ======
</TABLE>

6. DEBT

Columbus Neunkirchen Foundry GmbH (Neunkirchen), a wholly owned subsidiary
of the Company, has various revolving note agreements which are payable on
demand. These notes provide for borrowings up to DM 18,998,000 (approximately
$12,267,000) at December 31, 1996. There were no outstanding borrowings under
these agreements as of December 31, 1996 and approximately $13,000 was
outstanding at December 31, 1995.

Long-term debt consists of the following (in thousands of dollars):

<TABLE>
<CAPTION>
1996 1995
-------- -------
<S> <C> <C>
Intermet:
Revolving credit facility................................. $118,400 $ --
Prudential term loan...................................... 25,000 25,000
Subsidiaries:
Sudbury subordinated notes................................ 9,831 --
Sudbury PIK Notes......................................... 666 --
Lynchburg revenue bonds................................... 5,025 5,700
Neunkirchen term notes.................................... 2,446 3,664
IMI promissory notes...................................... 258 907
Other..................................................... 527 --
-------- -------
Total.................................................. $162,153 $35,271
-------- -------
Less long-term debt due within one year..................... 12,676 2,596
-------- -------
Long-term debt due after one year........................... $149,477 $32,675
======== =======
</TABLE>

The Company has an unsecured revolving credit agreement with a bank
consortium which was refinanced in November 1996. The agreement, which expires
in November 1999, provides for loans up to $200,000,000. The borrowing limit is
reduced by certain standby letters of credit. At December 31, 1996 such standby
letters of credit totaled $3,375,000. The revolving credit agreement provides
the Company with several interest rate pricing mechanisms ranging from 6.025% to
8.25% at December 31, 1996. The Company must also pay a fee at an annual rate of
.15% on any unused portion of the loan commitment. The revolving credit
agreement requires the Company to maintain certain financial ratios and imposes
limitations on certain activities.

The Company has an unsecured term loan agreement with The Prudential
Insurance Company of America. The loan bears interest at an annual rate of 8.05%
payable quarterly. Principal amounts are to be

F-10
<PAGE> 45

INTERMET CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

repaid in five equal annual installments beginning in December 1998. The term
loan agreement requires the Company to maintain certain financial ratios and
imposes limitations on certain activities.

As a result of the acquisition of Sudbury, Inc., the Company assumed the
outstanding subordinated notes of Sudbury. These notes are due September 1997
and bear interest at an annual rate of 8.6%. Prior to Sudbury refinancing its
bank debt in May 1993, the Subordinated Notes provided that interest payments
would be made through the issuance of additional promissory notes in the
aggregate principal of the amount of interest owed ("PIK Notes"). The terms and
conditions of the PIK Notes are identical to the Subordinated Notes. The Company
has notified the trustee for the bondholders that it is redeeming all of the
notes prior to maturity, at par, and expects this redemption to be completed by
February 21, 1997.

Lynchburg Foundry Company (Lynchburg), a wholly owned subsidiary of the
Company, issued $4,400,000 of 6.25% Pollution Control Revenue Bonds Series 1973
maturing in December 1998 and $4,800,000 of 7% Industrial Development Revenue
Bonds maturing in June 2006. Principal amounts to be repaid under the pollution
control revenue bonds are $530,000 in 1997 with a final payment at maturity of
$570,000. Principal amounts to be repaid under the industrial development
revenue bonds are $175,000 in 1997 with further mandatory redemption prior to
maturity of $2,100,000 with annual payments ranging from $175,000 to $350,000
with a final payment at maturity of $1,650,000. The bonds are also subject to
optional redemption prior to maturity.

The Neunkirchen term notes mature at various times beginning in September
1998 through March 2003 and bear interest at rates ranging from 5% to 7.3%.
Mandatory payments are required. Approximately 38.2% of the notes are required
to be paid in both 1997 and 1998 with the remaining 23.6% to be repaid in 1999
through 2003 in substantially equal payments. These borrowings are secured by
property, plant and equipment with net book values aggregating to $25,085,000 at
December 31, 1996.

Sudbury has a credit agreement with National City Bank and Star Bank for
$805,000 to support letters of credit which are outstanding for the same amount
as the credit agreement. The letters of credit are at an annual rate of .75%
payable on a quarterly basis.

Long Term Debt Maturities

Maturities of long-term debt at December 31, 1996 are as follows (in
thousands of dollars):

<TABLE>
<S> <C>
1997........................................................ $ 12,676
1998........................................................ 6,883
1999........................................................ 123,733
2000........................................................ 5,334
2001........................................................ 5,312
Thereafter.................................................. 8,215
--------
Total.................................................. $162,153
========
</TABLE>

Interest paid totaled $3,048,000, $6,485,000 and $7,693,000 in 1996, 1995
and 1994, respectively.

The Company is in compliance with the terms and restrictions of its various
loan and credit agreements. At December 31, 1996, approximately $43,513,000 of
the Company's retained earnings were restricted and unavailable for the payment
of dividends under these agreements.

7. SHAREHOLDERS' EQUITY

The Company has a Key Individual Stock Option Plan ("Individual Plan") and
a Directors Stock Option Plan ("Directors Plan"). The Company has also granted
options to purchase common stock to certain

F-11
<PAGE> 46

INTERMET CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

individuals that are not covered under these two plans. The Individual Plan,
which provided for the granting of options for 1,440,000 shares of common stock,
expired in 1994 except as to options still outstanding. A new plan was approved
April 27, 1995 which provided for granting of options for 1,500,000 shares of
common stock. The Directors Plan provides for the granting of options to
purchase 100,000 shares of common stock. Options granted under the Individual
Plan vest over a four-year period. All other options granted were exercisable at
the grant date. At December 31, 1996 options for 660,000 shares were
exercisable, while 837,500 shares were available for future grants.

In October, 1995, the Financial Accounting Standards board issued Statement
of Financial Accounting Standards (SFAS) No. 123, "Accounting for Stock-Based
Compensation." This new standard defines a fair value based method of accounting
for an employee stock option or similar equity instrument.

The fair value of the Company's stock options were estimated as of the date
of grant using a Black-Scholes option pricing model with the following
weighted-average assumptions for 1996 and 1995: risk-free interest rates of
6.4%; a dividend yield of 1.0%; volatility factors of the expected market price
of the Company's common stock of .34; and a weighted-average expected life of
the options of 6 years.

The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions including the expected stock price
volatility. Because the Company's employee stock options have characteristics
significantly different from those of traded options, and because changes in the
subjective input assumptions can materially affect the fair value estimate, in
management's opinion, the existing models do not necessarily provide a reliable
single measure of the fair value of its employee stock options.

For purposes of the pro forma disclosures required under Statement 123, the
estimated fair value of the options is amortized to expense over the options'
vesting period. For 1996 and 1995, net income and earnings per share on a pro
forma basis does not differ significantly from that determined under APB 25.

A summary of the Company's stock option activity, and related information
for the years ended December 31, 1995 and 1994 are as follows:

<TABLE>
<CAPTION>
EXERCISE PRICE NUMBER OF
RANGE OPTIONS
-------------- ---------
<S> <C> <C>
Outstanding at December 31, 1993............................ $5.69-$12.62 983,000
Granted................................................... 5.75-10.11 426,000
Exercised................................................. 5.69 (22,500)
Canceled or expired....................................... 5.69-10.75 (137,500)
---------
Outstanding at December 31, 1994............................ 5.69-12.62 1,249,000
Granted................................................... 8.56-9.00 391,000
Exercised................................................. 5.69-10.75 (124,500)
Canceled or expired....................................... 5.69-11.83 (323,000)
---------
Outstanding at December 31, 1995............................ 5.69-12.62 1,192,500
=========
</TABLE>

F-12
<PAGE> 47

INTERMET CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

A summary of the Company's 1996 stock option activity, including related
Statement 123 disclosures, are as follows:

<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
NUMBER OF EXERCISE EXERCISE
OPTIONS PRICE PRICE RANGE
--------- -------- -------------
<S> <C> <C> <C>
Outstanding at December 31, 1995................... 1,192,500 $ 8.74
Granted.......................................... 381,500 13.03 $12.75-$13.81
Exercised........................................ (114,500) 8.44 5.69-10.75
Forfeited........................................ (69,500) 10.12 9.00-12.75
--------- ------
Outstanding at December 31, 1996................... 1,390,000 $ 9.87
========= ======
Exercisable at December 31, 1996................... 660,000 $ 8.48
Weighted-average fair value of options granted
during 1996...................................... $ 5.33
</TABLE>

Exercise prices for options outstanding as of December 31, 1996 ranged from
$5.69 to $13.81. The weighted-average remaining contractual life of those
options is 7.4 years.

The Company has an Employee Stock Ownership Plan and Trust ("ESOP") for
certain of its United States employees who are not covered by collective
bargaining agreements. The ESOP requires contributions by the Company equal to
3% of the annual compensation of the ESOP participants. The Company may, at its
discretion, make additional contributions within specified limits. Contributions
to the Plan of $665,000, $685,000 and $719,000 were expensed in 1996, 1995 and
1994, respectively.

On October 6, 1995 the Company's Board of Directors declared a dividend of
one Right for each share of Intermet Common Stock held of record at the close of
business on October 17, 1995, pursuant to a Shareholder Protection Rights
Agreement dated October 6, 1995. The Rights are generally not exercisable until
10 days after an announcement by the Company that a person, as defined
(excluding, with certain limitations, any current 10% or more shareholders who
do not acquire additional shares, any of the Company's ESOP's or benefit plans,
and the Company or any of its wholly-owned subsidiaries), has acquired 10% of
the Company's Common Stock or announces a tender offer which could result in the
ownership of 10% or more of the Company's Common Stock. Each Right, should it
become exercisable, will entitle the owner to buy 1/100th of a share of
Participating Preferred Stock, a new series of the Company's Preferred Stock, at
an exercise price of $40.

In the event the Rights become exercisable as a result of the acquisition
of shares, each Right will entitle the owner, other than the acquiring person,
to buy at the Rights' then current exercise price a number of shares of Common
Stock with a market value equal to twice the exercise price. In addition, unless
the acquiring person owns more than 50% of the outstanding shares of Common
Stock, the Board of Directors may elect to exchange all outstanding Rights
(other than those owned by such acquiring person or affiliates thereof) at an
exchange ratio of one share of Common Stock per Right. Unless the Company merges
with another company under certain conditions or redeems or exchanges the Rights
before October 6, 2005, the Rights will expire on such date.

F-13
<PAGE> 48

INTERMET CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

8. COMMITMENTS AND CONTINGENCIES

Future minimum rental payments required under building and equipment
operating leases that have initial or remaining non-cancelable lease terms in
excess of one year at December 31, 1996 are as follows (in thousands of
dollars):

<TABLE>
<S> <C>
1997........................................................ $ 5,308
1998........................................................ 4,189
1999........................................................ 3,022
2000........................................................ 2,217
2001........................................................ 1,789
Thereafter.................................................. 2,058
-------
$18,583
=======
</TABLE>

Total rental expense under operating leases aggregated $2,833,000,
$2,671,000 and $2,938,000 in 1996, 1995 and 1994, respectively.

At December 31, 1996 the Company had commitments for the purchase of
equipment totaling approximately $7,746,000.

Certain operating and non-operating subsidiaries of the Company have been
named as potentially responsible parties liable for cleanup of known
environmental conditions. For known environmental situations, the Company, with
the assistance of environmental engineers and consultants, has accrued reserves
to cover estimated future environmental expenditures. Environmental reserves at
December 31, 1996 and 1995 approximated $5,400,000 and $1,600,000 respectively.
The Company has initiated corrective action and/or preventative environmental
projects to ensure the safe and lawful operation of its facilities. There could
exist, however, more extensive or unknown environmental situations at existing
or previously owned businesses for which the future cost is not known or exceeds
amounts accrued at December 31, 1996.

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 these above-mentioned proceedings or matters will have a material adverse
effect on the Company's consolidated financial position or results of
operations.

9. RETIREMENT PLANS AND BENEFITS

The Company maintains several noncontributory defined benefit pension plans
for certain of its U.S. employees covered by collective bargaining agreements.
The benefits are based on years of service. The Company's policy is to fund
amounts as required under applicable laws and regulations.

Net pension expense included the following components (in thousands of
dollars):

<TABLE>
<CAPTION>
1996 1995 1994
------- ------- ------
<S> <C> <C> <C>
Service cost.............................................. $ 842 $ 693 $ 685
Interest cost on projected benefit obligations............ 1,805 1,709 1,554
Return on plan assets..................................... (3,886) (2,842) (381)
Net amortization and deferral............................. 2,494 1,847 (409)
------- ------- ------
$ 1,255 $ 1,407 $1,449
======= ======= ======
</TABLE>

F-14
<PAGE> 49

INTERMET CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The reconciliation of the plans' funded status to the amounts reported in
the Company's consolidated balance sheets at December 31, 1996 and 1995 is as
follows (in thousands of dollars):

<TABLE>
<CAPTION>
1996 1995
------- -------
<S> <C> <C>
Actuarial present value of accumulated benefit obligations:
Vested.................................................... $47,533 $22,668
Nonvested................................................. 3,416 2,009
------- -------
Total accumulated benefit obligations....................... $50,949 $24,677
======= =======
Projected benefit obligations............................... $50,949 $24,677
Plan assets at fair value................................... 47,435 17,895
------- -------
Excess of projected benefit obligations over assets......... 3,514 6,782
Unrecognized prior service cost............................. (1,228) (1,382)
Unrecognized net actuarial loss............................. (795) (2,682)
Unrecognized transition obligation.......................... (276) (328)
Additional minimum liability................................ 2,299 4,392
------- -------
Pension liabilities included in consolidated balance
sheets.................................................... $ 3,514 $ 6,782
======= =======
</TABLE>

The discount rate used in determining the actuarial present value of the
projected benefit obligations was 7.625% in 1996 and 7.5% in 1995. The expected
long-term rate of return on assets used in determining net pension expense was
9% in 1996, 1995 and 1994. Plan assets consist of publicly traded stocks and
bonds, cash equivalents and insurance contracts.

The Company maintains several defined contribution plans for certain hourly
employees. Contributions to these plans are accrued based on hours worked by
each employee, and totaled $724,000, $635,000 and $597,000 in 1996, 1995 and
1994, respectively. Some of the plans allow participants to make pretax
contributions, as a percentage of their compensation.

The Company also maintains defined contribution plans for domestic salaried
employees. The Company contributes a specified percentage of the annual
compensation of participants. Participants are also allowed to make pretax
contributions to the plans, as a percentage of their compensation. The Company
matches participant contributions, up to a specified limit. The Company accrued
contributions to the plans of $991,000, $1,023,000 and $1,077,000 in 1996, 1995
and 1994, respectively.

In addition to providing pension benefits, the Company provides health care
and life insurance benefits to certain retired U.S. employees and their
dependents. Salaried employees can become eligible for retiree health care
benefits at age 55 depending on years of service. Certain hourly employees
currently can become eligible for retiree health care benefits at age 60
depending on years of service. Retirees receive substantially the same health
care benefits as active employees. The medical plans generally pay 80% of most
medical expenses less deductible amounts. Salaried employees also contribute to
the cost of dependent coverage. The salaried employee coverage converts to a
Medicare supplement at age 65, while most hourly employee coverage ceases at age
65. Net postretirement benefit expense for 1996, 1995 and 1994 included the
following components (in thousands of dollars):

<TABLE>
<CAPTION>
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
Service cost................................................ $1,073 $ 909 $1,151
Interest cost on accumulated benefit obligation............. 2,425 2,414 2,426
Amortization................................................ (496) (715) 31
------ ------ ------
$3,002 $2,608 $3,608
====== ====== ======
</TABLE>

F-15
<PAGE> 50

INTERMET CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The reconciliation of the postretirement benefit plans' funded status to
the amounts reported in the Company's consolidated balance sheets at December
31, 1996 and 1995 is as follows (in thousands of dollars):

<TABLE>
<CAPTION>
1996 1995
------- -------
<S> <C> <C>
Present value of accumulated postretirement benefit
obligation:
Retirees.................................................... $21,055 $15,081
Fully eligible active participants.......................... 3,126 2,373
Other active participants................................... 14,771 16,291
------- -------
38,952 33,745
Unrecognized net gain....................................... 10,955 5,540
------- -------
Postretirement benefit liability included in consolidated
balance sheets............................................ $49,907 $39,285
======= =======
</TABLE>

The discount rate used in determining the present value of the accumulated
postretirement benefit obligation was 7.625% at December 31, 1996 and 7.5% at
December 31, 1995. The assumed health care cost trend rate used in measuring the
accumulated postretirement benefit obligation was 7.5% to 11% in 1996, declining
by 0.5% per year to an ultimate rate of 5.5% to 6% for the applicable employee
age groups. Certain subsidiaries providing a dental benefit assumed a 7.0% cost
trend rate for dental in 1996, declining to 5.5% in 1998. If the assumed health
care cost trend rate were increased 1% in all future years, the accumulated
postretirement benefit obligation would increase by $2,582,000 and
postretirement benefit expense would increase by $360,000.

10. INCOME TAXES

The provision (benefit) for income taxes consists of the following (in
thousands of dollars):

<TABLE>
<CAPTION>
1996 1995 1994
------- ------- ------
<S> <C> <C> <C>
Current:
Federal................................................. $ 6,642 $ 7,436 $ 651
State................................................... 2,448 2,058 1,629
Foreign................................................. 8,443 7,397 4,416
------- ------- ------
17,533 16,891 6,696
Deferred:
Federal................................................. (5,280) 3,288 (651)
State................................................... (1,748) 96 --
Foreign................................................. 664 (150) (149)
------- ------- ------
(6,364) 3,234 (800)
------- ------- ------
$11,169 $20,125 $5,896
======= ======= ======
</TABLE>

Income taxes paid were approximately $17,380,000, $8,407,000 and $3,067,000
in 1996, 1995 and 1994, respectively.

F-16
<PAGE> 51

INTERMET CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The provision (benefit) for income taxes differs from the amount computed
by applying statutory U.S. federal income tax rates to income before income
taxes for the following reasons (in thousands of dollars):

<TABLE>
<CAPTION>
1996 1995 1994
-------- ------- -------
<S> <C> <C> <C>
Provision (benefit) for income taxes at U.S. statutory
rate.................................................. $ 19,013 $15,932 $(1,781)
Losses with no tax effect............................... -- 2,517 3,683
Difference between U.S. and foreign tax rates........... 3,734 3,081 998
Utilization of NOL and credit carryforwards............. (2,137) (3,608) --
State income taxes, net of federal income tax
benefits.............................................. 455 1,400 1,059
Reduction in deferred valuation allowance............... (11,513) -- --
Other................................................... 1,617 803 1,937
-------- ------- -------
$ 11,169 $20,125 $ 5,896
======== ======= =======
</TABLE>

The tax effects of the types of temporary differences and carryforwards
which give rise to deferred income tax assets (liabilities) at December 31, 1996
and 1995 are as follows (in thousands of dollars):

<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Compensation and benefit items, primarily related to SFAS
106....................................................... $ 27,514 $ 21,653
Operating loss, capital loss, foreign tax credit and AMT
credit carryforwards...................................... 19,253 13,269
Other temporary differences................................. 13,050 4,901
-------- --------
Gross deferred income tax assets.......................... 59,817 39,823
Depreciation and related items.............................. (22,103) (10,863)
Other temporary differences................................. (11,884) (2,798)
-------- --------
Gross deferred income tax liabilities..................... (33,987) (13,661)
-------- --------
Net deferred tax asset.................................... 25,830 26,162
Valuation allowance......................................... (14,819) (26,332)
-------- --------
Net deferred income taxes................................... $ 11,011 $ (170)
======== ========
</TABLE>

These amounts are included in the consolidated balance sheets as follows
(in thousands of dollars):

<TABLE>
<CAPTION>
1996 1995
------- -------
<S> <C> <C>
Current assets.............................................. $13,242 $ 3,774
Other noncurrent assets..................................... 4,136 1,260
Other noncurrent liabilities................................ (6,367) (5,204)
------- -------
$11,011 $ (170)
======= =======
</TABLE>

Financial Accounting Standard Board Statement No. 109 "Accounting For
Income Taxes" ("Statement No. 109") requires the reduction of the deferred tax
asset by a valuation allowance, based on the weight of available evidence, if it
is more likely than not that a portion or all of the deferred tax asset will not
be realized. For the year ended December 31, 1996 the Company reduced its
valuation allowance by $11,513,000, due to the increased viability of
anticipated future income. The company has continued to provide a valuation
allowance in the amount of $14,819,000 for capital losses, foreign tax credits
and operating loss carryforwards, the utilization of which is presently
uncertain.

There are certain limitations on the use of most of the tax loss and credit
carryforwards noted above. Tax loss and credit carryforwards with a value of
approximately $19,253,000 expire in various amounts between 1997 and 2010.

F-17
<PAGE> 52

INTERMET CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

11. GEOGRAPHIC AREA AND MAJOR CUSTOMER INFORMATION

The Company produces iron castings, principally for automotive
manufacturers in North America and Europe and effective with the acquisition of
Sudbury, Inc. (See Note 2) the Company supplies applications of custom coatings;
cranes, truck bodies and related equipment; and precision machine components.
All sales are to unaffiliated customers. Revenue and income amounts for the
three years ended December 31, 1996, and identifiable assets at the end of each
year, were as follows for U.S. and foreign operations (in thousands of dollars):

<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Net sales:
U.S................................................... $441,942 $448,447 $433,067
Foreign............................................... 92,536 93,302 68,202
Operating profit (loss):
U.S................................................... 38,338 36,763 (9,051)
Foreign............................................... 17,765 16,052 10,779
Income (loss) before income taxes:
U.S................................................... 36,960 30,394 (14,476)
Foreign............................................... 17,362 15,126 9,387
Identifiable assets:
U.S................................................... 469,359 220,548 250,498
Foreign............................................... 63,003 53,523 55,766
</TABLE>

Net sales to customers exceeding 10% of consolidated net sales were as
follows (as a percentage of consolidated net sales):

<TABLE>
<CAPTION>
1996 1995 1994
CUSTOMER ---- ---- ----
<S> <C> <C> <C>
Chrysler.................................................... 23% 20% 23%
Ford........................................................ 19 18 23
General Motors.............................................. 12 18 14
</TABLE>

Credit is extended based on an evaluation of the customer's financial
condition, and generally collateral is not required. Credit losses are provided
for in the financial statements and consistently have been within management's
expectation.

F-18
<PAGE> 53

INTERMET CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

12. QUARTERLY DATA AND SHARE INFORMATION (UNAUDITED)

<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
--------- --------- --------- ---------
(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
1996
Net sales................................... $134,158 $143,782 $130,279 $126,259
Gross profit................................ 19,777 24,277 17,830 15,976
Net income.................................. 8,810 10,814 6,786 16,743
Net income per common share................. .35 .42 .27 .65
Share prices (Nasdaq):
High...................................... 13.375 17.625 14.375 16.25
Low....................................... 9.75 12.00 10.375 10.125
1995
Net sales................................... $153,278 $149,035 $117,331 $122,105
Gross profit................................ 21,650 27,460 12,727 22,575
Net income.................................. 6,520 9,537 3,377 5,961
Net income per common share................. .26 .39 .14 .24
Share prices (Nasdaq):
High...................................... 8.125 9.75 12.625 14.125
Low....................................... 6.25 7.625 9.50 9.50
</TABLE>

Third and fourth quarter sales are usually lower than the first and second
quarter sales due to plant closings by automotive manufacturers for vacations
and model changeovers. The above share price information represents inter-dealer
transactions in The Nasdaq National Market without retail markup, markdown or
commission.

F-19
<PAGE> 54

INTERMET CORPORATION

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
---------------------- ----------------------
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1997 1996 1997 1996
--------- --------- --------- ---------
(UNAUDITED)
(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Net sales........................................... $210,898 $143,782 $420,389 $277,940
Cost of sales....................................... 182,639 119,505 364,537 233,886
-------- -------- -------- --------
Gross profit........................................ 28,259 24,277 55,852 44,054
Operating expenses:
Selling........................................... 2,498 882 4,924 1,763
General and administrative........................ 5,089 3,637 9,622 7,885
-------- -------- -------- --------
7,587 4,519 14,546 9,648
-------- -------- -------- --------
Operating profit.................................... 20,672 19,758 41,306 34,406
Other income and expenses:
Interest income................................... 200 276 437 447
Interest expense.................................. (3,151) (660) (6,147) (1,439)
Other, net........................................ (1,241) (105) (1,407) (44)
-------- -------- -------- --------
(4,192) (489) (7,117) (1,036)
-------- -------- -------- --------
Income before income taxes.......................... 16,480 19,269 34,189 33,370
Provision for income taxes.......................... 5,344 8,455 12,103 13,746
-------- -------- -------- --------
Net income.......................................... $ 11,136 $ 10,814 $ 22,086 $ 19,624
======== ======== ======== ========
Earnings per share.................................. $ 0.44 $ 0.42 $ 0.86 $ 0.77
======== ======== ======== ========
</TABLE>

See accompanying notes.

F-20
<PAGE> 55

INTERMET CORPORATION

INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
----------- ------------
(UNAUDITED)
(IN THOUSANDS OF DOLLARS)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 7,403 $ 23,485
Accounts receivable:
Trade, less allowance for doubtful accounts of $1,697
in 1997 and $949 in 1996.............................. 109,722 87,049
Other.................................................. 7,955 4,642
---------- ---------
117,677 91,691
Inventories............................................... 57,103 56,047
Other current assets...................................... 8,478 18,071
---------- ---------
Total current assets.............................. 190,661 189,294
Property, plant and equipment, at cost...................... 442,173 436,704
Less:
Foreign industrial development grants, net of
amortization........................................... (4,039) (4,804)
Accumulated depreciation and amortization................. (216,571) (209,118)
---------- ---------
Net property, plant and equipment........................... 221,563 222,782
Goodwill, net of amortization............................... 86,963 88,223
Other noncurrent assets..................................... 23,749 26,013
---------- ---------
Total assets...................................... $ 522,936 $ 526,312
========== =========
</TABLE>

See accompanying notes.

F-21
<PAGE> 56

INTERMET CORPORATION

INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
----------- ------------
(UNAUDITED)
(IN THOUSANDS OF DOLLARS)
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................................... $ 57,966 $ 54,721
Income taxes payable...................................... 7,389 15,198
Accrued liabilities....................................... 52,755 51,474
Accrued Sudbury acquisition costs......................... 1,306 37,299
Long-term debt due within one year........................ 1,891 12,676
-------- --------
Total current liabilities.............................. 121,307 171,368
Non current liabilities:
Long term debt due after one year......................... 179,627 149,477
Retirement benefits....................................... 54,790 53,421
Other noncurrent liabilities.............................. 6,029 8,107
-------- --------
Total noncurrent liabilities........................... 240,446 211,005
Minority interest........................................... 2,337 2,837
Shareholders' equity:
Common stock.............................................. 2,523 2,517
Capital in excess of par value............................ 60,922 57,308
Retained earnings......................................... 98,337 78,267
Accumulated translation adjustments....................... (2,331) 3,548
Minimum pension liability adjustment...................... (485) (485)
Unearned restricted stock................................. (120) (53)
-------- --------
Total shareholders' equity............................. 158,846 141,102
-------- --------
Total liabilities and shareholders' equity............. $522,936 $526,312
======== ========
</TABLE>

See accompanying notes.

F-22
<PAGE> 57

INTERMET CORPORATION

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
SIX MONTHS ENDED
------------------------------
JUNE 30, JUNE 30,
1997 1996
------------- -------------
(UNAUDITED)
(IN THOUSANDS OF DOLLARS)
<S> <C> <C>
OPERATING ACTIVITIES
Net income.................................................. $ 22,086 $ 19,624
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization.......................... 18,582 14,475
Other.................................................. (409) 58
Changes in assets and liabilities:
Accounts receivable............................... (27,735) (13,476)
Inventories....................................... (1,801) (840)
Accounts payable.................................. 3,701 7,829
Other assets and liabilities...................... 6,161 3,395
-------- --------
Net cash provided by operating activities................... 20,585 31,065
INVESTING ACTIVITIES
Additions to property, plant and equipment.................. (18,672) (8,194)
Sudbury acquisition costs................................... (35,993) --
Other....................................................... 2,984 44
-------- --------
Net cash used in investing activities....................... (51,681) (8,150)
FINANCING ACTIVITIES
Net increase (decrease) in borrowings....................... 19,625 (1,047)
Issuance of common stock.................................... 537 298
Dividends paid.............................................. (2,017) --
Other....................................................... 2 2,026
-------- --------
Net cash provided by financing activities................... 18,147 1,277
Effect of exchange rate changes on cash and cash
equivalents............................................... (3,133) (485)
-------- --------
Net (decrease) increase in cash and cash equivalents........ (16,082) 23,707
Cash and cash equivalents at beginning of period............ 23,485 11,173
-------- --------
Cash and cash equivalents at end of period.................. $ 7,403 $ 34,880
======== ========
</TABLE>

See accompanying notes.

F-23
<PAGE> 58

INTERMET CORPORATION

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 1997 (UNAUDITED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of
Intermet Corporation ("Intermet") and its subsidiaries (collectively, the
"Company") 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 and six
months ended June 30, 1997 are not necessarily indicative of the results that
may be expected for the year ended December 31, 1997. For further information,
refer to the consolidated financial statements and footnotes thereto included in
the Company's annual report on Form 10-K for the year ended December 31, 1996.

Inventories

Inventories consist of the following (in thousands of dollars):

<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
-------- ------------
<S> <C> <C>
Finished goods.............................................. $10,963 $13,530
Work in process............................................. 15,509 13,408
Raw materials............................................... 12,199 11,679
Supplies and patterns....................................... 18,432 17,430
------- -------
$57,103 $56,047
======= =======
</TABLE>

Property, Plant and Equipment

Property, plant and equipment consist of the following (in thousands of
dollars):

<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
-------- ------------
<S> <C> <C>
Land........................................................ $ 4,964 $ 5,260
Buildings and improvements.................................. 86,568 88,459
Machinery and equipment..................................... 313,868 335,003
Construction in progress.................................... 36,773 7,982
-------- --------
$442,173 $436,704
======== ========
</TABLE>

Intangible Assets

Intangible assets consist principally of costs in excess of net assets
acquired of $86,963,000 and $88,223,000 (net of accumulated amortization of
$3,097,000 and $1,837,000) at June 30, 1997 and December 31, 1996, respectively.
Such costs are being amortized using the straight-line method over periods
ranging from ten to forty years.

Income Per Common Share

In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, "Earnings per Share", which is required to be adopted on December 31,
1997. At that time, the Company will be required to

F-24
<PAGE> 59

INTERMET CORPORATION

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

change the method currently used to compute earnings per share and to restate
all prior periods. Under the new requirements for calculating primary earnings
per share, the dilutive effect of stock options will be excluded. Earnings per
share and fully diluted earnings per share for the three and six month periods
ended June 30, 1997 and June 30, 1996, as calculated pursuant to Statement No.
128, do not differ materially from the reported amounts.

2. DEBT

Long term debt consists of the following (in thousands of dollars):

<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
-------- ------------
<S> <C> <C>
Intermet.................................................... $174,500 $143,400
Subsidiaries................................................ 7,018 18,753
-------- --------
Total long-term debt........................................ 181,518 162,153
Less amounts due within one year............................ 1,891 12,676
-------- --------
Long-term debt due after one year........................... $179,627 $149,477
======== ========
</TABLE>

3. ENVIRONMENTAL AND LEGAL MATTERS

The Company has initiated corrective action and/or preventative
environmental projects to ensure the safe and lawful operation of its
facilities. There could exist, however, more extensive or unknown environmental
situations at existing or previously owned businesses for which the future cost
is not known or exceeds amounts accrued at June 30, 1997.

4. ACQUISITIONS AND DISPOSITIONS

In May 1997, the Company purchased Ford Motor Company's interest in New
River Castings Company's ("New River") outstanding preferred stock for $500,000.
Intermet now owns 100% of the New River facility.

In December, 1996, the Company acquired for cash substantially all of the
outstanding stock of Sudbury, Inc. ("Sudbury") for $182,434,000, including costs
of $5,277,000 directly related to the acquisition. The accompanying balance
sheet includes as a current liability remaining accrued acquisition costs of
approximately $1,306,000. The transaction has been accounted for as a purchase
and, accordingly, the purchase price has been allocated to the assets purchased
and the liabilities assumed based upon their fair values at the date of
acquisition. The excess of the purchase price over the fair values of tangible
net assets acquired was $82,598,000 and has been recorded as goodwill, which is
being amortized on a straight-line basis over 40 years. Sudbury and its
subsidiaries manufacture high-quality castings and industrial products. The
products are used primarily in the automotive, appliance and construction
markets providing iron, aluminum and zinc castings; applications of custom
coatings; cranes, truck bodies and related equipment; and precision machined
components.

F-25
<PAGE> 60

INTERMET CORPORATION

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The following represents the unaudited pro forma consolidated results of
operations for the Company for the three and six months ended June 30, 1996,
assuming the acquisition described above occurred on January 1, 1996 (in
thousands of dollars, except for per share data):

<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED ENDED
JUNE 30, JUNE 30,
1996 1996
------------ ----------
<S> <C> <C>
Net sales................................................... $220,978 $430,335
Net income.................................................. 13,709 23,199
Income per common share..................................... $0.54 $0.91
</TABLE>

These pro forma results are presented for comparative purposes only. They
are not necessarily indicative of what would have occurred had the acquisitions
actually transpired on January 1, 1996, or of future results of operations.

5. INVESTMENT IN IWESA GMBH

During the second quarter of 1997, the Company's ownership of the common
stock of IWESA GmbH ("IWESA") increased from 49% to 72%. The Company's majority
control of IWESA is likely to be temporary and, accordingly, the Company is
accounting for this investment on the equity method. For the six month period
ended June 30, 1997, the Company's equity in net loss of IWESA is 1,352,000 DM
($788,000) (none in 1996).

6. INCOME TAXES

The decrease in the effective tax rate for the six month period ended June
30, 1997 from the same period in 1996, is attributable to the tax benefits from
the utilization of net operating loss tax carryforwards.

F-26
<PAGE> 61

======================================================

NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS, AND IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT
TO THE DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OFFERED HEREBY BY ANYONE IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH
THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO
ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.

------------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
Incorporation of Certain Information by
Reference............................... 2
Additional Information.................... 2
Prospectus Summary........................ 3
Risk Factors.............................. 7
Cautionary Statements for Purposes of the
"Safe Harbor" Provisions of the Private
Securities Litigation Reform Act of
1995.................................... 8
Use of Proceeds........................... 9
Capitalization............................ 9
Price Range of Common Stock and
Dividends............................... 10
Selected Consolidated Financial Data...... 11
Management's Discussion and Analysis of
Financial Condition and Results of
Operations.............................. 12
Business.................................. 17
Management................................ 28
Description of Common Stock............... 29
Selling Shareholders...................... 29
Underwriting.............................. 31
Legal Matters............................. 32
Experts................................... 32
Indemnification........................... 32
</TABLE>

======================================================

3,000,000 SHARES

INTERMET LOGO

COMMON STOCK

------------------------

PROSPECTUS
------------------------

DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION

PRUDENTIAL SECURITIES INCORPORATED

INTERSTATE/JOHNSON LANE
CORPORATION

AUGUST , 1997

======================================================
<PAGE> 62

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND REGISTRATION.

The following sets forth the estimated expenses, in connection with the
issuance and distribution of the securities offered hereby, all of which are
payable by the Company:

<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee......... $ 17,250
NASD Filing Fee............................................. 6,193
Blue Sky Fees and Expenses.................................. 3,000
Printing Expenses........................................... 38,000
Legal Fees and Expenses..................................... 100,000
Accounting Fees and Expenses................................ 17,000
Transfer Agent Fees and Expenses............................ 500
Miscellaneous............................................... 18,057
--------
Total.................................................. $200,000
========
</TABLE>

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

The Registrant's Amended and Restated Articles of Incorporation (which are
incorporated herein as Exhibit 4.1) provide that, subject to Georgia law, a
director shall not be personally liable to the corporation or its shareholders
or any other person for breach of any duty as a director, whether as a fiduciary
or otherwise. Georgia law permits the Articles of Incorporation to include a
provision eliminating the liability of a director for monetary damages for
breach of duty of care or any other duty owed to the corporation as a director,
except for liability: (a) for any appropriation, in violation of his duties, of
any business opportunity of the corporation, (b) for acts or omissions which
involve intentional misconduct or a knowing violation of law, (c) for unlawful
corporate distributions or (d) for any transaction from which the director
received an improper benefit.

Article VII of the Bylaws of the Registrant authorize indemnification of
the Registrant's officers and directors for any liability and expense incurred
by them in connection with or resulting from any threatened, pending or
completed legal action or other proceeding or investigation by reason of his
being or having been an officer or director. An officer or director may only be
indemnified if he acted in good faith and in a manner he reasonably believed to
be in, or not opposed to, the best interests of the Registrant, and, with
respect to a criminal matter, he did not have reasonable cause to believe that
his conduct was unlawful. No officer or director who has been adjudged liable
for negligence or misconduct in the performance of his corporate duties is
entitled to indemnification, unless and except to the extent that the court
reaching such a determination of liability, in view of all the relevant
circumstances, shall also determine that despite such liability such person is
fairly and reasonably entitled to indemnification.

Any officer or director who has been wholly successful on the merits or
otherwise in an action or proceeding in his official capacity is entitled to
indemnification by the Registrant as of right. All other determinations in
respect of indemnification shall be made by any of the following: (a) if there
are two or more disinterested directors a majority vote of a quorum of
disinterested directors; (b) special legal counsel selected in accordance with
Georgia law; or (c) the shareholders, but shares owned by or voted under the
control of a director who at the time does not qualify as a disinterested
director may not be voted on the determination.

In the event any payments are made to an officer or director by way of
indemnity, other than by court order, action of the shareholders or by an
insurance carrier, the Registrant must notify the shareholders of the Registrant
of such payment and all relevant details not later than the next annual meeting
of shareholders unless such meeting is within 3 months from the date of such
payment and in no event later than 15 months after the date of such payment.

II-1
<PAGE> 63

The provisions of the Registrant's Bylaws on indemnification are consistent
in all material respects with the laws of the State of Georgia, which authorize
indemnification of corporate officers and directors.

The Registrant's directors and officers are insured against losses arising
from any claim against them as such for wrongful acts or omissions, subject to
certain limitations.

Reference is also made to Section 8 of the Underwriting Agreement filed as
Exhibit 1 hereto.

ITEM 16. EXHIBITS.

The following exhibits are filed as part of this Registration Statement:

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
<C> <S>
1 Form of Underwriting Agreement(1)
4.1 Amended and Restated Articles of Incorporation of the
Registrant (included as Exhibit 4.1 to the Registrant's Form
S-3 Registration Statement, filed June 3, 1992, File No.
33-48304, previously filed with the Commission and
incorporated herein by reference).
4.2 Bylaws, as amended (included as Exhibit 3.1 and 4.1 to the
Registrant's Quarterly Report on Form 10-Q for the quarter
ended October 1, 1995, File No. 0-13787, and as Exhibit 3.3
to the Registrant's Annual Report on Form 10-K for the year
ended December 31, 1996, File No. , each previously filed
with the Commission and incorporated herein by reference).
4.3 Shareholders Protection Rights Agreement, which includes a
Form of Rights Certificate and of Election to Exercise,
included as Exhibit A to the Rights Agreement (included as
Exhibit 4 to the Registrant's Form 8-K, dated October 6,
1995, File No. 0-13787, previously filed with the Commission
and incorporated herein by reference).
5 Opinion of Dickinson, Wright, Moon, Van Dusen & Freeman.(1)
23.1 Consent of Ernst & Young LLP.(2)
23.2 Consent of Dickinson, Wright, Moon, Van Dusen & Freeman
(contained in its opinion to be filed as Exhibit 5
hereto).(1)
24 Power of Attorney.(2)
</TABLE>

- -------------------------

(1) To be filed by amendment.

(2) Previously filed.

ITEM 17. UNDERTAKINGS.

(a) The Company hereby undertakes that, for purposes of determining
any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of
the Securities Exchange Act of 1934 (and, where applicable, each filing of
an employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in this
Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered therein and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.

(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Company pursuant to the foregoing provisions, or
otherwise, the Company has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the Company of expenses incurred or paid by a director,
officer or controlling person of the Company in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Company will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of

II-2
<PAGE> 64

appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.

(1) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed
as part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Company pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to
be part of this registration statement as of the time it was declared
effective.

(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a
form of prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.

II-3
<PAGE> 65

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
Company has duly caused this Amendment to Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of Troy,
State of Michigan, on August 6, 1997.

INTERMET CORPORATION

By: /s/ JOHN DODDRIDGE

------------------------------------
John Doddridge
Chairman of the Board of Directors
and Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment to Registration Statement has been signed by the following
persons in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ JOHN DODDRIDGE Chairman of the Board of Directors and August 6, 1997
- ------------------------------------------ Chief Executive Officer (Principal
John Doddridge Executive Officer)
* Director
- ------------------------------------------
Vernon R. Alden
* Director
- ------------------------------------------
J. Frank Broyles
* Director
- ------------------------------------------
John P. Crecine
* Director
- ------------------------------------------
Anton Dorfmueller, Jr.
* Director
- ------------------------------------------
Norman Ehlers
* Director
- ------------------------------------------
John B. Ellis
* Director
- ------------------------------------------
Wilfred E. Gross, Jr.
* Director
- ------------------------------------------
A. Wayne Hardy
* Director
- ------------------------------------------
John R. Horne

</TABLE>

II-4
<PAGE> 66

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
* Director
- ------------------------------------------
Thomas H. Jeffs II
* Director
- ------------------------------------------
George W. Mathews, Jr.
* Director
- ------------------------------------------
Harold C. McKenzie, Jr.
* Director
- ------------------------------------------
J. Mason Reynolds
* Director
- ------------------------------------------
Curtis W. Tarr

/s/ DORETHA J. CHRISTOPH Vice President--Finance, Chief August 6, 1997
- ------------------------------------------ Financial Officer and Secretary
Doretha J. Christoph (Principal Financial Officer)

/s/ WALTER T. KNOLLENBERG Controller (Principal Accounting August 6, 1997
- ------------------------------------------ Officer)
Walter T. Knollenberg
</TABLE>

*By: /s/ DORETHA J. CHRISTOPH

---------------------------------

Doretha J. Christoph

Attorney-in-Fact

August 6, 1997

II-5
<PAGE> 67

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
<C> <S>

1 Form of Underwriting Agreement(1)
4.1 Amended and Restated Articles of Incorporation of the
Registrant (included as Exhibit 4.1 to the Registrant's Form
S-3 Registration Statement, filed June 3, 1992, File No.
33-48304, previously filed with the Commission and
incorporated herein by reference).
4.2 Bylaws, as amended (included as Exhibit 3.1 and 4.1 to the
Registrant's Quarterly Report on Form 10-Q for the quarter
ended October 1, 1995, File No. 0-13787, and as Exhibit 3.3
to the Registrant's Annual Report on Form 10-K for the year
ended December 31, 1996, File No. 0-13787, each previously
filed with the Commission and incorporated herein by
reference).
4.3 Shareholders Protection Rights Agreement, which includes a
Form of Rights Certificate and of Election to Exercise,
included as Exhibit A to the Rights Agreement (included as
Exhibit 4 to the Registrant's Form 8-K, dated October 6,
1995, File No. 0-13787, previously filed with the Commission
and incorporated herein by reference).
5 Opinion of Dickinson, Wright, Moon, Van Dusen & Freeman.(1)
23.1 Consent of Ernst & Young LLP.(2)
23.2 Consent of Dickinson, Wright, Moon, Van Dusen & Freeman
(contained in its opinion to be filed as Exhibit 5
hereto).(1)
24 Power of Attorney.(2)
</TABLE>

- -------------------------

(1) To be filed by amendment.

(2) Previously filed.