<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934 For the fiscal year ended December 31, 1997, or
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the transition period from to .
Commission File No. 0-13787
INTERMET CORPORATION
(Exact name of registrant as specified in its charter)
GEORGIA 58-1563873
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
5445 Corporate Drive, Suite 200, Troy, Michigan 48098-2683
(Address of principal executive offices) (Zip code)
(248) 952-2500
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
None Not applicable
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.10 par value
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No .
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein and will not be contained, to the best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
Aggregate market value of the voting stock held by non-affiliates of the
registrant as of March 2, 1998 was $511,142,523 based on $20.063 per share, the
closing sale price of the Common Stock as quoted on the Nasdaq National Market.
For purposes of determining the aggregate market value of the Registrant's
voting stock held by non-affiliates, shares held by all current directors and
executive officers of the Registrant have been excluded. The exclusion of such
shares is not intended to, and shall not, constitute a determination as to which
persons or entities may be "affiliates" of the Registrant as defined by the
Securities and Exchange Commission.
At March 2, 1998 there were 25,476,874 shares of Common Stock, $0.10 par value,
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's Annual Report to Shareholders for the fiscal year
ended December 31, 1997 are incorporated by reference into Parts I and II.
Portions of the registrant's definitive Proxy Statement for the 1998 Annual
Meeting of Shareholders, filed with the Commission, are incorporated by
reference into Part III.
<PAGE> 2
PART I
ITEM 1. BUSINESS
GENERAL
The Company is the largest independent producer of precision ductile iron
castings in the world, specializing in the design and manufacture of complex
precision-engineered ductile iron, 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. The Company provides cast products used by over 20 automobile original
equipment manufacturers ("OEMs"), including: Chrysler, Ford, General Motors,
BMW, Honda and Toyota and their leading suppliers throughout the world,
including: ITT Automotive, Dana and LucasVarity.
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, Tier 1 and Tier 2 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 processes. 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 total casting capacity of 600,000 tons per year, on a straight-time basis,
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
acquisition of Sudbury, Inc. ("Sudbury") in December 1996 significantly
increased its ferrous casting capacity.
The Company's castings are used primarily in passenger cars and light trucks, as
well as in heavy trucks. The castings also have railroad, municipal, marine and
construction applications. The Company specializes in safety-related parts
critical to vehicle control that meet its customers' exacting metallurgical,
dimensional and quality control standards. Products manufactured for the
automotive, light truck and heavy truck industries include brake and suspension
parts, steering components, differential cases, camshafts and crankshafts.
The Company also manufactures zinc and aluminum die castings, cantilevered
cranes, specialty service vehicle truck bodies and precision machined components
for the automotive and industrial markets. In addition, the Company serves the
automotive and appliance industries through the application of coatings to metal
parts, components and finished products.
As used herein, the term "Company" refers collectively to Intermet Corporation
and its subsidiaries, except where otherwise indicated by context.
<PAGE> 3
RECENT DEVELOPMENTS
In December 1996, the Company acquired substantially all of the outstanding
stock of Sudbury, Inc. for $182,434,000 in cash, including costs of $5,277,000
directly related to the acquisition. The transaction was 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 $85,563,000 and was 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.
In November 1996, the Company purchased for cash a minority interest in IWESA
GmbH ("IWESA"), for DM 4,000,000. The Company also purchased a newly issued
share from IWESA for DM 374,000, bringing its share interest to 49%, and
contributed DM 6,000,000 to the capital reserves of IWESA in support of new
capital expansion projects. At December 31, 1996, the Company's investment in
IWESA was $6,780,000 (at then current exchange rates) and was accounted for on
the equity method. The operating results of IWESA were not significant during
1996. During 1997, the Company increased its ownership interest in IWESA to
82.4% and accordingly, accounted for IWESA as a consolidated subsidiary as of
December 31, 1997. The Company's equity in net loss of IWESA for 1997 is DM
6,534,000 ($3,708,000) and is included in other income and expense in the
accompanying statement of operations. IWESA is a precision machining and
engineering company located in Saarbrucken, Germany, producing parts for the
commercial motor vehicle and industrial markets.
The Company has an unsecured revolving credit agreement with a bank group which
was refinanced in November 1996. The agreement, which expires in November 1999,
provides for loans aggregating $200,000,000. The borrowing limit includes
certain standby letters of credit. At December 31, 1997 such standby letters of
credit totaled $3,375,000. The revolving credit agreement provides the Company
with several interest rate pricing options ranging from 6.025% to 8.25% at
December 31, 1997. The Company must also pay a fee at an annual rate of 0.15% 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.
PRODUCTS, MARKETS AND SALES
The Company focuses on value-added cast products that it supplies to the
automotive, industrial and appliance markets. In 1997, approximately 83% of the
Company's sales were attributable to the automotive market. Within this market,
its products generally fall into four major categories, including: (i) engine
components such as camshafts, crankshafts, bedplates and aluminum intake
manifolds; (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
1997, approximately 17% of the Company's sales were attributable to the
industrial and appliance markets.
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The Company has 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 or ISO-9000 certification and the remaining foundry is expected to
complete the certification process during the second quarter of 1998. In
addition, many of the Company's facilities have received quality awards from
its customers during 1997, including Chrysler's Gold Pentastar, Toyota's
Certificate of Achievement for Quality and Delivery, Honda's Quality
Performance and CMI's Certified Supplier.
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 Company maintains its
principal sales office in Michigan. The Company produces primarily to customer
order and does not maintain any significant inventory of finished goods not on
order.
The Company provides extensive 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. Through its
product engineering group, the Company offers 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, 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. During 1997, 1996 and
1995, direct sales to Chrysler accounted for 18%, 23% and 20%, respectively;
direct sales to Ford accounted for 18%, 19% and 18%, respectively; and direct
sales to GM accounted for 8%, 12% and 18%, respectively, of the Company's
consolidated net 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 58%, 72% and 77% of the Company's consolidated net sales during
1997, 1996 and 1995, respectively.
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The following table sets forth information regarding sales by the Company to
customers in these markets during 1997, 1996 and 1995.
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
Sales % Sales % Sales %
----- - ----- - ----- -
(in thousands of dollars, except percentages)
<S> <C> <C> <C> <C> <C> <C>
North American passenger
cars and light trucks $538,200 66 $406,220 76 $413,600 76
North American industrial 141,700 17 48,105 9 34,800 7
European light and heavy duty vehicles 133,800 17 80,175 15 93,300 17
======== ======== ========
Total Sales $813,700 $534,500 $541,700
======== ======== ========
</TABLE>
In 1997, reported sales included 539,000 tons of casting shipments, compared to
458,000 tons in 1996 and 445,000 tons in 1995. This increase in tonnage sales
from 1996 to 1997 is due to the acquisition of Sudbury in December 1996. The
Company's foundries operated at 87% of average annual capacity in 1997 and 1996
and 89% during 1995.
DESIGN, MANUFACTURING AND MACHINING
At the end of 1997, the Company opened its new technical center. The Intermet
Technical Center provides advanced design and engineering services to the
Company's customers as well as technical support to all of its cast metals and
machining plants worldwide. Customer design support is provided within the
native computer aided design and computer aided engineering languages utilized
by the customer, and with cast metal process simulation software. The Company's
design and engineering teams assist the customer, when requested, in the initial
stages of product creation and modification.
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 and 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. 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 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. The Company's
castings range in size from small products weighing less than one pound to
those weighing up to 100 pounds. For the years ended December 31, 1997, 1996
and 1995, sales of ductile iron castings represented 89%, 87% and 92%,
respectively, and sales of gray iron represented 7%, 10% and 8%, respectively,
of the Company's total sales of castings (in dollars). The balance of castings
sales for 1997 were aluminum and malleable castings and the balance of castings
sales in 1996 were aluminum castings. The alumimun castings sales in 1995 were
not significant. Total castings sales were 76% for 1997 and 94% for 1996 and
1995, of the total sales of the Company.
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The cast iron production process involves melting steel scrap and pig iron in a
cupola or an electric furnace, 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 and displaced 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 casting process is
necessary to maintain the quality and performance consistency of the castings.
Electronic testing and monitoring equipment, including x-ray, radioisotopes,
ultrasonic, magnetic-particle and spectroscopy, is used extensively in grading
scrap metal, analyzing molten metal and testing 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, boring, milling,
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 an 82.4 % 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.
In addition, the Company serves the automotive and appliance industries through
the application of powder 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 also 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
extend the performance range for existing iron castings such as austempering
which enhances the strength and toughness of iron, as well as projects to
develop new products through development of new materials, improved product
manufacturing processes and improved characterization of material properties.
The Company directly expensed totals of $1.1 million, $1.0 million and $0.9
million in 1997, 1996 and 1995, respectively, for research and development.
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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.
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 material long-term contractual
commitments with any steel scrap supplier. The cost of steel scrap is subject to
fluctuations and 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
2002, 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 lower
than first and second quarter sales due to plant closings by automakers for
vacations and model changeovers.
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BACKLOG
Most of the Company's business involves supplying all or a stated portion of the
customer's annual requirements, generally flexible in amount, for a particular
casting against blanket purchase orders. The lead time and cost of commencing
production of a particular casting tend to inhibit transfers of production from
one foundry to another. Customers typically issue firm releases and shipping
schedules on a monthly basis. The Company's backlog at any given time generally
consists only of the orders which have been released for shipment. Certain
subsidiaries of the Company which manufacture industrial products other than
castings, have a backlog at December 31, 1997 of $21.2 million in the aggregate,
all of which is expected to be shipped during 1998.
EMPLOYEES
At March 2, 1998 the Company employed approximately 6,520 persons, including
5,650 in North America. Of the persons employed in North America, 4,470 were
hourly manufacturing personnel and the remainder were clerical, sales and
management personnel. The Company employed 860 persons in Europe, 710 of whom
were hourly manufacturing personnel. Most of the manufacturing personnel are
represented by unions under collective bargaining agreements expiring at various
times through 2001. Five collective bargaining agreements, expiring at various
times during 1997 and covering 1,300 hourly employees, were replaced. Another
domestic bargaining agreement covering approximately 90 hourly employees was
scheduled to expire in April 1998 and was replaced in January 1998.
The Company occasionally 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 employees covered by a collective
bargaining agreement 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, has accrued as of December 31, 1997
a $5.5 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.
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The Company also has recurring costs related to environmental matters,
particularly the management and disposition of waste (principally non-hazardous)
generated as part of ongoing operations. In 1997 and 1996, such costs totaled
approximately $12.3 and $9.0 million, respectively. Environmental expense for
1996 does not include that for the subsidiaries purchased in the Sudbury
acquisition. Although the Company continues to take various steps to control
environmental 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 $6.9 million in 1997 and $2.6 million in 1996.
The Company expects to spend $2.6 million in capital expenditures related to
environmental matters in 1998. The actual amount of capital expenditures will be
influenced by sales volume increases and available engineering resources, among
other factors.
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 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.
See also Item 3 "Legal Proceedings" below and the "Management's Discussion and
Analysis of Financial Condition and Results of Operations" section of the Annual
Report to Shareholders of the Company for the year ended December 31, 1997, for
additional information related to environmental matters, which are incorporated
herein by reference.
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FOREIGN AND DOMESTIC OPERATIONS AND EXPORT SALES
Revenues, operating profits and identifiable assets for the Company's foreign
and domestic operations for 1997, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
1997 1996 1995
-------------- ------------- -------------
<S> <C> <C> <C>
Sales to unaffiliated customers:
North America $705,193 $441,942 $448,447
Europe 104,641 92,536 93,302
Other International 3,895 - -
Operating profit:
North America 61,605 38,338 36,763
Europe 15,732 17,765 16,052
Identifiable assets:
North America 453,351 463,309 220,548
Europe 85,454 63,003 53,523
</TABLE>
EXECUTIVE OFFICERS OF THE REGISTRANT
Executive officers are elected by the Board of Directors annually at its meeting
immediately following the Annual Meeting of Shareholders, and hold office until
the next Annual Meeting unless they resign or are removed from office by the
Board of Directors prior to the Annual Meeting of Shareholders.
The executive officers of the Company as of March 2, 1998 and their ages and
principal positions with the Company, as of that date, are as follows:
<TABLE>
<CAPTION>
Name (Age) Principal Position(s)
- ---------- ---------------------
<S> <C>
John Doddridge (57) Chairman of the Board and Chief Executive Officer
Doretha J. Christoph (48) Vice President - Finance, Chief Financial Officer, Treasurer and
Secretary
John C. Engeswick (63) Vice President - Technical Services
Daryl R. Marsh (59) Group Vice President
David L. Neilson (53) Vice President - Sales and Marketing
C. James Peterson (50) 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.
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Ms. Christoph became Vice President - Finance in June 1995. In addition, she was
named Chief Financial Officer and Treasurer in April 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 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.
ITEM 2. PROPERTIES
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, one research foundry and one technical
center. 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 assembles components at one facility, performs various
powder coating services at seven separate facilities, manufactures precision
machined components at two facilities, and manufactures cantilevered cranes and
specialty service vehicle truck bodies at one facility.
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The following 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 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 Machines and assembles components
Industrial Powder Coatings Norwalk, Ohio (4 locations) Custom powder and electrodeposition coating
Louisville, Kentucky Custom powder coating
Shelbyville, Kentucky Custom powder coating
Monterrey, Mexico Electrodeposition coating
Frisby P.M.C. Elk Grove Village, Illinois 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
occasionally close one or more on a permanent or temporary basis in response to
its production needs and general business and economic conditions. A number of
the assets of the Company's Pennsylvania foundry, which was idled in 1991, were
transferred to other Company facilities or sold during 1997.
The research foundry is located in Lynchburg, Virginia and is wholly-owned by
the Company. The Company's technical center, which is also located in Lynchburg,
Virginia, provides advance design and engineering services to the Company's
customers as well as technical support to all of its cast metals and machining
plants worldwide. The Company also has an 82.4% interest in IWESA GmbH, a
precision machining company in Saarbrucken, Germany and a 35% interest in
General Products Delaware Corporation, a machining and assembly company with a
facility in Michigan and a facility in Indiana. In addition, the Company leases
certain executive, sales and other administrative offices, located in Michigan,
Georgia and Ontario, Canada.
At December 31, 1997, Columbus Neunkirchen had DM 2.3 million ($1.3 million at
the December 31, 1997 exchange rate) outstanding and secured by property, plant
and equipment with net book values aggregating $21,428,000. In addition,
substantially all of the assets of IWESA are encumbered by liens guaranteeing
the performance of various loans and leases. For additional information on
secured debt, see Note 6 to the consolidated financial statements of the Company
included in the Company's 1997 Annual Report to Shareholders, which is furnished
to the Commission as Exhibit 13 to this Report, and is incorporated herein by
reference.
11
<PAGE> 13
ITEM 3. LEGAL PROCEEDINGS
The Company 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. 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 decreed that the Company reimburse the Attorney General's Office $13,000
for the costs of investigating this case, which were paid in July 1997. In
August 1997 the Company paid $272,103 in civil penalties, which had been fully
accrued since 1995.
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 (the "Clark" property) Metalcote owned in St. Paul, Minnesota. This
Clark property was subsequently transferred to Randolph Capital Corporation, a
subsidiary of Western Capital Corporation, which sold a large portion of the
property to A.D.M. Corporation. Although Randolph Capital has contested its
responsibility for environmental conditions that allegedly exist at the Clark
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
installed a venting system at the Clark property. The consultants work has been
submitted and approved by the MPCA. Randolph Capital also submitted a claim
under the Minnesota Petroleum Tank Release Cleanup Act (the "Minnesota Act") for
reimbursement of the eligible 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 (See Note 8
to the consolidated financial statements of the Company included in the
Company's Annual Report to Shareholders for the fiscal year ended December 31,
1997, furnished to the Commission as Exhibit 13 to this Report, which is
incorporated herein by reference and "Environmental Matters" in Item 1
"Business"). Actual future costs of such matters are uncertain, and could differ
from the Company's estimates.
Consultants on behalf of Sudbury have also completed certain environmental
investigations with respect to former operations of Metalcote at an adjacent
site (the "Metalcote" property) in St. Paul Minnesota. In 1995, a release of
petroleum products was identified at the Metalcote property 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
investigation results and has not requested further investigation. The buyer of
the Metalcote property reportedly requested the MPCA to require further
investigation with respect to potential environmental issues at the Metalcote
property, but the MPCA has not required any further work at this time. It is
uncertain whether any additional investigation or remediation will be necessary.
Randolph Capital submitted a claim under the Minnesota Act for reimbursement of
the costs of investigation at this property, and may submit a claim for any
future investigation or cleanup costs incurred at the site. The actual future
costs of such matters are uncertain and could differ from the Company's
estimates (See Note 8 to the consolidated financial statements of the Company
included in the Company's Annual Report to Shareholders for the fiscal year
ended December 31, 1997, furnished to the Commission as Exhibit 13 to this
Report, which is incorporated herein by reference and "Environmental Matters" in
Item 1 "Business").
12
<PAGE> 14
The Company is also party to a number of other legal proceedings in the ordinary
course of its business. Except as set forth above and in the "Environmental
Matters" section above, Management of the Company presently does not believe
there are any pending or threatened legal proceeding to which the Company is a
party or to 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 taken as a whole.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders of the Company during
the fourth quarter of the fiscal year covered by this Report.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The information contained in Note 13 to the consolidated financial statements of
the Company included in the Company's Annual Report to Shareholders for the
fiscal year ended December 31, 1997, furnished to the Commission as Exhibit 13
to this Report, is incorporated herein by reference.
The Company's Common Stock, $0.10 par value, is traded on the Nasdaq National
Market under the symbol "INMT" and had a closing price of $20.063 on March 2,
1998. As of this same date, there were approximately 515 holders of record of
the Company's Common Stock.
The Board of Directors of the Company suspended payment of the regular quarterly
dividend in 1993 pending improvement in the Company's operating performance.
This suspension was lifted in 1996 due to improvements in the Company's
performance. During the third and fourth quarters of 1996, the Company declared
and paid dividends of $2.0 million in the aggregate ($0.04 per share per
quarter). During the four quarters of 1997, the Company declared and paid
dividends of $4.0 million in the aggregate ($0.04 per share per quarter). The
Company is subject to restrictions on the payment of dividends under certain
loan agreements. As of December 31, 1997, $63,520,000 of the Company's retained
earnings were restricted and unavailable for the payment of dividends under
those agreements.
The Company did not sell unregistered securities within the past three years.
ITEM 6. SELECTED FINANCIAL DATA
Selected financial data included in the Company's 1997 Annual Report to
Shareholders, which is furnished to the Commission as Exhibit 13 to this Report,
in the section Financial Highlights under the headings "Statement of Operations
Data," "Share Data" and "Balance Sheet Data," are incorporated herein by
reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information included under the heading "Management's Discussion and Analysis
of Financial Condition and Results of Operations" in the Company's 1997 Annual
Report to Shareholders, which is furnished to the Commission as Exhibit 13 to
this Report, is incorporated herein by reference.
13
<PAGE> 15
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
Not applicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements and related notes of the Company and the
report of the independent auditors thereon included in the Company's 1997 Annual
Report to Shareholders, which is furnished to the Commission as Exhibit 13 to
this Report, are incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Within the 24-month period prior to the date of the Company's financial
statements for the fiscal year ended December 31, 1997, the Company did not
change auditors.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information contained under the headings "INFORMATION ABOUT NOMINEES FOR
DIRECTORS" and "SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE" in the
definitive Proxy Statement used in connection with the solicitation of proxies
for the Company's Annual Meeting of Shareholders to be held April 16, 1998,
filed with the Commission, is hereby incorporated herein by reference. Pursuant
to Instruction 3 to Paragraph (b) of Item 401 of Regulation S-K, information
relating to the executive officers of the Company is included in Item 1 of this
Report.
ITEM 11. EXECUTIVE COMPENSATION
The information contained under the headings "EXECUTIVE COMPENSATION",
"INTERMET CORPORATION COMPENSATION OF DIRECTORS", "INTERMET CORPORATION
EMPLOYMENT AGREEMENTS AND CHANGE OF CONTROL ARRANGEMENTS", "INTERMET CORPORATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION", "INTERMET CORPORATION
COMPENSATION COMMITTEE" and "SHAREHOLDER RETURN PERFORMANCE GRAPH" in the
definitive Proxy Statement used in connection with the solicitation of proxies
for the Company's Annual Meeting of Shareholders to be held April 16, 1998,
filed with the Commission, is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information contained under the heading "VOTING SECURITIES AND PRINCIPAL
HOLDERS" in the definitive Proxy Statement used in connection with the
solicitation of proxies for the Company's Annual Meeting of Shareholders to be
held April 16, 1998, filed with the Commission, is incorporated herein by
reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information contained under the heading "CERTAIN TRANSACTIONS" in the
definitive Proxy Statement used in connection with the solicitation of proxies
for the Company's Annual Meeting of Shareholders to be held April 16, 1998,
filed with the Commission, is incorporated herein by reference.
14
<PAGE> 16
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. Financial Statements
The following consolidated financial statements and notes thereto of the
Company and its subsidiaries contained in the Company's 1997 Annual Report
to Shareholders are incorporated by reference in Item 8 of this Report:
Consolidated Balance Sheets at December 31, 1997 and 1996
Consolidated Statements of Operations for the Years Ended
December 31, 1997, 1996 and 1995
Consolidated Statements of Shareholders' Equity for the Years Ended
December 31, 1997, 1996 and 1995
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1997, 1996 and 1995
Notes to Consolidated Financial Statements
Report of Independent Auditors
2. Financial Statement Schedules
The following consolidated financial statement schedule for the Company is
filed as Item 14(d) hereof, beginning on page F-1.
Report and Consent of Independent Auditors
Schedule II - Valuation and Qualifying Accounts
3. Exhibits
The following exhibits are filed with this Report pursuant to Item 601 of
Regulation S-K:
Exhibit Number Description of Exhibit
2.1 Agreement and Plan of Merger among the Company, I M
Acquisition Corp., and Sudbury, Inc. dated as of November
18, 1996 (included as Exhibit 4 to the Company's Form 8-K
dated November 18, 1996, File No. 0-13787, previously
filed with the Commission and incorporated herein by
reference).
2.2 Agreement and Plan of Merger among South Coast Delaware,
Inc., Sudbury, Inc. and South Coast Terminals, Inc. dated
as of December 22, 1995 (included as Exhibit 2 to
Sudbury's Form 10-Q for the fiscal quarter ended November
30, 1995, File No. 1-10023, previously filed with the
Commission and incorporated herein by reference).
15
<PAGE> 17
2.3 Agreement on the Sale and Transfer of Shares in IWESA
Gesellschaft fur Qualifizierten Maschinenbau between
Intermet Corporation, Mr. Axel Ganz and Mr. Armin Becker
dated October 30, 1996 (included as Exhibit 2.3 to the
Company's Form 10-K for the year ended December 31, 1996,
File No. 0-13787, previously filed with the Commission and
incorporated herein by reference).
2.4 Documentation regarding the sale and transfer of shares in
IWESA Gesellschaft fur Qualifizierten Maschinenbau between
Intermet Corporation, Mr. Axel Ganz and Mr. Armin Becker,
dated June 5, 1997 (included as Exhibit 2.1 to the
Company's Form 10-Q for the quarter ended June 30, 1997,
File No. 0-13787, previously filed with the Commission and
incorporated herein by reference).
2.5 Documentation regarding the sale and transfer of shares in
IWESA Gesellschaft fur Qualifizierten Maschinenbau between
Intermet Corporation and Mr. Armin Becker, dated June 18,
1997 (included as Exhibit 2.2 to the Company's Form 10-Q
for the quarter ended June 30, 1997, File No. 0-13787,
previously filed with the Commission and incorporated
herein by reference).
3.1 Amended and Restated Articles of Incorporation of the
Company (included as Exhibit 4.1 to the Company's Form S-3
Registration Statement, filed June 3, 1992, File No.
33-48304, previously filed with the Commission and
incorporated herein by reference).
3.2 By-Laws of the Company, as amended through October
17,1996.
3.3 Amendment to the by-Laws of the Company, adopted January
30, 1998 and effective April 16, 1998.
4.1 Promissory Note of Lynchburg Foundry Company, dated
December 1, 1973, payable to Industrial Development
Authority of the City of Lynchburg, Virginia in the
original principal amount of $4,400,000.*
4.2 Guaranty Agreement, dated December 1, 1973, by and between
The Mead Corporation and the Industrial Development
Authority of the City of Lynchburg, Virginia.*
4.3 Trust Indenture, dated December 1, 1973, by and among
Industrial Development Authority of the City of Lynchburg,
Virginia, Lynchburg Foundry Company and United Virginia
Bank, as trustee.*
4.4 Promissory Notes of Lynchburg Foundry Company, dated June
1, 1976, payable to Industrial Development Authority of
the City of Lynchburg, Virginia, in the original principal
amounts of $2,700,000, $1,000,000, $550,000 and $550,000,
respectively.*
4.5 Guaranty Agreement, dated June 1, 1976, of The Mead
Corporation in favor of Industrial Development Authority
of the City of Lynchburg, Virginia.*
4.6 Trust Indenture, dated June 1, 1976, by and among
Industrial Development Authority of the City of Lynchburg,
Virginia, Lynchburg Foundry Company and United Virginia
Bank, as trustee, with respect to Pollution Control
Revenue Bonds (Mead-Lynchburg Foundry Project), Series
1976, Series 1976A, Series 1976B and Series 1976C.*
16
<PAGE> 18
4.7 Loan Contract, dated September 28, 1988, by and between
Columbus Neunkirchen Foundry GmbH and Saarlandische
Investitionskreditbank, relating to a loan in the original
principal amount of DM 740,000.*
4.8 Loan Contract, dated October 11, 1988, by and between
Columbus Neunkirchen Foundry GmbH and the Landesbank Saar
Girozentrale, relating to a loan in the original principal
amount of DM 1,550,000.*
4.9 Loan Contract, dated December 14, 1988, by and between
Columbus Neunkirchen Foundry GmbH and Saarlandische
Investitionskreditbank, relating to a loan in the
principal amount of DM 3,833,500.*
4.10 Loan Contract, dated March 1, 1989, by and between
Columbus Neunkirchen Foundry GmbH and Saarlandische
Investitionskreditbank, relating to a loan in the
principal amount of DM 2,000,000.*
4.11 Loan Contract, dated April 12, 1989, by and between
Columbus Neunkirchen Foundry GmbH and Landesbank Saar
Girozentrale, relating to a loan in the principal amount
of DM 2,725,000.*
4.12 Third Amended and Restated Credit Agreement, dated
November 14, 1996, by and among the Company, SunTrust
Bank, Atlanta (formerly known as Trust Company Bank) as
lender and agent and the various lenders named therein
(included as Exhibit 4.14 to the Company's Form 10-K for
the year ended December 31, 1996, File No. 0-13787,
previously filed with the Commission and incorporated
herein by reference).
4.13 Master Assignment and Acceptance Agreement dated December
9, 1996, by and among the Company and various lenders
named therein (included as Exhibit 4.15 to the Company's
Form 10-K for the year ended December 31, 1996, File No.
0-13787, previously filed with the Commission and
incorporated herein by reference).
4.14 Amended and Restated Note Agreement, dated as of March 21,
1996, by and between Intermet Corporation and The
Prudential Insurance Company of America, relating to
$25,000,000 principal amount of 8.05% Senior Notes due
December 11, 2002 and related Promissory Note (included as
Exhibit 4.20 to the Company's Form 10-K for the year ended
December 31, 1995, File No. 0-13787, previously filed with
the Commission and incorporated herein by reference).
4.15 First Amendment to Amended and Restated Note Agreement,
dated as of January 31, 1997, by and between the Company
and The Prudential Insurance Company of America, relating
to $25,000,000 principal amount of 8.05% Senior Notes due
December 11, 2002 and related Promissory Note (included as
Exhibit 4.17 to the Company's Form 10-K for the year ended
December 31, 1996, File No. 0-13787, previously filed with
the Commission and incorporated herein by reference).
4.16 Shareholder Protection Rights Agreement, dated as of
October 6, 1995 between the Company and Trust Company
Bank, as Rights Agent (included as Exhibit 4 to the
Company's Form 8-K, having an event date of October 6,
1995, File No. 0-13787, previously filed with the
Commission and incorporated herein by reference).
17
<PAGE> 19
4.17 Amendment No. 1, dated October 16, 1997, to the
Shareholder Protection Rights Agreement, dated October 6,
1995, between the Company and Trust Company Bank, as
Rights Agent (included as Exhibit 4 to the Company's Form
8-A12G/A, File No. 0-13787, previously filed with the
Commission and incorporated herein by reference).
10.1(a) Intermet Corporation Key Individual Stock Option Plan,
adopted April 25, 1984 (included as Exhibit 10.1 to the
Company's registration statement on Form S-14, File No.
2-90815, previously filed with the Commission and
incorporated herein by reference).**
10.1(b) Amendment No. 1 to the Intermet Corporation Key Individual
Stock Option Plan, dated as of August 4, 1988 (included as
Exhibit 10.2 to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1988, File No.
0-13787, previously filed with the Commission and
incorporated herein by reference).**
10.1(c) Amendment No. 2 to the Intermet Corporation Key Individual
Stock Option Plan, dated October 27, 1988 (included as
Exhibit 10.3 to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1988, File No.
0-13787, previously filed with the Commission and
incorporated herein by reference).**
10.2(a) Form of Intermet Corporation Directors Stock Option
Agreement (included as Exhibit 10.4 to the Company's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1988, File No. 0-13787, previously filed with
the Commission and incorporated herein by reference).**
10.2(b) Intermet Corporation Director's Stock Option Plan
(included as Exhibit 10.6 to the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1990,
File No. 0-13787, previously filed with the Commission and
incorporated herein by reference).**
10.3 Intermet Corporation Executive Stock Option and Incentive
Award Plan (included as Exhibit 4 to the Company's Form
S-8, File No. 33-59011, previously filed with the
Commission and incorporated herein by reference)**
10.4 Asset Purchase Agreement among Intermet Corporation,
Intermet Machining, Inc., PBM Industries, Inc. and PBM
Acquisition Limited, dated September 6, 1995, as amended
by Amendments 1, 2 and 3 thereto (included as an Exhibit
to the Company's Form 8-K dated October 6, 1995, File No.
0-13787, previously filed with the Commission and
incorporated herein by reference).
10.5 Asset Purchase Agreement by and among Ricardo North
American Detroit, Inc., Ricardo Group, plc., InterMotive
Technologies, Inc. and Intermet Corporation, dated October
12, 1995 (included as an Exhibit to the Company's Form 8-K
dated October 18, 1995, File No. 0-13787, previously filed
with the Commission and incorporated herein by reference).
10.6(a) Agreement for Purchase and Sale of Assets of
Bodine-Robinson, Inc. among the Company, Alexander City
Casting Company, Inc., Bodine-Robinson, Inc., Joe Robinson
and Robinson Foundry, Inc., dated November 15, 1995
(included as Exhibit 2(a) to the Company's Form 8-K dated
November 15, 1995 (the "Robinson 8-K"), File No. 0-13787,
previously filed with the Commission and incorporated
herein by reference).
18
<PAGE> 20
10.6(b) Agreement for Purchase and Sale of Certain Assets of
Robinson Foundry, Inc. among the Company, Alexander City
Casting Company, Inc., Bodine-Robinson Foundry, Inc., Joe
Robinson and Robinson Foundry, Inc., dated November 15,
1995 (included as Exhibit 2(b) to the Robinson 8-K, File
No. 0-13787, previously filed with the Commission and
incorporated herein by reference).
10.6(c) Management Agreement among Joe Robinson, the Company and
Alexander City Casting Company, Inc., dated November 15,
1995 (included as Exhibit 2(c) to the Robinson 8-K, File
No. 0-13787, previously filed with the Commission and
incorporated herein by reference).
10.6(d) Registration Rights Agreement between the Company and
Robinson Foundry, Inc., dated November 15, 1995 (included
as Exhibit 2(d) to the Robinson 8-K, File No. 0-13787,
previously filed with the Commission and incorporated
herein by reference).
10.7 Operating Committee 1998 Profit Sharing Plan.**
10.8(a) Intermet Corporation Salaried Employees Severance Plan
effective as of October 1, 1993 (included as Exhibit
10.16(a) to the Company's Form 10-K for the year ended
December 31, 1993, File No. 0-13787, previously filed with
the Commission and incorporated herein by reference).**
10.8(b) Amendment No. 1 to the Intermet Corporation Salaried
Employees Severance Plan, dated December 20, 1993
(included as Exhibit 10.16(b) to the Company's Form 10-K
for the year ended December 31, 1993, File No. 0-13787,
previously filed with the Commission and incorporated
herein by reference).**
10.9 Intermet Salary Continuation Plan (included as Exhibit
10.18 to the Company's Form 10-K for the year ended
December 31, 1992, File No. 0-13787, previously filed with
the Commission and incorporated herein by reference).**
10.10 Form of employment agreement by and between the Company
and the executive officers of the Company, other than John
Doddridge, effective November 1, 1996 (included as Exhibit
10.21 to the Company's Form 10-K for the year ended
December 31, 1995, File No. 0-13787, previously filed with
the Commission and incorporated herein by reference).**
10.11 Employment Agreement, dated October 26, 1995, by and
between the Company and John Doddridge (included as
Exhibit 10.22 to the Company's Form 10-K for the year
ended December 31, 1995, File No. 0-13787, previously
filed with the Commission and incorporated herein by
reference).**
10.12 Employment Agreement, dated December 27, 1996, by and
between the Company and David L. Neilson (included as
Exhibit 10.24 to the Company's Form 10-K for the year
ended December 31, 1996, File No. 0-13787, previously
filed with the Commission and incorporated herein by
reference).**
10.13 1997 Directors' Deferred Compensation Plan (included as
Exhibit 10.25 to the Company's Form 10-K for the year
ended December 31, 1996, File No. 0-13787, previously
filed with the Commission and incorporated herein by
reference).**
19
<PAGE> 21
10.14(a) Agreement and Plan of Merger dated November 7, 1989 among
Sudbury, Inc., Western, General Products Delaware
Corporation, General Products Angola Corporation and
General Products Corporation (included as Exhibit (10)(b)
to Sudbury's Form 8-K filed for the November 7, 1989
event, File No. 1-10023, previously filed with the
Commission and incorporated herein by reference).
10.14(b) Asset Purchase Agreement dated November 7, 1989 among
Sudbury, Inc., Western and General Products Delaware
Corporation (included as Exhibit (10)(a) to Sudbury's Form
8-K filed for the November 7, 1989 event, File No.
1-10023, previously filed with the Commission and
incorporated herein by reference).
13 Annual Report to Shareholders. Certain portions of this
Exhibit, which are incorporated by reference into this
Report on Form 10-K, are filed herewith.
21 Subsidiaries of the Company.
23 Consent of Independent Auditors (included herein on Page
F-1).
24 Power of Attorney is included on the signature pages of
this Report.
27 Financial Data Schedule.
99 Notice of Annual Meeting of Shareholders to be held April
16, 1998 and related Proxy Statement of the Company, dated
March 9, 1998 (previously filed with the Commission on
March 6, 1998 and incorporated herein by reference).
* This instrument defines the rights of holders of long-term
debt of the Company not being registered and the total
amount of securities authorized under the instrument does
not exceed ten percent of the total assets of the Company
and its subsidiaries on a consolidated basis. This
instrument is not being filed, but the Company will
furnish a copy of this instrument to the Commission upon
request.
** Management contract or compensatory plan or arrangement
required to be filed as an exhibit.
(b) No reports on Form 8-K were filed by the Company for the fourth quarter of
1997.
(c) The Company hereby files as exhibits to this Report the exhibits set forth
in Item 14(a)(3) hereof.
(d) The Company hereby files as financial statement schedules to this Report
the financial statement schedules set forth in Item 14(a)(2) hereof.
20
<PAGE> 22
INDEX TO FINANCIAL STATEMENT SCHEDULES
Item Page
- ---- ----
Consent of Independent Auditors F-1
Schedule II - Valuation and Qualifying Accounts F-2
<PAGE> 23
Consent of Independent Auditors
We consent to the incorporation by reference in this Annual Report (Form 10-K)
of Intermet Corporation of our report dated January 30, 1998, included in the
1997 Annual Report to Shareholders of Intermet Corporation.
Our audits also included the financial statement schedule of Intermet
Corporation listed in Item 14(a). This schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion based on our
audits. In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
We also consent to the incorporation by reference in the Registration Statements
(Form S-8 Nos. 33-57665, 33-58354, 33-58352 and 33-59011) pertaining to 50,000
shares of Intermet Corporation common stock, the Intermet Corporation Directors
Stock Option Plan, the Intermet Corporation Key Individual Stock Option Plan and
the Intermet Corporation Executive Stock Option and Incentive Award Plan,
respectively, of our report dated January 30, 1998, with respect to the
consolidated financial statements incorporated herein by reference, and our
report included in the preceding paragraph with respect to the financial
statement schedule included in this Annual Report (Form 10-K) of Intermet
Corporation.
/s/ Ernst & Young LLP
March 26, 1998
Detroit, Michigan
F-1
<PAGE> 24
Intermet Corporation
(Consolidated)
Schedule II
Valuation and Qualifying Accounts
<TABLE>
<CAPTION>
Balance at Balance at
Beginning of Charged to End of
Description Period Expense Other Period
- ----------- ------ ------- ----- ------
(in thousands of dollars)
<S> <C> <C> <C> <C>
Year ended December 31, 1997:
Allowance for returns and doubtful accounts (a) $3,895 1,730(b) (77)(c) $5,548
Inventory reserve (f) 3,529 2,065 - 5,594
Deferred tax asset valuation allowance 14,819 - (1,246)(d) 11,722
(1,851)(e)
Year ended December 31, 1996:
Allowance for returns and doubtful accounts (a) 4,407 (465)(b) (47)(c) 3,895
Inventory reserve (f) 3,784 (255) - 3,529
Deferred tax asset valuation allowance 26,332 - (11,513)(d) 14,819
Year ended December 31, 1995:
Allowance for returns and doubtful accounts (a) 3,039 1,319(b) 49(c) 4,407
Inventory reserve (f) 4,361 (775) 198(c) 3,784
Deferred tax asset valuation allowance 26,332 - - 26,332
</TABLE>
(a) Reflected as reduction of trade accounts receivable on consolidated balance
sheet.
(b) Net effect of amounts charged to expense less actual returns and write offs.
(c) Effect of foreign currency translation.
(d) Decrease in valuation allowance due to increased viability of anticipated
future income.
(e) Decrease in valuation allowance due to reclassification of certain items.
(f) Reflected as reduction of inventory on the balance sheet.
F-2
<PAGE> 25
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Company has duly caused this Report to be signed on its behalf
by the undersigned, thereunto duly authorized.
INTERMET CORPORATION
By: /s/ John Doddridge
-------------------------------
John Doddridge
Chairman of the Board of
Directors and Chief Executive
Officer
Date: March 27, 1998
POWER OF ATTORNEY AND SIGNATURES
Know all men by these presents, that each person whose signature appears below
constitutes and appoints John Doddridge and Doretha J. Christoph, or either of
them, as attorney-in-fact, each with power of substitution, for such person in
any and all capacities, to sign any amendments to this Report on Form 10-K, and
to file the same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that each of said attorneys-in-fact, or his substitute or
substitutes, may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below, as of March 27, 1998, by the following persons on behalf
of the Company in the capacities indicated.
<TABLE>
<CAPTION>
Signature Capacity
<S> <C>
/s/ John Doddridge Chairman of the Board of Directors and Chief Executive Officer
- ------------------------------ (Principal Executive Officer)
John Doddridge
/s/ Vernon R. Alden Director
- ------------------------------
Vernon R. Alden
/s/ J. Frank Broyles Director
- ------------------------------
J. Frank Broyles
/s/ John P. Crecine Director
- -------------------------------
John P. Crecine
/s/ Anton Dorfmueller, Jr. Director
- -------------------------------
Anton Dorfmueller, Jr.
</TABLE>
<PAGE> 26
<TABLE>
<S> <C>
/s/ Norman F. Ehlers Director
- -------------------------------
Norman F. Ehlers
/s/ John B. Ellis Director
- -------------------------------
John B. Ellis
/s/ Wilfred E. Gross, Jr. Director
- -------------------------------
Wilfred E. Gross, Jr.
/s/ A. Wayne Hardy Director
- -------------------------------
A. Wayne Hardy
/s/ John R. Horne Director
- -------------------------------
John R. Horne
/s/ Thomas H. Jeffs II Director
- -------------------------------
Thomas H. Jeffs II
/s/ Harold C. McKenzie, Jr. Director
- -------------------------------
Harold C. McKenzie, Jr.
/s/ J. Mason Reynolds Director
- -------------------------------
J. Mason Reynolds
/s/ Curtis W. Tarr Director
- -------------------------------
Curtis W. Tarr
/s/ Doretha J. Christoph Vice President - Finance, Chief Financial Officer, Treasurer and
- ------------------------------- Secretary (Principal Financial Officer)
Doretha J. Christoph
/s/ Walter T. Knollenberg Controller (Principal Accounting Officer)
- -------------------------------
Walter T. Knollenberg
</TABLE>
<PAGE> 27
EXHIBIT INDEX
Exhibit Number Description of Exhibit
2.1 Agreement and Plan of Merger among the Company, I M
Acquisition Corp., and Sudbury, Inc. dated as of November
18, 1996 (included as Exhibit 4 to the Company's Form 8-K
dated November 18, 1996, File No. 0-13787, previously
filed with the Commission and incorporated herein by
reference).
2.2 Agreement and Plan of Merger among South Coast Delaware,
Inc., Sudbury, Inc. and South Coast Terminals, Inc. dated
as of December 22, 1995 (included as Exhibit 2 to
Sudbury's Form 10-Q for the fiscal quarter ended November
30, 1995, File No. 1-10023, previously filed with the
Commission and incorporated herein by reference).
2.3 Agreement on the Sale and Transfer of Shares in IWESA
Gesellschaft fur Qualifizierten Maschinenbau between
Intermet Corporation, Mr. Axel Ganz and Mr. Armin Becker
dated October 30, 1996 (included as Exhibit 2.3 to the
Company's Form 10-K for the year ended December 31, 1996,
File No. 0-13787, previously filed with the Commission and
incorporated herein by reference).
2.4 Documentation regarding the sale and transfer of shares in
IWESA Gesellschaft fur Qualifizierten Maschinenbau between
Intermet Corporation, Mr. Axel Ganz and Mr. Armin Becker,
dated June 5, 1997 (included as Exhibit 2.1 to the
Company's Form 10-Q for the quarter ended June 30, 1997,
File No. 0-13787, previously filed with the Commission and
incorporated herein by reference).
2.5 Documentation regarding the sale and transfer of shares in
IWESA Gesellschaft fur Qualifizierten Maschinenbau between
Intermet Corporation and Mr. Armin Becker, dated June 18,
1997 (included as Exhibit 2.2 to the Company's Form 10-Q
for the quarter ended June 30, 1997, File No. 0-13787,
previously filed with the Commission and incorporated
herein by reference).
3.1 Amended and Restated Articles of Incorporation of the
Company (included as Exhibit 4.1 to the Company's Form S-3
Registration Statement, filed June 3, 1992, File No.
33-48304, previously filed with the Commission and
incorporated herein by reference).
3.2 By-Laws of the Company, as amended through October
17,1996.
3.3 Amendment to the by-Laws of the Company, adopted January
30, 1998 and effective April 16, 1998.
4.1 Promissory Note of Lynchburg Foundry Company, dated
December 1, 1973, payable to Industrial Development
Authority of the City of Lynchburg, Virginia in the
original principal amount of $4,400,000.*
4.2 Guaranty Agreement, dated December 1, 1973, by and between
The Mead Corporation and the Industrial Development
Authority of the City of Lynchburg, Virginia.*
4.3 Trust Indenture, dated December 1, 1973, by and among
Industrial Development Authority of the City of Lynchburg,
Virginia, Lynchburg Foundry Company and United Virginia
Bank, as trustee.*
4.4 Promissory Notes of Lynchburg Foundry Company, dated June
1, 1976, payable to Industrial Development Authority of
the City of Lynchburg, Virginia, in the original principal
amounts of $2,700,000, $1,000,000, $550,000 and $550,000,
respectively.*
4.5 Guaranty Agreement, dated June 1, 1976, of The Mead
Corporation in favor of Industrial Development Authority
of the City of Lynchburg, Virginia.*
4.6 Trust Indenture, dated June 1, 1976, by and among
Industrial Development Authority of the City of Lynchburg,
Virginia, Lynchburg Foundry Company and United Virginia
Bank, as trustee, with respect to Pollution Control
Revenue Bonds (Mead-Lynchburg Foundry Project), Series
1976, Series 1976A, Series 1976B and Series 1976C.*
4.7 Loan Contract, dated September 28, 1988, by and between
Columbus Neunkirchen Foundry GmbH and Saarlandische
Investitionskreditbank, relating to a loan in the original
principal amount of DM 740,000.*
4.8 Loan Contract, dated October 11, 1988, by and between
Columbus Neunkirchen Foundry GmbH and the Landesbank Saar
Girozentrale, relating to a loan in the original principal
amount of DM 1,550,000.*
4.9 Loan Contract, dated December 14, 1988, by and between
Columbus Neunkirchen Foundry GmbH and Saarlandische
Investitionskreditbank, relating to a loan in the
principal amount of DM 3,833,500.*
4.10 Loan Contract, dated March 1, 1989, by and between
Columbus Neunkirchen Foundry GmbH and Saarlandische
Investitionskreditbank, relating to a loan in the
principal amount of DM 2,000,000.*
4.11 Loan Contract, dated April 12, 1989, by and between
Columbus Neunkirchen Foundry GmbH and Landesbank Saar
Girozentrale, relating to a loan in the principal amount
of DM 2,725,000.*
4.12 Third Amended and Restated Credit Agreement, dated
November 14, 1996, by and among the Company, SunTrust
Bank, Atlanta (formerly known as Trust Company Bank) as
lender and agent and the various lenders named therein
(included as Exhibit 4.14 to the Company's Form 10-K for
the year ended December 31, 1996, File No. 0-13787,
previously filed with the Commission and incorporated
herein by reference).
4.13 Master Assignment and Acceptance Agreement dated December
9, 1996, by and among the Company and various lenders
named therein (included as Exhibit 4.15 to the Company's
Form 10-K for the year ended December 31, 1996, File No.
0-13787, previously filed with the Commission and
incorporated herein by reference).
4.14 Amended and Restated Note Agreement, dated as of March 21,
1996, by and between Intermet Corporation and The
Prudential Insurance Company of America, relating to
$25,000,000 principal amount of 8.05% Senior Notes due
December 11, 2002 and related Promissory Note (included as
Exhibit 4.20 to the Company's Form 10-K for the year ended
December 31, 1995, File No. 0-13787, previously filed with
the Commission and incorporated herein by reference).
4.15 First Amendment to Amended and Restated Note Agreement,
dated as of January 31, 1997, by and between the Company
and The Prudential Insurance Company of America, relating
to $25,000,000 principal amount of 8.05% Senior Notes due
December 11, 2002 and related Promissory Note (included as
Exhibit 4.17 to the Company's Form 10-K for the year ended
December 31, 1996, File No. 0-13787, previously filed with
the Commission and incorporated herein by reference).
4.16 Shareholder Protection Rights Agreement, dated as of
October 6, 1995 between the Company and Trust Company
Bank, as Rights Agent (included as Exhibit 4 to the
Company's Form 8-K, having an event date of October 6,
1995, File No. 0-13787, previously filed with the
Commission and incorporated herein by reference).
4.17 Amendment No. 1, dated October 16, 1997, to the
Shareholder Protection Rights Agreement, dated October 6,
1995, between the Company and Trust Company Bank, as
Rights Agent (included as Exhibit 4 to the Company's Form
8-A12G/A, File No. 0-13787, previously filed with the
Commission and incorporated herein by reference).
10.1(a) Intermet Corporation Key Individual Stock Option Plan,
adopted April 25, 1984 (included as Exhibit 10.1 to the
Company's registration statement on Form S-14, File No.
2-90815, previously filed with the Commission and
incorporated herein by reference).**
10.1(b) Amendment No. 1 to the Intermet Corporation Key Individual
Stock Option Plan, dated as of August 4, 1988 (included as
Exhibit 10.2 to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1988, File No.
0-13787, previously filed with the Commission and
incorporated herein by reference).**
10.1(c) Amendment No. 2 to the Intermet Corporation Key Individual
Stock Option Plan, dated October 27, 1988 (included as
Exhibit 10.3 to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1988, File No.
0-13787, previously filed with the Commission and
incorporated herein by reference).**
10.2(a) Form of Intermet Corporation Directors Stock Option
Agreement (included as Exhibit 10.4 to the Company's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1988, File No. 0-13787, previously filed with
the Commission and incorporated herein by reference).**
10.2(b) Intermet Corporation Director's Stock Option Plan
(included as Exhibit 10.6 to the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1990,
File No. 0-13787, previously filed with the Commission and
incorporated herein by reference).**
10.3 Intermet Corporation Executive Stock Option and Incentive
Award Plan (included as Exhibit 4 to the Company's Form
S-8, File No. 33-59011, previously filed with the
Commission and incorporated herein by reference)**
10.4 Asset Purchase Agreement among Intermet Corporation,
Intermet Machining, Inc., PBM Industries, Inc. and PBM
Acquisition Limited, dated September 6, 1995, as amended
by Amendments 1, 2 and 3 thereto (included as an Exhibit
to the Company's Form 8-K dated October 6, 1995, File No.
0-13787, previously filed with the Commission and
incorporated herein by reference).
10.5 Asset Purchase Agreement by and among Ricardo North
American Detroit, Inc., Ricardo Group, plc., InterMotive
Technologies, Inc. and Intermet Corporation, dated October
12, 1995 (included as an Exhibit to the Company's Form 8-K
dated October 18, 1995, File No. 0-13787, previously filed
with the Commission and incorporated herein by reference).
10.6(a) Agreement for Purchase and Sale of Assets of
Bodine-Robinson, Inc. among the Company, Alexander City
Casting Company, Inc., Bodine-Robinson, Inc., Joe Robinson
and Robinson Foundry, Inc., dated November 15, 1995
(included as Exhibit 2(a) to the Company's Form 8-K dated
November 15, 1995 (the "Robinson 8-K"), File No. 0-13787,
previously filed with the Commission and incorporated
herein by reference).
10.6(b) Agreement for Purchase and Sale of Certain Assets of
Robinson Foundry, Inc. among the Company, Alexander City
Casting Company, Inc., Bodine-Robinson Foundry, Inc., Joe
Robinson and Robinson Foundry, Inc., dated November 15,
1995 (included as Exhibit 2(b) to the Robinson 8-K, File
No. 0-13787, previously filed with the Commission and
incorporated herein by reference).
10.6(c) Management Agreement among Joe Robinson, the Company and
Alexander City Casting Company, Inc., dated November 15,
1995 (included as Exhibit 2(c) to the Robinson 8-K, File
No. 0-13787, previously filed with the Commission and
incorporated herein by reference).
10.6(d) Registration Rights Agreement between the Company and
Robinson Foundry, Inc., dated November 15, 1995 (included
as Exhibit 2(d) to the Robinson 8-K, File No. 0-13787,
previously filed with the Commission and incorporated
herein by reference).
10.7 Operating Committee 1998 Profit Sharing Plan.**
10.8(a) Intermet Corporation Salaried Employees Severance Plan
effective as of October 1, 1993 (included as Exhibit
10.16(a) to the Company's Form 10-K for the year ended
December 31, 1993, File No. 0-13787, previously filed with
the Commission and incorporated herein by reference).**
10.8(b) Amendment No. 1 to the Intermet Corporation Salaried
Employees Severance Plan, dated December 20, 1993
(included as Exhibit 10.16(b) to the Company's Form 10-K
for the year ended December 31, 1993, File No. 0-13787,
previously filed with the Commission and incorporated
herein by reference).**
10.9 Intermet Salary Continuation Plan (included as Exhibit
10.18 to the Company's Form 10-K for the year ended
December 31, 1992, File No. 0-13787, previously filed with
the Commission and incorporated herein by reference).**
10.10 Form of employment agreement by and between the Company
and the executive officers of the Company, other than John
Doddridge, effective November 1, 1996 (included as Exhibit
10.21 to the Company's Form 10-K for the year ended
December 31, 1995, File No. 0-13787, previously filed with
the Commission and incorporated herein by reference).**
10.11 Employment Agreement, dated October 26, 1995, by and
between the Company and John Doddridge (included as
Exhibit 10.22 to the Company's Form 10-K for the year
ended December 31, 1995, File No. 0-13787, previously
filed with the Commission and incorporated herein by
reference).**
10.12 Employment Agreement, dated December 27, 1996, by and
between the Company and David L. Neilson (included as
Exhibit 10.24 to the Company's Form 10-K for the year
ended December 31, 1996, File No. 0-13787, previously
filed with the Commission and incorporated herein by
reference).**
10.13 1997 Directors' Deferred Compensation Plan (included as
Exhibit 10.25 to the Company's Form 10-K for the year
ended December 31, 1996, File No. 0-13787, previously
filed with the Commission and incorporated herein by
reference).**
10.14(a) Agreement and Plan of Merger dated November 7, 1989 among
Sudbury, Inc., Western, General Products Delaware
Corporation, General Products Angola Corporation and
General Products Corporation (included as Exhibit (10)(b)
to Sudbury's Form 8-K filed for the November 7, 1989
event, File No. 1-10023, previously filed with the
Commission and incorporated herein by reference).
10.14(b) Asset Purchase Agreement dated November 7, 1989 among
Sudbury, Inc., Western and General Products Delaware
Corporation (included as Exhibit (10)(a) to Sudbury's Form
8-K filed for the November 7, 1989 event, File No.
1-10023, previously filed with the Commission and
incorporated herein by reference).
13 Annual Report to Shareholders. Certain portions of this
Exhibit, which are incorporated by reference into this
Report on Form 10-K, are filed herewith.
21 Subsidiaries of the Company.
23 Consent of Independent Auditors (included herein on Page
F-1).
24 Power of Attorney is included on the signature pages of
this Report.
27 Financial Data Schedule.
99 Notice of Annual Meeting of Shareholders to be held April
16, 1998 and related Proxy Statement of the Company, dated
March 9, 1998 (previously filed with the Commission on
March 6, 1998 and incorporated herein by reference).
* This instrument defines the rights of holders of long-term
debt of the Company not being registered and the total
amount of securities authorized under the instrument does
not exceed ten percent of the total assets of the Company
and its subsidiaries on a consolidated basis. This
instrument is not being filed, but the Company will
furnish a copy of this instrument to the Commission upon
request.
** Management contract or compensatory plan or arrangement
required to be filed as an exhibit.
(b) No reports on Form 8-K were filed by the Company for the fourth quarter of
1997.
(c) The Company hereby files as exhibits to this Report the exhibits set forth
in Item 14(a)(3) hereof.
(d) The Company hereby files as financial statement schedules to this Report
the financial statement schedules set forth in Item 14(a)(2) hereof.
<PAGE> 1
Exhibit 3.2
BY-LAWS
OF
INTERMET CORPORATION
(As Amended through October 17, 1996)
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office shall be in the
State of Georgia, County of Cobb.
Section 2. Other Offices. The corporation may also have offices at such
other places both within and without the State of Georgia as the board of
directors may from time to time determine and the business of the corporation
may require or make desirable.
ARTICLE II
SHAREHOLDERS MEETINGS
Section 1. Annual Meetings. The annual meeting of the shareholders of
the corporation shall be held at the principal office of the corporation or at
such other place within or without the United States as may be determined by the
board of directors, at 10:00 a.m. on the last business day of the fifth month
following the close of each fiscal year or at such other time and date prior
thereto and following the close of the fiscal year as such is determined by the
board of directors, for the purpose of electing directors and transacting such
other business as may be properly brought before the meeting.
Section 2. Special Meetings. Special meetings of the shareholders shall
be held at the principal office of the corporation or at such other place within
or without the United States as may be designated in the notice of said
meetings, upon call of the chairman of the board of directors or the president
and shall be called by the president or the secretary when so directed by the
board of directors or at the request in writing of shareholders owning at least
50% of the issued and outstanding capital stock of the corporation entitled to
vote thereat. Any such request shall state the purposes for which the meeting is
to be called.
Section 3. Notice of Meetings. Written notice of every meeting of
shareholders, stating the place, date and hour of the meetings, shall be given
personally or by mail to each shareholder of record entitled to vote at such
meeting not less than 10 nor more than 50 days before the date of the meeting.
If mailed, such notice shall be deemed to be delivered when deposited in the
United States mail with first class postage (air mail postage if the address is
outside of the United States) thereon prepaid addressed to the shareholder at
his address as it appears on the corporation's record of shareholders.
Attendance of a shareholder at a meeting of shareholders shall constitute a
waiver of notice of such meeting and of all
<PAGE> 2
objections to the place or time of meeting, or the manner in which it has been
called or convened, except when a shareholder attends a meeting solely for the
purpose of stating, at the beginning of the meeting, any such objection to the
transaction of any business. Notice need not be given to any shareholder who
signs a waiver of notice, in person or by proxy, either before or after the
meeting.
Section 4. Quorum. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum for the transaction of business at all meetings
of the shareholders except as otherwise provided by statute, by the articles of
incorporation, or by these by-laws. If a quorum is not present or represented at
any meeting of the shareholders, a majority of the shareholders entitled to vote
thereat, present in person or represented by proxy, may adjourn the meeting from
time to time, without notice other than announcement at the meeting, until a
quorum shall be present or represented. At such adjourned meeting at which a
quorum shall be present or represented, any business may be transacted which
might have been transacted at the meeting as originally notified. If the
adjournment is for more than 30 days, or it after the adjournment a new record
is fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each shareholder of record entitled to vote at the meeting.
Section 5. Order of Business. At the annual meeting of shareholders
the order of business shall be as follows:
1. Calling meeting to order.
2. Proof of notice of meeting.
3. Reading of minutes of last previous annual meeting.
4. Reports of officers.
5. Reports of committees.
6. Election of directors.
7. Miscellaneous business.
Section 6. Voting. When a quorum is present at any meeting, the vote of
the holders of a majority of the stock having voting power, present in person or
represented by proxy, shall decide any question brought before such meeting,
unless the question is open upon which by express provision of law or of the
articles of incorporation, a different vote is required, in which case such
express provision shall govern and control the decision of the question. Each
shareholder shall at every meeting of the shareholders be entitled to one vote,
in person or by proxy, for each share of the capital stock having voting power
registered in his name on the books of the corporation, but no proxy shall be
voted or acted upon after 11 months from its date, unless otherwise provided in
the proxy.
Section 7. Consent of Shareholders. Any action required or permitted to
be taken at any meeting of the shareholders may be taken without a meeting if
all of the shareholders consent thereto in writing, setting forth the action so
taken. Such consent shall have the same force and effect as a unanimous vote of
shareholders.
Section 8. List of Shareholders. The corporation shall keep at its
registered office or principal-place of business, or at the office of its
transfer agent or registrar, a record of its shareholders, giving their names
and addresses and tat number, class and series, if any, of the shares held by
each. The officer who has charge of the stock transfer books of the corporation
shall prepare and make, before every meeting of shareholders or any adjournment
thereof, a complete list of the shareholders entitled to vote at the meeting or
any adjournment thereof, arranged in alphabetical order, with the address of and
the number and class and series, if any, of shares held by each. The list shall
be produced and kept open at the time and place of the meeting and shall be
subject to inspection by any shareholder during the
<PAGE> 3
whole time of the meeting for the purposes thereof. The said list may be the
corporation's regular record of shareholders if it is arranged in alphabetical
order or contains an alphabetical index.
Section 9. Advance Notice of Shareholder Proposals. At any annual or
special meeting of shareholders, proposals by shareholders and persons nominated
for election as directors by shareholders shall be considered only if advance
notice thereof has been timely given as provided herein and such proposals or
nominations are otherwise proper for consideration under applicable law and the
articles of incorporation and by-laws of the corporation. Notice of any proposal
to be presented by any shareholder or of the name of any person to be nominated
by any shareholder for election as a director of the corporation at any meeting
of shareholders shall be delivered to the secretary of the corporation at its
principal executive office not less than 60 nor more than 90 days prior to the
date of the meeting; provided, however, that if the date of the meeting is first
publicly announced or disclosed (in a public filing or otherwise) less than 70
days prior to the date of the meeting, such advance notice shall be given not
more than ten days after such date is first so announced or disclosed. Public
notice shall be deemed to have been given more than 70 days in advance of the
annual meeting if the corporation shall have previously disclosed, in these
by-laws or otherwise, that the annual meeting in each year is to be held on a
determinable date, unless and until the Board determines to hold the meeting on
a different date. Any shareholder who gives notice of any such proposal shall
deliver herewith the text of the proposal to be presented and a brief written
statement of the reasons why such shareholder favors the proposal and setting
forth such shareholder's name and address, the number and class of all shares of
each class of stock of the corporation beneficially owned by such shareholder
and any material interest of such shareholder in the proposal (other than as a
shareholder). Any shareholder desiring to nominate any person for election as a
director of the corporation shall deliver with such notice a statement in
writing setting forth the name of the person to be nominated, the number and
class of all shares of each class of stock of the corporation beneficially owned
by such person, the information regarding such person required by paragraphs
(a), (e) and (f) of Item 401 of Regulation S-K adopted by the Securities and
Exchange Commission (or the corresponding provisions of any regulation
subsequently adopted by the Securities and Exchange Commission applicable to the
corporation), such person's signed consent to serve as a director of the
corporation if elected, such shareholder's name and address and the number and
class of all shares of each class of stock of the corporation beneficially owned
by such shareholder. As used herein, shares "beneficially owned" shall mean all
shares as to which such person, together with such person's affiliates and
associates (as defined in Rule 12b-2 under the Securities Exchange Act of 1934,
may be deemed to beneficially own pursuant to Rules 13d-3 and 13d-5 under the
Securities Exchange Act of 1934, as well as all shares as to which such person,
together with such person's affiliates and associates, has the right to become
the beneficial owner pursuant to any agreement or understanding, or upon the
exercise of warrants, options or rights to convert or exchange (whether such
rights are exercisable immediately or only after the passage of time or the
occurrence of conditions). The person presiding at the meeting, in addition to
making any other determinations that may be appropriate to the conduct of the
meeting, shall determine whether such notice has been duly given and shall
direct that proposals and nominees not be considered if such notice has not been
given.
ARTICLE III
DIRECTORS
Section 1. Powers. Except as otherwise provided by any legal agreement
among shareholders, the property, affairs and business of the corporation shall
be managed and directed by its board of directors,
<PAGE> 4
which may exercise all powers of the corporation and do all lawful acts and
things which are not by law, by any legal agreement among shareholders, by the
articles of incorporation or by these by-laws directed or required to be
exercised or done by the shareholders.
Section 2. Number, Election and Term. The number of directors which
shall constitute the whole board shall be up to fifteen (15) directors.
Provided, however, the number of directors may be increased or decreased from
time to time by the board of directors by amendment of this by-law, but no
decrease shall have the effect of shortening the term of an incumbent director.
Except as hereinafter provided, the directors shall be elected by plurality vote
at the annual meeting of shareholders, and each director elected shall hold
office until his successor is elected and qualified or until his earlier
resignation, removal from office or death. Directors shall be natural persons
who have attained the age of 18 years, but need not be residents of the State of
Georgia or shareholders of the corporation.
Section 3. Vacancies. Vacancies, including vacancies resulting from any
increase in the number of directors, but not including vacancies resulting from
removal from office by the shareholders, may be filled by a majority of the
directors then in office, though less than a quorum, or by a sole remaining
director, and a director so chosen shall hold office until the next annual
election and until his successor is duly elected and qualified unless sooner
displaced. If there are no directors in office, then vacancies shall be filled
through election by the shareholders.
Section 4. Meetings and Notice. The board of directors of the
corporation may hold meetings, both regular and special, either within or
without the State of Georgia. Regular meetings of the board of directors may be
held without notice at such time and place as shall from time to time be
determined by resolution of the board. Special meetings of the board may be
called by the chairman of the board or president or by any two
directors on one day's oral, telegraphic or written notice duly given or served
on each director personally, or three days' notice deposited, first class
postage (air mail postage if the address is outside of the United States)
prepaid, in the United States mail. Such notice shall state a reasonable time,
date and place of meeting, but the purpose need not be stated therein. Notice
need not be given to any director who signs a waiver of notice either before or
after the meeting. Attendance of a director at a meeting shall constitute a
waiver of notice of such meeting and waiver of all objections to the place and
time of the meeting, or the manner in which it has been called or convened
except when the director states, at the beginning of the meeting, any such
objection or objections to the transaction of business.
Section 5. Quorum. At all meetings of the board a majority of directors
shall constitute a quorum for the transaction of business, and the act of a
majority of the directors present at any meeting at which there is a quorum
shall be the act of the board, except as may be otherwise specifically provided
by law, by the articles of incorporation, or by these by-laws. If a quorum shall
not be present at any meeting of the board, the directors present thereat may
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present.
Section 6. Conference Telephone Meeting. Unless the articles of
incorporation or these by-laws otherwise provide, members of the board of
directors, or any committee designated by the board, may participate in a
meeting of the board or committee by means of conference telephone or similar
communications equipment whereby all persons participating in the meeting can
hear each other. Participation in the meeting shall constitute presence in
person.
<PAGE> 5
Section 7. Consent of Directors. Unless otherwise restricted by the
articles of incorporation or these by-laws, any action required or permitted to
be taken at any meeting of the board of directors or of any committee thereof
may be taken without a meeting, if all members of the board or committee, as the
case may be, consent thereto in writing, setting forth the action so taken, and
the writing or writings are filed with the minutes of the proceedings of the
board or committee. Such consent shall have the same force and effect as a
unanimous vote of the board.
Section 8. Committees. The board of directors may, by resolution passed
by a majority of the whole board, designate from among its members one or more
committees, each committee to consist of two or more directors. The board may
designate one or more directors as alternate members of any committee, who may
replace any absent member at any meeting of such committee. Any such committee,
to the extent provided in the resolution, shall have and may exercise all of the
authority of the board of directors in the management of the business and
affairs of the corporation except that it shall have no authority with respect
to (1) amending the articles of incorporation or these by-laws; (2) adopting a
plan of merger or consolidation; (3) the sale, lease, or exchange or other
disposition of all or substantially all of the property and assets of the
corporation; and (4) a voluntary dissolution of the corporation or a revocation
thereof. Such committee or committees shall have such name or names as may be
determined from time to time by resolution adopted by the board of directors. A
majority of each committee may determine its action and may fix the time and
places of its meetings, unless otherwise provided by the board of directors.
Each committee shall keep regular minutes of its meetings and report the same to
the board of directors when required.
Section 9. Removal of Directors. At any shareholders' meeting with
respect to which notice of such purpose has been given, any director may be
removed from office, with or without cause, by the vote of shareholders
representing a majority of the issued and outstanding capital stock entitled to
vote for the election of directors, and his successor may be elected at the same
or any subsequent meeting of shareholders; provided that to the extent any
vacancy created by such removal is not filled by such an election within 60 days
after such removal, the remaining directors shall, by majority vote, fill any
such vacancy.
Section 10. Compensation of Directors. Directors shall be entitled to
such reasonable compensation for their services as directors or members of any
committee of the board as shall be fixed from time to time by resolution adopted
by the board, and shall also be entitled to reimbursement for any reasonable
expenses incurred in attending any meeting of the board or any such committee.
ARTICLE IV
OFFICERS
Section 1. Number. The officers of the corporation shall be chosen by
the board of directors and shall be a chairman of the board, a president, a
secretary and a treasurer. The board of directors may also choose one or more
vice-presidents, assistant secretaries and assistant treasurers. Any number of
offices, except the offices of president and secretary may be held by the same
person. The board of directors may appoint such other officers and agents as it
shall deem necessary who shall hold their offices for such terms and shall
exercise such powers and perform such duties as shall be determined from time to
time by the board.
<PAGE> 6
Section 2. Compensation. The salaries of all officers and agents of
the corporation shall be fixed by the board of directors or a
committee or officer appointed by the board.
Section 3. Term of Office. Unless otherwise provided by resolution of
the board of directors, the principal officers shall be chosen annually by the
board at the first meeting of the board following the annual meeting of
shareholders of the corporation, or as soon thereafter as is conveniently
possible. Subordinate officers may be elected from time to time. Each officer
shall serve until his successor shall have been chosen and qualified, or until
his death, resignation or removal.
Section 4. Removal. Any officer may be removed from office at any time,
with or without cause, by the board of directors whenever in its judgment the
best interest of the corporation will be served thereby.
Section 5. Vacancies. Any vacancy in an office resulting from any
cause may be filled by the board of directors.
Section 6. Powers and Duties. Except as hereinafter provided, the
officers of the corporation shall each have such powers and duties as generally
pertain to their respective offices, as well as such powers and duties as from
time to time may be conferred by the board of directors.
(a) Chairman of the Board. The chairman of the board shall be the chief
executive officer of the corporation and shall preside at all meetings of the
shareholders and the board of directors. Except where by law the signature of
the president is required, the chairman shall possess the same power as the
president to sign all certificates representing shares of the capital stock of
the corporation and all bonds, mortgages and Other contracts requiring a seal,
under the seal of the corporation.
(b) Vice Chairman of the Board. The vice chairman of the board shall in
the absence of the chairman of the board preside at all meetings of the
shareholders and the board of directors, and shall perform such other duties and
have such other powers as the board of directors may from time to time
prescribe.
(c) President. The president shall be the chief operations officer of
the corporation, and in the absence of the chairman of the board shall preside
at all meetings of the shareholders and the board of directors. The president
shall have general and active management of the business of the corporation and
shall see that all orders and resolutions of the board of directors are carried
into effect. He shall execute bonds, mortgages and other contracts requiring a
seal, under the seal of the corporation, except where required or permitted by
law to be otherwise signed and executed and except where the signing and
execution thereof shall be expressly delegated by the board of directors to some
other officer or agent of the corporation.
(d) Vice-President. In the absence of the president or in the event of
his inability or refusal to act, the vice-president (or in the event there be
more than one vice-president, the vice presidents in the order designated, or in
the absence of any designation, then in order of their election) shall perform
the duties of the president, and when so acting, shall have all the powers of
and be subject to all the restrictions upon the president. The vice-presidents
shall perform such other duties and have such other powers as the board of
directors may from time to time prescribe.
<PAGE> 7
(e) Secretary. The secretary shall attend all meetings of the board of
directors and all meetings of the shareholders and record of all the proceedings
of the meetings of the corporation and of the board of directors in a book to be
kept for that purpose and shall perform like duties four the standing committees
when required. He shall give, or pause to be given, notice of all meetings of
the shareholders and special meetings of the board of directors, and shall
perform such other duties as may be prescribed by the board of directors or
president, under whose supervision he shall be. He shall have custody of the
corporate seal of the corporation and he, or an assistant secretary, shall have
authority to affix the same to any instrument requiring it and when so affixed,
it may be attested by his signature or by the signature of such assistant
secretary. The board of directors may give general authority to any other
officer to affix the seal of the corporation and to attest the affixing by his
signature.
(f) Assistant Secretary. The assistant secretary or if there be more
than one, the assistant secretaries in the order determined by the board of
directors (or if there be no such determination, then in the order of their
election), shall, in the absence of the secretary or in the event of his
inability or refusal to act, perform the duties and exercise the powers of the
secretary and shall perform such other duties and have such other powers as the
board of directors may from time to time prescribe.
(g) Treasurer. The treasurer shall have the custody of the corporate
funds and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the corporation in
such depositories as may be designated by the board of directors. He shall
disburse the funds of the corporation as may be ordered by the board of
directors, taking proper vouchers for such disbursements, and shall render to
the chairman of the board, the president and the board of directors, at its
regular meetings, or when the board of directors so requires, an account of all
his transactions as treasurer and of the financial condition of the corporation.
If required by the board of directors, he shall give the corporation a bond
(which shall be renewed every six years) in such sum and with such surety or
sureties as shall be satisfactory to the board of directors for the faithful
performance of the duties of his office and for the restoration to the
corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the corporation.
(h) Assistant Treasurer. The assistant treasurer, or if there shall be
more than one, the assistant treasurers in the order determined by the board of
directors (or if there be no such determination, then in the order of their
election) shall, in the absence of the treasurer or in the event of his
inability or refusal to act, perform the duties and exercise the powers of the
treasurer and shall perform such other duties and have such other powers as the
board of directors may from time to time prescribe.
Section 7. Voting Securities of the Corporation. Unless otherwise
ordered by the board of directors, the chairman of the board and the president
shall each have full power and authority on behalf of the corporation to attend
and to act and vote at any meetings of security holders of corporations in which
the corporation may hold securities, and at such meetings shall possess and may
exercise any and all rights and powers incident to the ownership of such
securities which the corporation might have possessed and exercised if it had
been present. The board of directors by resolution from time to time may confer
like powers upon any other person or persons.
ARTICLE V
<PAGE> 8
CERTIFICATE
Section 1. Form of Certificate. Every holder of fully-paid stock in the
corporation shall be entitled to have a certificate in such form as the board of
directors may from time to time prescribe.
Section 2. Lost Certificates. The board of directors may direct that a new
certificate be issued in place of any certificate theretofore issued by the
corporation and alleged to have been lost, stolen or destroyed, upon the making
of an affidavit of that fact by the person claiming the certificate of stock to
be lost, stolen or destroyed. When authorizing such issue of a new certificate,
the board of directors may, in its discretion and as a condition precedent to
the issuance thereof, require the owner of such lost, stolen or destroyed
certificate, or his legal representative, to advertise the same in such manner
as it shall require and/or to give the corporation a bond in such sum as it may
direct as indemnity against any claim that may be made against the corporation
with respect to the certificate alleged to have been lost, stolen or destroyed.
Section 3. Transfers. (a) Transfers of shares of the capital stock of
the corporation shall be made only on the books of the corporation by the
registered holder thereof, or by his duly authorized attorney, or with a
transfer clerk or transfer agent appointed as provided in Section 5 of this
Article, and on surrender of the certificates for such shares properly endorsed
and the payment of all taxes thereon.
(b) The corporation shall be entitled to recognize the exclusive right
of a person registered on its books as the owner of shares to receive dividends,
and to vote as such owner, and for all other purposes, and shall not be bound to
recognize any equitable or other claim to or interest in such share or shares on
the part of any other person, whether or not it shall have express or other
notice thereof, except as otherwise provided by law.
(c) Shares of capital stock may be transferred by delivery of the
certificates therefor, accompanied either by an assignment in writing on the
back of the certificates or by separate written power of attorney to sell,
assign and transfer the same, signed by the record holder thereof, or by his
duly authorized attorney-in-fact, but no transfer shall affect the right of the
corporation to pay any dividend upon the stock to the holder of record as the
holder in fact thereof for all purposes, and no transfer shall be valid, except
between the parties thereto, until such transfer shall have been made upon the
books of the corporation as herein provided.
(d) The board may, from time to time, make such additional rules and
regulations as it may deem expedient, not inconsistent with these by-laws or the
articles of incorporation, concerning the issue, transfer and registration of
certificates for shares of the capital stock of the corporation.
Section 4. Record Date. In order that the corporation may determine the
shareholders entitled to notice of or to vote at any meeting of shareholders or
any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the board of directors may fix, in advance, a record date,
which shall not be more than 50 days and, in case of a meeting of shareholders,
not less than 10 days prior to the date on which the particular action requiring
such determination of stockholders is to be taken. If no record date is fixed
for the determination of shareholders entitled to notice of and to vote at any
meeting of shareholders, the record date shall be at
<PAGE> 9
the close of business on the day next preceding the day on which the notice is
given, or, if notice is waived, at the close of business on the day next
preceding the day on which the meeting is held. If no record date is fixed for
other purposes, the record date shall be at the close of business on the day
next preceding the day on which the board of directors adopts the resolution
relating thereto. A determination of shareholders of record entitled to notice
of or to vote at a meeting of shareholders shall apply to any adjournment of the
meeting unless the board of directors shall fix a new record date for the
adjourned meeting.
Section 5. Transfer Agent and Registrar. The board of directors may
appoint one or more transfer agents or one or more transfer clerks and one or
more registrars, and may require all certificates of stock to bear the signature
or signatures of any of them.
ARTICLE VI
GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the capital stock of the
corporation, subject to the provisions of the articles of incorporation, if any,
may be declared by the board of directors at any regular or special meetings,
pursuant to law. Dividends may be paid in cash, in property, or in shares of the
corporation's capital stock, subject to the provisions of the articles of
incorporation. Before payment of any dividend, there may be set aside out of any
funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
Section 2. Fiscal Year. The fiscal year of the corporation shall be
fixed by resolution of the board of directors.
Section 3. Seal. The corporate seal shall have inscribed thereon the
name of the corporation, the year of its organization and the words "Corporate
Seal" and "Georgia". The seal may be used by causing it or a facsimile thereof
to be impressed or affixed or reproduced or otherwise. In the event it is
inconvenient to use such a seal at any time, the signature of the corporation
followed by the word "Seal" enclosed in parentheses shall be deemed the seal of
the corporation.
Section 4. Annual Statements. Not later than four months after the
close of each fiscal year, and in any case prior to the next annual meeting of
shareholders, the corporation shall prepare:
(1) A balance sheet showing in a reasonable detail the financial
condition of the corporation as of the close of its fiscal year, and
(2) A profit and loss statement showing the results of its operations
during its fiscal year. Upon written request, the corporation promptly shall
mail to any shareholder of record a copy of the most recent such balance sheet
and profit and loss statement.
ARTICLE VII
<PAGE> 10
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 1. Right of Indemnification and Standards of Conduct. Every
person (and the heirs and legal representatives of such person) who is or was a
director or officer of this corporation or any other corporation of which he
served as such at the request of this corporation and of which this corporation
directly or indirectly is a shareholder or creditor, or in which, or in the
stocks, bonds, securities or other obligations of which it is in any way
interested, may in accordance with Section 2 hereof be indemnified for any
liability and expense that may be incurred by him in connection with or
resulting from any threatened, pending or completed action, suit or proceedings,
whether civil, criminal, administrative or investigative (whether brought by or
in the right of this corporation or otherwise), or in connection with any appeal
relating thereto, in which he may become involved, as a party or prospective
party or otherwise, by reason of his being or having been a director of officer
of this corporation or such other corporation, or by reason of any action taken
or not taken in his capacity as such director of officer or as a member of any
committee appointed by the board of directors of this corporation to act for, in
the interest of, or on behalf of this corporation, whether or not he continues
to be such at the time such liability or expense shall have been incurred;
provided such person acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of this corporation and, in
addition, with respect to any criminal action or proceeding, did not have
reasonable cause to believe that his conduct was unlawful. As used in this
Article, the terms "liability" and "expense" shall include, but shall not be
limited to, counsel fees and disbursements and amounts of judgments, fines or
penalties, and amounts paid in compromise or settlement by a director of
officer. The termination of any claim, action suit or proceeding, by judgment,
order, compromise, settlement (with or without court approval) or conviction or
upon a plea of guilty or of nolo contendere, or its equivalent, shall not create
a presumption that a director or officer did not meet the standards of conduct
set forth in this Section.
Section 2. Determination of Right of Indemnification. Every person (and
the heirs and legal representatives of such person) referred to in Section 1
hereof who has been wholly successful, on the merits or otherwise, with respect
to any claim, action, suit or proceeding of the character described in Section 1
hereof shall be entitled to indemnification as of right without any further
action or approval by the board of directors. Except as provided in the
immediately preceding sentence, any indemnification under Section 1 next above
shall be made at the discretion of this corporation, but only if (a) the board
of directors, acting by majority vote of a quorum consisting of directors who
were not parties to such claim, action, suit or proceeding, present or voting,
shall find that the director or officer has met the standard of conduct set
forth in Section 1 hereof, or (b) if no such quorum of the board exists,
independent legal counsel selected by any Judge of the United States District
Court for the Northern District of Georgia, at the request of either the
corporation or the person seeking indemnification, shall deliver to the
corporation their written opinion that such director or officer has met such
standards, or (c) the holders of a majority of stock then entitled to vote for
the election of directors shall determine by affirmative vote that such director
or officer has met such standards. Notwithstanding the foregoing, no officer or
director who was or is a party to any action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that he is
or was an officer or director of this or such other corporation shall be
determined in respect of any claim, issue or matter as to which such person
shall have been adjudged to be liable for negligence or misconduct in the
performance of his duty to this corporation unless and except to the extent that
the Court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability and in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses as the Court shall deem proper.
<PAGE> 11
Section 3. Advance of Expenses. Expenses incurred with respect to any
claim, action, suit or proceeding of the character described in Section 1 of
this Article VII may be advanced by the corporation prior to the final
disposition thereof upon receipt of an undertaking by or on behalf of the
recipient to repay such amount unless it shall ultimately be determined that he
is entitled to indemnification under this Article.
Section 4. Rights of Indemnification Cumulative. The rights of
indemnification provided in this Article VII shall be in addition to any rights
to which any such director or officer or other person may otherwise be entitled
under any by-law, agreement, vote of shareholders, or otherwise, and shall be in
addition to the power of the corporation to purchase and maintain insurance on
behalf of any such director or officer or other person against any liability
asserted against him and incurred by him in such capacity, or arising out of his
status as such, regardless of whether the corporation would have the power to
indemnify him against such liability under this Article or otherwise.
Section 5. Statement to Stockholders. If any expenses or other amounts
are paid by way of indemnification, otherwise than by court order or action by
the shareholders or by an insurance carrier pursuant to insurance maintained by
the corporation, the corporation shall, not later than the next annual meeting
of shareholders unless such meeting is held within three months from the date of
such payment, and, in any event, within 15 months from the date of such payment,
send by first class mail to its shareholders of record at the time entitled to
vote for the election of directors a statement specifying the person paid, the
amounts paid, and the nature and status at the time of such payment of the
litigation or threatened litigation.
ARTICLE VIII
AMENDMENTS
The board of directors shall have power to alter, amend or repeal the
by-laws or adopt new by-laws by majority vote of all of the directors, but any
by-laws adopted by the board of directors may be altered, amended or repealed
and new by-laws adopted, by the shareholders by majority vote of all of the
shares having voting power.
<PAGE> 1
Exhibit 3.3
Intermet Corporation
Amendment to Article III, Section 2, of the By-Laws
Effective April 16, 1998
Pursuant to a resolution of the Board of Directors of Intermet Corporation (the
"Corporation") adopted on January 30, 1998, the first sentence of Section
2 (Number, Election and Term) of Article III (Directors) of the By-Laws of
the Corporation was amended to decrease the number of directors which
shall constitute the whole board to nine (9), from up to fifteen (15).
Pursuant to the Board's resolution, this amendment becomes effective on the
date of the next Annual Meeting of Shareholders, Thursday, April 16, 1998.
Accordingly, Section 2 of Article III of the By Laws of the Corporation is
amended to read in full as follows, effective April 16, 1998:
Section 2. Number, Election and Term. The number of directors which
shall constitute the whole board shall be nine (9). Provided, however, the
number of directors may be increased or decreased from time to time by the
board of directors by amendment of this by-law, but no decrease shall have
the effect of shortening the term of an incumbent director. Except as
hereinafter provided, the directors shall be elected by plurality vote at
the annual meeting of shareholders, and each director elected shall hold
office until his successor is elected and qualified or until his earlier
resignation, removal from office or death. Directors shall be natural
persons who have attained the age of 18 years, but need not be residents of
the State of Georgia or shareholders of the corporation.
<PAGE> 1
Exhibit 10.7
OPERATING COMMITTEE
1998 PROFIT SHARING PLAN
The purpose of this plan is to provide an incentive compensation system which
rewards the corporate operating management proportionally to the profitability
of the Corporation. It is intended that base salaries be held at about 75% of
industry peer group averages, and a large portion of total compensation be
variable depending on corporate earning performance. Stock options should make
the third leg of the compensation plan so that the key operating management of
Intermet is rewarded only when the shareholders are rewarded.
The percentages listed below shall be the profit sharing of Intermet's audited
annual pretax earning before minority interest and corporate profit sharing.
Profit sharing is to be paid not later than three (3) months after the end of
the fiscal year.
Jim Peterson 0.25% (.0025)
Doretha Christoph 0.22% (.0022)
John Engeswick 0.20% (.0020)
Dar Marsh 0.20% (.0020)
Dave Neilson 0.22% (.0022)
-----
Total 1.09%
Interim payouts may be made at the end of each fiscal quarter in an amount of up
to 75% of the annual profit sharing entitlement, calculated as of the end of
each fiscal quarter.
Submitted: /s/ John Doddridge
----------------------------
Chairman & CEO
Approved: /s/ Vernon R. Alden
----------------------------
Chairman, Compensation
Committee
12/1/97 JED
<PAGE> 1
Exhibit 13
Financial Highlights
<TABLE>
<CAPTION>
Years Ended December 31 1997 1996 1995 1994 1993 1992
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA (IN THOUSANDS)
Net sales $813,729 $534,478 $541,749 $501,269 $444,214 $401,951
Restructuring charge _ _ _ 24,000 _
Operating profit (loss) 77,337 56,103 52,815 1,728 (23,486) 5,830
Income (loss) before cumulative
effect of accounting changes 40,013 43,153 25,395 (10,985) (20,504) (1,515)
Cumulative effect on prior years of
changes in accounting methods _ _ _ _ _ (28,421)
Net income (loss) 40,013 43,153 25,395 (10,985) (20,504) (29,936)
- -------------------------------------------------------------------------------------------------------------------
SHARE DATA
Earnings (loss) per share before
cumulative effect of accounting changes $1.55 1.69 $1.02 (.45) (.83) (.06)
Income (loss) per common share - diluted $1.55 1.69 $1.02 (.45) (.83) (1.31)
Cash dividends per share .16 .08 _ _ .12 .16
Average diluted shares 25,783 25,594 24,893 24,591 24,564 22,783
- -------------------------------------------------------------------------------------------------------------------
BALANCE SHEET DATA (IN THOUSANDS)
Total assets $538,805 $526,312 $274,071 $306,264 $307,458 $274,457
Debt due after one year 167,295 149,477 32,675 87,698 93,391 69,478
Total debt 177,833 162,153 35,271 99,715 95,854 76,751
Shareholders' equity 175,428 141,102 98,028 67,971 75,532 101,054
Return on equity 23% 30% 26% (16%) (27%) (30%)
</TABLE>
1
<PAGE> 2
Management's Discussion and Analysis of Financial Condition and Results of
Operations
THE CHAIRMAN'S LETTER AND THIS MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS CONTAIN FORWARD-LOOKING STATEMENTS WITHIN
THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. WHEN USED
IN THIS SECTION, THE WORDS "ANTICIPATE," "BELIEVE," "ESTIMATE" AND "EXPECT" AND
SIMILAR EXPRESSIONS ARE GENERALLY INTENDED TO IDENTIFY FORWARD-LOOKING
STATEMENTS. READERS 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) FOREIGN CURRENCY AND EXCHANGE FLUCTUATIONS; AND (VI) OTHER RISKS
DETAILED FROM TIME TO TIME IN THE COMPANY'S FILINGS WITH THE SECURITIES AND
EXCHANGE COMMISSION. THE COMPANY DOES NOT INTEND TO UPDATE THESE FORWARD-LOOKING
STATEMENTS.
UNLESS THE CONTEXT INDICATES OTHERWISE, AS USED IN THIS MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, THE TERM
"COMPANY" REFERS TO INTERMET CORPORATION, ITS CONSOLIDATED SUBSIDIARIES AND
THEIR RESPECTIVE PREDECESSORS. THE COMPANY ACQUIRED SUDBURY, INC. ("SUDBURY")
EFFECTIVELY ON DECEMBER 21, 1996; AND ACCORDINGLY, INCLUDED SUDBURY IN THE
DECEMBER 31, 1996 BALANCE SHEET. THE RESULTS OF OPERATIONS OF SUDBURY FROM THE
DATE OF ACQUISITION TO DECEMBER 31, 1996 WERE NOT SIGNIFICANT.
Results of Operations
1997 Compared to 1996
Sales in 1997 were $813.7 million compared to 1996 sales of $534.5 million. This
52.2% increase in sales related primarily to the acquisition of Sudbury in late
December 1996. Domestic sales during 1997, excluding Sudbury, were relatively
flat from 1996. European sales, excluding Sudbury, were strong, down only 2.6%
despite a 13% ($13.5 million) negative exchange rate impact from 1996 to 1997.
The Company's European sales, in local currency, set a new record for the year.
Sales at machining operations (i.e., operations in place both years) increased
$12.0 million for 1997, over the same period in 1996, with the launch of new
products. Sales at the Company's domestic foundry operations, excluding Sudbury,
were down 3.8% in 1997 from the prior year. This decrease was primarily due to
the "selling gap" created by capacity constraints in 1993 and 1994. Looking
forward to 1998, sales are expected to increase as a result of significant new
automotive business that is expected to launch during the second half of the
year. Actual results may differ materially.
Gross profit increased to $107.0 million in 1997 from $77.9 million in 1996.
This improvement is due primarily to the acquisition of Sudbury. Gross profit as
a percentage of sales was 13.1% in 1997 versus 14.6% in 1996 (13.3% in 1996
including Sudbury). Gross profit as a percentage of sales was lower in 1997
primarily because the Sudbury subsidiaries in the aggregate generate lower
percentage margins than pre-acquisition Intermet subsidiaries in the aggregate.
In addition, the Company continues to have higher than anticipated costs
associated with new product launches at the Company's lost foam aluminum plant
and underutilized capacity at certain other domestic foundries.
2
<PAGE> 3
Management's Discussion and Analysis of Financial Condition and Results of
Operations (continued)
Results of Operations (continued)
1997 Compared to 1996 (continued)
Selling, general and administrative expenses were $29.6 million for 1997, an
increase of $7.9 million over 1996. This increase relates primarily to expenses
incurred by the operating units of Sudbury which were not part of the Company's
results in 1996. Selling, general and administrative expenses as a percentage of
sales for the years ending December 31, 1997 and 1996 were 3.6% and 4.1%,
respectively. Amounts in 1997 included expenses related to acquisition
investigations of $0.4 million and expenses related to the secondary stock
offering for the George Mathews family and certain related parties of $0.3
million.
Interest expense for the years ended December 31, 1997 and 1996 was $12.4
million and $3.1 million, respectively. This change was a result of an increase
in borrowings that were used primarily to finance the Sudbury acquisition and,
to a lesser extent, to fund working capital.
Other expenses increased from $0.1 million in 1996 to $4.1 million in 1997. This
increase relates primarily to equity in net losses of $3.2 million from minority
holdings, principally IWESA GmbH ("IWESA.
The Company recorded a consolidated tax provision of $21.4 million in 1997. 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. The Company was able to utilize $4.9 million of NOLs and credit carry
forwards and recorded a reduction in the deferred tax valuation allowance of
$1.2 million, related to the acquisition of Sudbury.
3
<PAGE> 4
Management's Discussion and Analysis of Financial Condition and Results of
Operations (continued)
Results of Operations (continued)
1996 Compared to 1995
Sales in 1996 were $7.3 million (1%) lower than in 1995 reflecting the lack of
sales from the 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 actually 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 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. Margins were 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. In addition, 1995
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's level due to a
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 at $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 was the net of statutory provisions less reduction in deferred valuation
allowance and utilization of NOLs and credit carry forwards. 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.
4
<PAGE> 5
Management's Discussion and Analysis of Financial Condition and Results of
Operations (continued)
Liquidity and Capital Resources
During 1997, net cash provided by operating activities was $62.2 million.
Non-cash charges (principally depreciation and amortization expense) were $36.6
million. Accounts receivable increased primarily because sales in December 1997
were greater than sales in December 1996, including Sudbury. Inventories were
greater at December 31, 1997 versus December 31, 1996 due to an increase in
patterns for tooling programs in progress. Accounts payable and accrued
liabilities decreased from December 31, 1996 due to a decrease in income taxes
payable. The Company's investing activities for 1997 used cash of $76.1 million.
This included $36.4 million paid for costs related to the acquisition of Sudbury
and $40.6 million for property, plant and equipment additions. Bank borrowings
decreased slightly, in the aggregate, from the end of 1996.
Cash and cash equivalents decreased to $7.0 million at December 31, 1997 from
$23.5 million at December 31, 1996. Of the $23.5 million at December 31, 1996,
$10.9 million was obtained in the acquisition of Sudbury. Since the beginning of
1997, the Company has reduced the cash on hand to a level that management
believes is required for current operations. The Company declared cash dividends
of $0.04 per share per quarter ($4.0 million in aggregate) during 1997.
During 1997, the Company increased its ownership interest of the common stock of
IWESA from 49% to 82.4%, and accordingly, accounts for its investment using the
consolidation method. The information presented below is segregated to
illustrate the impact of the consolidation of IWESA. Certain balance sheet data
(in millions of dollars) are summarized as follows:
<TABLE>
<CAPTION>
December 31, 1997 December 31,
Pre- Post-
IWESA IWESA 1996 1995 1994
----- ------- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Funded debt $160.9 $186.9 $162.2 $35.3 $107.4
Shareholders' equity 175.4 175.4 141.1 98.0 68.0
Net working capital 68.1 57.3 18.0 14.3 29.1
</TABLE>
Outstanding funded debt increased in 1997 to a high of $198.0 million then
decreased to $160.9 million (excluding IWESA) at December 31, 1997, slightly
below December 31, 1996 levels. The increase in borrowings during early 1997 was
expected and related primarily to funds required to complete the December 1996
Sudbury acquisition. The Company's debt-to-capital ratio decreased from 53% at
December 31, 1996 to 52% at December 31, 1997 (48% without IWESA).
Shareholders' equity increased $34.3 million from $141.1 million at December 31,
1996 to $175.4 million at December 31, 1997 surpassing any previous level
attained by the Company.
5
<PAGE> 6
Management's Discussion and Analysis of Financial Condition and Results of
Operations (continued)
Liquidity and Capital Resources (continued)
The Company has recurring costs related to environmental matters, particularly
the management and disposition of waste (principally non-hazardous waste)
generated as part of ongoing operations. In 1997 and 1996, such costs totaled
approximately $12.3 and $9.0 million, respectively. Environmental expense for
1996 does not include that for the subsidiaries purchased in the Sudbury
acquisition. Although the Company continues to take various steps to control
environmental 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 $6.9 million in 1997 and $2.6 million in 1996.
The Company expects to spend $2.6 million in capital expenditures related to
environmental matters in 1998. The actual amount of capital expenditures will be
influenced by sales volume increases and available engineering resources, among
other factors.
In addition, 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 conditions, the Company, with
the assistance of environmental engineers and consultants, has accrued $5.5
million to cover estimated future environmental expenditures [in such matters].
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 December 31, 1997.
In addition to these recurring and anticipated expenditures, the 1990 amendments
to the Federal Clean Air Act, and regulations promulgated thereunder are
expected to have a major impact on the compliance cost 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,
and until certain control measures under existing regulations are determined, it
is not possible to estimate such costs.
The Company is also a party to certain lawsuits and claims arising out of the
conduct of its business, including those relating to commercial transactions,
product liability, environmental, safety and health matters. The Company self
insures a significant portion of its health care , property and casualty
insurance risks. However, the Company purchases additional insurance for
catastrophic losses.
While the ultimate result of the contingencies described above cannot be
predicted with certainty, management of the Company does not expect such known
contingencies to have a material adverse effect on the consolidated financial
position, results of operations or cash flows of the Company. However, the
Company cannot be assured that its 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. In addition, 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 and water
discharges.
At December 31, 1997 the Company had commitments for the purchase of operating
equipment of approximately $5.3 million which are expected to be funded through
cash flow from operations. The Company had committed and uncommitted bank credit
facilities with outstanding borrowing capacity of approximately $113.4 million
at December 31, 1997. The Company has a term loan of $25.0 million outstanding,
$5.0 million of which it will repay in December 1998. Additional current
maturities of long term debt total $5.5 million at December 31, 1997.
6
<PAGE> 7
Management's Discussion and Analysis of Financial Condition and Results of
Operations (continued)
Liquidity and Capital Resources (continued)
The Company is holding certain assets as "held for sale", with a carrying value
of $16.9 million at December 31, 1997 that, if sold, are expected to reduce
borrowings. Whether such borrowing reductions are achieved will be influenced by
the timing of such sales and the actual sale proceeds received, among other
factors.
Year 2000
The Company has developed plans to address issues related to the impact on its
computer systems and operations of the Year 2000. Financial and operational
systems have been assessed and plans have been developed to address systems
modification requirements. The financial impact of making the required systems
changes is not expected to be material to the Company's consolidated financial
position, results of operations or cash flows. The Company expects to be Year
2000 compliant before December 31, 1999.
7
<PAGE> 8
Consolidated Financial Statements
Intermet Corporation
Years ended December 31, 1997, 1996 and 1995
with Report of Independent Auditors
<PAGE> 9
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, 1997 and 1996, and the related consolidated
statements of operations, shareholders' equity and cash flows for each of the
three years in the period ended December 31, 1997. 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, 1997 and 1996, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1997, in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Detroit, Michigan
January 30, 1998
<PAGE> 10
Intermet Corporation
Consolidated Statements of Operations
<TABLE>
<CAPTION>
Years ended December 31,
1997 1996 1995
----------------- --------------- ---------------
(in thousands of dollars, except per share data)
<S> <C> <C> <C>
Net sales $813,729 $534,478 $541,749
Cost of sales 706,771 456,618 457,337
----------------- --------------- ---------------
Gross profit 106,958 77,860 84,412
Operating expenses:
Selling 9,810 3,646 4,957
General and administrative 19,811 18,111 26,640
----------------- --------------- ---------------
Operating profit 77,337 56,103 52,815
Other income and expenses:
Interest income 546 1,403 382
Interest expense (12,396) (3,056) (6,461)
Other, net (4,098) (128) (1,216)
----------------- --------------- ---------------
(15,948) (1,781) (7,295)
----------------- --------------- ---------------
Income before income taxes 61,389 54,322 45,520
Provision for income taxes 21,376 11,169 20,125
----------------- --------------- ---------------
Net income $40,013 $43,153 $25,395
================= =============== ===============
Income per common share - Basic $1.59 $1.72 $1.03
================= =============== ===============
Income per common share - Diluted $1.55 $1.69 $1.02
================= =============== ===============
</TABLE>
See accompanying notes.
2
<PAGE> 11
Intermet Corporation
Consolidated Balance Sheets
<TABLE>
<CAPTION>
December 31,
1997 1996
--------------- --------------
(in thousands of dollars)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $7,022 $23,485
Accounts receivable:
Trade, less allowance for doubtful accounts of
$2,125 in 1997 and $949 in 1996 92,871 87,049
Other 7,549 4,642
-------------- -------------
100,420 91,691
Inventories:
Finished goods 9,035 13,530
Work in process 14,705 13,408
Raw materials 12,806 11,679
Supplies and patterns 24,618 17,430
-------------- -------------
61,164 56,047
Assets held for sale 16,892 -
Deferred income tax 3,244 13,242
Other current assets 4,540 4,829
-------------- -------------
Total current assets 193,282 189,294
Property, plant and equipment, at cost:
Land 4,783 5,260
Buildings and improvements 89,215 88,459
Machinery and equipment 357,745 335,003
Construction in progress 20,238 7,982
-------------- -------------
471,981 436,704
Less:
Foreign industrial development grants, net of
amortization 5,638 4,804
Accumulated depreciation and amortization 224,444 209,118
-------------- -------------
Net property, plant and equipment 241,899 222,782
Goodwill, net of amortization 82,309 88,223
Other noncurrent assets 21,315 26,013
============== =============
$538,805 $526,312
============== =============
</TABLE>
3
<PAGE> 12
Intermet Corporation
Consolidated Balance Sheets
<TABLE>
<CAPTION>
December 31,
1997 1996
---------------- -------------
(in thousands of dollars)
<S> <C> <C>
Liabilities and shareholders' equity
Current liabilities:
Notes payable $9,087 -
Accounts payable 59,173 $54,721
Accrued wages, severance and benefits 21,998 26,697
Accrued Sudbury acquisition costs 903 37,299
Income taxes payable 8,635 15,198
Other accrued liabilities 25,620 24,777
Long term debt due within one year 10,538 12,676
---------------- ------------
Total current liabilities 135,954 171,368
Noncurrent liabilities:
Long term debt due after one year 167,295 149,477
Retirement benefits 49,013 53,421
Other noncurrent liabilities 8,778 8,107
---------------- ------------
Total noncurrent liabilities 225,086 211,005
Minority interest 2,337 2,837
Shareholders' equity:
Preferred stock; 5,000,000 shares authorized; none issued
Common stock, $.10 par value; 50,000,000 shares authorized;
25,256,374 and 25,165,374 shares issued in 1997 and 1996,
respectively 2,526 2,517
Capital in excess of par value 58,176 57,308
Retained earnings 114,242 78,267
Accumulated translation adjustments 573 3,548
Minimum pension liability adjustment (12) (485)
Unearned restricted stock (77) (53)
---------------- ------------
Total shareholders' equity 175,428 141,102
================ ============
$538,805 $526,312
================ ============
</TABLE>
See accompanying notes.
4
<PAGE> 13
Intermet Corporation
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Years ended December 31,
1997 1996 1995
--------------- ------------- -------------
(in thousands of dollars)
<S> <C> <C> <C>
Operating activities:
Net income $40,013 $43,153 $25,395
Adjustments to reconcile net income to
cash provided by operating activities:
Depreciation 32,482 25,016 27,801
Amortization 3,849 1,837 314
Equity in results of minority holdings 3,199 - -
Loss on sale of subsidiaries - - 1,272
(Gain) loss on sale of assets, other (320) 552 219
Deferred income taxes (2,577) (6,364) 3,234
Changes in operating assets and liabilities
excluding the effects of acquisitions and
dispositions:
Accounts receivable (6,098) 279 13,474
Inventories (4,050) (5,225) 1,533
Accounts payable and accrued liabilities (6,219) 5,133 (2,586)
Other assets and liabilities 1,895 6,750 12,615
------------- ------------- -------------
Cash provided by operating activities 62,174 71,131 83,271
Investing activities:
Additions to property, plant and equipment (40,585) (26,025) (24,442)
Purchase of Alexander City Castings - - (2,704)
Purchase of Sudbury, net of cash acquired (36,396) (146,676) -
Purchase of minority interest in IWESA - (6,780) -
Proceeds from sales of plant, property & equipment 815 3,516 4,462
Proceeds from sale of subsidiaries - - 9,750
Other, net 25 (105) (3,759)
------------- ------------- -------------
Cash used in investing activities (76,141) (176,070) (16,693)
Financing activities:
Net increase in revolving credit facility 6,600 118,400 -
Reduction in debt (12,576) (2,337) (64,159)
Net increase (decrease) in note payable 5,000 - (7,656)
Issuance of common stock 877 889 903
Dividends paid (4,038) (2,011) -
Other, net 420 - -
------------- ------------- ------------
Cash (used in) provided by financing activities (3,717) 114,941 (70,912)
Effect of exchange rate changes on cash 1,221 2,310 1,789
------------- ------------- ------------
Net (decrease) increase in cash and cash equivalents (16,463) 12,312 (2,545)
Cash and cash equivalents at beginning of year 23,485 11,173 13,718
============= ============= ============
Cash and cash equivalents at end of year $7,022 $23,485 $11,173
============= ============= ============
</TABLE>
See accompanying notes.
5
<PAGE> 14
Intermet Corporation
Consolidated Statements of Shareholders' Equity
<TABLE>
<CAPTION>
Years ended December 31,
1997 1996 1995
----------------- -------------- --------------
(in thousands of dollars)
<S> <C> <C> <C>
Common stock
Beginning balance $2,517 $2,505 $2,464
Exercise of options to purchase 88,500, 114,500 and
124,500 shares of common stock in 1997, 1996 and 1995,
respectively 9 12 12
Exercise of options purchased with common stock - - (2)
Issuance of 310,000 shares of common stock - - 31
--------------- ------------ ------------
Ending balance 2,526 2,517 2,505
Capital in excess of par value
Beginning balance 57,308 56,431 52,150
Exercise of options to purchase 88,500, 114,500 and
124,500 shares of common stock in 1997, 1996 and 1995,
respectively 868 877 891
Exercise of options purchased with common stock - - (265)
Issuance of 310,000 shares of common stock - - 3,655
--------------- ------------ --------------
Ending balance 58,176 57,308 56,431
Retained earnings
Beginning balance 78,267 37,125 11,730
Net income 40,013 43,153 25,395
Cash dividends (4,038) (2,011) -
--------------- ------------ --------------
Ending balance 114,242 78,267 37,125
Accumulated translation adjustments
Beginning balance 3,548 3,765 2,959
Translation adjustments (4,575) (344) 1,321
Related income tax effect 1,600 127 (515)
--------------- ------------ --------------
Ending balance 573 3,548 3,765
Minimum pension liability adjustment
Beginning balance (485) (1,636) (1,164)
Adjustment 776 1,887 (774)
Related income tax effect (303) (736) 302
--------------- ------------ --------------
Ending balance (12) (485) (1,636)
Unearned restricted stock
Beginning balance (53) (162) (168)
Issuance of 7,500 and 10,000 shares of common stock in
1997 and 1995, respectively (115) - (86)
Amortization 91 109 92
--------------- ------------ ------------
Ending balance (77) (53) (162)
=============== ============== ==============
Total shareholders' equity $175,428 $141,102 $98,028
=============== ============== ==============
</TABLE>
See accompanying notes.
6
<PAGE> 15
Intermet Corporation
Notes to Consolidated Financial Statements
Years ended December 31, 1997, 1996 and 1995
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.
Business
The Company produces iron and aluminum castings, principally for automotive
manufacturers in North America and Europe. The Company also supplies
applications of custom coatings, cranes, truck bodies and related equipment and
precision machined components to automotive and other industrial customers.
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 36% and 40% of the December 31, 1997 and
1996 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 $1,273,000 and $1,310,000 at December 31, 1997 and 1996,
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 $82,309,000 and $88,223,000 (net of accumulated amortization of $4,281,000
and $1,837,000) at December 31, 1997 and 1996, respectively. Such costs are
being amortized using the straight-line method over periods ranging from three
to forty years.
7
<PAGE> 16
Intermet Corporation
Notes to Consolidated Financial Statements (continued)
1. Summary of Significant Accounting Policies (continued)
Fair Value of Financial Instruments
The carrying amounts reported in the consolidated balance sheets for cash and
cash equivalents, accounts receivable and accounts payable approximate fair
values. The fair value of the Company's debt approximates the reported amounts
in the accompanying 1997 consolidated balance sheet as their respective interest
rates approximate the December 31, 1997 market rates for similar debt
instruments.
Income Per Common Share
Net income per common share amounts were previously 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 repurchase, at fair market
value, of shares using the proceeds from such exercise, unless the effect was
antidilutive. In February 1997, the Financial Accounting Standards Board
("FASB") issued Statement No. 128, "Earnings per Share", which was adopted by
the Company on December 31, 1997. Under the new requirements for calculating
basic earnings per share, the dilutive effect of stock options are excluded.
Fully diluted EPS has not changed significantly but has been renamed diluted
EPS. Earnings per share for all prior periods have been restated to reflect the
new accounting standard.
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. 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.
Reporting for Business Segments
In June 1997, the FASB issued Statement No. 131, "Disclosures about Segments of
an Enterprise and Related Information", which will become effective for the year
ending December 31, 1998 and supersedes FASB Statement No. 14, "Financial
Reporting for Segments of a Business Enterprise". Based on the provisions in
Statement No. 14, the Company does not report segment information. The Company
is evaluating the impact, if any, of Statement No. 131 regarding segment
reporting.
2. Acquisitions and Dispositions
In May 1997, the Company purchased for $500,000 the minority interest held by
Ford Motor Company of the Company's subsidiary, New River Castings Company ("New
River"). The Company now owns 100% of the capital stock of New River.
8
<PAGE> 17
Intermet Corporation
Notes to Consolidated Financial Statements (continued)
2. Acquisitions and Dispositions (continued)
In December 1996, the Company acquired substantially all of the outstanding
stock of Sudbury, Inc. for $182,434,000 in cash, including costs of $5,277,000
directly related to the acquisition. The transaction was 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 $85,563,000 and was 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.
In November 1995, the Company acquired certain operating assets and the aluminum
foundry business 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.
The following represents the unaudited pro forma consolidated results of
operations (in thousands of dollars, except per share data) for the Company for
1996 and 1995, assuming the above acquisitions and dispositions occurred on
January 1 of each year presented.
<TABLE>
<CAPTION>
1996 1995
------------- -------------
<S> <C> <C>
Net sales $837,880 $848,790
Net income 47,326 35,072
Income per common share - Basic 1.89 1.42
Income per common share - Diluted 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 and
dispositions actually been made on the dates indicated or of future results of
operations.
In November 1996, the Company purchased for cash a minority interest in IWESA
GmbH ("IWESA"), for DM 4,000,000. The Company also purchased a newly issued
share from IWESA for DM 374,000 bringing its share interest to 49% and
contributed DM 6,000,000 to the capital reserves of IWESA in support of new
capital expansion projects. At December 31, 1996, the Company's investment in
IWESA was $6,780,000 (at then current exchange rates) and was accounted for on
the equity method. The operating results of IWESA were not significant during
1996. During 1997, the Company increased its ownership interest in IWESA to
82.4% and accordingly, accounted for IWESA as a consolidated subsidiary as of
December 31, 1997. The Company's equity in net loss of IWESA for 1997 is DM
6,534,000 ($3,708,000) and is included in other income and expense in the
accompanying statement of operations. IWESA is a precision machining and
engineering company located in Saarbrucken, Germany, producing parts for the
commercial motor vehicle and industrial markets.
9
<PAGE> 18
Intermet Corporation
Notes to Consolidated Financial Statements (continued)
2. Acquisitions and Dispositions (continued)
The Company has determined that certain assets are not consistent with its long
term objectives and is holding them for sale at December 31, 1997. The Company's
results of operations for 1997 were not significantly impacted by the assets
held for sale. The carrying value of these assets approximates their fair value
less estimated disposal costs. The Company expects to dispose of these assets in
1998.
3. Minority Interest
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 because Ironton has incurred a cumulative net loss since
1988. The preferred shares are included in minority interest in the consolidated
balance sheet.
4. 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 significant non-cash investing and financing activities in 1997.
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 $172,722 $3,625
Costs in excess of net assets acquired 85,563 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>
5. Notes Payable
The Company maintains various uncommitted bank lines of credit which are payable
on demand. At December 31, 1997, Intermet's borrowings under the lines of credit
totaled $5,000,000. Availability under these lines of credit at the year ended
December 31, 1997 was $40,000,000. Availability of uncommitted bank lines of
credit at December 31, 1996 was $5,000,000, none of which was outstanding at
that time. Interest is paid on a daily basis at a negotiated rate. At December
31, 1997, the interest rate was 7.25% per annum.
IWESA, an 82.4% owned subsidiary of the Company, had a bank demand note
obligation outstanding at December 31, 1997 of $4,087,000. The interest rate
associated with the note, payable monthly, is 7.9% per annum. This bank demand
obligation is payable upon the earlier of demand or December 31, 1998, unless
extended.
Columbus Neunkirchen Foundry GmbH ("Neunkirchen"), a wholly owned subsidiary of
the Company, has various revolving note agreements which are payable upon the
earlier of demand or December 31, 1998, unless extended. These notes provide for
borrowings up to DM 18,998,000 (approximately $10,601,000) at December 31, 1997.
There were no outstanding borrowings under these agreements as of December 31,
1997 or December 31, 1996.
10
<PAGE> 19
Intermet Corporation
Notes to Consolidated Financial Statements (continued)
6. Long Term Debt
Long term debt consists of the following (in thousands of dollars):
<TABLE>
<CAPTION>
1997 1996
--------------- -------------
<S> <C> <C>
Intermet:
Revolving credit facility $125,000 $118,400
Prudential term loan 25,000 25,000
Subsidiaries:
Sudbury subordinated notes - 9,831
Sudbury PIK Notes - 666
Lynchburg revenue bonds 4,320 5,025
Neunkirchen term notes 1,306 2,446
IWESA bank term debt 15,947 -
IWESA capitalized leases 6,012 -
Other 248 785
-------------- ------------
Total $177,833 $162,153
Less long term debt due within one year 10,538 12,676
-------------- ------------
Long term debt due after one year $167,295 $149,477
============== ============
</TABLE>
The Company has an unsecured revolving credit agreement with a bank group that
was refinanced in November 1996. The agreement, which expires in November 1999,
provides for loans up to $200,000,000 in the aggregate. The borrowing limit is
reduced by certain standby letters of credit. At December 31, 1997 such standby
letters of credit totaled $12,214,581. The revolving credit agreement provides
the Company with several interest rate pricing mechanisms ranging from 6.25% to
7.25% per annum at December 31, 1997. The Company must also pay a fee at a rate
of 0.15% per annum 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 Prudential term loan is unsecured and bears interest at a rate of 8.05% per
annum, payable quarterly. Principal amounts are to be 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.
Prior to Sudbury refinancing its bank debt in May 1993, Sudbury had issued
subordinated notes which provided that interest payments would be made through
the issuance of additional subordinated notes in the aggregate principal amount
of interest owed ("PIK Notes"). The terms and conditions of the PIK Notes were
identical to the Subordinated Notes. The interest rate associated with these
notes was 8.6% per annum with a scheduled maturity of September 1997. The
Company redeemed all of the notes, at par, in February 1997.
Lynchburg Foundry Company, 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 under the pollution control revenue bonds
amounts to $570,000 payable in 1998. The industrial development revenue bonds
are to be repaid in annual installments ranging from $175,000 to $350,000 with a
final payment at maturity of $1,650,000. The bonds are subject to optional
redemption prior to maturity.
11
<PAGE> 20
Intermet Corporation
Notes to Consolidated Financial Statements (continued)
6. Long Term Debt (continued)
The Neunkirchen term notes mature at various times beginning in September 1998
through March 2003 and bear interest at rates ranging from 5.0% to 6.9% per
annum. Approximately $809,000 of the notes are required to be paid in 1998 with
the balance to be repaid in 1999 through 2003 in substantially equal payments.
These borrowings were secured by property, plant and equipment with net book
values aggregating to $21,428,000 at December 31, 1997.
The IWESA bank term debt bears interest at rates ranging from 4.55% to 10.00%.
Such debts are the obligations of IWESA and are neither the obligation of or
guaranteed by the Company. In addition, there are various governmental
guaranties on the IWESA debt. IWESA's capitalized leases represent financing for
a portion of its machinery and equipment, having a net book value of DM
10,437,000 ($5,824,000) at December 31, 1997. Interest on these leases range
from 5.52% to 10.69% per annum, payable monthly.
Maturities of long term debt and capital leases at December 31, 1997 are as
follows (in thousands of dollars):
<TABLE>
<CAPTION>
Intermet and
Wholly Owned
Subsidiaries IWESA Total
---------------- --------------- ---------------
<S> <C> <C> <C>
1998 $6,757 $3,781 $10,538
1999 130,338 3,800 134,138
2000 5,293 3,604 8,897
2001 5,293 3,123 8,416
2002 5,468 3,606 9,074
Thereafter 2,725 4,045 6,770
=============== =============== ===============
Totals $155,874 $21,959 $177,833
=============== =============== ===============
</TABLE>
Interest paid totaled $11,500,000, $3,048,000 and $6,485,000 in 1997, 1996 and
1995, respectively.
The Company is in compliance with the terms and restrictions of its various loan
and credit agreements. At December 31, 1997, approximately $63,520,000 of the
Company's retained earnings was restricted and unavailable for the payment of
dividends.
At December 31, 1997, the Company has two interest rate swap transaction
arrangements in effect for which the Company pays a fixed interest rate of 6.75%
and 6.755% per annum with respect to notional amounts of $40,000,000 and
$30,000,000, respectively. The swap transactions terminate in May 2000.
12
<PAGE> 21
Intermet Corporation
Notes to Consolidated Financial Statements (continued)
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 individuals that are not covered
under these two plans. The Individual Plan, which provided for the granting of
options and restricted shares for 1,500,000 shares of common stock was approved
by the shareholders of the Company April 27, 1995. The Directors' Plan was
approved by the shareholders of the Company on April 10, 1997 and provides for
the granting of options to purchase 150,000 shares of common stock. Options
granted under the Individual Plan vest over a four-year period. All other
options granted in 1997 were exercisable at the grant date. Certain options also
remain outstanding from prior stock option plans. At December 31, 1997 options
for 856,375 shares were exercisable, while 634,000 Individual Plan shares and
141,000 Directors' Plan shares were available for future grant.
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 1997, 1996 and 1995: risk-free interest rates of 5.25%;
a dividend yield of 1.0%; volatility factors of the expected market price of the
Company's common stock of .32; 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 stock options.
For purposes of the pro forma disclosures required under SFAS No. 123, the
estimated fair value of the options is amortized over the options' vesting
period. For 1997, 1996 and 1995, net income and earnings per share, computed
under SFAS No. 123, on a pro forma basis does not differ significantly from that
determined under APB Opinion No. 25.
13
<PAGE> 22
Intermet Corporation
Notes to Consolidated Financial Statements (continued)
7. Shareholders' Equity (continued)
A summary of the Company's stock option activity, and related information for
the year ended December 31, 1995 is as follows:
<TABLE>
<CAPTION>
Exercise Number of
Price Range Options
----------------- ----------------
<S> <C> <C>
Outstanding at January 1, 1995 $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>
A summary of the Company's 1996 and 1997 stock option activity, including
related SFAS No. 123 disclosures, are as follows:
<TABLE>
<CAPTION>
Weighted
Number of Average Exercise
Options Exercise 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
Outstanding at December 31, 1996 1,390,000 $ 9.87
Granted 219,500 16.27 $15.375-$17.00
Exercised (88,500) 7.22 5.69-12.75
Forfeited (41,500) 10.12 9.00-12.75
-------------- ----------------
Outstanding at December 31, 1997 1,479,500 $9.87
============== ================
Exercisable at December 31, 1997 856,375 $9.36
Weighted average fair value of
options granted during 1997 $6.48
</TABLE>
Exercise prices for options outstanding as of December 31, 1997 ranged from
$5.69 to $17.00. The weighted-average remaining contractual life of those
options is 7.0 years.
14
<PAGE> 23
Intermet Corporation
Notes to Consolidated Financial Statements (continued)
7. Shareholders' Equity (continued)
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 ESOP of $827,000, $665,000 and $685,000 were expensed in 1997, 1996 and
1995, 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 ("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, certain holders of 10%
or more of the Company's Common Stock who do not acquire additional shares, any
of the Company's ESOPs 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. On
October 16, 1997, the Company amended the Rights Agreement to provide that
certain institutional investors who own in excess of 10%, but less than 15% of
the Company's Common Stock, are not "Acquiring Persons", as defined by the
Rights Agreement.
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.
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, 1997 are as follows (in thousands of dollars):
<TABLE>
<S> <C>
1998 $4,932
1999 3,633
2000 2,900
2001 2,150
2002 1,548
Thereafter 1,136
--------------
Total $16,299
==============
</TABLE>
15
<PAGE> 24
Intermet Corporation
Notes to Consolidated Financial Statements (continued)
8. Commitments and Contingencies (continued)
Total rental expense under operating leases aggregated $5,445,000, $2,833,000
and $2,671,000 in 1997, 1996 and 1995, respectively.
At December 31, 1997 the Company had commitments for its purchase of operating
equipment of approximately $5,301,000 in the aggregate.
Certain 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, 1997 and 1996
approximated $5,477,000 and $5,400,000 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, 1997.
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
or cash flows.
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>
1997 1996 1995
-------------- ------------- ------------
<S> <C> <C> <C>
Service cost $1,232 $842 $693
Interest cost on projected benefit obligations 3,855 1,805 1,709
Return on plan assets (10,198) (3,886) (2,842)
Net amortization and deferral 6,264 2,494 1,847
------------ --------- --------
Totals $1,153 $1,255 $1,407
============ ========= ========
</TABLE>
16
<PAGE> 25
Intermet Corporation
Notes to Consolidated Financial Statements (continued)
9. Retirement Plans and Benefits (continued)
The reconciliation of the plans' funded status to the amounts reported in the
Company's consolidated balance sheets at December 31, 1997 and 1996 is as
follows (in thousands of dollars):
<TABLE>
<CAPTION>
1997 1996
--------------- ------------
<S> <C> <C>
Actuarial present value of accumulated benefit obligations:
Vested $52,060 $47,533
Nonvested 3,186 3,416
--------------- ---------
Total accumulated benefit obligations $55,246 $50,949
=============== =========
Projected benefit obligations $55,246 $50,949
Plan assets at fair value 58,962 47,435
--------------- ---------
Projected benefit obligations (under) over assets (3,716) 3,514
Unrecognized prior service cost (1,809) (1,228)
Unrecognized net actuarial loss 4,110 (795)
Unrecognized transition obligation (224) (276)
Additional minimum liability 238 2,299
--------------- ---------
Pension (prepayments) liabilities included in consolidated balance
sheets $(1,401) $3,514
=============== =========
</TABLE>
The discount rate used in determining the actuarial present value of the
projected benefit obligations was 7.5% in 1997 and 7.625% in 1996. The expected
long term rate of return on assets used in determining net pension expense was
9% in 1997 and 1996. 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, which are principally based on hours
worked by each employee, totaled $1,173,000, $724,000 and $635,000 in 1997, 1996
and 1995, 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. In certain plans 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 and, in
certain plans, provides for a discretionary profit-sharing contribution by the
Company. The Company accrued contributions to the plans of $1,297,000, $991,000
and $1,023,000 in 1997, 1996 and 1995, respectively.
17
<PAGE> 26
Intermet Corporation
Notes to Consolidated Financial Statements (continued)
9. Retirement Plans and Benefits (continued)
In addition to providing pension benefits, the Company provides health care and
life insurance benefits to certain retired U.S. employees and their dependents.
Certain 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 most medical expenses less deductible
and co-pay amounts. Salaried and hourly employees also contribute to the cost of
dependent coverage. Certain salaried employee coverage converts to a Medicare
supplement at age 65, while most hourly employee coverage ceases at age 65. Net
post-retirement benefit expense for 1997, 1996 and 1995 included the following
components (in thousands of dollars):
<TABLE>
<CAPTION>
1997 1996 1995
-------------- ------------- ------------
<S> <C> <C> <C>
Service cost $949 $1,073 $909
Interest cost on accumulated benefit obligation 2,924 2,425 2,414
Amortization (772) (496) (715)
------------ ----------- -----------
Totals $3,101 $3,002 $2,608
============ =========== ===========
</TABLE>
The reconciliation of the post-retirement benefit plans' funded status to the
amounts reported in the Company's consolidated balance sheets at December 31,
1997 and 1996 is as follows (in thousands of dollars):
<TABLE>
<CAPTION>
1997 1996
-------------- ------------
<S> <C> <C>
Present value of accumulated post-retirement benefit obligation:
Retirees $21,107 $21,055
Fully eligible active participants 2,814 3,126
Other active participants 11,270 14,771
------------- ---------
35,191 38,952
Unrecognized net gain 15,223 10,955
============= =========
Post-retirement benefit liability included in consolidated
balance sheets $50,414 $49,907
============= =========
</TABLE>
The discount rate used in determining the present value of the accumulated
post-retirement benefit obligation was 7.5% at December 31, 1997 and 7.625% at
December 31, 1996. The assumed health care cost trend rate used in measuring the
accumulated post-retirement benefit obligation was 8.0% to 10.5% in 1997,
declining by 0.5% per year to an ultimate rate of 5.5% to 6.0% for the
applicable employee age groups. Certain subsidiaries providing a dental benefit
assumed a 6.0% cost trend rate for dental in 1997, declining to 5.5% in 1998. If
the assumed health care cost trend rate was increased 1% in all future years,
the accumulated post-retirement benefit obligation would increase by $2,235,000
and post-retirement benefit expense would increase by $312,000.
18
<PAGE> 27
Intermet Corporation
Notes to Consolidated Financial Statements (continued)
10. Income Taxes
The provision (benefit) for income taxes consists of the following (in thousands
of dollars):
<TABLE>
<CAPTION>
1997 1996 1995
-------------- -------------- --------------
<S> <C> <C> <C>
Current:
Federal $13,489 $6,642 $7,436
State 2,811 2,448 2,058
Foreign 7,653 8,443 7,397
------------ ---------- ---------
23,953 17,533 16,891
------------ ---------- ---------
Deferred:
Federal (1,769) (5,280) 3,288
State (71) (1,748) 96
Foreign (737) 664 (150)
------------ ---------- ---------
(2,577) (6,364) 3,234
------------ ---------- ---------
Totals $21,376 $11,169 $20,125
============ ========== =========
</TABLE>
Income taxes paid were approximately $2,931,000, $17,380,000 and $8,407,000 in
1997, 1996 and 1995, respectively.
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>
1997 1996 1995
------------- -------------- -------------
<S> <C> <C> <C>
Provision (benefit) for income taxes
at U.S. statutory rate $21,486 $19,013 $15,932
Losses with no tax effect 1,160 - 2,517
Difference between U.S. and
foreign tax rates 1,561 3,734 3,081
Utilization of NOL and credit
carryforwards (4,862) (2,137) (3,608)
State income taxes, net of federal
income tax benefits 1,781 455 1,400
Reduction in deferred valuation
allowance (1,246) (11,513) -
Other 1,496 1,617 803
--------- --------- ---------
Totals $21,376 $11,169 $20,125
========= ========= =========
</TABLE>
19
<PAGE> 28
Intermet Corporation
Notes to Consolidated Financial Statements (continued)
10. Income Taxes (continued)
The tax effects of temporary differences and carryforwards which give rise to
deferred income tax assets (liabilities) at December 31, 1997 and 1996 are as
follows (in thousands of dollars):
<TABLE>
<CAPTION>
1997 1996
--------------- --------------
<S> <C> <C>
Compensation and benefit items,
primarily related to SFAS 106 $23,364 $27,514
Operating loss, capital loss, foreign tax credit and
AMT credit carryforwards 17,403 19,253
Other temporary differences 10,290 13,050
------------- -----------
Gross deferred tax assets 51,057 59,817
------------- -----------
Depreciation and related items (20,729) (22,103)
Other temporary differences (12,048) (11,884)
------------- -----------
Gross deferred tax liabilities (32,777) (33,987)
------------- -----------
Net deferred tax asset 18,280 25,830
Valuation allowance (11,722) (14,819)
------------- -----------
Net deferred income taxes $6,558 $11,011
============= ===========
</TABLE>
These amounts are included in the consolidated balance sheets as follows (in
thousands of dollars):
<TABLE>
<CAPTION>
1997 1996
-------------- ------------
<S> <C> <C>
Current assets $3,244 $13,242
Other noncurrent assets 4,741 4,136
Other noncurrent liabilities (1,427) (6,367)
------------ ---------
Totals $6,558 $11,011
============ =========
</TABLE>
Current accounting standards require 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. In 1997 and 1996 the Company reduced its valuation allowance by
$1,246,000 and $11,513,000, respectively, due to the increased viability of
anticipated future income. The Company has continued to provide a valuation
allowance in the amount of $11,722,000 at December 31, 1997 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 $17,403,000 expire in various amounts between 1998 and 2010.
20
<PAGE> 29
Intermet Corporation
Notes to Consolidated Financial Statements (continued)
11. Geographic Area and Major Customer Information
All sales are to unaffiliated customers. Revenue and income amounts for the
three years ended December 31, 1997, and identifiable assets at the end of each
year, were as follows for U.S. and foreign source operations (in thousands of
dollars):
<TABLE>
<CAPTION>
1997 1996 1995
-------------- ------------- -------------
<S> <C> <C> <C>
Net sales:
U.S. $723,644 $441,942 $448,447
Foreign 90,085 92,536 93,302
Operating profit:
U.S. 61,605 38,338 36,763
Foreign 15,732 17,765 16,052
Income before income taxes:
U.S. 50,972 36,960 30,394
Foreign 10,417 17,362 15,126
Identifiable assets:
U.S. 453,351 469,359 220,548
Foreign 85,454 63,003 53,523
</TABLE>
Net sales to customers exceeding 10% of consolidated net sales in 1997, 1996 or
1995 were as follows (as a percentage of consolidated net sales):
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Customer:
Chrysler 18% 23% 20%
Ford 18% 19% 18%
General Motors 8% 12% 18%
</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.
21
<PAGE> 30
Intermet Corporation
Notes to Consolidated Financial Statements (continued)
12. Earnings per Share
Basic earnings per share is computed by dividing income available to common
shareholders by the weighted average number of common shares outstanding for the
period. Dilutive earnings per share reflects the assumed exercise of stock
options.
<TABLE>
<CAPTION>
1997 1996 1995
-------- -------- -------
(in thousands, except per share data)
<S> <C> <C> <C>
Numerator:
Net income $40,013 $43,153 $25,395
Denominator:
Denominator for basic earnings per
share - weighted average shares 25,211 25,067 24,699
Effect of dilutive securities:
Employee stock options 572 527 157
Stock issued in acquisition - - 37
--------- --------- ---------
Denominator for diluted earnings per
share - adjusted weighted average
shares and assumed conversions 25,783 25,594 24,893
========= ========= =========
Basic earnings per share $1.59 $1.72 $1.03
========= ========= =========
Diluted earnings per share $1.55 $1.69 $1.02
========= ========= =========
</TABLE>
22
<PAGE> 31
Intermet Corporation
Notes to Consolidated Financial Statements (continued)
13. 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>
1997
Net sales $209,491 $210,898 $189,535 $203,805
Gross profit 27,605 28,259 22,063 29,031
Net income 10,951 11,136 7,356 10,570
Net income per common share - Basic 0.43 0.44 0.29 0.43
Net income per common share - Diluted 0.43 0.43 0.28 0.41
Share prices (NASDAQ):
High 17.2500 16.0625 18.6250 19.8750
Low 11.7500 11.1250 15.2500 15.8125
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 - Basic 0.35 0.43 0.27 0.67
Net income per common share - Diluted 0.35 0.42 0.27 0.65
Share prices (NASDAQ):
High 13.375 17.625 14.375 16.25
Low 9.75 12.00 10.375 10.125
</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.
23
<PAGE> 1
Exhibit 21 Subsidiaries of the Company
<TABLE>
<CAPTION>
NAME OF SUBSIDIARY INCORPORATION OR PLACE OF ORGANIZATION
<S> <C>
Alexander City Casting Company, Inc. Alabama
Cast-Matic Corporation Michigan
Columbus Neunkirchen Foundry, GmbH Germany
Frisby P.M.C., Incorporated Illinois
Industrial Powder Coatings, Inc. Ohio
Intermet International, Inc. Georgia
Iowa Mold Tooling Co., Inc. Iowa
Ironton Iron, Inc. Ohio
IWESA GmbH (82.4% owned) Germany
Lower Basin, Inc. Delaware
Lynchburg Foundry Company Virginia
Northern Castings Corporation Georgia
Sudbury, Inc. Delaware
Transnational Indemnity Company Vermont
Wagner Castings Company Delaware
Wagner Havana, Inc. Delaware
</TABLE>
The above subsidiaries, unless otherwise indicated, are wholly owned, either
directly or indirectly, by the Company.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 7,022
<SECURITIES> 0
<RECEIVABLES> 94,996
<ALLOWANCES> 2,125
<INVENTORY> 61,164
<CURRENT-ASSETS> 193,282
<PP&E> 471,981
<DEPRECIATION> 241,899
<TOTAL-ASSETS> 538,805
<CURRENT-LIABILITIES> 135,954
<BONDS> 0
0
0
<COMMON> 2,526
<OTHER-SE> 172,902
<TOTAL-LIABILITY-AND-EQUITY> 538,805
<SALES> 813,729
<TOTAL-REVENUES> 813,729
<CGS> 706,771
<TOTAL-COSTS> 736,392
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 12,396
<INCOME-PRETAX> 61,389
<INCOME-TAX> 21,376
<INCOME-CONTINUING> 40,013
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 40,013
<EPS-PRIMARY> 1.59
<EPS-DILUTED> 1.55
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<S> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1997 DEC-31-1997
<PERIOD-START> JAN-01-1997 JAN-01-1997 JAN-01-1997
<PERIOD-END> MAR-31-1997 JUN-30-1997 SEP-30-1997
<CASH> 14,133 6,196 5,181
<SECURITIES> 0 1,207 92
<RECEIVABLES> 117,823 117,374 123,948
<ALLOWANCES> 1,175 1,697 1,519
<INVENTORY> 55,349 57,103 55,145
<CURRENT-ASSETS> 194,560 190,661 189,917
<PP&E> 437,087 442,173 453,178
<DEPRECIATION> 212,601 216,571 223,229
<TOTAL-ASSETS> 527,070 522,936 525,333
<CURRENT-LIABILITIES> 123,770 121,307 114,793
<BONDS> 0 0 0
0 0 0
0 0 0
<COMMON> 2,521 2,523 2,525
<OTHER-SE> 146,545 156,323 162,853
<TOTAL-LIABILITY-AND-EQUITY> 527,070 522,936 525,333
<SALES> 209,491 420,389 609,924
<TOTAL-REVENUES> 209,491 420,389 609,924
<CGS> 181,886 364,537 532,010
<TOTAL-COSTS> 188,856 379,083 553,883
<OTHER-EXPENSES> 163 1,407 2,022
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 2,997 6,147 9,297
<INCOME-PRETAX> 17,708 34,189 45,191
<INCOME-TAX> 6,757 12,103 15,748
<INCOME-CONTINUING> 10,951 22,086 29,443
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> 10,951 22,086 29,443
<EPS-PRIMARY> 0.43 0.88 1.17
<EPS-DILUTED> 0.43 0.86 1.14
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<S> <C> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS 9-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1996 DEC-31-1996 DEC-31-1996
<PERIOD-START> JAN-01-1996 JAN-01-1996 JAN-01-1996 JAN-01-1996
<PERIOD-END> MAR-31-1996 JUN-30-1996 SEP-30-1996 DEC-31-1996
<CASH> 10,746 34,880 34,426 23,485
<SECURITIES> 0 0 0 0
<RECEIVABLES> 65,378 64,779 66,785 87,998
<ALLOWANCES> 1,271 1,035 1,028 949
<INVENTORY> 30,214 29,679 30,580 56,047
<CURRENT-ASSETS> 112,663 134,839 138,793 189,294
<PP&E> 344,622 347,164 348,902 436,704
<DEPRECIATION> 194,606 199,700 205,097 209,118
<TOTAL-ASSETS> 277,307 294,896 294,807 526,312
<CURRENT-LIABILITIES> 86,087 94,343 88,957 171,368
<BONDS> 0 0 0 0
0 0 0 0
0 0 0 0
<COMMON> 2,507 2,509 2,513 2,517
<OTHER-SE> 106,958 114,553 120,310 138,585
<TOTAL-LIABILITY-AND-EQUITY> 277,307 294,896 294,807 526,312
<SALES> 134,158 277,940 408,219 534,478
<TOTAL-REVENUES> 134,158 277,940 408,219 534,478
<CGS> 114,381 233,886 346,335 456,618
<TOTAL-COSTS> 119,510 243,534 361,541 478,375
<OTHER-EXPENSES> 0 0 0 0
<LOSS-PROVISION> 0 0 0 0
<INTEREST-EXPENSE> 779 1,439 2,141 3,056
<INCOME-PRETAX> 14,101 33,370 45,360 54,322
<INCOME-TAX> 5,291 13,746 18,950 11,169
<INCOME-CONTINUING> 8,810 19,624 26,410 43,153
<DISCONTINUED> 0 0 0 0
<EXTRAORDINARY> 0 0 0 0
<CHANGES> 0 0 0 0
<NET-INCOME> 8,810 19,624 26,410 43,153
<EPS-PRIMARY> 0.35 0.78 1.05 1.72
<EPS-DILUTED> 0.35 0.77 1.04 1.69
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 11,173
<SECURITIES> 0
<RECEIVABLES> 51,081
<ALLOWANCES> 1,267
<INVENTORY> 29,155
<CURRENT-ASSETS> 103,072
<PP&E> 344,288
<DEPRECIATION> 189,625
<TOTAL-ASSETS> 274,071
<CURRENT-LIABILITIES> 91,198
<BONDS> 0
0
0
<COMMON> 2,505
<OTHER-SE> 95,523
<TOTAL-LIABILITY-AND-EQUITY> 274,071
<SALES> 541,749
<TOTAL-REVENUES> 541,749
<CGS> 457,337
<TOTAL-COSTS> 488,934
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,461
<INCOME-PRETAX> 45,520
<INCOME-TAX> 20,125
<INCOME-CONTINUING> 25,395
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 25,395
<EPS-PRIMARY> 1.03
<EPS-DILUTED> 1.02
</TABLE>
