<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, 1998 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 1, 1999 was $311,608,440 based on $12.0625 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 1, 1999 there were 25,832,824 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, 1998 are incorporated by reference into Parts I and II.
Portions of the registrant's definitive Proxy Statement for the 1999 Annual
Meeting of Shareholders to be held April 15, 1999 are incorporated by reference
into Part III.
<PAGE> 2
PART I
ITEM 1. BUSINESS
GENERAL
Intermet is the largest independent producer of ductile iron castings in the
world. We specialize in the design and manufacture of complex ductile iron, gray
iron and aluminum cast products. We manufacture our products for the global
light truck, passenger car and heavy-duty vehicle markets. Our products include
cast components used in vehicle axles, chassis, engines and transmissions. In
addition, we provide machining and a range of other products and services to the
automotive and industrial markets. We provide cast products used by over 20
automotive original equipment manufacturers ("OEMs"), including DaimlerChrysler,
Ford, General Motors, BMW, Honda and Toyota and their leading suppliers
throughout the world, including Dana, LucasVarity, PBR, SMW and ZF.
Intermet's focus is to supply cast products to a broad array of automotive and
industrial customers. These products require advanced technology and
engineering. OEMs, Tier 1 and Tier 2 suppliers increasingly rely on their
suppliers to design and engineer parts based on specific design parameters,
including weight, size, cost and performance criteria. In addition, OEMs, Tier 1
and Tier 2 suppliers look to their suppliers to solve problems arising in the
design and manufacturing processes. We believe that we are well positioned to
benefit from these trends by providing a broad range of full-service
capabilities, including advanced design and engineering, casting, machining and
sub-assembly.
During 1998, we had a total average casting capacity available of 624,000 tons,
on a straight-time basis. As a result of the year-end acquisitions and capital
improvements throughout the year, total casting capacity at December 31, 1998
was 663,000 tons, on a straight-time basis. We believe that the market for
ferrous and non-ferrous castings is highly fragmented, with approximately 3,000
suppliers in the United States alone. Intermet 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, Intermet's acquisition of Sudbury, Inc. ("Sudbury") in December 1996
significantly increased its ferrous casting capacity and the acquisition of Tool
Products, Inc. ("Tool Products") in December 1998 significantly increased its
aluminum casting capacity.
Intermet'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. We specialize in safety-related parts, critical to
vehicle control, which meet our 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.
Intermet also manufactures lost foam aluminum castings, aluminum and zinc die
castings, cantilevered cranes, specialty service vehicle truck bodies and
precision-machined components for the automotive and industrial markets.
<PAGE> 3
RECENT DEVELOPMENTS
On March 19, 1999, Intermet's board of directors authorized the repurchase of up
to 10% of its 25.8 million outstanding shares of common stock. The repurchase
authority allows us to selectively repurchase our stock in the open market or in
privately negotiated transactions, depending on market price and other factors.
Intermet may repurchase the shares at its discretion and without a target price.
We will hold the repurchased shares in treasury for general corporate purposes.
On December 31, 1998, Intermet acquired the operating assets and the aluminum
die-casting business of Quadion Corporation for $56,951,000 and operating
supplies inventories for $1,353,000, both in cash. These assets form the base of
Intermet's wholly owned subsidiary Tool Products, Inc. This transaction has been
accounted for as a purchase. The purchase price has been allocated to the assets
purchased and the liabilities assumed based upon the estimated fair values at
the date of acquisition. The excess of the purchase price over the fair value of
tangible net assets acquired was approximately $39,052,000. This was recorded as
goodwill, which will be amortized on a straight-line basis over 40 years. The
consolidated financial statements include the balance sheet of Tool Products at
December 31, 1998. The balance sheet of Tool Products is subject to audit, which
may result in an adjustment to the purchase price subsequent to December 31,
1998. Tool Products manufactures aluminum die castings for broad applications in
the automotive, electronics and other industries. Tool Products has
manufacturing facilities in New Hope, Minnesota and Jackson, Tennessee.
On December 31, 1998 Intermet acquired 100% of the outstanding shares of
Vorpommersche Eisenwerke GmbH Ueckermunde ("VEGU") for DM 6,000,000 in cash. The
transaction was accounted for as a purchase. The purchase price has been
allocated to the assets purchased and the liabilities assumed based on the
estimated fair values at the date of acquisition. The fair value of tangible net
assets acquired exceeded the purchase price and has resulted in negative
goodwill of approximately DM 3,300,000. This will be amortized on a
straight-line basis over 5 years. The consolidated financial statements include
the balance sheet of VEGU as of December 31, 1998. VEGU is a ferrous foundry
company located in eastern Germany.
In June 1998 we sold substantially all the stock of our subsidiary, Industrial
Powder Coatings, for $22,338,000 in cash, net of related selling expenses, and
recognized a net gain of approximately $115,000.
During the second quarter of 1998, Intermet entered into an agreement with
Portuguese Grupo Jorge de Mello to create a joint venture company called
PortCast-Fundicao Nodular, S.A. ("PortCast"). PortCast is located in Porto,
Portugal. This joint venture increased our foundry capacity in Europe. Intermet
spent $2,000,000 for its 50% equity interest in PortCast. During the third
quarter of 1998, Intermet advanced approximately $1,300,000 to PortCast for its
working capital requirements. Intermet has management control. Our investment in
PortCast is accounted for using the equity method. Intermet's share in the net
loss of PortCast for 1998 is $440,000. This is included in other income and
expense in Intermet's statements of operations.
In December 1996, Intermet acquired substantially all of the outstanding stock
of Sudbury, Inc. for $182,434,000 in cash. This included costs of $5,277,000
directly related to the acquisition. We accounted for this transaction as a
purchase. The results of operations of Sudbury from the date of acquisition to
December 31, 1996 were not significant.
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In 1996, Intermet purchased a minority interest in IWESA GmbH ("IWESA") for DM
4,000,000 in cash. We also purchased a newly issued share from IWESA for DM
374,000 bringing our share interest to 49%. In addition, we contributed DM
6,000,000 to the capital reserves of IWESA in support of new capital expansion
projects. As a result of the financial difficulties IWESA was experiencing in
1997, we increased our ownership interest to 82.4% at a cost of DM 1.
Accordingly, we accounted for IWESA as a consolidated subsidiary at December 31,
1997. In May 1998, IWESA entered bankruptcy proceedings whereby the receiver
assumed all remaining assets and obligations, without cash effect, in accordance
with German bankruptcy laws and, as a result, Intermet wrote-off assets related
to IWESA.
Intermet has an unsecured revolving credit agreement with a bank group, which
expires on January 1, 2000. This agreement provides for loans up to $200,000,000
in the aggregate. Standby letters of credit reduce the borrowing limit. At
December 31, 1998 such standby letters of credit totaled $4,959,279. The
revolving credit agreement provides us with several interest rate-pricing
mechanisms. Rates at December 31, 1998 ranged from 5.71% to 6.12% per annum. We
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 Intermet to maintain
specified financial ratios and imposes limitations on certain activities.
FINANCIAL INFORMATION ABOUT SEGMENTS
The information contained in Note 2 to the consolidated financial statements of
Intermet's 1998 Annual Report to Shareholders, furnished to the Commission as
Exhibit 13 to this Report, is incorporated by reference into this filing.
PRODUCTS, MARKETS AND SALES
Intermet focuses on value-added cast products, which it supplies to the
automotive and industrial markets. In 1998, approximately 85% of our sales were
and attributable to the automotive market. Within this market, our products
generally fall into four major categories, including:
- - Engine components such as camshafts, crankshafts, bedplates and aluminum
intake manifolds
- - Transmission components such as differential cases, pump bodies and gear
blanks
- - Chassis components such as steering knuckles, control arms, steering gear
housings, brake housings and supports, spindle carriers and damper forks
- - Axle components such as differential cases and carriers, bearing caps, hubs,
drums, spring seats and driveline yokes
Intermet also manufactures a variety of products for the industrial and
appliance markets. In 1998, approximately 15% of our sales were attributable to
the industrial and appliance markets.
Intermet has a long-standing quality assurance program. We are committed to
maintaining our reputation for high quality products and timely delivery. With
the exception of VEGU, all of our foundry facilities that supply the automotive
industry have QS-9000 and ISO-9001 certification. VEGU has ISO-9002
certification. In addition, many of our facilities have received quality awards
from their customers during 1998, including:
- - Toyota's Excellent Quality Performance
- - Honda's Delivery Performance
- - CMI's Certified Supplier
- - Milwaukee Electric Tool Corporation Outstanding Supplier Award for 1998.
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We primarily market our products through our own sales and customer service
staff. We use independent sales representatives in Europe and, to a limited
degree, in the United States. Intermet's principal sales office is in Michigan.
We produce primarily to customer order and do not maintain any significant
inventory of finished goods not on order.
Intermet provides extensive production and technical training to our sales
staff. This technical background enables the sales staff to act as an effective
liaison between our customers and our production personnel. Through the product
engineering group, we offer assistance at the design stage of major casting
programs. We employ quality assurance representatives and engineers who work
with customers' manufacturing personnel to detect and avoid potential problems
and to develop new product opportunities for us. In addition to working with
customer purchasing personnel, our product engineers frequently work closely
with design engineers and other technical staff.
Intermet supplies cast products to over 20 automotive OEMs, directly or through
Tier 1 and Tier 2 suppliers. Our cast products are included on more than 200
vehicle models. Net sales to customers exceeding 10% of consolidated net sales
were as follows (as a percentage of consolidated net sales):
<TABLE>
<CAPTION>
Percentage of Net Sales
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Customer:
DaimlerChrysler 20% 18% 23%
Ford 18% 18% 19%
General Motors 6% 8% 12%
</TABLE>
Ford sales for 1998 include sales to Ford (10%) and Ford Visteon (8%) and GM
sales include sales to GM (2%) and Delphi (4%). The loss of any of these
customers or a substantial reduction in their purchases would have a material
adverse effect on us. Our six largest customers accounted for approximately 54%,
58% and 72% of consolidated net sales during 1998, 1997 and 1996, respectively.
Net sales by market were as follows (as a percentage of consolidated net sales):
<TABLE>
<CAPTION>
Percentage of Net Sales
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
North American passenger
cars and light trucks 70% 66% 78%
North American industrial 14% 17% 4%
European light and heavy duty vehicles 15% 13% 17%
Other 1% 4% 1%
</TABLE>
Sales of iron castings were 576,000, 539,000 and 458,000 tons in 1998, 1997 and
1996, respectively. The increase in tons sold in 1998 over 1997 is principally
attributable to increased sales from existing foundries. The increase in tons
sold in 1997 over 1996 is due to the acquisition of Sudbury in December 1996.
Based on production, Intermet's foundries operated at average annual capacity of
94% in 1998 and 87% in 1997 and 1996.
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DESIGN, MANUFACTURING AND MACHINING
Intermet opened its new technical center in Lynchburg, Virginia at the end of
1997. The Intermet Technical Center provides advanced design and engineering
services to customers. In addition, we provide technical support to all of our
cast metals and machining plants worldwide. We provide the customer with design
support using their own computer aided design and computer aided engineering
languages and cast metal process simulation software. Our design and engineering
teams assist the customer, when requested, in the initial stages of product
creation and modification.
We believe we are one of the few independent foundry companies fully capable of
designing and engineering products based on customer specifications. Our
advanced capabilities include finite element analysis, design optimization,
prototyping, modeling enhancements and testing. We use three-dimensional solid
modeling software in conjunction with rapid prototype development, among other
advanced computer aided design techniques, to assist our customers in the
initial stages of product design and prototype creation. These techniques
greatly enhance our design and flexibility. In addition, we can substantially
reduce the time required to produce sample castings, depending on the complexity
of the products. Intermet's goal is to continually improve product quality and
performance. We also strive to reduce costs by offering new product solutions
that reduce weight, use alternative materials or incorporate more efficient
manufacturing processes. Intermet's product and manufacturing process
development work has included the development of new products and processes that
can broaden our overall product offerings and capabilities. We believe that our
advanced design and engineering capabilities serve as a significant competitive
advantage as our customers continue to outsource these critical activities to
their suppliers.
Intermet produces ductile and gray iron castings, as well as aluminum castings.
Ductile iron has greater strength and elasticity than gray iron. Ductile iron's
use as a higher strength substitute for gray iron and a lower-cost substitute
for steel has grown steadily. Aluminum brings a lower weight alternative.
Intermet'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, 1998,
1997 and 1996, sales of ductile iron castings represented 90%, 89% and 87%,
respectively, and sales of gray iron represented 7%, 7% and 10%, respectively,
of Intermet's total sales of castings (in dollars). The balance of casting sales
for 1998 and 1997 were aluminum and malleable castings and the balance of
casting sales in 1996 were aluminum castings. Total castings sales were 81% in
1998, 76% in 1997 and 94% in 1996, of the total sales of Intermet.
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 cools and solidifies
in the molds. The molds are then 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 Intermet 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. Intermet also uses its
testing equipment and procedures to provide particular tests requested by a
customer for its castings.
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Most castings require machining before they can be put to their ultimate use.
This machining may include drilling, boring, milling, threading or cutting
operations. Most customers provide their own machining for castings or have them
machined by third parties. Intermet operates a facility in Columbus, Georgia,
where it machines castings produced by us and by others. We own a precision
machining company in Elk Grove Village, Illinois. We also own a 35% interest in
General Products Delaware Corporation, a machining and assembly company
headquartered in Jackson, Michigan. Intermet also contracts with other companies
to machine castings it produces, before shipment to customers.
Intermet also manufactures cantilevered cranes and specialty service vehicle
truck bodies at a facility in Garner, Iowa.
RAW MATERIALS
Steel scrap is the primary raw material Intermet uses to manufacture ferrous
castings. We purchase steel scrap from numerous sources, generally regional
scrap brokers, using a combination of spot market purchases and contract
commitments. We have no material long-term contractual commitments with any
steel scrap supplier. The cost of steel scrap is subject to fluctuations and we
have contractual arrangements with many of our major customers. These
arrangements allow us to adjust our 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 we use is secondary aluminum ingot. The cost of aluminum
ingot is subject to fluctuations, but we do not anticipate any difficulty in
obtaining aluminum ingot in the foreseeable future.
Intermet has contractual arrangements with some of its suppliers, which expire
at various times through 2002, for the purchase of various materials, other than
steel scrap or secondary aluminum ingot, used in or during the manufacturing
process. These contracts and our overall level of purchases provide some
protection against price increases. In most cases, Intermet does not have
specific arrangements in place to adjust casting prices for fluctuations in the
prices of alloys and other materials.
CYCLICALITY AND SEASONALITY
Although most of our 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
our sales and earnings during periods of slow economic growth or recession. Our
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.
BACKLOG
Most of Intermet's business involves supplying all or a stated portion of the
customer's annual requirements against blanket purchase orders. Customers
typically issue firm releases and shipping schedules on a monthly basis. The
lead-time and cost of commencing production of a particular casting tend to
inhibit transfers of production from one foundry to another. Our backlog at any
given time generally consists only of the orders that have been released for
shipment. Subsidiaries of Intermet that manufacture industrial products other
than castings, have a backlog at December 31, 1998 of $16.0 million in the
aggregate, all of which we expect to ship during 1999.
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COMPETITION
Intermet 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 automobile manufacturers in North
America, which are among our largest customers, operate their own foundries and
have greater financial resources. However, they also purchase a significant
amount of castings from Intermet and others, and there is a trend toward
increased outsourcing by the domestic OEMs. Our castings 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.
Intermet competes primarily on the basis of product quality, engineering,
service and price. We emphasize our ability to produce complex products in
order to compete for value-added castings.
RESEARCH AND DEVELOPMENT
Intermet conducts process and product development programs, principally at a
separate research and development foundry 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 extensive metallurgical, physical and chemical testing
capabilities. The work on new manufacturing processes focuses 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. In addition, we are currently
working to develop new materials, improved product manufacturing processes and
improved characterization of material properties. We directly expensed $1.0
million, $1.1 million and $1.0 million in 1998, 1997 and 1996, respectively, for
research and development.
ENVIRONMENTAL MATTERS
Intermet's operations are subject to various federal, state and local laws and
regulations. These laws and regulations 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.
Some of Intermet'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, we are attempting to
resolve known environmental matters with various third parties, including
matters that arise in connection with the sale of businesses and properties by
us or by our present and former subsidiaries.
Although we intend to minimize our exposure by asserting appropriate defenses in
connection with environmental proceedings, based on the advice and assistance of
environmental engineers and consultants, we have reserved $4.6 million at
December 31, 1998 to cover estimated known environmental liabilities. Although
we continue to assess our potential liability, the ultimate liability for
environmental matters cannot be predicted with certainty and could exceed
estimates.
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We also have recurring costs in the normal course of business that are necessary
to ensure that our facilities are in compliance with applicable environmental
laws and regulations, particularly in the management and disposition of waste
(principally non-hazardous) generated by our ongoing operations. In 1998, 1997
and 1996 these costs totaled approximately $14.4, $12.3 and $9.0 million,
respectively. In addition, a portion of our capital expenditures is regularly
incurred to limit or monitor pollution, principally for ventilation and dust
control equipment. These expenditures were approximately $5.2, $6.9 and $2.6
million in 1998, 1997 and 1996, respectively. We expect to spend $4.8 million in
capital expenditures related to environmental matters in 1999, although sales
volume levels and available engineering resources, among other factors, will
influence the actual amount of capital expenditures.
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 we
operate. Until final regulations implementing those amendments are adopted by
the federal and state governments, it is not possible to estimate these costs.
Also, our foundry capacity and any capacity increases are dependent on the
ability to maintain or increase permitted levels for air emissions or water
discharges. In the event we desire to increase our foundry capacity levels in
the future, we cannot be assured that approvals of such increases can be
obtained under the applicable permits.
For additional information related to environmental matters, see Item 3 "Legal
Proceedings" below; and see "Management's Discussion and Analysis of Financial
Condition and Results of Operations", which is incorporated by reference from
Intermet's 1998 Annual Report to Shareholders, which is furnished to the
Commission as Exhibit 13 to this Report.
EMPLOYEES
At March 1, 1999 we employed approximately 6,890 persons, including 6,060 in
North America. Of the persons employed in North America, 4,870 were hourly
manufacturing personnel and the remaining were clerical, sales and management
personnel. We employed 830 persons in Europe, 720 of whom were hourly
manufacturing personnel.
FOREIGN AND DOMESTIC OPERATIONS AND EXPORT SALES
Revenues and identifiable assets for Intermet's foreign and domestic operations
for 1998, 1997 and 1996 were as follows (in thousands of dollars):
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Sales to unaffiliated customers in:
North America $714,400 $705,100 $441,900
Europe 121,500 104,700 92,600
Other International 5,700 3,900 -
Identifiable assets in:
North America 517,500 453,300 463,300
Europe 66,500 85,500 63,000
</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. An executive officer
holds office until his or her successor is chosen and qualified, or until his or
her death, resignation or removal.
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The executive officers of Intermet as of March 1, 1999 and their ages and
principal positions with Intermet, as of that date, are as follows:
Name (Age) Principal Position(s)
- ---------- ---------------------
John Doddridge (58) Chairman of the Board and Chief Executive Officer
Doretha J. Christoph (49) Vice President - Finance, Chief Financial Officer,
Treasurer and Secretary
John C. Engeswick (64) Vice President - Technical Services
David L. Neilson (54) Vice President - Sales and Marketing
James F. Mason (57) Group Vice President
C. James Peterson (51) Group Vice President
Mr. Doddridge became Chairman of the Board and Chief Executive Officer of
Intermet in 1994. From November 1992 until November 1994, Mr. Doddridge was Vice
Chairman and Chief Executive Officer of Magna International, Inc., a supplier of
motor vehicle parts. From 1989 to 1992 he served as President of North American
Operations of Dana Corporation, a motor vehicle parts manufacturer, and prior to
that time he served as President of Hayes-Dana Inc., a subsidiary of Dana
Corporation.
Ms. Christoph became Vice President - Finance of Intermet in June 1995. In
addition, she was named Chief Financial Officer and Treasurer of Intermet in
April 1996 and Secretary in January 1997. From November 1991 until May 1995, 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 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 of Intermet in February
1995. Prior to that time he served as Vice President - Quality Assurance for
Intermet Foundries, Inc. ("IFI"), a former subsidiary of Intermet, from 1988.
Mr. Neilson joined Intermet in January 1997 as Vice President - Sales and
Marketing. He served as Vice President of Sales for North and South America for
ITT Automotive, an automotive parts supplier, from June 1993 to January 1997.
From September 1992 to June 1993, he was Vice President of Sales and Marketing
at Takata, Inc, an automotive parts supplier. He served as President of Sales at
a subsidiary of Automotive Industries, an automotive parts supplier, from
December 1991 to June 1992.
Mr. Mason became Group Vice President of Intermet in September 1998. Prior to
that, he served as President of Wagner Castings Company, a subsidiary of
Intermet. He was with Wagner since 1984 and served in several positions before
becoming President in April 1988.
Mr. Peterson became Group Vice President of Intermet in September 1998. He
served as Vice President - Foundry Operations of Intermet from February 1995 to
September 1998. 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
Intermet, most recently as General Manager.
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ITEM 2. PROPERTIES
At December 31, 1998, Intermet owned, operated or had an ownership interest in
ten operational ductile and gray iron foundries, one lost foam aluminum foundry,
one aluminum and zinc die cast foundry, two aluminum die cast foundries, one
research foundry and one technical center. Lost foam aluminum castings can only
be produced by Intermet at Alexander City Casting and die castings can only be
produced by Intermet at Cast-Matic and Tool Products. In addition, Intermet
machines and assembles components at one facility, manufactures precision
machined components at one facility, and manufactures cantilevered cranes and
specialty service vehicle truck bodies at one facility.
The following provides information about Intermet's manufacturing locations and
the types of products produced at each location:
<TABLE>
<CAPTION>
Name Location Type of Products
- ---- -------- ----------------
<S> <C> <C>
Alexander City Foundry Alexander City, Alabama Lost foam aluminum castings
Archer Creek Foundry Lynchburg, Virginia Ductile iron castings
Cast-Matic Corporation Stevensville, Michigan Aluminum and zinc die castings
Columbus Foundry Columbus, Georgia Ductile iron castings
Columbus Machining Midland, Georgia Machines and assembles components
Columbus Neunkirchen Foundry Neunkirchen, Germany Ductile iron castings
Frisby P.M.C. Elk Grove Village, Illinois Precision machined components
Havana Foundry Havana, Illinois Ductile iron castings
Iowa Mold Tooling Garner, Iowa Metal fabrication of truck mounted cranes and
specialty service vehicle truck bodies
Ironton Foundry Ironton, Ohio Ductile iron castings
New River Foundry Radford, Virginia Ductile iron castings
Northern Foundry Hibbing, Minnesota Ductile iron castings
Radford Foundry Radford, Virginia Ductile and gray iron castings
Tool Products, Inc. New Hope, Minnesota Precision engineered, close tolerance aluminum
Jackson, Tennessee die castings
Ueckermunde Foundry Ueckermunde, Germany Ductile and gray iron castings
Wagner Foundry Decatur, Illinois Ductile iron castings
</TABLE>
Intermet 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.
Intermet owns a research foundry located in Lynchburg, Virginia. The technical
center, which is also located in Lynchburg, Virginia, provides advanced design
and engineering services to our customers. In addition, we provide technical
support to all of our cast metals and machining plants worldwide. We also have a
50% equity interest in PortCast, an iron castings company in Porto, Portugal 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, we lease executive, sales and other administrative offices, located in
Michigan and Georgia.
Tool Products has capital leases of approximately $3,781,000 at December 31,
1998, which relate to assets with net book values of approximately $3,849,000.
In addition, Columbus Neunkirchen and VEGU have bank term notes of approximately
$1,242,000 in the aggregate. These notes are secured by property, plant and
equipment with net book values aggregating approximately $22,743,000 at December
31, 1998. For additional information on secured debt, see Note 7 to the
consolidated financial statements included in Intermet's 1998 Annual Report to
Shareholders, which is furnished to the Commission as Exhibit 13 to this Report,
and is incorporated by reference into this filing.
10
<PAGE> 12
ITEM 3. LEGAL PROCEEDINGS
Intermet's facility in Decatur, Illinois received a Violation Notice dated June
11, 1998 issued by the Illinois Environmental Protection Agency ("Illinois EPA")
in connection with an instance of alleged improper disposal of a hazardous
material. The incident involved the disposal of calcium carbide material, which
was sent to a landfill by the Decatur facility on March 3, 1998. On October 29,
1998 the Illinois EPA issued a Notice of Intent to Pursue Legal Action with
respect to the matter, alleging violation of the Illinois Environmental
Protection Act and hazardous waste regulations. While we intend to defend our
conduct in this matter, the action taken by the Illinois EPA may result in the
imposition of fines or penalties. Although we cannot predict whether penalties
will be imposed, or the amount of any penalties, we believe that any such
penalties will not be material to our business or financial condition.
Intermet is also a party to a number of other legal proceedings in the ordinary
course of its business. We do not believe there are any pending or threatened
legal proceedings to which we are a party, or to which any of our property is
subject, that will have a material adverse effect on our consolidated financial
position, results of operations or liquidity taken as a whole.
See Note 9 to the consolidated financial statements included in Intermet's 1998
Annual Report to Shareholders, furnished to the Commission as Exhibit 13 to this
Report, which is incorporated by reference into this filing, and the discussion
under "Environmental Matters" in Item 1 above.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders of Intermet 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 14 to the consolidated financial statements of
Intermet's 1998 Annual Report to Shareholders, furnished to the Commission as
Exhibit 13 to this Report, is incorporated by reference into this filing.
Intermet's common stock, $0.10 par value, is traded on the Nasdaq National
Market under the symbol "INMT" and had a closing price of $12.0625 on March 1,
1999. As of this same date, there were approximately 485 holders of record of
Intermet's common stock.
The Board of Directors of Intermet suspended payment of the regular quarterly
dividend in 1993 pending improvement in our operating performance. This
suspension was lifted in 1996 due to improvements in our performance. During the
third and fourth quarters of 1996, we declared and paid dividends of $2.0
million in the aggregate ($0.04 per share per quarter). During the four quarters
of 1998 and of 1997, Intermet declared and paid dividends of $4.1 million and
$4.0 million, respectively, in the aggregate for each year ($0.04 per share per
quarter). We are subject to restrictions on the payment of dividends under
certain loan agreements. As of December 31, 1998, $84,012,000 of our retained
earnings was restricted and unavailable for the payment of dividends under those
agreements.
Intermet did not sell unregistered securities within the past three years.
11
<PAGE> 13
ITEM 6. SELECTED FINANCIAL DATA
Selected financial data included in Intermet's 1998 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 by reference into
this filing.
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" is incorporated by reference
from Intermet's 1998 Annual Report to Shareholders which is furnished to the
Commission as Exhibit 13 to this Report.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
Intermet is subject to market risk with regard to interest rate, foreign
exchange and commodity pricing. We have analyzed the effect of these risks on
the balance sheet, results of operations and cash flows and we consider the
impact to be immaterial.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements of Intermet and the report of the
independent auditors included in Intermet's 1998 Annual Report to Shareholders,
which are furnished to the Commission as Exhibit 13 to this Report, are
incorporated by reference into this filing.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information contained under the headings "INFORMATION ABOUT NOMINEES FOR
DIRECTOR" and "SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE" in
Intermet's definitive Proxy Statement for its Annual Meeting of Shareholders to
be held April 15, 1999 is incorporated by reference into this filing. Pursuant
to Instruction 3 to Paragraph (b) of Item 401 of Regulation S-K, information
relating to the executive officers of Intermet is included in Item 1 of this
Report.
ITEM 11. EXECUTIVE COMPENSATION
The information contained under the headings "EXECUTIVE COMPENSATION",
"COMPENSATION OF DIRECTORS", "EMPLOYMENT AGREEMENTS AND CHANGE IN CONTROL
ARRANGEMENTS", "COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION" and
"SHAREHOLDER RETURN PERFORMANCE GRAPH" in Intermet's definitive Proxy Statement
for its Annual Meeting of Shareholders to be held April 15, 1999 is incorporated
by reference into this filing.
12
<PAGE> 14
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information contained under the heading "VOTING SECURITIES AND PRINCIPAL
HOLDERS" in Intermet's definitive Proxy Statement for its Annual Meeting of
Shareholders to be held April 15, 1999 is incorporated by reference into this
filing.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information contained under the heading "CERTAIN TRANSACTIONS" in the
definitive Proxy Statement for its Annual Meeting of Shareholders to be held
April 15, 1999 is incorporated by reference into this filing.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. Financial Statements
The following consolidated financial statements of Intermet and its
subsidiaries contained in Intermet's 1998 Annual Report to Shareholders
are incorporated by reference in Item 8 of this Report:
- Consolidated Statements of Operations for the Years Ended December 31,
1998, 1997 and 1996
- Consolidated Statements of Comprehensive Income for the Years Ended
December 31, 1998, 1997 and 1996
- Consolidated Balance Sheets at December 31, 1998 and 1997
- Consolidated Statements of Cash Flows for the Years Ended December 31,
1998, 1997 and 1996
- Consolidated Statements of Shareholders' Equity for the Years Ended
December 31, 1998, 1997 and 1996
- Notes to Consolidated Financial Statements
2. Financial Statement Schedules
The following consolidated financial statement schedules for Intermet are
included in Item 14(d) of this filing:
- Schedule II - Valuation and Qualifying Accounts
13
<PAGE> 15
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 Intermet, I M Acquisition
Corp., and Sudbury, Inc. dated November 18, 1996 (included as
Exhibit 4 to Intermet's Form 8-K dated November 18, 1996,
File No. 0-13787, previously filed with the Commission and
incorporated by reference into this filing).
2.2 Asset Purchase Agreement Between Intermet Corporation and
Quadion Corporation for the purchase of the assets of Tool
Products, Inc. dated December 2, 1998 (included as Exhibit
2.1 to Intermet's Form 8-K, having an event date of
December 31, 1998, File No. 0-13787, previously filed with
the Commission and incorporated by reference into this
filing).
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
Intermet's Form 10-K for the year ended December 31, 1996,
File No. 0-13787, previously filed with the Commission and
incorporated by reference into this filing).
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 Intermet's
Form 10-Q for the quarter ended June 30, 1997, File No.
0-13787, previously filed with the Commission and
incorporated by reference into this filing).
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 Intermet's Form 10-Q for
the quarter ended June 30, 1997, File No. 0-13787,
previously filed with the Commission and incorporated by
reference into this filing).
3.1 Amended and Restated Articles of Incorporation of Intermet
(included as Exhibit 4.1 to Intermet's Form S-3 Registration
Statement, filed June 3, 1992, File No. 33-48304, previously
filed with the Commission and incorporated by reference into
this filing).
3.2 By-laws of Intermet, as amended through January 28, 1999.
3.3 Amendment to the by-laws of Intermet, adopted by resolution
of the board of directors of Intermet on January 30, 1998.
3.4 Amendment to the by-laws of Intermet, adopted by resolution
of the board of directors of Intermet on December 3, 1998.
3.5 Amendment to the by-laws of Intermet, adopted by resolution
of the board of directors of Intermet on January 28, 1999.
14
<PAGE> 16
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 Intermet, 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 Intermet's Form 10-K for the year ended
December 31, 1996, File No. 0-13787, previously filed with
the Commission and incorporated by reference into this
filing).
15
<PAGE> 17
4.13 Letter agreement referencing Third Amended and Restated
Credit Agreement, dated January 28, 1999, by and among
Intermet, SunTrust Bank, Atlanta (formerly known as Trust
Company Bank) as lender and agent and the various lenders
named therein.
4.14 Master Assignment and Acceptance Agreement dated December
9, 1996, by and among Intermet and various lenders named
therein (included as Exhibit 4.15 to Intermet's Form 10-K
for the year ended December 31, 1996, File No. 0-13787,
previously filed with the Commission and incorporated by
reference into this filing).
4.15 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 Intermet's Form 10-K for the year ended
December 31, 1995, File No. 0-13787, previously filed with
the Commission and incorporated by reference into this
filing).
4.16 First Amendment to Amended and Restated Note Agreement,
dated as of January 31, 1997, by and between Intermet 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 Intermet's Form 10-K for the year ended
December 31, 1996, File No. 0-13787, previously filed with
the Commission and incorporated by reference into this
filing).
4.17 Shareholder Protection Rights Agreement, dated as of October
6, 1995 between Intermet and Trust Company Bank, as Rights
Agent (included as Exhibit 4 to Intermet's Form 8-K, having
an event date of October 6, 1995, File No. 0-13787,
previously filed with the Commission and incorporated by
reference into this filing).
4.18 Amendment No. 1, dated October 16, 1997, to the Shareholder
Protection Rights Agreement, dated October 6, 1995, between
Intermet and Trust Company Bank, as Rights Agent (included as
Exhibit 4 to Intermet's Form 8-A12G/A, File No. 0-13787,
previously filed with the Commission and incorporated by
reference into this filing).
10.1(a) Intermet Corporation Key Individual Stock Option Plan,
adopted April 25, 1984 (included as Exhibit 10.1 to
Intermet's registration statement on Form S-14, File No.
2-90815, previously filed with the Commission and
incorporated by reference into this filing).**
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 Intermet'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 by
reference into this filing).**
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 Intermet'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 by
reference into this filing).**
10.2 Intermet Corporation Executive Stock Option and Incentive
Award Plan (included as Exhibit 4 to Intermet's Form S-8,
File No. 33-59011, previously filed with the Commission
and incorporated by reference into this filing)**
16
<PAGE> 18
10.3(a) Form of employment agreement by and between Intermet and
the executive officers of Intermet, other than John
Doddridge and David L. Neilson, effective November 1, 1996
(included as Exhibit 10.21 to Intermet's Form 10-K for the
year ended December 31, 1995, File No. 0-13787, previously
filed with the Commission and incorporated by reference
into this filing).**
10.3(b) Employment Agreement, dated October 26, 1995, by and
between Intermet and John Doddridge (included as Exhibit
10.22 to Intermet's Form 10-K for the year ended December
31, 1995, File No. 0-13787, previously filed with the
Commission and incorporated by reference into this
filing).**
10.3(c) Employment Agreement, dated December 27, 1996, by and
between Intermet and David L. Neilson (included as Exhibit
10.24 to Intermet's Form 10-K for the year ended December
31, 1996, File No. 0-13787, previously filed with the
Commission and incorporated by reference into this
filing).**
10.4 Operating Committee 1999 Profit Sharing Plan.**
10.5(a) Intermet Corporation Salaried Employees Severance Plan
effective as of October 1, 1993 (included as Exhibit
10.16(a) to Intermet's Form 10-K for the year ended
December 31, 1993, File No. 0-13787, previously filed with
the Commission and incorporated by reference into this
filing).**
10.5(b) Amendment No. 1 to the Intermet Corporation Salaried
Employees Severance Plan, dated December 20, 1993
(included as Exhibit 10.16(b) to Intermet's Form 10-K for
the year ended December 31, 1993, File No. 0-13787,
previously filed with the Commission and incorporated by
reference into this filing).**
10.6 Intermet Salary Continuation Plan (included as Exhibit 10.18
to Intermet's Form 10-K for the year ended December 31, 1992,
File No. 0-13787, previously filed with the Commission and
incorporated by reference into this filing).**
10.7(a) Form of Intermet Corporation Director's Stock Option
Agreement (included as Exhibit 10.4 to Intermet'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 by reference into this
filing).**
10.7(b) Intermet Corporation Director's Stock Option Plan
(included as Exhibit 10.6 to Intermet'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 by reference into this filing).**
10.7(c) Intermet Corporation 1997 Director's Stock Option Plan
(included as Exhibit A to Intermet's definitive Proxy
Statement dated March 4, 1997 for its Annual Meeting of
Shareholders held April 10, 1997, File No. 0-13787,
previously filed with the Commission and incorporated by
reference into this filing).**
10.8 1997 Directors' Deferred Compensation Plan (included as
Exhibit 10.25 to Intermet's Form 10-K for the year ended
December 31, 1996, File No. 0-13787, previously filed with
the Commission and incorporated by reference into this
filing).**
17
<PAGE> 19
13 Intermet's 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 Intermet.
23 Consent of Independent Auditors.
24 Power of Attorney.
27 Financial Data Schedule.
* This instrument defines the rights of holders of long-term
debt of Intermet not being registered and the total amount of
securities authorized under the instrument does not exceed
ten percent of the total assets of Intermet and its
subsidiaries on a consolidated basis. This instrument is not
being filed, but Intermet 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) Intermet did not file any reports on Form 8-K during the fourth quarter of
1998. Intermet filed a Form 8-K on January 14, 1999, File No. 0-13787,
having an event date of December 31, 1998.
(c) Intermet has filed as exhibits to this report those exhibits required by
Item 601 of Regulation S-K.
(d) Intermet has filed as financial statement schedules to this report those
financial statement schedules required by Regulation S-X, which are
excluded from Intermet's 1998 Annual Report to Shareholders by Rule
14a-3(b).
- Schedule II - Valuation and Qualifying Accounts
The schedules not filed are omitted because the information required to be
contained therein is disclosed elsewhere in the Financial Statements or the
amounts involved are not sufficient to require submission.
18
<PAGE> 20
Intermet Corporation
(Consolidated)
Schedule II
Valuation and Qualifying Accounts
<TABLE>
<CAPTION>
Additions
---------------------------------
Balance at Charged to Balance at
Beginning of Costs and Charged to End of
Description Period Expenses Other Accounts Deductions Period
- ----------- ------ -------- -------------- ---------- ------
(in thousands of dollars)
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1998:
Allowance for returns and doubtful accounts (a) $4,118 $970(b) $ - $45(c) $5,133
Inventory reserve (g) 5,594 245 - - 5,839
Deferred tax asset valuation allowance 11,722 - - 4,518(f) 16,240
Year ended December 31, 1997:
Allowance for returns and doubtful accounts (a) 3,895 300(b) - (77)(c) 4,118
Inventory reserve (g) 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 (g) 3,784 (255) - - 3,529
Deferred tax asset valuation allowance 26,332 - - (11,513)(d) 14,819
</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) Increase in valuation allowance for acquired net operating losses.
(g) Reflected as reduction of inventory on the consolidated balance sheet.
19
<PAGE> 21
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, Intermet 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 30, 1999
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below, as of March 30, 1999, by the following persons on behalf
of Intermet 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
* Director
- -------------------------------------------------
John P. Crecine
* Director
- -------------------------------------------------
Norman F. Ehlers
* Director
- -------------------------------------------------
Wilfred E. Gross, Jr.
* Director
- -------------------------------------------------
A. Wayne Hardy
* Director
- -------------------------------------------------
John R. Horne
* Director
- -------------------------------------------------
Thomas H. Jeffs II
* Director
- -------------------------------------------------
Harold C. McKenzie, Jr.
</TABLE>
21
<PAGE> 22
<TABLE>
<S> <C>
* Director
- -------------------------------------------------
Byron O. Pond, Jr.
* Director
- -------------------------------------------------
John H. Reed
/s/ Doretha J. Christoph Vice President - Finance, Chief Financial Officer, Treasurer and
- ------------------------------------------------- Secretary (Principal Financial Officer)
Doretha J. Christoph
/s/ Ronald C. Ryninger Jr. Controller (effective March 11, 1999)
- -------------------------------------------------
Ronald C. Ryninger Jr.
*By: /s/ Doretha J. Christoph
- -------------------------------------------------
Doretha J. Christoph
Attorney-in-Fact
March 30, 1999
</TABLE>
22
<PAGE> 23
Exhibit Index
Exhibit
Number Description of Exhibit
2.1 Agreement and Plan of Merger among Intermet, I M Acquisition
Corp., and Sudbury, Inc. dated November 18, 1996 (included as
Exhibit 4 to Intermet's Form 8-K dated November 18, 1996, File
No. 0-13787, previously filed with the Commission and
incorporated by reference into this filing).
2.2 Asset Purchase Agreement Between Intermet Corporation and Quadion
Corporation for the purchase of the assets of Tool Products, Inc.
dated December 2, 1998 (included as Exhibit 2.1 to Intermet's
Form 8-K, having an event date of December 31, 1998, File No.
0-13787, previously filed with the Commission and incorporated by
reference into this filing).
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 Intermet's Form 10-K for the
year ended December 31, 1996, File No. 0-13787, previously filed
with the Commission and incorporated by reference into this
filing).
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 Intermet's Form 10-Q for the
quarter ended June 30, 1997, File No. 0-13787, previously filed
with the Commission and incorporated by reference into this
filing).
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 Intermet's Form 10-Q for the quarter ended June
30, 1997, File No. 0-13787, previously filed with the Commission
and incorporated by reference into this filing).
3.1 Amended and Restated Articles of Incorporation of Intermet
(included as Exhibit 4.1 to Intermet's Form S-3 Registration
Statement, filed June 3, 1992, File No. 33-48304, previously
filed with the Commission and incorporated by reference into this
filing).
3.2 By-laws of Intermet, as amended through January 28, 1999.
3.3 Amendment to the by-laws of Intermet, adopted by resolution of
the board of directors of Intermet on January 30, 1998.
3.4 Amendment to the by-laws of Intermet, adopted by resolution of
the board of directors of Intermet on December 3, 1998.
3.5 Amendment to the by-laws of Intermet, adopted by resolution of
the board of directors of Intermet on January 28, 1999.
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.*
<PAGE> 24
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 Intermet, 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 Intermet's
Form 10-K for the year ended December 31, 1996, File No. 0-13787,
previously filed with the Commission and incorporated by
reference into this filing).
4.13 Letter agreement referencing Third Amended and Restated Credit
Agreement, dated January 28, 1999, by and among Intermet,
SunTrust Bank, Atlanta (formerly known as Trust Company Bank) as
lender and agent and the various lenders named therein.
4.14 Master Assignment and Acceptance Agreement dated December 9,
1996, by and among Intermet and various lenders named therein
(included as Exhibit 4.15 to Intermet's Form 10-K for the year
ended December 31, 1996, File No. 0-13787, previously filed with
the Commission and incorporated by reference into this filing).
<PAGE> 25
4.15 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 Intermet's Form 10-K for the
year ended December 31, 1995, File No. 0-13787, previously filed
with the Commission and incorporated by reference into this
filing).
4.16 First Amendment to Amended and Restated Note Agreement, dated as
of January 31, 1997, by and between Intermet 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 Intermet's Form 10-K
for the year ended December 31, 1996, File No. 0-13787,
previously filed with the Commission and incorporated by
reference into this filing).
4.17 Shareholder Protection Rights Agreement, dated as of October 6,
1995 between Intermet and Trust Company Bank, as Rights Agent
(included as Exhibit 4 to Intermet's Form 8-K, having an event
date of October 6, 1995, File No. 0-13787, previously filed with
the Commission and incorporated by reference into this filing).
4.18 Amendment No. 1, dated October 16, 1997, to the Shareholder
Protection Rights Agreement, dated October 6, 1995, between
Intermet and Trust Company Bank, as Rights Agent (included as
Exhibit 4 to Intermet's Form 8-A12G/A, File No. 0-13787,
previously filed with the Commission and incorporated by
reference into this filing).
10.1(a) Intermet Corporation Key Individual Stock Option Plan, adopted
April 25, 1984 (included as Exhibit 10.1 to Intermet's
registration statement on Form S-14, File No. 2-90815, previously
filed with the Commission and incorporated by reference into this
filing).**
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 Intermet'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 by reference into this filing).**
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
Intermet'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 by reference into this filing).**
10.2 Intermet Corporation Executive Stock Option and Incentive Award
Plan (included as Exhibit 4 to Intermet's Form S-8, File No.
33-59011, previously filed with the Commission and incorporated
by reference into this filing)**
10.3(a) Form of employment agreement by and between Intermet and the
executive officers of Intermet, other than John Doddridge and
David L. Neilson, effective November 1, 1996 (included as Exhibit
10.21 to Intermet's Form 10-K for the year ended December 31,
1995, File No. 0-13787, previously filed with the Commission and
incorporated by reference into this filing).**
10.3(b) Employment Agreement, dated October 26, 1995, by and between
Intermet and John Doddridge (included as Exhibit 10.22 to
Intermet's Form 10-K for the year ended December 31, 1995, File
No. 0-13787, previously filed with the Commission and
incorporated by reference into this filing).**
<PAGE> 26
10.3(c) Employment Agreement, dated December 27, 1996, by and between
Intermet and David L. Neilson (included as Exhibit 10.24 to
Intermet's Form 10-K for the year ended December 31, 1996, File
No. 0-13787, previously filed with the Commission and
incorporated by reference into this filing).**
10.4 Operating Committee 1999 Profit Sharing Plan.**
10.5(a) Intermet Corporation Salaried Employees Severance Plan effective
as of October 1, 1993 (included as Exhibit 10.16(a) to Intermet's
Form 10-K for the year ended December 31, 1993, File No. 0-13787,
previously filed with the Commission and incorporated by
reference into this filing).**
10.5(b) Amendment No. 1 to the Intermet Corporation Salaried Employees
Severance Plan, dated December 20, 1993 (included as Exhibit
10.16(b) to Intermet's Form 10-K for the year ended December 31,
1993, File No. 0-13787, previously filed with the Commission and
incorporated by reference into this filing).**
10.6 Intermet Salary Continuation Plan (included as Exhibit 10.18 to
Intermet's Form 10-K for the year ended December 31, 1992, File
No. 0-13787, previously filed with the Commission and
incorporated by reference into this filing).**
10.7(a) Form of Intermet Corporation Director's Stock Option Agreement
(included as Exhibit 10.4 to Intermet'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 by
reference into this filing).**
10.7(b) Intermet Corporation Director's Stock Option Plan (included as
Exhibit 10.6 to Intermet'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 by reference into this
filing).**
10.7(c) Intermet Corporation 1997 Director's Stock Option Plan (included
as Exhibit A to Intermet's definitive Proxy Statement dated March
4, 1997 for its Annual Meeting of Shareholders held April 10,
1997, File No. 0-13787, previously filed with the Commission and
incorporated by reference into this filing).**
10.8 1997 Directors' Deferred Compensation Plan (included as Exhibit
10.25 to Intermet's Form 10-K for the year ended December 31,
1996, File No. 0-13787, previously filed with the Commission and
incorporated by reference into this filing).**
13 Intermet's 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 Intermet.
23 Consent of Independent Auditors.
24 Power of Attorney.
27 Financial Data Schedule.
<PAGE> 1
Exhibit 3.2
BY-LAWS
OF
INTERMET CORPORATION
(As Amended through January 28, 1999)
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 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,
<PAGE> 2
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 whole time of
<PAGE> 3
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, which may exercise all powers
of the corporation and do all lawful acts and things which are not by law,
<PAGE> 4
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 nine (9) 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.
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
<PAGE> 5
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.
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.
<PAGE> 6
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.
(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
<PAGE> 7
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
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.
<PAGE> 8
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.
<PAGE> 9
(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 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.
<PAGE> 10
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:
(l) 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
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.
<PAGE> 11
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.
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.
<PAGE> 12
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 January 30, 1998
Pursuant to a resolution of the Board of Directors of Intermet Corporation ("the
Corporation") and adopted on January 30, 1998, the first sentence of Section 2
(Number, Election and Term) of Article III (Directors) of the by-laws of
Intermet Corporation was amended to decrease the number of directors which shall
constitute the whole board from up to fifteen (15) to nine (9), and shall be
effective immediately. Article III, Directors, Section 2, Number, Election and
Term of the by-laws of Intermet Corporation was amended to read as follows...
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 3.4
Intermet Corporation
Amendment to Article III, Section 2, of the By-Laws
Effective December 3, 1998
Pursuant to a resolution of the Board of Directors of Intermet Corporation ("the
Corporation") and adopted on December 3, 1998, the first sentence of Section 2
(Number, Election and Term) of Article III (Directors) of the by-laws of
Intermet Corporation was amended to decrease the number of directors which shall
constitute the whole board from nine (9) to ten (10), and shall be effective
immediately. Article III, Directors, Section 2, Number, Election and Term of the
by-laws of Intermet Corporation was amended to read as follows...
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 3.5
Intermet Corporation
Amendment to Article III, Section 2, of the By-Laws
Effective January 28, 1999
Pursuant to a resolution of the Board of Directors of Intermet Corporation ("the
Corporation") and adopted on January 28, 1999, the first sentence of Section 2
(Number, Election and Term) of Article III (Directors) of the by-laws of
Intermet Corporation was amended to decrease the number of directors which shall
constitute the whole board from ten (10) to nine (9), and shall be effective
immediately. Article III, Directors, Section 2, Number, Election and Term of the
by-laws of Intermet Corporation was amended to read as follows...
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 4.13
January 28, 1999
Intermet Corporation
5445 Corporate Drive
Suite 200
Troy, MI 48098
Ladies and Gentlemen:
We refer to that certain Third Amended and Restated Credit Agreement, dated as
of November 14, 1996 (as amended or modified from time, the "Credit Agreement"),
among Intermet Corporation ("Intermet"), the lenders from time to time parties
thereto (the "Lenders"), SunTrust Bank, Atlanta as Agent, and NBD Bank and First
Union National Bank (formerly First Union National Bank of North Carolina) as
Co-Agents. Capitalized terms used herein and not defined herein have the
meanings assigned to them in the Credit Agreement.
As you have requested, we hereby amend the definition of "Maturity Date" set
forth in Section 1.01 of the Credit Agreement by replacing such definition in
its entirety with the following:
"Maturity Date" shall mean the earlier of (i) January 1, 2000, and (ii) the date
on which all amounts outstanding under this Agreement have been declared or have
automatically become due and payable pursuant to the provisions of Article VIII.
The extension of the Maturity Date pursuant hereto is a renewal and amendment of
the Commitments previously outstanding under Credit Agreement and shall not be
deemed to be a novation with respect thereto.
Except as expressly set forth herein, this letter agreement shall not be deemed
to waive, amend or modify any other provision of the Credit Documents or any
other agreement between you and us, and shall not serve as a consent, waiver or
amendment to any other matter prohibited by the terms and conditions of the
Credit Documents.
THIS LETTER AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF GEORGIA (WITHOUT GIVING EFFECT TO THE
CONFLICT OF LAW PRINCIPLES THEREOF).
This letter agreement may be executed in one or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same document.
Please countersign below to evidence your consent to the foregoing amendment and
your acknowledgment and agreement that Obligations, including without
limitation, all Loans and Letter of Credit Obligations, remain secured by the
Security Documents after giving effect to this amendment. Please have the
Guarantors countersign below to evidence their consent to Intermet agreeing to
this amendment and to reaffirm, acknowledge and agree that all Obligations,
including without limitation, all Loans and Letter of Credit Obligations, remain
guaranteed by the Guarantors jointly and severally pursuant to the terms of the
Guaranty Agreement and remain secured by the Security Documents after giving
effect to this amendment.
Very truly yours,
SUNTRUST BANK, ATLANTA,
Individually and as Agent
<PAGE> 2
By: /s/ Shelley M. Browne By: /s/ Charles C. Pick
--------------------- -------------------
Name: Shelley M. Browne Name: Charles C. Pick
Title: Vice President Title: Vice President
NBD BANK, individually and as Co-Agent
By: /s/ William C. Goodhue
----------------------
Name: William C. Goodhue
Title: First Vice President
FIRST UNION NATIONAL BANK, formerly First Union National Bank of North Carolina,
individually and as Co-Agent
By: /s/ Kent Davis
--------------
Name: Kent Davis
Title: V.P.
COMERICA BANK
By: /s/ Mark A. Reifel
------------------
Name: Mark A. Reifel
Title: V.P.
ABN AMRO BANK N.V.
By: /s/ John J. Mack By: /s/ John M. Ellenwood
---------------- ---------------------
Name: John J. Mack Name: John M. Ellenwood
Title: Vice President Title: Group Vice President
THE BANK OF NOVA SCOTIA
By: /s/ F.C.H. Ashby
----------------
Name: F.C.H. Ashby
Title: Senior Manager
Loan Operation
HARRIS TRUST AND SAVINGS BANK
By: /s/ Kirby M. Law
----------------
Name: Kirby M. Law
Title: Vice President
LANDESBANK SAAR GIROZENTRALE
By: /s/ Thinnes Manfred By: /s/ Humburg Frank
------------------- -----------------
Name: Thinnes Manfred Name: Humburg Frank
Title: Head of Department Title: Area Manager
<PAGE> 3
INTERMET INTERNATIONAL, INC.
By: /s/ M. Skrzypczak
-----------------
Name: Michael Skrzypczak
Title: Asst. Treasurer
ALEXANDER CITY CASTINGS COMPANY, INC.
By: /s/ M. Skrzypczak
-----------------
Name: Michael Skrzypczak
Title: Asst. Treasurer
NEW RIVER CASTINGS COMPANY
By: /s/ M. Skrzypczak
-----------------
Name: Michael Skrzypczak
Title: Asst. Treasurer
We consent to the foregoing amendment to the definition of Maturity Date and
acknowledge and agree that all Obligations, including without limitation, all
Loans and Letter of Credit Obligations, remain secured by the Security Documents
after giving effect to such amendment.
INTERMET CORPORATION
By: /s/ M. Skrzypczak
-----------------
Name: Michael Skrzypczak
Title: Asst. Treasurer
We consent to Intermet agreeing to the foregoing amendment to the definition of
Maturity Date and reaffirm, acknowledge and agree that all Obligations,
including without limitation, all Loans and Letter of Credit Obligations, remain
guaranteed by us jointly and severally pursuant to the terms of the Guaranty
Agreement and remain secured by the Security Documents after giving effect to
such amendment.
LYNCHBURG FOUNDRY COMPANY
By: /s/ M. Skrzypczak
-----------------
Name: Michael Skrzypczak
Title: Asst. Treasurer
IRONTON IRON, INC.
By: /s/ M. Skrzypczak
-----------------
Name: Michael Skrzypczak
Title: Asst. Treasurer
NORTHERN CASTINGS CORPORATION
By: /s/ M. Skrzypczak
-----------------
Name: Michael Skrzypczak
Title: Asst. Treasurer
<PAGE> 1
Exhibit 10.4
OPERATING COMMITTEE
1999 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.
<TABLE>
<S> <C> <C>
Jim Peterson 0.20% (.0020)
Doretha Christoph 0.22% (.0022)
John Engeswick 0.15% (.0015)
Dave Neilson 0.25% (.0025)
-----
Total 0.82%
</TABLE>
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/ Thomas H. Jeffs
Chairman, Compensation Committee
<PAGE> 1
Exhibit 13
- -----------------------------------------------------
Financial Highlights
<TABLE>
<CAPTION>
Year Ended December 31, 1998 1997 1996 1995 1994 1993
Statement of Operations Data (in thousands of dollars)
<S> <C> <C> <C> <C> <C> <C>
Net sales $841,598 $813,729 $534,478 $541,749 $501,269 $444,214
Operating profit 75,649 75,198 56,103 52,815 1,728 (23,486)
Net income (loss) 40,989 40,013 43,153 25,395 (10,985) (20,504)
Share Data (in thousands, except per share data)
Income (loss) per common share - diluted $1.58 $1.55 $1.69 $1.02 ($0.45) ($0.83)
Cash dividends per share $0.16 $0.16 $0.08 - - $0.12
Weighted average shares outstanding - diluted 25,947 25,783 25,594 24,893 24,591 24,564
Balance Sheet Data (in thousands of dollars,
except return on equity data)
Total assets $584,015 $539,446 $526,312 $274,071 $306,264 $307,458
Long-term debt due after one year 156,690 167,295 149,477 32,675 87,698 93,391
Total long-term debt 163,101 177,833 162,153 35,271 99,715 95,854
Shareholders' equity 217,005 175,428 141,102 98,028 67,971 75,532
Return on equity 19% 23% 30% 26% (16%) (27%)
==============================================================================================================================
</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 THESE SECTIONS, 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; (VI) FACTORS AFFECTING
THE ABILITY OF THE COMPANY OR ITS KEY SUPPLIERS TO RESOLVE YEAR 2000 ISSUES IN A
TIMELY MANNER; AND (VII) 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
1998 Compared to 1997
Sales in 1998 were $841.6 million compared to 1997 sales of $813.7 million, an
increase of 3.4%. Sales from continuing operations (without Industrial Powder
Coatings ("IPC") and IWESA GmbH ("IWESA")) were 6.9% higher in 1998 than in
1997. Sales at the Company's domestic foundry operations were up 8.2% in 1998
from the prior year as North American light vehicle production for 1998 was
greater than 15 million units for the fifth consecutive year and U.S. sales of
light vehicles in 1998 were the second highest ever. Light truck production was
the highest ever in 1998. The Company's sales into Europe from continuing
operations increased 9.4% in local currency and increased 7.9% in U.S. dollars
for 1998 over 1997. This set a new record compared to previous years. These
sales were negatively impacted $1.5 million by exchange rates. Sales at other
continuing operations were down 5.2% for 1998 from 1997 due primarily to a
decrease in market demand. Looking forward to 1999, light vehicle production is
expected to taper off slightly but still to exceed 15 million units. Actual
results may differ materially.
Gross profit increased to $110.7 million in 1998 from $107.0 million in 1997.
Gross profit for continuing operations was $6.2 million higher in 1998 than in
1997. This improvement is due primarily to higher sales. Gross profit was
negatively affected by production inefficiencies resulting from operating some
facilities in excess of capacity and the cost associated with launching in
excess of 100 parts. Gross profit as a percentage of sales was 13.2 % in 1998
versus 13.1% in 1997.
Operating expenses in 1998 were $35.1 million, an increase of $3.3 million over
1997. This increase relates primarily to the write-off of certain assets at
IWESA. Operating expenses as a percentage of sales for the years ended December
31, 1998 and 1997 were 4.2% and 3.9%, respectively. Operating expenses include
expenses related to acquisition investigations of $0.5 and $0.4 million in 1998
and 1997, respectively. Also included in 1997 were $0.3 million of expenses
related to the secondary stock offering for the George Mathews family and
certain related parties.
2
<PAGE> 3
Interest expense for the years ended December 31, 1998 and 1997 was $11.4
million and $12.4 million, respectively. This change was a result of a decrease
in borrowings due to cash provided by operating activities and the sale of IPC.
The net of other income and expenses was income of $0.6 million in 1998 compared
to $2.0 million of net expense in 1997. This change relates primarily to equity
in net losses in 1997 of $3.2 million from minority holdings, principally IWESA.
For information concerning the provision for income taxes as well as information
regarding differences between effective tax rates and statutory rates, see Note
11 of the Notes to Consolidated Financial Statements.
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.
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.
Operating expenses in 1997 were $31.8 million, an increase of $10.0 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. Operating
expenses as a percentage of sales for the years ended December 31, 1997 and 1996
were 3.9% and 4.1%, respectively. Operating expenses in 1997 include expenses
related to acquisition investigations of $0.4 million and $0.3 million of
expenses related to the secondary stock offering for the George Mathews family
and certain related parties.
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 $2.0 million in 1997. This
increase relates primarily to equity in net losses of $3.2 million from minority
holdings, principally IWESA.
Income tax expense for 1996 was reduced $11.5 million for an adjustment to the
deferred tax valuation allowance. For additional information concerning the
provision for income taxes as well as information regarding differences between
effective tax rates and statutory rates, see Note 11 of the Notes to
Consolidated Financial Statements.
3
<PAGE> 4
Management's Discussion and Analysis of Financial Condition and Results of
Operations (continued)
Liquidity and Capital Resources
During 1998, net cash provided by operating activities was $96.4 million.
Non-cash charges (principally depreciation and amortization expense) were $37.5
million. Overall working capital provided by operations increased from 1997,
with the higher sales level and new programs. Accounts receivable increased
primarily because of higher sales of light truck components. Accounts payable
and current liabilities increased from December 31, 1997 as the Company managed
its cash to align its customers' and vendors' terms. The Company's investing
activities for 1998 used cash of $88.4 million. This included $60.3 million paid
for the purchase of businesses and $49.5 million for property, plant and
equipment additions. Bank borrowings decreased $6.8 million, in the aggregate,
from the end of 1997 as cash from operations decreased the need for borrowings.
Cash and cash equivalents decreased to $5.8 million at December 31, 1998 from
$7.0 million at December 31, 1997. Since the beginning of 1996, 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 ($4.1 million in the aggregate) during 1998.
Outstanding funded debt moved from a high in early 1998 of $185.3 million to a
low in 1998 of $129.9 million just before the acquisitions of Tool Products,
Inc. ("Tool Products") and Vorpommersche Eisenwerke GmbH UeckermUnde ("VEGU") in
late December 1998. Outstanding funded debt, including notes payable, at
December 31, 1998 was $164.1 million. The decrease in borrowings during 1998 was
mainly attributable to the sale of IPC and elimination of IWESA. Conversely, the
increase in borrowings at the end of the year was expected and related primarily
to funds required for the Tool Products and VEGU acquisitions. The Company's
debt-to-capital ratio decreased from 52% at December 31, 1997 to 43% at December
31, 1998 (32% without Tool Products and VEGU).
Shareholders' equity increased $41.6 million from $175.4 million at December 31,
1997, to $217.0 million at December 31, 1998.
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 1998 and 1997, such costs totaled
approximately $14.4 and $12.3 million, respectively. 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 is regularly incurred to limit or monitor pollution,
principally for ventilation and dust control equipment. Such expenditures were
approximately $5.2 million in 1998 and $6.9 million in 1997. The Company expects
to spend $4.8 million in capital expenditures related to environmental matters
in 1999. Sales volume levels and available engineering resources, among other
factors, will influence the actual amount of capital expenditures.
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 $4.6
million to cover estimated future environmental expenditures. 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, 1998.
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 Federal and State
governments
4
<PAGE> 5
adopt final regulations implementing those amendments 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, 1998, the Company had commitments for the purchase of operating
equipment of approximately $8.2 million, which the Company expects to fund
through cash flow from operations. The Company has an unsecured revolving credit
agreement with a bank group, which was extended to January 1, 2000, and provides
for loans up to $200 million in the aggregate. The Company had $164.1 million of
long-term debt and notes payable outstanding at December 31, 1998. Of this
amount, the Company is scheduled to pay $7.4 million during 1999. The Company
had committed and uncommitted bank credit facilities with outstanding borrowing
capacity of approximately $100.3 million at December 31, 1998.
Year 2000
The Company has conducted an evaluation of its Informational Technology ("IT")
and non-IT computer systems with respect to the "Year 2000" issue. This issue
arises because many electronic systems use two digits rather than four to
determine dates. This could cause information technology systems such as
software applications, hardware, network systems and embedded systems to misread
important dates beginning in the year 2000, which could cause system failures
and disruption of operations.
The Company has completed a Year 2000 readiness assessment of its business
critical IT and non-IT systems. As a result of the assessment, the Company is in
the process of developing and implementing corrective action plans designed to
address Year 2000 issues. These plans include modification, upgrade and
replacement of the Company's critical administrative, production, and research
and development computer systems to make them Year 2000 ready. Implementation of
corrective action plans has begun, and the Company expects to have its critical
systems Year 2000 ready by the end of March 1999 for its facilities servicing
the automotive industry and by June 1999 for the remainder of the Company.
Because the Company's operations depend on the uninterrupted flow of materials
and services from its suppliers, the Company has requested and has been
receiving and analyzing information from its suppliers with regard to their
progress toward Year 2000 readiness. The Company intends to continue to monitor
the progress of its key suppliers toward Year 2000 readiness.
A small number of the Company's products incorporate electronic components that
are purchased from third parties. The Year 2000 readiness of these purchased
components is also being assessed.
The Company began addressing Year 2000 issues in 1995, and prior to 1998 spent
approximately $2.2 million on Year 2000 readiness. In 1998, the Company spent
approximately $2.5 million to address the Year 2000 issue. The Company estimates
that it will spend in total between $7.5 and $8.0 million to become Year 2000
ready. The majority of this spending is for required upgrades to or for new
business systems required in the ordinary
5
<PAGE> 6
course of business, which will also be Year 2000 ready. It is possible that the
actual cost of the Company's Year 2000 readiness effort could exceed these
estimates.
Although the Company has a process in place to assess Year 2000 readiness on the
part of its suppliers, the Company considers the most reasonably likely worst
case scenario is that one or more of the Company's suppliers might encounter a
Year 2000 problem and be unable to supply materials. If this was to occur and
the Company could not obtain the same materials from another vendor, production
could be interrupted, which could result in lost sales and profits. However, it
is highly unlikely that the Company could not obtain the same materials from
another vendor. In addition, while the Company is taking action to correct
deficiencies in its own systems, it is possible that one or more of the
Company's facilities or critical business systems might not achieve Year 2000
readiness as anticipated. This could also result in disruption of operations and
lost sales and profits.
Contingency plans are being or will be developed that are intended to avoid or
mitigate the risks that either key suppliers or the Company might not achieve
Year 2000 readiness in time to avoid disruption of the Company's operations.
Readers are cautioned that forward looking statements contained in this Year
2000 discussion should be read in conjunction with the Company's disclosures
under the cautionary statement for the purposes of the "Safe Harbor" Provisions
of the Private Securities Litigation Reform Act of 1995, included elsewhere in
Management's Discussion and Analysis of Financial Condition and Results of
Operations.
6
<PAGE> 7
Consolidated Financial Statements
Intermet Corporation
Years ended December 31, 1998, 1997 and 1996
with Report of Independent Auditors
<PAGE> 8
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, 1998 and 1997, and the related consolidated
statements of operations, comprehensive income, shareholders' equity and cash
flows for each of the three years in the period ended December 31, 1998. 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, 1998 and 1997, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1998, in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Detroit, Michigan
January 28, 1999
<PAGE> 9
Intermet Corporation
Consolidated Statements of Operations
<TABLE>
<CAPTION>
Years ended December 31,
1998 1997 1996
---- ---- ----
(in thousands of dollars, except per share data)
<S> <C> <C> <C>
Net sales $841,598 $813,729 $534,478
Cost of sales 730,857 706,771 456,618
-------- -------- --------
Gross profit 110,741 106,958 77,860
Operating expenses:
Selling 8,878 9,810 3,646
General and administrative 26,214 21,950 18,111
-------- -------- --------
Operating profit 75,649 75,198 56,103
Other income and expenses:
Interest income 230 546 1,403
Interest expense (11,305) (12,396) (3,056)
Other, net 614 (1,959) (128)
-------- -------- --------
(10,461) (13,809) (1,781)
-------- -------- --------
Income before income taxes 65,188 61,389 54,322
Provision for income taxes 24,199 21,376 11,169
-------- -------- --------
Net income $40,989 $40,013 $43,153
======== ======== ========
Income per common share - Basic $1.60 $1.59 $1.72
======== ======== ========
Income per common share - Diluted $1.58 $1.55 $1.69
======== ======== ========
</TABLE>
See accompanying notes.
2
<PAGE> 10
Intermet Corporation
Consolidated Statements of Comprehensive Income
<TABLE>
<CAPTION>
Years ended December 31,
1998 1997 1996
---- ---- ----
(in thousands of dollars, except per share data)
<S> <C> <C> <C>
Net income $40,989 $40,013 $43,153
Other comprehensive loss, net of tax:
Foreign currency translation adjustment 348 (1,440) (1,752)
Minimum pension liability adjustment (837) 473 1,151
------- ------- -------
Total other comprehensive loss (489) (967) (601)
------- ------- -------
Comprehensive income $40,500 $39,046 $42,552
======= ======= =======
Comprehensive income per common share - Basic $1.58 $1.55 $1.70
======= ======= =======
Comprehensive income per common share - Diluted $1.56 $1.51 $1.66
======= ======= =======
</TABLE>
See accompanying notes.
3
<PAGE> 11
Intermet Corporation
Consolidated Balance Sheets
<TABLE>
<CAPTION>
December 31,
1998 1997
---- ----
(in thousands of dollars)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $5,848 $7,022
Accounts receivable:
Trade, less allowances of $5,133 in 1998 and
$4,118 in 1997 105,678 92,871
Other 8,713 7,549
-------- --------
114,391 100,420
Inventories:
Finished goods 14,701 13,852
Work in process 18,522 13,897
Raw materials 8,467 11,533
Supplies and patterns 24,208 23,440
-------- --------
65,898 62,722
Assets held for sale - 16,892
Deferred income taxes 2,829 3,244
Other current assets 8,464 2,982
-------- --------
Total current assets 197,430 193,282
Property, plant and equipment, at cost:
Land 4,567 4,783
Buildings and improvements 93,667 89,215
Machinery and equipment 357,545 357,745
Construction in progress 29,303 20,238
-------- --------
485,082 471,981
Less:
Foreign industrial development grants, net of
amortization 4,153 5,638
Accumulated depreciation and amortization 240,227 224,444
-------- --------
Net property, plant and equipment 240,702 241,899
Intangible assets, net of amortization 126,896 86,014
Other noncurrent assets 18,987 18,251
-------- --------
$584,015 $539,446
======== ========
</TABLE>
4
<PAGE> 12
Intermet Corporation
Consolidated Balance Sheets
<TABLE>
<CAPTION>
December 31,
1998 1997
---- ----
(in thousands of dollars,
except share and per share data)
<S> <C> <C>
Liabilities and shareholders' equity Current liabilities:
Notes payable $1,000 $9,087
Accounts payable 90,205 59,173
Accrued wages, severance and benefits 24,117 28,522
Income taxes payable 5,684 8,635
Other accrued liabilities 21,121 19,999
Long-term debt due within one year 6,411 10,538
-------- ---------
Total current liabilities 148,538 135,954
Noncurrent liabilities:
Long-term debt 156,690 167,295
Retirement benefits 45,964 49,013
Other noncurrent liabilities 13,481 9,419
-------- ---------
Total noncurrent liabilities 216,135 225,727
Minority interest 2,337 2,337
Shareholders' equity:
Preferred stock; 5,000,000 shares authorized; none issued
Common stock, $0.10 par value; 50,000,000 shares
authorized; 25,832,824 and 25,256,374 shares issued
in 1998 and 1997, respectively 2,583 2,526
Capital in excess of par value 63,382 58,176
Retained earnings 151,131 114,242
Accumulated other comprehensive income 72 561
Unearned restricted stock (163) (77)
-------- ---------
Total shareholders' equity 217,005 175,428
-------- ---------
$584,015 $539,446
======== =========
</TABLE>
See accompanying notes.
5
<PAGE> 13
Intermet Corporation
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Years ended December 31,
1998 1997 1996
---- ---- ----
(in thousands of dollars)
<S> <C> <C> <C>
Operating activities:
Net income $40,989 $40,013 $43,153
Adjustments to reconcile net income to cash provided by operating
activities:
Depreciation 31,975 32,482 25,016
Amortization 3,868 3,849 1,837
Equity in results of minority holdings 351 3,199 -
Gain on sale of subsidiary (115) - -
Dissolution of foreign holding 4,282 - -
(Gain) loss on sale of assets (460) (320) 552
Deferred income taxes (2,406) (2,577) (6,364)
Changes in operating assets and liabilities excluding the effects of
acquisitions and dispositions:
Accounts receivable (13,944) (6,098) 279
Inventories (78) (5,608) (5,225)
Accounts payable and current liabilities 35,078 (6,219) 5,133
Other assets and liabilities (3,095) 4,094 6,750
------- ------- --------
Cash provided by operating activities 96,445 62,815 71,131
Investing activities:
Additions to property, plant and equipment (49,496) (40,585) (26,025)
Purchase of businesses, net of cash acquired (60,339) (36,396) (153,456)
Investment in joint venture (2,000) - -
Proceeds from sales of property, plant and equipment 1,441 815 3,516
Proceeds from sale of subsidiary 22,860 - -
Other, net (915) (616) (105)
------- ------- --------
Cash used in investing activities (88,449) (76,782) (176,070)
Financing activities:
Net increase in revolving credit facility 5,000 6,600 118,400
Reduction in debt (7,787) (12,576) (2,337)
(Payment on) proceeds from notes payable (4,000) 5,000 -
Issuance of common stock 5,263 877 889
Dividends paid (4,100) (4,038) (2,011)
Other, net (836) 420 -
------- ------- --------
Cash (used in) provided by financing activities (6,460) (3,717) 114,941
Effect of exchange rate changes on cash and cash equivalents (2,710) 1,221 2,310
------- ------- --------
Net (decrease) increase in cash and cash equivalents (1,174) (16,463) 12,312
Cash and cash equivalents at beginning of year 7,022 23,485 11,173
------- ------- --------
Cash and cash equivalents at end of year $5,848 $7,022 $23,485
======= ======= ========
</TABLE>
See accompanying notes.
6
<PAGE> 14
Intermet Corporation
Consolidated Statements of Shareholders' Equity
<TABLE>
<CAPTION>
Years ended December 31,
1998 1997 1996
---- ---- ----
(in thousands of dollars, except share and per share
data)
<S> <C> <C> <C>
Common stock
Beginning balance $2,526 $2,517 $2,505
Exercise of options to purchase 576,450, 88,500 and
114,500 shares of common stock in 1998, 1997 and 1996,
respectively 57 9 12
-------- -------- --------
Ending balance 2,583 2,526 2,517
Capital in excess of par value
Beginning balance 58,176 57,308 56,431
Exercise of options to purchase shares of common
stock 5,206 868 877
-------- -------- --------
Ending balance 63,382 58,176 57,308
Retained earnings
Beginning balance 114,242 78,267 37,125
Net income 40,989 40,013 43,153
Cash dividends of $0.16 per share in 1998 and 1997 and
$0.08 per share in 1996 (4,100) (4,038) (2,011)
-------- -------- --------
Ending balance 151,131 114,242 78,267
Accumulated translation adjustment
Beginning balance 573 3,548 3,765
Translation adjustment 535 (4,575) (344)
Related income tax effect (187) 1,600 127
-------- -------- --------
Ending balance 921 573 3,548
Minimum pension liability adjustment
Beginning balance (12) (485) (1,636)
Adjustment (1,379) 776 1,887
Related income tax effect 542 (303) (736)
-------- -------- --------
Ending balance (849) (12) (485)
Unearned restricted stock
Beginning balance (77) (53) (162)
Issuance of 8,000 and 7,500 shares of common stock in
1998 and 1997, respectively (155) (115) -
Amortization 69 91 109
-------- -------- --------
Ending balance (163) (77) (53)
-------- -------- --------
Total shareholders' equity $217,005 $175,428 $141,102
======== ======== ========
</TABLE>
See accompanying notes.
7
<PAGE> 15
Intermet Corporation
Notes to Consolidated Financial Statements
Years ended December 31, 1998, 1997 and 1996
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 and performs value-added
services, principally for automotive manufacturers in North America and Europe.
The Company also supplies 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.
Reclassification
Certain amounts previously reported in the 1997 financial statements and notes
thereto have been reclassified to conform to the 1998 presentation.
Revenue Recognition
The Company recognizes revenue upon shipment of products.
Income per Common Share
Basic and diluted earnings per share are calculated in accordance with the
Financial Accounting Standards Board ("FASB") Statement of Financial Accounting
Standards ("SFAS") No. 128, "Earnings per Share". All earnings per share amounts
for all periods have been presented, and where appropriate, restated to conform
to the requirements of SFAS No. 128.
Cash and Cash Equivalents
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.
8
<PAGE> 16
Intermet Corporation
Notes to Consolidated Financial Statements (continued)
1. Summary of Significant Accounting Policies (continued)
Inventories
Inventories are stated at the lower of cost or market. Cost is determined on the
last-in, first-out ("LIFO") method for 34% and 36% of the December 31, 1998 and
1997 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 $1,105,000 and $1,273,000 at December 31, 1998 and 1997,
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 estimated useful lives of the related
assets.
Intangible Assets
Intangible assets of $126,896,000 and $86,014,000 (net of accumulated
amortization of $7,147,000 and $4,392,000) at December 31, 1998 and 1997,
respectively, consist principally of costs in excess of net assets acquired.
Such costs are being amortized using the straight-line method over periods
ranging principally from ten to forty years. The Company periodically assesses
the recoverability of the cost of its intangibles based on a review of projected
undiscounted cash flows of the related operating entities.
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
value. The fair value of the Company's debt approximates the reported amounts in
the accompanying consolidated balance sheets as their respective interest rates
approximate the respective year end market rates for similar debt instruments.
The Company obtains the fair value of the interest rate swaps from dealer
quotes. These values represent the estimated amount the Company would receive or
pay to terminate agreements taking into consideration current interest rates,
the creditworthiness of the counter-parties and current foreign currency
exchange rates.
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.
9
<PAGE> 17
Intermet Corporation
Notes to Consolidated Financial Statements (continued)
1. Summary of Significant Accounting Policies (continued)
Recently Issued Accounting Standards
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities". The Company expects to adopt SFAS No. 133
effective January 1, 2000. SFAS No. 133 will require the Company to recognize
all derivatives on the balance sheet at fair value. The Company does not
anticipate that the adoption of this SFAS will have a significant effect on its
results of operations or financial position.
2. Reporting for Business Segments
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information", which the Company has adopted and which
supersedes SFAS No. 14, "Financial Reporting for Segments of a Business
Enterprise". SFAS No. 131 requires a public enterprise to present specific
segment information according to how management internally evaluates the
operating performance of its business units. It also requires public enterprises
to present certain "enterprise wide" information, including revenue related to
products and services and geographic areas in which they operate. The Company's
management evaluates the operating performance of its business units
individually. Under the provisions of SFAS No. 131, the Company has aggregated
operating segments that have similar characteristics, which has resulted in one
reportable segment. The foundry segment consists of foundry operations, which
include both iron and aluminum castings and their related machining operations.
The operating units that comprise other are all nonfoundry operations, and none
of them constitutes a reportable segment on its own. This information is
displayed in the table below.
<TABLE>
<CAPTION>
Foundry Other Consolidated
------- ----- ------------
(in thousands of dollars)
<S> <C> <C> <C>
Year ended December 31, 1998
Net sales $731,111 $110,487 $841,598
Depreciation expense 28,725 3,250 31,975
Amortization expense 3,868 - 3,868
Provision for income taxes 23,607 592 24,199
Net income 40,048 941 40,989
Purchases of property, plant and equipment 45,372 4,124 49,496
December 31, 1998
Total assets $544,864 $39,151 $584,015
Year ended December 31, 1997
Net sales $666,094 $147,635 $813,729
Depreciation expense 27,824 4,658 32,482
Amortization expense 3,849 - 3,849
Provision for income taxes 18,337 3,039 21,376
Net income 34,903 5,110 40,013
Purchases of property, plant and equipment 32,716 7,869 40,585
December 31, 1997
Total assets $465,390 $74,056 $539,446
</TABLE>
10
<PAGE> 18
Intermet Corporation
Notes to Consolidated Financial Statements (continued)
3. Comprehensive Income
During 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive Income",
which the Company adopted as of January 1, 1998. SFAS No. 130 establishes new
rules for reporting and display of comprehensive income and its components. The
adoption of this SFAS had no impact on the Company's net income or shareholders'
equity. SFAS No. 130 requires the components of comprehensive income, which
include the foreign currency translation adjustment and minimum pension
liability adjustment, to be combined and reported as accumulated other
comprehensive income. Prior to adoption, these items were reported separately in
shareholders' equity. In addition, SFAS No. 130 requires net income and other
comprehensive income to be included as components of comprehensive income, which
is displayed in the consolidated statements of comprehensive income.
4. Acquisitions and Dispositions
On December 31, 1998, the Company acquired certain operating assets and the
aluminum die-casting business of Quadion Corporation for $56,951,000 and certain
operating supplies inventories for $1,353,000, both in cash. These assets form
the base of the Company's wholly owned subsidiary, Tool Products, Inc. ("Tool
Products"). This transaction has been accounted for as a purchase and,
accordingly, the purchase price has been allocated to the assets purchased and
the liabilities assumed based upon the estimated fair values at the date of
acquisition. The excess of the purchase price over the fair value of tangible
net assets acquired was approximately $39,052,000 and was recorded as goodwill,
which will be amortized on a straight-line basis over 40 years. The consolidated
financial statements include the balance sheet of Tool Products as of December
31, 1998. The balance sheet of Tool Products is subject to audit, which may
result in an adjustment to the purchase price subsequent to December 31, 1998.
Tool Products manufactures aluminum die castings for broad applications in the
automotive, electronics and other industries and has manufacturing facilities in
New Hope, Minnesota and Jackson, Tennessee.
On December 31, 1998 the Company acquired 100% of the outstanding shares of
Vorpommersche Eisenwerke GmbH UeckermUnde ("VEGU") for DM 6,000,000 in cash. 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 estimated fair values at the date of acquisition. The fair values of
tangible net assets acquired exceeded the purchase price and has resulted in
negative goodwill of approximately DM 3,300,000, which will be amortized on a
straight-line basis over five years. The consolidated financial statements
include the balance sheet of VEGU as of December 31, 1998. VEGU is a ferrous
foundry company located in Eastern Germany.
In June 1998 the Company sold substantially all the operating assets of its
subsidiary, Industrial Powder Coatings, for $22,338,000 in cash, net of related
selling expenses, and recognized a net gain of approximately $115,000.
11
<PAGE> 19
Intermet Corporation
Notes to Consolidated Financial Statements (continued)
4. Acquisitions and Dispositions (continued)
The following represents the unaudited pro forma consolidated results of
operations (in thousands of dollars, except per share data) for the Company for
1998 and 1997, assuming the above acquisitions and disposition occurred on
January 1 of each year presented.
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Net sales $889,464 $818,425
Net income $44,286 $42,863
Income per common share - Basic $1.73 $1.70
Income per common share - Diluted $1.71 $1.66
</TABLE>
These unaudited 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.
During the second quarter of 1998, the Company entered into an agreement with
Portuguese Grupo Jorge de Mello, creating a joint venture company called
PortCast-Fundicao Nodular, S.A. ("PortCast"). PortCast is located in Porto,
Portugal and increases the Company's foundry capacity in Europe. The Company
spent $2,000,000 of capital toward its investment in a 50% equity interest in
PortCast. The Company's investment in PortCast is accounted for on the equity
method. During the third quarter of 1998, the Company advanced approximately
$1,300,000 to PortCast for its working capital requirements. The Company has
managerial control. The Company's equity in net loss of PortCast for 1998 is
$440,000 and is included in other income and expense in the accompanying
statements of operations.
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. The results of operations of Sudbury from the date of acquisition to
December 31, 1996 were not significant.
In 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. During 1997, the Company's ownership interest in IWESA was increased
to 82.4% for DM 1 as a result of the financial difficulties IWESA was
experiencing. Accordingly, the Company accounted for IWESA as a consolidated
subsidiary at December 31, 1997. In the first half of 1998, the Company
wrote-off certain assets related to IWESA. In May 1998, IWESA entered bankruptcy
proceedings whereby the receiver assumed all remaining assets and obligations,
without cash effect, in accordance with German bankruptcy laws.
12
<PAGE> 20
Intermet Corporation
Notes to Consolidated Financial Statements (continued)
5. 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 sheets.
6. Notes Payable
The Company maintains various uncommitted bank lines of credit which are payable
on demand. At December 31, 1998, Intermet's borrowings under the lines of credit
totaled $1,000,000. Availability under these lines of credit at December 31,
1998 was $24,000,000. At December 31, 1997, Intermet's borrowings under the
lines of credit totaled $5,000,000. Availability under these lines of credit at
December 31, 1997 was $40,000,000. Interest is paid on a daily basis at a
negotiated rate. At December 31, 1998, the interest rate was 7.25% per annum.
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, 1999, unless extended. These notes provide for
borrowings up to DM 19,000,000 (approximately $11,356,000) at December 31, 1998.
There were no outstanding borrowings under these agreements as of December 31,
1998 and 1997.
7. Long-Term Debt
Long-term debt consists of the following at December 31, (in thousands of
dollars):
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Intermet:
Revolving credit facility $130,000 $125,000
Prudential note 20,000 25,000
Domestic Subsidiaries:
Industrial development bonds 8,075 4,320
Capitalized leases 3,781 -
Other 3 248
Foreign Subsidiaries:
Foreign bank term notes 1,242 1,306
IWESA bank term debt - 15,947
IWESA capitalized leases - 6,012
-------- --------
Total $163,101 $177,833
Less long-term debt due within one year 6,411 10,538
-------- --------
Long-term debt due after one year $156,690 $167,295
======== ========
</TABLE>
13
<PAGE> 21
Intermet Corporation
Notes to Consolidated Financial Statements (continued)
7. Long-Term Debt (continued)
The Company has an unsecured revolving credit agreement with a bank group, which
has been extended to January 1, 2000, and provides for loans up to $200,000,000
in the aggregate. Certain standby letters of credit reduce the borrowing limit.
At December 31, 1998 such standby letters of credit totaled $4,959,279. The
revolving credit agreement provides the Company with several interest
rate-pricing mechanisms ranging from 5.71% to 6.12% per annum at December 31,
1998. 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 note is unsecured and bears interest at a rate of 8.05% per
annum, payable quarterly. Annual principal payments of $5,000,000 are required.
The note agreement requires the Company to maintain certain financial ratios and
imposes limitations on certain activities.
Under the terms of the bond indenture, Lynchburg Foundry Company, a wholly owned
subsidiary of the Company, is required to redeem various amounts of industrial
development revenue bonds on an annual basis through June 2006. These amounts
range from $175,000 to $350,000 per year, with a final payment at maturity of
$1,650,000. The balance outstanding as of December 31, 1998 was $3,575,000. The
bonds are subject to optional redemption prior to maturity.
As part of the Company's acquisition of Tool Products, the Company assumed
$4,500,000 of industrial development revenue bond debt. The Company is required
to make annual principal payments of $500,000, with a final maturity date of
January 1, 2007.
The Company also has capital leases of approximately $3,781,000 at December 31,
1998, which relate to assets with net book values of approximately $3,849,000.
Interest rates for these leases range from 7.50% to 8.58%.
The foreign bank term notes are amortized approximately $221,000 per year,
through 2002, with the remainder amortized approximately $90,000 per year, from
2003 through 2006. These notes bear an interest rate of 5.0% per annum. These
borrowings are secured by property, plant and equipment with net book values
aggregating to approximately $22,743,000 at December 31, 1998.
As a result of IWESA entering bankruptcy proceedings in May 1998, the receiver
assumed all of IWESA's obligations, without cash effect, in accordance with
German bankruptcy laws.
Maturities of long-term debt and capital leases at December 31, 1998 are as
follows (in thousands of dollars):
<TABLE>
<S> <C>
1999 $6,411
2000 136,445
2001 6,433
2002 6,648
2003 1,579
Thereafter 5,585
--------
Totals $163,101
--------
</TABLE>
Interest paid totaled $10,398,000, $11,500,000 and $3,048,000 in 1998, 1997 and
1996, respectively.
14
<PAGE> 22
Intermet Corporation
Notes to Consolidated Financial Statements (continued)
7. Long-Term Debt (continued)
The Company is in compliance with the terms and restrictions of its various loan
and credit agreements. At December 31, 1998, approximately $84,012,000 of the
Company's retained earnings was restricted and unavailable for the payment of
dividends.
Interest rate swaps are contractual agreements between parties to exchange fixed
and floating interest rate payments periodically, over the life of the
agreements, without the exchange of underlying principal amounts. At December
31, 1998, 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, and off balance sheet risk, of
$40,000,000 and $30,000,000, respectively. These swaps are used to partially
hedge an underlying debt obligation and are not marked to market. The Company
does not expect to terminate the swaps prior to maturity. Had the swaps been
terminated at December 31, 1998, the Company would have been obligated to the
counter-parties for approximately $1.7 million. The swap transactions terminate
in May 2000.
8. Shareholders' Equity
The Company has a Key Individual Stock Option Plan ("Individual Plan") and a
Directors' Stock Option Plan ("Directors' Plan"). The Individual Plan, which
granted options and restricted shares for 1,500,000 shares of common stock, was
approved by the shareholders of the Company on April 27, 1995. The Directors'
Plan was approved by the shareholders of the Company on April 10, 1997 and
granted 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 1998 were exercisable at the grant date. Certain options also remain
outstanding from prior stock option plans. At December 31, 1998 options for
557,050 shares were exercisable, while 365,000 Individual Plan shares and
129,000 Directors' Plan shares were available for future grant.
The Company applies Accounting Principles Board Opinion No. 25 and related
interpretations in accounting for its stock option plans. Accordingly, no
compensation expense has been recognized for the Company's stock option plans.
Had compensation expense for these plans been determined based on the fair value
at the grant dates for awards under those plans consistent with the method of
SFAS No. 123, the Company's pro forma net income, basic earnings per share and
diluted earnings per share would have been $40,290,000, $39,413,000 and
$42,863,000; $1.57, $1.56 and $1.71; and $1.55, $1.53 and $1.67 in 1998, 1997
and 1996, respectively.
The fair values of the Company's stock options, as disclosed above, were
estimated as of the date of grant using a Black-Scholes option pricing model
with the following weighted average assumptions for 1998, 1997 and 1996:
risk-free interest rates ranged from 4.75% to 5.25%; a dividend yield of 1.0%;
volatility factors of the expected market price of the Company's common stock
ranged from 0.32 to 0.43; and a weighted average expected life of the options of
6 years. 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.
15
<PAGE> 23
Intermet Corporation
Notes to Consolidated Financial Statements (continued)
8. Shareholders' Equity (continued)
The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options that 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.
A summary of the Company's stock option activity for the three years ended
December 31, 1998 is 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
Outstanding at December 31, 1997 1,479,500 $ 9.87
Granted 305,750 18.11 $18.06-$19.38
Exercised (576,450) 8.79 5.69-12.75
Forfeited (24,750) 13.74 9.00-17.00
---------
Outstanding at December 31, 1998 1,184,050 $13.64
=========
Exercisable at December 31, 1998 557,050 $11.14
Weighted average fair value of
options granted during 1998 $7.91
</TABLE>
Exercise prices for options outstanding as of December 31, 1998 ranged
principally from $9.00 to $18.06. The weighted-average remaining contractual
life of those options is 7.4 years.
16
<PAGE> 24
Intermet Corporation
Notes to Consolidated Financial Statements (continued)
8. 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 $872,000, $827,000 and $665,000 were expensed in 1998, 1997 and
1996, 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.
9. 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, 1998 are as follows (in thousands of dollars):
<TABLE>
<S> <C>
1999 $4,126
2000 3,439
2001 2,467
2002 1,963
2003 812
Thereafter 517
-------
Total $13,324
=======
</TABLE>
17
<PAGE> 25
Intermet Corporation
Notes to Consolidated Financial Statements (continued)
9. Commitments and Contingencies (continued)
Total rental expense under operating leases aggregated $5,255,000, $5,445,000
and $2,833,000 in 1998, 1997 and 1996, respectively.
At December 31, 1998 the Company had commitments to purchase operating equipment
of approximately $8,176,000 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 recorded reserves to cover estimated future
environmental expenditures. Environmental reserves at December 31, 1998 and 1997
approximated $4,633,000 and $5,477,000 respectively. The Company has initiated
corrective action and/or preventive 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, 1998.
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.
18
<PAGE> 26
Intermet Corporation
Notes to Consolidated Financial Statements (continued)
10. 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. 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. The
following disclosures are provided in accordance with SFAS No. 132, "Employers'
Disclosures about Pensions and Other Postretirement Benefits", which became
effective in 1998:
<TABLE>
<CAPTION>
Years ended December 31,
Pension Benefits Other Benefits
---------------- --------------
1998 1997 1998 1997
---- ---- ---- ----
(in thousands of dollars)
<S> <C> <C> <C> <C>
Change in benefit obligation
Benefit obligation at beginning of year $ 55,246 $ 50,949 $ 35,191 $ 38,952
Service cost 1,204 1,232 707 949
Interest cost 4,044 3,855 2,490 2,924
Amendments 772 -- (358) --
Actuarial (gains)/losses 3,865 1,969 3,133 (4,514)
Acquisition -- -- 183 --
Benefits paid (3,204) (2,759) (3,395) (3,120)
-------- -------- -------- --------
Benefit obligation at end of year $ 61,927 $ 55,246 $ 37,951 $ 35,191
Change in plan assets
Fair value of plan assets at beginning of year $ 58,962 $ 47,435
Actual return on plan assets 3,315 10,198
Company contributions 1,945 4,088
Benefits paid (3,203) (2,759)
-------- --------
Fair value of plan assets at end of year $ 61,019 $ 58,962
Funded status of the plan (under-funded) ($ 908) $ 3,716 ($37,951) ($35,191)
Unrecognized net actuarial loss/(gain) 1,504 (4,110) (11,038) (15,463)
Unrecognized transition obligation 171 224 -- --
Unrecognized prior service cost 2,348 1,809 (90) 240
-------- -------- -------- --------
Prepaid (accrued) benefit cost $ 3,115 $ 1,639 ($49,079) ($50,414)
</TABLE>
19
<PAGE> 27
Intermet Corporation
Notes to Consolidated Financial Statements (continued)
10. Retirement Plans and Benefits (continued)
The discount rate used in determining the actuarial present value of the
projected benefit obligations was 7.125% in 1998 and 7.5% in 1997. The expected
long-term rate of return on assets used in determining net pension expense was
9.0% to 9.5% in 1998 and 9.0% in 1997. Plan assets consist of publicly traded
stocks and bonds, cash equivalents and insurance contracts.
The assumed health care cost trend rate used in measuring the accumulated
post-retirement benefit obligation was 7.0% to 10.5% in 1998, 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 1998, declining to 5.5% in 1999.
<TABLE>
<CAPTION>
Years ended December 31,
Pension Benefits Other Benefits
---------------- --------------
Components of net periodic cost: 1998 1997 1996 1998 1997 1996
---- ---- ---- ---- ---- ----
(in thousands of dollars)
<S> <C> <C> <C> <C> <C> <C>
Service cost $1,204 $1,232 $842 $707 $949 $1,073
Interest cost 4,044 3,855 1,805 2,490 2,924 2,425
Expected return on plan assets (5,062) (10,198) (3,886) - - -
Amortization of prior service cost and
net transition obligation 283 6,264 2,494 (508) 11 -
Recognized net actuarial gain - - - (813) (783) (496)
------ ------ ------ ------ ------ ------
Benefit cost $ 469 $1,153 $1,255 $1,876 $3,101 $3,002
====== ====== ====== ====== ====== ======
</TABLE>
The assumed health care cost trend rate has a significant effect on the amounts
reported. A one-percentage-point change in the assumed health care cost trend
rate would have the following effects:
<TABLE>
<CAPTION>
One Percentage One Percentage
Point Increase Point Decrease
---------------------- -----------------------
(in thousands of dollars)
<S> <C> <C>
Effect on total service and interest cost
components in 1998 $278 $264
Effect on postretirement benefit obligation as of
December 31, 1998 3,034 2,474
</TABLE>
20
<PAGE> 28
Intermet Corporation
Notes to Consolidated Financial Statements (continued)
10. Retirement Plans and Benefits (continued)
Amounts recognized for pension benefits in the consolidated balance sheets
consist of:
<TABLE>
<CAPTION>
December 31,
1998 1997
---------------- --------------
(in thousands of dollars)
<S> <C> <C>
Prepaid benefit cost $3,115 $1,639
Accrued benefit liability (3,910) (238)
Intangible asset 2,519 219
Accumulated other comprehensive income (pretax) 1,391 19
------ ------
Net amount recognized $3,115 $1,639
====== ======
</TABLE>
Because the Company aggregates the disclosures for its pension plans with plans
with accumulated benefit obligations in excess of plan assets (underfunded
plans), the following additional disclosures are applicable to the Company's
pension plans with accumulated benefit obligations in excess of plan assets, in
thousands of dollars, as of December 31, 1998:
<TABLE>
<S> <C>
Projected benefit obligation $35,619
Accumulated benefit obligation 35,619
Fair value of plan assets 32,408
</TABLE>
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 $1,034,000, $1,173,000 and $724,000 in 1998,
1997 and 1996, 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 $1,602,000,
$1,297,000 and $991,000 in 1998, 1997 and 1996, respectively.
21
<PAGE> 29
Intermet Corporation
Notes to Consolidated Financial Statements (continued)
11. Income Taxes
The provision for income taxes consists of the following (in thousands of
dollars):
<TABLE>
<CAPTION>
Years ended December 31,
1998 1997 1996
----- ---- ----
<S> <C> <C> <C>
Current:
Federal $22,317 $13,489 $ 6,642
State 3,555 2,811 2,448
Foreign 733 7,653 8,443
------- ------- -------
26,605 23,953 17,533
Deferred:
Federal (5,651) (1,769) (5,280)
State (467) (71) (1,748)
Foreign 3,712 (737) 664
------- ------- -------
(2,406) (2,577) (6,364)
======= ======= =======
Totals $24,199 $21,376 $11,169
======= ======= =======
</TABLE>
Income taxes paid were approximately $15,245,000, $2,931,000 and $17,380,000 in
1998, 1997 and 1996, respectively.
The provision for income taxes differs from the amount computed using the
statutory U.S. federal income tax rate for the following reasons (in thousands
of dollars):
<TABLE>
<CAPTION>
Years ended December 31,
1998 1997 1996
<S> <C> <C> <C>
Provision for income taxes at U.S. statutory
rate $22,816 $21,486 $19,013
(Income) loss with no tax effect (267) 1,160 -
Difference between U.S. and foreign tax rates
84 1,561 3,734
Utilization of NOL and credit carryforwards
- (4,862) (2,137)
State income taxes, net of federal income
tax benefits 2,030 1,781 455
Reduction in deferred valuation allowance
- (1,246) (11,513)
Other (464) 1,496 1,617
------- ------- -------
Totals $24,199 $21,376 $11,169
======= ======= =======
</TABLE>
22
<PAGE> 30
Intermet Corporation
Notes to Consolidated Financial Statements (continued)
11. Income Taxes (continued)
The tax effects of temporary differences and carryforwards that give rise to
deferred income tax assets (liabilities) at December 31, 1998 and 1997 are as
follows (in thousands of dollars):
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Compensation and benefit items, primarily related to SFAS
No. 106 $ 22,896 $ 23,364
Operating loss, capital loss, foreign tax credit and AMT
credit carryforwards 23,092 17,403
Other temporary differences 7,929 10,290
------- -------
Gross deferred tax assets 53,917 51,057
Depreciation and related items (19,935) (20,729)
Other temporary differences (13,590) (12,048)
------- -------
Gross deferred tax liabilities (33,525) (32,777)
Net deferred tax asset 20,392 18,280
Valuation allowance (16,240) (11,722)
------- -------
Net deferred income taxes $ 4,152 $ 6,558
======= =======
</TABLE>
At December 31, 1998, $6,455,000 of the Company's NOLs related to the
acquisition of VEGU (see Note 4 - Acquisitions and Dispositions). These NOLs
have no expiration date but are subject to certain statutory limitations. For
financial reporting purposes, a valuation allowance of $4,518,000 has been
recognized to offset the deferred tax asset related to this carryforward.
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 the entire deferred tax asset will not be
realized. Excluding VEGU, the Company did not change its valuation allowance in
1998. In 1997 the Company reduced the valuation allowance by $1,246,000 due to
the increased viability of anticipated future income. The Company has provided a
valuation allowance in the amount of $16,240,000, including VEGU, at December
31, 1998 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 $16,637,000 expire in various amounts between 1999 and 2010.
German loss carryforwards with a value of approximately $6,455,000 have an
unlimited life.
These amounts are included in the consolidated balance sheets as follows (in
thousands of dollars):
<TABLE>
<CAPTION>
December 31,
1998 1997
---- ----
<S> <C> <C>
Current assets $2,829 $3,244
Other noncurrent assets 4,449 4,741
Other noncurrent liabilities (3,126) (1,427)
------ ------
Totals $4,152 $6,558
====== ======
</TABLE>
23
<PAGE> 31
Intermet Corporation
Notes to Consolidated Financial Statements (continued)
12. Geographic Area and Major Customer Information
All sales are to unaffiliated customers. Revenue and income amounts for the
three years ended December 31, 1998, and identifiable assets at the end of each
year, were as follows for North American, principally United States, and
European, principally Germany, source operations:
<TABLE>
<CAPTION>
At and for the years ended December 31,
1998 1997 1996
---- ---- ----
(in thousands of dollars)
<S> <C> <C> <C>
Net sales:
North America $733,889 $723,644 $441,942
Europe 107,709 90,085 92,536
Operating profit:
North America 61,413 59,466 38,338
Europe 14,236 15,732 17,765
Income before income taxes:
North America 53,239 50,972 36,960
Europe 11,949 10,417 17,362
Assets:
North America 517,515 453,992 469,359
Europe 66,500 85,454 63,003
</TABLE>
Net sales to customers exceeding 10% of consolidated net sales in 1998, 1997 or
1996 were as follows (as a percentage of consolidated net sales):
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Customer:
DaimlerChrysler 20% 18% 23%
Ford 18% 18% 19%
General Motors 6% 8% 12%
</TABLE>
Ford sales include sales to Ford (10%) and Ford Visteon (8%) and GM sales
include sales to GM (2%) and Delphi (4%). Credit is extended based on an
evaluation of the customer's financial condition, and collateral is generally
not required. Credit losses are provided for in the financial statements and
consistently have been within management's expectation.
24
<PAGE> 32
Intermet Corporation
Notes to Consolidated Financial Statements (continued)
13. 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 and unearned restricted stock.
<TABLE>
<CAPTION>
Years ended December 31,
1998 1997 1996
---- ---- ----
(in thousands, except per share data)
<S> <C> <C> <C>
Numerator:
Net income $40,989 $40,013 $43,153
Denominator:
Denominator for basic earnings per
share - weighted average shares 25,610 25,211 25,067
Effect of dilutive securities:
Employee stock options and unearned
restricted stock 337 572 527
--- --- ---
Denominator for diluted earnings per share
- adjusted weighted average shares and
assumed conversions 25,947 25,783 25,594
====== ====== ======
Basic earnings per share $1.60 $1.59 $1.72
===== ===== =====
Diluted earnings per share $1.58 $1.55 $1.69
===== ===== =====
</TABLE>
25
<PAGE> 33
Intermet Corporation
Notes to Consolidated Financial Statements (continued)
14. 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>
1998
Net sales $224,033 $219,857 $188,808 $208,900
Gross profit 29,975 31,500 22,494 26,772
Net income 11,271 12,337 9,314 8,067
Net income per common share - Basic 0.44 0.48 0.36 0.31
Net income per common share - Diluted 0.43 0.47 0.36 0.31
Share prices (NASDAQ):
High 22.5000 23.7500 20.1880 17.1250
Low 16.0000 16.8750 12.6250 8.5000
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
</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.
26
<PAGE> 1
Exhibit 21 Subsidiaries of Intermet
<TABLE>
<CAPTION>
NAME OF SUBSIDIARY INCORPORATION OR PLACE OF ORGANIZATION
<S> <C>
Alexander City Casting Company, Inc. Alabama
Cast-Matic Corporation Michigan
Columbus Foundry, L.P. Delaware
Columbus Neunkirchen Foundry, GmbH Germany
Frisby P.M.C., Incorporated Illinois
Intermet International, Inc. Georgia
Iowa Mold Tooling Co., Inc. Iowa
Ironton Iron, Inc. Ohio
Lower Basin, Inc. Delaware
Lynchburg Foundry Company Virginia
Northern Castings Corporation Georgia
Sudbury, Inc. Delaware
SUDM, Inc. Michigan
Tool Products, Inc. Delaware
Transnational Indemnity Company Vermont
Vorpommersche Eisenwerke GmbH Germany
UeckermUnde
Wagner Castings Company Delaware
Wagner Havana, Inc. Delaware
</TABLE>
Intermet wholly owns the above subsidiaries directly or indirectly, unless
otherwise indicated.
<PAGE> 1
Exhibit 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 28, 1999, included in the
1998 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 Director's
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 28, 1999, 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
Detroit, Michigan
March 29, 1999
<PAGE> 1
Exhibit 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned constitute and
appoint Doretha J. Christoph and Walter T. Knollenberg, and each of them, his
attorney to do any and all acts which said attorney may deem necessary or
advisable to enable Intermet Corporation (the "Company") to comply with the
Securities Exchange Act of 1934, as amended (the "Act"), and the rules,
regulations and requirements of the Securities and Exchange Commission
thereunder, in connection with the filing under the Act of the Company's annual
report for the year ended December 31, 1998, including, but not limited to, the
power and authority to sign in the name and on the behalf of the undersigned, in
any and all capacities in which the signature of the undersigned would be
appropriate, an annual report on Form 10-K and any and all amendments thereto,
for filing with the Securities and Exchange Commission under the Act, and
generally to do and perform all things necessary to be done in the premises as
fully and effectually in all respects as the undersigned could do if personally
present.
IN WITNESS WHEREOF, each of the undersigned hereby execute this power of
attorney as of the date set forth below.
Dated: February 19, 1999
-----------------
/s/ John P. Crecine /s/ John Doddridge
- ------------------- ------------------
John P. Crecine John Doddridge
/s/ Norman F. Ehlers /s/ Wilfred E. Gross, Jr.
- -------------------- -------------------------
Norman F. Ehlers Wilfred E. Gross, Jr.
/s/ A. Wayne Hardy /s/ John R. Horne
- ------------------ -----------------
A. Wayne Hardy John R. Horne
/s/ Thomas H. Jeffs, II /s/ Harold C. McKenzie, Jr.
- ----------------------- ---------------------------
Thomas H. Jeffs, II Harold C. McKenzie, Jr.
/s/ Byron O. Pond, Jr. /s/ John H. Reed
- ---------------------- ----------------
Byron O. Pond, Jr. John H. Reed
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-1-1998
<PERIOD-END> DEC-31-1998
<CASH> 5,848
<SECURITIES> 0
<RECEIVABLES> 110,811
<ALLOWANCES> 5,133
<INVENTORY> 65,898
<CURRENT-ASSETS> 197,430
<PP&E> 485,082
<DEPRECIATION> 240,227
<TOTAL-ASSETS> 584,015
<CURRENT-LIABILITIES> 148,538
<BONDS> 0
0
0
<COMMON> 2,583
<OTHER-SE> 214,422
<TOTAL-LIABILITY-AND-EQUITY> 584,015
<SALES> 841,598
<TOTAL-REVENUES> 841,598
<CGS> 730,857
<TOTAL-COSTS> 765,949
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11,305
<INCOME-PRETAX> 65,188
<INCOME-TAX> 24,199
<INCOME-CONTINUING> 40,989
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 40,989
<EPS-PRIMARY> 1.60
<EPS-DILUTED> 1.58
</TABLE>
