<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 0-17028
IRONTON IRON, INC.
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(Exact name of registrant as specified in its charter)
Ohio 31-117407
- ---------------------------- -------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or Identification No.)
organization)
5445 Corporate Drive, Suite 200, Troy, Michigan 48098
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(Address of principal executive offices and zip code)
(810) 952-2500
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
Shares outstanding of each of the issuer's classes of common
stock at July 26, 1996: 23,000 shares of Common Stock, no
par value.
<PAGE> 2
PART I - Financial Information
ITEM 1. Financial Statements
Ironton Iron, Inc.
Interim Condensed Balance Sheets
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
--------------------------
(in thousands of dollars)
<S> <C> <C>
ASSETS
Current assets:
Cash $ 149 $ 290
Accounts receivable:
Trade 7,234 6,128
Other 617 630
Inventories 1,683 1,765
Other current assets 65 42
-------- --------
Total current assets 9,748 8,855
Property, plant and equipment:
Land 295 295
Building and improvements 5,200 5,125
Machinery and equipment 26,334 26,078
Construction in progress 1,317 1,369
-------- --------
33,146 32,867
Less accumulated depreciation 15,546 13,707
-------- --------
Net property, plant & equipment 17,600 19,160
Other noncurrent assets 15 26
-------- --------
$ 27,363 $ 28,041
======== ========
</TABLE>
See accompanying notes.
<PAGE> 3
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
--------------------------
(in thousands of dollars)
LIABILITIES AND NET SHAREHOLDER'S DEFICIENCY
<S> <C> <C>
Current Liabilities:
Accounts payable $ 3,695 $ 3,047
Accrued wages and benefits 1,237 857
Accrued workers' compensation 299 297
Other accrued liabilities 1,227 1,028
-------- --------
Total current liabilities 6,458 5,229
Due to affiliates 28,592 30,078
Redeemable preferred stock 3,213 3,155
Net shareholder's deficiency:
Common stock 2,000 2,000
Additional paid-in capital 49,523 49,523
Accumulated deficit (62,423) (61,944)
-------- --------
Net shareholder's deficiency (10,900) (10,421)
$ 27,363 $ 28,041
======== ========
</TABLE>
See accompanying Notes.
<PAGE> 4
Ironton Iron, Inc.
Interim Condensed Consolidated Statements of Income
<TABLE>
<CAPTION>
Three months ended Six months ended
----------------------- -----------------------
June 30, July 2, June 30, July 2,
1996 1995 1996 1995
----------------------- -----------------------
<S> <C> <C> <C> <C>
Net sales $16,897 $20,822 $32,213 $41,054
Cost of Sales 16,074 18,082 31,178 36,854
----------------------- -----------------------
Gross margin 823 2,740 1,035 4,200
Corporate charges from parent
companies 596 793 1,192 1,767
----------------------- -----------------------
Operating profit (loss) 227 1,947 (157) 2,433
Interest income - - - -
Interest expense (144) (394) (264) (838)
----------------------- -----------------------
Income (loss) before income taxes 83 1,553 (421) 1,595
Provision for income taxes - - - -
----------------------- -----------------------
Net income (loss) $ 83 $ 1,553 $ (421) $ 1,595
======================= =======================
</TABLE>
See accompanying notes.
<PAGE> 5
Ironton Iron, Inc.
Interim Condensed Statements of Cash Flow
<TABLE>
<CAPTION>
Six months ended
-----------------------
June 30, July 2,
1996 1995
-----------------------
(In thousands of dollars)
<S> <C> <C>
Operating activities:
Net income (loss) $ (421) $ 1,595
Adjustments to reconcile net income (Loss) to
cash used in operating activities:
Depreciation and amortization 1,850 1,815
Changes in assets and liabilities:
Accounts receivable (1,093) (1,580)
Inventories 82 (462)
Accounts payable and accrued liabilities 1,229 (1,240)
Other assets and liabilities (23) (77)
-----------------------
Net cash provided by (used in) operating activities 1,624 51
-----------------------
Investment activities:
Additions to property, plant and equipment (279) (1,250)
Other 0 41
-----------------------
Net cash used in investment activities (279) (1,209)
-----------------------
Financing activities:
(Decrease)Increase due to affiliates (1,486) 945
-----------------------
Net cash provided by (used in) financing activities (1,486) 945
-----------------------
Net decrease in cash and cash equivalents (141) (213)
Cash at beginning of period 290 699
-----------------------
Cash at end of period $ 149 $ 486
=======================
</TABLE>
See accompanying notes.
<PAGE> 6
Ironton Iron, Inc.
Notes to Interim Condensed Financial Statements
June 30, 1996
1. The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for
a fair presentation have been included. Operating results for the three month
and six month periods ended June 30, 1996 are not necessarily indicative of the
results that may be expected for the year ended December 31, 1996. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Registrant Company and Subsidiaries' annual report on
Form 10-K for the year ended December 31, 1995.
2. Inventories consist of the following (in thousands of dollars):
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
--------------------------
<S> <C> <C>
Finished goods $ 501 $ 146
Work in process 606 526
Raw materials 301 490
Supplies and patterns 275 603
-----------------------
$ 1,683 $ 1,765
=======================
</TABLE>
3. Because all common stock of the Company is owned by Intermet Corporation,
no income or loss per common share information is included herein.
<PAGE> 7
Ironton Iron, Inc.
Notes to Interim Condensed Financial Statements
June 30, 1996
4. In March 1994, the Company entered negotiations with the Ohio Attorney
General's office concerning past violations of Ohio water pollution laws and
regulations. In November 1995, the Company agreed to pay the State of Ohio
$285,000 to settle this and all other water discharge violations. The Company
has accrued this liability at December 31, 1995 and June 30, 1996 and expects
to pay this in 1996 on entry of a consent decree by the court. In addition,
the Company has submitted a plan to the Ohio EPA to bring its facility into
compliance with all applicable air emission requirements, after that agency had
advised management of several violations of air pollution regulations. It is
not known whether the agency will eventually demand the payment of civil
penalties for these past violations. However, management believes that such
penalties, if any, will not be material to the financial condition of the
Company.
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Material Changes in Financial Condition
The Company's financial condition has deteriorated since fourth quarter 1995
due to a much lower sales level. First half sales of $32.2 million is down
$8.8 million or (22%) from 1995. Second quarter sales of $16.9 million is down
$3.9 million or 19% from 1995. The Company remains dependent on its parent
company Intermet Corporation, for continued financial support.
Material Changes in Results of Operations
During most of 1995 the Company operated at near capacity. However, in the
first half of 1996 plant operations experienced reduced sales due to the
phase-out of the Ford I-beam program and generally lower OEM production. The
Ford I-beam, a major product line, began phase-out of production in the fourth
quarter 1995 as a result of a model change. Production requirements for this
product will decline significantly during the last half of 1996. The Company
continues to pursue replacement business.
Gross margin declined from 10.2% in 1995 to 3.2% in the first half of 1996.
Corporate charges have declined due to the lower costs incurred by the parent
company. All of the above led to the Company reporting a 1996 year-to-date
loss compared to a profit in 1995. Cumulative losses since 1988, when the
Company was acquired by Intermet, are approximately $62 million.
There is no income tax provision in 1995 or 1996 because on a separate income
tax return basis the Company has utilized available net operating losses to
offset any taxes which would be required.
<PAGE> 9
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Company has entered into negotiations with the Office of the Ohio
Attorney General with respect to certain past violations by the Company of Ohio
water pollution laws and regulations. The Attorney General's office has
advised the Company that it could avoid litigation with respect to such
violations by entering into a consent order. The parties have tentatively
agreed to a penalty of $285,000 and documentation to effectuate the settlement
is being prepared.
Item 2. Changes in Securities
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibit is filed as a part of this report:
Exhibit 27 - Financial Data Schedule
(b) No reports on Form 8-K were filed by the Company for
the quarter ended June 30, 1996.
<PAGE> 10
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
IRONTON IRON, INC.
By: /s/Doretha J. Christoph
---------------------------------
Doretha J. Christoph
Vice President of Finance
(Principal Financial Officer)
Date: August 8, 1996
<PAGE> 11
EXHIBIT INDEX
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------- ----------- ------------
27 -- Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 149
<SECURITIES> 0
<RECEIVABLES> 7,234
<ALLOWANCES> 0
<INVENTORY> 1,683
<CURRENT-ASSETS> 9,748
<PP&E> 33,146
<DEPRECIATION> (15,546)
<TOTAL-ASSETS> 27,363
<CURRENT-LIABILITIES> 6,458
<BONDS> 0
0
3,213
<COMMON> 2,000
<OTHER-SE> (12,900)
<TOTAL-LIABILITY-AND-EQUITY> 27,363
<SALES> 32,213
<TOTAL-REVENUES> 32,213
<CGS> 31,178
<TOTAL-COSTS> 31,178
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 264
<INCOME-PRETAX> (421)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (421)
<EPS-PRIMARY> 0.00
<EPS-DILUTED> 0.00
</TABLE>
