FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the period ended March 31, 1996
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to ______________
Commission File Number 0-17028
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 May 13, 1996: 23,000 shares of Common Stock, no
par value.<PAGE>
PART I - Financial Information
ITEM 1. Financial Statements
Ironton Iron, Inc.
Interim Condensed Balance Sheets
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
----------------------------
(in thousands of dollars)
<S> <C> <C>
ASSETS
Current assets:
Cash $ 105 $ 290
Accounts receivable:
Trade 7,166 6,128
Other 815 630
Inventories 1,819 1,765
Other current assets 64 42
------ -------
Total current assets 9,969 8,855
Property, plant and equipment:
Land 295 295
Building and improvements 5,200 5,125
Machinery and equipment 26,319 26,078
Construction in progress 1,105 1,369
------- --------
32,919 32,867
Less accumulated depreciation 14,621 13,707
------- --------
18,298 19,160
Other assets 17 26
------- -------
$28,284 $28,041
======= =======
</TABLE>
See accompanying notes.<PAGE>
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
---------------------------
(in thousands of dollars)
LIABILITIES AND NET SHAREHOLDER'S DEFICIENCY
<S> <C> <C>
Current Liabilities:
Accounts payable $ 3,735 $ 3,047
Accrued wages and benefits 1,243 857
Accrued workers' compensation 236 297
Other accrued liabilities 1,164 1,028
--------- --------
Total current liabilities 6,378 5,229
Due to affiliates 29,676 30,078
Redeemable preferred stock 3,184 3,155
Net shareholder's deficiency:
Common stock 2,000 2,000
Additional paid-in capital 49,523 49,523
Accumulated deficit (62,477) (61,944)
--------- --------
Net shareholder's deficiency (10,954) (10,421)
--------- --------
$ 28,284 $ 28,041
========= ========
</TABLE>
See accompanying Notes.<PAGE>
Ironton Iron, Inc.
Interim Condensed Consolidated Statements of Income
<TABLE>
<CAPTION>
Three months ended
------------------
March 31, April 2,
1996 1995
--------- -------
<S> <C> <C>
Net sales $15,316 $20,232
Cost of Sales 15,104 18,772
------- -------
Gross margin 212 1,460
Corporate charges from parent
companies 596 974
------- -------
Operating profit (loss) (384) 486
Interest expense (120) (444)
Income (loss) before income taxes (504) 42
Provision for income taxes -- --
------- -------
Net income (loss) $ (504) $ 42
======= =======
</TABLE>
See accompanying notes.<PAGE>
Ironton Iron, Inc.
Interim Condensed Statements of Cash Flows
<TABLE>
<CAPTION>
Three months ended
-------------------
March 31, April 2,
1996 1995
-------------------------
(In thousands of dollars)
<S> <C> <C>
Operating activities:
Net income (loss) $ (504) $ 42
Adjustments to reconcile net income (Loss) to
cash used in operating activities:
Depreciation and amortization 923 936
Changes in assets and liabilities:
Accounts receivable (1,223) (1,357)
Inventories (54) (862)
Accounts payable and accrued liabilities 1,149 (301)
Other assets and liabilities (22) (107)
------- --------
Net cash provided by (used in) operating activities 269 (1,649)
------- --------
Investment activities:
Additions to property, plant and equipment (52) (714)
Other 0 15
------- --------
Net cash used in investment activities (52) (699)
------- --------
Financing activities:
Increase due to affiliates (402) 2,339
------- --------
Net cash provided by (used in) financing activities (402) 2,339
------- --------
Net decrease in cash (185) (9)
------- --------
Cash at beginning of period 290 699
------- --------
Cash at end of period $ 105 $ 690
======= ========
</TABLE>
See accompanying notes.<PAGE>
Ironton Iron, Inc.
Notes to Interim Condensed Financial Statements
March 31, 1996
1. The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally
accepted accounting principles for interim financial information
and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted
accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation
have been included. Operating results for the three month period
ended April 2, 1995 and March 31, 1996 are not necessarily
indicative of the results that may be expected for the year ended
December 31, 1996. For further information, refer to the
consolidated financial statements and footnotes thereto included
in the Registrant Company and Subsidiaries annual report on Form
10-K for the year ended December 31, 1995.
2. Inventories consist of the following (in thousands of
dollars):
March 31, December 31,
1996 1995
-------- -----------
Finished goods $ 443 $ 146
Work in process 929 526
Raw materials 174 490
Supplies and patterns 273 603
-------- ------
$ 1,819 $1,765
======== ======
3. Because all common stock of the Company is owned by Intermet
Foundries, Inc., (which was dissolved and liquidated into
Intermet Corporation on March 31, 1996) no income or loss per
common share information is included herein.<PAGE>
Ironton Iron, Inc.
Notes to Interim Condensed Financial Statements
March 31, 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 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>
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 quarter
sales of $15.3 million is down $4.9 million or (24%) 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 quarter 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 profit declined from 7.3% in 1995 to 1.4% in the first
quarter 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 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>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
The Registrant has entered into negotiations with the Office
of the Ohio Attorney General with respect to certain past by the
Registrant of Ohio water pollution laws and regulations. The
Attorney General's office has advised the Registrant 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) None<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
IRONTON IRON, INC.
By: /s/ Doretha J. Christoph
Doretha J. Christoph
Vice President of Finance
(Principal Financial Officer)
Date: May 13, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000771176
<NAME> IRONTON IRON, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 105
<SECURITIES> 0
<RECEIVABLES> 7,981
<ALLOWANCES> 0
<INVENTORY> 1,819
<CURRENT-ASSETS> 9,969
<PP&E> 32,919
<DEPRECIATION> 14,621
<TOTAL-ASSETS> 28,284
<CURRENT-LIABILITIES> 6,378
<BONDS> 0
0
3,184
<COMMON> 2,000
<OTHER-SE> (12,954)
<TOTAL-LIABILITY-AND-EQUITY> 28,284
<SALES> 15,316
<TOTAL-REVENUES> 15,315
<CGS> 15,104
<TOTAL-COSTS> 15,104
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 120
<INCOME-PRETAX> (504)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (504)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
