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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

     
[ü]   Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended September 30, 2003, 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.
(Exact name of registrant as specified in its charter)

     
Ohio   31-1117407
(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)

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 whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).  Yes [X]   No [   ]

At November 13, 2003 there were 23,000 shares of common stock, no par value, outstanding.

 


TABLE OF CONTENTS

PART I — FINANCIAL INFORMATION
Item 1. Financial Statements
Statements of Net Liabilities in Liquidation
Statement of Deficiency
Notes to Interim Condensed Financial Statements
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Item 4. Controls and Procedures
PART II — OTHER INFORMATION
Item 1. Legal Proceedings
Item 6. Exhibits and Reports on Form 8-K
Signature
Exhibit Index
Section 302 Certification of CEO and CFO
Section 906 Certification of CEO and CFO


Table of Contents

TABLE OF CONTENTS

         
PART I. FINANCIAL INFORMATION
Item 1.   Financial Statements
    Statements of Net Liabilities in Liquidation
    Statement of Deficiency
    Notes to Interim Condensed Financial Statements
Item 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 3.   Quantitative and Qualitative Disclosure about Market Risk
Item 4.   Controls and Procedures
PART II. OTHER INFORMATION
Item 1.   Legal Proceedings
Item 6.   Exhibits and Reports on Form 8-K
Signature        
Exhibit Index        
Exhibit 31       Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Exhibit 32       Certification of Periodic Financial Report by the Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

Ironton Iron, Inc.
(In Process of Orderly Shutdown)

Statements of Net Liabilities in Liquidation
(in thousands of dollars)

                   
      September 30,     December 31,  
      2003     2002  
     
   
 
      (Unaudited)          
Assets:
               
 
Assets held for sale
  $ 856     $ 856  
Liabilities:
               
 
Accounts payable
          12  
 
Accrued liabilities
    134       215  
 
Due to affiliates
    73,833       73,569  
 
 
 
   
 
Total liabilities
    73,967       73,796  
 
 
 
   
 
Net liabilities in liquidation
  $ 73,111     $ 72,940  
 
 
   
 

See accompanying notes.

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Ironton Iron, Inc.

(In Process of Orderly Shutdown)

Statement of Deficiency
(in thousands of dollars)

           
      Nine Months Ended  
      September 30, 2003  
     
 
      (Unaudited)  
Net liabilities in liquidation at December 31, 2002
  $ 72,940  
 
Changes in net liabilities in liquidation
    171  
 
 
 
Net liabilities in liquidation at September 30, 2003
  $ 73,111  
 
 
 

See accompanying notes.

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Ironton Iron, Inc.
(In Process of Orderly Shutdown)

Notes to Interim Condensed Financial Statements

September 30, 2003 (Unaudited)

1. Summary of Significant Accounting Policies

Background and Summary of Significant Developments

Ironton Iron, Inc. (“Ironton”) was engaged in the production and sale of ductile iron castings, primarily for the transportation industry. INTERMET Corporation (“INTERMET”) owns all of the issued and outstanding common stock of Ironton.

During the fourth quarter of 1999, INTERMET’s board of directors authorized the closure of Ironton. INTERMET’s management approved and announced its plan for the liquidation of Ironton. The decision to close this foundry was the principal reason for treating the assets as held for sale and valuing them at the estimated fair market value. At December 31, 1999 Ironton adopted the liquidation basis of accounting.

During the nine months ended September 30, 2003, we incurred $77,000 for workers’ compensation claims which was accrued previously. We also incurred $171,000 for health insurance which was not accrued previously and was recorded directly to the statement of deficiency. The accrued liabilities of $134,000 at September 30, 2003 are management’s estimate of the remaining costs for workers’ compensation.

The $856,000 included as “Assets held for sale” on the accompanying statements of net liabilities in liquidation at September 30, 2003 is the estimated fair value of the remaining real property and machinery.

Use of Estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States under the liquidation basis of accounting requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Ironton has made significant estimates relative to the valuation of all its assets and liabilities, including, among others, the fair value of assets held for sale. Actual results may differ from amounts estimated.

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Ironton Iron, Inc.
(In Process of Orderly Shutdown)

Notes to Interim Condensed Financial Statements

September 30, 2003 (Unaudited)

1. Summary of Significant Accounting Policies (continued)

Basis of Accounting

Ironton adopted the liquidation basis of accounting as of December 31, 1999. The liquidation basis of accounting requires that assets and liabilities be stated at their estimated fair value. Accordingly, the statements of net liabilities in liquidation reflect assets and liabilities based on their estimated fair values and estimated settlement amounts. Changes in the estimated liquidation value of assets and liabilities are recognized in the statement of deficiencies in the period in which such changes are known. The statements of net liabilities in liquidation have been presented on such basis to provide more relevant information. However, as a result of the adoption of the plan for liquidation, comparative information using accounting principles applicable to a going concern and certain other disclosures are not meaningful and have not been presented in the accompanying financial statements.

2. Related Party Transactions

INTERMET incurs various selling, general and administrative costs principally related to salaries, professional services, aircraft and occupancy, which are allocated to each of its subsidiaries, including Ironton. Based on INTERMET’s decision to close the Ironton foundry in 1999, no allocation has been made for the administrative expenses incurred related to Ironton during 2003.

At September 30, 2003 and December 31, 2002, outstanding aggregate loans from INTERMET to Ironton were $73.8 million and $73.6 million, respectively.

3. Commitments and Contingencies

Ironton is a party to various legal proceedings arising out of the ordinary course of business prior to its shutdown. Ironton does not believe any of these matters will have a material adverse effect on its net liabilities in liquidation.

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Ironton Iron, Inc.
(In Process of Orderly Shutdown)

Notes to Interim Condensed Financial Statements

September 30, 2003 (Unaudited)

4. Guarantee of Debt

On June 13, 2002, INTERMET Corporation, our parent company, issued $175 million of senior notes, which will mature in 2009. The senior notes are guaranteed by certain of INTERMET’s domestic wholly-owned subsidiaries including Ironton (“Combined Guarantor Subsidiaries”). In addition, Ironton, together with the other Combined Guarantor Subsidiaries, is a guarantor of INTERMET’s $225 million revolving credit facility, of which $103.0 million was unused and available as of September 30, 2003. The revolving credit facility is secured by, among others, a pledge and mortgage of Ironton’s assets. The guarantees are unconditional and joint and several.

Certain of INTERMET’s domestic subsidiaries (Intermet International, Inc., Intermet Holding Company, Transnational Indemnity Company, and Western Capital Corporation) and all of INTERMET’s foreign subsidiaries are not guarantors of the senior notes (“Combined Non-Guarantor Subsidiaries”). The Combined Non-Guarantor Subsidiaries had approximately $16.0 million of debt outstanding as of September 30, 2003.

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Forward Looking Statement

The following Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations and Item 3. Quantitative and Qualitative Disclosures about Market Risk 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 Ironton 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:

  the ability of Ironton to liquidate its assets at the stated values,

  the future costs that may be associated with the shutdown, including, but not limited to, environmental remediation work that may be required at Ironton’s property for which Ironton has no accrual,

  other risks detailed from time to time in Ironton’s filings with the Securities and Exchange Commission.

Ironton does not intend to update these forward-looking statements.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Plant Closure and Liquidation Update

Ironton ceased operations on March 31, 2000. As of September 30, 2003, Ironton has $856,000 in fixed assets remaining, consisting of machinery and the real property at which Ironton operated. Management anticipates that the machinery will be sold or transferred to other INTERMET facilities. The demolition of the Ironton facility commenced during the third quarter of 2000 and was completed in third quarter of 2001. Management believes that when the plan for orderly shutdown is complete and that when Ironton’s present and contingent liabilities are satisfied, there will not be any assets available for distribution to its preferred shareholders. Management does not anticipate that any such distributions will be made.

During the nine months ended September 30, 2003, we incurred $77,000 for workers’ compensation claims which was accrued previously. We also incurred $171,000 for health insurance which was not accrued previously and was recorded directly to the statement of deficiency. The accrued liabilities of $134,000 at September 30, 2003 are management’s estimate of the remaining costs for workers’ compensation.

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Assets and Liabilities following the Plan for Orderly Shutdown

As a result of the plan for orderly shutdown, Ironton adopted the liquidation basis of accounting as of December 31, 1999. The liquidation basis of accounting requires that assets and liabilities be stated at their estimated fair values. Accordingly, the statements of net liabilities in liquidation reflects assets and liabilities based on their estimated fair values and estimated settlement amounts at September 30, 2003 and December 31, 2002. The statements of net liabilities in liquidation has been presented on such basis to provide more relevant information. However, as a result of the plan for orderly shutdown, comparative information and certain other disclosures are not meaningful and have not been presented in the Management’s Discussion and Analysis of Financial Condition and Results of Operations and accompanying financial statements.

Ironton’s real property and machinery were segregated on the statements of net liabilities in liquidation as assets held for sale. Ironton did not accrue any additional amounts for asset impairment or shutdown for the nine months ended September 30, 2003. However, Ironton may have additional costs related to asset impairment or shutdown after that date, which would be recorded directly to the statement of deficiency.

Guarantee of Debt

On June 13, 2002, INTERMET Corporation, our parent company, issued $175 million of senior notes, which will mature in 2009. The senior notes are guaranteed by certain of INTERMET’s domestic wholly-owned subsidiaries including Ironton (“Combined Guarantor Subsidiaries”). In addition, Ironton, together with the other Combined Guarantor Subsidiaries, is a guarantor of INTERMET’s $225 million revolving credit facility, of which $103.0 million was unused and available as of September 30, 2003. The revolving credit facility is secured by, among others, a pledge and mortgage of Ironton’s assets. The guarantees are unconditional and joint and several.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

As part of the plan for orderly shutdown, Ironton ceased production on March 31, 2000. Therefore, quantitative and qualitative disclosures about market risk are not applicable.

Item 4. Controls and Procedures

(a)   We have conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, as of September 30, 2003. Based on our evaluation, our principal executive officer and principal financial officer has concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us is recorded, processed, summarized and reported within the required time periods.

(b)   There have been no changes in our internal control over financial reporting during the quarter ended September 30, 2003 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II — OTHER INFORMATION

Item 1. Legal Proceedings

Ironton is a party to various legal proceedings arising out of the ordinary course of its business prior to its shutdown. Ironton does not believe any of these matters will have a material adverse effect on its net liabilities in liquidation.

Item 2. Changes in Securities and Use of Proceeds

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) Exhibits

     The following exhibits are filed with this Report pursuant to Item 601 of Regulation S-K:

     
Exhibit    
Number   Description of Exhibit
31   Certification by the Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32   Certification of Periodic Financial Report by the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(b) Reports on Form 8-K

     No reports on Form 8-K were filed by Ironton during the quarter for which this report is being filed.

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SIGNATURE

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

         
    Ironton Iron, Inc.
         
         
    By:   /s/ Robert E. Belts
        Robert E. Belts
        President of Ironton Iron, Inc.
        (Principal Executive Officer and Principal Financial Officer)
        Vice President of Finance and Chief Financial Officer of
        INTERMET Corporation
         
    Date:   November 13, 2003

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Exhibit    
Number   Description of Exhibit
31   Certification by the Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32   Certification of Periodic Financial Report by the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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