##### Table of Contents



United States
Securities and Exchange Commission
 Washington, D.C. 20549
 Form 10-Q
 þ
    
    Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the quarterly period ended June 30, 2005, or
 o
    
    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
  Georgia
(State or other jurisdiction of
incorporation or organization)
    
    58-1563873
(IRS Employer
Identification No.)5445 Corporate Drive, Suite 200, Troy, Michigan
(Address of principal executive offices)
    
    48098-2683
(Zip code)
 
 o þ
 þ o




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##### Table of Contents



TABLE OF CONTENTS
 Part I  Financial InformationItem 1. Interim Condensed Consolidated Financial Statements (Unaudited)Notes to Interim Condensed Consolidated Financial Statements (Unaudited)Item 2. Managements Discussion and Analysis of Financial Condition and Results of OperationsItem 3. Quantitative and Qualitative Disclosures about Market RisksItem 4. Controls and ProceduresPart II- Other InformationItem 1. Legal ProceedingsItem 4. Submission of Matters to a Vote of Securities HoldersItem 6. ExhibitsSignaturesCertificationsExhibit IndexCertification of Chief Executive Officer pursuant to Section 302Certification of Chief Financial Officer pursuant to Section 302Certification of Periodic Financial Report by the CEO and CFO to Section 906
 2




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##### Table of Contents



Item 1. Financial Statements
   Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,
    
    June 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004(Unaudited)(in thousands of dollars, except per share data)Net sales
    
    $
    215,892
    
    
    $
    217,185
    
    
    $
    450,382
    
    
    $
    427,831Cost of sales
    
    
    204,487
    
    
    
    204,473
    
    
    
    425,632
    
    
    
    401,629Gross profit
    
    
    11,405
    
    
    
    12,712
    
    
    
    24,750
    
    
    
    26,202Selling, general and administrative expenses
    
    
    10,996
    
    
    
    10,778
    
    
    
    22,997
    
    
    
    21,501Reorganization charges
    
    
    9,483
    
    
    
    
    
    
    
    17,683
    
    
    
    Restructuring and impairment charges
    
    
    1,530
    
    
    
    1,165
    
    
    
    2,932
    
    
    
    1,165Operating (loss) profit
    
    
    (10,604
    )
    
    
    769
    
    
    
    (18,862
    )
    
    
    3,536Other expense:Interest expense, net
    
    
    5,846
    
    
    
    7,991
    
    
    
    11,289
    
    
    
    17,193Other expense (income), net
    
    
    874
    
    
    
    146
    
    
    
    525
    
    
    
    (445
    )6,720
    
    
    
    8,137
    
    
    
    11,814
    
    
    
    16,748(Loss) income from continuing operations before
income taxes
    
    
    (17,324
    )
    
    
    (7,368
    )
    
    
    (30,676
    )
    
    
    (13,212
    )Income tax (expense) benefit
    
    
    (1,891
    )
    
    
    2,169
    
    
    
    (5,138
    )
    
    
    872(Loss) income from continuing operations
    
    
    (19,215
    )
    
    
    (5,199
    )
    
    
    (35,814
    )
    
    
    (12,340
    )(Loss) income from discontinued operations, net of tax
    
    
    (593
    )
    
    
    (1,255
    )
    
    
    (984
    )
    
    
    (1,967
    )Net loss
    
    ($
    19,808
    )
    
    ($
    6,454
    )
    
    ($
    36,798
    )
    
    ($
    14,307
    )Net (loss) income per common share:Basic and diluted:(Loss) income from continuing operations
    
    ($
    0.75
    )
    
    ($
    0.20
    )
    
    ($
    1.40
    )
    
    ($
    0.48
    )(Loss) income from discontinued operations, net
of tax
    
    
    (0.02
    )
    
    
    (0.05
    )
    
    
    (0.04
    )
    
    
    (0.08
    )Net loss per share  basic and diluted
    
    ($
    0.77
    )
    
    ($
    0.25
    )
    
    ($
    1.44
    )
    
    ($
    0.56
    )Dividends declared per common share
    
    $
    0.00
    
    
    $
    0.04
    
    
    $
    0.00
    
    
    $
    0.04Weighted average shares outstanding:Basic
    
    
    25,665
    
    
    
    25,599
    
    
    
    25,665
    
    
    
    25,597Diluted
    
    
    25,665
    
    
    
    25,599
    
    
    
    25,665
    
    
    
    25,597
 See accompanying notes.
 3




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##### Table of Contents



Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,
    
    June 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004(Unaudited)(in thousands of dollars)Net loss
    
    ($
    19,808
    )
    
    ($
    6,454
    )
    
    ($
    36,798
    )
    
    ($
    14,307
    )Other comprehensive (loss)
income, net of tax:Foreign currency
translation adjustment
    
    
    (5,966
    )
    
    
    (419
    )
    
    
    (10,350
    )
    
    
    (2,803
    )(5,966
    )
    
    
    (419
    )
    
    
    (10,350
    )
    
    
    (2,803
    )Total comprehensive (loss) income
    
    ($
    25,774
    )
    
    ($
    6,873
    )
    
    ($
    47,148
    )
    
    ($
    17,110
    )
 See accompanying notes.
 4




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##### Table of Contents



June 30,
    
    December 31,2005
    
    2004(Unaudited)(in thousands of dollars)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    10,759
    
    
    $
    11,239Accounts receivable:Trade, less allowance of $6,434 in 2005 and $9,560 in 2004
    
    
    120,957
    
    
    
    108,932Other
    
    
    5,396
    
    
    
    5,593126,353
    
    
    
    114,525Inventories
    
    
    77,440
    
    
    
    71,527Other current assets
    
    
    8,938
    
    
    
    11,410Assets held for sale
    
    
    1,794
    
    
    
    1,837Total current assets
    
    
    225,284
    
    
    
    210,538Property, plant and equipment, net
    
    
    249,986
    
    
    
    276,243Other non-current assets
    
    
    19,840
    
    
    
    26,042Total assets
    
    $
    495,110
    
    
    $
    512,823LIABILITIES AND SHAREHOLDERS DEFICITCurrent liabilities:Accounts payable
    
    $
    26,757
    
    
    $
    29,969Accrued liabilities
    
    
    67,637
    
    
    
    61,830Current portion of retirement benefits
    
    
    11,085
    
    
    
    11,855Short-term lines of credit
    
    
    39,386
    
    
    
    15,975Long-term debt due within one year
    
    
    170,918
    
    
    
    168,180Total current liabilities
    
    
    315,783
    
    
    
    287,809Liabilities subject to compromise
    
    
    250,233
    
    
    
    250,464Non-current liabilities:Long-term debt due after one year
    
    
    2,152
    
    
    
    4,055Retirement benefits
    
    
    74,966
    
    
    
    70,982Other non-current liabilities
    
    
    7,779
    
    
    
    8,168Total non-current liabilities
    
    
    84,897
    
    
    
    83,205Shareholders deficit:Common stock
    
    
    2,606
    
    
    
    2,606Capital in excess of par value
    
    
    57,276
    
    
    
    57,276Retained deficit
    
    
    (203,052
    )
    
    
    (166,254
    )Accumulated other comprehensive loss
    
    
    (12,442
    )
    
    
    (2,092
    )Unearned restricted stock
    
    
    (191
    )
    
    
    (191
    )Total shareholders deficit
    
    
    (155,803
    )
    
    
    (108,655
    )Total liabilities and shareholders deficit
    
    $
    495,110
    
    
    $
    512,823
 See accompanying notes.
 5




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Six Months EndedJune 30,
    
    June 30,2005
    
    2004(Unaudited)(in thousands of dollars)OPERATING ACTIVITIES:Loss from continuing operations
    
    ($
    35,814
    )
    
    ($
    12,340
    )Adjustments to reconcile loss from continuing operations to
cash (used in) provided by operating activities:Depreciation and amortization
    
    
    21,736
    
    
    
    25,309Amortization of debt discount and issuance costs
    
    
    1,914
    
    
    
    2,135Restructuring and impairment charges
    
    
    2,932
    
    
    
    1,165Loss on disposal of property, plant and equipment
    
    
    918
    
    
    
    Change in operating assets and liabilities:Accounts receivable
    
    
    (15,932
    )
    
    
    (18,935
    )Inventories
    
    
    (10,197
    )
    
    
    2,280Accounts payable and current liabilities
    
    
    6,084
    
    
    
    4,475Other assets and liabilities
    
    
    7,326
    
    
    
    (9,653
    )Net cash used in continuing operating activities
    
    
    (21,033
    )
    
    
    (5,564
    )Net cash (used in) provided by discontinued operations
    
    
    (674
    )
    
    
    223Net cash used in by operating activities
    
    
    (21,707
    )
    
    
    (5,341
    )INVESTING ACTIVITIES:Additions to property, plant and equipment
    
    
    (7,494
    )
    
    
    (12,547
    )Proceeds from sale of property, plant and equipment
    
    
    3,385
    
    
    
    379Net cash used in investing activities
    
    
    (4,109
    )
    
    
    (12,168
    )FINANCING ACTIVITIES:Net increase (decrease) in lines of credit
    
    
    1,437
    
    
    
    (49,424
    )Proceeds from term loan
    
    
    
    
    
    
    120,000Proceeds from debtor-in-possession facility
    
    
    26,700
    
    
    
    Repayment of term loan and other debts
    
    
    (1,496
    )
    
    
    (2,661
    )Funding of restricted cash
    
    
    
    
    
    
    (35,819
    )Payments of debt issuance costs
    
    
    
    
    
    
    (3,359
    )Dividends paid
    
    
    
    
    
    
    (2,051
    )Issuance of common stock
    
    
    
    
    
    
    13Net cash provided by financing activities
    
    
    26,641
    
    
    
    26,699Effect of exchange rate changes on cash and cash equivalents
    
    
    (1,305
    )
    
    
    (880
    )Net increase (decrease) in cash and cash equivalents
    
    
    (480
    )
    
    
    8,310Cash and cash equivalents at beginning of period
    
    
    11,239
    
    
    
    1,035Cash and cash equivalents at end of period
    
    $
    10,759
    
    
    $
    9,345
 See accompanying notes.
 6




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1. Basis of Presentation
   INTERMET Corporation, et al.
  Restricted Cash
  7




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##### Table of Contents



1. Basis of Presentation (continued)
 Stock-Based Compensation
  Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,
    
    June 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004(in thousands of dollars, except per share data)Net loss, as reported
    
    ($
    19,808
    )
    
    ($
    6,454
    )
    
    ($
    36,798
    )
    
    ($
    14,307
    )Less: Total stock-based employee
compensation expense determined
under fair value method for all
awards, net of related tax effects
    
    
    (153
    )
    
    
    (267
    )
    
    
    (319
    )
    
    
    (503
    )Pro forma net loss
    
    ($
    19,961
    )
    
    ($
    6,721
    )
    
    ($
    37,117
    )
    
    ($
    14,810
    )Loss per share  basic and diluted:As reported
    
    ($
    0.77
    )
    
    ($
    0.25
    )
    
    ($
    1.44
    )
    
    ($
    0.56
    )Pro forma
    
    ($
    0.78
    )
    
    ($
    0.26
    )
    
    ($
    1.45
    )
    
    ($
    0.58
    )
 2. Balance Sheet Details
 Inventories
  June 30,
    
    December 31,2005
    
    2004Finished goods
    
    $
    22,739
    
    
    $
    24,123Work in process
    
    
    9,422
    
    
    
    9,751Raw materials
    
    
    20,299
    
    
    
    11,947Supplies and patterns
    
    
    24,980
    
    
    
    25,706Total inventories
    
    $
    77,440
    
    
    $
    71,527
 8




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##### Table of Contents



2. Balance Sheet Details (continued)
 Property, Plant and Equipment, Net
  June 30,
    
    December 31,2005
    
    2004Land
    
    $
    5,817
    
    
    $
    6,066Buildings and improvements
    
    
    134,817
    
    
    
    138,459Machinery and equipment
    
    
    532,293
    
    
    
    549,705Construction in progress
    
    
    11,242
    
    
    
    22,695Property, plant and equipment, at cost
    
    
    684,169
    
    
    
    716,925Less: Accumulated depreciation
    
    
    434,183
    
    
    
    440,682Property, plant and equipment, net
    
    $
    249,986
    
    
    $
    276,243
 3. Voluntary Reorganization under Chapter 11 and Administration
 In re: INTERMET Corporation, et
al.
    9




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3. Voluntary Reorganization under Chapter 11 and Administration (continued)
    Liabilities Subject to Compromise
   June 30,
    
    December 31,2005
    
    2004Senior notes payable
    
    $
    177,000
    
    
    $
    177,000Accounts payable
    
    
    62,600
    
    
    
    64,192Interest payable
    
    
    5,000
    
    
    
    5,000Other accrued liabilities
    
    
    5,633
    
    
    
    4,272Subtotal
    
    
    250,233
    
    
    
    250,464Intercompany payables to affiliates
    
    
    173,985
    
    
    
    197,547Total liabilities subject to compromise
    
    $
    424,218
    
    
    $
    448,011
  Debtors Financial Statements
  10




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##### Table of Contents



3. Voluntary Reorganization under Chapter 11 and Administration (continued)
 Debtors Condensed Consolidated Statements of Operations
 Three Months
    
    Six MonthsEnded
    
    EndedJune 30,
    
    June 30,2005
    
    2005Net sales
    
    $
    159,661
    
    
    $
    337,038Cost of sales
    
    
    156,447
    
    
    
    327,515Gross profit
    
    
    3,214
    
    
    
    9,523Operating expenses:Selling, general and administrative
    
    
    7,251
    
    
    
    15,474Management fee income from non-Debtors
    
    
    (217
    )
    
    
    (435
    )Reorganization charges
    
    
    9,483
    
    
    
    17,683Restructuring and impairment charges
    
    
    1,530
    
    
    
    2,932Total operating expenses
    
    
    18,047
    
    
    
    35,654Operating loss
    
    
    (14,833
    )
    
    
    (26,131
    )Other expenses (income):Interest expense, net
    
    
    5,858
    
    
    
    7,035Other expense, net
    
    
    928
    
    
    
    606Net total other expenses
    
    
    6,786
    
    
    
    7,641Loss from continuing operations before income taxes and equity income of
non-Debtor subsidiaries
    
    
    (21,619
    )
    
    
    (33,772
    )Income tax expense
    
    
    478
    
    
    
    911Loss from continuing operations before equity loss of non-Debtor subsidiaries
    
    
    (22,097
    )
    
    
    (34,683
    )Equity income (loss) from continuing operations of non-Debtor subsidiaries
    
    
    2,882
    
    
    
    (1,131
    )Loss from continuing operations
    
    
    (19,215
    )
    
    
    (35,814
    )Loss from discontinued operations, net of tax
    
    
    (593
    )
    
    
    (984
    )Net loss
    
    ($
    19,808
    )
    
    ($
    36,798
    )
 11




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3. Voluntary Reorganization under Chapter 11 and Administration (continued)
 Debtors Condensed Consolidated Balance Sheet
 As of
    
    As ofJune 30,
    
    December 31,2005
    
    2004ASSETSCurrent assets:Cash and cash equivalents
    
    $
    1,975
    
    
    $
    1,729Accounts receivable, net
    
    
    89,385
    
    
    
    78,454Accounts receivable, non-Debtors
    
    
    68,809
    
    
    
    68,897Inventories
    
    
    55,156
    
    
    
    45,856Other current assets
    
    
    8,377
    
    
    
    10,757Assets held for sale
    
    
    1,794
    
    
    
    1,837Total current assets
    
    
    225,496
    
    
    
    207,530Property, plant and equipment, net
    
    
    183,433
    
    
    
    199,378Investment in non-Debtors
    
    
    53,641
    
    
    
    69,399Loan receivable from non-Debtors
    
    
    139,711
    
    
    
    154,821Other noncurrent assets
    
    
    13,365
    
    
    
    19,167Total noncurrent assets
    
    
    390,150
    
    
    
    442,765Total assets
    
    $
    615,646
    
    
    $
    650,295LIABILITIES AND SHAREHOLDERS DEFICITCurrent liabilities:Accounts payable
    
    $
    12,723
    
    
    $
    9,877Accounts payable, non-Debtors
    
    
    (7
    )
    
    
    (3
    )Other accrued liabilities
    
    
    60,993
    
    
    
    61,861Short-term lines of credit
    
    
    29,700
    
    
    
    3,000Long-term debt due within one year
    
    
    167,598
    
    
    
    163,585Total current liabilities
    
    
    271,007
    
    
    
    238,320Liabilities subject to compromise
    
    
    424,218
    
    
    
    448,011Noncurrent liabilities:Retirement benefits
    
    
    74,966
    
    
    
    70,982Deferred income tax liabilities
    
    
    (2,781
    )
    
    
    (2,781
    )Other noncurrent liabilities
    
    
    4,039
    
    
    
    4,418Total noncurrent liabilities
    
    
    76,224
    
    
    
    72,619Shareholders deficit
    
    
    (155,803
    )
    
    
    (108,655
    )Total liabilities and shareholders deficit
    
    $
    615,646
    
    
    $
    650,295
 12




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3. Voluntary Reorganization under Chapter 11 and Administration (continued)
 Debtors Condensed Consolidated Statement of Cash Flows
 Six MonthsEndedJune 30,2005Cash used in operating activities
    
    ($
    28,940
    )INVESTING ACTIVITIES:Additions to property, plant and equipment
    
    
    (4,624
    )Proceeds from sale of property, plant and equipment
    
    
    3,385Cash used in investing activities
    
    
    (1,239
    )FINANCING ACTIVITIES:Net increase in revolving credit facility
    
    
    3,270Proceeds from debtor-in-possession facility
    
    
    26,700Net increase in other debts
    
    
    455Cash provided by financing activities
    
    
    30,425Effect of foreign currency exchange rate changes
    
    
    Net increase in cash and cash equivalents
    
    
    246Cash and cash equivalents at beginning of year
    
    
    1,729Cash and cash equivalents at end of year
    
    $
    1,975
 4. Acquisition
    13




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5. Discontinued Operations
 Frisby
  Radford
     Impairment
    
    Write-
    
    Employee
    
    Employeeof
    
    down of
    
    Termination
    
    Postretirementfixed assets
    
    inventory
    
    Benefits
    
    Benefits
    
    Other
    
    TotalInitial charge in second quarter of 2003
    
    $
    7,554
    
    
    $
    2,351
    
    
    $
    1,336
    
    
    $
    301
    
    
    $
    50
    
    
    $
    11,592Additional charge
    
    
    
    
    
    
    
    
    
    
    138
    
    
    
    
    
    
    
    
    
    
    
    138Noncash charges
    
    
    (7,554
    )
    
    
    (2,351
    )
    
    
    
    
    
    
    (301
    )
    
    
    
    
    
    
    (10,206
    )Reduction of post-retirement obligations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,997
    )
    
    
    
    
    
    
    (1,997
    )Noncash credit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,997
    
    
    
    
    
    
    
    1,997Cash payments
    
    
    
    
    
    
    
    
    
    
    (920
    )
    
    
    
    
    
    
    (50
    )
    
    
    (970
    )Balance at December 31, 2003
    
    
    
    
    
    
    
    
    
    
    554
    
    
    
    
    
    
    
    
    
    
    
    554Additional charge
    
    
    
    
    
    
    120
    
    
    
    35
    
    
    
    
    
    
    
    
    
    
    
    155Noncash charge
    
    
    
    
    
    
    (120
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (120
    )Cash payments
    
    
    
    
    
    
    
    
    
    
    (473
    )
    
    
    
    
    
    
    
    
    
    
    (473
    )Balance at December 31, 2004
    
    
    
    
    
    
    
    
    
    
    116
    
    
    
    
    
    
    
    
    
    
    
    116Cash payments
    
    
    
    
    
    
    
    
    
    
    (25
    )
    
    
    
    
    
    
    
    
    
    
    (25
    )Balance at June 30, 2005
    
    $
    
    
    
    $
    
    
    
    $
    91
    
    
    $
    
    
    
    $
    
    
    
    $
    91
 14




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5. Discontinued Operations (continued)
  June 30,
    
    December 31,2005
    
    2004Accounts receivable
    
    $
    
    
    
    $
    56Property, plant and equipment, net
    
    
    440
    
    
    
    440Total assets
    
    $
    440
    
    
    $
    496Accrued liabilities
    
    $
    1,119
    
    
    $
    1,062Retirement benefits
    
    
    2,684
    
    
    
    2,439Other non-current liabilities
    
    
    1,989
    
    
    
    2,039Total liabilities
    
    $
    5,792
    
    
    $
    5,540
  Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,
    
    June 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004Sales
    
    $
    
    
    
    ($
    142
    )
    
    $
    
    
    
    $
    33Cost of sales
    
    
    593
    
    
    
    1,083
    
    
    
    974
    
    
    
    1,949Gross loss
    
    
    (593
    )
    
    
    (1,225
    )
    
    
    (974
    )
    
    
    (1,916
    )Expenses
    
    
    
    
    
    
    30
    
    
    
    10
    
    
    
    51Loss before income taxes
    
    
    (593
    )
    
    
    (1,255
    )
    
    
    (984
    )
    
    
    (1,967
    )Income tax benefit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (Loss) income from discontinued operation, net of tax
    
    ($
    593
    )
    
    ($
    1,255
    )
    
    ($
    984
    )
    
    ($
    1,967
    )
   6. Restructuring and Impairment Charges
 Hannibal Plant
  15




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##### Table of Contents



6. Restructuring and Impairment Charges (continued)
 Decatur Closure
  Racine Closure
  Columbus Machining Closure
   16




---



##### Table of Contents



6. Restructuring and Impairment Charges (continued)
 Havana Plant Closure
    7. Short-term Lines of Credit
    17




---



##### Table of Contents



8. Debt
  June 30,
    
    December 31,2005
    
    2004INTERMET:Revolving credit facility
    
    $
    46,931
    
    
    $
    43,661Term loan
    
    
    120,607
    
    
    
    119,708Domestic subsidiaries:Capitalized leases
    
    
    61
    
    
    
    504Foreign subsidiaries:Bank term note
    
    
    3,892
    
    
    
    5,890Capitalized leases
    
    
    1,579
    
    
    
    2,472Total
    
    
    173,070
    
    
    
    172,235Less: Long-term debt due within one year
    
    
    170,918
    
    
    
    168,180Long-term debt due after one year
    
    $
    2,152
    
    
    $
    4,055
  June 30,
    
    December 31,2005
    
    2004Senior notes
    
    $
    175,000
    
    
    $
    175,000Industrial development bonds
    
    
    2,000
    
    
    
    2,000Total debt included in liabilities subject to compromise
    
    $
    177,000
    
    
    $
    177,000
 Bank Credit Agreement
   18




---



##### Table of Contents



8. Debt (continued)
   Senior Notes
  Columbus Foundry Revenue Bonds
  Lynchburg Foundry Company Revenue Bonds
  19




---



##### Table of Contents



8. Debt (continued)
 Tool Products, Inc. Revenue Bonds
   Twelve-month period ending:June 30, 2006
    
    $
    170,918June 30, 2007
    
    
    1,243June 30, 2008
    
    
    605June 30, 2009
    
    
    304Thereafter
    
    
    $
    173,070
  20




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##### Table of Contents



9. Supplemental Condensed Consolidating Financial Information
      21




---



##### Table of Contents



9. Supplemental Condensed Consolidating Financial Information (continued)
 Three Months Ended June 30, 2005Combined
    
    CombinedGuarantor
    
    Non-GuarantorParent
    
    Subsidiaries
    
    Subsidiaries
    
    Eliminations
    
    Consolidated(in thousands of dollars)INCOME STATEMENT DATANet sales
    
    $
    
    
    
    $
    163,987
    
    
    $
    56,231
    
    
    ($
    4,326
    )
    
    $
    215,892Cost of sales
    
    
    
    
    
    
    160,503
    
    
    
    48,040
    
    
    
    (4,056
    )
    
    
    204,487Gross profit
    
    
    
    
    
    
    3,484
    
    
    
    8,191
    
    
    
    (270
    )
    
    
    11,405Selling, general and administrative expenses
    
    
    1,616
    
    
    
    5,689
    
    
    
    3,961
    
    
    
    (270
    )
    
    
    10,996Reorganization charges
    
    
    9,483
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,483Restructuring and impairment charges
    
    
    
    
    
    
    1,530
    
    
    
    
    
    
    
    
    
    
    
    1,530Operating (loss) profit
    
    
    (11,099
    )
    
    
    (3,735
    )
    
    
    4,230
    
    
    
    
    
    
    
    (10,604
    )Other (income) expenses, net:Interest expense, net
    
    
    1,912
    
    
    
    3,463
    
    
    
    471
    
    
    
    
    
    
    
    5,846Other (income) expense, net
    
    
    (23
    )
    
    
    948
    
    
    
    (51
    )
    
    
    
    
    
    
    874(Loss) income from continuing operations
before income taxes
    
    
    (12,988
    )
    
    
    (8,146
    )
    
    
    3,810
    
    
    
    
    
    
    
    (17,324
    )Income tax expense (benefit)
    
    
    (257
    )
    
    
    735
    
    
    
    1,413
    
    
    
    
    
    
    
    1,891(Loss) income from continuing operations
    
    
    (12,731
    )
    
    
    (8,881
    )
    
    
    2,397
    
    
    
    
    
    
    
    (19,215
    )Loss from discontinued operations, net of tax
    
    
    
    
    
    
    (593
    )
    
    
    
    
    
    
    
    
    
    
    (593
    )Equity in net income (loss) of subsidiaries
    
    
    (7,077
    )
    
    
    2,397
    
    
    
    
    
    
    
    4,680
    
    
    
    Net (loss) income
    
    ($
    19,808
    )
    
    ($
    7,077
    )
    
    $
    2,397
    
    
    $
    4,680
    
    
    ($
    19,808
    )
 Three Months Ended June 30, 2004Combined
    
    CombinedGuarantor
    
    Non-GuarantorParent
    
    Subsidiaries
    
    Subsidiaries
    
    Eliminations
    
    Consolidated(in thousands of dollars)INCOME STATEMENT DATANet sales
    
    $
    
    
    
    $
    176,350
    
    
    $
    44,112
    
    
    ($
    3,277
    )
    
    $
    217,185Cost of sales
    
    
    
    
    
    
    169,939
    
    
    
    37,811
    
    
    
    (3,277
    )
    
    
    204,473Gross profit
    
    
    
    
    
    
    6,411
    
    
    
    6,301
    
    
    
    
    
    
    
    12,712Selling, general and administrative expenses
    
    
    2,092
    
    
    
    5,210
    
    
    
    3,476
    
    
    
    
    
    
    
    10,778Restructuring and impairment charges
    
    
    
    
    
    
    1,165
    
    
    
    
    
    
    
    
    
    
    
    1,165Operating (loss) profit
    
    
    (2,092
    )
    
    
    36
    
    
    
    2,825
    
    
    
    
    
    
    
    769Other (income) expenses, net:Interest expense, net
    
    
    5,335
    
    
    
    2,301
    
    
    
    355
    
    
    
    
    
    
    
    7,991Other (income) expense, net
    
    
    (147
    )
    
    
    50
    
    
    
    243
    
    
    
    
    
    
    
    146(Loss) income from continuing operations
before income taxes
    
    
    (7,280
    )
    
    
    (2,315
    )
    
    
    2,227
    
    
    
    
    
    
    
    (7,368
    )Income tax benefit (expense)
    
    
    2,343
    
    
    
    (139
    )
    
    
    (35
    )
    
    
    
    
    
    
    2,169(Loss) income from continuing operations
    
    
    (4,937
    )
    
    
    (2,454
    )
    
    
    2,192
    
    
    
    
    
    
    
    (5,199
    )Loss from discontinued operations, net of tax
    
    
    
    
    
    
    (1,255
    )
    
    
    
    
    
    
    
    
    
    
    (1,255
    )Equity in net income (loss) of subsidiaries
    
    
    (1,517
    )
    
    
    2,192
    
    
    
    
    
    
    
    (675
    )
    
    
    Net (loss) income
    
    ($
    6,454
    )
    
    ($
    1,517
    )
    
    $
    2,192
    
    
    $
    (675
    )
    
    ($
    6,454
    )
 22




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##### Table of Contents



9. Supplemental Condensed Consolidating Financial Information (continued)
 Six Months Ended June 30, 2005Combined
    
    CombinedGuarantor
    
    Non-GuarantorParent
    
    Subsidiaries
    
    Subsidiaries
    
    Eliminations
    
    Consolidated(in thousands of dollars)INCOME STATEMENT DATANet sales
    
    $
    
    
    
    $
    345,847
    
    
    $
    113,344
    
    
    ($
    8,809
    )
    
    $
    450,382Cost of sales
    
    
    
    
    
    
    335,885
    
    
    
    98,117
    
    
    
    (8,370
    )
    
    
    425,632Gross profit
    
    
    
    
    
    
    9,962
    
    
    
    15,227
    
    
    
    (439
    )
    
    
    24,750Selling, general and administrative expenses
    
    
    3,114
    
    
    
    12,364
    
    
    
    7,958
    
    
    
    (439
    )
    
    
    22,997Reorganization charges
    
    
    17,683
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,683Restructuring and impairment charges
    
    
    
    
    
    
    2,932
    
    
    
    
    
    
    
    
    
    
    
    2,932Operating (loss) profit
    
    
    (20,797
    )
    
    
    (5,334
    )
    
    
    7,269
    
    
    
    
    
    
    
    (18,862
    )Other (income) expenses, net:Interest expense, net
    
    
    4,086
    
    
    
    6,480
    
    
    
    723
    
    
    
    
    
    
    
    11,289Other (income) expense , net
    
    
    (164
    )
    
    
    769
    
    
    
    (80
    )
    
    
    
    
    
    
    525(Loss) income from continuing operations
before income taxes
    
    
    (24,719
    )
    
    
    (12,583
    )
    
    
    6,626
    
    
    
    
    
    
    
    (30,676
    )Income tax expense (benefit)
    
    
    (196
    )
    
    
    1,107
    
    
    
    4,227
    
    
    
    
    
    
    
    5,138(Loss) income from continuing operations
    
    
    (24,523
    )
    
    
    (13,690
    )
    
    
    2,399
    
    
    
    
    
    
    
    (35,814
    )Loss from discontinued operations, net of tax
    
    
    
    
    
    
    (984
    )
    
    
    
    
    
    
    
    
    
    
    (984
    )Equity in net income (loss) of subsidiaries
    
    
    (12,275
    )
    
    
    2,399
    
    
    
    
    
    
    
    9,876
    
    
    
    Net (loss) income
    
    ($
    36,798
    )
    
    ($
    12,275
    )
    
    $
    2,399
    
    
    $
    9,876
    
    
    ($
    36,798
    )
 Six Months Ended June 30, 2004Combined
    
    CombinedGuarantor
    
    Non-GuarantorParent
    
    Subsidiaries
    
    Subsidiaries
    
    Eliminations
    
    Consolidated(in thousands of dollars)INCOME STATEMENT DATANet sales
    
    $
    
    
    
    $
    347,513
    
    
    $
    86,564
    
    
    ($
    6,246
    )
    
    $
    427,831Cost of sales
    
    
    
    
    
    
    334,472
    
    
    
    73,403
    
    
    
    (6,246
    )
    
    
    401,629Gross profit
    
    
    
    
    
    
    13,041
    
    
    
    13,161
    
    
    
    
    
    
    
    26,202Selling, general and administrative expenses
    
    
    3,595
    
    
    
    11,024
    
    
    
    6,882
    
    
    
    
    
    
    
    21,501Restructuring and impairment charges
    
    
    
    
    
    
    1,165
    
    
    
    
    
    
    
    
    
    
    
    1,165Operating (loss) profit
    
    
    (3,595
    )
    
    
    852
    
    
    
    6,279
    
    
    
    
    
    
    
    3,536Other (income) expenses, net:Interest expense, net
    
    
    11,617
    
    
    
    4,790
    
    
    
    786
    
    
    
    
    
    
    
    17,193Other income, net
    
    
    (344
    )
    
    
    (94
    )
    
    
    (7
    )
    
    
    
    
    
    
    (445
    )(Loss) income from continuing operations before income taxes
    
    
    (14,868
    )
    
    
    (3,844
    )
    
    
    5,500
    
    
    
    
    
    
    
    (13,212
    )Income tax benefit (expense)
    
    
    2,072
    
    
    
    (324
    )

    
    
    (876
    )
    
    
    
    
    
    
    872(Loss) income from continuing operations
    
    
    (12,796
    )
    
    
    (4,168
    )
    
    
    4,624
    
    
    
    
    
    
    
    (12,340
    )Loss from discontinued operations, net of tax
    
    
    
    
    
    
    (1,967
    )
    
    
    
    
    
    
    
    
    
    
    (1,967
    )Equity in net income (loss) of subsidiaries
    
    
    (1,511
    )
    
    
    4,624
    
    
    
    
    
    
    
    (3,113
    )
    
    
    Net (loss) income
    
    ($
    14,307
    )
    
    ($
    1,511
    )
    
    $
    4,624
    
    
    $
    (3,113
    )
    
    ($
    14,307
    )
 23




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##### Table of Contents



9. Supplemental Condensed Consolidating Financial Information (continued)
 As of June 30, 2005CombinedCombined Guarantor
    
    Non-GuarantorParent
    
    Subsidiaries
    
    Subsidiaries
    
    Eliminations
    
    Consolidated(in thousands of dollars)BALANCE SHEET DATA
ASSETSCurrent assets:Cash and cash equivalents
    
    $
    1,948
    
    
    $
    27
    
    
    $
    8,784
    
    
    $
    
    
    
    $
    10,759Accounts receivable, net
    
    
    731
    
    
    
    88,669
    
    
    
    36,953
    
    
    
    
    
    
    
    126,353Inventories
    
    
    
    
    
    
    55,214
    
    
    
    22,285
    
    
    
    (59
    )
    
    
    77,440Other current assets
    
    
    5,982
    
    
    
    4,623
    
    
    
    564
    
    
    
    (2,231
    )
    
    
    8,938Assets held for sale
    
    
    
    
    
    
    1,794
    
    
    
    
    
    
    
    
    
    
    
    1,794Total current assets
    
    
    8,661
    
    
    
    150,327
    
    
    
    68,586
    
    
    
    (2,290
    )
    
    
    225,284Other assets:Property, plant and equipment, net
    
    
    3,673
    
    
    
    178,919
    
    
    
    66,553
    
    
    
    841
    
    
    
    249,986Other non-current assets
    
    
    8,082
    
    
    
    6,095
    
    
    
    6,471
    
    
    
    (808
    )
    
    
    19,840Intercompany , net
    
    
    (49,615
    )
    
    
    77,614
    
    
    
    (31,757
    )
    
    
    3,758
    
    
    
    Investments in subsidiaries
    
    
    285,596
    
    
    
    56,474
    
    
    
    
    
    
    
    (342,070
    )
    
    
    Total assets
    
    $
    256,397
    
    
    $
    469,429
    
    
    $
    109,853
    
    
    ($
    340,569
    )
    
    $
    495,110LIABILITIES AND SHAREHOLDERS EQUITY
(DEFICIT)Current liabilities:Accounts payable
    
    $
    1,118
    
    
    $
    11,670
    
    
    $
    13,969
    
    
    $
    
    
    
    $
    26,757Accrued liabilities
    
    
    22,143
    
    
    
    38,791
    
    
    
    17,730
    
    
    
    58
    
    
    
    78,722Short-term lines of credit
    
    
    29,700
    
    
    
    
    
    
    
    9,686
    
    
    
    
    
    
    
    39,386Long-term debt due within one year
    
    
    167,538
    
    
    
    60
    
    
    
    3,320
    
    
    
    
    
    
    
    170,918Total current liabilities
    
    
    220,499
    
    
    
    50,521
    
    
    
    44,705
    
    
    
    58
    
    
    
    315,783Liabilities subject to compromise
    
    
    187,855
    
    
    
    62,378
    
    
    
    
    
    
    
    
    
    
    
    250,233Non-current liabilitiesLong-term debt due after one year
    
    
    
    
    
    
    
    
    
    
    2,152
    
    
    
    
    
    
    
    2,152Retirement benefits
    
    
    3,245
    
    
    
    71,721
    
    
    
    
    
    
    
    
    
    
    
    74,966Other non-current liabilities
    
    
    601
    
    
    
    656
    
    
    
    6,522
    
    
    
    
    
    
    
    7,779Total non-current liabilities
    
    
    3,846
    
    
    
    72,377
    
    
    
    8,674
    
    
    
    
    
    
    
    84,897Shareholders equity (deficit)
    
    
    (155,803
    )
    
    
    284,153
    
    
    
    56,474
    
    
    
    (340,627
    )
    
    
    (155,803
    )Total liabilities and shareholders
equity (deficit)
    
    $
    256,397
    
    
    $
    469,429
    
    
    $
    109,853
    
    
    ($
    340,569
    )
    
    $
    495,110
 24




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##### Table of Contents



9. Supplemental Condensed Consolidating Financial Information (continued)
 As of December 31, 2004CombinedCombined Guarantor
    
    Non-GuarantorParent
    
    Subsidiaries
    
    Subsidiaries
    
    Eliminations
    
    Consolidated(in thousands of dollars)BALANCE SHEET DATA
ASSETSCurrent assets:Cash and cash equivalents
    
    $
    1,477
    
    
    $
    252
    
    
    $
    9,510
    
    
    $
    
    
    
    $
    11,239Accounts receivable, net
    
    
    654
    
    
    
    77,806
    
    
    
    36,065
    
    
    
    
    
    
    
    114,525Inventories
    
    
    
    
    
    
    45,915
    
    
    
    25,671
    
    
    
    (59
    )
    
    
    71,527Other current assets
    
    
    6,812
    
    
    
    6,175
    
    
    
    654
    
    
    
    (2,231
    )
    
    
    11,410Other current assets
    
    
    
    
    
    
    1,837
    
    
    
    
    
    
    
    
    
    
    
    1,837Total current assets
    
    
    8,943
    
    
    
    131,985
    
    
    
    71,900
    
    
    
    (2,290
    )
    
    
    210,538Non-current assets:Property, plant and equipment, net
    
    
    8,738
    
    
    
    189,781
    
    
    
    76,865
    
    
    
    859
    
    
    
    276,243Other non-current assets
    
    
    13,853
    
    
    
    10,881
    
    
    
    2,116
    
    
    
    (808
    )
    
    
    26,042Intercompany , net
    
    
    (50,741
    )
    
    
    78,189
    
    
    
    (31,210
    )
    
    
    3,762
    
    
    
    Investments in subsidiaries
    
    
    291,505
    
    
    
    64,426
    
    
    
    
    
    
    
    (355,931
    )
    
    
    Total assets
    
    $
    272,298
    
    
    $
    475,262
    
    
    $
    119,671
    
    
    ($
    354,408
    )
    
    $
    512,823LIABILITIES AND SHAREHOLDERS EQUITY
(DEFICIT)Current liabilities:Accounts payable
    
    $
    1,986
    
    
    $
    7,958
    
    
    $
    20,025
    
    
    $
    
    
    
    $
    29,969Accrued liabilities
    
    
    20,392
    
    
    
    41,123
    
    
    
    12,112
    
    
    
    58
    
    
    
    73,685Short-term lines of credit
    
    
    3,000
    
    
    
    
    
    
    
    12,975
    
    
    
    
    
    
    
    15,975Long-term debt due within one year
    
    
    163,369
    
    
    
    504
    
    
    
    4,307
    
    
    
    
    
    
    
    168,180Total current liabilities
    
    
    188,747
    
    
    
    49,585
    
    
    
    49,419
    
    
    
    58
    
    
    
    287,809Liabilities subject to compromise
    
    
    186,820
    
    
    
    63,644
    
    
    
    
    
    
    
    
    
    
    
    250,464Non-current liabilitiesLong-term debt due after one year
    
    
    
    
    
    
    
    
    
    
    4,055
    
    
    
    
    
    
    
    4,055Retirement benefits
    
    
    4,786
    
    
    
    66,196
    
    
    
    
    
    
    
    
    
    
    
    70,982Other non-current liabilities
    
    
    600
    
    
    
    5,795
    
    
    
    1,773
    
    
    
    
    
    
    
    8,168Total non-current liabilities
    
    
    5,386
    
    
    
    71,991
    
    
    
    5,828
    
    
    
    
    
    
    
    83,205Shareholders equity (deficit)
    
    
    (108,655
    )
    
    
    290,042
    
    
    
    64,424
    
    
    
    (354,466
    )
    
    
    (108,655
    )Total liabilities and shareholders
equity (deficit)
    
    $
    272,298
    
    
    $
    475,262
    
    
    $
    119,671
    
    
    ($
    354,408
    )
    
    $
    512,823
 25




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##### Table of Contents



9. Supplemental Condensed Consolidating Financial Information (continued)
 Six Months Ended June 30, 2005Combined
    
    CombinedGuarantor
    
    Non-GuarantorParent
    
    Subsidiaries
    
    Subsidiaries
    
    Eliminations
    
    Consolidated(in thousands of dollars)CASH FLOW DATACash (used in) provided by continuing operating activities
    
    ($
    29,740
    )
    
    $
    1,154
    
    
    $
    7,233
    
    
    $
    
    
    
    ($
    21,353
    )Cash used in discontinued operations
    
    
    
    
    
    
    (354
    )
    
    
    
    
    
    
    
    
    
    
    (354
    )Net cash (used in) provided by operating activities
    
    
    (29,740
    )
    
    
    800
    
    
    
    7,233
    
    
    
    
    
    
    
    (21,707
    )Investing activities:Additions to property, plant and equipment
    
    
    (657
    )
    
    
    (3,967
    )
    
    
    (2,870
    )
    
    
    
    
    
    
    (7,494
    )Proceeds from sale of property, plant and equipment
    
    
    
    
    
    
    3,385
    
    
    
    
    
    
    
    
    
    
    
    3,385Net cash used in investing activities
    
    
    (657
    )
    
    
    (582
    )
    
    
    (2,870
    )
    
    
    
    
    
    
    (4,109
    )Financing activities:Net (decrease) increase in lines of credit
    
    
    3,270
    
    
    
    
    
    
    
    (1,833
    )
    
    
    
    
    
    
    1,437Proceeds from debtor-in-possession facility
    
    
    26,700
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26,700Proceeds from (repayment of) other debts
    
    
    898
    
    
    
    (443
    )
    
    
    (1,951
    )
    
    
    
    
    
    
    (1,496
    )Net cash provided by (used in) financing activities
    
    
    30,868
    
    
    
    (443
    )
    
    
    (3,784
    )
    
    
    
    
    
    
    26,641Effect of exchange rate changes on cash and cash
equivalents
    
    
    
    
    
    
    
    
    
    
    (1,305
    )
    
    
    
    
    
    
    (1,305
    )Net increase (decrease) in cash and cash equivalents
    
    $
    471
    
    
    ($
    225
    )
    
    ($
    726
    )
    
    $
    
    
    
    ($
    480
    )
 Six Months Ended June 30, 2004Combined
    
    CombinedGuarantor
    
    Non-GuarantorParent
    
    Subsidiaries
    
    Subsidiaries
    
    Eliminations
    
    Consolidated(in thousands of dollars)CASH FLOW DATACash (used in) provided by continuing operating
activities
    
    ($
    23,722
    )
    
    $
    9,746
    
    
    $
    8,412
    
    
    $
    
    
    
    ($
    5,564
    )Cash provided by discontinued operations
    
    
    
    
    
    
    223
    
    
    
    
    
    
    
    
    
    
    
    223Net cash (used in) provided by operating activities
    
    
    (23,722
    )
    
    
    9,969
    
    
    
    8,412
    
    
    
    
    
    
    
    (5,341
    )Investing activities:Additions to property, plant and equipment
    
    
    (1,196
    )
    
    
    (8,884
    )
    
    
    (2,467
    )
    
    
    
    
    
    
    (12,547
    )Proceeds from sale of property, plant and
equipment
    
    
    300
    
    
    
    79
    
    
    
    
    
    
    
    
    
    
    
    379Net cash used in investing activities
    
    
    (896
    )
    
    
    (8,805
    )
    
    
    (2,467
    )
    
    
    
    
    
    
    (12,168
    )Financing activities:Net decrease in revolving credit facility
    
    
    (49,000
    )
    
    
    
    
    
    
    (424
    )
    
    
    
    
    
    
    (49,424
    )Proceeds from term loan
    
    
    120,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    120,000Repayment of other debts
    
    
    (600
    )
    
    
    (1,087
    )
    
    
    (974
    )
    
    
    
    
    
    
    (2,661
    )Funding of restricted cash
    
    
    (35,819
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (35,819
    )Payment of debt issuance costs
    
    
    (3,359
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,359
    )Dividends paid
    
    
    (2,051
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,051
    )Issuance of common stock
    
    
    13
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13Net cash (used in) provided by financing activities
    
    
    29,184
    
    
    
    (1,087
    )
    
    
    (1,398
    )
    
    
    
    
    
    
    26,699Effect of exchange rate changes on cash and cash
equivalents
    
    
    
    
    
    
    
    
    
    
    (880
    )
    
    
    
    
    
    
    (880
    )Net increase in cash and cash equivalents
    
    $
    4,566
    
    
    $
    77
    
    
    $
    3,667
    
    
    $
    
    
    
    $
    8,310
 26




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##### Table of Contents



10. Commitments and Contingencies
       27




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##### Table of Contents



11. Retirement Benefits
   OtherPension Benefits
    
    Postretirement BenefitsThree Months Ended June 30,2005
    
    2004
    
    2005
    
    2004Service cost
    
    $
    631
    
    
    $
    587
    
    
    $
    113
    
    
    $
    112Interest cost
    
    
    1,586
    
    
    
    1,557
    
    
    
    553
    
    
    
    608Expected return on plan assets
    
    
    (1,492
    )
    
    
    (1,421
    )
    
    
    
    
    
    
    Amortization of prior service cost
    
    
    210
    
    
    
    230
    
    
    
    (93
    )
    
    
    (91
    )Amortization of loss (gain)
    
    
    647
    
    
    
    537
    
    
    
    40
    
    
    
    38Curtailment loss
    
    
    1,626
    
    
    
    
    
    
    
    
    
    
    
    Net periodic benefit cost
    
    $
    3,208
    
    
    $
    1,490
    
    
    $
    613
    
    
    $
    667
 OtherPension Benefits
    
    Postretirement BenefitsSix Months Ended June 30,2005
    
    2004
    
    2005
    
    2004Service cost
    
    $
    1,261
    
    
    $
    1,174
    
    
    $
    226
    
    
    $
    224Interest cost
    
    
    3,173
    
    
    
    3,115
    
    
    
    1,106
    
    
    
    1,216Expected return on plan assets
    
    
    (2,984
    )
    
    
    (2,843
    )
    
    
    
    
    
    
    Amortization of prior service cost
    
    
    421
    
    
    
    460
    
    
    
    (186
    )
    
    
    (182
    )Amortization of loss (gain)
    
    
    1,293
    
    
    
    1,074
    
    
    
    80
    
    
    
    75Curtailment loss
    
    
    1,626
    
    
    
    
    
    
    
    
    
    
    
    Net periodic benefit cost
    
    $
    4,790
    
    
    $
    2,980
    
    
    $
    1,226
    
    
    $
    1,333
    28




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##### Table of Contents



12. Income Taxes
  13. Reporting for Business Segments
  Ferrous
    
    Light
    
    CorporateMetals
    
    Metals
    
    and Other
    
    Consolidated(in thousands of dollars)Three-month period ended June 30, 2005:Net sales
    
    $
    156,964
    
    
    $
    58,928
    
    
    $
    
    
    
    $
    215,892Operating loss
    
    $
    9,898
    
    
    ($
    9,411
    )
    
    ($
    11,091
    )
    
    ($
    10,604
    )Interest expense, net
    
    
    (471
    )
    
    
    23
    
    
    
    (5,398
    )
    
    
    (5,846
    )Other (expense) income, net
    
    
    (585
    )
    
    
    (250
    )
    
    
    (39
    )
    
    
    (874
    )Income tax expense
    
    
    (1,515
    )
    
    
    (241
    )
    
    
    (135
    )
    
    
    (1,891
    )Loss from discontinued operations, net of tax
    
    
    (593
    )
    
    
    
    
    
    
    
    
    
    
    (593
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    ($
    19,808
    )Three-month period ended June 30, 2004:Net sales
    
    $
    145,383
    
    
    $
    71,802
    
    
    $
    
    
    
    $
    217,185Operating profit (loss)
    
    $
    3,276
    
    
    ($
    358
    )
    
    ($
    2,149
    )
    
    $
    769Interest expense, net
    
    
    (347
    )
    
    
    (18
    )
    
    
    (7,626
    )
    
    
    (7,991
    )Other income, net
    
    
    (282
    )
    
    
    (14
    )
    
    
    150
    
    
    
    (146
    )Income tax (expense) benefit
    
    
    (93
    )
    
    
    (81
    )
    
    
    2,343
    
    
    
    2,169Income (loss) from discontinued operations, net of tax
    
    
    (1,255
    )
    
    
    
    
    
    
    
    
    
    
    (1,255
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    ($
    6,454
    )
 29




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##### Table of Contents



13. Reporting for Business Segments (continued)
 Ferrous
    
    Light
    
    CorporateMetals
    
    Metals
    
    and Other
    
    Consolidated(in thousands of dollars)Six-month period ended June 30, 2005:Net sales
    
    $
    319,644
    
    
    $
    130,738
    
    
    $
    
    
    
    $
    450,382Operating loss
    
    $
    14,304
    
    
    ($
    10,689
    )
    
    ($
    22,477
    )
    
    ($
    18,862
    )Interest expense, net
    
    
    (723
    )
    
    
    13
    
    
    
    (10,579
    )
    
    
    (11,289
    )Other income (expense), net
    
    
    (376
    )
    
    
    (250
    )
    
    
    101
    
    
    
    (525
    )Income tax (expense) benefit
    
    
    (4,429
    )
    
    
    (511
    )
    
    
    (198
    )
    
    
    (5,138
    )Loss from discontinued operations, net of tax
    
    
    (984
    )
    
    
    
    
    
    
    
    
    
    
    (984
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    ($
    36,798
    )As of June 30, 2005:Total assets
    
    $
    324,372
    
    
    $
    145,596
    
    
    $
    25,142
    
    
    $
    495,110Six-month period ended June 30, 2004:Net sales
    
    $
    286,533
    
    
    $
    141,298
    
    
    $
    
    
    
    $
    427,831Operating profit (loss)
    
    $
    6,594
    
    
    $
    1,631
    
    
    ($
    4,689
    )
    
    $
    3,536Interest expense, net
    
    
    (771
    )
    
    
    (40
    )
    
    
    (16,382
    )
    
    
    (17,193
    )Other income, net
    
    
    112
    
    
    
    (4
    )
    
    
    337
    
    
    
    445Income tax (expense) benefit
    
    
    (1,012
    )
    
    
    (188
    )
    
    
    2,072
    
    
    
    872Loss from discontinued operations, net of tax
    
    
    (1,967
    )
    
    
    
    
    
    
    
    
    
    
    (1,967
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    ($
    14,307
    )As of December 31, 2004:Total assets
    
    $
    378,720
    
    
    $
    104,031
    
    
    $
    30,072
    
    
    $
    512,823
 14. Loss per Share
  Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,
    
    June 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004(in thousands of dollars, except per share data)Numerator:Net loss
    
    ($
    19,808
    )
    
    ($
    6,454
    )
    
    ($
    36,798
    )
    
    ($
    14,307
    )Denominator:Denominator for basic and
diluted loss per share 
weighted average shares
    
    
    25,665
    
    
    
    25,599
    
    
    
    25,665
    
    
    
    25,597Basic and fully diluted loss per share
    
    ($
    0.77
    )
    
    ($
    0.25
    )
    
    ($
    1.44
    )
    
    ($
    0.56
    )
  30




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15. Derivative Financial Instruments
   16.
Subsequent Events
   31




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Managements Discussion and Analysis of Financial Condition and Results of Operations and the
Quantitative and Qualitative Disclosures about Market Risks 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 INTERMET or its management, are not guarantees of future performance and involve
risks and uncertainties. We undertake no obligation to publicly update or revise any
forward-looking statements. The following factors are important and should be considered carefully
in connection with any evaluation of INTERMETs business, financial condition, results of
operations and prospects. The following factors could cause our actual results to differ materially
from those reflected in any forward-looking statements we may make from time to time. The factors
identified here do not represent an exhaustive list of potential risks involved in our business and
we undertake no obligation to publicly update or revise the following risk factors:
 
    
    On September 29, 2004, we and seventeen of our wholly-owned domestic
subsidiaries filed voluntary bankruptcy petitions for reorganization
under Chapter 11 of the United States Bankruptcy Code, and we are
currently operating as debtors-in-possession under the supervision of
the bankruptcy court. Although we are working to obtain confirmation
of a plan of reorganization, we need to secure adequate equity and/or
debt financing to do so to fund payments under a plan and to provide
adequate liquidity for our post-bankruptcy operations. Our inability
to timely exit bankruptcy could materially and adversely impact our
business if it affects our ability to obtain new product awards or
renewals of existing product awards from our customers.
    
    In connection with our September, 2004 bankruptcy filing we entered
into a debtor-in-possession revolving credit facility in October, 2004
which expires October 2005. This facility contains a number of
financial covenants and other requirements. We rely on this facility
to fund our operations and provide necessary liquidity during the
pendency of our Chapter 11 proceeding. Our business would be
materially and adversely impacted if we were unable to borrow under
this facility due to our failure to meet the covenants and other
conditions required for continued borrowings under this facility.
    
    Sales to the automotive industry accounted for substantially all of
our sales in 2004. In addition, our automotive sales are highly
concentrated among a few major customers, and our products are
generally sold for specific vehicle programs. Therefore, the loss of
any significant customer or vehicle program could have a material
adverse effect on our business. Additionally, sales of our products
are dependent on unit sales of the applicable vehicle models and any
reduction in sales or failure to meet sales estimates of vehicle
models could also have a material adverse effect on our business.
    
    As is typical in the automotive supply industry, we have no long-term
contracts with our customers for most of the products that we supply.
While our customers provide annual estimates of their requirements and
update those estimates from time to time throughout the year, most of
our sales are made on a short-term purchase order basis, which
generally can be terminated by the customer.
    
    If one or more of our customers were to initiate bankruptcy or
insolvency proceedings, it could render a material portion of our
accounts receivable uncollectible or substantially impaired, which
could have a material adverse effect on our financial condition.
    
    A challenge that we and other automotive industry suppliers face is
the pressure from our customers to reduce the prices we charge for our
products. To the extent this trend continues, it puts pressure on our
margins and profitability, and could have a material and adverse
effect on our financial condition.
    
    The automotive industry is cyclical and dependent on consumer
spending. General economic factors that adversely affect automotive
sales could adversely impact our business. In addition, our business
is seasonal due to lower sales in the third and fourth quarters due to
the pass-through effect of plant closings by OEMs for holidays,
vacations and model changeovers. Nevertheless, a substantial
percentage of our costs are generally not seasonal due to our need for
continued expenditures for capital equipment, product development and
ongoing production improvements and support, as well as other factors,
making it difficult for us to significantly reduce operating expenses
in a particular period even if our net sales forecasts for that period
are less than other periods.
 32




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##### Table of Contents




    
    Our product lines are subject to change as OEMs introduce new or
redesigned products and vehicles. We compete for new business both at
the beginning of the development phase of new vehicles, which
generally begins two to five years prior to the marketing and public
sale of models based upon such vehicles, and upon redesign of existing
vehicles. Our sales would be adversely affected if we fail to obtain
business for new vehicles, or fail to retain or increase business on
redesigned existing vehicles.
    
    The substantial increases in scrap steel and other raw material costs
that we have experienced were the primary factors leading to our
bankruptcy filing in September of 2004. Energy costs have also risen.
If raw material and energy costs continue to increase, and we are
unable to pass a substantial portion of those costs on to our
customers on a timely basis, it could have a material adverse effect
on our financial condition.
    
    We are substantially leveraged and must generate enough cash to make
required interest and other payments under our debtor-in-possession
revolving credit facility. In the event we do not generate enough
cash, a default would occur under the facility unless the lenders
agreed to an amendment or a waiver. Any default would have a material
adverse effect on our business. Additionally, our debt under the
facility accrues interest at a rate that varies with prevailing market
rates. Therefore, increases in market interest rates would increase
our interest payment obligations under the facility and could have a
material adverse effect on our financial condition.
    
    A substantial percentage of our hourly employees, as well as those of
our OEM and Tier 1 customers, are represented by labor unions and work
pursuant to collective bargaining agreements. Our failure, or the
failure of any of our significant customers, to reach agreement with a
labor union on a timely basis, resulting in either a work stoppage or
strike, could have a material adverse effect on our business.
    
    We operate production facilities in Germany and Portugal, in addition
to our production facilities in the United States, that expose us to
the risks associated with non-U.S. operations, including: (i)
fluctuations in currency exchange rates; (ii) compliance with the law
and other regulatory requirements of non-U.S. jurisdictions; (iii)
overlapping and potentially inconsistent tax structures; and (iv)
possible restrictions or limitations imposed on the repatriation of
funds. Any of these risks could lave a material adverse effect on our
business or financial condition.
    
    We are subject to U.S. and non-U.S. environmental laws and regulations
governing the emission, discharge, generation, handling, storage,
transportation, treatment and disposal of hazardous and waste
materials and the clean-up of contaminated property. Although we have
made and continue to make expenditures to comply with environmental
laws and regulations, future compliance with these laws may have a
material adverse effect on our business or financial condition.
Additionally, if an improper release of hazardous materials occurs on
or from our property or from any offsite disposal site that receives
or has received such materials from us or any of our predecessors, or
if contamination is discovered at any of our or our predecessors
current or former properties, we could be held liable for such release
or for the cost to remediate contaminated property, and such liability
could have a material adverse effect on our financial condition.
 Material Changes in Results of Operations  Three months ended June 30, 2005
   33




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##### Table of Contents



Material Changes in Results of Operations  Six months ended June 30, 2005
      34




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##### Table of Contents



Material Changes in Financial Condition, Liquidity and Capital Resources
    Critical Accounting Policies and Use of Estimates
  
 Item 3. Quantitative and Qualitative Disclosures about Market Risks
   35




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##### Table of Contents



Item 4. Controls and Procedures
    36




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##### Table of Contents



Item 1. Legal Proceedings
       Item 2. Changes in Securities and Use of Proceeds
  Item 3. Defaults upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Securities Holders
  Item 5. Other Information
  37




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##### Table of Contents



Item 6. Exhibits
  ExhibitNumber
    
    Description of Exhibit31.1
    
    Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 200232
    
    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
 38




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##### Table of Contents



INTERMET CorporationBy:
    
    /s/ Robert E. BeltsRobert E. BeltsVice President of Finance andChief Financial OfficerDate:
    
    August 15, 2005
 39




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##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    
    Description of Exhibit31.1
    
    Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 200232
    
    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
 40