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United States
Securities and Exchange Commission  Form 10-Q  [X]
    Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934   [  ]
    Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934  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)
 (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 April 30, 2004 there were 25,599,266 shares of common stock, $0.10 par
value, outstanding.




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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.
    
    Exhibits and Reports on Form 8-KSignaturesCertificationsExhibit Index1st Amendment to 1st Amended & Restated Credit Agm1st Amendment to Letter of Credit Facility Agrmt.Sec. 302 Certification of Chief Executive OfficerSec. 302 Certification of Chief Financial OfficerCertification by CEO and CFO To Section 906
  2




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Part I  Financial Information 
 Item 1. Financial Statements INTERMET Corporation
Interim Condensed Consolidated Statements of Operations Three Months EndedMarch 31,
    
    March 31,2004
    
    2003(Unaudited)(in thousands of dollars,except per share data)Net sales
    
    $
    210,646
    
    
    $
    193,040Cost of sales
    
    
    197,156
    
    
    
    171,799Gross profit
    
    
    13,490
    
    
    
    21,241Selling, general and administrative expenses
    
    
    10,723
    
    
    
    8,557Operating profit
    
    
    2,767
    
    
    
    12,684Other expense (income):Interest expense, net
    
    
    9,202
    
    
    
    7,301Other (income) expense, net
    
    
    (591
    )
    
    
    2728,611
    
    
    
    7,573(Loss) income from continuing operations before
income taxes and equity interest in a joint
venture
    
    
    (5,844
    )
    
    
    5,111Income tax expense
    
    
    (1,297
    )
    
    
    (2,031
    )Equity interest in a joint venture
    
    
    
    
    
    
    260(Loss) income from continuing operations
    
    
    (7,141
    )
    
    
    3,340Loss from discontinued operations, net of tax
    
    
    (712
    )
    
    
    (188
    )Net (loss) income
    
    
    ($7,853
    )
    
    $
    3,152(Loss) earnings per common share:Basic:(Loss) earnings from continuing operations
    
    
    ($0.28
    )
    
    $
    0.13Loss from discontinued operations, net of tax
    
    
    (0.03
    )
    
    
    (0.01
    )(Loss) earnings per share  basic
    
    
    ($0.31
    )
    
    $
    0.12Diluted:(Loss) earnings from continuing operations
    
    
    ($0.28
    )
    
    $
    0.13Loss from discontinued operations, net of tax
    
    
    (0.03
    )
    
    
    (0.01
    )(Loss)
earnings per share - diluted
    
    
    ($0.31
    )
    
    $
    0.12Dividends declared per common share
    
    $
    0.04
    
    
    $
    0.04Weighted average shares outstanding:Basic
    
    
    25,595
    
    
    
    25,547Diluted
    
    
    25,595
    
    
    
    25,676
 See accompanying notes. 3




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INTERMET Corporation
Interim Consolidated Statements of Comprehensive Income Three Months EndedMarch 31,
    
    March 31,2004
    
    2003(Unaudited)(in thousands of dollars)Net (loss) income
    
    
    ($7,853
    )
    
    $
    3,152Other comprehensive (loss) income, net of tax:Foreign currency translation adjustment
    
    
    (2,384
    )
    
    
    1,030Interest rate swap fair value adjustment
    
    
    
    
    
    
    372(2,384
    )
    
    
    1,402Total comprehensive (loss) income
    
    
    ($10,237
    )
    
    $
    4,554
 See accompanying notes. 4




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INTERMET Corporation
Interim Condensed Consolidated Balance Sheets March 31,
    
    December 31,2004
    
    2003(Unaudited)(in thousands of dollars)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    58,806
    
    
    $
    1,035Accounts receivable:Trade, less allowance of $5,666 in 2004 and $6,528 in 2003
    
    
    98,689
    
    
    
    76,218Other
    
    
    10,059
    
    
    
    10,555108,748
    
    
    
    86,773Inventories
    
    
    73,357
    
    
    
    77,411Other current assets
    
    
    10,414
    
    
    
    10,748Total current assets
    
    
    251,325
    
    
    
    175,967Property, plant and equipment, net
    
    
    316,460
    
    
    
    324,080Goodwill
    
    
    165,933
    
    
    
    165,933Restricted cash
    
    
    35,690
    
    
    
    Other non-current assets
    
    
    23,755
    
    
    
    20,704Total assets
    
    $
    793,163
    
    
    $
    686,684LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    93,026
    
    
    $
    80,737Accrued liabilities
    
    
    65,027
    
    
    
    59,542Short-term lines of credit
    
    
    8,164
    
    
    
    9,992Long-term debt due within one year
    
    
    5,471
    
    
    
    4,303Total current liabilities
    
    
    171,688
    
    
    
    154,574Non-current liabilities:Long-term debt due after one year
    
    
    380,080
    
    
    
    279,248Retirement benefits
    
    
    85,648
    
    
    
    85,309Other non-current liabilities
    
    
    4,861
    
    
    
    5,416Total non-current liabilities
    
    
    470,589
    
    
    
    369,973Shareholders equity:Common stock
    
    
    2,603
    
    
    
    2,601Capital in excess of par value
    
    
    57,176
    
    
    
    57,165Retained earnings
    
    
    100,548
    
    
    
    109,428Accumulated other comprehensive loss
    
    
    (9,378
    )
    
    
    (6,994
    )Unearned restricted stock
    
    
    (63
    )
    
    
    (63
    )Total shareholders equity
    
    
    150,886
    
    
    
    162,137Total liabilities and shareholders equity
    
    $
    793,163
    
    
    $
    686,684
 See accompanying notes. 5




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INTERMET Corporation
Interim Condensed Consolidated Statements of Cash Flows Three Months EndedMarch 31,
    
    March 31,2004
    
    2003(Unaudited)(in thousands of dollars)OPERATING ACTIVITIES:(Loss) income from continuing operations
    
    
    ($7,141
    )
    
    $
    3,340Adjustments to reconcile net (loss) income to cash provided
by operating activities:Depreciation and amortization
    
    
    12,353
    
    
    
    12,233Amortization of debt discount and issuance costs
    
    
    1,717
    
    
    
    463Results of equity investment
    
    
    
    
    
    
    (260
    )Stock-based compensation
    
    
    
    
    
    
    18Change in operating assets and liabilities:Accounts receivable
    
    
    (24,238
    )
    
    
    (18,754
    )Inventories
    
    
    3,333
    
    
    
    3,506Accounts payable and current liabilities
    
    
    20,573
    
    
    
    1,373Other assets and liabilities
    
    
    (3,638
    )
    
    
    (2,328
    )Net cash provided by (used in) continuing operating activities
    
    
    2,959
    
    
    
    (409
    )Net cash provided by discontinued operations
    
    
    900
    
    
    
    49Net cash provided by (used in) operating activities
    
    
    3,859
    
    
    
    (360
    )INVESTING ACTIVITIES:Additions to property, plant and equipment
    
    
    (6,926
    )
    
    
    (2,601
    )Additions to property, plant and equipment by discontinued
operations
    
    
    
    
    
    
    (102
    )Net cash used in investing activities
    
    
    (6,926
    )
    
    
    (2,703
    )FINANCING ACTIVITIES:Net (decrease) increase in lines of credit
    
    
    (18,267
    )
    
    
    8,000Proceeds from term loan
    
    
    120,000
    
    
    
    Repayment of term loan and other debts
    
    
    (975
    )
    
    
    (722
    )Funding of restricted cash
    
    
    (35,690
    )
    
    
    Payments of debt issuance costs
    
    
    (2,422
    )
    
    
    (405
    )Dividends paid
    
    
    (1,024
    )
    
    
    (1,020
    )Issuance of common stock
    
    
    13
    
    
    
    Net cash provided by financing activities
    
    
    61,635
    
    
    
    5,853Effect of exchange rate changes on cash and cash equivalents
    
    
    (797
    )
    
    
    (744
    )Net increase in cash and cash equivalents
    
    
    57,771
    
    
    
    2,046Cash and cash equivalents at beginning of period
    
    
    1,035
    
    
    
    3,298Cash and cash equivalents at end of period
    
    $
    58,806
    
    
    $
    5,344
 See accompanying notes. 6




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INTERMET Corporation 
 Notes to Interim Condensed Consolidated Financial Statements March 31, 2004 (Unaudited) 1. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with accounting principles generally accepted in
the United States 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 accounting principles
generally accepted in the United States 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 March 31, 2004 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2004. The balance sheet at December 31, 2003 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by accounting principles generally accepted in the
United States for complete financial statements. Refer to our 2003 Annual
Report and Form 10-K for complete financial statement and footnotes. Restricted Cash In accordance with our credit agreements, beginning January 8, 2004, $35.7
million of cash is used as collateral for a letter of credit which backs up
$35.0 million of variable rate limited obligation revenue bonds issued in
connection with our Columbus Foundry. If the Company were to retire the bonds,
the letter of credit would no longer be required and the restricted cash would
be used for bond repayment. Refer to Note 7, Debt, for further information. Restricted
cash is excluded from cash and cash equivalents in the accompanying balance sheets. Stock-Based Compensation We grant stock options to employees and directors with an exercise price equal
to the fair value of the shares at the date of grant. We account for stock
option grants in accordance with Accounting Principles Board Opinion No. 25,
Accounting for Stock Issued to Employees, and, accordingly, recognize no
compensation expense for the stock option grants. Had compensation expense for
these stock option grants been determined based on the fair values at the grant
dates for awards under the stock option plans consistent with the method of
SFAS No. 123, Accounting for Stock-Based Compensation, our pro forma net
(loss) income, basic (loss) earnings per share and diluted (loss) earnings per
share would be the following: Three Months EndedMarch 31,
    
    March 31,2004
    
    2003(in thousands of dollars,except per share data)Net (loss) income, as reported
    
    
    ($7,853
    )
    
    $
    3,152Less: Total stock-based employee
compensation expense determined under
fair value method for all awards, net of
related tax effects
    
    
    (151
    )
    
    
    (289
    )Pro forma net (loss) income
    
    
    ($8,004
    )
    
    $
    2,863(Loss) earnings per share:Basic - as reported
    
    
    ($0.31
    )
    
    $
    0.12Basic - pro forma
    
    
    ($0.31
    )
    
    $
    0.11Diluted - as reported
    
    
    ($0.31
    )
    
    $
    0.12Diluted - pro forma
    
    
    ($0.31
    )
    
    $
    0.11
 7




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INTERMET Corporation Notes to Interim Condensed Consolidated Financial Statements March 31, 2004 (Unaudited) 2. Balance Sheet Details Inventories: The components of inventories are as follows (in thousands of dollars): March 31,
    
    December2004
    
    31, 2003Finished goods
    
    $
    21,281
    
    
    $
    22,433Work in process
    
    
    8,649
    
    
    
    8,198Raw materials
    
    
    7,519
    
    
    
    8,113Supplies and patterns
    
    
    35,908
    
    
    
    38,667Total inventories
    
    $
    73,357
    
    
    $
    77,411
 Property, Plant and Equipment, Net: The components of property, plant and equipment are as follows (in thousands of
dollars): March 31,
    
    December2004
    
    31, 2003Land
    
    $
    6,613
    
    
    $
    6,681Buildings and improvements
    
    
    142,740
    
    
    
    143,382Machinery and equipment
    
    
    522,575
    
    
    
    517,846Construction in progress
    
    
    23,521
    
    
    
    26,443Property, plant and equipment, at cost
    
    
    695,449
    
    
    
    694,352Less: Accumulated depreciation and foreign
industrial development grants, net of amortization
    
    
    378,989
    
    
    
    370,272Property, plant and equipment, net
    
    $
    316,460
    
    
    $
    324,080
 8




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INTERMET Corporation Notes to Interim Condensed Consolidated Financial Statements March 31, 2004 (Unaudited) 3. Acquisition On June 25, 2003, we entered into an agreement with Estudos, Servicos e
Participacoes, S.A. to acquire 100% ownership of the shares of Fundicao
Nodular, S.A. (Porto Foundry), which is located in Porto, Portugal.
Previously we owned 50% interest in the Porto Foundry. Under the terms of the
agreement, we acquired 25% of the shares for a cash investment of Euros 4.9
million (approximately $5.6 million) on July 1, 2003, increasing our ownership
from 50% to 75%. We have a call option to acquire, and Estudos, Servicos e
Participacoes, S.A. has a put option to sell, the remaining 25% ownership for
an additional cash investment of 4.9 million Euros (approximately $6.0 million
at the exchange rate on March 31, 2004) on July 1, 2004. Because of the put
option, we recorded $5.9 million, the net present value of the $6.0 million
future cash investment, as Accounts payable in the accompanying balance
sheet as of March 31, 2004, and we consolidate 100% of the financial results
of the Porto Foundry beginning in July 2003. We accounted for the acquisition of the additional shares using the purchase
accounting method. Fundicao Nodular, S.A. became a consolidated subsidiary at
July 1, 2003 and the results of its operations from July 1, 2003 are included
in our consolidated results of operations. Our equity in the net income of the
Porto Foundry for the three months ended March 31, 2003 is included in Equity
interest in a joint venture in the accompanying statement of operations. The
pro forma effects of this acquisition are not material to our consolidated
results of operations. 4. Discontinued Operations Frisby On July 24, 2003, we sold substantially all the assets of Frisby P.M.C.,
Incorporated (Frisby) for $5.3 million, consisting of $3.9 million in cash
and $1.4 million in the form of a promissory note, the balance of which is due
to be paid in full by July 31, 2008. Frisby was a non-core operation, and is
included in our Corporate and Other segment in Note 12, Reporting for Business
Segments. The results of operations of Frisby are summarized as follows (in thousands of
dollars): Three Months EndedMarch 31, 2003Sales
    
    $
    3,817Cost of sales
    
    
    3,411Gross profit
    
    
    406Expenses
    
    
    228Income before income taxes
    
    
    178Income tax expense
    
    
    (68
    )Income from discontinued operation, net of tax
    
    $
    110
 9




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INTERMET Corporation Notes to Interim Condensed Consolidated Financial Statements March 31, 2004 (Unaudited) 4. Discontinued Operations (continued) Radford In May 2003, we decided to permanently close our shell-molding plant in
Radford, Virginia due to changes in market conditions and production
technology, as well as a substantial investment in environmental controls that
would have been necessary for continued operation. The Radford Foundry had
approximately 41 salaried and 333 hourly employees. The facility was closed,
and all the hourly employees and substantially all the salaried employees were
terminated, by December 2003. The Radford Foundry is included in the Ferrous
Metals segment in Note 12, Reporting for Business Segments. As a result of this decision, we recorded an $11.6 million pre-tax
restructuring and impairment charge during the second quarter of 2003. The
charge included a write-down of $9.9 million to reduce the capital assets and
inventories to their fair values, $1.4 million for employee severance and
related contractually guaranteed benefit costs, and $0.3 million for employee
pension costs. In the fourth quarter of 2003, we accrued for an additional $0.1
million for employee severance costs. The accruals for the employee severance
and benefit costs are included in Accrued liabilities in the accompanying
balance sheet at March 31, 2004. In addition, we recorded pre-tax gains of $1.3
million and $0.7 million on the reduction of postretirement benefit obligations
when the employees were terminated in the third and fourth quarter of 2003,
respectively. No additional restructuring charge was recorded in the first
quarter of 2004. We expect to incur approximately $0.4 million for closure costs related to environmental regulations at
the Radford Foundry in the future, which is in addition to the $2.4 million
that is reserved for environmental remediation costs as discussed in Note 9,
Environmental and Legal Matters. Activities relating to the restructuring charges and liabilities related to the
Radford Foundry closure are as follows (in thousands of dollars): Impairment
    
    
    
    
    
    Employee
    
    Employeeof
    
    Write-down
    
    Termination
    
    Postretirementfixed assets
    
    of inventory
    
    Benefits
    
    Benefits
    
    Other
    
    TotalInitial charge in
second quarter of 2003
    
    $
    7,554
    
    
    $
    2,351
    
    
    $
    1,336
    
    
    $
    301
    
    
    $
    50
    
    
    $
    11,592Noncash charges
    
    
    (7,554
    )
    
    
    (2,351
    )
    
    
    
    
    
    
    (301
    )
    
    
    
    
    
    
    (10,206
    )Balance at June 30, 2003
    
    
    
    
    
    
    
    
    
    
    1,336
    
    
    
    
    
    
    
    50
    
    
    
    1,386Reduction of
post-retirement
obligations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,278
    )
    
    
    
    
    
    
    (1,278
    )Noncash credit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,278
    
    
    
    
    
    
    
    1,278Cash payments
    
    
    
    
    
    
    
    
    
    
    (28
    )
    
    
    
    
    
    
    (50
    )
    
    
    (78
    )Balance at September
30, 2003
    
    $
    
    
    
    $
    
    
    
    $
    1,308
    
    
    $
    
    
    
    $
    
    
    
    $
    1,308
 10




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INTERMET Corporation Notes to Interim Condensed Consolidated Financial Statements March 31, 2004 (Unaudited) 4. Discontinued Operations (continued) Impairment
    
    
    
    
    
    Employee
    
    Employeeof
    
    Write-down
    
    Termination
    
    Postretirementfixed assets
    
    of inventory
    
    Benefits
    
    Benefits
    
    Other
    
    TotalBalance at
September 30, 2003
    
    $
    
    
    
    $
    
    
    
    $
    1,308
    
    
    $
    
    
    
    $
    
    
    
    $
    1,308Additional charge
    
    
    
    
    
    
    
    
    
    
    138
    
    
    
    
    
    
    
    
    
    
    
    138Reduction of
post-retirement
obligations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (719
    )
    
    
    
    
    
    
    (719
    )Noncash credit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    719
    
    
    
    
    
    
    
    719Cash payments
    
    
    
    
    
    
    
    
    
    
    (892
    )
    
    
    
    
    
    
    
    
    
    
    (892
    )Balance at December
31, 2003
    
    
    
    
    
    
    
    
    
    
    554
    
    
    
    
    
    
    
    
    
    
    
    554Cash payments
    
    
    
    
    
    
    
    
    
    
    (252
    )
    
    
    
    
    
    
    
    
    
    
    (252
    )Balance at March
31, 2004
    
    $
    
    
    
    $
    
    
    
    $
    302
    
    
    $
    
    
    
    $
    
    
    
    $
    302
 Major classes of assets and liabilities of the Radford Foundry are as follows
(in thousands of dollars): March 31, 2004
    
    December 31, 2003Accounts receivable
    
    $
    506
    
    
    $
    2,052Inventory
    
    
    333
    
    
    
    429Other current assets
    
    
    
    
    
    
    514Property, plant and equipment, net
    
    
    673
    
    
    
    673Total assets
    
    $
    1,512
    
    
    $
    3,668Accounts payable
    
    $
    150
    
    
    $
    491Accrued liabilities
    
    
    1,288
    
    
    
    1,611Retirement benefits
    
    
    2,079
    
    
    
    1,959Other non-current liabilities
    
    
    2,374
    
    
    
    2,508Total liabilities
    
    $
    5,891
    
    
    $
    6,569
 11




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INTERMET Corporation Notes to Interim Condensed Consolidated Financial Statements March 31, 2004 (Unaudited) 4. Discontinued Operations (continued) The results of operations of the Radford Foundry are summarized as follows (in
thousands of dollars): Three Months EndedMarch 31,
    
    March 31,2004
    
    2003Sales
    
    $
    175
    
    
    $
    10,247Cost of sales
    
    
    866
    
    
    
    10,612Gross loss
    
    
    (691
    )
    
    
    (365
    )Expenses
    
    
    21
    
    
    
    105Loss before income taxes
    
    
    (712
    )
    
    
    (470
    )Income tax benefit
    
    
    
    
    
    
    172Loss from discontinued operation, net of tax
    
    
    ($712
    )
    
    
    ($298
    )
 Corporate interest expense was allocated to Frisby and Radford based on the
ratio of their net assets to the consolidated net assets of INTERMET plus
consolidated debt, excluding the net assets of the European subsidiaries. The
European subsidiaries were excluded because they were cash flow positive and
did not directly use the proceeds from the debt outstanding during the periods
covered by the financial statements. The total corporate interest expense
allocated to Frisby and Radford was $179,000 for three months ended March 31,
2003. No corporate interest expense was allocated to Radford for the three
months ended March 31, 2004. SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets
provides that the results of operations of a component of an entity that has
been disposed of should be reported as discontinued operation when the
operations and cash flows of the component have been eliminated from the
ongoing operations of the entity and the entity will not have any significant
continuing involvement in the operations of the component after the disposal
transaction. This occurred when Frisby was sold in July 2003 and when Radford
was closed and abandoned in December 2003. As a result, the results of
operations of both Frisby and Radford for all periods presented, have been
reported as discontinued operations in the accompanying statements of
operations. 12




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INTERMET Corporation Notes to Interim Condensed Consolidated Financial Statements March 31, 2004 (Unaudited) 5. Havana Plant Closure In December 2003, we decided to permanently close our casting plant in Havana,
Illinois, in order to improve our capacity utilization. The Havana Foundry had
approximately 33 salaried and 141 hourly employees. We currently anticipate
that the final plant closure will occur, and substantially all the salaried and
hourly employees will be terminated, by June 30, 2004. The facility is included
in the Ferrous Metals segment in Note 12, Reporting for Business Segments. The
Havana Foundry had revenues of $6.3 million and $6.8 million, and net (loss)
profit of ($0.4) million and $0.1 million, for the three months ended March 31,
2004 and 2003, respectively. Because of our decision to close the Havana Foundry, we recorded an $8.5
million pre-tax charge during the fourth quarter of 2003. The charge included
a write-down of $8.0 million to reduce the capital assets and inventories to
their fair values, and $0.5 million for employee severance and related
contractually guaranteed benefit costs. The accrual for the employee
termination costs is included in Accrued liabilities in the accompanying
balance sheet at March 31, 2004. No restructuring charge was recorded in the
first quarter of 2004. We expect to incur approximately $2 million for
additional employee severance and related benefit costs, facility closure costs, and costs of testing required to transfer the manufacturing
processes of Havana Foundry to other INTERMETs facilities when the Havana
Foundry is finally closed. Activities relating to the restructuring charges and liabilities related to the
Havana Foundry closure are as follows (in thousands of dollars): EmployeeImpairment of
    
    Write-down
    
    Terminationfixed assets
    
    of inventory
    
    Benefits
    
    TotalInitial charge in
fourth quarter of
2003
    
    $
    7,342
    
    
    $
    677
    
    
    $
    462
    
    
    $
    8,481Noncash charges
    
    
    (7,342
    )
    
    
    (677
    )
    
    
    
    
    
    
    (8,019
    )Balance at December
31, 2003 and March
31, 2004
    
    $
    
    
    
    $
    
    
    
    $
    462
    
    
    $
    462
 13




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##### Table of Contents



INTERMET Corporation Notes to Interim Condensed Consolidated Financial Statements (continued) March 31, 2004 (Unaudited) 6. Short-term Lines of Credit Columbus Neunkirchen Foundry GmbH, our wholly owned subsidiary, has various
revolving lines of credit which are payable upon demand. These credit lines
provide for borrowings up to Euros 6.8 million (approximately $8.3 million) at
March 31, 2004. There were no outstanding borrowings under these agreements as
of March 31, 2004. At March 31, 2004, the Porto Foundry maintained lines of credit with various
institutions for up to Euros 13.7 million (approximately $16.7 million). There
was approximately $8.2 million outstanding under these credit lines as of March
31, 2004. Interest accrues at various rates from approximately 3% to 5% and is
payable monthly. 7. Debt Long-term debt consists of the following (in thousands of dollars): March 31,
    
    December 31,2004
    
    2003INTERMET:Revolving credit facility
    
    $
    43,000
    
    
    $
    60,000Senior notes
    
    
    175,000
    
    
    
    175,000Term loan
    
    
    119,700
    
    
    
    Domestic subsidiaries:Industrial development bonds
    
    
    38,850
    
    
    
    39,350Capitalized leases
    
    
    857
    
    
    
    974Foreign subsidiaries:Bank term note
    
    
    7,335
    
    
    
    7,629Capitalized leases
    
    
    809
    
    
    
    598Total
    
    
    385,551
    
    
    
    283,551Less: Long-term debt due within one year
    
    
    5,471
    
    
    
    4,303Long-term debt due after one year
    
    $
    380,080
    
    
    $
    279,248
 As of December 31, 2003, we had a bank revolving credit agreement under which
we had a commitment amount of $190 million. That revolving credit agreement
provided for a maturity date of November 5, 2004 and was secured by all
domestic assets and a pledge of 65% of the stock of foreign subsidiaries. On
January 8, 2004, we refinanced our revolving credit agreement by entering into
a new First Amended and Restated Credit Agreement, which provides for a $90
million revolving credit line and a $120 million term loan. The $90 million
revolving credit portion matures on January 8, 2009, and the $120 million term
loan has a final maturity date of January 8, 2010. Our borrowings under the
First Amended and Restated Credit Agreement continue to be secured by all
domestic assets and a pledge of 65% of the stock of foreign subsidiaries.
Standby letters of credit reduce the amount that the Company is able to borrow
under this credit facility. At March 31, 2004, such standby letters of credit
totaled $26.6 million. The interest rate on the revolving loan is based on our
leverage, and as of March 31, 2004 was LIBOR plus 3.50%. We are also required
to pay 0.50% on any unused portion of the revolving credit facility. The
interest rate on the term loan is LIBOR plus 4.25%. 14




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##### Table of Contents



INTERMET Corporation Notes to Interim Condensed Consolidated Financial Statements (continued) March 31, 2004 (Unaudited) 7. Debt (continued) Also on January 8, 2004, we entered into a $35.7 million Letter of Credit
Facility Agreement, as well as a Cash Collateral Agreement in the same amount.
Under these agreements, $35.7 million of the proceeds from the term loan
portion of the First Amended and Restated Credit Agreement are used as
collateral for the issuance of a $35.7 million letter of credit. This letter
of credit was issued under our prior bank revolving credit agreement and was
issued to back up $35.0 million of variable rate limited obligation revenue
bonds issued in connection with our Columbus Foundry. We are required to pay a
fee of 0.625% for the Letter of Credit Facility Agreement. The agreement has
the same maturity as the First Amended and Restated Credit Agreement. As a result of entering into the First Amended and Restated Credit Agreement
and the related agreements described above, we incurred $2.4 million of debt
issuance costs during the first quarter of 2004, which are included in Other
non-current assets in the accompanying balance sheet as of March 31, 2004. In
addition, capitalized debt issuance costs of $1.4 million related to our prior
bank revolving credit agreement were written off during the first quarter of
2004. The First Amended and Restated Credit Agreement and the related Letter of
Credit Facility Agreement include covenants that require us to maintain
specified financial ratios, restrictions on the amount that we can pay in
dividends, as well as other covenants and restrictions. On April 13, 2004, we
entered into a First Amendment to First Amended and Restated Credit Agreement
and a First Amendment to Letter of Credit Facility Agreement. The purpose of
these amendments was primarily to change our financial ratio covenants to make
them less restrictive for the six fiscal quarters beginning with the quarter
ended March 31, 2004. See Note 16, Subsequent Event, for further information. As
of March 31, 2004, we were in compliance with those financial covenants, as
amended.
As of March 31, 2004, total borrowings and letter of credit obligations under
the $90 million revolving credit facility were $69.6 million, leaving $20.4
million of availability. Maturities of long-term debt at March 31, 2004 and for each twelve-month period
thereafter are as follows (in thousands of dollars): Twelve-month period endingMarch 31, 2005
    
    $
    5,471March 31, 2006
    
    
    5,407March 31, 2007
    
    
    7,356March 31, 2008
    
    
    14,417Thereafter
    
    
    352,900$
    385,551
 15




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##### Table of Contents



INTERMET Corporation Notes to Interim Condensed Consolidated Financial Statements (continued) March 31, 2004 (Unaudited) 8. Supplemental Condensed Consolidating Financial Information On June 13, 2002, we issued $175 million of senior notes, which will mature in
2009. The senior notes are guaranteed by certain of our domestic wholly-owned
subsidiaries (Combined Guarantor Subsidiaries). The guarantees are
unconditional and joint and several. The senior notes are effectively
subordinated to the secured debt of the Company (Parent). Restrictions
contained in the indenture covering the senior notes include, but are not
limited to, restrictions on incurring additional secured debt, repurchasing of
our capital stock, disposal of assets, affiliate transactions, and transfer of
assets. As of March 31, 2004, the Parent and the Combined Guarantor
Subsidiaries had $200 million of secured debt outstanding and $20.4 million of
unused commitments, net of outstanding letters of credit, under our credit
facility. The secured debt of the Parent is also guaranteed by each of the
Combined Guarantor Subsidiaries. Certain of our domestic subsidiaries (Intermet International, Inc., Intermet
Holding Company, Transnational Indemnity Company, and Western Capital
Corporation) and all of our foreign subsidiaries are not guarantors of the
notes (Combined Non-Guarantor Subsidiaries). The Combined Non-Guarantor
Subsidiaries had $16.3 million of debt outstanding as of March 31, 2004. Presented below is summarized condensed consolidating financial information for
the Parent, the Combined Guarantor Subsidiaries, the Combined Non-Guarantor
Subsidiaries, and the Company on a consolidated basis as of March 31, 2004 and
December 31, 2003, and for the three months ended March 31, 2004 and 2003. Investments in subsidiaries are presented using the equity method of
accounting. Separate financial statements of the Combined Guarantor
Subsidiaries are not provided as the condensed consolidating financial
information contained herein provides a more meaningful disclosure to allow
investors to determine the nature of the assets held by and the operations of
the combined group. 16




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INTERMET Corporation Notes to Interim Condensed Consolidated Financial Statements (continued) March 31, 2004 (Unaudited) 8. Supplemental Condensed Consolidating Financial Information (continued) Three Months Ended March 31, 2004Combined
    
    CombinedGuarantor
    
    Non-GuarantorParent
    
    Subsidiaries
    
    Subsidiaries
    
    Eliminations
    
    Consolidated(in thousands of dollars)INCOME STATEMENT DATANet sales
    
    $
    
    
    
    $
    171,163
    
    
    $
    42,452
    
    
    
    ($2,969
    )
    
    $
    210,646Cost of sales
    
    
    
    
    
    
    164,533
    
    
    
    35,592
    
    
    
    (2,969
    )
    
    
    197,156Gross profit
    
    
    
    
    
    
    6,630
    
    
    
    6,860
    
    
    
    
    
    
    
    13,490Selling, general and administrative
expenses
    
    
    1,503
    
    
    
    5,814
    
    
    
    3,406
    
    
    
    
    
    
    
    10,723Operating (loss) profit
    
    
    (1,503
    )
    
    
    816
    
    
    
    3,454
    
    
    
    
    
    
    
    2,767Other (income) expenses, net:Interest expense, net
    
    
    6,282
    
    
    
    2,489
    
    
    
    431
    
    
    
    
    
    
    
    9,202Other income, net
    
    
    (197
    )
    
    
    (144
    )
    
    
    (250
    )
    
    
    
    
    
    
    (591
    )(Loss) income from continuing operations
before income taxes
    
    
    (7,588
    )
    
    
    (1,529
    )
    
    
    3,273
    
    
    
    
    
    
    
    (5,844
    )Income tax expense
    
    
    (271
    )
    
    
    (185
    )
    
    
    (841
    )
    
    
    
    
    
    
    (1,297
    )(Loss) income from continuing operations
    
    
    (7,859
    )
    
    
    (1,714
    )
    
    
    2,432
    
    
    
    
    
    
    
    (7,141
    )Loss from discontinued operations, net of
tax
    
    
    
    
    
    
    (712
    )
    
    
    
    
    
    
    
    
    
    
    (712
    )Net (loss) income
    
    
    ($7,859
    )
    
    
    ($2,426
    )
    
    $
    2,432
    
    
    $
    
    
    
    
    ($7,853
    )
 17




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##### Table of Contents



INTERMET Corporation Notes to Interim Condensed Consolidated Financial Statements (continued) March 31, 2004 (Unaudited) 8. Supplemental Condensed Consolidating Financial Information (continued) Three Months Ended March 31, 2003Combined
    
    CombinedGuarantor
    
    Non-GuarantorParent
    
    Subsidiaries
    
    Subsidiaries
    
    Eliminations
    
    Consolidated(in thousands of dollars)INCOME STATEMENT DATANet sales
    
    $
    
    
    
    $
    171,486
    
    
    $
    26,967
    
    
    
    ($5,413
    )
    
    $
    193,040Cost of sales
    
    
    
    
    
    
    153,144
    
    
    
    24,068
    
    
    
    (5,413
    )
    
    
    171,799Gross profit
    
    
    
    
    
    
    18,342
    
    
    
    2,899
    
    
    
    
    
    
    
    21,241Selling, general and administrative expenses
    
    
    1,316
    
    
    
    5,340
    
    
    
    1,901
    
    
    
    
    
    
    
    8,557Operating (loss) profit
    
    
    (1,316
    )
    
    
    13,002
    
    
    
    998
    
    
    
    
    
    
    
    12,684Other (income) expenses, net:Interest expense (income), net
    
    
    5,244
    
    
    
    2,142
    
    
    
    (85
    )
    
    
    
    
    
    
    7,301Other expense (income), net
    
    
    218
    
    
    
    (5
    )
    
    
    59
    
    
    
    
    
    
    
    272(Loss) income from continuing operations before
income taxes and equity interest in a joint venture
    
    
    (6,778
    )
    
    
    10,865
    
    
    
    1,024
    
    
    
    
    
    
    
    5,111Income tax benefit (expense)
    
    
    2,383
    
    
    
    (4,241
    )
    
    
    (173
    )
    
    
    
    
    
    
    (2,031
    )Equity interest in a joint venture
    
    
    
    
    
    
    
    
    
    
    260
    
    
    
    
    
    
    
    260(Loss) income from continuing operations
    
    
    (4,395
    )
    
    
    6,624
    
    
    
    1,111
    
    
    
    
    
    
    
    3,340Loss from discontinued operations, net of tax
    
    
    
    
    
    
    (188
    )
    
    
    
    
    
    
    
    
    
    
    (188
    )Net (loss) income
    
    
    ($4,395
    )
    
    $
    6,436
    
    
    $
    1,111
    
    
    $
    
    
    
    $
    3,152
 18




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INTERMET Corporation Notes to Interim Condensed Consolidated Financial Statements (continued) March 31, 2004 (Unaudited) 8. Supplemental Condensed Consolidating Financial Information (continued) As of March 31, 2004Combined
    
    Combined Non-Guarantor
    
    GuarantorParent
    
    Subsidiaries
    
    Subsidiaries
    
    Eliminations
    
    Consolidated(in thousands of dollars)BALANCE SHEET DATAASSETSCurrent assets:Cash and cash equivalents
    
    $
    55,858
    
    
    $
    82
    
    
    $
    2,866
    
    
    $
    
    
    
    $
    58,806Accounts receivable, net
    
    
    267
    
    
    
    79,453
    
    
    
    29,028
    
    
    
    
    
    
    
    108,748Inventories
    
    
    
    
    
    
    53,247
    
    
    
    20,169
    
    
    
    (59
    )
    
    
    73,357Other current assets
    
    
    239
    
    
    
    3,542
    
    
    
    12,397
    
    
    
    (5,764
    )
    
    
    10,414Total current assets
    
    
    56,364
    
    
    
    136,324
    
    
    
    64,460
    
    
    
    (5,823
    )
    
    
    251,325Other assets:Property, plant and equipment, net
    
    
    3,942
    
    
    
    243,038
    
    
    
    68,612
    
    
    
    868
    
    
    
    316,460Goodwill
    
    
    
    
    
    
    165,933
    
    
    
    
    
    
    
    
    
    
    
    165,933Restricted cash
    
    
    35,690
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    35,690Other non-current assets
    
    
    20,963
    
    
    
    163
    
    
    
    1,994
    
    
    
    635
    
    
    
    23,755Intercompany, net
    
    
    (68,389
    )
    
    
    90,855
    
    
    
    (29,760
    )
    
    
    7,294
    
    
    
    Investments in subsidiaries
    
    
    548,033
    
    
    
    
    
    
    
    
    
    
    
    (548,033
    )
    
    
    Total assets
    
    $
    596,603
    
    
    $
    636,313
    
    
    $
    105,306
    
    
    
    ($545,059
    )
    
    $
    793,163LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    4,049
    
    
    $
    67,982
    
    
    $
    21,304
    
    
    
    ($309
    )
    
    $
    93,026Accrued liabilities
    
    
    17,399
    
    
    
    36,703
    
    
    
    10,558
    
    
    
    367
    
    
    
    65,027Short-term lines of credit
    
    
    
    
    
    
    
    
    
    
    8,164
    
    
    
    
    
    
    
    8,164Long-term debt due within one year
    
    
    1,550
    
    
    
    993
    
    
    
    2,928
    
    
    
    
    
    
    
    5,471Total current liabilities
    
    
    22,998
    
    
    
    105,678
    
    
    
    42,954
    
    
    
    58
    
    
    
    171,688Non-current liabilitiesLong-term debt due after one year
    
    
    338,500
    
    
    
    36,364
    
    
    
    5,216
    
    
    
    
    
    
    
    380,080Retirement benefits
    
    
    83,871
    
    
    
    1,777
    
    
    
    
    
    
    
    
    
    
    
    85,648Other non-current liabilities
    
    
    348
    
    
    
    934
    
    
    
    3,579
    
    
    
    
    
    
    
    4,861Total non-current liabilities
    
    
    422,719
    
    
    
    39,075
    
    
    
    8,795
    
    
    
    
    
    
    
    470,589Shareholders equity
    
    
    150,886
    
    
    
    491,560
    
    
    
    53,557
    
    
    
    (545,117
    )
    
    
    150,886Total liabilities and shareholders equity
    
    $
    596,603
    
    
    $
    636,313
    
    
    $
    105,306
    
    
    
    ($545,059
    )
    
    $
    793,163
 19




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##### Table of Contents



INTERMET Corporation Notes to Interim Condensed Consolidated Financial Statements (continued) March 31, 2004 (Unaudited) 8. Supplemental Condensed Consolidating Financial Information (continued) As of December 31, 2003Combined
    
    Combined Non-Guarantor
    
    GuarantorParent
    
    Subsidiaries
    
    Subsidiaries
    
    Eliminations
    
    Consolidated(in thousands of dollars)BALANCE SHEET DATAASSETSCurrent assets:Cash and cash equivalents
    
    
    ($2,674
    )
    
    $
    127
    
    
    $
    3,582
    
    
    $
    
    
    
    $
    1,035Accounts receivable, net
    
    
    7
    
    
    
    64,457
    
    
    
    22,309
    
    
    
    
    
    
    
    86,773Inventories
    
    
    
    
    
    
    58,030
    
    
    
    19,440
    
    
    
    (59
    )
    
    
    77,411Other current assets
    
    
    7,319
    
    
    
    1,677
    
    
    
    1,751
    
    
    
    1
    
    
    
    10,748Total current assets
    
    
    4,652
    
    
    
    124,291
    
    
    
    47,082
    
    
    
    (58
    )
    
    
    175,967Non-current assets:Property, plant and equipment, net
    
    
    3,765
    
    
    
    247,681
    
    
    
    71,766
    
    
    
    868
    
    
    
    324,080Goodwill
    
    
    
    
    
    
    165,933
    
    
    
    
    
    
    
    
    
    
    
    165,933Other non-current assets
    
    
    15,834
    
    
    
    1,378
    
    
    
    2,049
    
    
    
    1,443
    
    
    
    20,704Intercompany, net
    
    
    (65,291
    )
    
    
    86,241
    
    
    
    (24,711
    )
    
    
    3,761
    
    
    
    Investments in subsidiaries
    
    
    550,411
    
    
    
    
    
    
    
    
    
    
    
    (550,411
    )
    
    
    Total assets
    
    $
    509,371
    
    
    $
    625,524
    
    
    $
    96,186
    
    
    
    ($544,397
    )
    
    $
    686,684LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    2,151
    
    
    $
    58,504
    
    
    $
    20,398
    
    
    
    ($316
    )
    
    $
    80,737Accrued liabilities
    
    
    27,671
    
    
    
    29,041
    
    
    
    224
    
    
    
    2,606
    
    
    
    59,542Short-term lines of credit
    
    
    
    
    
    
    
    
    
    
    9,992
    
    
    
    
    
    
    
    9,992Long-term debt due within one year
    
    
    350
    
    
    
    983
    
    
    
    2,970
    
    
    
    
    
    
    
    4,303Total current liabilities
    
    
    30,172
    
    
    
    88,528
    
    
    
    33,584
    
    
    
    2,290
    
    
    
    154,574Non-current liabilitiesLong-term debt due after one year
    
    
    237,000
    
    
    
    36,991
    
    
    
    5,257
    
    
    
    
    
    
    
    279,248Retirement benefits
    
    
    84,135
    
    
    
    1,174
    
    
    
    
    
    
    
    
    
    
    
    85,309Other non-current liabilities
    
    
    (4,073
    )
    
    
    4,843
    
    
    
    3,838
    
    
    
    808
    
    
    
    5,416Total non-current liabilities
    
    
    317,062
    
    
    
    43,008
    
    
    
    9,095
    
    
    
    808
    
    
    
    369,973Shareholders equity
    
    
    162,137
    
    
    
    493,988
    
    
    
    53,507
    
    
    
    (547,495
    )
    
    
    162,137Total liabilities and shareholders equity
    
    $
    509,371
    
    
    $
    625,524
    
    
    $
    96,186
    
    
    
    ($544,397
    )
    
    $
    686,684
 20




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##### Table of Contents



INTERMET Corporation Notes to Interim Condensed Consolidated Financial Statements (continued) March 31, 2004 (Unaudited) 8. Supplemental Condensed Consolidating Financial Information (continued) Three Months Ended March 31, 2004Combined
    
    CombinedGuarantor
    
    Non-GuarantorParent
    
    Subsidiaries
    
    Subsidiaries
    
    Eliminations
    
    Consolidated(in thousands of dollars)CASH FLOW DATACash (used in) provided by continuing
operating activities
    
    
    ($4,556
    )
    
    $
    4,570
    
    
    $
    2,945
    
    
    $
    
    
    
    $
    2,959Cash provided by discontinued operations
    
    
    
    
    
    
    900
    
    
    
    
    
    
    
    
    
    
    
    900Net cash (used in) provided by operating
activities
    
    
    (4,556
    )
    
    
    5,470
    
    
    
    2,945
    
    
    
    
    
    
    
    3,859Investing activities:Additions to property, plant and
equipment
    
    
    (489
    )
    
    
    (4,898
    )
    
    
    (1,539
    )
    
    
    
    
    
    
    (6,926
    )Net cash used in investing activities
    
    
    (489
    )
    
    
    (4,898
    )
    
    
    (1,539
    )
    
    
    
    
    
    
    (6,926
    )Financing activities:Net decrease in lines of credit
    
    
    (17,000
    )
    
    
    
    
    
    
    (1,267
    )
    
    
    
    
    
    
    (18,267
    )Proceeds from term loan
    
    
    120,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    120,000Repayment of term loan and
    other debts
    
    
    (300
    )
    
    
    (617
    )
    
    
    (58
    )
    
    
    
    
    
    
    (975
    )Funding of restricted cash
    
    
    (35,690
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (35,690
    )Payment of debt issuance costs
    
    
    (2,422
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,422
    )Dividends paid
    
    
    (1,024
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,024
    )Issuance of common stock
    
    
    13
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13Net cash provided by (used in) financing
activities
    
    
    63,577
    
    
    
    (617
    )
    
    
    (1,325
    )
    
    
    
    
    
    
    61,635Effect of exchange rate changes on cash and
cash equivalents
    
    
    
    
    
    
    
    
    
    
    (797
    )
    
    
    
    
    
    
    (797
    )Net increase (decrease) in cash and cash
equivalents
    
    $
    58,532
    
    
    
    ($45
    )
    
    
    ($716
    )
    
    $
    
    
    
    $
    57,771
 21




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##### Table of Contents



INTERMET Corporation Notes to Interim Condensed Consolidated Financial Statements (continued) March 31, 2004 (Unaudited) 8. Supplemental Condensed Consolidating Financial Information (continued) Three Months Ended March 31, 2003Combined
    
    CombinedGuarantor
    
    Non-GuarantorParent
    
    Subsidiaries
    
    Subsidiaries
    
    Eliminations
    
    Consolidated(in thousands of dollars)CASH FLOW DATACash (used in) provided by continuing
operating activities
    
    
    ($6,073
    )
    
    $
    3,926
    
    
    $
    1,738
    
    
    $
    
    
    
    
    ($409
    )Cash provided by discontinued operations
    
    
    
    
    
    
    49
    
    
    
    
    
    
    
    
    
    
    
    49Net cash (used in) provided by operating
activities
    
    
    (6,073
    )
    
    
    3,975
    
    
    
    1,738
    
    
    
    
    
    
    
    (360
    )Investing activities:Additions to property, plant and
equipment
    
    
    (142
    )
    
    
    (2,432
    )
    
    
    (27
    )
    
    
    
    
    
    
    (2,601
    )Additions to property, plant and
equipment by discontinued operations
    
    
    
    
    
    
    (102
    )
    
    
    
    
    
    
    
    
    
    
    (102
    )Net cash used in investing activities
    
    
    (142
    )
    
    
    (2,534
    )
    
    
    (27
    )
    
    
    
    
    
    
    (2,703
    )Financing activities:Net increase in revolving credit facility
    
    
    8,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,000Net (decrease) increase in other debts
    
    
    (1,551
    )
    
    
    (651
    )
    
    
    1,480
    
    
    
    
    
    
    
    (722
    )Payment of debt issuance costs
    
    
    (405
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (405
    )Dividends paid
    
    
    (1,020
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,020
    )Net cash provided by (used in) financing
activities
    
    
    5,024
    
    
    
    (651
    )
    
    
    1,480
    
    
    
    
    
    
    
    5,853Effect of exchange rate changes on cash and
cash equivalents
    
    
    
    
    
    
    
    
    
    
    (744
    )
    
    
    
    
    
    
    (744
    )Net (decrease) increase in cash and cash
equivalents
    
    
    ($1,191
    )
    
    $
    790
    
    
    $
    2,447
    
    
    $
    
    
    
    $
    2,046
 22




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##### Table of Contents



INTERMET Corporation Notes to Interim Condensed Consolidated Financial Statements (continued) March 31, 2004 (Unaudited) 9. Environmental and Legal Matters We are subject to federal, state, local and foreign environmental laws and
regulations concerning, among other things, air emissions, effluent discharges,
storage treatment and disposal of hazardous materials and remediation of
contaminated soil and groundwater. At some of our industrial sites, hazardous
materials have been managed for many years. Consequently, we are subject to
various environmental laws that impose compliance obligations and can create
liability for historical releases of hazardous substances. It is likely that we
will be subject to increasingly stringent environmental standards in the future
and that we will be required to make additional expenditures, which could be
significant, relating to environmental matters on an ongoing basis. The 1990 amendments to the Federal Clean Air Act and regulations promulgated
thereunder are expected to have a major impact on the compliance cost of many
U.S. companies, including foundries of the type we own. We are in the process
of reviewing Maximum Achievable Control Technology Standards that will be
applicable to our industry. We also have current and former operating entities (for which we may be
responsible) that are potentially responsible for clean-up of known
environmental sites. These include third-party-owned sites, as well as sites
that are currently owned, or formerly owned, by us or our subsidiaries. For
known environmental sites, we have recorded reserves to cover estimated future
environmental expenditures. Environmental reserves were $6.6 million as of
March 31, 2004. These reserves include a $3.1 million cash escrow account
acquired as a part of the acquisition of Ganton Technologies in 1999 that is
being used to fund the clean-up of an inactive property located in Addison,
Illinois. We currently expect that the clean-up will occur and the account will
be settled in 2004. The reserves also include $2.4 million for the closed
Radford facility, which is discussed below. There can be no assurance that
costs in excess of these accruals will not be incurred, or that unknown
conditions will not be discovered that result in material additional
expenditures by us for environmental matters. On March 14, 2002, we entered into a Consent Order with the U.S. Environmental
Protection Agency (USEPA), which will require investigation of the nature and
extent of any hazardous waste disposed of at our Radford, Virginia, facilities.
We have entered into this Consent Order in connection with the USEPAs
Corrective Action Program, which is being undertaken on a nationwide basis by
USEPA pursuant to the Resource Conservation and Recovery Act of 1976. The
Corrective Action Program requires facilities that have historically generated
or handled hazardous waste to determine whether those activities have or could
adversely affect groundwater or human health. Because we historically disposed
of waste material at this site, it is probable that remedial action will be
required with respect to that on-site disposal. We have accrued $2.4 million
for such remediation activity based on our investigation to date. However, our
investigation of this site will continue and it is possible that ultimate
remediation costs could exceed the amounts that we have accrued. We are a party to other legal proceedings associated with environmental,
employment, commercial, product liability or other matters in the ordinary
course of our business. At the present time, we do not believe that any of
such proceedings will have a material adverse effect on our results of
operations. It is possible, however, that future results of operations for any
particular quarterly or annual period could be materially affected by changes
in our assumptions related to these proceedings. 23




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##### Table of Contents



INTERMET Corporation Notes to Interim Condensed Consolidated Financial Statements (continued) March 31, 2004 (Unaudited) 10. Retirement Benefits We maintain six noncontributory defined benefit pension plans for certain U.S.
employees. Our policy is to fund amounts as required under applicable laws and
regulations. In addition, we provide health care and life insurance benefits to
certain retired U.S. employees and their dependents. The components of net periodic benefit cost are as follows (in thousands of
dollars): OtherPension Benefits
    
    Postretirement BenefitsThree Months Ended March 31,2004
    
    2003
    
    2004
    
    2003Service cost
    
    $
    587
    
    
    $
    611
    
    
    $
    112
    
    
    $
    255Interest cost
    
    
    1,558
    
    
    
    1,505
    
    
    
    608
    
    
    
    686Expected return on plan assets
    
    
    (1,421
    )
    
    
    (1,413
    )
    
    
    
    
    
    
    Amortization of prior service
cost
    
    
    225
    
    
    
    184
    
    
    
    (91
    )
    
    
    (15
    )Amortization of loss (gain)
    
    
    541
    
    
    
    325
    
    
    
    38
    
    
    
    (52
    )Net periodic benefit cost
    
    $
    1,490
    
    
    $
    1,212
    
    
    $
    667
    
    
    $
    874
 We previously disclosed in our 2003 annual report that we expected to
contribute $14.9 million to our pension plans in 2004. As of March 31, 2004,
$0.4 million of contributions have been made. We presently expect to
contribute an additional $15.3 million, for a total of $15.7 million, to fund
our pension plans in 2004. We provide prescription drug benefits to some of our retirees and will,
therefore, be affected by the provisions of the Medicare Prescription Drug,
Improvement and Modernization Act of 2003 (the Medicare Reform Act), which
was enacted on December 8, 2003. The Medicare Reform Act provides for a
federal subsidy to sponsors of retiree health care benefit plans that provide
a benefit at least actuarially equivalent to the benefit established by this
Act, and therefore may reduce our postretirement benefit obligations. In
accordance with the Position of the Staff of the Financial Accounting
Standards Board FAS 106-1, the effects on our accumulated postretirement
benefit obligation and net periodic postretirement benefit cost have not been
recognized in our financial statements. Specific authoritative guidance on
the accounting for the Medicare Reform Act is pending and that guidance, when
issued, could require changes in the information reported in our financial
statements. Due to the lack of direction regarding the provision of the
Medicare Reform Act and the uncertainty associated with the related
accounting issues, we are deferring recognition of the effects of the
Medicare Reform Act. 11. Income Taxes Beginning 2004, federal tax expense or benefit will not be recorded until
the pre-tax profit of our domestic operations exceeds our accumulated tax loss and credits carryforward.
As a result of the accumulation of losses in the past three years, the deferred tax asset derived from the pre-tax
loss of our domestic operations is fully reserved. 24




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##### Table of Contents



INTERMET Corporation Notes to Interim Condensed Consolidated Financial Statements (continued) March 31, 2004 (Unaudited) 12. Reporting for Business Segments We evaluate our financial results in two business segments, the Ferrous
Metals segment and the Light Metals segment. Our segment reporting is
consistent with the manner in which our business is managed and our resources
are allocated by the management. The Ferrous Metals segment consists of
ferrous foundry operations and their related machining operations. The Light
Metals segment consists of aluminum, magnesium and zinc casting operations
and their related machining operations. The Corporate and Other segment
includes operations that do not fall within the Ferrous Metals segment or
Light Metals segment, and the corporate business unit and its related
expenses and eliminations. Selected financial information of the business
segments is displayed in the following table: Ferrous
    
    Light
    
    CorporateMetals
    
    Metals
    
    and Other
    
    Consolidated(in thousands of dollars)Three-month period ended March 31, 2004:Net sales
    
    $
    141,150
    
    
    $
    69,496
    
    
    $
    
    
    
    $
    210,646Operating profit (loss)
    
    $
    3,318
    
    
    $
    1,989
    
    
    
    ($2,540
    )
    
    $
    2,767Interest expense, net
    
    
    (424
    )
    
    
    (22
    )
    
    
    (8,756
    )
    
    
    (9,202
    )Other income, net
    
    
    394
    
    
    
    10
    
    
    
    187
    
    
    
    591Income tax expense
    
    
    (919
    )
    
    
    (107
    )
    
    
    (271
    )
    
    
    (1,297
    )Loss from discontinued operations, net of tax
    
    
    (712
    )
    
    
    
    
    
    
    
    
    
    
    (712
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    ($7,853
    )As of March 31, 2004:Total assets
    
    $
    382,469
    
    
    $
    283,871
    
    
    $
    126,823
    
    
    $
    793,163Three-month period ended March 31, 2003:Net sales
    
    $
    130,141
    
    
    $
    62,899
    
    
    $
    
    
    
    $
    193,040Operating profit (loss)
    
    $
    10,449
    
    
    $
    4,043
    
    
    
    ($1,808
    )
    
    $
    12,684Interest expense, net
    
    
    (895
    )
    
    
    (1,149
    )
    
    
    (5,257
    )
    
    
    (7,301
    )Other (expense) income, net
    
    
    (281
    )
    
    
    
    
    
    
    9
    
    
    
    (272
    )Income tax (expense) benefit
    
    
    (3,348
    )
    
    
    (1,172
    )
    
    
    2,489
    
    
    
    (2,031
    )Equity interest in a joint venture
    
    
    260
    
    
    
    
    
    
    
    
    
    
    
    260(Loss) income from discontinued operations,
net of tax
    
    
    (298
    )
    
    
    
    
    
    
    110
    
    
    
    (188
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    3,152As of December 31, 2003:Total assets
    
    $
    372,812
    
    
    $
    281,396
    
    
    $
    32,476
    
    
    $
    686,684
 25




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##### Table of Contents



INTERMET Corporation Notes to Interim Condensed Consolidated Financial Statements (continued) March 31, 2004 (Unaudited) 13. Earnings per Share (Loss) earnings per share are computed as follows: Three Months EndedMarch 31,
    
    March 31,2004
    
    2003(in thousands of dollars,except per share data)Numerator:Net (loss) income
    
    
    ($7,853
    )
    
    $
    3,152Denominator:Denominator for basic (loss) earnings per share 
weighted average shares
    
    
    25,595
    
    
    
    25,547Effect of dilutive securities:Employee stock options and unearned restricted stock
    
    
    
    
    
    
    129Denominator for diluted (loss) earnings per share 
adjusted weighted average shares and assumed exercise
of options
    
    
    25,595
    
    
    
    25,676Basic (loss) earnings per share
    
    
    ($0.31
    )
    
    $
    0.12Fully diluted (loss) earnings per share
    
    
    ($0.31
    )
    
    $
    0.12
 The fully diluted (loss) earnings per share reflect the assumed exercise of
stock options and unearned restricted stock. 26




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##### Table of Contents



INTERMET Corporation Notes to Interim Condensed Consolidated Financial Statements (continued) March 31, 2004 (Unaudited) 14. Derivative Financial Instruments Under our risk management policy, the use of derivatives for managing risk is
confined to hedging the exposure related to variable rate funding activities,
hedging the foreign currency exposure of inter-company payables and
receivables, and hedging purchase commitments relating to raw materials used in
our production processes and related energy costs. Specifically, we review our
liability structure on a recurring basis and make the determination as to
whether our risk exposure should be adjusted using derivative instruments. We
do not participate in speculative derivatives trading. At March 31, 2004, we had outstanding foreign exchange contracts with a
notional amount of Euros 12.0 million (approximately $14.6 million) to hedge
our European operations. We have designated these contracts as fair value
hedges. The market value of such contracts was minimal at March 31, 2004. In addition to the above derivative financial instruments, we have other
contracts that have the characteristics of derivatives but are not required to
be accounted for as derivatives. These contracts for the physical delivery of
commodities qualify for the normal purchases and normal sales exception under
SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities as
we take physical delivery of the commodity and use it in the production
process. This exception is an election and, if not elected, these contracts
would be carried in the balance sheet at fair value with changes in the fair
value reflected in earnings. These contracts are used to cover our raw
materials and energy purchases. 15. Related Party Transactions We received management and technical support fees from Fundicao Nodular, S.A.
(Porto Foundry), our previously 50% owned Portuguese joint venture, for
providing administrative service and technical support to them. We also had an
outstanding interest-bearing loan to and other receivables from the Porto
Foundry, mainly consisting of management and technical support fee receivables
and advances made by us to finance the Porto Foundrys operations. Interest
rates on these loan and other receivables ranged from three-month European
Interbank Offered Rate (EURIBOR) plus 0.8% to three-month EURIBOR plus 1.0%. On July 1, 2003, our ownership in the Porto Foundry increased from 50% to 75%.
Therefore, beginning July 1, 2003, our related party transactions with the
Porto Foundry were eliminated from our consolidated financial statements. The related party transactions with the Porto Foundry are summarized as follows
(in thousands of dollars): Three Months EndedMarch 31, 2003Management fee
    
    $
    81Technical support fee
    
    $
    105Interest income
    
    $
    49
 There were no other material transactions with, or material balances due to or
from, any other related party. 27




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##### Table of Contents



INTERMET Corporation Notes to Interim Condensed Consolidated Financial Statements (continued) March 31, 2004 (Unaudited) 16. Subsequent Event On April 13, 2004, we amended our First Amended and Restated Credit Agreement
by entering into a First Amendment to First Amended and Restated Credit
Agreement. We also amended our $35.7 million Letter of Credit Facility
Agreement by entering into a First Amendment to Letter of Credit Facility
Agreement. The purpose of these amendments was primarily to change our
financial ratio covenants to make them less restrictive for the six fiscal
quarters beginning with the quarter ended March 31, 2004. 28




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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.
Actual results may differ materially from those in the forward-looking
statements as a result of various factors including, but not limited to:  
    
    General economic conditions, including any downturn in the markets in which we operate  
    
    Fluctuations in automobile and light and heavy truck production, which directly affect demand for our products  
    
    Changes in procurement practices and policies of our customers for automotive components, including the risk of the loss of
any of our major customers or the loss of a significant vehicle program  
    
    Pricing practices of our customers, including continuing demands for price concessions as a condition to retaining current
business or obtaining new business, and the negative effect that price concessions have on our profit margins  
    
    Fluctuations in the cost of raw materials, including the cost of energy, aluminum, zinc, magnesium, alloys and scrap steel,
and our ability, if any, to pass those costs on to our customers  
    
    The rising cost of scrap steel, one of our primary raw materials, and the possibility that scrap steel costs will remain at
high levels or continue to increase, which would have a negative effect on our profit margins  
    
    Our ability to meet the financial covenants set forth in our debt agreements, and our ability to negotiate less restrictive
covenants if necessary, all of which have an effect on our liquidity  
    
    Fluctuations in interest rates that may affect our borrowing costs  
    
    Deterioration in the market share of any of our major customers  
    
    Fluctuations in foreign currency exchange rates  
    
    Work stoppages or other labor disputes that could disrupt production at our facilities or those of our customers  
    
    Continuing changes in environmental regulations to which we are subject, and the costs will we incur in meeting more
stringent regulations  
    
    Factors or presently unknown circumstances that may result in impairment of our assets, including further write downs of
our goodwill  
    
    Other risks as detailed from time to time in our filings with the Securities and Exchange Commission We do not intend to update these forward-looking statements. 29




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Material Changes in Results of Operations  Three months ended March 31, 2004 Sales for the first quarter of 2004 were $210.6 million, an increase of $17.6
million or 9.1% as compared to sales in the same period in 2003 of $193.0
million. Ferrous Metals segment sales were $141.1 million during the first
quarter of 2004 compared to $130.1 million for the same period last year,
representing an increase in sales of $11.0 million or 8.5%. Included as part
of Ferrous Metals segment sales, European sales during the three months ended
March 31, 2004 were $42.5 million, an increase of $15.5 million or 57.4% as
compared to European sales of $27.0 million for the same period last year. The
overall increase in Ferrous Metals segment sales is mainly attributable to the
consolidation of the Porto Foundrys sales of $9.8 million and favorable
foreign currency exchange on other European sales of $4.6 million, partially
offset by lower selling price of certain of our products. Light Metals segment
sales were $69.5 million during the first quarter of 2004, an increase of $6.6
million or 10.5% compared to $62.9 million for the same period last year. The
increase in sales is mainly attributable to the growth of our business in
domestic products made with our pressure-counter-pressure casting
(PCPC)
process. Gross profit for the three months ended March 31, 2004 and 2003 was $13.5
million and $21.2 million, respectively. Gross profit as a percentage of sales
for the three months ended March 31, 2004 and 2003 was 6.4% and 11.0%,
respectively. The decrease in gross profit margin is mainly due to the
significant increase in scrap steel cost, and to a lesser extent lower selling
price. We continue to be adversely affected by the high cost of scrap steel. Selling, general and administrative expenses for the three months ended March
31, 2004 and 2003 were 5.1% and 4.4% of sales, respectively. The increase is
mainly due to the consolidation of the Porto Foundrys financial results
beginning July 2003 and the new European Engineering Center established in July
2003. Net interest expense for the first quarter of 2004 was $9.2 million, which was
$1.9 million more than the same period last year. The increase was partly due
to the write-off of $1.4 million of capitalized debt issuance costs related to
our prior bank revolving credit agreement, and partly due to the consolidation
of the Porto Foundrys financial results beginning July 2003. The effective income tax expense rate was 26.8% and 39.7% for the first quarter
of 2004 and 2003, respectively. The income tax expense on our pre-tax loss in
the first quarter of 2004 was mainly due to the state tax expense on our
domestic operations and the income tax expense on our profitable foreign
operations. No federal tax benefit was recorded on the pre-tax loss of our
domestic operations. Federal tax expense or benefit will not be recorded until
the pre-tax profit of our domestic operations exceeds our accumulated tax loss
and credits carryforward. As a result of the accumulation of losses in the past
three years, the deferred tax asset derived from the pre-tax loss of our
domestic operations is fully reserved. The effective income tax rate in the
first quarter of 2003 was higher than the statutory rate because income tax
included state taxes. 30




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##### Table of Contents



Material Changes in Financial Condition, Liquidity and Capital Resources Through the first quarter of 2004, net cash provided by operations totaled $3.9
million compared to net cash used by operations of $0.4 million for the same
period last year. Depreciation and amortization expense for the three months
ended March 31, 2004 and 2003, excluding depreciation expense related to our
discontinued operations, was $12.4 million and $12.2 million, respectively.
For the three months ended March 31, 2004, after adjusting for the effect of
exchange rates, accounts receivable increased by $24.2 million, inventory
decreased by $3.3 million, accounts payable increased by $13.3 million, and
accrued liabilities increased by $7.5 million. The increase in accounts
receivable was a result of higher sales volume in the first quarter of 2004 as
compared to the last quarter of 2003 in which sales were lower due to fewer
working days. The decrease in inventory and the increase in accounts payable
and accrued liabilities was due to our continuous effort to reduce our working
capital and optimize our liquidity. During the first three months of 2004, we
spent $6.9 million for the purchase of property, plant and equipment. The
Company has committed capital not yet spent of $7.3 million as of March 31,
2004. We anticipate that the funds needed for the committed capital spending
will come from operations or bank financing. Cash and cash equivalents at March 31, 2004 were $58.8 million, as compared to
$1.0 million at December 31, 2004. This increase in our cash balances resulted
from the fact that during the first quarter of 2004 we accumulated cash, which,
as of the end of the quarter, had not yet been applied to reduce our borrowings
under our revolving credit line. Consequently, our long-term debt at March 31,
2004 was $380.1 million, as compared to long-term borrowings of $279.2 million
at December 31, 2003. On January 8, 2004, we refinanced our then existing revolving credit agreement
by entering into a new First Amended and Restated Credit Agreement, which
provides for a $90 million revolving credit line and a $120 million term loan.
The term loan has quarterly amortization and the principal balance was reduced
by $300,000 during the first quarter of 2004. The $90 million revolving credit
portion matures on January 8, 2009, and the $120 million term loan has a final
maturity date of January 8, 2010. Also on January 8, 2004, we entered into a
First Amendment to Letter of Credit Facility Agreement, under which $35.7
million of the proceeds of the term loan are used as collateral for the
issuance of a $35.7 million letter of credit. Please refer to Note 7 to our
consolidated financial statements, Debt, for further details. As of March 31, 2004, $69.6 million of the current credit facility was
outstanding, consisting of borrowings of $43.0 million and letters of credit of
$26.6 million. In addition, as of March 31, 2004, we had outstanding unsecured
senior notes of $175 million and other debt of $56.0 million. We had committed
and uncommitted bank credit facilities with unused borrowing capacity of $37.2
million as of March 31, 2004. On April 13, 2004, we entered into a First Amendment to First Amended and
Restated Credit Agreement. The purpose of this amendment was to change our
financial covenants to make them less restrictive for the six fiscal quarters
beginning with the quarter ended March 31, 20004. As of March 31, 2004, we
were in compliance with those covenants, as amended, as set forth below. Financial Covenants
    
    Requirement
    
    ActualSenior Funded Debt to Consolidated EBITDA
    
    
    £ 3.25
    
    
    
    2.78Funded Debt to Consolidated EBITDA
    
    
    £ 5.75
    
    
    
    5.09Consolidated EBITDA to Consolidated Interest Expense
    
    
    3 1.75
    
    
    
    2.34
 These ratios are calculated based on the last twelve months activities. EBITDA
is not a financial measure prepared in accordance with accounting principles
generally accepted in the United States GAAP, but is used by our lenders to
evaluate our liquidity and operating performance in relation to the financial
covenants on a quarterly basis. EBITDA is defined generally as the sum of net
income (excluding certain non-cash charges), income taxes, interest expense,
and depreciation and amortization. For a complete definition of EBITDA and
description of our financial covenants as of March 31, 2004, see our First
Amended and Restated Credit Agreement dated January 8, 2004, included as
Exhibit 10.18 to our annual report on Form 10-K filed on March 15, 2004, and
our First Amendment to First Amended and Restated Credit Agreement dated April
13, 2004, included as Exhibit 10.1 to this 31




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report. EBITDA should not be
considered a substitute for income from operations, net income, cash flows or
other measures
of financial performance prepared in accordance with GAAP. It is presented here
because it is an important measure in determining our ability to borrow, and,
therefore, our liquidity position. Our borrowing availability at March 31, 2004 was $20.4 million. As discussed
below in Item 3, Quantitative and Qualitative Disclosures about Market Risks,
we have been affected by the high cost of scrap steel. Continued
high costs of this raw material could have a material effect on our
profitability, our cash flow and our ability to meet our financial covenants in
the future. Critical Accounting Policies and Use of Estimates Our interim condensed consolidated financial statements have been prepared in
conformity with accounting principles generally accepted in the United States,
which require management to make estimates and assumptions that affect the
amounts reported in the financial statements and accompanying notes. We
evaluate estimates used in the preparation of our financial statements on a
continual basis. Actual results may differ from the estimates. Our critical
accounting policies, and our methods and policies used to establish estimates
and assumptions, were previously disclosed in Item 7, Management Discussion
and Analysis of Financial Condition and Results of Operations  Critical
Accounting Policies and Use of Estimatesin our annual report on Form 10-K for
the year ended December 31, 2003, and have not changed. 
 Item 3 Quantitative and Qualitative Disclosures about Market Risks We have exposure to four types of market risk. The first is the risk of
interest rate changes and how it impacts our interest expense and current
results. Second, we have risk with regard to foreign currency and its impact on
our European operating results. Third, we have risk related to commodity
pricing which, based on current pricing trends, has been immaterial to us with
the exception of energy costs, and costs of aluminum, magnesium, zinc and scrap
steel. The cost of scrap steel has increased steadily since early 2002 and
represents a risk to our operating results, as discussed further below.
Lastly, we have consumer risk. We operate principally in the cyclical
automotive industry. A weakening of the economy represents a risk to our
operating results. We continue to be adversely affected by the high cost of scrap steel, which is
our primary raw material in our Ferrous Metals segment. Our cost of scrap
steel has increased from an average of approximately $160 per ton at the
beginning of 2003, and approximately $210 per ton at the end of 2003, to
approximately $290 per ton at March 31, 2004. We use approximately 30,000 tons
of scrap steel per month in our Ferrous Metals operations worldwide.
Therefore, for each $10 increase in scrap steel cost per ton, we experience an
increase in cost of raw materials of approximately $3.6 million on an
annualized basis, assuming we are unable to recover any cost increases from our
customers. We have contractual arrangements with many of our customers to pass through
increases in the cost of scrap steel. However, there is a delay between the
time when we experience price increases and the time when we are able to begin
charging the relevant customer. This time delay varies by customer, but is
generally from 30 days to 180 days. In addition, we are not able to pass
through 100% of cost increases in all cases. The actual amount of the total
scrap steel price increases that we are able to pass through depends on the
amount and timing of the price movements, the base price from which increases
are measured, the amount of the increase that is recoverable, and the amount of
scrap steel we use on each particular customer program. Notwithstanding our
ability to pass through a portion of our cost increases, continued high costs
of scrap steel, or further escalation, could have a material negative effect on
our profitability and cash flow. Other than for the continued volatility in the cost of scrap steel, there has
been no material change to our exposures to market risk since December 31,
2003. 32




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Item 4 Controls and Procedures We carried out an evaluation, under the supervision and with the participation
of management, including our principal executive officer and principal
financial officer, of the effectiveness of the design and operation of our
disclosure controls and procedures (as defined under Rules 13a-15(e) and
15d-15(e) under the Securities Exchange Act of 1934, as amended) as of March
31, 2004. Based upon that evaluation, our principal executive officer and
principal financial officer concluded that our disclosure controls and
procedures are effective in timely alerting them to material information
relating to us (including our consolidated subsidiaries) that is required to be
included in our periodic Security Exchange Commission reports. There was no change in our internal control over financial reporting that
occurred during the quarter ended March 31, 2004 that has materially affected,
or is reasonably likely to materially affect, our internal control over
financial reporting. 33




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Part II  Other Information 
 Item 1. Legal Proceedings See Note 9, Environmental and Legal Matters, for a description of
environmental matters, including environmental matters relating to our
Radford, Virginia, facility. There have been no other material changes in matters reported in the Form 10-K
for the year ended December 31, 2003. We are a party to a number of legal proceedings associated with
environmental, employment, commercial, product liability and other matters in
the ordinary course of our business. We do not believe that such pending or
threatened legal proceedings to which we are a party, or to which any of our
property is subject, will have a material adverse effect on our consolidated
financial position or results of operations or liquidity, taken as a whole.
It is possible, however, that future results of operations for any particular
quarterly or annual period could be materially affected by changes in our
assumptions related to these proceedings. 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 Securities Holders The Annual Meeting of Stockholders was held on April 15, 2004. At the meeting,
the following matters were submitted to a vote of the stockholders:  (1)
    
    The election of eleven directors to constitute the Board of Directors to
serve until the next annual meeting or until their successors are elected
and qualified. The vote with respect to each nominee was as follows: Nominee
    
    For
    
    WithheldJohn Doddridge
    
    
    22,306,160
    
    
    
    416,768John P. Crecine
    
    
    22,247,545
    
    
    
    475,383Julia D. Darlow
    
    
    18,230,000
    
    
    
    4,492,928Norman F. Ehlers
    
    
    22,307,729
    
    
    
    415,199John R. Horne
    
    
    22,454,979
    
    
    
    267,949Thomas H. Jeffs II
    
    
    22,454,979
    
    
    
    267,949Charles G. McClure
    
    
    22,452,519
    
    
    
    270,409Richard A. Nawrocki
    
    
    22,453,679
    
    
    
    269,249Richard J. Peters
    
    
    22,312,029
    
    
    
    410,899Pamela E. Rodgers
    
    
    22,325,824
    
    
    
    397,104Gary F. Ruff
    
    
    22,393,793
    
    
    
    329,135
  (2)
    
    The appointment of Ernst & Young as the independent auditors for 2004. For
    
    Against
    
    Abstain22,461,114
    
    
    226,901
    
    
    
    34,913
 34




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Item 5. Other Information None. 
 Item 6. Exhibits and Reports on Form 8-K  (a)
    
    Exhibits ExhibitNumber
    
    Description of Exhibit10.1
    
    First Amendment to First Amended and Restated Credit Agreement10.2
    
    First Amendment to Letter of Credit Facility Agreement31.1
    
    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
  (b)
    
    Reports on Form 8-K On April 15, 2004, we filed a current report on Form 8-K containing a press
release announcing the financial results for the first quarter of 2004. 35




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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. INTERMET CorporationBy:
    
    /s/ Robert E. BeltsRobert E. BeltsVice President of Finance andChief Financial OfficerDate:
    
    May 10, 2004
 36




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Exhibit Index ExhibitNumber
    
    Description of Exhibit10.1
    
    First Amendment to First Amended and Restated Credit Agreement10.2
    
    First Amendment to Letter of Credit Facility Agreement31.1
    
    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