UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
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 | | Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended March 31, 2002, or |
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 | | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to . |
Commission File Number 0-17028
Ironton Iron, Inc.
(Exact name of registrant as specified in its charter)
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Ohio
(State or other jurisdiction of
incorporation or organization) | | 31-1117407
(IRS Employer
Identification No.) |
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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 
No At April 30, 2002 there were 23,000 shares of common stock, no par value, outstanding.
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TABLE OF CONTENTS
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements
Ironton Iron, Inc.
(In Process of Orderly Shutdown)
Statement of Net Liabilities in Liquidation
(in thousands of dollars)
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| | | | March 31, 2002 | | | December 31, 2001 | |
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| | | | (Unaudited) | |
| Assets: | | | | | | | | |
| | Assets held for sale | | $ | 962 | | | $ | 962 | |
| Liabilities: | | | | | | | | |
| | Accrued liabilities | | | 433 | | | | 484 | |
| | Due to affiliates | | | 73,134 | | | | 73,005 | |
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| Total liabilities | | | 73,567 | | | | 73,489 | |
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| Net liabilities in liquidation | | $ | 72,605 | | | $ | 72,527 | |
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See accompanying notes.
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Ironton Iron, Inc.
(In Process of Orderly Shutdown)
Statement of Deficiency
(in thousands of dollars)
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| | | | Three Months ended | |
| | | | March 31, 2002 | |
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| | | | (Unaudited) | |
| Net liabilities in liquidation at December 31, 2001 | | $ | 72,527 | |
| | Changes in net liabilities in liquidation | | | 78 | |
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| Net liabilities in liquidation at March 31, 2002 | | $ | 72,605 | |
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See accompanying notes.
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Ironton Iron, Inc.
(In Process of Orderly Shutdown)
Notes to Interim Condensed Financial Statements
March 31, 2002 (Unaudited)
1. Summary of Significant Accounting Policies
Background and Summary of Significant Developments
Until March 31, 2000 Ironton Iron, Inc. was engaged in the production and sale of ductile iron castings, primarily for the automotive industry. INTERMET Corporation owns all of the issued and outstanding common stock of Ironton.
During the fourth quarter of 1999, INTERMET’s board of directors authorized the closure of Ironton. INTERMET’s management approved and announced its plan for the liquidation of Ironton. The decision to close this foundry was the principal reason for treating the assets as held for sale and valuing them at the estimated fair market value. At December 31, 1999, Ironton recorded a shut down accrual for the building demolition and environmental remediation costs. Also at December 31, 1999 Ironton adopted the liquidation basis of accounting.
The $484 thousand accrued at December 31, 2001 consisted primarily of workers’ compensation and environmental. During the three months ended March 31, 2002, we incurred costs of $40 thousand related to workers’ compensation, $40 thousand related to environmental and $60 thousand related to health insurance. Those amounts not accrued previously were recorded directly to the statement of deficiency. The remaining accrued liabilities at March 31, 2002 are management’s estimate of the remaining costs for workers’compensation.
The $1.0 million included as “Assets held for sale” on the accompanying statement of net liabilities in liquidation at March 31, 2002 is the estimated fair value of the remaining assets.
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Ironton Iron, Inc.
(In Process of Orderly Shutdown)
Notes to Interim Condensed Financial Statements
March 31, 2002 (Unaudited)
1. Summary of Significant Accounting Policies (continued)
Use of Estimates
The preparation of financial statements in accordance with generally accepted accounting principles under the liquidation basis of accounting requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Ironton has made significant estimates relative to the valuation of all its assets and liabilities, including, among others, the estimate for shutdown and the fair value of assets held for sale. Actual results may differ from amounts estimated.
Basis of Accounting
Ironton adopted the liquidation basis of accounting as of December 31, 1999. The liquidation basis of accounting requires that assets and liabilities be stated at their estimated fair value. Accordingly, the statement of net liabilities in liquidation reflects assets and liabilities based on their estimated fair values and estimated settlement amounts. Changes in the estimated liquidation value of assets and liabilities are recognized in the statement of deficiencies in the period in which such changes are known. The statement of net liabilities in liquidation has been presented on such basis to provide more relevant information. However, as a result of the adoption of the plan for liquidation, comparative information using accounting principles applicable to a going concern and certain other disclosures are not meaningful and have not been presented in the accompanying financial statements.
2. Related Party Transactions
INTERMET incurs various selling, general and administrative costs principally related to salaries, professional services, aircraft and occupancy, which are allocated to each of its subsidiaries, including Ironton. Based on INTERMET’s decision to close the Ironton foundry in 2000, no allocation was made for the administrative expenses incurred related to Ironton during 2002.
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Ironton Iron, Inc.
(In Process of Orderly Shutdown)
Notes to Interim Condensed Financial Statements
March 31, 2002 (Unaudited)
3. Commitments and Contingencies
Ironton is engaged in various other legal proceedings and other matters. Ironton does not believe any of these matters will have a material adverse effect on its net liabilities in liquidation, or that any of these matters will affect its liquidation.
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Forward Looking Statement
The following Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations and Item 3. Quantitative and Qualitative Disclosures about Market Risk contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. When used in these sections, the words “anticipate,” “believe,” “estimate” and “expect” and similar expressions are generally intended to identify forward-looking statements. Readers are cautioned that any forward-looking statements, including statements regarding the intent, belief or current expectations of Ironton or its management, are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those in the forward-looking statements as a result of various factors including, but not limited to:
| • | | the ability of Ironton to liquidate its assets at the stated values, |
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| • | | the ability of Ironton to address and remediate any environmental issues within the amounts that have been reserved, |
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| • | | the future costs that may be associated with the shutdown, including, but not limited to, work that may be required at Ironton’s property |
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| • | | other risks detailed from time to time in Ironton’s filings with the Securities and Exchange Commission. |
Ironton does not intend to update these forward-looking statements.
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| Item 2. | | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Plant Closure and Liquidation Update
Ironton ceased operations on March 31, 2000. As of March 31, 2002, Ironton has $962 thousand in fixed assets remaining, including the real property at which Ironton operated. Management anticipates that the remaining assets, other than real property, will be sold or transferred to other INTERMET facilities during the remainder of 2002. The demolition of the Ironton facility commenced during the third quarter of 2000 and was completed in third quarter of 2001. Management believes that when the plan for orderly shutdown is complete and Ironton’s present and contingent liabilities are satisfied, there will not be any assets available for distribution to its preferred shareholders and management does not anticipate that any such distributions will be made.
During the three months ended March 31, 2002, Ironton spent approximately $40 thousand for workers’ compensation claims, $60 thousand for health insurance, and $40 thousand on environmental remediation. Those amounts not previously accrued were recorded directly to the statement of deficiency. The remaining accrual of $433 thousand is our estimate of the remaining costs to be incurred related primarily to workers’ compensation.
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Assets and Liabilities following the Plan for Orderly Shutdown
As a result of the plan for orderly shutdown, Ironton adopted the liquidation basis of accounting as of December 31, 1999. The liquidation basis of accounting requires that assets and liabilities be stated at their estimated fair values. Accordingly, the statement of net liabilities in liquidation reflects assets and liabilities based on their estimated fair values and estimated settlement amounts at March 31, 2002 and December 31, 2001. The statement of net liabilities in liquidation has been presented on such basis to provide more relevant information. However, as a result of the plan for orderly shutdown, comparative information and certain other disclosures are not meaningful and have not been presented in the Management’s Discussion and Analysis of Financial Condition and Results of Operations and accompanying financial statements.
Ironton’s land, machinery and equipment were segregated on the statement of net liabilities in liquidation as assets held for sale. We did not accrue any additional amounts for asset impairment or shutdown for the three months ended March 31, 2002. However, we may have additional costs related to asset impairment or shutdown after that date, which would be recorded directly to the statement of deficiency.
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| Item 3. | | Quantitative and Qualitative Disclosures about Market Risk |
As part of the plan for orderly shutdown, Ironton ceased production on March 31, 2000. Therefore, quantitative and qualitative disclosures about market risk are not applicable.
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PART II — OTHER INFORMATION
Item 1. Legal Proceedings
Ironton is engaged in various legal proceedings and other matters incidental to its normal business activities. Ironton does not believe any of these matters will have a material adverse effect on its net liabilities in liquidation.
Item 2. Changes in Securities and Use of Proceeds
None.
Item 3. Defaults upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibits are filed with this Report pursuant to Item 601 of Regulation S-K:
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| Exhibit Number | Description of Exhibit | |
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| None |
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
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| | | Ironton Iron, Inc. |
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| | | By: | | /s/ Doretha Christoph
Doretha Christoph
Vice President and Director (Principal
Financial and Accounting Officer) |
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| Date: | | | | May 14, 2002 |
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Exhibits Index
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| Exhibit Number | Description of Exhibit | |
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| None |
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