UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-K

[X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the fiscal year ended December 31, 1996, or

[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the transition period from to .

Commission File Number 0-17028

IRONTON IRON, INC.
(Exact Name of registrant as Specified in its Charter)

OHIO 31-1117407
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)

5445 Corporate Drive, Suite 200, Troy Michigan 48098
(Address of principal executive offices) (Zip code)

(248) 952-2500
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Name of each exchange on which registered
None Not applicable

Securities registered pursuant to Section 12(g) of the Act:
Series A Cumulative Preferred Stock*
(Title of Class)

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 if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10K. X

As of February 25, 1997 none of the registrant's Common Stock was held by non-
affiliates of the registrant; therefore, the aggregate market value of the
registrant's voting stock held by non-affiliates of the registrant was $0.
Twenty three thousand shares of the registrant's Common Stock were outstanding
as of March 10, 1997.

*Registered a as result of the reclassification of the registrant's Common
Stock, no par value, into Series A Cumulative Preferred Stock, pursuant to an
amendment to the registrant's Articles of Incorporation filed on October 30,
1988, described in the registrant's Form 8 to its registration Statement on
Form 10, dated November 3, 1988, previously filed with the Commission. See Item
1, "Business--General."

PART I

ITEM 1. BUSINESS

GENERAL

In July 1984, Ironton Iron, Inc. (the "Company") was incorporated under the laws
of the State of Ohio. The Company operates a foundry in Ironton, Ohio which
manufactures ductile iron castings for the transportation industry.

In October 1988, Intermet Foundries, Inc. ("IFI"), a Georgia corporation and
wholly-owned subsidiary of Intermet Corporation ("Intermet"), acquired through
a recapitalization, all of the outstanding Common Stock of the Company. In
connection with the recapitalization, IFI paid $2 million for newly-issued
Common Stock of the Company and refinanced approximately $2.1 million of the
Company's debt. Also, the Company issued a new class of Series A Cumulative
Preferred Stock to the former holders of the Company's Common Stock in exchange
for all of their common shares. On March 31, 1996, IFI was merged into
Intermet.

The Company has sustained operating losses since it was acquired in 1988 with
the exception of 1995, when it generated net income of $793,000. As of
December 31, 1996, the Company had incurred cumulative losses of approximately
$68.6 million. A significant portion of the losses were incurred in 1992 and
1993 when the Company added a new production line at the same time it was
adding a second shift on its existing production line. The Company remains
dependent on Intermet for financial support.

PRODUCTS, MARKETS AND SALES

The Company markets its products principally to original equipment
manufacturers and their suppliers in the automotive industry. The following
table sets forth information regarding sales by the Company:

% of total sales
year ended December 31,
----------------------------------
1996 1995 1994
-------- -------- --------

Automotive 80% 78% 89%
Rail Car 10 14 7
Other 10 8 4

Products manufactured for the automotive industry include brake parts, steering
and suspension system components and differential cases. The Company produces
brake adapter plates for the rail car industry.

The Company utilizes the in-house sales and customer service staff of Intermet.
The Company produces principally to customer order and does not maintain any
significant inventory of finished goods not on order.

The major customers of the Company during 1996, 1995 and 1994 were as follows:

% of total Company Sales
year ended December 31,
------------------------------
1996 1995 1994
-------- -------- --------

Dana 29% 22% 21%
General Products Delaware Corp. 24 20 24
Ford 12 23 22
Chrysler 11 9 14

2
3

The sales to General Products Delaware Corporation are under the terms of a
purchase order issued by Ford. Intermet, through a subsidiary purchased in
December 1996, owns a 35% interest in General Products Delaware Corporation, a
machining and assembly company in Michigan.

The loss of any of these customers or a substantial reduction in their
purchases from the Company would have a material adverse effect upon the
Company unless the work were replaced by sales to other customers. See Item 7
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

MANUFACTURING, MACHINING AND DESIGN

The Company produces ductile iron castings. Ductile iron, which is produced by
removing sulfur from molten iron and adding magnesium and other alloys, has
greater strength and elasticity than the more widely used gray iron, and its
use as a higher-strength substitute for gray iron and a lower-cost substitute
for steel has grown steadily. The Company's castings range in size from pieces
weighing approximately six pounds to castings weighing 125 pounds.

The manufacturing process involves melting steel scrap and pig iron in a gas
and coke-fired cupola furnace, adding various alloys and pouring the molten
metal into molds made primarily of sand. The molten metal cools and solidifies
in the molds, and the molds are broken and removed.

Shipments for the year ended December 31, 1996 totaled approximately 58,000
tons, compared to approximately 74,000 tons during the year ended December 31,
1995, and 77,300 tons during the year ended December 31, 1994. The decrease in
shipments is primarily due to the phase out of the Ford F 150 I-beam program
without replacement.

Customers usually specify the properties their castings are to embody, such as
hardness and strength, and the Company determines how best to meet those
specifications. Constant testing and monitoring of the manufacturing process
is important in order to maintain the quality and performance consistency of
the castings. Electronic testing and monitoring equipment, including x-ray,
cobalt x-ray, ultrasonic and magnetic-particle testing equipment, are used
extensively in grading scrap metal, analyzing molten metal and testing
castings. The Company also uses its testing equipment and procedures to
provide particular tests requested by a customer for its castings.

COMPETITION

The Company competes with many other foundries, including others owned by
Intermet, both in the United States and Europe. Some of these foundries are
owned by major users of iron castings, and a number of foundry operators have,
or are subsidiaries of companies which have, greater financial resources than
the Company. For example, the three largest domestic automobile manufacturers,
two of which are among the Company's largest customers, operate their own
foundries. However, they also purchase castings from the Company and others,
and there is a trend toward increased outsourcing by the domestic original
equipment manufacturers. Castings produced by the Company also compete to some
degree with malleable iron castings, other metal castings and steel forgings.

The Company competes on the basis of product quality, engineering, service and
price. The Company emphasizes its ability to produce complex,
precision-engineered products in order to compete for value-added castings,
which generally provide a higher profit margin.

3
4

RAW MATERIALS

The primary raw material the Company uses to manufacture iron castings is steel
scrap. The Company has no long-term contractual commitments with any steel
scrap supplier, and does not anticipate any difficulties in obtaining scrap
because of the large number of suppliers and because of Intermet's position as
a major purchaser. Scrap was obtained from a variety of sources during the
three years ended December 31, 1996. Competitive prices are assured through
discussions with various suppliers of steel scrap. The cost of steel scrap is
subject to fluctuations, but the Company has implemented arrangements with most
of its customers for adjusting its castings prices to reflect those
fluctuations. The Company can generally adjust its castings prices to reflect
such cost fluctuations.

Various alloys that are added to scrap steel in the manufacturing process have
been in short supply from time to time, resulting in price increases. The
Company has always been able to purchase necessary alloys; alternate alloys may
be substituted in some cases.

The Company benefits from the contractual arrangements of Intermet, which
expire at various times through 2001, for the purchase of various materials
other than steel scrap used in or during the manufacturing process. Although
these contracts and Intermet's overall level of purchases provide some
protection against price increases, in most cases neither the Company nor
Intermet has specific arrangements in place to adjust its casting prices for
fluctuations in the price of alloys and other materials.

CYCLICALITY AND SEASONALITY

Most of the Company's products are generally not affected by year-to-year
automotive style changes. However, the inherent cyclicality of the automotive
industry has affected the Company's sales and earnings during periods of slow
economic growth or recession. The Company's third and fourth quarter sales are
usually lower than first and second quarter sales due to plant closings by
domestic automakers for vacations and model changeovers.

BACKLOG

Most of the Company's business involves supplying all or a stated portion of
the customer's annual requirements, generally flexible in amount, for a
particular casting against blanket purchase orders. Terms of sale are normally
net 30 days. The lead time and cost of commencing production of a particular
casting tend to inhibit transfer of production from one foundry to another.
Customers typically issue releases and shipping schedules on a monthly basis.
The Company's backlog at any given time therefore consists only of the orders
which have been released for shipment.

EMPLOYEES

As of February 28, 1997, the Company employed 496 members of the local
bargaining unit, United Steelworkers of America, and 77 salaried employees. The
bargaining agreement was set to expire in January 1997, but was replaced with a
new agreement in September 1996, which expires January 31, 2000. The Company
has not experienced any strike or work stoppage since it commenced operations
in 1986. The Company believes that its relationship with its employees is
satisfactory.

4
5

ENVIRONMENTAL MATTERS

The Company's operations are subject to various federal, state and local laws
and regulations relating to the protection of the environment. These
regulations, which are implemented principally by the United States
Environmental Protection Agency and the Ohio EPA, govern the management of
solid and hazardous waste, the discharge of pollutants into the air and into
surface and ground waters, and the manufacture, treatment and disposal of
hazardous and nonhazardous substances.

See "Item 3. Legal Proceedings" concerning an issue raised by the Ohio Attorney
General's office. In addition, the Company has submitted a plan to the Ohio EPA
to bring its facility into compliance with all applicable air emission
requirements, after that agency advised the Company of certain alleged
violations of air Ohio pollution regulations. It is not known whether the
agency will eventually demand the payment of civil penalties for these past air
violations.

The 1990 amendments to the federal Clean Air Act are expected to have a major
impact on the compliance costs of many U.S. companies, including foundries of
the type owned by the Company. Final regulations implementing these amendments
have been adopted by state governments, but are expected to have only minimal
cost impact to the Company.

ITEM 2. PROPERTIES

The Company owns its foundry and offices located at 2520 South Third Street,
Ironton, Ohio. The foundry and offices consist of an aggregate of 514,000
square feet situated on 26 acres of land zoned for industrial use.

ITEM 3. LEGAL PROCEEDINGS

The Company is not aware of any material pending or threatened legal
proceedings to which the Company is a party or of which any of its property is
the subject, except as set forth below.

The Company entered into negotiations with the Office of the Ohio Attorney
General with respect to certain past violations by the Company of Ohio water
pollution laws and regulations. The Attorney General's Office advised the
Company that the Company could avoid litigation with respect to such violations
by entering into a consent order with respect to the violations. In November
1995, the Company agreed to pay the State of Ohio a fine of $285,000 to settle
the water pollution matter. The parties have agreed to the language of the
consent decree, and the Company is waiting for the Office of Attorney General
to file the decree in Ohio State Court. Upon receipt of the decree, the fee
will be paid by the Company.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of security holders of the Company during
the fourth quarter of the 1996 fiscal year.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

There is no established public trading market for the Company's Common Stock or
Series A Cumulative Preferred Stock. As of December 31, 1996, there were 1,391
holders of record of the Company's Series A Cumulative Preferred Stock and one
holder of the Company's Common Stock, Intermet.

5
6

The Company has paid no dividends on its Common Stock since its organization.
Because the Company has had cumulative operating losses since its organization,
it is unlikely that it will pay dividends in 1997 on its outstanding Common
Stock or Series A Cumulative Preferred Stock.

ITEM 6. SELECTED FINANCIAL DATA

IRONTON IRON, INC.
Selected Historical Financial Data
(000 omitted)

1996 1995 1994 1993 1992
-------- -------- -------- -------- --------

Net sales $ 54,497 $ 74,476 $ 76,315 $ 56,434 $ 29,005
Operating (loss)/profit (6,007) 2,138 (6,186) (14,056) (11,450)
Net (loss)/profit (6,505) 793 (8,730) (16,977) (12,829)
Net (loss)/profit per common share (a) (a) (a) (a) (a)
Weighted average common shares
outstanding (a) (a) (a) (a) (a)

Working capital $ 627 $ 3,626 $ 2,370 $ 3,243 $ 2,181
Property, plant and equipment, net 16,893 19,160 20,353 19,364 17,406
Total assets 23,597 28,041 31,416 30,242 26,157
Long-term liabilities 31,302 30,078 37,002 41,460 43,671
Redeemable preferred stock 3,272 3,155 3,038 2,921 2,804
Net common shareholders' deficiency (17,043) (10,421) (17,097) (21,250) (26,156)
Cash dividends declared -- -- -- -- --

(a) On October 31, 1988 IFI became the sole shareholder of the Company's Common
Stock. On March 31, 1996, IFI was merged into Intermet, thus making Intermet
the sole shareholder of the Company's Common Stock. As a result, common share
data is not presented because it is no longer meaningful.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

Net sales declined approximately $20 million (27%) in 1996 compared to 1995 and
$2 million (2%) in 1995 compared to 1994. The decline in sales in 1996 and
1995 was primarily due to the phase out of the Ford F 150 I-Beam program
without replacement. Much of the growth in 1994 was due to an increase in tons
shipped, especially suspension components for Ford, including the F 150 I-Beam,
made on a production line installed in 1992. Demand from other automotive
customers was fairly strong in all three years, but especially in 1994.

Operating loss for 1996 was approximately $6 million versus an operating profit
of $2.1 million in 1995. 1995's operating profit, the first since Intermet's
purchase in 1988, was due primarily to higher sales volumes, cost reduction and
improvement programs, and plant management stability. Operating loss for the
year ended December 31, 1994 was approximately $6.2 million.

6
7

LIQUIDITY AND CAPITAL RESOURCES

Working capital at December 31, 1996 decreased approximately $3 million from a
balance of $3.63 million at December 31, 1995. This decrease relates primarily
to a reduction in accounts receivable of $2.5 million resulting from a decrease
in sales from 1995 to 1996 of $20.0 million. Working capital at December 31,
1995 increased $1.3 million from December 31, 1994. This increase resulted
primarily from the Company paying down current liabilities, primarily accounts
payable, using long term funds provided by Intermet.

Prior to its acquisition by IFI, which was subsequently merged into Intermet,
the Company was in violation of certain loan agreements and had exhausted all
available sources of capital. Much of the Company's debt was refinanced by IFI
after it purchased the Company. Intermet and IFI have continued to provide
financial support to the Company by funding operating losses, working capital
increases and capital expenditures since the acquisition. During 1995 and 1994,
$6 million and $13 million, respectively of the amount due to Intermet and IFI
was converted to equity in order to reduce the Company's interest-bearing debt
levels. Intermet currently intends to continue providing financial support to
the Company. As such, the Company believes it has adequate resources to satisfy
its current obligations due to nonaffiliates.

The Company also incurs recurring costs to manage and dispose of waste
(principally nonhazardous waste) generated as part of ongoing operations. In
1996, 1995 and 1994 such costs totaled approximately $2.5 million, $3 million
and $3.4 million, respectively. Although the Company continues to take various
steps to control these costs, they are expected to increase in the future. In
addition, a portion of the Company's capital expenditures are regularly
incurred to limit or monitor pollution, principally for ventilation and dust
control equipment. Such expenditures were approximately $0.7 million in 1996
and $0.4 million in 1995. See Note 8 to the Financial Statements included
elsewhere herein.

The Company has agreed with the Ohio Attorney General that it will pay $285,000
for past violations of Ohio water pollution laws. See "Item 1.
Business-Environmental Matters" and "Item 3. Legal Proceedings."

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements and the report of independent auditors identified in
Item 14(a) are included in this Report beginning on page F-1.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

Within the 24-month period prior to the date of the Company's financial
statements for the fiscal year ended December 31, 1996, the Company did not
change auditors.

7
8

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

As of February 25, 1997, the directors and executive officers of the Company,
their respective ages, positions, date of election and principal occupations
were as follows:

Name (Age) Principal Position(s)
- ---------- ---------------------

John E. Doddridge (56) Director

C. James Peterson (49) President, Chief Executive Officer and Director

Doretha J. Christoph (47) Treasurer and Secretary

Mr. Doddridge became Director of the Company in March 1995. He served as
President of the Company from March 1995 to January 1997. Mr. Doddridge became
Chairman of the Board and Chief Executive Officer of Intermet in 1994 and
became President of Intermet in February 1995. He was Vice Chairman and Chief
Executive Officer of Magna International, Inc., a supplier of motor vehicle
parts, from November 1992 until November 1994. From 1989 to 1992 he served as
President of North American Operations of Dana Corporation, a motor vehicle
parts manufacturer, and prior to that time he served as President of Hayes-Dana
Inc., a subsidiary of Dana Corporation.

Mr. Peterson became President and Chief Executive Officer of the Company in
January 1997 and became a Director of the Company in March 1995. He was Vice
President of the Company from March 1995. He became Vice President - Foundry
Operations of Intermet in February 1995, and he served as Director of
Manufacturing of IFI from 1993 to 1995. From 1985 to 1993 he was with Columbus
Foundries, Inc., a subsidiary of Intermet, most recently as General Manager.

Ms. Christoph became Treasurer of the Company on June 1, 1995 and Secretary in
January 1997. Ms. Christoph became Vice President - Finance of Intermet in June
1995. In addition, she was named Chief Financial Officer of Intermet in March
1996 and Secretary of Intermet in January 1997. Prior to that time she served
as Vice President and Director of Administration of LNP Engineering Plastics, a
worldwide supplier of engineered plastics and a subsidiary of Kawasaki Steel
Corporation, from November 1991 until May 1995. From 1989 to 1991, she served
as Director of Finance for the Engineering Plastics Americas operation of ICI,
plc.

There are no family relationships between or among any of the officers and
directors of the Company.

The term of office for each director commences with his or her election and
continues until the next annual meeting of shareholders and until his or her
successor is elected and qualified.

ITEM 11. EXECUTIVE COMPENSATION

The Company has paid no compensation or offered any benefits of any kind to its
executive officers or members of the Board of Directors since its
acquisition by IFI (and subsequently by Intermet). See Note 6 to the Financial
Statements included elsewhere herein.

8
9

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT

As of February 25, 1997, none of the officers or directors of the Company
beneficially owned any of the Company's Common Stock, the only class of voting
securities of the Company. As of that date, Intermet Corporation , 5445
Corporate Drive, Suite 200, Troy, Michigan 48098, owned 23,000 shares of the
Company's Common Stock (100% of the class).

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

See Note 6 to the Financial Statements included elsewhere herein.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a) 1. Financial Statements

The following financial statements and notes thereto of the Company are
incorporated by reference into Item 8 of this Report:

Report of Independent Auditors

Balance Sheets at December 31, 1996 and 1995

Statements of Operations for the years ended December 31, 1996, 1995 and
1994

Statements of Net Common Shareholders' Deficiency for the years ended
December 31, 1996, 1995 and 1994

Statements of Cash Flows for the years ended December 31, 1996, 1995 and
1994

Notes to Financial Statements

2. Financial Statement Schedules

The following consolidated financial statement schedule for the Company is
filed as Item 14(d) hereof, beginning on page F-1.

Schedule II - Valuation and Qualifying Accounts

9
10

3. Exhibits

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

Exhibit Number Description of Exhibit
3.1 and 4.1 Articles of Incorporation of Ironton Iron, Inc., as amended
(included as Exhibit 3.1 and 4 to the Company's Annual Report
on Form 10-K for the 1988 fiscal year, file no. 0-17028,
previously filed with the Commission and incorporated herein by
reference).

3.2 and 4.2 Code of Regulations of Ironton Iron, Inc., as amended (included
as Exhibit 3.2 to the Company's Annual Report on Form 10-K for
the 1988 fiscal year, file no. 0-17028, previously filed with
the Commission and incorporated herein by reference).

10.1 Ironton Iron, Inc. Retirement Plan, as amended (included as
Exhibit 10.1 to the Company's Annual Report on Form 10-K for
the 1988 fiscal year, file no. 0-17028, previously filed with
the Commission and incorporated herein by reference).

24 Power of Attorney is included on the signature pages of this
Report.

27 Financial Data Schedule

(b) The Company did not file a report of Form 8-K during the last quarter of
the Company's fiscal year ended December 31, 1996.

(d) The Company hereby files as a financial statement schedule to this Report
the schedule set forth in Item 14(a)(2) hereof.

10
11

INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES

Page
----

Report of Independent Auditors F-1

Balance Sheets at December 31, 1996 and 1995 F-2

Statements of Operations for the years ended December 31, 1996, 1995 and 1994 F-4

Statements of Net Common Shareholder's Deficiency for the years ended
December 31, 1996, 1995 and 1994 F-5

Statements of Cash Flows for the years ended December 31, 1996, 1995 and 1994 F-6

Notes to Financial Statements F-7

Schedule II - Valuation and Qualifying Accounts F-11

Report of Independent Auditors

The Board of Directors and Shareholders
Ironton Iron, Inc.

We have audited the accompanying balance sheets of Ironton Iron, Inc. as of
December 31, 1996 and 1995 and the related statements of operations, net common
shareholder's deficiency, and cash flows for each of the three years in the
period ended December 31, 1996. Our audits also included the financial
statement schedule listed in the Index at Item 14(a). These financial
statements and schedule are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements and
schedule based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Ironton Iron, Inc. at December
31, 1996 and 1995, and the results of its operations and its cash flows for
each of the three years in the period ended December 31, 1996, in conformity
with generally accepted accounting principles. Also, in our opinion, the
related financial statement schedule, when considered in relation to the basic
financial statements taken as a whole, presents fairly in all material respects
the information set forth therein.

ERNST & YOUNG

Detroit, Michigan
January 13, 1997

F-1
13

Ironton Iron, Inc.

Balance Sheets

December 31
1996 1995
------------------------
(In Thousands)

Assets
Current assets:
Cash $ 53 $ 290
Accounts receivable:
Trade, less allowance of $300 and $687 3,886 6,128
Other 407 630
Inventories 2,283 1,765
Other current assets 64 42
------------------
Total current assets 6,693 8,855

Property, plant and equipment:
Land 295 295
Buildings and improvements 5,280 5,125
Machinery and equipment 27,344 26,078
Construction in progress 783 1,369
------------------
33,702 32,867
Less accumulated depreciation 16,809 13,707
------------------
Net property, plant and equipment 16,893 19,160

Other noncurrent assets 11 26
------------------
$23,597 $28,041
==================

F-2

December 31
1996 1995
----------------------
(In Thousands)

Liabilities and net common shareholder's deficiency
Current liabilities:
Accounts payable $ 3,505 $ 3,047
Accrued wages and benefits 1,009 857
Accrued workers' compensation 642 297
Other accrued liabilities 910 1,028
---------------------
Total current liabilities 6,066 5,229

Due to affiliates 31,302 30,078

Redeemable preferred stock, $200 par value,
20,000 shares authorized; 11,685 shares issued 3,272 3,155

Net common shareholder's deficiency:
Common stock, no par value, 25,000 shares authorized;
23,000 shares issued and outstanding 2,000 2,000
Additional paid-in capital 49,523 49,523
Accumulated deficit (68,566) (61,944)
---------------------
Net common shareholder's deficiency (17,043) (10,421)
---------------------
$ 23,597 $28,041
=====================

See accompanying notes

F-3
15

Ironton Iron, Inc.

Statements of Operations

Year ended December 31
1996 1995 1994
----------------------------------
(In Thousands)

Net sales $54,497 $74,746 $ 76,315
Cost of sales 58,117 69,432 78,152
-----------------------------
Gross margin (3,620) 5,314 (1,837)
Corporate charges 2,387 3,176 4,349
-----------------------------
Operating income (loss) (6,007) 2,138 (6,186)
Interest income - - 2
Interest expense (498) (1,335) (2,546)
-----------------------------
Net income (loss) before income taxes (6,505) 803 (8,730)
Income taxes--currently payable - 10 -
-----------------------------
Net income (loss) $(6,505) $ 793 $(8,730)
=============================

See accompanying notes.

F-4
16

Ironton Iron, Inc.

Statements of Net Common Shareholder's Deficiency

Additional Net Common
Common Paid-In Accumulated Shareholder's
Stock Capital Deficit Deficiency
----------------------------------------------------
(In Thousands)

Balance at December 31, 1993 $2,000 $30,523 $(53,773) $(21,250)
Contribution of intercompany
debt to additional paid-in
capital - 13,000 - 13,000
Accrued dividends on
redeemable preferred stock
($10 per share) - - (117) (117)
Net loss - - (8,730) (8,730)
---------------------------------------------
Balance at December 31, 1994 2,000 43,523 (62,620) (17,097)
Contribution of intercompany
debt to additional paid-in
capital - 6,000 - 6,000
Accrued dividends on
redeemable preferred stock
($10 per share) - - (117) (117)
Net income - - 793 793
---------------------------------------------
Balance at December 31, 1995 2,000 49,523 (61,944) (10,421)
Accrued dividends on
redeemable preferred stock
($10 per share) - - (117) (117)
Net loss - - (6,505) (6,505)
---------------------------------------------
Balance at December 31, 1996 $2,000 $49,523 $(68,566) $(17,043)
=============================================

See accompanying notes.

F-5
17

Ironton Iron, Inc.

Statements of Cash Flows

Year ended December 31
1996 1995 1994
-------------------------------
(In Thousands)

Operating activities
Net income (loss) $(6,505) $ 793 $(8,730)
Adjustments to reconcile net income (loss) to
cash provided by (used in) operating activities:
Depreciation and amortization 3,610 3,865 3,432
Loss on fixed assets 420 - -
Changes in operating assets and liabilities:
Accounts receivable 2,465 2,047 (1,004)
Inventories (518) (452) 680
Accounts payable and accrued liabilities 837 (3,244) 1,988
Other (22) (16) 50
----------------------------
Cash provided by (used in) operating activities 287 2,993 (3,584)

Investing activities
Additions to property, plant and equipment (1,748) (2,478) (4,767)

Financing activities
(Decrease) increase in due to affiliates 1,224 (924) 8,542
----------------------------
Net (decrease) increase in cash (237) (409) 191

Cash at beginning of year 290 699 508
----------------------------
Cash at end of year $ 53 $ 290 $ 699
============================

See accompanying notes.

F-6

Ironton Iron, Inc.

Notes to Financial Statements

December 31, 1996

1. Summary of Significant Accounting Policies

Description of Business

Ironton Iron, Inc. (the "Company") is engaged in the production and sale of
ductile iron castings, primarily for the automotive industry. The Company was a
wholly owned subsidiary of Intermet Foundries, Inc. ("IFI"), a wholly owned
subsidiary of Intermet Corporation ("Intermet"). In March 1996, IFI was merged
into Intermet and the Company became a wholly owned subsidiary of Intermet
thereafter. The Company has transactions with IFI and Intermet as described
in Note 6.

The Company has incurred significant operating losses since its inception.
Intermet has provided financial support by funding losses, capital expenditures
and working capital increases. The Company remains dependent on Intermet and
Intermet intends to continue providing financial support.

Use of Estimates

The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

Inventories

Inventories are stated at the lower of cost or market. Raw material and
supplies are valued on a weighted average cost basis. Work in process and
finished goods inventories are valued at standard costs which approximate
actual costs determined on a first-in, first-out basis. The specific
identification method is used for patterns.

Property, Plant and Equipment

Property, plant and equipment are recorded at cost. The provision for
depreciation of property, plant and equipment is determined on the basis of
estimated useful lives using the straight-line method.

Other Noncurrent Assets

Other noncurrent assets consist of deferred pattern and tooling charges. Such
costs are amortized over their estimated economic lives using the straight-line
method.

Net Income (Loss) Per Common Share

Intermet is the sole shareholder of the Company's common stock. As a result,
earnings per share data is not presented since it is not meaningful.

F-7
19

1. Summary of Significant Accounting Policies (continued)

Fair Value of Financial Instruments

The carrying amounts reported in the balance sheet for cash, accounts
receivable, accounts payable and debt approximate fair values.

2. Inventories

Inventories consist of the following (in thousands of dollars):

1996 1995
------------------

Finished goods $ 572 $ 146
Work in process 640 526
Raw materials 456 490
Supplies and patterns 615 603
---------------
$2,283 $1,765
===============

3. Redeemable Preferred Stock

IFI acquired all of the common stock of the Company in October 1988. As part
of this transaction, the existing preferred stock of the Company was canceled
and the previous common stockholders of the Company received an equivalent
number of shares of the Company's new 5% cumulative preferred stock with an
aggregate par value of $2,337,000. The preferred shares were to be retired at
par value from net income, if available, in four annual installments beginning
in 1993. However, no shares have been retired and no dividends have been paid
to date since the Company has incurred a cumulative net loss since 1988.
Accrued but unpaid dividends on the preferred stock totaled $935,000 at
December 31, 1996.

4. Retirement Plans and Benefits

Intermet has an Employee Stock Ownership Plan for certain of its United States
employees who are not covered by collective bargaining agreements. The plan
requires contributions equal to 3% of the annual compensation of the plan
participants. Intermet may, at its discretion, make additional contributions
within specified limits. Intermet also has a defined contribution plan for
domestic salaried employees. Intermet and its subsidiaries make contributions
equal to 2% of the annual compensation of participants. Participants are also
allowed to make contributions to the plan, on a pre-tax basis, of up to 10% of
their compensation. Intermet and its subsidiaries match 50% of participant's
contributions, up to a specified limit. The Company accrued contributions to
the two plans of $202,000, $196,000 and $143,000 in 1996, 1995 and 1994,
respectively.

The Company has also established a defined contribution plan for hourly
employees. Contributions to the Plan are based on hours worked by each
employee and totaled $217,000, $250,000 and $264,000 in 1996, 1995 and 1994,
respectively. The Plan also allows employees to make contributions, on a
pre-tax basis, of up to 15% of their compensation.

Intermet provides health care and life insurance benefits to certain retired
salaried employees and their dependents, including employees of the Company.
Costs for these benefits are incurred by Intermet and are not allocated back to
the Company. Salaried employees can become eligible for retiree health care
benefits at age 55 depending on years of service. Retirees receive
substantially the same benefits as active employees. The medical plan
generally pays 80% of most medical expenses, less deductible amounts, with
employees contributing to the cost of dependent coverage. Coverage converts to
a Medicare supplement at age 65.

F-8

5. Income Taxes

Intermet files a consolidated federal income tax return which includes the
Company. The Company's income tax provisions are calculated and reported as if
the Company filed a separate federal income tax return.

While certain temporary differences exist in recognizing expenses for income
tax and financial reporting purposes, no deferred tax liability has been
recorded because of the loss carryforwards available. The tax effects of the
types of temporary differences and loss carryforwards which give rise to
deferred tax assets (liabilities) at December 31, 1996 and 1995 are as follows
(in thousands of dollars):

1996 1995
-----------------------

Losses after IFI acquisition $ 21,881 $ 19,745
Losses before IFI acquisition 1,975 2,130
Other temporary differences 492 461
---------------------
Gross deferred tax assets 24,348 22,336
Valuation allowance (22,758) (20,860)
---------------------
1,590 1,476
Depreciation (1,590) (1,476)
---------------------
$ - $ -
=====================

The Company utilized its operating loss carryforward to offset a substantial
portion of its 1995 income.

There are certain limitations on the use of the loss carryforward generated
prior to the Company's acquisition by IFI. This loss carryforward expires as
follows: $1,354,000 in 2001 and $621,000 in 2002.

The loss carryforward generated after the acquisition by IFI on October 31,
1988 results from calculating the Company's income tax provision on a separate
tax return basis. These losses have already been utilized by Intermet in its
consolidated federal income tax return. While no income tax benefits have been
included in the accompanying financial statements, Intermet does advance funds
to the Company in amounts which approximate the income tax benefits expected to
be realized by Intermet as a result of the Company's losses after October 31,
1988. These amounts totaled $2,404,000 and $3,186,000 in 1996 and 1994,
respectively. No interest is charged on these amounts. In 1995, the Company
generated income, therefore no such advance was received from Intermet.

6. Related Party Transactions

Intermet incurs various costs, principally related to salaries, data
processing, aircraft, interest and occupancy, which are allocated to each of
its subsidiaries. Amounts charged to each subsidiary by Intermet are a
function of the subsidiary's sales and rate capacity. Intermet believes the
resulting allocation to be reasonable.

Intermet has an unsecured revolving credit agreement with a bank consortium
which was refinanced in November 1996. The agreement, which expires in
November 1999, provides for loans up to $200,000,000. The borrowing limit is
reduced by certain standby letters of credit. At December 31, 1996 such
standby letters of credit totaled $3,375,000. The revolving credit agreement
provides Intermet with several interest rate pricing mechanisms ranging from
6.025% to 8.25% at December 31, 1996. Intermet must also pay a fee at an
annual rate of .15% on any unused portion of the loan commitment. The
revolving credit agreement requires Intermet to maintain certain financial
ratios and imposes limitations on certain activities.

F-9
21

6. Related Party Transactions (continued)

Intermet has an unsecured term loan agreement with The Prudential Insurance
Company of America. The loan bears interest at an annual rate of 8.05% payable
quarterly. Principal amounts are to be repaid in five equal annual
installments beginning in December 1998. The term loan agreement requires
Intermet to maintain certain financial ratios and imposes limitations on
certain activities.

Intermet and its subsidiaries are jointly and severally liable for any
borrowings under the agreements described above. Intermet loans money to, or
invests the excess cash of, each of its subsidiaries depending on the cash
requirements of each subsidiary. Prior to 1996, borrowings under the credit
arrangement with Intermet provided interest at the average rate that Intermet
pays for its revolving and line of credit borrowings. Beginning in 1996,
interest is calculated monthly based on a percentage of accounts receivable and
inventory. The total of all interest paid to Intermet by the Company was
$498,000, $1,557,000 and $2,518,000 in 1996, 1995 and 1994, respectively.

7. Major Customers

Net sales to customers exceeding 10% of total net sales in any period were as
follows (as a percentage of total net sales):

1996 1995 1994
----------------------
Dana 29% 22% 21%
General Products 24 20 24
Ford 12 23 22
Chrysler 11 9 14

Sales to General Products are under the terms of a purchase order issued by
Ford.

8. Contingency

In March, 1994, the Company entered negotiations with the Ohio Attorney
General's office concerning past violations of Ohio water pollution laws and
regulations. In November 1995, the Company agreed to pay the State of Ohio
$285,000 to settle this and all other water discharge violations. The Company
has accrued this liability at December 31, 1996 and expects to pay this in 1997
on receipt of the State decree. In addition, the Company has submitted a plan
to the Ohio EPA to bring its facility into compliance with all applicable air
emission requirements, after that agency had advised management of several
violations of air pollution regulations. It is not known whether the agency
will eventually demand the payment of civil penalties for these past
violations. However, management believes that such penalties, if any, will not
be material to the financial condition of the Company.

F-10
22

Ironton Iron, Inc.

Schedule II

Valuation and Qualifying Accounts

Balance at Balance
Beginning Charged to at End of
Description of Period Expense Other Period
- -------------------------------------------------------------------------------------
(In Thousands of Dollars)

Year ended December 31, 1996:
Returns and allowance (a) $ 687 $(387)(b) $ - $ 300
Inventory (e) - 35 - 35
Deferred tax asset valuation 20,860 - 1,898 (c) 22,758

Year ended December 31, 1995:
Returns and allowance (a) $ 362 $ 325 (b) $ - $ 687
Deferred tax asset valuation 21,156 - (296) (d) 20,860

Year ended December 31, 1994:
Returns and allowance (a) $ 382 $ (20)(b) $ - $ 362
Deferred tax asset valuation 18,091 - 3,065 (c) 21,156

(a) Reflected as reduction of trade accounts receivable on consolidated
balance sheet.

(b) Net effect of amounts charged to expense less actual returns.

(d) Decrease in certain deferred tax assets.

(e) Reflected as reduction of inventory on the consolidated balance sheet.

F-11

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.

IRONTON IRON, INC.

(Company)

By: /s/ C. James Peterson
----------------------------------------------------

C. James Peterson
President, Chief Executive Officer and Director

Date: March 27, 1997

POWER OF ATTORNEY AND SIGNATURES

Know all men by these presents, that each person whose signature appears below
constitutes and appoints John Doddridge and Doretha J. Christoph, or either of
them, as attorney-in-fact, with each having power of substitution, for him in
any and all capacities to sign any amendments to this Report on Form 10-K and
to file the same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that each of said attorneys-in-fact, or his or her substitute or
substitutes, may do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below as of March 27, 1997 by the following persons on
behalf of the Company in the capacities indicated.

Signature Capacity

/s/ John Doddridge Director
- -------------------------
John Doddridge

/s/ C. James Peterson President, Chief Executive Officer and Director
- -------------------------
C. James Peterson

/s/ Doretha J. Christoph Secretary and Treasurer (Principal Financial and
- ------------------------- Accounting Officer)
Doretha J. Christoph

24
EXHIBIT INDEX

Exhibit
Number Description
- ------- -----------
3.1 and 4.1 Articles of Incorporation of Ironton Iron, Inc., as amended
(included as Exhibit 3.1 and 4 to the Company's Annual Report
on Form 10-K for the 1988 fiscal year, file no. 0-17028,
previously filed with the Commission and incorporated herein by
reference).

24 Power of Attorney is included on the signature pages of this
Report.

27 Financial Data Schedule