Back to GetFilings.com
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2005
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 333-28751
NEENAH FOUNDRY COMPANY
(Exact name of each registrant as it appears in its charter)
Wisconsin 39-1580331
(State or other jurisdiction of (IRS Employer ID Number)
incorporation or organization)
2121 Brooks Avenue, P.O. Box 729, Neenah, Wisconsin 54957
(Address of principal executive offices) (Zip Code)
(920) 725-7000
(Registrant's telephone number, including area code)
None
(Former name, former address and former
fiscal year, if changed since last report)
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 periods 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 Exchange Act). Yes [ ] No [X]
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date.
On April 30, 2005, the registrant had 1,000 shares of Common Stock, par value
$100 per share, outstanding, all of which were owned by NFC Castings, Inc., a
wholly owned subsidiary of ACP Holding Company.
1
NEENAH FOUNDRY COMPANY
Form 10-Q Index
For the Quarter Ended March 31, 2005
Page
----
Part I. Financial Information
Item 1. Financial Statements
Condensed consolidated balance sheets -- Reorganized Neenah Foundry Company as of March 31,
2005 and September 30, 2004 3
Condensed consolidated statements of operations -- Reorganized Neenah Foundry Company for
the three months ended March 31, 2005 and 2004 4
Condensed consolidated statements of operations -- Reorganized Neenah Foundry Company for the
six months ended March 31, 2005 and 2004, and for Predecessor Neenah Foundry Company for
October 1, 2003 5
Condensed consolidated statements of cash flows -- Reorganized Neenah Foundry Company for the
six months ended March 31, 2005 and 2004, and for Predecessor Neenah Foundry Company for
October 1, 2003 6
Notes to condensed consolidated financial statements -- March 31, 2005 7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of 16
Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk 21
Item 4. Controls and Procedures 21
Part II. Other Information
Item 2. Legal Proceedings 22
Item 6. Exhibits 22
Signatures 23
Exhibits 24
2
NEENAH FOUNDRY COMPANY
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
March 31 September 30
2005 2004(1)
---- -------
(Unaudited)
ASSETS
Current assets:
Accounts receivable, net .................................... $ 88,206 $ 81,320
Inventories ................................................. 66,827 61,119
Other current assets ........................................ 7,125 6,978
Current assets of discontinued operations ................... 200 200
-------- --------
Total current assets ................................ 162,358 149,617
Property, plant and equipment ................................. 106,134 98,074
Less accumulated depreciation ................................. 16,368 10,798
-------- --------
89,766 87,276
Deferred financing costs, net ................................. 2,476 2,566
Identifiable intangible assets, net ........................... 72,753 76,316
Goodwill ...................................................... 86,699 86,699
Other assets .................................................. 4,837 4,966
-------- --------
$418,889 $407,440
======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable ............................................ $ 33,955 $ 29,150
Accrued wages and employee benefits ......................... 12,265 12,881
Accrued interest ............................................ 7,210 7,140
Other accrued liabilities ................................... 6,154 4,953
Deferred income taxes ....................................... 1,360 1,360
Current portion of long-term debt ........................... 48,842 42,632
Current portion of capital lease obligations ................ 250 1,583
-------- --------
Total current liabilities ........................... 110,036 99,699
Long-term debt ................................................ 238,801 239,586
Deferred income taxes ......................................... 28,636 28,636
Postretirement benefit obligations ............................ 10,845 10,575
Other liabilities ............................................. 20,000 20,160
-------- --------
Total liabilities ................................... 408,318 398,656
Commitments and contingencies
STOCKHOLDER'S EQUITY:
Common stock, par value $100 per share -- authorized,
issued and outstanding 1,000 shares ................ 100 100
Capital in excess of par value .............................. 5,429 5,429
Retained earnings ........................................... 5,042 3,255
-------- --------
Total stockholder's equity .......................... 10,571 8,784
-------- --------
$418,889 $407,440
======== ========
See notes to condensed consolidated financial statements.
(1) The balance sheet as of September 30, 2004 has been derived from the
audited financial statements as of 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.
3
NEENAH FOUNDRY COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands)
Reorganized
-----------
Three Months Ended
March 31,
---------
2005 2004
---- ----
Net sales ........................................... $ 131,527 $ 105,113
Cost of sales ....................................... 111,067 91,374
--------- ---------
Gross profit ........................................ 20,460 13,739
Selling, general and administrative expenses ........ 8,331 7,137
Amortization of intangible assets ................... 1,780 1,774
Gain on disposal of equipment ....................... - (1)
--------- ---------
Total operating expenses ............................ 10,111 8,910
--------- ---------
Operating income .................................... 10,349 4,829
Net interest expense .............................. (8,389) (8,473)
--------- ---------
Income (loss) from continuing operations before
income taxes ...................................... 1,960 (3,644)
Income tax provision ................................ 785 -
--------- ---------
Net income (loss) ................................... $ 1,175 $ (3,644)
========= =========
See notes to condensed consolidated financial statements.
4
NEENAH FOUNDRY COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands)
Reorganized
-----------
Six Months Ended Predecessor
March 31, -----------
--------- October 1,
2005 2004 2003
---- ---- ----
Net sales ........................................... $ 253,391 $ 194,938 $ -
Cost of sales ....................................... 213,763 169,717 -
--------- --------- ---------
Gross profit ........................................ 39,628 25,221 -
Selling, general and administrative expenses ........ 16,284 12,359 -
Amortization of intangible assets ................... 3,563 3,571 -
Gain on disposal of equipment ....................... (1) (52) -
--------- --------- ---------
Total operating expenses ............................ 19,846 15,878 -
--------- --------- ---------
Operating income .................................... 19,782 9,343 -
Net interest expense .............................. (16,800) (17,072) -
Reorganization gain, net .......................... - - 43,943
--------- --------- ---------
Income (loss) from continuing operations before
income taxes ...................................... 2,982 (7,729) 43,943
Income tax provision ................................ 1,195 - -
--------- --------- ---------
Income (loss) from continuing operations ............ 1,787 (7,729) 43,943
Loss from discontinued operations ................... - (599) -
--------- --------- ---------
Net income (loss) ................................... $ 1,787 $ (8,328) $ 43,943
========= ========= =========
See notes to condensed consolidated financial statements.
5
NEENAH FOUNDRY COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
Reorganized
-----------
Six Months Ended Predecessor
March 31, -----------
--------- October 1,
2005 2004 2003
---- ---- ----
OPERATING ACTIVITIES
Net income (loss) ......................................................... $ 1,787 $ (8,328) $ 43,943
Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating activities:
Non-cash reorganization items .......................................... - - (68,299)
Depreciation and amortization .......................................... 9,299 8,866 -
Amortization of deferred financing costs and discount on notes ......... 1,033 1,407 -
Changes in operating assets and liabilities ............................ (7,042) (12,759) -
-------- -------- --------
Net cash provided by (used in) operating
activities ........................................................ 5,077 (10,814) (24,356)
INVESTING ACTIVITIES
Purchase of property, plant and equipment ................................. (8,226) (6,681) -
-------- -------- --------
Net cash used in investing
activities ........................................................ (8,226) (6,681) -
FINANCING ACTIVITIES
Proceeds from long-term debt .............................................. 6,210 19,704 -
Payments on long-term debt and capital lease obligations .................. (2,910) (1,797) -
Debt issuance costs ....................................................... (151) (51) -
-------- -------- --------
Net cash provided by financing
activities ........................................................ 3,149 17,856 -
-------- -------- --------
Increase (decrease) in cash and cash equivalents .......................... - 361 (24,356)
Cash and cash equivalents at beginning of period .......................... - - 24,356
-------- -------- --------
Cash and cash equivalents at end of period ................................ $ - $ 361 $ -
======== ======== ========
See notes to condensed consolidated financial statements.
6
NEENAH FOUNDRY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(In thousands)
NOTE 1 -- BASIS OF PRESENTATION
On August 5, 2003, Neenah Foundry Company (the Company) filed a voluntary
petition for relief under Chapter 11 of the United States Bankruptcy Code with
the United States Bankruptcy Court, District of Delaware (the Bankruptcy Court).
On September 26, 2003, the Bankruptcy Court confirmed the Company's Plan of
Reorganization, and, on October 8, 2003, the Company consummated the Plan of
Reorganization and emerged from its Chapter 11 reorganization proceedings with a
significantly restructured balance sheet.
The Company implemented the fresh start accounting provisions (fresh start) of
the AICPA Statement of Position 90-7, "Financial Reporting by Entities in
Reorganization under the Bankruptcy Code," (SOP 90-7) as of October 1, 2003.
Under fresh start, the fair value of the reorganized Company was allocated among
its assets and liabilities, and its accumulated deficit as of October 1, 2003
was eliminated. The implementation of fresh start has resulted in a substantial
reduction in the carrying value of the Company's long-lived assets, including
property, plant and equipment and intangible assets, and long-term liabilities.
As a result, the predecessor financial statements are not comparable to
financial statements of the reorganized Company.
The Company adopted fresh start accounting as of October 1, 2003. Although the
effective date of the Plan of Reorganization was October 8, 2003, due to the
immateriality of the results of operations for the period between October 1,
2003 and the effective date, the Company has accounted for the consummation of
the Plan of Reorganization as if it had occurred on October 1, 2003 and
implemented fresh start reporting as of that date. Fresh start required that the
Company adjust the historical cost of its assets and liabilities to their fair
value. The fair value of the reorganized Company, or the reorganization value,
of approximately $290,000 was determined by an independent party based on
multiples of earnings before interest, income taxes, depreciation and
amortization (EBITDA) and discounted cash flows under the Company's financial
projections.
Reorganization gain for the Predecessor on October 1, 2003 consisted of the
following:
Net gain on extinguishment of debt $ 168,208
Net loss resulting from fresh start
fair value adjustments to assets
and liabilities (124,265)
---------
Total reorganization gain $ 43,943
=========
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 the instructions to Form
10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all 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 and recurring adjustments)
considered necessary for a fair presentation have been included. Operating
results for the three and six months ended March 31, 2005 are not necessarily
indicative of the results that may be expected for the year ending September 30,
2005. For further information, refer to the consolidated financial statements
and footnotes thereto included in Neenah Foundry Company's Annual Report on Form
10-K for the year ended September 30, 2004.
NOTE 2 -- INVENTORIES
The components of inventories are as follows:
March 31, September 30,
2005 2004
---- ----
Raw materials ............................ $ 6,539 $ 5,218
Work in process and finished goods ....... 46,181 41,566
Supplies ................................. 14,107 14,335
------- -------
$66,827 $61,119
======= =======
7
NOTE 3 -- RECENT ACCOUNTING PRONOUNCEMENTS
On December 16, 2004, the Financial Accounting Standards Board (FASB) issued
FASB Statement No. 123 (revised 2004), Share-Based Payment, which is a revision
of FASB Statement No. 123, Accounting for Stock-Based Compensation. Statement
123(R) supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees,
and amends FASB Statement No. 95, Statement of Cash Flows. Generally, the
approach in Statement 123(R) is similar to the approach described in Statement
123. However, Statement 123(R) requires all share-based payments to employees,
including grants of employee stock options, to be recognized in the income
statement based on their fair values. Pro forma disclosure is no longer an
alternative.
Under the amended compliance dates recently adopted by the SEC, Statement 123(R)
must be adopted by the Company no later than October 1, 2005, the beginning of
the Company's next fiscal year. Early adoption will be permitted in periods in
which financial statements have not yet been issued. We expect to adopt
Statement 123(R) on October 1, 2005. The adoption of Statement 123(R) will not
have a material impact on the Company's results of operations or financial
position as the Company has no stock-based compensation plans.
NOTE 4 -- EMPLOYEE BENEFIT PLANS
COMPONENTS OF NET PERIODIC BENEFIT COST
The Company has five defined-benefit pension plans covering the majority of its
hourly employees and also sponsors unfunded defined benefit postretirement
health care plans covering substantially all salaried and hourly employees and
their dependents. Components of net periodic benefit costs are as follows for
the three and six months ended March 31, (in thousands):
Pension Benefits Postretirement Benefits
---------------- -----------------------
Three Months Ended March 31, Three Months Ended March 31,
---------------------------- ----------------------------
2005 2004 2005 2004
---- ---- ---- ----
Service cost $ 487 $ 491 $ 75 $ 60
Interest cost 883 896 137 116
Expected return on plan assets (899) (890) - -
Amortization of prior service cost (credit) - 10 (6) 11
Recognized net actuarial loss (gain) - 37 (7) -
----- ----- ----- -----
Net periodic benefit cost $ 471 $ 544 $ 199 $ 187
===== ===== ===== =====
Pension Benefits Postretirement Benefits
---------------- -----------------------
Six Months Ended March 31, Six Months Ended March 31,
-------------------------- --------------------------
2005 2004 2005 2004
---- ---- ---- ----
Service cost $ 973 $ 982 $ 150 $ 120
Interest cost 1,767 1,792 275 232
Expected return on plan assets (1,799) (1,780) - -
Amortization of prior service cost (credit) - 20 (12) 22
Recognized net actuarial loss (gain) - 74 (15) -
------- ------- ------- -------
Net periodic benefit cost $ 941 $ 1,088 $ 398 $ 374
======= ======= ======= =======
EMPLOYER CONTRIBUTIONS
For the six months ended March 31, 2005, $1.0 million of contributions have been
made. The Company presently anticipates contributing an additional $3.1 million
to fund its pension plans in 2005 for a total of $4.1 million.
8
NOTE 5 -- GUARANTOR SUBSIDIARIES
The following tables present condensed consolidating financial information as of
March 31, 2005 and September 30, 2004 and for the three and six months ended
March 31, 2005 and 2004 for: (a) the Company and (b) on a combined basis, the
guarantors of the Company's 11% Senior Secured Notes due 2010 and 13% Senior
Subordinated Notes due 2013, which include all of the wholly owned subsidiaries
of the Company (Subsidiary Guarantors). Separate financial statements of the
Subsidiary Guarantors are not presented because the guarantors are jointly,
severally and unconditionally liable under the guarantees, and the Company
believes separate financial statements and other disclosures regarding the
Subsidiary Guarantors are not material to investors.
CONDENSED CONSOLIDATING BALANCE SHEET
MARCH 31, 2005
Subsidiary
Company Guarantors Eliminations Consolidated
------- ---------- ------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ (943) $ 943 $ - $ -
Accounts receivable, net 34,580 53,626 - 88,206
Inventories 28,211 38,616 - 66,827
Other current assets 3,444 3,881 - 7,325
--------- --------- ---------- ---------
Total current assets 65,292 97,066 - 162,358
Investments in and advances to subsidiaries 128,747 - (128,747) -
Property, plant and equipment, net 35,098 54,668 - 89,766
Deferred financing costs and identifiable intangible
assets, net 56,873 18,356 - 75,229
Goodwill 86,699 - - 86,699
Other assets 1,895 2,942 - 4,837
--------- --------- ---------- ---------
$ 374,604 $ 173,032 $ (128,747) $ 418,889
========= ========= ========== =========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable $ 7,065 $ 26,890 $ - $ 33,955
Accrued liabilities 18,262 8,727 - 26,989
Current portion of long-term debt 48,842 - - 48,842
Current portion of capital lease obligations - 250 - 250
--------- --------- ---------- ---------
Total current liabilities 74,169 35,867 - 110,036
Long-term debt 238,801 - - 238,801
Deferred income taxes 27,747 889 - 28,636
Postretirement benefit obligations 10,845 - - 10,845
Other liabilities 12,471 7,529 - 20,000
Stockholder's equity 10,571 128,747 (128,747) 10,571
--------- --------- ---------- ---------
$ 374,604 $ 173,032 $ (128,747) $ 418,889
========= ========= ========== =========
9
NOTE 5 -- GUARANTOR SUBSIDIARIES (CONTINUED)
CONDENSED CONSOLIDATING BALANCE SHEET
SEPTEMBER 30, 2004
Subsidiary
Company Guarantors Eliminations Consolidated
------- ---------- ------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ 1,683 $ (1,683) $ - $ -
Accounts receivable, net 39,487 41,833 - 81,320
Inventories 25,481 35,638 - 61,119
Deferred income taxes 4,086 (4,086) - -
Other current assets 3,638 3,540 - 7,178
--------- --------- ---------- ---------
Total current assets 74,375 75,242 - 149,617
Investments in and advances to subsidiaries 111,982 - (111,982) -
Property, plant and equipment, net 31,683 55,593 - 87,276
Deferred financing costs and identifiable intangible
assets, net 59,816 19,066 - 78,882
Goodwill, net 86,699 - - 86,699
Other assets 1,895 3,071 - 4,966
--------- --------- ---------- ---------
$ 366,450 $ 152,972 $ (111,982) $ 407,440
========= ========= ========== =========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable $ 8,457 $ 20,693 $ - $ 29,150
Accrued liabilities 16,054 10,280 - 26,334
Current portion of long-term debt 42,632 - 42,632
Current portion of capital lease obligations - 1,583 - 1,583
--------- --------- ---------- ---------
Total current liabilities 67,143 32,556 - 99,699
Long-term debt 239,586 - - 239,586
Deferred income taxes 27,747 889 - 28,636
Postretirement benefit obligations 10,575 - - 10,575
Other liabilities 12,615 7,545 - 20,160
Stockholder's equity 8,784 111,982 (111,982) 8,784
--------- --------- ---------- ---------
$ 366,450 $ 152,972 $ (111,982) $ 407,440
========= ========= ========== =========
10
NOTE 5 -- GUARANTOR SUBSIDIARIES (CONTINUED)
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2005
Subsidiary
Company Guarantors Eliminations Consolidated
--------- ---------- ------------ ------------
Net sales $ 50,486 $ 82,363 $ (1,322) $ 131,527
Cost of sales 39,680 72,709 (1,322) 111,067
--------- --------- --------- ---------
Gross profit 10,806 9,654 - 20,460
Selling, general and administrative expenses 4,101 4,230 - 8,331
Amortization of intangible assets 1,426 354 - 1,780
--------- --------- --------- ---------
Operating income 5,279 5,070 - 10,349
Net interest expense (4,484) (3,905) - (8,389)
--------- --------- --------- ---------
Income before income taxes and equity in
earnings of subsidiaries 795 1,165 - 1,960
Income tax provision 783 2 - 785
--------- --------- --------- ---------
12 1,163 - 1,175
Equity in income of subsidiaries 1,163 - (1,163) -
--------- --------- --------- ---------
Net income $ 1,175 $ 1,163 $ (1,163) $ 1,175
========= ========= ========= =========
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2004
Subsidiary
Company Guarantors Eliminations Consolidated
--------- ---------- ------------ ------------
Net sales $ 40,828 $ 65,462 $ (1,177) $ 105,113
Cost of sales 32,137 60,414 (1,177) 91,374
--------- --------- --------- ---------
Gross profit 8,691 5,048 - 13,739
Selling, general and administrative expenses 3,574 3,563 - 7,137
Amortization of intangible assets 1,427 347 - 1,774
Gain on disposal of equipment (1) - - (1)
--------- --------- --------- ---------
Operating income 3,691 1,138 - 4,829
Net interest expense (4,448) (4,025) - (8,473)
--------- --------- --------- ---------
Loss before equity in earnings of subsidiaries (757) (2,887) - (3,644)
Equity in loss of subsidiaries (2,887) - 2,887 -
--------- --------- --------- ---------
Net loss $ (3,644) $ (2,887) $ 2,887 $ (3,644)
========= ========= ========= =========
11
NOTE 5 -- GUARANTOR SUBSIDIARIES (CONTINUED)
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
SIX MONTHS ENDED MARCH 31, 2005
Subsidiary
Company Guarantors Eliminations Consolidated
--------- ---------- ------------ ------------
Net sales $ 105,521 $ 150,659 $ (2,789) $ 253,391
Cost of sales 82,638 133,914 (2,789) 213,763
--------- --------- --------- ---------
Gross profit 22,883 16,745 - 39,628
Selling, general and administrative expenses 8,427 7,857 - 16,284
Amortization of intangible assets 2,853 710 - 3,563
Gain on disposal of equipment (1) - - (1)
--------- --------- --------- ---------
Operating income 11,604 8,178 - 19,782
Net interest expense (8,920) (7,880) - (16,800)
--------- --------- --------- ---------
Income before income taxes and equity in
earnings of subsidiaries 2,684 298 - 2,982
Income tax provision 1,191 4 - 1,195
--------- --------- --------- ---------
1,493 294 - 1,787
Equity in income of subsidiaries 294 - (294) -
--------- --------- --------- ---------
Net income $ 1,787 $ 294 $ (294) $ 1,787
========= ========= ========= =========
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
SIX MONTHS ENDED MARCH 31, 2004
Subsidiary
Company Guarantors Eliminations Consolidated
--------- ---------- ------------ ------------
Net sales $ 78,006 $ 119,382 $ (2,450) $ 194,938
Cost of sales 59,597 112,570 (2,450) 169,717
--------- --------- --------- ---------
Gross profit 18,409 6,812 - 25,221
Selling, general and administrative expenses 5,675 6,684 - 12,359
Amortization of intangible assets 2,853 718 - 3,571
Gain on disposal of equipment (48) (4) - (52)
--------- --------- --------- ---------
Operating income (loss) 9,929 (586) - 9,343
Net interest expense (9,001) (8,071) - (17,072)
--------- --------- --------- ---------
Income (loss) from continuing operations before equity
in earnings of subsidiaries 928 (8,657) - (7,729)
Equity in loss of subsidiaries (9,256) - 9,256 -
--------- --------- --------- ---------
Loss from continuing operations (8,328) (8,657) 9,256 (7,729)
Loss from discontinued operations - (599) - (599)
--------- --------- --------- ---------
Net loss $ (8,328) $ (9,256) $ 9,256 $ (8,328)
========= ========= ========= =========
12
NOTE 5 -- GUARANTOR SUBSIDIARIES (CONTINUED)
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
SIX MONTHS ENDED MARCH 31, 2005
Subsidiary
Company Guarantors Eliminations Consolidated
--------- ---------- ------------ ------------
OPERATING ACTIVITIES
Net income $ 1,787 $ 294 $ (294) $ 1,787
Adjustments to reconcile net income to
net cash provided by (used in) operating activities:
Depreciation and amortization 4,053 5,246 - 9,299
Amortization of deferred financing costs and
discount on notes 1,033 - - 1,033
Changes in operating assets and liabilities 7,399 (14,441) - (7,042)
--------- --------- --------- ---------
Net cash provided by (used in) operating activities 14,272 (8,901) (294) 5,077
INVESTING ACTIVITIES
Investments in and advances to subsidiaries (16,765) 16,471 294 -
Purchase of property, plant and equipment (4,615) (3,611) - (8,226)
--------- --------- --------- ---------
Net cash provided by (used in) investing activities (21,380) 12,860 294 (8,226)
FINANCING ACTIVITIES
Proceeds from long-term debt 6,210 - - 6,210
Payments on long-term debt and capital lease obligations (1,577) (1,333) - (2,910)
Deferred financing costs (151) - - (151)
--------- --------- --------- ---------
Net cash provided by (used in) financing activities 4,482 (1,333) - 3,149
--------- --------- --------- ---------
Increase (decrease) in cash and cash equivalents (2,626) 2,626 - -
Cash and cash equivalents at beginning of period 1,683 (1,683) - -
--------- --------- --------- ---------
Cash and cash equivalents at end of period $ (943) $ 943 $ - $ -
========= ========= ========= =========
13
NOTE 5 -- GUARANTOR SUBSIDIARIES (CONTINUED)
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
SIX MONTHS ENDED MARCH 31, 2004
Subsidiary
Company Guarantors Eliminations Consolidated
--------- ---------- ------------ ------------
OPERATING ACTIVITIES
Net loss $ (8,328) $ (9,256) $ 9,256 $ (8,328)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 3,939 4,927 - 8,866
Amortization of deferred financing costs and
discount on notes 1,407 - - 1,407
Changes in operating assets and liabilities (7,704) (5,055) - (12,759)
--------- --------- --------- ---------
Net cash used in operating activities (10,686) (9,384) 9,256 (10,814)
INVESTING ACTIVITIES
Investments in and advances to subsidiaries (5,164) 14,420 (9,256) -
Purchase of property, plant and equipment (2,291) (4,390) - (6,681)
--------- --------- --------- ---------
Net cash provided by (used in) investing activities (7,455) 10,030 (9,256) (6,681)
FINANCING ACTIVITIES
Proceeds from long-term debt 19,704 - 19,704
Payments on long-term debt and capital lease obligations (484) (1,313) (1,797)
Deferred financing costs (51) - - (51)
--------- --------- --------- ---------
Net cash provided by (used in) financing activities 19,169 (1,313) - 17,856
--------- --------- --------- ---------
Increase (decrease) in cash and cash equivalents 1,028 (667) - 361
Cash and cash equivalents at beginning of period 76 (76) - -
--------- --------- --------- ---------
Cash and cash equivalents at end of period $ 1,104 $ (743) $ - $ 361
========= ========= ========= =========
14
NOTE 6 -- SEGMENT INFORMATION
The Company has two reportable segments, Castings and Forgings. The Castings
segment manufactures and sells castings for the industrial and municipal
markets, while the Forgings segment manufactures forged components for the
industrial market. The Other segment includes machining operations and freight
hauling.
The Company evaluates performance and allocates resources based on the operating
income before depreciation and amortization charges of each segment. The
accounting policies of the reportable segments are the same as those described
in the summary of significant accounting policies in the Company's Annual Report
on Form 10-K. Intersegment sales and transfers are recorded at cost plus a share
of operating profit. The following segment information is presented for
continuing operations:
Three months ended Six months ended
March 31, March 31,
---------------------- --------------------------
2005 2004 2005 2004
--------- ---------- ---------- -----------
Revenues from continuing operations:
Castings $ 116,916 $ 96,246 $ 226,634 $ 179,417
Forgings 12,669 7,151 23,364 12,361
Other 6,009 5,435 11,270 10,343
Elimination of intersegment revenues (4,067) (3,719) (7,877) (7,183)
--------- --------- --------- ---------
Consolidated $ 131,527 $ 105,113 $ 253,391 $ 194,938
========= ========= ========= =========
Income (loss) from continuing operations:
Castings $ 1,004 $ (6,317) $ (703) $ (15,429)
Forgings 836 (743) 1,310 (1,941)
Other 853 521 1,474 976
Elimination of intersegment (income) loss (1,518) 2,895 (294) 8,665
--------- --------- --------- ---------
Consolidated $ 1,175 $ (3,644) $ 1,787 $ (7,729)
========= ========= ========= =========
March 31, September 30,
2005 2004
---------- -------------
Total assets:
Castings $ 436,131 $ 420,437
Forgings 9,627 8,110
Other 11,988 12,097
Elimination of intersegment assets (38,857) (33,204)
--------- ---------
Consolidated $ 418,889 $ 407,440
========= =========
15
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
Certain matters discussed in this Management's Discussion and Analysis of
Financial Condition and Results of Operations and other sections of this
quarterly report are "forward-looking statements" intended to qualify for the
safe harbors from liability established by the Private Securities Litigation
Reform Act of 1995. These forward-looking statements can generally be identified
as such because the context of the statement will include words such as the
Company "believes," "anticipates," "expects" or words of similar import.
Similarly, statements that describe the Company's future plans, objectives or
goals are also forward-looking statements. Such forward-looking statements are
subject to certain risks and uncertainties which may cause actual results to
differ materially from those currently anticipated. The forward-looking
statements made herein are made only as of the date of this report and the
Company undertakes no obligation to update such forward-looking statements to
reflect subsequent events or circumstances.
Due to the Company's emergence from its Chapter 11 proceedings on October 8,
2003, the Company has implemented the "fresh start" accounting provisions of
AICPA Statement of Position 90-7, "Financial Reporting by Entities in
Reorganization under the Bankruptcy Code," to its financial statements. Fresh
start requires that, upon the Company's emergence, the Company establish a "fair
value" basis for the carrying value of the assets and liabilities for the
reorganized Company. Although the effective date of the Plan of Reorganization
was October 8, 2003, due to the immateriality of the results of operations for
the period between October 1, 2003 and the effective date, the Company accounted
for the consummation of the Plan of Reorganization as if it had occurred on
October 1, 2003 and implemented fresh start accounting as of that date.
The following discussions compare the results of operations of the Company for
the three and six months ended March 31, 2005, to the results of the operations
of the Company for the three and six months ended March 31, 2004.
RESULTS OF OPERATIONS (dollars in thousands)
Three Months Ended March 31, 2005 and 2004
Net sales. Net sales for the three months ended March 31, 2005 were $131,527
which are $26,414 or 25.1% higher than the quarter ended March 31, 2004.
Approximately $9,800, which represents 37% of the total increase in net sales,
was due to the increased cost of steel scrap charged to customers. Most of the
remainder of the increase was due to increased demand for industrial castings
used in the heavy duty truck market, increased shipments of municipal products
and new business at all locations.
Gross profit. Gross profit for the three months ended March 31, 2005 was
$20,460, an increase of $6,721, or 48.9%, as compared to the quarter ended March
31, 2004. Gross profit as a percentage of net sales increased to 15.6% for the
three months ended March 31, 2005 from 13.1% for the quarter ended March 31,
2004. The majority of the increase in gross profit resulted from sales volume
increases and the efficiencies achieved by operating the manufacturing plants at
higher capacity. The Company continues to recover the increased
cost of its steel scrap through its surcharge mechanism for industrial products.
These increased scrap metal costs are recovered on a delayed basis from the
Company's industrial customers and require a general price increase to recover
the costs from municipal customers.
Selling, general and administrative expenses. Selling, general and
administrative expenses for the three months ended March 31, 2005 were $8,331,
an increase of $1,194, or 16.7%, as compared to the $7,137 for the quarter ended
March 31, 2004. The increase was due to increased professional fees related to
compliance with Sarbanes-Oxley requirements and increases in fringe benefit
costs, specifically health care and workers' compensation costs. Selling,
general and administrative expenses decreased as a percentage of net sales to
6.3% compared to the 6.8% for the quarter ended March 31, 2004.
Amortization of intangible assets. Amortization of intangible assets was $1,780
for the three months ended March 31, 2005 which is comparable to the $1,774 for
the quarter ended March 31, 2004.
Operating income. Operating income was $10,349 for the three months ended March
31, 2005, an increase of $5,520 from operating income of $4,829 for the quarter
ended March 31, 2004. The increased operating income was caused by the reasons
discussed above under gross profit partially offset by increased selling,
general and administrative expenses. As a percentage of net sales, operating
income increased from 4.6% for the quarter ended March 31, 2004 to 7.9% for the
three months ended March 31, 2005.
16
Net interest expense. Net interest expense was $8,389 for the three months ended
March 31, 2005 compared to $8,473 for the quarter ended March 31, 2004. Interest
expense for the three months ended March 31, 2005 included amortization of bond
discount of $396 and amortization of deferred financing costs of $121.
Income tax provision. The income tax provision for the three months ended March
31, 2005 is based on the Company's 2005 estimated effective tax rate of
approximately 40%. There was no income tax benefit recorded for the three months
ended March 31, 2004. At that time it was deemed more likely than not that the
Company would not be able to utilize the net operating loss generated for the
quarter to offset future taxable income.
Six Months Ended March 31, 2005 and 2004
Net sales. Net sales for the six months ended March 31, 2005 were $253,391 which
are $58,453 or 30.0% higher than the six months ended March 31, 2004.
Approximately $24,900, which represents 43% of the total increase in net sales,
was due to the increased cost of steel scrap charged to customers. Most of the
remainder of the increase was due to increased demand for industrial castings
used in the heavy duty truck market, increased shipments of municipal products
and new business at all locations.
Gross profit. Gross profit for the six months ended March 31, 2005 was $39,628,
an increase of $14,407, or 57.1%, as compared to the six months ended March 31,
2004. Gross profit as a percentage of net sales increased to 15.6% for the six
months ended March 31, 2005 from 12.9% for the six months ended March 31, 2004.
The majority of the increase in gross profit resulted from sales volume
increases and the efficiencies achieved by operating the manufacturing plants at
higher capacity. The Company continues to recover the increased
cost of its steel scrap through its surcharge mechanism for industrial products.
These increased scrap metal costs are recovered on a delayed basis from the
Company's industrial customers and require a general price increase to recover
the costs from municipal customers.
Selling, general and administrative expenses. Selling, general and
administrative expenses for the six months ended March 31, 2005 were $16,284, an
increase of $3,925, or 31.8%, as compared to the $12,359 for the six months
ended March 31, 2004. The increase was due to increased professional fees
related to compliance with Sarbanes-Oxley requirements, a decrease in the rebate
received from countervailing duties assessed on imported products, increases in
certain distribution costs (freight, travel, commissions) and increases in
fringe benefit costs, specifically health care and workers' compensation costs.
Selling, general and administrative expenses increased as a percentage of net
sales to 6.4% compared to 6.3% for the six months ended March 31, 2004.
Amortization of intangible assets. Amortization of intangible assets was $3,563
for the six months ended March 31, 2005 which is comparable to the $3,571 for
the six months ended March 31, 2004.
Operating income. Operating income was $19,782 for the six months ended March
31, 2005, an increase of $10,439 from operating income of $9,343 for the six
months ended March 31, 2004. The increased operating income was caused by the
reasons discussed above under gross profit partially offset by increased
selling, general and administrative expenses. As a percentage of net sales,
operating income increased from 4.8% for the six months ended March 31, 2004 to
7.8% for the six months ended March 31, 2005.
Net interest expense. Net interest expense was $16,800 for the six months ended
March 31, 2005 compared to $17,072 for the six months ended March 31, 2004.
Interest expense for the six months ended March 31, 2005 included amortization
of bond discount of $792 and amortization of deferred financing costs of $241.
Income tax provision. The income tax provision for the six months ended March
31, 2005 is based on the Company's 2005 estimated effective tax rate of
approximately 40%. There was no income tax benefit recorded for the six months
ended March 31, 2004. At that time it was deemed more likely than not that the
Company would not be able to utilize the net operating loss generated for the
six month period to offset future taxable income.
17
LIQUIDITY AND CAPITAL RESOURCES (dollars in thousands)
Credit Facility
The Company's Credit Facility consists of a revolving credit facility of up to
$70,000 (with a $5,000 sublimit available for letters of credit) and borrowing
base term loans in the aggregate amount of $22,085. The Credit Facility has a
five-year maturity and bears interest at rates based on the lenders' Base Rate,
as defined in the Credit Facility or an adjusted rate based on LIBOR.
Availability under the Credit Facility is based on various advance rates against
the Company's accounts receivable and inventory. Amounts under the revolving
credit facility may be borrowed, repaid and reborrowed subject to the terms of
the facility. At March 31, 2005, the Company had approximately $45,700
outstanding under the revolving credit facility and approximately $18,100
outstanding under the term loan facility. No portion of the term loan, once
repaid, may be reborrowed.
NFC Castings, Inc.(NFC), the Company's immediate parent, and the wholly owned
subsidiaries of the Company jointly and severally guarantee the Company's
obligations under the Credit Facility, subject to customary exceptions for
transactions of this type. The borrower's and guarantors' obligations under the
Credit Facility are secured by a first priority perfected security interest,
subject to customary restrictions, in substantially all of the Company's
tangible and intangible assets. The senior secured notes, and the guarantees in
respect thereof, are equal in right of payment to the Credit Facility, and the
guarantees in respect thereof. The liens in respect of the senior secured notes
are junior to the liens securing the Credit Facility and guarantees thereof.
Voluntary prepayments may be made at any time on the term loan borrowings or the
revolving borrowings upon customary prior notice. Prepayments on the term loan
borrowings may be made at any time without premium or penalty unless a
simultaneous prepayment is being made on the revolving borrowings or if any such
prepayment has been made previously. For the first three years of the Credit
Facility, prepayments on the revolving borrowings are subject to certain
premiums specified in the Credit Facility. Mandatory repayments are required
under certain circumstances, including a sale of assets or the issuance of debt
or equity.
The Credit Facility requires the Company to observe certain customary
conditions, affirmative covenants and negative covenants including financial
covenants. The Credit Facility also contains events of default customary for
these types of facilities, including, without limitation, payment defaults,
material misrepresentations, covenant defaults, bankruptcy and a change of
ownership of the Company, NFC or ACP Holding Company, NFC's immediate parent. At
March 31, 2005, the Company is in compliance with existing bank covenants.
18
11% Senior Secured Notes due 2010. The Company has outstanding Senior Secured
Notes due 2010 in the principal amount of $133,130, with a coupon rate of 11%.
These notes were issued at a price which included a discount of $11,692. The
obligations under the senior secured notes are equal in right of payment to the
Credit Facility and the associated guarantees. The liens securing the senior
secured notes are junior to the liens securing the Credit Facility and
guarantees thereof. Interest on the senior secured notes is payable on a
semi-annual basis. The Company's obligations under the notes are guaranteed on a
secured basis by each of its wholly owned subsidiaries. Subject to the
restrictions in the Credit Facility, the notes are redeemable at the Company's
option in whole or in part at any time after the fourth anniversary of their
issuance, with not less than 30 days nor more than 60 days notice for an amount
to be determined pursuant to a formula set forth in the indenture governing the
notes. Upon the occurrence of a "change of control" as defined in the indenture
governing the notes, the Company may be required to make an offer to purchase
the secured notes at 101% of the outstanding principal amount thereof, plus
accrued and unpaid interest up to the purchase date. The secured notes contain
customary covenants typical to this type of financing, such as limitations on
(1) indebtedness, (2) restricted payments, (3) liens, (4) restrictions on
distributions from restricted subsidiaries, (5) sale of assets, (6) affiliate
transactions, (7) mergers and consolidations and (8) lines of business. The
secured notes also contain customary events of default typical to this type of
financing, such as (1) failure to pay principal and/or interest when due, (2)
failure to observe covenants, (3) certain events of bankruptcy, (4) the
rendering of certain judgments or (5) the loss of any guarantee.
13% Senior Subordinated Notes due 2013. The Company has outstanding Senior
Subordinated Notes due 2013 in the principal amount of $100,000, with a coupon
rate of 13%. The obligations under the senior subordinated notes are senior to
the Company's subordinated unsecured indebtedness and are subordinate to the
Credit Facility and the senior secured notes. Interest on the senior
subordinated notes is payable on a semi-annual basis. Five percent of the
interest on the senior subordinated notes will be paid in cash and 8% interest
may be paid-in-kind. The Company's obligations under the notes are guaranteed on
an unsecured basis by each of its wholly owned subsidiaries. Subject to the
restrictions in the Credit Facility, the notes are redeemable at our option in
whole or in part at any time, with not less than 30 days nor more than 60 days
notice for an amount to be determined pursuant to a formula set forth in the
indenture governing the notes. Upon the occurrence of a "change of control" as
defined in the indenture governing the notes, the Company may be required to
make an offer to purchase the subordinated notes at 101% of the outstanding
principal amount thereof, plus accrued and unpaid interest up to the purchase
date. The subordinated notes contain customary covenants typical to this type of
financing, such as limitations on (1) indebtedness, (2) restricted payments, (3)
liens, (4) restrictions on distributions from restricted subsidiaries, (5) sale
of assets, (6) affiliate transactions, (7) mergers and consolidations and (8)
lines of business. The subordinated notes also contain customary events of
default typical to this type of financing, such as, (1) failure to pay principal
and/or interest when due, (2) failure to observe covenants, (3) certain events
of bankruptcy, (4) the rendering of certain judgments or (5) the loss of any
guarantee.
For the six months ended March 31, 2005 and March 31, 2004, capital expenditures
were $8,226 and $6,681, respectively. Both periods represent a level of capital
expenditures necessary to maintain equipment and facilities. The 2005 period
includes some make-up of deferred capital projects during the six months ended
March 31, 2005.
The Company's principal source of cash to fund its liquidity needs will be net
cash from operating activities and borrowings under the revolving credit
facility. The Company had remaining availability of $23,975 under the revolving
credit facility at March 31, 2005. Net cash provided by operating activities for
the six months ended March 31, 2005 was $5,077, an increase of $15,891 from cash
used by operating activities for the six months ended March 31, 2004 of $10,814.
The increase in net cash provided by operating activities was primarily due to
the increase in net income, as well as a smaller increase in the accounts
receivable balance relative to the start of the fiscal year.
19
Future Capital Needs. Despite the significant decrease in leverage as a result
of the Plan of Reorganization, the Company is still significantly leveraged and
its ability to meet debt obligations will depend upon future operating
performance which will be affected by many factors, some of which are beyond the
Company's control. Based on the Company's current level of operations, the
Company anticipates that its operating cash flows and available credit
facilities will be sufficient to fund anticipated operational investments,
including working capital and capital expenditure needs, for at least the next
twelve months. If, however, the Company is unable to service its debt
requirements as they become due or is unable to maintain ongoing compliance with
restrictive covenants, the Company may be forced to adopt alternative strategies
that may include reducing or delaying capital expenditures, selling assets,
restructuring or refinancing indebtedness or seeking additional equity capital.
There can be no assurances that any of these strategies could be effected on
satisfactory terms, if at all.
A reconciliation of EBITDA for the three and six months ended March 31, 2005,
compared to the three and six months ended March 31, 2004, is provided below:
Three Months Ended Six Months Ended
March 31, March 31,
------------------ -------------------
2005 2004 2005 2004
------- -------- -------- --------
Net income (loss).............................. $ 1,175 $ (3,644) $ 1,787 $ (8,328)
Income tax provision........................... 785 - 1,195 -
Net interest expense .......................... 8,389 8,473 16,800 17,072
Depreciation and amortization.................. 4,672 4,373 9,299 8,866
Gain on disposal of equipment.................. - (1) (1) (52)
Loss from discontinued operations.............. - - - 599
Gregg non-cash inventory charge................ - 535 - 1,024
Deeter non-cash inventory charge............... - - - 624
Gregg write-off of lease deposits.............. 104 - 104 -
------- -------- -------- --------
Consolidated EBITDA (as defined below) $15,125 $ 9,736 $ 29,184 $ 19,805
======= ======== ======== ========
EBITDA is defined in the Company's Credit Facility and is generally calculated
as the sum of net income (excluding non-cash charges), income taxes, interest
expense, and depreciation and amortization. EBITDA is adjusted for acquisitions
and dispositions. EBITDA is not a measure prepared in accordance with accounting
principles generally accepted in the United States, but is being presented
because the Company and the Company's lenders use it to evaluate operating
performance relative to the financial covenants contained in the Company's
credit agreement. 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 accounting principles generally accepted in the
United States.
CONTRACTUAL OBLIGATIONS
There have been no material changes to our contractual obligations outside the
ordinary course of our business from those disclosed in our Annual Report on
Form 10-K for the fiscal year ended September 30, 2004.
CRITICAL ACCOUNTING POLICIES
Our accounting policies are more fully described in Note 4 of notes to
consolidated financial statements included in our Annual Report on Form 10-K for
the year ended September 30, 2004. As disclosed in Note 4 of notes to
consolidated financial statements, the preparation of financial statements in
conformity with accounting principles generally accepted in the United States
requires the Company to make estimates and assumptions about future events that
affect the amounts reported in the financial statements and accompanying notes.
Future events and their effects cannot be determined with absolute certainty.
Therefore, the determination of estimates requires the exercise of judgment.
Actual results inevitably will differ from those estimates, and such differences
may be material to the financial statements.
The most significant accounting estimates inherent in the preparation of the
Company's financial statements include estimates associated with the evaluation
of the recoverability of certain assets including goodwill, other intangible
assets and fixed assets as well as those estimates used in the determination of
reserves related to the allowance for doubtful accounts, inventory obsolescence,
workers compensation and pensions and other post-retirement benefits. Various
assumptions and other factors impact the determination of these significant
estimates. The process of determining significant estimates is fact specific and
takes into account factors such as historical experience, product mix, and in
some cases, actuarial techniques. The Company constantly reevaluates these
significant factors and makes adjustments where facts and circumstances dictate.
Historically, actual results have not significantly deviated from those
determined using the estimates described above.
20
RECENT DEVELOPMENTS
Subsequent to our fiscal year end, the Company entered into a letter of intent
("LOI") for a management buyout of all the outstanding stock of our wholly owned
subsidiary Mercer Forge Corporation ("Mercer"). The parties to the LOI, however,
were unable to agree on the terms of a definitive agreement by the extended
termination date of the LOI, which thus has lapsed. The long-lived assets of
Mercer were classified as held for use as of September 30, 2004 and continue to
be so classified. On January 24, 2005, JD Holdings, LLC, one of the
counterparties to the LOI, filed a complaint in the United States District Court
for the Southern District of New York against the Company alleging, among other
things, that the Company breached the terms of the LOI by not consummating the
sale of the stock of Mercer to JD Holdings, LLC. The complaint seeks an order of
specific performance of the LOI or, in the alternative, $35 million in damages
and, in either case, an order temporarily, preliminarily and permanently
restraining the Company from transferring the stock of Mercer to any third
party. The Company currently is defending the case vigorously.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to market risk related to changes in interest rates. The
Company does not use derivative financial instruments for speculative or trading
purposes.
Interest Rate Sensitivity. The Company's earnings are affected by changes
in short-term interest rates as a result of its borrowings under the Credit
Facility. If market interest rates for such borrowings change by 1% during the
remainder of the fiscal year ending September 30, 2005, the Company's interest
expense would increase or decrease by approximately $308 thousand. This analysis
does not consider the effects of changes in the level of overall economic
activity that could occur due to interest rate changes. Further, in the event of
an upward change of such magnitude, management could take actions to further
mitigate its exposure to the change. However, due to the uncertainty of the
specific actions that would be taken and their possible effects, the sensitivity
analysis assumes no changes in the Company's financial structure.
Item 4. CONTROLS AND PROCEDURES
Disclosure Control and Procedures. The Company's management, with the
participation of the Company's Chief Executive Officer and Chief Financial
Officer, have evaluated the effectiveness of the Company's disclosure controls
and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934, as amended (Exchange Act)) as of the end of the period
covered by this report. Based upon such evaluation, the Chief Executive Officer
Chief Financial Officer have concluded that, as of the end of such period, the
Company's disclosure controls and procedures are effective in recording,
processing, summarizing and reporting, on a timely basis, information required
to be disclosed by the Company in the reports that the Company files or submits
under the Exchange Act.
Internal Control Over Financial Reporting. There have not been any changes in
the Company's internal control over financial reporting (as such term is defined
in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal
quarter to which this report relates that have materially affected, or are
reasonably likely to materially affect, the Company's internal control over
financial reporting.
21
NEENAH FOUNDRY COMPANY
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
See "Recent Developments" in Item 2 in Part 1 of this report for
information concerning a legal proceeding which is incorporated herein by
reference.
We are involved in routine litigation incidental to our business. Such
litigation is not, in our opinion, likely to have a material adverse
effect on our financial condition or results of operations.
Item 6. EXHIBITS
(a) Exhibits
31.1 Certification of Chief Executive Officer Pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002
31.2 Certification of Chief Financial Officer Pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002
32 Certification of Periodic Financial Report by CEO and CFO Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002
22
SIGNATURES
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.
NEENAH FOUNDRY COMPANY
DATE: May 11, 2005 /s/ Gary W. LaChey
-----------------------------------
Gary W. LaChey
Corporate Vice President - Finance
(Principal Financial Officer and Duly
Authorized Officer)
23