NEENAH FOUNDRY CO - 10-Q Quarterly Report

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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 December 31, 2004

OR

( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from to
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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 January 31, 2005 the registrant had 1,000 shares of Common Stock, par value
$100 per share, outstanding, all of which were held of record by ACP Holding
Company.

1

NEENAH FOUNDRY COMPANY
Form 10-Q Index
For the Quarter Ended December 31, 2004

2

NEENAH FOUNDRY COMPANY
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)

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)

See notes to condensed consolidated financial statements.

4

NEENAH FOUNDRY COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)

See notes to condensed consolidated financial statements.

5

NEENAH FOUNDRY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

December 31, 2004
(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 months ended December 31, 2004 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.

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NOTE 2 -- INVENTORIES

The components of inventories are as follows:

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.

Statement 123(R) must be adopted no later than July 1, 2005. Early adoption will
be permitted in periods in which financial statements have not yet been issued.
We expect to adopt Statement 123(R) on July 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 we have 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 months ended December 31, (in thousands):

EMPLOYER CONTRIBUTIONS

For the three months ended December 31, 2004, $0.3 million of contributions have
been made. The Company presently anticipates contributing an additional $3.8
million to fund its pension plans in 2005 for a total of $4.1 million.

7

NOTE 5 -- GUARANTOR SUBSIDIARIES

The following tables present condensed consolidating financial information as of
December 31, 2004 and September 30, 2004 and for the three months ended December
31, 2004 and 2003 for: (a) the Company and (b) on a combined basis, the
guarantors of the Senior Subordinated Notes, 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
DECEMBER 31, 2004

8

NOTE 5 -- GUARANTOR SUBSIDIARIES (CONTINUED)

CONDENSED CONSOLIDATING BALANCE SHEET
SEPTEMBER 30, 2004

9

NOTE 5 -- GUARANTOR SUBSIDIARIES (CONTINUED)

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
THREE MONTHS ENDED DECEMBER 31, 2004

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
THREE MONTHS ENDED DECEMBER 31, 2003

10

NOTE 5 -- GUARANTOR SUBSIDIARIES (CONTINUED)

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
THREE MONTHS ENDED DECEMBER 31, 2004

11

NOTE 5 -- GUARANTOR SUBSIDIARIES (CONTINUED)

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
THREE MONTHS ENDED DECEMBER 31, 2003

12

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:

13

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 are described in close
proximity to such statements and 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 months ended December 31, 2004, to the results of the operations of
the Company for the three months ended December 31, 2003.

RESULTS OF OPERATIONS (dollars in thousands)

Three Months Ended December 31, 2004 and 2003

Net sales. Net sales for the three months ended December 31, 2004 were $121,864
which are $32,039 or 35.7% higher than the quarter ended December 31, 2003.
Approximately $15,100, which represents 47% 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 December 31, 2004 was
$19,168, an increase of $7,686, or 66.9%, as compared to the quarter ended
December 31, 2003. Gross profit as a percentage of net sales increased to 15.7%
for the three months ended December 31, 2004 from 12.8% for the quarter ended
December 31, 2003. 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 has been successful in
recovering 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 December 31, 2004 were
$7,953, an increase of $2,731, or 52.3%, as compared to the $5,222 for the
quarter ended December 31, 2003. 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
significant increases in fringe benefit costs. Selling, general and
administrative expenses increased as a percentage of net sales to 6.5% compared
to the 5.8% for the quarter ended December 31, 2003.

Amortization of intangible assets. Amortization of intangible assets was $1,783
for the three months ended December 31, 2004 which is comparable to the $1,797
for the quarter ended December 31, 2003.

14

Operating income. Operating income was $9,433 for the three months ended
December 31, 2004, an increase of $4,919 from operating income of $4,514 for the
quarter ended December 31, 2003. 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 5.0% for the quarter ended December 31, 2003 to
7.7% for the three months ended December 31, 2004.

Net interest expense. Net interest expense was $8,411 for the three months ended
December 31, 2004 compared to $8,599 for the quarter ended December 31, 2003.

Income tax provision. The income tax provision for the three months ended
December 31, 2004 is based on the Company's 2004 estimated effective tax rate of
approximately 40%. There was no income tax benefit recorded for the three months
ended December 31, 2003. 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.

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 December 31, 2004, the Company had approximately $45,600
outstanding under the revolving credit facility, which includes $13,800 borrowed
on December 31, 2004 for an interest payment due January 1, 2005, and
approximately $18,900 outstanding under the term loan facility. No portion of
the term loan, once repaid, may be reborrowed.

NFC Castings, Inc.(NFC) and the inactive 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 Second
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 Second 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. At December 31, 2004, the
Company is in compliance with existing bank covenants.

15

11% Senior Secured Notes due 2010. The Company has Senior Secured Notes due 2010
in the principal amount of $133,130, with a coupon rate of 11%. The Notes were
issued at a price which included a discount of $11,692. The obligations under
the senior secured notes are pari passu 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. The secured notes are subordinate to the Credit Facility. 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 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 all of 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 three months ended December 31, 2004 and December 31, 2003, capital
expenditures were $4,822 and $3,036, respectively. Both periods represent a
level of capital expenditures necessary to maintain equipment and facilities and
includes some make-up of deferred maintenance projects during the three months
ended December 31, 2004.

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 $24,051 under the Revolving
Credit Facility at December 31, 2004. Net cash provided by operating activities
for the three months ended December 31, 2004 was $190, a decrease of $4,362 from
cash provided by operating activities for the three months ended December 31,
2003 of $4,552. The decrease in net cash provided by operating activities was
primarily due to a large increase in the accounts receivable balance
proportional to our increased sales volume.

16

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 months ended December 31, 2004 is
provided below:

EBITDA is defined in our 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 we and our lenders use it to evaluate our operating performance relative
to the financial covenants contained in our 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.

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.

17

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 intends to defend 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 $464,000. 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

(a) Evaluation of disclosure controls and procedures. At December 31, 2004, an
evaluation was carried out under the supervision and with the participation of
the Company's management, including the Company's President and Chief Executive
Officer and Corporate Vice President - Finance, of the effectiveness of the
design and operation of the Company's disclosure controls and procedures (as
defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based upon
their evaluation of these disclosure controls and procedures, the President and
Chief Executive Officer and Corporate Vice President - Finance concluded that
the disclosure controls and procedures were effective as of the date of such
evaluation to ensure that material information relating to the Company,
including its consolidated subsidiaries, was made known to them by others within
those entities, particularly during the period in which this Quarterly Report on
Form 10-Q was being prepared.

(b) Changes in internal controls. There were no significant changes in the
Company's internal controls over financial reporting or in other factors that
could significantly affect the Company's disclosure controls and procedures, nor
were there any significant deficiencies or material weaknesses in the Company's
internal controls. As a result, no corrective actions were required or
undertaken.

18

NEENAH FOUNDRY COMPANY
PART II. OTHER INFORMATION

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

19

SIGNATURES

Pursuant to the requirements of the Securities and 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: February 11, 2005 /s/ Gary LaChey
-----------------------------------------
Gary LaChey
Corporate Vice President - Finance
(Principal Financial Officer and Duly
Authorized Officer)

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