Neenah Transport Inc – ‘10-K’ for 9/30/97

As of:  Monday, 12/29/97   ·   For:  9/30/97   ·   Accession #:  950124-97-6676   ·   File #:  333-28751-01

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Annual Report   —   Form 10-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-K        Annual Report                                         71    294K 
 2: EX-10.16    Material Contract                                     70    336K 
 3: EX-21.1     Subsidiaries of the Registrant                         1      4K 
 4: EX-27.1     Financial Data Schedule (Pre-XBRL)                     1      8K 

10-K   —   Annual Report
Document Table of Contents

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 UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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 September 30,1997.
[ ] 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
NEENAH TRANSPORT, INC.
HARTLEY CONTROLS CORPORATION
 (Exact name of registrant as it appears in its charter)

Wisconsin                                  39-1580331 
Wisconsin                                  39-1378433 
Wisconsin                                  39-0842568 
(State or other jurisdiction of            (IRS Employer ID Number)     
Incorporation or organization)                                          

2121 Brooks Avenue, P.O. Box 729, Neenah, Wisconsin      54957                  
2121 Brooks Avenue, P.O. Box 729, Neenah, Wisconsin      54957                  
2400 Holly Road, Neenah, Wisconsin                       54956                  
(Address of principal executive offices)               (Zip Code)               
(920) 725-7000
(920) 725-7000
(920) 734-2689
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:    NONE             

Securities registered pursuant to section 12(g) of the Act:                     
 11 1/8% Series B Senior Subordinated Notes Due 2007
 11 1/8% Series D Senior Subordinated Notes Due 2007
(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 [ ]                               

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PART I
Item 1.    BUSINESS                                                             

     On April 30, 1997, pursuant to an Agreement and Plan of Reorganization with
NC Merger Company and NFC Castings, Inc., Neenah Corporation (the "Predecessor  
Company") was acquired by NFC Castings, Inc. (the "Merger"). Prior to July 1,   
1997, Neenah Foundry Company was one of three wholly owned subsidiaries of      
Neenah Corporation, a holding company with no significant assets or operations  
other than its holdings in the common stock of its three wholly owned           
subsidiaries. On July 1, 1997, Neenah Foundry Company merged with and into      
Neenah Corporation and the surviving company changed its name to Neenah Foundry 
Company (the "Company").                                                        

  The Company, founded in 1872, is one of the largest manufacturers of a
wide range of high quality ductile and gray iron castings for the heavy         
municipal market and selected segments of the industrial market. The Company    
believes it is the largest manufacturer of heavy municipal iron castings in the 
United States with approximately a 19% market share in calendar year 1996. The  
Company's broad range of heavy municipal iron castings includes manhole covers  
and frames, storm sewer frames and grates, heavy duty airport castings,         
specialized trench drain castings, specialty flood control castings and         
ornamental tree grates. These municipal castings are sold throughout the United 
States to state and local government entities, utility companies, precast       
concrete manhole structure producers and contractors for both new construction  
and infrastructure replacement. The heavy municipal market generated            
approximately 45% of the Company's net sales on a pro forma basis for the six   
months ended September 30, 1997. The Company believes it is also a leading      
manufacturer of a wide range of complex industrial castings, including castings 
for medium- and heavy-duty truck drive line components, a broad range of        
castings for the farm equipment industry and specific components for compressors
used in heating, ventilation and air conditioning systems. The industrial market
generated approximately 52.6% of the Company's net sales on a pro forma basis   
for the six months ended September 30, 1997. In addition, the Company engineers,
manufactures and sells customized sand control systems and related products,    
which are an essential part of the casting process, to other iron foundries.    
Sales of these sand control systems and related products represented            
approximately 2.4% of the Company's net sales on a pro forma basis for the six  
months ended September 30, 1997.                                                

The Company currently operates two modern foundries with an annual    
aggregate rated capacity of approximately 187,000 tons at a single site in      
Neenah, Wisconsin. Since 1985, the Company has invested over $100 million in its
production facilities, with approximately $73 million invested in a major plant 
modernization program from 1985 to 1990. This plant modernization program was a 
critical part of a long-term strategy to produce higher volume, value-added     
castings for its existing industrial customers and to penetrate other selected  
segments of the industrial market, while preserving its position as the leader  
in the heavy municipal market. This modernization program entailed the closing  
of the Company's oldest foundry, Plant 1, and the updating of the Company's     
other two foundries, Plants 2 and 3, which enabled the Company both to produce  
higher volume, complex castings for selected industrial segments and to improve 
the Company's cost position in the heavy municipal market. Following the        
completion of the modernization program, the Company has steadily decreased its 
production of lower margin products such as axle covers and brake drums and     
increased the production of higher margin, more complex parts, such as          
transmission and axle housings. As a result of this strategy, the Company's     
ongoing improvements in its manufacturing process and increased demand for      
medium- and heavy-duty truck components have caused net sales and EBITDA to     
increase substantially.                                                         

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PRODUCTS, CUSTOMERS AND MARKETS                                                 

    The Company provides a variety of products to both the heavy municipal and
industrial markets. The following table sets forth certain information regarding
the end-user markets served by the Company, the products produced by the        
Company, representative customers in each end-user market and the percentage of 
net sales attributable to each of the Company's markets for the fiscal year     
ended March 31, 1997 and for the Pro forma six months ended September 30, 1997. 

                                                        [Enlarge/Download Table]


                                                                                Percentage of Net               
                                                                                      Sales(1)                  
                                                                     -------------------------------------------
                                                                      Fiscal Year                Pro forma      
                                                   Representative        Ended               Six Months Ended   
      Market              End Product                 Customers      March 31, 1997       September 30, 1997 (2)
      ------              -----------                 ---------      --------------       ----------------------
                                                                                                                
Heavy Municipal   Standard castings including    State and local         44.6%                     46.5%        
                 storm and sanitary sewer        government                                                     
                 castings, including manhole     entities, utility                                              
                 covers and frames, storm        companies, precast                                             
                 sewer frames and grates;        concrete structure                                             
                 Specialty castings including    producers and                                                  
                 heavy duty airport castings,    contractors (3)                                                
                 specialized trench drain                                                                       
                 castings, specialty flood                                                                      
                 control castings and                                                                           
                 ornamental tree grates                                                                         
Industrial                                                                                                      
  Medium- and                                                                                                   
  Heavy-Duty                                                                                                    
  Truck          Differential carriers and       Rockwell                34.3%                     33.8%        
                 cases, brackets, cages,           International                                                
                 calipers, caps, carriers,       Eaton Corp.                                                    
                 hubs, knuckles, transmission    Dana Corp                                                      
                 housings, yokes                                                                                
  Farm                                                                                                          
  Equipment      Various gear housings, planet   John Deere              16.0%                     15.8%        
                 carrier, axle housings,         New Holland                                                    
                 planting and harvesting                                                                        
                 equipment parts,                                                                               
                 counterweights                                                                                 
  Other                                                                                                         
  Industrial     Compressor components,          Aisin                    5.1%                      3.9%        
                 various housing and gear cases  The Trane                                                      
                                                   Company                                                      


(1) Net sales include sales of Neenah Foundry Company only.                     
(2) The Company changed its fiscal year end to September 30 from March 31       
effective September 30, 1997.                                           
(3) No municipal customer represented more than 1.5% of Neenah Foundry Company's
net sales for the fiscal year ended March 31, 1997 or the pro forma six 
months ended September 30, 1997.                                        

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   Heavy Municipal. Based on industry reported data, the Company believes it
is the largest manufacturer of heavy municipal iron castings in the United      
States with an estimated 19% market share in calendar year 1996. The Company's  
broad heavy municipal product line consists of two general categories of        
castings, "standard" and "specialty" castings. Standard castings principally    
consist of storm and sanitary sewer castings that are consistent with           
pre-existing dimension and strength specifications established by local         
authorities. Standard castings are generally high volume items that are         
routinely used in new construction and infrastructure replacement. Specialty    
castings are generally lower volume, higher margin products which include       
heavy-duty airport castings, trench drain castings, flood control castings,     
special manhole and inlet castings and ornamental tree grates. These specialty  
items are frequently selected and/or specified from the Company's municipal     
product catalog and its tree grate catalog, which together encompass over 4,400 
standard and specialty patterns. For many of these specialty products, the      
Company believes it is the only manufacturer with existing patterns to produce  
such a particular casting, although a competing manufacturer could elect to make
the investment in patterns or equipment necessary to produce a similar casting. 

 The Company's municipal castings are sold to state and local government
entities, utility companies, pre-cast concrete manhole structure producers and  
contractors for both new construction and infrastructure replacement. The       
Company's 17,000 active municipal customers generally make purchase decisions   
based on a number of criteria including acceptability of the product per local  
specification, quality, service, price and the customer's relationship with the 
foundry. Relative to customers in the industrial market, municipal market       
customers are less technically demanding and rely on published product          
specifications to ensure product performance.                                   

A key aspect of winning orders in the heavy municipal market is the   
specification process in which a local authority or design engineer sets        
specific criteria for the casting or castings to be used in a particular        
project. Those criteria then become part of the formal plans and specifications 
that will govern the acceptability of castings for a particular project. The    
Company seeks to be an active participant in the specification process. Its     
sales staff makes frequent calls on design engineers as part of a continuous    
effort to stay abreast of current specifications and upcoming projects. In these
sales calls, the Company seeks to create opportunities for the selection of     
specifications which utilize an existing Company pattern. Although in many cases
the design engineer who sets the specification does not make the purchase       
decision, when the Company's specialty product is specified it becomes more     
difficult for another manufacturer to provide an alternate part which is        
considered acceptable. The Company's professional sales staff and product       
engineering department are highly regarded by design engineers and are          
frequently consulted during the specification drafting process. The Company     
believes its reputation for its product engineering support, consistent quality 
and reliable service have made the Company's municipal and tree grate catalogs  
two of the most frequently used specification design tools in the municipal     
casting industry.                                                               

Over the past three years, the Company has introduced what it calls   
"lightweighted" parts to the heavy municipal market. These lightweighted parts  
have been reengineered in order to reduce both their weight and amount of raw   
materials necessary for their manufacture, while maintaining the high quality   
performance characteristics of the heavier version of the casting. This         
improvement in the design and manufacture of municipal castings has resulted in 
lower material costs and improved margins for this product line. The Company is 
able to manufacture lightweighted castings because its manufacturing processes  
enable it to refine castings walls down to very narrow tolerances, many of which
are currently not achievable by the Company's competitors. While only a portion 
of the municipal castings the Company sells are candidates for lightweighting,  
the Company expects to continue to increase the number of lightweighted castings
which it offers for sale over the next several years.                           

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 Industrial. The Company believes it is a leading manufacturer of a wide
range of complex industrial castings, including castings for medium- and        
heavy-duty truck drive line components and farm equipment as well as castings   
for specific components for compressors used in HVAC systems. The Company's     
industrial castings have increased in complexity since the early 1990's and are 
generally produced in higher volumes than municipal castings. Complexity in the 
industrial market is determined by the intricacy of a casting's shape, the      
thinness of its walls and the amount of processing by a customer required before
a part is suitable for use by it. OEMs and their first tier suppliers have been 
demanding higher complexity parts principally to reduce labor costs in their own
production processes by using fewer parts to manufacture the same finished      
product or assembly and by using parts which require less preparation before    
entering the production process.                                                

     The Company's industrial castings are primarily sold to a limited number of
customers with whom the Company has established a close working relationship.   
The Company has sold to certain industrial customers for over 20 years and      
currently has multi-year arrangements with certain of those customers. These    
customers make purchasing decisions based on, among other things, technical     
ability, price, service, quality assurance systems, facility capabilities and   
reputation. However, as in the municipal market, the Company's assistance in    
product engineering plays an important role in winning bids for industrial      
castings. The average industrial casting typically takes between 12 and 18      
months to go from the design phase to full production and has an average product
life cycle of approximately 8 to 10 years. The patterns for industrial castings,
unlike the patterns for municipal castings, are owned by the Company's customers
rather than the Company. However, such industrial patterns are not readily      
transferable to other foundries without, in most cases, significant additional  
investment. Although foundries, including the Company, do not design industrial 
castings, a close working relationship between a foundry and the customer during
a product launch is critical to reduce potential production problems and        
minimize the customer's risk of incurring lost sales or reputation damage due to
a delayed launch. Involvement by a foundry early in the design process generally
improves the likelihood that the customer will design a casting within the      
manufacturing capabilities of such foundry and also improves the likelihood that
such foundry will be awarded the casting for full production.                   

The Company is the sole-sourced supplier of over 85% of the industrial
castings it currently produces. Historically, the Company has retained          
approximately 90% of the castings it has been awarded throughout the product    
life cycle, which is typical for the industry. The Company believes industrial  
customers will continue to seek out foundries with a strong reputation for      
performance who are capable of providing a cost-effective combination of        
manufacturing technology and quality. The Company's strategy is to further its  
relationships with existing customers by participating in the design and        
production of more complex industrial castings, while seeking out selected new  
customers who would value the Company's performance reputation, technical       
ability and high level of quality and service.                                  

   In addition to increasing its sales to existing customers and seeking out
new customers, the Company intends to explore opportunities in austempering and 
machining and assembling sub-components for specific industrial customers.      
Austempering is the process of heat treating a ductile iron casting to increase 
its strength, thereby increasing the casting's ability to replace steel in      
additional applications. Machining and sub-assembling are value-added processes 
often performed by the OEM or third parties. Austempering and machining and     
sub-assembly are both processes which generally provide higher margins and      
increase a customer's reliance on the manufacturer.                             

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SALES AND MARKETING                                                             

     Heavy Municipal. Over its 70 years of heavy municipal market participation,
the Company has emphasized sales and marketing and believes it has built a      
strong reputation for customer service. The Company believes that it is one of  
the leaders in U.S. heavy municipal casting production and that it has strong   
name recognition. The Company has the largest sales and marketing effort of any 
foundry serving the heavy municipal market, including 56 Company employees and  
26 commissioned representatives. The dedicated sales force works out of regional
sales offices to market the Company's municipal castings to contractors and     
state and local governmental entities throughout the United States. The Company 
operates nine regional distribution and sales centers and has two other sales   
offices in Oklahoma City, Oklahoma and Norwood, Pennsylvania. The Company       
believes this regional approach enhances its knowledge of local specifications  
and its position in the heavy municipal market.                                 

    Industrial. The Company employs a dedicated industrial casting sales force
of six people, five based in Neenah, Wisconsin and one based in Mansfield, Ohio.
These six people consist of three account coordinators, who support the ongoing 
customer relationships and organize the scheduling and delivery of shipments,   
and three major account managers who work with customers' engineers and         
procurement representatives, Company engineers, manufacturing management and    
quality assurance representatives throughout all stages of the production       
process to ensure that the final product consistently meets or exceeds customer 
specifications. This team approach consisting of sales, marketing,              
manufacturing, engineering and quality assurance effort is an integral part of  
the Company's marketing strategy.                                               

MANUFACTURING PROCESS                                                           

  The Company operates two modern foundries with an annual rated capacity of
approximately 187,000 tons at a single location in Neenah, Wisconsin. The       
Company's foundries manufacture gray and ductile iron and cast it into intricate
shapes according to customer metallurgical and dimensional specifications. Since
1985, the Company has invested over $100 million in its production facilities,  
with approximately $73 million invested from 1985 to 1990 in plant modernization
and new equipment. The Company also continually invests in the improvement of   
process controls and product performance and believes that these investments and
its significant experience in the industry have made it one of the most         
efficient manufacturers of industrial and heavy municipal casting products.     
During the pro forma six months ended September 30, 1997, the Company had a     
combined scrap rate of less that 2.0%.                                          

     The casting process involves using metal, wood or urethane patterns to make
an impression of a casting product in a mold made primarily of sand. Cores, also
made primarily of sand, are used to make the internal cavities and openings in a
casting product. Once the casting impression is made in the mold, the cores are 
set into the mold and the mold is closed. Molten metal is then poured into the  
mold, fills the mold cavity and takes on the shape of the desired casting       
product. Once the iron has solidified and cooled, the mold is shaken from the   
casting and the sand is recycled. The selection of the appropriate casting      
method, pattern, core-making equipment and sand and other raw materials depends 
on the final product including its complexity, specifications, and function as  
well as intended production volumes. Because the casting process involves many  
critical variables, such as choice of raw materials, design and production of   
tooling, iron chemistry and metallurgy, and core and molding sand properties, it
is important to monitor the process parameters closely to ensure dimensional    
precision and metallurgical consistency.                                        

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  The Company continually seeks to find ways to expand the capabilities of
existing technology to improve manufacturing processes. An example of this      
expansion is the Company's integration of Disamatic molding machines into its   
operations. Disamatic molding machines are considered to be among the most      
efficient sand molding machines because of their ability to produce high quality
molds at high production rates. Disamatic molding machines are also used by most
of the Company's direct competitors. Although the Company was not the first     
foundry to acquire Disamatic molding machines, it has significantly enhanced the
equipment's range of production by combining it with core-setting capabilities  
which exceed those of most foundries. To further improve upon the productivity  
of the Disamatic molding machines, the Company has recently increased the length
of two of its cooling lines, making each line among the longest lines in the    
world for comparable Disamatic equipment. This extension allows the Company to  
run its machines at higher production rates while providing sufficient in-mold  
cooling time prior to mold shakeout to facilitate the production of high quality
castings. As a result of these and other similar efforts, the Company has been  
able to increase productivity as measured in the number of molds per hour.      
Additionally, from 1992 through 1997, the Company reduced employee hours per ton
from 14.8 to 9.0.                                                               

The Company also achieves productivity gains by improving upon the      
individual steps of the casting process such as reducing the amount of time     
required to make a pattern change to produce a different casting product. The   
reduced time permits it to profitably produce castings in medium volume         
quantities on high volume, cost-effective equipment such as the Disamatic       
molding machines. Additionally, extensive effort in real time process controls  
permits the Company to produce a consistent, dimensionally accurate casting     
product, which requires less time and effort in the final processing stages of  
production. This accuracy contributes significantly to the Company's            
manufacturing efficiency.                                                       

QUALITY ASSURANCE                                                               

    Continual testing and monitoring of the manufacturing process is important
to maintain product quality. The Company has adopted sophisticated quality      
assurance techniques and policies for its manufacturing operations. During and  
after the casting process, the Company performs numerous tests, including       
tensile, proof-load, radiography, ultrasonic, magnetic particle and chemical    
analysis. The Company utilizes statistical process controls to measure and      
control significant process variables and casting dimensions. The results of    
this testing are documented in metallurgical certifications, which are provided 
with each shipment to most industrial customers. The Company strives to maintain
systems that provide for continuous improvement of operations and personnel,    
emphasize defect prevention and reduce variation and waste in all areas.        

DISTRIBUTION                                                                    

   Industrial castings are shipped direct to customers from the Company. For
many municipal and a small portion of its industrial customers, castings are    
delivered by Neenah Transport, Inc. ("Neenah Transport"), a wholly owned        
subsidiary of the Company, which operates a fleet of 28 tractors and 101        
trailers that deliver products throughout the Midwest. For sales outside of the 
Midwest, increased transportation costs impact the ability of the Company to    
compete on a cost basis. Neenah Transport also backhauls raw materials for use  
by the Company on return trips. Neenah Transport is staffed with professional   
drivers who are trained in service standards and product knowledge as           
representatives of the Company. To the Company's knowledge, none the Company's  
major heavy municipal competitors have a captive transportation subsidiary. The 
Company believes Neenah Transport's service and drivers provide another         
differentiating factor in favor the Company.                                    

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RAW MATERIALS                                                                   

  The primary raw materials used by the Company to manufacture ductile and
gray iron castings are steel scrap, pig iron, metallurgical coke and silica     
sand. While there are multiple suppliers for each of these commodities, the     
Company has single-source arrangements with its suppliers of each of these major
raw materials, with the exception of pig iron. Due to long standing             
relationships with each of its suppliers, the Company believes that it will     
continue to be able to secure raw materials from its suppliers at competitive   
prices. The primary energy sources for the Company's operations, electricity and
natural gas, are purchased through utilities.                                   

Although the prices of all raw materials used by the Company vary, the
fluctuations in the price of steel scrap are the most significant to the        
Company. The Company has arrangements with most of its industrial customers     
which require the Company to adjust industrial casting prices to reflect scrap  
price fluctuations. In periods of rapidly rising or falling scrap prices, these 
adjustments will lag the current scrap price because they are generally based on
average market prices for prior periods, which periods vary by customer but are 
generally no longer than six months. Castings are generally sold to the heavy   
municipal market on a bid basis and, after a bid is won, the price for the      
municipal casting subject to the bid generally cannot be adjusted for raw       
material price increases. However, in most cases the Company has been successful
in obtaining higher municipal casting unit prices in subsequent bids to         
compensate for rises in scrap prices in prior periods. Rapidly fluctuating scrap
prices may have an adverse or positive effect on the Company's financial        
condition and results of operations.                                            

COMPETITION                                                                     

    The markets for the Company's products are highly competitive. Competition
is based not only on price, but also on quality of product, range of capability,
level of service and reliability of delivery. The Company competes with numerous
independent and captive foundries, as well as with a number of foreign iron     
foundries, including certain foundries located in India. The Company also       
competes with several large domestic manufacturers whose products are made with 
materials other than ductile and gray iron, such as steel or aluminum. The      
industry consolidation that has occurred over the past 20 years has resulted in 
a significant reduction in the number of smaller foundries and a rise in the    
share of production by larger foundries, some of which have significantly       
greater financial resources than the Company. Competition from India has had a  
strong presence in the heavy municipal market and continues to be a factor,     
primarily in the western and eastern U.S., due in part to costs associated with 
transportation. However, foreign companies have been, and continue to be,       
subject to antidumping and countervailing duty enforcement litigation which the 
Company believes has had a negative effect on foreign companies' ability to     
compete in the U.S. markets. There can be no assurance that these factors will  
continue to mitigate the impact of foreign competition, or that the Company will
be able to maintain or improve its competitive position in the markets in which 
it competes.                                                                    

BACKLOG                                                                         

 The Company's industrial business generally involves supplying all or a
portion of a customer's annual requirements for a particular casting. Industrial
customers generally order castings on a monthly basis. Orders for the heavy     
municipal market are generally received for specific casting products and cover 
a much larger range of castings. The Company's backlog at any given time        
consists only of firm industrial and municipal orders. The Company's backlog was
24,800 tons at September 30, 1997 as compared to 16,000 tons at September 30,   
1996. The increase in backlog of approximately 55% was due primarily to an      
increase in the medium- and heavy-duty truck market, coupled with a substantial 
extended order from a new customer in the railroad industry.                    

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HARTLEY CONTROLS CORPORATION                                                    

Hartley Controls Corporation ("Hartley Controls"), a wholly owned     
subsidiary of the Company, engineers, manufactures and sells customized sand    
control systems, which are an essential part of the casting process, to other   
iron foundries. The sand molding media used in all high production iron         
foundries is a critical element in determining mold quality. Exacting and       
consistent control of this sand with respect to moisture and chemical additives 
is an essential element for process control, and relates directly to casting    
quality, scrap rate and the ability to produce complex molds for highly         
engineered castings. Hartley Controls is a major U.S. supplier of sand control  
systems with over 300 installations since 1986. Hartley Controls has made       
investments in process technology and has several patented technologies related 
to sand systems, including the "Automatic Moisture Controller," the "Even-Flo   
Bin," the "Automatic Compactibility Tester," the "Automatic Bond Determinator," 
the "Green Stand Reconditioner" and the "Sandman." Sales of these sand systems  
and other products represented approximately 2.4% of the Company's net sales on 
a pro forma basis for the six months ended September 30, 1997.                  

EMPLOYEES                                                                       

   As of September 30, 1997 the Company had 937 full time employees, of whom
739 were hourly employees and 198 were salaried employees. Of the 198 salaried  
employees, 96 are in manufacturing and engineering, 56 are in sales and         
marketing, 42 are in management and administration and 4 are in transportation. 
The Local 121B of the Glass, Molders, Pottery, Plastics and Allied Workers      
International Union AFL-CIO is the major bargaining agent for the representative
of 705 of the Company's hourly employees. A collective bargaining agreement with
Local 121B was reached on January 1, 1996 and expires on December 31, 1998. The 
Independent Patternmakers Union of Neenah, Wisconsin is the major bargaining    
agent for and representative of 34 of the Company's hourly employees. A         
collective bargaining agreement with the Independent Patternmakers Union was    
reached on January 1, 1995 and expires on December 31, 1997. The Company        
believes that it has a good relationship with its employees.                    

ENVIRONMENTAL MATTERS                                                           

   The Company's facilities are subject to federal, state and local laws and
regulations relating to the protection of the environment and worker health and 
safety, including those relating to discharges to air, water and land, the      
handling and disposal of solid and hazardous waste and the cleanup of properties
affected by hazardous substances. Such laws include the Federal Clean Air Act,  
the Clean Water Act, the Resource Conservation and Recovery Act and the         
Occupational Health and Safety Act. The Company believes that its operations    
have been and are currently in substantial compliance with applicable           
environmental laws, and that it has no liabilities arising under such           
environmental laws, except as would not be expected to have a material adverse  
effect on the Company's operations, financial condition or competitive position.
However, some risk of environmental liability and other costs is inherent in the
nature of the iron foundry business. The Company might in the future incur      
significant costs to meet current or more stringent compliance, cleanup or other
obligations pursuant to environmental requirements. Such costs may include      
expenditures related to remediation of historical releases or clean-up of       
structures prior to demolition.                                                 

Under the Federal Clean Air Act Amendments of 1990 ("CAA"), the       
Environmental Protection Agency must establish maximum achievable control       
technology standards for hazardous air pollutants emitted from iron foundry     
operations by the year 2000. In addition, Wisconsin law imposes requirements on 
emissions of air toxins from iron foundries and other industries. Many of the   
regulations that will implement the CAA and Wisconsin law have not yet been     
promulgated. Although it is not possible to estimate the costs of complying with
the regulations until they are issued, iron foundries, including the Company,   
can be expected to incur significant costs over time to comply with these       
federal and state regulations.                                                  

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CYCLICALITY AND SEASONALITY                                                     

    The Company has historically experienced moderate cyclicality in the heavy
municipal market. Sales of municipal products are influenced by, among other    
things, public spending. In the industrial market, the Company has experienced  
cyclicality in sales resulting from fluctuations in the medium- and heavy-duty  
truck market and the farm equipment market, which are subject to general        
economic trends.                                                                

   The Company experiences seasonality in its municipal business where sales
tend to be higher during the construction season, which occurs during the warmer
months, generally the third and fourth quarters of the Company's fiscal year.   
The Company maintains level production throughout the year in anticipation of   
such seasonality and does not experience production volume fluctuations as a    
result. The Company builds inventory in anticipation of the construction season 
with such inventories reaching a peak in March or April. The Company has not    
historically experienced seasonality in industrial casting sales.               

Item 2.     PROPERTIES                                                          

The Company's headquarters and two foundries are located in Neenah,   
Wisconsin. The first manufacturing foundry, Plant 2, produces gray and ductile  
iron castings and is equipped with one BMD air impulse molding line, two Hydro  
slinger cope and drag molding units, and one 2070 Type B Disamatic molding      
machine. The annual rated capacity for Plant 2 is 116,000 gst (good salable     
tons). The second manufacturing foundry, Plant 3, produces ductile iron castings
and is equipped with one 2013 Mark IV Disamatic molding machine and one 2070    
Type B Disamatic molding machine. The annual rated capacity for Plant 3 is      
approximately 71,000 gst. Industrial and municipal castings are produced in both
plants. Rated capacity is based on an assumed product mix and, due to the       
Company's current industrial product mix, which includes numerous complex       
castings, practical capacity is currently approximately 5% to 6% less than rated
capacity. The Company owns seven and leases six distribution and sales centers. 
In early 1994, the Company closed Plant 1, its oldest and lowest capacity plant,
which was primarily producing large castings for HVAC Systems. The Company      
closed Plant 1 because of its decision to discontinue the low volume, highly    
complex castings produced by Plant 1 and the significant capital expenditures   
that would have been necessary to modernize Plant 1.                            

Item 3.     LEGAL PROCEEDINGS                                                   

   The Company is involved in routine litigation incidental to its business.
Such litigation is not, in the opinion of management, likely to have a material 
adverse effect on the financial condition or results of operations of the       
Company.                                                                        

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

  There were no matters submitted to a vote of security holders during the
period ended September 30, 1997.                                                

 PART II

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

    There is no public market for the common stock of the Company. There was
one holder of record of the Company's common stock as of September 30, 1997.    

Item 6.       SELECTED FINANCIAL DATA                                           

The following table sets forth the selected historical consolidated 
financial data of the Company for the five years ended March 31,1997,           
the six months ended September 30, 1996 and the one month ended April 30, 1997  
which have been derived from the Company's historical consolidated financial    
statements before the Merger and the five months ended September 30, 1997 which 
have been derived from the Company's historical consolidated financial          
statements following the Merger.                                                
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The information contained in the following table should also be read in         
conjunction with "Management's Discussion and Analysis of Financial Condition   
and Results of Operations," and the Company's historical consolidated financial 
statements and related notes included elsewhere in this report.                 

                                                        [Enlarge/Download Table]

-------------------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------------------
                                                    Predecessor Company                                                        
                     -------------------------------------------------------------------------------                           
                                           Fiscal Year Ended March 31,                                                         
                                           ---------------------------                                                         
                                  1993       1994      1995      1996      1997         Six         One Month      Five Months 
                                  ----       ----      ----      ----      ----        Months         Ended           Ended    
                                                                                        Ended         April        September   
                                                                                      September     30, 1997       30, 1997    
                                                                                      30, 1996                                 
(DOLLARS IN                                                                                                                    
THOUSANDS)                                                                                                                     
STATEMENT OF                                                                                                                   
  INCOME DATA:                                                                                                                 
                                                                                                                               
  Net sales (1)                 $133,422   $131,982  $160,621  $166,951  $165,426      $89,739        $17,276         $87,093  
  Cost of sales                  108,279    106,531   120,981   121,631   116,736       62,986         11,351          60,166  
                                 -------   --------  --------  --------   -------     --------        -------         -------  
  Gross profit                    25,143     25,451    39,640    45,320    48,690       26,753          5,925          26,927  
  Selling, general                                                                                                             
    and administrative                                                                                                         
    expenses                      12,865     13,614    16,673    16,983    17,547        9,276          1,752           7,088  
  Amortization expense                --         --        --        --        --           --             --           3,678  

  Restructuring charge             6,172         --        --        --        --           --             --              --  
                                 -------   --------  --------  --------   -------     --------        -------         -------  
  Operating income                 6,106     11,837    22,967    28,337    31,143       17,477          4,173          16,161  

  Interest expense                                                                                                             
    (income), net                  2,118      1,043       397      (481)   (1,162)        (413)          (121)         (8,832) 
                                 -------   --------  --------  --------   -------     --------        -------         -------  
  Income before                                                                                                                
    income taxes                                                                                                               
    and cumulative                                                                                                             
    effect of accounting                                                                                                       
    changes                        3,988     10,794    22,570    28,818    32,305       17,890          4,294           7,329  
  Provision for income                                                                                                         
    taxes                          1,544      4,213     8,866    11,676    12,467        7,154          1,615           3,479  
                                 -------   --------  --------  --------   -------     --------        -------         -------  
  Income before                                                                                                                
    cumulative  effect of                                                                                                      
     accounting changes            2,444      6,581    13,704    17,142    19,838       10,736          2,679           3,850  

  Cumulative effect of                                                                                                         
  accounting changes:                                                                                                          
    Income taxes                   5,200         --        --        --        --           --             --              --  

    Postretirement                                                                                                             
    benefits other                                                                                                             
    than pensions                 (2,564)        --        --        --        --           --             --              --  
                                 -------   --------  --------  --------   -------     --------        -------         -------  

Income before                                                                                                                  
extraordinary item                 5,080      6,581    13,704    17,142    19,838       10,736          2,679           3,850  

Extraordinary item                    --         --        --        --        --           --             --           1,630  
                                 -------   --------  --------  --------   -------     --------        -------         -------  
Net income                       $ 5,080   $  6,581  $ 13,704  $ 17,142   $19,838     $ 10,736        $ 2,679         $ 2,220  
                                 =======   ========  ========  ========   =======     ========        =======         =======  

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                                                        [Enlarge/Download Table]

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BALANCE SHEET                                                                                                              
  DATA (AT END                                                                                                             
  OF PERIOD):                                                                                                              
                                                                                                                           
  Cash and cash                                                                                                            
    equivalents         $   79     $  118    $  238  $ 10,126  $ 22,403     $ 18,166       $ 29,046        $ 20,344        
  Working capital       12,983     14,419    15,239    28,113    43,707       34,930         34,052          39,830        
  Total assets          87,388     74,327    73,813    82,957    93,869       92,759        102,067         328,425        
  Total debt            21,409     13,325       887       241       134          169            129         197,620        
  Total stockholders'   36,862     37,929    43,198    54,790    68,857       62,676         74,458          47,220        
      equity                                                                                                               

---------------------------------------------------------------------------------------------------------------------------

(1)  Net sales for the years ended March 31, 1993 and 1994 include sales of     
   products manufactured in Plant 1, which was closed in 1994 as part of the
  Company's strategy to increase its focus on higher volume, complex parts
     for its industrial customers. The majority of the parts produced in Plant 1
  were then discontinued. Plant 1 provided sales of $30.9 million and $4.4
   million for the fiscal years ended March 31, 1993 and 1994, respectively.

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

     On April 30, 1997, pursuant to an Agreement and Plan of Reorganization with
NC Merger Company and NFC Castings, Inc., the stock of Neenah Corporation (the  
"Predecessor Company") was acquired by NFC Castings, Inc. (the "Merger"). On    
July 1, 1997, Neenah Foundry Company, which was the principal operating         
subsidiary of Neenah Corporation, merged with and into Neenah Corporation and   
the surviving company changed its name to Neenah Foundry Company (the           
"Company").                                                                     

    The following discussion and analysis of the Company's financial condition
and results of operations addresses the periods both before and after the       
Merger. The Merger has had a significant impact on the Company's results of     
operations and financial condition. The Merger resulted in the recording of     
goodwill and identifiable intangible assets totaling approximately $148.8       
million. These amounts are being amortized over their estimated useful lives,   
ranging from 5 months to 40 years. The Merger has also resulted in a significant
increase in the Company's interest expense.                                     

The Merger has been accounted for as a business combination and has   
resulted in differences in the basis of certain assets and liabilities between  
the Predecessor Company and the Company. The Company changed its fiscal year end
to September 30 from March 31 effective September 30, 1997. The following       
discussions compare the pro forma results of operations of the Company for the  
six months ended September 30, 1997, assuming the Merger occurred on April 1,   
1997, to the historical results of the Predecessor Company for the six months   
ended September 30, 1996.                                                       

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RESULTS OF OPERATIONS                                                           

   The following table sets forth for the periods shown certain statement of
income data expressed as a percentage of net sales:                             

                                                        [Enlarge/Download Table]

                                             Predecessor Company                                      
                            -----------------------------------------------------                     
                             Fiscal Year Ended March 31,                              Pro Forma       
                            -----------------------------      Six Months Ended    Six Months Ended   
                            1995         1996        1997      September 30, 1996   September 30, 1997
                            ----         ----        ----      ------------------  -------------------
                                                                                                      
Net sales:                                                                                            
    Municipal sales          43.9%        41.6%      43.1%            49.3%              45.0%        
    Industrial sales         53.2         55.2       53.4             47.5               52.6         
    Hartley Controls sales    2.9          3.2        3.5              3.2                2.4         
                            -----        -----      -----            -----              -----         
Total net sales             100.0        100.0      100.0            100.0              100.0         

Cost of sales                75.3         72.9       70.6             70.2               67.4         
                            -----        -----      -----            -----              -----         
Gross profit                 24.7         27.1       29.4             29.8               32.6         
Selling, general and                                                                                  
   administrative expense    10.4         10.1       10.6             10.3               12.1         
                            -----        -----      -----            -----              -----         
Operating income             14.3%        17.0%      18.8%            19.5%              20.5%        
                            =====        =====      =====            =====              =====         


COMPARISON OF PRO FORMA SIX MONTHS ENDED SEPTEMBER 30, 1997 TO SIX MONTHS ENDED 
SEPTEMBER 30, 1996                                                              

    Net Sales. Net sales for the pro forma six months ended September 30, 1997
were $104.4 million which are $14.6 million or 16.3% higher than the six months 
ended September 30, 1996. Net sales of municipal castings increased by $2.8     
million or 6.2 % due primarily to a strong economy in the upper Midwest and     
market share gains in strategic focus areas of the East and Southwest. Net      
sales of industrial castings increased by $12.3 million or 28.8% due to a       
continuing surge in the heavy duty truck build rates, percentage gains on       
dual sourced components and increased build rates by a major industrial         
customer. Net sales for Hartley Controls for the pro forma six months ended     
September 30,1997, declined by $0.4 million mostly due to a reduction in        
equipment sales caused by capital spending cutbacks at the major foundry        
customers that Hartley Controls services.                                       

     Gross Profit. Gross profit for the pro forma six months ended September 30,
1997 was $34.0 million, an increase of $7.3 million or 27.3%, as compared to the
six months ended September 30, 1996. Gross profit as a percentage of net sales  
increased to 32.6% from 29.8% for the six months ended September 30, 1996. The  
margin improvement was due to the combined effect of spreading manufacturing    
overhead over a greater volume, improved efficiency in plant operations and, to 
a lesser extent, improved pricing in both municipal and industrial products.    
Production, expressed in good tons, increased during the six months ended       
September 30, 1997 by 12,971 tons or 16.7% over the six month period ended      
September 30, 1996. Furthermore, man hours per ton over this time period were   
reduced from 8.86 hours/ton to 8.77 hours/ton and variable expenses (most       
notably foundry supplies, repair parts, utilities and coke) decreased from $207 
per good ton to $190 per good ton.                                              

Selling, General and Administrative Expenses. Selling, general and    
administrative expenses for the pro forma six months ended September 30, 1997   
were $12.6 million, an increase of $3.4 million or 36.2% over the $9.3 million  
for the six months ended September 30, 1996. As a percentage of net sales,      
selling, general and administrative expenses increased from 10.3% for the six   
months ended September 30, 1996 to 12.1% for the pro forma six months ended     
September 30, 1997. The increase in selling, general and administrative expense 
was primarily due to amortization of goodwill and identifiable intangible assets
resulting from the Merger.                                                      

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    Operating Income. Operating income was $21.4 million for the pro forma six
months ended September 30, 1997, an increase of $3.9 million or 22.5% from the  
six months ended September 30, 1996. As a percentage of net sales, operating    
income increased from 19.5% for the six months ended September 30, 1996 to 20.5%
for the pro forma six months ended September 30, 1997. The improvement in       
operating income was achieved for the reasons discussed above offset by         
amortization of goodwill and identifiable intangible assets resulting from the  
Merger.                                                                         

    Net Interest Expense. Net interest expense increased from $0.4 million net
interest income for the six months ended September 30, 1996 to $10.6 million net
interest expense for the pro forma six months ended September 30, 1997 due to   
the interest expense on the indebtedness incurred in connection with the Merger.

    Extraordinary Item. For the pro forma six months ended September 30, 1997,
the Company recorded an extraordinary loss of $1.6 million (which is net of an  
income tax benefit of $1.0 million) for the write-off of unamortized deferred   
financing costs in connection with the repayment in full of the term            
indebtedness under the Company's Senior Bank Facility.                          

COMPARISON OF FISCAL YEAR ENDED MARCH 31, 1997 TO FISCAL YEAR ENDED             
MARCH 31, 1996                                                                  

   Net Sales. Net sales were $165.4 million for the year ended March 31, 1997, a
decrease of $1.6 million, or 0.9%, from $167.0 million for the year ended March 
31, 1996. Net sales of industrial castings decreased $3.9 million, or 4.2%, to  
$88.3 million. The decrease in industrial casting sales was primarily the result
of a decision by the Company to discontinue its production of certain lower     
margin brake components which resulted in a 9,600 ton decrease in tons produced 
compared to the year earlier period, and, to a lesser extent, reduced demand for
casting products in the medium- and heavy-duty truck market. Net sales of       
municipal castings increased $1.9 million, or 2.7%, to $71.3 million, primarily 
due to increased pricing. Hartley Controls net sales grew $0.4 million, or 7.4%,
to $5.8 million, principally due to increased volume of equipment sales.        

 Gross Profit. Gross profit was $48.7 million for the year ended March 31,
1997, an increase of $3.4 million, or 7.5%, from $45.3 million for the year     
ended March 31, 1996. Gross profit as a percentage of net sales increased to    
29.4% for the year ended March 31, 1997, from 27.1% for the year ended March 31,
1996. The increase in gross profit as a percentage of net sales was due mainly  
to improved product mix in the industrial product line and greater overall plant
efficiency. Gross profit percentage also improved due to the continued effect of
the lightweighted municipal casting program.                                    

Selling, General and Administrative Expenses. Selling, general and    
administrative expenses were $17.5 million for the year ended March 31, 1997, an
increase of $0.5 million, or 2.9%, from $17.0 million for the year ended March  
31, 1996. As a percentage of net sales, selling, general and administrative     
expenses increased to 10.6% for the year ended March 31, 1997, from 10.1% for   
the year ended March 31, 1996. Approximately $0.2 million of the increase in    
selling, general and administrative expenses was due to a non-recurring         
charitable contribution and approximately $0.9 million of the increase was due  
to increased compensation and benefits to officers of the Company who resigned  
at the time of the Merger. Excluding the effects of estimated nonrecurring      
officer compensation and benefits and the charitable contribution, selling,     
general and administrative expenses, as a percentage of net sales, decreased    
slightly to 8.3% for the year ended March 31, 1997, from 8.4% for the year ended
March 31, 1996.                                                                 

    Operating Income. Operating income increased to $31.1 million for the year
ended March 31, 1997, an increase of $2.8 million or 9.9% from $28.3 million for
the year ended March 31, 1996. As a percentage of net sales, operating income   
increased to 18.8% for the year ended March 31, 1997, from 17.0% for the year   
ended March 31, 1996. The improvement in operating income was achieved primarily
for the reasons discussed above.                                                

COMPARISON OF FISCAL YEAR ENDED MARCH 31, 1996 TO FISCAL YEAR ENDED MARCH 31,   
1995                                                                            

   Net sales. Net sales were $167.0 million for the year ended March 31, 1996,
an increase of $6.4 million, or 4.0%, from $160.6 million for the year ended    
March 31, 1995. Net sales of industrial castings grew $6.6 million, or 7.7%, to 
$92.2 million. The increase in industrial sales was primarily due to improved   
pricing while sales volume remained stable. The improved pricing for industrial 
castings was mainly the result of a better industrial product mix as the Company
increased its sales of more complex, value-added industrial castings. Net sales 
of municipal castings decreased $1.0 million, or                                

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1.4%,  to  $69.4  million,  due to a  decrease  in unit  volume,  which  was    
partially offset by improved pricing.  The decrease in municipal castings volume
was  principally  due to  artificially  high sales in fiscal 1995 resulting from
weather  conditions.  Fiscal 1995 net sales were affected by poor winter weather
in January to March 1994 which  resulted in the  postponement  of certain  sales
from fiscal 1994 into fiscal  1995,  and mild weather from January to March 1995
which resulted in the  acceleration  of sales from fiscal 1996 into fiscal 1995.
Total production  volume in tons decreased more  significantly  than unit volume
for municipal sales because of the effect of the lightweighted  casting program.
Hartley  Controls  net  sales  grew $0.8  million,  or  17.4%,  to $5.4         
million, principally due to increased volume of equipment sales.                

   Gross Profit. Gross profit was $45.3 million for the year ended March 31,
1996, an increase of $5.7 million, or 14.4%, from $39.6 million for the year    
ended March 31, 1995. Gross profit as a percentage of net sales increased to    
27.1% for the year ended March 31, 1996, from 24.7% for the year ended March 31,
1995. The continued improvement in gross profit, as a percentage of net sales,  
was due to the combined effect of margin improvements in both the industrial and
municipal product lines. Industrial castings gross profit percentage improved   
due to the shift to a more profitable product mix and improved efficiency in    
plant operations. Municipal castings gross profit percentage improved largely   
due to the effect of implementing the lightweighted casting program and an      
increase in selling prices.                                                     

Selling, General and Administrative Expenses. Selling, general and    
administrative expenses were $17.0 million for the year ended March 31, 1996, an
increase of $0.3 million, or 1.8%, from $16.7 million for the year ended March  
31, 1995. As a percentage of net sales, selling, general and administrative     
expenses decreased slightly to 10.1% for the year ended March 31, 1996, from    
10.4% for the year ended March 31, 1995. Approximately $0.1 million of the      
increase in selling, general and administrative expense was due to increased    
compensation and benefits to officers of the Company who resigned at the time of
the Merger. Excluding the effects of estimated nonrecurring executive           
compensation and benefits, selling, general and administrative expenses, as a   
percentage of net sales, decreased to 8.4% from 8.6% for the year ended March   
31, 1995, primarily due to the spreading of fixed expenses over a greater volume
of sales.                                                                       

    Operating Income. Operating income increased to $28.3 million for the year
ended March 31, 1996, an increase of $5.3 million, or 23.0%, from $23.0 million 
for the year ended March 31, 1995. As a percentage of net sales, operating      
income increased to 17.0% for the year ended March 31, 1996, from 14.3% for the 
year ended March 31, 1995. The improvement in operating income was achieved     
primarily for the reasons discussed above.                                      

LIQUIDITY AND CAPITAL RESOURCES                                                 

    In connection with the Merger, the Company issued $150.0 million aggregate
principal amount of 11-1/8% Senior Subordinated Notes due 2007 ("the Senior     
Subordinated Notes") and entered into a credit agreement providing for term     
loans of $45.0 million and a revolving credit facility of up to $30.0 million   
(the "Senior Bank Facility.") On July 1, 1997, the Company issued an            
additional $45.0 million aggregate principal amount of Senior Subordinated      
Notes and used the proceeds of $47.6 million to pay off the term loans under    
the Senior Bank Facility, together with the accrued interest thereon and        
related fees and expenses. In addition, on September 12, 1997, the Company      
amended the revolving credit facility under the Senior Bank Facility to         
increase the borrowings available under the revolving credit facility from      
$30.0 million to $50.0 million and eliminate all borrowing base limitations.    

     The Company's liquidity needs will arise primarily from debt service on the
above indebtedness, working capital needs and funding of capital expenditures.  
Borrowings under the revolving credit facility bear interest at variable        
interest rates. The Senior Bank Facility imposes restrictions on the Company's  
ability to make capital expenditures and both the Senior Bank Facility and the  
indentures governing the Senior Subordinated Notes limit the Company's ability  
to incur additional indebtedness. The covenants contained in the Senior Bank    
Facility also, among other things, restrict the ability of the Company and its  
subsidiaries to dispose of assets, incur guarantee obligations, prepay the      
Senior Subordinated Notes or amend its indentures, pay dividends, create liens  
on assets, enter into sale and leaseback transactions, make investments, loans  
or advances, make acquisitions, engage in mergers or consolidations, change the 
business conducted by the Company, make capital expenditures or engage in       
certain transactions with affiliates, and otherwise restrict corporate          
activities.                                                                     

     For the fiscal years ended March 31, 1995, 1996 and 1997, and the pro forma
six months ended September 30, 1997, the Company's capital expenditures were    
$3.7 million, $7.3 million, $4.5 million and $2.5 million, respectively. The    
$3.6                                                                            

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million increase in capital expenditures for the fiscal year ended March        
31, 1996 from the comparable period for 1995 was primarily the result of the    
expansion of the cooling capabilities of two of the Company's production lines. 

    The Company's principal source of cash to fund its liquidity needs will be
net cash from operating activities and borrowings under its revolving credit    
facility. Net cash from operating activities for the pro forma six months ended 
September 30, 1997 was $25.4 million. Net cash from operating activities for the
year ended March 31, 1997 was $23.5 million, an increase of $1.2 million from   
$22.3 million for the year ended March 31, 1996, primarily as a result of an    
increase in net income. Net cash from operating activities for the year ended   
March 31, 1996 of $22.3 million represented a decrease of $1.3 million from     
$23.6 million in the comparable period of 1995, primarily as a result of a net  
increase in working capital (excluding cash and cash equivalents) during 1996   
partially offset by greater net income in 1996.                                 

The Company believes that cash generated from operations and existing 
revolving lines of credit will be sufficient to meet its normal operating       
requirements, including future interest payments on the Company's outstanding   
indebtedness.                                                                   

RAW MATERIALS                                                                   

Although the prices of all raw materials used by the Company vary, the
fluctuations in the price of steel scrap are the most significant to the        
Company. The Company has arrangements with most of its industrial customers     
which require the Company to adjust industrial casting prices to reflect scrap  
price fluctuations. In periods of rapidly rising or falling scrap prices, these 
adjustments will lag the current scrap price because they are generally based on
average market prices for prior periods, which periods vary by customer but are 
generally no longer than six months. Castings are generally sold to the heavy   
municipal market on a bid basis and, after a bid is won, the price for the      
municipal casting subject to the bid generally cannot be adjusted for raw       
material price increases. However, in most cases the Company has been successful
in obtaining higher municipal casting unit prices in subsequent bids to         
compensate for rises in scrap prices in prior periods. Rapidly fluctuating scrap
prices may have a temporary adverse or positive effect on the Company's results 
of operations.                                                                  

INFLATION                                                                       

  The Company does not believe that inflation has had a material impact on
its financial position or results of operations during the pro forma six month  
period ended September 30, 1997 or during the three years ended March 31, 1997. 

CYCLICALITY AND SEASONALITY                                                     

    The Company has historically experienced moderate cyclicality in the heavy
municipal market. Sales of municipal products are influenced by, among other    
things, public spending. In the industrial market, the Company has experience   
cyclicality in sales resulting from fluctuations in the medium- and heavy-duty  
truck market and the farm equipment market, which are subject to general        
economic trends.                                                                

   The Company experiences seasonality in its municipal business where sales
tend to be higher during the construction season, which occurs during the warmer
months, generally the third and fourth quarters of the Company's fiscal year.   
The Company maintains level production throughout the year in anticipation of   
such seasonality and does not experience production volume fluctuations as a    
result. The Company builds inventory in anticipation of the construction season 
with such inventories reaching a peak in March or April. The Company has not    
historically experienced seasonality in industrial casting sales.               

Item 8.       FINANCIAL STATEMENTS AND  SUPPLEMENTARY DATA                      

 The financial statements and schedules are listed in Part IV Item 14 of
this Form 10-K.                                                                 

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

None.                                                                 

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PART III

Item 10.       DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT               

MANAGEMENT

     The following sets forth certain information as of September 30, 1997, with
respect to the persons who are members of the Board of Directors or executive   
officers of the Company.                                                        

                                                                [Download Table]

        Name         Age              Position                             
        ----         ---              --------                             
                                                                           
James K. Hildebrand   60  Chairman of the Board and Chief Executive Officer
William M. Barrett    50  Vice President and General Manger                
Gary W. LaChey        51  Vice President - Finance, Treasurer and Secretary
Charles M. Kurtti     60  Vice President - Manufacturing and Engineering   
William J. Martin     49  Vice President and General Manager - Hartley     
                             Controls Corporation                          
John Z.  Rader        48  Vice President - Human Resources                 
Brenton F. Halsey     69  Director                                         
David F. Thomas       47  Director                                         
John D. Weber         33  Director                                         

     Mr.  Hildebrand is Chairman of the Board and Chief Executive Officer of the
Company,  a  position  he has held since May 1, 1997.  Mr.  Hildebrand  has been
President and Chief  Executive  Officer of Advanced Cast  Products,  Inc.  since
1988, and will continue in that position for the foreseeable future. Previously,
he served as President of the Cast Products Group of Amcast Industrial Corp. Mr.
Hildebrand is also employed by ACP Holding Company which,  beneficially owns all
the common  equity of both the Company and  Advanced  Cast  Products,  Inc.  Mr.
Hildebrand  devotes  substantial  time  to,  and is  partially  compensated  by,
Advanced Cast Products, Inc.                                                    

     Mr.  Barrett  is Vice  President  and  General  Manager of the  Company,  a
position he has held since May 1, 1997.  Mr.  Barrett joined the Company in 1992
serving as General Sales Manager - Industrial  Castings.  From 1985 to 1992, Mr.
Barrett  was the Vice  President - Sales for Harvard  Industries  Cast  Products
Group.                                                                          

     Mr.  LaChey is Vice  President - Finance,  Treasurer  and  Secretary of the
Company, a position he has held since May 1, 1997. Mr. LaChey joined the Company
in 1971,  serving in a variety of positions of increasing  responsibility in the
finance department. Mr. LaChey was most recently Vice President - Administration
of the Company.                                                                 

     Mr.  Kurtti is Vice  President  -  Manufacturing  and  Engineering,  of the
Company,  a position he has held since 1991.  Mr.  Kurtti  joined the Company in
1976 as a salesman. Mr. Kurtti has served as Director of Marketing,  Director of
Purchasing - Engineering and Director - Manufacturing and Engineering.          

     Mr.  Martin  is Vice  President  and  General  Manger  -  Hartley  Controls
Corporation,  a wholly owned  subsidiary of the Company,  a position he has held
since 1996.  Previously,  Mr. Martin was  Territory  Sales Manager at Disamatic,
Inc., a molding machine manufacturer, from 1986 to 1996.                        

     Mr. Rader is Vice President - Human Resources, a position he has held since
1990.  Mr.  Rader  joined the  Company in 1987,  serving as Director - Personnel
until 1989 and as Director - Human Resources until 1990.                        

     Mr.  Halsey is a director of the Company,  a position he has held since May
1, 1997. Mr. Halsey was the founding Chief Executive Officer and Chairman of the
James River  Corporation  from 1969 to 1990. He continued as Chairman until 1992
when he became Chairman Emeritus.                                               
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     Mr.  Thomas is a director of the Company,  a position he has held since May
1, 1997. Mr. Thomas has been a Managing  Director of Citicorp  Venture  Capital,
Ltd. for more than the past five years.  Mr.  Thomas is a director of Lifestyles
Furnishings  International Ltd., Galey & Lord, Inc., Anvil Knitwear,  Inc. and a
number of private companies.                                                    

     Mr. Weber is a director of the Company, a position he has held since May 1,
1997.  Since 1994,  Mr.  Weber has been a Vice  President  at  Citicorp  Venture
Capital,  Ltd.  Previously,  Mr.  Weber worked at Putnam  Investments  from 1992
through 1994.  Mr. Weber is a director of Anvil  Knitwear,  Inc. and a number of
private companies.                                                              

    Directors of the Company do not receive compensation for their services as
directors. Directors of the Company receive reimbursement of their reasonable   
out-of-pocket expenses in connection with their travel to and attendance at     
meetings of the board of directors or committees thereof.                       

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ITEM 11.        Executive Compensation                                          

     The following table sets forth information concerning compensation received
by the chief executive officer of the Company and its five most highly          
compensated executive officers (the "Named Executive Officers") for services    
rendered during the five months ended September 30, 1997.                       

                                                        [Enlarge/Download Table]

                                                                        Long-Term                                
                                                                       Compensation                              
                                  Annual Compensation    ------------------------------------------              
                              -------------------------    Other Annual        Options/     LTIP      All Other  
Name and Principal Position       Salary      Bonus       Compensation(1)       SARs(#)     Payouts  Compensation
---------------------------       ------      -----       ---------------      --------     -------  ------------
                                                                                                                 
Jim Hildebrand                                                                                                   
   Chairman and Chief                                                                                            
   Executive Officer          $ 50,000      $ 48,000             $527                                            
Bill Barrett                                                                                                     
   Vice President and                                                                                            
   General Manager              55,000        46,200            9,562                                            
Gary LaChey                                                                                                      
   Vice President - Finance,                                                                                     
    Secretary and Treasurer     59,175        49,700           11,528                                            
Chuck Kurtti                                                                                                     
   Vice President -                                                                                              
   Manufacturing and                                                                                             
   Engineering                  55,000        46,200           12,926                                            
Bill Martin                                                                                                      
   Vice President and                                                                                            
    General Manager -                                                                                            
    Hartley Controls                                                                                             
    Corporation                 50,000        30,000           11,553                                            
John Rader                                                                                                       
   Vice President - Human                                                                                        
   Resources                    55,000        46,200           11,984                                            

(1) The Named Executive Officers have participated in the Company's profit      
sharing, Company 401(k) contributions, and excess benefit programs. The 
   aggregate payments made by the Company pursuant to such programs are listed
as Other Annual Compensation.                                           

MANAGEMENT INCENTIVE PLAN                                                       

 The Company intends to provide performance-based compensation awards to
executive officers and key employees for achievement during each year as part of
a bonus plan. Such compensation awards may be a function of individual          
performance and consolidated corporate results. The qualitative and quantitative
criteria will be determined from time to time by the Board of Directors of the  
Company.                                                                        

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MANAGEMENT EQUITY PARTICIPATION                                                 

In connection with the Merger, (a) certain management investors acquired
units representing membership interests in ACP Products, L.L.C., ("ACP          
Products") which represent, in the aggregate, approximately a ten percent       
beneficial interest in the Company (the "Purchased Interests") and (b) certain  
management investors and certain other employees of the Company are expected to 
be granted, over a five year period, options (the "Options") to purchase        
additional Purchased Interests representing, in the aggregate, approximately a  
two percent beneficial interest in the Company. The Options are expected to be  
granted periodically and to vest and become exercisable upon (i) certain        
threshold dates and/or (ii) the satisfaction of certain financial performance   
tests.                                                                          

Upon the termination of employment with the Company, an employee's    
Purchased Interests will be subject to certain repurchase provisions exercisable
by ACP Products or its designees. The Purchased Interests obtainable upon       
exercise of the Options are expected to be subject to rights and restrictions   
similar to those of the Purchased Interests purchased in connection with the    
closing of the Merger. The exercise price of the Options will be established by 
ACP Products, in consultation with the Board of Directors of the Company or a   
compensation committee thereof.                                                 

Item 12.       SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT   

    The Company's authorized capital stock consists of 11,000 shares of common
stock, par value $100 per share (the "Common Stock"), 1,000 shares of which are 
issued and outstanding and owned by NFC Castings, Inc. and are pledged under the
Senior Bank Facility. NFC Castings, Inc. is a wholly-owned subsidiary of ACP    
Holdings Company ("ACP Holdings") which in turn is wholly-owned by ACP          
Products.                                                                       

   The outstanding common units of ACP Products consist of 185,000 Class A-3
Common Units (the "Class A Common Units"), 815,000 Class B-3 Common Units (the  
"Class B Common Units", and together with the Class A Common Units, the "Common 
Units"). Holders of Class A Common Units are entitled to one vote per Class A   
Common Unit on all matters to be voted upon by the holders of Class A Common    
Units. Holders of Class B Common Units have no right to vote on any matters to  
be voted on by holders of Common Units. Holders of Class B Common Units may     
elect at any time to convert any or all of such Units into Class A Common       
Units, on a Common Unit-for-Common-Unit basis.                                  

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 Set forth below is certain information regarding the beneficial
ownership as of September 30, 1997 of Class A Common Units by each person who   
beneficially owns 5.0% or more of the outstanding Class A Common Units, each    
director and Named Executive Officer and all directors and Named Executive      
Officers as a group. Except as indicated below, the address for each of the     
persons listed below is c/o Neenah Foundry Company, 2121 Brooks Avenue, Box 729,
Neenah, Wisconsin 54957.                                                        

                                                        [Enlarge/Download Table]


                                                                         Number of  Percentage of
                                                                          Voting        Voting   
                                                                          Class A       Class A  
                                                                          Common        Common   
         NAME AND ADDRESS OF BENEFICIAL OWNER                              Units         Units   
         ------------------------------------                            ---------  -------------
                                                                                                 
Citicorp Venture Capital, Ltd. (1) (2)..................................   90,000         48.65% 
James K. Hildebrand   (1)...............................................   20,000         10.81% 
William M. Barrett  (1).................................................   13,000          7.03% 
Gary W. LaChey  (1) ....................................................   13,000          7.03% 
Charles W. Kurtti  (1)..................................................   13,000          7.03% 
Bill Martin  (1) .......................................................   13,000          7.03% 
John Z. Rader  (1)......................................................   13,000          7.03% 
David F Thomas  (3)  ...................................................   90,000         48.65% 
John D. Weber  (3)......................................................   90,000         48.65% 
Directors and named executive officers as a group.......................  175,000         94.59% 

(1)   Such person disclaims beneficial ownership of the Common Stock.         

(2)   Citicorp Venture Capital, Ltd. and its affiliates (collectively, "CVC") 
    own 739,821.82 Class B Common Units representing 90.78% of the Class B
Common Units outstanding.                                         

(3)   Consists of the Class A Common Units held by CVC, which may be deemed   
    to be beneficially owned by Messrs. Thomas and Weber.   Messrs. Thomas
       and Weber disclaim beneficial ownership of shares held by CVC. Mr. Thomas
   is a managing director of CVC.  Mr. Weber is a vice president of CVC.

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ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                        

RELATIONSHIP WITH ACP HOLDINGS                                                  

ACP Products holds all of the issued and outstanding shares of capital
stock of ACP Holdings. ACP Holdings is the parent company of NFC Castings,      
Inc., and thus ACP Holdings indirectly owns 100% of the Common Stock of the     
Company. James K. Hildebrand, who serves as the Chairman of the Board and Chief 
Executive Officer of the Company, currently serves as President and Chief       
Executive Officer of ACP Holdings and its principal operating subsidiary,       
Advanced Cast Products, Inc. ("Advanced Cast"). Since the closing of the        
Merger, Mr. Hildebrand has devoted substantial time to, and has been partially  
compensated by, Advanced Cast, in addition to his role with the Company.        
Advanced Cast also produces iron castings for sale to the industrial medium-and 
heavy-duty truck market, but it has not competed with the Company in the past   
in any significant way and the Company does not anticipate that it will so      
compete with Advanced Cast in the future.                                       

SHAREHOLDER RELATIONSHIPS                                                       

In connection with Merger, certain management investors and certain   
institutional investors, including CVC, became parties to the Third Amended and 
Restated Limited Liability Agreement of ACP Products as amended (the "L.L.C.    
Agreement"). The L.L.C. Agreement contains certain provisions with respect to   
the beneficial equity interests and corporate governance of the Company. The    
L.L.C. Agreement provides that CVC and certain institutional investors and      
certain management investors, as the only members of ACP Products holding       
beneficial interests in the Company, have the right to direct all actions taken 
in respect of NFC Castings, Inc. and the Company, including, without limitation,
appointing members of the Board of Directors of the Company and of NFC Castings,
Inc.                                                                            

REGISTRATION RIGHTS AGREEMENT                                                   

     The Company entered into a registration rights agreement (the "Registration
Rights Agreement") with CVC and certain institutional investors and certain     
management investors. Pursuant to the terms of the Registration Rights          
Agreement, certain holders of the Common Stock have the right to require the    
Company, at the Company's sole cost and expense and subject to certain          
limitations, to register under the Securities Act of 1933, as amended, or list  
on any recognized stock exchange all or part of the Common Stock beneficially   
owned by such holders (the "Registrable Securities"). All such holders will be  
entitled to participate in all registrations by the Company or other holders,   
subject to certain limitations. In connection with all such registrations, the  
Company agreed to indemnify all beneficial owners of Registrable Securities     
against certain liabilities, including liabilities under the Securities Act of  
1933, as amended, and other applicable state or foreign securities laws.        
Registrations pursuant to the Registration Rights Agreement will be made, if    
applicable, on the appropriate registration form and may be underwritten        
registrations.                                                                  

EMPLOYMENT AGREEMENTS                                                           

      The Company entered into a consulting agreement with James P. Keating that
provides, among other things, that Mr. Keating will be available to serve as a  
consultant to the Company from July 1, 1997 to June 30, 1999. Mr. Keating is    
paid $16,500 per month under such consulting agreement.                         

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Part IV                                                                         

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

(a)  (1) Consolidated Financial Statements of Neenah Foundry Company            

                                                        [Enlarge/Download Table]


                                                                                               Page                        
                                                                                                                           
          Report of Ernst & Young LLP, Independent Auditors                                     29                         

          Consolidated Balance Sheet                                                            30                         

          Consolidated Statement of Income                                                      32                         

          Consolidated Statement of Cash Flows                                                  33                         

          Notes to Consolidated Financial Statements                                            34                         

         Consolidated Financial Statements of Neenah Foundry Company (Predecessor)                                         

          Report of Ernst & Young LLP, Independent Auditors                                    50                          

          Consolidated Balance Sheets                                                          51                          

          Consolidated Statements of Income                                                    53                          

          Consolidated Statements of Changes in Stockholders' Equity                           54                          

          Consolidated Statements of Cash Flows                                                55                          

          Notes to Consolidated Financial Statements                                           56                          

         (2)   Financial Statements Schedules                                                                              

          Report of Ernst & Young LLP, Independent Auditors                                    68                          

          Schedule II - Valuation and Qualifying Accounts of Neenah Foundry Company            69                          

          Report of Ernst & Young LLP, Independent Auditors                                    70                          

          Schedule II - Valuation and Qualifying Accounts of Neenah Foundry                                                
          Company(Predecessor)                                                                 71                          

The following schedules are omitted as not applicable or not required under the rules of regulation S-X: I, III, IV, and V.

(b) Reports on Form 8-K.                                                                                                   

          No reports on Form 8-K were filed by the Company for the quarter ended September 30, 1997.                       

(c) Exhibits                                                                                                               

          See Exhibit Index.                                                                                               


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SIGNATURES                                                                      

Pursuant to the requirements of Section 13 or 15(d) 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 in the City of Neenah,     
State of Wisconsin, on December 29, 1997.                                       

                                NEENAH FOUNDRY COMPANY
                                NEENAH TRANSPORT, INC.
                                      HARTLEY CONTROLS CORPORATION
                        (Registrant)

                           /s/Gary W. LaChey
                           -----------------
                              Gary W. LaChey
                                             Vice President - Finance, Secretary
                                                     and Treasurer
                                             (Principal Financial and  Principal
                                       Accounting Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below on December 29, 1997, by the following persons on behalf  
of the registrant and in the capacities indicated.                              

/s/James K. Hildebrand                       /s/ Brenton F. Halsey              
----------------------                       ---------------------              
James K. Hildebrand                           Brenton F. Halsey           
Chairman of the Board and                         Director                  
Chief Executive Officer                                                   

/s/ David F. Thomas                           /s/ Gary W. LaChey                
----------------------                        ------------------                
David F. Thomas                               Gary W. LaChey            
     Director                                Vice President - Finance, Secretary
                                         and Treasurer
                                             (Principal Financial and  Principal
                                         Accounting Officer)
/s/ John D. Weber                                                               
-----------------------                                                         
John D. Weber                                                             
Director                                                              

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 EXHIBIT INDEX

                                                                [Download Table]

EXHIBITS                                                                        
                                                                                
2.1      Agreement and Plan of Reorganization, dated November 20, 1996, by and  
         among NFC Castings, Inc., NC Merger Company and Neenah Corporation. ** 
2.2      First Amendment to Agreement and Plan of Reorganization, dated as of   
         January 13, 1997, by and among NFC Castings, Inc., NC Merger Company   
         and Neenah Corporation. **                                             
2.3      Second Amendment to Agreement and Plan of Reorganization, dated as of  
         February 21, 1997, by and among NFC Castings, Inc., NC Merger          
         Company and Neenah Corporation. **                                     
2.4      Third Amendment to Agreement and Plan of Reorganization, dated as of   
         April 3, 1997, by and among NFC Castings, Inc., NC Merger Company and  
         Neenah Corporation. **                                                 
2.5      Merger Agreement, made as of July 1,1997, by and between Neenah        
         Corporation and Neenah Foundry Company. **                             
3.1      Restated Articles of Incorporation of  Neenah Foundry Company. **      
3.2      By-laws of Neenah Foundry Company. **                                  
3.3      (Intentionally omitted.)                                               
3.4      (Intentionally omitted.)                                               
3.5      Restated Articles of Incorporation of Hartley Controls Corporation. ** 
3.6      By-laws of Hartley Controls Corporation. **                            
3.7      Restated Articles of Incorporation of Neenah Transport, Inc.**         
3.8      By-laws of Neenah Transport, Inc. **                                   
4.1      Indenture dated as of April 30, 1997 among NC Merger Company and United
         States Trust Company of New York. **                                   
4.2      Purchase Agreement dated as of April 23, 1997 among NC Merger Company, 
         Chase Securities Inc. and Morgan Stanley & Co. Incorporated. **        
4.3      Exchange and Registration Rights Agreement dated as of April 30, 1997  
         among Neenah Corporation, Neenah Foundry Company, Hartley Controls     
         Corporation and Neenah Transport, Inc.  and Chase Securities, Inc.**   
4.4      First Supplemental Indenture, dated as of April 30, 1997 among Neenah  
         Corporation, Neenah Foundry Company, Neenah Transport, Inc. and Hartley
         Controls Corporation and United States Trust Company of New York. **   
4.5      Letter Agreement, dated as of April 30, 1997 among Neenah Corporation, 
         Neenah Foundry Company, Hartley Controls Corporation and Neenah        
         Transport, Inc. and Chase Securities Inc. and Morgan Stanley & Co.     
         Incorporated. **                                                       
4.6      Form of Global Note relating to the Indenture dated as of April 23,    
         1997. **                                                               
4.7      Indenture dated as of July 1, 1997 among Neenah Corporation, Neenah    
         Foundry Company, Neenah Transport, Inc., Hartley Controls Corporation  
         and United States Trust Company of New York.  **                       
4.8      Purchase Agreement dated as of June 26, 1997 among Neenah Corporation, 
         Neenah Foundry Company, Hartley Controls Corporation, Neenah Transport,
         Inc. and Chase Securities Inc.  **                                     
4.9      Exchange and Registration Rights Agreement dated as of July 1, 1997 by 
         and between Neenah Corporation, Neenah Foundry Company, Hartley        
         Controls Corporation, Neenah Transport, Inc. and Chase Securities,     
         Inc.  **                                                               
4.10     Form of Global Note related to the Indenture dated as of July 1,       
         1997.  **                                                              
10.1     Master Lease Agreement between Neenah Foundry Company and Bank One     
         Leasing Corporation dated December 14, 1992. **                        
10.2     Agreement between Neenah Foundry Company and Rockwell International    
         Corporation effective April 1, 1995. **                                
10.3     Letter Agreement between Neenah Foundry Company and Eaton Corporation  
         dated April 4, 1996.**                                                 
10.4     (Intentionally omitted).                                               
10.5     1996-1998 Collective Bargaining Agreement between Neenah Foundry       
         Company and Local 121B Glass, Molders, Pottery, Plastics and Allied    
         Workers International Union AFL-CIO-CLC. **                            

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                                                                [Download Table]
                                                                                
10.6     1995-1997 Collective Bargaining Agreement between Neenah Foundry       
         Company and The Independent Patternmakers Union of Neenah,             
         Wisconsin. **                                                          
10.7     Credit Agreement, dated as of April 30, 1997 among Chase Manhattan     
         Bank, N.A., NFC Castings, Inc. and NC Merger Company. **               
10.8     Employment Agreement dated September 9, 1994 between the Neenah        
         Corporation, Neenah Foundry Company, Harley Controls Corporation,      
         Neenah Transport, Inc. and James P. Keating, Jr.**                     
10.9     Consulting Agreement dated September 9, 1994 between the Neenah        
         Foundry Company and the Guarantors and James P. Keating, Jr. **        
10.10    First Amendment to Employment Agreement, dated September 9, 1994,      
         between Neenah Foundry Company, Neenah Corporation, Hartley Controls   
         Corporation and James P. Keating, Jr. **                               
10.11    Pledge Agreement dated as of April 30, 1997, among NC Merger Company, a
         Wisconsin Corporation, NFC Castings, Inc., a Delaware Corporation. **  
10.12    Subsidiary Guarantee Agreement dated as of April 30, 1997, among each  
         of the subsidiaries listed of NC Merger Company, a Wisconsin           
         corporation, and The Chase Manhattan Bank, a New York banking          
         corporation, as collateral agent for the secured parties. **           
10.13    Parent Guarantee Agreement dated as of April 30, 1997, between NFC     
         Castings, Inc., a Delaware corporation and The Chase Manhattan Bank,   
         a New York banking corporation, as collateral agent for the secured    
         parties. **                                                            
10.14    Security Agreement dated as of April 30, 1997, among NC Merger Company,
         a Wisconsin corporation, each subsidiary of the borrower and The Chase 
         Manhattan Bank, a New York banking corporation, as collateral agent for
         the secured parties. **                                                
10.15    Form of Mortgage. **                                                   
10.16    Amended and Restated Revolving Credit Agreement, dated                 
         September 12, 1997 among Chase Manhattan Bank, N.A., NFC Castings,     
         Inc. and NC Merger Company.                                            
21.1     Subsidiaries of the Registrant.                                        
24.1     Powers of Attorney (included in signature page). **                    
25.1     Statement of Eligibility of Trustee on Form T-1. **                    
27.1     Financial Data Schedule.                                               

-------                                                                         
** Incorporated by reference to the Company's Form S-4 (Registration No.      
333-28751) which became effective August 12, 1997.                      

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 CONSOLIDATED FINANCIAL STATEMENTS

NEENAH FOUNDRY COMPANY

Period from inception, May 1, 1997,                 
through September 30, 1997                          

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            Neenah Foundry Company

             Consolidated Financial Statements

            Period from inception, May 1, 1997, through September 30, 1997

            CONTENTS

Report of Independent Auditors.....................................             

Consolidated Balance Sheet.........................................             
Consolidated Statement of Income...................................             
Consolidated Statement of Cash Flows...............................             
Notes to Consolidated Financial Statements.........................             

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 Report of Ernst & Young LLP, Independent Auditors

Board of Directors                                                              
Neenah Foundry Company                                                          

We have audited the accompanying consolidated balance sheet of Neenah Foundry   
Company (the Company) as of September 30, 1997, and the related consolidated    
statements of income and cash flows for the period from inception, May 1, 1997, 
through September 30, 1997. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these  
financial statements based on our audit.                                        

We conducted our audit 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 audit provides a reasonable basis for our opinion.          

In our opinion, the consolidated financial statements referred to above present 
fairly, in all material respects, the consolidated financial position of the    
Company as of September 30, 1997, and the consolidated results of its operations
and its cash flows for the period from inception, May 1, 1997, through September
30, 1997, in conformity with generally accepted accounting principles.          

Milwaukee, Wisconsin                                    ERNST & YOUNG LLP       
October 31, 1997                                                                

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Neenah Foundry Company

Consolidated Balance Sheet
(In Thousands, Except Share and Per Share Amounts)

September 30, 1997

                                                        [Enlarge/Download Table]

                                                                                        
ASSETS                                                                                  
Current assets:                                                                         
   Cash and cash equivalents                                                    $ 20,344
   Accounts receivable, less allowance for doubtful accounts                            
     of $386                                                                      29,932
   Inventories                                                                    19,639
   Other current assets                                                              318
   Deferred income taxes                                                           1,695
                                                                           -------------
Total current assets                                                              71,928

Property, plant and equipment:                                                          
   Land                                                                            1,576
   Buildings and improvements                                                      7,856
   Machinery and equipment                                                        71,491
   Patterns                                                                       22,787
                                                                           -------------
                                                                                 103,710
   Less accumulated depreciation                                                   3,131
                                                                           -------------
                                                                                 100,579

Deferred financing costs, net of accumulated amortization of $295                  6,853
Identifiable intangible assets, net of accumulated amortization of $2,450               
                                                                                  28,424
Goodwill, net of accumulated amortization of $1,228                              116,690
Other assets                                                                       3,951
                                                                           -------------
                                                                                 155,918
                                                                           -------------
                                                                                $328,425
                                                                           =============

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                                                        [Enlarge/Download Table]

                                                                                                    
LIABILITIES AND STOCKHOLDERS' EQUITY                                                                
Current liabilities:                                                                                
   Accounts payable                                                                      $    10,333
   Income taxes payable                                                                        4,384
   Accrued wages and employee benefits                                                         5,174
   Accrued interest                                                                            8,251
   Other accrued liabilities                                                                   3,858
   Current portion of long-term debt                                                              98
                                                                                         -----------
Total current liabilities                                                                     32,098

Long-term debt                                                                               197,522
Postretirement benefit obligations                                                             4,894
Deferred income taxes                                                                         44,519
Other liabilities                                                                              2,172
                                                                                         -----------
Total liabilities                                                                            281,205

Commitments and contingencies (Note 5)                                                              

Stockholders' equity:                                                                               
   Preferred stock, par value $100 per share; authorized 3,000 shares; no shares issued             
     or outstanding                                                                                -
   Common stock, Class A (voting), par value $100 per share; authorized 1,000 shares;               
     issued and outstanding, 1,000 shares                                                        100
   Common stock, Class B (nonvoting), par value $100 per share; authorized 10,000                   
     shares; no shares issued or outstanding                                                       -
   Additional paid-in capital                                                                 44,900
   Retained earnings                                                                           2,220
                                                                                         -----------
Total stockholders' equity                                                                    47,220
                                                                                         -----------
                                                                                         $   328,425
                                                                                         ===========

See accompanying notes                                                          

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Neenah Foundry Company

Consolidated Statement of Income
(In Thousands)

Period from inception, May 1, 1997, through September 30, 1997

                                                                [Download Table]
                                                                    
Net sales                                                   $87,093 
Cost of sales                                                60,166 
                                                       ------------ 
Gross profit                                                 26,927 

Selling, general and administrative expenses                  7,088 
Amortization expense                                          3,678 
                                                       ------------ 
Operating income                                             16,161 
Other income (expense):                                             
   Interest income                                              367 
   Interest expense                                          (9,199)
                                                       ------------ 
Income before income taxes and extraordinary item             7,329 
Provision for income taxes                                    3,479 
                                                       ------------ 
Income before extraordinary item                              3,850 

Extraordinary item, net of income tax benefit of $999         1,630 
                                                       ============ 
Net income and retained earnings at end of period      $      2,220 
                                                       ============ 


See accompanying notes              32                                          

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Neenah Foundry Company

Consolidated Statement of Cash Flows
(In Thousands)

Period from inception, May 1, 1997, through September 30, 1997

                                                        [Enlarge/Download Table]
                                                                                            
OPERATING ACTIVITIES                                                                        
Net income                                                                         $  2,220 
Adjustments to reconcile net income to net cash provided by operating activities:           
   Extraordinary item                                                                 2,629 
   Depreciation                                                                       3,141 
   Amortization of identifiable intangible assets and goodwill                        3,678 
   Amortization of deferred financing costs and premium on notes                        273 
   Deferred income taxes                                                             (2,939)
   Other                                                                                (10)
   Changes in operating assets and liabilities:                                             
     Accounts receivable                                                             (4,235)
     Inventories                                                                      5,707 
     Other current assets                                                              (318)
     Accounts payable                                                                    (1)
     Income taxes payable                                                             1,866 
     Accrued liabilities                                                              9,327 
     Postretirement benefit obligations                                                 141 
     Other liabilities                                                                   21 
                                                                                   -------- 
Net cash provided by operating activities                                            21,500 

INVESTING ACTIVITIES                                                                        
Payment of closing date net worth adjustment                                        (12,530)
Purchase of property, plant and equipment                                            (2,281)
Proceeds from redemption of life insurance                                              866 
Other                                                                                    43 
                                                                                   -------- 
Net cash used in investing activities                                               (13,902)

FINANCING ACTIVITIES                                                                        
Proceeds from long-term debt                                                         47,588 
Payments on long-term debt                                                          (45,030)
Debt issuance costs                                                                  (1,356)
                                                                                   -------- 

Net cash provided by financing activities                                             1,202 
                                                                                   -------- 

Increase in cash and cash equivalents                                                 8,800 
Cash and cash equivalents at beginning of period                                     11,544 
                                                                                   -------- 
Cash and cash equivalents at end of period                                         $ 20,344 
                                                                                   ======== 

Supplemental disclosures of cash flow information:                                          
   Cash paid for:                                                                           
     Interest                                                                      $    674 
     Income taxes                                                                     3,502 

See accompanying notes.            33                                           

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Neenah Foundry Company

Notes to Consolidated Financial Statements
September 30, 1997  
(In Thousands)

1. NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES                     

NATURE OF OPERATIONS                                                            

On April 30, 1997, pursuant to an Agreement and Plan of Reorganization with NC  
Merger Company and NFC Castings, Inc., Neenah Corporation (Predecessor Company) 
was acquired by NFC Castings, Inc. using (i) $45,000 of cash equity contributed 
by NFC Castings, Inc., (ii) $45,000 of term loans, (iii) proceeds from the      
issuance of $150,000 of unsecured Senior Subordinated Notes in a Rule 144A      
private placement and (iv) cash of Neenah Corporation. The purchase price was   
$261,713 including a closing date net worth adjustment and direct costs of the  
acquisition. The acquisition has been accounted for using the purchase method of
accounting. The purchase price has been allocated on the basis of fair values of
the underlying assets acquired and liabilities assumed. The excess of the cost  
of acquisition over the fair value of the net tangible and identifiable         
intangible assets acquired has been allocated to goodwill.                      

Prior to July 1, 1997, Neenah Foundry Company was one of three wholly owned     
subsidiaries of Neenah Corporation, a holding company with no significant assets
or operations other than its holdings in the common stock of its subsidiaries.  
On July 1, 1997, Neenah Foundry Company merged into Neenah Corporation and the  
surviving company changed its name to Neenah Foundry Company (the Company).     

The Company operates in one business segment for financial reporting purposes:  
the manufacture of gray and ductile iron castings. The Company manufactures     
castings for sale to industrial and municipal customers throughout the United   
States and several foreign countries. Industrial castings are custom-engineered 
and are produced for customers in several industries, with a concentration in   
the medium and heavy-duty truck components, farm equipment, and heating,        
ventilation, and air-conditioning industries. Municipal castings include manhole
covers and frames, storm sewer frames and grates, trench drain systems, tree    
grates and specialty castings for a variety of applications.                    

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Neenah Foundry Company

Notes to Consolidated Financial Statements
(In Thousands)

1. NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)         

Industrial castings are generally sold to large, well-established companies,    
with two customers accounting for 15% and 10% of net sales in the five months   
ended September 30, 1997. Combined receivables from these two customers totaled 
$5,145 at September 30, 1997. Municipal castings are sold to a large number of  
customers. The Company's accounts receivable generally are unsecured.           

The Company has two wholly owned subsidiaries--Neenah Transport, Inc.           
(Transport) and Hartley Controls Corporation (Hartley). Transport is a common   
and contract carrier licensed to operate in the continental United States. The  
majority of Transport's revenues are derived from transport services provided to
the Company. Hartley designs and manufactures customized sand control systems   
for the foundry industry, which are sold and serviced throughout the United     
States and several foreign countries. Hartley and Transport each account for    
less than 10% of consolidated net sales, net income and total assets.           

The Company changed its fiscal year end to September 30 effective September 30, 
1997. The following is unaudited financial information of the Predecessor       
Company for the six months ended September 30, 1996:                            

  Net sales                              $89,739
  Gross profit                            26,753
  Provision for income taxes               7,154
  Net income                              10,736

PRINCIPLES OF CONSOLIDATION                                                     

The consolidated financial statements include the accounts of the Company and   
its wholly owned subsidiaries, Transport and Hartley. All significant           
intercompany accounts and transactions have been eliminated in consolidation.   

USE OF ESTIMATES                                                                

The preparation of 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.                               

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Neenah Foundry Company

Notes to Consolidated Financial Statements
(In Thousands)

1. NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)         

CASH AND CASH EQUIVALENTS                                                       

For purposes of the consolidated statement of cash flows, the Company considers 
all highly liquid investments with a maturity of three months or less when      
purchased to be cash equivalents.                                               

INVENTORIES                                                                     

Inventories are stated at the lower of cost or market. Cost is determined on the
last-in, first-out (LIFO) method for substantially all inventories except for   
supplies, for which cost is determined on the first-in, first-out (FIFO) method.

PROPERTY, PLANT AND EQUIPMENT                                                   

Expenditures for additions and improvements to property, plant and equipment are
capitalized at cost while replacements, maintenance and repairs which do not    
improve or extend the lives of the respective assets are expensed as incurred.  

Depreciation for financial reporting purposes is provided over the estimated    
useful lives of the respective assets, using the straight-line method.          

DEFERRED FINANCING COSTS                                                        

Costs incurred to obtain long-term financing are amortized using the interest   
method over the term of the related debt.                                       

IDENTIFIABLE INTANGIBLE ASSETS                                                  

Identifiable intangible assets are amortized on a straight-line basis over the  
estimated useful lives of five months to 40 years.                              

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Neenah Foundry Company

Notes to Consolidated Financial Statements
(In Thousands)

1. NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)         

GOODWILL                                                                        

Goodwill is amortized on a straight-line basis over 40 years. The carrying value
of goodwill will be reviewed if facts and circumstances suggest that it may be  
impaired. If this review indicates that goodwill will not be recoverable, as    
determined based on the undiscounted cash flows of the Company over the         
remaining amortization period, the Company would reduce the carrying value of   
the goodwill by the estimated shortfall of cash flows.                          

REVENUE RECOGNITION                                                             

Revenue from the sale of castings and sand control systems is recognized upon   
shipment to the customer.                                                       

ADVERTISING COSTS                                                               

Advertising costs are expensed as incurred, and amounted to $274 for the five   
months ended September 30, 1997.                                                

INCOME TAXES                                                                    

Deferred income taxes are provided for temporary differences between the        
financial reporting and income tax basis of the Company's assets and liabilities
and are measured using currently enacted tax rates and laws.                    

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Neenah Foundry Company

Notes to Consolidated Financial Statements
(In Thousands)

1. NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)         

FINANCIAL INSTRUMENTS                                                           

The Company has a number of financial instruments, none of which are held for   
trading purposes. The following presents the carrying amounts and estimated fair
values of such instruments at September 30, 1997:                               

                                                                [Download Table]

                                                Carrying            Fair      
                                                 Amount            Value      
                                               ------------     ------------  
                                                                              
Cash and cash equivalents                       $  20,344        $  20,344    
Accounts receivable                                29,932           29,932    
Accounts payable                                   10,333           10,333    
Long-term debt                                    197,620          213,623 (1)

(1) The fair value of the Senior Subordinated Notes is based on quoted market   
prices.                                                                 

PENDING ACCOUNTING STANDARDS                                                    

In June 1997, the Financial Accounting Standards Board issued SFAS No. 131,     
"Disclosures about Segments of an Enterprise and Related Information." SFAS No. 
131 establishes the standards for the manner in which public enterprises are    
required to report financial and descriptive information about their operating  
segments. The statement defines operating segments as components of an          
enterprise for which separate financial information is available and evaluated  
regularly as a means for assessing segment performance and allocating resources 
to segments. A measure of profit or loss, total assets and other related        
information are required to be disclosed for each operating segment. In         
addition, this statement requires the annual disclosure of information          
concerning revenues derived from the enterprise's products or services,         
countries in which it earns revenue or holds assets, and major customers. SFAS  
No. 131 is effective for fiscal years beginning after December 15, 1997. The    
adoption of SFAS No. 131 will not affect the Company's results of operations or 
financial position, but may affect the disclosure of segment information.       

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Neenah Foundry Company

Notes to Consolidated Financial Statements
(In Thousands)

2. INVENTORIES                                                                  

Inventories consist of the following at September 30, 1997:                     

                                                                [Download Table]
                                            
Raw materials                       $  1,688
Work in process and finished goods    13,379
Supplies                               4,572
                                    --------
                                    $ 19,639
                                    ========

At September 30, 1997, inventories at LIFO approximate FIFO cost.               

3. IDENTIFIABLE INTANGIBLE ASSETS                                               

Identifiable intangible assets consist of the following at September 30, 1997:  

                                                                [Download Table]
                                      
Customer lists                 $14,200
Trade names                     11,700
Assembled work force             2,050
Other                            2,924
                               -------
                                30,874
Less accumulated amortization    2,450
                               -------
                               $28,424
                               =======

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Neenah Foundry Company

Notes to Consolidated Financial Statements
(In Thousands)

4. LONG-TERM DEBT                                                               

Long-term debt consists of the following at September 30, 1997:                 

                                                                [Download Table]
                                                                          
111/8% Series B Senior Subordinated Notes                         $150,000
111/8% Series D Senior Subordinated Notes, including unamortized          
   premium of $2,522                                                47,522
Other                                                                   98
                                                                  --------
                                                                   197,620
Less current portion                                                    98
                                                                  --------
                                                                  $197,522
                                                                  ========

The Series B and Series D Senior Subordinated Notes (collectively, the Notes)   
are unsecured and mature on May 1, 2007. Interest is payable semiannually on May
1 and November 1. The Notes are fully, unconditionally, jointly and severally   
guaranteed by Transport and Hartley (Guarantor Subsidiaries). The Notes are     
subordinated to all existing and future senior indebtedness of the Company but  
rank equally in right of                                                        

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Neenah Foundry Company

Notes to Consolidated Financial Statements
(In Thousands)

4. LONG-TERM DEBT (CONTINUED)                                                   

payment with any future senior subordinated indebtedness of the Company. The    
Notes contain covenants which limit the Company from incurring additional       
indebtedness and restrict dividend payments, stock redemptions and certain other
transactions.                                                                   

The Series D Senior Subordinated Notes were issued on July 1, 1997. The Company 
used the proceeds to repay the term loans, accrued interest thereon and related 
fees and expenses. In connection with the prepayment in full of the term loans, 
the Company wrote off the unamortized balance of the related deferred financing 
costs of $2,629.                                                                

The Company has an unsecured revolving credit facility that provides for        
borrowings up to $50 million through April 30, 2002. The revolving credit       
facility bears interest at (a) the base rate (as defined) plus 1.5% or (b) LIBOR
(as defined) plus 2.5%, in each case subject to certain reductions based on the 
Company's financial performance. Interest is payable quarterly on outstanding   
borrowings. The Company is subject to a quarterly commitment fee of .5% per     
annum, subject to reduction based upon the Company's financial performance, on  
the average daily unused portion of the revolving credit facility.              

The covenants contained in the revolving credit facility restrict the payment of
dividends, capital expenditures and certain other transactions and require the  
Company to maintain leverage, net worth and interest coverage ratios.           

5. COMMITMENTS AND CONTINGENCIES                                                

The Company leases warehouse space, machinery and equipment, office equipment   
and vehicles under operating leases. Rent expense under these operating leases  
for the five-month period ended September 30, 1997 amounted to $446. Minimum    
rental payments due under these operating leases for subsequent fiscal years are
as follows:                                                                     

                                                                [Download Table]
                                                     
1998                                          $   678
1999                                              506
2000                                              223
2001                                               94
2002                                               21
                                              -------
                                              $ 1,522
                                              =======

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Neenah Foundry Company

Notes to Consolidated Financial Statements
(In Thousands)

5. COMMITMENTS AND CONTINGENCIES (CONTINUED)                                    

The Company is involved in a number of product liability claims, none of which, 
in the opinion of management, is expected to have a material adverse effect on  
the consolidated financial statements.                                          

The Company is partially self-insured for workers compensation claims. An       
accrued liability is recorded for claims incurred but not yet paid or reported, 
with such accrual based on current and historical claim information. The accrual
may ultimately be settled for an amount greater or lesser than the recorded     
amount. Adjustments of the accrual are recorded in the period in which they are 
determined.                                                                     

As of September 30, 1997, the Company had outstanding letters of credit in the  
aggregate amount of $595, which secure certain workers compensation and other   
obligations.                                                                    

6. INCOME TAXES                                                                 

The provision for income taxes consists of the following at September 30, 1997: 

                                                                [Download Table]
                                                      
 Current:                                             
  Federal                                     $ 5,265 
  State                                         1,153 
                                              ------- 
                                                6,418 
 Deferred                                      (2,939)
                                              ------- 
                                              $ 3,479 
                                              ======= 

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Neenah Foundry Company

Notes to Consolidated Financial Statements
(In Thousands)

6. INCOME TAXES (CONTINUED)                                                     

The provision for income taxes differs from the amount computed by applying the 
federal statutory rate of 34% to income before income taxes and extraordinary   
item at September 30, 1997, as follows:                                         

                                                                [Download Table]
                                                                                 
Provision at statutory rate                                            $   2,492 
State income taxes, net of federal tax benefit                               432 
Amortization of goodwill                                                     467 
Other                                                                         88 
                                                                       --------- 
Provision for income taxes                                             $   3,479 
                                                                       ========= 

The components of the Company's deferred income tax assets and liabilities are   
as follows at September 30, 1997:                                                

Deferred income tax liabilities:                                                 
  Book basis of inventories in excess of tax basis                     $  (3,270)
  Book basis of property, plant and equipment in excess of tax basis     (32,310)
  Identifiable intangible assets                                         (11,370)
  Employee benefit plans                                                    (720)
  Other                                                                     (296)
                                                                       --------- 
                                                                         (47,966)
Deferred income tax assets:                                                      
  Employee benefit plans                                                   2,805 
  Accrued vacation                                                         1,011 
  Other accrued liabilities                                                1,112 
  Other                                                                      214 
                                                                       --------- 
                                                                           5,142 
                                                                       --------- 
Net deferred income tax liability                                      $ (42,824)
                                                                       ========= 

Included in the consolidated balance sheet as:                                   
  Current deferred income tax asset                                    $   1,695 
  Noncurrent deferred income tax liability                               (44,519)
                                                                       --------- 
                                                                       $ (42,824)
                                                                       ========= 

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Neenah Foundry Company

Notes to Consolidated Financial Statements
(In Thousands)

7. EMPLOYEE BENEFIT PLANS                                                       

DEFINED BENEFIT PENSION PLANS                                                   

The Company sponsors two defined benefit pension plans covering substantially   
all hourly employees. Retirement benefits for the pension plans are based on    
years of credited service and defined benefit rates. The Company funds the      
pension plans based on an actuarially determined cost method allowable under    
Internal Revenue Service regulations.                                           

The following table reconciles the funded status of the pension plans as of     
August 31, 1997 (the Company uses a measurement date as of August 31), to the   
amounts included in the consolidated balance sheet at September 30, 1997:       

                                                        [Enlarge/Download Table]

                                                                     Underfunded       Overfunded
                                                                          Plan             Plan  
                                                                    -----------------------------
                                                                                                 
Actuarial present value of benefit obligations:                                                  
   Vested benefit obligations                                           $   (821)       $(20,506)
                                                                    ============    ============ 
   Accumulated benefit obligations                                      $   (836)       $(21,006)
                                                                    ============    ============ 

Projected benefit obligations                                           $   (836)       $(21,006)
Plan assets at fair value (consisting principally of pooled                                      
   investment funds and an investment contract with an                                           
   insurance company)                                                        776          24,524 
                                                                    ------------    ------------ 
Projected benefit obligations less than (in excess of) plan assets                               
                                                                             (60)          3,518 
Unrecognized net gain                                                         (3)         (1,655)
                                                                    ------------    ------------ 
Prepaid (accrued) pension obligations                                   $    (63)      $   1,863 
                                                                    ============    ============ 

Net pension asset included in other assets  in the consolidated                                  
   balance sheet                                                        $  1,800                 
                                                                    ============                 

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Neenah Foundry Company

Notes to Consolidated Financial Statements
(In Thousands)

7. EMPLOYEE BENEFIT PLANS (CONTINUED)                                           

Components of net periodic pension cost for the five-month period ended         
September 30, 1997 are as follows:                                              

Service cost - benefits earned during the period             $  202             
Interest cost on projected benefit obligations                  662             
Actual return on plan assets                                   (723)            
                                                ------
                                                $  141
                                                ======

The discount rate used in estimating the projected benefit obligations and in   
determining the interest cost component of pension expense for the following    
year for both plans was 7.5%. The assumed long-term rate of return on plan      
assets used in determining pension expense was 7.5%.                            

PROFIT-SHARING AND SAVINGS RETIREMENT PLAN                                      

The Company sponsors a Profit-Sharing and Savings Retirement Plan covering      
substantially all salaried employees. The plan allows participants to make      
401(k) contributions in an amount from 1% to 5% of their compensation. The      
Company matches 50% of the participants' contributions. The Company may make    
additional voluntary contributions to the plan as determined annually by the    
Board of Directors. Total Company contributions amounted to $378 for the        
five-month period ended September 30, 1997.                                     

POSTRETIREMENT BENEFITS                                                         

The Company sponsors defined benefit postretirement health care plans covering  
substantially all salaried employees and their dependents. Benefits are provided
from the date of retirement for the duration of the employee's life up to a     
maximum of $1 million per individual. Retirees' contributions to the plans are  
based on years of service and age at retirement. The Company funds benefits as  
incurred.                                                                       

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Neenah Foundry Company

Notes to Consolidated Financial Statements
(In Thousands)

7. EMPLOYEE BENEFIT PLANS (CONTINUED)                                           

The following table reconciles the funded status of the postretirement benefit  
plans to the amounts included in the consolidated balance sheet at September 30,
1997:                                                                           

Accumulated postretirement benefit obligations:           
        Retirees                                                $2,191
        Fully eligible active participants                         801
        Other active participants                                1,902
                                                                ------
      Accrued postretirement benefit obligations                $4,894
                                                                ======

Components of net periodic postretirement benefit cost for the five-month period
ended September 30, 1997 are as follows:                                        

      Service cost                                              $   58
Interest cost on accumulated postretirement benefit       
obligations                                           
                                                                   148
                                                                ------
                                                                $  206
                                                                ======

The weighted-average discount rate used in determining the accumulated          
postretirement benefit obligations for both plans was 7.5%, and the healthcare  
cost trend rate was assumed to decrease gradually to 2009 and then remain at    
that level thereafter. The range of cost trend rates is 8.5% to 4.5%. The       
healthcare cost trend rate assumption has a significant effect on the amounts   
reported. Increasing the healthcare cost trend rate by one percentage point     
would increase the accumulated postretirement benefit obligations as of         
September 30, 1997 by $825 and would increase postretirement benefit expense for
the five-month period ended September 30, 1997 by $48.                          

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Neenah Foundry Company

Notes to Consolidated Financial Statements
(In Thousands)

8. GUARANTOR SUBSIDIARIES                                                       

Transport and Hartley, wholly owned subsidiaries of the Company, fully,         
unconditionally, jointly and severally guarantee the Notes. The following is    
summarized combined financial information of the wholly owned subsidiaries. Net 
sales include net sales to Neenah Foundry Company of $2,048 for the five months 
ended September 30, 1997. Separate financial statements of the Guarantor        
Subsidiaries are not separately presented because, in the opinion of management,
such financial statements are not material to investors.                        

                                                                [Download Table]

                         SEPTEMBER 30, 1997  
                         ------------------  
                                             
Current assets                   $1,999      
Noncurrent assets                 2,464      
Current liabilities               1,337      
Noncurrent liabilities              382      

                                             
                        FIVE MONTHS ENDED    
                         SEPTEMBER 30, 1997  
                        ---------------------
                                             
Net sales                        $4,232      
Gross profit                      1,530      
Net income                          381      


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                                 CONSOLIDATED FINANCIAL STATEMENTS

                                    NEENAH FOUNDRY COMPANY (PREDECESSOR)

                           Years ended March 31, 1995,
                           1996 and 1997 and one month
                    ended April 30, 1997

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Neenah Foundry Company (Predecessor)

 Consolidated Financial Statements

 Years ended March 31, 1995, 1996 and 1997 and one
month ended April 30, 1997

            CONTENTS

Report of Independent Auditors............................................      

Consolidated Balance Sheets...............................................      
Consolidated Statements of Income.........................................      
Consolidated Statements of Changes in Stockholders' Equity................      
Consolidated Statements of Cash Flows.....................................      
Notes to Consolidated Financial Statements................................      

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 Report of Ernst & Young LLP, Independent Auditors

Board of Directors                                                              
Neenah Foundry Company (formerly                                                
Neenah Corporation - see Note 1)                                          

We have audited the accompanying consolidated balance sheets of Neenah Foundry  
Company (the Company) as of March 31, 1996 and 1997, and the related            
consolidated statements of income, changes in stockholders' equity and cash     
flows for each of the three years in the period ended March 31, 1997, and for   
the one month ended April 30, 1997. These financial statements are the          
responsibility of the Company's management. Our responsibility is to express an 
opinion on these financial statements 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 consolidated financial statements referred to above present 
fairly, in all material respects, the consolidated financial position of the    
Company as of March 31, 1996 and 1997, and the consolidated results of its      
operations and its cash flows for each of the three years in the period ended   
March 31, 1997, and for the one month ended April 30, 1997, in conformity with  
generally accepted accounting principles.                                       

Milwaukee, Wisconsin                                        ERNST & YOUNG LLP   
June 4, 1997, except for Notes 1 and 10                                         
as to which the date is July 1, 1997                                        

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Neenah Foundry Company (Predecessor)

 Consolidated Balance Sheets
(In Thousands, Except Share and Per Share Amounts)

                                                                [Download Table]


                                                             MARCH 31          
                                                       1996            1997    
                                                   ----------------------------
                                                                               
ASSETS                                                                         
Current assets:                                                                
 Cash and cash equivalents                          $  10,126        $  22,403 
 Accounts receivable, less allowance for doubtful                              
   accounts of $386 at March 31, 1996 and 1997         20,831           21,423 
 Inventories                                           13,324           13,956 
 Other current assets                                       -              401 
 Deferred income taxes                                  2,253            2,325 
                                                    ---------      ----------- 
Total current assets                                   46,534           60,508 

Property, plant and equipment:                                                 
 Land                                                     847              847 
 Buildings and improvements                            14,972           15,063 
 Machinery and equipment                               97,749          101,655 
                                                    ---------      ----------- 
                                                      113,568          117,565 
 Less accumulated depreciation                         79,840           86,186 
                                                    ---------      ----------- 
                                                       33,728           31,379 

Other assets                                            2,695            1,982 

                                                    ---------      ----------- 
                                                    $  82,957        $  93,869 
                                                    =========     ============ 


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                                                        [Enlarge/Download Table]

                                                                     MARCH 31         
                                                              1996             1997   
                                                         -----------------------------
                                                                                      
LIABILITIES AND STOCKHOLDERS' EQUITY                                                  
Current liabilities:                                                                  
  Accounts payable                                          $   8,124       $   8,497 
  Dividends payable                                             2,220               - 
  Income taxes payable                                            517             573 
  Accrued wages and employee benefits                           5,516           5,545 
  Other accrued liabilities                                     1,937           2,052 
  Current portion of long-term debt                               107             134 
                                                            ---------       --------- 
Total current liabilities                                      18,421          16,801 

Long-term debt                                                    134               - 
Pension obligations                                             1,737               - 
Postretirement benefit obligations                              5,300           5,667 
Deferred income taxes                                           2,575           2,544 
                                                            ---------       --------- 
Total liabilities                                              28,167          25,012 

Commitments and contingencies (Note 5)                                                

Stockholders' equity:                                                                 
 Preferred stock, par value $100 per share:                                           
   Authorized 3,000 shares; no shares issued and                                      
    outstanding                                                     -               - 
 Common stock, par value $100 per share:                                              
  Class A (voting):                                                                   
   Authorized 1,000 shares; issued and outstanding,                                   
    620 shares                                                     62              62 
  Class B (nonvoting):                                                                
   Authorized 10,000 shares; issued and outstanding,                                  
    3,820 shares                                                                      
                                                                  382             382 
 Retained earnings                                             57,268          71,335 
 Notes receivable from owners to finance stock purchase        (2,922)         (2,922)
                                                            ---------        -------- 
Total stockholders' equity                                     54,790          68,857 
                                                            ---------        -------- 
                                                            $  82,957        $ 93,869 
                                                            =========        ======== 


See accompanying notes                                                          

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Neenah Foundry Company (Predecessor)

 Consolidated Statements of Income
(In Thousands)

                                                        [Enlarge/Download Table]

                                                                                     ONE MONTH   
                                                                                       ENDED     
                                                  YEAR ENDED MARCH 31                APRIL 30    
                                          1995           1996            1997          1997      
                                     ------------------------------------------------------------

                                                                                                 
Net sales                                $ 160,621       $166,951       $165,426        $17,276  
Cost of sales                              120,981        121,631        116,736         11,351  
                                         ---------      ---------      ---------       --------  
Gross profit                                39,640         45,320         48,690          5,925  
Selling, general and administrative                                                              
   expenses                                 16,673         16,983         17,547          1,752  
                                         ---------      ---------      ---------       --------  
Operating income                            22,967         28,337         31,143          4,173  
Net interest income (expense)                 (397)           481          1,162            121  
                                         ---------      ---------      ---------       --------  
Income before income taxes                  22,570         28,818         32,305          4,294  
Provision for income taxes                   8,866         11,676         12,467          1,615  
                                         ---------      ---------      ---------       --------  
Net income                               $  13,704      $  17,142      $  19,838       $  2,679  
                                         =========      =========      =========       ========  


See accompanying notes                                                          

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Neenah Foundry Company (Predecessor)

Consolidated Statements of Changes in Stockholders' Equity
(In Thousands, Except Share and Per Share Amounts)

                                                        [Enlarge/Download Table]


                                                                    Common Stock                                                    
                                                        -------------------------------------            Notes Receivable           
                                       Preferred Stock        Class A           Class B                    from Owners              
                                     -------------------------------------------------------- Retained    to Finance                
                                        Shares   Amount   Shares  Amount  Shares     Amount   Earnings  Stock Purchase   Total      
                                     -----------------------------------------------------------------------------------------------
                                                                                                                                    
Balance at April 1, 1994                1,468  $  147      719    $ 72     4,920     $  492    $ 40,140    $(2,922)   $ 37,929      
   Redemption and retirement of stock  (1,468)   (147)     (99)    (10)   (1,100)      (110)     (5,932)        --      (6,199)     
   Dividends declared:                                                                                                              
     Preferred - $4.50 per share           --      --       --      --        --         --          (5)        --          (5)     
     Common - $475 per share               --      --       --      --        --         --      (2,231)        --      (2,231)     
   Net income                              --      --       --      --        --         --      13,704         --      13,704      
                                       ------  ------   ------  ------    ------     ------    --------    -------      ------      
Balance at March 31, 1995                  --      --      620      62     3,820        382      45,676     (2,922)     43,198      
   Common dividends declared -                                                                                                      
     $1,250 per share                      --      --       --      --        --         --      (5,550)        --      (5,550)     
   Net income                              --      --       --      --        --         --      17,142         --      17,142      
                                       ------  ------   ------  ------    ------     ------    --------    -------      ------      
Balance at March 31, 1996                  --      --      620      62     3,820        382      57,268     (2,922)     54,790      
   Common dividends declared -                                                                                                      
     $1,300 per share                      --      --       --      --        --         --      (5,771)        --      (5,771)     
   Net income                              --      --       --      --        --         --      19,838         --      19,838      
                                       ------  ------   ------  ------    ------     ------    --------    -------      ------      
Balance at March 31, 1997                  --      --      620      62     3,820        382      71,335     (2,922)     68,857      
   Collection of notes                                                                                                              
     receivable from owners                --      --       --      --        --         --          --      2,922       2,922      
   Net income                              --      --       --      --        --         --       2,679         --       2,679      
                                       ------  ------   ------  ------    ------     ------    --------    -------     -------      
Balance at April 30, 1997                  --  $   --      620  $   62     3,820     $  382    $  74,01    $    --     $74,458      
                                       ======  ======   ======  ======    ======     ======    ========    =======     =======      

See accompanying notes                                                          

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Neenah Foundry Company (Predecessor)

 Consolidated Statements of Cash Flows
(In Thousands)

                                                        [Enlarge/Download Table]

                                                                                                  ONE MONTH       
                                                                                                   ENDED          
                                                                YEAR ENDED MARCH 31               APRIL 30        
                                                                 1995            1996          1997          1997 
                                                     -------------------------------------------------------------
                                                                                                                  
OPERATING ACTIVITIES                                                                                              
Net income                                                     $ 13,704       $ 17,142       $19,838     $  2,679 
Adjustments to reconcile net income to net cash                                                                   
   provided by operating activities:                                                                              
     Depreciation                                                 6,842          6,776         6,881          518 
     Deferred income taxes                                        2,862          1,863          (103)        (120)
     Other                                                         (274)            48          (103)           - 
     Changes in operating assets and liabilities:                                                                 
       Accounts receivable                                       (3,384)           439          (592)      (3,764)
       Inventories                                                 (142)          (603)         (632)         495 
       Other current assets                                         186             27          (401)         401 
       Accounts payable                                             684         (2,653)          373        1,308 
       Income taxes payable                                         526           (585)           56        1,734 
       Accrued liabilities                                        1,388         (1,261)          144         (185)
       Pension obligations                                          900            859        (2,349)         822 
       Postretirement benefit obligations                           289            221           367           29 
                                                               --------        --------      -------      ------- 
Net cash provided by (used in) operating activities              23,581         22,273        23,479        3,917 

INVESTING ACTIVITIES                                                                                              
Purchase of property, plant and equipment                        (3,665)        (7,275)       (4,546)        (190)
Proceeds from life insurance policy                                   -              -         1,439            - 
Other                                                               253            (24)            3           (1)
                                                               --------        --------      -------      ------- 
Net cash used in investing activities                            (3,412)        (7,299)       (3,104)        (191)

FINANCING ACTIVITIES                                                                                              
Dividends paid                                                   (1,411)        (4,440)       (7,991)           - 
Redemption of stock                                              (6,199)             -             -            - 
Proceeds from long-term debt                                     70,529         16,370             -            - 
Payments on long-term debt                                      (82,968)       (17,016)         (107)          (5)
Collection of notes receivable from owners                            -              -             -        2,922 
                                                               --------        --------      -------      ------- 
Net cash provided by (used in) financing activities             (20,049)        (5,086)       (8,098)       2,917 
                                                               --------        --------      -------      ------- 

Increase in cash and cash equivalents                               120          9,888        12,277        6,643 
Cash and cash equivalents at beginning of period                    118            238        10,126       22,403 
                                                               --------       --------       -------     -------- 
Cash and cash equivalents at end of period                     $    238       $ 10,126       $22,403     $ 29,046 
                                                               ========       ========       =======     ======== 
Supplemental disclosures of cash flow information:                                                                
  Cash paid for:                                                                                                  
     Interest                                                  $    624       $     84    $       39    $       1 
     Income taxes                                                 5,478         10,398        12,515            - 

See accompanying notes.                55                                       

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Neenah Foundry Company (Predecessor)

Notes to Consolidated Financial Statements

NEENAH FOUNDRY COMPANY (PREDECESSOR)  
Years ended March 31, 1995,   
1996 and 1997 and one month   
ended April 30, 1997  
(In Thousands)  

1. NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES                     

NATURE OF OPERATIONS                                                            

Prior to July 1, 1997, Neenah Foundry Company was one of three wholly owned     
subsidiaries of Neenah Corporation, a holding company with no significant assets
or operations other than its holdings in the common stock of its subsidiaries.  
On July 1, 1997, Neenah Foundry Company merged into Neenah Corporation and the  
surviving company changed its name to Neenah Foundry Company (the Company).     

The Company operates in one business segment for financial reporting purposes:  
the manufacture of gray and ductile iron castings. The Company manufactures     
castings for sale to industrial and municipal customers throughout the United   
States and several foreign countries. Industrial castings are custom-engineered 
and are produced for customers in several industries, with a concentration in   
the medium and heavy-duty truck components, farm equipment, and heating,        
ventilation, and air-conditioning industries. Municipal castings include manhole
covers and frames, storm sewer frames and grates, trench drain systems, tree    
grates and specialty castings for a variety of applications.                    

Industrial castings are generally sold to large, well-established companies,    
with two customers accounting for 18% and 15% of net sales in fiscal 1995, 17%  
and 9% of net sales in fiscal 1996, 16% and 10% of net sales in fiscal 1997 and 
29% and 24% for the one month ended April 30, 1997. Combined receivables from   
these two customers totaled $4,974 and $6,651 at March 31, 1996 and 1997,       
respectively. Municipal castings are sold to a large number of customers. The   
Company's accounts receivable generally are unsecured.                          

The Company has two wholly owned subsidiaries--Neenah Transport, Inc.           
(Transport) and Hartley Controls Corporation (Hartley). Transport is a common   
and contract carrier licensed to operate in the continental United States. The  
majority of Transport's revenues are derived from transport services provided to
the Company. Hartley designs and manufactures customized sand control systems   
for the foundry industry, which are sold and serviced throughout the United     
States and several foreign countries. Hartley and Transport each account for    
less than 10% of consolidated net sales, net income and total assets.           

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Neenah Foundry Company (Predecessor)

Notes to Consolidated Financial Statements
(In Thousands)

1. NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)         

PRINCIPLES OF CONSOLIDATION                                                     

The consolidated financial statements include the accounts of the Company and   
its wholly owned subsidiaries, Transport and Hartley. All significant           
intercompany accounts and transactions have been eliminated in consolidation.   

USE OF ESTIMATES                                                                

The preparation of 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.                               

CASH AND CASH EQUIVALENTS                                                       

For purposes of the consolidated statement of cash flows, the Company considers 
all highly liquid investments with a maturity of three months or less when      
purchased to be cash equivalents. Cash equivalents, consisting principally of   
investments in commercial paper, totaled $11,598 and $23,028 at March 31, 1996  
and 1997, respectively. The cost of these debt securities, which are considered 
as "available for sale" for financial reporting purposes, approximates fair     
value at both March 31, 1996 and 1997. There were no realized gains or losses   
recognized on these securities during any of the three years in the period ended
March 31, 1997 or the one month ended April 30, 1997.                           

INVENTORIES                                                                     

Inventories are stated at the lower of cost or market. Cost is determined on the
last-in, first-out (LIFO) method for substantially all inventories except for   
supplies, for which cost is determined on the first-in, first-out (FIFO) method.

PROPERTY, PLANT AND EQUIPMENT                                                   

Property, plant and equipment are recorded at cost. Expenditures for additions  
and improvements are capitalized while replacements, maintenance and repairs    
which do not improve or extend the lives of the respective assets are expensed  
as incurred.                                                                    

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Neenah Foundry Company (Predecessor)

Notes to Consolidated Financial Statements
(In Thousands)

1. NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)         

Depreciation for financial reporting purposes is provided over the estimated    
useful lives of the respective assets, using accelerated and straight-line      
methods. Depreciation expense includes amortization of machinery and equipment  
recorded under capitalized leases.                                              

REVENUE RECOGNITION                                                             

Revenue from the sale of castings and sand control systems is recognized upon   
shipment to the customer.                                                       

ADVERTISING COSTS                                                               

Advertising  costs are expensed as incurred, and amounted to $467, $527, $524   
and $55 for the years ended March 31, 1995, 1996 and 1997 and one month ended   
April 30, 1997, respectively.                                                   

INCOME TAXES                                                                    

Deferred income taxes are provided for temporary differences between the        
financial reporting and income tax basis of the Company's assets and liabilities
and are measured using currently enacted tax rates and laws.                    

FINANCIAL INSTRUMENTS                                                           

The Company has a number of financial instruments, none of which are held for   
trading purposes. The Company estimates that the fair value of all financial    
instruments at March 31, 1996 and 1997 does not differ materially from the      
carrying value of such instruments recorded in the accompanying consolidated    
balance sheets, as follows:                                                     

                                                                [Download Table]

                                       MARCH 31         
                                 1996           1997    
                           -----------------------------
                                                        
Cash and cash equivalents      $ 10,126       $ 22,403  
Accounts receivable              20,831         21,423  
Accounts payable                 (8,124)        (8,497) 
Long-term debt                     (241)          (134) 

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Neenah Foundry Company (Predecessor)

Notes to Consolidated Financial Statements
(In Thousands)

1. NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)         

NEW ACCOUNTING STANDARDS                                                        

The Company adopted FASB Statement of Financial Accounting Standards (SFAS) No. 
121, "Accounting for the Impairment of Long-Lived Assets and for Assets to Be   
Disposed Of," and SFAS No. 123, "Accounting for Stock-Based Compensation," on   
April 1, 1996, SFAS No. 125, "Accounting for Transfers and Servicing of         
Financial Assets and Extinguishments of Liabilities," on January 1, 1997, and   
Statement of Position 96-1, "Environmental Remediation Liabilities," on April 1,
1997. The adoption of these statements did not have any effect on the Company's 
consolidated financial statements.                                              

In accordance with SFAS No. 121, the Company records impairment losses on       
long-lived assets used in operations when events and circumstances indicate that
the assets might be impaired and the undiscounted cash flows estimated to be    
generated by those assets are less than the carrying amounts of those assets.   

2. INVENTORIES                                                                  

Inventories consist of the following:                                           

                                                                [Download Table]

                                              MARCH 31          
                                        1996            1997    
                                    --------------------------- 
                                                                
Raw materials                          $  2,214        $  2,017 
Work in process and finished goods       13,957          14,324 
Supplies                                  4,886           4,860 
                                       --------        -------- 
Inventories at FIFO cost                 21,057          21,201 
Excess of FIFO cost over LIFO cost       (7,733)         (7,245)
                                       --------        -------- 
                                        $13,324        $ 13,956 
                                       ========        ======== 

3. LONG-TERM DEBT                                                               

Long-term debt consists of the following:                                       

                                                                [Download Table]

                                    MARCH 31      
                             1996            1997 
                           ---------------------- 
                                                  
Capital lease obligations   $ 241          $  134 
Less current portion          107             134 
                            -----          ------ 
                            $ 134          $    - 
                            =====          =======

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Neenah Foundry Company (Predecessor)

Notes to Consolidated Financial Statements
(In Thousands)

3. LONG-TERM DEBT (CONTINUED)                                                   

The Company has a revolving credit agreement (the Agreement) with a bank that   
provides for borrowings up to $25,000 through July 31, 1998. Interest is payable
monthly on outstanding borrowings at the bank's Reference Rate (8.25% at March  
31, 1997). The Agreement contains an option that allows the Company to designate
a portion (minimum of $2,000) of the borrowings to bear a fixed rate of interest
for a specified period of time. Borrowings under the Agreement are unsecured and
a quarterly fee is charged by the bank on the unused portion of the facility.   

The capital lease obligations consist of leases for a propane system and        
semi-tractors and trailers. Included in machinery and equipment is $567 and     
$397, and included in accumulated depreciation is $272 and $179 at March 31,    
1996 and 1997, respectively, related to these capital leases.                   

4. NOTES RECEIVABLE FROM OWNERS                                                 

The notes receivable from owners of $2,922 were repaid by the owners prior to   
the consummation of the plan of reorganization described in Note 10. The        
proceeds of the notes receivable were used to purchase 1,461 shares of Company  
Class B common stock from other shareholders, and were secured by such common   
stock.                                                                          

5. COMMITMENTS AND CONTINGENCIES                                                

The Company leases warehouse space, machinery and equipment, office equipment   
and vehicles under operating leases. Rent expense under these operating leases  
for the years ended March 31, 1995, 1996 and 1997 and one month ended April 30, 
1997 amounted to $850, $996, $1,088 and $85, respectively. Minimum rental       
payments due under these operating leases for subsequent fiscal years are as    
follows:                                                                        

1998                            $   736           
1999                                586           
2000                                287           
2001                                115           
                     -------
                     $ 1,724
                     =======

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Neenah Foundry Company (Predecessor)

Notes to Consolidated Financial Statements
(In Thousands)

5. COMMITMENTS AND CONTINGENCIES (CONTINUED)                                    

The Company is involved in a number of product liability claims, none of which, 
in the opinion of management, is expected to have a material adverse effect on  
the consolidated financial statements.                                          

The Company is partially self-insured for workers compensation claims. An       
accrued liability is recorded for claims incurred but not yet paid or reported, 
with such accrual based on current and historical claim information. The accrual
may ultimately be settled for an amount greater or lesser than the recorded     
amount. Adjustments of the accrual are recorded in the period in which they are 
determined.                                                                     

As of March 31, 1997, the Company had outstanding  letters of credit in the     
aggregate  amount of $595,  which secure certain workers  compensation and      
other obligations.                                                              

6. INCOME TAXES                                                                 

The provision for income taxes consists of the following:                       

                                                                [Download Table]


                                                        ONE MONTH
                                                          ENDED  
                      YEAR ENDED MARCH 31               APRIL 30 
               1995          1996           1997          1997   
           ----------------------------------------------------  
                                                                 
Current:                                                         
  Federal      $5,556      $  9,147       $11,554        $1,460  
  State           448           666         1,016           275  
               ------      --------       -------        ------  
                6,004         9,813        12,570         1,735  
Deferred        2,862         1,863          (103)         (120) 
               ------      --------       -------        ------  
               $8,866       $11,676       $12,467        $1,615  
               ======      ========       =======        ======  


The  difference  between the  provision  for income taxes and income taxes      
computed  using the statutory  U.S.  federal  income tax rate of 35% is as      
follows:                                                                        

                                                        [Enlarge/Download Table]

                                                                                             ONE MONTH
                                                                                              ENDED   
                                                           YEAR ENDED MARCH 31               APRIL 30 
                                                    1995          1996          1997           1997   
                                                ----------------------------------------------------  
                                                                                                      
Provision at statutory rate                        $7,900       $10,086       $11,307        $1,503   
State income taxes, net of federal tax benefit        801         1,126         1,318           112   
Other                                                 165           464          (158)            -   
                                                   ------       -------       -------        ------   
Provision for income taxes                         $8,866       $11,676       $12,467        $1,615   
                                                   ======       =======       =======        ======   

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Neenah Foundry Company (Predecessor)

Notes to Consolidated Financial Statements
(In Thousands)

6. INCOME TAXES (CONTINUED)                                                     

The components of the Company's deferred income tax assets and liabilities are  
as follows:                                                                     

                                                                [Download Table]


                                                              MARCH 31           
                                                        1996            1997     
                                                   -------------- ---------------
                                                                                 
Deferred income tax liabilities:                                                 
  Tax depreciation in excess of book depreciation      $(5,621)       $(5,156)   
  Employee benefit plans                                  (602)          (441)   
  Other                                                   (437)          (127)   
                                                       -------        -------    
                                                        (6,660)        (5,724)   
Deferred income tax assets:                                                      
  Inventories                                              560            560    
  Employee benefit plans                                 3,316          3,128    
  Accrued vacation                                         825            855    
  Other accrued liabilities                                672            790    
  State tax credit carryforwards                           676              -    
  Other                                                    289            172    
                                                       -------        -------    
                                                         6,338          5,505    
                                                       -------        -------    
Net deferred income tax liability                      $  (322)       $  (219)   
                                                       =======        =======    

Included in the consolidated balance sheets as:                                  
  Current deferred income tax asset                    $ 2,253        $ 2,325    
  Noncurrent deferred income tax liability              (2,575)        (2,544)   
                                                       -------        -------    
                                                       $  (322)       $  (219)   
                                                       =======        =======    

The Company has not recorded a valuation allowance with respect to any deferred 
tax assets at March 31, 1996 or 1997.                                           

7. EMPLOYEE BENEFIT PLANS                                                       

DEFINED BENEFIT PENSION PLANS                                                   

The Company sponsors two defined benefit pension plans covering                 
substantially all hourly employees and previously sponsored a defined benefit   
supplemental executive retirement plan (SERP) which covered certain salaried    
employees. During the year ended March 31, 1997, the Company purchased          
nonparticipating annuity contracts to settle the vested benefit obligations     
under the SERP. Retirement benefits for the pension plans are                   

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Neenah Foundry Company (Predecessor)

Notes to Consolidated Financial Statements
(In Thousands)

7. EMPLOYEE BENEFIT PLANS (CONTINUED)                                           

based on years of credited service and defined benefit rates while retirement   
benefits for the SERP were based on compensation levels. The Company funds the  
pension plans based on an actuarially determined cost method allowable under    
Internal Revenue Service regulations. The SERP was unfunded.                    

The following table reconciles the funded status of the pension plans, as of    
December 31, 1995 and 1996 (the Company uses a measurement date as of December  
31), to the amounts included in the consolidated balance sheets at March 31,    
1996 and 1997:                                                                  

                                                        [Enlarge/Download Table]


                                                            1996                          1997             
                                                -----------------------------------------------------------
                                                 Underfunded     Overfunded    Underfunded     Overfunded  
                                                    Plans           Plan           Plan          Plan      
                                                -----------------------------------------------------------
                                                                                                           
Accumulated benefit obligations                 $   (3,944)      $(19,805)         $(845)      $(20,150)   
Effect of assumed increases in compensation on                                                             
  SERP                                              (2,593)            --             --             --    
                                                ----------     ----------     ----------     ----------    
                                                    (6,537)       (19,805)          (845)       (20,150)   
Projected benefit obligations                                                                              
Plan assets at fair value (consisting                                                                      
  principally of pooled investment funds and                                                               
  an investment contract with an insurance                                                                 
  company)                                             697         21,110            735         22,169    
                                                ----------     ----------     ----------     ----------    

Projected benefit obligations less than                                                                    
  (in excess of) plan assets                        (5,840)         1,305           (110)         2,019    
Unrecognized net loss (gain)                         2,055         (1,940)            (8)        (2,966)   
Unrecognized prior service cost                        259          4,833            160          4,452    
Unrecognized net transition obligation (asset)         782         (2,695)           (21)        (2,411)   
Adjustment to recognize additional minimum                                                                 
  liability                                           (503)            --           (131)            --    
                                                ----------     ----------     ----------     ----------    

Prepaid (accrued) pension obligation, at                                                                   
  December 31, 1995 and December 31, 1996,                                                                 
  respectively                                     (3,247)          1,503           (110)         1,094    
Contributions between January 1 and March 31,                                                              
  1996 and 1997, respectively                           7              --             --            --     
                                                ----------      ---------     ----------     ----------    
Prepaid (accrued) pension obligations           $   (3,240)     $   1,503     $     (110)    $    1,094    
                                                ==========      =========     ==========     ==========    

Net pension asset (obligation) included in                                                                 
  the consolidated balance sheets               $   (1,737)                        $ 984                   
                                                ==========                    ==========                   


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Neenah Foundry Company (Predecessor)

Notes to Consolidated Financial Statements
(In Thousands)

7. EMPLOYEE BENEFIT PLANS (CONTINUED)                                           

Components of net periodic pension cost are as follows:                         

                                                        [Enlarge/Download Table]

                                                                                         ONE MONTH   
                                                                                            ENDED    
                                                          YEAR ENDED MARCH 31             APRIL 30   
                                                   1995         1996          1997          1997     
                                                ------------ ------------ -------------- ------------
                                                                                                     
Service cost - benefits earned during the year  $     822     $    880     $    820       $    38    
Interest cost on projected benefit obligations      1,437        1,545        1,742           125    
Actual return on plan assets                       (1,412)      (1,450)      (1,531)         (132)   
Net amortization and deferral                         217          203          220            (1)   
                                                ---------     --------     --------       -------    
                                                $   1,064     $  1,178     $  1,251       $    30    
                                                =========     ========     ========       =======    

As a result of the settlement of the SERP, the Company recognized a curtailment 
gain of $1,317 and a settlement loss of $878 during the year ended March 31,    
1997. The discount rate used in estimating the projected benefit obligations and
in determining the interest cost component of pension expense for the following 
year for all plans was 7.5% for all years. The annual rate of compensation      
increase assumed for the SERP in estimating the projected benefit obligations   
was 6.5% for all years. The assumed long-term rate of return on plan assets used
in determining pension expense was 7.5% for all years.                          

PROFIT-SHARING AND SAVINGS RETIREMENT PLAN                                      

The Company sponsors a Profit-Sharing and Savings Retirement Plan covering      
substantially all salaried employees. The plan allows participants to make      
401(k) contributions in an amount from 1% to 5% of their compensation. The      
Company matches 50% of the participants' contributions. The Company may make    
additional voluntary contributions to the plan as determined annually by the    
Board of Directors. Total Company contributions amounted to $859, $891, $915 and
$82 for the years ended March 31, 1995, 1996 and 1997 and one month ended April 
30, 1997, respectively.                                                         

POSTRETIREMENT BENEFITS                                                         

The Company sponsors defined benefit postretirement health care plans covering  
substantially all salaried employees and their dependents. Benefits are provided
from the date of retirement for the duration of the employee's life up to a     
maximum of $1 million per individual. Retirees' contributions to the plans are  
based on years of service and age at retirement. The Company funds benefits as  
incurred.                                                                       

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Neenah Foundry Company (Predecessor)

Notes to Consolidated Financial Statements
(In Thousands)

7. EMPLOYEE BENEFIT PLANS (CONTINUED)                                           

The following table reconciles the funded status of the postretirement benefit  
plans to the amounts included in the consolidated balance sheets at March 31:   

                                                                    [Download Table]
                                                                      

                                                      1996         1997   
                                                 ------------  -----------
                                                                          
Accumulated postretirement benefit obligations:                           
 Retirees                                          $   2,047    $  1,830  
 Fully eligible active participants                      654         810  
 Other active participants                             2,534       2,784  
                                                   ---------    --------  
                                                       5,235       5,424  
Plan assets                                                -           -  
                                                   ---------    --------  
                                                       5,235       5,424  
Unrecognized net gain                                     65         243  
                                                    ========    ========  
Accrued postretirement benefit obligations          $  5,300    $  5,667  
                                                    ========    ========  

Components of net periodic postretirement benefit cost are as follows:          

                                                        [Enlarge/Download Table]


                                                                             ONE MONTH
                                                                               ENDED  
                                            YEAR ENDED MARCH 31              APRIL 30 
                                    1995           1996          1997          1997   
                                    ----           ----          ----      -----------
                                                                                      
Service cost                          $  164           $ 176      $  193        $  11 
Interest cost on accumulated post-                                                    
 retirement benefit obligations          340             361         370           27 
Net amortization and deferral             (4)             (4)         (5)          (7)
                                      ======           =====      ======        ===== 
                                      $  500           $ 533      $  558        $  31 
                                      ======           =====      ======        ===== 

The weighted-average discount rate used in determining the accumulated          
postretirement benefit obligations for both plans was 7.5% for all years, and   
the healthcare cost trend rate was projected to have annual increases of 8.5%.  
The healthcare cost trend rate assumption has a significant effect on the       
amounts reported. Increasing the healthcare cost trend rate by one percentage   
point would increase the accumulated postretirement benefit obligations as of   
March 31, 1997 by $1,014 and would increase postretirement benefit expense for  
the year ended March 31, 1997 by $131.                                          

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Neenah Foundry Company (Predecessor)

Notes to Consolidated Financial Statements
(In Thousands)

8. STOCKHOLDERS' EQUITY                                                         

The Company has a Restrictive Stock Transfer Agreement with certain of its      
stockholders which permits the transfer of its stock held by such stockholders  
to permitted transferees, as defined. In the event a stockholder wishes to sell 
stock to a third party who is not a permitted transferee, the stock must first  
be offered for sale to the Company. If the Company accepts the offer of sale,   
the purchase price is based on a formula, as defined. The purchase price will be
financed by a promissory note payable in ten equal annual installments with     
interest at the prime rate less 1%. The Restrictive Stock Transfer Agreement was
terminated concurrently with the consummation of the plan of reorganization     
described in Note 10.                                                           

9. UNAUDITED QUARTERLY RESULTS                                                  

                                                                [Download Table]


                                  YEAR ENDED MARCH 31, 1996                         
                 Quarter 1         Quarter 2         Quarter 3         Quarter 4    
              ----------------- ----------------- ----------------- ----------------
                                                                                    
Net sales           $46,277           $44,454           $39,015           $37,205   
Gross profit         12,976            12,243            10,199             9,902   
Net income            5,325             5,024             3,839             2,954   

                                                                [Download Table]


                                    YEAR ENDED MARCH 31, 1997                       
                 Quarter 1         Quarter 2         Quarter 3         Quarter 4    
              ----------------- ----------------- ----------------- ----------------
                                                                                    
Net sales           $44,309           $45,430           $37,815           $37,872   
Gross profit         13,140            13,613            10,825            11,112   
Net income            5,178             5,558             4,635             4,467   

10. SUBSEQUENT EVENT                                                            

On April 30, 1997, pursuant to an Agreement and Plan of Reorganization with NC  
Merger Company and NFC Castings, Inc., Neenah Corporation was acquired by NFC   
Castings, Inc. using (i) $45,000 of cash equity contributed by NFC Castings,    
Inc., (ii) $45,000 of term loans, (iii) proceeds from the issuance of $150,000  
of unsecured Senior Subordinated Notes in a Rule 144A private placement and (iv)
Company cash. The consideration for the acquisition is subject to a closing date
net worth adjustment. On July 1, 1997, the Company issued $45,000 of unsecured  
Senior Subordinated Notes in a Rule 144A private placement and used the proceeds
to repay the term loans.                                                        

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Neenah Foundry Company (Predecessor)

Notes to Consolidated Financial Statements
(In Thousands)

10. SUBSEQUENT EVENT (CONTINUED)                                                

As described in Note 1, on July 1, 1997, Neenah Foundry Company, the principal  
operating subsidiary of Neenah Corporation, merged into Neenah Corporation.     
Transport and Hartley, wholly owned subsidiaries of the Company, fully,         
unconditionally, jointly and severally guarantee the Senior Subordinated Notes  
issued in the private placement discussed above. The following is summarized    
combined financial information of the wholly owned subsidiaries. Net sales      
includes net sales to Neenah Foundry Company of $4,181, $4,090, $4,012 and $365 
for the years ended March 31, 1995, 1996 and 1997 and one month ended April 30, 
1997, respectively. Separate financial statements of the guarantor subsidiaries 
are not separately presented because, in the opinion of management, such        
financial statements are not material to investors.                             

                                                                [Download Table]
                                  MARCH 31       
                            1996            1997 
                        ----------     ----------
                                                 
Current assets              $1,494         $1,867
Noncurrent assets            1,661          1,918
Current liabilities            941          1,006
Noncurrent liabilities         401            453

                                                                [Download Table]


                                                                    ONE MONTH    
                                                                      ENDED      
                                YEAR ENDED MARCH 31                  APRIL 30    
                        1995           1996           1997             1997      
                   --------------- -------------- -------------- ----------------
                                                                                 
Net sales              $9,131          $9,795          $9,971           $703     
Gross profit            2,719           3,165           3,247            169     
Net income (loss)         501             651             513            (15)    

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 Report of Ernst & Young LLP, Independent Auditors

We have audited the consolidated financial statements of Neenah Foundry Company 
as of September 30, 1997, and for the period from inception, May 1, 1997 through
September 30, 1997, and have issued our report thereon dated October 31, 1997   
(included elsewhere in this Annual Report on Form 10-K). Our audit also included
the financial statement schedule listed in the index at Item 14(a). This        
schedule is the responsibility of the Company's management. Our responsibility  
is to express an opinion based on our audit.                                    

In our opinion, the financial statement schedule referred to above, when        
considered in relation to the basic financial statements taken as a whole,      
presents fairly in all material respects the information set forth therein.     

Milwaukee, Wisconsin                                        ERNST & YOUNG LLP   
October 31, 1997                                                                

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                                                                     Schedule II

NEENAH FOUNDRY COMPANY  

 VALUATION AND QUALIFYING ACCOUNTS
Period from inception, May 1, 1997, through September 30, 1997
(Dollars in Thousands)

                                                        [Enlarge/Download Table]


                                       BALANCE AT        ADDITIONS                                       
                                        BEGINNING       CHARGED TO                         BALANCE AT    
            DESCRIPTION                 OF PERIOD         EXPENSE         DEDUCTIONS       END OF PERIOD 
---------------------------------------------------------------------------------------------------------
                                                                                                         
Allowance for doubtful                                                                                   
 accounts receivable:                                                                                    

  1997                                     $ 386            $    36         $    36 (A)      $    386    
                                           =====            =======         =======          ========    

(A) Uncollectible accounts written off, net of recoveries.                      

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 Report of Ernst & Young LLP, Independent Auditors

We have audited the consolidated financial statements of Neenah Foundry Company 
(formerly Neenah Corporation) as of March 31, 1996 and 1997, and for each of the
three years in the period ended March 31, 1997, and have issued our report      
thereon dated June 4, 1997, except for Notes 1 and 10 as to which the date is   
July 1, 1997 (included elsewhere in this Annual Report on Form 10-K). Our audits
also included the financial statement schedule listed in the index at Item      
14(a). This schedule is the responsibility of the Company's management. Our     
responsibility is to express an opinion based on our audits.                    

In our opinion, the financial statement schedule referred to above, when        
considered in relation to the basic financial statements taken as a whole,      
presents fairly in all material respects the information set forth therein.     

Milwaukee, Wisconsin                                        ERNST & YOUNG LLP   
June 4, 1997                                                                    

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                                                                     Schedule II

NEENAH FOUNDRY COMPANY (PREDECESSOR)

 VALUATION AND QUALIFYING ACCOUNTS
 Years ended March 31, 1995, 1996 and 1997
(Dollars in Thousands)

                                                        [Enlarge/Download Table]


                                       BALANCE AT        ADDITIONS                                       
                                        BEGINNING       CHARGED TO                         BALANCE AT    
            DESCRIPTION                  OF YEAR          EXPENSE         DEDUCTIONS       END OF YEAR   
---------------------------------------------------------------------------------------------------------
                                                                                                         
Allowance for doubtful                                                                                   
 accounts receivable:                                                                                    

  1995                                     $ 386            $   214         $   214 (A)      $    386    
                                           =====            =======         =======          ========    

  1996                                     $ 386            $   233         $   233 (A)      $    386    
                                           =====            =======         =======          ========    

  1997                                     $ 386            $   175         $   175 (A)      $    386    
                                           =====            =======         =======          ========    

(A) Uncollectible accounts written off, net of recoveries.                      

71

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘10-K’ Filing		Date		First		Last			Other Filings
		5/1/07		40
		4/30/02		41
		6/30/99		22
		12/31/98		9
		7/31/98		60
		12/31/97		9					10-Q,  10-Q/A
		12/30/97
Filed on:		12/29/97		24
		12/15/97		38
		10/31/97		29		68
For Period End:		9/30/97		2		69
		9/12/97		15		26
		8/31/97		44
		8/12/97		26					S-4/A
		7/1/97		2		70
		6/26/97		25
		6/4/97		50		70
		5/1/97		17		69
		4/30/97		2		67
		4/23/97		25
		4/3/97		25
		4/1/97		12		59
		3/31/97		3		71
		2/21/97		25
		1/13/97		25
		1/1/97		59
		12/31/96		63
		11/20/96		25
		9/30/96		8		35
		4/4/96		25
		4/1/96		59
		3/31/96		14		71
		1/1/96		9
		12/31/95		63
		4/1/95		25
		3/31/95		14		71
		1/1/95		9
		9/9/94		26
		3/31/94		12
		3/31/93		12
		12/14/92		25
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