-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, ApdtwixsH60GSwejWwUGW7KZkNLJgiqeUVEdab28Zg4S7B7yQWFd/Y6O63sELXzT B0fr3nZrwWj+H6OjDDhrgg== 0000950124-01-501137.txt : 20010515 0000950124-01-501137.hdr.sgml : 20010515 ACCESSION NUMBER: 0000950124-01-501137 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20010331 FILED AS OF DATE: 20010514 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NEENAH FOUNDRY CO CENTRAL INDEX KEY: 0001040599 STANDARD INDUSTRIAL CLASSIFICATION: GLASS, GLASSWARE, PRESSED OR BLOWN [3220] IRS NUMBER: 391580331 STATE OF INCORPORATION: WI FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-28751-03 FILM NUMBER: 1633927 BUSINESS ADDRESS: STREET 1: 2121 BROOKS AVE STREET 2: PO BOX 729 CITY: NEENAH STATE: WI ZIP: 54927 BUSINESS PHONE: 9207257000 MAIL ADDRESS: STREET 1: 2121 BROOKS AVE STREET 2: PO BOX 729 CITY: NEENAH STATE: WI ZIP: 54927 10-Q 1 c62438e10-q.txt FORM 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2001 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ----------------------- ------------------- Commission File Number 333-28751 NEENAH FOUNDRY COMPANY (Exact name of each registrant as it appears in its charter) Wisconsin 39-1580331 (State or other jurisdiction of (IRS Employer ID Number) incorporation or organization) 2121 Brooks Avenue, P.O. Box 729, Neenah, Wisconsin 54957 (Address of principal executive offices) (Zip Code) (920) 725-7000 (Registrant's telephone number, including area code) None (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practical date. Common Stock, Class A, $100 par value- 1,000 shares as of April 30, 2001 Common Stock, Class B, $100 par value- 0 shares as of April 30, 2001 2 NEENAH FOUNDRY COMPANY Form 10-Q Index For the Quarter Ended March 31, 2001
Page ---- Part 1. Financial Information Item 1. Financial Statements Condensed consolidated balance sheets -- March 31, 2001 and September 30, 2000 3 Condensed consolidated statements of operations -- Three and six months ended March 31, 2001 and 2000 4 Condensed consolidated statements of cash flows -- Six months ended March 31, 2001 and 2000 5 Notes to condensed consolidated financial statements -- March 31, 2001 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of 15 Operations Item 3. Quantitative and Qualitative Disclosures About Market Risk 18 Part II. Other Information Item 1. Legal Proceedings 19 Item 2. Changes in Securities 19 Item 3. Defaults upon Senior Securities 19 Item 4. Submission of Matters to a Vote of Security Holders 19 Item 5. Other Information 19 Item 6. Exhibits and Reports on Form 8-K 19 Signatures 19
Page 2 3 NEENAH FOUNDRY COMPANY PART I. FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands)
March 31 September 30 2001 2000(1) ----------- ------------ (Unaudited) ASSETS Current assets: Cash and cash equivalents .......................................................... $ -- $ 19,478 Accounts receivable, net ........................................................... 59,111 72,873 Inventories ........................................................................ 75,260 65,119 Refundable income taxes ............................................................ 2,409 167 Deferred income taxes .............................................................. 4,026 2,748 Other current assets ............................................................... 4,879 6,131 --------- --------- Total current assets ............................................ 145,685 166,516 Property, plant and equipment ........................................................ 305,542 295,562 Less accumulated depreciation ........................................................ 82,086 67,323 --------- --------- 223,456 228,239 Identifiable intangible assets, net .................................................. 67,761 70,766 Goodwill, net ........................................................................ 188,788 191,557 Other assets ......................................................................... 8,932 9,140 --------- --------- $ 634,622 $ 666,218 ========= ========= LIABILITIES AND STOCKHOLDER'S EQUITY Current liabilities: Accounts payable ................................................................... $ 28,937 $ 31,172 Accrued liabilities ................................................................ 30,629 35,833 Current portion of long-term debt .................................................. 11,280 11,280 Current portion of capital lease obligation ........................................ 2,351 2,151 --------- --------- Total current liabilities ....................................... 73,197 80,436 Long-term debt ....................................................................... 426,440 438,327 Capital lease obligations ............................................................ 8,909 10,143 Deferred income taxes ................................................................ 66,322 66,046 Postretirement benefit obligations ................................................... 5,952 6,118 Other liabilities .................................................................... 6,373 6,630 --------- --------- Total liabilities ............................................... 587,193 607,700 Commitments and contingencies STOCKHOLDER'S EQUITY: Preferred stock, par value $100 per share -- authorized 3,000 shares no shares issued or outstanding ................................ -- -- Common stock, par value $100 per share -- authorized 11,000 shares, issued and outstanding 1,000 shares ................................................ 100 100 Additional paid in capital ......................................................... 51,317 51,317 Retained earnings (accumulated deficit) ............................................ (3,899) 7,190 Accumulated other comprehensive loss ............................................... (89) (89) --------- --------- Total stockholder's equity ...................................... 47,429 58,518 --------- --------- $ 634,622 $ 666,218 ========= =========
See notes to condensed consolidated financial statements (1) The balance sheet as of September 30, 2000 has been derived from the audited financial statements as of that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements Page 3 4 NEENAH FOUNDRY COMPANY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands)
Three Months Ended Six Months Ended March 31, March 31, -------------------------- -------------------------- 2001 2000 2001 2000 --------- --------- --------- --------- (Unaudited) (Unaudited) Net sales ...................................................... $ 112,584 $ 142,662 $ 227,154 $ 269,096 Cost of sales .................................................. 99,942 118,526 200,791 224,939 --------- --------- --------- --------- Gross profit ................................................... 12,642 24,136 26,363 44,157 Selling, general and administrative expenses ................... 8,180 9,980 17,215 18,858 Amortization of intangible assets .............................. 2,905 2,726 5,810 5,433 Gain on disposal of equipment .................................. (78) -- (110) -- --------- --------- --------- --------- Total operating expenses ....................................... 11,007 12,706 22,915 24,291 --------- --------- --------- --------- Operating income ............................................... 1,635 11,430 3,448 19,866 Net interest expense ........................................... (12,068) (11,804) (24,245) (23,307) --------- --------- --------- --------- Loss from continuing operations before income taxes ............ (10,433) (374) (20,797) (3,441) Income tax provision (benefit) ................................. (3,592) 525 (7,156) 185 --------- --------- --------- --------- Loss from continuing operations ................................ (6,841) (899) (13,641) (3,626) Gain on sale of discontinued operations, net of tax ............ -- -- 2,552 -- Income (loss) from discontinued operations, net of tax ......... -- (11) -- 125 --------- --------- --------- --------- Net loss ....................................................... $ (6,841) $ (910) $ (11,089) $ (3,501) ========= ========= ========= =========
See notes to condensed consolidated financial statements. Page 4 5 NEENAH FOUNDRY COMPANY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)
Six Months Ended March 31, ----------------------------- 2001 2000 -------- -------- (Unaudited) OPERATING ACTIVITIES Net loss ................................................................................. $(11,089) $ (3,501) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization ......................................................... 21,052 19,553 Amortization of deferred financing costs and premium on notes ......................... 560 541 Gain on sale of discontinued operations ............................................... (2,552) -- Deferred income taxes ................................................................. (1,210) (259) Changes in operating assets and liabilities ........................................... (7,307) (3,863) -------- -------- Net cash provided by (used in) operating activities ....................................................................... (546) 12,471 INVESTING ACTIVITIES Purchase of property, plant and equipment ................................................ (10,459) (14,743) Acquisition of Gregg Industries, Inc., net of cash acquired .............................. -- (23,002) Proceeds from sale of Hartley Controls Corporation, net of fees .......................... 5,044 -- -------- -------- Net cash used in investing activities ....................................................................... (5,415) (37,745) FINANCING ACTIVITIES Proceeds from long-term debt ............................................................. -- 26,470 Payments on long-term debt and capital lease obligations ................................. (12,610) (2,864) Debt issuance costs ...................................................................... (907) -- -------- -------- Net cash provided by (used in) financing activities ....................................................................... (13,517) 23,606 -------- -------- Decrease in cash and cash equivalents .................................................... (19,478) (1,668) Cash and cash equivalents at beginning of period ......................................... 19,478 17,368 -------- -------- Cash and cash equivalents at end of period ............................................... $ -- $ 15,700 ======== ========
See notes to condensed consolidated financial statements. Page 5 6 NEENAH FOUNDRY COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) March 31, 2001 (In thousands) NOTE 1 -- BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal and recurring adjustments ) considered necessary for a fair presentation have been included. Operating results for the three and six months ended March 31, 2001 are not necessarily indicative of the results that may be expected for the year ending September 30, 2001. For further information, refer to the consolidated financial statements and footnotes thereto included in Neenah Foundry Company's Annual Report on Form 10-K for the year ended September 30, 2000. NOTE 2 -- INVENTORIES The components of inventories are as follows:
March 31, September 30, 2001 2000 ------------ ------------- Raw materials ................................................................ $ 10,604 $ 10,333 Work in process and finished goods ........................................... 52,784 43,946 Supplies ..................................................................... 11,872 10,840 ------------ ------------- $ 75,260 $ 65,119 ============ =============
If the FIFO method of inventory valuation had been used on all components, inventories would have been approximately $202 and $549 higher than reported at March 31, 2001 and September 30, 2000, respectively. NOTE 3 -- ACQUISITIONS On November 30, 1999, the Company purchased Gregg Industries, Inc. ("Gregg"), a manufacturer of gray and ductile iron castings, for $23,002 (including direct costs of $735 and net of $403 of acquired cash). The acquisition of Gregg was financed through drawings under the Company's Acquisition Loan Facility. Additional purchase consideration of $6,500 was paid in April, 2000 based on Gregg's operating results for the calendar year ended December 31, 1999. Had the acquisition of Gregg occurred as of October 1, 1999, there would have been no material pro forma effect on net sales or net loss for the three and six months March 31, 2000. The acquisition of Gregg has been accounted for using the purchase method of accounting and, accordingly, the purchase price has been allocated on the basis of fair values to the underlying assets acquired and liabilities assumed. The excess of the cost of acquisition over the fair value of the net tangible and identifiable assets acquired has been allocated to goodwill. The operating results of Gregg are included in the consolidated statements of operations since the date of its acquisition. Page 6 7 NOTE 4 -- SALE OF SUBSIDIARY On October 2, 2000, the Company sold all of the issued and outstanding shares of common stock of Hartley Controls Corporation ("Hartley") for a cash purchase price of $5,500, subject to adjustment as defined in the Stock Purchase Agreement. The disposition of Hartley resulted in a pretax gain of $4,252 which was recognized in the three months ended December 31, 2000. In accordance with the provisions of Accounting Principles Board Opinion No. 30, the results of operations of Hartley have been reported separately as discontinued operations in the consolidated statements of operations. Revenues for Hartley for the three and six months ended March 31, 2000 were $1,095 and $2,884, respectively. NOTE 5 -- GUARANTOR SUBSIDIARIES The following tables present condensed consolidating financial information for the three and six month periods ended March 31, 2001 and 2000 for: (a) the Company and (b) on a combined basis, the guarantors of the Senior Subordinated Notes, which include all of the wholly owned subsidiaries of the Company (Subsidiary Guarantors). Separate financial statements of the Subsidiary Guarantors are not presented because the guarantors are jointly, severally and unconditionally liable under the guarantees, and the Company believes separate financial statements and other disclosures regarding the Subsidiary Guarantors are not material to investors. Page 7 8 NOTE 5 -- GUARANTOR SUBSIDIARIES (CONTINUED) CONDENSED CONSOLIDATING BALANCE SHEET MARCH 31, 2001
Subsidiary Company Guarantors Eliminations Consolidated ------------------------------------------------------------------- ASSETS Current assets: Accounts receivable, net $ 21,167 $ 37,944 $ -- $ 59,111 Inventories 25,648 49,612 -- 75,260 Refundable income taxes (3,565) 5,974 -- 2,409 Deferred income taxes 2,069 1,957 -- 4,026 Other current assets 936 3,943 -- 4,879 ------------------------------------------------------------------- Total current assets 46,255 99,430 -- 145,685 Investments in and advances to subsidiaries 281,535 (50,797) (230,738) -- Property, plant and equipment, net 89,734 133,722 -- 223,456 Identifiable intangible assets, net 30,314 37,447 -- 67,761 Goodwill, net 106,372 82,416 -- 188,788 Other assets 3,475 5,457 -- 8,932 ------------------------------------------------------------------- $ 557,685 $ 307,675 $(230,738) $634,622 =================================================================== LIABILITIES AND STOCKHOLDER'S EQUITY Current liabilities: Accounts payable $ 5,300 $ 23,637 $ -- $ 28,937 Accrued liabilities 19,321 11,308 -- 30,629 Current portion of long-term debt 11,280 -- -- 11,280 Current portion of capital lease obligations -- 2,351 -- 2,351 ------------------------------------------------------------------- Total current liabilities 35,901 37,296 -- 73,197 Long-term debt 426,207 233 426,440 Capital lease obligations -- 8,909 -- 8,909 Deferred income taxes 39,823 26,499 -- 66,322 Postretirement benefit obligations 5,952 -- -- 5,952 Other liabilities 2,373 4,000 -- 6,373 Stockholder's equity 47,429 230,738 (230,738) 47,429 ------------------------------------------------------------------- $ 557,685 $ 307,675 $(230,738) $634,622 ===================================================================
Page 8 9 NOTE 5 -- GUARANTOR SUBSIDIARIES (CONTINUED) CONDENSED CONSOLIDATING BALANCE SHEET SEPTEMBER 30, 2000
Subsidiary Company Guarantors Eliminations Consolidated ------------------------------------------------------------------- ASSETS Current assets: Cash and cash equivalents $ 16,982 $ 2,496 $ -- $ 19,478 Accounts receivable, net 29,270 43,603 -- 72,873 Inventories 22,036 43,083 -- 65,119 Refundable income taxes 347 (180) -- 167 Deferred income taxes (885) 3,633 -- 2,748 Other current assets 1,391 4,740 -- 6,131 ------------------------------------------------------------------- Total current assets 69,141 97,375 -- 166,516 Investments in and advances to subsidiaries 278,429 (32,318) (246,111) -- Property, plant and equipment, net 91,509 136,730 -- 228,239 Identifiable intangible assets, net 31,263 39,503 -- 70,766 Goodwill, net 107,846 83,711 -- 191,557 Other assets 3,831 5,309 -- 9,140 ------------------------------------------------------------------- $ 582,019 $ 330,310 $(246,111) $666,218 =================================================================== LIABILITIES AND STOCKHOLDER'S EQUITY Current liabilities: Accounts payable $ 7,667 $ 23,505 $ -- $ 31,172 Accrued liabilities 21,493 14,340 -- 35,833 Current portion of long-term debt 11,280 -- -- 11,280 Current portion of capital lease obligations -- 2,151 -- 2,151 ------------------------------------------------------------------- Total current liabilities 40,440 39,996 -- 80,436 Long-term debt 438,095 232 -- 438,327 Capital lease obligations -- 10,143 -- 10,143 Deferred income taxes 36,868 29,178 -- 66,046 Postretirement benefit obligations 5,724 394 -- 6,118 Other liabilities 2,374 4,256 -- 6,630 Stockholder's equity 58,518 246,111 (246,111) 58,518 ------------------------------------------------------------------- $ 582,019 $ 330,310 $(246,111) $666,218 ===================================================================
Page 9 10 NOTE 5 -- GUARANTOR SUBSIDIARIES (CONTINUED) CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS SIX MONTHS ENDED MARCH 31, 2001
Subsidiary Company Guarantors Eliminations Consolidated ------------------------------------------------------------------- Net sales $ 69,570 $ 159,786 $ (2,202) $ 227,154 Cost of sales 51,554 151,439 (2,202) 200,791 ------------------------------------------------------------------- Gross profit 18,016 8,347 -- 26,363 Selling, general and administrative expense 6,811 10,404 -- 17,215 Amortization of intangible assets 2,459 3,351 -- 5,810 Gain on disposal of equipment (61) (49) -- (110) ------------------------------------------------------------------- Operating income (loss) 8,807 (5,359) -- 3,448 Net interest expense (10,002) (14,243) -- (24,245) ------------------------------------------------------------------- Loss from continuing operations before income taxes and equity in loss of subsidiaries (1,195) (19,602) -- (20,797) Income tax provision (benefit) 113 (7,269) -- (7,156) ------------------------------------------------------------------- (1,308) (12,333) -- (13,641) Equity in loss of subsidiaries (12,333) -- 12,333 -- Loss from continuing operations (13,641) (12,333) 12,333 (13,641) ------------------------------------------------------------------- Gain on sale of discontinued operations, net of tax 2,552 -- -- 2,552 ------------------------------------------------------------------- Net loss $(11,089) $ (12,333) $ 12,333 $ (11,089) ===================================================================
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS SIX MONTHS ENDED MARCH 31, 2000
Subsidiary Company Guarantors Eliminations Consolidated ------------------------------------------------------------------- Net sales $ 90,713 $ 181,883 $(3,500) $ 269,096 Cost of sales 63,808 164,631 (3,500) 224,939 ------------------------------------------------------------------- Gross profit 26,905 17,252 -- 44,157 Selling, general and administrative expense 7,305 11,553 -- 18,858 Amortization of intangible assets 2,459 2,974 -- 5,433 ------------------------------------------------------------------- Operating income 17,141 2,725 -- 19,866 Net interest expense (10,521) (12,786) -- (23,307) ------------------------------------------------------------------- Income (loss) from continuing operations before income taxes and equity in loss of subsidiaries 6,620 (10,061) -- (3,441) Income tax provision (benefit) 3,239 (3,054) -- 185 ------------------------------------------------------------------- 3,381 (7,007) -- (3,626) Equity in loss of subsidiaries (7,007) 7,007 -- ------------------------------------------------------------------- Loss from continuing operations (3,626) (7,007) 7,007 (3,626) Income from discontinued operations, net of tax 125 -- -- 125 ------------------------------------------------------------------- Net loss $ (3,501) $ (7,007) $ 7,007 $ (3,501) ===================================================================
Page 10 11 NOTE 5 -- GUARANTOR SUBSIDIARIES (CONTINUED) CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS THREE MONTHS ENDED MARCH 31, 2001
Subsidiary Company Guarantors Eliminations Consolidated ------------------------------------------------------------------- Net sales $ 32,980 $ 80,608 $(1,004) $ 112,584 Cost of sales 25,057 75,889 (1,004) 99,942 ------------------------------------------------------------------- Gross profit 7,923 4,719 -- 12,642 Selling, general and administrative expense 3,525 4,655 -- 8,180 Amortization of intangible assets 1,230 1,675 -- 2,905 Gain on disposal of equipment (61) (17) -- (78) ------------------------------------------------------------------- Operating income (loss) 3,229 (1,594) -- 1,635 Net interest expense (4,935) (7,133) -- (12,068) ------------------------------------------------------------------- Loss before income taxes and equity in loss of subsidiaries (1,706) (8,727) -- (10,433) Income tax benefit (388) (3,204) -- (3,592) ------------------------------------------------------------------- (1,318) (5,523) -- (6,841) Equity in loss of subsidiaries (5,523) -- 5,523 -- ------------------------------------------------------------------- Net loss $ (6,841) $ (5,523) $ 5,523 $ (6,841) ===================================================================
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS THREE MONTHS ENDED MARCH 31, 2000
Subsidiary Company Guarantors Eliminations Consolidated ------------------------------------------------------------------- Net sales $ 44,631 $ 99,851 $(1,820) $ 142,662 Cost of sales 31,900 88,446 (1,820) 118,526 ------------------------------------------------------------------- Gross profit 12,731 11,405 -- 24,136 Selling, general and administrative expense 3,836 6,144 -- 9,980 Amortization of intangible assets 1,230 1,496 -- 2,726 ------------------------------------------------------------------- Operating income 7,665 3,765 -- 11,430 Net interest expense (5,143) (6,661) -- (11,804) ------------------------------------------------------------------- Income (loss) from continuing operations before income taxes and equity in loss of subsidiaries 2,522 (2,896) -- (374) Income tax provision (benefit) 1,305 (780) -- 525 ------------------------------------------------------------------- 1,217 (2,116) -- (899) Equity in loss of subsidiaries (2,116) -- 2,116 -- ------------------------------------------------------------------- Loss from continuing operations (899) (2,116) 2,116 (899) Loss from discontinued operations, net of tax (11) -- -- (11) ------------------------------------------------------------------- Net loss $ (910) $ (2,116) $ 2,116 $ (910) ===================================================================
Page 11 12 NOTE 5 -- GUARANTOR SUBSIDIARIES (CONTINUED) CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS SIX MONTHS ENDED MARCH 31, 2001
Subsidiary Company Guarantors Eliminations Consolidated ------------------------------------------------------------------- OPERATING ACTIVITIES Net loss $(11,089) $(12,333) $ 12,333 $(11,089) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 6,719 14,333 -- 21,052 Amortization of deferred financing costs and premium on notes 560 -- -- 560 Gain on sale of discontinued operations (2,552) -- -- (2,552) Deferred income taxes (207) (1,003) -- (1,210) Changes in operating assets and liabilities 2,617 (9,924) -- (7,307) ------------------------------------------------------------------- Net cash used in operating activities (3,952) (8,927) 12,333 (546) INVESTING ACTIVITIES Investments in and advances to subsidiaries (3,105) 15,438 (12,333) -- Purchase of property, plant and equipment (2,485) (7,974) -- (10,459) Proceeds from sale of discontinued operations 5,044 -- -- 5,044 ------------------------------------------------------------------- Net cash provided by (used in) investing activities (546) 7,464 (12,333) (5,415) FINANCING ACTIVITIES Payments on long-term debt and capital lease obligations (11,577) (1,033) -- (12,610) Debt issuance costs (907) -- -- (907) ------------------------------------------------------------------- Net cash used in financing activities (12,484) (1,033) -- (13,517) ------------------------------------------------------------------- Decrease in cash and cash equivalents (16,982) (2,496) -- (19,478) Cash and cash equivalents at beginning of year 16,982 2,496 -- 19,478 ------------------------------------------------------------------- Cash and cash equivalents at end of year $ -- $ -- $ -- $ -- ===================================================================
Page 12 13 NOTE 5 -- GUARANTOR SUBSIDIARIES (CONTINUED) CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS SIX MONTHS ENDED MARCH 31, 2000
Subsidiary Company Guarantors Eliminations Consolidated ------------------------------------------------------------------- OPERATING ACTIVITIES Net loss $ (3,501) $ (7,007) $ 7,007 $ (3,501) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 6,660 12,893 -- 19,553 Amortization of deferred financing costs and premium on notes 541 -- -- 541 Deferred income taxes -- (259) -- (259) Changes in operating assets and liabilities 3,417 (7,280) -- (3,863) ------------------------------------------------------------------- Net cash provided by (used in) operating activities 7,117 (1,653) 7,007 12,471 INVESTING ACTIVITIES Investments in and advances to subsidiaries (31,860) 38,867 (7,007) -- Purchase of property, plant and equipment (3,165) (11,578) -- (14,743) Acquisition of business -- (23,002) -- (23,002) ------------------------------------------------------------------- Net cash provided by (used in) investing activities (35,025) 4,287 (7,007) (37,745) FINANCING ACTIVITIES Proceeds from long-term debt 25,000 1,470 -- 26,470 Payments on long-term debt and capital lease obligations (2,526) (338) -- (2,864) ------------------------------------------------------------------- Net cash provided by financing activities 22,474 1,132 -- 23,606 ------------------------------------------------------------------- Increase (decrease) in cash and cash equivalents (5,434) 3,766 -- (1,668) Cash and cash equivalents at beginning of year 15,852 1,516 -- 17,368 ------------------------------------------------------------------- Cash and cash equivalents at end of year $ 10,418 $ 5,282 $ -- $ 15,700 ===================================================================
Page 13 14 NOTE 6 -- SEGMENT INFORMATION The Company has two reportable segments, Castings and Forgings. The Castings segment manufactures and sells castings for the industrial and municipal markets, while the Forgings segment manufactures forged components for the industrial market. The Other segment includes machining operations and freight hauling.
Three months ended Six months ended March 31, March 31, --------------------------- --------------------------- 2001 2000 2001 2000 --------- --------- --------- --------- Revenues from external customers: Castings $ 101,233 $ 118,757 $ 207,600 $ 234,956 Forgings 6,605 9,783 12,390 17,776 Other 5,650 18,811 11,629 25,727 Elimination of intersegment revenues (904) (4,689) (4,465) (9,363) --------- --------- --------- --------- Consolidated $ 112,584 $ 142,662 $ 227,154 $ 269,096 ========= ========= ========= ========= Income (loss) from continuing operations: Castings $ (10,875) $ (1,557) $ (22,315) $ (7,736) Forgings (1,285) (1,031) (3,269) (2,062) Other (203) (888) (389) (709) Elimination of intersegment income 5,522 2,577 12,332 6,881 --------- --------- --------- --------- Consolidated $ (6,841) $ (899) $ (13,641) $ (3,626) ========= ========= ========= =========
March 31, September 30, 2001 2000 --------- ------------- Identifiable Assets: Castings $ 789,057 $ 832,256 Forgings 51,136 57,933 Other 15,705 19,654 Elimination of intersegment assets (221,276) (243,625) --------- --------- Total consolidated assets $ 634,622 $ 666,218 ========= =========
Page 14 15 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL Certain matters discussed in this Management's Discussion and Analysis of Financial Condition and Results of Operations and other sections of this annual report are "forward-looking statements" intended to qualify for the safe harbors from liability established by the Private Securities Litigation Reform Act of 1995. These forward looking statements can generally be identified as such because the context of the statement will include words such as the Company "believes," "anticipates," "expects" or words of similar import. Similarly, statements that describe the Company's future plans, objectives or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties which are described in close proximity to such statements and which may cause actual results to differ materially from those currently anticipated. The forward-looking statements made herein are made only as of the date of this report and the Company undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances. The following discussions compare the results of operations of the Company for the three and six months ended March 31, 2001, to the results of the operations of the Company for the three and six months ended March 31, 2000. RESULTS OF OPERATIONS (dollars in thousands) Three Months Ended March 31, 2001 and 2000 Net sales. Net sales for the three months ended March 31, 2001 were $112,584 which are $30,078 or 21.1% lower than the quarter ended March 31, 2000. The decrease in net sales resulted from continued significant weakness in the demand for industrial castings used for the heavy duty truck market and an overall slowing of demand for castings in our other major markets. Gross profit. Gross profit for the three months ended March 31, 2001 was $12,642, a decrease of $11,494, or 47.6%, as compared to the quarter ended March 31, 2000. Gross profit as a percentage of net sales decreased to 11.2% for the three months ended March 31, 2001 from 16.9% for the quarter ended March 31, 2000. The decrease in gross profit resulted from lower sales volume noted above, significantly increased energy prices, and an inability, at the lower production and sales levels, to sufficiently absorb the overhead costs necessary to effectively run the foundry operations. Selling, general and administrative expenses. Selling, general and administrative expenses for the three months ended March 31, 2001 were $8,180, a decrease of $1,800, or 18.0%, as compared to the $9,980 for the quarter ended March 31, 2000. The decrease was due to decreased corporate expense and the implementation of other cost cutting measures due to the decreased sales level. As a percentage of net sales, selling, general and administrative expenses increased from 7.0% for the quarter ended March 31, 2000 to 7.3% for the three months ended March 31, 2001. Amortization of intangible assets. Amortization of intangible assets was $2,905 for the three months ended March 31, 2001, an increase of $179, or 6.6%, as compared to the $2,726 for the quarter ended March 31, 2000. The increase is due to the increased amortization of goodwill and identifiable intangible assets of Gregg. Operating income. Operating income was $1,635 for the three months ended March 31, 2001, a decrease of $9,795, or 85.7%, from the quarter ended March 31, 2000. The decrease in operating income was caused by the reasons discussed above under gross profit, partially offset by decreased selling, general and administrative expenses. As a percentage of net sales, operating income decreased from 8.0% for the quarter ended March 31, 2000 to 1.5% for the three months ended March 31, 2001. Page 15 16 Net interest expense. Net interest expense was $12,068 for the three months ended March 31, 2001 compared to $11,804 for the quarter ended March 31, 2000. The increased interest expense resulted from the interest on capital leases entered into during the second half of fiscal 2000. Provision for income taxes. The provision for income taxes for the three months ended March 31, 2001 and 2000 is higher than the amount computed by applying the statutory rate of approximately 40% to income before income taxes mainly due to the amortization of goodwill which is not deductible for income tax purposes. Six Months Ended March 31, 2001 and 2000 Net sales. Net sales for the six months ended March 31, 2001 were $227,154 which are $41,942 or 15.6% lower than the six months ended March 31, 2000. The decrease in net sales resulted from continued significant weakness in the demand for industrial castings used for the heavy duty truck market and an overall slowing of demand for castings in our other major markets. Gross profit. Gross profit for the six months ended March 31, 2001 was $26,363, a decrease of $17,794, or 40.3%, as compared to the six months ended March 31, 2000. Gross profit as a percentage of net sales decreased to 11.6% for the six months ended March 31, 2001 from 16.4% for the six months ended March 31, 2000. The decrease in gross profit resulted from lower sales volume noted above, significantly increased energy prices, and an inability, at the lower production and sales levels, to sufficiently absorb the overhead costs necessary to effectively run the foundry operations. Selling, general and administrative expenses. Selling, general and administrative expenses for the six months ended March 31, 2001 were $17,215, a decrease of $1,643, or 8.7%, as compared to the $18,858 for the six months ended March 31, 2000. The decrease was due to decreased corporate expense and the implementation of other cost cutting measures partially offset by the recognition of severance benefits payable to certain terminated employees and the inclusion of Gregg's operating expenses for the entire period in 2001. As a percentage of net sales, selling, general and administrative expenses increased from 7.0% for the six months ended March 31, 2000 to 7.6% for the six months ended March 31, 2001. Amortization of intangible assets. Amortization of intangible assets was $5,810 for the six months ended March 31, 2001, an increase of $377, or 6.9%, as compared to the $5,433 for the six months ended March 31, 2000. The increase is due to the increased amortization of goodwill and identifiable intangible assets of Gregg. Operating income. Operating income was $3,448 for the six months ended March 31, 2001, a decrease of $16,418, or 82.6%, from the six months ended March 31, 2000. The decrease in operating income was caused by the reasons discussed above under gross profit. As a percentage of net sales, operating income decreased from 7.4% for the six months ended March 31, 2000 to 1.5% for the six months ended March 31, 2001. Net interest expense. Net interest expense was $24,245 for the six months ended March 31, 2001 compared to $23,307 for the six months ended March 31, 2000. The increased interest expense resulted from the interest on the drawings under the Company's Senior Bank Facilities which were outstanding for the entire six months ended March 31, 2001 as compared to four months during the six months ended March 31, 2000. These borrowings were used to finance the purchase of Gregg on November 30, 1999. Also, increased interest expense was incurred on capital leases entered into during the second half of fiscal 2000. Page 16 17 Provision for income taxes. The provision for income taxes for the six months ended March 31, 2001 and 2000 is higher than the amount computed by applying the statutory rate of approximately 40% to income before income taxes mainly due to the amortization of goodwill which is not deductible for income tax purposes. Discontinued operations. On October 2, 2000, the Company sold the common stock of Hartley. The disposition of Hartley resulted in a gain of $2,552, net of tax, which was recognized in the six months ended March 31, 2001. The results of operations of Hartley have been reported separately as discontinued operations. LIQUIDITY AND CAPITAL RESOURCES (dollars in thousands) The Company has outstanding $282.0 million principal of 11 1/8% Senior Subordinated Notes due 2007 (the "Senior Subordinated Notes"). In addition, the Company has a credit agreement (the "Senior Bank Facility" or "Credit Agreement") providing for term loans, an Acquisition Loan Facility, and a Revolving Credit Facility of up to $50.0 million. At March 31, 2001, there are no borrowings outstanding on the Revolving Credit Facility, $22.6 million principal amount outstanding on the Acquisition Loan Facility and $128.9 million principal amount outstanding under the term loans. The Company's liquidity needs will arise primarily from debt service on the above indebtedness, working capital needs and funding of capital expenditures and additional acquisitions. Borrowings under the Senior Bank Facilities bear interest at variable interest rates. The Senior Bank Facility imposes restrictions on the Company's ability to make capital expenditures. 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 the 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. In March 2001, the Credit Agreement was amended to provide temporary reductions of certain financial ratio covenants and to further restrict capital expenditure limits and permitted acquisitions. For the six months ended March 31, 2001 and March 31, 2000, capital expenditures were $10,459 and $14,743, respectively. The decrease in capital expenditures of $4,284 was the result of tighter spending controls placed on capital expenditures during the six months ended March 31, 2001. The Company's principal source of cash to fund its liquidity needs will be net cash from operating activities and borrowings under its Senior Bank Facilities. Net cash used in operating activities for the six months ended March 31, 2001 was $546, a decrease of $13,017 from cash provided by operating activities for the six months ended March 31, 2000 of $12,471. The decrease in net cash from operating activities was the result of decreased operating income and a buildup of inventory balances to support an anticipated increased sales level during the summer months. The Company believes that cash generated from operations and existing revolving lines of credit under the Senior Bank Facilities will be sufficient to meet its normal operating requirements, including working capital needs and interest payments on the Company's outstanding indebtedness. Page 17 18 Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company is exposed to market risk related to changes in interest rates. The Company does not use derivative financial instruments for speculative or trading purposes. Interest Rate Sensitivity. The Company's earnings are affected by changes in short-term interest rates as a result of its borrowings under the Senior Bank Facilities. If market interest rates for such borrowings change by 1% during the remainder of the fiscal year ended September 30, 2001, the Company's interest expense would increase or decrease by approximately $.8 million. This analysis does not consider the effects of changes in the level of overall economic activity that could occur due to interest rate changes. Further, in the event of an upward change of such magnitude, management could take actions to further mitigate its exposure to the change. However, due to the uncertainty of the specific actions that would be taken and their possible effects, the sensitivity analysis assumes no changes in the Company's financial structure. Page 18 19 NEENAH FOUNDRY COMPANY PART II. OTHER INFORMATION Item 1. LEGAL PROCEEDINGS None. Item 2. CHANGES IN SECURITIES None. Item 3. DEFAULTS UPON SENIOR SECURITIES None. Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. Item 5. OTHER INFORMATION None. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits Exhibit 10 - Material Contracts Amendment No. 2 dated as of March 16, 2001, to the Credit Agreement dated as of April 30, 1997 as Amended and Restated as of September 12, 1997, as of April 3, 1998, and as of September 8, 1998 by and among Neenah Foundry Company, NFC Castings, Inc., the Lenders from time to time party thereto, and the Chase Manhattan Bank. (b) Reports on Form 8-K None. SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. NEENAH FOUNDRY COMPANY DATE: May 9, 2001 /s/ Gary LaChey ------------------------------------- Gary LaChey Vice President-Finance, Secretary & Treasurer (Principal Financial Officer and Duly Authorized Officer) Page 19 EX-10 2 c62438ex10.txt MATERIAL CONTRACTS 1 CONFORMED COPY EXHIBIT 10 AMENDMENT NO. 2 dated as of March 23, 2001 (this "Amendment"), to the Credit Agreement dated as of April 30, 1997, as amended and restated as of September 12, 1997, as of April 3, 1998, and as of September 8, 1998, as amended (the "Credit Agreement"), among NEENAH FOUNDRY COMPANY, a Wisconsin corporation (the "Borrower"), NFC CASTINGS, INC., a Delaware corporation ("Holdings"), the Lenders from time to time party thereto (the "Lenders"), and THE CHASE MANHATTAN BANK, a New York banking corporation, as issuing bank, as administrative agent (in such capacity, the "Administrative Agent") and as collateral agent (in such capacity, the "Collateral Agent") for the Lenders. A. Pursuant to the Credit Agreement, the Lenders have extended and have agreed to extend credit to the Borrower on the terms and subject to the conditions set forth therein. B. The Borrower and Holdings have requested that certain provisions of the Credit Agreement be amended as set forth herein. C. The Required Lenders are willing to amend the Credit Agreement pursuant to the terms and subject to the conditions set forth herein. D. Capitalized terms used and not otherwise defined herein shall have the meanings assigned to them in the Credit Agreement. Accordingly, in consideration of the mutual agreements herein contained and other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the parties hereto agree as follows: SECTION 1. Amendments. (a) The definition of the term "Senior Debt Leverage Ratio" in Section 1.01 of the Credit Agreement is hereby amended and restated in its entirety to read as follows: "Senior Debt Leverage Ratio" shall mean, as of any date of determination, the ratio of (a) Senior Debt as of such date to (b) Consolidated EBITDA for the period of four consecutive fiscal quarters of the Borrower ended on such date (including the Consolidated EBITDA for such four fiscal quarters of any Subsidiary acquired during such four fiscal quarters constituting a Permitted Acquisition pursuant to Section 6.04(g)). 2 2 (b) The definition of the term "Applicable Percentage" in Section 1.01 of the Credit Agreement is hereby amended by restating the table set forth therein in its entirety as follows:
Eurodollar Eurodollar ABR Spread B Spread B ABR Spread B Spread B Tranche B Tranche A Term Tranche A Term Tranche B Term Loans Loans, Loans, Term Loans and and Revolving Loans Revolving Loans Additional Additional Consolidated Leverage and Acquisition and Acquisition Tranche B Tranche B Fee Ratio Loans Loans Term Loans Term Loans Percentage ----- ----- ----- ----- ----- ---------- Category 1 3.50% 2.50% 3.75% 2.75% .50% - ---------- Equal to or greater than 4.50 to 1.00 Category 2 3.25% 2.25% 3.50% 2.50% .50% - ---------- Equal to or greater than 4.00 to 1.00, but less than 4.50 to 1.00 Category 3 3.00% 2.00% 3.25% 2.25% .50% - ---------- Equal to or greater than 3.50 to 1.00, but less than 4.00 to 1.00 Category 4 2.75% 1.75% 3.00% 2.00% .50% - ---------- Equal to or greater than 3.00 to 1.00, but less than 3.50 to 1.00 Category 5 2.50% 1.50% 3.00% 2.00% .50% - ---------- Less than 3.00 to 1.00
3 3 (c) The definition of the term "Senior Debt" in Section 1.01 of the Credit Agreement is hereby amended and restated in its entirety to read as follows: "Senior Debt" shall mean, at any date and without duplication, (a) the aggregate amount of all Indebtedness of the Borrower and the Subsidiaries on a consolidated basis at such date (other than any Indebtedness described in clause (i) or (j) of the definition of such term) minus (b) to the extent included therein, the sum of (i) the aggregate amount of all Indebtedness pursuant to the Senior Subordinated Notes at such date and (ii) the aggregate amount of all Indebtedness pursuant to Qualified Subordinated Debt at such date. (d) Section 2.13(c) of the Credit Agreement is hereby amended by replacing the percentage of "50%" in clause (ii) therein with the percentage of "75%". (e) Section 5.04 of the Credit Agreement is hereby amended by deleting the word "and" at the end of paragraphs (d) and (e) thereof and replacing the punctuation at the end of paragraph (f) thereof with the word "; and". Section 5.04 of the Credit Agreement is further amended by adding at the end thereof the following: (g) within 30 days after the end of each month through and including December 31, 2001, its consolidated balance sheet and related statements of operations, stockholders' equity and cash flows showing the financial condition of the Borrower and its consolidated Subsidiaries as of the end of and for such month and the results of its operations and the operations of such Subsidiaries as of the end of and for such month, all certified by one of its Financial Officers as fairly presenting in all material respects the financial condition and results of operations of the Borrower and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, subject to normal year-end audit adjustments; (f) Section 6.04(g) of the Credit Agreement is hereby amended by adding at the end thereof the following proviso: provided, further that none of Holdings, the Borrower or any of the Subsidiaries may consummate any Permitted Acquisition during the period from and including March 23, 2001, to and including December 31, 2001; (g) Section 6.10 of the Credit Agreement is hereby amended and restated in its entirety to read as follows: SECTION 6.10. Capital Expenditures. Permit the aggregate amount of Consolidated Capital Expenditures (other than Consolidated Capital Expenditures for patterns and Permitted Acquisitions permitted by Section 6.04(g)) made by the Borrower and the Subsidiaries, taken as a whole, (a) during the fiscal year of the Borrower ending on September 30, 2001, to exceed $22,000,000, (b) during the fiscal quarter of the Borrower ending on December 31, 2001, to exceed $5,500,000, and (c) in any fiscal year of the Borrower commencing on or after 4 4 October 1, 2001, to exceed the sum of (i) $40,000,000, (ii) the net cash proceeds of any issuance of equity securities by, without duplication, Holdings, ACP Holdings or ACP Products made during such fiscal year and substantially concurrently used to fund Consolidated Capital Expenditures, and (iii) 100% of Excess Cash Flow for the preceding fiscal year that was not required to be used to make prepayments of the outstanding Term Loans pursuant to Section 2.13; provided, however, that the amount of Consolidated Capital Expenditures in any fiscal year of the Borrower commencing on or after October 1, 2002 permitted to be incurred pursuant to clause (c) above shall be increased by an amount equal to the amount of unused Consolidated Capital Expenditures permitted to be incurred pursuant to clause (c) above for the immediately preceding fiscal year of the Borrower (without giving effect to this proviso). (h) Section 6.11 of the Credit Agreement is hereby amended by restating the table set forth therein in its entirety as follows:
Period Ratio ------ ----- January 1, 1998 through September 30, 1999 6.00 to 1.00 October 1, 1999 through September 30, 2000 5.75 to 1.00 October 1, 2000 through December 31, 2000 5.50 to 1.00 January 1, 2001 through December 31, 2001 6.75 to 1.00 Thereafter 5.50 to 1.00
(i) Section 6.13 of the Credit Agreement is hereby amended by replacing the punctuation at the end thereof with the following proviso: ; provided that notwithstanding the foregoing the Consolidated Interest Coverage Ratio as of the end of the second, third and fourth quarters of the fiscal year of the Borrower ended September 30, 2001 and the first quarter of the fiscal year of the Borrower ended September 30, 2002, in each case, shall not be less than 1.35 to 1:00. (j) A new Section 6.15 shall be inserted after Section 6.14 of the Credit Agreement and shall read as follows: SECTION 6.15. Senior Debt Leverage Ratio. Permit the Senior Debt Leverage Ratio as of the end of any fiscal quarter of the Borrower to be in excess of 2.75 to 1.00. SECTION 2. Representations and Warranties. To induce the other parties hereto to enter into this Amendment, each of Holdings and the Borrower represents and warrants to each other party hereto that after giving effect to this Amendment, (i) the representations and warranties set forth in Article III of the Credit Agreement are true and correct in all material respects on and as of the date hereof, except to the extent such representations and warranties expressly relate to an earlier date, and (ii) no Default or Event of Default has occurred and is continuing. 5 5 SECTION 3. Amendment Fee. Subject to the following proviso, the Borrower agrees to pay to each Lender that executes and delivers a copy of this Amendment to the Administrative Agent (or its counsel) on or prior to 5:00 pm New York City time, on March 21, 2001, through the Administrative Agent, a non-refundable amendment fee (the "Amendment Fee") in an amount equal to 0.25% of the sum of the aggregate principal amount outstanding of such Lender's Loans, L/C Exposure and unused Commitments as of such date; provided that the Borrower shall have no liability for any such amendment fee if this Amendment does not become effective in accordance with Section 4 below. Such amendment fee shall be payable in immediately available funds on, and subject to the occurrence of, the Amendment Effective Date (as defined below). SECTION 4. Conditions to Effectiveness. This Amendment shall become effective at such time (the "Amendment Effective Date") as (a) the Administrative Agent (or its counsel) shall have received counterparts hereof which, when taken together, bear the signatures of the Borrower, Holdings and the Required Lenders, (b) the Administrative Agent shall have received the Amendment Fee and (c) all out-of-pocket expenses incurred by the Administrative Agent in connection with this Amendment or the transactions contemplated thereby, for which invoices shall have been submitted to the Borrower on or prior to the Amendment Effective Date, shall have been paid. Without limiting the foregoing, the amendments set forth herein that affect the interest rates under the Credit Agreement shall apply to all Loans outstanding on or after the Amendment Effective Date from and including the Amendment Effective Date. SECTION 5. Effect of Amendment. Except as expressly set forth herein, this Amendment shall not by implication or otherwise limit, impair, constitute a waiver of, or otherwise affect, the rights and remedies of the Lenders or the Administrative Agent under the Credit Agreement or any other Loan Document, and shall not alter, modify, amend or in any way affect any of the terms, conditions, obligations, covenants or agreements contained in the Credit Agreement or any other Loan Document, all of which are ratified and affirmed in all respects and shall continue in full force and effect. Nothing herein shall be deemed to entitle Holdings or the Borrower to a consent to, or a waiver, amendment, modification or other change of, any of the terms, conditions, obligations, covenants or agreements contained in the Credit Agreement or any other Loan Document in similar or different circumstances. This Amendment shall apply and be effective only with respect to the provisions of the Credit Agreement specifically referred to herein. This Amendment shall constitute a "Loan Document" for all purposes under the Credit Agreement and the other Loan Documents. SECTION 6. Expenses. The Borrower agrees to pay the reasonable out-of-pocket costs and expenses incurred by the Administrative Agent in connection with the preparation of this Amendment. SECTION 7. Counterparts. This Amendment may be executed in any number of counterparts and by different parties hereto on separate counterparts, each of which when so executed and delivered shall be deemed an original, but all of which 6 6 together shall constitute a single instrument. Delivery of an executed counterpart of a signature page of this Amendment by facsimile transmission shall be as effective as delivery of a manually executed counterpart hereof. SECTION 8. Applicable Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. SECTION 9. Headings. The headings of this Amendment are for purposes of reference only and shall not limit or otherwise affect the meaning hereof. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their duly authorized officers, all as of the date and year first above written. NEENAH FOUNDRY COMPANY, by /s/ Gary LaChey ------------------------------------- Name: Gary LaChey Title: Corporate V.P. Finance NFC CASTINGS, INC., by /s/ Gary LaChey ------------------------------------- Name: Gary LaChey Title: Corporate V.P. Finance 7 7 THE CHASE MANHATTAN BANK, individually and as Administrative Agent and Collateral Agent, by /s/ Peter S. Predun ------------------------------------- Name: Peter S. Predun Title: Vice President AIM FLOATING RATE FUND, By: INVESCO Senior Secured Management, Inc. As Attorney in fact, by /s/ Gregory Stoeckle ------------------------------------- Name: Gregory Stoeckle Title: Authorized Signatory AVALON CAPITAL LTD., By: INVESCO Senior Secured Management, Inc., as Portfolio Advisor, by /s/ Gregory Stoeckle ------------------------------------- Name: Gregory Stoeckle Title: Authorized Signatory BALANCED HIGH-YIELD FUND I, LTD., By: ING Capital Advisors LLC acting as Asset Manager, by /s/ Michael D. Hatley ------------------------------------- Name: Michael D. Hatley Title: Managing Director 8 8 THE BANK OF NOVA SCOTIA, by /s/ F.C.H. Ashby ------------------------------------- Name: F.C.H. Ashby Title: Senior Manager Loan Operations BANK ONE, WISCONSIN, by /s/ Fred J. Nehrling ------------------------------------- Name: Fred J. Nehrling Title: Vice President CAPTIVA II FINANCE, LTD., by /s/ David Dyer ------------------------------------- Name: David Dyer Title: Director CERES FINANCE LTD., By: INVESCO Senior Secured Management, Inc., as Sub-Managing Agent, by /s/ Gregory Stoeckle ------------------------------------- Name: Gregory Stoeckle Title: Authorized Signatory CIT GROUP/EQUIPMENT FINANCING, INC., by /s/ Undrae L. Mitchell ------------------------------------- Name: Undrae L. Mitchell Title: Senior Credit Analyst 9 9 CYPRESSTREE INVESTMENT FUND, LLC, By: CypressTree Investment Management Company, Inc., its Managing Member, by /s/ P. Jeffrey Huth ------------------------------------- Name: P. Jeffrey Huth Title: Principal CYPRESSTREE INVESTMENT MANAGEMENT COMPANY, INC., As: Attorney-in-Fact and on behalf of First Allmerica Financial Life Insurance Company as Portfolio Manager, by /s/ P. Jeffrey Huth ------------------------------------- Name: P. Jeffrey Huth Title: Principal CYPRESSTREE SENIOR FLOATING RATE FUND, By: CypressTree Investment Management Company, Inc. as Portfolio Manager, by /s/ P. Jeffrey Huth ------------------------------------- Name: P. Jeffrey Huth Title: Principal 10 10 EATON VANCE SENIOR INCOME TRUST, By: Eaton Vance Management, as Investment Advisor, by ------------------------------------- Name: Title: FIRSTAR BANK, N.A., by /s/ Mark A. Whitson ------------------------------------- Name: Mark A. Whitson Title: Vice President GENERAL ELECTRIC CAPITAL CORPORATION, by ------------------------------------- Name: Title: HELLER FINANCIAL INC., by /s/ Scott Ziemke ------------------------------------- Name: Scott Ziemke Title: Vice President KZH CYPRESSTREE-1 LLC, by /s/ Kimberly Rowe ------------------------------------- Name: Kimberly Rowe Title: Authorized Agent 11 11 LASALLE BANK NATIONAL ASSOCIATION, by /s/ Lou D. Banach ------------------------------------- Name: Lou D. Banach Title: Vice President & Senior Lender NATIONAL CITY BANK, by /s/ Lisa B. Lisi ------------------------------------- Name: Lisa B. Lisi Title: Senior Vice President NORTH AMERICAN SENIOR FLOATING RATE FUND, By: CypressTree Investment Management Company, Inc. as Portfolio Manager, by /s/ P. Jeffrey Huth ------------------------------------- Name: P. Jeffrey Huth Title: Principal OXFORD STRATEGIC INCOME FUND, By: Eaton Vance Management, as Investment Advisor, by ------------------------------------- Name: Title: 12 12 PACIFICA PARTNERS I, L.P., By: Imperial Credit Asset Management as its Investment Manager, by /s/ Tom Colwell ------------------------------------- Name: Tom Colwell Title: Vice President PNC BANK, NATIONAL ASSOCIATION, by /s/ Louis K. McLinden, Jr. ------------------------------------- Name: Louis K. McLinden, Jr. Title: Vice President SENIOR DEBT PORTFOLIO, By: Boston Management and Research, as Investment Advisor, by ------------------------------------- Name: Title: STANFIELD CLO, LTD., By: Stanfield Capital Partners LLC, as its Collateral Manager, by /s/ Christopher A. Pucillo ------------------------------------- Name: Christopher A. Pucillo Title: Managing Director 13 13 STANFIELD/RMF TRANSLANTIC CDO, LTD., By: Stanfield Capital Partners LLC, as its Collateral Manager, by /s/ Christopher A. Pucillo ------------------------------------- Name: Christopher A. Pucillo Title: Managing Director VAN KAMPEN CLO I, LIMITED, By: Van Kampen Management Inc., as Collateral Manager, by /s/ Darvin D. Pierce ------------------------------------- Name: Darvin D. Pierce Title: Principal VAN KAMPEN CLO II, LIMITED, By: Van Kampen Management Inc., as Collateral Manager, by /s/ David D. Pierce ------------------------------------- Name: Darvin D. Pierce Title: Principal VAN KAMPEN PRIME RATE INCOME TRUST, By: Van Kampen Investment Advisory Corp., by /s/ Darvin D. Pierce ------------------------------------- Name: Darvin D. Pierce Title: Principal -----END PRIVACY-ENHANCED MESSAGE-----