e10vq

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


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

For the quarterly period ended March 31, 2007


o		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 registrant as specified 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 þ o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated flier, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o Accelerated Filer o Non-accelerated filer þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes þ No o

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

On April 30, 2007, the registrant had 1,000 shares of Common Stock, par value $100 per share, outstanding, all of which were owned by NFC Castings, Inc., a wholly owned subsidiary of ACP Holding Company.

NEENAH FOUNDRY COMPANY

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)


	March 31,			September 30,
	2007			2006(1)
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	2,147		$	910
Accounts receivable, net		67,103			85,161
Inventories		69,160			61,847
Deferred income taxes		2,697			2,697
Refundable income taxes		9,381			—
Other current assets		7,144			7,425

Total current assets		157,632			158,040

Property, plant and equipment		152,789			131,710
Less accumulated depreciation		41,215			34,832

		111,574			96,878

Deferred financing costs, net		3,450			1,695
Identifiable intangible assets, net		58,512			62,072
Goodwill		86,699			86,699
Other assets		5,384			5,536

	$	423,251		$	410,920


Liabilities and stockholder’s equity
Current liabilities:
Accounts payable	$	26,358		$	29,766
Income taxes payable		—			2,550
Accrued wages and employee benefits		9,942			13,713
Accrued interest		7,688			7,157
Other accrued liabilities		4,196			2,924
Current portion of long-term debt		—			27,750
Current portion of capital lease obligations		161			161

Total current liabilities		48,345			84,021

Long-term debt		300,000			236,445
Capital lease obligations		1,377			1,060
Deferred income taxes		26,931			26,931
Postretirement benefit obligations		10,219			10,141
Other liabilities		13,824			13,136

Total liabilities		400,696			371,734

Commitments and contingencies

Stockholder’s equity:
Common stock, par value $100 per share — authorized, issued and outstanding 1,000 shares		100			100
Capital in excess of par value		5,429			5,429
Retained earnings		17,868			34,499
Accumulated other comprehensive loss		(842	)		(842	)

Total stockholder’s equity		22,555			39,186

	$	423,251		$	410,920

See notes to condensed consolidated financial statements.


(1)		The balance sheet as of September 30, 2006 has been derived from the audited financial statements as of that date but does not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements.

NEENAH FOUNDRY COMPANY

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


	Six Months Ended
	March 31,
	2007			2006
Operating activities
Net income (loss)	$	(16,631	)	$	1,777
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization		10,223			10,007
Amortization of deferred financing costs and discount on notes		595			1,041
Write-off of deferred financing costs and discount on notes		7,512			—
Changes in operating assets and liabilities		(11,303	)		(13,438	)

Net cash used in operating activities		(9,604	)		(613	)

Investing activities
Purchase of property, plant and equipment		(20,948	)		(9,359	)

Net cash used in investing activities		(20,948	)		(9,359	)

Financing activities
Net change in revolver balance		(24,595	)		6,851
Proceeds from long-term debt		300,000			1,244
Payments on long-term debt and capital lease obligations		(227,173	)		(1,607	)
Payment of tender premium		(12,917	)		—
Debt issuance costs		(3,526	)		—

Net cash provided by financing activities		31,789			6,488

Increase (decrease) in cash and cash equivalents		1,237			(3,484	)
Cash and cash equivalents at beginning of period		910			3,484

Cash and cash equivalents at end of period	$	2,147		$	—

See notes to condensed consolidated financial statements.

NEENAH FOUNDRY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(In thousands)

Note 1 — Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. 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 U.S. 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 six months ended March 31, 2007 are not necessarily indicative of the results that may be expected for the year ending September 30, 2007. 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, 2006.

Note 2 — Inventories

The components of inventories are as follows:


	March 31,		September 30,
	2007		2006
Raw materials	$	8,103	$	7,857
Work in process and finished goods		44,742		38,437
Supplies		16,315		15,553

	$	69,160	$	61,847

Note 3 — Recent Accounting Pronouncements

In July 2006, the Financial Accounting Standards Board (FASB) issued FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109” (FIN 48), which clarifies the accounting for uncertainty in tax positions. This Interpretation requires that the Company recognize in its financial statements the impact of a tax position, if that position is more likely than not of being sustained on audit, based on the technical merits of the position. This interpretation is effective for fiscal years beginning after December 15, 2006, with the cumulative effect of the change in accounting principle recorded as an adjustment to opening retained earnings. The Company is currently evaluating the impact FIN 48 will have on its financial statements.

In September 2006, the FASB issued Statement of Financial Accounting Standards (SFAS) No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans” (SFAS No. 158). SFAS No. 158 amends SFAS No. 87, “Employers’ Accounting for Pensions,” SFAS No. 88, “Employers’ Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits,” SFAS No. 106, “Employers’ Accounting for Postretirement Benefits Other than Pensions,” and SFAS No. 132, “Employers’ Disclosures about Pensions and Other Postretirement Benefits.” The amendments retain most of the existing measurement and disclosure guidance and will not change the amounts recognized in the Company’s statement of operations. SFAS No. 158 requires companies to recognize a net asset or liability with an offset to equity, by which the defined benefit post-retirement obligation is over- or under-funded. SFAS No. 158 requires prospective application, and the recognition and disclosure requirements will be effective for the Company’s fiscal year ending September 30, 2007. The Company is currently evaluating the impact SFAS No. 158 will have on its consolidated balance sheets.

Note 4 — Employee Benefit Plans

Components of Net Periodic Benefit Cost

The Company has five defined-benefit pension plans covering the majority of its hourly employees and also sponsors unfunded defined benefit postretirement health care plans covering substantially all salaried and hourly employees and their dependents. Components of net periodic benefit costs are as follows for the three and six months ended March 31, 2007 and 2006 (in thousands):


	Pension Benefits						Postretirement Benefits
	Three Months Ended March 31,						Three Months Ended March 31,
	2007			2006			2007			2006
Service cost	$	382		$	667		$	50		$	68
Interest cost		788			1,052			75			160
Expected return on plan assets		(939	)		(1,141	)		—			—
Amortization of prior service credit		7			—			(13	)		(10	)
Recognized net actuarial loss (gain)		—			6			(52	)		(108	)

Net periodic benefit cost	$	238		$	584		$	60		$	110


	Pension Benefits						Postretirement Benefits
	Six Months Ended March 31,						Six Months Ended March 31,
	2007			2006			2007			2006
Service cost	$	763		$	1,335		$	100		$	136
Interest cost		1,576			2,103			150			320
Expected return on plan assets		(1,878	)		(2,281	)		—			—
Amortization of prior service credit		14			—			(26	)		(20	)
Recognized net actuarial loss (gain)		—			11			(103	)		(216	)

Net periodic benefit cost	$	475		$	1,168		$	121		$	220

Employer Contributions

For the six months ended March 31, 2007, $265 of contributions have been made to the defined-benefit pension plans. The Company presently anticipates contributing an additional $3,021 to fund its pension plans in fiscal 2007 for a total of $3,286.

Note 5 — Refinancing Transactions

On December 29, 2006, the Company repaid its outstanding indebtedness under its then existing credit facility, repurchased all $133,130 of its outstanding 11% Senior Secured Notes due 2010 through an issuer tender offer, retired $75,000 of its outstanding 13% Senior Subordinated Notes due 2013 (the “13% Notes”) by exchanging them for $75,000 of new 12¹/2% Senior Subordinated Notes due 2013 (the “12¹/2% Notes”) in a private transaction, and issued a notice to redeem the remaining $25,000 of 13% Notes that remained outstanding after the initial exchange. The remaining 13% Notes were redeemed on February 2, 2007. To fund these payments and to provide cash for capital expenditures, ongoing working capital requirements and general corporate purposes, the Company (a) issued $225,000 of new 9¹/2% Senior Secured Notes due 2017 (the “9¹/2% Notes”) and the $75,000 of 12¹/2% Notes and (b) entered into an amended and restated credit facility (the “2006 Credit Facility”) providing for borrowings in an amount up to $100,000.

The 2006 Credit Facility provides for borrowings in an amount up to $100,000 and includes a provision permitting the Company from time to time to request increases (subject to the lenders’ consent) in the aggregate amount by up to $10,000 with the increases to be funded through additional commitments from existing lenders or new commitments from financial institutions acceptable to the current lenders. It matures on December 31, 2011. Outstanding borrowings bear interest at rates based on the lenders’ Base Rate, as defined in the 2006 Credit Facility, or, if elected by the Company, at an adjusted rate based on LIBOR. Availability under the 2006 Credit Facility is subject to customary conditions and is limited by the Company’s borrowing base determined by the amount of accounts receivable, inventory and casting patterns and core boxes. At March 31, 2007, the Company had no borrowings and had remaining availability of $91,249 under the 2006 Credit Facility.

Obligations under the 2006 Credit Facility are secured by first priority liens, subject to customary restrictions, in the Company’s accounts receivable, inventory, casting patterns and core boxes, business interruption insurance policies, certain inter-company loans, cash and deposit accounts and related assets, subject to certain exceptions, and any proceeds of the foregoing, and by second priority liens (junior to the liens securing the 9¹/2% Notes) on substantially all of the Company’s remaining assets.

The 2006 Credit Facility requires the Company to observe certain customary conditions, affirmative covenants and negative covenants including financial covenants and it requires the Company to maintain a specified minimum interest coverage ratio or fixed charge coverage ratio whenever the unused availability is less than $15,000.

The $225,000 of outstanding 9¹/2% Notes will mature on January 1, 2017. The 9¹/2% Notes are secured by first-priority liens on substantially all of the Company’s assets (other than accounts receivable, inventory, casting patterns and core boxes, business interruption insurance policies, certain inter-company loans, cash and deposit accounts and related assets, subject to certain exceptions, and any proceeds of the foregoing) and by second-priority liens, junior to the liens for the benefit of the lenders under the 2006 Credit Facility, on the Company’s and the guarantors’ accounts receivable, inventory, casting patterns and core boxes, business interruption insurance policies, certain inter- company loans, cash and deposit accounts and related assets, subject to certain exceptions, and any proceeds of the foregoing. Interest on the 9¹/2% Notes is payable on a semi-annual basis.

The $75,000 of outstanding 12¹/2% Notes will mature on September 30, 2013. The obligations under the 12¹/2% Notes are senior to the Company’s subordinated unsecured indebtedness, if any, and are subordinate to the 2006 Credit Facility and the 9¹/2% Notes. Interest on the 12¹/2% Notes is payable on a semi-annual basis. Not less than five percent (500 basis points) of the interest on the 12¹/2% Notes must be paid in cash and the remainder (up to 7¹/2% or 750 basis points) of the interest may be deferred at the Company’s option. The Company must pay interest on any interest so deferred at a rate of 12¹/2% per annum.

The 9¹/2% Notes and the 12¹/2% Notes contain customary covenants typical to this type of financing, such as limitations on (1) indebtedness, (2) restricted payments, (3) liens, (4) distributions from restricted subsidiaries, (5) sale of assets, (6) affiliate transactions, (7) mergers and consolidations and (8) lines of business.

As a result of the refinancing transactions discussed above, the Company incurred $20,429 of debt refinancing costs in the six months ended March 31, 2007. This amount consisted of a $12,917 tender premium paid to repurchase the 11% Senior Secured Notes due 2010, $5,940 to write off the unamortized portion of discount on the 11% Senior Secured Notes and $1,572 to write off the unamortized portion of deferred financing costs on the old indebtedness.

Note 6 — Subsidiary Guarantors

The following tables present condensed consolidating financial information as of March 31, 2007 and September 30, 2006 and for the three and six months ended March 31, 2007 and 2006 for: (a) Neenah Foundry Company (“Neenah”) and (b) on a combined basis, the guarantors of the 9¹/2% Notes due 2017 and 12¹/2% Notes due 2013, which include all of the wholly owned subsidiaries of Neenah (Subsidiary Guarantors). Separate financial statements of the Subsidiary Guarantors are not presented because the guarantors are jointly, severally, fully and unconditionally liable under the guarantees, and the Company believes separate financial statements and other disclosures regarding the Subsidiary Guarantors are not material to investors.

Condensed Consolidating Balance Sheet
March 31, 2007


			Subsidiary
	Neenah		Guarantors			Eliminations			Consolidated

Assets
Current assets:
Cash and cash equivalents	$	4,043	$	(1,896	)	$	—		$	2,147
Accounts receivable, net		25,732		41,371			—			67,103
Inventories		29,351		39,809			—			69,160
Deferred income taxes		4,169		(1,472	)		—			2,697
Refundable income taxes		9,193		188			—			9,381
Other current assets		4,644		2,500			—			7,144

Total current assets		77,132		80,500			—			157,632

Investments in and advances to subsidiaries		112,074		—			(112,074	)		—
Property, plant and equipment, net		53,596		57,978			—			111,574
Deferred financing costs and identifiable intangible assets, net		46,437		15,525			—			61,962
Goodwill		86,699		—			—			86,699
Other assets		1,952		3,432			—			5,384

	$	377,890	$	157,435		$	(112,074	)	$	423,251


Liabilities and Stockholder’s Equity
Current liabilities:
Accounts payable	$	8,185	$	18,173		$	—		$	26,358
Net intercompany payable		—		95,281			(95,281	)		—
Accrued liabilities		13,911		7,915			—			21,826
Current portion of long-term debt		—		161			—			161

Total current liabilities		22,096		121,530			(95,281	)		48,345

Long-term debt		300,000		1,377			—			301,377
Deferred income taxes		16,640		10,291			—			26,931
Postretirement benefit obligations		10,219		—			—			10,219
Other liabilities		6,380		7,444			—			13,824
Stockholder’s equity		22,555		16,793			(16,793	)		22,555

	$	377,890	$	157,435		$	(112,074	)	$	423,251

Note 6 — Subsidiary Guarantors (continued)

Condensed Consolidating Balance Sheet
September 30, 2006


			Subsidiary
	Neenah		Guarantors			Eliminations			Consolidated

Assets
Current assets:
Cash	$	2,433	$	(1,523	)	$	—		$	910
Accounts receivable, net		43,452		41,709			—			85,161
Inventories		22,990		38,857			—			61,847
Deferred income taxes		4,169		(1,472	)		—			2,697
Other current assets		4,930		2,495			—			7,425

Total current assets		77,974		80,066			—			158,040

Investments in and advances to subsidiaries		115,243		—			(115,243	)		—
Property, plant and equipment, net		41,183		55,695			—			96,878
Deferred financing costs and identifiable intangible assets, net		47,534		16,233			—			63,767
Goodwill, net		86,699		—			—			86,699
Other assets		1,952		3,584			—			5,536

	$	370,585	$	155,578		$	(115,243	)	$	410,920

Liabilities and Stockholder’s Equity
Current liabilities:
Accounts payable	$	10,147	$	19,619		$	—		$	29,766
Net intercompany payable		—		89,207			(89,207	)		—
Income taxes payable		2,550		—			—			2,550
Accrued liabilities		14,657		9,137			—			23,794
Current portion of long-term debt		27,750		161			—			27,911

Total current liabilities		55,104		118,124			(89,207	)		84,021

Long-term debt		236,445		1,060			—			237,505
Deferred income taxes		23,740		3,191			—			26,931
Postretirement benefit obligations		10,141		—			—			10,141
Other liabilities		5,969		7,167			—			13,136
Stockholder’s equity		39,186		26,036			(26,036	)		39,186

	$	370,585	$	155,578		$	(115,243	)	$	410,920

Note 6 — Subsidiary Guarantors (continued)

Condensed Consolidating Statement of Operations
Three months ended March 31, 2007


				Subsidiary
	Neenah			Guarantors			Eliminations			Consolidated

Net sales	$	44,841		$	68,338		$	(1,390	)	$	111,789
Cost of sales		38,288			64,158			(1,390	)		101,056

Gross profit		6,553			4,180			—			10,733

Selling, general and administrative expenses		4,400			4,587			—			8,987
Amortization of intangible assets		1,426			354			—			1,780
Gain on disposal of equipment		(6	)		(19	)		—			(25	)

Operating income (loss)		733			(742	)		—			(9	)

Net interest expense		(2,920	)		(4,112	)		—			(7,032	)

Loss before income taxes and equity in loss of subsidiaries		(2,187	)		(4,854	)		—			(7,041	)
Income tax benefit		(851	)		(1,891	)		—			(2,742	)

		(1,336	)		(2,963	)		—			(4,299	)
Equity in loss of subsidiaries		(2,963	)		—			2,963			—

Net loss	$	(4,299	)	$	(2,963	)	$	2,963		$	(4,299	)

Condensed Consolidating Statement of Operations
Three months ended March 31, 2006


				Subsidiary
	Neenah			Guarantors			Eliminations			Consolidated

Net sales	$	55,249		$	76,813		$	(1,549	)	$	130,513
Cost of sales		41,504			69,339			(1,549	)		109,294

Gross profit		13,745			7,474			—			21,219

Selling, general and administrative expenses		5,025			4,172			—			9,197
Amortization of intangible assets		1,426			353			—			1,779
Gain on disposal of equipment		(3	)		—			—			(3	)

Operating income		7,297			2,949			—			10,246

Net interest expense		(4,478	)		(3,845	)		—			(8,323	)

Income (loss) before income taxes and equity in loss of subsidiaries		2,819			(896	)		—			1,923
Income tax provision (benefit)		1,270			(404	)		—			866

		1,549			(492	)		—			1,057
Equity in loss of subsidiaries		(492	)		—			492			—

Net income (loss)	$	1,057		$	(492	)	$	492		$	1,057

Note 6 — Subsidiary Guarantors (continued)

Condensed Consolidating Statement of Operations
Six months ended March 31, 2007


				Subsidiary
	Neenah			Guarantors			Eliminations			Consolidated

Net sales	$	100,014		$	132,124		$	(3,007	)	$	229,131
Cost of sales		79,116			123,664			(3,007	)		199,773

Gross profit		20,898			8,460			—			29,358

Selling, general and administrative expenses		8,621			8,808			—			17,429
Amortization of intangible assets		2,852			708			—			3,560
Gain on disposal of equipment		(11	)		(53	)		—			(64	)
Debt refinancing costs		20,429			—			—			20,429

Operating loss		(10,993	)		(1,003	)		—			(11,996	)

Net interest expense		(7,027	)		(8,228	)		—			(15,255	)

Loss before income taxes and equity in loss of subsidiaries		(18,020	)		(9,231	)		—			(27,251	)
Income tax benefit		(7,023	)		(3,597	)		—			(10,620	)

		(10,997	)		(5,634	)		—			(16,631	)
Equity in loss of subsidiaries		(5,634	)		—			5,634			—

Net loss	$	(16,631	)	$	(5,634	)	$	5,634		$	(16,631	)

Condensed Consolidating Statement of Operations
Six months ended March 31, 2006


				Subsidiary
	Neenah			Guarantors			Eliminations			Consolidated

Net sales	$	107,622		$	147,699		$	(3,094	)	$	252,227
Cost of sales		80,993			134,019			(3,094	)		211,918

Gross profit		26,629			13,680			—			40,309

Selling, general and administrative expenses		9,130			8,026			—			17,156
Amortization of intangible assets		2,852			707			—			3,559
Loss (gain) on disposal of equipment		(9	)		1			—			(8	)

Operating income		14,656			4,946			—			19,602

Net interest expense		(8,831	)		(7,717	)		—			(16,548	)

Income (loss) before income taxes and equity in loss of subsidiaries		5,825			(2,771	)		—			3,054
Income tax provision (benefit)		2,436			(1,159	)		—			1,277

		3,389			(1,612	)		—			1,777
Equity in loss of subsidiaries		(1,612	)		—			1,612			—

Net income (loss)	$	1,777		$	(1,612	)	$	1,612		$	1,777

Note 6 — Subsidiary Guarantors (continued)

Condensed Consolidating Statement of Cash Flows
Six months ended March 31, 2007


				Subsidiary
	Neenah			Guarantors			Eliminations			Consolidated

Operating activities
Net loss	$	(16,631	)	$	(5,634	)	$	5,634		$	(16,631	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		4,622			5,601			—			10,223
Amortization of deferred financing costs and discount on notes		595			—			—			595
Write-off of deferred financing costs and discount on notes		7,512			—			—			7,512
Changes in operating assets and liabilities		(15,357	)		4,054			—			(11,303	)

Net cash provided by (used in) operating activities		(19,259	)		4,021			5,634			(9,604	)

Investing activities
Investments in and advances to subsidiaries		3,169			2,465			(5,634	)		—
Purchase of property, plant and equipment		(14,183	)		(6,765	)		—			(20,948	)

Net cash used in investing activities		(11,014	)		(4,300	)		(5,634	)		(20,948	)

Financing activities
Net change in revolver balance		(24,595	)		—			—			(24,595	)
Proceeds from long-term debt		300,000			—			—			300,000
Payments on long-term debt and capital lease obligations		(227,079	)		(94	)		—			(227,173	)
Payment of tender premium		(12,917	)		—			—			(12,917	)
Debt issuance costs		(3,526	)		—			—			(3,526	)

Net cash provided by (used in) financing activities		31,883			(94	)		—			31,789


Increase (decrease) in cash and cash equivalents		1,610			(373	)		—			1,237
Cash and cash equivalents at beginning of period		2,433			(1,523	)		—			910


Cash and cash equivalents at end of period	$	4,043		$	(1,896	)	$	—		$	2,147

Note 6 — Subsidiary Guarantors (continued)

Condensed Consolidating Statement of Cash Flows
Six months ended March 31, 2006


				Subsidiary
	Neenah			Guarantors			Eliminations			Consolidated

Operating activities
Net income (loss)	$	1,777		$	(1,612	)	$	1,612		$	1,777
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		4,335			5,672			—			10,007
Amortization of deferred financing costs and discount on notes		1,041			—			—			1,041
Changes in operating assets and liabilities		(11,180	)		(2,258	)		—			(13,438	)

Net cash provided by (used in) operating activities		(4,027	)		1,802			1,612			(613	)

Investing activities
Investments in and advances to subsidiaries		(2,879	)		4,491			(1,612	)		—
Purchase of property, plant and equipment		(3,406	)		(5,953	)		—			(9,359	)

Net cash used in investing activities		(6,285	)		(1,462	)		(1,612	)		(9,359	)

Financing activities
Net change in revolver balance		6,851			—						6,851
Proceeds from long-term debt		—			1,244						1,244
Payments on long-term debt and capital lease obligations		(1,578	)		(29	)		—			(1,607	)

Net cash provided by financing activities		5,273			1,215			—			6,488


Increase (decrease) in cash and cash equivalents		(5,039	)		1,555			—			(3,484	)
Cash and cash equivalents at beginning of period		4,952			(1,468	)		—			3,484


Cash and cash equivalents at end of period	$	(87	)	$	87		$	—		$	—

Note 7 — Segment Information

The Company has two reportable segments, Castings and Forgings. The Castings segment manufactures and sells gray and ductile iron castings for the industrial and municipal markets, while the Forgings segment manufactures and sells forged components for the industrial market. The Other segment includes machining operations and freight hauling.

The Company evaluates performance and allocates resources based on the operating income before depreciation and amortization charges of each segment. The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies in the Company’s Annual Report on Form 10-K. Intersegment sales and transfers are recorded at cost plus a share of operating profit. The following segment information is presented:


	Three months ended						Six months ended
	March 31,						March 31,
	2007			2006			2007			2006
Revenues from external customers:
Castings	$	100,011		$	117,439		$	205,688		$	226,517
Forgings		9,397			10,155			19,463			20,061
Other		5,276			5,767			8,700			11,059
Elimination of intersegment revenues		(2,895	)		(2,848	)		(4,720	)		(5,410	)

	$	111,789		$	130,513		$	229,131		$	252,227


Net income (loss):
Castings	$	(8,986	)	$	306		$	(26,013	)	$	(1,129	)
Forgings		(44	)		(679	)		287			(875	)
Other		(128	)		537			(148	)		1,009
Elimination of intersegment loss		4,859			893			9,243			2,772

	$	(4,299	)	$	1,057		$	(16,631	)	$	1,777


	March 31,			September 30,
	2007			2006
Total assets:
Castings	$	483,820		$	472,760
Forgings		5,350			6,399
Other		11,309			10,285
Elimination of intersegment assets		(77,228	)		(78,524	)

	$	423,251		$	410,920

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

General

In addition to historical information, this Management’s Discussion and Analysis of Financial Condition and Results of Operations and other sections of this quarterly report include some “forward-looking statements” that involve risks and uncertainties that could cause our actual results to differ materially from those currently anticipated. Forward-looking statements give our current expectations or forecasts of future events. The words “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates” and similar expressions are generally intended to identify forward-looking statements. Factors that could cause our results to differ materially from current expectations include material disruptions to the major industries we serve; continued price fluctuations in the scrap metal market; increases in price or interruptions in the availability of metallurgical coke; regulatory restrictions or requirements; developments affecting the valuation or prospects of the casting and forging industries generally or our business in particular; the outcome of legal proceedings in which we are involved; and other factors described or referenced in our Form 10-K for the year ended September 30, 2006 or subsequent SEC filings. You should not place undue reliance on these forward-looking statements, which reflect our opinions only as of the date of this report. We undertake no obligation to publicly release any revisions to the forward- looking statements after the date of this document.

Recent Developments

Refinancing Transactions. On December 29, 2006, we repaid our outstanding indebtedness under our then existing credit facility, repurchased all $133.1 million of our outstanding 11% Senior Secured Notes due 2010 through an issuer tender offer, retired $75 million of our outstanding 13% Senior Subordinated Notes due 2013 (the “13% Notes”) by exchanging them for $75 million of our new 12¹/2% Senior Subordinated Notes due 2013 (the “12¹/2% Notes”) in a private transaction, and called for redemption all $25 million of our 13% Notes that remained outstanding after the exchange for 12¹/2% Notes. Those remaining 13% Notes were redeemed on February 2, 2007. To fund these payments and to provide cash for our capital expenditures, ongoing working capital requirements and general corporate purposes, we (a) issued $225 million of new 9¹/2% Senior Secured Notes due 2017 (the “9¹/2% Notes”) and the $75 million of 12¹/2% Notes and (b) entered into an amended and restated credit facility (the “2006 Credit Facility”) providing for borrowings in an amount up to $100.0 million. We refer to these actions collectively as the Refinancing Transactions.

New Mold Line. We are continuing to invest in a $54 million capital project to replace a 40-year-old mold line at our Neenah facility. Our new state-of-the-art mold line is expected to significantly enhance operating efficiencies, increase capacity and provide expanded molding capabilities for our heavy municipal products. As of March 31, 2007, $12.3 million has been spent on the new mold line project with approximately $41.7 million remaining to be spent to complete the project. Based on our current and projected level of operations, we anticipate that operating cash flows and borrowings under the 2006 Credit Facility will be sufficient to fund this and other anticipated operational investments, including working capital and capital expenditure needs, over the remaining construction timeframe. We expect the new mold line to become operational in early calendar 2008.

Order of Abatement at Gregg Facility. Due to neighborhood complaints, we are presently operating our Gregg facility under the terms of an order of abatement with the California South Coast Air Quality Management District (SCAQMD). Despite being in compliance with federal and state emission laws, the order requires us to comply with certain operating parameters in an effort to reduce odors. Failure to operate within such criteria could result in the SCAQMD terminating operations at the Gregg facility. The current order expires on September 15, 2007, after which we expect to operate the Gregg facility pursuant to a new operating permit. We believe we are in compliance with the testing and operating requirements mandated by the current order and that our actions have resulted in a substantial reduction in the intensity and frequency of downwind odors.

Coke Supplier Announces Plant Closing. Our major supplier of metallurgical coke, a key raw material used in our iron melting process, recently announced it will permanently cease coking production and operations at its plant by May 16, 2007. We have secured other alternatives to ensure coke supply to our foundries. Increases in price or interruptions in availability of coke could reduce our profits.

Results of Operations

The following discussions compare the results of operations of the Company for the three and six months ended March 31, 2007, to the results of the operations of the Company for the three and six months ended March 31, 2006.

Three Months Ended March 31, 2007 and 2006

Net sales. Net sales for the three months ended March 31, 2007 were $111.8 million, which are $18.7 million or 14.3% lower than the quarter ended March 31, 2006. The decrease was due to reduced shipments of municipal products, heavy-duty truck components, components shipped to heating, ventilation and air conditioning (HVAC) customers and construction and agriculture vehicle components. New housing starts have declined in fiscal 2007 from 2006 levels, reflecting softness in the overall housing sector. As a result, sales of municipal products castings are down approximately $7.2 million from fiscal 2006 levels and sales to the HVAC market are down approximately $3.2 million from fiscal 2006 levels. Also, due to new emission standards that took effect January 1, 2007, heavy-duty truck production has declined significantly as many customers accelerated purchases in 2006, artificially increasing 2006 sales to customers in the heavy-duty truck market. As a result, sales of heavy-duty truck products are down approximately $5.9 million from fiscal 2006 levels. Sales of construction and agriculture vehicle components are down approximately $3.8 million from fiscal 2006 levels. These decreases were offset by an increase of approximately $1.4 million in sales to other markets.

Cost of sales. Cost of sales for the three months ended March 31, 2007 was $101.1 million, a decrease of $8.2 million, or 7.5%, as compared to the quarter ended March 31, 2006. Cost of sales as a percentage of net sales increased to 90.4% for the three months ended March 31, 2007 from 83.8% for the three months ended March 31, 2006, primarily as a result of an approximately 13% increase in raw material costs, principally in the price of steel scrap, and a decreased ability to absorb fixed costs due to lower production levels. During the quarter, steel scrap costs increased by an approximate average of $140 per ton. Scrap costs increased in each of the three months of the quarter. This dramatic and month over month increase results in a 30-day delay in recovering these costs with our industrial customers and a longer delay with our municipal customers.

Gross profit. Gross profit for the three months ended March 31, 2007 was $10.7 million, a decrease of $10.5 million, or 49.5%, as compared to the quarter ended March 31, 2006. Gross profit as a percentage of net sales decreased to 9.6% for the three months ended March 31, 2007 from 16.2% for the three months ended March 31, 2006, primarily as a result of the increased raw material costs and a decreased ability to absorb fixed costs due to lower production levels as discussed above.

Selling, general and administrative expenses. Selling, general and administrative expenses for the three months ended March 31, 2007 were $9.0 million, a decrease of $0.2 million, or 2.2%, as compared to the $9.2 million for the quarter ended March 31, 2006. Selling, general and administrative expenses as a percentage of net sales increased to 8.1% for the quarter ended March 31, 2007 from 7.0% for the quarter ended March 31, 2006, due mainly to costs incurred to comply with the order of abatement at the Gregg facility and the decreased sales volume.

Amortization of intangible assets. Amortization of intangible assets was $1.8 million for the three months ended March 31, 2007 and $1.8 million for the three months ended March 31, 2006.

Operating income(loss). Operating loss was $0.01 million for the three months ended March 31, 2007, a decrease of $10.21 million from operating income of $10.2 million for the quarter ended March 31, 2006. As a percentage of net sales, the operating loss was 0.0% for the three months ended March 31, 2007, compared to operating income of 7.8% of net sales for the three months ended March 31, 2006. The decrease in operating income was due to the reduced sales volume combined with the substantial increase in raw materials costs discussed above.

Net interest expense. Net interest expense was $7.0 million for the three months ended March 31, 2007 compared to $8.3 million for the quarter ended March 31, 2006. The decrease in interest expense was the result of capitalizing interest incurred on borrowings used to finance the new mold line, interest earned on cash balances and the termination of bond discount amortization as a result of our refinancing transaction. Interest expense for the three months ended March 31, 2007 included amortization of deferred financing costs of $0.08 million.

Income tax provision(benefit). The effective tax rate for the three months ended March 31, 2007 and 2006 was 39% and 45%, respectively. The effective tax rate for the three months ended March 31, 2006 includes the impact of the resolution of an IRS tax audit, partially offset by the estimated favorable impact of the Production Activities Deduction as permitted under the American Jobs Creation Act of 2004.

Six Months Ended March 31, 2007 and 2006

Net sales. Net sales for the six months ended March 31, 2007 were $229.1 million, which are $23.1 million or 9.2% lower than the six months ended March 31, 2006. The decrease was due to reduced shipments of municipal products, construction and agriculture vehicle components and components shipped to heating, ventilation and air conditioning (HVAC) customers. New housing starts have declined in fiscal 2007 from 2006 levels, reflecting softness in the overall housing sector. As a result, sales of municipal products castings are down approximately $9.6 million from fiscal 2006 levels and sales to the HVAC market are down approximately $7.5 million from fiscal 2006 levels. Sales of construction and agriculture vehicle components are down approximately $8.6 million from fiscal 2006. These decreases were offset by an increase of approximately $2.6 million in sales to other markets.

Cost of sales. Cost of sales for the six months ended March 31, 2007 was $199.8 million, a decrease of $12.1 million, or 5.7%, as compared to the six months ended March 31, 2006. Cost of sales as a percentage of net sales increased to 87.2% for the six months ended March 31, 2007 from 84.0% for the six months ended March 31, 2006, primarily as a result of an approximately 3% increase in raw material costs, principally in the price of steel scrap, and a decreased ability to absorb fixed costs due to lower production levels as discussed above. As noted above, during the three months ended March 31, 2007, steel scrap costs increased by an approximate average of $140 per ton. Scrap costs increased in each of those three months. This dramatic and month over month increase results in a 30-day delay in recovering these costs with our industrial customers and a longer delay with our municipal customers.

Gross profit. Gross profit for the six months ended March 31, 2007 was $29.4 million, a decrease of $10.9 million, or 27.0%, as compared to the six months ended March 31, 2006. Gross profit as a percentage of net sales decreased to 12.8% for the six months ended March 31, 2007 from 16.0% for the six months ended March 31, 2006, primarily as a result of the increased raw material costs and a decreased ability to absorb fixed costs due to lower production levels.

Selling, general and administrative expenses. Selling, general and administrative expenses for the six months ended March 31, 2007 were $17.4 million, an increase of $0.2 million, or 1.2%, as compared to the $17.2 million for the six months ended March 31, 2006. Selling, general and administrative expenses as a percentage of net sales increased to 7.6% for the six months ended March 31, 2007 from 6.8% for the six months ended March 31, 2006. The increase in selling, general and administrative expenses is due mainly to a decrease in the rebate received from countervailing duties assessed on imported products and costs incurred to comply with the order of abatement at the Gregg facility.

Amortization of intangible assets. Amortization of intangible assets was $3.6 million for the six months ended March 31, 2007 and $3.6 million for the six months ended March 31, 2006.

Debt refinancing costs. The Company recorded $20.4 million of debt refinancing costs in the six months ended March 31, 2007 related to the Refinancing Transactions. This amount consisted of a $12.9 million tender premium paid to repurchase the 11% Senior Secured Notes due 2010, $5.9 million to write off the unamortized portion of discount on our 11% Senior Secured Notes and $1.6 million to write off the unamortized portion of deferred financing costs on our old indebtedness.

Operating income(loss). Operating loss was $12.0 million for the six months ended March 31, 2007, a decrease of $31.6 million from operating income of $19.6 million for the six months ended March 31, 2006. As a percentage of net sales, the operating loss was (5.2)% for the six months ended March 31, 2007, compared to operating income of 7.8% of net sales for the six months ended March 31, 2006. The decrease in operating income was primarily due to $20.4 million of refinancing costs incurred in connection with the Refinancing Transactions described above and the increases in raw material costs discussed above.

Net interest expense. Net interest expense was $15.3 million for the six months ended March 31, 2007 compared to $16.5 million for the six months ended March 31, 2006. The decrease in interest expense was the result of capitalizing interest incurred on borrowings used to finance the new mold line, interest earned on cash balances and the termination of bond discount amortization as a result of our refinancing transaction. Interest expense for the six months ended March 31, 2007 included amortization of bond discount of $0.4 million and amortization of deferred financing costs of $0.2 million.

Income tax provision(benefit). The effective tax rate for the six months ended March 31, 2007 and 2006 was 39% and 42%, respectively. The effective tax rate for the six months ended March 31, 2006 includes the impact of the resolution of an IRS tax audit, partially offset by the estimated favorable impact of the Production Activities Deduction as permitted under the American Jobs Creation Act of 2004.

Liquidity and Capital Resources

As a result of the Refinancing Transactions, as of March 31, 2007 our outstanding indebtedness consisted of $225.0 million of outstanding 9¹/2% Notes and $75.0 million of outstanding 12¹/2% Notes. At March 31, 2007, we also had cash and cash equivalents of $2.1 million. Our primary sources of liquidity in the future will be cash flow from operations and borrowings under our 2006 Credit Facility. We expect that ongoing requirements for debt service, capital expenditures and other operating needs will be funded from these sources of funds.

2006 Credit Facility. The 2006 Credit Facility provides for borrowings in an amount up to $100.0 million and includes a provision permitting us from time to time to request increases (subject to the lenders’ consent) in the aggregate amount by up to $10.0 million with the increases to be funded through additional commitments from existing lenders or new commitments from financial institutions acceptable to the current lenders. It matures on December 31, 2011. Outstanding borrowings bear interest at rates based on the lenders’ Base Rate, as defined in the 2006 Credit Facility, or, if we so elect, at an adjusted rate based on LIBOR. Availability under the 2006 Credit Facility is subject to customary conditions and is limited by our borrowing base determined by the amount of our accounts receivable, inventory and casting patterns and core boxes. Amounts under the 2006 Credit Facility may be borrowed, repaid and reborrowed subject to the terms of the facility. At March 31, 2007, we had no borrowings and had unused availability of $91.2 million under the 2006 Credit Facility.

Most of our wholly owned subsidiaries are co-borrowers under the 2006 Credit Facility and are jointly and severally liable with us for all obligations under the 2006 Credit Facility, subject to customary exceptions for transactions of this type. In addition, NFC Castings, Inc. (“NFC”), our immediate parent, and our remaining wholly owned subsidiaries jointly and severally guarantee the borrowers’ obligations under the 2006 Credit Facility, subject to customary exceptions for transactions of this type. The borrowers’ and guarantors’ obligations under the 2006 Credit Facility are secured by first priority liens, subject to customary restrictions, in our and the guarantors’ accounts receivable, inventory, casting patterns and core boxes, business interruption insurance policies, certain inter-company loans, cash and deposit accounts and related assets, subject to certain exceptions, and any proceeds of the foregoing, and by second priority liens (junior to the liens securing the 9¹/2% Notes) on substantially all of our and the guarantors’ remaining assets. The 9¹/2% Notes discussed below, and the guarantees in respect thereof, are equal in right of payment to the 2006 Credit Facility, and the guarantees in respect thereof.

The 2006 Credit Facility requires us to prepay outstanding principal amounts upon certain asset sales, upon certain equity offerings, and under certain other circumstances. It also requires us to observe certain customary conditions, affirmative covenants and negative covenants including financial covenants and it requires us to maintain a specified minimum interest coverage ratio or specified fixed charge coverage ratio whenever our unused availability is less than $15.0 million. Non-compliance with the covenants could result in the requirement to immediately repay all amounts outstanding under the 2006 Credit Facility which could have a material adverse effect on our results of operations, financial position and cash flow. The 2006 Credit Facility also contains events of default customary for these types of facilities, including, without limitation, payment defaults, material misrepresentations, covenant defaults, bankruptcy and certain changes of ownership or control of the Company, NFC or ACP Holding Company, NFC’s immediate parent company. We are prohibited from paying dividends, with certain limited exceptions, and are restricted to a maximum yearly stock repurchase of $1.0 million.

At March 31, 2007, we were in compliance with existing bank covenants.

9¹/2% Notes. The $225.0 million of outstanding 9¹/2% Notes will mature on January 1, 2017. The 9¹/2% Notes are fully and unconditionally guaranteed by our existing and certain future direct and indirect wholly-owned domestic restricted subsidiaries. The 9¹/2% Notes and the guarantees are secured by first-priority liens on substantially all of our and the guarantors’ assets (other than accounts receivable, inventory, casting patterns and core boxes, business interruption insurance policies, certain inter-company loans, cash and deposit accounts and related assets, subject to certain exceptions, and any proceeds of the foregoing) and by second-priority liens, junior to the liens for the benefit of the lenders under the 2006 Credit Facility, on our and the guarantors’ accounts receivable, inventory, casting patterns and core boxes, business interruption insurance policies, certain inter- company loans, cash and deposit accounts and related assets, subject to certain exceptions, and any proceeds of the foregoing. Interest on the 9¹/2% Notes is payable on a semi-annual basis. Subject to the restrictions in the 2006 Credit Facility, the 9¹/2% Notes are redeemable at our option in whole or in part at any time on or after January 1, 2012, at the redemption price specified in the indenture governing the 9¹/2% Notes (104.750% of the principal amount redeemed beginning January 1, 2012, 103.167% beginning January 1, 2013, 101.583% beginning January 1, 2014 and 100.000% beginning January 1, 2015 and thereafter), plus accrued and unpaid interest up to the redemption date. Subject to certain conditions, until January 1, 2010, we also have the right to redeem up to 35% of the 9¹/2% Notes with the proceeds of one or more equity offerings at a redemption price equal to 109.500% of the face amount thereof plus accrued and unpaid interest. Upon the occurrence of a “change of control” as defined in the indenture governing the notes, we are required to make an offer to purchase the 9¹/2% Notes at 101.000% of the outstanding principal amount thereof, plus accrued and unpaid interest up to the purchase date. The 9¹/2% Notes contain customary covenants typical to this type of financing, such as limitations on (1)

indebtedness, (2) restricted payments, (3) liens, (4) distributions from restricted subsidiaries, (5) sale of assets, (6) affiliate transactions, (7) mergers and consolidations and (8) lines of business. The 9¹/2% Notes also contain customary events of default typical to this type of financing, such as (1) failure to pay principal and/or interest when due, (2) failure to observe covenants, (3) certain events of bankruptcy, (4) the rendering of certain judgments or (5) the loss of any guarantee.

12¹/2% Notes. The $75.0 million of outstanding 12¹/2% Notes will mature on September 30, 2013. The 12¹/2% Notes were issued to Tontine Capital Partners, L.P., the controlling shareholder of ACP Holding Company (which is our ultimate parent company), in exchange for an equal principal amount of our 13% Notes that were held by Tontine. The obligations under the 12¹/2% Notes are senior to our subordinated unsecured indebtedness, if any, and are subordinate to the 2006 Credit Facility and the 9¹/2% Notes. Interest on the 12¹/2% Notes is payable on a semi-annual basis. Not less than five percent (500 basis points) of the interest on the 12¹/2% Notes must be paid in cash and the remainder (up to 7¹/2% or 750 basis points) of the interest may be deferred at our option. We must pay interest on any interest so deferred at a rate of 12¹/2% per annum. Our obligations under the 12¹/2% Notes are guaranteed on an unsecured basis by each of our wholly owned subsidiaries. Subject to the restrictions in the 2006 Credit Facility and in the indenture for the 9¹/2% Notes, the 12¹/2% Notes are redeemable at our option in whole or in part at any time, with not less than 30 days nor more than 60 days notice, at 100.000% of the principal amount thereof, plus accrued and unpaid interest up to the redemption date. Upon the occurrence of a “change of control,” we are required to make an offer to purchase the 12¹/2% Notes at 101.000% of the outstanding principal amount thereof, plus accrued and unpaid interest up to the purchase date. The 12¹/2% Notes contain customary covenants typical to this type of financing, such as limitations on (1) indebtedness, (2) restricted payments, (3) liens, (4) distributions from restricted subsidiaries, (5) sale of assets, (6) affiliate transactions, (7) mergers and consolidations and (8) lines of business. The 12¹/2% Notes also contain customary events of default typical to this type of financing, such as, (1) failure to pay principal and/or interest when due, (2) failure to observe covenants, (3) certain events of bankruptcy, (4) the rendering of certain judgments or (5) the loss of any guarantee.

Under the new capital structure resulting from the Refinancing Transactions, we currently have no principal amortization requirements. We expect to use our existing cash and a portion of our unused availability under the 2006 Credit Facility to fund the new mold line described above under “Recent Developments.”

For the six months ended March 31, 2007 and March 31, 2006, capital expenditures were $20.9 million and $9.4 million, respectively. Capital expenditures for the six months ended March 31, 2006 represent a level of capital expenditures necessary to maintain equipment and facilities. The increased level of capital expenditures for the six months ended March 31, 2007 includes $11.3 million for the new mold line at the Neenah location described above under “Recent Developments.”

Our principal sources of cash to fund our liquidity needs are net cash from operating activities, existing cash balances and borrowings under the 2006 Credit Facility. At March 31, 2007, we had no borrowings and had unused availability of $91.2 million under the 2006 Credit Facility. Net cash used in operating activities for the six months ended March 31, 2007 was $9.6 million, an increase of $9.0 million from cash used in operating activities for the six months ended March 31, 2006 of $0.6 million. The increase in net cash used in operating activities was due to the net loss incurred for the six months ended March 31, 2007, primarily as a result of costs paid in connection with the Refinancing Transactions and increased raw material costs.

Future Capital Needs. We are significantly leveraged. Our ability to meet debt obligations will depend upon future operating performance which will be affected by many factors, some of which are beyond our control. We are proceeding with a major capital project to replace an existing mold line that is expected to enhance efficiency, increase capacity and provide expanded molding capabilities. Based on our current level of operations, we anticipate that our operating cash flows, existing cash balances and borrowings under the 2006 Credit Facility will be sufficient to fund anticipated operational investments, including working capital and capital expenditure needs, for at least the next twelve months. If, however, we are unable to service our debt requirements as they become due or if we are unable to maintain ongoing compliance with certain covenants, we may be forced to adopt alternative strategies that may include reducing or delaying capital expenditures, selling assets, restructuring or refinancing indebtedness or seeking additional equity capital. There can be no assurances that any of these strategies could be effected on satisfactory terms, if at all.

Contractual Obligations

The following table includes the Company’s significant contractual obligations at March 31, 2007 (in millions):


			Less Than						More Than
	Total		1 year		1-3 Years		3-5 Years		5 Years

Long-term debt	$	300.0	$	—	$	—	$	—	$	300.0
Interest on long-term debt		277.3		31.0		61.5		61.5		123.3
Capital leases		1.5		0.3		0.4		0.4		0.4
Operating leases		5.2		1.9		2.3		0.8		0.2
New mold line commitments		25.2		25.2		—		—		—

Total contractual obligations	$	609.2	$	58.4	$	64.2	$	62.7	$	423.9

Off-Balance Sheet Arrangements

None.

Critical Accounting Estimates

There have been no changes in critical accounting estimates from those disclosed in our Annual Report on Form 10-K for the fiscal year ended September 30, 2006.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to market risk related to changes in interest rates. We do not use derivative financial instruments for speculative or trading purposes.

Interest Rate Sensitivity. Although the 9¹/2% Notes and the 12¹/2% Notes are subject to fixed interest rates, the Company’s earnings are affected by changes in short- term interest rates as a result of its borrowings under the 2006 Credit Facility. As of March 31, 2007 the Company has no borrowings under the 2006 Credit Facility and no other borrowings subject to changes in interest rates.

Item 4. Controls and Procedures

Disclosure Control and Procedures. The Company’s management, with the participation of the Company’s Chief Executive Officer and the Chief Financial Officer, have evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based upon such evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures are effective (i) in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act and (ii) to ensure that information required to be disclosed in the reports that the Company files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

Internal Control Over Financial Reporting. There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

NEENAH FOUNDRY COMPANY

PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

The following should be read in conjunction with Item 3. “Legal Proceedings” in Part I of our 2006 Annual Report on Form 10-K and in Item 1 in Part II of our Quarterly Report on Form 10-Q for the quarter ended December 31, 2006.

See “Recent Developments—Order of Abatement at Gregg Facility” under Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part I of this report, which is incorporated herein by reference.

We are presently disputing a claim from an investment bank for $3.34 million in fees allegedly arising from Tontine’s acquisition of control of the Company in May 2006. See Item 3. “Legal Proceedings” in Part I of our 2006 Annual Report on Form 10-K. We have established an accrual of $550 thousand for the estimated loss contingency at September 30, 2006 for the disputed claim from the investment bank. There have been no changes to the accrual in fiscal 2007.

In addition to those legal proceedings discussed in our reports to the SEC, we are involved in various claims and litigation in the normal course of business. Although the results of legal proceedings cannot be predicted with certainty, in the judgment of management, the ultimate resolution of these matters is not likely to have a material adverse effect on our consolidated financial statements.

Item 1A. Risk Factors.

We believe there are no material changes to the disclosure regarding risk factors contained in our 2006 Annual Report on Form 10-K.

Item 4. Submission of Matters to a Vote of Security Holders

As previously reported in our Quarterly Report on Form 10-Q for the quarter ended December 31, 2006, ACP Holding Company, a Delaware corporation and Neenah Foundry Company’s ultimate parent company, held its Annual Meeting of Stockholders on January 25, 2007. A quorum was present at the Annual Meeting, with 45,669,840 shares out of a total of 46,974,602 shares entitled to cast votes represented in person or by proxy at the meeting. Two proposals were submitted to stockholders at the meeting.

PROPOSAL 1: To elect six directors for terms expiring at the 2008 Annual Meeting of ACP Holding Company Stockholders.

The stockholders voted to elect the six directors nominated by the board of directors to serve as directors until the 2008 Annual Meeting of ACP Holding Company Stockholders and until their respective successors are duly elected and qualified. The results of the vote are as follows:


	For		Withheld From
William M. Barrett		45,669,840		—
Albert E. Ferrara, Jr.		45,669,840		—
David B. Gendell		45,669,840		—
Stephen E.K. Graham		45,669,840		—
Joseph V. Lash		45,669,840		—
Jeffrey G. Marshall		45,669,840		—

The directors of ACP Holding Company are also the directors of Neenah Foundry Company.

PROPOSAL 2: The ratification of Ernst & Young LLP as the independent registered public accounting firm for the 2007 fiscal year.

The stockholders voted to ratify Ernst & Young LLP as the independent registered public accounting firm for the 2007 fiscal year. The results of the vote are as follows:


For			45,669,840
Against			—
Abstentions			—
Broker Non-Votes			—


	Page
Part I. Financial Information
Item 1. Financial Statements
Condensed consolidated balance sheets — Neenah Foundry Company as of March 31, 2007 and September 30, 2006		3
Condensed consolidated statements of operations — Neenah Foundry Company for the three and six months ended March 31, 2007 and 2006		4
Condensed consolidated statements of cash flows — Neenah Foundry Company for the six months ended March 31, 2007 and 2006		5
Notes to condensed consolidated financial statements — March 31, 2007		6

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		16

Item 3. Quantitative and Qualitative Disclosures About Market Risk		21

Item 4. Controls and Procedures		21

Part II. Other Information
Item 1. Legal Proceedings		22
Item 1A. Risk Factors		22
Item 4. Submission of Matters to a vote of Security Holders		22
Item 6. Exhibits		23

Signatures		24
Amended and Restated Loan and Security Agreement
302 Certification of Chief Executive Officer
302 Certification of Chief Financial Officer
Section 1350 Certifications of CEO and CFO


		NEENAH FOUNDRY COMPANY

DATE: May 15, 2007		/s/ Gary W. LaChey Gary W. LaChey
		Corporate Vice President — Finance and Chief Financial Officer
		(Principal Financial Officer and Duly Authorized Officer)


Exhibit No.	Description	Incorporated Herein by Reference to	Filed Herewith
10.13	Amended and Restated Loan and Security Agreement, dated as of December 29, 2006, by and among Neenah Foundry Company, its subsidiaries party thereto, the various lenders party thereto and Bank of America, N.A., as agent		X

31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002		X

31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002		X

32.1	Chief Executive and Chief Financial Officers’ certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002		X

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