Neenah Enterprises 10Q 2008 Q2 Quarterly report

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, 2008


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

For the transition period from to


Commission	Name of Registrant, State of Incorporation, Address of	IRS Employer
File No.	Principal Executive Offices, and Telephone No.	Identification No.
000-52681	Neenah Enterprises, Inc.	25-1618281
	(a Delaware Corporation)
	2121 Brooks Avenue
	P.O. Box 729
	Neenah, WI 54957
	(920) 725-7000
333-28751	Neenah Foundry Company	39-1580331
	(a Wisconsin Corporation)
	2121 Brooks Avenue
	P.O. Box 729
	Neenah, WI 54957
	(920) 725-7000

Indicate by check mark whether the registrants (1) have 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 registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. Yesþ Noo

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated flier, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.


	Neenah Enterprises, Inc.	Neenah Foundry Company
Large accelerated filer	—	—
Accelerated filer	—	—
Non-accelerated filer	X	X
Smaller reporting company	—	—

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).


		Neenah Enterprises, Inc.		Yeso Noþ
		Neenah Foundry Company		Yeso Noþ

Indicate by check mark whether the registrants have 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. Yesþ Noo


Neenah Enterprises, Inc.		As of April 30, 2008, Neenah Enterprises, Inc. had 13,761,929 shares of common stock outstanding.

Neenah Foundry Company		As of April 30, 2008, Neenah Foundry Company had 1,000 shares of common stock outstanding, all of which were owned by NFC Castings, Inc, a wholly owned subsidiary of Neenah Enterprises, Inc.

NEENAH ENTERPRISES, INC.
NEENAH FOUNDRY COMPANY
Form 10-Q Index
For the Quarter Ended March 31, 2008


	Page
Part I. Financial Information
Item 1. Financial Statements
Neenah Enterprises, Inc.
Condensed consolidated balance sheets — Neenah Enterprises, Inc. as of March 31, 2008 and September 30, 2007		4
Condensed consolidated statements of operations — Neenah Enterprises, Inc. for the three and six months ended March 31, 2008 and 2007		5
Condensed consolidated statements of cash flows — Neenah Enterprises, Inc. for the six months ended March 31, 2008 and 2007		6
Notes to condensed consolidated financial statements — March 31, 2008		7
Neenah Foundry Company
Condensed consolidated balance sheets — Neenah Foundry Company as of March 31, 2008 and September 30, 2007		11
Condensed consolidated statements of operations — Neenah Foundry Company for the three and six months ended March 31, 2008 and 2007		12
Condensed consolidated statements of cash flows — Neenah Foundry Company for the six months ended March 31, 2008 and 2007		13
Notes to condensed consolidated financial statements — March 31, 2008		14
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		25
Item 3. Quantitative and Qualitative Disclosures About Market Risk		32
Item 4. Controls and Procedures		32
Part II. Other Information
Item 1. Legal Proceedings		33
Item 4. Submission of Matters to a Vote of Security Holders		33
Item 6. Exhibits		34
Signatures		35
Form of Non-Qualified Stock Option Agreement
Form of Directors Restricted Stock Unit Agreement
Amended and Restated 2003 Severance and Change of Control Plan
302 Certification of Chief Executive Officer
302 Certification of Chief Financial Officer
302 Certification of Chief Executive Officer
302 Certification of Chief Financial Officer
Section 906 Certification of CEO and CFO
Section 906 Certification of CEO and CFO

NEENAH ENTERPRISES, INC.

PART I. FINANCIAL INFORMATION

Item 1.Financial Statements

CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)


	March 31,		September 30,
	2008		2007(1)
	(Unaudited)
Assets
Current assets:
Cash	$	—	$	—
Accounts receivable, net		74,928		81,085
Inventories		76,138		64,196
Deferred income taxes		3,070		3,070
Refundable income taxes		6,729		6,501
Other current assets		5,987		6,479

Total current assets		166,852		161,331

Property, plant and equipment		207,167		179,522
Less accumulated depreciation		55,922		47,972

		151,245		131,550

Deferred financing costs, net		3,228		3,457
Identifiable intangible assets, net		51,389		54,951
Goodwill		86,699		86,699
Other assets		6,885		5,986

	$	466,298	$	443,974


Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	35,114	$	27,764
Accrued wages and employee benefits		9,912		13,139
Accrued interest		5,532		5,449
Accrued interest — related party		2,344		2,344
Other accrued liabilities		3,850		4,763
Current portion of long-term debt		44,000		17,152
Current portion of capital lease obligations		213		213

Total current liabilities		100,965		70,824

Long-term debt		225,000		225,000
Long-term debt — related party		75,000		75,000
Capital lease obligations		1,118		1,222
Deferred income taxes		28,134		28,134
Postretirement benefit obligations		5,347		5,269
Other liabilities		10,211		7,960

Total liabilities		445,775		413,409

Commitments and contingencies

Stockholders’ equity:
Preferred stock, par value $0.01 per share — 1,000,000 shares authorized, no shares issued and outstanding		—		—
Common stock, par value $0.01 per share — 35,000,000 shares authorized, 13,761,929 and 13,672,764 issued and outstanding at March 31, 2008 and September 30, 2007, respectively		138		137
Capital in excess of par value		5,823		5,686
Retained earnings		10,511		20,571
Accumulated other comprehensive income		4,051		4,171

Total stockholders’ equity		20,523		30,565

	$	466,298	$	443,974

See notes to condensed consolidated financial statements.


(1)		The balance sheet as of September 30, 2007 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 ENTERPRISES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)


	Three Months Ended						Six Months Ended
	March 31,						March 31,
	2008			2007			2008			2007
Net sales	$	114,658		$	111,789		$	215,883		$	229,131
Cost of sales		105,822			100,561			193,514			199,448

Gross profit		8,836			11,228			22,369			29,683
Selling, general and administrative expenses		8,917			8,987			17,900			17,429
Restructuring costs		—			—			1,227			—
Amortization of intangible assets		1,780			1,780			3,562			3,560
Gain on disposal of equipment		(18	)		(25	)		(19	)		(64	)

Total operating expenses		10,679			10,742			22,670			20,925

Operating income (loss)		(1,843	)		486			(301	)		8,758
Interest expense		(5,402	)		(4,688	)		(10,684	)		(12,911	)
Interest expense — related party		(2,344	)		(2,344	)		(4,688	)		(2,344	)
Debt refinancing costs		—			—			—			(20,429	)

Loss before income taxes		(9,589	)		(6,546	)		(15,673	)		(26,926	)
Income tax benefit		(3,308	)		(2,549	)		(5,613	)		(10,493	)

Net loss	$	(6,281	)	$	(3,997	)	$	(10,060	)	$	(16,433	)


Loss per share:
Basic and diluted	$	(0.46	)	$	(0.43	)	$	(0.74	)	$	(1.75	)

Shares used in the computation of loss per share:
Basic and diluted		13,691			9,395			13,686			9,395

See notes to condensed consolidated financial statements.

NEENAH ENTERPRISES, INC.

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


	Six Months Ended
	March 31,
	2008			2007
Operating activities
Net loss	$	(10,060	)	$	(16,433	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		11,877			10,223
Amortization of deferred financing costs and discount on notes		229			595
Write-off of deferred financing costs and discount on notes		—			7,512
Stock-based compensation		134			—
Changes in operating assets and liabilities		(917	)		(11,501	)

Net cash provided by (used in) operating activities		1,263			(9,604	)

Investing activities
Purchase of property, plant and equipment		(28,010	)		(20,948	)

Net cash used in investing activities		(28,010	)		(20,948	)

Financing activities
Net change in revolver balance		26,848			(24,595	)
Proceeds from long-term debt		—			225,000
Proceeds from long-term debt — related party		—			75,000
Payments on long-term debt and capital lease obligations		(104	)		(164,975	)
Payments on long-term debt — related party		—			(75,115	)
Proceeds from exercise of stock warrants		3			—
Debt issuance costs		—			(3,526	)

Net cash provided by financing activities		26,747			31,789

Increase in cash		—			1,237
Cash at beginning of period		—			910

Cash at end of period	$	—		$	2,147

See notes to condensed consolidated financial statements.

NEENAH ENTERPRISES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(In thousands, except share and per share data)

Note 1 — Basis of Presentation

Neenah Enterprises, Inc. (formerly ACP Holding Company) (“NEI”) is a Delaware corporation which has no business activity other than its ownership of NFC Castings, Inc. Neenah Foundry Company (Neenah) is a wholly owned subsidiary of NFC Castings, Inc. NEI, alone or together with its subsidiaries as appropriate in the context, is referred to as “the Company.” 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, 2008 are not necessarily indicative of the results that may be expected for the year ending September 30, 2008. Certain reclassifications have been made to the fiscal 2007 condensed consolidated financial statements to conform to the fiscal 2008 presentation. Specifically, the $20,429 of debt refinancing costs presented as operating expenses in fiscal 2007 was reclassified to non-operating expenses in fiscal 2008 to conform with the presentation in NEI’s Annual Report on Form 10-K for the year ended September 30, 2007. For further information, refer to the consolidated financial statements and footnotes thereto included in NEI’s Annual Report on Form 10-K for the year ended September 30, 2007.

Note 2 — Inventories

The components of inventories are as follows:


	March 31,		September 30,
	2008		2007
Raw materials	$	8,163	$	6,941
Work in process and finished goods		51,231		41,407
Supplies		16,744		15,848


	$	76,138	$	64,196

Note 3 — Recent Accounting Pronouncements

In June 2006, the Financial Accounting Standards Board (FASB) issued FASB Interpretation No. (FIN) 48, “Accounting for Uncertainty in Income Taxes,” which clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with Statement of Financial Accounting Standards (SFAS) No. 109, “Accounting for Income Taxes.” The interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.

The Company adopted FIN 48 as of October 1, 2007. As a result of the adoption of FIN 48, the Company had no change to the liability for unrecognized tax benefits. The total gross liability for unrecognized tax benefits (excluding penalties and interest) was $2.3 million at October 1, 2007. To the extent these unrecognized tax benefits are ultimately recognized, they will impact the effective tax rate in future periods. The Company’s accounting policy is to recognize interest and penalties related to unrecognized tax benefits as income tax expense. Accrued interest was $.8 million at October 1, 2007 and $.9 million at March 31, 2008. There were no penalties accrued. There was no material change to the amount of unrecognized tax benefits during the six months ended March 31, 2008. The Company or one of its subsidiaries files income tax returns in the United States Federal and various state jurisdictions. The Company is no longer subject to income tax examinations for any significant tax jurisdictions for any tax year before 2005.

In September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans” (SFAS 158) which requires employers that sponsor defined benefit pension and postretirement benefit plans to recognize previously unrecognized actuarial gains and losses and prior service costs in the statement of financial position and to recognize future changes in these amounts in the year in which changes occur through comprehensive income. Additionally, employers are required to measure the funded status of a plan as of the date of its year-end statement of financial position and provide additional disclosures. On September 30, 2007, the Company adopted the provisions of SFAS 158 by recognizing the funded status of its defined benefit pension and postretirement benefit plans in the balance sheet. In addition, the Company will be required to measure the plan assets and benefit obligations as of the date of the year-end balance sheet by September 30, 2009. The Company is currently evaluating the impact the change in the measurement date will have on its consolidated financial statements and notes thereto.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (SFAS 157). SFAS 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. The Company is required to adopt SFAS 157 effective October 1, 2008 and is currently evaluating the impact of adopting SFAS 157 on its future results of operations and financial condition.

In September 2006, the FASB issued Staff Position No. AUG AIR-1, “Accounting for Planned Major Maintenance Activities” (FSP). This FSP prohibits the use of the accrue-in-advance method of accounting for planned major maintenance activities in annual and interim financial reporting periods and was effective for fiscal years beginning after December 15, 2006. Prior to the adoption of this FSP, the Company determined its planned maintenance costs for the year and amortized these costs ratably throughout the year. On October 1, 2007, the Company began accounting for its planned major maintenance activities in accordance with FSP No. AUG AIR-1 by expensing the costs in the month in which they were incurred. The implementation of FSP No. AUG AIR-1 will not have any impact on the Company’s year end financial position or full year results of operations and cash flows as all maintenance costs incurred have been and continue to be expensed in the fiscal year in which the maintenance activity occurs. In accordance with FSP No. AUG AIR-1, the Company’s financial position, results of operations and cash flows for each quarter of the fiscal year ended September 30, 2007 were adjusted to apply the FSP retrospectively. The following financial statement line items as of and for the three and six month periods ended March 31, 2007 were adjusted as follows(in thousands, except per share data):


Statement of Operations	As Originally						Effect of
Three Months Ended March 31, 2007	Reported			As Adjusted			Change
Cost of sales	$	101,056		$	100,561		$	(495	)
Gross profit		10,733			11,228			495
Operating income (loss)		(9	)		486			495
Loss before income taxes		(7,041	)		(6,546	)		495
Income tax benefit		(2,742	)		(2,549	)		193
Net loss		(4,299	)		(3,997	)		302

Loss per share:
Basic		(0.46	)		(0.43	)		0.03
Diluted		(0.46	)		(0.43	)		0.03


Statement of Operations	As Originally						Effect of
Six Months Ended March 31, 2007	Reported			As Adjusted			Change
Cost of sales	$	199,773		$	199,448		$	(325	)
Gross profit		29,358			29,683			325
Operating income		8,433			8,758			325
Loss before income taxes		(27,251	)		(26,926	)		325
Income tax benefit		(10,620	)		(10,493	)		127
Net loss		(16,631	)		(16,433	)		198

Loss per share:
Basic		(1.77	)		(1.75	)		0.02
Diluted		(1.77	)		(1.75	)		0.02


Statement of Cash Flows	As Originally						Effect of
Six Months Ended March 31, 2007	Reported			As Adjusted			Change
Net loss	$	(16,631	)	$	(16,433	)	$	198
Changes in operating assets and liabilities		(11,303	)		(11,501	)		(198	)

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities, including an amendment of FASB Statement No. 115” (SFAS 159). SFAS 159 permits companies to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value and establishes presentation and disclosure requirements designed to facilitate comparisons between companies that choose different measurement attributes for similar types of assets and liabilities. The Company is required to adopt SFAS 159 effective October 1, 2008 and is currently evaluating the impact of adopting SFAS 159 on its future results of operations and financial condition.

Note 4 — Comprehensive Loss

Comprehensive loss for the three-month periods ended March 31, 2008 and 2007 was $6,401 and $3,997, respectively. Comprehensive loss for the six-month periods ended March 31, 2008 and 2007 was $10,180 and $16,433, respectively. Amounts included in accumulated other comprehensive loss relate to unrecognized pension and post retirement benefit plan liabilities.

Note 5 — 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 at Neenah and their dependents. Components of net periodic benefit costs are as follows for the three and six months ended March 31, 2008 and 2007:


	Pension Benefits						Postretirement Benefits
	Three months ended March 31,						Three months ended March 31,
	2008			2007			2008			2007
Service cost	$	461		$	382		$	55		$	50
Interest cost		1,097			788			81			75
Expected return on plan assets		(1,364	)		(939	)		—			—
Amortization of prior service cost (credit)		5			7			(13	)		(13	)
Recognized net actuarial gain		—			—			(53	)		(52	)

Net periodic benefit cost	$	199		$	238		$	70		$	60


	Pension Benefits						Postretirement Benefits
	Six months ended March 31,						Six months ended March 31,
	2008			2007			2008			2007
Service cost	$	922		$	763		$	110		$	100
Interest cost		2,194			1,576			162			150
Expected return on plan assets		(2,728	)		(1,878	)		—			—
Amortization of prior service cost (credit)		9			14			(26	)		(26	)
Recognized net actuarial gain		—			—			(106	)		(103	)

Net periodic benefit cost	$	397		$	475		$	140		$	121

Employer Contributions

For the six months ended March 31, 2008, $282 of contributions have been made to the defined-benefit pension plans. The Company presently anticipates contributing an additional $2,739 to fund its pension plans in fiscal 2008 for a total of $3,021.

Note 6 — Refinancing Transactions

On December 29, 2006, the Company repaid its outstanding indebtedness under Neenah’s then existing credit facility, repurchased all $133,130 of Neenah’s outstanding 11% Senior Secured Notes due 2010 through an issuer tender offer, retired $75,000 of Neenah’s 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, Neenah (a) issued $225,000 of 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 12¹/₂% Notes were issued in a related party transaction with a substantial stockholder of the Company in exchange for 13% Notes held by such stockholder.

As a result of the refinancing transactions discussed above, Neenah incurred $20,429 of debt refinancing costs in the year ended September 30, 2007. This amount consisted of a $12,917 tender premium paid to repurchase the 11% Senior Secured Notes, $5,940 to write off the unamortized discount on the 11% Senior Secured Notes and $1,572 to write off the unamortized deferred financing costs on the indebtedness existing prior to the refinancing.

Note 7 — Cost Reduction Actions

On November 16, 2007, the Company announced a restructuring plan to reduce costs and improve general operating efficiencies. The restructuring primarily consisted of salaried headcount reductions at the Company’s operating facilities. In connection with the restructuring plan, the Company incurred employee termination costs of $1,227, which were recognized as a charge to operations during the first quarter of fiscal 2008. The employee termination costs are presented as restructuring costs in the condensed consolidated statement of operations. During the first six months of fiscal 2008, $639 of employee termination costs were paid, with the remaining $588 recorded in accrued wages and employee benefits in the condensed consolidated balance sheet. A majority of the employee termination costs relate to headcount reductions in the castings segment with a small portion attributable to the forgings segment.

Note 8 — 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. The following segment information is presented:


	Three months ended						Six months ended
	March 31,						March 31,
	2008			2007			2008			2007
Revenues from external customers:
Castings	$	101,318		$	99,936		$	191,331		$	205,513
Forgings		11,211			9,397			20,209			19,463
Other		4,459			5,276			8,961			8,700
Elimination of intersegment revenues		(2,330	)		(2,820	)		(4,618	)		(4,545	)
							��
	$	114,658		$	111,789		$	215,883		$	229,131


Net income (loss):
Castings	$	(6,746	)	$	(4,033	)	$	(10,406	)	$	(16,729	)
Forgings		306			(44	)		118			287
Other		76			(128	)		67			(148	)
Elimination of intersegment loss		83			208			161			157

	$	(6,281	)	$	(3,997	)	$	(10,060	)	$	(16,433	)


	March 31,			September 30,
	2008			2007
Total assets:
Castings	$	452,264		$	431,906
Forgings		21,801			19,015
Other		9,034			8,336
Elimination of intersegment assets		(16,801	)		(15,283	)

	$	466,298		$	443,974

NEENAH FOUNDRY COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)


	March 31,		September 30,
	2008		2007(1)
	(Unaudited)
Assets
Current assets:
Cash	$	—	$	—
Accounts receivable, net		74,928		81,085
Inventories		76,138		64,196
Deferred income taxes		3,070		3,070
Refundable income taxes		6,729		6,501
Other current assets		5,987		6,479

Total current assets		166,852		161,331

Property, plant and equipment		207,167		179,522
Less accumulated depreciation		55,922		47,972

		151,245		131,550

Deferred financing costs, net		3,228		3,457
Identifiable intangible assets, net		51,389		54,951
Goodwill		86,699		86,699
Other assets		6,885		5,986

	$	466,298	$	443,974


Liabilities and stockholder’s equity
Current liabilities:
Accounts payable	$	35,114	$	27,764
Accrued wages and employee benefits		9,912		13,139
Accrued interest		5,532		5,449
Accrued interest — related party		2,344		2,344
Other accrued liabilities		4,107		5,016
Current portion of long-term debt		44,000		17,152
Current portion of capital lease obligations		213		213

Total current liabilities		101,222		71,077

Long-term debt		225,000		225,000
Long-term debt — related party		75,000		75,000
Capital lease obligations		1,118		1,222
Deferred income taxes		28,134		28,134
Postretirement benefit obligations		5,347		5,269
Other liabilities		10,211		7,960

Total liabilities		446,032		413,662

Commitments and contingencies

Stockholder’s equity:
Common stock		100		100
Capital in excess of par value		5,604		5,470
Retained earnings		10,511		20,571
Accumulated other comprehensive income		4,051		4,171

Total stockholder’s equity		20,266		30,312

	$	466,298	$	443,974

See notes to condensed consolidated financial statements.


(1)		The balance sheet as of September 30, 2007 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 OPERATIONS
(Unaudited)
(In thousands)


	Three Months Ended						Six Months Ended
	March 31,						March 31,
	2008			2007			2008			2007
Net sales	$	114,658		$	111,789		$	215,883		$	229,131
Cost of sales		105,822			100,561			193,514			199,448

Gross profit		8,836			11,228			22,369			29,683
Selling, general and administrative expenses		8,917			8,987			17,900			17,429
Restructuring costs		—			—			1,227			—
Amortization of intangible assets		1,780			1,780			3,562			3,560
Gain on disposal of equipment		(18	)		(25	)		(19	)		(64	)

Total operating expenses		10,679			10,742			22,670			20,925

Operating income (loss)		(1,843	)		486			(301	)		8,758
Interest expense		(5,402	)		(4,688	)		(10,684	)		(12,911	)
Interest expense – related party		(2,344	)		(2,344	)		(4,688	)		(2,344	)
Debt refinancing costs		—			—			—			(20,429	)

Loss before income taxes		(9,589	)		(6,546	)		(15,673	)		(26,926	)
Income tax benefit		(3,308	)		(2,549	)		(5,613	)		(10,493	)

Net loss	$	(6,281	)	$	(3,997	)	$	(10,060	)	$	(16,433	)


See notes to condensed consolidated financial statements.

NEENAH FOUNDRY COMPANY

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


	Six Months Ended
	March 31,
	2008			2007
Operating activities
Net loss	$	(10,060	)	$	(16,433	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		11,877			10,223
Amortization of deferred financing costs and discount on notes		229			595
Write-off of deferred financing costs and discount on notes		—			7,512
Stock-based compensation		134			—
Changes in operating assets and liabilities		(914	)		(11,501	)

Net cash provided by (used in) operating activities		1,266			(9,604	)

Investing activities
Purchase of property, plant and equipment		(28,010	)		(20,948	)

Net cash used in investing activities		(28,010	)		(20,948	)

Financing activities
Net change in revolver balance		26,848			(24,595	)
Proceeds from long-term debt		—			225,000
Proceeds from long-term debt – related party		—			75,000
Payments on long-term debt and capital lease obligations		(104	)		(164,975	)
Payments on long-term debt – related party		—			(75,115	)
Debt issuance costs		—			(3,526	)

Net cash provided by financing activities		26,744			31,789

Increase in cash		—			1,237
Cash at beginning of period		—			910

Cash 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

Neenah Foundry Company (Neenah), together with its subsidiaries (collectively, the Company), is a wholly owned subsidiary of NFC Castings, Inc., which is a wholly owned subsidiary of Neenah Enterprises, Inc. (NEI). 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, 2008 are not necessarily indicative of the results that may be expected for the year ending September 30, 2008. Certain reclassifications have been made to the fiscal 2007 condensed consolidated financial statements to conform to the fiscal 2008 presentation. Specifically, the $20,429 of debt refinancing costs presented as operating expenses in fiscal 2007 was reclassified to non-operating expenses in fiscal 2008 to conform with the presentation in Neenah’s Annual Report on Form 10-K for the year ended September 30, 2007. For further information, refer to the consolidated financial statements and footnotes thereto included in Neenah’s Annual Report on Form 10-K for the year ended September 30, 2007.

Note 2 — Inventories

The components of inventories are as follows:


	March 31,		September 30,
	2008		2007
Raw materials	$	8,163	$	6,941
Work in process and finished goods		51,231		41,407
Supplies		16,744		15,848

	$	76,138	$	64,196

Note 3 — Recent Accounting Pronouncements


Statement of Operations	As Originally						Effect of
Three Months Ended March 31, 2007	Reported			As Adjusted			Change
Cost of sales	$	101,056		$	100,561		$	(495	)
Gross profit		10,733			11,228			495
Operating loss		(9	)		486			495
Loss before income taxes		(7,041	)		(6,546	)		495
Income tax benefit		(2,742	)		(2,549	)		193
Net loss		(4,299	)		(3,997	)		302


Statement of Operations	As Originally						Effect of
Six Months Ended March 31, 2007	Reported			As Adjusted			Change
Cost of sales	$	199,773		$	199,448		$	(325	)
Gross profit		29,358			29,683			325
Operating income		8,433			8,758			325
Loss before income taxes		(27,251	)		(26,926	)		325
Income tax benefit		(10,620	)		(10,493	)		127
Net loss		(16,631	)		(16,433	)		198


Statement of Cash Flows	As Originally						Effect of
Six Months Ended March 31, 2007	Reported			As Adjusted			Change
Net loss	$	(16,631	)	$	(16,433	)	$	198
Changes in operating assets and liabilities		(11,303	)		(11,501	)		(198	)

Note 4 — Comprehensive Loss

Note 5 — Employee Benefit Plans

Components of Net Periodic Benefit Cost


	Pension Benefits						Postretirement Benefits
	Three months ended March 31,						Three months ended March 31,
	2008			2007			2008			2007
Service cost	$	461		$	382		$	55		$	50
Interest cost		1,097			788			81			75
Expected return on plan assets		(1,364	)		(939	)		—			—
Amortization of prior service cost (credit)		5			7			(13	)		(13	)
Recognized net actuarial gain		—			—			(53	)		(52	)

Net periodic benefit cost	$	199		$	238		$	70		$	60


	Pension Benefits						Postretirement Benefits
	Six months ended March 31,						Six months ended March 31,
	2008			2007			2008			2007
Service cost	$	922		$	763		$	110		$	100
Interest cost		2,194			1,576			162			150
Expected return on plan assets		(2,728	)		(1,878	)		—			—
Amortization of prior service cost (credit)		9			14			(26	)		(26	)
Recognized net actuarial gain		—			—			(106	)		(103	)

Net periodic benefit cost	$	397		$	475		$	140		$	121

Employer Contributions

Note 6 — 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 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 12¹/₂% Notes were issued in a related party transaction with a substantial stockholder of the Company’s ultimate parent, NEI, in exchange for 13% Notes held by such stockholder.

As a result of the refinancing transactions discussed above, the Company incurred $20,429 of debt refinancing costs in the year ended September 30, 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 discount on the 11% Senior Secured Notes and $1,572 to write off the unamortized deferred financing costs on the indebtedness existing prior to the refinancing.

Note 7 — Cost Reduction Actions

Note 8 — Subsidiary Guarantors

The following tables present condensed consolidating financial information as of March 31, 2008 and September 30, 2007 and for the three and six months ended March 31, 2008 and 2007 for: (a) Neenah and (b) on a combined basis, the guarantors of the 9¹/₂% Notes due 2017 and the 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, 2008


				Subsidiary
	Neenah			Guarantors			Eliminations			Consolidated
Assets
Current assets:
Cash	$	48		$	(48	)	$	—		$	—
Accounts receivable, net		29,275			45,653			—			74,928
Inventories		29,612			46,526			—			76,138
Deferred income taxes		(409	)		3,479			—			3,070
Refundable income taxes		6,729			—			—			6,729
Other current assets		3,380			2,607			—			5,987

Total current assets		68,635			98,217			—			166,852

Investments in and advances to subsidiaries		128,662			—			(128,662	)		—
Property, plant and equipment, net		90,133			61,112			—			151,245
Deferred financing costs and intangible assets, net		40,509			14,108			—			54,617
Goodwill		86,699			—			—			86,699
Other assets		2,588			4,297			—			6,885

	$	417,226		$	177,734		$	(128,662	)	$	466,298


Liabilities and Stockholder’s Equity
Current liabilities:
Accounts payable	$	8,990		$	26,124		$	—		$	35,114
Net intercompany payable		—			126,688			(126,688	)		—
Accrued liabilities		14,335			7,560			—			21,895
Current portion of long-term debt		44,000			213			—			44,213

Total current liabilities		67,325			160,585			(126,688	)		101,222

Long-term debt and capital lease obligations		300,000			1,118			—			301,118
Deferred income taxes		18,663			9,471			—			28,134
Postretirement benefit obligations		5,347			—			—			5,347
Other liabilities		5,625			4,586			—			10,211
Stockholder’s equity		20,266			1,974			(1,974	)		20,266

	$	417,226		$	177,734		$	(128,662	)	$	466,298

Note 8 — Subsidiary Guarantors (continued)

Condensed Consolidating Balance Sheet
September 30, 2007


				Subsidiary
	Neenah			Guarantors			Eliminations			Consolidated
Assets
Current assets:
Cash	$	969		$	(969	)	$	—		$	—
Accounts receivable, net		37,052			44,033			—			81,085
Inventories		25,143			39,053			—			64,196
Refundable income taxes		6,501			—			—			6,501
Deferred income taxes		(409	)		3,479			—			3,070
Other current assets		4,072			2,407			—			6,479

Total current assets		73,328			88,003			—			161,331

Investments in and advances to subsidiaries		123,314			—			(123,314	)		—
Property, plant and equipment, net		73,683			57,867			—			131,550
Deferred financing costs and intangible assets, net		43,591			14,817			—			58,408
Goodwill		86,699			—			—			86,699
Other assets		1,711			4,275			—			5,986

	$	402,326		$	164,962		$	(123,314	)	$	443,974


Liabilities and Stockholder’s Equity
Current liabilities:
Accounts payable	$	10,236		$	17,528		$	—		$	27,764
Net intercompany payable		—			111,947			(111,947	)		—
Accrued liabilities		16,040			9,908			—			25,948
Current portion of long-term debt		17,152			213			—			17,365

Total current liabilities		43,428			139,596			(111,947	)		71,077

Long-term debt and capital lease obligations		300,000			1,222			—			301,222
Deferred income taxes		19,945			8,189			—			28,134
Postretirement benefit obligations		5,269			—			—			5,269
Other liabilities		3,372			4,588			—			7,960
Stockholder’s equity		30,312			11,367			(11,367	)		30,312

	$	402,326		$	164,962		$	(123,314	)	$	443,974

Note 8 — Subsidiary Guarantors (continued)

Condensed Consolidating Statement of Operations
Three months ended March 31, 2008


				Subsidiary
	Neenah			Guarantors			Eliminations			Consolidated
Net sales	$	44,930		$	71,151		$	(1,423	)	$	114,658
Cost of sales		40,037			67,208			(1,423	)		105,822

Gross profit		4,893			3,943			—			8,836

Selling, general and administrative expenses		4,731			4,186			—			8,917
Amortization of intangible assets		1,426			354			—			1,780
Gain on disposal of equipment		(2	)		(16	)		—			(18	)

Operating loss		(1,262	)		(581	)		—			(1,843	)

Net interest expense		(3,532	)		(4,214	)		—			(7,746	)

Loss before income taxes and equity in loss of subsidiaries		(4,794	)		(4,795	)		—			(9,589	)
Income tax benefit		(1,681	)		(1,627	)		—			(3,308	)

		(3,113	)		(3,168	)		—			(6,281	)
Equity in loss of subsidiaries		(3,168	)		—			3,168			—

Net loss	$	(6,281	)	$	(3,168	)	$	3,168		$	(6,281	)

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		37,988			63,963			(1,390	)		100,561

Gross profit		6,853			4,375			—			11,228

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)		1,033			(547	)		—			486

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


Loss before income taxes and equity in loss of subsidiaries		(1,887	)		(4,659	)		—			(6,546	)
Income tax benefit		(734	)		(1,815	)		—			(2,549	)

		(1,153	)		(2,844	)		—			(3,997	)
Equity in loss of subsidiaries		(2,844	)		—			2,844			—

Net loss	$	(3,997	)	$	(2,844	)	$	2,844		$	(3,997	)

Note 8 — Subsidiary Guarantors (continued)

Condensed Consolidating Statement of Operations
Six months ended March 31, 2008


				Subsidiary
	Neenah			Guarantors			Eliminations			Consolidated

Net sales	$	90,233		$	128,508		$	(2,858	)	$	215,883
Cost of sales		76,317			120,055			(2,858	)		193,514

Gross profit		13,916			8,453			—			22,369

Selling, general and administrative expenses		9,747			8,153			—			17,900
Restructuring costs		885			342			—			1,227
Amortization of intangible assets		2,853			709			—			3,562
Gain on disposal of equipment		(2	)		(17	)		—			(19	)

Operating income (loss)		433			(734	)		—			(301	)

Net interest expense		(6,931	)		(8,441	)		—			(15,372	)

Loss before income taxes and equity in loss of subsidiaries		(6,498	)		(9,175	)		—			(15,673	)
Income tax benefit		(2,327	)		(3,286	)		—			(5,613	)

		(4,171	)		(5,889	)		—			(10,060	)
Equity in loss of subsidiaries		(5,889	)		—			5,889			—

Net loss	$	(10,060	)	$	(5,889	)	$	5,889		$	(10,060	)

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			123,339			(3,007	)		199,448

Gross profit		20,898			8,785			—			29,683

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	)

Operating income (loss)		9,436			(678	)		—			8,758

Net interest expense		(7,027	)		(8,228	)		—			(15,255	)
Debt refinancing costs		(20,429	)		—						(20,429	)


Loss before income taxes and equity in loss of subsidiaries		(18,020	)		(8,906	)		—			(26,926	)
Income tax benefit		(7,023	)		(3,470	)		—			(10,493	)

		(10,997	)		(5,436	)		—			(16,433	)
Equity in loss of subsidiaries		(5,436	)		—			5,436			—

Net loss	$	(16,433	)	$	(5,436	)	$	5,436		$	(16,433	)

Note 8 — Subsidiary Guarantors (continued)

Condensed Consolidating Statement of Cash Flows
Six months ended March 31, 2008


				Subsidiary
	Neenah			Guarantors			Eliminations			Consolidated

Operating activities
Net loss	$	(10,060	)	$	(5,889	)	$	5,889		$	(10,060	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		5,523			6,354			—			11,877
Amortization of deferred financing costs and discount on notes		229			—			—			229
Stock-based compensation		134			—			—			134
Changes in operating assets and liabilities		873			(1,787	)		—			(914	)

Net cash provided by (used in) operating activities		(3,301	)		(1,322	)		5,889			1,266

Investing activities
Investments in and advances to subsidiaries		(5,348	)		11,237			(5,889	)		—
Purchase of property, plant and equipment		(19,120	)		(8,890	)		—			(28,010	)

Net cash provided by (used in) investing activities		(24,468	)		2,347			(5,889	)		(28,010	)

Financing activities
Net change in revolver balance		26,848			—			—			26,848
Payments on long-term debt and capital lease obligations		—			(104	)		—			(104	)

Net cash provided by (used in) financing activities		26,848			(104	)		—			26,744


Increase (decrease) in cash		(921	)		921			—			—
Cash at beginning of period		969			(969	)		—			—

Cash at end of period	$	48		$	(48	)	$	—		$	—

Note 8 — Subsidiary Guarantors (continued)

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


				Subsidiary
	Neenah			Guarantors			Eliminations			Consolidated

Operating activities
Net loss	$	(16,433	)	$	(5,436	)	$	5,436		$	(16,433	)
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	)		3,856			—			(11,501	)

Net cash provided by (used in) operating activities		(19,061	)		4,021			5,436			(9,604	)

Investing activities
Investments in and advances to subsidiaries		3,169			2,267			(5,436	)		—
Purchase of property, plant and equipment		(14,183	)		(6,765	)		—			(20,948	)

Net cash used in investing activities		(11,014	)		(4,498	)		(5,436	)		(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		(239,996	)		(94	)		—			(240,090	)
Debt issuance costs		(3,526	)		—			—			(3,526	)

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


Increase in cash		1,808			(571	)		—			1,237
Cash at beginning of period		2,433			(1,523	)		—			910

Cash at end of period	$	4,241		$	(2,094	)	$	—		$	2,147

Note 9 — Segment Information


	Three months ended						Six months ended
	March 31,						March 31,
	2008			2007			2008			2007
Revenues from external customers:
Castings	$	101,318		$	99,936		$	191,331		$	205,513
Forgings		11,211			9,397			20,209			19,463
Other		4,459			5,276			8,961			8,700
Elimination of intersegment revenues		(2,330	)		(2,820	)		(4,618	)		(4,545	)

	$	114,658		$	111,789		$	215,883		$	229,131

Net income (loss):
Castings	$	(6,746	)	$	(4,033	)	$	(10,406	)	$	(16,729	)
Forgings		306			(44	)		118			287
Other		76			(128	)		67			(148	)
Elimination of intersegment loss		83			208			161			157

	$	(6,281	)	$	(3,997	)	$	(10,060	)	$	(16,433	)


	March 31,			September 30,
	2008			2007
Total assets:
Castings	$	452,264		$	431,906
Forgings		21,801			19,015
Other		9,034			8,336
Elimination of intersegment assets		(16,801	)		(15,283	)

	$	466,298		$	443,974

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

General

As used in this report, except as the context otherwise requires, the terms “NEI,” “Company,” “we,” “our,” “ours,” and “us” refers to Neenah Enterprises, Inc. and its direct and indirect subsidiaries, collectively and individually, as appropriate from the context. Except as the context otherwise requires, “Neenah” refers to our indirect subsidiary, Neenah Foundry Company, and its wholly-owned subsidiaries.

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, 2007 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

Steel Scrap Cost Increases.In recent months, we have experienced significant increases in the cost of steel scrap used in our manufacturing process. From December 2007 to April 2008, the cost of steel scrap (measured by quoted prices for shredded steel by Iron Age publication for the Chicago market) has risen $290 per ton, an increase of 104%. Of all the varying costs of raw materials, fluctuations in the cost of steel scrap impact our business the most. The cost for steel scrap is subject to market forces that are unpredictable and largely beyond our control, including demand by U.S. and international industries, freight costs and speculation. Although we have surcharge arrangements with our industrial customers that enable us to adjust industrial casting prices to reflect steel scrap cost fluctuations, these adjustments have historically lagged behind the current cost of steel scrap during periods of rapidly rising or falling steel scrap costs because these adjustments were generally based on average market costs for prior periods. We are currently reviewing surcharge procedures with our industrial customers in an attempt to recover scrap cost increases on a real time basis. We have historically recovered steel scrap cost increases for municipal products through periodic price increases. However, the recent increases in steel scrap costs have forced us to institute a price increase coupled with a surcharge on our municipal casting products. Our ability to recover the steel scrap increases from our customers will determine the extent of the adverse effect they will have on our business, financial condition and results of operations.

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, 2008, $43.4 million (excluding capitalized interest of $2.3 million) had been spent on the new mold line project with approximately $10.6 million remaining to be spent to complete the project. Based on our current and projected level of operations, we anticipate that our 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. The mold line has been installed and is currently going through planned startup stages according to our launch schedule. We expect the mold line to become fully operational during the quarter ended June 30, 2008.

Labor Agreement at Dalton.In April 2008, production employees at the Dalton-Warsaw facility agreed to a new five-year collective bargaining agreement. This new agreement expires in April 2013.

Order for Abatement at Gregg Facility.Due to neighborhood complaints, we were operating the Gregg facility under the terms of an order for abatement with the California South Coast Air Quality Management District (SCAQMD). Despite being in compliance with federal and state emission laws, the order required us to comply with certain operating parameters in an effort to reduce odors. Failure to operate within such criteria could have resulted in the SCAQMD suspending operations at the Gregg facility. The order expired on September 20, 2007 and Gregg is currently negotiating settlements with the SCAQMD regarding outstanding notices of violation (NOV’s) for odor complaints. Gregg does not expect any issues in settling the NOV’s and is expecting to conclude negotiations in July 2008. We believe we are in compliance with all other operating requirements and that our actions have resulted in a substantial reduction in the intensity and frequency of downwind odors.

Cost Reduction Actions.On November 16, 2007, we announced a restructuring plan intended to reduce costs and improve general operating efficiencies. The restructuring primarily consisted of salaried headcount reductions at the Company’s operating facilities. In connection with the restructuring plan, the Company incurred employee termination costs of approximately $1.2 million, on a pretax basis, which were recognized as a charge to operations during the first quarter of fiscal 2008.

Reverse Stock Split. On August 3, 2007, an amendment to NEI’s certificate of incorporation effected a 1-for-5 reverse stock split, among other things. All of the share and per share amounts in this filing have been retroactively restated to adjust for the reverse stock split.

Refinancing Transactions.On December 29, 2006, we repaid our outstanding indebtedness under Neenah’s then existing credit facility, repurchased all $133.1 million of Neenah’s outstanding 11% Senior Secured Notes due 2010 through an issuer tender offer, retired $75 million of Neenah’s outstanding 13% Senior Subordinated Notes due 2013 (the “13% Notes”) by exchanging them for $75 million of new 12¹/₂% Senior Subordinated Notes due 2013 (the “12¹/₂% Notes”) in a private transaction, and called for redemption all $25 million of Neenah’s 13% Notes that remained outstanding after the exchange for 12¹/₂% Notes. The 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, Neenah (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 of up to $100 million. The 9¹/₂% Notes were initially issued in a private offering that was not registered under the Securities Act, and were subsequently registered pursuant to an exchange offer in which the unregistered notes were exchanged for freely transferable notes. That exchange offer was completed on April 18, 2007. We refer to these actions collectively as the “Refinancing Transactions.”

Results of Operations

The following discussions compare the results of operations of the Company for the three and six months ended March 31, 2008, to the results of the operations of the Company for the three and six months ended March 31, 2007.

Three months ended March 31, 2008 and 2007

Net sales.Net sales for the three months ended March 31, 2008 were $114.7 million, which were $2.9 million or 2.6% higher than the quarter ended March 31, 2007. The increase was primarily due to increases in sales to the construction and agriculture equipment market offset by reduced shipments of heavy-duty truck components and municipal products. Sales to construction and agriculture equipment markets were up approximately $10.4 million in the second quarter of fiscal 2008 from the second quarter of fiscal 2007. Due to reduced build rates of heavy-duty trucks, sales of heavy-duty truck products were down approximately $7.6 million in the second quarter of fiscal 2008 from the second quarter of fiscal 2007. Sales of municipal products were down approximately $2.3 million in the second quarter of fiscal 2008 from the second quarter of fiscal 2007, reflecting continued softness in the overall housing sector. Sales to other markets, primarily components shipped to heating, ventilation and air conditioning customers, were up approximately $2.4 million in the second quarter of fiscal 2008 from the second quarter of fiscal 2007.

Cost of sales.Cost of sales for the three months ended March 31, 2008 were $105.8 million, an increase of $5.2 million, or 5.2%, as compared to the quarter ended March 31, 2007. Cost of sales as a percentage of net sales increased to 92.2% for the three months ended March 31, 2008 from 90.0% for the three months ended March 31, 2007, primarily as a result of an approximately 22% increase in raw material unit costs, principally in the price of steel scrap, and a decreased ability to absorb fixed manufacturing costs due to lower production levels.

Gross profit.Gross profit for the three months ended March 31, 2008 was $8.9 million, a decrease of $2.3 million, or 20.5%, as compared to the quarter ended March 31, 2007. Gross profit as a percentage of net sales decreased to 7.8% for the three months ended March 31, 2008 from 10.0% for the three months ended March 31, 2007, 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, 2008 were $8.9 million, a decrease of $0.1 million, or 1.1%, as compared to the $9.0 million for the quarter ended March 31, 2007. Selling, general and administrative expenses as a percentage of net sales decreased to 7.8% for the quarter ended March 31, 2008 from 8.1% for the quarter ended March 31, 2007.

Amortization of intangible assets.Amortization of intangible assets was $1.8 million for the three months ended March 31, 2008 and 2007.

Operating income (loss).Operating loss was $1.8 million for the three months ended March 31, 2008, a decrease of $2.3 million from operating income of $0.5 million for the quarter ended March 31, 2007. As a percentage of net sales, the operating loss was 1.5% for the three months ended March 31, 2008 compared to operating income of 0.4% for the three months ended March 31, 2007. The decrease in operating income was primarily due to the increase in raw materials costs.

Net interest expense.Net interest expense was $7.7 million for the three months ended March 31, 2008 compared to $7.0 million for the quarter ended March 31, 2007. The increase in interest expense was the result of the increased level of borrowing on the revolving line of credit.

Income tax provision.The effective tax rate for the three months ended March 31, 2008 and 2007 was 34.7% and 38.5%, respectively. The decrease in the effective tax rate is primarily due to an increase in Federal income tax deductions available to manufacturers for qualified production activities.

Six months ended March 31, 2008 and 2007

Net sales.Net sales for the six months ended March 31, 2008 were $215.9 million, which were $13.2 million or 5.8% lower than the six months ended March 31, 2007. The decrease was primarily due to reduced shipments of heavy-duty truck components and municipal products partially offset by an increase in sales to the construction and agriculture equipment market. Due to new emission standards that took effect January 1, 2007, heavy-duty truck production declined significantly in calendar year 2007 (which includes the first quarter of our fiscal year 2008), as many buyers of heavy-duty trucks accelerated purchases into calendar year 2006, artificially increasing our sales to customers in the heavy-duty truck market in calendar year 2006 (which includes the first quarter of our fiscal year 2007). As a result, sales of heavy-duty truck products were down approximately $24.1 million for the six months ended March 31, 2008 compared to the six months ended March 31, 2007. New housing starts declined in the first six months of fiscal 2008 from the first six months of fiscal 2007, reflecting softness in the overall housing sector. As a result of this and other related factors, sales of municipal products were down approximately $5.3 million for the six months ended March 31, 2008 compared to the six months ended March 31, 2007. Sales to construction and agriculture equipment markets were up approximately $13.8 million in the six months ended March 31, 2008 compared to the six months ended March 31, 2007. Sales to other markets, primarily components shipped to heating, ventilation and air conditioning customers, were up approximately $2.4 million for the six months ended March 31, 2008 compared to the six months ended March 31, 2007.

Cost of sales.Cost of sales for the six months ended March 31, 2008 were $193.5 million, a decrease of $5.9 million, or 3.0%, as compared to the six months ended March 31, 2007. Cost of sales as a percentage of net sales increased to 89.6% for the six months ended March 31, 2008 from 87.0% for the six months ended March 31, 2007, primarily as a result of an approximately 21% increase in raw material unit costs, principally in the price of steel scrap, and a decreased ability to absorb fixed manufacturing costs due to lower production levels.

Gross profit.Gross profit for the six months ended March 31, 2008 was $22.4 million, a decrease of $7.3 million, or 24.6%, as compared to the six months ended March 31, 2007. Gross profit as a percentage of net sales decreased to 10.4% for the six months ended March 31, 2008 from 13.0% for the six months ended March 31, 2007, 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 six months ended March 31, 2008 were $17.9 million, an increase of $0.5 million, or 2.9%, as compared to the $17.4 million for the six months ended March 31, 2007, primarily due to increased legal and professional fees incurred in the six months ended March 31, 2008. Selling, general and administrative expenses as a percentage of net sales increased to 8.3% for the six months ended March 31, 2008 from 7.6% for the six months ended March 31, 2007.

Restructuring costs. The Company recorded $1.2 million of restructuring costs during the six months ended March 31, 2008. These costs consisted of employee termination costs incurred as a result of salaried headcount reductions at the Company’s operating facilities.

Amortization of intangible assets.Amortization of intangible assets was $3.6 million for the six months ended March 31, 2008 and 2007.

Operating income (loss).Operating loss was $0.3 million for the six months ended March 31, 2008, a decrease of $9.1 million from operating income of $8.8 million for the six months ended March 31, 2007. As a percentage of net sales, the operating loss decreased to 0.1% for the six months ended March 31, 2008 from an operating income of 3.8% for the six months ended March 31, 2007. The decrease in operating income was due to the reduced sales volume, the increase in raw materials costs and employee termination costs.

Net interest expense.Net interest expense was $15.4 million for the six months ended March 31, 2008 compared to $15.3 million for the six months ended March 31, 2007.

Debt Refinancing Costs.The Company recorded $20.4 million of debt refinancing costs during 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 Neenah’s 11% Senior Secured Notes due 2010, $5.9 million to write off the unamortized discount on Neenah’s 11% Senior Secured Notes and $1.6 million to write off the unamortized deferred financing costs on Neenah’s indebtedness existing prior to the refinancing.

Income tax provision.The effective tax rate for the six months ended March 31, 2008 and 2007 was 35.7% and 39.0%, respectively. The decrease in the effective tax rate is primarily due to an increase in Federal income tax deductions available to manufacturers for qualified production activities.

Liquidity and Capital Resources

As of March 31, 2008, our outstanding indebtedness consisted of Neenah’s $225.0 million of outstanding 9¹/₂% Notes, $1.3 million of capital lease obligations, Neenah’s $75.0 million of outstanding 12¹/₂% Notes, and $44.0 million of borrowings outstanding under Neenah’s 2006 Credit Facility. Our primary sources of liquidity in the future will be cash flow from operations and borrowings under Neenah’s 2006 Credit Facility. We expect that ongoing requirements for debt service, capital expenditures, including Neenah’s new mold line, 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. The 2006 Credit Facility matures on December 31, 2011. Outstanding borrowings bear interest at rates based on the lenders’ Base Rate, as defined, or, if Neenah so elects, 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, inventories 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.

Most of Neenah’s wholly owned subsidiaries are co-borrowers under the 2006 Credit Facility and are jointly and severally liable with Neenah for all obligations under the 2006 Credit Facility, subject to customary exceptions for transactions of this type. In addition, NFC Castings, Inc. (“NFC”), NEI’s immediate subsidiary, and Neenah’s remaining wholly owned subsidiaries jointly, fully, severally and unconditionally 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 Neenah’s and the guarantors’ accounts receivable, inventories, 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 Neenah 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. At March 31, 2008, we had $44.0 million outstanding under the 2006 Credit Facility and had unused availability of $53.2 million. At March 31, 2008, we were in compliance with applicable bank covenants.

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 NEI, Neenah, or NFC. We are prohibited from paying dividends, with certain limited exceptions, and are restricted to a maximum yearly stock repurchase of $1.0 million.

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 Neenah’s 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 Neenah’s 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 Neenah’s and the guarantors’ accounts receivable, inventories, 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, Neenah is 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 Neenah’s outstanding 12¹/₂% Notes will mature on September 30, 2013. The 12¹/₂% Notes were issued to Tontine Capital Partners, L.P. (“TCP”) in exchange for an equal principal amount of Neenah’s 13% Notes that were then held by TCP. The obligations under the 12¹/₂% Notes are senior to Neenah’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 our option. We must pay interest on any interest so deferred at a rate of 12¹/₂% per annum. Neenah’s obligations under the 12¹/₂% Notes are guaranteed on an unsecured basis by each of Neenah’s 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,” Neenah is 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 capital structure resulting from the Refinancing Transactions, we currently have no principal amortization requirements. We have been using cash flow from operations 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, 2008 and March 31, 2007, capital expenditures were $28.0 million and $20.9 million, respectively. The increased level of capital expenditures for the six months ended March 31, 2008 includes $16.4 million (including capitalized interest of $1.2 million) for the new mold line at the Neenah location described above under “Recent Developments.” Capital expenditures for the six months ended March 31, 2007 included $11.9 million (including capitalized interest of $0.2 million) for the new mold line at the Neenah location.

Our primary sources of liquidity are cash flow from operations and borrowings under Neenah’s 2006 Credit Facility. At March 31, 2008, we had $44.0 million outstanding under the 2006 Credit Facility and had unused availability of $53.2 million. Net cash provided by operating activities during the six months ended March 31, 2008 was $1.3 million, an increase of $10.9 million over net cash of $9.6 million used in operating activities during the six months ended March 31, 2007. The increase in cash provided by operating activities was primarily due to $12.9 million paid in the quarter ended December 31, 2006 for the tender premium to repurchase Neenah’s 11% Senior Secured Notes and due to changes in working capital balances. Operating cash flows for the six months ended March 31, 2008 are not necessarily indicative of the operating cash flows that may be expected for the remainder of fiscal 2008, due to the seasonality of our business.

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 completing 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 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 applicable 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.

Off-Balance Sheet Arrangements

None.

Contractual Obligations

The following table includes the Company’s significant contractual obligations at March 31, 2008 (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		246.3		30.8		61.5		61.5		92.5
Revolving line of credit		44.0		44.0		—		—		—
Interest and fees on revolving line of credit		2.2		2.2		—		—		—
Capital leases		1.3		0.2		0.4		0.4		0.3
Operating leases		5.2		1.9		2.3		0.8		0.2
New mold line commitments		10.6		10.6		—		—		—

Total contractual obligations	$	609.6	$	89.7	$	64.2	$	62.7	$	393.0

As of March 31, 2008, the Company had no material purchase obligations other than those arising in the ordinary course of business related to inventories and property, plant and equipment, which generally have terms of less than 90 days. The Company also has long-term obligations related to its pension and post-retirement plans which are discussed in detail in Note 9 of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended September 30, 2007. For the six months ended March 31, 2008, $0.3 million of contributions have been made to the Company’s pension plans. The Company presently anticipates contributing an additional $2.7 million to fund its pension plans in fiscal 2008 for a total of $3.0 million. Post-retirement medical claims are paid as they are submitted and are anticipated to be $0.5 million in fiscal 2008. As of March 31, 2008, the Company’s expected payment for significant contractual obligations includes approximately $2.4 million of liabilities for unrecognized tax benefits associated with the adoption of FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes.” The Company cannot make a reasonably reliable estimate of the period of potential cash settlement for these liabilities for unrecognized tax benefits.

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, 2007.

Accounting Changes

The Company adopted provisions of FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” and FASB Staff Position No. AUG AIR-1, “Accounting for Planned Major Maintenance Activities” on October 1, 2007. See Note 3 to the Notes to Unaudited Consolidated Condensed Financial Statements in this Form 10-Q for information regarding these accounting changes.

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, 2008 the Company had $44.0 million outstanding under the 2006 Credit Facility. If market interest rates for such borrowings change by 1% during the remainder of the fiscal year ending September 30, 2008, the Company’s interest expense would increase or decrease by approximately $0.2 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.

Item 4.Controls and Procedures

Disclosure Control and Procedures.NEI’s and Neenah’s management, with the participation of the Chief Executive Officer and the Chief Financial Officer, have evaluated the effectiveness of NEI’s and Neenah’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, NEI’s and Neenah’s disclosure controls and procedures are effective (i) in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by NEI and Neenah in the reports that NEI and Neenah file or submit under the Exchange Act and (ii) to ensure that information required to be disclosed in the reports that NEI and Neenah file or submit under the Exchange Act is accumulated and communicated to NEI’s and Neenah’s management, including the 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 NEI’s and Neenah’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, NEI’s and Neenah’s internal control over financial reporting.

NEENAH ENTERPRISES, INC.
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 2007 Annual Report on Form 10-K and Item 1. “Legal Proceedings” in Part II of our Quarterly Report on Form 10-Q for the quarter ended December 31, 2007.

See “Recent Developments—Order for 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.

Fox River Cleanup Matter.Certain areas of the Lower Fox River System in Wisconsin have been designated for remedial activities under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) due to PCB contamination. Neenah Foundry Company (“Neenah”) operates a facility near this area. With respect to the Fox River PCB site, Appleton Papers Inc. (“API”) and NCR Corporation (“NCR”) commenced an action in U.S. District Court for the Eastern District of Wisconsin on January 7, 2008 seeking to allocate among all responsible parties the equitable shares of response costs and natural resources damages associated with the environmental contamination of the Fox River. API and NCR indicated that they believe that other parties, including Neenah, should participate in the funding of this work because they allegedly contributed to the environmental contamination and are responsible parties. Accordingly, in a letter dated March 12, 2008, API and NCR notified Neenah that they were thereby terminating the 2004 tolling and standstill agreement among Neenah, NCR, API, and Arjo Wiggins Appleton Ltd., with the intent of adding Neenah as a party to the referenced litigation. On April 14, 2008, Neenah was served with a third amended complaint and joined as a defendant in the pending lawsuit brought by plaintiffs API and NCR. Plaintiffs make claims against Neenah (and other defendants) for response costs allegedly incurred by plaintiffs, contribution, and declaratory relief. No case management dates have yet been set in the case. Neenah will assert factual and legal defenses to these claims.

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 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, 2007, Neenah Enterprises, Inc. held its Annual Meeting of Stockholders on January 24, 2008. A quorum was present at the Annual Meeting, with 13,217,522 shares out of a total of 13,741,337 shares entitled to cast votes represented in person or by proxy at the meeting. Four proposals were submitted to stockholders at the meeting.

Proposal 1: To elect seven directors for terms expiring at the 2009 Annual Meeting of NEI Stockholders.

The stockholders voted to elect the seven directors nominated by the board of directors to serve as directors until the 2009 Annual Meeting of NEI 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	13,217,522	0
Albert E. Ferrara, Jr.	13,217,522	0
David B. Gendell	13,217,522	0
Stephen E.K. Graham	13,217,522	0
Joseph V. Lash	13,072,664	144,858
Jeffrey G. Marshall	13,217,522	0
Robert E. Ostendorf, Jr.	13,188,111	29,411

The directors of NEI 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 2008 fiscal year.

The stockholders voted to ratify Ernst & Young LLP as the independent registered public accounting firm for the 2008 fiscal year. The results of the vote are as follows:


For		13,217,522
Against		—
Abstentions		—
Broker Non-Votes		—

Proposal 3: The approval of the Neenah Enterprises, Inc. Incentive Compensation Plan.

The stockholders approved the Neenah Enterprises, Inc. Incentive Compensation Plan. The results of the vote are as follows:


For		12,254,850
Against		11,500
Abstentions		—
Broker Non-Votes		951,172

Proposal 4: The approval of the Neenah Enterprises, Inc. Management Equity Incentive Plan.

The stockholders approved the Neenah Enterprises, Inc. Management Equity Incentive Plan. The results of the vote are as follows:


For		12,254,850
Against		11,500
Abstentions		—
Broker Non-Votes		951,172

Item 6.Exhibits

(a) Exhibits

See the Exhibit Index following the signature page of this report, which is incorporated herein by reference.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned thereunto duly authorized.


	NEENAH ENTERPRISES, INC. NEENAH FOUNDRY COMPANY
DATE: May 13, 2008	/s/ Gary W. LaChey
	Gary W. LaChey
	Corporate Vice President — Finance and Chief Financial Officer (Principal Financial Officer and Duly Authorized Officer)

Exhibit Index
to
Quarterly Report on Form 10-Q
For the Quarter Ended March 31, 2008


Exhibit No.	Description	Incorporated Herein by Reference to	Filed Herewith
10.1	General Release and Separation Agreement between Neenah Enterprises, Inc. and Joseph Varkoly	Exhibit 10.1 to Neenah Enterprises, Inc.’s Current Report on Form 8-K dated January 8, 2008

10.2	Form of Non-Qualified Stock Option Agreement under the Neenah Enterprises, Inc. Management Equity Incentive Plan		X

10.3	Form of Directors Restricted Stock Unit Agreement under the Neenah Enterprises, Inc. Management Equity Incentive Plan		X

10.4	Neenah Foundry Company Amended and Restated 2003 Severance and Change of Control Plan		X

31.1	Certification of Chief Executive Officer of Neenah Enterprises, Inc. 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 of Neenah Enterprises, Inc. 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

31.3	Certification of Chief Executive Officer of Neenah Foundry Company 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

31.4	Certification of Chief Financial Officer of Neenah Foundry Company 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	Certification of Chief Executive Officer and Chief Financial Officer of Neenah Enterprises, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002		X

32.2	Certification of Chief Executive Officer and Chief Financial Officer of Neenah Foundry Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002		X

Positive
Negative
Uncertain
Constraining
Legalese
Litigous
Readability	H.S. sophomore Avg

Neenah Enterprises (NNHE) Inactive 10-Q2008 Q2 Quarterly report

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