EXHIBIT 99.1
NEENAH FOUNDRY COMPANY ANNOUNCES FINANCIAL RESULTS FOR FISCAL 2005
AND REPORTS ON END OF SALE PROCESS
NEENAH, WI, November 29, 2005 - Neenah Foundry Company announced today that it
has completed the previously announced process to explore the potential sale or
merger of the Company. Its board of directors, which is also the board of
directors of its parent company, ACP Holding Company, unanimously voted to end
that process and turn the Company's focus to successfully implementing the
Company's business plan. The Company's business plan recognizes a consolidating
market and is intended to position the Company for growth by expanding its
revenues and further penetrating existing markets that are already being served.
It also involves exploring other strategic alternatives that would have the
effect of reducing costs and expanding capacity in selected markets. The board
of directors believes that the Company can enhance shareholder value by
continuing to execute its current strategy while giving careful consideration to
available strategic opportunities that might arise based on evolving market
conditions.
The Company also announced fiscal 2005 consolidated net sales of $541.7 million
and consolidated net income of $15.1 million. The net sales for 2005 represents
a 20.2% increase over the $450.9 net sales recorded in fiscal 2004. The
additional revenue is attributed to stronger sales in the markets in which the
Company participates coupled with the steel scrap surcharge that compensates the
Company for higher raw material costs. The net income for 2005 represents an
increase of $11.8 million or 463.8% over the $3.3 million recorded in fiscal
2004. The increased volume coupled with the ability to pass through increased
raw material costs accounted for most of the difference in net income. Adjusted
EBITDA (which is a non-GAAP financial measure), as defined in the attached
Adjusted EBITDA reconciliation, was $72.0 million for fiscal 2005 versus $61.1
million for fiscal 2004. Fiscal 2005 Adjusted EBITDA was $6.5 million lower than
it would have been without the $6.5 million one-time cash settlement to resolve
the Mercer Forge litigation. See below for a reconciliation of Adjusted EBITDA
to the most directly comparable GAAP financial measure.
Unaudited condensed consolidated financial statements without explanatory
footnotes and other required disclosures are attached for informational purposes
only.
ABOUT NEENAH FOUNDRY COMPANY
Neenah Foundry Company manufactures and markets a wide range of iron castings
and steel forgings for the heavy municipal market and selected segments of the
industrial markets. Neenah is one of the larger independent foundry companies in
the country, with substantial market share in the municipal and various
industrial markets for gray and ductile iron castings and forged steel products.
Additional information about Neenah is available on the Company's web site at
www.nfco.com.
FORWARD-LOOKING STATEMENTS
This press release may contain forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. These statements are based
on the Company's current expectations and involve risks and uncertainties that
could cause the Company's actual results to differ materially from those set
forth in the statements. The Company can give no assurance that such
expectations will prove to be correct. Factors that could cause the Company's
results to differ materially from current expectations include material
disruptions to the major industries served by the Company, fluctuations in the
price of scrap metal and increasing competition from foreign foundries as well
as other factors described or referenced in the Company's Form 10-K for the year
ended September 30, 2004, and its most recent Form 10-Q for the quarter ended
June 30, 2005.
CONTACTS:
Neenah Foundry Company
William Barrett
(920) 725-7000
Neenah Foundry Company
Condensed Consolidated Balance Sheets
(In Thousands)
(Unaudited)
SEPTEMBER 30,
2005 2004
---------------------
ASSETS
Total current assets $158,603 $149,617
Property, plant and equipment 91,250 87,276
Other assets 162,702 170,547
---------------------
$412,555 $407,440
=====================
LIABILITIES AND STOCKHOLDER'S EQUITY
Total current liabilities $ 95,666 $ 99,699
Other liabilities 299,536 298,957
---------------------
Total liabilities 395,202 398,656
Total stockholder's equity 17,353 8,784
---------------------
$412,555 $407,440
=====================
Neenah Foundry Company
Condensed Consolidated Statements of Operations
(In Thousands)
(Unaudited)
YEARS ENDED SEPTEMBER 30,
2005 2004
------------------------
Net sales $ 541,772 $ 450,942
Cost of sales 440,818 375,124
------------------------
Gross profit 100,954 75,818
Selling, general and administrative expenses 34,467 27,374
Litigation settlement 6,500 -
Amortization expense 7,124 7,121
Loss on disposal of property, plant and equipment 953 465
------------------------
Operating income 51,910 40,858
Net interest expense (33,406) (33,363)
------------------------
Income from continuing operations before
income taxes 18,504 7,495
Provision for income taxes 3,409 3,881
------------------------
Income from continuing operations 15,095 3,614
Loss from discontinued operations - (359)
------------------------
Net income $ 15,095 $ 3,255
========================
Neenah Foundry Company
Condensed Consolidated Statements of Cash Flows
(In Thousands)
(Unaudited)
YEARS ENDED SEPTEMBER 30,
2005 2004
-------------------------
OPERATING ACTIVITIES
Net income $ 15,095 $ 3,255
Noncash adjustments 17,088 24,603
Changes in operating assets and liabilities 1,404 (25,113)
----------------------
Net cash provided by operating activities 33,587 2,745
INVESTING ACTIVITIES
Purchase of property, plant and equipment (17,572) (12,713)
Proceeds from sale of property, plant and equipment 905 55
Other 347 475
----------------------
Net cash used in investing activities (16,320) (12,183)
FINANCING ACTIVITIES
Proceeds from long-term debt 84 14,450
Payments on long-term debt and capital lease obligations (13,716) (5,012)
Debt issuance costs (151) -
----------------------
Net cash provided by (used in) financing activities (13,783) 9,438
----------------------
Increase in cash and cash equivalents 3,484 -
Cash and cash equivalents at beginning of year - -
----------------------
Cash and cash equivalents at end of year $ 3,484 $ -
======================
A reconciliation of Adjusted EBITDA for the years ended September 30, 2005 and
2004 is provided below:
(In thousands)
Years Ended September 30,
2005 2004
------- -------
Net income ............................. $15,095 $ 3,255
Income tax provision ................... 3,409 3,881
Net interest expense ................... 33,406 33,363
Depreciation and amortization .......... 18,864 17,992
Loss on disposal of equipment .......... 953 465
Loss from discontinued operations ...... - 359
Neenah non-cash inventory charge ....... 242 -
Gregg non-cash inventory charge ........ - 1,172
Deeter non-cash inventory charge ....... - 624
Gregg write-off of lease deposits ...... 64 -
------- -------
Adjusted EBITDA (as defined below) ..... $72,033 * $61,111
======= =======
Adjusted EBITDA is defined in the Company's Credit Facility as "EBITDA" and is
generally calculated as the sum of net income (excluding non-cash charges),
income taxes, interest expense, and depreciation and amortization. Adjusted
EBITDA is not a measure prepared in accordance with accounting principles
generally accepted in the United States, but is being presented because the
Company and the Company's lenders use it to evaluate operating performance
relative to the financial covenants contained in the Company's Credit Facility,
and management believes that certain investors use information concerning
Adjusted EBITDA as a measure of a company's performance and ability to service
its debt. Adjusted EBITDA should not be considered a substitute for, or more
meaningful than, income from operations, net income, cash flows or other
measures of financial performance prepared in accordance with accounting
principles generally accepted in the United States. Adjusted EBITDA, as
presented by the Company, may not be comparable to similarly titled measures
reported by other companies.
- ----------
*Adjusted EBITDA for the year ended September 30, 2005 is $6,500 lower than
it would have been without the $6,500 Mercer Forge litigation settlement paid in
August, 2005.