<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-K

 [x] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
                                  Act of 1934.
                  For the fiscal year ended September 30,1999.


[ ] Transition Report Pursuant to Section 13 or 15(d)of the Securities Exchange
                                  Act of 1934

                      For the transition period from      to
                                                     ----    ----

                        Commission file number 333-28751

                             NEENAH FOUNDRY COMPANY
             (Exact name of registrant as it appears in its charter)

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

2121 Brooks Avenue, P.O. Box 729, Neenah, Wisconsin                    54957
(Address of principal executive offices)                             (Zip Code)

                                 (920) 725-7000
              (Registrant's telephone number, including area code)

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

Securities registered pursuant to section 12(g) of the Act:    NONE

                                (Title of class)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date.
Common Stock, Class A, $100 par value- 1,000 shares as of November 30, 1999
Common Stock, Class B, $100 par value-     0 shares as of November 30, 1999





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                                     PART I
Item 1.    BUSINESS

THE COMPANY (OTHER THAN THE ACQUIRED SUBSIDIARIES)

Overview

     On April 30, 1997, pursuant to an Agreement and Plan of Reorganization (the
"Merger Agreement") with NC Merger Company and NFC Castings, Inc., Neenah
Corporation (the "Predecessor Company") was acquired by NFC Castings, Inc., a
holding company and a wholly owned subsidiary of ACP Holding Company ("ACP
Holdings") (the "Merger"). Prior to July 1, 1997, Neenah Foundry Company was one
of three wholly owned subsidiaries of Neenah Corporation, a holding company with
no significant assets or operations other than its holdings in the common stock
of its three wholly owned subsidiaries. On July 1, 1997, Neenah Foundry Company
merged with and into Neenah Corporation and the surviving company changed its
name to Neenah Foundry Company (the "Company"). Unless otherwise stated in this
document or unless the context otherwise requires, references herein to the
"Company" include Neenah Foundry Company, Hartley Controls Corporation and
Neenah Transport, Inc., and exclude Deeter Foundry, Inc. ("Deeter"), Mercer
Forge Corporation ("Mercer"), Dalton Corporation ("Dalton"), Niemen Porter & Co.
d/b/a Cast Alloys, Inc. ("Cast Alloys"), and their respective subsidiaries, each
of which were acquired and Advanced Cast Products ("ACP") and its respective
subsidiaries, whose capital stock was contributed to the Company by ACP
Holdings. Deeter, Mercer, Dalton, Cast Alloys and ACP are referred to herein as
the "Acquired Subsidiaries." The Company changed its fiscal year end to
September 30 from March 31 effective September 30, 1997.

      The Company, founded in 1872, is one of the largest manufacturers of a
wide range of high quality ductile and gray iron castings for the heavy
municipal market and selected segments of the industrial market. The Company
believes it is the largest manufacturer of heavy municipal iron castings in the
United States with approximately a 19% market share in calendar year 1998. The
Company's broad range of heavy municipal iron castings includes manhole covers
and frames, storm sewer frames and grates, heavy duty airport castings,
specialized trench drain castings, specialty flood control castings and
ornamental tree grates. These municipal castings are sold throughout the United
States to state and local government entities, utility companies, precast
concrete manhole structure producers and contractors for both new construction
and infrastructure replacement. The heavy municipal market generated
approximately 44% of the Company's net sales for the year ended September 30,
1999. The Company believes it is also a leading manufacturer of a wide range of
complex industrial castings, including castings for medium- and heavy-duty truck
drive line components, a broad range of castings for the farm equipment industry
and specific components for compressors used in heating, ventilation and air
conditioning systems. The industrial market generated approximately 53% of the
Company's net sales for the year ended September 30, 1999. In addition, the
Company engineers, manufactures and sells customized sand control systems and
related products, which are an essential part of the casting process, to other
iron foundries. Sales of these sand control systems and related products
represented approximately 3% of the Company's net sales for the year ended
September 30, 1999.







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     The Company currently operates two modern foundries with an annual
aggregate rated capacity of approximately 187,000 tons at a single site in
Neenah, Wisconsin. From 1985 to 1998, the Company has invested heavily in its
production facilities, with approximately $73 million invested in a major plant
modernization program from 1985 to 1990. This plant modernization program was a
critical part of a long-term strategy to produce higher volume, value-added
castings for its existing industrial customers and to penetrate other selected
segments of the industrial market, while preserving its position as the leader
in the heavy municipal market. This modernization program entailed the closing
of the Company's oldest foundry, Plant 1, and the updating of the Company's
other two foundries, Plants 2 and 3, which enabled the Company both to produce
higher volume, complex castings for selected industrial segments and to improve
the Company's cost position in the heavy municipal market. Following the
completion of the modernization program, the Company has steadily decreased its
production of lower margin products such as axle covers and brake drums and
increased the production of higher margin, more complex parts, such as
transmission and axle housings. As a result of this strategy, the Company's
ongoing improvements in its manufacturing process and increased demand for
medium- and heavy-duty truck components have caused net sales and EBITDA to
increase.

Products, Customers and Markets

     The Company provides a variety of products to both the heavy municipal and
industrial markets. The heavy municipal market is comprised of storm and
sanitary sewer castings, manhole covers and frames, and storm sewer frames and
grates. It also includes heavy airport castings, specialized trench drain
castings, specialty flood control castings and ornamental tree grates. Customers
for these products include state and local government entities, utility
companies, precast concrete structure producers, and contractors.

    The industrial market is comprised of differential carriers and casings,
transmission, gear and axle housings, calipers, yokes, planting and harvesting
equipment parts, and compressor components. Customers for these products include
medium and heavy-duty truck, farm equipment and heating, ventilating, and
air-conditioning manufacturers.

     Heavy Municipal. Based on industry reported data, the Company believes it
is the largest manufacturer of heavy municipal iron castings in the United
States with an estimated 19% market share in calendar year 1998. The Company's
broad heavy municipal product line consists of two general categories of
castings, "standard" and "specialty" castings. Standard castings principally
consist of storm and sanitary sewer castings that are consistent with
pre-existing dimension and strength specifications established by local
authorities. Standard castings are generally high volume items that are
routinely used in new construction and infrastructure replacement. Specialty
castings are generally lower volume, higher margin products which include
heavy-duty airport castings, trench drain castings, flood control castings,
special manhole and inlet castings and ornamental tree grates. These specialty
items are frequently selected and/or specified from the Company's municipal
product catalog and its tree grate catalog, which together encompass over 4,400
standard and specialty patterns. For many of these specialty products, the
Company believes it is the only manufacturer with existing patterns to produce
such a particular casting, although a competing manufacturer could elect to make
the investment in patterns or equipment necessary to produce a similar casting.

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




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

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

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






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Sales and Marketing

     Heavy Municipal. Over its 70 years of heavy municipal market participation,
the Company has emphasized sales and marketing and believes it has built a
strong reputation for customer service. The Company believes that it is one of
the leaders in U.S. heavy municipal casting production and that it has strong
name recognition. The Company has the largest sales and marketing effort of any
foundry serving the heavy municipal market, including 59 Company employees and
28 commissioned representatives. The dedicated sales force works out of regional
sales offices to market the Company's municipal castings to contractors and
state and local governmental entities throughout the United States. The Company
operates ten regional distribution and sales centers and has two other sales
offices in Oklahoma City, Oklahoma and Norwood, Pennsylvania. The Company
believes this regional approach enhances its knowledge of local specifications
and its position in the heavy municipal market.

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

Manufacturing Process

    The Company operates two modern foundries with an annual rated capacity of
approximately 187,000 tons at a single location in Neenah, Wisconsin. The
Company's foundries manufacture gray and ductile iron and cast it into intricate
shapes according to customer metallurgical and dimensional specifications. From
1985 to 1998, the Company has invested heavily in its production facilities,
with approximately $73 million invested from 1985 to 1990 in plant modernization
and new equipment. The Company also continually invests in the improvement of
process controls and product performance and believes that these investments and
its significant experience in the industry have made it one of the most
efficient manufacturers of industrial and heavy municipal casting products.
During the fiscal year ended September 30, 1999, the Company had a combined
scrap rate of 2.5%.

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






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

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

Quality Assurance

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

Distribution

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





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Raw Materials

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

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

Competition

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






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Hartley Controls Corporation

     Hartley Controls Corporation, a wholly owned subsidiary of the Company
("Hartley Controls"), engineers, manufactures and sells customized sand control
systems, which are an essential part of the casting process, to other iron
foundries. The sand molding media used in all high production iron foundries is
a critical element in determining mold quality. Exacting and consistent control
of this sand with respect to moisture and chemical additives is an essential
element for process control and relates directly to casting quality, scrap rate
and the ability to produce complex molds for highly engineered castings. Harley
Controls is a major U.S. supplier of sand control systems with over 300
installations since 1986. Harley Controls has made investments in process
technology and has several patented technologies related to sand systems,
including the "Automatic Moisture Controller," the "Even-Flo Bin," the
"Automatic Compactibility Tester," the "Automatic Bond Determinator," the "Green
Stand Reconditioner" and the "Sandman." Sales of these sand systems and related
products represented approximately 3% of the Company's net sales for the year
ended September 30, 1999.

Employees

     As of September 30, 1999 the Company had 1,030 full time employees, of whom
805 were hourly employees and 225 were salaried employees. The Local 121B of the
Glass, Molders, Pottery, Plastics and Allied Workers International Union AFL-CIO
is the major bargaining agent for the representative of 726 of the Company's
hourly employees. A collective bargaining agreement with Local 121B was reached
on January 1, 1999 and expires on December 31, 2001. The Independent
Patternmakers Union of Neenah, Wisconsin is the major bargaining agent for and
representative of 36 of the Company's hourly employees. A collective bargaining
agreement with the Independent Patternmakers Union was reached on January 1,
1998 and expires on December 31, 2000. The Company believes that it has a good
relationship with its employees.

Environmental Matters

     The facilities of the Company and Acquired Subsidiaries' are subject to
federal, state and local laws and regulations relating to the protection of the
environment and worker health and safety, including those relating to discharges
to air, water and land, the handling and disposal of solid and hazardous waste
and the cleanup of properties affected by hazardous substances. Such laws
include the Federal Clean Air Act, the Clean Water Act, the Resource
Conservation and Recovery Act, the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980 ("CERCLA"), and the Occupational Health
and Safety Act. The Company believes that its and each of the Acquired
Subsidiaries' operations are currently in substantial compliance with applicable
environmental laws, and that it has no liabilities arising under such
environmental laws, except as would not be expected to have a material adverse
effect on the Company's or any of the Acquired Subsidiaries' operations,
financial condition or competitive position. However, some risk of environmental
liability and other costs is inherent in each of the Company's and Acquired
Subsidiaries' businesses. Any of the Company or the Acquired Subsidiaries might
in the future incur significant costs to meet current or more stringent
compliance, cleanup or other obligations pursuant to environmental requirements.
Such costs may include expenditures related to remediation of historical
releases of hazardous substances or clean-up of physical structures prior to
decommissioning.

     Under the Federal Clean Air Act Amendments of 1990, the Environmental
Protection Agency ("EPA") is directed to establish maximum achievable control
technology ("MACT") standards for certain industrial operations that are major
sources of hazardous air pollutants ("HAPs"). The iron foundry industry is not
expected to be required to implement the MACT emission limits, control
technologies or work practices until the year 2003 at the earliest. Although the
Company cannot accurately estimate the costs to comply with the MACT standard
until it is issued, the MACT standard, when implemented, and state laws
governing the emission of toxic air pollutants may require that certain of the
Company's or the Acquired Subsidiaries' facilities incur significant costs for
air emission control equipment, air emission monitoring equipment or process
modifications.






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ACQUISITIONS

     On March 30, 1998, the Company acquired all the capital stock of Deeter for
$24.3 million (excluding fees and expenses incurred in connection with the
acquisition of $0.3 million), consisting of $20.4 million of cash and a $3.9
million seller note (the "Deeter Seller Note"). The Deeter Seller Note, which
did not bear interest, was issued to the selling shareholders of Deeter by ACP
Holdings and matured on March 30, 1999. The Company financed the cash portion of
the consideration and all fees and expenses from cash on hand. Since 1945,
Deeter has been producing gray iron castings for the heavy municipal market.
Deeter's municipal casting product line includes manhole frames and covers,
storm sewer inlet frames, grates and curbs, trench grating and tree grates.
Deeter also produces a wide variety of special application construction
castings. These products are utilized in waste treatment plants, airports,
telephone and electrical construction projects.

     On April 3, 1998, the Company acquired all the capital stock of Mercer for
$47.0 million in cash (excluding fees and expenses incurred in connection with
the acquisition of $0.5 million). Concurrently with the acquisition of Mercer,
the Company, ACP Holdings and the lenders party thereto amended and restated the
Credit Agreement (the "Credit Agreement") dated April 30, 1997, as amended and
restated on September 12, 1997. The Credit Agreement, as so amended and
restated, provided availability of $75.0 million of term loans to the Company
(consisting of $20.0 million of Tranche A Loans (as defined) and $55.0 million
of Tranche B Loans (as defined) in addition to the Company's existing $50.0
million Revolving Credit Facility (as defined). On April 3, 1998, the Company
borrowed $55.0 million of the Tranche B Loans, of which $48.6 million was used
to finance the acquisition of Mercer, to pay fees and expenses incurred in
connection with the acquisition and to pay financing costs. The available
Tranche A Loans were not borrowed on April 3, 1998. Founded in 1954, Mercer is a
leading producer of complex-shaped forged components for use in transportation,
railroad, mining and heavy industrial applications. Mercer is also a leading
producer of microalloy forgings. Mercer sells directly to OEMs, as well as to
industrial end users.

     On September 8, 1998, the Company acquired all the capital stock of Dalton
for $102.0 million in cash (excluding fees and expenses incurred in connection
with the acquisition of $0.6 million). Dalton manufactures and sells gray iron
castings for refrigeration systems, air conditioners, heavy equipment, engines,
gear boxes, stationary transmissions, heavy duty truck transmissions and other
automotive parts.

     On September 8, 1998, the capital stock of ACP was contributed to the
Company by ACP Holdings. In connection with the contribution, the Company
assumed $14.9 million of indebtedness of ACP, $14.6 million of which was
refinanced with borrowings under the Senior Bank Facilities. ACP is a leading
independent manufacturer of ductile and malleable iron castings that are
produced through both traditional casting methods and through ACP's Evapcast
lost foam casting process. ACP's production capabilities also include a range of
finishing operations including austempering and machining. ACP sells its
products primarily to companies in the heavy truck, construction equipment,
railroad, mining, electrical fittings and automotive industries.

     In connection with the acquisition of Dalton and the contribution of the
capital stock of ACP, the Company, ACP Holdings and the lenders party thereto
amended and restated the Credit Agreement to provide availability of additional
Tranche B Loans in an aggregate principal amount of $70.0 million and an
Acquisition Loan Facility (as defined) in an aggregate principal amount
outstanding at any one time not to exceed $50.0 million. In connection with the
acquisition of Dalton and the contribution of the capital stock of ACP, the
Company borrowed $29.0 million under the Acquisition Loan Facility, $20.0
million of Tranche A Loans and $70.0 million of Tranche B Loans.





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     On December 31, 1998, the Company purchased Niemin Porter & Co. d/b/a Cast
Alloys, Inc. ("Cast Alloys"), a manufacturer of investment-cast titanium and
stainless steel golf clubheads, for $40.1 million in cash (excluding fees and
expenses incurred in connection with the acquisition of $1.2 million). The
acquisition of Cast Alloys was financed out of a portion of the proceeds of the
issuance of the Company's 11 1/8% Senior Subordinated Notes due 2007 issued on
November 24, 1998.

     Currently, each of the Acquired Subsidiaries is operating as a separate
subsidiary of the Company with independent operations under the direction of the
management that was in place prior to its acquisition by the Company. Although
the Company currently does not have plans to integrate the operations of the
Company with the Acquired Subsidiaries, it may to some extent do so in the
future.

     Each of the Deeter, Mercer, Dalton and Cast Alloys acquisitions were
accounted for using the purchase method of accounting. The acquisition of ACP
was accounted for at historical cost in a manner similar to that in pooling of
interest accounting since the Company and ACP were under common control.

     The foregoing transactions are herein referred to as the "Acquisitions."
The credit facilities available under the Credit Agreement are collectively
referred to herein as the "Senior Bank Facilities".




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DALTON CORPORATION

Overview

     Dalton manufactures and sells gray iron castings for refrigeration systems,
air conditioners, heavy equipment, engines, gear boxes, stationary
transmissions, heavy duty truck transmissions and other automotive parts.
Dalton's operating facilities have been structured to manufacture or machine
specific components to customer specifications. Dalton specializes in using cold
box and shell core products as well as precision high-pressure molds to
manufacture gray iron castings. The majority of Dalton's castings range in size
from one pound to 700 pounds.

Products and Markets

     During fiscal year 1999, the nine months ended September 30, 1998, and
calendar year 1997 Dalton produced 209,334, 159,728, and 192,495 tons of
castings, respectively. As a result of being acquired in September, 1998 the
figures for 1998 only include nine months of production. Dalton's revenues are
generated from customers in several industries, however, refrigeration and air
conditioning represent the largest concentration of tons shipped, which
management estimates was approximately 45% of tons shipped in 1999.The next
largest markets served include heavy truck at an estimated 16% and
automotive/light truck at an estimated 10% of the tons shipped in 1999. Dalton
serves primarily three markets: refrigeration and air conditioning,
automotive/truck market and heavy equipment.

Customers

     Dalton has over 100 customers across several industries, with four of
Dalton's largest five customers operating in the refrigeration/air conditioning
industry. Dalton's largest 10 customers accounted for approximately 70% of
Dalton's 1999 net sales. Dalton's largest customer, Copeland Corporation,
accounted for approximately 18% of Dalton's 1999 net sales.

Raw Materials

     The primary raw materials used by Dalton to manufacture iron castings are
steel scrap, pig iron, metallurgical coke and silica sand. By using steel scrap
in its production process, Dalton becomes significant contributor to the
recycling efforts being undertaken around the world. While there are multiple
suppliers for each of these commodities, Dalton has sourcing arrangements with
its suppliers for each of these major raw materials, with the exception of pig
iron. Due to long standing relationships with each of its suppliers and the
supply availability, Dalton management believes that it will continue to be able
to secure raw materials from its suppliers at competitive prices. The primary
energy sources for Dalton's operations, electricity and natural gas, are
purchased through utilities.

     Although the prices of all raw materials used by Dalton vary, the
fluctuations in the price of steel scrap are the most significant to Dalton.
Dalton has arrangements with most of its industrial customers which require
Dalton to adjust industrial casting prices to reflect fluctuations in scrap
metal prices. In periods of rapidly rising or falling scrap prices, these
adjustments will lag the current scrap price because they are generally based on
average market prices for prior periods, which periods vary by customer but are
generally no longer than six months. Rapidly fluctuating scrap prices may have a
temporary adverse or positive effect on Dalton's results of operations.




                                       11

<PAGE>   12



Competition

     Dalton operates in the same industry as the Company and therefore faces the
same competitive environment as the company. See "-The Company (other than the
Acquired Subsidiaries) -Competition."

Manufacturing Facilities

     Dalton currently operates four facilities. The main plant, located in
Warsaw, Indiana ("Warsaw") was established in 1910. In 1992 Dalton acquired a
second plant in Kendallville, Indiana ("Kendallville") and in 1995, Dalton
acquired a third plant in Ashland, Ohio ("Ashland"). On September 30, 1999
Dalton announced the closure of the Ashland plant, with all manufacturing
expected to be completed by December 31, 1999. In addition to the foundry
operations, Dalton owns a machining facility in Stryker, Ohio ("Stryker").
Dalton has established a separate General Office for centralized finance and MIS
operations along with executive management of Dalton.

Employees

      At September 30, 1999, Dalton employed 1,668 individuals, consisting of
1,365 hourly employees and 303 salaried and clerical employees.Nearly all of
Dalton's production employees are members of either the Steel Workers' Union or
the Glass, Molders, Pottery, Plastics and Allied Workers International Union. A
collective bargaining agreement is negotiated every three to five years. The
current agreements expire as follows: Warsaw, April 5, 2003; Kendallville, June
28, 2002; and Ashland, April 27, 2002.

Environmental Matters

     Dalton is subject to environmental, health and safety laws comparable to
those governing the Company. See "-The Company (other than the Acquired
Subsidiaries) -Environmental Matters."

     Status of Dalton's Air Emission Compliance In connection with Dalton's
submission of draft operating permits for air emission sources at its facilities
in Warsaw and Kendallville under Title V of the federal Clean Air Act Amendments
of 1990 ("Title V"), the Indiana Department of Environmental Management ("IDEM")
has asked Dalton to address several issues of concern: (i) alleged exceedances
of particulate and volatile organic compound emission levels; (ii) the
applicability of Prevention of Significant Deterioration ("PSD") permit review
requirements; and (iii) alleged construction and operation of sources without
the required permits. Depending on the results of ongoing discussions with IDEM
and the course of developing regulations, the costs of addressing Dalton's air
emission control issues could be material.

     Dalton has retained an environmental consultant to address the concerns
identified by IDEM. IDEM may require Dalton to perform tests on various emission
sources, install new or upgrade existing emission capture or control equipment,
use substitute materials or modify production rates to reduce regulated
emissions and/or perform PSD review for several sources. IDEM issued Notices of
Violations ("NOVs") in 1999 to both facilities regarding the failure to permit
equipment. Negotiations between IDEM and Dalton continue regarding the NOVs and
the content of its air permits. Penalties will be assessed against Dalton for
the failure to permit, but at this time IDEM has not set any penalties. IDEM
could also assess penalties against Dalton for the other identified concerns. At
this time, management believes that any penalties assessed by IDEM will not be
material.





                                       12

<PAGE>   13



     Warsaw Monofill NOVs On May 15, 1998, IDEM issued an NOV to Dalton
regarding Dalton's operation of an authorized landfill used exclusively by the
Warsaw facility to dispose of its foundry waste (the"monofill"). IDEM issued the
NOV after Dalton notified the agency that it had disposed of materials outside
the authorized landfill area. IDEM is currently reviewing Dalton's request to
modify the landfill permit and allow the disposal of wastes in the overfilled
locations. IDEM is seeking a civil penalty of $100,000 to $150,000 from Dalton
to resolve the NOV. Dalton could be required to relocate the overfill material
to an authorized off-site disposal location if IDEM denies the pending request
for permit modification.

ADVANCED CAST PRODUCTS, INC.

Overview

      ACP produces its products through three principal facilities. The largest
operation, Meadville, manufactures ductile iron castings through both the
traditional green sand molding process and its proprietary Evapcast lost foam
casting process. The Belcher operation manufactures malleable cast iron parts
primarily for the electrical fittings industry. Finally, the Peerless operation
produces bearing adapters for use in rail cars. Peerless is one of only three
U.S. companies that manufacture railroad bearing adapters. Since 1990, ACP has
generated gradually increasing sales and operating income primarily due to
increased volume of products shipped.

Products and Markets

     ACP is a leading independent manufacturer of ductile and malleable iron
castings that are produced through both traditional casting methods and through
ACP's Evapcast lost foam casting process. ACP's production capabilities also
include a range of finishing operations including austempering and machining.
ACP sells its products primarily to companies in the heavy truck, construction
equipment, railroad, mining, electrical fittings and automotive industries.

     Evapcast and CasTuf are two of ACP's proprietary casting processes.
Evapcast utilizes lost foam molding technology to produce near net-shape
castings, which allow for tighter tolerances, a smoother surface and enhanced
part complexity and require significantly less machining. CasTuf process
produces austempered ductile iron castings with superior strength
characteristics. CasTuf replaces more expensive steel castings, forgings and
fabrications, providing increased design flexibility. Management believes that
ACP is the first and only ductile foundry in the U.S. with its own in-house
austemper furnace and is one of only two ductile iron foundries to have
developed the lost-foam casting process. ACP is also a leading provider of
in-house machined castings through its expanded machining capability, which
utilizes state-of-the-art CNC machines.

     ACP's products and processes have enabled the development of long-term
working relationships with many key customers. This has allowed ACP to retain
existing customers, build on its customer base and obtain favorable pricing.

Customers

     ACP serves a diverse base of approximately 400 customers. Freightliner
Corporation, ACP's largest customer, accounted for more than 21% of ACP's net
sales for its fiscal year ended September 30, 1999. ACP specializes in meeting
the more difficult requirements of its largest customers such as Caterpillar,
Freightliner and Dana. ACP has been presented supplier awards from each of these
OEMs and has earned the ability to obtain new part awards as they become
available.





                                       13

<PAGE>   14



     ACP works closely with its customers from the beginning of the design
process until the shipment of finished parts. Due to this level of customer
service along with its products and services, ACP has been able to increase
sales to existing customers as well as expand its customer base. ACP offers its
customers a package, which includes casting, austempering, machining, painting
and assembly. This combination of products and services reduces the risk of ACP
customers moving their products to other manufacturers.

Raw Materials

     The primary raw materials used by ACP to manufacture iron castings are
steel scrap, alloys and silica sand. While there are multiple suppliers for each
of these commodities, ACP has sourcing arrangements with its suppliers of each
of these major raw materials. Due to long standing relationships with each of
its suppliers, ACP believes that it will continue to be able to secure raw
materials from its suppliers at competitive prices. The primary energy sources
for ACP's operations, electricity and natural gas, are purchased through
utilities and competitive third party bidding.

     Although the prices of all raw materials used by ACP vary over time, the
fluctuations in the price of steel scrap are the most significant to ACP. ACP
has arrangements with most of its industrial customers which allow ACP to adjust
industrial casting prices to reflect scrap price fluctuations.

Competition

     ACP operates in the same industry as the Company and therefore faces the
same competitive environment as the Company. See "-The Company (other than the
Acquired Subsidiaries) -Competition."

Manufacturing Facilities

     ACP currently operates 3 facilities. Since 1989, ACP has spent over $31.2
million on capital equipment to expand production capacity, improve efficiency,
add new production capabilities, replace equipment and improve the quality of
its products. ACP investments have included, for example, state of the art
Disamatic molding lines at both its Meadville and Belcher facilities and
computer numerical controlled ("CNC") machining centers at Meadville. The new
molding lines have increased capacity with the potential to reduce operating
costs.

     In addition, new capital expenditures have been completed for Meadville
that include an autopour unit for its current Disamatic line, a larger Disamatic
molding line for larger castings, and additional CNC machines. Belcher's new
capital expenditures also include an autopour unit in addition to a heat treat
furnace.

Employees

     ACP has approximately 101 salaried and approximately 425 hourly employees
represented by the United Steelworkers of America. The collective bargaining
agreement for Belcher and Meadville expires in June 2004 and in October 2004,
respectively.

Environmental Matters
     ACP is subject to environmental, health and safety laws comparable to those
governing the Company. See "-The Company (other than the Acquired Subsidiaries)
-Environmental Matters."







                                       14

<PAGE>   15

Intellectual Property

     Meadville holds trademark rights on two advanced proprietary processes,
Evapcast and CasTuf. ACP's Evapcast process utilizes a lost foam casting
technique which produces near net shape castings. Evapcast eliminates the need
for coring and reduces the need for machining resulting in significant cost
savings to the customer. CasTuf is a process to produce a line of austempered
ductile iron castings which have superior strength characteristics and are
easier to cast than steel products, thus providing greater design freedom.
Meadville is the only ductile iron casting company in North America with
in-house austempering capabilities (CasTuf) and one of only two independent,
ductile iron foundries with lost foam technology (EvapCast). Additionally,
Meadville was one of the first foundry operations to provide completely finished
parts through an integrated machining capability.

MERCER FORGE CORPORATION

Overview

     Founded in 1954, Mercer is a leading producer of complex-shaped forged
components for use in transportation, railroad, mining and heavy industrial
applications. Mercer is also a leading producer of microalloy forgings. Mercer
sells directly to OEMs, as well as to industrial end users. Mercer's subsidiary,
A&M Specialties, Inc.(A&M), machines forgings and castings for Mercer and other
industrial applications.

     Until the mid-1980's, Mercer produced military tank parts, but successfully
converted from a defense contractor to a commercial manufacturer and today is
one of the leading suppliers to the heavy duty truck sector. Mercer produces
approximately 500 individually forged components and has developed specialized
expertise in forgings of microalloy steel which management estimates accounts
for approximately 40% of its production.

Products and Markets

     Mercer manufactures its products to customer specification with typical
production runs of 1,000 or more units. Mercer currently operates eight
mechanical press lines, from 1,300 tons to 4,000 tons. Mercer's principal plant
is a 130,000 square foot facility located in Mercer, Pennsylvania. Key markets
for Mercer include truck and automotive parts, railroad equipment and general
industrial machinery.

     The following is a summary of Mercer's product capabilities, broken out by
the principal customer categories it serves:

<TABLE>
<CAPTION>

-----------------------------------------------------------------------------------------------
INDUSTRY                PRODUCTS
<S>                     <C>
-----------------------------------------------------------------------------------------------
Truck                   Drive Train Components; Sector Shafts; Knuckles,
                        Spindles; King Pins
-----------------------------------------------------------------------------------------------
Automotive              Transmission Gears; Hubs, Front Wheel Universal
                        Components; Drive Train Yokes; Spindles
-----------------------------------------------------------------------------------------------
Mining Equipment        Shoes; Fight Bars; Gear Blanks; Hubs; Sleeves
-----------------------------------------------------------------------------------------------
Railroad                Wheels; Draft Gear Components; Tank Car Valves; Piston
                        Carries; Articulated Car Bearings; Connecting Rods
-----------------------------------------------------------------------------------------------
Off-Highway/            Yokes; Spindles; Flanges; Gear Blanks; Hubs; Track Links; Roller
Agriculture             Shafts; Drive Line Components

-----------------------------------------------------------------------------------------------
Industrial              Gears; Bearings; Wheels; Cams
-----------------------------------------------------------------------------------------------
Military Ordnance       Projectile Components; Missile Components; Center
                        Guides; End Connectors; Tank Track Components
-----------------------------------------------------------------------------------------------
</TABLE>




                                       15

<PAGE>   16



The Forged Components Market

     Demand for forged products for civilian application closely follows the
general business cycles of the various market segments and the demand level for
capital goods. While there is a more consistent base level of demand for the
replacement parts portion of the business, the strongest expansions in the
forging industry coincide with the periods of industrial segment economic
growth. While the heavy truck segment remains relatively strong, there has been
some weakness in the railroad car building components and mining equipment
during recent months. Management attributes this to normal industrial cycles in
these markets and adjustments to overbuilds in inventory levels. Mercer
experienced a three month strike in 1999 which had an adverse impact on its
volume levels and customers. After a five year settlement at the end of June of
1999, management is working to rebuild and restore its volume and customer base
to pre-strike levels.

     Sales of military forgings, which was at one time Mercer's principal
product, have been virtually eliminated and replaced with an industrial base of
sales. Mercer operates two of its eight forge press lines under contracts with
the U.S. Government, but no longer actively bids for defense contracts. During
the 1990-92 Gulf War period, Mercer was active in producing ordnance components.
Management anticipates, however, that military products will continue to account
for a small portion of its business on an intermittent basis.

Manufacturing Process

     Forgings and casting (together with a third process, fabrication) are the
principal commercial metal working processes. In forging, metal is pressed,
pounded or squeezed under great pressure, with or without the use of heat, into
parts that retain the metal's original grain flow, imparting high strength,
ductility and resistance properties.

     Forging itself usually entails one of four principal processes: impression
die; open die; cold; and seamless rolled ring forging. Impression die forging,
commonly referred to as "closed die" forging, is the principal process employed
by Mercer, and involves bringing two or more dies containing "impressions" of
the part shape together under extreme pressure, causing the forging stock to
undergo plastic reformation. Because the metal flow is restricted by die
containers, this process can yield more complex shapes and closer tolerances
than the "open die" forging process. Impression die forging is used to produce
products such as military and off-highway track and drive train parts;
automotive and truck drive train and suspension parts; railroad engine, coupling
and suspension parts; military ordinance parts and other items where close
tolerances are required.

     Once a rough forging is produced, regardless of the forging process, it
must generally still be machined. This process, known as "finishing" or
"conversion", smoothes the component's exterior and mating surfaces and adds any
required specification, such as groves, threads, bolt holes and brand name
markings. The finishing process can contribute significantly to the value of the
end product, in particular in certain custom situations where high value
specialized machining is required. Machining can be performed either in-house by
the forger, by a machine shop which performs this process exclusively or by the
end-user.

     An internal staff of five engineers designs products to meet customer
specifications incorporating computer assisted design (CAD) work stations for
tooling design. Because its forged products are inherently less expensive and
stronger, Mercer has been successful in replacing certain cast parts previously
supplied by third party foundries. Management believes that Mercer is an
industry leader in forging techniques using microalloy steel which produces
parts which are lighter and stronger than those forged from conventional carbon
steel.




                                       16


<PAGE>   17




Customers

     Mercer's in-house sales organization sells direct to end users and OEMs. A
key element of Mercer's sales strategy is its ability to develop strong customer
relationships through responsive engineering capability, dependable quality and
just-in-time performance. Mercer currently serves approximately 40 individual
customer accounts. Dana Corporation represents Mercer's largest customer and
accounted for approximately 46% of Mercer's fiscal year ended September 30, 1999
sales.

Raw Materials

     The principal raw materials used in Mercer's products are carbon and
microalloy steel. Mercer purchases substantially all of its carbon steel from
four principal sources. Mercer typically maintains 10 to 30 days supply on hand.
Mercer buys approximately 25,000 tons of raw steel per year. While Mercer has
never suffered an interruption of materials supply, management believes that, in
the event of any disruption from any individual source, adequate alternative
sources of supply are available within the immediate vicinity although there can
be no assurance in this regard.

Competition

     Mercer competes primarily in a highly fragmented industry which includes
several dozen other press forgers and hammer forge shops. Hammer shops cannot
typically match press forgers' for high volume, single component manufacturing,
or close tolerance production. Competition in the forging industry has also
historically been determined both by product and geography, with a large number
of relatively small forgers across the country carving out their own product and
customer niches. In addition, most end users manufacture some forgings
themselves, often maintaining a critical minimum level of production in-house
and contracting out the balance. The primary basis of competition in the forging
industry is price, but engineering, quality and dependability are also
important, particularly with respect to building and maintaining customer
relationships. Some of Mercer's competitors have significantly greater resources
than Mercer. There can be no assurance that Mercer will be able to maintain or
improve its competitive position in the markets in which it competes.

     Mercer is not aware of any significant offshore competition within its
current product categories. Due to the importance of customer relationships and
engineering capabilities, most foreign producers are unable to compete.

Manufacturing Facilities

     Mercer is located in northwest Pennsylvania, about 60 miles north and west
of the Greater Pittsburgh airport. Mercer owns it principal forging facility,
which occupies a twenty-one acre site, and consists of a 130,000 square foot
manufacturing facility (which was partially rebuilt and expanded by 50,000
square feet in 1989) and an adjacent office complex. Mercer's subsidiary, A&M,
also leases an 18,000 square foot machine shop facility located in Sharon,
Pennsylvania, approximately ten miles from Mercer's headquarters.

     Mercer's main plant is able to forge complex components in runs from 500 to
more than 10,000 units. Mercer manufactures approximately 500 individual
products (SKUs) of which approximately half run throughout the production year.
Heating capacity is 59,000 pounds per hour through eight induction heaters.
Mercer's existing equipment can handle forging weights from 3 to 100 pounds and
forging diameters ranging from 2 1/2 inches to 5 1/2 inches. Shear/saw
production can handle up to 6 inch diameter billets.





                                       17

<PAGE>   18





     Mercer presently operates eight press lines consisting of one 4,000 ton,
two 3,000 ton, two 2,000 ton and three 1,300 ton press lines with billet
loaders, induction furnaces, and trim presses. The plant uses four microalloy
conveyors. Mercer is also equipped with saws and shearers to cut billets from
round and square steel bars. Mercer maintains a fully equipped quality control
facility, magniflux machine, shot cleaning equipment, complete die welding
facility and die repair machine shop. A&M operates approximately 20 CNC lathes
and mills as well as a high speed die machining operation utilizing 2 CNC mills.

Employees

     Mercer currently employs approximately 140 full time hourly forging
employees and A&M employs approximately 40 full time hourly machining employees,
all of whom are represented by collective bargaining agreements with United
Steel Workers of America. Following a three month strike ending June 28, 1999,
Mercer has a five year contract ending in 2004. Management believes labor
relations are stable and improving following the three-month strike.

Environmental Matters

     Mercer is subject to environmental, health and safety laws comparable to
those governing the Company. See "- The Company (other than the Acquired
Subsidiaries) -Environmental Matters."

DEETER FOUNDRY, INC.

Overview

     Since 1945, Deeter has been producing gray iron castings for the heavy
municipal market. Deeter's municipal casting product line includes manhole
frames and covers, storm sewer inlet frames, grates and curbs, trench grating
and tree grates. Deeter also produces a wide variety of special application
construction castings. These products are utilized in waste treatment plants,
airports, telephone and electrical construction projects. Deeter's centralized
location in Lincoln, Nebraska allows it to service the majority of its
geographical market area with overnight delivery. In addition, Deeter maintains
2 stockyards located in the midwest and western U.S.

Products, Customers and Markets

     Deeter manufactures the same products, serves the same markets and sells
to the same customer and market base as Neenah's heavy municipal line. See"-The
Company (other than the Acquired Subsidiaries) -Products, Customers and
Markets."

Raw Materials

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




                                       18

<PAGE>   19


     Although the prices of all raw materials used by Deeter vary, the
fluctuations in the price of steel scrap are the most significant to Deeter.
Deeter builds to stock based on forecast sales during any given period and
generally does not have any long term customer contracts. As a result, in
periods of rapidly rising or falling scrap prices, prices charged to customers
will relatively quickly reflect the current scrap price. Rapidly fluctuating
scrap prices may have a temporary adverse or positive effect on Deeter's results
of operations.

Competition

     Deeter operates in the same industry as the Company and therefore faces the
same competitive environment as the Company. See "-The Company (other than the
Acquired Subsidiaries) -Competition."

Manufacturing Facilities

     Deeter is located on an 10 acre site with 65,000 square feet of
manufacturing area. Deeter operates three green sand molding lines with a
current annual capacity of 24,000 net saleable tons. Deeter maintains stockyards
located in Denver, Colorado and their primary distribution yard is located on
site in Lincoln, Nebraska.

Employees

     At September 30, 1999 Deeter had 97 full time hourly employees and 25
salaried employees. The workers are non-union and Deeter believes its relations
with its employees are good.

Environmental Matters

     Deeter is subject to environmental, health and safety laws comparable to
those governing the Company. See " -Company (other than the Acquired
Subsidiaries) -Environmental Matters."

     On May 30, 1997, prior to the Company's acquisition of Deeter, Deeter
pleaded guilty to disposing of hazardous waste without a permit and agreed to
pay a fine of $500,000, performed (by its president, Douglas E. Deeter) 300
hours of community service and provided certain information regarding its waste
handling and disposal practices. Management believes that Deeter has complied
with regulations and that the matter will result in no further liabilities.

CAST ALLOYS INC.

Overview

     Cast Alloys manufactures and sells titanium and stainless steel clubheads
for the golf industry. Cast Alloy's operating facilities have been structured to
manufacture and machine specific components to customer specifications. Cast
Alloys uses an investment casting manufacturing process utilizing equipment
which will allow the expansion into alternative commercial products.

 Products and Markets

     Cast Alloy's clubheads are generally used in premium-quality stainless
steel and titanium golf clubs targeted at the high end of the market. These
clubs must satisfy the requirements of highly-skilled amateur and professional
golfers, including touring professionals. Cast Alloys' clubheads are included in
a variety of leading metal woods, irons and putters.




                                       19

<PAGE>   20



Manufacturing Process

     Investment Casting. Investment-casting is highly specialized method of
making metal products and has become the principal method for the manufacture of
metal clubheads. Investment casting permits greater flexibility in the shape and
weight distribution of clubheads than alternative methods such as forging and
machining. Investment-casting facilitates perimeter weighting, hollow forms and
the utilization of lighter and higher-performance alloys. It enhances
manufacturing precision and uniformity which is critical in the manufacture of
metal woods.

Polishing and finishing process. Cast Alloys conducts golf clubhead polishing
and finishing operations, including painting, at its facilities in Tijuana,
Mexico. Finishing of the head for an iron or putter can require more than 50
separate steps and finishing of a head for a metal wood can involve as many as
100 separate steps. When the process is completed, a fully finished golf
clubhead is delivered to the customer per their exact specifications.

Metal Alloys. All of the clubheads manufactured by Cast Alloys are made of
titanium or stainless steel alloys. Titanium clubheads have higher tensile
strength than stainless steel with approximately one-half the weight of steel.
Therefore, a larger oversized clubhead can be manufactured using titanium
without increasing clubhead weight. Cast Alloys' Northridge facility is designed
exclusively for high volume titanium casting operations.

Quality Control. Cast Alloys believes that its success as a leading supplier of
golf clubheads is largely attributable to its statistical quality control
measures. Cast Alloys attempts to monitor every aspect of the engineering and
manufacturing process to assure the quality of the clubheads manufactured.
Particular attention is paid to the quality of raw materials (principally wax,
ceramic and metal alloys), gating techniques employed in channeling the flow of
molten metal into the ceramic shell in the casting process, and rigorous
inspection standards to assure compliance with a customer's product
specifications throughout the manufacturing process. Statistical process control
is utilized to maintain consistency in manufacturing.

Customers

     Substantially all of the clubheads manufactured by Cast Alloys are used by
leading golf equipment companies in the production of high-quality,
premium-priced golf clubs. Most golf club companies source the three principal
components of a golf club--the clubhead, shaft, and grip--from independent
suppliers like Cast Alloys, which manufacture these components to meet each
customer's specifications. Cast Alloys is currently a major supplier of
stainless steel and titanium clubheads to Callaway and Taylor Made.

      Cast Alloys believes that it has successfully established close working
relationships with the leading golf club manufacturers. Cast Alloys' sales and
marketing activities are conducted by a limited number of direct sales
employees, as well as senior executives of Cast Alloys.

Raw Materials

     All of the clubheads and other commercial/industrial parts manufactured by
Cast Alloys are made of titanium or stainless steel alloys. Titanium clubheads
have higher tensile strength than stainless steel with approximately one-half
the weight of steel. Therefore, a larger oversized clubhead can be manufactured
using titanium alloys from overseas and steel is procured domestically, both at
very competitive prices with long term supply agreements.

Competition

     Cast Alloys operates in a highly competitive market and competes primarily
with four major golf clubhead manufacturers in the United States, including but
not limited to Coastcast Corporation, Sturm Ruger, Inc., Selmet, Inc., and
Hitchiner Manufacturing Co., Inc.




                                       20

<PAGE>   21


Manufacturing Facilities

     Cast Alloys' corporate and administrative offices and manufacturing
facilities currently occupy an aggregate of 231,277 square feet in six separate
locations. All of Cast Alloys' facilities are leased. Cast Alloys believes that
each of these properties are in good condition and that these facilities are
sufficient for current and anticipated needs. In June, 1999 Cast Alloys
purchased an R&D facility from Callaway Golf which it will use for its
manufacturing operations. Eventually, the facilities at Northridge and
Chatsworth, CA. will be vacated.

Employees

     At September 30, 1999, Cast Alloys had 377 full time employees at its U.S.
locations and 1,923 full time employees at its three Mexican locations. The
workers are non-union and Cast Alloys believes its relations with its employees
are good.

Environmental Matters

     None.

Item 2.     PROPERTIES

     The Company and the Acquired Subsidiaries maintain the following locations.
All of the facilities are owned, with the exception of Cast Alloys' facilities,
Mercer's machining facility and the Dublin, OH office facility, which are
leased.

<TABLE>
<CAPTION>

     ENTITY                                 LOCATION                                       PURPOSE
     ------                                 --------                                       -------
<S>                             <C>                                       <C>
ACP Holding Company                Dublin, OH                              Office facility

Neenah Foundry Company             Neenah, WI                              2 manufacturing facilities
                                                                           Office facility

Dalton Corporation                 Warsaw, IN                              Manufacturing/office facility
                                   Kendallville, IN                        Manufacturing facility
                                   Ashland, OH                             Manufacturing facility
                                   Stryker, OH                             Machining facility

Advanced Cast Products, Inc.       Meadville, PA                           Manufacturing/office facility
                                   South Easton, MA                        Manufacturing facility
                                   Ironton, OH                             Manufacturing facility

Mercer Forge Corporation           Mercer, PA                              Manufacturing/office facility
                                   Sharon, PA                              Machining facility


Deeter Foundry, Inc.               Lincoln, NE                             Manufacturing/office facility

Cast Alloys, Inc.                  Carlsbad, CA                            Office facility / R&D Center
                                   Northridge, CA                          Manufacturing facility
                                   Tijuana, B.C.N. Mexico                  Manufacturing facility
                                   Chatsworth, CA                          Storage facility
</TABLE>


    The principal equipment at the facilities consist of molding machines,
presses, machining equipment, welding, grinding and painting equipment. The
Company and its acquired subsidiaries regard its plant and equipment as
well-maintained and adequate for its needs. In addition to the facilities above,
the Company owns seven and leases seven distribution and sales centers.






                                       21

<PAGE>   22



Item 3.     LEGAL PROCEEDINGS

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

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

     There were no matters submitted to a vote of security holders during the
year ended September 30, 1999.






                                       22
<PAGE>   23



                                            PART II

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

      There is no public market for the common stock of the Company. There was
one holder of record of the Company's common stock as of September 30, 1999.


Item 6.   SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA

      The following table sets forth the selected historical consolidated
financial and other data of the Company for the three years ended March 31,1997,
the six months ended March 31, 1997, and the one month ended April 30, 1997 (the
"Predecessor Company"), which have been derived from the Company historical
consolidated financial statements before the Merger and the five months ended
September 30, 1997 and the years ended September 30, 1998 and 1999, which have
been derived from the Company's historical consolidated financial statements
following the Merger. The information contained in the following table should
also be read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations," and the Company's historical
consolidated financial statements and related notes included elsewhere in this
report.
<TABLE>
<CAPTION>


                                          Predecessor Company
                         ------------------------------------------------------

                             Fiscal Year Ended
                             -----------------
                                  March 31,
                                  ---------            Six Months  One Month   Five Months    Fiscal Year     Fiscal Year
                                                         Ended       Ended        Ended          Ended          Ended
                         ---------  --------  --------  March 31,   April 30,  September 30,  September 30,   September 30,
   (Dollars in thousands)   1995      1996      1997      1997        1997        1997           1998 (1)       1999 (2)
STATEMENT OF                ----      ----      ----      ----        ----        ----           --------       --------
    INCOME DATA:
<S>                      <C>       <C>        <C>      <C>         <C>        <C>            <C>             <C>
    Net sales              $160,621  $166,951  $165,426   $75,686    $17,276     $ 108,353         $ 303,414   $ 530,057


    Cost of sales           120,981   121,631   116,736    53,749     11,351        77,444           222,451     432,437
                         ------------------------------------------------------------------------------------------------

    Gross profit             39,640    45,320    48,690    21,937      5,925        30,909            80,963      97,620
    Selling, general,
      and administrative
      expenses               16,673    16,983    17,547     8,247      1,752         8,642            23,192      35,855
    Other expenses (3)            -         -         -         -          -            10                38       7,502
    Amortization expense          -         -         -         -          -         3,900             7,727      11,696
                         ------------------------------------------------------------------------------------------------

    Operating income         22,967    28,337    31,143    13,690      4,173        18,357            50,006      42,567

    Interest expense
      (income), net             397      (481)   (1,162)     (726)      (121)        9,991            27,203      42,395
                         ------------------------------------------------------------------------------------------------
    Income before taxes &
      extraordinary item     22,570    28,818    32,305    14,416      4,294         8,366            22,803         172

    Provision for income
      taxes                   8,866    11,676    12,467     4,701      1,615         4,000            10,922       2,064
                         ------------------------------------------------------------------------------------------------

    Income/(loss)            13,704    17,142    19,838     9,715      2,679         4,366            11,881      (1,892)
    before
     Extraordinary item
    Extraordinary item (4)        -         -         -         -          -         1,630               392           -
                         ------------------------------------------------------------------------------------------------

    Net income/(loss)       $13,704  $ 17,142   $19,838    $9,715    $ 2,679        $2,736          $ 11,489     $(1,892)
                         ================================================================================================


    =====================================================================================================================
</TABLE>






                                       23

<PAGE>   24






<TABLE>
<CAPTION>
                                      Predecessor Company
                      ----------------------------------------------------
                            Fiscal Year Ended       Six Months   One Month    Five Months    Fiscal Year    Fiscal Year
                               March 31,              Ended        Ended         Ended          Ended          Ended
                      ---------  --------  --------  March 31,    April 30,   September 30,  September 30,  September 30,
(Dollars in thousands)   1995      1996      1997      1997         1997          1997           1998           1999
                         ----      ----      ----      ----         ----          ----           ----           ----


------------------------------------------------------------------------------------------------------------------------
<S>                    <C>        <C>        <C>       <C>        <C>         <C>            <C>           <C>
BALANCE SHEET
  DATA (AT END
  OF PERIOD):
Cash and Cash          $   118    $   238   $10,126    $22,403    $29,046      $20,346       $19,978        $17,368
  Equivalents
Working Capital         14,419     15,239    28,113     43,707     34,052       40,849        78,186         83,962
Total Assets            74,327     73,813    82,957     93,869    102,067      358,406       584,309        641,702
Total Debt              13,325        887       241        134        129      218,314       371,871        429,221
Total Stockholder's     37,929     43,198    54,970     68,857     74,458       47,407        67,922         63,750
  Equity
------------------------------------------------------------------------------------------------------------------------
</TABLE>


(1)  The amounts include the results of Deeter subsequent to March 30, 1998, the
     results of Mercer subsequent to April 3, 1998 and the results of Dalton
     subsequent to September 8, 1998.
(2)  The amounts include the results of Cast Alloys subsequent to December 31,
     1998.
(3)  In 1999, this amount includes a $6.7 million charge related to the
     closure of Dalton's Ashland facility.
(4)  Extraordinary item includes the write
     off of unamortized deferred financing costs due to the early
     extinguishment of debt net of tax of $260 and $999, for the year ended
     September 30, 1998 and the five months ended September 30, 1997,
     respectively.




                                       24

<PAGE>   25





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

     Certain matters discussed in this Management's Discussion and Analysis of
Financial Condition and Results of Operations and other sections of this annual
report are "forward-looking statements" intended to qualify for the safe harbors
from liability established by the Private Securities Litigation Reform Act of
1995. These forward-looking statements can generally be identified as such
because the context of the statement will include words such as the Company
"believes," "anticipates," "expects" or words of similar import. Similarly,
statements that describe the Company's future plans, objectives or goals are
also forward-looking statements. Such forward-looking statements are subject to
certain risks and uncertainties which are described in close proximity to such
statements and which may cause actual results to differ materially from those
currently anticipated. The forward-looking statements made herein are made only
as of the date of this report and the Company undertakes no obligation to
publicly update such forward-looking statements to reflect subsequent events or
circumstances.

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

     The following discussion and analysis of the Company's financial condition
and results of operations addresses the periods both before and after the
Merger. The Merger has had a significant impact on the Company's results of
operations and financial condition. The Merger resulted in the recording of
goodwill and identifiable intangible assets totaling $148.8 million. These
amounts are being amortized over their estimated useful lives, ranging from 5 to
40 years. The Merger has also resulted in a significant increase in the
Company's interest expense as a result of an increased level of indebtedness. As
a result of the Merger, the financial data presented herein for the Pro Forma
Twelve Months Ended September 30, 1997 period represents the combination of
financial data for the Predecessor Company's seven month period ended April 30,
1997 and the Company's five month period ended September 30, 1997 and does not
include any financial data for the Recent Acquisitions, excluding ACP. The Pro
Forma Twelve Months Ended September 30, 1997 data was prepared by adding
together the respective amounts of each line item for such seven month and five
month periods. No purchase accounting or other pro forma adjustments have been
made. The following discussion includes the comparison of the results of
operations of the Company for the fiscal year ended September 30, 1998 to the
combined historical results of the operations of the Company and the Predecessor
Company for the twelve months ended September 30, 1997.

     The Recent Acquisitions have had a significant impact on the Company's
results of operations and financial condition. Each of the Recent Acquisitions
(other than the ACP acquisition) was accounted for using the purchase method of
accounting. These Recent Acquisitions resulted in the recording of goodwill and
identifiable intangible assets totaling $129.3 million. These amounts are being
amortized over their estimated useful lives, ranging from 5 to 40 years. The
Recent Acquisitions have also resulted in a significant increase in the
Company's interest expense as a result of a substantially increased level of
indebtedness incurred to finance the Recent Acquisitions. The contribution of
the capital stock of ACP was accounted for in a manner similar to a pooling of
interests because the Company and ACP were under common control. The financial
results for the period from inception, May 1, 1997 through September 30, 1997
have been restated to account for this transaction.

The Company changed its fiscal year end to September 30 from March 31 effective
September 30, 1997.

     On November 30, 1999, the Company acquired all of the capital stock of
Gregg Industries, Inc., (Gregg) and all the assets of its affiliate,
Environmental Sand Reclamation and Coating, Inc. for approximately $22.5
million, subject to adjustments as defined in the Agreement and Plan of Merger.
Gregg is a manufacturer of gray and ductile iron castings for industrial and
commercial use. The acquisition was financed through borrowings under the
Company's Acquisition Loan Facility.





                                       25
<PAGE>   26
COMPARISON OF FISCAL YEAR ENDED SEPTEMBER 30, 1999 TO FISCAL YEAR ENDED
SEPTEMBER 30, 1998

     Net Sales. Net sales for the year ended September 30, 1999 were $530.1
million which was $226.7 million or 74.7% higher than the fiscal year ended
September 30, 1998. The Acquired Subsidiaries accounted for an increase of
$225.0 million in net sales. Net sales of municipal castings increased by $9.1
million or 11.7% due primarily to a strong economy in the upper Midwest and
market share gains in strategic focus areas of the East and Southwest. Net sales
of industrial castings decreased by $6.5 million or 5.2% as the continued
strength of the heavy duty truck market was more than offset by sharply lower
demand in the agricultural business.

     Gross Profit. Gross profit for the year ended September 30, 1999 was $97.6
million, an increase of $16.6 million or 20.5%, as compared to the fiscal year
ended September 30, 1998. The increase of $14.8 million was from the inclusion
of the operating results of the Acquired Subsidiaries excluding ACP after their
acquisition. The remaining margin improvement was due to favorable pricing for
certain raw materials and improved efficiency in plant operations. Gross profit
as a percentage of net sales decreased to 18.4% during the year ended September
30, 1999 from 26.7% for the fiscal year ended September 30, 1998. Gross profit
was negatively impacted by a strike at Mercer which began in April, 1999 and was
settled in July, 1999. In addition, Cast Alloys had a negative gross margin for
the first four months (January 1999 through April 1999) after its acquistion.

     Selling, General and Administrative Expenses. Selling, general and
administrative expenses for the year ended September 30, 1999 were $35.9
million, an increase of $12.7 million over the $23.2 million for the fiscal year
ended September 30, 1998. The majority of the increase in selling, general and
administrative expense was due to the inclusion of $10.3 million of expenses
from the Acquired Subsidiaries. The remainder of the increase was due to higher
acquisition expenses. As a percentage of net sales, selling, general and
administrative expenses decreased from 7.7% for the fiscal year ended September
30, 1998 to 6.8% for the year ended September 30, 1999. The percentage decrease
was due to expenses being spread over a larger volume base with the inclusion of
the Acquired Subsidiaries' operating results.

     Amortization of intangible assets. Amortization of intangible assets was
$11.7 million for the year ended September 30, 1999, an increase of $4.0
million, or 51.9%, as compared to the $7.7 million for the fiscal year ended
September 30, 1998. The increase is due to the increased amortization from
goodwill and identifiable intangible assets from the Acquired Subsidiaries,
excluding ACP.

     Other expenses. During the year ended September 30, 1999, a restructuring
charge of $6.7 million was recorded to close Dalton's Ashland facility. The
decision to close the facility was made due to recurring operating losses by the
Ashland division over the past several years. Of the $6.7 million charge, $6.0
million is a non-cash charge for impairment of assets that will no longer be
used and the remaining amount of $.7 million will be cash outlays for exit
activity costs during the year ended September 30, 2000. The restructuring is
expected to improve future operating results and liquidity, however, the amount
of the improvement is undeterminable at this time. Also included in other
expenses for the year ended September 30, 2000 is a loss of $.7 million for the
disposal of assets in the ordinary course of business.

     Operating Income. Operating income was $42.6 million for the year ended
September 30, 1999, a decrease of $7.4 million or 14.8% from fiscal year ended
September 30, 1998. The decrease in operating income was caused by a $6.7
million charge related to the closing of Dalton's Ashland facility and increased
amortization expense. This was partially offset by the inclusion of the
operating results of the Acquired Subsidiaries. As a percentage of net sales,
operating income decreased from 16.5% for the fiscal year ended September 30,
1998 to 8.0% for the year ended September 30, 1999.

                                       26

<PAGE>   27



     Net Interest Expense. Net interest expense increased from $27.2 million for
the fiscal year ended September 30, 1998 to $42.4 million for the year ended
September 30, 1999. The increased interest expense resulted from the drawings
under the Company's Senior Bank Facilities to finance the Mercer, Deeter,
Dalton, and ACP acquisitions which were outstanding for the entire year ended
September 30, 1999. In addition, interest was incurred on the Senior
Subordinated Notes used to finance the Cast Alloys acquisition.

     Provision for Income Taxes. The provision for income taxes for the year
ended September 30, 1999 is higher than the amount computed by applying the
statutory rate of approximately 40% to income before income taxes mainly due to
the amortization of goodwill which is not deductible for income tax purposes.

     Extraordinary Item. During the year ended September 30, 1998, the Company
recorded an extraordinary loss of $0.4 million (which is net of an income tax
benefit of $0.3 million) for the write-off of unamortized deferred financing
costs in connection with the repayment in full of indebtedness of ACP prior to
its scheduled maturity.

COMPARISON OF FISCAL YEAR ENDED SEPTEMBER 30, 1998 TO PRO FORMA TWELVE MONTHS
ENDED SEPTEMBER 30, 1997

     Net Sales. Net sales for the year ended September 30, 1998 were $303.4
million which was $102.1 million or 50.7% higher than the pro forma twelve
months ended September 30, 1997. The Acquired Subsidiaries excluding ACP
accounted for an increase of $53.5 million in net sales. The inclusion of ACP
for twelve months in 1998 versus five months in 1997 accounted for an increase
of $33.7 million in net sales. Net sales of municipal castings increased by $3.1
million or 4.2 % due primarily to a strong economy in the upper Midwest and
market share gains in strategic focus areas of the East and Southwest. Net sales
of industrial castings increased by $11.7 million or 11.8% due to the overall
strength of the heavy duty truck market coupled with high demand in the
agricultural business.

     Gross Profit. Gross profit for the year ended September 30, 1998 was $81.0
million, an increase of $22.2 million or 37.8%, as compared to the pro forma
twelve months ended September 30, 1997. Approximately $8.0 million of the
increase was from the inclusion of the operating results of the Acquired
Subsidiaries excluding ACP after their acquisition. The inclusion of ACP for
twelve months in 1998 versus five months in 1997 accounted for an increase of
$6.4 million in gross profit. The remaining margin improvement was due to the
combined effect of spreading manufacturing overhead over a greater volume and
improved efficiency in plant operations. Gross profit as a percentage of net
sales decreased to 26.7% during the year ended September 30, 1998 from 29.2% for
the pro forma twelve months ended September 30, 1997. The decline in gross
profit percentage is attributable to the mix of industrial products and lack of
seasoning from the Acquired Subsidiaries excluding ACP.

     Selling, General and Administrative Expenses. Selling, general and
administrative expenses for the year ended September 30, 1998 were $23.2
million, an increase of $4.5 million or 24.4% over the $18.7 million for the pro
forma twelve months ended September 30, 1997. The increase in selling, general
and administrative expense was due to the inclusion of $2.7 million of expenses
from the Acquired Subsidiaries, excluding ACP, after their acquisition. The
inclusion of ACP for twelve months in 1998 versus five months in 1997 accounted
for an increase of $3.0 million in expenses. As a percentage of net sales,
selling, general and administrative expenses decreased from 9.3% for the pro
forma twelve months ended September 30, 1997 to 7.7% for the year ended
September 30, 1998. The percentage decrease was due to expenses being spread
over a larger volume base with the inclusion of the Acquired Subsidiaries'
operating results, excluding ACP.

                                       27


<PAGE>   28




     Amortization of intangible assets. Amortization of intangible assets was
$7.7 million for the year ended September 30, 1998, an increase of $3.8 million,
or 97.4%, as compared to the $3.9 million for the pro forma twelve months ended
September 30, 1997. The increase is due to the recording of twelve months of
amortization during the period ended September 30, 1998 for the goodwill and
identifiable intangible assets arising from the Merger versus five months of
amortization during the period ended September 30, 1997 as well as increased
amortization from goodwill and identifiable intangible assets from the Acquired
Subsidiaries, excluding ACP.

     Operating Income. Operating income was $50.0 million for the year ended
September 30, 1998, an increase of $13.8 million or 38.1% from the pro forma
twelve months ended September 30, 1997. The improvement in operating income was
achieved for the reasons discussed above under gross profit. As a percentage of
net sales, operating income decreased from 18.0% for the pro forma twelve months
ended September 30, 1997 to 16.5% for the year ended September 30, 1998. The
decrease in operating income percentage was due to the factors discussed above
under gross profit, as well as increased amortization of intangible assets.

     Net Interest Expense. Net interest expense increased from $9.1 million for
the pro forma twelve months ended September 30, 1997 to $27.2 million for the
year ended September 30, 1998. The increased interest expense resulted from the
Company's Senior Subordinated Notes being outstanding for twelve months during
the year ended September 30, 1998 and only five months during the period ended
September 30, 1997 and the interest on the drawings under the Company's Senior
Bank Facilities to finance the Recent Acquisitions.

     Provision for Income Taxes. The provision for income taxes for the year
ended September 30, 1998 is higher than the amount computed by applying the
statutory rate of approximately 40% to income before income taxes mainly due to
the amortization of goodwill which is not deductible for income tax purposes.

     Extraordinary Item. During the year ended September 30, 1998, the Company
recorded an extraordinary loss of $0.4 million (which is net of an income tax
benefit of $0.3 million) for the write-off of unamortized deferred financing
costs in connection with the repayment in full of indebtedness of ACP prior to
its scheduled maturity. For the pro forma twelve months ended September 30,
1997, the Company recorded an extraordinary loss of $1.6 million (which is net
of an income tax benefit of $1.0 million) for the write-off of unamortized
deferred financing costs in connection with the repayment in full of the term
indebtedness under the Company's Senior Bank Facilities.


                                     28

<PAGE>   29



LIQUIDITY AND CAPITAL RESOURCES

     In connection with the Merger, the Company issued $150.0 million principal
amount of 11-1/8% Senior Subordinated Notes due 2007 (the Senior Subordinated
Notes) and entered into a credit agreement providing for term loans of $45.0
million and a revolving credit facility of up to $30.0 million (the "Senior Bank
Facilities.) On July 1, 1997, the Company issued an additional $45.0 million
principal amount of 11-1/8% Senior Subordinated Notes and used the proceeds of
$47.6 million to pay the term loans under the Senior Bank Facility, the accrued
interest thereon and related fees and expenses. In addition, on September 12,
1997, the Company amended the revolving credit facility under the Senior Bank
Facility to increase the borrowings available under the revolving credit
facility from $30.0 million to $50.0 million and eliminate all borrowing base
limitations. On April 3, 1998, in connection with the acquisition of Mercer, the
Company, ACP Holdings and the lenders party thereto amended the Credit Agreement
to provide availability of $75.0 million of term loans to the Company
(consisting of $20.0 million of Tranche A Loans and $55.0 million of Tranche B
Loans) in addition to the Company's existing $50.0 million Revolving Credit
Facility. On September 8, 1998, in connection with the acquisition of Dalton and
the contribution of the capital stock of ACP, the Company, ACP Holdings and the
lenders party thereto amended and restated the Credit Agreement to provide for
additional Tranche B Loans in an aggregate principal amount of $70.0 million and
an Acquisition Loan Facility in aggregate principal amount outstanding at any
one time not to exceed $50.0 million. On November 24, 1998, the Company sold
$87.0 million principal amount of Senior Subordinated Notes, using $42.7 million
of the total proceeds of $86.8 million (net of debt issuance costs) to finance
the acquisition of Cast Alloys and $29.0 million of the proceeds to pay down
borrowings under the Acquisition Loan Facility. The Company used the remaining
proceeds for general corporate purposes.

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

     For the fiscal year ended March 31, 1997, the pro forma twelve months ended
September 30, 1997 and the fiscal years ended September 30, 1998 and 1999,
capital expenditures were $4.5 million, $5.1 million, $13.1 million and $41.6
million, respectively. The capital expenditures for the year ended September 30,
1999 were primarily the result of planned enhancements to certain equipment in
the manufacturing area and include expenditures of the Acquired Subsidiaries,
excluding ACP, since their acquisition date. Beside normal capital expenditures
at Neenah of $7.2 million, other significant capital expenditures were incurred
for updating of molding machines, melt and sand systems and purchase of an R&D
facility at certain subsidiaries during the fiscal year ended September 30,
1999.

     The Company's principal source of cash to fund its liquidity needs will be
net cash from operating activities and borrowings under its Senior Bank
Facilities. Net cash from operating activities for the years ended September 30,
1999 and 1998 was $31.1 million and $24.2 million, respectively. The increase
was due to increased operating income (before amortization and restructuring
charges) from the inclusion of the operating results of the Acquired
Subsidiaries. Net cash from operating activities for the pro forma twelve months
ended September 30, 1997 was $37.4 million, an increase of $13.9 million from
$23.5 million for the year ended March 31, 1997, primarily as a result of an
increase in operating income.

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

                                       29
<PAGE>   30




     Amounts under the $50.0 million Revolving Credit Facility may be used for
working capital and general corporate purposes, subject to certain limitations
under the Senior Bank Facilities. Amounts under the Acquisition Loan Facility
may be used to make acquisitions permitted under the Senior Bank Facilities. The
Company believes that such resources, together with the potential future use of
debt or equity financing, will allow the Company to pursue its strategic goal of
making selective acquisitions.

 RAW MATERIALS

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

INFLATION

     The Company does not believe that inflation has had a material impact on
its financial position or results of operations during the past three years.

CYCLICALITY AND SEASONALITY

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

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

YEAR 2000

     The company and its subsidiaries have conducted an evaluation of the
actions necessary in order to ensure that its computer systems will be able to
function without disruption with respect to the application of dating systems in
the year 2000. As a result of this evaluation, each company within the
consolidated entity is engaged in the process of upgrading, replacing and
testing certain of its information and other computer systems in order to
operate without disruption due to the year 2000 issues. The following represents
a summary of the status of information systems and non-information systems by
subsidiary:

Neenah Foundry Company
Information Systems. As of September 30, 1999, we believe that our information
systems are fully compliant with the year 2000. A local consulting firm has been
engaged since March, 1998 to assess the adequacy of all Neenah's software and
make whatever changes are necessary to be compliant with year 2000 issues. As of
September 30, 1999, Neenah completed all assessment, remediation and testing of
its software.

                                       30

<PAGE>   31



Non-Information Systems. With respect to date sensitive non-information systems,
Neenah has completed the assessment phase and internal checking all computer
programs and PC units, including embedded chip technology and microcontrollers,
for year 2000 compliance. This phase was completed by September 30, 1999.
Remediation began upon completion of the assessment phase and is scheduled to be
completed before December 31, 1999 for material programs and equipment.
Additionally, we are working with our insurance carrier to develop contingency
plans in the event a system failure occurs in our holding furnaces and other
equipment used in processing molten metal.

Dalton Corporation
Information Systems. The task force organized to address year 2000 issues at
Dalton Corporation has completed all phases of its plan to ensure all critical
systems are Year 2000 compliant. These efforts included full time dedication to
the project by approximately six employees over the past 18 months. Total costs
incurred during the project, including wages and benefits, are estimated at
$500,000.

Non-Information Systems. Virtually all of Dalton's non-information systems used
in the operation of its facility are not date sensitive. All date sensitive
non-information systems have been inventoried, assessed, remediated and tested
and are believed to be Year 2000 compliant.

Advanced Cast Products
Information Systems. An internal task force has reviewed
all financial and information systems currently in use and has determined that
all existing systems are year 2000 compliant.

Non-Information Systems. We believe all computer numeric controls and other
controls within the operation are year 2000 compliant.

Mercer Forge Corporation
Information Systems. New year 2000 compliant software has been purchased for
Mercer and A&M . Mercer's software has been installed and is fully operative.
The same package has been installed at A&M and will be fully operative by
December 15, 1999.

Non-Information Systems. Older PC's are currently being replaced and custom
programs have been reviewed and updated where necessary. Manufacturing
programmable controllers and computer numeric controls have been analyzed for
year 2000 problems and we believe no problems exist that will have any material
adverse effect on the business.

Deeter Foundry
Information Systems. New year 2000 compliant software has been installed and is
fully operational.

Non-Information Systems. With respect to non-information systems, Deeter has
just completed major renovations in the melting and sand system areas. As a
result, all of these systems are compliant with year 2000 issues.

Cast Alloys, Inc.
Information Systems. Cast Alloys has assembled a year 2000 task force consisting
of representatives from each company location to complete the assessment phase,
conduct research, complete testing and create contingency plans at Cast Alloys.
New year 2000 compliant financial software was installed in August, 1999 for
approximately $25,000. This remediation phase is complete. Contingency plans
will be completed prior to December 31, 1999 for those areas in which
remediation is not feasible.

                                       31
<PAGE>   32



Non-Information Systems. With respect to non-information systems, Cast Alloys is
in the assessment phase and is currently reviewing all critical systems
internally as well as embedded chip technology and microcontrollers to make sure
they are year 2000 compliant. The assessment and remediation phase is expected
to be completed by December 31, 1999, and contingency plans will be completed
for those areas in which remediation is not feasible.

     In summary, we believe that all out important critical vendors and
customers either have or will have addressed any problems associated with the
year 2000 issue such that there will be no significant deterioration in future
business dealings due to this issue.

     Costs specifically associated with renovating software for year 2000
readiness are funded through operating cash flows and expensed as incurred. Year
2000 related costs have not had a material effect on the Company's financial
position or results of operations. The Company and subsidiaries expect to incur
total costs (capital and expense) in the range of $1.5 to $2.0 million on the
year 2000 problem of which a total of approximately 5% to 10% is remaining to be
incurred. Costs of replacing some of the systems with Year 2000 compliant
systems (including both hardware and software) that have an extended useful life
in excess of one year have been appropriately capitalized.

     Although there can be no assurance that the remedial actions being
implemented by the Company and its subsidiaries will address every issue
relating to the year 2000 issue, the Company believes it is unlikely that any
disruptions resulting from the year 2000 issue would have any significant impact
on its overall operations. Although it is highly unlikely that the Company will
face year 2000 issues that significantly impact its overall operations, business
continuity plans have been developed to handle potential contingencies regarding
unforeseen year 2000 problems. Up to this point, no critical informational
technology projects have been either delayed or curtailed due to year 2000
efforts. In addition, the Company and subsidiaries have not experienced any
significant year 2000 problems to date.

Item 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is exposed to market risk related to changes in interest rates. The
Company does not use derivative financial instruments for speculative or trading
purposes.

     Interest Rate Sensitivity. The Company's earnings are affected by changes
in short-term interest rates as a result of its borrowings under the Senior Bank
Facilities. If market interest rates for such borrowings averaged 1% more during
the fiscal year ended September 30, 2000 than they did during fiscal 1999, the
Company's interest expense would increase, and income before income taxes would
decrease by approximately $4.0 million. This analysis does not consider the
effects of the reduced level of overall economic activity that could exist in
such an environment. Further, in the event of a 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 8.       FINANCIAL STATEMENTS AND  SUPPLEMENTARY DATA

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


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

     None.

                                       32
<PAGE>   33



                                    PART III

Item 10.       DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The following sets forth certain information as of September 30, 1999, with
respect to the persons who are members of the Board of Directors, key executive
officers and certain other key employees of the Company.

<TABLE>
<CAPTION>
        Name              Age            Position
        ----              ---            --------
<S>                       <C>    <C>

James K. Hildebrand        63    Chairman of the Board and Chief Executive Officer
William M. Barrett         52    President
Gary W. LaChey             53    Vice President - Finance, Treasurer and Secretary
Charles M. Kurtti          62    Vice President - Manufacturing and Engineering
William J. Martin          52    President - Hartley Controls Corporation
John Z. Rader              51    Vice President - Human Resources
Timothy J. Koller          50    Vice President - Construction Products, Sales, and Engineering
Frank C. Headington        50    Vice President - Marketing and Technology
Brenton F. Halsey          70    Director
David F. Thomas            49    Director
John D. Weber              35    Director
</TABLE>


     Mr. Hildebrand is Chairman of the Board and Chief Executive Officer of ACP
Holding Company, a position he has held since May 1, 1997. Mr. Hildebrand had
been President and Chief Executive Officer of Advanced Cast Products, Inc. from
1988 to 1997. Previously, he served as President of the Cast Products Group of
Amcast Industrial Corp.

     Mr. Barrett is President of the Company, a position he has held since
October 1, 1998. Mr. Barrett joined the Company in 1992 serving as General Sales
Manager - Industrial Castings until May 1, 1997. Mr. Barrett was Vice President
and General Manager from May 1, 1997 to September 30, 1998. From 1985 to 1992,
Mr. Barrett was the Vice President - Sales for Harvard Industries Cast Products
Group.

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

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

     Mr. Martin is President - Hartley Controls Corporation, a wholly owned
subsidiary of the Company, a position he has held since 1998. From 1996 to
September 30, 1998 Mr. Martin was Vice President and General Manager.
Previously, Mr. Martin was Territory Sales Manager at Disamatic, Inc., a molding
machine manufacturer, from 1986 to 1996.

     Mr. Rader is Vice President - Human Resources, a position he has held since
1990. Mr. Rader joined The Company in 1987, serving as Director - Personnel
until 1989 and as Director - Human Resources until 1990. Mr. Rader resigned his
position effective September 30, 1999.

     Mr. Koller is Vice President - Construction Products, Sales and Engineering
for the Company. Mr. Koller joined the Company in 1978, serving in a variety of
positions of increasing responsibility in the sales and marketing departments.

                                       33


<PAGE>   34



     Mr. Headington is Vice President - Marketing and Technology, a position he
has held since 1999. Mr. Headington joined the Company in 1989, as Manager -
Technical Services, a position he held until 1991. Previously Mr. Headington
served as Director - Product Reliability, from 1991 to 1999.

     Mr. Halsey is a director of the Company, a position he has held since May
1, 1997. Mr. Halsey was the founding Chief Executive Officer and Chairman of the
James River Corporation from 1969 to 1990. He continued as Chairman until 1992
when he became Chairman Emeritus.

     Mr. Thomas is a director of the Company, a position he has held since May
1, 1997. Mr. Thomas has been a Managing Director of Citicorp Venture Capital,
Ltd. for more than the past five years. Mr. Thomas is a director of Lifestyles
Furnishings International Ltd., Galey & Lord, Inc., Anvil Knitwear, Inc. and a
number of private companies.

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

     Directors of the Company who are officers or employees of the Company or
its affiliates are presently not expected to receive compensation for their
services as directors. No determination has yet been made with respect to
compensation for directors of the Company who are not officers or employees of
the Company or any of its affiliates. Directors of the Company will be entitled
to reimbursement of their reasonable out-of-pocket expenses in connection with
their travel to and attendance at meetings of the board of directors or
committees thereof.

                                       34

<PAGE>   35



ITEM 11.        Executive Compensation

     The compensation of executive officers of the Company will be determined by
the Board of Directors of the Company. None of the historical benefit or
compensation plans of the Company are described herein because each were
terminated with respect to the named officers and replaced as a group by a
single compensation plan in connection with the Merger (with the exception of a
401(k) plan and a retirement plan for Mr. Kurtti). The following table sets
forth information concerning compensation received by the five most highly
compensated officers of the Company for services rendered in the fiscal year
ended September 30, 1999, the fiscal year ended September 30, 1998, the five
month period ended September 30, 1997 ("FM 1997"), the one month period ended
April 30, 1997 ("OM 1997") and the fiscal year ended March 31, 1997.


<TABLE>
<CAPTION>





                                                                                                  Long-Term Compensation
                                              Annual Compensation                                 ----------------------
     Name and Principal      Fiscal           -------------------    Other Annual          Options/         LTIP       All Other
        Position              Year            Salary        Bonus    Compensation(1)        SARs(#)      Payouts    Compensation
        --------              ----            ------        -----     ---------------        -------      -------    ------------
<S>                          <C>         <C>            <C>           <C>                  <C>          <C>          <C>
James K. Hildebrand              1999     $ 500,000      $304,000      $36,605                 --         --                 --
   Chairman and Chief            1998       120,000        84,000       34,107
   Executive Officer          FM 1997        50,000            --       10,860
                              OM 1997            --            --           --
                                 1997            --            --           --

William M. Barrett               1999       240,629       140,000       30,271                 --         --                 --
   Vice President and            1998       148,500        85,575       31,490
   General Manager            FM 1997        55,000            --       11,430
                              OM 1997         8,225            --        1,936
                                 1997        98,700        20,000       26,030

Gary W. LaChey                   1999       175,000       122,500       29,909                 --         --                 --
   Vice President -              1998       145,345        86,980       31,469
Finance, Secretary            FM 1997        59,175            --       10,723
    and Treasurer             OM 1997        11,833            --        2,081
                                 1997       137,998        40,000       26,984

Charles M. Kurtti                1999       150,100        97,020       31,063                 --         --                 --
   Vice President -              1998       137,500        80,850       34,510
   Manufacturing and          FM 1997        55,000            --       11,430
   Engineering                OM 1997        11,000            --        2,229
                                 1997       127,750        45,000       32,230

John Z. Rader                    1999       143,000        96,600       27,278                 --         --                 --
   Vice President -              1998       137,000        80,850       31,303
Human Resources               FM 1997        55,000            --       11,430
                              OM 1997        11,000            --        2,229
                                 1997       127,750        40,000       29,725
</TABLE>



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

                                       35
<PAGE>   36


MANAGEMENT INCENTIVE PLAN

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

MANAGEMENT EQUITY PARTICIPATION

    In connection with the Merger, the then current Management Investors
acquired units representing membership interests in ACP Products, L.L.C., which
represent, in the aggregate, approximately a ten percent beneficial interest in
the Company (the "Purchased Interests"). In addition, in connection with certain
of the Recent Acquisitions, certain senior managers of certain of the Acquired
Subsidiaries purchased common interests in ACP Products, L.L.C. The Management
Investors and certain other employees of the Company may be given the
opportunity to purchase additional Purchased Interests either in connection with
future acquisitions or otherwise.

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



Item 12.       SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

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

     The outstanding common units of ACP Products, L.L.C. consist of 95,000
Class A-3 Common Units (the "Class A Common Units"), 936,735 Class B-3 Common
Units (the "Class B Common Units") and 103,500 Class C-3 Common Units (the
"Class C Common Units"), and together with the Class A "Common Units" and the
Class B Common Units, the "Common Units"). Holders of Class A Common Units are
entitled to one vote per Class A Common Unit on all matters to be voted upon by
the holders of Class A Common Units. Holders of Class C Common Units are
entitled to a number of votes per Class C Common Unit based on the total number
of Class C Common Units outstanding, on all matters to be voted upon by the
holders of Class C Common Units. Holders of Class B Common Units have no right
to vote on any matters to be voted on by holders of Common Units. Holders of
Class B Common Units may elect at any time to convert any or all of such Units
into Class A Common Units, on a Common Unit-for-Common-Unit basis.

                                       36
<PAGE>   37


      Set forth below is certain information regarding the beneficial ownership
as of September 30, 1999 of Class A Common Units and Class C Common Units,
respectively, by each person who beneficially owns 5.0% or more of the
outstanding Class A Common Units or Class C Common Units, each director and
Named Executive Officer and all directors and Named Executive Officers as a
group. Except as indicated below, the address for each of the persons listed
below is c/o Neenah Foundry Company, 2121 Brooks Avenue, Box 729, Neenah,
Wisconsin 54957.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
                                                Number of       Number of     Percentage     Percentage    Percentage
                                               Voting Class   Voting Class     of Voting      of Voting     of Voting
NAME AND ADDRESS OF BENEFICIAL OWNER            A Common       C Common        Class A         Class C       Common
------------------------------------             Units           Units         Common          Common         Units
                                                                                Units           Units
------------------------------------------------------------------------------------------------------------------------
<S>                                             <C>           <C>             <C>             <C>           <C>
Citicorp Venture Capital, Ltd. (1) (2)            81,000              --         85.26%             --        40.81%
399 Park Avenue
New York, New York  10043
------------------------------------------------------------------------------------------------------------------------
Metropolitan Life Insurance Company (1)            5,000              --          5.26%             --         2.52%
One Madison Avenue
New York, New York  10010
------------------------------------------------------------------------------------------------------------------------
Executive Officers (1)                                --          93,000             --         89.85%        46.86%
------------------------------------------------------------------------------------------------------------------------
David F Thomas (1) (3)                            84,167              --         88.60%             --        42.40%
------------------------------------------------------------------------------------------------------------------------
John D. Weber (1) (3)                             81,169              --         85.44%             --        40.89%
------------------------------------------------------------------------------------------------------------------------
Directors and named executive officers as a
group                                             89,336          93,000         94.04%         89.85%        91.86%
------------------------------------------------------------------------------------------------------------------------
</TABLE>



     (1)  Such persons disclaim beneficial ownership of the Common Stock.

     (2)  Citicorp Venture Capital, Ltd. and its affiliates (collectively,
          "CVC") own 766,794 Class B Common Units representing 81.86% of the
          Class B Common Units outstanding.

     (3)  Consists of the Class A Common Units held directly by Messrs. Thomas
          and Weber and the 81,000 held by CVC, which may be deemed to be
          beneficially owned by Messrs. Thomas and Weber. Messrs. Thomas and
          Weber disclaim beneficial ownership of Units held by CVC. Mr. Thomas
          is a managing director of CVC. Mr. Weber is a vice president of CVC.

                                       37
<PAGE>   38




ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

RELATIONSHIP WITH ACP HOLDINGS

     ACP Products, L.L.C. holds all of the issued and outstanding shares of
capital stock of ACP Holdings. ACP Holdings is the parent company of NFC
Castings, Inc., and thus ACP Holdings indirectly owns 100% of the Common Stock
of the Company. James K. Hildebrand, who serves as the Chairman of the Board and
Chief Executive Officer of the Company, currently serves as President and Chief
Executive Officer of ACP Holdings.

SHAREHOLDER RELATIONSHIPS

     The Management Investors and certain institutional investors, including
Citicorp Venture Capital, Ltd., are parties to the Fifth Amended and Restated
Limited Liability Agreement of ACP Products, L.L.C. (the "L.L.C. Agreement").
The L.L.C. Agreement contains certain provisions with respect to the beneficial
equity interests and corporate governance of the Company. The L.L.C. Agreement
provides that the Investor Group and the Management Investors, as the only
members of ACP Products, L.L.C. holding beneficial interests in the Company,
have the right to direct all actions taken in respect of NFC Castings, Inc. and
the Company, including, without limitation, appointing members of the Board of
Directors of the Company and of NFC Castings, Inc..

CONTRIBUTION OF ACP CAPITAL STOCK

     On September 8, 1998, the capital stock of ACP was contributed to the
Company by ACP Holdings. In connection with the contribution, the Company
assumed $14.9 million of indebtedness of ACP, $14.6 of which was refinanced
through borrowings of Tranche A Loans. In connection with the contribution of
the capital stock of ACP to the Company, (i) NFC Castings, Inc. issued a $4.2
million senior subordinated note to CVC in exchange for a $4.2 million current
pay obligation of ACP to CVC and (ii) $6.7 million of outstanding subordinated
debt of ACP to ACP Holdings and NFC Castings, Inc. was contributed to the
capital of ACP.

REGISTRATION RIGHTS AGREEMENT

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

EMPLOYMENT AGREEMENTS

      Prior to the Merger, the Predecessor Company entered into a consulting
agreement with James P. Keating, Jr. a former Senior Vice President of the
Company, that provided that Mr. Keating would be available to serve as a
consultant to the Company from July 1, 1997 to June 30, 1999. During this term,
Mr. Keating was paid $16,500 per month under such consulting agreement.

                                       38
<PAGE>   39


     The Company, ACP, ACP Holdings and ACP Products, L.L.C. entered into an
executive employment and consulting agreement with James K. Hildebrand dated as
of September 15, 1998. Such agreement provides for (I) an initial term of
employment until September 30, 2001 after which, barring termination by the
Company under certain circumstances (including gross negligence, willful
misconduct and commission of certain crimes), Mr. Hildebrand will serve as a
consultant to the Company for a period of two years with automatic renewal,
subject to earlier termination notice by either party, for successive one year
periods up to an additional three years; (ii) a minimum base salary of $500,000
and a bonus to be calculated based on achieved EBITDA performance so long as Mr.
Hildebrand is employed by the Company; (iii) severance benefits; (iv)
non-competition, non-solicitation and confidentiality agreements; (v) an option
to purchase certain common membership units of ACP Products L.L.C.; and (vi)
other terms and conditions of Mr. Hildebrand's employment including health
benefits.

     In connection with the Company's acquisition of all of the capital stock of
Dalton, Dalton entered into an employment agreement with K.L. Davidson dated as
of September 8, 1998 to serve as President of Dalton. Such agreement provides
for (I) an initial one year term which shall be renewed automatically, subject
to earlier termination notice by either party, for successive one year terms
until Mr. Davidson attains the age of 65; (ii) a minimum base salary and bonus
following the end of each fiscal year so long as Dalton employs Mr. Davidson;
(iii) severance benefits; (iv) non-solicitation, non-compete and confidentiality
agreements; and (v) other terms and conditions of Mr. Davidson's employment. On
June 30, 1999, Mr. Davidson elected to retire as President of Dalton under the
terms of the above employment agreement.


                                       39
<PAGE>   40


Part IV

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

<TABLE>
<CAPTION>

                                                                                                  Page
                                                                                                  ----
<S>                                                                                               <C>
(a)  (1) Consolidated Financial Statements of Neenah Foundry Company

               Report of Ernst & Young LLP, Independent Auditors                                   47

               Consolidated Balance Sheets                                                         48

               Consolidated Statements of  Operations                                              50

               Consolidated Statements of Changes in Stockholder's Equity                          51

               Consolidated Statements of Cash Flows                                               52

               Notes to Consolidated Financial Statements                                          54

         Consolidated Financial Statements of Neenah Foundry Company  (Predecessor)

               Report of Ernst & Young LLP, Independent Auditors                                   78

               Consolidated Balance Sheets                                                         79

               Consolidated Statements of Income                                                   81

               Consolidated Statements of Changes in Stockholder's Equity                          82

               Consolidated Statements of Cash Flows                                               83

               Notes to Consolidated Financial Statements                                          84

         (2)   Financial Statements Schedules

               Report of Ernst & Young LLP, Independent Auditors                                   96

               Schedule II - Valuation and Qualifying Accounts of Neenah Foundry Company           97

               Report of Ernst & Young LLP, Independent Auditors                                   98

               Schedule II - Valuation and Qualifying Accounts of Neenah Foundry Company           99
                    (Predecessor)
</TABLE>


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

(b) Reports on Form 8-K.

          The Company filed no reports on Form 8-K during the quarter ended
          September 30, 1999.

(c) Exhibits

          See Exhibit Index.

                                       40

<PAGE>   41



SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized in the City of Neenah,
State of Wisconsin, on December 23, 1999.



                                          NEENAH FOUNDRY  COMPANY
                                          --------------------------------------


                                          (Registrant)

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

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below on December 23, 1999, by the following persons on behalf
of the registrant and in the capacities indicated.

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

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


     /s/ John D. Weber
--------------------------------------
           John D. Weber
             Director



                                       41

<PAGE>   42


<TABLE>
<CAPTION>
                                  EXHIBIT INDEX
EXHIBITS
<S>  <C>

2.1  Agreement and Plan of Reorganization, dated November 20, 1996, by and among
     NFC Castings, Inc., NC Merger Company and Neenah Corporation. **
2.2  First Amendment to Agreement and Plan of Reorganization, dated as of
     January 13, 1997, by and among NFC Castings, Inc., NC Merger Company and
     Neenah Corporation. **
2.3  Second Amendment to Agreement and Plan of Reorganization, dated as of
     February 21, 1997, by and among NFC Castings, Inc., NC Merger Company and
     Neenah Corporation. **
2.4  Third Amendment to Agreement and Plan of
     Reorganization, dated as of April 3, 1997, by and among NFC Castings, Inc.,
     NC Merger Company and Neenah Corporation. **
2.5  Merger Agreement, made as of July 1,1997, by and between Neenah Corporation
     and Neenah Foundry Company. **
2.6  Stock Purchase Agreement for the acquisition of Deeter Foundry, Inc. dated
     as of March 26, 1998 by and among Neenah Foundry Company and the Selling
     Shareholders of Deeter Foundry, Inc. (incorporated by reference to the
     Company's Form 10-Q for the period ended March 31, 1998 filed on May 14,
     1998.)
2.7  Stock Purchase Agreement for the acquisition of Mercer dated as of April 3,
     1998 by and among Neenah Foundry Company, Mercer Forge Corporation and the
     Selling Shareholders of Mercer (incorporatedby reference to the Company's
     Form 8-K filed on April 14, 1998.)
2.8  Stock Purchase Agreement for the acquisition of Dalton dated as of August
     7, 1998 by and among Neenah Foundry Company, Dalton Corporation and the
     Dalton Corporation Employee Stock Ownership Plan and Trust (incorporated by
     reference to the Company's Form 8-K filed on September 21, 1998.)
2.9  Stock Purchase Agreement dated as of December 3, 1998 among Niemin Porter &
     Co. d/b/a Cast Alloys, Inc., the Sellers as defined therein and Neenah
     Foundry Company. ****
2.10 First Amendment to the Stock Purchase Agreement dated December 30, 1998
     among Niemin Porter & Co. d/b/a Cast Alloys, Inc., the Sellers as defined
     therein and Neenah Foundry Company. ****
3.1  Restated Articles of Incorporation of Neenah Foundry Company. **
3.2  By-laws of Neenah Foundry Company. **
3.3  (Intentionally omitted.)
3.4  (Intentionally omitted.)
3.5  Restated Articles of Incorporation of Hartley Controls Corporation. **
3.6  By-laws of Hartley Controls Corporation. **
3.7  Restated Articles of Incorporation of Neenah Transport, Inc.**
3.8  By-laws of Neenah Transport, Inc. **
4.1  Indenture dated as of April 30, 1997 among NC Merger Company and United
     States Trust Company of New York. *
4.2  Purchase Agreement dated as of April 23, 1997 among NC Merger Company,
     Chase Securities Inc. and Morgan Stanley & Co. Incorporated. **
4.3  Exchange and Registration Rights Agreement dated as of April 30, 1997 among
     Neenah Corporation, Neenah Foundry Company, Hartley Controls Corporation
     and Neenah Transport, Inc. and Chase Securities, Inc.**
4.4  First Supplemental Indenture, dated as of April 30, 1997 among Neenah
     Corporation, Neenah Foundry Company, Neenah Transport, Inc. and Hartley
     Controls Corporation and United States Trust Company of New York. **
4.5  Letter Agreement, dated as of April 30, 1997 among Neenah Corporation,
     Neenah Foundry Company, Hartley Controls Corporation and Neenah Transport,
     Inc. and Chase Securities Inc. and Morgan Stanley & Co. Incorporated. **
4.6  Form of Global Note relating to the Indenture dated as of April 23, 1997.
     **
</TABLE>



                                       42

<PAGE>   43
<TABLE>
<S>   <C>
4.7    Indenture dated as of July 1, 1997 among Neenah Corporation, Neenah Foundry
       Company, Neenah Transport, Inc., Hartley Controls Corporation and United
       States Trust Company of New York. **
4.8    Purchase Agreement dated as of June 26, 1997 among Neenah Corporation,
       Neenah Foundry Company, Hartley Controls Corporation, Neenah Transport,
       Inc. and Chase Securities Inc. **
4.9    Exchange and Registration Rights Agreement dated as of July 1, 1997 by and
       between Neenah Corporation, Neenah Foundry Company, Hartley Controls
       Corporation, Neenah Transport, Inc. and Chase Securities, Inc. **
4.10   Form of Global Note related to the Indenture dated as of July 1, 1997. **
4.11   Indenture dated as of November 24, 1998 among Neenah Foundry Company,
       Neenah Transport, Inc., Hartley Controls Corporation, the Guarantors and
       United States Trust Company of New York. ****
10.1   Master Lease Agreement between Neenah Foundry Company and Bank One Leasing
       Corporation dated December 14, 1992. **
10.2   Agreement between Neenah Foundry Company and Rockwell International
       Corporation effective April 1, 1995. **
10.3   Letter Agreement between Neenah Foundry Company and Eaton Corporation dated
       April 4, 1996.**
10.4   (Intentionally omitted).
10.5   1999-2001 Collective Bargaining Agreement between Neenah Foundry Company
       and Local 121B Glass, Molders, Pottery, Plastics and Allied Workers
       International Union AFL-CIO-CLC. *
10.6   1998-2000 Collective Bargaining Agreement between Neenah Foundry Company
       and The Independent Patternmakers Union of Neenah, Wisconsin. ***
10.7   Credit Agreement dated as of April 30, 1997 as Amended and Restated as of
       September 12, 1997, as of April 3, 1998, and as of September 8, 1998 by and
       among Neenah Foundry Company, NFC Castings, Inc., the Chase Manhattan Bank
       as Administrative Agent, Chase Securities, Inc. as Arranger and the other
       Lenders from time to time party thereto (incorporated by reference to the
       Company's Form 8-K filed on September 21, 1998.)
10.8   Employment Agreement dated September 9, 1994 between the Neenah
       Corporation, Neenah Foundry Company, Harley Controls Corporation, Neenah
       Transport, Inc. and James P. Keating, Jr.**
10.9   Consulting Agreement dated September 9, 1994 between the Neenah Foundry
       Company and the Guarantors and James P. Keating, Jr. **
10.10  First Amendment to Employment Agreement, dated September 9, 1994, between
       Neenah Foundry Company, Neenah Corporation, Hartley Controls Corporation
       and James P. Keating, Jr. **
10.11  Pledge Agreement dated as of April 30, 1997, among NC Merger Company, a
       Wisconsin Corporation, NFC Castings, Inc., a Delaware Corporation. **
10.12  Subsidiary Guarantee Agreement dated as of April 30, 1997, among each of
       the subsidiaries listed of NC Merger Company, a Wisconsin corporation, and
       The Chase Manhattan Bank, a New York banking corporation, as collateral
       agent for the secured parties. **
10.13  Parent Guarantee Agreement dated as of April 30, 1997, between NFC
       Castings, Inc., a Delaware corporation and The Chase Manhattan Bank, a New
       York banking corporation, as collateral agent for the secured parties. **
10.14  Security Agreement dated as of April 30, 1997, among NC Merger Company, a
       Wisconsin corporation, each subsidiary of the borrower and The Chase
       Manhattan Bank, a New York banking corporation, as collateral agent for the
       secured parties. **
10.15  Form of Mortgage. **
</TABLE>


                                       43

<PAGE>   44
<TABLE>
<S>   <C>
10.16 Amendment No. 1, Consent and Waiver, dated as of November 18, 1998, to the
      Credit Agreement dated as of April 30, 1997 as Amended and Restated as of
      September 12, 1997, as of April 3, 1998, and as of September 8, 1998 by
      and among Neenah Foundry Company, NFC Castings, Inc., the Lenders from
      time to time party thereto, and the Chase Manhattan Bank. ***

10.17 Cash Collateral Account Agreement dated as of November 24, 1998, between
      Neenah Foundry Company and the Chase Manhattan Bank. ***

10.18 Executive Employment and Consulting Agreement dated September 15, 1998 by
      and among Neenah Foundry Co., Advanced Cast Products, Inc., ACP Holding
      Co., ACP Products, LLC and James K. Hildebrand.***

10.19 Dalton Corporation, KLDavidson Employment Agreement dated September 8,
      1998. ***

10.20 Purchase Agreement dated November 19, 1998 among Neenah Foundry Company.
      Neenah Transport, Inc., Hartley Controls Corporation, the Guarantors and
      the Initial Purchasers. ****

10.21 Exchange and Registration Rights Agreement dated November 24, 1998 among
      Neenah Foundry Company, Neenah Transport, Inc., Hartley Controls
      Corporation, the Guarantors and the Initial Purchasers. ****

21.1  Subsidiaries of the Registrant. *

27.1  Financial Data Schedule. *
</TABLE>


-----
   * Filed herewith
  ** Incorporated by reference to the Company's Form S-4 (Registration No.
     333-28751) which became effective August 29, 1997.
 *** Incorporated by reference to the Company's Form 10-K (Registration No.
     332-28751) which was filed December 23, 1998.
**** Incorporated by reference to the Company's Form S-4
     (Registration No. 333-72455) which became effective May 13, 1999.

                                       44



















<PAGE>   45








                             CONSOLIDATED FINANCIAL
                             STATEMENTS

                             NEENAH FOUNDRY COMPANY

                             For the twelve months ended
                             September 30, 1999 and 1998
                             and for the period from inception,
                             May 1, 1997, through September 30, 1997






                                       45
<PAGE>   46


                             Neenah Foundry Company

                        Consolidated Financial Statements

             For the twelve months ended September 30, 1999 and 1998
                 and for the period from inception, May 1,1997,
                           through September 30, 1997





                                    CONTENTS
<TABLE>
<S>                                                                                                    <C>
Report of Independent Auditors...........................................................................1

Consolidated Balance Sheets..............................................................................2
Consolidated Statements of Operations....................................................................4
Consolidated Statements of Changes in Stockholder's Equity...............................................5
Consolidated Statements of Cash Flows....................................................................6
Notes to Consolidated Financial Statements...............................................................8
</TABLE>


                                       46




<PAGE>   47


                         Report of Independent Auditors


Board of Directors
Neenah Foundry Company

We have audited the accompanying consolidated balance sheets of Neenah Foundry
Company (the Company) as of September 30, 1999 and 1998 and the related
consolidated statements of operations, changes in stockholder's equity and cash
flows for the twelve months ended September 30, 1999 and 1998 and for the period
from inception, May 1, 1997, through September 30, 1997. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of the
Company as of September 30, 1999 and 1998, and the consolidated results of its
operations and its cash flows for the twelve months ended September 30, 1999 and
1998 and for the period from inception, May 1, 1997, through September 30, 1997,
in conformity with generally accepted accounting principles.



November 5, 1999


                                       47

<PAGE>   48


                             Neenah Foundry Company

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


<TABLE>
<CAPTION>

                                                                                   SEPTEMBER 30
                                                                               1999            1998
                                                                         ---------------------------------
<S>                                                                         <C>               <C>
ASSETS
Current assets:
   Cash and cash equivalents                                                  $ 17,368         $ 19,798
   Accounts receivable, less allowance for doubtful
    accounts of $1,020 in 1999 and $853 in 1998                                 77,696           71,655
   Inventories                                                                  56,387           40,841
   Refundable income taxes                                                           -              375
   Deferred income taxes                                                         3,534            4,888
   Other current assets                                                          5,223            5,060
                                                                         ---------------------------------
Total current assets                                                           160,208          142,617


Property, plant and equipment:
   Land                                                                          5,647            4,724
   Buildings and improvements                                                   24,653           19,954
   Machinery and equipment                                                     181,078          147,554
   Patterns                                                                     26,950           26,439
   Construction in progress                                                     16,917            5,251
                                                                         ---------------------------------
                                                                               255,245          198,671
   Less accumulated depreciation                                                46,441           18,134
                                                                         ---------------------------------
                                                                               208,804          180,537


Deferred financing costs, net of accumulated amortization
 of $2,781 in  1999 and $1,179 in 1998                                          10,451            8,818
Identifiable intangible assets, net of accumulated
 amortization of $10,700 in 1999 and $4,448 in 1998                             62,852           61,086
Goodwill, net of accumulated amortization of $11,560 in
 1999 and $6,268  in 1998                                                      190,469          184,181
Other assets                                                                     8,918            7,070
                                                                         ---------------------------------
                                                                               272,690          261,155
                                                                         ---------------------------------
                                                                              $641,702         $584,309
                                                                         =================================
</TABLE>

                                       48

<PAGE>   49


<TABLE>
<CAPTION>

                                                                                  SEPTEMBER 30
                                                                               1999            1998
                                                                         ---------------------------------
<S>                                                                           <C>            <C>
LIABILITIES AND STOCKHOLDER'S EQUITY
 Current liabilities:
   Accounts payable                                                           $ 31,151        $ 29,920
   Income taxes payable                                                          1,129               -
   Accrued wages and employee benefits                                          14,560          13,005
   Accrued interest                                                             13,678           9,847
   Other accrued liabilities                                                    10,394           7,474
   Current portion of long-term debt                                             5,334           4,185
                                                                         ---------------------------------
Total current liabilities                                                       76,246          64,431

Long-term debt                                                                 423,887         367,686
Postretirement benefit obligations                                               5,641           5,220
Deferred income taxes                                                           64,237          68,069
Other liabilities                                                                7,941          10,981
                                                                         ---------------------------------
Total liabilities                                                              577,952         516,387

Commitments and contingencies

Stockholder's equity:
   Preferred stock, par value $100 per share; authorized
    3,000 shares; no shares issued or outstanding                                   -               -
   Common stock, Class A (voting), par value $100 per
    share; authorized 1,000 shares; issued and outstanding,
    1,000 shares                                                                  100             100

   Common stock, Class B (nonvoting), par value $100 per
   share; authorized 10,000 shares; no shares issued or
   outstanding                                                                       -               -

   Capital in excess of par value                                               51,317          55,167
   Retained earnings                                                            12,333          14,225
   Pension liability adjustment                                                      -          (1,570)
                                                                         ---------------------------------
Total stockholder's equity                                                      63,750          67,922
                                                                         ---------------------------------

                                                                              $641,702        $584,309
                                                                         =================================
</TABLE>




See accompanying notes.
                                       49
<PAGE>   50


                             Neenah Foundry Company

                      Consolidated Statements of Operations
                                 (In Thousands)

<TABLE>
<CAPTION>
                                                                                        FIVE MONTHS ENDED
                                                                                           SEPTEMBER
                                                      YEAR ENDED SEPTEMBER 30                   30
                                                     1999                 1998                 1997
                                             ---------------------------------------------------------------
<S>                                                 <C>                  <C>                  <C>
Net sales                                           $530,057             $303,414             $108,353
Cost of sales                                        432,437              222,451               77,444
                                             ---------------------------------------------------------------
Gross profit                                          97,620               80,963               30,909

Selling, general and administrative
  expenses                                            35,855               23,192                8,642

Amortization expense                                  11,696                7,727                3,900
Restructuring charge                                   6,713                    -                    -
Loss on disposal of equipment                            789                   38                   10
                                             ---------------------------------------------------------------
Operating income                                      42,567               50,006               18,357

Other income (expense):
   Interest expense                                  (43,803)             (28,096)             (10,358)
   Interest income                                     1,408                  893                  367
                                             ---------------------------------------------------------------
Income before income taxes and
   extraordinary item                                    172               22,803                8,366
Provision for income taxes                             2,064               10,922                4,000
                                             ---------------------------------------------------------------
Income (loss) before extraordinary
  item                                                (1,892)              11,881                4,366

Extraordinary item, net of income
 tax benefit of $260 in 1998 and
 $999 in 1997                                              -                 (392)              (1,630)
                                             ---------------------------------------------------------------
Net income (loss)                                   $ (1,892)           $  11,489            $   2,736
                                             ===============================================================
</TABLE>



See accompanying notes.

                                       50
<PAGE>   51
                             Neenah Foundry Company

           Consolidated Statements of Changes in Stockholder's Equity
                                 (In Thousands)


<TABLE>
<CAPTION>


                                                             Common Stock
                                                          --------------------                               Accumulated
                                                                                   Capital in                   Other
                                               Preferred                         Excess of Par   Retained   Comprehensive
                                                 Stock    Class A    Class B         Value       Earnings    Income (Loss)   Total
                                               ---------  ---------  ---------   -------------   ---------  -------------  --------
<S>                                            <C>        <C>        <C>         <C>             <C>        <C>            <C>
Balance at May 1, 1997                         $      --  $     100  $      --   $      44,571   $      --  $          --  $ 44,671
   Net income                                         --         --         --              --       2,736             --     2,736
                                               ---------  ---------  ---------   -------------   ---------  -------------  --------
Balance at September 30, 1997                         --        100         --          44,571       2,736             --    47,407
   Additional capital contributions                   --         --         --          10,596          --             --    10,596
   Components of comprehensive income (loss):
     Net income                                       --         --         --              --      11,489             --    11,489
     Pension liability adjustment, net of tax
       effect of $1,048                               --         --         --              --          --         (1,570)   (1,570)
                                                                                                                           --------
   Total comprehensive income                                                                                                 9,919
                                               ---------  ---------  ---------   -------------   ---------  -------------  --------
Balance at September 30, 1998                         --        100         --          55,167      14,225         (1,570)   67,922
   Return of fiscal 1998 capital contribution         --         --         --          (3,850)         --             --    (3,850)
   Components of comprehensive income (loss):
     Net loss                                         --         --         --              --      (1,892)            --    (1,892)
     Pension liability adjustment, net of tax
       effect of $1,048                               --         --         --              --          --          1,570     1,570
                                                                                                                           --------
   Total comprehensive income                                                                                                  (322)
                                               ---------  ---------  ---------   -------------   ---------  -------------  --------
Balance at September 30, 1999                  $      --  $     100  $      --   $      51,317   $  12,333  $          --  $ 63,750
                                               =========  =========  =========   =============   =========  =============  ========

</TABLE>


See accompanying notes.


                                       51


<PAGE>   52


                             Neenah Foundry Company

                      Consolidated Statements of Cash Flows
                                 (In Thousands)

<TABLE>
<CAPTION>


                                                                           YEAR ENDED
                                                                          SEPTEMBER 30                FIVE MONTHS ENDED
                                                              -------------------------------------     SEPTEMBER 30
                                                                     1999              1998                1997
                                                              ---------------------------------------------------------
<S>                                                               <C>               <C>                <C>

OPERATING ACTIVITIES
Net income (loss)                                                 $  (1,892)        $    11,489           $   2,736
Adjustments to reconcile net income (loss) to
   net cash provided by operating activities:
     Extraordinary item                                                   -                 652               2,629
     Provision for impairment of assets                               6,030                   -                   -
     Depreciation                                                    23,990              11,927               3,799
     Amortization of identifiable intangible assets
      and goodwill                                                   11,696               7,727               3,900
     Amortization of deferred financing costs and
      premium on notes                                                1,011                 713                 342
     Loss on sale of property, plant and equipment                      789                  38                  10
     Deferred income taxes                                           (8,248)             (2,437)             (2,147)
     Other                                                                -                  41                 (20)
     Changes in operating assets and liabilities:
       Accounts receivable                                           (2,977)             (3,926)             (4,696)
       Inventories                                                   (1,028)                812               5,648
       Other current assets                                             684                (715)                152
       Accounts payable                                              (5,217)               (158)              1,403
       Income taxes                                                   1,504              (5,050)              2,143
       Accrued liabilities                                            4,452               4,198               9,099
       Postretirement benefit obligations                               421                 341                 141
       Other liabilities                                               (110)             (1,416)                 21
                                                              ---------------------------------------------------------
Net cash provided by operating activities                            31,105              24,236              25,160

INVESTING ACTIVITIES
Acquisition of businesses, net of cash acquired                     (40,824)           (169,109)            (12,530)
Purchase of property, plant and equipment                           (41,643)            (13,117)             (3,081)
Other                                                                  (780)                 58                 909
                                                              ---------------------------------------------------------
Net cash used in investing activities                               (83,247)           (182,168)            (14,702)
</TABLE>





                                       52
<PAGE>   53


                             Neenah Foundry Company

                Consolidated Statements of Cash Flows (continued)
                                 (In Thousands)

<TABLE>
<CAPTION>

                                                                           YEAR ENDED
                                                                          SEPTEMBER 30                FIVE MONTHS ENDED
                                                              -------------------------------------     SEPTEMBER 30
                                                                     1999                1998                1997
                                                              ----------------------------------------------------------
<S>                                                                 <C>                <C>                 <C>
FINANCING ACTIVITIES
Proceeds from long-term debt                                        $ 90,405          $ 175,987           $  47,588
Payments on long-term debt                                           (33,607)           (15,753)            (47,888)
Return of capital contribution                                        (3,850)                 -                   -
Debt issuance costs                                                   (3,236)            (2,850)             (1,356)
                                                              ----------------------------------------------------------
Net cash provided by financing activities                             49,712            157,384              (1,656)
                                                              ----------------------------------------------------------

Increase (decrease) in cash and cash equivalents                      (2,430)              (548)              8,802
Cash and cash equivalents at beginning of period                      19,798             20,346              11,544
                                                              ----------------------------------------------------------
Cash and cash equivalents at end of period                          $ 17,368          $  19,798           $  20,346
                                                              ==========================================================
Supplemental disclosures of cash flow
  information:
    Cash paid for:
       Interest                                                     $ 38,961          $  25,994           $   1,560
       Income taxes                                                    8,656             16,340               3,716
</TABLE>



                                       53




<PAGE>   54


                             Neenah Foundry Company

                   Notes to Consolidated Financial Statements

                               September 30, 1999
                                 (In Thousands)



1. NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES

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

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

Neenah manufactures gray and ductile iron castings for sale to industrial and
municipal customers. Industrial castings are custom-engineered and are produced
for customers in several industries, including the medium and heavy-duty truck
components, farm equipment, heating, ventilation, and air-conditioning
industries. Municipal castings include manhole covers and frames, storm sewer
frames and grates, trench drain systems, tree grates and specialty castings for
a variety of applications and are sold principally to state and local government
entities, utility companies and contractors.


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

     Neenah has the following subsidiaries, all of which are wholly owned:
     Neenah Transport, Inc. (Transport); Hartley Controls Corporation (Hartley);
     Deeter Foundry, Inc. (Deeter); Mercer Forge Corporation and subsidiaries
     (Mercer); Dalton Corporation and subsidiaries (Dalton); Advanced Cast
     Products, Inc. (ACP); and Cast Alloys, Inc. (Cast Alloys). Transport is a
     common and contract carrier licensed to operate in the continental






                                       54

<PAGE>   55

                             Neenah Foundry Company

                Notes to Consolidated Financial Statements (continued)
                                 (In Thousands)


United States. The majority of Transport's revenues are derived from transport
services provided to the Company. Hartley designs and manufactures customized
sand control systems for the foundry industry. Deeter manufactures gray iron
castings for the municipal market and special application construction castings
which are used in waste treatment plants, airports, telephone and electrical
construction projects. Mercer produces forged components for use in
transportation, railroad, mining and heavy industrial applications and
microalloy forgings for use by original equipment manufacturers and industrial
end users. Dalton manufactures gray iron castings for refrigeration systems, air
conditioners, heavy equipment, engines, gear boxes, stationary transmissions,
heavy duty truck transmissions and other automotive parts. ACP manufactures
ductile and malleable iron castings for use in various industrial segments,
including heavy truck, construction equipment, railroad, mining and automotive.
Cast Alloys manufactures investment-cast titanium and stainless steel golf club
heads for the golf industry. The Company's sales generally are unsecured.

The Company changed its fiscal year end to September 30 effective September 30,
1997.

PRINCIPLES OF CONSOLIDATION

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

USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.




                                       55


<PAGE>   56


                             Neenah Foundry Company

                Notes to Consolidated Financial Statements (continued)
                                 (In Thousands)


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

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents. Cash equivalents,
consisting entirely of Euro-Dollar investments, totaled $15,500 and $16,500 at
September 30, 1999 and 1998, respectively. The cost of these investments
approximates fair value at September 30, 1999 and 1998.

INVENTORIES

Inventories are stated at the lower of cost or market. The cost of inventories
for Neenah and Dalton is determined on the last-in, first-out (LIFO) method for
substantially all inventories except for supplies, for which cost is determined
on the first-in, first-out (FIFO) method. The cost of inventories for Deeter,
Mercer, Cast Alloys and ACP is determined on the FIFO method. LIFO inventories
comprise 45% and 67% of total inventories at September 30, 1999 and 1998,
respectively.

PROPERTY, PLANT AND EQUIPMENT

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

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

DEFERRED FINANCING COSTS

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

IDENTIFIABLE INTANGIBLE ASSETS

Identifiable intangible assets are amortized on a straight-line basis over the
estimated useful lives of 5 to 40 years.






                                       56
<PAGE>   57

                             Neenah Foundry Company

                Notes to Consolidated Financial Statements (continued)
                                 (In Thousands)


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

GOODWILL

Goodwill is amortized on a straight-line basis over 15 to 40 years.

IMPAIRMENT OF LONG-LIVED ASSETS

Property, plant and equipment, goodwill and other intangible assets are reviewed
for impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. If the sum of the expected undiscounted
cash flows is less than the carrying value of the related asset or group of
assets, a loss is recognized for the difference between the fair value and
carrying value of the asset or group of assets. Such analyses necessarily
involve significant judgment.

REVENUE RECOGNITION

Revenue is recognized upon shipment of product to the customer.

ADVERTISING COSTS

Advertising costs are expensed as incurred, and amounted to $854 and $662 for
the years ended September 30, 1999 and 1998, respectively, and $292 for the five
months ended September 30, 1997.

INCOME TAXES

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



                                       57


<PAGE>   58

                             Neenah Foundry Company

                Notes to Consolidated Financial Statements (continued)
                                 (In Thousands)



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

FINANCIAL INSTRUMENTS

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

<TABLE>
<CAPTION>

                                                 SEPTEMBER 30, 1999               SEPTEMBER 30, 1998
                                           -------------------------------------------------------------
                                             Carrying           Fair          Carrying          Fair
                                              Amount           Value           Amount           Value
                                           -------------------------------------------------------------
<S>                                          <C>             <C>              <C>            <C>
Cash and cash equivalents                    $  17,368       $  17,368        $  19,798      $  19,798
Accounts receivable                             77,696          77,696           71,655         71,655
Accounts payable                                31,151          31,151           29,920         29,920
Long-term debt                                 429,221         408,071          371,871        371,367
</TABLE>


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

RECLASSIFICATIONS

Certain prior year amounts have been reclassified to conform to the current year
presentation.

COMPREHENSIVE INCOME

Effective October 1, 1998, the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 130, "Reporting Comprehensive Income," which establishes
the standards for reporting and displaying comprehensive income and its
components (revenues, expenses, gains and losses) as part of a full set of
financial statements. The adoption of SFAS No. 130 had no impact on the
Company's results of operations, financial position or cash flows. Comprehensive
income (loss) has been included in the consolidated statement of changes in
stockholders' equity.

SEGMENT INFORMATION

Effective September 30, 1999, the Company adopted SFAS No. 131, "Disclosures
about Segments of an Enterprise and Related Information." SFAS No. 131
establishes the standards for public enterprises to report financial and
descriptive information about their





                                       58
<PAGE>   59
                             Neenah Foundry Company

                Notes to Consolidated Financial Statements (continued)
                                 (In Thousands)


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

operating segments in annual and interim financial statements, and provide
disclosures with respect to products and services, geographic areas of
operations and major customers. The adoption of SFAS No. 131 did not affect the
Company's results of operations, financial position or cash flows, but did
affect the disclosure of segment information.

PENSIONS AND OTHER POSTRETIREMENT BENEFITS

Effective September 30, 1999, the Company adopted SFAS No. 132, "Employers'
Disclosures about Pensions and Other Postretirement Benefits." The provisions of
SFAS No. 132 revise employers' disclosures about pension and other
postretirement benefit plans. This statement does not change the measurement or
recognition of costs associated with these plans. In addition, SFAS No. 132
standardizes the disclosure requirements for pensions and other postretirement
benefits to the extent practicable.

PENDING ACCOUNTING STANDARDS

In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities," which was
amended by SFAS No. 137. Provisions of these standards are required to be
adopted in years beginning after June 15, 2000. Because of the Company's minimal
use of derivatives, management does not anticipate that the adoption of SFAS No.
133 will have a significant effect on the results of operations or on the
financial position of the Company.

2. ACQUISITIONS

On March 30, 1998, Neenah purchased Deeter, a manufacturer of gray iron
castings, for $20,759 in cash (including direct costs of $313) and a $3,850 note
issued by ACP Holding Company payable to the selling shareholders of Deeter
which was accounted for as a contribution to the capital of Neenah in fiscal
1998. During fiscal 1999, Neenah settled the note on behalf of ACP Holding
Company which was accounted for as a return of capital.

On April 3, 1998, Neenah purchased Mercer, a manufacturer of forged components,
for $47,420 (including direct costs of $525 and net of $154 of acquired cash).
The acquisition of Mercer was financed through borrowings under the Tranche B
term loan.



                                       59
<PAGE>   60
                             Neenah Foundry Company

             Notes to Consolidated Financial Statements (continued)
                                 (In Thousands)


2. ACQUISITIONS (CONTINUED)

On September 8, 1998, Neenah purchased Dalton, a manufacturer of gray iron
castings, for $100,930 (including direct costs of $601 and net of $1,679 of
acquired cash). The acquisition of Dalton was financed through drawings under
the Tranche B term loan and the Acquisition Loan Facility.

On December 31, 1998, Neenah purchased Cast Alloys, a manufacturer of
investment-cast titanium and stainless steel golf club heads, for $40,824 in
cash (including direct costs of $1,206, and net of $488 of acquired cash). The
acquisition of Cast Alloys was financed by a portion of the proceeds from the
issuance of the Company's 11-1/8% Series F Senior Subordinated Notes.

The acquisitions of Deeter, Mercer, Dalton and Cast Alloys have been accounted
for using the purchase method of accounting and, accordingly, the purchase price
has been allocated on the basis of fair values to the underlying assets acquired
and liabilities assumed. The excess of the cost of acquisition over the fair
value of the net tangible and identifiable intangible assets acquired has been
allocated to goodwill. The operating results of Deeter, Mercer, Dalton and Cast
Alloys are included in the consolidated statements of operations since the date
of their respective acquisition.

On September 8, 1998, the capital stock of ACP was contributed to Neenah by ACP
Holding Company, the sole shareholder of ACP. ACP is a manufacturer of ductile
and malleable iron castings. In connection with the merger, Neenah assumed
$14,613 of indebtedness of ACP which was subsequently refinanced through
borrowings under the Tranche A term loan. In addition, senior subordinated notes
totaling $6,746 due by ACP to its shareholder were converted into the equity of
ACP by its shareholder. The acquisition of ACP was accounted for in a manner
similar to a pooling of interests because Neenah and ACP were under common
control.

                                       60


<PAGE>   61
                             Neenah Foundry Company

             Notes to Consolidated Financial Statements (continued)
                                 (In Thousands)


2. ACQUISITIONS (CONTINUED)

Pro forma unaudited consolidated operating results of the Company, assuming
Deeter, Mercer, Dalton and Cast Alloys had all been acquired as of October 1,
1998 and 1997, are summarized below:

<TABLE>
<CAPTION>

                                                                                    YEAR ENDED
                                                                                   SEPTEMBER 30
                                                                              1999              1998
                                                                         ----------------------------------
<S>                                                                         <C>              <C>
Net sales                                                                    $544,671         $576,161
Income (loss) before extraordinary item                                        (4,515)             999
Net income (loss)                                                              (4,515)             607
</TABLE>

These pro forma results have been prepared for informational purposes only and
include certain adjustments to depreciation expense related to acquired plant
and equipment, amortization expense arising from goodwill and identifiable
intangible assets, interest expense on acquisition debt, and the estimated
related income tax effects of all such adjustments. The pro forma results do not
purport to be indicative of the results of operations which would have resulted
had the business combinations occurred on October 1, 1998 and 1997, or of the
future results of operations of the consolidated entities.

3. INVENTORIES

Inventories consist of the following as of September 30:

<TABLE>
<CAPTION>
                                                                              1999              1998
                                                                         ----------------------------------
 <S>                                                                        <C>              <C>
  Raw materials                                                              $  9,702         $  4,550
  Work in process and finished goods                                           37,654           28,141
  Supplies                                                                      9,031            8,150
                                                                         ==================================
                                                                             $ 56,387         $ 40,841
                                                                         ==================================
</TABLE>

If the FIFO method of inventory valuation had been used on all components,
inventories would have been approximately $1,156 lower than reported at
September 30, 1999 and $499 higher than reported at September 30, 1998.

                                       61


<PAGE>   62
                             Neenah Foundry Company

             Notes to Consolidated Financial Statements (continued)
                                 (In Thousands)


4. IDENTIFIABLE INTANGIBLE ASSETS

Identifiable intangible assets consist of the following as of September 30:

<TABLE>
<CAPTION>
                                                                              1999              1998
                                                                         ----------------------------------
 <S>                                                                         <C>              <C>
  Customer lists                                                              $33,941          $30,341
  Trade names                                                                  24,353           19,853
  Assembled work force                                                          8,842            8,142
  Facilities in place                                                           2,982            3,764
  Other                                                                         4,343            3,434
                                                                         ----------------------------------
                                                                               73,552           65,534
  Less accumulated amortization                                                10,700            4,448
                                                                         ==================================
                                                                              $62,852          $61,086
                                                                         ==================================
</TABLE>

5. LONG-TERM DEBT

Long-term debt consists of the following as of September 30:

<TABLE>
<CAPTION>

                                                                              1999              1998
                                                                         ----------------------------------
<S>                                                                         <C>              <C>
111/8% Series B Senior Subordinated Notes                                    $150,000         $150,000
111/8% Series D Senior Subordinated Notes, including
  unamortized premium of $1,995 in 1999 and $2,259 in 1998                     46,995           47,259
111/8% Series F Senior Subordinated Notes, including
 unamortized  premium of $2,717                                                89,717                -
Term Loan Facilities                                                          140,747          145,000
Acquisition Loan Facility                                                           -           29,000
Revolving Loan Facility                                                             -                -
Other                                                                           1,762              612
                                                                         ----------------------------------
                                                                              429,221          371,871
Less current portion                                                            5,334            4,185
                                                                         ==================================
                                                                             $423,887         $367,686
                                                                         ==================================
</TABLE>

                                       62


<PAGE>   63


                             Neenah Foundry Company

             Notes to Consolidated Financial Statements (continued)
                                 (In Thousands)


5. LONG-TERM DEBT (CONTINUED)

The Series B, Series D and Series F Senior Subordinated Notes (collectively, the
Notes) are unsecured and mature on May 1, 2007. Interest is payable semiannually
on May 1 and November 1. The Notes are fully, unconditionally, jointly and
severally guaranteed by Transport, Hartley, Deeter, Mercer, Dalton, Cast Alloys
and ACP (Guarantor Subsidiaries). The Notes are subordinated to all existing and
future senior indebtedness of the Company but rank equally in right of payment
with any future senior subordinated indebtedness of the Company. The Notes
contain covenants which restrict the Company from incurring additional
indebtedness and prohibit dividend payments, stock redemptions and certain other
transactions.

The Company used the proceeds from the Series D Senior Subordinated Notes to
repay the term loans used to finance the acquisition of the Company on April 30,
1997, accrued interest thereon and related fees and expenses. In connection with
the prepayment in full of the term loans during the five months ended September
30, 1997, the Company recorded an extraordinary charge to write off the
unamortized balance of the related deferred financing costs of $2,629.

The Company has a Credit Agreement with a bank which provides a) Term Loan
Facilities of $145 million, b) an Acquisition Loan Facility of $50 million and
c) a Revolving Credit Facility of $50 million.

The Term Loan Facilities consist of two tranches of term loans. The Tranche A
term loans outstanding at September 30, 1999 and 1998, total $17 million and $20
million, respectively, and mature on September 30, 2003. The Tranche B term
loans outstanding at September 30, 1999 and 1998 total $124 million and $125
million, respectively, and mature on September 30, 2005. Installments of the
Tranche A term loans are due in aggregate principal amounts of $1,000 per
quarter until September 30, 2002 and $1,250 per quarter from December 31, 2002
through September 30, 2003. Installments on $54 million of the Tranche B term
loans are due in aggregate principal amounts of $250 per quarter until September
30, 2003 and $6,250 per quarter from December 31, 2003 through September 30,
2005. Installments on the remaining Tranche B term loans are due in aggregate
principal amounts of $8,750 per quarter commencing on December 31, 2003 and
continuing through September 30, 2005. Interest on the Tranche A and Tranche B
term loans is at LIBOR (6.0% at September 30, 1999) plus 2.50% and 2.75%,
respectively.

                                       63


<PAGE>   64

                             Neenah Foundry Company

             Notes to Consolidated Financial Statements (continued)
                                 (In Thousands)


5. LONG-TERM DEBT (CONTINUED)

Loans under the Acquisition Loan Facility may be paid and reborrowed at any time
through September 8, 2000. Outstanding borrowing under the Acquisition Loan
Facility on September 8, 2000 will be repaid quarterly beginning on such date
through June 30, 2004. Interest on borrowings under the Acquisition Loan
Facility is at LIBOR plus 2.50%.

The Company is entitled to draw amounts under the Revolving Credit Facility for
general corporate purposes, including permitted acquisitions, as defined. The
Revolving Credit Facility includes a $15 million sub-limit for letters of credit
and matures on April 30, 2002. Covenants contained in the Revolving Credit
Facility restrict the payment of dividends, capital expenditures and certain
other transactions and require the Company to maintain leverage, net worth and
interest coverage ratios.

The Company used the proceeds of the Tranche A term loan to repay the bank term
loan, revolving credit note payable and equipment loan totaling $13,631 it
assumed when the capital stock of ACP was contributed to the Company. In
connection with the repayment in full of these obligations during the year ended
September 30, 1998, the Company recorded an extraordinary charge to write off
the unamortized balance of the related deferred financing costs of $652.

During the year ended September 30, 1999, the Company financed purchases of
property, plant and equipment totaling $1,143 by entering into capital leases.

Scheduled maturities of long-term debt during fiscal years subsequent to
September 30, 1999, are as follows:

<TABLE>

<S>                                                                       <C>
                  2000                                                     $    5,334
                  2001                                                          5,344
                  2002                                                          5,317
                  2003                                                          6,275
                  2004                                                         60,224
                  Thereafter                                                  342,015
                                                                     ----------------------
                                                                           $  424,509
                                                                     ======================
</TABLE>

                                       64


<PAGE>   65

                             Neenah Foundry Company

             Notes to Consolidated Financial Statements (continued)
                                 (In Thousands)


6. COMMITMENTS AND CONTINGENCIES

The Company leases certain plants, warehouse space, machinery and equipment,
office equipment and vehicles under operating leases. Rent expense under these
operating leases for the years ended September 30, 1999 and 1998 and for the
five-month period ended September 30, 1997 totaled $2,595, $1,485 and $515,
respectively. Minimum rental payments due under these operating leases for
fiscal years subsequent to September 30, 1999 are as follows:

<TABLE>

<S>                                                                         <C>
                  2000                                                       $2,549
                  2001                                                        1,655
                  2002                                                          916
                  2003                                                          473
                  2004                                                          220
                  Thereafter                                                    303
                                                                     ----------------------
                                                                             $6,116
                                                                     ======================

</TABLE>

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

Approximately 52% of the Company's work force is covered by collective
bargaining agreements. None of the current agreements are scheduled to expire
within the next year.

As of September 30, 1999, the Company had outstanding letters of credit of $350,
which secure certain workers compensation and other obligations. The outstanding
letters of credit reduce the availability under the Revolving Credit Facility.


                                       65


<PAGE>   66

                             Neenah Foundry Company

             Notes to Consolidated Financial Statements (continued)
                                 (In Thousands)


7. RESTRUCTURING CHARGE

During fiscal 1999, the Company recorded a restructuring charge of $6,713 to
close one of their manufacturing facilities. Included in the restructuring
charge in the consolidated statement of operations for the fiscal year ended
September 30, 1999 are the following:

<TABLE>

<S>                                                                                              <C>
Impairment and abandonment of assets that will no longer be used                                  $6,030
Employee severance costs                                                                             328
Lease commitment and contractual obligations                                                         130
Other exit activity costs, primarily facility closure expenses                                       225
                                                                                            ----------------
                                                                                                  $6,713
                                                                                            ================
</TABLE>

The fair value of assets that will no longer be used was determined based on an
appraisal performed with consideration given to offers received from prospective
buyers. Employee severance costs relate to 20 salaried employees and 146
bargaining unit employees and have been communicated in writing to the
employees.

No amounts were disbursed in the year ended September 30, 1999. It is expected
that substantially all actions related to the Company's restructuring plan will
be completed by September 30, 2000.

For the year ended September 30, 1999 and from September 8, 1998, the date of
acquisition, through September 30, 1998, net sales related to this manufacturing
facility were $17,213 and $1,831, respectively, and the operating loss related
to this manufacturing facility was $10,071 and $361, respectively, including the
restructuring charge of $6,713 in 1999.

8. INCOME TAXES

The provision for income taxes consists of the following:

<TABLE>
<CAPTION>

                                                                        SEPTEMBER 30
                                                          1999              1998               1997
                                                   --------------------------------------------------------
<S>                                                     <C>                <C>              <C>
Current:
   Federal                                               $ 8,615            $11,126          $ 5,835
   State                                                   1,697              2,233            1,236
                                                   --------------------------------------------------------
                                                          10,312             13,359            7,071
Deferred                                                  (8,248)            (2,437)          (3,071)
                                                   --------------------------------------------------------
                                                         $ 2,064            $10,922          $ 4,000
                                                   ========================================================
</TABLE>


                                       66

<PAGE>   67

                             Neenah Foundry Company

             Notes to Consolidated Financial Statements (continued)
                                 (In Thousands)


8. INCOME TAXES (CONTINUED)

The provision for income taxes differs from the amount computed by applying the
federal statutory rate of 34%, 35% and 34% as of September 30, 1999, 1998 and
1997, respectively, to income before income taxes and extraordinary item as
follows:

<TABLE>
<CAPTION>

                                                          TWELVE MONTHS ENDED            FIVE MONTHS
                                                             SEPTEMBER 30             ENDED SEPTEMBER 30
                                                          1999           1998                1997
                                                     -------------------------------------------------------
<S>                                                    <C>             <C>                   <C>
Provision at statutory rate                             $     59        $  7,981              $2,844
State income taxes, net of federal tax benefit               161           1,148                 480
Amortization of goodwill                                   1,799           1,389                 550
Other                                                         45             404                 126
                                                      ------------------------------------------------------
Provision for income taxes                              $  2,064        $ 10,922              $4,000
                                                      ======================================================
</TABLE>

Deferred income tax assets and liabilities consist of the following as of
September 30:

<TABLE>
<CAPTION>
                                                                         1999                  1998
                                                                --------------------------------------------
<S>                                                                  <C>                  <C>
Deferred income tax liabilities:
   Book basis of assets in excess of tax basis:
     Inventories                                                      $    (2,879)          $    (3,221)
     Property, plant and equipment                                        (43,396)              (46,447)
     Identifiable intangible assets                                       (25,226)              (24,476)
   Employee benefit plans                                                    (426)                 (590)
   Other                                                                     (500)                 (572)
                                                                 -------------------------------------------
                                                                          (72,427)              (75,306)
Deferred income tax assets:
   Employee benefit plans                                                   5,898                 6,919
   Accrued vacation                                                         2,278                 1,989
   Restructuring reserve                                                      344                     -
   Other accrued liabilities                                                2,784                 2,667
   State net operating loss carryforward                                      377                     -
   Other                                                                      420                   550
   Valuation allowance                                                       (377)                    -
                                                                 -------------------------------------------
                                                                           11,724                12,125
                                                                 -------------------------------------------
Net deferred income tax liability                                     $   (60,703)          $   (63,181)
                                                                 ===========================================

Included in the consolidated balance sheet as:
   Current deferred income tax asset                                  $     3,534           $     4,888
   Noncurrent deferred income tax liability                               (64,237)              (68,069)
                                                                 -------------------------------------------
                                                                      $   (60,703)          $   (63,181)
                                                                 ===========================================
</TABLE>


                                       67

<PAGE>   68

                             Neenah Foundry Company

             Notes to Consolidated Financial Statements (continued)
                                 (In Thousands)


8. INCOME TAXES (CONTINUED)

As of September 30, 1999, Cast Alloys has a state net operating loss (NOL)
carryforward for income tax purposes of $4,049 which expires in September 2004.
A full valuation allowance has been provided against the deferred tax asset
related to this state NOL carryforward.

9. EMPLOYEE BENEFIT PLANS

DEFINED-BENEFIT PENSION PLANS AND POSTRETIREMENT BENEFITS

The Company sponsors five defined-benefit pension plans covering the majority of
its hourly employees. Retirement benefits under the pension plans are based on
years of service and defined-benefit rates. The Company funds the pension plans
based on actuarially determined cost methods allowable under Internal Revenue
Service regulations. Plan assets consist primarily of mutual funds.

The Company also sponsors unfunded defined-benefit postretirement health care
plans covering substantially all salaried and hourly employees at Neenah and
Hartley and their dependents. For Hartley and salaried employees at Neenah,
benefits are provided from the date of retirement for the duration of the
employee's life, while benefits for hourly employees at Neenah are provided from
retirement to age 65. Retirees' contributions to the plans are based on years of
service and age at retirement. The Company funds benefits as incurred.


                                       68

<PAGE>   69

                             Neenah Foundry Company

             Notes to Consolidated Financial Statements (continued)
                                 (In Thousands)


9. EMPLOYEE BENEFIT PLANS (CONTINUED)

The following table summarizes the funded status of the pension plans and
postretirement benefit plans and the amounts recognized in the consolidated
balance sheet at September 30, 1999 and 1998:

<TABLE>
<CAPTION>
                                                               PENSION                POSTRETIREMENT
                                                               BENEFITS                  BENEFITS
                                                     -------------------------------------------------------
                                                         1999           1998          1999         1998
                                                     -------------------------------------------------------
<S>                                                   <C>            <C>          <C>           <C>
Change in benefit obligation:
   Benefit obligation, October 1                        $36,759       $22,909      $ 6,114       $ 4,894
     Acquisition                                              -         8,857            -             -
     Service cost                                         1,263           749          202           152
     Interest cost                                        2,533         1,716          419           366
     Amendments                                           1,710             -            -             -
     Actuarial (gains) losses                            (2,280)        3,754            -           906
     Benefits paid                                       (1,779)       (1,226)        (233)         (204)
                                                     -------------------------------------------------------
   Benefit obligation, September 30                     $38,206       $36,759      $ 6,502       $ 6,114
                                                     =======================================================

Change in plan assets:
   Fair value of plan assets, October 1                 $33,299       $26,419      $     -       $     -
     Acquisition                                              -         6,690            -             -
     Actual return on plan assets                         4,132         1,300            -             -
     Company contributions                                1,066           116          233           204
     Benefits paid                                       (1,779)       (1,226)        (233)         (204)
                                                     -------------------------------------------------------
   Fair value of plan assets, September 30              $36,718       $33,299      $     -       $     -
                                                     =======================================================

Funded status of the plans:
   Benefit obligation in excess of plan assets          $(1,488)      $(3,460)     $(6,502)      $(6,114)
   Unrecognized prior service cost                        2,002           313          716           760
   Unrecognized net (gain) loss                          (1,321)        2,612          145           134
                                                     -------------------------------------------------------
                                                        $  (807)      $  (535)     $(5,641)      $(5,220)
                                                     =======================================================

Amounts recognized in the consolidated
  balance sheet at September 30 consist of:
     Accrued benefit liability                          $(3,221)      $(5,142)     $(5,641)      $(5,220)
     Prepaid benefit cost                                 1,239         1,676            -             -
     Intangible asset                                     1,175           313            -             -
     Deferred tax asset                                       -         1,048            -             -
     Accumulated other comprehensive income                   -         1,570            -             -
                                                     --------------------------------------------------------
                                                        $  (807)      $  (535)     $(5,641)      $(5,220)
                                                     =======================================================
</TABLE>


                                       69

<PAGE>   70

                             Neenah Foundry Company

             Notes to Consolidated Financial Statements (continued)
                                 (In Thousands)


9. EMPLOYEE BENEFIT PLANS (CONTINUED)

Amounts applicable to the Company's pension plans with accumulated benefit
obligations and projected benefit obligations in excess of plan assets:

<TABLE>
<CAPTION>

                                                                              1999              1998
                                                                        ------------------------------------
<S>                                                                         <C>                <C>
Projected benefit obligation                                                 $36,810            $35,415
Accumulated benefit obligation                                                36,810             35,415
Fair value of plan assets                                                     35,176             32,079
</TABLE>

Components of net periodic pension cost for the years ended September 30, 1999
and 1998, respectively, and the five months ended September 30, 1997 are as
follows:

<TABLE>
<CAPTION>

                                               PENSION BENEFITS                POSTRETIREMENT BENEFITS
                                       ----------------------------------  ---------------------------------
                                          1999        1998       1997         1999       1998       1997
                                       ----------------------------------  ---------------------------------
<S>                                     <C>        <C>          <C>           <C>        <C>       <C>
Service cost                             $ 1,263    $    749     $ 251         $202       $152      $  58
Interest cost                              2,533       1,716       688          419        366        148
Expected return on plan assets            (2,488)     (1,403)     (802)           -          -          -
Amortization of prior service cost            22        (591)       49           45          -          -
Recognized net actuarial loss                 10           -         -            -          -          -
                                        ---------------------------------    -------------------------------
Net periodic benefit cost                $ 1,340    $    471     $ 186         $666       $518       $206
                                        =================================    ===============================
Assumptions as of September 30:
     Discount rate                      7.25% to    6.75% to   6.75% to
                                        7.75%       7.25%      7.25%            7.0%       7.0%       7.5%

     Expected long-term rate of         7.50% to    7.50% to   7.50% to
       return                           9.50%       9.50%      9.50%              -          -          -
</TABLE>

For measurement purposes the healthcare cost trend rate was assumed to be 8.5%
decreasing gradually to 4.5% in 2010 and then remain at that level thereafter.
The healthcare cost trend rate assumption has a significant effect on the
amounts reported. Increasing the healthcare cost trend rate by one percentage
point would have the following effect:

<TABLE>

  <S>                                                            <C>
   Effect on total of service and interest cost                   $   170
   Effect on postretirement benefit obligation                      1,104
</TABLE>

                                       70


<PAGE>   71

                             Neenah Foundry Company

             Notes to Consolidated Financial Statements (continued)
                                 (In Thousands)


9. EMPLOYEE BENEFIT PLANS (CONTINUED)

DEFINED-CONTRIBUTION RETIREMENT PLANS

The Company sponsors various defined-contribution retirement plans (the Plans)
covering substantially all salaried and certain hourly employees. The Plans
allow participants to make 401(k) contributions in amounts ranging from 1% to
15% of their compensation. The Company matches between 35% and 50% of the
participants' contributions, as defined. The Company may make additional
voluntary contributions to the Plans as determined annually by the Board of
Directors. Total Company contributions amounted to $1,759 and $994 for the years
ended September 30, 1999 and 1998, respectively, and $423 for the five months
ended September 30, 1997, respectively.

OTHER EMPLOYEE BENEFITS

The Company provides unfunded supplemental retirement benefits to certain active
and retired employees at Dalton. At September 30, 1999, the present value of the
current and long-term portion of these supplemental retirement obligations
totaled $111 and $3,036 respectively.

Certain of Dalton's hourly employees are covered by a multi-employer
defined-benefit pension plan pursuant to a collective bargaining agreement. The
Company's expense for the year ended September 30, 1999 was $567 and $53 from
September 8, 1998, the date of acquisition, through September 30, 1998.

The Company sponsors a noncontributory, multiemployer defined benefit pension
plan for substantially all of the union employees at Mercer pursuant to a
collective bargaining agreement. The Company's expense for the year ended
September 30, 1999 was $166 and $107 from April 3, 1998, the date of
acquisition, through September 30, 1998.

10. SEGMENT INFORMATION

The Company has two reportable segments, Castings and Forgings. The Castings
segment manufactures and sells iron castings for the industrial and municipal
markets, while the Forgings segment manufactures forged components for the
industrial market.

The Other segment includes machining operations, manufacture of foundry
equipment and freight hauling.

                                       71


<PAGE>   72

                             Neenah Foundry Company

             Notes to Consolidated Financial Statements (continued)
                                 (In Thousands)



10. SEGMENT INFORMATION (CONTINUED)

The Company evaluates performance and allocates resources based on the operating
income before depreciation, amortization of goodwill and intangibles and
restructuring charges of each segment. The accounting policies of the reportable
segments are the same as those described in the summary of significant
accounting policies. Intersegment sales and transfers are recorded at cost plus
a share of operating profit.

<TABLE>
<CAPTION>

                                                                YEAR ENDED              FIVE MONTHS ENDED
                                                               SEPTEMBER 30                SEPTEMBER 30
                                                    --------------------------------    -------------------
                                                         1999              1998                1997
                                                    --------------------------------    -------------------
<S>                                                    <C>               <C>                  <C>
Revenues from external customers:
   Castings                                             $ 475,412         $ 262,315            $104,013
   Forgings                                                39,493            25,135                   -
   Other                                                   33,311            20,577               6,421
   Elimination of intersegment revenues                   (18,159)           (4,613)             (2,081)
                                                    --------------------------------      ----------------
Total revenues                                          $ 530,057         $ 303,414            $108,353
                                                    ================================      ================

Income (loss) before extraordinary item:
   Castings                                             $ (12,414)        $  13,793            $  4,919
   Forgings                                                (2,650)              822                   -
   Other                                                      826             1,138                 320
   Elimination of intersegment profit (loss)               12,346            (3,872)               (873)
                                                    --------------------------------     -----------------
                                                        $  (1,892)        $  11,881            $  4,366
                                                    ================================     =================
Assets:
   Castings                                             $ 792,939         $ 698,638            $357,335
   Forgings                                                57,321            65,104                   -
   Other                                                   19,127            16,962               6,387
   Adjustments                                           (225,273)         (196,395)             (5,316)
                                                    --------------------------------     -----------------
Total consolidated assets                               $ 644,114         $ 584,309            $358,406
                                                    ================================     =================
</TABLE>


                                       72

<PAGE>   73

                             Neenah Foundry Company

             Notes to Consolidated Financial Statements (continued)
                                 (In Thousands)


10. SEGMENT INFORMATION (CONTINUED)

<TABLE>
<CAPTION>

                                                  Castings        Forgings         Other          Total
                                               -------------------------------------------------------------
<S>                                              <C>              <C>          <C>              <C>
Year ended September 30, 1999:
   Interest expense                               $38,849          $4,388       $    586         $43,803
   Interest income                                  1,303              33             72           1,408
   Depreciation and amortization expense           30,420           3,277          1,989          35,686
   Restructuring charge                             6,713               -              -           6,713
   Expenditures for long-lived assets              39,725             855          1,513          41,643

Year ended September 30, 1998:
   Interest expense                                27,785               4            307          28,096
   Interest income                                    883               -             10             893
   Depreciation and amortization expense           16,344           2,450            860          19,654
   Expenditures for long-lived assets              12,573              58            486          13,117

Five months ended September 30, 1997:
   Interest expense                                10,207               -            151          10,358
   Interest income                                    333               -             34             367
   Depreciation and amortization expense            7,557               -            142           7,699
   Expenditures for long-lived assets               2,971               -            110           3,081
</TABLE>


GEOGRAPHIC INFORMATION

<TABLE>
<CAPTION>
                                                                                              Long-Lived
                                                                            Revenues            Assets
                                                                       -------------------------------------
<S>                                                                        <C>                 <C>
Year ended September 30, 1999:
   United States                                                            $512,940            $206,432
   Foreign countries                                                          17,117               2,372
                                                                       =------------------------------------
Total                                                                       $530,057            $208,804
                                                                       =====================================

Year ended September 30, 1998:
   United States                                                            $293,037            $180,537
   Foreign countries                                                          10,377                   -
                                                                       -------------------------------------
Total                                                                       $303,414            $180,537
                                                                       =====================================

Year ended September 30, 1997:
   United States                                                            $102,787            $112,624
   Foreign countries                                                           5,566                   -
                                                                       -------------------------------------
Total                                                                       $108,353            $112,624
                                                                       =====================================

</TABLE>

                                       73


<PAGE>   74

                             Neenah Foundry Company

             Notes to Consolidated Financial Statements (continued)
                                 (In Thousands)


10. SEGMENT INFORMATION (CONTINUED)

MAJOR CUSTOMERS

There were no sales to individual customers in excess of 10% of net sales for
the years ended September 30, 1999 and 1998. Sales to two customers totaled
$21,879 of net sales for the five months ended September 30, 1997.

11. GUARANTOR SUBSIDIARIES

All of the wholly owned subsidiaries of Neenah (Transport, Hartley, Deeter,
Mercer, Dalton, ACP and Cast Alloys - collectively, Guarantor Subsidiaries)
fully, unconditionally, jointly and severally guarantee the Notes. The following
is summarized combined financial information of the Guarantor Subsidiaries. Net
sales include net sales to Neenah of $7,306 and $4,613 for the year ended
September 30, 1999 and 1998, respectively, and $2,048 for the five months ended
September 30, 1997. Separate financial statements of the Guarantor Subsidiaries
are not separately presented because, in the opinion of management, such
financial statements are not material to investors.

<TABLE>
<CAPTION>

                                                                            SEPTEMBER 30
                                                                  1999                     1998
                                                          -------------------------------------------------
<S>                                                            <C>                       <C>
Current assets                                                  $  63,153                 $ 77,594
Noncurrent assets                                                 236,185                  191,793
Current liabilities                                                38,148                   34,708
Noncurrent liabilities                                             30,570                   32,405
</TABLE>

<TABLE>
<CAPTION>


                                              YEAR ENDED SEPTEMBER 30               FIVE MONTHS ENDED
                                            1999                      1998         SEPTEMBER 30, 1997
                                     ----------------------------------------------------------------------
<S>                                           <C>                  <C>                    <C>
Net sales                                      $345,249             $118,449               $25,492
Gross profit                                     34,464               21,766                 5,512
Net income (loss)                               (13,129)               3,355                   897

</TABLE>

                                       74

<PAGE>   75


                             Neenah Foundry Company

             Notes to Consolidated Financial Statements (continued)

                                 (In Thousands)




12. SUBSEQUENT EVENT

On November 30, 1999, the Company acquired all of the capital stock of Gregg
Industries, Inc. ("Gregg") and all of the assets of its affiliate, Environmental
Sand Reclamation and Coating, Inc. for approximately $22,500, subject to
adjustments as defined in the Agreement and Plan of Merger. Gregg is a
manufacturer of gray and ductile iron castings for industrial and commercial
use. The acquisition was financed through borrowings under the Company's
Acquisition Loan Facility.













                                       75



<PAGE>   76












                                  CONSOLIDATED FINANCIAL STATEMENTS

                                  NEENAH FOUNDRY COMPANY
                                  (PREDECESSOR)

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






                                       76


<PAGE>   77


                      Neenah Foundry Company (Predecessor)

                        Consolidated Financial Statements

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




                                    CONTENTS


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

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





                                       77
<PAGE>   78









                         Report of Independent Auditors


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

We have audited the accompanying consolidated balance sheets of Neenah Foundry
Company (the Company) as of March 31, 1996 and 1997, and the related
consolidated statements of income, changes in stockholders' equity and cash
flows for the years then ended, and for the one month ended April 30, 1997.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of the
Company as of March 31, 1996 and 1997, and the consolidated results of its
operations and its cash flows for the years then ended, and for the one month
ended April 30, 1997, in conformity with generally accepted accounting
principles.

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




                                       78
<PAGE>   79


                      Neenah Foundry Company (Predecessor)

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

<TABLE>
<CAPTION>

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

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

Other assets                                                                     2,695            1,982
















                                                                         ---------------------------------
                                                                             $  82,957        $  93,869
                                                                         =================================
</TABLE>



                                       79
<PAGE>   80








<TABLE>
<CAPTION>


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

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

Commitments and contingencies (Note 5)

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


See accompanying notes

                                       80
<PAGE>   81


                      Neenah Foundry Company (Predecessor)

                        Consolidated Statements of Income
                                 (In Thousands)


<TABLE>
<CAPTION>


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

<S>                                                                <C>            <C>           <C>
Net sales                                                          $166,951       $165,426      $17,276
Cost of sales                                                       121,631        116,736       11,351
                                                              ---------------------------------------------
Gross profit                                                         45,320         48,690        5,925
Selling, general and administrative expenses                         16,983         17,547        1,752
                                                              ---------------------------------------------
Operating income                                                     28,337         31,143        4,173
Net interest income (expense)                                           481          1,162          121
                                                              ---------------------------------------------
Income before income taxes                                           28,818         32,305        4,294
Provision for income taxes                                           11,676         12,467        1,615
                                                              =============================================
Net income                                                         $ 17,142       $ 19,838      $ 2,679
                                                              =============================================
</TABLE>




See accompanying notes.

                                       81



<PAGE>   82


                      Neenah Foundry Company (Predecessor)

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


<TABLE>
<CAPTION>

                                                              Common Stock
                                                 --------------------------------------            Notes Receivable
                              Preferred Stock         Class A             Class B                    from Owners
                              ---------------------------------------------------------   Retained   to Finance
                              Shares  Amount     Shares    Amount   Shares      Amount    Earnings  Stock Purchase    Total
                              -----------------------------------------------------------------------------------------------

<S>                            <C>       <C>        <C>   <C>          <C>      <C>       <C>         <C>           <C>
Balance at April 1, 1995          -      $--        620   $     62    3,820    $    382   $ 45,676    $ (2,922)     $ 43,198
   Common dividends declared -
     $1,250 per share             -       --         --         --       --          --     (5,550)         --        (5,550)
   Net income                     -       --         --         --       --          --     17,142          --        17,142
                               ---------------------------------------------------------------------------------------------
Balance at March 31, 1996         -       --         620        62    3,820         382     57,268      (2,922)       54,790
   Common dividends declared -
     $1,300 per share             -       --         --         --       --          --     (5,771)         --        (5,771)
   Net income                     -       --         --         --       --          --     19,838          --        19,838
                               ---------------------------------------------------------------------------------------------
Balance at March 31, 1997         -       --         620        62    3,820         382     71,335      (2,922)       68,857
   Collection of notes
     receivable from owners       -       --         --         --       --          --         --       2,922         2,922
   Net income                     -       --         --         --       --          --      2,679          --         2,679
                               ---------------------------------------------------------------------------------------------
Balance at April 30, 1997         -      $--         620   $     62   3,820    $    382   $ 74,014        $ --      $ 74,458
                               =============================================================================================

</TABLE>

































                                 See accompanying notes.



                                       82

<PAGE>   83






                      Neenah Foundry Company (Predecessor)

                      Consolidated Statements of Cash Flows
                                 (In Thousands)

<TABLE>
<CAPTION>


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

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

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

Increase in cash and cash equivalents                                 9,888        12,277         6,643
Cash and cash equivalents at beginning of period                        238        10,126        22,403
                                                                 ------------------------------------------
Cash and cash equivalents at end of period                         $ 10,126       $22,403      $ 29,046
                                                                 ==========================================

Supplemental disclosures of cash flow information:
  Cash paid for:
     Interest                                                      $     84       $    39      $      1
     Income taxes                                                    10,398        12,515             -
</TABLE>


                            See accompanying notes.

                                       83



<PAGE>   84


                      Neenah Foundry Company (Predecessor)

                   Notes to Consolidated Financial Statements

                       Years ended March 31, 1996 and 1997
                       and one month ended April 30, 1997
                                 (In Thousands)



1. NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES

NATURE OF OPERATIONS

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

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

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

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



                                       84

<PAGE>   85


                      Neenah Foundry Company (Predecessor)

             Notes to Consolidated Financial Statements (continued)
                                 (In Thousands)


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

PRINCIPLES OF CONSOLIDATION

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

USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.

CASH AND CASH EQUIVALENTS

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

INVENTORIES

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

PROPERTY, PLANT AND EQUIPMENT

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




                                       85

<PAGE>   86




                      Neenah Foundry Company (Predecessor)

             Notes to Consolidated Financial Statements (continued)
                                 (In Thousands)


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

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

REVENUE RECOGNITION

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

ADVERTISING COSTS

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

INCOME TAXES

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

FINANCIAL INSTRUMENTS

The Company has a number of financial instruments, none of which are held for
trading purposes. The Company estimates that the fair value of all financial
instruments at March 31, 1996 and 1997 does not differ materially from the
carrying value of such instruments recorded in the accompanying consolidated
balance sheets, as follows:
<TABLE>
<CAPTION>
                                                                                      MARCH 31
                                                                                1996             1997
                                                                          ----------------- ----------------
<S>                                                                            <C>               <C>
Cash and cash equivalents                                                      $10,126           $22,403
Accounts receivable                                                             20,831            21,423
Accounts payable                                                                 8,124             8,497
Long-term debt                                                                     241               134
</TABLE>




                                       86
<PAGE>   87
                      Neenah Foundry Company (Predecessor)

             Notes to Consolidated Financial Statements (continued)
                                 (In Thousands)



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

NEW ACCOUNTING STANDARDS

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

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

2. INVENTORIES

Inventories consist of the following:

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

3. LONG-TERM DEBT

Long-term debt consists of the following:

<TABLE>
<CAPTION>
                                                                                        MARCH 31
                                                                                1996              1997
                                                                              ----------------------------
<S>                                                                           <C>               <C>
Capital lease obligations                                                       $241              $134
Less current portion                                                             107               134
                                                                              ----------------------------
                                                                                $134              $  -
                                                                              ============================
</TABLE>




                                       87

<PAGE>   88

                      Neenah Foundry Company (Predecessor)

             Notes to Consolidated Financial Statements (continued)
                                 (In Thousands)



3. LONG-TERM DEBT (CONTINUED)

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

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

4. NOTES RECEIVABLE FROM OWNERS

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

5. COMMITMENTS AND CONTINGENCIES

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

<TABLE>


<S>                                                                            <C>
                            1998                                                    $   736
                            1999                                                        586
                            2000                                                        287
                            2001                                                        115
                                                                              -------------------
                                                                                     $1,724
                                                                              ===================
</TABLE>







                                       88

<PAGE>   89


                      Neenah Foundry Company (Predecessor)

             Notes to Consolidated Financial Statements (continued)
                                 (In Thousands)



5. COMMITMENTS AND CONTINGENCIES (CONTINUED)

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

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

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

6. INCOME TAXES

The provision for income taxes consists of the following:

<TABLE>
<CAPTION>

                                                                                 ONE MONTH
                                                                                   ENDED
                                                     YEAR ENDED MARCH 31          APRIL 30
                                                      1996        1997              1997
                                                  -------------------------------------------
          Current:
<S>                                               <C>             <C>           <C>
             Federal                                $  9,147       $11,554       $1,460
             State                                       666         1,016          275
                                                  -------------------------------------------
                                                       9,813        12,570        1,735
          Deferred                                     1,863          (103)        (120)
                                                  -------------------------------------------
                                                    $ 11,676       $12,467       $1,615
                                                  ===========================================
</TABLE>

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

<TABLE>
<CAPTION>
                                                                                  ONE MONTH
                                                                                    ENDED
                                                      YEAR ENDED MARCH 31         APRIL 30
                                                       1996         1997            1997
                                                   ------------------------------------------
<S>                                                 <C>           <C>           <C>
          Provision at statutory rate                 $10,086       $11,307       $1,503
          State income taxes, net of federal
             tax benefit                                1,126         1,318          112
          Other                                           464          (158)           -
                                                   ------------------------------------------
          Provision for income taxes                  $11,676       $12,467       $1,615
                                                   ==========================================

</TABLE>





                                       89

<PAGE>   90


                      Neenah Foundry Company (Predecessor)

             Notes to Consolidated Financial Statements (continued)
                                 (In Thousands)



6. INCOME TAXES (CONTINUED)

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

<TABLE>
<CAPTION>

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

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


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

7. EMPLOYEE BENEFIT PLANS

DEFINED BENEFIT PENSION PLANS

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




                                       90


<PAGE>   91


                      Neenah Foundry Company (Predecessor)

             Notes to Consolidated Financial Statements (continued)
                                 (In Thousands)



7. EMPLOYEE BENEFIT PLANS (CONTINUED)

the SERP were based on compensation levels. The Company funds the pension plans
based on an actuarially determined cost method allowable under Internal Revenue
Service regulations. The SERP was unfunded.

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

<TABLE>
<CAPTION>


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

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

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

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

</TABLE>





                                       91

<PAGE>   92

                      Neenah Foundry Company (Predecessor)

             Notes to Consolidated Financial Statements (continued)
                                 (In Thousands)



7. EMPLOYEE BENEFIT PLANS (CONTINUED)

Components of net periodic pension cost are as follows:

<TABLE>
<CAPTION>

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


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

PROFIT-SHARING AND SAVINGS RETIREMENT PLAN

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

POSTRETIREMENT BENEFITS

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







                                     92

<PAGE>   93

                      Neenah Foundry Company (Predecessor)

             Notes to Consolidated Financial Statements (continued)
                                 (In Thousands)



7. EMPLOYEE BENEFIT PLANS (CONTINUED)

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

<TABLE>
<CAPTION>


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

</TABLE>

Components of net periodic postretirement benefit cost are as follows:

<TABLE>
<CAPTION>
                                                                                              ONE MONTH
                                                                                                ENDED
                                                                  YEAR ENDED MARCH 31         APRIL 30
                                                                  1996           1997            1997
                                                               ---------------------------------------------
<S>                                                            <C>               <C>          <C>
Service cost                                                        $176          $193            $11
Interest cost on accumulated postretirement benefit
   obligations                                                       361           370             27
Net amortization and deferral                                         (4)           (5)            (7)
                                                               ---------------------------------------------
                                                                    $533          $558            $31
                                                               =============================================
</TABLE>


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






                                       93

<PAGE>   94

                      Neenah Foundry Company (Predecessor)

             Notes to Consolidated Financial Statements (continued)
                                 (In Thousands)



8. STOCKHOLDERS' EQUITY

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

9. UNAUDITED QUARTERLY RESULTS

<TABLE>
<CAPTION>

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

<CAPTION>

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

</TABLE>


10. SUBSEQUENT EVENT

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





                                       94

<PAGE>   95

                      Neenah Foundry Company (Predecessor)

             Notes to Consolidated Financial Statements (continued)
                                 (In Thousands)



10. SUBSEQUENT EVENT (CONTINUED)

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

<TABLE>
<CAPTION>

                                                                              MARCH 31
                                                                        1996            1997
                                                                   -------------------------------
<S>                                                                 <C>              <C>
      Current assets                                                   $1,494          $1,867
      Noncurrent assets                                                 1,661           1,918
      Current liabilities                                                 941           1,006
      Noncurrent liabilities                                              401             453

<CAPTION>
                                                                                     ONE MONTH
                                                                                        ENDED
                                                         YEAR ENDED MARCH 31          APRIL 30
                                                        1996            1997            1997
                                                    -------------- --------------- ---------------
<S>                                                   <C>            <C>               <C>
      Net sales                                         $9,795         $9,971            $703
      Gross profit                                       3,165          3,247             169
      Net income (loss)                                    651            513             (15)

</TABLE>







                                       95


<PAGE>   96


                Report of Ernst & Young LLP, Independent Auditors

We have audited the consolidated financial statements of Neenah Foundry Company
as of September 30, 1999 and 1998, and for the years then ended, and for the
period from inception, May 1, 1997, through September 30, 1997, and have issued
our report thereon dated November 5, 1999 (included elsewhere in this Annual
Report on Form 10-K). Our audits also included the financial statement schedule
listed in the index at Item 14(a). This schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion based on our
audits.

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


Milwaukee, Wisconsin                                ERNST & YOUNG LLP
November 5, 1999







                                       96




<PAGE>   97


                                                                     Schedule II

                             NEENAH FOUNDRY COMPANY

                        VALUATION AND QUALIFYING ACCOUNTS
                 Years ended September 30, 1999 and 1998 and for
       the period from inception, May 1, 1997, through September 30, 1997
                             (Dollars in Thousands)

<TABLE>
<CAPTION>

                                BALANCE AT     PURCHASE        ADDITIONS
                                BEGINNING     ACCOUNTING       CHARGED TO                         BALANCE AT
         DESCRIPTION            OF PERIOD     ADJUSTMENTS       EXPENSE         DEDUCTIONS      END OF PERIOD
----------------------------------------------------------------------------------------------------------------
<S>                            <C>            <C>             <C>               <C>             <C>
Allowance for doubtful
accounts receivable:
  1997                              $   483       $     -          $  44         $    36 (A)       $  491
                                    =======       =======          =====         =======           ======

  1998                              $   491       $   325          $ 180         $   143 (A)       $  853
                                    =======       =======          =====         =======           ======

  1999                              $   853       $    90          $ 266         $   189 (A)       $1,020
                                    =======       =======          =====         =======           ======

</TABLE>

(A) Uncollectible accounts written off, net of recoveries






                                       97


<PAGE>   98





                Report of Ernst & Young LLP, Independent Auditors


We have audited the consolidated financial statements of Neenah Foundry Company
(formerly Neenah Corporation) as of March 31, 1997 and 1996, and for the years
then ended, and for the one month ended April 30, 1997, and have issued our
report thereon dated June 4, 1997, except for Notes 1 and 10 as to which the
date is July 1, 1997 (included elsewhere in this Annual Report on Form 10-K).
Our audits also included the financial statement schedule listed in the index at
Item 14(a). This schedule is the responsibility of the Company's management. Our
responsibility is to express an opinion based on our audits.

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



Milwaukee, Wisconsin                               ERNST & YOUNG LLP
June 4, 1997





                                       98

<PAGE>   99












                                                                     Schedule II



                      NEENAH FOUNDRY COMPANY (PREDECESSOR)

                        VALUATION AND QUALIFYING ACCOUNTS
                 Years ended March 31, 1996 and 1997 and for the
                         One month ended April 30, 1997
                             (Dollars in Thousands)

<TABLE>
<CAPTION>

                                        BALANCE AT        ADDITIONS
                                         BEGINNING       CHARGED TO                          BALANCE AT
             DESCRIPTION                 OF PERIOD         EXPENSE         DEDUCTIONS      END OF PERIOD
-----------------------------------------------------------------------------------------------------------
<S>                                     <C>              <C>               <C>             <C>
Allowance for doubtful
  Accounts receivable:
  1996                                      $ 386            $   233         $   233 (A)      $  386
                                            =====            =======         =======          ======

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

  April 30, 1997                            $ 386            $    14         $    14 (A)      $  386
                                            =====            =======         =======          ======

</TABLE>


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





                                       99