<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 30,1997.
[ ] 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
                             NEENAH TRANSPORT, INC.
                          HARTLEY CONTROLS CORPORATION
             (Exact name of registrant as it appears in its charter)

             Wisconsin                                  39-1580331
             Wisconsin                                  39-1378433
             Wisconsin                                  39-0842568
    (State or other jurisdiction of            (IRS Employer ID Number)
    Incorporation or organization)

2121 Brooks Avenue, P.O. Box 729, Neenah, Wisconsin      54957
2121 Brooks Avenue, P.O. Box 729, Neenah, Wisconsin      54957
2400 Holly Road, Neenah, Wisconsin                       54956
(Address of principal executive offices)               (Zip Code)
                                 (920) 725-7000
                                 (920) 725-7000
                                 (920) 734-2689
              (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:
               11 1/8% Series B Senior Subordinated Notes Due 2007
               11 1/8% Series D Senior Subordinated Notes Due 2007
                                (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 [ ]





<PAGE>   2



                                     PART I
Item 1.    BUSINESS


     On April 30, 1997, pursuant to an Agreement and Plan of Reorganization with
NC Merger Company and NFC Castings, Inc., Neenah Corporation (the "Predecessor
Company") was acquired by NFC Castings, Inc. (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").

      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 1996. 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 45% of the Company's net sales on a pro forma basis for the six
months ended September 30, 1997. 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 52.6% of the Company's net sales on a pro forma basis
for the six months ended September 30, 1997. 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 2.4% of the Company's net sales on a pro forma basis for the six
months ended September 30, 1997.

     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. Since 1985, the Company has invested over $100 million 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 substantially.

                                       2

<PAGE>   3



PRODUCTS, CUSTOMERS AND MARKETS

     The Company provides a variety of products to both the heavy municipal and
industrial markets. The following table sets forth certain information regarding
the end-user markets served by the Company, the products produced by the
Company, representative customers in each end-user market and the percentage of
net sales attributable to each of the Company's markets for the fiscal year
ended March 31, 1997 and for the Pro forma six months ended September 30, 1997.

<TABLE>
<CAPTION>

                                                                                        Percentage of Net
                                                                                              Sales(1)
                                                                             -------------------------------------------
                                                                              Fiscal Year                Pro forma
                                                      Representative             Ended               Six Months Ended
      Market                 End Product                 Customers           March 31, 1997       September 30, 1997 (2)
      ------                 -----------                 ---------           --------------       ----------------------
<S>                 <C>                            <C>                          <C>                      <C> 
Heavy Municipal      Standard castings including    State and local              44.6%                     46.5%
                    storm and sanitary sewer        government
                    castings, including manhole     entities, utility
                    covers and frames, storm        companies, precast
                    sewer frames and grates;        concrete structure
                    Specialty castings including    producers and
                    heavy duty airport castings,    contractors (3)
                    specialized trench drain
                    castings, specialty flood
                    control castings and
                    ornamental tree grates
Industrial
  Medium- and
  Heavy-Duty
  Truck             Differential carriers and       Rockwell                     34.3%                     33.8%
                    cases, brackets, cages,           International
                    calipers, caps, carriers,       Eaton Corp.
                    hubs, knuckles, transmission    Dana Corp
                    housings, yokes
  Farm
  Equipment         Various gear housings, planet   John Deere                   16.0%                     15.8%
                    carrier, axle housings,         New Holland
                    planting and harvesting
                    equipment parts,
                    counterweights
  Other
  Industrial        Compressor components,          Aisin                         5.1%                      3.9%
                    various housing and gear cases  The Trane
                                                      Company

</TABLE>

(1) Net sales include sales of Neenah Foundry Company only.
(2) The Company changed its fiscal year end to September 30 from March 31
    effective September 30, 1997.
(3) No municipal customer represented more than 1.5% of Neenah Foundry Company's
    net sales for the fiscal year ended March 31, 1997 or the pro forma six 
    months ended September 30, 1997.


                                       3

<PAGE>   4


     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 1996. 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 on published product
specifications to ensure product performance.

     A key aspect of winning orders in the heavy municipal market is the
specification process in which a local authority or design engineer sets
specific criteria for the casting or castings to be used in a particular
project. Those criteria then become part of the formal plans and specifications
that will govern the acceptability of castings for a particular project. The
Company seeks to be an active participant in the specification process. Its
sales staff makes frequent calls on design engineers as part of a continuous
effort to stay abreast of current specifications and upcoming projects. In these
sales calls, the Company seeks to create opportunities for the selection of
specifications which utilize an existing Company pattern. Although in many cases
the design engineer who sets the specification does not make the purchase
decision, when the Company's specialty product is specified it becomes more
difficult for another manufacturer to provide an alternate part which is
considered acceptable. The Company's professional sales staff and product
engineering department are highly regarded by design engineers and are
frequently consulted during the specification drafting process. The Company
believes its reputation for its product engineering support, consistent quality
and reliable service have made the Company's municipal and tree grate catalogs
two of the most frequently used specification design tools in the municipal
casting industry.

     Over the past three years, the Company has introduced what it calls
"lightweighted" parts to the heavy municipal market. These lightweighted parts
have been reengineered in order to reduce both their weight and amount of raw
materials necessary for their manufacture, while maintaining the high quality
performance characteristics of the heavier version of the casting. This
improvement in the design and manufacture of municipal castings has resulted in
lower material costs and improved margins for this product line. The Company is
able to manufacture lightweighted castings because its manufacturing processes
enable it to refine castings walls down to very narrow tolerances, many of which
are currently not achievable by the Company's competitors. While only a portion
of the municipal castings the Company sells are candidates for lightweighting,
the Company expects to continue to increase the number of lightweighted castings
which it offers for sale over the next several years.

                                       4

<PAGE>   5


     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 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. 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 multi-year arrangements with certain 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 is the sole-sourced supplier of over 85% of the industrial
castings it currently produces. Historically, the Company has 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.

     In addition to increasing its sales to existing customers and seeking out
new customers, the Company intends to explore opportunities in austempering and
machining and assembling sub-components for specific industrial customers.
Austempering is the process of heat treating a ductile iron casting to increase
its strength, thereby increasing the casting's ability to replace steel in
additional applications. Machining and sub-assembling are value-added processes
often performed by the OEM or third parties. Austempering and machining and
sub-assembly are both processes which generally provide higher margins and
increase a customer's reliance on the manufacturer.

                                       5
<PAGE>   6



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 56 Company employees and
26 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 nine 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 effort 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. Since
1985, the Company has invested over $100 million 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 pro forma six months ended September 30, 1997, the Company had a
combined scrap rate of less that 2.0%.

     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, 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.

                                       6
<PAGE>   7


     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 it 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.
Additionally, from 1992 through 1997, the Company reduced employee hours per ton
from 14.8 to 9.0.

    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 continuous improvement of operations and personnel,
emphasize defect prevention and reduce variation and waste in all areas.

DISTRIBUTION

     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. ("Neenah Transport"), a wholly owned
subsidiary of the Company, 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 the Company.

                                       7
<PAGE>   8


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 of 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 from its suppliers 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 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 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 U.S., 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.


BACKLOG

     The Company's industrial business generally involves supplying all or a
portion of a customer's annual requirements for a particular casting. Industrial
customers generally order castings on a monthly basis. Orders for the heavy
municipal market are generally received for specific casting products and cover
a much larger range of castings. The Company's backlog at any given time
consists only of firm industrial and municipal orders. The Company's backlog was
24,800 tons at September 30, 1997 as compared to 16,000 tons at September 30,
1996. The increase in backlog of approximately 55% was due primarily to an
increase in the medium- and heavy-duty truck market, coupled with a substantial
extended order from a new customer in the railroad industry.

                                       8
<PAGE>   9


HARTLEY CONTROLS CORPORATION

     Hartley Controls Corporation ("Hartley Controls"), a wholly owned
subsidiary of the Company, 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. Hartley Controls is a major U.S. supplier of sand control
systems with over 300 installations since 1986. Hartley 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 other products represented approximately 2.4% of the Company's net sales on
a pro forma basis for the six months ended September 30, 1997.

EMPLOYEES

     As of September 30, 1997 the Company had 937 full time employees, of whom
739 were hourly employees and 198 were salaried employees. Of the 198 salaried
employees, 96 are in manufacturing and engineering, 56 are in sales and
marketing, 42 are in management and administration and 4 are in transportation.
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 705 of the Company's hourly employees. A collective bargaining agreement with
Local 121B was reached on January 1, 1996 and expires on December 31, 1998. The
Independent Patternmakers Union of Neenah, Wisconsin is the major bargaining
agent for and representative of 34 of the Company's hourly employees. A
collective bargaining agreement with the Independent Patternmakers Union was
reached on January 1, 1995 and expires on December 31, 1997. The Company
believes that it has a good relationship with its employees.

ENVIRONMENTAL MATTERS

     The Company's facilities 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 and the
Occupational Health and Safety Act. The Company believes that its operations
have been and 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 operations, financial condition or competitive position.
However, some risk of environmental liability and other costs is inherent in the
nature of the iron foundry business. The Company 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 or clean-up of
structures prior to demolition.

     Under the Federal Clean Air Act Amendments of 1990 ("CAA"), the
Environmental Protection Agency must establish maximum achievable control
technology standards for hazardous air pollutants emitted from iron foundry
operations by the year 2000. In addition, Wisconsin law imposes requirements on
emissions of air toxins from iron foundries and other industries. Many of the
regulations that will implement the CAA and Wisconsin law have not yet been
promulgated. Although it is not possible to estimate the costs of complying with
the regulations until they are issued, iron foundries, including the Company,
can be expected to incur significant costs over time to comply with these
federal and state regulations.

                                       9
<PAGE>   10

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 in March or April. The Company has not
historically experienced seasonality in industrial casting sales.


Item 2.     PROPERTIES

     The Company's headquarters and two foundries are located in Neenah,
Wisconsin. The first manufacturing foundry, Plant 2, produces gray and ductile
iron castings and is equipped with one BMD air impulse molding line, two Hydro
slinger cope and drag molding units, and one 2070 Type B Disamatic molding
machine. The annual rated capacity for Plant 2 is 116,000 gst (good salable
tons). The second manufacturing foundry, Plant 3, produces ductile iron castings
and is equipped with one 2013 Mark IV Disamatic molding machine and one 2070
Type B Disamatic molding machine. The annual rated capacity for Plant 3 is
approximately 71,000 gst. Industrial and municipal castings are produced in both
plants. Rated capacity is based on an assumed product mix and, due to the
Company's current industrial product mix, which includes numerous complex
castings, practical capacity is currently approximately 5% to 6% less than rated
capacity. The Company owns seven and leases six distribution and sales centers.
In early 1994, the Company closed Plant 1, its oldest and lowest capacity plant,
which was primarily producing large castings for HVAC Systems. The Company
closed Plant 1 because of its decision to discontinue the low volume, highly
complex castings produced by Plant 1 and the significant capital expenditures
that would have been necessary to modernize Plant 1.


Item 3.     LEGAL PROCEEDINGS

     The Company is 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.


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

     There were no matters submitted to a vote of security holders during the
period ended September 30, 1997.



                                     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, 1997.

Item 6.       SELECTED FINANCIAL DATA

      The following table sets forth the selected historical consolidated
financial data of the Company for the five years ended March 31,1997,
the six months ended September 30, 1996 and the one month ended April 30, 1997 
which have been derived from the Company's historical consolidated financial
statements before the Merger and the five months ended September 30, 1997 which
have been derived from the Company's historical consolidated financial
statements following the Merger.
                                       10

<PAGE>   11
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,
                                           ---------------------------
                                  1993       1994      1995      1996      1997         Six         One Month      Five Months
                                  ----       ----      ----      ----      ----        Months         Ended           Ended   
                                                                                        Ended         April        September  
                                                                                      September     30, 1997       30, 1997   
                                                                                      30, 1996                                
(DOLLARS IN                                                                                                     
THOUSANDS)
STATEMENT OF
  INCOME DATA:
<S>                            <C>        <C>       <C>       <C>       <C>          <C>             <C>            <C>
  Net sales (1)                 $133,422   $131,982  $160,621  $166,951  $165,426      $89,739        $17,276         $87,093 
  Cost of sales                  108,279    106,531   120,981   121,631   116,736       62,986         11,351          60,166 
                                 -------   --------  --------  --------   -------     --------        -------         ------- 
  Gross profit                    25,143     25,451    39,640    45,320    48,690       26,753          5,925          26,927 
  Selling, general                                                                                                            
    and administrative                                                                                                        
    expenses                      12,865     13,614    16,673    16,983    17,547        9,276          1,752           7,088 
  Amortization expense                --         --        --        --        --           --             --           3,678 
                                                                                                                              
  Restructuring charge             6,172         --        --        --        --           --             --              -- 
                                 -------   --------  --------  --------   -------     --------        -------         ------- 
  Operating income                 6,106     11,837    22,967    28,337    31,143       17,477          4,173          16,161 
                                                                                                                              
  Interest expense                                                                                                            
    (income), net                  2,118      1,043       397      (481)   (1,162)        (413)          (121)         (8,832)
                                 -------   --------  --------  --------   -------     --------        -------         ------- 
  Income before
    income taxes
    and cumulative
    effect of accounting
    changes                        3,988     10,794    22,570    28,818    32,305       17,890          4,294           7,329
  Provision for income                                                                                                       
    taxes                          1,544      4,213     8,866    11,676    12,467        7,154          1,615           3,479
                                 -------   --------  --------  --------   -------     --------        -------         ------- 
  Income before
    cumulative  effect of                                                                                                          
     accounting changes            2,444      6,581    13,704    17,142    19,838       10,736          2,679           3,850
                                                                                                                             
  Cumulative effect of                                                                                                       
  accounting changes:                                                                                                        
    Income taxes                   5,200         --        --        --        --           --             --              --
                                                                                                                             
    Postretirement                                                                                                           
    benefits other                                                                                                           
    than pensions                 (2,564)        --        --        --        --           --             --              --
                                 -------   --------  --------  --------   -------     --------        -------         ------- 
                                                                                                                             
Income before                                                                                                                
extraordinary item                 5,080      6,581    13,704    17,142    19,838       10,736          2,679           3,850
                                                                                                                             
Extraordinary item                    --         --        --        --        --           --             --           1,630
                                 -------   --------  --------  --------   -------     --------        -------         ------- 
Net income                       $ 5,080   $  6,581  $ 13,704  $ 17,142   $19,838     $ 10,736        $ 2,679         $ 2,220
                                 =======   ========  ========  ========   =======     ========        =======         =======      
</TABLE>


                                       11
<PAGE>   12

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------

BALANCE SHEET
  DATA (AT END
  OF PERIOD):
<S>                  <C>         <C>      <C>       <C>        <C>          <C>           <C>              <C> 
  Cash and cash
    equivalents         $   79     $  118    $  238  $ 10,126  $ 22,403     $ 18,166       $ 29,046        $ 20,344
  Working capital       12,983     14,419    15,239    28,113    43,707       34,930         34,052          39,830
  Total assets          87,388     74,327    73,813    82,957    93,869       92,759        102,067         328,425
  Total debt            21,409     13,325       887       241       134          169            129         197,620
  Total stockholders'   36,862     37,929    43,198    54,790    68,857       62,676         74,458          47,220
      equity

---------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)  Net sales for the years ended March 31, 1993 and 1994 include sales of
     products manufactured in Plant 1, which was closed in 1994 as part of the
     Company's strategy to increase its focus on higher volume, complex parts
     for its industrial customers. The majority of the parts produced in Plant 1
     were then discontinued. Plant 1 provided sales of $30.9 million and $4.4
     million for the fiscal years ended March 31, 1993 and 1994, respectively.


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

     On April 30, 1997, pursuant to an Agreement and Plan of Reorganization with
NC Merger Company and NFC Castings, Inc., the stock of Neenah Corporation (the
"Predecessor Company") was acquired by NFC Castings, Inc. (the "Merger"). 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
"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 approximately $148.8
million. These amounts are being amortized over their estimated useful lives,
ranging from 5 months to 40 years. The Merger has also resulted in a significant
increase in the Company's interest expense.

     The Merger has been accounted for as a business combination and has
resulted in differences in the basis of certain assets and liabilities between
the Predecessor Company and the Company. The Company changed its fiscal year end
to September 30 from March 31 effective September 30, 1997. The following
discussions compare the pro forma results of operations of the Company for the
six months ended September 30, 1997, assuming the Merger occurred on April 1,
1997, to the historical results of the Predecessor Company for the six months
ended September 30, 1996.

                                       12
<PAGE>   13


RESULTS OF OPERATIONS

     The following table sets forth for the periods shown certain statement of
income data expressed as a percentage of net sales:


<TABLE>
<CAPTION>
                                                      Predecessor Company                 
                                     -----------------------------------------------------      
                                      Fiscal Year Ended March 31,                               Pro Forma 
                                     -----------------------------      Six Months Ended     Six Months Ended
                                     1995         1996        1997      September 30, 1996    September 30, 1997
                                     ----         ----        ----      ------------------   -------------------
<S>                                 <C>          <C>        <C>          <C>                     <C>    
Net sales:                                                                                              
    Municipal sales                   43.9%        41.6%      43.1%            49.3%               45.0%
    Industrial sales                  53.2         55.2       53.4             47.5                52.6 
    Hartley Controls sales             2.9          3.2        3.5              3.2                 2.4 
                                     -----        -----      -----            -----               -----
Total net sales                      100.0        100.0      100.0            100.0               100.0 
                                                                                                        
Cost of sales                         75.3         72.9       70.6             70.2                67.4 
                                     -----        -----      -----            -----               -----
Gross profit                          24.7         27.1       29.4             29.8                32.6 
Selling, general and                                                                                    
   administrative expense             10.4         10.1       10.6             10.3                12.1 
                                     -----        -----      -----            -----               -----
Operating income                      14.3%        17.0%      18.8%            19.5%               20.5%
                                     =====        =====      =====            =====               =====

</TABLE>

COMPARISON OF PRO FORMA SIX MONTHS ENDED SEPTEMBER 30, 1997 TO SIX MONTHS ENDED
SEPTEMBER 30, 1996

     Net Sales. Net sales for the pro forma six months ended September 30, 1997
were $104.4 million which are $14.6 million or 16.3% higher than the six months
ended September 30, 1996. Net sales of municipal castings increased by $2.8
million or 6.2 % 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 $12.3 million or 28.8% due to a
continuing surge in the heavy duty truck build rates, percentage gains on
dual sourced components and increased build rates by a major industrial
customer. Net sales for Hartley Controls for the pro forma six months ended
September 30,1997, declined by $0.4 million mostly due to a reduction in
equipment sales caused by capital spending cutbacks at the major foundry
customers that Hartley Controls services.

     Gross Profit. Gross profit for the pro forma six months ended September 30,
1997 was $34.0 million, an increase of $7.3 million or 27.3%, as compared to the
six months ended September 30, 1996. Gross profit as a percentage of net sales
increased to 32.6% from 29.8% for the six months ended September 30, 1996. The
margin improvement was due to the combined effect of spreading manufacturing
overhead over a greater volume, improved efficiency in plant operations and, to
a lesser extent, improved pricing in both municipal and industrial products.
Production, expressed in good tons, increased during the six months ended
September 30, 1997 by 12,971 tons or 16.7% over the six month period ended
September 30, 1996. Furthermore, man hours per ton over this time period were
reduced from 8.86 hours/ton to 8.77 hours/ton and variable expenses (most
notably foundry supplies, repair parts, utilities and coke) decreased from $207
per good ton to $190 per good ton.

     Selling, General and Administrative Expenses. Selling, general and
administrative expenses for the pro forma six months ended September 30, 1997
were $12.6 million, an increase of $3.4 million or 36.2% over the $9.3 million
for the six months ended September 30, 1996. As a percentage of net sales,
selling, general and administrative expenses increased from 10.3% for the six
months ended September 30, 1996 to 12.1% for the pro forma six months ended
September 30, 1997. The increase in selling, general and administrative expense
was primarily due to amortization of goodwill and identifiable intangible assets
resulting from the Merger.

                                       13

<PAGE>   14

     Operating Income. Operating income was $21.4 million for the pro forma six
months ended September 30, 1997, an increase of $3.9 million or 22.5% from the
six months ended September 30, 1996. As a percentage of net sales, operating
income increased from 19.5% for the six months ended September 30, 1996 to 20.5%
for the pro forma six months ended September 30, 1997. The improvement in
operating income was achieved for the reasons discussed above offset by
amortization of goodwill and identifiable intangible assets resulting from the
Merger.

     Net Interest Expense. Net interest expense increased from $0.4 million net
interest income for the six months ended September 30, 1996 to $10.6 million net
interest expense for the pro forma six months ended September 30, 1997 due to
the interest expense on the indebtedness incurred in connection with the Merger.

     Extraordinary Item. For the pro forma six 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 Facility.

COMPARISON OF FISCAL YEAR ENDED MARCH 31, 1997 TO FISCAL YEAR ENDED 
MARCH 31, 1996

   Net Sales. Net sales were $165.4 million for the year ended March 31, 1997, a
decrease of $1.6 million, or 0.9%, from $167.0 million for the year ended March
31, 1996. Net sales of industrial castings decreased $3.9 million, or 4.2%, to
$88.3 million. The decrease in industrial casting sales was primarily the result
of a decision by the Company to discontinue its production of certain lower
margin brake components which resulted in a 9,600 ton decrease in tons produced
compared to the year earlier period, and, to a lesser extent, reduced demand for
casting products in the medium- and heavy-duty truck market. Net sales of
municipal castings increased $1.9 million, or 2.7%, to $71.3 million, primarily
due to increased pricing. Hartley Controls net sales grew $0.4 million, or 7.4%,
to $5.8 million, principally due to increased volume of equipment sales.

    Gross Profit. Gross profit was $48.7 million for the year ended March 31,
1997, an increase of $3.4 million, or 7.5%, from $45.3 million for the year
ended March 31, 1996. Gross profit as a percentage of net sales increased to
29.4% for the year ended March 31, 1997, from 27.1% for the year ended March 31,
1996. The increase in gross profit as a percentage of net sales was due mainly
to improved product mix in the industrial product line and greater overall plant
efficiency. Gross profit percentage also improved due to the continued effect of
the lightweighted municipal casting program.

     Selling, General and Administrative Expenses. Selling, general and
administrative expenses were $17.5 million for the year ended March 31, 1997, an
increase of $0.5 million, or 2.9%, from $17.0 million for the year ended March
31, 1996. As a percentage of net sales, selling, general and administrative
expenses increased to 10.6% for the year ended March 31, 1997, from 10.1% for
the year ended March 31, 1996. Approximately $0.2 million of the increase in
selling, general and administrative expenses was due to a non-recurring
charitable contribution and approximately $0.9 million of the increase was due
to increased compensation and benefits to officers of the Company who resigned
at the time of the Merger. Excluding the effects of estimated nonrecurring
officer compensation and benefits and the charitable contribution, selling,
general and administrative expenses, as a percentage of net sales, decreased
slightly to 8.3% for the year ended March 31, 1997, from 8.4% for the year ended
March 31, 1996.

     Operating Income. Operating income increased to $31.1 million for the year
ended March 31, 1997, an increase of $2.8 million or 9.9% from $28.3 million for
the year ended March 31, 1996. As a percentage of net sales, operating income
increased to 18.8% for the year ended March 31, 1997, from 17.0% for the year
ended March 31, 1996. The improvement in operating income was achieved primarily
for the reasons discussed above.

COMPARISON OF FISCAL YEAR ENDED MARCH 31, 1996 TO FISCAL YEAR ENDED MARCH 31,
1995 

    Net sales. Net sales were $167.0 million for the year ended March 31, 1996,
an increase of $6.4 million, or 4.0%, from $160.6 million for the year ended
March 31, 1995. Net sales of industrial castings grew $6.6 million, or 7.7%, to
$92.2 million. The increase in industrial sales was primarily due to improved
pricing while sales volume remained stable. The improved pricing for industrial
castings was mainly the result of a better industrial product mix as the Company
increased its sales of more complex, value-added industrial castings. Net sales
of municipal castings decreased $1.0 million, or 

                                       14

<PAGE>   15

1.4%,  to  $69.4  million,  due to a  decrease  in unit  volume,  which  was
partially offset by improved pricing.  The decrease in municipal castings volume
was  principally  due to  artificially  high sales in fiscal 1995 resulting from
weather  conditions.  Fiscal 1995 net sales were affected by poor winter weather
in January to March 1994 which  resulted in the  postponement  of certain  sales
from fiscal 1994 into fiscal  1995,  and mild weather from January to March 1995
which resulted in the  acceleration  of sales from fiscal 1996 into fiscal 1995.
Total production  volume in tons decreased more  significantly  than unit volume
for municipal sales because of the effect of the lightweighted  casting program.
Hartley  Controls  net  sales  grew $0.8  million,  or  17.4%,  to $5.4  
million, principally due to increased volume of equipment sales.

     Gross Profit. Gross profit was $45.3 million for the year ended March 31,
1996, an increase of $5.7 million, or 14.4%, from $39.6 million for the year
ended March 31, 1995. Gross profit as a percentage of net sales increased to
27.1% for the year ended March 31, 1996, from 24.7% for the year ended March 31,
1995. The continued improvement in gross profit, as a percentage of net sales,
was due to the combined effect of margin improvements in both the industrial and
municipal product lines. Industrial castings gross profit percentage improved
due to the shift to a more profitable product mix and improved efficiency in
plant operations. Municipal castings gross profit percentage improved largely
due to the effect of implementing the lightweighted casting program and an
increase in selling prices.

     Selling, General and Administrative Expenses. Selling, general and
administrative expenses were $17.0 million for the year ended March 31, 1996, an
increase of $0.3 million, or 1.8%, from $16.7 million for the year ended March
31, 1995. As a percentage of net sales, selling, general and administrative
expenses decreased slightly to 10.1% for the year ended March 31, 1996, from
10.4% for the year ended March 31, 1995. Approximately $0.1 million of the
increase in selling, general and administrative expense was due to increased
compensation and benefits to officers of the Company who resigned at the time of
the Merger. Excluding the effects of estimated nonrecurring executive
compensation and benefits, selling, general and administrative expenses, as a
percentage of net sales, decreased to 8.4% from 8.6% for the year ended March
31, 1995, primarily due to the spreading of fixed expenses over a greater volume
of sales.

     Operating Income. Operating income increased to $28.3 million for the year
ended March 31, 1996, an increase of $5.3 million, or 23.0%, from $23.0 million
for the year ended March 31, 1995. As a percentage of net sales, operating
income increased to 17.0% for the year ended March 31, 1996, from 14.3% for the
year ended March 31, 1995. The improvement in operating income was achieved
primarily for the reasons discussed above.

LIQUIDITY AND CAPITAL RESOURCES

     In connection with the Merger, the Company issued $150.0 million aggregate 
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 Facility.") On July 1, 1997, the Company issued an
additional $45.0 million aggregate principal amount of Senior Subordinated
Notes and used the proceeds of $47.6 million to pay off the term loans under
the Senior Bank Facility, together with 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.
        
     The Company's liquidity needs will arise primarily from debt service on the
above indebtedness, working capital needs and funding of capital expenditures.
Borrowings under the revolving credit facility 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 years ended March 31, 1995, 1996 and 1997, and the pro forma
six months ended September 30, 1997, the Company's capital expenditures were
$3.7 million, $7.3 million, $4.5 million and $2.5 million, respectively. The
$3.6 

                                       15

<PAGE>   16

million increase in capital expenditures for the fiscal year ended March
31, 1996 from the comparable period for 1995 was primarily the result of the
expansion of the cooling capabilities of two of the Company's production lines.

     The Company's principal source of cash to fund its liquidity needs will be
net cash from operating activities and borrowings under its revolving credit
facility. Net cash from operating activities for the pro forma six months ended
September 30, 1997 was $25.4 million. Net cash from operating activities for the
year ended March 31, 1997 was $23.5 million, an increase of $1.2 million from
$22.3 million for the year ended March 31, 1996, primarily as a result of an
increase in net income. Net cash from operating activities for the year ended
March 31, 1996 of $22.3 million represented a decrease of $1.3 million from
$23.6 million in the comparable period of 1995, primarily as a result of a net
increase in working capital (excluding cash and cash equivalents) during 1996
partially offset by greater net income in 1996.

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

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 pro forma six month
period ended September 30, 1997 or during the three years ended March 31, 1997.

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 experience
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 in March or April. The Company has not
historically experienced seasonality in industrial casting sales.

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.


                                       16
<PAGE>   17



                                    PART III

Item 10.       DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

                                   MANAGEMENT

     The following sets forth certain information as of September 30, 1997, with
respect to the persons who are members of the Board of Directors or executive
officers of the Company.

<TABLE>
<CAPTION>
        Name              Age                Position
        ----              ---                --------
<S>                       <C>    <C>   
James K. Hildebrand        60    Chairman of the Board and Chief Executive Officer
William M. Barrett         50    Vice President and General Manger
Gary W. LaChey             51    Vice President - Finance, Treasurer and Secretary
Charles M. Kurtti          60    Vice President - Manufacturing and Engineering
William J. Martin          49    Vice President and General Manager - Hartley
                                    Controls Corporation
John Z.  Rader             48    Vice President - Human Resources
Brenton F. Halsey          69    Director
David F. Thomas            47    Director
John D. Weber              33    Director
</TABLE>

     Mr.  Hildebrand is Chairman of the Board and Chief Executive Officer of the
Company,  a  position  he has held since May 1, 1997.  Mr.  Hildebrand  has been
President and Chief  Executive  Officer of Advanced Cast  Products,  Inc.  since
1988, and will continue in that position for the foreseeable future. Previously,
he served as President of the Cast Products Group of Amcast Industrial Corp. Mr.
Hildebrand is also employed by ACP Holding Company which,  beneficially owns all
the common  equity of both the Company and  Advanced  Cast  Products,  Inc.  Mr.
Hildebrand  devotes  substantial  time  to,  and is  partially  compensated  by,
Advanced Cast Products, Inc.

     Mr.  Barrett  is Vice  President  and  General  Manager of the  Company,  a
position he has held since May 1, 1997.  Mr.  Barrett joined the Company in 1992
serving as General Sales Manager - Industrial  Castings.  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 Vice  President  and  General  Manger  -  Hartley  Controls
Corporation,  a wholly owned  subsidiary of the Company,  a position he has held
since 1996.  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.  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.
                                       17

<PAGE>   18

     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 do not receive compensation for their services as
directors. Directors of the Company receive 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.

                                       18
<PAGE>   19


ITEM 11.        Executive Compensation

     The following table sets forth information concerning compensation received
by the chief executive officer of the Company and its five most highly
compensated executive officers (the "Named Executive Officers") for services
rendered during the five months ended September 30, 1997.


<TABLE>
<CAPTION>
                                                                                    Long-Term
                                                                                   Compensation
                                       Annual Compensation           ------------------------------------------
                                   -------------------------           Other Annual        Options/     LTIP          All Other
Name and Principal Position            Salary      Bonus              Compensation(1)       SARs(#)     Payouts      Compensation
---------------------------            ------      -----              ---------------      --------     -------      ------------
<S>                               <C>           <C>                <C>                     <C>          <C>          <C>
Jim Hildebrand
   Chairman and Chief
   Executive Officer               $ 50,000      $ 48,000                    $527
Bill Barrett
   Vice President and
   General Manager                   55,000        46,200                   9,562
Gary LaChey
   Vice President - Finance,
    Secretary and Treasurer          59,175        49,700                  11,528
Chuck Kurtti
   Vice President -
   Manufacturing and
   Engineering                       55,000        46,200                  12,926
Bill Martin
   Vice President and
    General Manager -
    Hartley Controls
    Corporation                      50,000        30,000                  11,553
John Rader
   Vice President - Human
   Resources                         55,000        46,200                  11,984
</TABLE>

(1) The Named Executive 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.

MANAGEMENT INCENTIVE PLAN

     The Company intends to provide 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.

                                       19
<PAGE>   20




MANAGEMENT EQUITY PARTICIPATION

    In connection with the Merger, (a) certain management investors acquired
units representing membership interests in ACP Products, L.L.C., ("ACP
Products") which represent, in the aggregate, approximately a ten percent
beneficial interest in the Company (the "Purchased Interests") and (b) certain
management investors and certain other employees of the Company are expected to
be granted, over a five year period, options (the "Options") to purchase
additional Purchased Interests representing, in the aggregate, approximately a
two percent beneficial interest in the Company. The Options are expected to be
granted periodically and to vest and become exercisable upon (i) certain
threshold dates and/or (ii) the satisfaction of certain financial performance
tests.

     Upon the termination of employment with the Company, an employee's
Purchased Interests will be subject to certain repurchase provisions exercisable
by ACP Products or its designees. The Purchased Interests obtainable upon
exercise of the Options are expected to be subject to rights and restrictions
similar to those of the Purchased Interests purchased in connection with the
closing of the Merger. The exercise price of the Options will be established by
ACP Products, 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 under the
Senior Bank Facility. NFC Castings, Inc. is a wholly-owned subsidiary of ACP
Holdings Company ("ACP Holdings") which in turn is wholly-owned by ACP 
Products.

     The outstanding common units of ACP Products consist of 185,000 Class A-3 
Common Units (the "Class A Common Units"), 815,000 Class B-3 Common Units (the
"Class B Common Units", and together with the Class A 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 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.
        

                                       20

<PAGE>   21


         Set forth below is certain information regarding the beneficial
ownership as of September 30, 1997 of Class A Common Units by each person who
beneficially owns 5.0% or more of the outstanding Class A 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        Percentage of
                                                                              Voting              Voting
                                                                              Class A             Class A
                                                                              Common              Common
         NAME AND ADDRESS OF BENEFICIAL OWNER                                  Units               Units
         ------------------------------------                                ---------        -------------
<S>                                                                           <C>                 <C> 
Citicorp Venture Capital, Ltd. (1) (2)..................................       90,000               48.65%
James K. Hildebrand   (1)...............................................       20,000               10.81%
William M. Barrett  (1).................................................       13,000                7.03%
Gary W. LaChey  (1) ....................................................       13,000                7.03%
Charles W. Kurtti  (1)..................................................       13,000                7.03%   
Bill Martin  (1) .......................................................       13,000                7.03%
John Z. Rader  (1)......................................................       13,000                7.03%               
David F Thomas  (3)  ...................................................       90,000               48.65%
John D. Weber  (3)......................................................       90,000               48.65%
Directors and named executive officers as a group.......................      175,000               94.59%
</TABLE>

 (1)   Such person disclaims beneficial ownership of the Common Stock.

 (2)   Citicorp Venture Capital, Ltd. and its affiliates (collectively, "CVC") 
       own 739,821.82 Class B Common Units representing 90.78% of the Class B  
       Common Units outstanding.                                               

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


                                       21

<PAGE>   22



ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

RELATIONSHIP WITH ACP HOLDINGS

     ACP Products 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 and its principal operating subsidiary,
Advanced Cast Products, Inc. ("Advanced Cast"). Since the closing of the
Merger, Mr. Hildebrand has devoted substantial time to, and has been partially
compensated by, Advanced Cast, in addition to his role with the Company.
Advanced Cast also produces iron castings for sale to the industrial medium-and
heavy-duty truck market, but it has not competed with the Company in the past
in any significant way and the Company does not anticipate that it will so
compete with Advanced Cast in the future.
        
SHAREHOLDER RELATIONSHIPS

     In connection with Merger, certain management investors and certain
institutional investors, including CVC, became parties to the Third Amended and
Restated Limited Liability Agreement of ACP Products as amended (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 CVC and certain institutional investors and
certain management investors, as the only members of ACP Products 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.
        
REGISTRATION RIGHTS AGREEMENT

     The Company entered into a registration rights agreement (the "Registration
Rights Agreement") with CVC and certain institutional investors and certain
management investors. Pursuant to the terms of the Registration Rights
Agreement, certain holders of the 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

      The Company entered into a consulting agreement with James P. Keating that
provides, among other things, that Mr. Keating will be available to serve as a
consultant to the Company from July 1, 1997 to June 30, 1999. Mr. Keating is
paid $16,500 per month under such consulting agreement.

                                       22
<PAGE>   23


Part IV

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

(a)  (1) Consolidated Financial Statements of Neenah Foundry Company

<TABLE>
<CAPTION>

                                                                                               Page
          <S>                                                                                 <C> 
          Report of Ernst & Young LLP, Independent Auditors                                     29
                                                                                                  
          Consolidated Balance Sheet                                                            30
                                                                                                  
          Consolidated Statement of Income                                                      32
                                                                                                  
          Consolidated Statement of Cash Flows                                                  33
                                                                                                  
          Notes to Consolidated Financial Statements                                            34


         Consolidated Financial Statements of Neenah Foundry Company (Predecessor)

          Report of Ernst & Young LLP, Independent Auditors                                    50
                                                                                                  
          Consolidated Balance Sheets                                                          51
                                                                                                 
          Consolidated Statements of Income                                                    53
                                                                                                 
          Consolidated Statements of Changes in Stockholders' Equity                           54
                                                                                                 
          Consolidated Statements of Cash Flows                                                55
                                                                                                 
          Notes to Consolidated Financial Statements                                           56

         (2)   Financial Statements Schedules

          Report of Ernst & Young LLP, Independent Auditors                                    68

          Schedule II - Valuation and Qualifying Accounts of Neenah Foundry Company            69

          Report of Ernst & Young LLP, Independent Auditors                                    70
          
          Schedule II - Valuation and Qualifying Accounts of Neenah Foundry
          Company(Predecessor)                                                                 71
          

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.

          No reports on Form 8-K were filed by the Company for the quarter ended September 30, 1997.

(c) Exhibits

          See Exhibit Index.


</TABLE>

                                       23

<PAGE>   24



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 29, 1997.


                                             NEENAH FOUNDRY COMPANY
                                             NEENAH TRANSPORT, INC.
                                             HARTLEY CONTROLS CORPORATION
                                              (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 29, 1997, 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


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



                                       24

<PAGE>   25




                                  EXHIBIT INDEX


<TABLE>
<CAPTION>
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. **
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. **
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.  **
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     1996-1998 Collective Bargaining Agreement between Neenah Foundry 
         Company and Local 121B Glass, Molders, Pottery, Plastics and Allied 
         Workers International Union AFL-CIO-CLC. **
</TABLE>

                                       25
<PAGE>   26


<TABLE>
<S>     <C>  
10.6     1995-1997 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 among Chase Manhattan 
         Bank, N.A., NFC Castings, Inc. and NC Merger Company. **
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. ** 
10.16    Amended and Restated Revolving Credit Agreement, dated 
         September 12, 1997 among Chase Manhattan Bank, N.A., NFC Castings, 
         Inc. and NC Merger Company.
21.1     Subsidiaries of the Registrant.
24.1     Powers of Attorney (included in signature page). **
25.1     Statement of Eligibility of Trustee on Form T-1. **
27.1     Financial Data Schedule.
</TABLE>
         
-------
 ** Incorporated by reference to the Company's Form S-4 (Registration No. 
    333-28751) which became effective August 12, 1997.

                                       26

<PAGE>   27









                        CONSOLIDATED FINANCIAL STATEMENTS

                             NEENAH FOUNDRY COMPANY

              Period from inception, May 1, 1997,
              through September 30, 1997




                                       27
<PAGE>   28


                                   Neenah Foundry Company

                              Consolidated Financial Statements

               Period from inception, May 1, 1997, through September 30, 1997




                                          CONTENTS

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

Consolidated Balance Sheet.........................................
Consolidated Statement of Income...................................
Consolidated Statement of Cash Flows...............................
Notes to Consolidated Financial Statements.........................




                                       28

<PAGE>   29


                Report of Ernst & Young LLP, Independent Auditors


Board of Directors
Neenah Foundry Company

We have audited the accompanying consolidated balance sheet of Neenah Foundry
Company (the Company) as of September 30, 1997, and the related consolidated
statements of income and cash flows 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 audit.

We conducted our audit 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 audit provides 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, 1997, and the consolidated results of its operations
and its cash flows for the period from inception, May 1, 1997, through September
30, 1997, in conformity with generally accepted accounting principles.



Milwaukee, Wisconsin                                    ERNST & YOUNG LLP
October 31, 1997

                                       29

<PAGE>   30


                             Neenah Foundry Company

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

                               September 30, 1997


<TABLE>
<CAPTION>
<S>                                                                                           <C>
ASSETS
Current assets:
   Cash and cash equivalents                                                                   $ 20,344
   Accounts receivable, less allowance for doubtful accounts
     of $386                                                                                     29,932
   Inventories                                                                                   19,639
   Other current assets                                                                             318
   Deferred income taxes                                                                          1,695
                                                                                          -------------    
Total current assets                                                                             71,928



Property, plant and equipment:
   Land                                                                                           1,576
   Buildings and improvements                                                                     7,856
   Machinery and equipment                                                                       71,491
   Patterns                                                                                      22,787
                                                                                          -------------     
                                                                                                103,710     
   Less accumulated depreciation                                                                  3,131     
                                                                                          -------------     
                                                                                                100,579


Deferred financing costs, net of accumulated amortization of $295                                 6,853
Identifiable intangible assets, net of accumulated amortization of $2,450
                                                                                                 28,424
Goodwill, net of accumulated amortization of $1,228                                             116,690
Other assets                                                                                      3,951
                                                                                          -------------    
                                                                                                155,918    
                                                                                          -------------    
                                                                                               $328,425    
                                                                                          =============    
</TABLE>
                                       30
<PAGE>   31


<TABLE>
<CAPTION>
<S>                                                                                       <C> 
LIABILITIES AND STOCKHOLDERS' EQUITY 
Current liabilities:
   Accounts payable                                                                         $    10,333
   Income taxes payable                                                                           4,384
   Accrued wages and employee benefits                                                            5,174
   Accrued interest                                                                               8,251
   Other accrued liabilities                                                                      3,858
   Current portion of long-term debt                                                                 98
                                                                                            -----------    
Total current liabilities                                                                        32,098

Long-term debt                                                                                  197,522
Postretirement benefit obligations                                                                4,894
Deferred income taxes                                                                            44,519
Other liabilities                                                                                 2,172
                                                                                            -----------    
Total liabilities                                                                               281,205

Commitments and contingencies (Note 5)

Stockholders' 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
   Common stock, Class B (nonvoting), par value $100 per share; authorized 10,000
     shares; no shares issued or outstanding                                                          -
   Additional paid-in capital                                                                    44,900
   Retained earnings                                                                              2,220
                                                                                            -----------    
Total stockholders' equity                                                                       47,220    
                                                                                            -----------    
                                                                                            $   328,425         
                                                                                            ===========    
</TABLE>

See accompanying notes

                                      31
<PAGE>   32


                             Neenah Foundry Company

                        Consolidated Statement of Income
                                 (In Thousands)

         Period from inception, May 1, 1997, through September 30, 1997



<TABLE>
<S>                                                                                              <C>
Net sales                                                                                         $87,093
Cost of sales                                                                                      60,166
                                                                                             ------------  
Gross profit                                                                                       26,927

Selling, general and administrative expenses                                                        7,088
Amortization expense                                                                                3,678
                                                                                             ------------  
Operating income                                                                                   16,161
Other income (expense):
   Interest income                                                                                    367
   Interest expense                                                                                (9,199)
                                                                                             ------------  
Income before income taxes and extraordinary item                                                   7,329
Provision for income taxes                                                                          3,479
                                                                                             ------------  
Income before extraordinary item                                                                    3,850

Extraordinary item, net of income tax benefit of $999                                               1,630
                                                                                             ============  
Net income and retained earnings at end of period                                            $      2,220
                                                                                             ============  

</TABLE>



   
See accompanying notes              32



<PAGE>   33


                             Neenah Foundry Company

                      Consolidated Statement of Cash Flows
                                 (In Thousands)

         Period from inception, May 1, 1997, through September 30, 1997

                                           

<TABLE>
<S>                                                                                       <C>  
OPERATING ACTIVITIES                                                                      
Net income                                                                                 $  2,220
Adjustments to reconcile net income to net cash provided by operating activities:
   Extraordinary item                                                                         2,629
   Depreciation                                                                               3,141
   Amortization of identifiable intangible assets and goodwill                                3,678
   Amortization of deferred financing costs and premium on notes                                273
   Deferred income taxes                                                                     (2,939)
   Other                                                                                        (10)
   Changes in operating assets and liabilities:
     Accounts receivable                                                                     (4,235)
     Inventories                                                                              5,707
     Other current assets                                                                      (318)
     Accounts payable                                                                            (1)
     Income taxes payable                                                                     1,866
     Accrued liabilities                                                                      9,327
     Postretirement benefit obligations                                                         141
     Other liabilities                                                                           21
                                                                                           --------
Net cash provided by operating activities                                                    21,500

INVESTING ACTIVITIES
Payment of closing date net worth adjustment                                                (12,530)
Purchase of property, plant and equipment                                                    (2,281)
Proceeds from redemption of life insurance                                                      866
Other                                                                                            43
                                                                                           --------
Net cash used in investing activities                                                       (13,902)

FINANCING ACTIVITIES
Proceeds from long-term debt                                                                 47,588
Payments on long-term debt                                                                  (45,030)
Debt issuance costs                                                                          (1,356)
                                                                                           --------
                                                                
Net cash provided by financing activities                                                     1,202
                                                                                           --------

Increase in cash and cash equivalents                                                         8,800
Cash and cash equivalents at beginning of period                                             11,544
                                                                                           --------
Cash and cash equivalents at end of period                                                 $ 20,344
                                                                                           ========

Supplemental disclosures of cash flow information:
   Cash paid for:
     Interest                                                                              $    674
     Income taxes                                                                             3,502
</TABLE>

See accompanying notes.            33 

                                                                          
<PAGE>   34


                             Neenah Foundry Company

                   Notes to Consolidated Financial Statements
                              September 30, 1997
                                 (In Thousands)

                                          


1. NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES

NATURE OF OPERATIONS

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. 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) 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 (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.

                                       34

<PAGE>   35

                             Neenah Foundry Company

                   Notes to Consolidated Financial Statements
                                 (In Thousands)


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

Industrial castings are generally sold to large, well-established companies,
with two customers accounting for 15% and 10% of net sales in the five months
ended September 30, 1997. Combined receivables from these two customers totaled
$5,145 at September 30, 1997. 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.

The Company changed its fiscal year end to September 30 effective September 30,
1997. The following is unaudited financial information of the Predecessor
Company for the six months ended September 30, 1996:

                  Net sales                              $89,739
                  Gross profit                            26,753
                  Provision for income taxes               7,154
                  Net income                              10,736

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.

                                       35
<PAGE>   36
                             Neenah Foundry Company

                   Notes to Consolidated Financial Statements
                                 (In Thousands)


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

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.

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

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 five months to 40 years.

                                       36
<PAGE>   37
                             Neenah Foundry Company

                   Notes to Consolidated Financial Statements
                                 (In Thousands)


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

GOODWILL

Goodwill is amortized on a straight-line basis over 40 years. The carrying value
of goodwill will be reviewed if facts and circumstances suggest that it may be
impaired. If this review indicates that goodwill will not be recoverable, as
determined based on the undiscounted cash flows of the Company over the
remaining amortization period, the Company would reduce the carrying value of
the goodwill by the estimated shortfall of cash flows. 

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 $274 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.

                                       37
<PAGE>   38
                             Neenah Foundry Company

                   Notes to Consolidated Financial Statements
                                 (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 at September 30, 1997:

<TABLE>
<CAPTION>
                                                Carrying            Fair
                                                 Amount            Value
                                               ------------     ------------
<S>                                            <C>              <C> 
Cash and cash equivalents                       $  20,344        $  20,344
Accounts receivable                                29,932           29,932
Accounts payable                                   10,333           10,333
Long-term debt                                    197,620          213,623 (1)
</TABLE>

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

PENDING ACCOUNTING STANDARDS

In June 1997, the Financial Accounting Standards Board issued SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related Information." SFAS No.
131 establishes the standards for the manner in which public enterprises are
required to report financial and descriptive information about their operating
segments. The statement defines operating segments as components of an
enterprise for which separate financial information is available and evaluated
regularly as a means for assessing segment performance and allocating resources
to segments. A measure of profit or loss, total assets and other related
information are required to be disclosed for each operating segment. In
addition, this statement requires the annual disclosure of information
concerning revenues derived from the enterprise's products or services,
countries in which it earns revenue or holds assets, and major customers. SFAS
No. 131 is effective for fiscal years beginning after December 15, 1997. The
adoption of SFAS No. 131 will not affect the Company's results of operations or
financial position, but may affect the disclosure of segment information.

                                       38
<PAGE>   39
                             Neenah Foundry Company

                   Notes to Consolidated Financial Statements
                                 (In Thousands)


2. INVENTORIES

Inventories consist of the following at September 30, 1997:

<TABLE>
<S>                                                                                         <C> 
    Raw materials                                                                             $  1,688
    Work in process and finished goods                                                          13,379
    Supplies                                                                                     4,572
                                                                                              --------
                                                                                              $ 19,639
                                                                                              ========
</TABLE>

At September 30, 1997, inventories at LIFO approximate FIFO cost.

3. IDENTIFIABLE INTANGIBLE ASSETS

Identifiable intangible assets consist of the following at September 30, 1997:

<TABLE>
<S>                                                                                           <C>    
    Customer lists                                                                             $14,200
    Trade names                                                                                 11,700
    Assembled work force                                                                         2,050
    Other                                                                                        2,924
                                                                                               -------
                                                                                                30,874
    Less accumulated amortization                                                                2,450
                                                                                               -------
                                                                                               $28,424
                                                                                               =======
</TABLE>



                                       39
<PAGE>   40

                             Neenah Foundry Company

                   Notes to Consolidated Financial Statements
                                 (In Thousands)


4. LONG-TERM DEBT

Long-term debt consists of the following at September 30, 1997:
<TABLE>
<S>                                                                                          <C>
111/8% Series B Senior Subordinated Notes                                                      $150,000
111/8% Series D Senior Subordinated Notes, including unamortized
   premium of $2,522                                                                             47,522
Other                                                                                                98
                                                                                               --------
                                                                                                197,620
Less current portion                                                                                 98
                                                                                               --------
                                                                                               $197,522
                                                                                               ========
</TABLE>

The Series B and Series D 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 and Hartley (Guarantor Subsidiaries). The Notes are
subordinated to all existing and future senior indebtedness of the Company but
rank equally in right of

                                       40

<PAGE>   41
                             Neenah Foundry Company

                   Notes to Consolidated Financial Statements
                                 (In Thousands)


4. LONG-TERM DEBT (CONTINUED)

payment with any future senior subordinated indebtedness of the Company. The
Notes contain covenants which limit the Company from incurring additional
indebtedness and restrict dividend payments, stock redemptions and certain other
transactions.

The Series D Senior Subordinated Notes were issued on July 1, 1997. The Company
used the proceeds to repay the term loans, accrued interest thereon and related
fees and expenses. In connection with the prepayment in full of the term loans,
the Company wrote off the unamortized balance of the related deferred financing
costs of $2,629.

The Company has an unsecured revolving credit facility that provides for
borrowings up to $50 million through April 30, 2002. The revolving credit
facility bears interest at (a) the base rate (as defined) plus 1.5% or (b) LIBOR
(as defined) plus 2.5%, in each case subject to certain reductions based on the
Company's financial performance. Interest is payable quarterly on outstanding
borrowings. The Company is subject to a quarterly commitment fee of .5% per
annum, subject to reduction based upon the Company's financial performance, on
the average daily unused portion of the revolving credit facility.

The 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.

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 five-month period ended September 30, 1997 amounted to $446. Minimum
rental payments due under these operating leases for subsequent fiscal years are
as follows:

<TABLE>
<S>                                                   <C>  
         1998                                          $   678
         1999                                              506
         2000                                              223
         2001                                               94
         2002                                               21
                                                       -------
                                                       $ 1,522
                                                       =======
</TABLE>

                                       41
<PAGE>   42



                             Neenah Foundry Company

                   Notes to Consolidated Financial Statements
                                 (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 September 30, 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 at September 30, 1997:

<TABLE>
          <S>                                          <C> 
           Current:
            Federal                                     $ 5,265
            State                                         1,153
                                                        -------
                                                          6,418
           Deferred                                      (2,939)
                                                        -------
                                                        $ 3,479
                                                        =======
</TABLE>
                                       42

<PAGE>   43

                             Neenah Foundry Company

                   Notes to Consolidated Financial Statements
                                 (In Thousands)


6. INCOME TAXES (CONTINUED)

The provision for income taxes differs from the amount computed by applying the
federal statutory rate of 34% to income before income taxes and extraordinary
item at September 30, 1997, as follows:
<TABLE>
<S>                                                                    <C> 
Provision at statutory rate                                            $   2,492
State income taxes, net of federal tax benefit                               432
Amortization of goodwill                                                     467
Other                                                                         88
                                                                       ---------
Provision for income taxes                                             $   3,479
                                                                       =========

The components of the Company's deferred income tax assets and liabilities are
as follows at September 30, 1997:

Deferred income tax liabilities:
  Book basis of inventories in excess of tax basis                     $  (3,270)
  Book basis of property, plant and equipment in excess of tax basis     (32,310)
  Identifiable intangible assets                                         (11,370)
  Employee benefit plans                                                    (720)
  Other                                                                     (296)
                                                                       ---------
                                                                         (47,966)
Deferred income tax assets:
  Employee benefit plans                                                   2,805
  Accrued vacation                                                         1,011
  Other accrued liabilities                                                1,112
  Other                                                                      214
                                                                       ---------
                                                                           5,142
                                                                       ---------
Net deferred income tax liability                                      $ (42,824)
                                                                       =========

Included in the consolidated balance sheet as:
  Current deferred income tax asset                                    $   1,695
  Noncurrent deferred income tax liability                               (44,519)
                                                                       ---------
                                                                       $ (42,824)
                                                                       =========
</TABLE>

                                       43
<PAGE>   44


                             Neenah Foundry Company

                   Notes to Consolidated Financial Statements
                                 (In Thousands)



7. EMPLOYEE BENEFIT PLANS

DEFINED BENEFIT PENSION PLANS

The Company sponsors two defined benefit pension plans covering substantially
all hourly employees. Retirement benefits for the pension plans are based on
years of credited service and defined benefit rates. The Company funds the
pension plans based on an actuarially determined cost method allowable under
Internal Revenue Service regulations.

The following table reconciles the funded status of the pension plans as of
August 31, 1997 (the Company uses a measurement date as of August 31), to the
amounts included in the consolidated balance sheet at September 30, 1997:
 
<TABLE>
<CAPTION>
                                                                          Underfunded       Overfunded
                                                                               Plan             Plan
                                                                         -----------------------------
<S>                                                                         <C>             <C> 
Actuarial present value of benefit obligations:
   Vested benefit obligations                                                $   (821)       $(20,506)
                                                                         ============    ============      
   Accumulated benefit obligations                                           $   (836)       $(21,006)      
                                                                         ============    ============      
                                                                                                           
Projected benefit obligations                                                $   (836)       $(21,006)      
Plan assets at fair value (consisting principally of pooled 
   investment funds and an investment contract with an 
   insurance company)                                                             776          24,524
                                                                         ------------    ------------      
Projected benefit obligations less than (in excess of) plan assets                                         
                                                                                  (60)          3,518      
Unrecognized net gain                                                              (3)         (1,655)      
                                                                         ------------    ------------      
Prepaid (accrued) pension obligations                                        $    (63)      $   1,863      
                                                                         ============    ============      

Net pension asset included in other assets  in the consolidated
   balance sheet                                                             $  1,800
                                                                         ============
</TABLE>
                                       44


<PAGE>   45

                             Neenah Foundry Company

                   Notes to Consolidated Financial Statements
                                 (In Thousands)

7. EMPLOYEE BENEFIT PLANS (CONTINUED)

Components of net periodic pension cost for the five-month period ended
September 30, 1997 are as follows:

Service cost - benefits earned during the period             $  202
Interest cost on projected benefit obligations                  662
Actual return on plan assets                                   (723)
                                                             ------
                                                             $  141
                                                             ======

The discount rate used in estimating the projected benefit obligations and in
determining the interest cost component of pension expense for the following
year for both plans was 7.5%. The assumed long-term rate of return on plan
assets used in determining pension expense was 7.5%.

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 $378 for the
five-month period ended September 30, 1997.

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.

                                       45

<PAGE>   46
                             Neenah Foundry Company

                   Notes to Consolidated Financial Statements
                                 (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 sheet at September 30,
1997:

           Accumulated postretirement benefit obligations:
             Retirees                                                $2,191
             Fully eligible active participants                         801
             Other active participants                                1,902
                                                                     ------
           Accrued postretirement benefit obligations                $4,894
                                                                     ======

Components of net periodic postretirement benefit cost for the five-month period
ended September 30, 1997 are as follows:


           Service cost                                              $   58
           Interest cost on accumulated postretirement benefit 
             obligations
                                                                        148
                                                                     ------
                                                                     $  206
                                                                     ======

The weighted-average discount rate used in determining the accumulated
postretirement benefit obligations for both plans was 7.5%, and the healthcare
cost trend rate was assumed to decrease gradually to 2009 and then remain at
that level thereafter. The range of cost trend rates is 8.5% to 4.5%. 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
September 30, 1997 by $825 and would increase postretirement benefit expense for
the five-month period ended September 30, 1997 by $48.

                                       46
<PAGE>   47

                             Neenah Foundry Company

                   Notes to Consolidated Financial Statements
                                 (In Thousands)


8. GUARANTOR SUBSIDIARIES

Transport and Hartley, wholly owned subsidiaries of the Company, fully,
unconditionally, jointly and severally guarantee the Notes. The following is
summarized combined financial information of the wholly owned subsidiaries. Net
sales include net sales to Neenah Foundry Company of $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, 1997
                                                                       ------------------
               <S>                                                          <C> 
               Current assets                                                  $1,999
               Noncurrent assets                                                2,464
               Current liabilities                                              1,337
               Noncurrent liabilities                                             382


 <CAPTION>
                                                                      FIVE MONTHS ENDED
                                                                       SEPTEMBER 30, 1997
                                                                      ---------------------
               <S>                                                          <C> 
               Net sales                                                       $4,232
               Gross profit                                                     1,530
               Net income                                                         381

</TABLE>


                                       47
<PAGE>   48




                                        CONSOLIDATED FINANCIAL STATEMENTS

                                        NEENAH FOUNDRY COMPANY (PREDECESSOR)

                                        Years ended March 31, 1995, 
                                        1996 and 1997 and one month
                                        ended April 30, 1997


                                       48
<PAGE>   49

                      Neenah Foundry Company (Predecessor)

                        Consolidated Financial Statements

                Years ended March 31, 1995, 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................................


                                       49



<PAGE>   50

                Report of Ernst & Young LLP, 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 each of the three years in the period ended March 31, 1997, 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 each of the three years in the period ended
March 31, 1997, and for the one month ended April 30, 1997, in conformity with
generally accepted accounting principles.

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


                                       50

<PAGE>   51


                      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>

                                       51

<PAGE>   52


<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



                                       52
<PAGE>   53


                      Neenah Foundry Company (Predecessor)


                        Consolidated Statements of Income
                                 (In Thousands)

<TABLE>
<CAPTION>
                                                                                                ONE MONTH
                                                                                                  ENDED
                                                             YEAR ENDED MARCH 31                APRIL 30
                                                     1995           1996            1997          1997
                                                ------------------------------------------------------------

<S>                                                 <C>            <C>            <C>            <C>  
Net sales                                           $ 160,621       $166,951       $165,426        $17,276
Cost of sales                                         120,981        121,631        116,736         11,351
                                                    ---------      ---------      ---------       --------
Gross profit                                           39,640         45,320         48,690          5,925
Selling, general and administrative         
   expenses                                            16,673         16,983         17,547          1,752
                                                    ---------      ---------      ---------       --------
Operating income                                       22,967         28,337         31,143          4,173
Net interest income (expense)                            (397)           481          1,162            121
                                                    ---------      ---------      ---------       --------
Income before income taxes                             22,570         28,818         32,305          4,294
Provision for income taxes                              8,866         11,676         12,467          1,615
                                                    ---------      ---------      ---------       --------
Net income                                          $  13,704      $  17,142      $  19,838       $  2,679
                                                    =========      =========      =========       ========

</TABLE>

See accompanying notes

                                       53


<PAGE>   54


                      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, 1994                1,468  $  147      719    $ 72     4,920     $  492    $ 40,140    $(2,922)   $ 37,929
   Redemption and retirement of stock  (1,468)   (147)     (99)    (10)   (1,100)      (110)     (5,932)        --      (6,199)
   Dividends declared:                                                                          
     Preferred - $4.50 per share           --      --       --      --        --         --          (5)        --          (5)
     Common - $475 per share               --      --       --      --        --         --      (2,231)        --      (2,231)
   Net income                              --      --       --      --        --         --      13,704         --      13,704
                                       ------  ------   ------  ------    ------     ------    --------    -------      ------
Balance at March 31, 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    $  74,01    $    --     $74,458
                                       ======  ======   ======  ======    ======     ======    ========    =======     =======
</TABLE>


See accompanying notes


                                       54
<PAGE>   55


                      Neenah Foundry Company (Predecessor)

                      Consolidated Statements of Cash Flows
                                 (In Thousands)
                                       




<TABLE>
<CAPTION>
                                                                                                     ONE MONTH
                                                                                                      ENDED
                                                                   YEAR ENDED MARCH 31               APRIL 30
                                                                    1995            1996          1997          1997
                                                        -------------------------------------------------------------
<S>                                                              <C>            <C>           <C>          <C>        
OPERATING ACTIVITIES
Net income                                                        $ 13,704       $ 17,142       $19,838     $  2,679 
Adjustments to reconcile net income to net cash                                                                      
   provided by operating activities:                                                                                 
     Depreciation                                                    6,842          6,776         6,881          518 
     Deferred income taxes                                           2,862          1,863          (103)        (120)
     Other                                                            (274)            48          (103)           - 
     Changes in operating assets and liabilities:                                                                    
       Accounts receivable                                          (3,384)           439          (592)      (3,764)
       Inventories                                                    (142)          (603)         (632)         495 
       Other current assets                                            186             27          (401)         401 
       Accounts payable                                                684         (2,653)          373        1,308 
       Income taxes payable                                            526           (585)           56        1,734 
       Accrued liabilities                                           1,388         (1,261)          144         (185)
       Pension obligations                                             900            859        (2,349)         822 
       Postretirement benefit obligations                              289            221           367           29 
                                                                  --------        --------      -------      -------
Net cash provided by (used in) operating activities                 23,581         22,273        23,479        3,917 
                                                                                                                     
INVESTING ACTIVITIES                                                                                                 
Purchase of property, plant and equipment                           (3,665)        (7,275)       (4,546)        (190)
Proceeds from life insurance policy                                      -              -         1,439            - 
Other                                                                  253            (24)            3           (1)
                                                                  --------        --------      -------      -------
Net cash used in investing activities                               (3,412)        (7,299)       (3,104)        (191)
                                                                                                                     
FINANCING ACTIVITIES                                                                                                 
Dividends paid                                                      (1,411)        (4,440)       (7,991)           - 
Redemption of stock                                                 (6,199)             -             -            - 
Proceeds from long-term debt                                        70,529         16,370             -            - 
Payments on long-term debt                                         (82,968)       (17,016)         (107)          (5)
Collection of notes receivable from owners                               -              -             -        2,922 
                                                                  --------        --------      -------      -------
Net cash provided by (used in) financing activities                (20,049)        (5,086)       (8,098)       2,917 
                                                                  --------        --------      -------      -------
                                                                                                                     
Increase in cash and cash equivalents                                  120          9,888        12,277        6,643 
Cash and cash equivalents at beginning of period                       118            238        10,126       22,403 
                                                                  --------       --------       -------     --------
Cash and cash equivalents at end of period                        $    238       $ 10,126       $22,403     $ 29,046 
                                                                  ========       ========       =======     ========
Supplemental disclosures of cash flow information:
  Cash paid for:
     Interest                                                     $    624       $     84    $       39    $       1
     Income taxes                                                    5,478         10,398        12,515            -
</TABLE>
                                       
See accompanying notes.                55

<PAGE>   56


                      Neenah Foundry Company (Predecessor)

                   Notes to Consolidated Financial Statements


                     NEENAH FOUNDRY COMPANY (PREDECESSOR)
                         Years ended March 31, 1995,
                         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 18% and 15% of net sales in fiscal 1995, 17%
and 9% of net sales in fiscal 1996, 16% and 10% of net sales in fiscal 1997 and
29% and 24% 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.

                                       56
<PAGE>   57


                      Neenah Foundry Company (Predecessor)

                   Notes to Consolidated Financial Statements
                                 (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 any of the three years in the period ended
March 31, 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.

                                       57
<PAGE>   58


                      Neenah Foundry Company (Predecessor)

                   Notes to Consolidated Financial Statements
                                 (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 $467, $527, $524 
and $55 for the years ended March 31, 1995, 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>

                                       58
<PAGE>   59


                      Neenah Foundry Company (Predecessor)

                   Notes to Consolidated Financial Statements
                                 (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>


                                       59
<PAGE>   60


                      Neenah Foundry Company (Predecessor)

                   Notes to Consolidated Financial Statements
                                 (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, 1995, 1996 and 1997 and one month ended April 30,
1997 amounted to $850, $996, $1,088 and $85, respectively. Minimum rental
payments due under these operating leases for subsequent fiscal years are as
follows:

               1998                            $   736
               1999                                586
               2000                                287
               2001                                115
                                               -------
                                               $ 1,724
                                               =======



                                       60
<PAGE>   61


                      Neenah Foundry Company (Predecessor)

                   Notes to Consolidated Financial Statements
                                 (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
                                                      1995          1996           1997          1997
                                                  ----------------------------------------------------
          <S>                                       <C>          <C>            <C>            <C> 
           Current:
             Federal                                  $5,556      $  9,147       $11,554        $1,460
             State                                       448           666         1,016           275
                                                      ------      --------       -------        ------
                                                       6,004         9,813        12,570         1,735
           Deferred                                    2,862         1,863          (103)         (120)
                                                      ------      --------       -------        ------
                                                      $8,866       $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
                                                       1995          1996          1997           1997
                                                   ----------------------------------------------------
<S>                                                 <C>           <C>            <C>            <C>
Provision at statutory rate                           $7,900       $10,086       $11,307        $1,503 
State income taxes, net of federal tax benefit           801         1,126         1,318           112 
Other                                                    165           464          (158)            - 
                                                      ------       -------       -------        ------ 
Provision for income taxes                            $8,866       $11,676       $12,467        $1,615 
                                                      ======       =======       =======        ====== 
</TABLE>

                                       61
<PAGE>   62


                      Neenah Foundry Company (Predecessor)

                   Notes to Consolidated Financial Statements
                                 (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


                                       62
<PAGE>   63


                      Neenah Foundry Company (Predecessor)

                   Notes to Consolidated Financial Statements
                                 (In Thousands)

7. EMPLOYEE BENEFIT PLANS (CONTINUED)

based on years of credited service and defined benefit rates while retirement
benefits for 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)            --             --             --    
                                                                ----------     ----------     ----------     ----------
                                                                    (6,537)       (19,805)          (845)       (20,150)   
Projected benefit obligations                                                                                              
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>

                                       63

<PAGE>   64


                      Neenah Foundry Company (Predecessor)

                   Notes to Consolidated Financial Statements
                                 (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
                                                        1995         1996          1997          1997
                                                     ------------ ------------ -------------- ------------
<S>                                                  <C>          <C>          <C>             <C>  
Service cost - benefits earned during the year       $     822     $    880     $    820       $    38
Interest cost on projected benefit obligations           1,437        1,545        1,742           125
Actual return on plan assets                            (1,412)      (1,450)      (1,531)         (132)
Net amortization and deferral                              217          203          220            (1)
                                                     ---------     --------     --------       -------  
                                                     $   1,064     $  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 for all plans was 7.5% for all years. The annual rate of compensation
increase assumed for the SERP in estimating the projected benefit obligations
was 6.5% for all years. The assumed long-term rate of return on plan assets used
in determining pension expense was 7.5% for all 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 $859, $891, $915 and
$82 for the years ended March 31, 1995, 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.

                                       64
<PAGE>   65


                      Neenah Foundry Company (Predecessor)

                   Notes to Consolidated Financial Statements
                                 (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
                                                   1995           1996           1997            1997
                                                   ----           ----           ----        -----------
<S>                                            <C>              <C>           <C>             <C> 
Service cost                                         $  164           $ 176       $  193          $  11 
Interest cost on accumulated post-                                                                        
 retirement benefit obligations                         340             361          370             27 
Net amortization and deferral                            (4)             (4)          (5)            (7)
                                                     ======           =====       ======          ===== 
                                                     $  500           $ 533       $  558          $  31 
                                                     ======           =====       ======          ===== 
</TABLE>

The weighted-average discount rate used in determining the accumulated
postretirement benefit obligations for both plans was 7.5% for all 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.

                                       65

<PAGE>   66


                      Neenah Foundry Company (Predecessor)

                   Notes to Consolidated Financial Statements
                                 (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
</TABLE>

<TABLE>
<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.

                                       66
<PAGE>   67


                      Neenah Foundry Company (Predecessor)

                   Notes to Consolidated Financial Statements
                                 (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 $4,181, $4,090, $4,012 and $365
for the years ended March 31, 1995, 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
</TABLE>

<TABLE>
<CAPTION>

                                                                                              ONE MONTH
                                                                                                ENDED
                                                          YEAR ENDED MARCH 31                  APRIL 30
                                                  1995           1996           1997             1997
                                             --------------- -------------- -------------- ----------------
<S>                                             <C>             <C>             <C>             <C>    
Net sales                                        $9,131          $9,795          $9,971           $703 
Gross profit                                      2,719           3,165           3,247            169 
Net income (loss)                                   501             651             513            (15)
</TABLE>
                                       67


<PAGE>   68

                Report of Ernst & Young LLP, Independent Auditors


We have audited the consolidated financial statements of Neenah Foundry Company
as of September 30, 1997, and for the period from inception, May 1, 1997 through
September 30, 1997, and have issued our report thereon dated October 31, 1997
(included elsewhere in this Annual Report on Form 10-K). Our audit 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 audit.

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
October 31, 1997

                                       68
<PAGE>   69




                                                                     Schedule II



                            NEENAH FOUNDRY COMPANY

                        VALUATION AND QUALIFYING ACCOUNTS
         Period from inception, May 1, 1997, through September 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:

  1997                                     $ 386            $    36         $    36 (A)      $    386
                                           =====            =======         =======          ========
</TABLE>

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

                                       69

<PAGE>   70
                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, 1996 and 1997, and for each of the
three years in the period ended March 31, 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


                                      70
<PAGE>   71




                                                                     Schedule II



                      NEENAH FOUNDRY COMPANY (PREDECESSOR)

                        VALUATION AND QUALIFYING ACCOUNTS
                    Years ended March 31, 1995, 1996 and 1997
                             (Dollars in Thousands)

<TABLE>
<CAPTION>

                                       BALANCE AT        ADDITIONS
                                        BEGINNING       CHARGED TO                         BALANCE AT
            DESCRIPTION                  OF YEAR          EXPENSE         DEDUCTIONS       END OF YEAR
---------------------------------------------------------------------------------------------------------
<S>                                       <C>             <C>              <C>             <C>  
Allowance for doubtful 
 accounts receivable:

  1995                                     $ 386            $   214         $   214 (A)      $    386
                                           =====            =======         =======          ========

  1996                                     $ 386            $   233         $   233 (A)      $    386
                                           =====            =======         =======          ========

  1997                                     $ 386            $   175         $   175 (A)      $    386
                                           =====            =======         =======          ========
</TABLE>

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

                                       71