<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
AMENDMENT NO.2 TO CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report: November 19, 1998
NEENAH FOUNDRY COMPANY
(Exact name of registrant as it appears in its charter)
Wisconsin 333-28751 39-1580331
(State or other jurisdiction of (Commission File Number)(IRS Employer ID Number)
incorporation or organization)
2121 Brooks Avenue, P.O. Box 729, Neenah, Wisconsin 54957
(Address of principal executive offices) (Zip Code)
(920) 725-7000
(Registrant's telephone number, including area code)
None
(Former name or former address
if changed since last report)
<PAGE> 2
Neenah Foundry Company (the "Company) hereby amends Item 7 of the Company's Form
8-K dated November 6, 1998 reporting the Company's acquisition of all of the
issued and outstanding stock of Dalton Corporation ("Dalton") to adjust the
Dalton financial statements as of July 4, 1998 and January 3, 1998 and for the
six month periods ended July 4, 1998 and June 28, 1997 and the pro forma
financial statements. The amended items are as follows:
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of Business Acquired
- As of July 4, 1998 and January 3, 1998 and for the six month periods
ended July 4, 1998 and June 28, 1997
- Condensed Consolidated Balance Sheets
- Condensed Consolidated Statements of Income
- Condensed Consolidated Statements of Cash Flows
- Notes to Condensed Consolidated Financial Statements
(b) Pro Forma Financial Information
- Pro Forma Consolidated Balance Sheet as of June 30, 1998 and related
notes
- Pro Forma Consolidated Statement of Income for the nine months ended
June 30, 1998 and related notes
<PAGE> 3
DALTON CORPORATION
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JULY 4, 1998
<PAGE> 4
DALTON CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
July 4 January 3
1998 1998(1)
----------- ---------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ............................. $ 226 $ 184
Accounts receivable, net .............................. 22,526 19,908
Inventories ........................................... 12,634 13,066
Other current assets .................................. 1,728 2,031
Refundable income taxes ............................... -- 219
Deferred income taxes ................................. -- 922
-------- --------
Total current assets ......................... 37,114 36,330
Property, plant and equipment ........................... 74,850 72,511
Less accumulated depreciation ........................... 41,403 37,873
-------- --------
33,447 34,638
Other assets ............................................ 3,450 3,232
-------- --------
$ 74,011 $ 74,200
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ...................................... $ 10,308 $ 9,743
Accrued liabilities ................................... 9,559 7,648
Income taxes payable .................................. 78 --
Current portion of long-term debt ..................... 36,264 203
-------- --------
Total current liabilities .................... 56,209 17,594
Long-term debt .......................................... -- 41,238
Long-term retirement benefits and deferred
compensation .......................................... 2,945 2,752
Deferred income taxes ................................... -- 1,363
-------- --------
Total liabilities ............................ 59,154 62,947
Commitments and contingencies
STOCKHOLDERS' EQUITY:
Common stock, no par value
8,750,000 shares authorized,
4,801,750 shares issued ........................ 350 350
Additional paid in capital ............................ 11,385 11,385
Retained earnings ..................................... 41,815 38,211
Minimum pension liability adjustment, net of tax ...... (247) (247)
Treasury stock, 2,430,407 shares at cost ............. (38,446) (38,446)
-------- --------
Total stockholders' equity ................... 14,857 11,253
-------- --------
$ 74,011 $ 74,200
======== ========
</TABLE>
See notes to condensed consolidated financial statements.
(1) The balance sheet as of January 3, 1998 has been derived from the
audited financial statements as of that date but does not include all
of the information and footnotes required by generally accepted
accounting principles for complete financial statements.
<PAGE> 5
DALTON CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Six Months Six Months
Ended Ended
July 4, 1998 June 28, 1997
------------ -------------
<S> <C> <C>
Net sales ..................................... $ 100,322 $ 88,035
Cost of sales ................................. 91,514 79,302
--------- ---------
Gross profit .................................. 8,808 8,733
Selling, general and administrative expenses... 3,663 3,641
--------- ---------
Operating income .............................. 5,145 5,092
Net interest expense .......................... 1,883 1,300
--------- ---------
Income before income taxes .................... 3,262 3,792
Provision (credit) for income taxes ........... (342) 1,164
--------- ---------
Net income .................................... $ 3,604 $ 2,628
========= =========
</TABLE>
See notes to condensed consolidated financial statements.
<PAGE> 6
DALTON CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Six Months Six Months
Ended Ended
July 4, 1998 June 28, 1997
------------ -------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income ........................................... $ 3,604 $ 2,628
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization ..................... 3,640 3,314
Changes in operating assets and liabilities ....... 418 1,584
------- -------
Net cash provided by operating
activities ................................... 7,662 7,526
INVESTING ACTIVITIES
Purchase of property, plant and equipment ............ (2,473) (6,333)
Other ................................................ 30 --
------- -------
Net cash used in investing
activities ................................... (2,443) (6,333)
FINANCING ACTIVITIES
Dividends paid ....................................... -- (275)
Purchase of treasury stock ........................... -- (8,886)
Proceeds from long-term debt ......................... -- 8,086
Payments on long-term debt ........................... (5,177) --
------- -------
Net cash used in financing
activities ................................... (5,177) (1,075)
------- -------
Increase in cash and cash equivalents ................ 42 118
Cash and cash equivalents at beginning of period...... 184 167
------- -------
Cash and cash equivalents at end of period ........... $ 226 $ 285
======= =======
</TABLE>
See notes to condensed consolidated financial statements.
<PAGE> 7
DALTON CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
July 4, 1998 and June 28, 1997
NOTE 1 -- BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information. Accordingly, they do not include all the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal and recurring adjustments) considered necessary for a fair
presentation have been included. Operating results for the six months ended July
4, 1998 and June 28, 1997 are not necessarily indicative of the results that may
be expected for the period ending January 2, 1999 or January 3, 1998. For
further information, refer to the Company's consolidated financial statements
and footnotes thereto for the period ended January 3, 1998.
NOTE 2 -- INVENTORIES
The components of inventories are as follows:
<TABLE>
<CAPTION>
July 4, January 3,
1998 1998
---------- ------------
(000's omitted)
<S> <C> <C>
Raw materials and supplies ..................... $ 1,749 $ 1,651
In process and finished goods .................. 7,724 8,435
Factory supplies ............................... 3,161 2,980
------- -------
Total inventories .............................. $12,634 $13,066
======= =======
</TABLE>
If the FIFO method of accounting had been used for all inventories, inventories
would have increased by $1,292,483 at July 4, 1998 and $1,165,699 at January 3,
1998.
NOTE 3 -- INCOME TAXES
On March 2, 1998, the Company filed an election to be treated as an
S-Corporation for income tax purposes effective January 4, 1998. As a result of
this election, the Company is no longer subject to Federal and state income
taxes, other than potential taxes resulting from the disposal of assets within a
ten-year period of the election or non-income based taxes. With this change in
tax status, deferred income taxes and other income tax accounts of the Company
have been adjusted to take into account the new tax status of the Company.
<PAGE> 8
NEENAH FOUNDRY COMPANY
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
June 30, 1998
(In thousands)
<TABLE>
<CAPTION>
Historical
---------------------------------
Neenah Pro Forma
Foundry Dalton ACP Adjustments Pro Forma
---------- ------ ------ ------------- -----------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ................................... $ 9,741 $ 226 $ -- $ 81 (a) $ 10,048
Accounts receivable, net .................................... 38,333 22,526 7,747 -- 68,606
Inventories ................................................. 26,686 12,634 2,496 1,268 (b) 43,084
Other current assets ........................................ 2,936 1,728 281 -- 4,945
Prepaid income taxes ........................................ 1,155 -- 438 -- 1,593
Deferred income taxes ....................................... 1,710 -- -- 2,425 (b) 4,135
--------- --------- --------- -------- ---------
Total current assets ............................... 80,561 37,114 10,962 3,774 132,411
Property, plant and equipment ................................. 138,116 74,850 17,783 (38,623)(b) 192,126
Less accumulated depreciation ................................. 9,820 41,403 4,533 (41,403)(b) 14,353
--------- --------- --------- -------- ---------
128,296 33,447 13,250 2,780 177,773
Identifiable intangible assets, net ........................... 41,951 -- -- 27,919 (b) 69,870
Goodwill, net ................................................. 147,487 -- 6,254 30,185 (b) 183,926
Other assets .................................................. 3,756 3,450 784 3,279 (a)
(315)(b)
1,697 (c)
(652)(d) 11,999
--------- --------- --------- -------- ---------
$ 402,051 $ 74,011 $ 31,250 $ 68,667 $ 575,979
========= ========= ========= ======== =========
LIABILITIES AND SToCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ............................................ $ 14,558 $ 10,308 $ 3,853 -- $ 28,719
Income taxes payable ........................................ -- 78 -- -- 78
Accrued liabilities ......................................... 15,601 9,559 2,856 (237)(b) 27,779
Current portion of long-term debt ........................... 827 36,264 1,746 (38,010)(a)
2,250 (a) 3,077
--------- --------- --------- -------- ---------
Total current liabilities .......................... 30,986 56,209 8,455 (35,997) 59,653
Long-term debt ................................................ 251,715 -- 12,337 (12,337)(a)
116,750 (a) 368,465
Postretirement benefit obligations ............................ 5,137 -- -- -- 5,137
Deferred income taxes ......................................... 54,592 -- 2,405 12,868 (b) 69,865
Other liabilities ............................................. 2,151 2,945 -- 2,892 (b) 7,988
--------- --------- --------- -------- ---------
Total liabilities .................................. 344,581 59,154 23,197 84,176 511,108
Commitments and contingencies
STOCKHOLDERS' EQUITY:
Preferred stock, par value $100 per share --
authorized 3,000 shares, no shares
issued or outstanding ................................ -- -- -- -- --
Common stock, par value $100 per share --
authorized 11,000 shares, issued
and outstanding 1,000 shares ......................... 100 350 4,254 (350)(b)
(4,254)(e) 100
Additional paid in capital .................................. 48,750 11,385 2,265 (11,385)(b)
4,254 (e) 55,269
Retained earnings ........................................... 8,620 41,815 1,534 (41,815)(b)
(652)(d) 9,502
Treasury stock .............................................. -- (38,446) -- 38,446 (b) --
Minimum pension liability adjustment, net of tax ............ -- (247) -- 247 (b) --
--------- --------- --------- -------- ---------
Total stockholders' equity ......................... 57,470 14,857 8,053 (15,509) 64,871
--------- --------- --------- -------- ---------
$ 402,051 $ 74,011 $ 31,250 $ 68,667 $ 575,979
========= ========= ========= ======== =========
</TABLE>
See accompanying Notes to Unaudited Pro Forma Consolidated Balance Sheet.
<PAGE> 9
NEENAH FOUNDRY COMPANY
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
(Dollars in thousands)
<TABLE>
<S> <C> <C>
(a) Adjustment to reflect the net effect on cash of the Dalton and
ACP Acquisitions, as follows:
Proceeds from Tranche A Term Loan $ 20,000
Proceeds from Tranche B Term Loan 70,000
Proceeds from Multi-Draw Acquisition Revolver 29,000
Less deferred financing cost (1,697)
---------
117,303
Purchase price:
Acquisition of Dalton common stock $ (62,995)
Fees and expenses incurred in connection with
the Dalton Acquisition (601)
Satisfaction of Dalton outstanding indebtedness (including
$2,749 borrowed subsequent to June 30, 1998) (39,013)
Satisfaction of ACP outstanding indebtedness (including
$530 borrowed subsequent to June 30, 1998) (14,613)
---------
(117,222)
---------
$ 81
=========
(b) Adjustment to reflect the allocation of the $63,596 purchase
cost of Dalton:
Net assets acquired at historical cost $ 14,857
Fair value adjustments(1):
Eliminate LIFO reserve 973
Inventory step-up 295
Write-up property, plant, and equipment(2) 2,780
Record intangible assets(3) 27,919
Adjustment to accrued ESOP contribution 1,006
Adjustment to pension liability (1,092)
Deferred compensation (2,935)
Other 51
Record deferred income taxes associated with the
valuation of Dalton assets and liabilities (10,443)
Cost in excess of net assets acquired - goodwill(4) 30,185
---------
$ 63,596
=========
</TABLE>
- ------------------------
(1) For all other recorded assets and liabilities of Dalton, the historical
book values were estimated to approximate their fair values at the balance
sheet date.
(2) The fair value of property, plant and equipment was based on an outside
appraisal completed in connection with the acquisition. The write-up has
been allocated to the fixed asset categories as shown below. The remaining
economic useful lives used in depreciating the new basis of the
depreciable fixed assets are also indicated:
<TABLE>
<CAPTION>
Remaining Economic
Allocated excess Useful Life
---------------- ------------------
<S> <C> <C>
Land $ 183 n/a
Buildings and improvements (781) 10 to 35 years
Machinery and equipment 3,378 5 to 15 years
</TABLE>
<PAGE> 10
(3) The fair value of intangible assets was based on an outside valuation
completed in connection with the Dalton Acquisition For purposes of the
proforma financial information, the valuation of the intangible assets and
amortization periods are shown below:
<TABLE>
<CAPTION>
Amortization
Fair Value Period
----------- ----------------
<S> <C> <C>
Assembled workforce $ 5,522 5 years
Customer list 12,341 10 years
Backlog 1,239 4 months
Trade name 5,053 40 years
Facilities in place 3,764 40 years
</TABLE>
(4) An amortization period of 40 years will be used for goodwill because the
period expected to be benefited exceeds 40 years.
- ------------------------
(c) Adjustment to record the transaction costs of $1,697 (made up of
financing costs). For purposes of the proforma consolidated balance sheet,
the amount is shown as part of other assets and amortized over 5 years,
the life of the Term Loan.
(d) Adjustment to write off deferred financing costs related to outstanding
indebtedness of ACP which was satisfied in connection with the ACP
Acquisition.
(e) Adjustment to account for the merger with ACP.
<PAGE> 11
NEENAH FOUNDRY COMPANY
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
Nine Months Ended June 30, 1998
(In thousands)
<TABLE>
<CAPTION>
Historical for Periods
Historical Prior to Acquisition(2)
--------------- -------------------------------
Neenah Foundry Mercer Deeter
--------------- -------------------------------
Nine Months Six Months Six Months
Ended Ended Ended
June 30, 1998 March 31, 1998 March 31, 1998
------------- -------------- ---------------
<S> <C> <C> <C>
Net sales................................................ $ 160,441 $ 27,529 $ 5,916
Cost of sales............................................ 113,259 20,632 3,407
--------- --------- ---------
Gross profit............................................. 47,182 6,897 2,509
Selling, general and administrative expenses............. 13,023 1,812 4,111
Amortization of intangible assets........................ 4,467 41 -
--------- --------- ---------
Total operating expenses............................... 17,490 1,853 4,111
--------- --------- ---------
Operating income......................................... 29,692 5,044 (1,602)
Net interest income (expense)............................ (17,512) (485) (196)
--------- --------- ---------
Income before income taxes............................... 12,180 4,559 (1,798)
Provision for income taxes............................... 5,780 1,436 -
--------- --------- ---------
Net income............................................... $ 6,400 $ 3,123 $ (1,798)
========= ========= =========
<CAPTION>
Historical
-----------------------------
Dalton ACP
----------- ------------
Nine Months Nine Months
Ended Ended Pro Forma
July 4, 1998 June 30, 1998 Adjustments Pro Forma
------------ ------------- ------------- -----------
<S> <C> <C> <C> <C>
Net sales................................................ $ 144,962 $ 40,981 $ - $ 379,829
Cost of sales............................................ 133,712 33,350 1,181 (a) 305,541
--------- --------- --------- ---------
Gross profit............................................. 11,250 7,631 (1,181) 74,288
Selling, general and administrative expenses............. 5,231 3,510 (778)(a)
105 (a) 27,014
Amortization of intangible assets........................ - 528 4,564 (a)
1,027 (a) 10,627
--------- --------- --------- ---------
Total operating expenses............................... 5,231 4,038 4,918 37,641
--------- --------- --------- ---------
Operating income......................................... 6,019 3,593 (6,099) 36,647
Net interest income (expense)............................ (2,691) (1,723) (4,866)(b) (27,473)
--------- --------- --------- ---------
Income before income taxes............................... 3,328 1,870 (10,965) 9,174
Provision for income taxes............................... (322) 751 (3,975)(c)
1,653 (d) 5,323
--------- --------- --------- ---------
Net income............................................... $ 3,650 $ 1,119 $ (8,643) $ 3,851
========= ========= ========= =========
</TABLE>
See accompanying Notes to Unaudited Pro Forma Consolidated Statements of Income.
(2) Mercer Forge Corporation (Mercer) was acquired on April 3, 1998 in a
transaction accounted for as a purchase. Deeter Foundry, Inc. (Deeter) was
acquired on March 30, 1998 in a transaction accounted for as a purchase.
<PAGE> 12
NEENAH FOUNDRY COMPANY
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
Nine Months Ended June 30, 1998
(Dollars in thousands)
(a) The pro forma adjustments to cost of sales, selling, general and
administrative expenses and amortization of intangible assets are
comprised of the following:
<TABLE>
<CAPTION>
Proforma
Historical Proforma Adjustment
---------- -------- ----------
<S> <C> <C> <C>
Depreciation of property, plant and equipment:
Cost of sales:
Per the Form 8-K/A dated November 5, 1998 $ 3,888 $ 4,835 $ 947
Dalton Acquisition 8,358 8,592 234
------- -------- ------
Total 12,246 13,427 1,181
Selling, general and administrative:
Per the Form 8-K/A dated November 5, 1998 1,245 1,350 105
Amortization of identifiable intangible assets:
Per the Form 8-K/A dated November 5, 1998 1,515 2,920 1,405
Dalton Acquisition 1,366 4,525 3,159
------- -------- ------
Total 2,881 7,445 4,564
Amortization of goodwill:
Per the Form 8-K/A dated November 5, 1998 985 1,446 461
Dalton Acquisition 1,170 1,736 566
------- -------- ------
Total 2,155 3,182 1,027
Elimination of certain non-recurring expenses
incurred by Deeter prior to acquisition:
Per the Form 8-K/A dated November 5, 1998 - (778) (778)
</TABLE>
(b) Adjustment to record interest expense and amortization of deferred
financing costs on the debt incurred to finance the Acquisitions,
calculated as follows:
<TABLE>
<S> <C>
Per the Form 8-K/A dated November 5, 1998:
Tranche B Term Loan ($55,000 @ 8.25%) $ 2,269
Amortization of deferred financing costs (over 5 years) 110
Dalton Acquisition:
Tranche A Term Loan ($20,000 @ 8.0625%) 1,209
Tranche B Term Loan ($70,000 @ 8.3125%) 4,364
Multi-Draw Acquisition Revolver ($29,000 @ 8.0625%) 1,754
Amortization of deferred financing costs (over 5 years) 255
Reduction in interest expense related to indebtedness satisfied
in connection with the Acquisitions (5,095)
-------
$ 4,866
=======
</TABLE>
(c) Adjustment to record the tax effect on the above adjustments using the
marginal effective income tax rate of 40%. All adjustments were
tax-effected except for goodwill amortization.
(d) Adjustment to record the tax effect of Dalton as a C-Corporation.
<PAGE> 13
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this amendment to be signed on its behalf by the
undersigned hereunto duly authorized.
NEENAH FOUNDRY COMPANY
DATE: November 19, 1998 /s/ Gary LaChey
------------------------------------------
Gary LaChey
Vice President-Finance, Secretary & Treasurer
(Principal Financial Officer and Duly Authorized
Officer)
