Hoosier Castings Corporation

The Dynamics of Transitioning a Family Business

Hoosier Casting Corporation Written by: Justin A. Wolfort, MBA Class of 2012 Under the supervision of: Professor David C. Haeberle

Hoosier Castings Corporation

Situation Overview
When Brendon Morris arrived early at his office on the morning of December 21, 2011, he knew he would have only a couple hours of time to himself to collect his thoughts and prepare for the Companys annual Board of Directors meeting later that afternoon. As the President of The Hoosier Castings Corporation (HCC), the 45 year-old was responsible for the Companys day-to-day operations and also managed the Companys largest customer account. Having been recruited to join HCC upon his graduation from the MBA program at Indiana University in 1996, Brendon knew that this afternoons annual Board meeting would be unlike any other he had seen in his 15-year tenure with the Company. During this afternoons Board meeting the Companys Chairman, David DeWitt, had invited the Investment Bank Riverdale Partners to give a presentation regarding the potential sale of the business. A few weeks prior, David had received an unsolicited bid to buy the Company from their long time competitor Ridgecreek Industries. Additionally, Brendon had known of Davids desire to sell HCC since his health scare six months prior, but was unsure how a company such as HCC would be perceived by a potential buyer. He wondered if Riverdale Partners would be able to deliver a premium price for the 66 year-old family business. Was a sale to Ridgecreek Industries in the best interest of HCCs stakeholders? Furthermore, having been privy to previous Board meetings and family politics, he knew there would be significant challenges to the sale process as other members of the DeWitt Family may not be emotionally prepared to relinquish majority ownership and control of HCC.

The Business
In 1945 after returning from service in World War II to their home town of Indianapolis, Indiana, brothers Abraham and David DeWitt founded The Hoosier Castings Corporation to provide various iron, steel and brass castings to the growing automobile industry in the Midwestern United States. Having started from the humble beginnings of a back yard workshop, the DeWitt brothers had managed to grow Hoosier Castings into a business with annual revenues of $10 million by the beginning of 1980. After years of profitable growth the DeWitt brothers decided that they had outgrown their original location and HCC relocated to a 180,000 square foot greenfield facility, which opened in the fall of 1980. Situated on 25 acres of land at the edge of downtown, the new Burnham Road Facility would allow for substantial manufacturing growth and flexibility in the years to come. Unfortunately, during the spring of 1981 tragedy struck the DeWitt family as older brother Abraham was killed in an unfortunate automobile accident while leaving the plant late one evening. With the death of his brother, closest friend, and business partner David decided to ask his oldest son Gregory, who was graduating from the engineering program at Purdue University, to join the family business in hopes of filling Abrahams void. Although he had no previous business training, after a short deliberation Gregory enthusiastically accepted his fathers offer. In an effort to alleviate the financial stress that Abrahams

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untimely death had placed on his family, David generously offered and completed the purchase of half of his late brothers ownership in t business from his widow Mabel. Additionally, in order to provide the n Mabel with a source of continual income, it was decided that she would retain 22% ownership in the business and be entitled to a modest annual salary, although not technically employed by the Company. From 1981 to 2005 HCC took active steps to expand the Companys customer base from the domestic automotive industry towards a more diversified set of businesses. By the end of 2005 HCC was es. 200 successfully manufacturing a portfolio of castings f numerous Original Equipment Manufacturers for (OEMs) including agricultural and mining equipment, gas exploration and collection equipment, electric cluding equipment power generation equipment, military defense equipment and alternative energy production. In early 2006 business seemed to be looking up for HCC (Historical Income Statement data in Exhibit III). The Company had successfully . diversified from the declining automotive industry; management had recently reported a record fiscal year; and the Companys robust order backlog coupled with a strong manufacturing economy pointed towards another record year. Given the strength in his business and having recently celebrated his 80th birthday, David DeWitt decided it was time to hang up his entrepreneurial spurs and pa pass the reigns of the Company onto the next generation. In January 2006, David retired from the day day operations of the business named his , day-to-day son Gregory, President of HCC. Additionally, recognizing the numerous contributions made over his years of service to HCC; David promoted Brendon Morris to the newly created position of Executive Vice ice President and awarded him with a 5% percent ownership stake in the business. This newly created position made Brendon the only the second non-family member to own shares in HCC and solidified his ares position as the Companys Second in- Command. SecondWith his succession plan in place, David transitioned to the title of Chairman of the Board, modified his work schedule to a part-time consulting role and began to enjoy his retirement at the youthful age of 80 time years-old.

The Buckeye Acquisition

Castings are not enough! Having recently assumed the helm of the growing Castings business, Gregory was eager to make his mark on the Company and transition the business to the next level. Following several solid years of financial performance, HCC was flush with cash. After a routine visit from the Companys long time commercial banker Danielle Adams of Second National Savings, Gregory learned that even the traditionally conservative Evansville, Indiana based bank

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seemed poised to extend HCC a new credit facility with aggressive terms. Throughout the Companys hroughout history, David DeWitt, a child of the Great Depression, had shunned the use of leverage for growth growth; however, Gregory saw the current market conditions as a way to modernize HCCs capital structure. With a cash-rich balance sheet and a new credit facility at his disposal, Gregory began to look at rich egory diversifying the Company from castings and grow growing the business through acquisition. Although he initially objected to the idea of straying from HCCs core competency of castings production, Brendon production agreed to help Gregory in the search for a suitable acquisition target. rch After an exhausting six month search, Gregory and Brendon had identified Buckeye Truss, Inc., a Columbus, Ohio based manufacturer of residential trusses as an attractive acquisition target. Buckeye Truss, Inc., founded in 1975, was solely owned by the ed Yahska Family. Buckeye Truss specialized in the manufacture of a wide variety of pre-fabricated wooden trusses, which are fabricated triangulated architectural structures used to support the roof of residential homes. Through a n network of sales representatives, the Company sold its products primarily to large national homebuilders nationwide. In recent years, the Company had recorded record sales and profitability a their as network of loyal customers placed orders at an astonishing rate. Buckeye Trust was led by Bernie Yahska, who had immigrated to the United States in the late 1960s. Having built a successful business over the last three decades Bernie now in decades, his late 60s, decided it was time to enjoy some of his s success, retire and move full-time to his vacation home in Naples, time Florida where he could escape the harsh Ohio winters once and for all. Although they had been encouraged multiple times by their father, none of Bernie three children had ever displayed an interest in joining the family Bernies business. Thus when it came time for Bernie to move to the fairer climate and daily golf games of Florida, he had no choice but to sell the business. Not long after Bernie had made the decision to look for a buyer he was introduced to Gregory DeWitt by as Samantha Left, a local corporate attorney and board member of HCC. Soon after Bernie and Gregorys ttorney initial meeting, the two agreed on an acquisition price of $ , $14.3 million for Buckeye, which represented a 7.5x enterprise value multiple to the Companys 200 EBITDA (Buckeye Financial Data in Exhibit IV). The 2007 IV) transaction would be subject only to board approval at HCCs upcoming annual meeting (Buckeye Transaction Detail in Exhibit VII). During the December 2007 Board meeting, l long time board member Daniel Michaelson was the only one to strenuously bolster an object objection to the transaction saying Look we know a lot of things about Look castings and sure while we are all individually homeowners, we dont know the first thing about selling

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TO homebuilders! If we want to grow by acquisition, why dont we just wait until we can find another castings company? If the money is really burning a hole in your pocket, why dont we look at putting an expansion onto the plant or taking a special dividend? Despite the strenuous objections voiced by Daniel, with a vote of six to one the Board of Directors approved the $14.3 million acquisition, which successfully closed shortly thereafter.

Integration, The Great Recession and Recovery (2008 to 2011)

Following the close of the Buckeye transaction, business resumed as normal for HCC. It was agreed that in order to fill the void left by Bernies retirement that Brendon would remotely manage the truss business from HCCs Indianapolis office, making bi-weekly trips to Columbus to inspect the manufacturing operations. Late In the first quarter of 2008, shortly after the Buckeye transaction close, purchase orders for trusses began to slow causing the subsidiarys backlog to weaken. By June of that year, Buckeye reported a 15% decline in sales from the prior year, creating significant alarm amongst HCC management. As a result of the declining performance, Brendon had increased his visits to the Buckeye subsidiary, allocating significantly more of his attention to the truss business. By the end of 2008, he found himself spending up to three days a week at the Columbus facility, struggling to turn the subsidiarys failing financial performance back to profitable. Tempers began to flair during the December 2008 Annual Meeting as the Board vented their frustrations surrounding HCCs declining financial performance. In addition to the weakened performance of the Buckeye division, the broader economic recession had resulted in a decrease in demand for HCCs castings. The decreased order volume coupled with the increased debt load from the Buckeye acquisition had created a perfect storm for HCC, making 2008 the worst fiscal year in Company history. The Boards frustrations where largely directed towards Gregory who had championed the Buckeye acquisition as a turning point for HCC. By the end of the meeting Gregory had been relieved from managerial duties as President and was demoted to Executive Vice President. It was decided that Gregorys role would revert to a sales position and that Brendan Morris would take over the daily operations of the Company as HCCs new President. Over the next two years, Brendon, with the help of his management team, charted and executed a plan for reversing the Companys losses. Brendon had successfully identified a number of operational improvements and cost cutting measures that improved the Companys margins. In addition to the profitability improvements put in place, by the 2011 Annual Meeting the economy had begun to show signs of improvement and the Companys backlog had shown improvement.

The Plant
Prior to receiving the offer from Ridgecreek Capital the most significant item on the December 2011 Annual Meeting agenda had been to discuss the potential relocation of HCC from their Burnham Road

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Facility. In recent years, the area surrounding HCCs primary facility had gone through an economic transformation from that of a predominately industrial area to a hip residential neighborhood dominated by renovated loft warehouse apartments and art galleries. Although HCC had never formally been contacted by a real estate agent, the surrounding development convinced management that their 25 acre property would create significant interest in the market, should it go up for auction. (Details regarding real estate values can be found in Exhibit VI.)

The 2011 Annual Meeting

Brendon took the last sips of his morning coffee, got up from his desk and began to walk down the hall to the Board Room. As he stopped at his assistants desk to grab a handful of Skittles candy to satisfy his sweet tooth, Brendon could not help but worry about how the impending meeting would play out. Having never been through a process like this, Brendon asked himself: How could he be sure that all of HCCs stakeholders objectives where met? Should HCC still entertain the sale of the Burnham Road Facility? If so, how disruptive would a move be for the Company? Was Ridgecreeks offer fair or should we see what other potential buyers are willing to pay? Do we have time to market the Company to other prospective buyers and still respond to the Ridgecreek offer considering their stated deadline? Would the advice from Riverdale truly be objective? How would a bidder view the DeWitt Familys involvement with the business? Was now the right time to sell the Company? How would the Board react to Ridgecreeks offer & to Riverdales recommendation? If the Company was sold, would he still have a job?

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Exhibits
I. Consolidated Historical Income Statement of Hoosier Castings
Actual Year Ended December 31, Proforma 2007 2008 2009 2010 $73,355 51,644 21,710 29.6% 14,671 7,040 9.6% 446 22 6,571 2,300 $4,271 927 $7,967 10.9% $68,228 49,776 18,453 27.0% 14,018 4,435 6.5% 446 22 3,967 1,389 $2,579 881 $5,316 7.8% $65,810 47,733 18,077 27.5% 13,512 4,566 6.9% 386 22 4,158 1,455 $2,702 856 $5,421 8.2% $68,017 48,659 19,358 28.5% 13,909 5,448 8.0% 327 22 5,100 1,785 $3,315 884 $6,333 9.3%

($ in thousands)

2011

Income Statement Sales Cost of Sales Gross Profit

Gross Margin

$71,044 50,702 20,342 28.6% 14,404 5,938 8.4% 267 22 5,649 1,977 $3,672 924 $6,861 9.7%

SG&A Expense Operating Income

Operating Margin

Interest Expense Amortization of Deferred Financing Fees Pretax Income Income Taxes Net Income Depreciation & Amortization EBITDA EBITDA Margin

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II.
($ in thousands)

Consolidated Historical Balance Sheet of Hoosier Castings

Actual Year Ended December 31, Proforma 2007 2008 $1,854 5,608 13,264 1,706 $22,432 23,717 5,432 154 $51,735 $4,773 846 1,244 $6,864 0 8,750 1,000 250 $16,864 $34,871 $51,735 2009 $3,670 5,409 12,724 1,645 $23,447 23,894 5,432 132 $52,905 $4,577 811 1,193 $6,582 0 7,500 1,000 250 $15,332 $37,573 $52,905 2010 $5,161 5,590 12,968 1,700 $25,420 24,137 5,432 110 $55,098 $4,666 827 1,216 $6,710 0 6,250 1,000 250 $14,210 $40,888 $55,098 2011 $6,703 5,839 13,510 1,776 $27,829 24,453 5,432 88 $57,801 $4,862 862 1,268 $6,991 0 5,000 1,000 250 $13,241 $44,560 $57,801

Balance Sheet Cash Accounts Receivable, net Inventory Other Current Assets Total Current Assets PP&E, net Transaction Goodwill Deferred Financing Fees Total Assets Accounts Payable Accrued Expenses Other Current Liabilities Total Current Liabilities Revolving Credit Facility Buckeye Senior Term Debt Deferred Income Taxes Other Long-Term Liabilities Total Liabilities Total Equity Total Liabilities and Equity

$0 6,029 13,757 1,834 $21,620 23,469 5,432 176 $50,696 $4,952 878 1,291 $7,121 33 10,000 1,000 250 $18,404 $32,292 $50,696

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III.
($ in thousands) 2003 Select Income Statement Data Sales $50,000 Cost of Sales Gross Profit Gross Margin SG&A Expense Operating Income Operating Margin Depreciation & Amortization EBITDA EBITDA Margin Effective Tax Rate Select Balance Sheet Data Accounts Receivable, net Inventory Other Current Assets PP&E, net Accounts Payable Accrued Expenses Other Current Liabilities Total Current Liabilities Deferred Income Taxes Other Long-Term Liabilities Capital Expenditures 35,500 14,500 29.0% 10,000 4,500 9.0% 650 $5,150 10.3% 35.0% 2004 $51,500 36,565 14,935 29.0% 10,300 4,635 9.0% 670 $5,305 10.3% 35.0%

Historical & Projected Operating Results of Casting Division

Actual Year Ended December 31, 2005 2006 2007 2008 $53,560 38,028 15,532 29.0% 10,712 4,820 9.0% 696 $5,517 10.3% 35.0% $55,970 39,739 16,231 29.0% 11,194 5,037 9.0% 728 $5,765 10.3% 35.0% $58,769 41,726 17,043 29.0% 11,754 5,289 9.0% 764 $6,053 10.3% 35.0% $55,830 40,477 15,353 27.5% 11,166 4,187 7.5% 726 $4,913 8.8% 35.0% 2009 2010 $55,780 39,604 16,176 29.0% 11,156 5,020 9.0% 725 $5,745 10.3% 35.0% 2011 $58,011 41,188 16,823 29.0% 11,602 5,221 9.0% 754 $5,975 10.3% 35.0% Projected Year Ending December 31, 2012 2013 2014 2015 2016 $60,912 43,247 17,664 29.0% 12,182 5,482 9.0% 792 $6,274 10.3% 35.0% $63,957 45,410 18,548 29.0% 12,791 5,756 9.0% 831 $6,588 10.3% 35.0% $65,876 46,772 19,104 29.0% 13,175 5,929 9.0% 856 $6,785 10.3% 35.0% $67,523 47,941 19,582 29.0% 13,505 6,077 9.0% 878 $6,955 10.3% 35.0% $69,211 49,140 20,071 29.0% 13,842 6,229 9.0% 900 $7,129 10.3% 35.0%

$54,155 38,992 15,164 28.0% 10,831 4,332 8.0% 704 $5,036 9.3% 35.0%

$4,110 9,595 1,250 $15,000 $3,404 604 888 $4,895 $500 $125 $900

$4,233 9,882 1,288 $15,258 $3,506 622 914 $5,042 $500 $125 $927 15.5%

$4,402 10,278 1,339 $15,525 $3,646 646 951 $5,244 $500 $125 $964

$4,600 10,740 1,399 $15,805 $3,811 676 993 $5,480 $500 $125 $1,007

$4,830 11,277 1,469 $16,099 $4,001 709 1,043 $5,754 $500 $125 $1,058

$4,589 10,940 1,396 $16,378 $3,881 688 1,012 $5,581 $500 $125 $1,005

$4,451 10,538 1,354 $16,649 $3,739 663 975 $5,377 $500 $125 $975

$4,585 10,704 1,395 $16,928 $3,798 673 990 $5,461 $500 $125 $1,004

$4,768 11,132 1,450 $17,218 $3,950 700 1,030 $5,679 $500 $125 $1,044

$5,006 11,688 1,523 $17,522 $4,147 735 1,081 $5,963 $500 $125 $1,096

$5,257 12,273 1,599 $17,842 $4,354 772 1,135 $6,262 $500 $125 $1,151

$5,414 12,641 1,647 $18,172 $4,485 795 1,169 $6,449 $500 $125 $1,186

$5,550 12,957 1,688 $18,509 $4,597 815 1,199 $6,611 $500 $125 $1,215

$5,689 13,281 1,730 $18,855 $4,712 835 1,228 $6,776 $500 $125 $1,246

Weighted Average Cost of Capital

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IV.
($ in thousands) 2003 Select Income Statement Data Sales $12,000 Cost of Sales Gross Profit
Gross Margin

Historical & Projected Operating Results of Buckeye Division

Actual Year Ended December 31, 2005 2006 2007 2008 $13,230 9,195 4,035 30.5% 2,646 1,389 10.5% 148 $1,537 11.6% 35.0% $13,892 9,585 4,306 31.0% 2,778 1,528 11.0% 155 $1,684 12.1% 35.0% $14,586 9,919 4,668 32.0% 2,917 1,750 12.0% 163 $1,914 13.1% 35.0% $12,398 9,299 3,100 25.0% 2,852 248 2.0% 155 $403 3.3% 35.0% 2009 2010 $12,237 9,055 3,182 26.0% 2,753 428 3.5% 159 $587 4.8% 35.0% 2011 $13,032 9,514 3,519 27.0% 2,802 717 5.5% 169 $886 6.8% 35.0% Projected Year Ending December 31, 2012 2013 2014 2015 2016 $13,554 9,826 3,727 27.5% 2,982 745 5.5% 169 $915 6.8% 35.0% $13,960 10,121 3,839 27.5% 3,071 768 5.5% 175 $942 6.8% 35.0% $14,240 10,324 3,916 27.5% 3,133 783 5.5% 185 $968 6.8% 35.0% $14,524 10,457 4,067 28.0% 3,159 908 6.3% 189 $1,097 7.6% 35.0% $14,815 10,667 4,148 28.0% 3,185 963 6.5% 193 $1,156 7.8% 35.0%

2004 $12,600 8,820 3,780 30.0% 2,520 1,260 10.0% 141 $1,401 11.1% 35.0%

$11,654 8,741 2,914 25.0% 2,680 233 2.0% 152 $385 3.3% 35.0%

8,400 3,600 30.0% 2,400 1,200 10.0% 134 $1,334 11.1% 35.0%

SG&A Expense Operating Income

Operating Margin

Depreciation & Amortization EBITDA

EBITDA Margin

Effective Tax Rate Select Balance Sheet Data Accounts Receivable, net Inventory Other Current Assets PP&E, net Accounts Payable Accrued Expenses Other Current Liabilities Total Current Liabilities Deferred Income Taxes Other Long-Term Liabilities Capital Expenditures

$986 2,100 300 $7,000 $805 143 210 $1,158 $500 $125 $216

$1,036 2,205 315 $7,086 $846 150 221 $1,216 $500 $125 $227 15.5%

$1,087 2,299 331 $7,176 $882 156 230 $1,268 $500 $125 $238

$1,142 2,396 347 $7,270 $919 163 240 $1,322 $500 $125 $250

$1,199 2,480 365 $7,370 $951 169 248 $1,368 $500 $125 $263

$1,019 2,325 310 $7,339 $892 158 232 $1,282 $500 $125 $124

$958 2,185 291 $7,245 $838 149 219 $1,205 $500 $125 $58

$1,006 2,264 306 $7,209 $868 154 226 $1,249 $500 $125 $122

$1,071 2,378 326 $7,235 $912 162 238 $1,312 $500 $125 $195

$1,114 2,457 339 $7,323 $942 167 246 $1,355 $500 $125 $258

$1,147 2,530 349 $7,414 $971 172 253 $1,396 $500 $125 $265

$1,170 2,581 356 $7,499 $990 176 258 $1,424 $500 $125 $271

$1,194 2,614 363 $7,586 $1,003 178 261 $1,442 $500 $125 $276

$1,218 2,667 370 $7,675 $1,023 181 267 $1,471 $500 $125 $281

Weighted Average Cost of Capital

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V.
Name David DeWitt Mabel DeWitt Gregory DeWitt Daniel Michaelson Brendon Morris Samantha Left, Esq. James Sherriff

Hoosier Castings Corporations Board of Directors

Age 86 79 55 62 45 52 56 Ownership % Year Joined Board 51.0% 1945 22.0% 1981 15.0% 1981 7.0% 1996 5.0% 2006 0.0% 1995 0.0% 2010 100.0% Salary and/or Board Fee $125,000 $65,000 $200,000 $7,500 $250,000 $7,500 $7,500 Relationship to Company Founder Abe DeWitt's Widow, never worked at HCC David's Son, President since 1990 Local entrepreneur and private investor EVP from 2006 to 2008, joined Company in 1996 Company's Corporate Attorney since 1995 Former management consultant

1 2 3 4 5 6 7

Title Chairman & Founder Board Member Executive Vice President Board Member President Board Member Board Member

David DeWitt David, an Indianapolis native, founded HCC with his older brother Abraham in 1945. David served as the Companys Executive Vice President until Abrahams death in 1981. From 1981 until his retirement in 2006, David served as HCCs President overseeing the Companys daily operations and managing key customer accounts. Prior to founding HCC, David was enlisted in the United States Marine Corps where he received the Silver Star for heroic acts during combat in the Pacific Theatre of WWII. Currently, David serves as HCCs Chairman and remains the largest shareholder of the Company.

Mabel DeWitt Mabel is a retired schoolteacher and the widow of Abraham DeWitt. Although she has never worked at HCC, she has been familiar with its operations since its foundation. Upon her husbands untimely death in 1981, she assumed his seat on the Companys Board of Directors. She is an active participant in company Board meetings. Mabel relies on her income from HCC as a supplement to her pension from the local school district.

Gregory DeWitt Gregory joined HCC in 1981 following the completion of his undergraduate studies. Currently, Gregory serves as HCCs Executive Vice President where he focuses primarily on sales. Prior to assuming this roll in 2008, Gregory served as the Companys President, a position he assumed from his father in 2006. With the exception of summer internships during college, all of Gregorys work experience has been with HCC. Gregory has a B.S. in Engineering from Purdue University.

Daniel Michaelson Daniel is a successful local entrepreneur, having started and sold three manufacturing business of his own. Daniel is a highly respected within the Indianapolis business and civic communities, as he serves as a Director on multiple corporate and non-profit boards. Daniel decided to invest $500,000 in HCC in 1996 after meeting David through a mutual friend. The proceeds from his investment were used to purchase new equipment. Typically Daniel targets a 16% annual return on private investments he makes.

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Brendon Morris Brendon joined HCC in 1996 after completing his graduate studies. During his tenure with HCC, Brendon has held multiple positions across various departments, making him uniquely familiar with the operations of the Company. Prior to business school, Brendon worked at a regional private wealth firm where he focused primarily on portfolio creation and gained critical valuation skills. Outside of his equity ownership in HCC, Brendon has accumulated a modest savings. Brendon and his wife currently have a daughter enrolled in college who is considering law school and two other children who are in high school. Brendon has a B.A. from Syracuse University and an M.B.A. from Indiana University.

Samantha Left, Esq. Samantha has served as the Companys Corporate Attorney since 1995. Recently Samantha was named Managing Partner of her law firm, one of the largest in the State of Indiana employing over 200 attorneys. As a highly respected member of the local legal community, Samantha is often asked to join corporate boards although rarely accepts. Currently she serves on the board of two other local companies and is the Chairman of the Board of Trustees for the local Childrens Hospital. Samantha brings a unique perspective on legal and business issues to the Board.

James Sherriff James recently retired as a partner from a leading regional management consulting firm. During his career as a consultant, James advised numerous companies on a variety of strategic issues including: management succession planning, market entry strategies and turn around management. Although his tenure on the Board is significantly less than his counterparts, James has become very familiar with the Companys operations.

VI.

Land Value Exhibits

Comparable Recent Land Sales (per acre) Burnham Road Comparable Industrial Park Average Construction Cost for Industrial Property Average time of construction Average Cost of a business disruption due to a move Probability of a business disruption due to a move

$1,000,000 to $1,500,000 $300,000 to $500,000 $25 to $35 per sq. ft. 6 to 8 months Loss of $5.0 million in Revenue 25%

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VII.
($ in thousands)

Buckeye Transaction Detail

Use of Proceeds Cash to Shareholders Financing Fees Transaction Expenses Total Uses

Source of Funds HCC Cash $4,995 Revolving Credit Facility 1 33 2 Senior Term Debt 10,000 $15,028 Total Sources

$14,352 176 500 $15,028

1 2

Interest rate of 4.5% & a financing fee of 2% Interest rate of 4.75%, 8 year term & a financing fee of 1.75%

VIII.
($ in millions) Transaction Transaction 1 Transaction 2 Transaction 3 Transaction 4 Transaction 5 Transaction 6 Transaction 7 Transaction 8 Transaction 9 Transaction 10 Transaction 11

Precedent Transactions for the Casting Industry

Target Revenues $4,796.7 $163.3 $17,616.9 $64.0 $235.9 $136.0 $213.3 $132.6 $51.1 $41.1 $560.1 EBITDA $72.0 $17.2 $1,708.8 $5.6 $27.1 $12.1 $20.7 $46.4 $3.8 $4.2 $53.2 EBITDA Margins 1.5% 10.5% 9.7% 8.7% 11.5% 8.9% 9.7% 35.0% 7.3% 10.2% 9.5% Enterprise Value Enterprise Value to Revenue to EBITDA 0.3x 0.6x 0.8x 0.4x 0.7x 0.4x 0.5x 3.1x 0.3x 0.6x 0.5x 20.9x 5.6x 8.5x 4.9x 6.0x 4.5x 5.4x 8.9x 4.4x 5.5x 5.3x

Enterprise Value $1,503.8 $96.0 $14,525.1 $27.3 $162.4 $54.5 $111.7 $413.0 $16.5 $23.0 $282.0

IX.
($ in millions) Transaction Transaction 1 Transaction 2 Transaction 3 Transaction 4 Transaction 5

Precedent Transactions for the Building Products Industry

Enterprise Value $24.5 $6.3 $34.7 $21.6 $5.4 Target Revenues $140.0 $23.1 $97.1 $59.8 $20.9 EBITDA $7.0 $1.5 $6.8 $4.9 $0.9 EBITDA Margins 5.0% 6.5% 7.0% 8.2% 4.3% Enterprise Value Enterprise Value to Revenue to EBITDA 0.2x 0.3x 0.4x 0.4x 0.3x 3.5x 4.2x 5.1x 4.4x 6.0x

X.

Current Debt Capital Markets Conditions

Senior Debt Senior Secured Revolving Credit Facilities Senior Secured Term Debt (5 Year Term, Fully Amortizing) Subordinated Debt (5 Year Note, Bullet Repayment)

Rate Financing Fee 4.50% 2.00% 4.80% 1.75% 12.00% 3.50%

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XI.
November 1, 2011

Ridgecreek Industries Offer Letter

David DeWitt Chairman Hoosier Casting Corp. 5881 Burnham Rd. Indianapolis, IN

Dear David, We are pleased to submit to you our Letter of Intent setting forth the terms and conditions under which Ridgecreek Industries proposes to acquire 100.0% of the fully-diluted common stock of Hoosier Casting Corp. (HCC or the Company). The terms and conditions of our offer are as follows: Purchase Price: Ridgecreek will value the HCC business at a total enterprise value of $30 million. Our purchase price will be subject to a net working capital adjustment, using the October 31, 2011 financial statements as a baseline. Escrow and Indemnification: We would require a 24-month escrow of $3 million. The escrow will be used to pay damages arising from breach of representations or warranties by the Company. The aggregate liability of the seller for damages arising from breach of representations or warranties will not commence until such liability exceeds the sum of $100,000 and shall not exceed the aggregate sum of the escrow. Financing: We have discussed this Transaction with several senior lenders and are comfortable that we can secure debt financing at close of 2.5x LTM EBITDA. In addition to the senior financing we anticipate, we would ask the shareholders to provide up to $6 million in subordinated seller financing. The subordinated seller financing would have a five year bullet term and carry an interest rate of 10%, payable semi-annually. Due Diligence & Interrogation Period: We would anticipate closing the proposed transaction by March 31, 2012, following a typical due diligence investigation. During our due diligence process, we would require a guarantee of exclusivity. During our due diligence process we intend to identify the representations or warranties which we will require of the Company. Post-closing, we plan to operate HCC as a fully interrogated subsidiary of Ridgecreek. We would expect the integration process between HCC and Ridgecreek to take approximately six to nine months.

In order to close this transaction by March 31, 2012, it is imperative that we receive a response from you no later than January 3, 2012. Should we not receive your response by then, our offer will expire. Having long competed with HCC, my Management team and I at Ridgecreek have a tremendous amount of respect for HCC and are excited about the possibility of having you join our family. Please do not hesitate to contact me personally with questions regarding our offer. We look forward to hearing from you by January 3, 2012. Sincerely, Daniel Duberstein Chairman & CEO Ridgecreek Industries

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