NEWS RELEASE
- --------------------------------------------------------------------------------
CONTACT: Hugh Aiken
Kevin McDermed
913 367 2121
NYSE: FDY
Atchison Casting Corporation
Announces Improved Operating Results
For the 3rd Quarter and First Nine Months of Fiscal 2002
Atchison, Kansas - May 14, 2002 - Atchison Casting Corporation (NYSE:FDY)
today announced results for the third quarter and first nine months ended March
31, 2002.
For the third quarter of fiscal 2002, the Company recorded net income of
$708,000, or $0.09 per share, on net sales of $99.7 million, compared to a net
loss of $5.0 million, or $0.65 per share, on net sales of $116.9 million in the
comparable period last year. The operating loss for the third quarter of fiscal
2002 was $3.6 million, representing an improvement of $599,000, or 14%, from the
third quarter of fiscal 2001. A stimulus bill recently passed by the Senate, and
signed into law by the President, enables the Company to now carry its operating
losses back an additional three years. As a result of this change in the law,
the Company recorded an income tax benefit of approximately $7.1 million in the
third quarter of fiscal 2002 of which $5.5 million was received in the form of
an income tax refund in April 2002.
For the first nine months of fiscal 2002, the Company recorded a net loss
of $9.5 million, or $1.23 per share, on net sales of $299.4 million, compared to
a net loss, before the cumulative effect of a change in accounting principle, of
$8.5 million, or $1.10 per share, on net sales of $321.9 million in the
comparable period last year. Including the cumulative effect on prior years of a
change in accounting for derivative financial instruments, the Company recorded
a net loss of $9.0 million, or $1.17 per share, in the first nine months of
fiscal 2001. Included in the prior year results was a non-recurring gain of
$10.9 million, which consisted of business interruption and property insurance
gains resulting from an insurance claim relating to an industrial accident on
February 25, 1999 at the Company's subsidiary, Jahn Foundry Corp. The operating
loss for the first nine months of fiscal 2002 was $7.9 million, representing an
improvement of $5.8 million, or 42%, from the first nine months of fiscal 2001
excluding the non-recurring insurance gain.
"Over the last two years, ACC has taken a number of steps to become more
competitive in the face of a strong dollar and competition from foundries in low
wage countries like China and Mexico. We have reduced our least effective
capacity through the closure of four foundries and the layoff of over 800
employees. At the same time we have installed labor saving and quality
ATCHISON CASTING CORPORATION
400 SOUTH FOURTH STREET o P.O. BOX 188 o ATCHISON, KANSAS 66002-0188
o (913) 367-2121 o FAX (913) 367-2155
enhancing machine tools and foundry equipment at a number of plant locations.
Some of the larger projects include (i) two high speed CNC lathes and a milling
machine center at Sheffield for roll making, (ii) a twin table 4-axis machining
center in Sheffield for keying roll journals, (iii) a manufacturing cell
consisting of four dedicated machines for finishing gun barrels at Sheffield,
(iv) a dedicated twin table CNC machining cell in St. Joseph for finishing cast
steel locomotive trucks that reduces manufacturing time and improves quality,
(v) several new CNC machine tools at London Precision in Ontario that allow us
to finish machine more of our castings instead of sub-contracting that work to
others, and (vi) three CNC machining centers at Inverness for finish machining
of engine covers and differentials for DaimlerChrysler," said Hugh H. Aiken,
CEO. "These actions are positively affecting our operating results and cash
flow, and, at the same time, are consistent with our goals of increasing
capacity utilization and continuing to focus ACC on the production, machining
and assembly of complex, highly engineered castings for major OEMs," continued
Mr. Aiken.
"While these improvements have been significant, they have been somewhat
offset by weakness in the steel and rail markets, start-up expenses of
automotive castings at Autun, losses at La Grange, Sheffield and Autun, and the
costs of closing PrimeCast and Penn Steel." said Mr. Aiken. "Overall, though,
the actions described above are beginning to take effect. I hope that ACC will
be able to reach profitability despite the strong dollar and weakness in the
steel and rail markets, but some easing of the former and strengthening of the
latter would be a big help," he added.
"We continue to attempt to restructure our credit line. In addition, we
continue to work on several insurance claims related to the Jahn explosion and
the PFG restatement and theft loss. While there can be no assurance of recovery
on these losses, we feel that they are covered by our insurance policies," said
Mr. Aiken. "Despite our losses and difficult financial condition, ACC continues
to win significant new business. Some recent awards include new automotive parts
for DaimlerChrysler, Peugeot and Nissan, locomotive trucks for General Electric,
and mass transit work for METRA in Chicago," said Mr. Aiken.
ACC produces iron, steel and non-ferrous castings for a wide variety of
equipment, capital goods and consumer markets.
This press release contains forward-looking statements that involve risks
and uncertainties. Such statements include the Company's expectations as to
future performance and contingent obligations. Among the factors that could
cause actual results to differ materially from the forward looking statements
are the following: costs of closing foundries, the results of the reorganization
of the Company's wholly-owned subsidiary Fonderie d'Autun, the amount of any
claims made against Fonderie d'Autun's prior owner which are the subject of
certain guarantees, business conditions and the state of the general economy in
Europe and the US, particularly the capital goods industry, the strength of the
U.S. dollar, British pound sterling and the Euro, interest rates, the Company's
ability to renegotiate or refinance its lending arrangements, utility rates, the
availability of labor, the successful conclusion of union contract negotiations,
the results of any litigation arising out of the accident at Jahn Foundry,
results of any litigation or regulatory proceedings arising from the accounting
irregularities at the Pennsylvania Foundry Group, the competitive environment in
the casting industry and changes in laws and regulations that govern the
Company's business, particularly environmental regulations.
ATCHISON CASTING CORPORATION
400 SOUTH FOURTH STREET o P.O. BOX 188 o ATCHISON, KANSAS 66002-0188
o (913) 367-2121 o FAX (913) 367-2155
ATCHISON CASTING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Share Data)
(Unaudited)
Three Months Ended Nine Months Ended
March 31, March 31,
2002 2001 2002 2001
--------------- --------------- ----------- --------------
NET SALES $ 99,665 $ 116,924 $ 299,350 $ 321,941
COST OF GOODS SOLD 93,752 108,885 277,847 301,851
----------- ----------- ----------- -----------
GROSS PROFIT 5,913 8,039 21,503 20,090
OPERATING EXPENSES:
Selling, general and administrative 9,564 12,271 29,651 33,928
Amortization of intangibles (95) (77) (284) (197)
Other income, net (10,920)
----------- ----------- ----------- -----------
Total operating expenses 9,469 12,194 29,367 22,811
----------- ----------- ----------- -----------
OPERATING LOSS (3,556) (4,155) (7,864) (2,721)
INTEREST EXPENSE 2,786 2,982 8,335 8,532
MINORITY INTEREST IN NET INCOME (LOSS) 0 121 (38) 130
OF SUBSIDIARIES
LOSS BEFORE INCOME TAXES AND
CUMULATIVE EFFECT OF A CHANGE IN
----------- ----------- ----------- -----------
ACCOUNTING PRINCIPLE (6,342) (7,258) (16,161) (11,383)
INCOME TAX BENEFIT (7,050) (2,254) (6,694) (2,915)
INCOME (LOSS) BEFORE CUMULATIVE EFFECT
OF A CHANGE IN ACCOUNTING PRINCIPLE 708 (5,004) (9,467) (8,468)
----------- ----------- ----------- -----------
CUMULATIVE EFFECT ON PRIOR YEARS (TO JUNE 30,
2000) OF A CHANGE IN ACCOUNTING FOR DERIVATIVE
FINANCIAL INSTRUMENTS, NET OF $364 TAX BENEFIT (546)
----------- ----------- ----------- -----------
NET INCOME (LOSS) $ 708 ($ 5,004) ($ 9,467) ($ 9,014)
=========== =========== =========== ===========
INCOME (LOSS) PER SHARE - BASIC AND DILUTED:
INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF A
CHANGE IN ACCOUNTING PRINCIPLE $ 0.09 ($ 0.65) ($ 1.23) ($ 1.10)
CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING
FOR DERIVATIVE FINANCIAL INSTRUMENTS (0.07)
----------- ----------- ----------- -----------
NET INCOME (LOSS) $ 0.09 ($ 0.65) ($ 1.23) ($ 1.17)
=========== =========== =========== ===========
WEIGHTED AVERAGE NUMBER OF
SHARES USED IN CALCULATION:
BASIC 7,723,031 7,689,347 7,714,273 7,684,008
=========== =========== =========== ===========
DILUTED 7,723,031 7,689,347 7,714,273 7,684,008
=========== =========== =========== ===========
ATCHISON CASTING CORPORATION
400 SOUTH FOURTH STREET o P.O. BOX 188 o ATCHISON, KANSAS 66002-0188
o (913) 367-2121 o FAX (913) 367-2155
