Exhibit 99.1
NEWS RELEASE
- --------------------------------------------------------------------------------
CONTACT: Tom Armstrong
Kevin McDermed
913 367 2121
OTCBB:AHNC.OB
ATCHISON CASTING CORPORATION ANNOUNCES
4TH QUARTER AND FISCAL 2002 RESULTS
Atchison, Kansas - October 17, 2002 - Atchison Casting Corporation
(OTCBB:AHNC.OB) today announced results for the quarter and fiscal year ended
June 30, 2002.
Fourth quarter net sales decreased 16.3% to $88.9 million from $106.2
million in the comparable period last year. The net loss for the quarter was
$18.6 million, or $2.41 per share, compared to a net loss in the fourth quarter
of fiscal 2001 of $28.0 million, or $3.64 per share. During the fourth quarter
of fiscal 2002, Atchison recorded impairment and restructuring charges of $9.2
million, consisting of a $5.2 million fixed asset impairment charge relating to
the Company's downsizing of La Grange Foundry and approximately $4.0 million in
charges relating to the liquidation of Fonderie d'Autun, the Company's
subsidiary in France. Included in the prior year fourth quarter results were
asset impairment charges of $18.1 million relating to the Company's closure of
Empire Steel and sale of Jahn Foundry and Los Angeles Die Casting. Excluding
these items, the net loss for the fourth quarter of fiscal 2002 was $9.4
million, or $1.22 per share, compared to a net loss of $9.8 million, or $1.28
per share, for the fourth quarter of fiscal 2001.
Fiscal 2002 net sales were $388.2 million compared to $428.2 million in
fiscal 2001. The net loss for fiscal 2002 was $28.1 million, or $3.64 per share,
compared to a net loss of $37.0 million, or $4.81 per share, for fiscal 2001. A
recent stimulus bill signed into law enabled the Company to carry its operating
losses back an additional three years. As a result of this change in law, the
Company recorded an income tax benefit of approximately $7.1 million in the
third quarter of fiscal 2002. Excluding the items mentioned above and the $7.1
million income tax benefit, the net loss for fiscal 2002 was approximately $26.0
million, or $3.37 per share, compared to a net loss of $18.8 million, or $2.45
per share, for fiscal 2001.
As previously announced, on April 9, 2002 the Company's subsidiary,
Fonderie d' Autun, filed a voluntary petition for reorganization with the local
court in Chalons, France. After failing to sell Autun, the court appointed
administrator recommended to the court that Autun be liquidated. On September
19, 2002, the court appointed a liquidator to begin the liquidation of Autun.
During the fourth quarter of fiscal 2002, the Company recorded a charge of
$567,000 to write off its remaining net investment in Autun and a charge of $3.5
million relating to the Company's guarantee of Autun's obligations under certain
lease agreements.
ATCHISON CASTING CORPORATION
400 SOUTH FOURTH STREET o P.O. BOX 188o ATCHISON, KANSAS 66002-0188 o
(913)367-2121 o FAX (913)367-2155
"Fiscal 2002 was another difficult year for Atchison. We've now had three
years of a weak industrial economy, which has also been impacted by several
outside factors, including the events of September 11, 2001, corporate
accounting issues at numerous companies, declining capital markets and a general
tightening of credit by lenders," said Mr. Tom Armstrong, CEO. "The U.S. dollar
and the British pound sterling have remained high during the past several years.
Only recently have we seen some softening against other major currencies. This
not only affects the competitive position of our products, but also of our
domestic customers' products," continued Mr. Armstrong.
"We are taking a number of actions to improve our operating results,
including the steps identified in the recently announced new business model, the
downsizing of La Grange Foundry and additional cost reduction efforts related to
improving control of our manufacturing process," continued Mr. Armstrong.
On June 19, 2002, the Company announced a new business model, consisting of
these key components:
1) Narrow the customer focus to industrial manufacturers.
2) Narrow the product focus to complex and highly engineered castings.
3) Grow through value-added business, such as machining and assembly.
4) Increase utilization of casting design and simulation technology.
5) Provide a new customer service through ACC Global, a recently formed
division devoted to foreign sourcing of castings for customers seeking
lower cost global suppliers.
"Consistent with our new business model, and to reduce debt, the Company is
currently marketing for sale its Kramer International, G&C Foundry and Canada
Alloy subsidiaries," continued Mr. Armstrong. "In addition, on September 16,
2002, the Company announced the downsizing of La Grange Foundry to a pattern
repair, maintenance and storage facility," said Mr. Armstrong.
"We continue to work on a restructuring of our debt, with the help of some
experienced financial advisors," said Mr. Armstrong. "To date, our lenders have
continued to work with us. Obviously, we must improve earnings," continued Mr.
Armstrong.
"We are now narrowing our focus to industrial markets and to more complex,
higher margin products. Five operations have been closed, one is being
downsized, two have been sold and three are currently being marketed," continued
Mr. Armstrong. "The result will be a smaller company with a refined strategy and
a clearer focus," concluded Mr. Armstrong.
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: the results of the litigation with Deloitte and Touche LLP,
the re-audit of any financial statements, costs of closing foundries, the
results of the liquidation 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
ATCHISON CASTING CORPORATION
400 SOUTH FOURTH STREET o P.O. BOX 188o ATCHISON, KANSAS 66002-0188 o
(913)367-2121 o FAX (913)367-2155
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 188o 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)
Three Months Ended Year Ended
June 30, June 30,
2002 2001 2002 2001
------------ ------------ ---------- ------------
(unaudited) (unaudited) (unaudited)
NET SALES $88,890 $106,209 $388,240 $428,150
COST OF GOODS SOLD 87,481 98,438 365,328 400,289
------------ ------------ ---------- -------------
GROSS PROFIT 1,409 7,771 22,912 27,861
OPERATING EXPENSES:
Selling, general and 8,268 10,244 37,919 44,172
administrative
Impairment and 9,229 18,139 9,229 18,139
restructuring charges
Amortization of 288 (58) 4 (255)
intangibles
Other income, net - - - (10,920)
------------ ------------ ---------- -------------
Total operating 17,785 28,325 47,152 51,136
expenses
------------ ------------ ---------- -------------
OPERATING LOSS (16,376) (20,554) (24,240) (23,275)
INTEREST EXPENSE 2,513 2,797 10,848 11,329
MINORITY INTEREST IN
NET LOSS OF (14) (187) (52) (57)
SUBSIDIARIES
------------ ------------ ---------- -------------
LOSS BEFORE INCOME
TAXES AND CUMULATIVE
EFFECT OF A CHANGE IN (18,875) (23,164) (35,036) (34,547)
IN ACCOUNTING PRICIPLE
INCOME TAX EXPENSE (262) 4,807 (6,956) 1,892
(BENEFIT) ------------ ------------ ---------- -------------
LOSS BEFORE CUMULATIVE
EFFECT OF A CHANGE (18,613) (27,971) (28,080) (36,439)
IN ACCOUNTING PRICIPLE
CUMULATIVE EFFECT ON
PRIOR YEARS OF A CHANGE
IN ACCOUNTING FOR
DERIVATIVE FINANCIAL
INSTRUMENTS, NET OF
$364 TAX BENEFIT - - - (546)
------------ ------------ ---------- -------------
NET LOSS ($18,613) ($27,971) ($28,080) ($36,985)
============ ============ ========== =============
LOSS PER SHARE -
BASIC AND DILUTED:
LOSS PER SHARE BEFORE
CUMULATIVE EFFECT OF
A CHANGE IN ACCOUNTING
PRINCIPLE ($2.41) ($3.64) ($3.64) ($4.74)
CUMULATIVE EFFECT OF A
CHANGE IN ACCOUNTING
FOR DERIVATIVE
FINANCIAL INSTRUMENTS - - - (0.07)
------------ ------------ ---------- -------------
NET LOSS PER SHARE ($2.41) ($3.64) ($3.64) ($4.81)
============ ============ ========== =============
WEIGHTED AVERAGE NUMBER
OF SHARES USED IN
CALCULATION:
BASIC 7,723,031 7,689,347 7,716,479 7,685,339
============ ============ ========== ============
DILUTED 7,723,031 7,689,347 7,716,479 7,685,339
============ ============ ========== ============
* Based on the Company's current tax position, no income tax benefits were
recorded in connection with the losses in the United States and Europe.