NEWS RELEASE
- --------------------------------------------------------------------------------
CONTACT: Tom Armstrong
Kevin McDermed
913 367 2121
OTCBB:AHNC.OB
Atchison Casting Corporation
Announces Results for the Third Quarter
And First Nine Months of Fiscal 2003
Atchison, Kansas - May 16, 2003 - Atchison Casting Corporation
(OTCBB:AHNC.OB) today announced results for the third quarter and first nine
months ended March 31, 2003.
Third quarter net sales from continuing operations decreased 14.1% to
$80.7 million from $93.9 million in the comparable period last year. Excluding
operations that were sold, closed or placed into liquidation in fiscal 2002, net
sales for the third quarter were $80.1 million, representing a decrease of 7.6%
from net sales of $86.7 million in the third quarter of fiscal 2002. The net
loss for the quarter was $2.1 million, or $0.27 per share, compared to net
income in the third quarter of fiscal 2002 of $708,000, or $0.09 per share.
Included in fiscal 2003 third quarter results is a non-recurring gain of $4.0
million, or $0.52 per share, consisting of insurance proceeds relating to the
industrial accident in February 1999 at the Company's subsidiary, Jahn Foundry
Corp., and a loss from discontinued operations of $893,000, or $0.12 per share.
Included in fiscal 2002 third quarter results was an income tax benefit of
approximately $7.1 million, or $0.92 per share, resulting from a stimulus bill
passed by the Senate, and signed into law by the President, enabling the Company
to carry its operating losses back an additional three years and a loss from
discontinued operations of $733,000, or $0.09 per share. The loss from
discontinued operations in both periods consists of the results of Kramer
International, Inc., which was sold in January 2003, and La Grange Foundry Inc.,
which was closed in November 2002. Excluding these items, the loss from adjusted
continuing operations for the third quarter of fiscal 2003 was $5.2 million, or
$0.67 per share, compared to a loss of $5.7 million, or $0.73 per share, in the
comparable period last year.
For the first nine months of fiscal 2003, net sales from continuing operations
decreased 16.5% to $234.1 million from $280.4 million in the comparable period
last year. Excluding operations that were sold, closed or placed into
liquidation in fiscal 2002, net sales for the first nine months of fiscal 2003
were $232.9 million, representing a decrease of 8.5% from net sales of $254.4
million in the first nine of fiscal 2002. The net loss for the first nine of
fiscal 2003 was $38.8 million, or $5.02 per share, compared to a net loss in the
first nine months of fiscal 2002 of $9.5 million, or $1.23 per share. Included
in the results for the first nine months of fiscal 2003 is (i) a loss from
discontinued operations of $4.4 million, or $0.56 per share, (ii) a fixed asset
impairment charge relating to the Company's G&C Foundry Company and Canada Alloy
Castings, Ltd.
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
subsidiaries, of $4.4 million, or $0.57 per share, (iii) a restructuring charge
of $1.5 million, or $0.20 per share, relating to the liquidation of New England
Iron, LLC, the buyer of substantially all of the net assets of Jahn Foundry
Corp. in December 2001, (iv) a goodwill impairment charge of $17.4 million, or
$2.26 per share, due to the adoption of a new accounting standard, and (v) the
$4.0 million, or $0.52 per share, non-recurring insurance gain discussed above.
Included in the results for the first nine months of fiscal 2002 is the income
tax benefit of $7.1 million, or $0.92 per share, discussed above and a loss from
discontinued operations of $1.4 million, or $0.19 per share. Excluding these
items, the loss from adjusted continuing operations for the first nine of fiscal
2003 was $15.0 million, or $1.95 per share, compared to a loss of $15.2 million,
or $1.96 per share in the comparable period last year.
In connection with the adoption of Statement of Financial Accounting
Standards No. 142, "Goodwill and Other Intangible Assets", the Company recorded
the non-cash goodwill impairment charge of $17.4 million mentioned above, as of
the beginning of fiscal 2003. The goodwill impairment charge relates to four of
the Company's operations, and was recorded as a Cumulative Effect of Accounting
Change. The charge has no effect on operating income or cash flows from
operations.
"The foundry industry as a whole continues to fight through one of the
most challenging market conditions in history," said Mr. Armstrong.
"Fortunately, ACC has experienced good support from our customers, suppliers,
employees and lenders," continued Mr. Armstrong. "Our lenders have continued to
work with us, as we have had to take some difficult actions in an effort to
position the Company for improved results when the markets do return. As
previously announced, these actions have included both selling and closing
subsidiary operations," said Mr. Armstrong.
"We've continued to focus on things we do have some control over,
including cost reductions and reducing our debt levels. Since the beginning of
fiscal 2002, we have reduced our debt levels in North America by approximately
$25.0 million, primarily through asset sales, plant sales, tax refunds and
insurance proceeds," continued Mr. Armstrong.
"The Company continues in discussions to sell G&C Foundry, Canada
Alloy and Inverness Castings," said Mr. Armstrong. "In addition, we are also
marketing Canadian Steel Foundries, Ltd. for possible sale," continued Mr.
Armstrong. "Proceeds from these sales, should they be completed, will be used to
further reduce our debt levels," 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 & Touche LLP, the
re-audit of any financial statements, the sale of subsidiaries for which offers
are being solicited, costs of closing or selling foundries, the results of the
liquidation of 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 U.S.,
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, continued compliance with the
terms of various forbearance agreements with the Company's
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
lenders, 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 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
(Unaudited)
(In thousands, except share data)
Three Months Ended Nine Months Ended
March 31, March 31,
2003 2002 2003 2002
---------------- ---------------- ---------------- ----------------
NET SALES $80,740 $93,926 $234,073 $280,436
COST OF GOODS SOLD 75,892 87,907 217,303 259,349
---------------- ---------------- ---------------- ----------------
GROSS PROFIT 4,848 6,019 16,770 21,087
OPERATING EXPENSES:
Selling, general and administrative 7,495 8,982 24,311 27,943
Impairment and restructuring charges - - 5,938 -
Amortization of intangibles - (140) - (420)
---------------- ---------------- ---------------- ----------------
Total operating expenses 7,495 8,842 30,249 27,523
---------------- ---------------- ---------------- ----------------
OPERATING LOSS (2,647) (2,823) (13,479) (6,436)
INTEREST EXPENSE 2,481 2,786 7,432 8,335
OTHER INCOME (4,000) - (4,000) -
MINORITY INTEREST IN NET LOSS
OF SUBSIDIARIES (34) - (88) (38)
LOSS FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES AND CUMULATIVE
---------------- ---------------- ---------------- ----------------
EFFECT OF ACCOUNTING CHANGE (1,094) (5,609) (16,823) (14,733)
INCOME TAX EXPENSE (BENEFIT) 101 (7,050) 133 (6,694)
CUMULATIVE EFFECT OF ACCOUNTING CHANGE - - (17,441) -
---------------- ---------------- ---------------- ----------------
INCOME (LOSS) FROM CONTINUING OPERATIONS ($1,195) $1,441 ($34,397) ($8,039)
LOSS FROM DISCONTINUED
OPERATIONS, NET OF TAX (893) (733) (4,359) (1,428)
---------------- ---------------- ---------------- ----------------
NET INCOME (LOSS) ($2,088) $708 ($38,756) ($9,467)
================ ================ ================ ================
NET INCOME (LOSS) PER SHARE - BASIC AND DILUTED
CONTINUING OPERATIONS BEFORE ACCOUNTING CHANGE ($0.15) $0.18 ($2.20) ($1.04)
CUMULATIVE EFFECT OF ACCOUNTING CHANGE - - ($2.26) -
DISCONTINUED OPERATIONS ($0.12) ($0.09) ($0.56) ($0.19)
---------------- ---------------- ---------------- ----------------
NET INCOME (LOSS) PER SHARE - BASIC AND DILUTED ($0.27) $0.09 ($5.02) ($1.23)
================ ================ ================ ================
WEIGHTED AVERAGE NUMBER OF SHARES
USED IN CALCULATION - BASIC AND DILUTED 7,723,031 7,723,031 7,723,031 7,714,273
================ ================ ================ ================
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
SALES BY END MARKET
(In Thousands)
(unaudited)
Three Months Ended Nine Months Ended
March 31, March 31,
2003 2002 2003 2002
---------------- ----------------- ----------------- -----------------
RAIL (INCLUDES MASS TRANSIT) $12,234 $12,193 $35,062 $32,126
MINING & CONSTRUCTION 11,748 13,743 29,910 42,508
ENERGY 5,592 9,576 19,637 30,275
UTILITIES 3,743 2,671 10,793 9,543
AUTOMOTIVE & TRUCKING 10,871 12,877 32,180 36,183
MILITARY 3,975 2,918 12,944 7,683
STEEL 21,248 22,006 61,964 67,283
PROCESS 3,393 2,463 7,877 8,502
OTHER* 7,936 15,479 23,706 46,333
---------------- ----------------- ----------------- -----------------
TOTAL $80,740 $93,926 $234,073 $280,436
* INCLUDES GENERAL INDUSTRIAL MACHINERY, SHIP BUILDING, FARM EQUIPMENT,
COMMUNICATIONS, COMPUTER PERIPHERALS AND RECREATIONAL PRODUCTS