SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
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/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
Atchison Casting Corporation
- ----------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- ----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
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14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
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[LOGO]
ATCHISON CASTING CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 15, 1996
Notice is hereby given that the Annual Meeting of Stockholders of Atchison
Casting Corporation (the "Company") will be held at the offices of the Company,
400 South Fourth Street, Atchison, Kansas, on the 15th day of November 1996, at
11:00 a.m. (Central Time) for the following purposes:
1. To elect two Class III Directors to serve for a term of three years.
2. To transact such other business as may properly come before the
meeting.
The Board of Directors has fixed the close of business on September 27,
1996, as the record date for the determination of stockholders entitled to
receive notice of and to vote at the meeting.
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING. HOWEVER, WHETHER OR NOT
YOU PLAN TO BE PERSONALLY PRESENT AT THE MEETING, PLEASE SIGN AND DATE THE
ENCLOSED PROXY AND PROMPTLY RETURN IT IN THE ENVELOPE PROVIDED. NO POSTAGE IS
NECESSARY IF MAILED IN THE UNITED STATES. IF YOU ATTEND THE MEETING, WE WILL BE
GLAD TO RETURN YOUR PROXY SO THAT YOU MAY VOTE IN PERSON.
PLEASE RETURN YOUR PROXY - THANKS!
By Order of the Board of Directors,
HUGH H. AIKEN
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
Atchison, Kansas
October 7, 1996
P.S. - I look forward to seeing you at the meeting. We will give you a tour of
the foundry when it is over. If you would like transportation from and to the
Kansas City airport, let me or Leah Cox know your flight information, and we
will have you picked up and taken back. It is a 40 minute ride.
ATCHISON CASTING CORPORATION
400 South Fourth Street
Atchison, Kansas 66002-0188
(913) 367-2121
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 15, 1996
GENERAL INFORMATION
This proxy statement is being furnished on or about October 7, 1996, in
connection with the solicitation of proxies by the Board of Directors of
Atchison Casting Corporation, a Kansas corporation (the "Company"), for use at
the Annual Meeting of Stockholders to be held at the Company's offices, 400
South Fourth Street, Atchison, Kansas, at 11:00 a.m. (Central Time) on Friday,
November 15, 1996, for the purposes set forth in the foregoing Notice of Annual
Meeting of Stockholders. In order to provide every stockholder with an
opportunity to vote on all matters scheduled to come before the Annual Meeting
and to be able to transact business at the meeting, proxies are being solicited
by the Company's Board of Directors. Upon execution and return of the enclosed
proxy, the shares represented by it will be voted by the persons designated
therein as proxies, in accordance with the stockholder's directions. A
stockholder may vote on a matter by marking the appropriate box on the proxy or,
if no box is marked for a specific matter, the shares will be voted as
recommended by the Board of Directors on that matter.
The enclosed proxy may be revoked at any time before it is voted by (i) so
notifying the Secretary of the Company, (ii) exercising a proxy of a later date
and delivering such later proxy to the Secretary of the Company prior to the
Annual Meeting or (iii) attending the Annual Meeting and voting in person.
Unless the proxy is revoked or is received in a form that renders it invalid,
the shares represented by it will be voted in accordance with the instructions
contained therein.
The Company will bear the cost of solicitation of proxies, which will be
principally conducted by the use of the mails; however, certain officers and
employees of the Company may also solicit by telephone, telegram or personal
interview. Such expense may also include ordinary charges and expenses of
brokerage firms and others, for forwarding soliciting material to beneficial
owners.
On September 27, 1996, the record date for determining stockholders
entitled to vote at the Annual Meeting, the Company had outstanding and entitled
to vote 5,528,912 shares of common stock, par value $.01 per share (the "Common
Stock"). Each outstanding share of Common Stock entitles the record holder to
one vote.
-1-
ELECTION OF DIRECTORS
The Board of Directors is divided into three classes, elected for terms of
three years and until their successors are elected and qualified. At the
meeting two Class III directors are to be elected. The proxies named in the
accompanying proxy intend to vote for the election of Paul C. Craig and Ray H.
Witt. In the event Mr. Craig or Mr. Witt should become unavailable for
election, which is not anticipated, the proxies will be voted for such
substitute nominee as may be nominated by the Board of Directors. The two
nominees for election as Class III directors who receive the greatest number of
votes cast for election of directors at the meeting, a quorum being present,
shall be elected directors of the Company. Abstentions, broker nonvotes and
instructions on the accompanying proxy card to withhold authority to vote for
one or more of the nominees will result in the respective nominees receiving
fewer votes.
INFORMATION CONCERNING NOMINEES
The following table sets forth information with respect to the nominees to
the Board of Directors.
CLASS III - TERM EXPIRING 1996
PRINCIPAL OCCUPATION AND
NAME AGE FIVE-YEAR EMPLOYMENT HISTORY
- ---- --- -------------------------------------------------------
Paul C. Craig 39 Director since June 1991. Since 1988, Mr. Craig has
been the Managing General Partner of RPI Limited
Partnership I, which is the managing general partner of
Riverside Fund I, L.P. ("Riverside Partners"), an
investment firm located in Boston, Massachusetts.
Mr. Craig is a member of the Compensation Committee of
the Company's Board of Directors.
Ray H. Witt 68 Director since August 1993. Since 1957, Mr. Witt has
been the Chief Executive Officer and Chairman of the
Board of CMI International, Inc., which owns and
operates eight foundries in North America and Europe.
Mr. Witt was president of the American Foundryman's
Society from 1992 to 1993. Mr. Witt is a member of the
Audit Committee of the Company's Board of Directors.
INFORMATION CONCERNING DIRECTORS CONTINUING IN OFFICE
The following table sets forth information with respect to the directors
who are continuing in office for the respective periods and until their
successors are elected and qualified.
-2-
CLASS I - TERM EXPIRING 1997
PRINCIPAL OCCUPATION AND
NAME AGE FIVE-YEAR EMPLOYMENT HISTORY
- ---- --- -------------------------------------------------------
Hugh H. Aiken 52 Chairman of the Board, President, Chief Executive
Officer and Director since June 1991.
CLASS II - TERM EXPIRING 1998
PRINCIPAL OCCUPATION AND
NAME AGE FIVE-YEAR EMPLOYMENT HISTORY
- ---- --- -------------------------------------------------------
David L. Belluck 34 Director since June 1991. Since 1989, Mr. Belluck has
been a General Partner of RPI Limited Partnership I,
which is the managing general partner of Riverside
Partners. Mr. Belluck is a member of the Compensation
Committee of the Company's Board of Directors.
John O. Whitney 68 Director since June 1994. Since 1986, Mr. Whitney has
been Professor and Executive Director, Deming Center
for Quality Management at Columbia Business School.
Mr. Whitney has also written a number of books and
articles on management in business strategy, and
lectures on those subjects in the United States and
abroad. Mr. Whitney previously served as Chief
Executive Officer of Pathmark International, a division
of Supermarkets General Corporation engaged in food
distribution and retailing. Mr. Whitney is a member of
the Audit Committee of the Company's Board of
Directors.
COMMITTEES OF THE BOARD OF DIRECTORS
The standing committees of the Board of Directors consist of an Audit
Committee and a Compensation Committee.
The Audit Committee consists of Messrs. Whitney and Witt. The Audit
Committee annually makes recommendations to the Board regarding the appointment
of independent auditors of the Company and reviews the scope of audits.
The Compensation Committee consists of Messrs. Belluck and Craig. The
Compensation Committee annually reviews and makes recommendations to the Board
of Directors regarding compensation arrangements with the executive officers of
the Company and reviews and approves the procedures for administering employee
benefit plans of all types.
During the 1996 fiscal year, the Board of Directors met four times, the
Audit Committee met one time and the Compensation Committee met four times. All
Directors
-3-
attended at least 75% of the meetings of the Board of Directors and the
committees on which they served.
COMPENSATION OF DIRECTORS
Non-employee directors received $2,500 for each quarterly meeting of the
Board of Directors attended during fiscal year 1996 and, effective July 1, 1996,
will receive a fixed fee of $8,000 each year and $2,000 for each quarterly
meeting of the Board of Directors attended, all or part of which may be paid in
cash or Common Stock at their election. In addition, the Company reimburses
directors for expenses incurred in connection with attendance at meetings of the
Board of Directors and committees thereof. Each non-employee director has also
been granted an option to purchase 10,000 shares of Common Stock at an exercise
price per share equal to the average of the high and low sales prices of the
Common Stock, as reported on the NASDAQ Stock Market's National Market System
(the "NASDAQ National Market"), on the date of grant ($13 3/8 per share). In
June 1996, Mr. Witt was granted an option to purchase an additional 10,000
shares of Common Stock at an exercise price of $13 3/8 per share.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Company's Board of Directors during
fiscal 1996 was composed of Paul C. Craig and David L. Belluck.
Paul C. Craig, Managing General Partner of Riverside Partners, and David L.
Belluck, a General Partner of Riverside Partners, are directors of the Company.
Riverside Partners was paid a finder's fee of $45,000 in January 1996 in
connection with the acquisition of La Grange Foundry Inc. and $95,800 in April
1996 in connection with the acquisition of The G&C Foundry Company.
During the fiscal year ended June 30, 1996, there were no interlocking
relationships between any executive officers of the Company and any entity whose
directors or executive officers serve on the Board's Compensation Committee, nor
did any current or past officers of the Company serve on the Compensation
Committee.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors of the Company is
responsible for reviewing and approving policies, practices and procedures
relating to executive compensation and the establishment and administration of
employee benefit plans. The overall goal of the Compensation Committee is to
attract and retain strong management and to base incentive compensation on both
individual performance and the overall Company success. The key elements of the
Company's executive compensation package are base salary, annual bonuses, and
long-term incentives. Each of those elements are discussed below.
-4-
The Company's executive officers are compensated with base salary and
annual bonuses, as well as incentive stock options, restricted subsidiary stock
and by the Company's normal fringe benefits.
The base salary of each executive officer, other than the chief executive
officer ("CEO"), is determined by a subjective process of negotiation and
evaluation of performance involving the officer, the CEO and the Compensation
Committee. The base salary of the CEO was originally determined by negotiation
between the CEO and the major stockholders of the Company in February 1991,
resulting in a five-year employment contract between the Company and the CEO.
At the time of the Company's initial public offering of its Common Stock
(October 1993), this employment contract was extended by two years, changing its
expiration date from June 1996 to June 1998. The CEO's employment contract
allows for annual increases.
During the second fiscal quarter of 1996, the CEO voluntarily reduced his
salary from $200,000 per year to $146,000 per year for the remainder of fiscal
year 1996 because the Company missed its internal earnings targets during the
first half of fiscal year 1996.
The annual bonus for executive officers for fiscal 1996 (and for the prior
two years) was based on earnings before interest, taxes and amortization of
intangibles, or "EBITA." Targets are set by the Board of Directors for the
fiscal year EBITA of each executive's subsidiary or operating group. In the
case of the CEO and the chief financial officer, the target was based on
consolidated earnings for the entire Company. The amount of bonus which was to
be earned if EBITA reached 100% of target was also set by the Board (or by
contract in the case of the CEO), and was approximately 100% of base salary for
the CEO and 25% of base salary for other officers. If the target is reached,
the officer receives 100% of his annual bonus. For any percentage of actual
EBITA above the target, the amount of the calculated bonus at 100% of the target
is increased by the same percentage. A minimum level of EBITA is also set,
below which no bonus is paid. At EBITA above the minimum threshold the bonus is
pro-rated based on the relation of actual EBITA to the target and the minimum
threshold. The bonus payments for Messrs. Crowley, Stott and Sitarz were
determined by incentive plans in place at their foundries prior to becoming part
of the Company, each of which is based as on minimum EBITA threshold levels at
their respective foundries. During fiscal year 1996, the full bonus amount was
earned.
Incentive stock options are granted by the Company to eligible employees
under the Company's 1993 Incentive Stock Plan. The number of options granted is
determined by the Compensation Committee after considering subjective criteria
such as the employee's performance, the employee's value to the Company and the
use of options at other companies.
Restricted stock of subsidiaries of the Company for up to 10% of the
capital stock of some subsidiaries is made available to key managers of such
subsidiaries, and vests in equal annual installments over five years from the
date of awarding such stock. To participate in this plan, a manager must
purchase stock in the subsidiary.
-5-
This report has been issued over the names of each member of the
Compensation Committee, David L. Belluck and Paul C. Craig.
EXECUTIVE COMPENSATION
The table below sets forth information concerning the annual and long-term
compensation paid to the Chief Executive Officer and the four other most highly
paid executive officers whose compensation exceeded $100,000 during the last
fiscal year.
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION SECURITIES
---------------------- UNDERLYING
NAME AND OPTIONS/ ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($) SARS(#) COMPENSATION($)
- ------------------ ---- --------- -------- ------- ---------------
Hugh H. Aiken. . 1996 $164,667 $200,000 20,000 $ 5,310(1)
President and 1995 $192,222 $200,000 None $ 8,331
Chief Executive 1994 $153,950 $127,779 20,000 $ 6,746
Officer
Richard J. Sitarz 1996 $111,800 $34,242 2,000 $ 6,708(2)
Vice President- 1995 $106,600 $33,657 None $ 6,396
Prospect 1994 $101,400(3) $28,500(3) 2,000 $ 4,301
John R. Kujawa. . 1996 $105,000 $26,250 3,000 $ 6,300(4)
Vice President-- 1995 $105,000 $27,129 None $ 6,228
Atchison/St. 1994 $ 76,000 $15,837 4,000 $ 4,560
Joseph and
Amite
James Stott. . . 1996 $111,691 $82,612 None None
Vice President-- 1995 $100,777(5) $93,599(5) 10,000 None
Kramer
Edward J. Crowley 1996 $100,000 $40,091 None $ 6,502(7)
Vice President-- 1995 $130,769(6) $79,472(6) None $11,656
Empire
- ----------------
(1) Consists solely of Company contributions to the Company's 401(k) savings
plan for the benefit of Mr. Aiken.
(2) Consists solely of Company contributions to the Company's 401(k) savings
plan for the benefit of Mr. Sitarz.
(3) Mr. Sitarz became an executive officer of the Company subsequent to the
Company's acquisition of Prospect Foundry, Inc. ("Prospect") on April 1,
1994. Accordingly, only $25,350 of the salary reported above for 1994 was
paid by the Company and none of the bonus for 1994 was paid by the Company.
(4) Consists solely of Company contributions to the Company's 401(k) savings
plan for the benefit of Mr. Kujawa.
-6-
(5) Mr. Stott became an executive officer of the Company subsequent to the
Company's acquisition of Kramer International, Inc. ("Kramer") in January
1995. Accordingly, only $53,327 and $18,200 of the salary and bonus
reported above for 1995 was paid by the Company.
(6) Mr. Crowley became an executive officer of the Company subsequent to the
Company's acquisition of Empire Steel Castings, Inc. ("Empire") in February
1995. Accordingly, only $44,231 and $15,970 of the salary and bonus
reported above for 1995 was paid by the Company.
(7) Consists solely of contributions to a 401(k) plan for the benefit of Mr.
Crowley.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES
OF STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
--------------------------------------------------------------- ---------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS/SARs EMPLOYEES IN BASE EXPIRATION
NAME GRANTED(#)(1) FISCAL YEAR PRICE($/SH) DATE 5%($) 10%($)
---- ------------- ----------- ----------- ---- ----- ------
Hugh H. Aiken . . . . 20,000 43.7% $14.125 6/30/05 $177,668 $450,230
Richard J. Sitarz . . 2,000 4.4% $14.125 6/30/05 $ 17,767 $ 45,023
John R. Kujawa . . . 3,000 6.6% $14.125 6/30/05 $ 26,650 $ 67,535
James Stott . . . . . None
Edward J. Crowley . . None
- ------------------
(1) All options are rights to buy Common Stock of the Company. The options
granted to Mr. Aiken, Mr. Sitarz and Mr. Kujawa are subject to a three-year
vesting schedule commencing July 1, 1995 with one-third of the grant
vesting on each of the three anniversaries from the grant date.
AGGREGATED OPTION/SAR EXERCISES IN LAST
FISCAL YEAR AND FY-END OPTION/SAR VALUES
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
FY-END(#) FY-END($)
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- ------------------------- -------------------------
Hugh H. Aiken. . . . . . . . . 13,333/26,667 $31,666/$48,334
Richard J. Sitarz . . . . . . 1,333/2,667 $3,166/$4,834
John R. Kujawa. . . . . . . . 2,666/4,334 $6,332/$8,043
James Stott . . . . . . . . . 3,333/6,667 $3,333/$6,667
Edward J. Crowley . . . . . . 0/0 $0/$0
-7-
EMPLOYMENT CONTRACTS
The Company has entered into an employment agreement with Mr. Aiken that
expires in June 1998. At the discretion of the Board of Directors, the minimum
annual compensation may be increased during the term of this agreement. As of
June 30, 1996, the minimum annual compensation payable to Mr. Aiken pursuant to
this agreement was $200,000. This agreement provides for a severance payment in
the amount of one year of base salary in the event of his death or disability
and up to three years of base salary in the event he is terminated other than
for cause, disability or death. This agreement also prohibits Mr. Aiken from
competing with the Company for a period of two years following the termination
of his employment with the Company.
Prospect was subject to an employment agreement with Mr. Sitarz that
expired in June 1996. As of June 30, 1996, the base annual salary payable to
Mr. Sitarz pursuant to that agreement was $111,800. The agreement prohibited
Mr. Sitarz from competing with Prospect during the term of the agreement.
The Company and Empire have entered into an employment agreement with
Edward J. Crowley, Vice President-Empire, that expires on January 31, 2000. The
agreement provides for a minimum annual compensation of $100,000, which may be
increased at the discretion of the board of directors of Empire. The agreement
also provides for incentive compensation equal to 5% of the earnings before
interest, taxes and corporate charges ("EBIT") of Empire.
PENSION BENEFITS
The Company maintains a qualified defined benefit pension plan, the
Salaried Employees Retirement Plan of Atchison Casting Corporation (the
"Retirement Plan"), of which Mr. Aiken and Mr. Kujawa are participants. The
estimated annual benefits payable under the Retirement Plan payable upon
retirement at various years of credited service and at different levels of
remuneration are as follows:
REMUNERATION YEARS OF CREDITED SERVICE AT RETIREMENT
------------ --------------------------------------------------
15 20 25 30 35
-- -- -- -- --
$ 50,000 $16,933 $17,582 $18,231 $18,879 $19,528
75,000 26,933 28,207 29,481 30,754 32,028
100,000 36,934 38,832 40,731 42,630 44,528
125,000 46,934 49,457 51,981 54,505 57,028
150,000(1) 56,934 60,083 63,231 66,380 69,528
- ---------------
(1) Section 401(a)(17) of the Internal Revenue Code of 1986, as amended, and
the Omnibus Budget Reconciliation Act of 1993 limit the amount of
compensation that can be considered
-8-
in computing benefits under a qualified defined benefit pension plan. For
1996, the maximum amount of compensation allowed for use in calculating an
individual's pension benefits is $150,000. This limit may be raised in the
future by annual cost-of-living adjustments determined by the U.S.
Secretary of the Treasury.
The remuneration covered by the Retirement Plan is the average of the
highest five consecutive years during the last ten years prior to eligibility to
receive benefits under the Retirement Plan of total cash remuneration, including
salary and bonus (both as reported in the Summary Compensation Table) paid or
accrued and payable in the year following accrual. As of the end of fiscal
1996, Mr. Aiken and Mr. Kujawa each had seven years of service credited under
the Retirement Plan. Benefits shown are computed as life-only annuities
beginning at age 65 and are not reduced for Social Security benefits.
Effective May 1, 1996, the Company established an unfunded, nonqualified
supplemental retirement plan for the benefit of Mr. Aiken. The benefit payable
to Mr. Aiken under the plan is equal to the excess of (a) the benefit that would
be payable to Mr. Aiken under the Retirement Plan if his employment had
commenced April 1, 1975 instead of April 1, 1990, over (b) the benefit actually
payable to Mr. Aiken under the Retirement Plan. The estimated annual benefit
payable to Mr. Aiken under the supplemental retirement plan in the form of a
life-only annuity upon retirement at age 65 is $9,446.
Empire sponsors a defined benefit pension plan for salaried employees, of
which Mr. Crowley is a participant. The plan was amended to cease further
benefit accruals effective July 15, 1991. The monthly plan benefit is equal to
35% of average monthly compensation. For a participant with less than 20 years
of benefit accrual service, the benefit is reduced by multiplying it by a
fraction, the numerator of which is the actual years of benefit accrual service
and the denominator of which is 20. Years of service and compensation earned
after July 15, 1991 are not credited for purposes of benefit accrual under the
plan. Mr. Crowley is 100% vested in his plan benefit and is credited with 6
years of benefit accrual service. Mr. Crowley's annual plan benefit at age 65
will be approximately $11,856, payable for life.
PERFORMANCE OF THE COMPANY'S COMMON STOCK
The graph set forth below compares the percentage change in cumulative
stockholder return of the Company's Common Stock, from October 4, 1993 (the date
the Company commenced its initial public offering of Common Stock), to June 30,
1996 (the Company's fiscal year end), against the cumulative return of the Index
for the NASDAQ Stock Market (U.S. Companies only) (the "NASDAQ Index"), and an
index prepared by the Center for Research in Security Prices at The University
of Chicago Graduate School of Business consisting of stocks of U.S. companies
traded on NASDAQ that transact business in primary metal industries (S.I.C.
3300-3399) (the "Metals Industry Index") covering the same time period. The
Company undertakes to provide any stockholder upon written request, without
charge, a list of the component issues in the Metals Industry Index. The graph
is based on $100 invested on October 4, 1993, in the Company's Common Stock, the
NASDAQ Index and Metals Industry Index, each assuming dividend reinvestment.
The
-9-
historical stock price performance shown on this graph is not necessarily
indicative of future performance.
$160
---------------------------------------------------------------
- $159.20
$150
---------------------------------------------------------------
$140
---------------------------------------------------------------
$130 / /$132.20
---------------------------------------------------------------
-$124.00
$120
/ /$120.00 $120.00
---------------------------------------------------------------
$110
---------------------------------------------------------------
- $106.70 $109.50
$100 - $100.00 / / $100.80
---------------------------------------------------------------
$ 90 - $92.90
---------------------------------------------------------------
10/4/93 6/30/94 6/30/95 6/30/96
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
Atchison Casting NASDAQ Index Metals Industry Index
----- - ----- _________ - _________ ........ / / ........
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
CERTAIN TRANSACTIONS
Richard J. Sitarz, Vice President-Prospect, and C. Dinny Kinloch, Vice
President-Quaker Alloy, are each party to certain Employee Incentive Stock
Agreements, pursuant to which Mr. Sitarz was awarded 20,000 shares of Prospect's
Class B common stock, and Mr. Kinloch was awarded 20,000 shares of Class B
common stock of Quaker Alloy, Inc., which vest annually over five years or upon
an earlier date if certain events occur. ACC holds an irrevocable proxy in its
favor with respect to all such shares that are not vested. These agreements
also provide, among other things, that ACC has the right to purchase such shares
under certain circumstances, the obligation to purchase such shares under other
circumstances, and the right to cause such shares to be sold if ACC sells more
than one-half
-10-
of its capital stock in a single transaction or a series of related
transactions. Such shares may be exchanged for the Company's Common Stock after
five years from the date of issue based on relative book values of the shares at
the time of such exchange.
James Stott, Vice President-Kramer, has entered into an agreement with the
Company in which he will be paid $750,000 if by January 3, 1997 he causes net
sales at ACC and any of its subsidiaries (other than Kramer) to increase in the
aggregate by $7.5 million in regularly recurring annual sales while he is an
employee of Kramer provided that net sales volume at Kramer does not fall below
Kramer's fiscal 1994 net sales volume at the same time. In addition, on January
1, 1995 Mr. Stott and another individual renewed the lease of a manufacturing
facility to Kramer at $4,033.33 per month through December 31, 1996, subject to
two successive two-year extensions at its then fair market value.
The Company has entered into a stock option agreement with Mr. Crowley
which provides the Company an option to purchase the 26,895 shares of Common
Stock issued to Mr. Crowley in connection with the Company's acquisition of
Empire if Mr. Crowley ceases to be employed by the Company before January 31,
2000. The purchase option does not arise, however, if Mr. Crowley's employment
is terminated without cause or as a result of Mr. Crowley's disability. The
option price is $50,000 if Mr. Crowley's employment ceases before January 31,
1996, and increases annually in $100,000 increments up to $450,000 .
For a discussion of certain other transactions, see "Election of Directors
- -- Compensation Committee Interlocks and Insider Participation," "Compensation
Committee Report on Executive Compensation" and "Executive Compensation --
Employment Contracts."
CERTAIN BENEFICIAL OWNERSHIP OF THE COMPANY'S COMMON STOCK
The following table sets forth information as of September 27, 1996,
concerning the shares of Common Stock beneficially owned by (i) each person
known by the Company to be the beneficial owner of 5% or more of the Company's
outstanding Common Stock, (ii) each of the directors of the Company, (iii) each
of the executive officers of the Company named in the Summary Compensation Table
and (iv) all directors and executive officers of the Company as a group. Unless
otherwise indicated, the named beneficial owner has sole voting and investment
power over the shares listed.
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NUMBER OF SHARES PERCENTAGE OF
NAME OF INDIVIDUAL OR GROUP BENEFICIALLY OWNED COMMON STOCK OWNED
- --------------------------- ------------------ ------------------
Riverside Fund I, L.P. . . . . . . . . 1,770,976 32.0%
One Exeter Plaza
699 Boylston Street
Boston, MA 02116
Ingalls & Snyder (1) . . . . . . . . . 480,071 8.7
61 Broadway
New York, NY 10006
Principal Mutual Life Insurance Co. (2) 356,000 6.4
711 High Street
Des Moines, IA 50392-0088
Wanger Asset Management, Ltd. (3). . . 354,100 6.4
227 West Monroe Street, Suite 3000
Chicago, IL 60606
Hugh H. Aiken (4). . . . . . . . . . . 282,605 5.1
Paul C. Craig (5)(6) . . . . . . . . . 10,000 *
David L. Belluck (5)(6). . . . . . . . 23,150 *
Ray H. Witt (7). . . . . . . . . . . . 186,708 3.4
John O. Whitney (6)(8) . . . . . . . . 13,192 *
Richard J. Sitarz (9). . . . . . . . . 2,000 *
John R. Kujawa (10). . . . . . . . . . 28,814 *
James Stott (11) . . . . . . . . . . . 4,833 *
Edward J. Crowley. . . . . . . . . . . 26,995 *
All directors and executive officers as
a group (13 persons) (12) . . . . . . 613,072 11.0
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* Less than 1% of Common Stock outstanding.
(1) Based on a Schedule 13G Amendment No. 1 dated January 17, 1996, represents
shares of Common Stock owned by Ingalls & Snyder LLC, which has sole voting
power with respect to 9,551 shares and sole dispositive power with respect
to 480,071 shares.
(2) Based on a Schedule 13G dated February 14, 1996, represents shares of
Common Stock owned by Principal Mutual Life Insurance Co. ("PM"), which
shares voting and dispositive powers over all of such shares, including
shared voting and dispositive powers over 326,000 of such shares with
Invista Capital Management, Inc., an investment adviser and subsidiary of
PM.
(3) Based on a Schedule 13G dated February 9, 1996, Wanger Asset Management,
L.P. ("WAM") is an investment adviser, which shares voting and dispositive
powers with Wanger Asset Management Ltd, its general partner, and Mr. Ralph
Wanger, the principal stockholder of its general partner. WAM also shares
voting and dispositive powers with certain of its clients who do not
beneficially own 5% of more of the outstanding shares of Common Stock.
(4) Includes 20,000 shares subject to exercisable options, 500 shares owned by
Mr. Aiken's wife and 500 shares owned by each of Mr. Aiken's three
children.
(5) Messrs. Craig and Belluck are general partners of RPI Limited Partnership
I, which is the managing general partner of Riverside Partners. As such
general partners, Messrs. Craig and Belluck may be deemed to be the
beneficial owners of shares owned or held by Riverside Partners. Messrs.
Craig and Belluck disclaim beneficial ownership of such shares other than
to the extent such ownership corresponds to their respective percentage
interest in Riverside Partners.
(6) Includes 10,000 shares subject to exercisable options held by each of
Messrs. Craig, Belluck and Whitney, which they received pursuant to the
Atchison Casting Non-Employee Director Option Plan.
(7) Mr. Witt is Chief Executive Officer and Chairman of the Board of CMI
International, Inc., which received 175,583 shares of Common Stock of the
Company in connection with the Company's acquisition of the operating
assets of CMI-Quaker Alloy, Inc.
-12-
(8) Includes 800 shares owned by Mr. Whitney's wife.
(9) Includes 2,000 shares subject to exercisable options.
(10) Includes 3,666 shares subject to exercisable options.
(11) Includes 3,333 shares subject to exercisable options.
(12) Includes 66,332 shares subject to exercisable options.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
To the Company's knowledge, all Section 16(a) filing requirements
applicable to its directors, executive officers and ten percent holders were
satisfied during the fiscal year ended June 30, 1996, except that one Form 4
relating to one transaction for each of Messrs. Aiken, Kinloch, Kujawa, McDermed
and Sitarz was filed later than required.
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
The Board of Directors, on the recommendation of the Audit Committee, has
selected the firm of Deloitte & Touche LLP as independent auditors to examine
the financial statements of the Company and its subsidiaries for the fiscal year
1997. Representatives of Deloitte & Touche LLP will be present at the Annual
Meeting, will have an opportunity to make a statement if they so desire, and
will be available to respond to appropriate questions.
OTHER BUSINESS
As of the date of this proxy statement, management knows of no other
matters to be presented at the Annual Meeting. However, if any other matters
shall properly come before the meeting, it is the intention of the persons named
in the enclosed proxy to vote in accordance with their best judgment.
PROPOSALS OF SECURITY HOLDERS
Proposals of security holders intended to be presented at the next annual
meeting, scheduled for November 21, 1997, must be received by the Company no
later than June 9, 1997, in order to be considered for inclusion in the proxy
statement relating to that meeting.
ATCHISON CASTING CORPORATION
HUGH H. AIKEN
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
Dated: October 7, 1996
Atchison, Kansas
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PROXY PROXY
ATCHISON CASTING CORPORATION
400 South Fourth Street
Atchison, Kansas 66002
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Hugh H. Aiken and Kevin T. McDermed, or
either of them, as Proxies, each with the power to appoint his substitute, and
hereby authorizes them to represent and to vote, as designated below, all the
shares of Common Stock of Atchison Casting Corporation the undersigned is
entitled to vote at the Annual Meeting of Stockholders to be held on November
15, 1996, or any adjournment or postponement thereof. This proxy revokes all
prior proxies given by the undersigned.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED PREPAID ENVELOPE.
(Continued and to be signed on the reverse side)
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ATCHISON CASTING CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. /X/
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ELECTION OF ALL NOMINEES.
1. ELECTION OF DIRECTORS --
NOMINEES: Paul C. Craig and Ray H. Witt
FOR WITHHOLD FOR ALL (EXCEPT NOMINEE(S) WRITTEN BELOW)
/ / / / / /_____________________________
2. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING AND ALL MATTERS INCIDENT
TO THE CONDUCT OF THE MEETING.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR EACH OF THE NOMINEES FOR DIRECTOR LISTED
Dated:_________________________________________________, 1996
Signature(s)____________________________________________________________________
________________________________________________________________________________
Please sign exactly as name appears at left. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by an authorized person.
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