SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant |X|
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Check the appropriate box:
| | Preliminary Proxy Statement
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14a-6(e)(2))
|X| Definitive Proxy Statement o Definitive Additional
Materials
| | Soliciting Material Pursuant to ss. 240.14a-11(c) or ss.
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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|X| No fee required.
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and 0-11.
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_______________________________________________________________________
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[LOGO]
ATCHISON CASTING CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held June 29, 2001
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 29th day of June,
2001, at 11 a.m. (Central Time) for the following purposes:
1. To elect two Class I Directors to serve for a term of three
years.
2. To ratify the adoption of a Shareholder Rights Plan and the
Rights Agreement dated as of March 28, 2000 between the Company
and American Stock Transfer & Trust Company, as amended.
3. To transact such other business as may properly come before the
meeting.
The Board of Directors has fixed the close of business on May 18, 2001
as the record date for the determination of stockholders entitled to receive
notice of and to vote at the meeting. If you own stock in Atchison Casting
Corporation as of that date, you are cordially invited to attend the meeting.
Your vote is important. Whether or not you plan to attend 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,
/s/ Hugh H. Aiken
HUGH H. AIKEN
Chairman of the Board and
Chief Executive Officer
Atchison, Kansas
May 25, 2001
ATCHISON CASTING CORPORATION
400 South Fourth Street
Atchison, Kansas 66002-0188
(913) 367-2121
PROXY STATEMENT
for
Annual Meeting of Stockholders
to be held June 29, 2001
GENERAL INFORMATION
This proxy statement is being furnished to you on or about May 25,
2001, 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,
June 29, 2001. Atchison will use the proxies it receives to: (i) elect two Class
I directors, (ii) to ratify the adoption of a Shareholder Rights Plan and Rights
Agreement, as amended, and (iii) to transact other business properly coming
before the Annual Meeting. 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. You 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.
You may revoke the enclosed proxy at any time before it is voted by (i)
notifying the Secretary of the Company in writing before the Annual Meeting,
(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 May 18, 2001, the record date for determining stockholders entitled
to vote at the Annual Meeting, the Company had outstanding and entitled to vote
7,689,347 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
PROPOSAL ONE
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 I directors are to be elected. The proxies named in the
accompanying proxy intend to vote for the election of Hugh H. Aiken and David D.
Colburn. In the event Mr. Aiken or Mr. Colburn 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 I directors who receive the greatest number of
votes cast for election of the 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 a
nominee will result in the nominee receiving fewer votes.
Information Concerning Nominees
The following table sets forth information with respect to the nominees
to the Board of Directors.
Class I - Term Expiring 2000
Principal Occupation and
Name Age Five-Year Employment History
- ---- --- ----------------------------
Hugh H. Aiken 57 Chairman of the Board, President, Chief Executive
Officer and Director since June 1991.
David D. Colburn 42 Director since January 2000. Since 1989, Mr. Colburn
has been a private investor and the manager of various
investment partnerships. Mr. Colburn currently serves
as director of Ayr, Inc. and Hajoca Corporation.
Mr. Colburn is a member of the Audit Committee of the
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.
CLASS II - TERM EXPIRING 2001
Principal Occupation and
Name Age Five-Year Employment History
- ---- --- ----------------------------
David L. Belluck 39 Director since June 1991. Since 1989, Mr. Belluck
has been a Vice President of Riverside Partners, Inc.,
an investment firm located in Boston,
Massachusetts. Mr. Belluck is a member of the
Compensation Committee and the Audit Committee of the
Company's Board of Directors.
2
CLASS III - TERM EXPIRING 2002
Principal Occupation and
Name Age Five-Year Employment History
- ---- --- ----------------------------
Stuart Z. Uram 66 Director since August 1997. Since January 1997,
Dr. Uram has been a Senior Consultant to Carpenter
Technology Inc., of Reading, Pennsylvania. Dr. Uram
served as the President of Certech, Inc., from 1970 to
1997, a producer of ceramic cores for the investment
casting industry as well as injection molded ceramics
for a variety of industries. Dr. Uram founded Certech,
Inc. in 1970 and sold the company to Carpenter
Technology Inc. in 1995. Dr. Uram holds a Doctor of
Science, Master of Science and Bachelor of Science
degree from Massachusetts Institute of Technology in
Metallurgy. Dr. Uram is a member of the Compensation
Committee of the Company's Board of Directors.
Ray H. Witt 72 Director since August 1993. Mr. Witt served as
Chairman of the Board and majority owner of CMI
International, Inc., from 1957 to 1999, which operated
eight foundries in North America. Mr. Witt founded CMI
International in 1957 and sold the company to Hayes
Lammerz International, Inc. in 1999. Mr. Witt was
President of the American Foundryman's Society from
1992 to 1993. Mr. Witt currently serves as a director
Hayes Lammerz International, Inc. Mr. Witt 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 are an Audit
Committee and a Compensation Committee.
The Audit Committee consists of Messrs. Belluck, Colburn and Witt. The
Audit Committee serves as an independent and objective party to monitor the
Company's financial reporting process and internal control system; reviews and
appraises the audit efforts of the Company's independent auditors and internal
auditors; and provides an open avenue of communication among the independent
auditors, financial and senior management, the internal auditors and the Board
of Directors. Each member of the Audit Committee is independent, as defined in
Sections 303.01(B)(2)(a) and (3) of the listing standards of the New York Stock
Exchange.
The Compensation Committee consists of Mr. Belluck and Dr. Uram. 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 2000 fiscal year, the Board of Directors met 6 times, the
Audit Committee met 1 time and the Compensation Committee met 1 time. All
Directors attended at least 75% of the meetings of the Board of Directors and
the committees on which they served, except for Mr. Belluck who attended 67% of
the Board of Directors meetings and 100% of the Compensation
3
Committee meetings. Mr. Belluck was not a member of the Audit Committee during
the 2000 fiscal year.
AUDIT COMMITTEE REPORT
On May 17, 2000, the Board of Directors of the Company adopted a
written Audit Committee Charter. A copy of the Company's current Audit Committee
Charter is attached to this Proxy Statement as Appendix A.
The Audit Committee has reviewed and discussed the audited financial
statements of the Company with management and has discussed with Deloitte &
Touche LLP, the Company's independent auditors, the matters required to be
discussed by Statement on Auditing Standards No. 61 ("SAS 61"). In addition, the
Audit Committee has received from Deloitte & Touche LLP the written disclosures
and the letter required by Independence Standards Board Standard No. 1 ("ISB
Standard No. 1"). The Audit Committee has reviewed the materials received from
the independent auditors and has met with representatives of Deloitte & Touche
LLP to discuss the auditor's independence. The Audit Committee has considered
whether the non-audit services provided by Deloitte & Touche LLP to the Company
is compatible with the auditor's independence.
Based on the Audit Committee's review of the above items and the
discussions referred to above, the Audit Committee has recommended to the Board
of Directors that the audited financial statements (as restated) of the Company
be included in its amended Annual Report on Form 10-K/A for the fiscal year
ended June 30, 2000 for filing with the Commission.
This report is submitted by the members of the Audit Committee.
David D. Colburn
David L. Belluck
Ray H. Witt
AUDIT FEES
The aggregate fees billed by Deloitte & Touche LLP, the member firms of
Deloitte Touche Tohmatsu, and their respective affiliates (collectively,
"Deloitte") for professional services rendered for the audit of the Company's
annual consolidated financial statements (including the restatement) for the
fiscal year ended June 30, 2000 and for the reviews of the financial statements
included in the Company's Quarterly Reports on Form 10-Q for that fiscal year
were $610,000.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
There were no fees billed by Deloitte for professional services rendered
for information technology services relating to financial information systems
design and implementation for the fiscal year ended June 30, 2000.
4
ALL OTHER FEES
The aggregate fees billed by Deloitte for services rendered to the
Company, other than the services described above under "Audit Fees" and
"Financial Information Systems Design and Implementation Fees", for the fiscal
year ended June 30, 2000 were $725,000.
COMPENSATION OF DIRECTORS
Non-employee directors receive a fixed fee of $8,000 each year and
$4,000 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.
Upon their initial election, each non-employee director is granted an option to
purchase 10,000 shares of Common Stock at an exercise price per share equal to
its fair market value on the date of grant.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended June 30, 2000, 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.
5
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.
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 Employment
Contract with the CEO has been further amended to provide for the annual renewal
of a three year term, although either party may terminate the agreement with six
month's notice. The CEO's employment contract allows for annual increases. As of
July 1, 2000 Mr. Aiken's base salary was $289,000.
The annual bonus for executive officers for fiscal 2000 was based on
the return on net assets employed or "ROA" on a quarterly and annual basis. The
annual bonus for executive officers for fiscal 1999 and 1998 was based on annual
earnings before interest, taxes and amortization of intangibles, or "EBITA."
Targets are set by the Board of Directors for the fiscal year ROA (fiscal 2000)
and EBITA (fiscal 1999 and 1998) of each executive's subsidiary or operating
group. In the case of the CEO and the chief financial officer, the targets were
based on consolidated earnings for the entire Company. The amount of bonus which
was to be earned if ROA (fiscal 2000) or EBITA (fiscal 1999 and 1998) reached
100% of target was also set by the Board (or by contract in the case of the
CEO), and was 100% of base salary for the CEO and 25% to 40% of base salary for
other corporate officers. For fiscal 2000, the bonus was calculated based on
quarterly and annual targets. For fiscal 1999 and 1998, the bonus was calculated
based on annual targets. If all of the targets are reached, the officer receives
100% of his bonus. For any percentage of actual ROA (fiscal 2000) or EBITA
(fiscal 1999 and 1998) above the target, the amount of the calculated bonus at
100% of the target is increased by the same percentage. A minimum level of ROA
(fiscal 2000) or EBITA (fiscal 1999 and 1998) is also set, below which no bonus
is paid. At ROA (fiscal 2000) or EBITA (fiscal 1999 and 1998) above the minimum
threshold the bonus is pro-rated based on the relation of actual ROA (fiscal
2000) or EBITA (fiscal 1999 and 1998) to the target and the minimum threshold.
During fiscal 2000, bonuses to executive officers ranged from 0% to 47% of the
amount of their bonus set by the Board.
The Compensation Committee may raise or lower a bonus at its
discretion, based on an individual's overall performance.
6
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.
This report has been issued over the names of each member of the
Compensation Committee, David L. Belluck and Stuart Z. Uram.
7
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 $100,000 during
the last fiscal year.
Summary Compensation Table
Long Term
Annual Compensation Compensation
-------------------- Awards
------
Securities
Underlying
Name and Options/ All Other
Principal Position Year Salary($) Bonus($) SARs(#) Compensation($)
------------------ ---- --------- -------- ------- ---------------
Hugh H. Aiken............. 2000 $ 271,088 $ 32,288 20,000 $ 7,688 (1)
Chairman of the 1999 $ 246,000 None 20,000 $ 5,327
Board, President and 1998 $ 212,629 $ 174,500 20,000 $ 6,833
Chief Executive
Officer
Thomas K. Armstrong (2)... 2000 $ 180,000 None 15,000 $ 8,438 (1)
Chief Operating Officer - 1999 $ 50,540 None 35,000 None
North America
David Fletcher............ 2000 $ 175,168 (3) $ 17,407 None $ 56,097 (4)
Vice President 1999 $ 173,338 None 3,000 $ 43,475
1998 $ 180,495 $ 279,321 None $ 17,722
John R. Kujawa............ 2000 $ 150,000 $ 28,336 4,000 $ 7,688 (1)
Vice President 1999 $ 150,000 $ 42,018 6,000 $ 7,100
1998 $ 135,420 $ 33,126 None $ 7,675
James Stott............... 2000 $ 135,408 None None $ 6,094 (1)
Vice President 1999 $ 121,658 None None $ 1,641
1998 $ 132,804 None None $250,000
- -----------------------
(1) Consists solely of Company contributions to the Company's 401(k)
savings plan for the benefit of the executive.
(2) Mr. Armstrong became Chief Operating Officer - North America of
the Company in March, 1999.
(3) Mr. Fletcher's compensation has been converted from British
pounds to U.S. dollars at the exchange rate available at the
close of business on June 30, 2000.
(4) Consists of benefits of an auto, private medical insurance and
pension costs for the benefit of the executive.
8
Option/SAR Grants in Last Fiscal Year
Potential Realizable Value
At Assumed Annual Rates
of Stock Price Appreciation
Individual Grants for Option Term
--------------------------------------------------------------- -----------------------------
Number of % of Total
Securities Options/SARs
Underlying Granted to Exercise or
Options/SARs Employees in Base Expiration
Name Granted(#)(1) Fiscal Year Price ($/Sh) Date 5%($) 10%($)
- ---- ------------- ----------- ------------ ----- ----- ------
Hugh H. Aiken............. 20,000 30.1% $ 10.375 6/30/09 $ 130,496 $ 330,702
Thomas K. Armstrong....... 15,000 22.6% $ 10.375 6/30/09 $ 97,872 $ 248,026
David Fletcher............ None
John R. Kujawa............ 4,000 6.0% $ 8.875 9/13/09 $ 22,326 $ 56,578
James Stott............... None
(1) All options are rights to buy Common Stock of the Company. The
options granted are subject to a three-year vesting schedule
commencing one year from the date of the grant, 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 Value of
Securities Unexercised
Underlying In-the-Money
Unexercised Options/SARs at
Options/SARs at FY-End($)
FY-End(#) Exercisable/Unexercisable
Name Exercisable/Unexercisable -------------------------
- ---- -------------------------
Hugh H. Aiken...................... 80,000/40,000 $0/0
Thomas K. Armstrong................ 11,667/38,333 $0/0
David Fletcher..................... 1,000/2,000 $0/0
John R. Kujawa..................... 11,333/8,667 $0/0
James Stott........................ 15,000/0 $0/0
9
EMPLOYMENT CONTRACTS
The Company has entered into an employment agreement with Mr. Aiken
that has a rolling three year term. As of June 30, 2000, the minimum annual
compensation payable to Mr. Aiken pursuant to this agreement was $289,000. At
the discretion of the Board of Directors, the minimum annual compensation may be
increased during the term of this agreement. 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. Mr. Aiken's
employment contract has been extended until June 30, 2003, subject to
termination on 6 months' notice.
As part of the Share Exchange Agreement between the Company, Atchison
Casting UK Ltd. ("ACUK"), David Fletcher and other minority shareholders of
Sheffield, on April 6, 1998 ACUK assumed Sheffield's obligations under an
employment agreement with Mr. Fletcher originally executed October 31, 1988.
This agreement can be terminated: (i) upon 12 months notice by Sheffield or upon
6 months notice by Mr. Fletcher; or (ii) immediately upon a "serious" or
material breach of the employment agreement. The agreement provides for minimum
annual compensation payable to Mr. Fletcher of 110,000 pounds, which may be
increased at the discretion of the board of directors of Sheffield.
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 $16,654 $17,248 $17,842 $18,435 $19,029
75,000 26,654 27,873 29,092 30,310 31,529
100,000 36,654 38,498 40,342 42,185 44,029
125,000 46,654 49,123 51,592 54,060 56,529
150,000 56,654 59,748 62,842 65,935 69,029
170,000(1) 64,654 68,248 71,842 75,435 79,029
- -----------------------
(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 in computing benefits under a
qualified defined benefit pension plan. For 2000, the maximum amount
of compensation allowed for use in calculating an individual's pension
benefits is $170,000. This limit may be raised in the future by annual
cost-of-living adjustments determined by the U.S. Secretary of the
Treasury.
10
The remuneration covered by the Retirement Plan is the average of the
highest five consecutive years during all years of service 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 2000, Mr. Aiken and Mr. Kujawa each had eleven 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.
Sheffield maintains a qualified benefit pension plan for Mr. Fletcher
(the "Sheffield Pension Plan"). If Mr. Fletcher remains employed with Sheffield
until age 65, Mr. Fletcher will receive an annual pension benefit equal to
two-thirds of his base salary over the preceding twelve months. If Mr. Fletcher
leaves service or retires before age 65, the annual pension benefits payable
will be reduced proportionately based on the ratio that his years of service
with Sheffield from March 31, 1986 bears to 25. Had Mr. Fletcher reached age 65
this year, his annual pension benefit would have been $116,778.
11
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 June 30, 1995
to June 30, 2000 (the Company's fiscal year end), against the cumulative return
of the Index for the New York Stock Exchange (U.S. Companies only) (the "NYSE
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 the New York Stock Exchange that transact business in
primary metals industries (S.I.C. 3300-3399) (the "NYSE Metals Industry Index")
covering the same period.
[PERFORMANCE GRAPH OMITTED]
- ----------------------------------------------- ------------- ------------ ------------ ------------ ------------
06/30/1995 06/28/1996 06/30/1997 06/30/1998 06/30/1999 06/30/2000
---------- ---------- ---------- ---------- ---------- ----------
Atchison Casting Corporation 100.0 109.6 115.7 124.3 72.2 40.0
NYSE Index 100.0 126.0 165.0 211.6 242.7 242.9
NYSE Metals Industry Index 100.0 105.7 141.4 137.9 155.7 131.4
- ---------------------------------- ------------ ------------- ------------ ------------ ------------ ------------
Upon written request, we will provide any stockholder, without charge,
a list of the component issues in either of the indexes. The graph is based on
$100 invested on June 30, 1995, in the Company's Common Stock and each of the
indexes, each assuming dividend reinvestment. The historical stock price
performance shown on this graph is not necessarily indicative of future
performance.
12
CERTAIN TRANSACTIONS
On February 18, 2000, the Company entered into a Management Agreement
with Dunton Foundries, LLC ("Dunton") for the management of Atchison Indiana,
L.L.C. ("AI"), which owns the RMG Foundry in Mishawaka, Indiana. Under the terms
of the Management Agreement, the Company provided certain management services to
AI. David D. Colburn, a director of the Company, is the Manager of AI. Also, Mr.
Colburn owns approximately 10% of the capital stock of Dunton, which owns 100%
of AI. The Management Agreement called for a base management fee of $70,000
annually plus a variable fee based upon the financial performance of AI, up to a
maximum variable fee of $100,000 per year. The Management Agreement was
terminated by Dunton on December 4, 2000. A payment of $105,000 was paid by
Dunton to the Company on the date of termination. No other management fee was
paid to the Company by Dunton prior to its cancellation.
Contemporaneously with the Management Agreement, the Company entered
into an Option Agreement with Dunton, in which Dunton granted the Company an
option to purchase one-half of the equity interests of AI. The Company may
exercise the option at any time prior to March 6, 2003. If the Company exercises
the option, the Company must pay to Dunton one-half of Dunton's net capital
investment in AI (which includes any loans made by Dunton to AI) plus 15% annual
interest on the average monthly balance of Dunton's net capital investment in
AI.
ACUK has granted Mr. Fletcher options to purchase 660,000 shares of
Class "C" Ordinary Shares of ACUK at one pence per share. One-fifth of the
options vest on each anniversary date of the Agreement contingent upon Mr.
Fletcher remaining as an employee of ACUK upon each such anniversary. The
options are exercisable for a 10-year period, except upon the termination of Mr.
Fletcher's employment, in which case options exercisable pursuant to the option
scheme must be exercised within six weeks of termination. In addition to the
five-year vesting schedule described above, the options vest upon firm
negotiations or a firm proposal of a public offering of the shares of Sheffield
or ACUK, and become exercisable upon the completion of such public offering. The
options also vest upon any sale of control (as defined) of ACUK.
Mr. Fletcher was granted several rights related to the ACUK stock
received under the Agreement. First, Mr. Fletcher was granted the right to
exchange all of his Class "B" Ordinary Shares and Class "C" Ordinary Shares
(whether actually owned or vested) of ACUK for Common Stock of the Company. This
right can be exercised any time during the period starting five years and ending
ten years from the date of the Agreement and allows Mr. Fletcher to receive
Common Stock of the Company equal to 85% of the net asset value of the ACUK
Class "B" Ordinary Shares and Class "C" Ordinary Shares exchanged. Second, Mr.
Fletcher was granted the right to put all of his Class "B" Ordinary Shares and
Class "C" Ordinary Shares at their net asset value to ACUK within six weeks of
his termination of employment. Third, the Company must purchase the ACUK Class
"B" Ordinary Shares and Class "C" Ordinary Shares held by Mr. Fletcher at their
net asset value or procure an offer for an equivalent exchange in the event an
offer is received for the purchase of all of the shares of the Company.
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."
13
PROPOSAL TWO
RATIFICATION OF SHAREHOLDER RIGHTS PLAN
At the Annual Meeting, stockholders of the Company are being asked to
ratify the Company's Shareholder Rights Plan (the "Rights Plan") the terms and
conditions of which are set forth in the Rights Agreement dated as of March 28,
2000, as amended (the "Rights Agreement") between the Company and American Stock
Transfer & Trust Company (the "Rights Agent").
RATIFICATION BY STOCKHOLDERS
By resolutions passed on March 21, 2000, the Board of Directors of the
Company adopted the Rights Plan and the Rights Plan became effective, subject to
ratification of the stockholders, on March 28, 2000.
Under the provisions of the Rights Agreement, the Rights (as defined
below) and the Rights Agreement will terminate and be void and of no further
force and effect if the Rights Agreement is not ratified by the stockholders of
the Company. In order for the Rights Plan and Rights Agreement to be ratified,
no more than fifty percent (50%) of the holders of Common Stock of the Company
outstanding and entitled to vote at the meeting may cast votes against
ratification. Abstentions and broker nonvotes will be counted as "shares
present" for purposes of determining whether a quorum exists and will not be
counted as a vote "for" or "against" this proposal.
The text of the resolution to ratify the Rights Agreement is set forth
below:
"RESOLVED, that the Rights Agreement, dated as of March 28, 2000,
between Atchison Casting Corporation and American Stock Transfer & Trust
Company, as Rights Agent, as may be amended pursuant to its terms, be and
the same hereby is ratified, confirmed and approved."
RECOMMENDATION OF THE BOARD OF DIRECTORS
In adopting the Rights Plan, the Board of Directors considered the
appropriateness of establishing a shareholder rights plan and concluded, for the
reasons discussed below, that it was in the best interests of the Company to
adopt the Rights Plan. ACCORDINGLY, THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE RATIFICATION OF THE RIGHTS
AGREEMENT.
PURPOSES AND BACKGROUND OF THE RIGHTS PLAN
The Company's Board of Directors adopted the Rights Plan and the Rights
Agreement to protect the Company's stockholders against abusive takeover
tactics, to ensure that each stockholder would be treated fairly in the event of
an unsolicited offer to acquire the Company and to obtain fair value for the
Company in the event of a sale.
The primary objective of the Board of Directors in adopting the Rights
Agreement was, and continues to be, the preservation and maximization of the
Company's value for all stockholders. The Rights Agreement is intended in part
to discourage creeping acquisitions of control whereby
14
an acquirer may accumulate a controlling block of stock in the open market
without paying a control premium, attempt to unfairly pressure stockholders,
potentially squeeze them out of their investment without any real choice and
deprive them of the full value of their stock. Small stockholders are
particularly vulnerable to creeping acquisitions and partial or two-tiered
tender offers. The Board of Directors believes that the Rights Agreement is a
significant deterrent against such activities. The Rights Agreement is also
designed to assist the Company in obtaining the best price and other terms if a
transaction should occur.
The Board of Directors believes that there is substantial empirical
evidence that the Rights Agreement will position the Board of Directors to
achieve the best results for all stockholders in the event there is a bid for
the Company. In fact, a 1997 study of 319 merger and acquisition transactions
completed between 1992 and 1996, by Georgeson & Company, Inc., found the
following:
* premiums paid to acquire companies with stockholder rights
agreements averaged eight percentage points higher than premiums
paid for companies without such plans;
* the presence of stockholder rights agreements contributed an
estimated additional $13 billion in stockholder value in the
merger and acquisition transactions studied, and stockholders of
acquired companies without stockholder rights agreements
sacrificed an estimated $14.5 billion in potential premiums;
* the presence of a stockholder rights agreement did not increase
the likelihood of the withdrawal of a friendly bid nor the defeat
of a hostile bid; and
* stockholder rights agreements did not reduce the likelihood of a
company becoming a takeover target (in fact, companies with
stockholder rights agreements had a slightly higher takeover rate
than companies without plans).
The Rights Agreement is not designed or intended to prevent an
unsolicited, non-abusive offer to acquire the Company at a fair price. The
Company believes that potential acquirers will be encouraged by the Rights
Agreement to negotiate directly with the Board of Directors, which the Company
believes is in the best position to negotiate on behalf of all stockholders. The
Rights Agreement does not affect any potential takeover proposal that the Board
of Directors may determine, in the exercise of its fiduciary duties, adequately
reflects the value of the Company and is in the best interests of the Company's
stockholders. NEITHER AT THE TIME OF ADOPTION OF THE RIGHTS PLAN NOR AT THE DATE
OF THIS PROXY STATEMENT WAS THE BOARD OF DIRECTORS AWARE OF ANY SPECIFIC
TAKEOVER BID FOR THE COMMON STOCK THAT HAS BEEN MADE OR IS CONTEMPLATED.
It was not the intention of the Board of Directors in adopting the
Rights Plan to secure the continuance in office of the existing members of the
Board of Directors or to avoid an acquisition of control of the Company in a
transaction that is fair and in the best interests of the Company's
stockholders. The rights of stockholders under existing law to seek a change in
the management of the Company or to influence or promote action of management in
a particular manner will not be affected by the Rights Plan.
The actions of the Board of Directors are subject to fiduciary duties
that are imposed by law on all directors. These fiduciary duties assure that the
Board of Directors will act in the best
15
interests of the Company and all its stockholders. The Board of Directors
believes that the adoption of the Rights Agreement was an appropriate exercise
of its fiduciary duty.
Rights agreements have been adopted by a large number of public
companies. Many companies with rights agreements have received unsolicited
offers and have redeemed their rights after their directors were satisfied that
the offer, as negotiated by the company's board of director, adequately
reflected the value of the company and was fair and equitable to all
stockholders. Similarly, under the Company's Rights Agreement, the Board of
Directors can redeem rights granted in order to facilitate an acquisition that
it determines to be at a fair price and in the best interests of all
stockholders. The Board of Directors believes that the only proper time to
consider redemption of rights and termination of the Rights Agreement is if and
when a specific offer is made to acquire the Company's Common Stock. Redemption
of rights and termination of the Rights Agreement prior to that time would be
premature, would remove any incentive for a potential acquiror to negotiate with
the Board of Directors and would eliminate a valuable safeguard designed to
ensure that all stockholders are treated fairly.
THE RIGHTS PLAN
The following is a summary description of the terms of the Rights Plan,
which is qualified in its entirety to the full text of the Rights Agreement, a
copy of which has been filed as an Exhibit to the Company's Registration
Statement on Form 8-A dated March 28, 2000 and its amendment, a copy of which
has been filed as an Exhibit to the Company's amended Annual Report on Form
10-K/A dated April 24, 2001. Copies of the Rights Agreement, as amended, shall
be made available upon request to the Company, Attn: Secretary, 400 South Fourth
St., Atchison, Kansas 66002, (913) 367-2121.
Capitalized terms used below but not defined below have the meanings
ascribed to them in the Rights Agreement.
THE RIGHTS
The Board of Directors of the Company declared a dividend of one
Preferred Stock Purchase Right (a "Right") for each share of Common Stock of the
Company outstanding at the close of business on March 21, 2000 (the "Record
Date"), or issued thereafter and prior to the Distribution Date (as defined in
the Rights Agreement).
Each Right entitles its registered holder to purchase from the Company,
after the Distribution Date (as defined below), 1/1000th of one share of Series
A Participating Cumulative Preferred Stock (the "Preferred Stock") for $30.00
(the "Exercise Price"), subject to adjustment. The Rights will be evidenced by
the Common Stock certificates until the "Distribution Date," which is the close
of business on the earlier of (i) the tenth business day (or such later date as
the Board of Directors of the Company may from time to time fix by resolution
adopted prior to the Distribution Date that would otherwise have occurred) after
the date on which any Person (as defined in the Rights Agreement) commences a
tender or exchange offer which, if consummated, would result in such Person's
becoming an Acquiring Person (as defined below) and (ii) the tenth business day
after the first date of public announcement by the Company that such Person has
become an Acquiring Person (the "Flip-in Date") or such earlier or later date as
the Board of Directors of the Company may from time to time fix by resolution
adopted prior to the Flip-in Date (as defined below) that would otherwise have
occurred; provided that if a tender or exchange
16
offer referred to in clause (i) is canceled, terminated or otherwise withdrawn
prior to the Distribution Date without the purchase of any shares of stock
pursuant thereto, such offer shall be deemed never to have been made.
Until the Distribution Date (or the earlier redemption, expiration or
termination of the Rights), the surrender for transfer of any of the
certificates of the Common Stock outstanding in respect of which Rights have
been issued shall also constitute the transfer of the Rights associated with the
Common Stock represented by such certificate. Certificates for the Common Stock
issued after the Record Date, but prior to the earliest of the Distribution
Date, the Redemption Date or the Expiration Time, shall evidence one Right and
shall contain a legend incorporating by reference the terms of the Rights
Agreement (as such may be amended from time to time). With respect to such
certificates not containing the aforementioned legend, until the Distribution
Date (or the earlier redemption, expiration or termination of the rights), the
Right associated with the Common Stock represented by such certificate shall be
evidenced by such certificate alone.
The Rights will not be exercisable until the Business Day (as defined
in the Rights Agreement) following the Distribution Date. The Rights will expire
on the earliest of (i) the Exchange Time (as defined below), (ii) the date that
is ninety (90) days after the date of this Annual Meeting, in the event that
stockholders holding more than 50% of the issued and outstanding shares of
Common Stock vote against ratification of the Rights Agreement at this Annual
Meeting, (iii) the close of business on the tenth anniversary of the Rights
Agreement, (iv) the date on which the Rights are redeemed as described below and
(v) upon certain mergers of the Company with another corporation pursuant to an
agreement entered into prior to a Flip-in Date (in any such case, the
"Expiration Time").
The Exercise Price and the number of Rights outstanding, or in certain
circumstances the securities purchasable upon exercise of the Rights, are
subject to adjustment from time to time to prevent dilution in the event of a
Common Stock dividend on, or a subdivision or a combination into a smaller
number of shares of, Common Stock, or the issuance or distribution of any
securities or assets in respect of, in lieu of or in exchange for Common Stock.
ACQUIRING PERSON
An "Acquiring Person" is any Person who is the Beneficial Owner (as
defined in the Rights Agreement) of 20% or more of the outstanding shares of
Common Stock of the Company then outstanding, but shall not include the Company,
any Subsidiary (as defined in the Rights Agreement ) of the Company, any
employee stock ownership plan or employee benefit plan of the Company or any
Subsidiary of the Company, or any Person holding Common Stock for or pursuant to
the terms of any such plan. Notwithstanding the foregoing, if the Board of
Directors of the Company determines in good faith that a Person who would
otherwise be an "Acquiring Person," as defined pursuant to the foregoing
provisions of this paragraph, has become such inadvertently, and such Person
divests as promptly as practicable a sufficient number of shares of Common Stock
so that such Person would no longer be an Acquiring Person, as defined pursuant
to the foregoing provisions of this paragraph, then such Person shall not be
deemed to be an "Acquiring Person" for any purposes of the Rights Agreement.
17
FLIP-IN EVENT
In the event that prior to the Expiration Time a Flip-in Date occurs,
each Right (other than Rights Beneficially Owned by the Acquiring Person or any
affiliate or associate thereof, which Rights shall become void) shall constitute
the right to purchase from the Company, upon the exercise thereof in accordance
with the terms of the Rights Agreement, that number of shares of Common Stock of
the Company having an aggregate Market Price (as defined in the Rights
Agreement), on the date of the public announcement by the Company of an
Acquiring Person's becoming such (the "Shares Acquisition Date") that gave rise
to the Flip-in Date, equal to twice the Exercise Price for an amount in cash
equal to the then current Exercise Price. In addition, the Board of Directors of
the Company may, at its option, at any time after a Flip-in Date and prior to
the time an Acquiring Person becomes the Beneficial Owner of more than 50% of
the outstanding shares of Common Stock, elect to exchange all (but not less than
all) the then outstanding Rights (other than Rights Beneficially Owned by the
Acquiring Person or any affiliate or associate thereof, which Rights become
void) for shares of Common Stock at an exchange ratio of one share of Common
Stock per Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date of the Distribution
Date (the "Exchange Ratio"). Immediately upon such action by the Board of
Directors (the "Exchange Time"), the right to exercise the Rights will terminate
and each Right will thereafter represent only the right to receive a number of
shares of Common Stock equal to the Exchange Ratio.
Whenever the Company shall become obligated under the preceding
paragraph to issue shares of Common Stock upon exercise of or in exchange for
Rights, the Company, at its option, may substitute shares of Preferred Stock, at
a ratio of one one-thousandth (1/1000) of a share of Preferred Stock for each
share of Common Stock so issuable.
FLIP-OVER EVENT
A "Flip-over Transaction or Event" is a transaction or series of
transactions in which, directly or indirectly, (i) the Company consolidates or
merges or participates in a share exchange with any other Person, if at the time
of such consummation transaction or at the time the Company enters an agreement
with respect to such transaction, the Acquiring Person controls the Company's
Board of Directors (as "control" is defined in the Rights Agreement) and either
(A) any term of or arrangement concerning the treatment of shares of capital
stock in such transaction relating to the Acquiring Person is not identical to
the terms and arrangements relating to other holders of Common Stock or (B) the
Person with whom the transaction or series of transactions occurs is the
Acquiring Person or an affiliate or associate of the Acquiring Person or (ii)
the Company sells or otherwise transfers (or one or more of its Subsidiaries
shall sell or otherwise transfer) assets (A) aggregating more than 50% of the
assets (measured by either book value or fair market value), or (B) generating
more than 50% of the operating income or cash flow, of the Company and its
Subsidiaries (taken as a whole) to any other Person (other than the Company or
one or more of its wholly-owned Subsidiaries) or to two or more such Persons
which are Affiliates or Associates or otherwise acting in concert, if, at the
time the Company (or any such Subsidiary) enters into an agreement with respect
to such sale or transfer, the Acquiring Person Controls the Board of Directors
of the Company.
In the event that the Company enters into, consummates or permits to
occur a Flip-over Transaction or Event, the Company shall take such action as
shall be necessary to ensure, and shall not permit to occur such Flip-over
Transaction or Event until it shall have entered into a
18
supplemental agreement with the Flip-over Entity (as defined in the Rights
Agreement), for the benefit of the holders of the Rights, providing, that upon
consummation or occurrence of the Flip-over Transaction or Event (i) each Right
shall thereafter constitute the right to purchase from the Flip-over Entity,
upon exercise thereof in accordance with the terms of the Rights Agreement, that
number of shares of Flip-over Stock (as defined in the Rights Agreement) of the
Flip-over Entity having an aggregate Market Price on the date of consummation or
occurrence of the Flip-over Transaction or Event equal to twice the Exercise
Price for an amount in cash equal to the then current Exercise Price and (ii)
the Flip-over Entity shall thereafter be liable for, and shall assume, all the
obligations and duties of the Company pursuant to the Rights Agreement. For
purposes of the foregoing description, the term "Acquiring Person" shall include
any Acquiring Person and its Affiliates and Associates (both as defined in the
Rights Agreement) counted together as a single person.
REDEMPTION OF RIGHTS
The Board of Directors of the Company may, at its option, at any time
prior to the close of business on the Flip-in Date, redeem all (but not less
than all) the then outstanding Rights at a price of $.01 per Right (the
"Redemption Price"), as provided in the Rights Agreement. Immediately upon the
action of the Board of Directors of the Company electing to redeem the Rights,
without any further action and without any notice, the right to exercise the
Rights will terminate and each Right will thereafter represent only the right to
receive the Redemption Price in cash for each Right so held.
The holders of Rights will, solely by reason of their ownership of
Rights, have no rights as stockholders of the Company, including, without
limitation, the right to vote or to receive dividends.
19
CERTAIN BENEFICIAL OWNERSHIP OF THE COMPANY'S COMMON STOCK
The following table sets forth information as of March 31, 2001,
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.
Number of Shares Percentage of Common
Name of Individual or Group Beneficially Owned Stock Owned
--------------------------- ------------------ -----------
Edmundson International, Inc. (1)............................ 925,157 2.0%
227 West Monroe Street, Suite 3000
Chicago, IL 60606
Liberty Wanger Asset Management, L.P. (2)................... 593,400 7.7%
227 West Monroe Street, Suite 3000
Chicago, IL 60606
Dimensional Fund Advisors, Inc. (3)......................... 701,800 9.1%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
Ingalls & Snyder LLC (4).................................... 543,436 7.1%
61 Broadway
New York, NY 10006
Royce & Associates, Inc. (5)................................ 587,900 7.6%
1414 Avenue of the Americas
New York, NY 10019
Wellington Management Company, LLP (6)...................... 480,000 6.2%
75 State Street
Boston, MA 02019
Hugh H. Aiken (7)........................................... 456,204 5.9%
David L. Belluck (8)........................................ 30,292 *
Ray H. Witt (9)............................................. 70,442 *
Stuart Z. Uram (10)......................................... 22,973 *
David D. Colburn (11)....................................... 751,557 9.8%
Thomas Armstrong (12)....................................... 36,279 *
David Fletcher (13)......................................... 6,000 *
John R. Kujawa (14)......................................... 39,420 *
James Stott (15)............................................ 15,000 *
All directors and executive ................................ 1,491,200 18.8%
officers as a group (11 persons) (16)
- -------------------
* Less than 1% of Common Stock outstanding.
(1) Based on a Schedule 13D Amendment No. 1 dated September 29, 2000, (a)
Edmundson International Inc., Consolidated Electrical Distributors, Inc.,
Portshire Corp., Lincolnshire Associates, Ltd. and David D. Colburn,
President of Portshire Corp., share voting and dispositive power over
40,000 of shares or approximately .5% of the outstanding shares of Common
Stock, (b) Employees' Retirement Plan of Consolidated Electrical
Distributors, Inc. and David D. Colburn, a member of the investment
committee of the Employees' Retirement Plan of Consolidated Electrical
Distributors, Inc., share voting and dispositive power over 506,512 shares
or approximately 6.6% of the outstanding shares of Common Stock, (c)
Employees' Retirement Plan of Hajoca Corporation has sole voting and
dispositive power over 169,600 shares or approximately 2.2% of the
outstanding shares of Common Stock, (d) Dunton Foundries, LLC, of which
David D. Colburn is the sole manager, has sole voting and
20
dispositive power over 189,500 shares or approximately 2.5% of the
outstanding shares of Common Stock, (e) David D. Colburn has sole voting
and dispositive power over 15,545 shares or .2% of the outstanding shares
of Common Stock, as more thoroughly described in footnote (10) below, (f)
Keith W. Colburn Retirement Plan has sole voting and dispositive power over
2,000 shares of Common Stock, and (g) Keith W. Colburn Trust has sole
voting and dispositive power over 2,000 shares of Common Stock. The
reporting persons, although disclaiming membership in a group, have
nonetheless authorized Edmundson International, Inc. to file this Amendment
No. 1 to Schedule 13D as a group on behalf of each of them.
(2) Based on a Schedule 13G Amendment No. 6 dated February 14, 2001, Liberty
Wanger Asset Management, L.P. ("WAM") is an investment adviser, which
shares voting and dispositive powers with WAM Acquisition GP, Inc., its
general partner. WAM also shares voting and dispositive powers with certain
of its clients, including Liberty Acorn Investment Trust, an investment
company that shares voting and dispositive powers over 420,000 shares or
approximately 5.5% of the outstanding shares of Common Stock.
(3) Based on a Schedule 13G dated February 2, 2001, Dimensional Fund Advisors,
Inc. ("DFA") is an investment adviser to certain investment companies and
in such role possesses sole voting and dispositive powers over the shares;
however, DFA disclaims beneficial ownership of such shares which are owned
by certain of its advisory clients.
(4) Based on a Schedule 13G Amendment No. 7 dated February 4, 2001, Ingalls &
Snyder LLC is a broker-dealer which shares voting and dispositive powers
over 23,801 of such shares.
(5) Based on a Schedule 13G dated February 7, 2001, Royce & Associates, Inc.
("Royce") an investment adviser has sole voting and dispositive power over
the shares. Charles M. Royce is a controlling person of Royce but disclaims
beneficial ownership of the shares owned by Royce.
(6) Based on a Schedule 13G Amendment No. 3 dated February 14, 2001, Wellington
Management Company, LLP ("WMC") is an investment adviser, which 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.
(7) Includes 100,000 shares subject to exercisable options, 500 shares owned by
each of Mr. Aiken's three children, and 28,592 shares pursuant to the
Company's 401(k) Plan.
(8) Includes 10,000 shares subject to exercisable options, which Mr. Belluck
received pursuant to the Atchison Casting Non-Employee Director Option
Plan.
(9) Includes 35,583 shares owned by CMI Management Services, Inc. Mr. Witt is
Chairman of the Board of CMI Management Services, 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.
Includes 10,000 shares subject to an exercisable option received by Mr.
Witt in June 1996.
(10) Includes 10,000 shares subject to exercisable options, which Mr. Uram
received pursuant to the Atchison Casting Non-Employee Director Option
Plan.
(11) Includes 10,000 shares subject to exercisable options, which Mr. Colburn
received pursuant to the Atchison Casting Non-Employee Director Option
Plan, 506,512 shares owned by Employees' Retirement Plan of Consolidated
Electrical Distributors, Inc., of which Mr. Colburn is a member of the
investment committee, 189,500 shares owned by Dunton Foundries, LLC, of
which Mr. Colburn is the sole manager, and 40,000 shares owned by
Lincolnshire Associates, Ltd., whose general partner is Portshire Corp., of
which Mr. Colburn is President.
(12) Includes 28,333 shares subject to exercisable options and 390 shares
pursuant to the Company's 401(k) Plan.
(13) Includes 1,000 shares subject to exercisable options.
(14) Includes 11,333 shares subject to exercisable options.
(15) Includes 13,666 shares subject to exercisable options.
(16) Includes 228,999 shares subject to exercisable options, 30,786 shares
pursuant to the Company's 401(k) Plan, and 506,512 shares owned by
Employees' Retirement Plan of Consolidated Electrical Distributors, Inc.,
189,500 shares owned by Dunton Foundries, LLC and 40,000 shares owned by
Lincolnshire Associates, Ltd., as more thoroughly described in footnote
(11) above.
21
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, 2000, with the exception of one
late report on Form 5 by Thomas Armstrong.
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.
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 2001. 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.
PROPOSALS OF SECURITY HOLDERS
The Company currently plans to hold the 2001 Annual Meeting in
Atchison, Kansas, on or around November 16, 2001. Pursuant to the Company's
By-Laws, stockholders desiring to bring business before the annual meeting must
provide written notice of each matter to the Company's Secretary not less than
60 days nor more than 120 days prior to the date of the annual meeting. Such
notice must contain certain information specified in the Company's By-Laws. If a
stockholder desires his or her proposal to be considered for inclusion in the
proxy statement for the 2001 annual meeting, it must be received by the
Company's Secretary no later than June 15, 2001 and must comply with the process
described in Rule 14a-8 of the Securities Exchange Act of 1934, as amended.
ATCHISON CASTING CORPORATION
/s/ Hugh H. Aiken
HUGH H. AIKEN
Chairman of the Board and
Chief Executive Officer
Dated: May 25, 2001
Atchison, Kansas
22
APPENDIX A
AUDIT COMMITTEE CHARTER
I. ORGANIZATION
There shall be a committee of the Board of Directors to be known as the
Audit Committee. The Audit Committee shall consist of three or more
directors, as determined by the Board of Directors, each of whom shall have
no relationship to the Company that may interfere with the exercise of
their independence from management and the Company.
A. Definition of Independence
(1) Employees. A director who is an employee (including non-employee
executive officers) of the Company or any of its affiliates may not
serve on the Audit Committee until three years following the
termination of his or her employment. In the event the employment
relationship is with a former parent or predecessor of the Company,
the director could serve on the Audit Committee after three years
following the termination of the relationship between the Company and
the former parent or predecessor;
(2) Business Relationship. A director (i) who is a partner, controlling
stockholder, or executive officer of an organization that has a
business relationship with the Company, or (ii) who has a direct
business relationship with the Company (e.g., a consultant) may serve
on the Audit Committee only if the Company's Board of Directors
determines in its business judgment that the relationship does not
interfere with the director's exercise of independent judgment. In
making a determination regarding the independence of a director
pursuant to this paragraph, the Board of Directors should consider,
among other things, the materiality of the relationship to the
Company, to the director, and, if applicable, to the organization with
which the director is affiliated. "Business relationships" can include
commercial, industrial, banking, consulting, legal, accounting and
other relationships. A director can have this relationship directly
with the Company, or the director can be a partner, officer or
employee of an organization that has such a relationship. The director
may serve on the Audit Committee without the above-referenced Board of
Directors' determination after three years following the termination
of, as applicable, either (1) the relationship between the
organization with which the director is affiliated and the Company,
(2) the relationship between the director and his or her partnership
status, stockholder interest or executive officer position, or (3) the
direct business relationship between the director and the Company;
A-1
(3) Cross Compensation Committee Link. A director who is employed as an
executive of another company where any of the Company's executives
serves on that company's compensation committee may not serve on the
Audit Committee; and
(4) Immediate Family. A director who is an Immediate Family member of an
individual who is an executive officer of the Company or any of its
affiliates cannot serve on the Audit Committee until three years
following of the termination of such employment relationship.
"Immediate Family" includes a person's spouse, parents, children,
siblings, mothers-in-law and fathers-in-law, sons and
daughters-in-law, brothers and sisters-in-law, and anyone (other than
employees) who shares such person's home.
All members of the Audit Committee shall be financially literate, as such
qualification is interpreted by the Company's Board of Directors in its
business judgment, or must become financially literate within a reasonable
period of time after their appointment to the Audit Committee, and at least
one member of the Audit Committee shall have accounting or related
financial management expertise, as the Board of Directors interprets such
qualification in its business judgment.
The members of the Audit Committee shall be elected by the Board of
Directors at the annual meeting of the Board of Directors to serve a term
of three years or until their successors shall be duly elected and
qualified. The Board of Directors will appoint a Chair to preside at the
Audit Committee meetings and schedule meetings as appropriate.
II. PURPOSE
The primary function of the Audit Committee is to assist the Board of
Directors in fulfilling its oversight responsibilities by reviewing the
financial reports and other financial information provided by the Company
to any governmental body or the public; the Company's systems of internal
controls regarding finance, accounting, legal compliance and ethics that
management and the Board of Directors has established; and the Company's
auditing, accounting and financial reporting processes generally.
Consistent with this function, the Audit Committee should encourage
continuous improvement of, and should foster compliance with, the Company's
policies, procedures and practices at all levels. The Audit Committee's
primary duties and responsibilities are as follows:
* To serve as an independent and objective party to monitor the
Company's financial reporting process and internal control system.
* To review and appraise the audit efforts of the Company's independent
auditors and internal auditing department.
* To provide an open avenue of communication among the independent
auditors, financial and senior management, the internal auditing
department, and the Board of Directors.
The Audit Committee will primarily fulfill these responsibilities by
carrying out the activities enumerated in Section IV of this Charter.
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III. MEETINGS
The Audit Committee shall meet at least two times a year and at such
times as requested by the Chair, or a Director or Officer of the
Company, or by the Company's independent auditors. The Chair of the
Audit Committee shall prepare or approve an agenda in advance of each
meeting. The Chief Executive Officer, Chief Financial Officer, Director
of Internal Audit, outside legal counsel, representative from
independent auditors and other parties may be invited to all meetings.
Non-committee members may be excused from attendance at any meeting or
portion of any meeting by the Chair.
As part of its job to foster open communication, the Audit Committee
may meet at, in person or by telephone, at any time with management
with, the head of the Company's internal auditing department and the
independent auditors in separate sessions to discuss any matter that
the Audit Committee or each of these groups believes should be
discussed privately. In addition, the Audit Committee or its Chair may
meet or speak with the independent auditors and management at any time
to review the Company's financial statements and significant findings
based upon the auditor's limited review procedures.
IV. RESPONSIBILITIES
To fulfill its duties and responsibilities the Audit Committee shall:
REVIEW PROCEDURES
1. Review and reassess the adequacy of this Charter at least annually.
2. Review the Company's audited financial statements prior to the release
of year-end earnings and prior to filing the Company's Annual Report
on Form 10-K or 10-KSB.
3. Review the Company's quarterly financial results prior to the release
of quarterly earnings and/or the Company's financial statement and
prior to filing the Company's Quarterly Report on Form 10-Q or 10-QSB.
4. Review, as appropriate, any other material financial information
submitted to any governmental or public body, including any
certification, report, opinion, or review rendered by the independent
auditors.
INDEPENDENT AUDITORS
5. The independent auditors are ultimately accountable to the Audit
Committee and the Board of Directors, as representatives of the
Company's stockholders. The Audit Committee and the Board of Directors
have the ultimate authority and responsibility to select, evaluate
and, where appropriate, replace the independent auditors (or to
nominate the independent auditors to be proposed for stockholder
approval in any proxy statement).
6. Ensure that the independent auditors submit on a periodic basis to the
Audit Committee a formal written statement delineating all
relationships between the
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auditor and the Company, consistent with Independence Standards Board
Standard No. 1.
7. Actively engage in dialogue with the independent auditors and legal
counsel with respect to any disclosed relationships or services that
may impact the objectivity and independence of the independent
auditors.
8. Recommend that the Board of Directors take appropriate action in
response to the independent auditors' report to satisfy itself of the
independent auditors' independence.
9. Following each audit by the independent auditors, obtain from the
independent auditors assurance that Section 10A of the Private
Securities Litigation Reform Act of 1995 has not been implicated.
10. In connection with the Company's year-end financials, discuss with
financial management and the independent auditors significant issues
regarding accounting principals, practices and judgments and any items
required to be communicated by the independent auditors in accordance
with Statement on Accounting Standards No. 61.
11. In connection with the Company's interim financials, discuss with
financial management and independent auditors any significant changes
to the Company's accounting principles and any items required to be
communicated by the independent auditors in accordance with Statement
on Accounting Standards No. 71. The Chair of the Audit Committee may
represent the entire Audit Committee for purposes of the quarterly
review and communication.
12. Consider and approve, if appropriate, significant changes to the
Company's auditing and accounting principles and practices as
suggested by the independent auditors, management, or the internal
auditing department.
IMPROVEMENT PROCESS
13. Meet periodically, no less than annually, with management to review
the Company's major financial risk exposure and the steps management
has taken to monitor and control such exposures.
PROXY STATEMENT
14. Approve the report of the Audit Committee required by the rules of the
SEC to be included in the Company's annual proxy statement.
15. Submit to the NYSE on an annual basis, within one month of the
Company's annual meeting, or upon a change of the composition of the
Audit Committee, the written affirmation required by the NYSE
concerning the composition and expertise of the Audit Committee
members and the review and reassessment of this Charter.
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16. Oversee the publication of this Charter at least every three years in
the Company's annual proxy statement in accordance with SEC
regulations.
MISCELLANEOUS
17. Review with the Company's general counsel legal matters that may have
a material impact on the financial statements, the Company's
compliance policies related to financial matters and any material
reports or inquiries related to financial matters that are received
from regulators or governmental agencies.
18. Periodically conduct a self-assessment of the Audit Committee's
performance.
19. Advise the Board of Directors on the Company's policies and procedures
regarding compliance with applicable laws and regulations related to
financial matters.
20. Submit the minutes of all meetings of the Audit Committee to, and
discuss the matters discussed at each Audit Committee meeting with,
the Board of Directors, as appropriate.
21. Perform any other activities consistent with this Charter, the
Company's Bylaws and governing law, as the Audit Committee or the
Board of Directors deems necessary or appropriate.
While the Audit Committee has the responsibilities and powers set forth
in this Charter, it is not the duty of the Audit Committee to plan or
conduct audits or to determine that the Company's financial statements
are complete and accurate and are in accordance with generally accepted
accounting principles. This is the responsibility of management and the
independent auditors. Nor is it the duty of the Audit Committee to
conduct investigations, to resolve disagreements, if any, between
management and the independent auditors or to assure compliance with
laws and regulations.
Adopted May 17, 2000
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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 Kevin T. McDermed and Thomas Armstrong,
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 June 29,
2001, 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. | |
1. PROPOSAL ONE: ELECTION OF DIRECTORS --
FOR WITHHOLD
Nominee: Hugh H. Aiken |_| |_|
Nominee: David Colburn |_| |_|
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ELECTION OF ALL NOMINEES.
2. PROPOSAL TWO: PROPOSAL TO RATIFY THE SHAREHOLDER RIGHTS PLAN
FOR AGAINST ABSTAIN
|_| |_| |_|
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL TWO.
3. In their discretion, the Proxies are This proxy, when properly executed, will be
authorized to vote upon such other voted in the manner directed herein by the
business as may properly come before undersigned stockholder. If no direction is
the meeting and all matters incident made, this proxy will be voted FOR each of
to the conduct of the meeting. the nominees for Director listed in Proposal
One and FOR Proposal Two.
Dated: , 2001
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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