<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
AND EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO THE SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
-------------------------
Commission File Number 1-12541
Atchison Casting Corporation
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Kansas 48-1156578
- -------------------------------------- -----------------------------------
(State of other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
400 South Fourth Street, Atchison, Kansas 66002
- ------------------------------------------- -----------
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) (913) 367-2121
Not Applicable
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report.)
-------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements from the past 90 days. Yes X . No .
--- ---
There were 8,175,754 shares of common stock, $.01 par value per share,
outstanding on February 3, 1998
<PAGE>
PART I
ITEM 1. Financial Statements.
ATCHISON CASTING CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands)
<TABLE>
<CAPTION>
December 31, June 30,
1997 1997
----------- --------
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 3,982 $ 19,819
Customer accounts receivable, net of allowance for 46,329 40,310
doubtful accounts of $413 and $381, respectively
Inventories 40,054 30,867
Deferred income taxes 5,840 1,501
Other current assets 2,712 2,336
-------- --------
Total current assets 98,917 94,833
PROPERTY, PLANT AND EQUIPMENT, Net 113,837 93,116
INTANGIBLE ASSETS, Net 26,721 21,866
DEFERRED CHARGES, Net 440 525
OTHER ASSETS 4,655 3,068
-------- --------
TOTAL $244,570 $213,408
-------- --------
-------- --------
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
ATCHISON CASTING CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Cont'd)
(In Thousands)
<TABLE>
<CAPTION>
December 31, June 30,
1997 1997
----------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $ 15,270 $ 11,530
Accrued expenses 24,945 25,145
Current maturities of long-term obligations 3,837 927
-------- --------
Total current liabilities 44,052 37,602
LONG-TERM OBLIGATIONS 40,295 27,758
DEFERRED INCOME TAXES 21,409 16,349
OTHER LONG-TERM OBLIGATIONS 1,841 1,243
EXCESS OF FAIR VALUE OF ACQUIRED NET ASSETS 487 633
OVER COST, Net
POSTRETIREMENT OBLIGATION OTHER THAN PENSION 7,452 5,844
MINORITY INTEREST IN SUBSIDIARIES 1,930 1,248
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value, 2,000,000 - -
authorized shares; no shares issued and outstanding
Common stock, $.01 par value, 19,300,000 82 81
authorized shares; 8,174,854 and 8,146,715
shares issued and outstanding, respectively
Class A common stock (non-voting), $.01 par value, - -
700,000 authorized shares; no shares issued and
outstanding
Additional paid-in capital 80,738 80,342
Retained earnings 46,655 42,440
Accumulated foreign currency translation adjustment (371) (132)
-------- --------
127,104 122,731
Less shares held in treasury:
Common stock, 36,002 shares, at cost - -
-------- --------
Total stockholders' equity 127,104 122,731
-------- --------
TOTAL $244,570 $213,408
-------- --------
-------- --------
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
ATCHISON CASTING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Share Data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31, December 31,
1997 1996 1997 1996
-------- -------- --------- ---------
<S> <C> <C> <C> <C>
NET SALES $84,435 $61,622 $153,231 $110,620
COST OF GOODS SOLD 71,772 51,511 131,356 93,868
------- ------- -------- --------
GROSS PROFIT 12,663 10,111 21,875 16,752
OPERATING EXPENSES:
Selling, general and administrative 7,256 4,966 12,605 9,230
Amortization of intangibles 231 182 406 321
------- ------- -------- --------
Total operating expenses 7,487 5,148 13,011 9,551
------- ------- -------- --------
OPERATING INCOME 5,176 4,963 8,864 7,201
INTEREST EXPENSE 823 877 1,285 1,463
MINORITY INTEREST IN NET INCOME 116 43 179 34
OF SUBSIDIARIES
------- ------- -------- --------
INCOME BEFORE TAXES 4,237 4,043 7,400 5,704
INCOME TAXES 1,847 1,672 3,185 2,392
------- ------- -------- --------
NET INCOME $ 2,390 $ 2,371 $ 4,215 $ 3,312
------- ------- -------- --------
------- ------- -------- --------
EARNINGS PER SHARE:
BASIC $ 0.29 $ 0.43 $ 0.52 $ 0.60
------- ------- -------- --------
------- ------- -------- --------
DILUTED $ 0.29 $ 0.43 $ 0.51 $ 0.60
------- ------- -------- --------
------- ------- -------- --------
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
ATCHISON CASTING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
(In Thousands)
<TABLE>
<CAPTION>
Six Months Ended
December 31,
1997 1996
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 4,215 $ 3,312
Adjustments to reconcile net income to
net cash from operating activities:
Depreciation and amortization 5,839 4,011
Minority interest in net income of subsidiaries 184 34
Loss on disposal of capital assets 13 2
Deferred income taxes 713 578
Changes in assets and liabilities:
Receivables 3,834 717
Inventories (2,903) 1,777
Other current assets (315) (42)
Accounts payable (1,945) 318
Accrued expenses (5,974) (1,147)
Post retirement obligation other
than pension 323 227
Other 100 57
-------- --------
Cash provided by operating activities 4,084 9,844
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (8,229) (6,494)
Payment for purchase of net assets of subsidiaries,
net of cash acquired (26,725) (22,298)
Proceeds from sale of capital assets 781 3
Payment for purchase of minority interests - (308)
Advances under subordinated note receivable (1,484) -
Assets held for resale - (3)
-------- --------
Cash used in investing activities (35,657) (29,100)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 397 76
(Payment) proceeds from (purchase) sale of minority
interest in subsidiary (11) 199
Payments on long-term obligations (140) (551)
Proceeds from issuance of long-term obligations - 1,293
Net borrowings under revolving loan note 15,487 13,164
-------- --------
Cash provided by financing activities 15,733 14,181
EFFECT OF EXCHANGE RATE ON CASH 3 (28)
-------- --------
NET DECREASE IN CASH AND CASH EQUIVALENTS $(15,837) $(5,103)
CASH AND CASH EQUIVALENTS, Beginning of period 19,819 7,731
-------- --------
CASH AND CASH EQUIVALENTS, End of period $ 3,982 $ 2,628
-------- --------
-------- --------
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
ATCHISON CASTING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Accounting Policies and Basis of Presentation
The unaudited consolidated financial statements should be read in
conjunction with the consolidated financial statements of the Company for
the year ended June 30, 1997, as included in the Company's 1997 Annual
Report to Stockholders.
The accompanying unaudited consolidated financial statements include
all adjustments (consisting only of normal recurring accruals) which, in
the opinion of management, are necessary for a fair presentation of
financial position, results of operations and cash flows. Results of
operations for interim periods are not necessarily indicative of results to
be expected for a full year.
Certain December 31, 1996 amounts have been reclassified to conform
with December 31, 1997 classifications.
2. Inventories
As of
-----------------------
December 31, June 30,
1997 1997
---- ----
(Thousands)
Raw materials $ 7,620 $ 5,186
Work-in-process 23,609 17,540
Finished goods 3,916 3,967
Deferred supplies 4,909 4,174
------- -------
$40,054 $30,867
------- -------
------- -------
3. Income Taxes
The provision for income taxes consisted of:
Six Months Ended
December 31,
1997 1996
---- ----
(Thousands)
Current:
Domestic $2,004 $1,583
Foreign 468 231
------ ------
$2,472 $1,814
Deferred:
Domestic $ 713 $ 578
Foreign --- ---
------ ------
$ 713 $ 578
------ ------
Total $3,185 $2,392
------ ------
------ ------
<PAGE>
4. Acquisitions
On July 1, 1997, the Company purchased the Beloit Castings Division
("BCD") from Beloit Corporation for $8.2 million in cash. BCD now operates
under the name PrimeCast, Inc. ("PrimeCast"), as a subsidiary of the
Company. PrimeCast is a group of four foundries in Beloit, Wisconsin and
South Beloit, Illinois, including two iron foundries, a steel foundry and a
non-ferrous foundry, that produce castings for the paper-machinery, pump,
valve, mining and construction markets. This acquisition was financed with
available cash balances.
On October 6, 1997, the Company acquired approximately 91.5% of the
outstanding capital stock of Inverness Castings Group, Inc. ("Inverness"),
a Delaware corporation, for $6.7 million in cash, in addition to the
assumption of $587,000 of outstanding indebtedness. Contemporaneous with
the consummation of this acquisition, the Company retired approximately
$11.6 million of Inverness' outstanding indebtedness. The remaining 8.5%
of Inverness capital stock was retained by Inverness management.
Inverness, located in Dowagiac, Michigan, produces aluminum die castings
for the automotive, furniture and appliance markets. The Company
financed this transaction with available cash balances and funds
available under its revolving credit facility.
5. Additional Cash Flow Information
Six Months
Ended December 31,
1997 1996
---- ----
Cash paid during the period for:
Interest $1,335 $1,475
------ ------
------ ------
Income Taxes $4,024 $2,424
------ ------
------ ------
Supplemental schedule of noncash
investing and financing activities:
Unexpended bond funds $ (487) $ (164)
------ ------
------ ------
6. Earnings Per Share
In February 1997, the FASB issued SFAS No. 128, EARNINGS PER SHARE.
This Statement established new standards for computing and presenting
earnings per share ("EPS") and applies to entities with publicly held
common stock or potential common stock. It replaces the presentation
of primary EPS with a presentation of basic EPS and also requires that
entities with simple capital structures, that is, those with only
common stock outstanding, shall present basic per-share amounts for
income from continuing operations and for net income on the face of
the income statement. In addition the statement requires dual
presentation of basic and diluted EPS on the face of the income
statement for entities with complex capital structures and requires a
reconciliation of the numerator and denominator of the basic EPS
computation to the numerator and denominator of the diluted EPS
computation.
<PAGE>
The Company was required to adopt SFAS No. 128 effective for the
quarter ended December 31, 1997. EPS for prior periods have been
restated according to the new standard. Following is a reconciliation
of basic and diluted EPS for the three month and six month periods
ended December 31, 1997 and 1996, respectively.
FOR THE THREE MONTHS ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
Weighted
Net Average Earnings
Income Shares Per Share
---------- ---------------- ----------
<S> <C> <C> <C>
Basic EPS
Income available to common stockholders $2,390,000 8,161,661 $0.29
Effect of Dilutive Securities Options 58,392
---------- --------- -----
Diluted EPS $2,390,000 8,220,053 $0.29
---------- --------- -----
---------- --------- -----
FOR THE THREE MONTHS ENDED DECEMBER 31, 1996
<CAPTION>
Weighted
Net Average Earnings
Income Shares Per Share
---------- ---------------- ----------
<S> <C> <C> <C>
Basic EPS
Income available to common stockholders $2,371,000 5,531,623 $0.43
Effect of Dilutive Securities Options 26,644
---------- --------- -----
Diluted EPS $2,371,000 5,558,267 $0.43
---------- --------- -----
---------- --------- -----
FOR THE SIX MONTHS ENDED DECEMBER 31, 1997
<CAPTION>
Weighted
Net Average Earnings
Income Shares Per Share
---------- ---------------- ----------
<S> <C> <C> <C>
Basic EPS
Income available to common stockholders $4,215,000 8,154,812 $0.52
Effect of Dilutive Securities Options 60,785 (0.01)
---------- --------- -----
Diluted EPS $4,215,000 8,215,597 $0.51
---------- --------- -----
---------- --------- -----
FOR THE SIX MONTHS ENDED DECEMBER 31, 1996
<CAPTION>
Weighted
Net Average Earnings
Income Shares Per Share
---------- ---------------- ----------
<S> <C> <C> <C>
Basic EPS
Income available to common stockholders $3,312,000 5,530,278 $0.60
Effect of Dilutive Securities Options 20,311
---------- --------- -----
Diluted EPS $3,312,000 5,550,589 $0.60
---------- --------- -----
---------- --------- -----
</TABLE>
<PAGE>
7. Sheffield Forgemasters Group Limited
On December 23, 1997, the Company and Sheffield Forgemasters Group
Limited ("Sheffield") signed a non-binding letter of intent regarding
the purchase by the Company of the Engineering Division of Sheffield.
The companies which make up the Engineering Division include
Forgemasters Steel & Engineering Limited, River Don Castings Limited,
Forged Rolls (UK) Limited and British Rollmakers Limited, among other
operating units. The Engineering Division manufactures machined
castings and forgings in England and Scotland, which are distributed
in more than 40 countries worldwide. Net sales for the 12 month
period ending March 31, 1997 were approximately $168 million at
current exchange rates. Management of the Company expects to finance
this transaction, should it be consummated, with funds available under
its credit facility, which will need to be amended to increase the
amount of borrowing available thereunder.
<PAGE>
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS:
Net sales for the second quarter of fiscal 1998 were $84.4 million, representing
an increase of $22.8 million, or 37.0%, over net sales of $61.6 million in the
second quarter of fiscal 1997. The operations acquired by the Company since
October 26, 1996 generated net sales of $5.5 million and $29.3 million in the
second quarter of fiscal 1997 and fiscal 1998, respectively, as follows:
<TABLE>
<CAPTION>
FY97 2nd Qtr FY98 2nd Qtr
Operation Date Acquired Net Sales Net Sales
--------- ------------- ------------ -------------
<S> <C> <C> <C>
Canada Alloy Castings, Ltd. 10 / 26 / 96 $2.0 million $ 2.7 million
Pennsylvania Steel Foundry
& Machine Company 10 / 31 / 96 3.5 million 3.5 million
Jahn Foundry Corp. 2 / 14 / 97 -- 2.9 million
PrimeCast, Inc. 7 / 01 / 97 -- 7.7 million
Inverness Castings Group, Inc. 10 / 06 / 97 -- 12.5 million
</TABLE>
Excluding net sales generated by the operations acquired since October 26, 1996,
net sales for the second quarter of fiscal 1998 were $55.1 million, representing
a decrease of $1.0 million, or 1.8%, from net sales of $56.1 million in the
second quarter of fiscal 1997. This 1.8% decrease in net sales was due
primarily to decreases in net sales to the energy, utility and military markets,
partially offset by an increase in net sales to the rail market.
Net sales for the first six months of fiscal 1998 were $153.2 million,
representing an increase of $42.6 million, or 38.5%, over net sales of $110.6
million in the first six months of fiscal 1997. The operations acquired by the
Company since the beginning of fiscal 1997 generated net sales of $7.9 million
and $53.7 million in the first six months of fiscal 1997 and fiscal 1998,
respectively, as follows:
<TABLE>
<CAPTION>
FY97 First Six FY98 First Six
Months Months
Operation Date Acquired Net Sales Net Sales
--------- ------------- -------------- --------------
<S> <C> <C> <C>
Los Angeles Die Casting Inc. 10 / 01 / 97 $2.4 million $ 5.6 million
Canada Alloy Castings, Ltd. 10 / 26 / 96 2.0 million 5.0 million
Pennsylvania Steel Foundry
& Machine Company 10 / 31 / 96 3.5 million 8.2 million
Jahn Foundry Corp. 2 / 14 / 97 -- 5.9 million
PrimeCast, Inc. 7 / 01 / 97 -- 16.5 million
Inverness Castings Group, Inc. 10 / 06 / 97 -- 12.5 million
</TABLE>
<PAGE>
Excluding net sales generated by the operations acquired in fiscal 1997 and
fiscal 1998, net sales for the first six months of fiscal 1998 were $99.5
million, representing a decrease of $3.2 million, or 3.1%, over net sales of
$102.7 million in the first six months of fiscal 1997. This 3.1% decrease in
net sales was due primarily to decreases in net sales to the energy, utility
and military markets, partially offset by an increase in net sales to the
rail market.
Gross profit for the second quarter of fiscal 1998 increased by $2.6 million,
or 25.2%, to $12.7 million, or 15.0% of net sales, compared to $10.1 million,
or 16.4% of net sales, for the second quarter of fiscal 1997. Gross profit
for the first six months of fiscal 1998 increased by $5.1 million, or 30.6%,
to $21.9 million, or 14.3% of net sales, compared to $16.8 million, or 15.1%
of net sales, for the first six months of fiscal 1997. The increase in gross
profit for both periods is primarily attributable to increased sales volume
levels. The decrease in gross profit as a percentage of net sales for both
periods is primarily attributable to (i) a decrease in the absorption of
overhead resulting from a reduction in net sales (a) to the paper-machinery
market at the Company's subsidiary, PrimeCast, Inc. ("PrimeCast"), (b) at La
Grange Foundry Inc. ("La Grange") due to the efforts of La Grange's largest
customer to reduce their inventory levels and (c) to the energy and military
markets at the Company's Amite facility in Louisiana, (ii) above average
training expense associated with the start-up of new customer jobs at the
Company's Amite facility and (iii) increased costs associated with the
start-up of a new sand reclamation and separation system at the Company's
Atchison, Kansas foundry. Partially offsetting these factors was the
inclusion in the prior year period of: (i) lost production and expenses
associated with the conversion from cupola to electric melting at The G&C
Foundry Company ("G&C") and (ii) costs associated with the addition of iron
casting capability at Empire Steel Castings, Inc. ("Empire").
Selling, general and administrative expense ("SG&A") for the second quarter
of fiscal 1998 was $7.3 million, or 8.6% of net sales, compared to $5.0
million, or 8.1% of net sales, in the second quarter of fiscal 1997. For the
first six months of fiscal 1998, SG&A was $12.6 million, or 8.2% of net
sales, compared to $9.2 million, or 8.3% of net sales, for the first six
months of fiscal 1997. The increase in SG&A was primarily attributable to
expenses associated with the operations acquired by the Company in fiscal
1997 and fiscal 1998. The increase in SG&A as a percentage of net sales for
the second quarter of fiscal 1998 was primarily due to higher average SG&A as
a percentage of net sales at Inverness Castings Group, Inc. ("Inverness").
Amortization of certain intangibles for the second quarter of fiscal 1998 was
$231,000 or 0.3% of net sales, as compared to $182,000 or 0.3% of net sales,
in the second quarter of fiscal 1997. Amortization of certain intangibles
for the first six months of fiscal 1998 was $406,000 or 0.3% of net sales, as
compared to $321,000, or 0.3% of net sales, for the first six months of
fiscal 1997. The intangible assets consist of goodwill recorded in
connection with the acquisition of Prospect Foundry, Inc. ("Prospect"),
Kramer International, Inc., Empire, G&C, Los Angeles Die Casting Inc. and
Inverness. Partially offsetting the expense relating to the amortization of
these assets is the amortization of the excess of acquired net assets over
cost (negative goodwill) recorded by the Company in connection with the
acquisition of Canadian Steel Foundries, Ltd.
<PAGE>
Interest Expense for the second quarter of fiscal 1998 decreased to $823,000
or 1.0% of net sales, from $877,000, or 1.4% of net sales, in the second
quarter of fiscal 1997. For the first six months of fiscal 1998, interest
expense decreased to $1.3 million, or 0.8% of net sales, from $1.5 million,
or 1.3% of net sales, in the first six months of fiscal 1997. The decrease
in interest expense is primarily the result of a decrease in the average
amount of indebtedness outstanding.
Income tax expense for the second quarter and first six months of fiscal
1998 reflected the combined federal and state statutory rate of approximately
43.0%. Income tax expense for the second quarter and first six months of
fiscal 1997 reflected the combined federal and state statutory rate of
approximately 41.0%.
As a result of the foregoing, net income for the second quarter of fiscal
1998 was $2.4 million, compared to net income of $2.4 million for the second
quarter of fiscal 1997. Net income for the first six months of fiscal 1998
was $4.2 million, compared to net income of $3.3 million for the first six
months of fiscal 1997.
LIQUIDITY AND CAPITAL RESOURCES:
Cash provided by operating activities for the first six months of fiscal 1998
was $4.1 million, a decrease of $5.8 million from the first six months of
fiscal 1997. This decrease was primarily attributable to increased working
capital requirements primarily relating to inventory and accrued expenses
balances.
Working capital was $54.9 million at December 31, 1997, as compared to $57.2
million at June 30, 1997. The decrease primarily resulted from the use of
existing cash balances for the acquisition of PrimeCast and Inverness and a
$2.9 million increase in the current maturities of the Company's existing
outstanding indebtedness, partially offset by net additional working capital
of $859,000 and $11.0 million associated with the acquisition of PrimeCast
and Inverness, respectively.
During the first six months of fiscal 1998, the Company made capital
expenditures of $8.2 million, as compared to $6.5 million for the first six
months of fiscal 1997. Included in the first six months of fiscal 1998 were
capital expenditures of $1.4 million on a new sand reclamation system at the
Atchison/St. Joe Division and $1.3 million on a new mold line at Prospect.
Included in the first six months of fiscal 1997 were capital expenditures of
$1.9 million at G&C, primarily relating to the conversion from cupola to
electric melting. The balance of capital expenditures in both periods was
used for routine projects at each of the Company's facilities.
Total indebtedness of the Company at December 31, 1997 was $44.1 million, as
compared to $28.7 million at June 30, 1997. This increase of $15.4 million
reflects indebtedness incurred of $18.9 million to finance the acquisition of
Inverness. At December 31, 1997, $35.9 million was available for borrowing
under the Company's revolving credit facility.
<PAGE>
On July 1, 1997, the Company purchased the Beloit Castings Division ("BCD")
from Beloit Corporation for $8.2 million in cash. BCD now operates under the
name PrimeCast, as a subsidiary of the Company. PrimeCast is a group of four
foundries in Beloit, Wisconsin and South Beloit, Illinois, including two iron
foundries, a steel foundry and a non-ferrous foundry, that produce castings
for the paper-machinery, pump, valve, mining and construction markets. This
acquisition was financed with available cash balances.
On October 6, 1997, the Company acquired approximately 91.5% of the
outstanding capital stock of Inverness, a Delaware corporation, for $6.7
million in cash, in addition to the assumption of $587,000 of outstanding
indebtedness. Contemporaneous with the consummation of this acquisition, the
Company retired approximately $11.6 million of Inverness' outstanding
indebtedness. The remaining 8.5% of Inverness capital stock was retained by
Inverness management. Inverness, located in Dowagiac, Michigan, produces
aluminum die castings for the automotive, furniture and appliance markets.
The Company financed this transaction with available cash balances and funds
available under its revolving credit facility.
On December 23, 1997, the Company and Sheffield Forgemasters Group Limited
("Sheffield") signed a non-binding letter of intent regarding the purchase by
the Company of the Engineering Division of Sheffield. The companies which
make up the Engineering Division include Forgemasters Steel & Engineering
Limited, River Don Castings Limited, Forged Rolls (UK) Limited and British
Rollmakers Limited, among other operating units. The Engineering Division
manufactures machined castings and forgings in England and Scotland, which
are distributed in more than 40 countries worldwide. Net sales for the 12
month period ending March 31, 1997 were approximately $168 million at current
exchange rates. Management of the Company expects to finance this
transaction, should it be consummated, with funds available under its credit
facility, which will need to be amended to increase the amount of borrowing
available thereunder.
The Company believes that its operating cash flow and amounts available for
borrowing under its revolving credit facility will be adequate to fund its
capital expenditure and working capital requirements for the next two years.
However, the level of capital expenditure and working capital requirements
may be greater than currently anticipated as a result of the size and timing
of future acquisitions, or as a result of unforeseen expenditures relating to
compliance with environmental laws.
This section entitled "Liquidity and Capital Resources" contains
forward-looking statements that involve a number of risks and uncertainties.
Such forward-looking statements include statements pertaining to the adequacy
of funding for capital expenditure and working capital requirements for the
next two years. Factors that could cause actual results to differ materially
from such forward-looking statements include: the size and timing of future
acquisitions, business conditions and the state of the general economy,
particularly the capital goods industry, the strength of the dollar, the
fluctuation of interest rates, the competitive environment in the casting
industry and changes in laws and regulations that govern the Company's
business, particularly environmental regulations.
<PAGE>
PART II
ITEM 1 - Legal Proceedings
NOT APPLICABLE
ITEM 2 - Changes in Securities
NOT APPLICABLE
ITEM 3 - Defaults Upon Senior Securities
NOT APPLICABLE
ITEM 4 - Submission of Matters to a Vote of Security Holders
The Annual Meeting of Stockholders was held on November 21,
1997. Stockholders owning 7,308,074 shares voted in favor of
the sole nominee for director: Hugh H. Aiken. There were
10,066 shares withheld. Previously elected and continuing to
serve their terms are David L. Belluck, John O. Whitney,
Stuart Z. Uram and Ray H. Witt.
A proposal to approve the Amended and Restated Atchison
Casting 1993 Incentive Stock Plan was approved by a vote of
6,896,884 to 192,912. There were 228,345 votes withheld.
ITEM 5 - Other Information
NOT APPLICABLE
ITEM 6 - Exhibits and Reports of Form 8-K
(A) Exhibits
27 Financial Data Schedule
(B) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the
quarter ended December 31, 1997.
<PAGE>
* * * * * * * * * * * * * * * *
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ATCHISON CASTING CORPORATION
(Registrant)
DATE: February 3, 1998 /s/ HUGH H. AIKEN
-----------------------------------
Hugh H. Aiken, Chairman of the
Board, President and Chief
Executive Officer
DATE: February 3, 1998 /s/ KEVIN T. MCDERMED
-----------------------------------
Kevin T. McDermed, Vice President,
Chief Financial Officer, Treasurer
and Secretary
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
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