<PAGE>
SCHEDULE 14a INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant
Check the appropriate box:
- Preliminary Proxy Statement
- Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2))
/X/ Definitive Proxy Statement
- Definitive Additional Materials
- Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
Atchison Casting Corporation
- -----------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- -----------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
- Fee computed on table below per Exchange Act Rules 14a-6(I)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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<PAGE>
[LOGO]
ATCHISON CASTING CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 20, 1998
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 20th day of November 1998, at
11:00 a.m. (Central Time) for the following purposes:
1. To elect two Class II Directors to serve for a term of three years.
2. To transact such other business as may properly come before the
meeting.
The Board of Directors has fixed the close of business on September 21,
1998 as the record date for the determination of stockholders entitled to
receive notice of and to vote at the meeting.
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING. HOWEVER, WHETHER OR NOT
YOU PLAN TO BE PERSONALLY PRESENT AT THE MEETING, PLEASE SIGN AND DATE THE
ENCLOSED PROXY AND PROMPTLY RETURN IT IN THE ENVELOPE PROVIDED. NO POSTAGE IS
NECESSARY IF MAILED IN THE UNITED STATES. IF YOU ATTEND THE MEETING, WE WILL BE
GLAD TO RETURN YOUR PROXY SO THAT YOU MAY VOTE IN PERSON.
PLEASE RETURN YOUR PROXY - THANKS!
By Order of the Board of Directors,
/s/ Hugh H. Aiken
HUGH H. AIKEN
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
Atchison, Kansas
October 7, 1998
P.S. - I look forward to seeing you at the meeting. We will give you a
tour of the foundry when it is over. If you would like transportation from
and to the Kansas City airport, let me or Jeff Brentano know your flight
information, and we will have you picked up and taken back. It is a 40
minute ride.
<PAGE>
ATCHISON CASTING CORPORATION
400 South Fourth Street
Atchison, Kansas 66002-0188
(913) 367-2121
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 20, 1998
GENERAL INFORMATION
This proxy statement is being furnished on or about October 7, 1998, in
connection with the solicitation of proxies by the Board of Directors of
Atchison Casting Corporation, a Kansas corporation (the "Company"), for use
at the Annual Meeting of Stockholders to be held at the Company's offices,
400 South Fourth Street, Atchison, Kansas, at 11:00 a.m. (Central Time) on
Friday, November 20, 1998, for the purposes set forth in the foregoing Notice
of Annual Meeting of Stockholders. In order to provide every stockholder
with an opportunity to vote on all matters scheduled to come before the
Annual Meeting and to be able to transact business at the meeting, proxies
are being solicited by the Company's Board of Directors. Upon execution and
return of the enclosed proxy, the shares represented by it will be voted by
the persons designated therein as proxies, in accordance with the
stockholder's directions. A stockholder may vote on a matter by marking the
appropriate box on the proxy or, if no box is marked for a specific matter,
the shares will be voted as recommended by the Board of Directors on that
matter.
The enclosed proxy may be revoked at any time before it is voted by (i) so
notifying the Secretary of the Company, (ii) exercising a proxy of a later date
and delivering such later proxy to the Secretary of the Company prior to the
Annual Meeting or (iii) attending the Annual Meeting and voting in person.
Unless the proxy is revoked or is received in a form that renders it invalid,
the shares represented by it will be voted in accordance with the instructions
contained therein.
The Company will bear the cost of solicitation of proxies, which will be
principally conducted by the use of the mails; however, certain officers and
employees of the Company may also solicit by telephone, telegram or personal
interview. Such expense may also include ordinary charges and expenses of
brokerage firms and others, for forwarding soliciting material to beneficial
owners.
On September 21, 1998, the record date for determining stockholders
entitled to vote at the Annual Meeting, the Company had outstanding and entitled
to vote 7,984,068 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-
<PAGE>
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 II directors are to be elected. The proxies named in the
accompanying proxy intend to vote for the election of David L. Belluck and
John O. Whitney. In the event Mr. Belluck or Mr. Whitney 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 II 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 II - TERM EXPIRING 2001
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION AND
NAME AGE FIVE-YEAR EMPLOYMENT HISTORY
- ---- --- ---------------------------------------------------
<S> <C> <C>
David L. Belluck 36 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 of the Company's Board of
Directors.
John O. Whitney 70 Director since June 1994. Since 1986, Mr. Whitney
has been Professor and Director, Deming Center for
Quality Management at Columbia Business School.
Mr. Whitney has also written a number of books and
articles on management and business strategy, and
lectures on those subjects in the United States
and abroad. Mr. Whitney previously served as
President and Director of the Pathmark Division of
Supermarkets General Corporation engaged in food
distribution and retailing. Mr. Whitney currently
serves as a director of Church & Dwight Co., Inc.
and The Turner Corporation. Mr. Whitney is a
member of the Audit Committee of the Company's
Board of Directors.
</TABLE>
-2-
<PAGE>
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 III - TERM EXPIRING 1999
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION AND
NAME AGE FIVE-YEAR EMPLOYMENT HISTORY
- ---- --- ------------------------------------------------
<S> <C> <C>
Stuart Z. Uram 64 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 70 Director since August 1993. Since 1957, Mr. Witt
has been the Chairman of the Board and majority
owner of CMI International, Inc., which operates
eight foundries in North America. Mr. Witt was
President of the American Foundryman's Society
from 1992 to 1993. Mr. Witt is a member of the
Audit Committee of the Company's Board of
Directors.
</TABLE>
CLASS I - TERM EXPIRING 2000
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION AND
NAME AGE FIVE-YEAR EMPLOYMENT HISTORY
- ---- --- -------------------------------------------------
<S> <C> <C>
Hugh H. Aiken 54 Chairman of the Board, President, Chief Executive
Officer and Director since June 1991.
</TABLE>
COMMITTEES OF THE BOARD OF DIRECTORS
The standing committees of the Board of Directors consist of an Audit
Committee and a Compensation Committee.
-3-
<PAGE>
The Audit Committee consists of Messrs. Whitney and Witt. The Audit
Committee annually makes recommendations to the Board regarding the
appointment of independent auditors of the Company and reviews the scope of
audits.
The Compensation Committee consists of 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 1998 fiscal year, the Board of Directors met four times, the
Audit Committee met one time and the Compensation Committee met one time.
All Directors attended at least 75% of the meetings of the Board of Directors
and the committees on which they served.
COMPENSATION OF DIRECTORS
Non-employee directors receive a fixed fee of $8,000 each year and
$2,000 for each quarterly meeting of the Board of Directors attended, all or
part of which may be paid in cash or Common Stock at their election. In
addition, the Company reimburses directors for expenses incurred in
connection with attendance at meetings of the Board of Directors and
committees thereof. 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
The Compensation Committee of the Company's Board of Directors during
fiscal 1998 was composed of David L. Belluck and Stuart Z. Uram.
During the fiscal year ended June 30, 1998, there were no interlocking
relationships between any executive officers of the Company and any entity
whose directors or executive officers serve on the Board's Compensation
Committee, nor did any current or past officers of the Company serve on the
Compensation Committee.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors of the Company is
responsible for reviewing and approving policies, practices and procedures
relating to executive compensation and the establishment and administration
of employee benefit plans. The overall goal of the Compensation Committee is
to attract and retain strong management and to base incentive compensation on
both individual performance and the overall Company success. The key elements
of the Company's executive compensation package are base salary, annual
bonuses, and long-term incentives. Each of those elements are discussed
below.
-4-
<PAGE>
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.
During the second fiscal quarter of 1996, the CEO voluntarily reduced his
salary from $200,000 per year to $146,000 per year for the remainder of fiscal
year 1996 because the Company missed its internal earnings targets during the
first half of fiscal year 1996. His salary was restored to $200,000 at the
beginning of fiscal 1997 and was increased to $243,000 in July 1997 to reflect
the Company's continued growth in sales and the improvement in gross profit.
From November 16, 1997 until July 1, 1998 the CEO reduced his salary by
25%. He had requested management at several subsidiaries to reduce their
salaries by up to 20% until certain goals were met, and felt that he should
participate in the salary reductions. As of July 1, 1998 Mr. Aiken's base
salary was $246,000.
The annual bonus for executive officers for fiscal 1998 (and for the prior
two years) was based on earnings before interest, taxes and amortization of
intangibles, or "EBITA." Targets are set by the Board of Directors for the
fiscal year EBITA of each executive's subsidiary or operating group. In the
case of the CEO and the chief financial officer, the target was based on
consolidated earnings for the entire Company. The amount of bonus which was to
be earned if EBITA reached 100% of target was also set by the Board (or by
contract in the case of the CEO), and was approximately 100% of base salary for
the CEO and 25% to 33% of base salary for other corporate officers. If the
target is reached, the officer receives 100% of his annual bonus. For any
percentage of actual EBITA above the target, the amount of the calculated bonus
at 100% of the target is increased by the same percentage. A minimum level of
EBITA is also set, below which no bonus is paid. At EBITA above the minimum
threshold the bonus is pro-rated based on the relation of actual EBITA to the
target and the minimum threshold. During fiscal 1998, bonuses to executive
officers ranged from 0% to 153% 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.
In considering the CEO's bonus for fiscal 1998, the Compensation Committee
considered the increases in sales and net income of 52% and 31%, respectively,
and the completion of the acquisition of Sheffield Forgemasters.
-5-
<PAGE>
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.
-6-
<PAGE>
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 $100,000 during the last
fiscal year.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------- ------------
SECURITIES
UNDERLYING
NAME AND OPTIONS/ ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($) SARS(#) COMPENSATION($)
------------------ ---- --------- -------- ----------- --------------
<S> <C> <C> <C> <C> <C>
Hugh H. Aiken. . . . . . . . 1998 $ 212,629 $ 174,500 20,000 $ 6,833 (1)
Chairman of the 1997 $ 205,878 $ 155,778 20,000 $ 8,960
Board, President and 1996 $ 164,667 $ 200,000 20,000 $ 5,310
Chief Executive
Officer
John R. Kujawa. . . . . . . 1998 $ 135,420 $ 33,126 NONE $ 7,675 (1)
Group Vice President 1997 $ 120,566 $ 33,790 2,000 $ 7,200
1996 $ 105,000 $ 26,250 3,000 $ 6,300
Richard J. Sitarz . . . . . . 1998 $ 116,900 $ 28,226 NONE $ 7,176 (1)
Vice President 1997 $ 113,000 $ 23,329 NONE $ 6,780
1996 $ 106,600 $ 33,657 2,000 $ 6,396
James Stott . . . . . . . . . 1998 $ 132,804 NONE NONE $ 250,000 (2)
Vice President 1997 $ 128,405 $ 31,250 5,000 NONE
1996 $ 111,691 $ 82,612 NONE NONE
David Fletcher. . . . . . . . 1998 $ 180,495 (3) $ 279,321 (4) NONE $ 17,722 (5)
Group Vice President
</TABLE>
- ----------------
(1) Consists solely of Company contributions to the Company's 401(k) savings
plan for the benefit of the executive.
(2) Consists solely of sales commissions earned by the executive, established
as part of the agreement to acquire Kramer from the executive and
another shareholder.
(3) Mr. Fletcher became an executive officer of the Company subsequent to the
Company's acquisition of Sheffield Forgemasters Group Limited
("Sheffield") in April 1998. Accordingly, only $45,818 of the
salary reported above for 1998 was paid by the Company.
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, 1998.
(4) Primary bonus consists of $29,406 paid by Sheffield based on the earnings
of Sheffield and $249,915 paid by the former owners of Sheffield
for the sale of Sheffield to the Company. All of the bonuses
reported above for 1998 were paid by Sheffield prior to the
Company's acquisition, except for $13,745 which was paid by the
Company.
(5) Consists of benefits of an auto and private medical insurance for the
benefit of the executive, $11,029 of which was paid after the
Company's acquisition of Sheffield.
-7-
<PAGE>
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES
OF STOCK PRICE
INDIVIDUAL GRANTS APPRECIATION
FOR OPTION TERM
---------------------------------------------------------- -------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS/SARS EMPLOYEES IN BASE EXPIRATION
NAME Granted(#)(1) FISCAL YEAR PRICE ($/SH) DATE 5%($) 10%($)
- ----- ------------- ------------ ------------- ----------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Hugh H. Aiken. . . . . . . . . . . 20,000 60.0% $ 16.625 06/30/07 $ 209,107 $ 529,919
John R. Kujawa . . . . . . . . . . NONE
Richard J. Sitarz. . . . . . . . . NONE
James Stott. . . . . . . . . . . . NONE
David Fletcher . . . . . . . . . . NONE
</TABLE>
(1) All options are rights to buy common stock of the company. The options
granted to Mr. Aiken are subject to a three-year vesting schedule
commencing July 1, 1997, with one-third of the grant vesting on each of
the three anniversaries from the grant date.
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST
FISCAL YEAR AND FY-END OPTION/SAR VALUES
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
FY-END(#) FY-END($)
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ------ ------------------------- -------------------------
<S> <C> <C>
Hugh H. Aiken . . . . . . . . . . . . . 40,000/40,000 $154,166/$78,334
John R. Kujawa. . . . . . . . . . . . . 6,667/2,333 $26,167/$5,083
Richard J. Sitarz . . . . . . . . . . . 3,333/667 $13,199/$2,501
James Stott . . . . . . . . . . . . . . 11,667/3,333 $31,250/$0
David Fletcher. . . . . . . . . . . . . 0/0 $0/$0
</TABLE>
-8-
<PAGE>
EMPLOYMENT CONTRACTS
The Company has entered into an employment agreement with Mr. Aiken that
expired in June 1998. At the discretion of the Board of Directors, the minimum
annual compensation may be increased during the term of this agreement. As of
June 30, 1998, the minimum annual compensation payable to Mr. Aiken pursuant to
this agreement was $246,000. This agreement provides for a severance payment in
the amount of one year of base salary in the event of his death or disability
and up to three years of base salary in the event he is terminated other than
for cause, disability or death. This agreement also prohibits Mr. Aiken from
competing with the Company for a period of two years following the termination
of his employment with the Company. Mr. Aiken's employment contract has been
extended until June 30, 2001, 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 actual 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:
<TABLE>
<CAPTION>
REMUNERATION YEARS OF CREDITED SERVICE AT RETIREMENT
- -------------- -----------------------------------------------------
<S> <C> <C> <C> <C> <C>
15 20 25 30 35
-- -- -- -- --
$ 50,000 16,804 17,427 18,050 18,673 19,927
75,000 26,804 28,052 29,300 30,548 31,797
100,000 36,804 38,677 40,550 42,423 44,927
125,000 46,804 49,302 51,800 54,298 56,797
150,000 56,804 59,927 63,050 66,173 69,297
160,000(1) 60,804 64,177 67,550 70,923 74,297
</TABLE>
- --------------------------
(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 1998, the maximum amount of compensation
allowed for use in calculating an individual's pension benefits is
$160,000. This limit may be raised in the future by annual cost-of-living
adjustments determined by the U.S. Secretary of the Treasury.
-9-
<PAGE>
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 1998, Mr. Aiken and Mr. Kujawa each had nine 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
$120,336.
-10-
<PAGE>
PERFORMANCE OF THE COMPANY'S COMMON STOCK
The graph set forth below compares the percentage change in cumulative
stockholder return of the Company's Common Stock, from October 4, 1993 (the
date the Company commenced its initial public offering of Common Stock), to
June 30, 1998 (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.
The Company undertakes to provide any stockholder upon written request,
without charge, a list of the component issues in either of the indexes. The
graph is based on $100 invested on October 4, 1993, 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.
<TABLE>
<CAPTION>
10/4/93 6/30/94 6/30/95 6/30/96 6/30/97 6/30/98
<S> <C> <C> <C> <C> <C> <C>
Atchison Casting $100.00 $106.70 $109.50 $120.00 $126.70 $136.20
NYSE Index $100.00 $ 97.50 $119.80 $150.90 $197.60 $253.20
NYSE Metals Industry Index $100.00 $110.90 $125.90 $133.10 $177.90 $173.50
</TABLE>
-11-
<PAGE>
CERTAIN TRANSACTIONS
Richard J. Sitarz, Vice President-Prospect, is a party to an Employee
Incentive Stock Agreement, pursuant to which Mr. Sitarz was awarded 20,000
shares of Prospect's Class B common stock, which vest annually over five
years or upon an earlier date if certain events occur. ACC holds an
irrevocable proxy in its favor with respect to all such shares that are not
vested. This agreement also provides, among other things, that ACC has the
right to purchase such shares under certain circumstances, the obligation to
purchase such shares under other circumstances, and the right to cause such
shares to be sold if ACC sells more than one-half of its capital stock in a
single transaction or a series of related transactions. Such shares may be
exchanged for the Company's Common Stock after five years from the date of
issue based on relative book values of the shares at the time of such
exchange.
As part of the agreement to purchase Kramer International from Jim Stott
and another owner, ACC agreed to pay Mr. Stott, Vice President, $750,000 if
by January 3, 1997 he causes net sales at ACC and any of its subsidiaries
(other than Kramer) to increase in the aggregate by $7.5 million in regularly
recurring annual sales while he is an employee of Kramer provided that net
sales volume at Kramer does not fall below Kramer's fiscal 1994 net sales
volume at the same time. This agreement has been terminated. Under this
agreement Mr. Stott collected $250,000.
The Company, along with its wholly owned subsidiary Atchison Casting UK
Ltd. ("ACUK"), entered into a Share Exchange Agreement (the "Agreement") with
David Fletcher and certain other shareholders of Sheffield on April 6, 1998.
The Agreement called for the exchange of Sheffield shares by its shareholders
for shares of ACUK. ACUK received 804,360 shares of Sheffield from Mr.
Fletcher and issued 660,000 shares of Class "B" Ordinary Shares (3.17% of
ACUK outstanding shares) to Mr. Fletcher, valued at approximately $580,000 in
the aggregate. The Class "B" Ordinary Shares share equally in all respects
with the Class "A" Ordinary Shares of ACUK owned by the Company.
ACUK also 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
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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."
CERTAIN BENEFICIAL OWNERSHIP OF THE COMPANY'S COMMON STOCK
The following table sets forth information as of September 21, 1998,
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.
<TABLE>
<CAPTION>
Number of Shares Percentage of
Name of Individual or Group Beneficially Owned Common Stock Owned
--------------------------- ------------------ ------------------
<S> <C> <C>
Wanger Asset Management, Ltd. (1) . . . . 764,000 9.33%
227 West Monroe Street, Suite 3000
Chicago, IL 60606
Principal Mutual Life Ins. Co. (2). . . . 677,300 8.27%
711 High St.
Des Moines, IA 50392-0088
Wellington Management Company LLP (3) . . 599,900 7.32%
75 State Street
Boston, MA 02019
Ingalls & Snyder LLC (4). . . . . . . . . 532,959 6.51%
61 Broadway
New York, NY 10006
Hugh H. Aiken (5) . . . . . . . . . . . . 304,412 3.72%
David L. Belluck (6). . . . . . . . . . . 23,150 *
Ray H. Witt (7) . . . . . . . . . . . . . 123,334 1.51%
John O. Whitney (8) . . . . . . . . . . . 13,258 *
Stuart Z. Uram (6). . . . . . . . . . . . 12,865 *
John R. Kujawa (9). . . . . . . . . . . . 32,948 *
Richard J. Sitarz (10). . . . . . . . . . 4,256 *
James Stott (11). . . . . . . . . . . . . 13,167 *
David Fletcher. . . . . . . . . . . . . . 0 *
All Directors and Executive Officers as
a Group (11 Persons) (12) . . . . . . . 577,986 7.06 %
</TABLE>
____________________
* Less than 1% of Common Stock outstanding.
(1) Based on a Schedule 13G Amendment No. 2 dated February 6, 1998, Wanger
Asset Management, L.P. ("WAM") is an investment adviser, which shares
voting and dispositive powers with Wanger Asset Management Ltd., its
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<PAGE>
general partner, and Mr. Ralph Wanger, the principal stockholder of its
general partner. WAM also shares voting and dispositive powers with
certain of its clients who do not beneficially own 5% of more of the
outstanding shares of Common Stock.
(2) Based on Schedule 13G Amendment dated February 13, 1998, represents shares
of Common Stock owned by Principal Mutual Life Insurance Co. ("PM"), which
shares voting and dispositive powers over 645,400 of such shares with
invista Capital Management, Inc., and investment adviser and subsidiary of
PM.
(3) Based on a Schedule 13G Amendment dated February 9, 1998, 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.
(4) Based on a Schedule 13G dated February 10, 1998.
(5) Includes 60,000 shares subject to exercisable options, 500 shares owned by
Mr. Aiken's wife and 500 shares owned by each of Mr. Aiken's three
children.
(6) Includes 10,000 shares subject to exercisable options held by each of
Messrs. Belluck and Uram, which they received pursuant to the Atchison
Casting Non-Employee Director Option Plan.
(7) Includes 95,583 shares owned by CMI International, Inc. Mr. Witt is
Chairman of the Board of CMI International, Inc., which received 175,583
shares of Common Stock of the Company in connection with the Company's
acquisition of the operating assets of CMI-Quaker Alloy, Inc. Includes
10,000 shares subject to an exercisable option received by Mr. Witt in June
1996.
(8) Includes 11,458 shares held by the John O. Whitney Revocable Trust, of
which John O. Whitney is a trustee, and 800 shares held by the Marcia L.
Whitney Revocable Trust, of which John O. Whitney is a trustee.
(9) Includes 7,667 shares subject to exercisable options.
(10) Includes 4,000 shares subject to exercisable options.
(11) Includes 11,667 shares subject to exercisable options.
(12) Includes 134,668 shares subject to exercisable options.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
To the Company's knowledge, all Section 16(a) filing requirements
applicable to its directors, executive officers and ten percent holders were
satisfied during the fiscal year ended june 30, 1998, except that one form 4
relating to one transaction for Mr. Donald J. Marlborough was filed later than
required.
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
The Board of Directors, on the recommendation of the Audit Committee, has
selected the firm of Deloitte & Touche LLP as independent auditors to examine
the financial statements of the Company and its subsidiaries for the fiscal year
1999. Representatives of Deloitte & Touche LLP will be present at the Annual
Meeting, will have an opportunity to make a statement if they so desire, and
will be available to respond to appropriate questions.
OTHER BUSINESS
As of the date of this proxy statement, management knows of no other
matters to be presented at the Annual Meeting. However, if any other matters
shall properly come before the meeting, it is the intention of the persons named
in the enclosed proxy to vote in accordance with their best judgment.
PROPOSALS OF SECURITY HOLDERS
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<PAGE>
Proposals of security holders intended to be presented at the next annual
meeting must be received by the Company no later than June 9, 1999 in order to
be considered for inclusion in the proxy statement relating to that meeting.
Proposals of security holders not intended for inclusion in the Company's 1999
proxy statement must be received by the Company in writing no later than August
23, 1999 in order to preclude the Company's use of its discretionary proxy
voting authority if the proposal is raised at the 1999 annual meeting.
ATCHISON CASTING CORPORATION
/s/ Hugh H. Aiken
Hugh H. Aiken
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
Dated: October 7, 1998
Atchison, Kansas
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<PAGE>
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PROXY PROXY
ATCHISON CASTING CORPORATION
400 South Fourth Street
Atchison, Kansas 66002
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Hugh H. Aiken and Kevin T. McDermed, or
either of them, as Proxies, each with the power to appoint his substitute, and
hereby authorizes them to represent and to vote, as designated below, all the
shares of Common Stock of Atchison Casting Corporation the undersigned is
entitled to vote at the Annual Meeting of Stockholders to be held on November
20, 1998, 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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<PAGE>
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ATCHISON CASTING CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. /X/
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ELECTION OF ALL NOMINEES.
1. ELECTION OF DIRECTOR --
FOR WITHHOLD
NOMINEE: David L. Belluck / / / /
NOMINEE: John O. Whitney / / / /
2. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING AND ALL MATTERS INCIDENT
TO THE CONDUCT OF THE MEETING.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR EACH OF THE NOMINEES FOR DIRECTOR LISTED.
Dated: ______________________________________, 1998
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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