NEWS RELEASE
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CONTACT: Hugh Aiken
Kevin McDermed
913 367 2121
NYSE: FDY
ATCHISON CASTING POSTPONES ANNUAL MEETING
AND PROVIDES UPDATE ON INVESTIGATION OF
ACCOUNTING IRREGULARITIES AT
PENNSYLVANIA FOUNDRY GROUP UNIT
Atchison, Kansas - November 16, 2000 - "Atchison Casting Corporation [NYSE:
"FDY"] plans to adjourn the annual meeting of stockholders, scheduled for
November 17, 2000, until our investigation into accounting irregularities at PFG
is completed and reliable financial information has been made available to our
stockholders," according to Hugh Aiken, CEO.
"As previously announced, the Audit Committee of the Board of Directors
is directing an independent investigation into accounting irregularities at the
Pennsylvania Foundry Group (PFG), a unit of Atchison Casting Corporation (ACC),"
Aiken added. The Audit Committee engaged Jenner & Block to advise the committee
on the conduct of this investigation, and Jenner & Block has retained
PricewaterhouseCoopers as accountants to assist in the investigation.
"The investigation to date has not yielded any definitive conclusions.
Preliminary findings of the accounting irregularities suggest that pretax
earnings between fiscal 1996 and fiscal 2000 may have been cumulatively
overstated by approximately $19 million or more. Most balance sheet accounts
appear to be affected. The employment of PFG's former Chief Financial Officer
has been terminated. Preliminary findings suggest that one or more other
employees also may have been involved in the underlying conduct. The Company has
been in contact with the SEC. The investigators are working diligently to
quantify the amount and nature of the misstated earnings as well as the periods
involved. The Company has also contacted appropriate law enforcement authorities
and is continuing to investigate the possibility of employee theft, which is
currently estimated at $1.2 million or more," said Aiken.
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"As a result, the Company does not expect to release financial statements
for the fiscal quarter ended September 30, 2000, until the necessary
restatements have been made. The most recent financial statements for fiscal
2000 and the auditors' report thereon cannot be relied upon. When the
investigation is complete, earnings will be restated as necessary," Aiken added.
According to David Colburn, Chairman of the Audit Committee, "It appears
that company policies, procedures, and appropriate controls were not followed at
PFG. Preliminary indications are that the conduct was limited to PFG. Our
investigation continues. The Audit Committee will recommend the pursuit of
insurance, income tax, and other recoveries related to any losses, as
appropriate."
"In fiscal 2000, which ended June 30, 2000, PFG reported sales of $36.3
million, or approximately 8% of the total sales reported by Atchison," said
Aiken. "PFG and ACC continue to operate their business as usual."
ACC produces iron, steel and non-ferrous castings for a wide variety of
equipment, capital goods, and consumer markets.
This press release contains forward-looking statements that involve risks
and uncertainties. The Company's actual results could differ materially from the
expected results because of a variety of factors, including the final results of
the investigation into the irregularities described herein, and the amount, if
any, that may be recoverable from insurance or other parties, and other factors
described in the Company's filings with the U.S. Securities and Exchange
Commission.
