<PAGE>

                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549
                                    FORM 10-K

       (Mark One)
/X/    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
       EXCHANGE ACT OF 1934

                   For the fiscal year ended June 30, 2000 OR
/ /    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
       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 or other jurisdiction of                                (I.R.S. Employer
incorporation or organization)                               Identification No.)

         400 South Fourth Street
           Atchison, Kansas                                          66002
(Address of principal executive offices)                          (Zip Code)

Registrant's telephone number, including area code:  (913) 367-2121

          SECURITIES REGISTERED PURSUANT TO SECTION 12 (b) OF THE ACT:

                                                       Name of Each Exchange on
    Title of Each Class                                     Which Registered
    -------------------                                     ----------------
Common Stock, $.01 par value                           New York Stock Exchange

        SECURITIES REGISTERED PURSUANT TO SECTION 12 (G) OF THE ACT: NONE

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 for the past 90 days. YES /X/ NO / /

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. / /

The aggregate market value of the Common Stock, par value $.01 per share, of the
registrant held by. nonaffiliates of the registrant as of September 25, 2000 was
$31,496,112.

Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date.

Common Stock, $.01 par value, outstanding as of September 25, 2000: 7,673,272
Shares

                       DOCUMENTS INCORPORATED BY REFERENCE

     Portions of the Annual Proxy Statement for the Annual Meeting of
Stockholders to be held November 17, 2000, are incorporated by reference into
Part III.


<PAGE>


                                     PART I
    ITEM 1.   BUSINESS

    GENERAL

         Atchison Casting Corporation ("ACC", "Atchison" or the "Company") was
    formed in 1991 with the dual objectives of acting as a consolidator in the
    foundry industry and bringing new technology for casting design and
    manufacture to the foundries it acquires. While Atchison in its current form
    has been in operation since 1991, its operating units have been in
    continuous operation for much longer, in some cases for more than 100 years.
    The first foundry acquired by ACC, the steel-castings division of Rockwell
    International, has been in continuous operation since 1872. The period as a
    semi-captive foundry, under Rockwell, was characterized by high quality
    design and production, but less emphasis on outside customers and new
    markets.

         Atchison manufactures highly engineered metal castings and forgings
    that are utilized in a wide variety of products, including cars, trucks,
    gas, steam and hydroelectric turbines, mining equipment, locomotives,
    passenger rail cars, pumps, valves, army tanks, navy ships, paper-making
    machinery, oil field equipment, reactor vessels for plastic manufacturing,
    computer peripherals, office furniture, home appliances, satellite receivers
    and consumer goods. Having completed nineteen acquisitions since 1991, the
    Company has established itself as a leading consolidator in the casting
    industry. As a result of these acquisitions, the Company has the ability to
    produce castings from a wide selection of materials, including carbon,
    low-alloy and stainless steel, gray and ductile iron, aluminum and zinc as
    well as the ability to manufacture parts in a variety of sizes, ranging from
    small die cast components for the computer industry that weigh a few ounces
    to mill stands for the steel industry that weigh up to 280 tons. The Company
    believes that its broad range of capabilities, which addresses the needs of
    many different markets, provides a distinct competitive advantage in the
    casting and forging industry.

         The Company was founded to make acquisitions in the highly fragmented
    foundry industry and to implement new casting design technology to make the
    foundries more competitive. Following the initial acquisition of the steel
    casting operations of Rockwell International in 1991, the Company has
    continued to acquire foundries in the U.S., Canada and Europe. As a result
    of these acquisitions, as well as internal growth, ACC's net sales have
    increased from approximately $54.7 million in its first fiscal year ended
    June 30, 1992, to $468.3 million for the fiscal year ended June 30, 2000,
    resulting in a compound annual growth rate of 30.8%. The Company did not
    make any acquisitions in fiscal 2000, and is not currently contemplating any
    major acquisitions in fiscal 2001. The Company's primary focus in fiscal
    2001 will continue to be on the integration and improvement of existing
    operations.

         Since 1991, the number of customers served by the Company has increased
    from 12 to more than 600, including companies such as Caterpillar, Gardner
    Denver, General Motors, General Electric, Siemens Westinghouse, General
    Dynamics, Shell, British Steel, Nucor, GEC-Alstom, Ingersoll-Dresser, John
    Deere, DaimlerChrysler, Corus, CICH, Parker Hannifin, Weirton Steel and
    Meritor (formerly Rockwell International). The Company has received supplier
    excellence awards for quality from, or has been certified by, substantially
    all of its principal customers.

         The Company's favorable industry position is attributable to several
    factors, including: (i) its use of new and advanced casting technologies;
    (ii) its ability to cast substantially all types of iron and steel, as well
    as aluminum and zinc; (iii) the Company's emphasis on customer service and
    marketing; and (iv) the Company's position as a long-term supplier to many
    of its major customers.

         The principal executive offices of the Company are located at 400 South
    Fourth Street, Atchison, Kansas 66002-0188, and the Company's telephone
    number is (913) 367-2121.


                                       1
<PAGE>

    COMPANY STRATEGY

         Until recently, ACC pursued growth and diversification through a
    two-pronged approach of: (i) making strategic acquisitions within the widely
    fragmented and consolidating foundry industry; and (ii) integrating the
    acquired foundries to achieve economies of scale, while strengthening
    marketing and promoting the use of new casting technology. ACC's primary
    focus since the beginning of fiscal 2000 has been on the integration and
    improvement of existing operations. No major acquisitions are currently
    contemplated during fiscal 2001.

         STRATEGIC ACQUISITIONS

         ACQUIRE LEADERS AND BUILD CRITICAL MASS. The Company initially acquired
    foundries that were considered leaders in their respective sectors. After
    acquiring a leader in a new market, ACC strives to make subsequent
    acquisitions that further penetrate that market and take advantage of the
    leader's technical expertise. The Atchison/St. Joe Division is a leader in
    the field of large, complex steel castings. This acquisition in 1991
    provided credibility for ACC's presence in the industry and established a
    base for add-on acquisitions. Following the Atchison/St. Joe Division
    acquisition, the Company added capacity and strengthened its base through
    the add-on acquisitions of Amite Foundry and Machine, Inc. ("Amite") in 1993
    and Canadian Steel Foundries, Ltd. ("Canadian Steel") in 1994. As an
    additional example, Prospect Foundry, Inc. ("Prospect") was acquired in 1994
    due to its leading position in gray and ductile iron casting production. The
    subsequent acquisition of La Grange Foundry Inc. ("La Grange") in 1995
    further enhanced ACC's position in this market.

         BROADEN PRODUCT OFFERINGS AND CAPABILITIES. The Company also acquired
    foundries that added a new product line or customer base that can be
    leveraged throughout ACC's network of foundries. For example, prior to the
    acquisition of Prospect in 1994, which expanded ACC's capabilities to
    include gray and ductile iron, the Company only produced carbon and low
    alloy steel castings. The acquisition of Quaker Alloy, Inc. ("Quaker Alloy")
    expanded ACC's stainless and high alloy steel capabilities to include a
    wider range of casting sizes. Los Angeles Die Casting Inc. ("LA Die
    Casting"), a leading die caster of aluminum and zinc components for the
    computer and recreation markets, provides ACC with an entry into the
    aluminum and zinc die casting markets. PrimeCast, Inc. ("PrimeCast")
    (formerly the Beloit Castings Division of Beloit Corporation) expanded ACC's
    capabilities to produce large iron castings. The acquisition of Sheffield
    Forgemasters Group Limited ("Sheffield") brings to ACC the ability to offer
    cast and forged rolls, larger steel castings and centrifically cast parts.
    London Precision Machine & Tool Ltd. ("London Precision") expanded ACC's
    capabilities in the machining of castings.

         DIVERSIFY END MARKETS. The Company attempts to lessen the cyclical
    exposure at individual foundries by creating a diversified network of
    foundries that serve a variety of end markets. Kramer International, Inc.
    ("Kramer"), a supplier of pump impellers, was acquired in 1995, expanding
    ACC's sales to the energy and utility sectors. The Company believes ACC's
    presence in these markets somewhat offsets its exposure to the railroad and
    mining and construction markets, as energy and utility cycles do not
    necessarily coincide with railroad investment or mining and construction
    cycles. The acquisition of Prospect diversified the end markets served by
    the Company by providing access to both the agricultural equipment and
    trucking industries. Sheffield provided a strong position as a supplier to
    the steel industry, as well as substantial enhancement of ACC's presence in
    the oil and gas industry. Currently, the Company serves more than ten major
    end-user markets, compared to three in 1991.

                                       2
<PAGE>

         DIVERSIFY GEOGRAPHICALLY. The Company also seeks to acquire foundries,
    which would expand the operations to other major world economies. Sheffield
    and Fonderie d'Autun ("Autun") provide entry into the Euromarket.

         The following table presents the Company's nineteen acquisitions and
their primary strategic purpose.
<TABLE>
<CAPTION>
                                       DATE
  MANUFACTURING UNIT                  ACQUIRED                           STRATEGIC PURPOSE
--------------------------------    ------------   --------------------------------------------------------------
<S>                                   <C>          <C>
Atchison/St. Joe Division              06/14/91     Leader in carbon and low alloy, large, complex steel castings.
                                                      Initial platform for Company strategy.
Amite                                  02/19/93    Increase  capacity to take on new  projects  with  customers.
                                                      Add-on to Atchison/St. Joe Division.
Prospect                               04/01/94    Leader in gray and ductile iron castings.
Quaker Alloy                           06/01/94    Develop position in stainless and high alloy steel castings.
Canadian Steel                         11/30/94    Access to  hydroelectric  and  steel  mill  markets.  Develop
                                                      position in large castings.
Kramer                                 01/03/95    Leader in castings for pump industry.
Empire Steel Castings, Inc.            02/01/95    Build  position in pump and valve  markets.  Add-on to Quaker
                                                      Alloy.
La Grange                              12/14/95    Build position in gray and ductile iron casting markets.
The G&C Foundry Company                03/11/96    Highly  regarded in fluid  power  market.  Build  position in
                                                      gray and ductile iron casting markets.
LA Die Casting                         10/01/96    Leader in aluminum and zinc die casting.
Canada Alloy Castings, Ltd.            10/26/96    Build  position in existing  markets.  Smaller  castings than
                                                      Canadian Steel, but similar markets and materials.
Pennsylvania Steel Foundry             10/31/96    Build position in power  generation,  pump and valve markets.
 & Machine Company                                    Add-on to Quaker Alloy and Empire.
Jahn Foundry Corp.                     02/14/97    Develop  position in market for automotive  castings.  Add-on
                                                      iron foundry.
PrimeCast                              07/01/97    Build position in gray and ductile iron casting markets. Enter
                                                      paper-machinery market, acquire capability for large iron
                                                      castings and expandability to cast bronze.
Inverness Castings Group, Inc.         10/06/97    Expand in automotive and aluminum products.
Sheffield                              04/06/98    Enter  European   marketplace  and  add  new  product  lines,
                                                      including   forgings. Gain strong   position  in  steel
                                                      industry and off-shore oil and gas industry.
Claremont Foundry, Inc.                05/01/98    Company's  first  automatic  molding line for steel  castings
                                                      made in green  sand  molds.  Penetrate  more  deeply  into
                                                      mass transit market.
London Precision                       09/01/98    Enhance the Company's capability to machine castings,
                                                      including finish machining.
Autun                                  02/25/99    Establish operations in Europe.
</TABLE>


                                       3
<PAGE>



         INTEGRATION OF ACQUIRED FOUNDRIES

         STRENGTHEN MARKETING FUNCTIONS. Many foundries, particularly those that
    operate as captive foundries or only rely on a small number of customers, do
    not have strong marketing capabilities. ACC views this industry-wide
    marketing weakness as an opportunity to establish a competitive advantage.
    The Company places great emphasis on maximizing new business opportunities
    by strengthening marketing capabilities, adding sales people and
    cross-selling between foundries.

         One way in which ACC builds the marketing efforts of its foundries is
    to increase the number of sales personnel at its foundries. In addition to
    sales people added through acquisitions, the Company has incrementally
    increased the sales force by 36%. ACC has established a central marketing
    organization to assist the decentralized foundry sales teams. The central
    marketing group is headed up by industry veteran Charles Armor, who joined
    ACC in April 2000. Another element of the Company's marketing effort is to
    jointly develop castings with its customers. Joint development projects
    using new technology, and the resulting increased service and flexibility
    provided to customers, is an important marketing tool and has been
    instrumental in receiving several new orders. For example, a joint
    development project between Caterpillar and ACC led to the production of the
    boom tip casting for one of Caterpillar's new hydraulic excavators. Joint
    development projects have also taken place with General Motors, Nordberg,
    John Deere, Case New Holland, Timberjack and DaimlerChrysler, among others.

         An increasingly important aspect of the Company's marketing strategy
    has been to develop its ability to cross-sell among its foundries. In
    acquiring new foundries and expanding into new markets, the Company has
    gained a significant advantage over smaller competitors since its sales
    force is able to direct its customers to foundries with different
    capabilities. This benefits ACC in that it enables foundries to use the
    Atchison name and relationships to gain new customers as well as helping
    customers to reduce their supplier base by providing "one-stop" shopping.
    The Company facilitates cross-selling by reinforcing the sales force's
    knowledge of Company-wide capabilities through visits to individual plants
    and providing sales incentive opportunities.

         INTRODUCE ADVANCED TECHNOLOGY. The Company is systematically
    introducing new advanced technologies into each of its acquired foundries to
    enhance their competitive position. For example, the Company's capabilities
    in finite element analysis and three-dimensional solid modeling are having a
    beneficial impact on sales and casting production by helping customers to
    design lighter and stronger castings, shortening design cycles, lowering
    casting costs and, in some cases, creating new applications. These new
    technologies have enhanced the Company's ability to assist customers in the
    component design and engineering stages, strengthening the Company's
    relationships with its customers. New techniques involve computerized solid
    models that are used to simulate the casting process, to make patterns and
    auxiliary tooling and to machine the finished castings. The Company is in
    the process of implementing this technology in all of its foundries. The
    Company has established a Fabrication-to-Casting design center at its
    Atchison, Kansas facility. The focus of the design center is to help
    customers design new castings, especially those which can replace existing
    fabricated assemblies.

         Investments by the Company in technology improvements include: (i) new
    solidification software and hardware for better casting design and process
    improvement; (ii) Computer Numerical Control ("CNC") machine tools,
    computer-assisted, laser measurement devices and new cutting head designs
    for machine tools to improve productivity and quality in the machining of
    castings; (iii) Argon-Oxygen Decarburization ("AOD") refining, which is used
    to make high-quality stainless steel; (iv) computer-controlled sand binder
    pumps to improve mold quality and reduce cost; (v) equipment for measuring
    the nitrogen content of steel, which helps in casting quality improvement;
    (vi) CNC pattern making;


                                       4
<PAGE>

    (vii) new die casting machines; and (viii) automated testing cells using
    resonate testing. ACC is one of the few foundry companies that uses its own
    scanning electron microscope to analyze inclusions in cast metal. The
    Company also participates in technical projects led by the Steel Founders'
    Society of America and the American Foundrymen's Society, which are
    exploring ways to melt and cast cleaner iron and steel, as well as U.S.
    government/industry specific projects to shorten and improve the casting
    design cycle.

         INCREASE CAPACITY UTILIZATION. A principal objective of the Company in
    integrating and operating its foundries is to increase capacity utilization
    at both its existing and newly acquired facilities. Many of the Company's
    foundries at the time of their acquisition have been operating with
    underutilized capacity. The Company seeks to improve capacity utilization by
    introducing more effective marketing programs and applying advanced
    technologies as described above.

         ACHIEVE PURCHASING ECONOMIES. ACC makes its volume purchasing programs
    available to its foundries. ACC has realized meaningful cost savings by
    achieving purchasing efficiencies for its foundries. By jointly coordinating
    the purchase of raw materials, negotiation of insurance premiums and
    procurement of freight services, ACC's individual foundries have, in some
    cases, realized savings of 10% to 30% of these specific costs.

         LEVERAGE MANAGEMENT EXPERTISE. The Company believes that improvements
    can often be made in the way acquired foundries are managed, including the
    implementation of new technologies, advanced employee training programs,
    standardized budgeting processes and profit sharing programs and providing
    access to capital. In this view, ACC enhances management teams to add
    technical, marketing or production experience, if needed. For example, ACC
    was able to significantly improve the profitability of Canadian Steel by
    adding new members to management, entering new markets, installing finite
    element solidification modeling and providing capital.
    Under ACC ownership, La Grange was able to negotiate a new labor
    agreement, create profit sharing for all employees, broaden its customer
    base and install solidification modeling. Amite captured one of the largest
    steel casting orders of the last decade by combining proven management
    from the Atchison/St. Joe Division with casting design assistance from the
    Atchison/St. Joe Division fab-to-cast design center and a strong customer
    orientation.

    INDUSTRY TRENDS

         The American Foundrymen's Society estimates that global casting
    production was 63.3 million metric tons in 1998 of which steel castings
    accounted for approximately 6.4 million tons, iron castings for
    approximately 47.9 million tons and nonferrous castings for approximately
    9.0 million tons. It is further estimated that the top ten producing
    countries represent 80% of the total production, with the U.S. representing
    in excess of 20% of the world market.

         The U.S. casting industry is estimated to have had shipments of
    approximately 14.6 million tons in 1999, of which steel castings accounted
    for approximately 1.4 million tons, iron castings for approximately 10.4
    million tons and non-ferrous castings for approximately 2.8 million tons. .
    Metal casting shipments are forecast to grow at an annual rate of 1.5% to
    17.1 million tons by 2009. The Company has been able to grow at a rate
    substantially in excess of the overall industry principally as a result of
    its strategy and due to key trends affecting the casting industry, including
    the following:


                                       5
<PAGE>

         INDUSTRY CONSOLIDATION

         Although still highly fragmented, the U.S. foundry industry has
     consolidated from approximately 465 steel foundries and 1,400 iron
     foundries in 1982 to approximately 400 and 700 steel and iron foundries,
     respectively, in 1998. This consolidation trend has been accompanied by
     increased outsourcing of casting production and OEM supplier
     rationalization.

         OUTSOURCING. Many OEMs are outsourcing the manufacture of cast
     components to independent foundries in an effort to reduce their capital
     and labor requirements and to focus on their core businesses. Management
     believes that captive foundries are often underutilized, inefficiently
     operated and lack the latest technology. Several of ACC's OEM customers,
     such as Caterpillar, General Motors, General Electric, Meritor (formerly
     Rockwell International), Ingersoll-Dresser, Gardner Denver, Compagnie
     Internationale du Chauffage and Beloit Corporation, have closed or sold one
     or more of their captive foundries during the past ten years and have
     outsourced the castings which they once made to independent suppliers such
     as the Company. As described above, the closure of these facilities has
     contributed to increased capacity utilization at the remaining foundries.

         OEM SUPPLIER RATIONALIZATION. OEMs are rationalizing their supplier
     base to fewer foundries that are capable of meeting increasingly complex
     requirements. For example, OEMs are asking foundries to play a larger role
     in the design, engineering and development of castings. In addition, some
     customers have demanded that suppliers implement new technologies, adopt
     quality (ISO 9000 and QS 9000) standards and make continuous productivity
     improvements. As a result, many small, privately-owned businesses have
     chosen to sell their foundries because they are unwilling or unable to make
     investments necessary to remain competitive. Moreover, the EPA and OSHA
     require compliance with increasingly stringent environmental and
     governmental regulations.

         NEW CASTING TECHNOLOGY

         Recent advances in casting technology and pattern-making have created
     new opportunities for reducing costs while increasing efficiency and
     product quality. The combination of powerful, low cost computer
     workstations with finite element modeling software for stress analysis and
     metal solidification simulation is helping foundries and customers to
     design castings that are lighter, stronger and more easily manufactured at
     a competitive cost.

         The Company believes new casting technologies have led to growth in
     casting shipments by replacing forgings and fabrications in certain
     applications. In the past, fabricated (welded) components have been used in
     order to reduce tooling costs and product development lead-time. New
     casting technology has helped to reduce the weight and cost, and shorten
     the lead-time, of castings and has therefore increased the relative
     attractiveness of cast components. For example, these improvements allowed
     an ACC customer to replace a fabricated steel boom that is used in a
     typical mining vehicle with one that is cast. The cast steel boom weighs
     20% less than the fabricated component that it replaced, allowing an
     increase in payload. Product life is increased due to greater corrosion
     resistance. Another customer replaced the combination cast/fabricated body
     of a rock crusher with a one-piece casting, reducing labor for cutting,
     welding and machining as a result.

         The Company has established a Fabrication-to-Casting Design Center at
     its Atchison, Kansas facility. The focus of the design center is to help
     customers design new castings, especially those which can replace existing
     fabricated assemblies.

                                       6
<PAGE>

     MARKETS AND PRODUCTS

         STEEL INDUSTRY. The steel industry uses rolls to form cast steel into
     sheets, bars, rods, beams and plates, which are then used to make end
     products such as car bodies, tin cans and bridges. Rolls are consumed as
     steel is rolled, so there is a steady demand for rolls. Customers in this
     market include British Steel and Nucor, among others. Sheffield
     Forgemasters Rolls Limited ("Forgemasters Rolls") is one of the world
     leaders in cast and forged rolls for the steel-making industry. Steel
     products produced by the Company accounted for 7.0%, 18.7% and 18.2% of the
     Company's net sales in fiscal 1998, fiscal 1999 and fiscal 2000,
     respectively.

         MINING AND CONSTRUCTION. ACC's castings are used in tractor-crawlers,
     mining trucks, excavators, drag lines, wheel-loaders, rock crushers, diesel
     engines, slurry pumps, coal mining machines and ore-processing equipment.
     Mining and construction equipment customers include Caterpillar, Nordberg,
     Meritor (formerly Rockwell International), Gardner Denver, John Deere,
     Komatsu and Euclid, among others. Products supplied to the mining and
     construction industry accounted for 23.1%, 18.0% and 16.3% of the Company's
     net sales in fiscal 1998, fiscal 1999 and fiscal 2000, respectively.

         RAILROAD. The Company supplies cast steel undercarriages for
     locomotives, among other parts, for this market. GM is ACC's largest
     locomotive customer, and has purchased locomotive castings from the
     Atchison/St. Joe Division for over 60 years. The Company further penetrated
     this market through the purchase of London Precision. Rail products
     produced by the Company accounted for 6.6%, 11.4% and 10.3% of the
     Company's net sales in fiscal 1998, fiscal 1999 and fiscal 2000,
     respectively.

         AUTOMOTIVE. The automotive industry uses both iron and aluminum
     castings, as well as aluminum die castings. ACC entered this market through
     the purchase of Jahn Foundry Corp. ("Jahn Foundry") in Springfield,
     Massachusetts and Inverness Castings Group, Inc. ("Inverness") in Dowagiac,
     Michigan. Customers in this market include General Motors and
     DaimlerChrysler, among others. Automotive products produced by the Company
     accounted for 10.4%, 8.7% and 8.8% of the Company's net sales in fiscal
     1998, fiscal 1999 and fiscal 2000, respectively.


         ENERGY. The Company's products for the energy market include pumps,
     valves and compressors for transmission and refining of petrochemicals,
     blow-out preventers and mud pumps for drilling and work-over of wells,
     lifting hooks and shackles for offshore installation of equipment, winch
     components for rig positioning, nodes for platform construction, subsea
     components and other oil field castings. Shell, Amoco, Aker-Verdal,
     Shaffer, Rolls Royce, Hydril, Solar Turbines, Nordstrom, Ingersoll-Dresser
     Pumps and Amclyde are among the Company's many energy-related customers.


         UTILITIES. Many of ACC's castings are used in products for the utility
     industry, such as pumps, valves and gas compressors. ACC also makes steam,
     gas and hydroelectric turbine castings, nuclear plant components, sewage
     treatment parts and other castings for the utility industry. In addition,
     the Company manufactures replacement products that are used when customers
     perform refurbishments. Customers include Siemens Westinghouse, General
     Electric, Solar Turbines, GEC-Alsthom, Sulzer, Siemens, Kvaerner, Goulds
     Pumps and Neles Controls.

         MILITARY. Weapons and equipment for the Army, Navy and Coast Guard
     employ many different types of castings. The Company makes components for
     ships, battle tanks, howitzers and other heavy weapons. The capabilities of
     Sheffield has allowed ACC to bid on a wider range of work for the U.S.
     Navy. The military casting market has declined sharply, but ACC has been
     able to replace this

                                       7
<PAGE>

     volume by targeting new products such as turbines, compressors, pumps and
     valves. Customers in this market include General Dynamics, Litton, Bath
     Iron Works, Boeing, SEI, the U.S. Army and Avondale Shipyards, among
     others.

         TRUCKING. The Company manufactures components used on truck engines
     and suspension systems. Many of ACC's castings are used in aftermarket
     products to achieve better fuel economy or to enhance ride characteristics.
     Customers include Horton Industries, Detroit Diesel and others.

         FARM EQUIPMENT. ACC makes a variety of castings for farm tractors,
     baling equipment, harvesters, sugar cane processors and other agricultural
     equipment for customers such as John Deere, Caterpillar and New Holland.

         PAPER-MAKING MACHINERY. The paper-making machinery industry uses a
     variety of iron, steel and non-ferrous castings, both in original equipment
     and for the aftermarket.

         MASS TRANSIT. ACC began making undercarriages for passenger rail cars
     in 1992 and is a leading casting supplier to the mass transit market. The
     Company's castings are used on the BART system in San Francisco, METRA in
     Chicago, NCTD in San Diego, MARTA in Atlanta, and in Miami and Vancouver.
     La Grange casts components used in subway cars in several cities, including
     New York City, which is the largest user of subway cars in North America.

         OTHER. Other markets include process equipment such as rubber mixers,
     plastic extruders, dough mixers, machine tools and a variety of general
     industrial applications. With the acquisition of LA Die Casting, the
     Company entered the consumer market. LA Die Casting supplies components
     used to make recreational vehicles, computer peripherals, direct satellite
     receivers, telescopes and pool tables. Customers include California
     Amplifier, RC Design, Celestron and Printronix.

         For financial information about geographic areas, see footnote 20 of
     the notes to the Company's Consolidated Financial Statements.

     SALES AND MARKETING

         New foundry technologies and the new applications resulting therefrom
     require a more focused and knowledgeable sales force. The Company pursues
     an integrated sales and marketing approach that includes senior management,
     engineering and technical professionals, production managers and others,
     all of whom work closely with customers to better understand their specific
     requirements and improve casting designs and manufacturing processes. The
     Company supplements its direct sales effort with participation in trade
     shows, marketing videos, brochures, technical papers and customer seminars
     on new casting designs.

         The Company's engineering and technical professionals are actively
     involved in marketing and customer service, often working with customers to
     improve existing products and develop new casting products and
     applications. They typically remain involved throughout the product
     development process, working directly with the customer to design casting
     patterns, build the tooling needed to manufacture the castings and sample
     the castings to ensure they meet customers' specifications. The Company
     believes that the technical assistance in product development, design,
     manufacturing and testing that it provides to its customers gives it an
     advantage over its competition.

         Customers tend to develop long-term relationships with foundries that
     can provide high quality, machined castings delivered on a just-in-time
     basis that do not require on-site inspection. Frequently,

                                       8
<PAGE>

     the Company is the only current source for the castings that it produces.
     Maintaining duplicate tooling in multiple locations is costly, so customers
     prefer to rely on one supplier for each part number. Moving the tooling to
     another foundry is possible, however, such a move entails considerable time
     and expense on the customer's part. In addition, ACC is forming product
     development partnerships with a number of customers to develop new
     applications for castings.

     BACKLOG

         The Company's backlog is based upon customer purchase orders that the
     Company believes are firm and does not include purchase orders anticipated
     but not yet placed. At June 30, 2000, the Company's backlog was
     approximately $168.6 million, as compared to backlog of approximately
     $178.9 million at June 30, 1999. The backlog is scheduled for delivery in
     fiscal 2001 except for approximately $20.8 million, of which $11.5 million
     is scheduled for delivery in fiscal 2002. The level of backlog at any
     particular time is not necessarily indicative of the future operating
     performance of the Company. The Company historically has not experienced
     cancellation of any significant portion of customer orders.

     COMPETITION

         The Company competes with a number of foundries in one or more product
     lines, although none of the Company's competitors compete with it across
     all product lines. The principal competitive factors in the castings market
     are quality, delivery and price; however, breadth of capabilities and
     customer service have become increasingly important. The Company believes
     that it is able to compete successfully in its markets by: (i) offering
     high quality, machined castings; (ii) working with customers to develop and
     design new castings; (iii) providing reliable delivery and short
     lead-times; (iv) containing its manufacturing costs, thereby pricing
     competitively; and (v) offering a broad range of cast materials.

         The Company believes that the market for iron and steel castings is
     attractive because of a relatively favorable competitive environment, high
     barriers to entry and the opportunity to form strong relationships with
     customers. New domestic competitors are unlikely to enter the foundry
     industry because of the high cost of new foundry construction, the need to
     secure environmental approvals at a new foundry location, the technical
     expertise required and the difficulty of convincing customers to switch to
     a new, unproven supplier.

         ACC, and the foundry industry in general, competes with manufacturers
     of fabrications in some application areas. The Company believes that the
     relative advantages of castings, particularly in light of new casting
     design technology, which reduces weight, cost and leadtime while improving
     casting quality, will lead to increased replacement of fabrications by iron
     and steel castings. The Company competes with foundries in Asia, Europe and
     North America.

     MANUFACTURING

         CASTINGS. Casting is one of several methods, along with forging and
     fabricating, which shape metal into desired forms. Castings are made by
     pouring or introducing molten metal into a mold and allowing the metal to
     cool until it solidifies, creating a monolithic component. Some castings,
     such as die castings, are made with a permanent metal mold which can be
     used repeatedly. Others, such as sand castings, are made in a sand mold
     which is used only once. Forgings are made by shaping solid metal with
     pressure, usually in a die or with hammers. Fabrications are made by
     welding together separate pieces of metal. Castings may offer significant
     advantages over forgings and fabrications. A well-designed casting can be
     lighter, stronger and more stress and corrosion resistant than a fabricated

                                       9
<PAGE>

     part. Although castings and forgings are similar in several respects,
     castings are generally less expensive than forgings.

         CASTING PROCESS. The steel casting manufacturing process involves
     melting steel scrap in electric arc or induction furnaces, adding alloys,
     pouring the molten metal into molds made of sand or iron and removing the
     solidified casting for cleaning, heat treating and quenching prior to
     machining the casting to final specifications. The manufacture of a steel
     casting begins with the molding process. Initially, a pattern constructed
     of wood, aluminum or plastic is created to duplicate the shape of the
     desired casting. The pattern, which has similar exterior dimensions to the
     final casting, is positioned in a flask and foundry sand is packed tightly
     around it. After the sand mold hardens, the pattern is removed. When the
     sand mold is closed, a cavity remains within it shaped to the contours of
     the removed pattern. Before the mold is closed, sand cores are inserted
     into the cavity to create internal passages within the casting. For
     example, a core would be used to create the hollow interior of a valve
     casing. With the cores in place, the mold is closed for pouring. Castings
     for rolls are sometimes made by stirring the mold while the liquid steel or
     iron is being poured into it.

         Steel scrap and alloys are melted in an electric arc furnace at
     approximately 2,900 degrees Fahrenheit, and the molten metal is poured from
     a ladle into molds. After pouring and cooling, the flask undergoes a
     "shakeout" procedure in which the casting is removed from the flask and
     vibrated to remove sand. The casting is then moved to a blasting chamber
     for removal of any remaining foundry sand and scale. Next, the casting is
     sent to the cleaning room, where an extensive process removes all excess
     metal. Cleaned castings are put through a heat treating process, which
     improves properties such as hardness and tensile strength through
     controlled increases and decreases in temperature. A quench tank to reduce
     temperatures rapidly is also available for use in heat treatment. The
     castings are shot blasted again and checked for dimensional accuracy. Each
     casting undergoes a multi-stage quality control procedure before being
     transported to one of the Company's or the customer's machine shops for any
     required machining.

         Iron castings are processed similarly in many respects to steel
     castings. Melting and pouring temperatures for molten iron are
     approximately 2,400 degrees Fahrenheit, and less cleaning and finishing is
     required for iron castings than is typically required for steel castings.
     Iron and steel scrap may both be used in making cast iron.

         Die casting, as contrasted to sand casting, uses a permanent metal mold
     that is reused. Melting and pouring temperatures for aluminum and zinc are
     less than half that used for steel, and die castings normally require less
     cleaning than iron or steel castings.

         FORGING PROCESS. The forging process applies pressure by hitting or
     pressing a heated ingot or wrought steel blank. The forged piece is then
     heat-treated and machined much in the same manner as a steel casting.

         MATERIALS. Steel is more difficult to cast than iron, copper or
     aluminum because it melts at higher temperatures, undergoes greater
     shrinkage as it solidifies, causing the casting to crack or tear if the
     mold is not properly designed, and is highly reactive with oxygen, causing
     chemical impurities to form as it is poured through air into the mold.
     Despite these challenges, cast steel has become a vital material due to its
     superior strength compared to other ferrous metals. In addition, most of
     the beneficial properties of steel match or exceed those of competing
     ferrous metals. The Company's first foundry, which today forms the
     Atchison/St. Joe Division, produced carbon and low alloy steel castings
     when it was acquired from Rockwell International in 1991. ACC added an AOD
     vessel for making stainless steel in order to better supply the pump and
     valve markets, which sometimes require stainless steel castings to be made
     from the same patterns used for carbon steel castings. Also in 1994,

                                       10
<PAGE>

     ACC purchased Quaker Alloy, which specializes in casting high alloy and
     stainless steels for valves, pumps and other equipment. Sheffield, Canadian
     Steel and Canada Alloy Castings, Ltd. ("Canada Alloy") also make high alloy
     and stainless castings, further reinforcing ACC's market position and skill
     base concerning the casting of stainless and specialty, high alloy steels.

         In applications that do not require the strength, ductility and/or
     weldability of steel, iron castings are generally preferred due to their
     lower cost, shorter lead-times and somewhat simpler manufacturing
     processes. Ductile iron is stronger and more flexible than traditional cast
     iron, known as gray iron, and is easier and less expensive to cast than
     steel. Due to these qualities, the demand for ductile iron is increasing
     faster than for either traditional gray cast iron or cast steel. In 1994,
     ACC initiated manufacturing of gray and ductile iron through the
     acquisition of Prospect. ACC's presence in ductile iron was increased
     through the subsequent purchases of La Grange, The G&C Foundry Company
     ("G&C") and PrimeCast.

         Aluminum castings (including die castings) generally offer lighter
     weight than iron or steel, and are usually easier to cast because aluminum
     melts at a lower temperature. These advantages, coupled with low prices for
     aluminum during the last decade, have led to a substantial increase in the
     use of aluminum castings, especially in motor vehicles. Aluminum's relative
     softness, lower tensile strength and poor weldability limit its use in many
     applications where iron and steel castings are currently employed. In 1996,
     ACC entered the nonferrous market with the purchase of LA Die Casting,
     which die casts aluminum and zinc.

         Steel, unlike iron, can be forged as well as cast. Forging compresses
     steel, and is preferred for some critical applications like nuclear
     vessels, turbine shafts and pressure vessels, among others.

         The ability to provide cast and forged components in a broad range of
     materials allows ACC to present itself as a "one-stop shop" for some
     customers and simplifies purchasing for others. Since customers in general
     have a goal of reducing their total number of suppliers, a broader range of
     materials and casting skills gives ACC an advantage over many other foundry
     operations.

         MACHINING. The Company machines many of its steel castings, typically
     to tolerances within 30 thousandths of an inch. Some castings are machined
     to tolerances of one thousandth of an inch. Machining includes drilling,
     threading or cutting operations. The Company's Sheffield, St. Joe, Amite,
     Inverness and London Precision machine shops have a wide variety of machine
     tools, including CNC machine tools. The Company also machines some of its
     castings at Canadian Steel, Quaker Alloy, Empire Steel Castings, Inc.
     ("Empire") and Kramer. The ability to machine castings provides a higher
     value-added product to the customer and improved quality. Casting
     imperfections, which are typically located near the surface of the casting,
     are usually discovered during machining and corrected before the casting is
     shipped to the customer.

         NON-DESTRUCTIVE TESTING. Customers typically specify the physical
     properties, such as hardness and strength, which their castings are to
     possess. The Company determines how best to meet those specifications.
     Regular testing and monitoring of the manufacturing process are necessary
     to maintain high quality and to ensure the consistency of the castings.
     Electronic testing and monitoring equipment for tensile, impact,
     radiography, ultrasonic, magnetic particle, dye penetrant and
     spectrographic testing are used extensively to analyze molten metal and
     test castings.

         ENGINEERING AND DESIGN. The Company's process engineering teams assist
     customers in designing castings and work with manufacturing departments to
     determine the most cost effective manufacturing process. Among other
     computer-aided design techniques, the Company uses three-

                                       11
<PAGE>

     dimensional solid modeling and solidification software. This technology
     reduces the time required to produce sample castings for customers by
     several weeks and improves the casting design.

         CAPACITY UTILIZATION. The following table shows the type and the
     approximate amount of available capacity, in tons, for each foundry and die
     caster. The actual number of tons that a foundry can produce annually is
     dependent on product mix. Complicated castings, such as those used for
     military applications or in steam turbines, require more time, effort and
     use of facilities, than do simpler castings such as those for the mining
     and construction market. Also, high alloy and stainless steel castings
     generally require more processing time and use of facilities than do carbon
     and low alloy steel castings.
<TABLE>
<CAPTION>
                                                                                       TONS
                                                                                     SHIPPED
                                                                   ESTIMATED*       12 MONTHS
                                                                     ANNUAL           ENDED        ESTIMATED*
  MANUFACTURING      METALS CAST OR                                 CAPACITY         JUNE 30,       CAPACITY
      UNIT               FORGED           MAJOR APPLICATIONS       IN NET TONS         2000        UTILIZATION
-----------------    ----------------  -------------------------   ------------   ---------------  ------------
<S>                  <C>               <C>                         <C>            <C>              <C>
Atchison/St. Joe     Carbon, low       Mining and construction,       30,000          22,277          74.3%
Division              alloy and        rail, military, valve,
                      stainless        turbine and compressor
                      steel

Amite                Carbon and low    Marine, mining and
                      alloy steel       construction                  14,000            4,850         34.6%



Prospect             Gray and          Construction,
                      ductile iron     agricultural, trucking,        12,500            8,115         64.9%
                                       hydraulic, power
                                       transmission and machine
                                       tool

Quaker Alloy         Carbon, low       Pump and valve
                      alloy and                                        6,000            1,897         31.6%
                      stainless
                      steel

Canadian Steel       Carbon, low       Hydroelectric and steel
                     alloy and         mill                            6,000            1,995         33.3%
                     stainless steel


Kramer               Carbon, low       Pump impellers and
                     alloy and         casings                         1,450               858        59.2%
                     stainless
                     steel, gray
                     and ductile
                     iron

Empire               Carbon and low    Pump and valve
                      alloy steel                                      4,800             1,285        26.8%
                      and gray,
                      ductile and
                      nickel
                      resistant
                      iron

La Grange            Gray, ductile     Mining and construction
                      and compacted    and transportation             14,000             9,879        70.6%
                      graphite iron

G&C                  Gray and          Fluid power (hydraulic
                     ductile iron      control valves)                12,000             8,592        71.6%
</TABLE>

                                       12
<PAGE>


<TABLE>
<CAPTION>
                                                                                       TONS
                                                                                     SHIPPED
                                                                   ESTIMATED*       12 MONTHS
                                                                     ANNUAL           ENDED        ESTIMATED*
  MANUFACTURING      METALS CAST OR                                 CAPACITY         JUNE 30,       CAPACITY
      UNIT               FORGED           MAJOR APPLICATIONS       IN NET TONS         2000        UTILIZATION
-----------------    ----------------  -------------------------   ------------   ---------------  ------------
<S>                  <C>               <C>                         <C>            <C>              <C>
LA Die Casting       Aluminum and      Communications,
                      zinc              recreation and computer       1,750           1,062           60.7%

Canada Alloy         Carbon, low       Power generation, pulp
                     alloy and         and paper machinery,           2,500           1,360           54.4%
                     stainless steel   pump and valve

Pennsylvania         Carbon and        Power generation, pump
   Steel Foundry      stainless        and valve                       3,700          1,373           37.1%
   and Machine        steel
   Company

Jahn                 Gray iron         Automotive, air
                                       conditioning and               11,000          5,643           51.3%
                                       agricultural


PrimeCast             Gray and         Paper-making machinery
                      ductile iron                                    19,840          10,525          53.0%
                      and stainless
                      steel

Inverness            Aluminum          Automotive, furniture
                                       and appliances                 12,500          8,680           69.4%

Forgemasters         Iron and Steel    Steel and aluminum
Rolls                                  rolling                        31,000          25,197          81.3%

Sheffield            Iron and Steel    Oil and gas, ingot,
Forgemasters                           petrochemical, power          113,000          30,266          26.8%
Engineering                            generation
Limited

Claremont            Steel             Mining and construction
Foundry, Inc.                          and mass transit               6,000           1,162           19.4%

Autun                Iron              Heating , domestic
                                       appliance and automotive       30,000          19,229          64.1%
                                       castings
                                                                   -------------  ---------------  ------------
        Totals                                                       332,040          164,245         49.5%
                                                                   =============  ===============  ============
</TABLE>


<TABLE>
<CAPTION>
                                                                                    MACHINING
                                                                                      HOURS
                                                                   ESTIMATED*       12 MONTHS
                                                                     ANNUAL           ENDED        ESTIMATED*
  MANUFACTURING          METALS                                    MACHINING         JUNE 30,       CAPACITY
       UNIT             MACHINED          MAJOR APPLICATIONS         HOURS             2000        UTILIZATION
-------------------  ----------------  -------------------------  -------------   ---------------  ------------
<S>                  <C>               <C>                        <C>             <C>              <C>
London Precision     Carbon, low       Mining and                    170,000         201,223         118.4%
                      alloy,           construction, rail,
                      stainless        military, valve,
                      steel, iron      turbine and compressor
                      and aluminum

                                                                   ------------   ---------------  ------------
        Totals                                                       170,000          201,223        118.4%
                                                                   ============   ===============  ============
-------
</TABLE>
                                       13
<PAGE>

     * Estimated annual capacity and utilization are based upon management's
     estimate of the applicable manufacturing unit's theoretical capacity
     assuming a certain product mix and assuming such unit operated five days a
     week, three shifts per day and assuming normal shutdown periods for
     maintenance. Actual capacities will vary, and such variances may be
     material, based upon a number of factors, including product mix and
     maintenance requirements.

     RAW MATERIALS

         The principal raw materials used by the Company include scrap iron and
     steel, aluminum, zinc, molding sand, chemical binders and alloys, such as
     manganese, nickel and chrome. The raw materials utilized by the Company are
     available in adequate quantities from a variety of sources. From time to
     time the Company has experienced fluctuations in the price of scrap steel,
     which accounts for approximately 4% of net sales, and alloys, which account
     for less than 2% of net sales. The Company has generally been able to pass
     on the increased costs of raw materials and has escalation clauses for
     scrap with certain of its customers. As part of its commitment to quality,
     the Company issues rigid specifications for its raw materials and performs
     extensive inspections of incoming raw materials.

     QUALITY ASSURANCE

         The Company has adopted sophisticated quality assurance techniques and
     policies which govern every aspect of its operations to ensure high
     quality. During and after the casting process, the Company performs many
     tests, including tensile, impact, radiography, ultrasonic, magnetic
     particle, dye penetrant and spectrographic tests. The Company has long
     utilized statistical process control to measure and control dimensions and
     other process variables. Analytical techniques such as Design of
     Experiments and the Taguchi Method are employed for troubleshooting and
     process optimization.

         As a reflection of its commitment to quality, the Company has been
     certified by, or won supplier excellence awards from, substantially all of
     its principal customers. Of 600 suppliers to General Motors' Electromotive
     Division, the Company was the first supplier to receive the prestigious
     Targets of Excellence award. Reflecting its emphasis on quality, the
     Atchison/St. Joe Division was certified to ISO 9001 in August 1995, which
     represents compliance with international standards for quality assurance.
     Quaker Alloy, La Grange, Canada Alloy, Jahn Foundry, Pennsylvania Steel
     Foundry & Machine Company ("Pennsylvania Steel"), G & C, Inverness, London
     Precision, Forgemasters Rolls and Canadian Steel have each been certified
     to ISO 9002. Sheffield Forgemasters Engineering Ltd. ("Forgemasters
     Engineering") has been certified to ISO 9001. Other ACC foundries are
     preparing for ISO certification.

     EMPLOYEE AND LABOR RELATIONS

         As of June 30, 2000, the Company had approximately 4,200 full-time
     employees. Since its inception, the Company has had two work stoppages. The
     Company is currently in negotiations with newly formed unions at PrimeCast
     and London Precision. There is currently a work stoppage at PrimeCast
     resulting from these on-going negotiations. The PrimeCast operation has
     continued to operate during this work stoppage. The Company's hourly
     employees are covered by collective bargaining agreements with several
     unions at seventeen of its locations. These agreements expire at varying
     times over the next several years. The following table sets forth a summary
     of the principal unions and term of the principal collective bargaining
     agreements at the respective locations. The labor laws of France prevent
     the Company from learning the number of employees in the union at Autun.

                                       14
<PAGE>

<TABLE>
<CAPTION>
                                                                                                                  APPROXIMATE
                                                                                                                   NUMBER OF
   MANUFACTURING                                                                                DATE OF            MEMBERS (AS
       UNIT                       NAME OF PRINCIPAL UNION                EFFECTIVE DATE       EXPIRATION          OF 06/30/00)
--------------------     -----------------------------------------       --------------       ----------          ------------
<S>                      <C>                                             <C>                  <C>                      <C>
      Atchison/St. Joe   United Steelworkers of America, Local            05/11/99             05/12/02                335
                         6943

      Prospect           Glass, Molders, Pottery,                         08/31/00             06/30/03                170
                         Plastics & Allied Workers
                         International, Local 63B

      Quaker Alloy       United Steelworkers of                           05/15/99             07/15/03                138
                         America, Local 7274

      Canadian Steel     Metallurgistes Unis                              02/12/96             02/12/01                 85
                         d'Amerique, Local 6859

      Kramer             United Steelworkers of                           07/29/00             07/29/03                 80
                         America, Local 1343

      Empire             United Steelworkers of                           03/01/97             02/28/02                 87
                         America, Local 3178

      La Grange          Glass, Molders, Pottery,                         12/14/95             12/16/00                180
                         Plastics & Allied Workers
                         Union, Local 143

      G&C                United Electrical, Radio and                     03/01/97             06/30/01                110
                         Machine Workers of America,
                         Local 714

      LA Die Casting     United Automobile, Aircraft,                     12/13/97             12/08/00                 45
                         Agricultural Implement
                         Workers of America, Local 509

      Canada Alloy       United Steelworkers of                           04/04/97             04/03/02                 47
                         America, Local 5699

      Pennsylvania       United Steelworkers of                           10/24/98             10/24/01                115
      Steel              America, Local 6541

      Jahn               Glass, Molders, Pottery,                         06/01/98             06/03/01                106
                         Plastics and Allied Workers
                         International, Local 97

      PrimeCast          Glass, Molders, Pottery,                         08/22/00             07/31/04                112
                         Plastics and Allied Workers
                         International, Local 320

                         United Steelworkers of America,              Under negotiation                              To be
                          Local 1533-2                                                                             determined

      Inverness          United Paperworker's International,              02/05/97             08/05/01                220
                         Local 7363
</TABLE>



                                   15
<PAGE>

<TABLE>
<CAPTION>
                                                                                                                  APPROXIMATE
                                                                                                                   NUMBER OF
   MANUFACTURING                                                                                DATE OF            MEMBERS (AS
       UNIT                       NAME OF PRINCIPAL UNION                EFFECTIVE DATE       EXPIRATION          OF 06/30/00)
--------------------     -----------------------------------------       --------------       ----------          ------------
<S>                      <C>                                             <C>                  <C>                    <C>
      Sheffield          Steel and Industrial Managers Association        1/1/00               12/31/00                 4
       Forgemasters
       Engineering       Iron and Steel Trades Confederation
       Limited                                                            1/1/00               12/31/00                 60

                         Electrical Engineering and plumbing              1/1/00               12/31/00                 17
                         Trades Union

                         Manufacturing Science and Finance                1/1/00               12/31/00                 30

                         Trades Associated to Steel and                   1/1/00               12/31/00                  4
                         Sheetmakers

                         Association of Professional and                  1/1/00               12/31/00                  7
                         Executive Staff

                         General Municipal and Boilermakers               1/1/00               12/31/00                 42

                         Allied Engineering and Electrical Union          1/1/00               12/31/00                129

                         Transport and General Workers Union              1/1/00               12/31/00                  8

                         Amalgamated Metal and Steelworkers Union         1/1/00               12/31/00                 10


                         Union of Construction, allied Trades and         1/1/00               12/31/00                 3
                         Technicians

      Forgemasters       Amalgamated Engineering and Electrical
       Rolls             Union
                         -        Sheffield                               1/1/00               12/31/00                 79
                         -        Crewe                                   8/1/00               7/31/01                 196
                         -        Coatbridge                              1/1/98               12/31/99                 39

                         Iron and Steel Trades Confederation
                         -        Sheffield                               1/1/00               12/31/00                 10

                         General and Municipal Workers Union
                         -        Sheffield                               1/1/00               12/31/00                 3

                         Transport and General Workers Union
                         -        Sheffield                               1/1/00               12/31/00                 4


                         Manufacturing Science and Finance
                         -        Crewe                                   8/1/00               7/31/01                  19
                         -        Sheffield                               1/1/00               12/31/00                 7


      London Precision   United Steelworkers of America, Local       Under negotiation                                To be
                         2699                                                                                      determined
</TABLE>




                                       16
<PAGE>


     EXECUTIVE OFFICERS OF THE REGISTRANT

         The following table sets forth certain information with respect to the
     executive officers of the Company.
<TABLE>
<CAPTION>
NAME                                       AGE      POSITION WITH THE COMPANY
-----------------------------------------  -------  ------------------------------------------------------------
<S>                                        <C>      <C>

Hugh H. Aiken...........................     56     Chairman of the Board, President, Chief Executive Officer
                                                             and Director


Thomas K. Armstrong, Jr.................     46     Chief Operating Officer - North America


David Fletcher..........................     54     Vice President - Europe

John R. Kujawa..........................     45     Vice President - Large Steel Castings

Donald J. Marlborough...................     64     Vice President - Corporate Development

Kevin T. McDermed.......................     40     Vice President, Chief Financial Officer, Treasurer and
                                                             Secretary

James Stott.............................     58     Vice President
</TABLE>


         HUGH H. AIKEN has been the Chairman of the Board, President, Chief
     Executive Officer and a Director since June 1991. From 1989 to 1991, Mr.
     Aiken served as an Associate of Riverside Partners, Inc., an investment
     firm located in Boston, Massachusetts, and from 1985 to 1989, Mr. Aiken
     served as General Manager for AMP Keyboard Technologies, Inc., a
     manufacturer of electromechanical assemblies located in Milford, New
     Hampshire. Mr. Aiken previously served as a Director and Chief Operating
     Officer of COMNET Incorporated and as a Director and Chief Executive
     Officer of General Computer Systems, Inc., both public companies.

         THOMAS K. ARMSTRONG, JR. has been Chief Operating Officer - North
     America since March 1999. From 1987 to 1999, Mr. Armstrong served as
     President of Texas Steel Co., a Citation Corp. company. From 1979 to 1986,
     Mr. Armstrong held positions at Texas Steel of Executive Vice President,
     Information Systems and Engineering Manager. In addition, Mr. Armstrong
     served as Chief Executive Officer of Southwest Steel Casting Corp., a Texas
     Steel subsidiary, from 1984 through 1989. Mr. Armstrong began his career as
     an engineer with E.I. DuPont from 1976 through 1979. From 1997 to 1999 he
     has served as President of the Steel Founders' Society of America.

         DAVID FLETCHER has been Vice President and Chairman and CEO of Atchison
     Casting UK Limited and the Sheffield Forgemasters Group since April 1998.
     Prior to this he was Chief Executive Officer of the Sheffield Forgemasters
     Group in Sheffield, England, having joined the group in 1986 as the main
     board director responsible for the Engineering group of companies
     comprising Forgemasters Steel & Engineering Limited, River Don Castings
     Limited, Forged Rolls (UK) Limited and British Rollmakers Corporation. From
     1977 to 1986, Mr. Fletcher was Managing Director of various subsidiaries of
     the Aurora Group, including Darwin Alloy Castings, Edgar Allen Foundry,
     Willen Metals and Aurora Steels.

                                       17
<PAGE>

         JOHN R. KUJAWA has been Vice President - Large Steel Castings since
     August 1999. Prior to this he was Vice President - Atchison/St. Joe and
     Amite from November 1996 to August 1999 and Vice President-Atchison/St. Joe
     from August 1994 to November 1996. He served as Executive Vice
     President-Operations of the Company from July 1993 to August 1994, Vice
     President-Foundry of the Company from June 1991 to July 1993, Assistant
     Foundry Manager of the Company from 1990 to 1991 and as Senior Process
     Engineer of the Company from 1989 to 1990. He served as Operations Manager
     for Omaha Steel Castings, a foundry in Omaha, Nebraska, from 1984 to 1989.

         DONALD J. MARLBOROUGH has been Vice President - Corporate Development
     since September 2000. Prior to this he was Vice President - Iron Castings
     from August 1999 to August 2000, Vice President-Canadian Steel, La Grange,
     Canada Alloy and London Precision from November 1996 to August 1999, Vice
     President-Corporate Development and Canadian Steel from December 1994 to
     November 1996 and Vice President-La Grange from December 1995 to November
     1996. From May 1991 to October 1994, Mr. Marlborough served as Vice
     President-Manufacturing and Plant Manager for American Steel Foundries, a
     foundry in Chicago, Illinois, and served as President and Director of
     Manufacturing for Racine Steel Castings, a foundry in Racine, Wisconsin,
     from 1985 to June 1990.

         KEVIN T. MCDERMED has been Vice President, Chief Financial Officer and
     Treasurer of the Company since June 1991 and has served as Secretary of the
     Company since May 1992. He served as the Controller of the Company from
     1990 to June 1991 and as its Finance Manager from 1986 to 1990. Mr.
     McDermed has been with the Company since 1981.

         JAMES STOTT has been Vice President - Kramer since May 1998. He served
     as Vice President - Empire, Kramer, Pennsylvania Steel and Quaker Alloy
     from November 1996 to May 1998 and Vice President - Kramer from January
     1995 to November 1996. He has served as President, Chief Executive Officer
     and Chief Operating Officer of Kramer International, Inc. (the predecessor
     of Kramer) since 1980.

     PRODUCT WARRANTY

         The Company warrants that every product will meet a set of
     specifications, which is mutually agreed upon with each customer. The
     Company's written warranty provides for the repair or replacement of its
     products and excludes contingency costs. Often, the customer is authorized
     to make the repair within a dollar limit, in order to minimize freight
     costs and the time associated therewith. Although the warranty period is 90
     days, this time limit is not strictly enforced if there is a defect in the
     casting. In fiscal 2000, warranty costs amounted to less than one percent
     of the Company's net sales.

     ENVIRONMENTAL REGULATIONS

         Companies in the foundry industry must comply with numerous federal,
     state and local (and, with respect to Canadian, France and U.K. operations,
     federal, provincial and local) environmental laws and regulations relating
     to air emissions, solid waste disposal, stormwater runoff, landfill
     operations, workplace safety and other matters. The Clean Air Act, as
     amended, the Clean Water Act, as amended, and similar provincial, state and
     local counterparts of these federal laws regulate air and water emissions
     and discharges into the environment. The Resource Conservation and Recovery
     Act, as amended, and the Comprehensive Environmental Response, Compensation
     and Liability Act, as amended ("CERCLA"), among other laws, address the
     generation, storage, treatment, transportation and disposal of solid and
     hazardous waste and releases of hazardous substances into the environment,
     respectively. The Company believes that it is in material compliance with
     applicable environmental

                                       18

<PAGE>

     laws and regulations, other than violations or citations, the resolution of
     which would not have a material adverse effect on the Company's financial
     condition and results of operations.

         A Phase I environmental assessment of each of the Company's facilities
     has been performed, and no significant or widespread contamination has been
     identified at any Company facility. A Phase I assessment includes an
     historical review, a public records review, a preliminary investigation of
     the site and surrounding properties and the preparation and issuance of a
     written report, but it does not include soil sampling or subsurface
     investigations. There can be no assurance that these Phase I assessments
     have identified, or could be expected to identify, all areas of
     contamination. As the Company evaluates and updates the environmental
     compliance programs at foundry facilities recently acquired, the Company
     may become aware of matters of noncompliance that need to be addressed or
     corrected. In addition, there is a risk that material adverse conditions
     could have developed at the Company's facilities since such assessments.
     Within the last ten months, groundwater testing confirmed that solvent and
     metals contamination is migrating off of a property owned by Inverness.
     Current estimates suggest that corrective action costs could be
     approximately $400,000.

         The chief environmental issues for the Company's foundries are air
     emissions and solid waste disposal. Air emissions, primarily dust
     particles, are handled by dust collection systems. The Company anticipates
     that it will incur additional capital and operating costs to comply with
     the Clean Air Act Amendments of 1990 and the regulations that are in the
     process of being promulgated thereunder. The Company is currently in the
     process of obtaining permits under the new regulations and estimating the
     cost of compliance with these requirements and the timing of such costs.
     Such compliance costs, however, could have a material adverse effect on the
     Company's results of operations and financial condition. The Company has
     recently entered into an Administrative Consent Order with the
     Massachusetts Department of Environmental Protection to design and install
     new air handling equipment at Jahn Foundry over the next 2-3 years.

         The solid waste generated by the Company's foundries generally consists
     of nonhazardous foundry sand that is reclaimed for reuse in the foundries
     until it becomes dust. Nonhazardous foundry dust waste is then disposed of
     in landfills, two of which are owned by the Company (one in Atchison
     County, Kansas, and one in Myerstown, Pennsylvania). No other parties are
     permitted to use the Company's landfills, which are both in material
     compliance with all applicable regulations to the Company's knowledge.
     Costs associated with the future closure of the landfills according to
     regulatory requirements could be material. In the event a foundry generates
     waste that is identified as hazardous, then a hazardous waste permit is
     obtained and the Company complies in all material respects with its
     provisions for the collection, storage and disposal of hazardous waste.


         The Company also operates pursuant to regulations governing work place
     safety. The Company samples its interior air quality to ensure compliance
     with OSHA requirements. To the Company's knowledge, it currently operates
     in material compliance with all OSHA and other regulatory requirements
     governing work place safety, subject to Jahn Foundry's compliance with the
     settlement agreement with OSHA in connection with the industrial accident
     at Jahn Foundry on February 25, 1999.

         The Company continues to evaluate its manufacturing processes and
     equipment (including its recently acquired facilities) to ensure compliance
     with the complex and constantly changing environmental laws and
     regulations. Although the Company believes it is currently in material
     compliance with such laws and regulations, the operation of casting
     manufacturing facilities entails environmental risks, and there can be no
     assurance that the Company will not be required to make substantial
     additional expenditures to remain in or achieve compliance in the future.

                                       19
<PAGE>

     ITEM 2.  PROPERTIES

         The Company's principal facilities are listed in the accompanying
     table, together with information regarding their location, size and primary
     function. The two landfills are used solely by the Company and contain
     nonhazardous materials only, principally foundry sand. All of the Company's
     principal facilities are owned.

          The following table sets forth certain information with respect to the
     Company's principal facilities.
<TABLE>
<CAPTION>
                                                                                                 FLOOR SPACE IN
               NAME                         LOCATION                 PRINCIPAL USE                  SQ. FEET
------------------------------------   -------------------    -----------------------------    -------------------
<S>                                    <C>                    <C>                              <C>

Corporate Office                       Atchison, KS           Offices                                       3,907

Atchison Foundry                       Atchison, KS           Steel foundry                               451,218

Atchison Pattern Storage               Atchison, KS           Pattern storage                             159,711

St. Joe Machine Shop                   St. Joseph, MO         Machine shop                                142,676

Atchison Casting Landfill              Atchison, KS           Landfill for foundry sand                       N/A

Amite                                  Amite, LA              Steel foundry and machine                   339,000
                                                              shop

Prospect                               Minneapolis, MN        Iron foundry                                133,000

Quaker Alloy                           Myerstown, PA          Steel foundry & landfill                    301,000
                                                              for foundry sand

Canadian Steel                         Montreal, Quebec       Steel foundry                               455,335

Kramer                                 Milwaukee, WI          Steel foundry                                23,000

Empire                                 Reading, PA            Iron and steel foundry                      177,000

La Grange                              La Grange, MO          Iron foundry                                189,000

G & C                                  Sandusky, OH           Iron foundry                                111,000

LA Die Casting                         Los Angeles, CA        Aluminum and zinc die                        35,000
                                                              casting

Canada Alloy                           Kitchener, Ontario     Steel foundry                                83,000

Pennsylvania Steel                     Hamburg, PA            Steel foundry                               158,618
</TABLE>

                                       20

<PAGE>
<TABLE>
<CAPTION>
                                                                                                 FLOOR SPACE IN
               NAME                         LOCATION                 PRINCIPAL USE                  SQ. FEET
------------------------------------   -------------------    -----------------------------    -------------------
<S>                                    <C>                    <C>                              <C>
Jahn Foundry                           Springfield, MA        Iron foundry                                207,689

PrimeCast                              South Beloit, IL       Iron foundry                                325,000
                                       and Beloit, WI

Inverness                              Dowagiac, MI           Aluminum die casting                        210,900

Forgemasters Rolls                     Sheffield and          Iron and steel foundry                      694,306
                                       Crewe, England         and machine shop
                                       and Coatbridge,
                                       Scotland

 Forgemasters Engineering              Sheffield, England     Iron and steel foundry,                   1,181,277
                                                              forge and machine shop

Claremont                              Claremont, NH          Steel Foundry                               110,000

London Precision                       London, Ontario        Machine Shop                                 63,000

Autun                                  Autun, France          Iron foundry                                376,600
</TABLE>



                                       21
<PAGE>




     ITEM 3.  LEGAL PROCEEDINGS

     An accident, involving an explosion and fire, occurred on February 25,
1999, at Jahn Foundry, located in Springfield, Massachusetts. Nine employees
were seriously injured and there have been three fatalities. The damage was
confined to the shell molding area and boiler room. The other areas of the
foundry are operational. Molds are currently being produced at other foundries
as well as Jahn Foundry while the repairs are made. The new shell molding
department is scheduled to be in operation this fall.

     The Company carries insurance for property and casualty damages (over $475
million of coverage), business interruption (approximately $115 million of
coverage), general liability ($51 million of coverage) and workers' compensation
(up to full statutory liability) for itself and its subsidiaries. The Company
recorded charges of $450,000 ($750,000 before tax) during the third quarter of
fiscal 1999, primarily reflecting the deductibles under the Company's various
insurance policies. At this time there can be no assurance that the Company's
ultimate costs and expenses resulting from the accident will not exceed
available insurance coverage by an amount which could be material to its
financial condition or results of operations and cash flows.

       A civil action has been commenced in Massachusetts state court on behalf
of the estates of deceased workers, their families, injured workers and their
families, against the supplier of a chemical compound used in Jahn Foundry's
manufacturing process. Counsel for the plaintiffs informally have indicated a
desire to explore whether any facts would support adding the Company to that
litigation as a jointly and severally liable defendant. The supplier of the
chemical compound, Borden Chemical, Inc., filed a Third Party Complaint against
Jahn Foundry in Massachusetts State Court on February 2, 2000 seeking indemnity
for any liability it has to the plaintiffs in the civil action. The Company's
comprehensive general liability insurance carrier has retained counsel on behalf
of Jahn Foundry and the Company and is aggressively defending Jahn Foundry in
the Third Party Complaint, as well as monitoring the situation on behalf of the
Company. It is too early to assess the potential liability to Jahn Foundry for
the Third Party Complaint and the potential liability to the Company for any
claim, which in any event the Company would aggressively defend. Plaintiff's
counsel has informally raised the possibility of seeking to make a double
recovery under the workers' compensation policy in force for Jahn Foundry,
contending that there was willful misconduct on Jahn Foundry's part leading to
the accident. Such recovery, if pursued and made, would be of a material nature.
It is too early to assess the potential liability for such a claim, which in any
event Jahn Foundry would aggressively defend.



                                       22
<PAGE>



     ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         None
                                     PART II

     ITEM 5.   MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
               MATTERS.

                           PRICE RANGE OF COMMON STOCK

         The Common Stock is traded on the New York Stock Exchange under the
     symbol "FDY." The following table sets forth the high and low sales prices
     for the shares of Common Stock on the New York Stock Exchange for the
     periods indicated.
<TABLE>
<CAPTION>
                                                            HIGH       LOW
                                                            ----       ---
<S>                                                       <C>         <C>
Fiscal Year Ending June 30, 1999:
 First Quarter...............................             18 1/2      9 1/2
 Second Quarter..............................             10          8 3/8
 Third Quarter...............................             10 15/16    7 7/8
 Fourth Quarter..............................             12 1/8      7 1/2

Fiscal Year Ending June 30, 2000:
 First Quarter...............................             11 3/8      8 11/16
 Second Quarter..............................             11          8 1/2
 Third Quarter...............................              9 1/8      6 9/16
 Fourth Quarter..............................              8 5/16     5 11/16

Fiscal Year Ending June 30, 2001:
  First Quarter (through September 25, 2000)               7 3/16     4 11/16
</TABLE>


         As of September 25, 2000, there were over 2,200 holders of the Common
     Stock, including shares held in nominee or street name by brokers.

                                 DIVIDEND POLICY

         The Company has not declared or paid cash dividends on shares of its
     Common Stock. The Company does not anticipate paying any cash dividends or
     other distributions on its Common Stock in the foreseeable future. The
     current policy of the Company's Board of Directors is to reinvest all
     earnings to finance the expansion of the Company's business. The agreements
     governing the Company's credit facility and $20 million senior notes
     contain limitations on the Company's ability to pay dividends. See Note 10
     of Notes to Consolidated Financial Statements.


                                       23
<PAGE>


                      UNREGISTERED SECURITIES TRANSACTIONS

         In lieu of cash compensation for services rendered in their capacity,
     as Directors of the Company, Mr. David Belluck, Mr. Ray Witt, Mr. John
     Whitney and Mr. Stuart Uram were each provided at their election 2,314
     shares of common stock on August 3, 1999, with a then-current market value
     of $9.91 per share. Mr. David D. Colburn and Messrs. Belluck, Witt and Uram
     were each provided at their election 5,545, 2,783, 4,174, 4,174 shares,
     respectively, of common stock on August 9, 2000, with a then-current market
     value of $5.99 per share. Such transactions were exempt from registration
     under the Securities Act of 1993, as amended (the "Act"), pursuant to
     Section 4(2) of the Act.



     ITEM 6.   SELECTED FINANCIAL DATA

         The following table contains certain selected historical consolidated
     financial information and is qualified by the more detailed Consolidated
     Financial Statements and Notes thereto included elsewhere in this Annual
     Report on Form 10-K. The selected consolidated financial information for
     the fiscal years ended June 30, 1996, 1997, 1998, 1999 and 2000 has been
     derived from audited consolidated financial statements. The information
     below should be read in conjunction with the Consolidated Financial
     Statements and Notes thereto and "Management's Discussion and Analysis of
     Financial Condition and Results of Operations" included elsewhere in this
     Annual Report on Form 10-K.















                                       24
<PAGE>

<TABLE>
<CAPTION>
                                                                     (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
                                                      -----------------------------------------------------------------------------

                                                                               FISCAL YEAR ENDED JUNE 30,
                                                      -----------------------------------------------------------------------------
<S>                                                    <C>              <C>            <C>           <C>             <C>
STATEMENT OF OPERATIONS DATA:                            1996            1997           1998           1999            2000
                                                         ----            ----           ----           ----            ----
Net Sales............................................  $185,081         $245,769       $373,768      $475,559        $468,301
Cost of Sales........................................   156,612          203,386        318,280       407,787         414,748
                                                       --------         --------       --------      --------        --------
     Gross Profit....................................    28,469           42,383         55,488        67,772          53,553
  Operating Expenses:
     Selling, General & Administrative...............    15,459           21,559         28,798        44,682          43,089

     Impairment Charges..............................        -                -              -             -           10,256 (3)

     Amortization of Intangibles.....................     1,508              632            850           544            (408)

     Other Income ...................................   (26,957) (1)          -              -         (2,750)(2)        (606)(4)
                                                       --------         --------       --------      --------        --------
     Operating Income................................    38,459           20,192         25,840        25,296           1,222

 Interest Expense....................................     2,845            3,227          3,896         8,352           9,452

 Minority Interest in Net Income of Subsidiaries.....       225              270            448           237              66
                                                       --------         --------       --------      --------        --------
     Income (Loss) Before Taxes......................    35,389           16,695         21,496        16,707          (8,296)

 Income Taxes........................................    14,063            6,967          8,731         6,901         (10,752)(5)
                                                       --------         --------       --------      --------        --------
     Net Income......................................   $21,326           $9,728        $12,765        $9,806          $2,456
                                                       ========         ========       ========      ========        ========
Earnings Per Share:

   Basic.............................................     $3.87            $1.68          $1.56         $1.26           $0.32
                                                       ========         ========       ========      ========        ========
   Diluted...........................................     $3.87            $1.67          $1.55         $1.26           $0.32
                                                       ========         ========       ========      ========        ========

Weighted Average Number of  Common and  Equivalent
Shares Outstanding

   Basic............................................. 5,510,410        5,796,281      8,167,285     7,790,781       7,648,616

   Diluted........................................... 5,516,597        5,830,695      8,218,686     7,790,781       7,650,311

SUPPLEMENTAL DATA:

 Depreciation and Amortization.......................    $7,411           $8,667        $11,695       $13,400         $14,218

 Capital Expenditures ...............................    12,740           13,852         18,495        20,038          21,387

 Number of Operating Plants at Period End ...........         9               13             17            19              19

BALANCE SHEET DATA (AT PERIOD END):

 Working Capital.....................................   $36,419          $57,231        $76,782       $77,522         $11,794

 Total Assets........................................   162,184          213,408        346,139       373,778         377,265

 Long-Term Obligations...............................    34,655           27,758         87,272       104,607          36,691

 Total Stockholders' Equity (6)......................
                                                         74,654          122,731        135,614       139,069         138,952
</TABLE>

                                       25
<PAGE>


(1)  Other income consists of $27.0 million ($16.2 million, net of tax or $2.95
     per share), consisting primarily of insurance proceeds related to the July
     1993 Missouri River flood.

(2)  Other income consists of a $3.5 million ($2.1 million, net of tax or $0.27
     per share) gain resulting from a revision to the flood damage
     reconstruction reserve, partially offset by a charge of $750,000 ($450,000,
     net of tax or $0.06 per share) recorded in connection with an industrial
     accident that occurred on February 25, 1999 at Jahn Foundry.

(3)  Impairment charges consists of a $3.4 million ($2.1 million, net of tax or
     $0.28 per share) charge relating to the Company's planned closure of
     Claremont Foundry, Inc. ("Claremont") and a $6.9 million ($4.3 million, net
     of tax or $0.56 per share) charge relating to an impairment of long-lived
     assets at PrimeCast.

(4)  Other income consists primarily of gains of $1.1 million ($650,000, net of
     tax) on the termination of interest rate swap agreements.

(5)  Includes a $7.8 million, or $1.02 per share, deferred income tax benefit
     relating to the resolution of the Company's tax treatment of certain flood
     insurance proceeds received in fiscal 1995 and 1996.

(6)  There have been no cash dividends paid during fiscal year 1996 through
     2000.


                                       26
<PAGE>



     ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
               RESULTS OF OPERATIONS

     GENERAL

         Prior to fiscal 2000, the Company pursued an active acquisition program
     designed to take advantage of consolidation opportunities in the widely
     fragmented foundry industry. The Company has acquired nineteen foundries
     since its inception. As a result of these completed transactions as well as
     internal growth, the Company's net sales have increased from approximately
     $54.7 million for its first full fiscal year ended June 30, 1992 to $468.3
     million for the fiscal year ended June 30, 2000.

         The Company did not make any acquisitions in fiscal 2000 and is not
     currently contemplating any major acquisitions in fiscal 2001. The
     Company's primary focus in fiscal 2001 will be on the integration and
     improvement of existing operations.

         Due to the large size of certain orders, the timing for deliveries of
     orders and the number and types of castings produced, the Company's net
     sales and net income may fluctuate materially from quarter to quarter.
     Generally, the first fiscal quarter is seasonally weaker than the other
     quarters as a result of plant shutdowns for maintenance at most of the
     Company's foundries as well as at many customers' plants. See "Supplemental
     Quarterly Information."

     RESULTS OF OPERATIONS

         The following discussion of the Company's financial condition and
     results of operations should be read in conjunction with the Consolidated
     Financial Statements and Notes thereto and other financial information
     included elsewhere in this Report.

     FISCAL YEAR ENDED JUNE 30, 2000 COMPARED TO FISCAL YEAR ENDED JUNE 30, 1999

         Net sales for fiscal 2000 were $468.3 million, representing a decrease
     of $7.3 million, or 1.5%, from net sales of $475.6 million in fiscal 1999.
     The operations acquired by the Company since September 1, 1998 generated
     net sales of $26.4 million and $39.2 million in fiscal 1999 and fiscal
     2000, respectively, as follows:
<TABLE>
<CAPTION>
                                                    Date Acquired          FY 1999            FY 2000
      Operation                                                           Net Sales          Net Sales
     -------------------------------------------  -----------------   -----------------  ------------------
                                                                        (In millions)      (In millions)
     <S>                                          <C>                 <C>                <C>
      London Precision.........................       09/01/98               21.9                21.5
      Autun....................................       02/25/99                4.5                17.7
</TABLE>

         Excluding net sales attributable to the operations acquired since
     September 1, 1998, net sales for fiscal 2000 were $429.1 million,
     representing a decrease of $20.1 million, or 4.5%, from net sales of $449.2
     million in fiscal 1999. This 4.5% decrease in net sales was due primarily
     to decreases in net sales to the offshore oil and gas, steel, mining and
     power generation markets, partially offset by increases in net sales to the
     rail and military markets. Net sales of Sheffield Forgemasters Group
     Limited ("Sheffield") for fiscal 2000 decreased $18.0 million from net
     sales in fiscal 1999. In addition to the weak market conditions, net sales
     have also been impacted by the bankruptcy and subsequent cessation of
     operations of a major customer at the Company's PrimeCast, Inc.
     ("PrimeCast") subsidiary. Through fiscal 2000, PrimeCast has aggressively
     worked at replacing the volume lost from Beloit Corporation, which filed
     for bankruptcy in June 1999. During February


                                       27
<PAGE>

     2000, Beloit was sold at auction, in parts, and as a result, the plants
     to which PrimeCast supplied castings subsequently ceased operations. For
     fiscal 2000, PrimeCast's net sales were $24.5 million compared to net
     sales of $27.5 million in fiscal 1999. Included in this $3.0 million
     decrease was a $3.8 million decrease in net sales to Beloit Corporation.

         Gross profit for fiscal 2000 decreased by $14.2 million, or 20.9%, to
     $53.6 million, or 11.4% of net sales, compared to $67.8 million, or 14.3%
     of net sales, for fiscal 1999. The decrease in gross profit and gross
     profit as a percentage of net sales was primarily due to lower net sales
     and reduced absorption of overhead at the Company's subsidiaries which
     primarily serve the mining, offshore oil and gas, power generation and
     steel markets. The largest impact of these weak market conditions was at
     Sheffield, where its gross profit for fiscal 2000 decreased by $10.2
     million to $10.2 million, or 8.9% of net sales, compared to $20.4 million,
     or 15.4% of net sales, in fiscal 1999.

         The bankruptcy of a major customer at PrimeCast and, with a lesser
     impact, the loss of a major customer at Claremont Foundry, Inc.
     ("Claremont") have also had a negative effect on gross profit. Lower sales
     volume, coupled with the costs of developing new customers and training
     employees on new work has resulted in lower gross profits at these
     operations. PrimeCast's gross profit for fiscal 2000 decreased by $2.0
     million to a gross loss of $185,000, compared to a gross profit of $1.8
     million for fiscal 1999. Claremont's gross profit in fiscal 2000 was a loss
     of $1.5 million on net sales of $4.0 million, compared to a loss of $1.0
     million on net sales of $7.1 million in fiscal 1999. The Company is in the
     process of closing Claremont, and transferring much of the work to other
     Company operations.

         During fiscal 2000, the Company's reserve for warranty expense
     decreased to $9.8 million at June 30, 2000 from $11.8 million at June 30,
     1999. Warranty expense recorded by the Company in fiscal 2000 was a credit
     to income of $685,000 compared to a credit to income of $1.7 million in
     fiscal 1999. The decrease in the warranty reserve during fiscal 2000
     primarily related to the Company's Sheffield subsidiary located in the
     United Kingdom. The Company maintains reserves for warranty charges based
     on specific claims made by customers, for which management estimates a
     final settlement of the claim, and for expected claims not yet received.
     The estimate for claims not yet received is based on historical results and
     is estimated monthly. During fiscal 2000, the Company's warranty reserve
     requirement and related expense declined primarily due to the resolution of
     specific warranty claims with three different customers whose products were
     replaced or determined by the customer to be satisfactory.

         During fiscal 2000, the Company's reserve for workers' compensation and
     employee health care increased to $2.8 million at June 30, 2000 from $2.6
     million at June 30, 1999. Workers' compensation and employee health care
     expense was $17.0 million for fiscal 2000, compared to $14.5 million in
     fiscal 1999, primarily reflecting higher health care costs. The increase in
     the reserve for workers' compensation and employee health care primarily
     reflects changes in the amount and timing of actual payments.

         Selling, general and administrative expense ("SG&A") for fiscal 2000
     was $43.1 million, or 9.2% of net sales, compared to $44.7 million, or 9.4%
     of net sales, in fiscal 1999. The decrease in SG&A was primarily
     attributable to the consolidation of four operating units into two at
     Sheffield, partially offset by expenses associated with Fonderie d'Autun
     ("Autun"), which was acquired on February 25, 1999.

         Amortization of certain intangibles for fiscal 2000 was $1.5 million or
     0.3% of net sales, compared to $1.4 million, or 0.3% of net sales, in
     fiscal 1999. The intangible assets consist of goodwill recorded in
     connection with certain of the Company's acquisitions. The Company has also



                                       28
<PAGE>

     recorded a liability, consisting of the excess of acquired net assets over
     cost ("negative goodwill"), in connection with the acquisitions of Canadian
     Steel Foundries Ltd. ("Canadian Steel") and Autun. The amortization of
     negative goodwill was a credit to income in fiscal 2000 of $1.9 million, or
     0.4% of net sales, as compared to $870,000, or 0.2% of net sales, in fiscal
     1999.

         Impairment charges for fiscal 2000 were $10.3 million ($6.4 million,
     net of tax). This $10.3 million reflects a $3.4 million ($2.1 million, net
     of tax) charge relating to the Company's planned closure of Claremont and a
     $6.9 million ($4.3 million, net of tax) fixed asset impairment charge at
     PrimeCast.

         Other income for fiscal 2000 primarily consisted of non-recurring gains
     of $1.1 million ($650,000, net of tax) on the termination of interest rate
     swap agreements. Other income for fiscal 1999 was $2.8 million ($1.6
     million, net of tax). Following the July 1993 Missouri River flood, the
     Company established a reserve to repair long-term damage caused by the
     flood to the Company's plant. During fiscal 1999, the Company revised this
     estimate downward resulting in a non-recurring gain of $3.5 million ($2.1
     million, net of tax). Partially offsetting this gain was a charge of
     $750,000 ($450,000, net of tax) related to an industrial accident at Jahn
     Foundry Corp. ("Jahn Foundry") (see Liquidity and Capital Resources).

         During 2000, the Board of Directors committed to a plan for the closure
     of Claremont due to continued operating losses. The Company recorded a
     charge of $3.6 million primarily to reduce the carrying value of the
     Claremont fixed assets to estimated fair value. The Company intends to
     transfer as much work as possible to other ACC foundries by November 30,
     2000 and close the plant. The Company will terminate approximately 45
     employees and will recognize a charge for severance benefits of
     approximately $90,000 in the quarter ended September 30, 2000.

         On July 1, 1997, a newly formed subsidiary of the Company, PrimeCast,
     acquired the foundry division of Beloit Corporation ("Beloit") for $8.2
     million. Simultaneous with the purchase, PrimeCast entered a five-year
     supply agreement to supply castings to Beloit. As a captive supplier,
     historically over 40% of this operation's sales had been to Beloit. In June
     1999, Beloit declared bankruptcy, in combination with the bankruptcy of its
     parent, Harnischfeger Industries. Beloit continued to operate in
     bankruptcy, and the court granted Beloit's request to re-instate the
     five-year casting supply agreement. In February 2000, Beloit was sold at
     auction, in parts. Expectations were that the new owners would continue to
     operate the former Beloit business which PrimeCast primarily served. This
     business consisted primarily of paper mill equipment and was located in
     Beloit, Wisconsin. However, ultimately these parts of the former Beloit
     were closed, resulting in the elimination of this work for PrimeCast, and
     the termination of the five-year supply agreement. These events have caused
     PrimeCast to operate at a substantial loss, due to much lower production
     volume and a less profitable mix of work. As a result, the carrying value
     of PrimeCast's long-lived assets have been determined to be impaired. The
     Company recorded an impairment charge of $6.9 million ($4.3 million, net of
     tax) relating to the fixed assets at PrimeCast.

         Interest expense for fiscal 2000 increased to $9.5 million, or 2.0% of
     net sales, from $8.4 million, or 1.8% of net sales, in fiscal 1999. The
     increase in interest expense primarily reflects higher average interest
     rates on the Company's outstanding indebtedness.

         The Company has recorded a $7.8 million deferred income tax benefit in
     fiscal 2000 with respect to the reinvestment of certain flood insurance
     proceeds received in 1995 and 1996. The Company recorded pretax gains of
     approximately $20.1 million in 1995 and 1996 related to insurance proceeds
     resulting from flood damage to the Company's Atchison, Kansas foundry in
     July 1993. For federal

                                       29
<PAGE>

     income tax purposes, the Company treated the flood as an involuntary
     conversion event under the Internal Revenue Code ("Code") and related
     Treasury Regulations.

         The Code provides generally that if certain conditions are met, gains
     on insurance proceeds from an involuntary conversion are not taxable if the
     proceeds are reinvested in qualified replacement property within two years
     after the close of the first taxable year in which any part of the
     conversion gain is realized. The Company believed that its treatment of
     certain foundry subsidiary stock acquisitions as qualified replacement
     property was subject to potential challenge by the Internal Revenue Service
     ("Service") in 1996 (the first year in which involuntary conversion gain
     was realized for federal income tax purposes). The Company recorded income
     tax expense on the insurance gains in 1996 pending review of its position
     by the Service or the expiration of the statute of limitations under the
     Code for the Service to assess income taxes with respect to the Company's
     position.

         The Company's treatment of certain foundry subsidiary stock
     acquisitions as qualified replacement property creates differing basis in
     the foundry subsidiary stock for financial statement and tax purposes.
     These differences have not been recognized as taxable temporary differences
     under Statement of Financial Accounting Standards No. 109, "Accounting for
     Income Taxes," since the subsidiary basis differences can be permanently
     deferred through subsidiary mergers or tax-free liquidations. On March 15,
     2000, the statute of limitations for the Service to assess taxes with
     respect to the Company's position expired. The deferred taxes recorded in
     the consolidated financial statements in prior years were no longer
     required.

         Excluding this $7.8 million deferred income tax benefit, the income tax
     benefit for fiscal 2000 reflected an effective rate of approximately 31%,
     which is lower than the combined federal, state and provincial statutory
     rate because of the provision for tax benefits at lower effective rates on
     losses at certain subsidiaries. Income tax expense for fiscal 1999
     reflected an effective rate of approximately 41%. The Company's combined
     effective tax rate reflects the different federal, state and provincial
     statutory rates of the various jurisdictions in which the Company operates,
     and the proportion of taxable income earned in each of those tax
     jurisdictions.

         As a result of the foregoing, net income decreased from $9.8 million in
     fiscal 1999 to $2.5 million in fiscal 2000.

    FISCAL YEAR ENDED JUNE 30, 1999 COMPARED TO FISCAL YEAR ENDED JUNE 30, 1998

         Net sales for fiscal 1999 were $475.6 million, representing an increase
     of $101.8 million, or 27.2%, over net sales of $373.8 million in fiscal
     1998. The operations acquired by the Company since October 6, 1997
     generated net sales of $80.8 million and $213.8 million in fiscal 1998 and
     fiscal 1999, respectively, as follows:
<TABLE>
<CAPTION>
                                                       Date Acquired         FY 1998           FY 1999
      Operation                                                             Net Sales         Net Sales
     -----------------------------------------------  ----------------  -----------------  ----------------
                                                                          (In millions)     (In millions)
     <S>                                              <C>               <C>                <C>
      Inverness....................................       10/06/97            $41.9             $48.1
      Sheffield....................................       04/06/98             37.6             132.2
      Claremont....................................       05/01/98              1.3               7.1
      London Precision.............................       09/01/98               --              21.9
      Autun........................................       02/25/99               --               4.5
</TABLE>

                                       30
<PAGE>

         Excluding net sales attributable to the operations acquired since
     October 6, 1997, net sales for fiscal 1999 were $261.8 million,
     representing a decrease of $31.2 million, or 10.6%, over net sales of
     $293.0 million in fiscal 1998. This 10.6% decrease in net sales was due
     primarily to decreases in net sales to the offshore oil and gas, steel,
     mining, power generation, agriculture and petrochemical markets, partially
     offset by an increase in net sales to the rail market.

         Gross profit for fiscal 1999 increased by $12.3 million, or 22.2%, to
     $67.8 million, or 14.3% of net sales, compared to $55.5 million, or 14.9%
     of net sales, for fiscal 1998. The increase in gross profit was primarily
     due to increased sales volume levels resulting from the acquisitions of
     Sheffield and London Precision Machine and Tool Ltd. ("London Precision").
     The contribution from London Precision and improved results at Amite
     Foundry and Machine, Inc. ("Amite") due to increased sales volume levels,
     improved productivity and reduced employee turnover and training positively
     impacted gross profit as a percentage of net sales.

          Offsetting these factors were: (i) decreased absorption of overhead
     resulting from lower net sales to the offshore oil and gas, mining, steel,
     power generation, petrochemical and agricultural markets, (ii) delays in
     the scheduled delivery of orders by customers in the mining, construction
     and rail markets, (iii) continued productivity and scrap problems at
     Inverness Castings Group, Inc. ("Inverness") and Claremont, (iv) increased
     warranty costs at Canada Alloy Castings, Ltd. ("Canada Alloy") and (v)
     increased training costs, higher employee turnover and increased overtime
     due to the generally tight labor markets. In addition, gross profit as a
     percentage of net sales was impacted by (i) reduced productivity and
     excessive overtime due to power curtailments under the Company's
     interruptible electricity contracts resulting from the extreme heat during
     the first quarter and (ii) higher plant maintenance shutdown costs at
     Atchison/St. Joe and Prospect Foundry, Inc. ("Prospect").

         During fiscal 1999, the Company's reserve for warranty expense
     decreased to $11.8 million at June 30, 1999 from $16.3 million at June 30,
     1998. Warranty expense recorded by the Company was a credit to income of
     $1.7 million in fiscal 1999 compared to expense of $900,000 in fiscal 1998.
     The decrease in both the warranty reserve and warranty expense during
     fiscal 1999 primarily related to the Company's Sheffield subsidiary located
     in the United Kingdom. The Company maintains reserves for warranty charges
     based on specific claims made by customers, for which management estimates
     a final settlement of the claim, and for expected claims not yet received.
     The estimate for claims not yet received is based on historical results and
     is estimated monthly. During fiscal 1999, the Company's estimated reserve
     requirement and related expense declined primarily due to 1) an overall
     improvement in Sheffield's claim experience over the prior year and 2) a
     decline in sales volume resulting in a reduced estimate of claims not yet
     received. Sheffield's customer claims experience as a percentage of sales
     declined from 2.9% in fiscal 1998 to 2.2% in fiscal 1999. Sheffield's net
     sales for fiscal 1999 were $132.2 million, representing a decrease of $24.0
     million, or 15.4%, from net sales of $156.2 million for the twelve months
     ended June 30, 1998. In addition, two specific customer claims included in
     the reserve at June 30, 1998 were withdrawn by the customer in fiscal 1999,
     as the products were determined to be satisfactory. This resulted in an
     adjustment to the reserve, and a reduction in warranty expense, of
     approximately $800,000.

         During fiscal 1999, the Company's reserve for workers' compensation and
     employee health care decreased to $2.6 million at June 30, 1999 from $3.6
     million at June 30, 1998. Workers' compensation and employee health care
     expense was $14.5 million for fiscal 1999, compared to $12.6 million in
     fiscal 1998, of which $1.2 million of the increase was associated with
     operations acquired by the Company since October 1997. The decrease in the
     reserve for workers' compensation and employee health care primarily
     reflects changes in the amount and timing of actual payments.

                                       31
<PAGE>

         SG&A for fiscal 1999 was $44.7 million, or 9.4% of net sales, compared
     to $28.8 million, or 7.7% of net sales, in fiscal 1998. The increase in
     SG&A was primarily attributable to expenses associated with the operations
     acquired by the Company in fiscal 1998 and fiscal 1999. The increase in
     SG&A as a percentage of net sales was primarily due to higher average SG&A
     as a percentage of net sales at Sheffield.

         Other income for fiscal 1999 was $2.8 million ($1.6 million, net of
     tax). Following the July 1993 Missouri River flood, insurance proceeds
     related to property damage were reserved for estimated future repairs to
     the plant. During the fourth quarter, the Company revised this estimate
     downward resulting in a non-recurring gain of $3.5 million ($2.1 million,
     net of tax). Partially offsetting this gain was a charge of $750,000
     ($450,000, net of tax) related to an industrial accident at the Company's
     subsidiary, Jahn Foundry (see Liquidity and Capital Resources).

         Amortization of certain intangibles for fiscal 1999 was $1.6 million or
    0.2% of net sales, compared to $1.2 million, or 0.3% of net sales, in fiscal
    1998. The intangible assets consist of goodwill recorded in connection with
    certain of the Company's acquisitions. The Company has also recorded a
    liability, consisting of the excess of acquired net assets over cost
    ("negative goodwill"), in connection with the acquisitions of Canadian Steel
    and Autun. The amortization of negative goodwill was a credit to income in
    fiscal 1999 of $870,000, or 0.2% of net sales, as compared to $257,000, or
    0.1% of net sales, in fiscal 1998.

         Interest expense for fiscal 1999 increased to $8.4 million, or 1.8% of
     net sales, from $3.9 million, or 1.0% of net sales, in fiscal 1998. The
     increase in interest expense primarily reflects an increase in the average
     amount of outstanding indebtedness during fiscal 1999 primarily incurred to
     finance the Company's acquisitions.

         Income tax expense for fiscal 1999 and fiscal 1998 reflected the
     combined federal, state and provincial statutory rate of approximately 41%
     and 40%, respectively, which is higher than the combined federal, state and
     provincial statutory rate because of the provision for the tax benefits at
     lower effective rates on losses at certain subsidiaries. The Company's
     combined effective tax rate reflects the different federal, state and
     provincial statutory rates of the various jurisdictions in which the
     Company operates, and the proportion of taxable income earned in each of
     those tax jurisdictions.

         As a result of the foregoing, net income decreased from $12.8 million
     in fiscal 1998 to $9.8 million in fiscal 1999.

     LIQUIDITY AND CAPITAL RESOURCES

         The Company has historically financed operations with internally
     generated funds, proceeds from the sale of senior notes and available
     borrowings under its bank credit facilities. Cash provided by operating
     activities for fiscal 2000 was $18.0 million, an increase of $10.3 million
     from fiscal 1999. This increase was primarily attributable to advances by
     the Company's insurance carrier against the claim relating to the
     industrial accident at Jahn Foundry. (See below)

         Working capital was $11.8 million at June 30, 2000, as compared to
     $77.5 million at June 30, 1999. The decrease in working capital primarily
     reflects the classification of the Company's bank credit facility and
     senior notes with an insurance company as current at June 30, 2000. As
     described below, the Company obtained a waiver of compliance with certain
     financial covenants through September 30, 2000 from its bank lenders and an
     insurance company holding the Company's senior notes. Absent another
     waiver, the Company does not believe it will be in compliance with such


                                       32
<PAGE>

     covenants. The agreements with the Company's bank lenders and the insurance
     company contain cross acceleration/default provisions which would allow the
     debt to be accelerated. Accordingly, the outstanding balances under these
     agreements have been classified as current at June 30, 2000.

         During fiscal 2000, the Company made capital expenditures of $21.4
     million, as compared to $20.0 million for fiscal 1999. Included in fiscal
     2000 were capital expenditures of $7.7 million to rebuild the shell molding
     area and boiler room damaged in the industrial accident on February 25,
     1999 at Jahn Foundry (see below) and $2.7 million to expand Autun's product
     line capabilities in the manufacture of gray and ductile iron castings.
     Included in fiscal 1999 were capital expenditures of $2.1 million on
     upgrading the 1,500 ton forging press to 2,500 tons at Sheffield. The
     balance of capital expenditures in both periods were used for routine
     projects at each of the Company's facilities. The Company expects to make
     approximately $18.0 million of capital expenditures during fiscal 2001.

         On October 7, 1998, the Company and its lenders entered into the First
     Amendment to the Amended and Restated Credit Agreement (the "Credit
     Agreement"). The Credit Agreement consists of a $40 million term loan and a
     $70 million revolving credit facility. This amendment permits the Company
     to repurchase up to $24 million of its common stock, subject to a
     limitation of $10 million in any fiscal year unless certain financial
     ratios are met, and provides for an option to increase the revolving
     portion of the credit facility to $100 million if the Company issues senior
     subordinated notes. Proceeds from the issuance of any senior subordinated
     notes must be used to permanently pre-pay the $40 million term loan portion
     of the credit facility.

         On April 23, 1999, the Company and its lenders entered into the Second
     Amendment to the Credit Agreement. This amendment provides that the Company
     maintain a ratio of earnings before interest, taxes and amortization to
     fixed charges ("Fixed Charge Coverage Ratio") of at least 1.10 increasing
     to 1.25 on March 31, 2000 and 1.50 on March 31, 2001. The amendment also
     provides that the Company must maintain a ratio of total senior debt to
     earnings before interest, taxes, amortization and depreciation of not more
     than 3.2 prior to the issuance by the Company of any subordinated debt, and
     not more than 3.0 after the issuance of any subordinated debt. In addition,
     this amendment provides that the Company may not make acquisitions prior to
     May 1, 2000 and, from and after May 1, 2000, the Company may not make
     acquisitions unless the Fixed Charge Coverage Ratio is at least 1.50, among
     other existing restrictions. Loans under this revolving credit facility
     will bear interest at fluctuating rates of either: (i) the agent bank's
     corporate base rate or (ii) LIBOR plus 1.85% subject, in the case of the
     LIBOR rate option, to a reduction of up to 0.50% (50 basis points) if
     certain financial ratios are met. Loans under this revolving credit
     facility may be used for general corporate purposes, permitted acquisitions
     and approved investments. Absent the Amendment, the Company would not have
     been in compliance with the Fixed Charge Coverage Ratio.

         On August 20, 1999, the Company and its lenders entered into the Third
     Amendment to the Amended and Restated Credit Agreement (the "Credit
     Agreement"). This amendment provides that the Company's subsidiary, Autun,
     is not subject to the provisions governing subsidiary indebtedness. It
     further provides that the Company and its subsidiaries may not make any
     investment in Autun and the Company must exclude Autun's results in the
     calculation of various financial covenants.

         On October 20, 1999, the Company and the insurance company holding the
     Company's $20 million aggregate principal amount of unsecured, senior notes
     (the "Notes") entered into the Fourth Amendment to the Note Purchase
     Agreement. This amendment provides that the Company's subsidiary, Autun, is
     not subject to the provisions governing subsidiary indebtedness. It further


                                       33
<PAGE>

     provides that the Company and its subsidiaries may not make any investment
     in Autun and the Company must exclude Autun's results in the calculation of
     various financial covenants.

         On November 5, 1999, the Company and its lenders entered into the
     Fourth Amendment and Waiver (the "Fourth Amendment") to the Credit
     Agreement. The Fourth Amendment provided, among other things, that the
     Company maintain a ratio of earnings before interest, taxes and
     amortization to fixed charges ("Fixed Charge Coverage Ratio") of at least
     1.10 on December 31, 1999, increasing to 1.25 on July 1, 2000, if the
     Company incurs at least $20 million of subordinated debt by January 31,
     2000. If the Company did not obtain a commitment for the private placement
     of at least $20 million of subordinated debt by December 15, 1999, the
     Fourth Amendment provided that (1) the Company maintain a Fixed Charge
     Coverage Ratio of at least 1.10 on December 31, 1999, increasing to 1.25 on
     March 31, 2000 and 1.50 on March 31, 2001, (2) the fixed charges used in
     calculating the Fixed Charge Coverage Ratio will include 15% of the
     aggregate principal amount outstanding under the revolving credit facility
     after October 1, 1999 rather than after July 1, 2000, and (3) the Company
     will grant the lenders under the Credit Agreement liens on the Company's
     assets by February 14, 2000. The Company was unable to obtain such a
     commitment by December 15, 1999. The Fourth Amendment also provided that
     the Company must maintain a ratio of consolidated total debt to total
     capitalization of not more than 55%. Absent the Waiver, the Company would
     not have been in compliance with the Fixed Charge Coverage Ratio.

         On December 21, 1999, the Company and its lenders entered into the
     Fifth Amendment (The "Fifth Amendment") to the Credit Agreement. The Fifth
     Amendment provided that the Company may incur up to $35 million of
     indebtedness from General Electric Capital Corporation or its assignees
     (the "GE Financing"). In addition, the Fifth Amendment provided that (1)
     the bank revolving credit facility will be increased from $70.0 million to
     $80.0 million through April 30, 2000, (2) the fixed charges used in
     calculating the Fixed Charge Coverage Ratio will not include 15% of the
     aggregate principal amount outstanding under the revolving credit facility
     through June 30, 2000 and (3) the Company will grant the lenders under the
     Credit Agreement liens in certain of the Company's assets. Absent the
     Amendment, the Company would not have been in compliance with the Fixed
     Charge Coverage Ratio.

         On December 21, 1999, the Company and the insurance company holding the
     Notes entered into the Fifth Amendment to the Note Purchase Agreement. This
     amendment provided that the Company may incur indebtedness through the GE
     Financing. This amendment further provided that (1) the Company must
     maintain a ratio of consolidated total debt to total capitalization of not
     more than 55%, (2) the Company maintain a Fixed Charge Coverage Ratio of at
     least 1.10 on December 31, 1999, increasing to 1.25 on March 31, 2000 and
     1.50 on March 31, 2001 and (3) the fixed charges used in calculating the
     Fixed Charge Coverage Ratio will not include 15% of the aggregate principal
     amount outstanding under the revolving credit facility through June 30,
     2000.

         On December 29, 1999, the Company entered into a Master Security
     Agreement with General Electric Capital Corporation ("GECC") and its
     assigns providing for a term loan of $35.0 million. The term loan is
     secured by certain of the Company's fixed assets, real estate, equipment,
     furniture and fixtures located in Atchison, Kansas and St. Joseph,
     Missouri, matures in December 2004, and bears interest at a fixed rate of
     9.05%. On December 29, 1999 the proceeds of the term loan, together with
     borrowings under the Company's revolving credit facility, were used to
     retire the $35.7 million of outstanding indebtedness under the Company's
     term loan under its bank credit facility.

                                       34
<PAGE>

         On February 15, 2000, the Company, its lenders and the holder of the
     Notes entered into the Sixth Amendments (the "Sixth Amendments") to the
     Credit Agreement and the Note Purchase Agreement. Together with the GECC
     term loan, the Sixth Amendments provided for the perfection of a security
     interest in favor of GECC, the lenders under the Credit Agreement and the
     holder of the Notes in substantially all of the Company's assets other than
     real estate.

         On May 1, 2000, the Company and its lenders entered into the Seventh
     Amendment and Waiver (the "Seventh Amendment") to the Credit Agreement. The
     Seventh Amendment provides, among other things, for a waiver of compliance
     by the Company with the Cash Flow Leverage Ratio covenant through July 1,
     2000. The Cash Flow Leverage Ratio covenant requires the Company to
     maintain a ratio of total debt to earnings before interest, taxes,
     depreciation and amortization of no greater than 3.2. Loans under this
     credit facility will bear interest at fluctuating rates of either: (1)
     Harris's corporate base rate plus 0.75% or (2) LIBOR plus 2.25%, increasing
     to LIBOR plus 2.50% on June 1, 2000. Absent the waiver, the Company would
     not have been in compliance with the Cash Flow Leverage Ratio.

         On June 30, 2000, the Company and its lenders entered into the Eighth
     Amendment and Waiver (the "Eighth Amendment") to the Credit Agreement. The
     Eight Amendment provides, among other things, for a waiver of compliance by
     the Company with the Cash Flow Leverage Ratio and Fixed Charge Coverage
     Ratio covenants through July 31, 2000, and that the bank credit facility
     will be decreased from $80.0 million to $77.3 million through July 31,
     2000. Loans under this Credit Agreement will bear interest at Harris's
     corporate base rate plus 1.25%. Absent the waiver, the Company would not
     have been in compliance with the Cash Flow Leverage and Fixed Charged
     Coverage Ratio Covenants.

         Effective June 30, 2000, the insurance company holding the Notes
     granted a limited waiver of compliance with the Fixed Charge Coverage Ratio
     covenant through September 30, 2000. Absent the waiver, the Company would
     not have been in compliance with the Fixed Charge Coverage Ratio covenant.

         On July 31, 2000, the Company and its lenders entered into the Ninth
     Amendment and Waiver (the "Ninth Amendment") to the Credit Agreement. The
     Ninth Amendment provides, among other things, for a waiver of compliance by
     the Company with the Cash Flow Leverage Ratio and Fixed Charge Leverage
     Ratio covenants through September 30, 2000, and that the bank facility will
     be maintained at $77.3 million through September 30, 2000. Loans under the
     Credit Agreement will bear interest at fluctuating rates of either (1)
     Harris' corporate base rate plus 1.75% or (2) LIBOR plus 3.00%. Absent the
     waiver, the Company would not have been in compliance with the Cash Flow
     Leverage Ratio and Fixed Charge Coverage Ratio covenants.

         Compliance with the financial covenants under the Credit
     Agreement and Note Purchase Agreement is determined on a
     "rolling-four-quarter" basis. The results for fiscal 2000 are, and expected
     results for fiscal 2001 will likely continue to be, below results
     needed to achieve compliance with these covenants under the Credit
     Agreement and Note Purchase Agreement. Accordingly, the Company is
     currently (a) negotiating forbearance agreements to its Credit Agreement
     and Note Purchase Agreement in which the parties would agree not to
     enforce their rights with respect to defaults in connection with (i)
     covenants relating to the Cash Flow Leverage Ratios, Fixed Charge
     Coverage Ratio and Current Ratio, and (ii) extensions of additional
     credit due to noncompliance of the covenants described above and other
     provisions, and (b) negotiating with other financial institutions to
     establish a new credit facility with covenants that the Company believes
     it will be able to satisfy. During the past several years, the Company
     has been able to negotiate operating flexibility with its lenders,
     although future success in achieving any such renegotiations or
     refinancings, or the specific terms thereof, including interest rates,
     capital expenditure limits or borrowing capacity, cannot be assured. The
     Company believes that its operating cash flow and amounts available for
     borrowing under the new credit facility, when established, or its
     existing credit facility, assuming forbearances are obtained, will be
     adequate to fund its capital expenditure and working capital
     requirements for the next 12 months. However, the level of capital
     expenditure and working capital requirements may be greater than
     currently anticipated as a result of unforeseen expenditures such as
     compliance with environmental laws or the accident at Jahn Foundry. If the
     Company fails to achieve compliance with the terms of its Credit Agreement
     or, in the absence of such compliance, if the Company fails to amend such
     financial covenants on terms favorable to the Company, the Company may be
     in default under such covenants. If such default occurred, it would permit
     acceleration of its debt under its Credit Agreement which, in turn,
     would permit acceleration of the Notes under the Note Purchase
     Agreement, and vice versa.

                                        35

<PAGE>

         Total indebtedness of the Company at June 30, 2000 was $117.6 million,
     as compared to $113.4 million at June 30, 1999. This increase of $4.2
     million primarily reflects indebtedness incurred of $2.7 million to
     purchase common stock in certain of the Company's subsidiaries. At June 30,
     2000, $11.4 million was available for borrowing under the Company's
     revolving credit facility.

         An accident, involving an explosion and fire, occurred on February 25,
     1999, at Jahn Foundry, located in Springfield, Massachusetts. Nine
     employees were seriously injured and there have been three fatalities. The
     damage was confined to the shell molding area and boiler room. The other
     areas of the foundry are operational. Molds are currently being produced at
     other foundries as well as Jahn Foundry while the repairs are made. The new
     shell molding department is scheduled to be in operation this fall.

         The Company carries insurance for property and casualty damages (over
     $475 million of coverage), business interruption (approximately $115
     million of coverage), general liability ($51 million of coverage) and
     workers' compensation (up to full statutory liability) for itself and its
     subsidiaries. The Company recorded charges of $450,000 ($750,000 before
     tax) during the third quarter of fiscal 1999, primarily reflecting the
     deductibles under the Company's various insurance policies. At this time
     there can be no assurance that the Company's ultimate costs and expenses
     resulting from the accident will not exceed available insurance coverage by
     an amount which could be material to its financial condition or results of
     operations and cash flows.

         A civil action has been commenced in Massachusetts state court on
     behalf of the estates of deceased workers, their families, injured workers
     and their families, against the supplier of a chemical compound used in
     Jahn Foundry's manufacturing process. Counsel for the plaintiffs informally
     have indicated a desire to explore whether any facts would support adding
     the Company to that litigation as a jointly and severally liable defendant.
     The supplier of the chemical compound, Borden Chemical, Inc., filed a Third
     Party Complaint against Jahn Foundry in Massachusetts State Court on
     February 2, 2000 seeking indemnity for any liability it has to the
     plaintiffs in the civil action. The Company's comprehensive general
     liability insurance carrier has retained counsel on behalf of Jahn Foundry
     and the Company and is aggressively defending Jahn Foundry in the Third
     Party Complaint, as well as monitoring the situation on behalf of the
     Company. It is too early to assess the potential liability to Jahn Foundry
     for the Third Party Complaint and the potential liability to the Company
     for any claim, which in any event the Company would aggressively defend.
     Plaintiff's counsel has informally raised the possibility of seeking to
     make a double recovery under the workers' compensation policy in force for
     Jahn Foundry, contending that there was willful misconduct on Jahn
     Foundry's part leading to the accident. Such recovery, if pursued and made,
     would be of a material nature. It is too early to assess the potential
     liability for such a claim, which in any event Jahn Foundry would
     aggressively defend.

         The Company, its property insurance carrier and its insurance broker
     dispute the amount of property insurance available for property damages
     suffered in this accident. It is too early in the

                                       36
<PAGE>

     process of calculating the loss to estimate the amount in dispute.
     Management believes that the probability of any loss resulting from the
     disputed property insurance coverage is remote. The Company currently
     believes this dispute will be resolved during fiscal 2001. If this dispute
     cannot be resolved amicably, the Company would vigorously pursue its
     remedies against both parties.

         Following the accident, OSHA conducted an investigation of the
     accident. On August 24, 1999, OSHA issued a citation describing violations
     of the Occupational Safety and Health Act of 1970, which primarily related
     to housekeeping, maintenance and other specific, miscellaneous items.
     Neither of the two violations specifically addressing conditions related to
     the explosion and fire were classified as serious or willful. Without
     admitting any wrongdoing, Jahn Foundry entered into a settlement with OSHA
     that addresses the alleged work place safety issues and agreed to pay
     $148,500 in fines.

     MARKET RISK

         The Company operates manufacturing facilities in the U.S., Canada and
     Europe and utilizes fixed and floating rate debt to finance its global
     operations. As a result, the Company is subject to business risks inherent
     in non-U.S. activities, including political and economic uncertainty,
     import and export limitations, and market risk related to changes in
     interest rates and foreign currency exchange rates. The Company believes
     the political and economic risks related to its foreign operations are
     mitigated due to the stability of the countries in which its largest
     foreign operations are located.

         In the normal course of business, the company uses derivative financial
     instruments including interest rate swaps and foreign currency forward
     exchange contracts to manage its market risks, although, at June 30, 2000,
     the Company had no outstanding interest rate swap agreements. Additional
     information regarding the Company's financial instruments is contained in
     Note 12 to the Company's consolidated financial statements. The Company's
     objective in managing its exposure to changes in interest rates is to limit
     the impact of such changes on earnings and cash flow and to lower its
     overall borrowing costs. The Company's objective in managing its exposure
     to changes in foreign currency exchange rates is to reduce volatility on
     earnings and cash flow associated with such changes. The Company's
     principal currency exposures are in the major European currencies and the
     Canadian dollar. The Company does not hold derivatives for trading
     purposes.

         For 2000 and 1999, the Company's exposure to market risk has been
     estimated using sensitivity analysis, which is defined as the change in the
     fair value of a derivative or financial instrument assuming a hypothetical
     10% adverse change in market rates or prices. The Company used current
     market rates on its debt and derivative portfolio to perform the
     sensitivity analysis. Certain items such as lease contracts, insurance
     contracts, and obligations for pension and other post-retirement benefits
     were not included in the analysis. The results of the sensitivity analyses
     are summarized below. Actual changes in interest rates or market prices may
     differ from the hypothetical changes.

         The Company's primary interest rate exposures relate to its cash and
     short-term investments and fixed and variable rate debt. The potential loss
     in fair values is based on an immediate change in the net present values of
     the Company's interest rate-sensitive exposures resulting from a 10% change
     in interest rates. The potential loss in cash flows and earnings is based
     on the change in the net interest income/expense over a one-year period due
     to an immediate 10% change in rates. A hypothetical 10% change in interest
     rates would have a material impact on the Company's earnings of
     approximately $500,000 and $200,000 in fiscal 2000 and 1999, respectively.

         The Company's exposure to fluctuations in currency rates against the
     British pound sterling and Canadian dollar result from the Company's
     holdings in cash and short-term investments and its

                                       37
<PAGE>

     utilization of foreign currency forward exchange contracts to hedge
     customer receivables and firm commitments. The potential loss in fair
     values is based on an immediate change in the U.S. dollar equivalent
     balances of the Company's currency exposures due to a 10% shift in exchange
     rates versus the British pound sterling and Canadian dollar. The potential
     loss in cash flows and earnings is based on the change in cash flow and
     earnings over a one-year period resulting from an immediate 10% change in
     currency exchange rates versus the British pound sterling and Canadian
     dollar. Based on the Company's holdings of financial instruments at June
     30, 2000 and 1999, a hypothetical 10% depreciation in the pound sterling
     and the Canadian dollar versus all other currencies would have a material
     impact on the Company's earnings of approximately $1.7 million and $2.7
     million in fiscal 2000 and 1999, respectively. The Company's analysis does
     not include the offsetting impact from its underlying hedged exposures
     (customer receivables and firm commitments). If the Company included these
     underlying hedged exposures in its sensitivity analysis, these exposures
     would substantially offset the financial impact of its foreign currency
     forward exchange contracts due to changes in currency rates.

     INFLATION

         Management believes that the Company's operations have not been
     materially adversely affected by inflation or changing prices.

     FORWARD-LOOKING STATEMENTS

         Statements above in the subsections entitled "General," "Liquidity and
     Capital Resources" and "Market Risk," such as "expects," "intends,"
     "contemplating" and statements regarding quarterly fluctuations, statements
     regarding the adequacy of funding for capital expenditure and working
     capital requirements for the next twelve months and similar expressions
     that are not historical are forward-looking statements that involve risks
     and uncertainties. Such statements include the Company's expectations as to
     future performance. Among the factors that could cause actual results to
     differ materially from such forward-looking statements are the following:
     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 U.S. dollar, British pound sterling and the Euro, interest
     rates, the availability of labor, the successful conclusion of contract
     negotiations, the results of any litigation arising out of the accident at
     Jahn Foundry, the competitive environment in the casting industry and
     changes in laws and regulations that govern the Company's business,
     particularly environmental regulations.

     NEW ACCOUNTING STANDARDS

         For a discussion of new accounting standards, see Note 1 of the
     Company's Notes to Consolidated Financial Statements.



                                       38
<PAGE>

     SUPPLEMENTAL QUARTERLY INFORMATION

         The Company's business is characterized by large unit and dollar volume
     customer orders. As a result, the Company has experienced and may continue
     to experience fluctuations in its net sales and net income from quarter to
     quarter. Generally, the first fiscal quarter is seasonally weaker than the
     other quarters as a result of plant shutdowns for maintenance at most of
     the Company's foundries as well as at many customers' plants. In addition,
     the Company's operating results may be adversely affected in fiscal
     quarters immediately following the consummation of an acquisition while the
     operations of the acquired business are integrated into the operations of
     the Company.

         The following table presents selected unaudited supplemental quarterly
     results for fiscal 1999 and fiscal 2000.
<TABLE>
<CAPTION>
                                         FISCAL 1999                                 FISCAL 2000
                                       QUARTERS ENDED                               QUARTERS ENDED
                          ------------------------------------------   ----------------------------------------------
                              SEPT.       DEC.   MAR.(1)    JUNE(2)        SEPT.     DEC.(3)    MAR.(4)     JUNE(5)
                          -----------  -------- --------   --------      --------   --------   --------   --------
                                         (unaudited)                                   (unaudited)
     <S>                     <C>       <C>      <C>        <C>           <C>        <C>        <C>        <C>
                                                    (In thousands, except per share data)
     Net Sales.............  $116,576  $122,955 $119,533   $116,495      $109,693   $115,711   $124,745   $118,152
     Gross Profit..........    13,921    18,747   17,535     17,569        12,713     15,031     13,692     12,117
     Operating
       Income (Loss).......     2,701     6,810    4,590     11,195         3,102      4,658      2,730     (9,268)
     Net Income (Loss).....      $337    $2,708   $1,265     $5,496          $612     $1,144     $7,845    $(7,145)
                             ========  ======== ========   ========      ========   ========   ========   ========
     Net Income (Loss) Per
       Share..............
       Basic..............     $ 0.04    $ 0.35   $ 0.17     $ 0.72          $.08      $0.15      $1.03     $(0.93)
                             ========  ======== ========   ========      ========   ========   ========   ========
        Diluted............    $ 0.04    $ 0.35   $ 0.17     $ 0.72          $.08      $0.15      $1.03     $(0.93)
                             ========  ======== ========   ========      ========   ========   ========   ========
</TABLE>
(1)      The third quarter contains a $750 charge recorded in connection with an
         industrial accident that occurred on February 25, 1999 at Jahn Foundry,
         which decreased net income by $450,000, or $.06 per share.
(2)      The fourth quarter contains a $3,500 revision to the flood damage
         reconstruction reserve which increased net income by $2,086, or $.27
         per share. The flood damage reconstruction reserve related to the July
         1993 Missouri River flood.
(3)      The second quarter contains a $681 gain on the termination of an
         interest rate swap agreement, which increased net income by $412 or
         $.05 per share.
(4)      The third quarter contains a $7,786 deferred income tax benefit
         relating to the resolution of the Company's tax treatment of certain
         flood insurance proceeds received in fiscal 1995 and 1996, which
         increased net income by $7,786, or $1.02 per share.
(5)      The fourth quarter contains a $3,373 impairment charge and $227 of
         other costs recorded in connection with the closure of Claremont
         foundry, which decreased net income $2,268 or $0.30 per share. In
         addition, the fourth quarter also contains a $6,883 impairment charge
         recorded in connection with the write-down of PrimeCast fixed assets,
         which decreased net income $4,336 or $0.56 per share. In addition, the
         fourth quarter contains a $402 gain on the termination of an interest
         rate swap agreement, which increased net income by $243 or $.03 per
         share.



                                       39
<PAGE>



      ITEM 7A.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         The information required by this item is incorporated herein by
     reference to the section entitled "Market Risk" in the Company's
     Management's Discussion and Analysis of Financial Condition and Results of
     Operations in this Annual Report on Form 10-K.

     ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         The consolidated financial statements of the Company are filed under
     this Item, beginning on page F-1 of this Report. No financial statement
     schedules are required to be filed under Regulation S-X.

         Selected quarterly financial data required under this item is included
     in Item 7 - Management's Discussion and Analysis of Financial Condition and
     Results of Operations.

     ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
               FINANCIAL DISCLOSURE

         None


                                       40
<PAGE>

                                    PART III

     ITEM 10.   DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         The information required by this item with respect to directors and
     compliance with Section 16(a) of the Securities Exchange Act of 1934 is
     incorporated herein by reference to the Registrant's Proxy Statement for
     the 2000 Annual Meeting of Stockholders to be filed pursuant to Regulation
     14A. The required information as to executive officers is set forth in Part
     I hereof.

     ITEM 11.   EXECUTIVE COMPENSATION

         The information required by this item is incorporated herein by
     reference to the Registrant's Proxy Statement for the 2000 Annual Meeting
     of Stockholders to be filed pursuant to Regulation 14A.

     ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The information called for by this item is incorporated herein by
     reference to the Registrant's Proxy Statement for the 2000 Annual Meeting
     of Stockholders to be filed pursuant to Regulation 14A.

     ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The information called for by this item is incorporated herein by
     reference to the Registrant's Proxy Statement for the 2000 Annual Meeting
     of Stockholders to be filed pursuant to Regulation 14A.




                                       41
<PAGE>


                                     PART IV

     ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
                  FORM 8-K
<TABLE>
<CAPTION>
                                                                                        Page
                                                                                       Number
                                                                                       ------
<S>      <C>                                                                           <C>
(a)      DOCUMENTS LIST

         (1) The following financial statements are included in Part II Item 8:

                  Independent Auditors' Report                                          F-1

                  Consolidated Balance Sheets at June 30, 1999 and 2000                 F-2

                  Consolidated Statements of Income For the Years                       F-4
                  Ended June 30, 1998, 1999 and 2000

                  Consolidated Statements of Comprehensive Income                       F-5
                  For the Years Ended June 30, 1998, 1999 and 2000

                  Consolidated Statements of Stockholders' Equity                       F-6
                  For the Years Ended June 30, 1998, 1999 and 2000

                  Consolidated Statements of Cash Flows For the Years                   F-7
                  Ended June 30, 1998, 1999 and 2000

                  Notes to Consolidated Financial Statements For the Years              F-8
                  Ended June 30, 1998, 1999 and 2000

         (2)      Financial Statement Schedules

                  Valuation and Qualifying Accounts Schedule                             44

         (3)      List of Exhibits:

                  Exhibits required by Item 601 of Regulation S-K are listed in
                  the Exhibit Index which is incorporated herein by reference.

(b)      REPORTS ON FORM 8-K


                  The Company has filed a Form 8-K dated May 19, 2000.

                  Items Reported:

                  Item 5.  Other Events (Description of By-Law amendments)
                  Item 7.  Exhibits

</TABLE>
                                       42
<PAGE>

         (1)      Amendments to By-Laws of the Company
         (2)      Amended and Restated By-Laws of the Company

(c)     EXHIBITS

        The response to this portion of Item 14 is submitted as a separate
        section to this report.

(d)     FINANCIAL STATEMENT SCHEDULES

        The consolidated financial statement schedules required by this Item are
        listed under Item 14(a)(2).


                                       43
<PAGE>



   Financial Statement Schedules - Valuation and Qualifying Accounts Schedule

ACCOUNTS RECEIVABLE ALLOWANCE
<TABLE>
<CAPTION>
                 BEGINNING   BALANCE   ADDITIONS TO    DEDUCTION FROM    ENDING
                  BALANCE    ACQUIRED   (EXPENSE)        (WRITEOFFS)     BALANCE
                 ---------   --------  ------------    --------------    -------
<S>              <C>         <C>       <C>             <C>               <C>
Fiscal 2000         $591       $ -         $855             $862           $584

Fiscal 1999          508        21          282              220            591

Fiscal 1998          381       311          120              304            508

</TABLE>

                                       44
<PAGE>


                                   SIGNATURES


     Pursuant to the requirements of Section 13 or 15 (d) 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)

                                   By:      /s/ Hugh H. Aiken
                                       ------------------------------------
                                                Hugh H. Aiken
                                                Principal Executive Officer

     Dated:  Sept 25, 2000
             -------------

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
     report has been signed below by the following persons in the capacities and
     on the dated indicated:
<TABLE>
<CAPTION>

          Signature                     Title                         Date
          ---------                     -----                         ----
<S>                            <C>                                <C>
 /s/ Hugh H. Aiken             Chairman of the Board,             Sept. 25, 2000
 --------------------------    President, Chief Executive         --------------
     Hugh H. Aiken             Officer and Director
                               (Principal Executive Officer)

 /s/ Stuart Z. Uram            Director                           Sept. 25, 2000
 ---------------------------                                      --------------
     Stuart Z. Uram


 /s/ David L. Belluck          Director                           Sept. 27, 2000
 ---------------------------                                      --------------
     David L. Belluck


 /s/ Ray H. Witt               Director                           Sept. 27, 2000
 ---------------------------                                      --------------
     Ray H. Witt


 /s/ David D. Colburn          Director                           Sept. 27, 2000
 ---------------------------                                      --------------
     David D. Colburn


 /s/ Kevin T. McDermed         Vice President, Chief              Sept. 25, 2000
 ---------------------------   Financial Officer, Treasurer       --------------
     Kevin T. McDermed         and Secretary
                               (Principal Financial Officer
                               and Principal Accounting
                               Officer)
</TABLE>

                                       45
<PAGE>









ATCHISON CASTING

CORPORATION AND

SUBSIDIARIES



Consolidated Financial Statements as of
June 30, 1999 and 2000, and for Each of the Three
Years in the Period Ended June 30, 2000, and
Independent Auditors' Report




<PAGE>


ATCHISON CASTING CORPORATION
AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
-------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                             PAGE
                                                                             ----
<S>                                                                       <C>
INDEPENDENT AUDITORS' REPORT                                                 F-1

CONSOLIDATED FINANCIAL STATEMENTS FOR EACH OF THE THREE YEARS IN THE
 PERIOD ENDED JUNE 30, 2000:

Consolidated Balance Sheets - June 30, 1999 and 2000                      F-2 - F-3

Consolidated Statements of Income - Years Ended June 30, 1998,
 1999 and 2000                                                               F-4

Consolidated Statements of Comprehensive Income - Years Ended
 June 30, 1998, 1999 and 2000                                                F-5

Consolidated Statements of Stockholders Equity - Years Ended
 June 30, 1998, 1999 and 2000                                                F-6

Consolidated Statements of Cash Flows - Years Ended June 30, 1998,
 1999 and 2000                                                               F-7

Notes to Consolidated Financial Statements                                F-8 - F-41
</TABLE>

<PAGE>

INDEPENDENT AUDITORS' REPORT

Board of Directors and Stockholders of
  Atchison Casting Corporation and Subsidiaries
Atchison, Kansas

We have auditied the accompanying consolidated balance sheets of Atchison
Casting Corporation and subsidiaries (the "Company") as of June 30, 1999 and
2000 and the related consolidated statements of income, comprehensive income,
stockholders' equity and cash flows for each of the three years in the period
ended June 30, 2000. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis of our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of the Company as of June 30, 1999
and 2000, and the results of its operations and its cash flows for each of
the the three years in the period ended June 30, 2000 in conformity with
accounting principles generally accepted in the United States of America.

As discussed in Notes 10 and 24 to the consolidated financial statements, the
Company has classified approximately $72.8 million of debt as current due to
expected debt covenant violations. The Company is seeking to extend,
renegotiate or replace its current credit facilities.

/s/ Deloitte & Touche LLP

September 1, 2000
Kansas City, Missouri


                                     -F-1-

<PAGE>



ATCHISON CASTING CORPORATION
AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
JUNE 30, 1999 AND 2000
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

ASSETS                                                                      1999         2000
                                                                          --------     --------
<S>                                                                      <C>          <C>
CURRENT ASSETS:
  Cash and cash equivalents                                               $  4,222     $  5,932
  Customer accounts receivable, net of allowance for doubtful
    accounts of $591 and $584 at June 30, 1999 and 2000, respectively       83,235       94,988
  Inventories                                                               68,777       61,804
  Deferred income taxes                                                                     816
  Other current assets                                                      18,829       26,096
                                                                          --------     --------

           Total current assets                                            175,063      189,636

PROPERTY, PLANT AND EQUIPMENT, Net                                         150,056      142,367

INTANGIBLE ASSETS, Net                                                      32,846       31,233

DEFERRED FINANCING COSTS, Net                                                  660          923

OTHER ASSETS                                                                15,153       13,106
                                                                          --------     --------

TOTAL                                                                     $373,778     $377,265
                                                                          ========     ========
</TABLE>

                                                                     (Continued)


                                       -F-2-
<PAGE>


ATCHISON CASTING CORPORATION
AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
JUNE 30, 1999 AND 2000
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

LIABILITIES AND STOCKHOLDERS' EQUITY                                              1999         2000
                                                                                --------     --------
<S>                                                                            <C>          <C>
CURRENT LIABILITIES:
  Accounts payable                                                              $ 39,452     $ 40,607
  Accrued expenses                                                                43,130       56,316
  Current maturities of long-term obligations                                      8,833       80,919
  Deferred income taxes                                                            6,126
                                                                                --------     --------
          Total current liabilities                                               97,541      177,842

LONG-TERM OBLIGATIONS                                                            104,607       36,691

DEFERRED INCOME TAXES                                                              9,220        5,511

OTHER LONG-TERM OBLIGATIONS                                                        3,969        2,683

EXCESS OF FAIR VALUE OF ACQUIRED NET ASSETS OVER COST, Net of accumulated
  amortization of $1,776 and $2,298 at June 30, 1999 and 2000, respectively        6,889        4,843

POSTRETIREMENT OBLIGATION OTHER
  THAN PENSION                                                                     8,278        9,199

MINORITY INTEREST IN SUBSIDIARIES                                                  4,205        1,544
                                                                                --------     --------

          Total liabilities                                                      234,709      238,313
                                                                                --------     --------

STOCKHOLDERS' EQUITY:
  Preferred stock, $.01 par value, participating, cumulative, 2,000,000
    authorized shares; no shares issued and outstanding
  Common stock, $.01 par value, 19,300,000 authorized shares; 8,259,603 and
    8,295,974 shares issued at June 30, 1999
    and 2000, respectively                                                            83           83
  Class A common stock (non-voting), $.01 par value, 700,000 authorized shares;
    no shares issued and outstanding
  Additional paid-in capital                                                      81,216       81,460
  Retained earnings                                                               65,011       67,467
  Accumulated foreign currency translation adjustment                             (1,193)      (4,010)
  Less common stock held in treasury, 622,702 shares at June 30, 1999
    and 2000, at cost                                                             (6,048)      (6,048)
                                                                                ---------  -----------
           Total stockholders' equity                                            139,069      138,952
                                                                                ---------  -----------
TOTAL                                                                          $ 373,778    $ 377,265
                                                                               =========   ===========

See notes to consolidated financial statements                                              (Concluded)
</TABLE>


                                       -F-3-

<PAGE>


ATCHISON CASTING CORPORATION
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED JUNE 30, 1998, 1999 AND 2000
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                               1998              1999            2000
                                              ------            ------          ------
<S>                                      <C>              <C>              <C>
NET SALES                                 $   373,768      $   475,559      $   468,301

COST OF GOODS SOLD                            318,280          407,787          414,748
                                          -----------      -----------      -----------
GROSS PROFIT                                   55,488           67,772           53,553

OPERATING EXPENSES:
  Selling, general and administrative          28,798           44,682           43,089
  Impairment charges                                                             10,256
  Amortization of intangibles                     850              544             (408)
  Other income, net                                             (2,750)            (606)
                                          -----------      -----------      -----------

     Total operating expenses, net             29,648           42,476           52,331
                                          -----------      -----------      -----------

OPERATING INCOME                               25,840           25,296            1,222

INTEREST EXPENSE                                3,896            8,352            9,452

MINORITY INTEREST IN NET INCOME OF
  SUBSIDIARIES                                    448              237               66
                                          -----------      -----------      -----------

INCOME (LOSS) BEFORE INCOME TAXES              21,496           16,707           (8,296)

INCOME TAXES                                    8,731            6,901          (10,752)
                                          -----------      -----------      -----------
NET INCOME                                $    12,765      $     9,806      $     2,456
                                          ===========      ===========      ===========

NET INCOME PER COMMON AND
  EQUIVALENT SHARES:
    BASIC                                 $      1.56      $      1.26      $      0.32
                                          ===========      ===========      ===========
    DILUTED                               $      1.55      $      1.26      $      0.32
                                          ===========      ===========      ===========

WEIGHTED AVERAGE NUMBER OF COMMON
  AND EQUIVALENT SHARES OUTSTANDING:
    BASIC                                   8,167,285        7,790,781        7,648,616
                                          ===========      ===========      ===========
    DILUTED                                 8,218,686        7,790,781        7,650,311
                                          ===========      ===========      ===========
</TABLE>

See notes to consolidated financial statements.



                                       -F-4-
<PAGE>


ATCHISON CASTING CORPORATION
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
YEARS ENDED JUNE 30, 1998, 1999 AND 2000
(DOLLARS IN THOUSANDS)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                1998            1999          2000
                                               ------          ------        ------
<S>                                           <C>           <C>           <C>
NET INCOME                                     $ 12,765      $  9,806      $  2,456

OTHER COMPREHENSIVE INCOME -
  Foreign currency translation adjustments         (498)         (563)       (2,817)
                                               --------      --------      --------
TOTAL COMPREHENSIVE INCOME (LOSS)              $ 12,267      $  9,243      $   (361)
                                               ========      ========      ========
</TABLE>

See notes to consolidated financial statements.



                                       -F-5-
<PAGE>


ATCHISON CASTING CORPORATION
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED JUNE 30, 1998, 1999 AND 2000
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                                             ACCUMULATED
                                                                                               FOREIGN       COMMON
                                                              ADDITIONAL                       CURRENCY       STOCK
                                                    COMMON     PAID-IN         RETAINED      TRANSLATION     HELD IN
                                                    STOCK      CAPITAL         EARNINGS       ADJUSTMENT     TREASURY      TOTAL
                                                 ---------   -----------      ----------   --------------   ----------   ---------
<S>                                               <C>           <C>             <C>          <C>           <C>           <C>
Balance, July 1, 1997                              $ 81          $80,342         $42,440      $  (132)                    $122,731
  Issuance of 15,793 shares                                          227                                                       227
  Exercise of stock options (28,060 shares)           1              388                                                       389
  Foreign currency translation
    adjustment of investment in subsidiaries                                                     (498)                        (498)
  Net income                                                                      12,765                                    12,765
                                                 ---------   -----------      ----------   --------------                 ----------
Balance, June 30, 1998                               82           80,957          55,205         (630)                     135,614
  Issuance of 33,033 shares                           1              259                                                       260
  Purchase of 586,700 shares under Stock
    Repurchase Plan                                                                                         $(6,048)        (6,048)
  Foreign currency translation
    adjustment of investment in subsidiaries                                                     (563)                        (563)
  Net income                                                                       9,806                                     9,806
                                                 ---------   -----------      ----------   --------------   ----------   ---------
Balance, June 30, 1999                               83           81,216          65,011       (1,193)       (6,048)       139,069
  Issuance of 36,371 shares                                          244                                                       244
  Foreign currency translation
    adjustment of investment in subsidiaries                                                   (2,817)                      (2,817)
  Net income                                                                       2,456                                     2,456
                                                 ---------   -----------      ----------   --------------   ----------   ---------

Balance, June 30, 2000                             $ 83          $81,460         $67,467      $(4,010)      $(6,048)      $138,952
                                                 =========   ===========      ==========   ==============   ==========   =========
</TABLE>


See notes to consolidated financial statements.




                                        -F-6-

<PAGE>


ATCHISON CASTING CORPORATION
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED JUNE 30, 1998, 1999 AND 2000
(DOLLARS IN THOUSANDS)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                               1998         1999           2000
                                                                            --------      --------      --------
<S>                                                                        <C>           <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                                                $ 12,765      $  9,806      $  2,456
  Adjustments to reconcile net income to net cash provided by operating
    activities:
    Depreciation and amortization                                             11,695        13,400        14,218
    Minority interest in net income of subsidiaries                              448           237            66
    Provision for loss on closure of Claremont foundry                                                     3,373
    Impairment charge related to PrimeCast facility                                                        6,883
    Loss (gain) on disposal of capital assets                                    176          (190)         (486)
    Gain on termination of interest rate swap agreements                                                  (1,083)
    Deferred income tax expense (benefit)                                      1,394         4,151       (10,486)
    Changes in assets and liabilities (exclusive of effects of acquired
      companies):
      Receivables                                                             13,071         6,375       (10,878)
      Inventories                                                               (374)       (1,017)        5,979
      Other current assets                                                      (719)       (9,685)       (7,493)
      Accounts payable                                                        (6,854)          979         1,393
      Accrued expenses                                                       (16,472)      (14,423)       13,991
      Postretirement obligation other than pension                               467           682           921
      Other                                                                      265        (2,596)       (1,201)
                                                                            --------      --------      --------

           Cash provided by operating activities                              15,862         7,719        17,653
                                                                            --------      --------      --------
CASH FLOWS FROM  INVESTING ACTIVITIES:
  Capital expenditures                                                       (18,495)      (20,038)      (21,387)
  Proceeds from sale of capital assets                                         1,219         1,829         3,408
  Payment for purchase of net assets of subsidiaries,
    net of cash acquired                                                     (74,299)       (7,494)
  Payments for purchase of minority interest in subsidiaries                     (64)         (728)       (2,737)
  Repayments of subordinated note receivable                                     800
  Payment for investments in unconsolidated subsidiaries                                      (150)
                                                                            --------      --------      --------
           Cash used in investing activities                                 (90,839)      (26,581)      (20,716)
                                                                            --------      --------      --------
CASH FLOWS FROM  FINANCING ACTIVITIES:
  Proceeds from issuance of common stock, net of costs                           616           260           244
  Payments for repurchase of common stock                                                   (6,048)
  Proceeds from issuance of long-term obligations                                                         35,000
  Payments on long-term obligations                                             (979)       (6,528)      (42,010)
  Capitalized financing costs paid                                              (409)         (108)         (620)
  Termination of interest rate swap agreements                                                             1,083
  Net borrowings under revolving loan note                                    65,519        26,675        11,285
                                                                            --------      --------      --------
           Cash provided by financing activities                              64,747        14,251         4,982
                                                                            --------      --------      --------
EFFECT OF EXCHANGE RATE ON CASH                                                 (253)         (503)         (209)

NET INCREASE (DECREASE ) IN CASH AND CASH
  EQUIVALENTS                                                                (10,483)       (5,114)        1,710

CASH AND CASH EQUIVALENTS, Beginning of period                                19,819         9,336         4,222
                                                                            --------      --------      --------
CASH AND CASH EQUIVALENTS, End of period                                    $  9,336      $  4,222      $  5,932
                                                                            ========      ========      ========
</TABLE>


See notes to consolidated financial statements.



                                       -F-7-

<PAGE>


ATCHISON CASTING CORPORATION
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 1998, 1999 AND 2000
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
--------------------------------------------------------------------------------


1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      NATURE OF OPERATIONS - Atchison Casting Corporation and subsidiaries
      ("ACC" or the "Company") was organized in 1991 for the purpose of becoming
      a broad-based manufacturer of metal castings, producing iron, steel and
      non-ferrous castings ranging in size from a few ounces to 280 tons. A
      majority of the Company's sales are to U.S. customers, however, the
      Company also has sales to Canadian, European and other foreign customers.

      PERVASIVENESS OF ESTIMATES - The preparation of financial statements in
      conformity with accounting principles generally accepted in the United
      States of America requires management to make estimates and assumptions
      that affect the reported amounts of assets and liabilities and disclosure
      of contingent assets and liabilities at the date of the financial
      statements and the reported amounts of revenues and expenses during the
      reporting period. Actual results could differ from those estimates.

      BASIS OF PRESENTATION - The consolidated financial statements present the
      financial position of the Company and its subsidiaries, Amite Foundry and
      Machine, Inc. ("AFM"), Prospect Foundry, Inc. ("Prospect Foundry"), Quaker
      Alloy, Inc. ("Quaker"), Canadian Steel Foundries, Ltd. ("Canadian Steel"),
      Kramer International, Inc. ("Kramer"), Empire Steel Castings, Inc.
      ("Empire"), La Grange Foundry Inc. ("La Grange Foundry"), The G&C Foundry
      Company ("G&C"), Los Angeles Die Casting Inc. ("LA Die Casting"), Canada
      Alloy Castings, Ltd. ("Canada Alloy"), Pennsylvania Steel Foundry &
      Machine Company ("Pennsylvania Steel"), Jahn Foundry Corp. ("Jahn
      Foundry"), PrimeCast, Inc. ("PrimeCast"), Inverness Castings Group, Inc.
      ("Inverness"), Atchison Casting UK Limited ("ACUK"), Claremont Foundry,
      Inc. ("Claremont"), London Precision Machine & Tool Ltd. ("London
      Precision") and Fonderie d'Autun SA ("Autun"). AFM, Quaker, Canadian
      Steel, Kramer, Empire, La Grange Foundry, Canada Alloy, Pennsylvania
      Steel, Jahn Foundry, PrimeCast, Claremont and London Precision are wholly
      owned subsidiaries. The Company owns 96.0%, 93.9%, 90.6%, 96.7%, 95.5% and
      73.8% of the outstanding capital stock of Prospect Foundry, G&C, LA Die
      Casting, Inverness, ACUK and Autun, respectively. Sheffield Forgemasters
      Group, Ltd. ("Sheffield") is a wholly-owned subsidiary of ACUK. In August
      2000, ACC acquired the remaining 26% of Autun for $150. All significant
      intercompany accounts and balances have been eliminated.

      STATEMENT OF CASH FLOWS - For purposes of cash flow reporting, cash and
      cash equivalents include cash on hand, amounts due from banks and
      temporary investments with original maturities of 90 days or less at the
      date of purchase.




                                       -F-8-

<PAGE>


      REVENUE RECOGNITION - Sales and related cost of sales are recognized upon
      shipment of products. The Company provides for estimated product warranty
      costs based on historical experience at the time the product is sold and
      accrues for specific items at the time their existence is known and the
      amounts are determinable.

      CUSTOMER ACCOUNTS RECEIVABLE - Approximately 18%, 17% and 15% of the
      Company's business in 1998, 1999 and 2000, respectively, was with two
      major customers who operate in the automotive, locomotive and general
      industrial markets. As of June 30, 1999 and 2000, 12% and 7%,
      respectively, of accounts receivable were with these two major customers.
      The Company generally does not require collateral or other security on
      accounts receivable. Credit risk is controlled through credit approvals,
      limits and monitoring procedures.

      INVENTORIES - Approximately 10% of the Company's inventory is valued at
      the lower of cost, determined on the last-in, first-out ("LIFO") method,
      or market. The remaining inventory is valued at the lower of cost,
      determined on the first-in, first-out ("FIFO") method, or market.

      PRE-PRODUCTION COSTS - In September 1999, the Emerging Issues Task Force
      ("EITF") of the American Institute of Certified Public Accountants issued
      EITF 99-5, "ACCOUNTING FOR PRE-PRODUCTION COSTS RELATED TO LONG-TERM
      SUPPLY ARRANGEMENTS." The guidance in EITF 99-5 is effective for
      pre-production costs, which include tooling, dies, fixtures, patterns and
      drawings, among other items, incurred after December 31, 1999. The
      Company's long-term supply arrangements typically provide for specific
      reimbursement of such pre-production costs by the customer. As of June 30,
      1999 and 2000, the Company had $10,215 and $8,774 of capitalized
      pre-production costs recorded within other current assets within the
      consolidated balance sheets. Generally, the supply arrangements entered
      into by ACC provide the Company the noncancelable right to use the tooling
      during the supply arrangement even though the customer owns the tooling.
      As such, the adoption of EITF 99-5 has not had a material effect upon the
      Company's consolidated financial statements.

      PROPERTY, PLANT AND EQUIPMENT - Major renewals and betterments are
      capitalized while replacements, maintenance and repairs which do not
      improve or extend the life of the respective assets are charged to expense
      as incurred. Upon sale or retirement of assets, the cost and related
      accumulated depreciation applicable to such assets are removed from the
      accounts and any resulting gain or loss is reflected in operations.

      Property, plant and equipment is carried at cost less accumulated
      depreciation. Plant and equipment is depreciated over the estimated useful
      lives of the assets using the straight-line method.

      Applicable interest charges incurred during the construction of new
      machinery and equipment are capitalized as one of the elements of cost and
      are amortized over the assets' estimated useful lives. There was no
      interest capitalized during fiscal years 1998 and 1999, while $82 was
      capitalized in fiscal year 2000.




                                       -F-9-
<PAGE>


      INTANGIBLE ASSETS - Intangible assets acquired, primarily goodwill, are
      being amortized over their estimated lives of 25 years using the
      straight-line method.

      DEFERRED FINANCING COSTS - Costs incurred in connection with obtaining or
      amending financing are capitalized and amortized over the remaining term
      of the related debt instrument on a method approximating the interest
      method.

      FOREIGN CURRENCY TRANSLATION - Assets and liabilities of foreign
      subsidiaries are translated into U.S. dollars at the rate of exchange at
      the balance sheet date. Revenues and expenses are translated into U.S.
      dollars at average monthly exchange rates prevailing during the year.
      Resulting translation adjustments are recorded in the accumulated foreign
      currency translation adjustment account, which is a component of other
      comprehensive income and a separate component of stockholders' equity.
      Foreign currency transaction gains and losses are included in the results
      of operations as incurred.

      LONG-LIVED ASSETS - The Company periodically evaluates the carrying value
      of long-lived assets to be held and used, including goodwill and other
      intangible assets, when events and circumstances warrant such a review.
      The carrying value of a long-lived asset is considered impaired when the
      anticipated undiscounted cash flow from such asset is separately
      identifiable and is less than its carrying value. In that event, a loss is
      recognized based on the amount by which the carrying value exceeds the
      fair market value of the long-lived asset (Notes 2 and 3).

      ACCRUED INSURANCE EXPENSE - Costs estimated to be incurred in the future
      for employee medical benefits and casualty insurance programs resulting
      from claims which have occurred are accrued currently.

      At June 30, 2000, the Company had letters of credit aggregating $1,850 and
      a certificate of deposit of $200 which support claims for workers'
      compensation benefits.

      INCOME TAXES - Deferred income taxes are provided on temporary differences
      between the financial statement and tax basis of the Company's assets and
      liabilities in accordance with the liability method. SFAS No. 109,
      "ACCOUNTING FOR INCOME TAXES," requires a valuation allowance against
      deferred tax assets if, based on the weight of available evidence, it is
      more likely than not that some or all of the deferred tax assets will not
      be realized.

      STOCK OPTION PLANS - The Financial Accounting Standards Board ("FASB")
      issued Statement of Financial Accounting Standards ("SFAS") No. 123,
      "ACCOUNTING FOR STOCK-BASED COMPENSATION," in October 1995. SFAS No. 123
      allows companies to continue under the approach set forth in Accounting
      Principles Board Opinion ("APB") No. 25, "ACCOUNTING FOR STOCK ISSUED TO
      EMPLOYEES," for recognizing stock-based compensation expense in the
      financial statements, but encourages companies to adopt provisions of SFAS
      No. 123 based on the estimated fair value of employee stock options.
      Companies electing to retain the approach under APB No. 25 are required to
      disclose pro forma net income and net income per share in the notes to the
      financial statements, as if they had adopted the fair value accounting
      method under SFAS No. 123. The Company has elected to retain its current
      accounting approach under APB No. 25.

      EARNINGS PER SHARE - Basic earnings per share ("EPS") is computed by
      dividing net income by the weighted-average number of common shares
      outstanding for the year. Diluted EPS reflects the potential dilution that
      could occur if dilutive securities, such as stock options, were exercised.



                                       -F-10-
<PAGE>


      NEW ACCOUNTING STANDARDS - In June 1998, the FASB issued SFAS No. 133,
      "ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES." SFAS No.
      133 requires companies to record derivative instruments as assets or
      liabilities, measured at fair value. The recognition of gains or losses
      resulting from changes in the values of those derivative instruments is
      based on the use of each derivative instrument and whether it qualifies
      for hedge accounting. The key criterion for hedge accounting is that the
      hedging relationship must be highly effective in achieving offsetting
      changes in fair value or cash flows. In June 2000, the FASB issued SFAS
      No. 138, "ACCOUNTING FOR CERTAIN DERIVATIVE INSTRUMENTS AND CERTAIN
      HEDGING ACTIVITIES, AN AMENDMENT OF FASB STATEMENT NO. 133," which amends
      certain provisions of SFAS No. 133. SFAS Nos. 133 and 138 are effective
      for fiscal years beginning after June 15, 2000.

      At July 1, 2000, the Company had derivatives in the form of foreign
      exchange contracts ("FX contracts") to buy and sell various currencies.
      The Company uses FX contracts as an economic hedge of trade receivables
      and payables denominated in foreign currencies, as well as anticipated
      sales to foreign customers in the customers' local currency. On July 1,
      2000, the Company adopted SFAS Nos. 133 and 138, and as required, recorded
      its FX contracts at their fair value of approximately $(920). This
      resulted in a charge to income of approximately $920 ($560 net of deferred
      income tax benefit). Additionally, the translation of the foreign
      denominated trade receivables resulted in the increase in value of the
      receivables and the Company recorded a currency translation gain of
      approximately $440 ($270 net of deferred income tax expense). The impact
      of the adoption of SFAS Nos. 133 and 138 will be presented in the
      Company's fiscal year 2001 consolidated financial statements as the
      cumulative effect of a change in accounting principle.

      In December 1999, Staff Accounting Bulletin ("SAB") No. 101, "REVENUE
      RECOGNITION IN FINANCIAL STATEMENTS," was issued. SAB No. 101 summarizes
      the Securities and Exchange Commission's view on applying accounting
      principles generally accepted in the United States of America to revenue
      recognition in financial statements. Due to the issuance of SAB No. 101B,
      SAB No. 101 must be implemented no later than the fourth fiscal quarter of
      the Company's fiscal year ending June 30, 2001. The Company does not
      believe that the implementation of SAB No. 101 will have a material effect
      on the Company's consolidated financial statements.

      RECLASSIFICATIONS - Certain reclassifications have been made in the 1998
      and 1999 financial statements to conform with current year presentation.

2.    CLOSURE OF CLAREMONT

      During fiscal year 2000, the Company recorded an impairment loss
      associated with the planned closure of the Claremont foundry. The
      resulting impairment charge of $3,373 ($2,125, net of tax) to reduce the
      carrying value of these fixed assets was recorded in the fourth quarter
      ended June 30, 2000. During the fourth quarter of fiscal year 2000, the
      Company's Board of Directors committed to a plan for the closure of
      Claremont as a result of continued operating losses. As such, the carrying
      values of Claremont's fixed assets were written down to the Company's
      estimates of fair value, which was based on discounted future cash flows.
      Accordingly, actual results could vary significantly from such estimates.
      Prior to the impairment charge, these assets had a carrying value of
      $3,534. The Company intends to transfer as much work as possible to other
      ACC foundries by November 30, 2000, and close the foundry by such date.
      For fiscal years 1998, 1999, and 2000, Claremont recorded net sales of
      $1,297, $7,068, and $3,958, respectively, and incurred net losses of $97,
      $1,554, and $1,819, respectively, excluding the impairment charge in the
      fourth quarter of fiscal year 2000.




                                       -F-11-
<PAGE>


      In addition to the long-lived asset impairment, the Company will recognize
      certain other exit costs associated with the closure of Claremont in
      fiscal year 2001 related to employee termination costs. Such costs are
      recognized when benefit arrangements are communicated to affected
      employees in sufficient detail to enable the employees to determine the
      amount of benefits to be received upon termination. As of June 30, 2000,
      the planned closure of Claremont had not been communicated to the
      Claremont employees. The number of employees to be terminated in the
      process will approximate 45. As such, in the first quarter of fiscal year
      2001, the Company will recognize approximately $90 in severance benefits
      related to the Claremont closure.

      Other costs directly related to the closure of Claremont which are not
      eligible for recognition at the commitment date will be expensed as
      incurred under EITF 94-3, "LIABILITY RECOGNITION FOR CERTAIN EMPLOYEE
      TERMINATION BENEFITS AND OTHER COSTS TO EXIT AN ACTIVITY (INCLUDING
      CERTAIN COSTS INCURRED IN A RESTRUCTURING)".

3.    WRITE-DOWN OF PRIMECAST ASSETS

      The Company recognized an impairment charge of $6,883 ($4,336, net of tax)
      to reduce the carrying value of fixed assets at its PrimeCast foundry in
      the fourth quarter ended June 30, 2000. The Company considers continued
      operating losses, caused primarily by the bankruptcy of PrimeCast's major
      customer and subsequent closure of facilities to which PrimeCast supplied
      a significant amount of castings, as the primary indicator of impairment.
      An impairment loss was recognized as the future undiscounted cash flows of
      PrimeCast were estimated to be insufficient to recover the carrying values
      of the fixed assets. As such, the carrying values of these assets were
      written down to the Company's estimates of fair value, which was based
      upon discounted future cash flows of PrimeCast. Accordingly, actual
      results could vary significantly from such estimates. Prior to the
      impairment charge, these assets had a remaining carrying amount of $8,248.
      For fiscal years 1998, 1999, and 2000, PrimeCast recorded net sales of
      $33,861, $27,531, and $24,464, respectively, and incurred net income
      (losses) of $609, $(644), and $(2,033), respectively, excluding the
      impairment charge in the fourth quarter of fiscal year 2000.

4.    ACQUISITIONS

      On July 1, 1997, the Company purchased the Beloit Castings Division
      ("BCD") of Beloit Corporation for $8,209 in cash and $102 of related
      expenses. BCD now operates under the name PrimeCast, as a subsidiary of
      ACC. 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. The Company financed this
      acquisition with available cash balances (Note 3).

      On October 6, 1997, the Company acquired approximately 91.5% of the
      outstanding capital stock of Inverness, a Delaware corporation, for $5,882
      in cash and $202 of related expenses, in addition to the assumption of
      $587 of outstanding indebtedness. Contemporaneous with the consummation of
      this acquisition, the Company retired approximately $11,602 of Inverness'
      outstanding indebtedness. The remaining 8.5% of Inverness capital stock
      was retained by Inverness management. During fiscal year 1999, the Company
      purchased additional shares from 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.




                                       -F-12-

<PAGE>


      On April 6, 1998, ACUK, a subsidiary of the Company, acquired all of the
      outstanding capital stock, consisting of 76,987,733 ordinary shares of
      capital stock, of Sheffield, incorporated in England and Wales, from the
      stockholders of Sheffield for approximately $54,931 in cash, 1,040,000
      shares of ACUK valued at $915 and $226 of related expenses. The 1,040,000
      ordinary shares, consisting of 5.0% of the outstanding stock, of ACUK were
      issued to Sheffield management in exchange for 1,267,477 shares of
      Sheffield instead of cash consideration. Sheffield includes Forgemasters
      Steel & Engineering Limited, River Don Castings Limited, Forged Rolls (UK)
      Limited and British Rollmakers Limited, among other operating units. The
      companies' products serve a variety of markets and end users, including
      steel rolling mills, paper and plastic processing, oil and gas exploration
      and production, fossil and nuclear electricity generation and forging
      ingots. The Company financed this transaction with funds available under
      its bank credit facility.

      On May 31, 1996, the Company purchased approximately 21.0% of the
      outstanding shares of capital stock of Claremont for $330 in cash and $17
      of related expenses. On November 29, 1996, the Company purchased an
      additional 4.5% of the outstanding capital stock of Claremont for $40 in
      cash. On May 1, 1998, the Company purchased the balance of Claremont's
      outstanding capital stock for $1 in cash, the contribution of equipment
      with a fair market value of $300, the forgiveness of a subordinated note
      payable to the Company of $2,924 and related expenses of $7.
      Contemporaneous with the consummation of this acquisition, the Company
      retired $165 of Claremont's outstanding indebtness. Claremont, located in
      Claremont, New Hampshire, is a foundry that produces steel castings for
      the mining and mass transit industries, among others. The Company financed
      this transaction with funds available under its revolving credit facility
      (Note 2).

      Effective September 1, 1998, the Company purchased 90% of the outstanding
      shares of London Precision for U.S. $13,663 in cash and $124 of related
      expenses. On June 16, 1999, the Company purchased the remaining 10% of the
      outstanding shares of London Precision for U.S. $1,847 in cash. London
      Precision, located in London, Ontario, Canada, is an industrial machine
      shop which serves the locomotive, mining and construction, pulp and paper
      markets, among others. The Company financed this transaction with funds
      available under its revolving credit facility.

      On February 25, 1999, Autun purchased the foundry division assets of
      Compagnie Internationale du Chauffage ("CICH") located in Autun, France.
      Autun received U.S. $5,847 in cash and U.S. $5,505 in inventory in
      exchange for the assumption of potential environmental and employment
      liabilities if the facility is ever closed. CICH is a subsidiary of Blue
      Circle Industries plc, headquartered in London, England. Autun specializes
      in the manufacture of cast iron radiators and boiler castings.

      The acquisitions have been accounted for by the purchase method of
      accounting, and accordingly, the purchase price including the related
      acquisition expenses has been allocated to the assets acquired based on
      the estimated fair values at the date of the acquisitions. For the
      Inverness and London Precision acquisitions, the excess of purchase price
      over estimated fair values of the net assets acquired has been included in
      "Intangible Assets" on the Consolidated Balance Sheets. For the PrimeCast,
      Sheffield, Claremont and Autun acquisitions, the fair value of the net
      assets acquired exceeded the purchase price. Accordingly, the excess fair
      value was subtracted from identifiable long-term assets ratably based on
      their relative fair values as a percentage of total long-term assets with
      any remaining excess recorded as negative goodwill and included in "Excess
      of Fair Value of Acquired Net Assets Over Cost" on the Consolidated
      Balance Sheets.



                                       -F-13

<PAGE>


<TABLE>
<CAPTION>
                                                                 LIVES
                                                              (IN YEARS)      1999            2000
                                                             -----------     ------          ------
<S>                                                          <C>            <C>             <C>
Excess of fair value of acquired net assets over cost             4          $8,665          $7,141
Less accumulated amortization                                                 1,776           2,298
                                                                             ------          ------

                                                                             $6,889          $4,843
                                                                             ======          ======
</TABLE>


      Amoritization of negative goodwill was $257, $870, and $1,897 for the
      years ended June 30, 1998, 1999 and 2000, respectively. The increase in
      negative goodwill from fiscal year 1999 to fiscal year 2000 relates to the
      purchase of Autun.

      The estimated fair values of assets and liabilities acquired in the 1998
      and 1999 acquisitions are summarized as follows:

<TABLE>
<CAPTION>
                                                                              1998               1999
                                                                          ----------          ---------
        <S>                                                               <C>                <C>
         Cash                                                              $ 10,244           $  6,501
         Customer accounts receivable                                        61,669              2,748
         Inventories                                                         31,231              7,117
         Property, plant and equipment                                       38,164              7,705
         Intangible assets, primarily goodwill                                4,666              8,427
         Other assets                                                        14,670                 15
         Accounts payable and accrued expenses                              (75,775)            (7,489)
         Deferred income taxes                                                6,731             (1,269)
         Excess of fair value of acquired net assets over cost                                  (7,872)
         Other long-term obligations                                         (6,470)            (1,888)
         Long-term obligations                                                 (587)
                                                                          ----------          ---------

                                                                             84,543             13,995

         Cash acquired                                                      (10,244)            (6,501)
                                                                          ----------          ---------
         Cash used in acquisitions                                         $ 74,299           $  7,494
                                                                          ==========          =========

</TABLE>

      The operating results of the acquired companies are included in ACC's
      consolidated statements of income from the dates of acquisition. The
      following unaudited pro forma summary presents the consolidated results of
      operations as if the acquisitions occurred at July 1, 1997, after giving
      effect to certain adjustments, including amortization of goodwill,
      interest expense on the acquisition debt and related income tax effects.
      These pro forma results have been prepared for comparative purposes only
      and do not purport to be indicative of what would have occurred had the
      acquisitions been made as of that date or of results which may occur in
      the future.




                                       -F-14-
<PAGE>



<TABLE>
<CAPTION>


                                                                              1998               1999
                                                                           -----------        -----------
                                                                           (UNAUDITED)        (UNAUDITED)
<S>                                                                        <C>                <C>
      Net sales                                                              $549,011           $494,580
      Net income                                                               17,021             12,583
      Net income per common and equivalent shares:
        Basic                                                                    2.08               1.62
        Diluted                                                                  2.07               1.62

5.    INVENTORIES

                                                                               1999              2000
                                                                             -------            -------
      Raw materials                                                          $10,414            $ 9,552
      Work-in-process                                                         41,431             36,680
      Finished goods                                                          12,736             11,587
      Deferred supplies                                                        4,196              3,985
                                                                             -------            -------
                                                                             $68,777            $61,804
                                                                             =======            ========
</TABLE>

      Inventories as of June 30, 1999 and 2000 would have been higher by $381
      and $416, respectively, had the Company used the FIFO method of valuing
      those inventories valued using the LIFO method.

6.    PROPERTY, PLANT AND EQUIPMENT


<TABLE>
<CAPTION>

                                                                       LIVES
                                                                     (IN YEARS)                1999              2000
                                                                     ----------            ----------          --------
<S>                                                                  <C>                   <C>                <C>
      Land                                                                                 $ 15,686           $ 14,868
      Improvements to land                                            12-15                   4,781              4,807
      Buildings and improvements                                        35                   31,817             31,029
      Machinery and equipment                                          5-14                 124,567            125,707
      Automobiles and trucks                                            3                     1,784              1,688
      Office furniture, fixtures and equipment                         5-10                   5,675              6,358
      Tooling and patterns                                            1.5-6                   4,445              4,367
                                                                                          ----------          --------

                                                                                             188,755            188,824
      Less accumulated depreciation                                                           47,496             61,108
                                                                                           ----------          --------

                                                                                             141,259            127,716
      Construction in progress                                                                 8,797             14,651
                                                                                           ----------          --------

                                                                                            $150,056          $142,367
                                                                                           ==========          ========

</TABLE>

      Depreciation expense was $10,656, $12,647 and $14,365 for the years ended
      June 30, 1998, 1999 and 2000, respectively.




                                       -F-15-
<PAGE>

7.    INTANGIBLE ASSETS


<TABLE>
<CAPTION>

                                                                       LIVES
                                                                     (IN YEARS)               1999               2000
                                                                     ----------            ----------          --------
<S>                                                                  <C>                   <C>
      Goodwill                                                           25                  $37,440            $37,310
      Less accumulated amortization                                                            4,594              6,077
                                                                                           ----------          --------

                                                                                             $32,846            $31,233
                                                                                           ==========          ========
</TABLE>

      Amortization expense was $1,108, $1,429 and $1,489 for the years ended
      June 30, 1998, 1999 and 2000, respectively.

8.    DEFERRED FINANCING COSTS

<TABLE>
<CAPTION>

                                                                        LIVES
                                                                     (IN YEARS)               1999               2000
                                                                     ----------            ----------          --------
<S>                                                                  <C>                   <C>                 <C>
      Deferred financing costs                                        3 to 10                $ 1,045            $ 1,355
      Less accumulated amortization                                                              385                432
                                                                                           ----------          --------

                                                                                             $   660            $   923
                                                                                           ==========          ========
</TABLE>

      Amortization of such costs, included in interest expense, was $188, $194
      and $261 for the years ended June 30, 1998, 1999 and 2000, respectively.

9.    ACCRUED EXPENSES

<TABLE>
<CAPTION>
                                                                                               1999             2000
                                                                                           ----------        ---------
<S>                                                                                        <C>               <C>
      Accrued warranty                                                                      $ 11,785          $  9,786
      Payroll, vacation and other compensation                                                 8,688             7,721
      Accrued pension liability                                                                3,089             2,383
      Advances from customers                                                                  4,509             3,426
      Reserve for flood repairs                                                                1,197               645
      Reserve for workers' compensation and employee
        health care                                                                            2,570             2,837
      Taxes other than income                                                                    395               477
      Interest payable                                                                         1,145             1,036
      Insurance advances for Jahn Foundry industrial accident (Note 23)                        2,250            20,141
      Other                                                                                    7,502             7,864
                                                                                           ----------        ---------

                                                                                            $ 43,130          $ 56,316
                                                                                           ==========        =========
</TABLE>

10.   LONG-TERM OBLIGATIONS

      On April 3, 1998, the Company and the insurance company holding the
      Company's $20,000 aggregate principal amount of unsecured, senior notes
      entered into the Third Amendment to the Note Purchase Agreement providing
      for an increase in permitted subsidiary indebtedness from $3,500 to
      $8,000.

                                       -F-16-
<PAGE>


      On April 3, 1998, the Company and Harris Trust and Savings Bank
      ("Harris"), as agent for the lenders, entered into the Amended and
      Restated Credit Agreement (the "Credit Agreement") providing for an
      increase in unsecured loans from $60,000 to $110,000 and an extension of
      the maturity date to April 3, 2003. This Credit Agreement consists of a
      $40,000 term loan and a $70,000 revolving credit facility. The term loan
      began amortizing on March 31, 1999, with a final maturity of April 3,
      2003. Loans under the Credit Agreement will bear interest at fluctuating
      rates of either: (i) the agent bank's corporate base rate subject to a
      reduction of 0.25% (25 basis points) if certain financial ratios are met
      or (ii) LIBOR plus 1.50% subject, in the case of the LIBOR rate option, to
      a reduction of up to 0.50% (50 basis points) if certain financial ratios
      are met. Loans under this revolving credit facility may be used for
      general corporate purposes, acquisitions and approved investments.

      On October 7, 1998, the Company and Harris entered into the First
      Amendment to the Credit Agreement. This amendment permits the Company to
      repurchase up to $24,000 of its common stock, subject to a limitation of
      $10,000 in any fiscal year unless certain financial ratios are met, and
      provides for an option to increase the revolving portion of the credit
      facility to $100,000 if the Company issues senior subordinated notes.
      Proceeds from the issuance of any senior subordinated notes must be used
      to permanently pre-pay the $40,000 term loan portion of the credit
      facility.

      As of April 23, 1999, the Company and Harris entered into the Second
      Amendment to the Credit Agreement. This amendment provides that the
      Company maintain a ratio of earnings before interest, taxes and
      amortization to fixed charges ("Fixed Charge Coverage Ratio") of at least
      1.10, increasing to 1.25 on March 31, 2000 and 1.50 on March 31, 2001. The
      amendment also provides that the Company must maintain a ratio of total
      senior debt to earnings before interest, taxes, amortization and
      depreciation of not more that 3.2 prior to the issuance by the Company of
      any subordinated debt, and not more than 3.0 after the issuance of any
      subordinated debt. In addition, this amendment provides that the Company
      may not make acquisitions prior to May 1, 2000 and, from and after May 1,
      2000, the Company may not make acquisitions unless the Fixed Charge
      Coverage Ratio is at least 1.50, among other existing restrictions. Loans
      under this revolving credit facility will bear interest at fluctuating
      rates of either: (i) Harris' corporate base rate subject to a reduction of
      0.25% (25 basis points) if certain financial ratios are met or (ii) LIBOR
      plus 1.85% subject, in the case of the LIBOR rate option, to a reduction
      of up to 0.50% (50 basis points) if certain financial ratios are met.
      Loans under this revolving credit facility may be used for general
      corporate purposes, permitted acquisitions and approved investments.

      On August 20, 1999, the Company and Harris entered into the Third
      Amendment to the Credit Agreement. This amendment provides that the
      Company's subsidiary, Autun, is not subject to the provisions governing
      subsidiary indebtedness. It further provides that the Company and its
      subsidiaries may not make any investment in Autun and the Company must
      exclude Autun's results in the calculation of various financial covenants.

      On October 20, 1999, the Company and the insurance company holding the
      Company's $20 million aggregate principal amount of unsecured, senior
      notes (the "Notes") entered into the Fourth Amendment to the Note Purchase
      Agreement. This amendment provides that the Company's subsidiary, Autun,
      is not subject to the provisions governing subsidiary indebtedness. It
      further provides that the Company and its subsidiaries may not make any
      investment in Autun and the Company must exclude Autun's results in the
      calculation of various financial covenants.




                                       -F-17-
<PAGE>


      On November 5, 1999, the Company and Hrris entered into the Fourth
      Amendment and Waiver (the "Fourth Amendment") to the Credit Agreement. The
      Fourth Amendment provided, among other things, that the Company maintain a
      Fixed Charge Coverage Ratio of at least 1.10 on December 31, 1999,
      increasing to 1.25 on July 1, 2000, if the Company incurs at least $20
      million of subordinated debt by January 31, 2000. If the Company did not
      obtain a commitment for the private placement of at least $20 million of
      subordinated debt by December 15, 1999, the Fourth Amendment provided that
      (1) the Company maintain a Fixed Charge Coverage Ratio of at least 1.10 on
      December 31, 1999, increasing to 1.25 on March 31, 2000 and 1.50 on March
      31, 2001, (2) the fixed charges used in calculating the Fixed Charge
      Coverage Ratio will include 15% of the aggregate principal amount
      outstanding under the revolving credit facility after October 1, 1999
      rather than after July 1, 2000, and (3) the Company will grant the lenders
      under the Credit Agreement liens on the Company's assets by February 14,
      2000. The Company was unable to obtain such a commitment by December 15,
      1999. The Fourth Amendment also provided that the Company must maintain a
      ratio of consolidated total debt to total capitalization of not more than
      55%. Absent the waiver within the Fourth Amendment, the Company would not
      have been in compliance with the Fixed Charge Coverage Ratio. Loans under
      this credit facility will bear interest at fluctuating rates of either:
      (1) Harris' corporate base rate plus 0.25%, subject to a reduction of
      0.25% (25 basis points) if certain financial ratios are met or (2) LIBOR
      plus 2.10%, subject to a reduction of up to 0.50% (50 basis points) if
      certain financial ratios are met.

      On December 21, 1999, the Company and Harris entered into the Fifth
      Amendment (The "Fifth Amendment") to the Credit Agreement. The Fifth
      Amendment provided that the Company may incur up to $35 million of
      indebtedness from General Electric Capital Corporation or its assignees
      (the "GE Financing"). In addition, the Fifth Amendment provided that (1)
      the bank revolving credit facility will be increased from $70 million to
      $80 million through April 30, 2000, (2) the fixed charges used in
      calculating the Fixed Charge Coverage Ratio will not include 15% of the
      aggregate principal amount outstanding under the revolving credit facility
      through June 30, 2000 and (3) the Company will grant the lenders under the
      Credit Agreement liens in certain of the Company's assets. Absent the
      Fifth Amendment, the Company would not have been in compliance with the
      Fixed Charge Coverage Ratio.

      On December 21, 1999, the Company and the insurance company holding the
      Notes entered into the Fifth Amendment to the Note Purchase Agreement.
      This amendment provided that the Company may incur indebtedness through
      the GE Financing. This amendment further provided that (1) the Company
      must maintain a ratio of consolidated total debt to total capitalization
      of not more than 55%, (2) the Company maintain a Fixed Charge Coverage
      Ratio of at least 1.10 on December 31, 1999, increasing to 1.25 on March
      31, 2000 and 1.50 on March 31, 2001 and (3) the fixed charges used in
      calculating the Fixed Charge Coverage Ratio will not include 15% of the
      aggregate principal amount outstanding under the revolving credit facility
      through June 30, 2000.

      On December 29, 1999, the Company entered into a Master Security Agreement
      with General Electric Capital Corporation ("GECC") and its assigns
      providing for a term loan of $35 million. The term loan is secured by
      certain of the Company's fixed assets, real estate, equipment, furniture
      and fixtures located in Atchison, Kansas and St. Joseph, Missouri, matures
      in December 2004, and bears interest at a fixed rate of 9.05%. On December
      29, 1999, the proceeds of the term loan, together with borrowings under
      the Company's revolving credit facility, were used to retire the $35.7
      million of outstanding indebtedness under the Company's term loan under
      its bank credit facility.




                                       -F-18-
<PAGE>


      On February 15, 2000, the Company, its lenders and the holder of the Notes
      entered into the Sixth Amendments (the "Sixth Amendments") to the Credit
      Agreement and the Note Purchase Agreement. Together with the GECC term
      loan, the Sixth Amendments provided for the perfection of a security
      interest in favor of GECC, the lenders under the Credit Agreement and the
      holder of the Notes in substantially all of the Company's assets other
      than real estate.

      On May 1, 2000, the Company and Harris entered into the Seventh Amendment
      and Waiver (the "Seventh Amendment") to the Credit Agreement. The Seventh
      Amendment provided, among other things, for a waiver of compliance by the
      Company with the Cash Flow Leverage Ratio covenant through July 1, 2000
      and that the bank credit facility will be maintained at $80.0 million
      through June 30, 2000. The Cash Flow Leverage Ratio covenant requires the
      Company to maintain a ratio of total debt to earnings before interest,
      taxes, depreciation and amortization of no greater than 3.2. Absent the
      waiver, the Company would not have been in compliance with the Cash Flow
      Leverage Ratio. Loans under this credit facility will bear interest at
      fluctuating rates of either: (1) Harris' corporate base rate plus 0.75% or
      (2) LIBOR plus 2.25%, increasing to LIBOR plus 2.50% on June 1, 2000.

      On June 30, 2000, the Company and Harris entered into the Eighth Amendment
      and Waiver (the "Eighth Amendment") to the Credit Agreement. The Eighth
      Amendment provides, among other things, for a waiver of compliance by the
      Company with the Cash Flow Leverage Ratio and Fixed Charge Coverage Ratio
      covenants through July 31, 2000, and that the bank credit facility will be
      decreased from $80.0 million to $77.3 million through July 31, 2000. Loans
      under this Credit Agreement will bear interest at Harris' corporate base
      rate plus 1.25%. Absent the waiver, the Company would not have been in
      compliance with the Cash Flow Leverage Ratio and Fixed Charge Coverage
      Ratio covenants. At June 30, 1999 and 2000, $9,866 and $11,367,
      respectively, was available for borrowing under this facility after
      consideration of outstanding advances of $88,817 and $61,385 and letters
      of credit of $8,460 and $7,248, respectively (Note 12).

      Effective June 30, 2000, the insurance company holding the Notes granted a
      limited waiver of compliance with the Fixed Charge Coverage Ratio covenant
      through September 30, 2000. Absent the waiver, the Company would not have
      been in compliance with the Fixed Charge Coverage Ratio covenant.

      On July 31, 2000, the Company and Harris entered into the Ninth Amendment
      and Waiver (the "Ninth Amendment") to the Credit Agreement. The Ninth
      Amendment provides, among other things, for a waiver of compliance by the
      Company with the Cash Flow Leverage Ratio and Fixed Charge Coverage Ratio
      covenants through September 30, 2000, and that the bank facility will be
      maintained at $77.3 million through September 30, 2000. Loans under the
      Credit Agreement will bear interest at fluctuating rates of either (1)
      Harris' corporate base rate plus 1.75% or (2) LIBOR plus 3.00%. Absent the
      waiver, the Company would not have been in compliance with the Cash Flow
      Leverage Ratio and Fixed Charge Coverage Ratio covenants.

      As described previously and in Note 24, the Company has obtained a waiver
      of compliance of the covenants related to the Cash Flow Leverage Ratio and
      Fixed Charge Coverage Ratio through September 30, 2000 from Harris. In
      addition, the Company has obtained a waiver of compliance of the convenant
      related to the Fixed Charge Coverage Ratio through September 30, 2000 from
      the insurance company. Absent another waiver from each of these creditors,
      management does not believe that it will be in compliance with such
      covenants subsequent to September 30, 2000, and accordingly, has
      classified the Harris revolving credit facility and the senior notes with
      the insurance company as current at June 30, 2000.


                                       -F-19-
<PAGE>



      Long-term obligations consist of the following as of June 30, 1999 and
2000:

<TABLE>
<CAPTION>

                                                                                        1999             2000
                                                                                    ----------         ---------
<S>                                                                                 <C>                <C>
Unsecured, senior notes with an insurance company, maturing on July 30, 2004,
   subject to acceleration due to covenant violations
   (Note 10), and bearing interest at a fixed rate of 8.44% per year                 $  17,143         $ 14,286
Revolving credit facility with Harris, secured by certain assets of the
  Company, maturing on April 3, 2003, subject to acceleration due to covenant
  violations (Note 10), bearing interest at:
    LIBOR plus 1.50%, $40,000 at a  weighted average rate of 6.47% at June 30, 1999
    LIBOR plus 1.85%, $37,142 at 7.18% at June 30, 1999
    LIBOR plus 2.50%, $15,000 at 9.15% at June 30, 2000
    LIBOR plus 2.50%, $35,000 at 9.15% at June 30, 2000
    Prime, $11,675 at 7.75% at June 30, 1999
    Prime plus 0.75%, $11,385 at 10.25% at June 30, 2000                                88,817           61,385
Term loan between the Company and GECC, secured by certain
   assets of the Company, maturing on December 29, 2004,
   bearing interest at 9.05%                                                                             33,250
Term loan between G&C and OES Capital, Incorporated (assignee
   of loan agreement with Ohio Air Quality Development Authority), secured by
   certain assets of G&C, maturing on December 31, 2006,
   bearing interest at 6.50%                                                             2,380            2,119
Term loan between La Grange Foundry and the Missouri Development Finance Board,
   secured by a letter of credit, maturing on November 1, 2011, bearing interest
   at 3.87% and 4.87% at June 30, 1999 and 2000, respectively                            5,100            5,100
Revolving credit facility between Autun and Societe Generale, secured by trade
  receivables of Autun, maturing on April 17, 2007, bearing
  interest at EURIBOR plus 0.8% (5.21%) at June 30, 2000                                                  1,470
                                                                                    ----------         ---------

                                                                                       113,440          117,610
Less current maturities                                                                  8,833           80,919
                                                                                    ----------         ---------

Total long-term obligations                                                          $ 104,607         $ 36,691
                                                                                     =========         =========

</TABLE>

The Credit Agreement with Harris, the Note Purchase Agreement with an
insurance company and the Master Security Agreement with GECC limit the
Company's ability to pay dividends in any fiscal year to an amount not more
than 25% of net earnings in the preceding fiscal year.

      The amounts of long-term obligations outstanding as of June 30, 2000
mature as follows:


<TABLE>
<CAPTION>
             <S>                                                            <C>

              2001                                                          $ 80,919
              2002                                                             3,798
              2003                                                             3,817
              2004                                                             3,840
              2005                                                            19,610
              Thereafter                                                       5,626
</TABLE>


                                        - F-20 -

<PAGE>

      The amounts of interest expense for the years ended June 30, 1998, 1999
and 2000 consisted of the following:

<TABLE>
<CAPTION>

                                                   1998            1999           2000
                                                  ------          ------         ------
<S>                                               <C>             <C>            <C>
Senior notes with an insurance company            $1,688          $1,467         $1,224
Credit facility with Harris                        2,020           6,194          6,071
Term loan with GECC                                                               1,520
Amortization of deferred financing costs             188             194            261
Other                                                497             376
                                                  ------          ------         ------

                                                  $3,896          $8,352         $9,452
                                                  ======          ======         ======
</TABLE>

11.   INCOME TAXES

      Income taxes for the years ended June 30, 1998, 1999 and 2000 are
comprised of the following:


<TABLE>
<CAPTION>

                                                   1998            1999            2000
                                                  ------          ------         --------
<S>                                               <C>             <C>            <C>
Current expense (benefit):
  Federal                                         $4,298          $1,002         $   (629)
  State and local                                  1,410             410               73
  Foreign                                            913           1,578              455
                                                  ------          ------         --------
                                                   6,621           2,990             (101)

Deferred expense (benefit)                         2,110           3,911          (10,651)
                                                  ------          ------         --------

                                                  $8,731          $6,901         $(10,752)
                                                  ======          ======         =========
</TABLE>

<TABLE>
<CAPTION>
                                                 1998             1999              2000
                                                ------           ------           --------
<S>                                             <C>              <C>              <C>
Items giving rise to the deferred income
  tax provision (benefit):
  Deferred gain on flood proceeds                                $  975           $ (7,786)
  Impairment reserve                                                                (4,088)
  Depreciation and amortization                 $1,776            2,006              1,548
  Net operating loss carryforwards                 313              754               (916)
  Flood wall capitalization                                                            429
  Postretirement (benefits) costs                   10              (97)              (419)
  Pension costs                                   (397)            (163)               267
  Inventories                                     (430)             179                171
  Accrued expenses                                 555              294                158
  Valuation allowance                              128               56                  4
  Other, net                                       155              (93)               (19)
                                                ------           ------           --------
                                                $2,110           $3,911           $(10,651)
                                                ======           ======           ========
</TABLE>

                                     - F-21 -

<PAGE>


      Following is a reconciliation between total income taxes and the amount
      computed by multiplying income (loss) before income taxes plus the
      minority interest in net income of subsidiaries by the statutory federal
      income tax rate:


<TABLE>
<CAPTION>
                                       1998                       1999                              2000
                                -----------------------       --------------------      -------------------------
                                   AMOUNT         %              AMOUNT       %              AMOUNT        %
<S>                             <C>              <C>          <C>            <C>         <C>              <C>
Computed expected
  federal income tax
  expense (benefit)              $  7,680         35.0         $  5,930       3.5         $  (2,881)      (35.0)

State income tax
  expense (benefit),
  net of federal benefit            1,139          5.2              743       4.4              (256)       (3.1)
Non - U.S. taxes                      (75)        (0.3)                                         156         1.9
Permanent differences                 344          1.6              475       2.8                10         0.1
Deferred tax benefit
  associated with flood
  proceeds
                                                                                             (7,786)      (94.6)
Other, net                           (357)        (1.7)            (247)     (1.5)                5         0.1
                                 --------       ------         --------    ------          --------      ------
                                 $  8,731          3.9         $  6,901      40.7          $(10,752)     (130.6)
                                 ========       ======         ========    ======          ========      ======
</TABLE>


                                          - F-22 -

<PAGE>


Deferred income taxes reflect the impact of temporary differences between the
amount of assets and liabilities for financial reporting purposes and such
amounts as measured by tax laws and regulations. Deferred income taxes as of
June 30, 1999 and 2000 are comprised of the following:

<TABLE>
<CAPTION>

                                               1999              2000
                                            --------           --------
<S>                                         <C>                <C>
Deferred tax assets:
  Net operating loss carryforwards          $ 18,115           $ 19,031
  Impairment reserve                                              4,088
  Postretirement benefits                      3,105              3,524
  Accrued expenses                             2,368              2,210
  Pension costs                                1,549              1,282
  General business tax credits                   574                588
  Flood wall capitalization                      429
  Other                                          206                120
                                            --------           --------
                                              26,346             30,843
  Valuation allowance                        (13,410)           (13,414)
                                            --------           --------

           Net deferred tax assets            12,936             17,429
                                            --------           --------

Deferred tax liabilities:
  Depreciation and amortization              (18,258)           (19,806)
  Deferred gain on flood proceeds             (7,786)
  Inventories                                 (1,343)            (1,514)
  Discharge of indebtedness                     (422)              (422)
  Other                                         (473)              (382)
                                            --------           --------
                                             (28,282)           (22,124)
                                            --------           --------
Total                                       $(15,346)          $ (4,695)
                                            ========           ========
</TABLE>

                                   -  F-23 -

<PAGE>







      In general, it is the practice and intention of the Company to reinvest
      the earnings of its non - U.S. subsidiaries in those operations on a
      permanent basis. Applicable U.S. federal taxes are provided only on
      amounts actually or deemed to be remitted to the Company as dividends.
      U.S. income taxes have not been provided on $3,074 and $1,850 of
      cumulative undistributed earnings from United Kingdom operations for
      1999 and 2000, respectively. U.S. income taxes on such earnings, if
      ultimately remitted to the U.S., may be recoverable as foreign tax
      credits.

      The Company has federal net operating loss carryforwards totaling
      approximately $6,880 at June 30, 2000, which expire in the years 2007
      through 2012. The federal net operating loss carryforwards were
      acquired during previous years and are subject to the ownership change
      rules defined by section 382 of the Internal Revenue Code (the "Code").
      As a result of this event, the Company will be limited in its ability
      to use such net operating loss carryforwards. The amount of taxable
      income that can be offset by pre-change tax attributes in any annual
      period is limited to approximately $500.

      The Company has foreign net operating loss carryforwards totaling
      approximately $43,157 at June 30, 2000, which have no expiration date.
      The utilization of such net operating loss carryforwards are restricted
      to the earnings of specific foreign subsidiaries.

      The Company has recorded a $7,786 deferred income tax benefit in fiscal
      year 2000 with respect to the reinvestment of certain flood insurance
      proceeds received in 1995 and 1996. The Company recorded pretax gains
      of approximately $20,100 in 1995 and 1996 related to insurance proceeds
      resulting from flood damage to the Company's Atchison, Kansas foundry
      in July 1993. For federal income tax purposes, the Company treated the
      flood as an involuntary conversion event under the Code and related
      Treasury Regulations.

      The Code provides generally that if certain conditions are met, gains
      on insurance proceeds from an involuntary conversion are not taxable if
      the proceeds are reinvested in qualified replacement property within
      two years after the close of the first taxable year in which any part
      of the conversion gain is realized. The Company believed that its
      treatment of certain foundry subsidiary stock acquisitions as qualified
      replacement property was subject to potential challenge by the Internal
      Revenue Service (the "Service") in 1996 (the first year in which
      involuntary conversion gain was realized for federal income tax
      purposes). The Company recorded income tax expense on the insurance
      gains in 1996 pending review of its position by the Service or the
      expiration of the statute of limitations under the Code for the Service
      to assess income taxes with respect to the Company's position.

      The Company's treatment of certain foundry subsidiary stock
      acquisitions as qualified replacement property creates differing basis
      in the foundry subsidiary stock for financial statement and tax
      purposes. These differences have not been recognized as taxable
      temporary differences under SFAS No. 109 since the subsidiary basis
      differences can be permanently deferred through subsidiary mergers or
      tax-free liquidations. On March 15, 2000, the statute of limitations
      for the Service to assess taxes with respect to the Company's position
      expired. The deferred taxes recorded in the consolidated financial
      statements in prior years were no longer required.

12.   FINANCIAL INSTRUMENTS

      The Company's financial instruments include cash and cash equivalents,
      customer accounts receivable, accounts payable, debt obligations, and
      derivative financial instruments, including interest rate swap agreements,
      forward foreign exchange contracts and a foreign currency swap agreement.

                                    - F-24 -

<PAGE>


      The derivative financial instruments are used by the Company to manage its
      exposure to interest rate and foreign currency risk. The Company does not
      intend to use such instruments for trading or speculative purposes. The
      counterparties to these instruments are major financial institutions with
      which the Company has other financial relationships. The Company is
      exposed to credit loss in the event of nonperformance by these
      counterparties. However, the Company does not anticipate nonperformance by
      the counter parties, and no material loss would be expected from their
      nonperformance. The Company's financial instruments also expose it to
      certain additional market risks as discussed below.

      INTEREST RATE RISK - The Company's floating rate debt obligations (Note
      10) expose the Company to interest rate risk, such that when LIBOR,
      EURIBOR or Prime rates increase or decrease, so will the Company's
      interest expense. To manage this potential risk, the Company may use
      interest rate swap agreements to limit the effect of increases in interest
      rates on any of the Company's U.S. dollar floating rate debt by fixing the
      rate without the exchange of the underlying principal or notional amount.
      Net amounts paid or received are added to or deducted from interest
      expense in the period accrued.

      At June 30, 1999 and 2000, the Company had $88,817 and $62,855,
      respectively, of floating rate debt tied to LIBOR, EURIBOR or Prime rates.
      In April 1998, the Company entered into a $15,000 notional amount interest
      rate swap agreement under which the Company paid a fixed rate of 5.92% and
      received a LIBOR floating rate (5.0% at June 30, 1999). This agreement was
      a hedge against $15,000 of the $88,817 outstanding on the Company's
      revolving credit facility as of June 30, 1999. At June 30, 1999, the fair
      value of this agreement based on a quote received from the counterparty,
      indicating the amount the Company would pay or receive to terminate the
      agreement, is a payment of $67. This agreement was terminated on June 23,
      2000, with the Company receiving $402 upon termination. Such amount is
      included within other income on the accompanying consolidated statements
      of income.

      In September 1998, the Company entered into a $40 million notional amount
      interest rate swap agreement under which the Company paid a fixed rate of
      5.00% and received a LIBOR floating rate (5.3275% at June 30, 1999). Under
      this agreement, the notional amount was amortized at $1,429 per quarter
      beginning March 31, 1999. At June 30, 1999, this agreement was a hedge
      against $37,142 of the $88,817 outstanding on the Company's revolving
      credit facility. At June 30, 1999, the fair value of this agreement based
      on a quote received from the counterparty, indicating the amount the
      Company would pay or receive to terminate the agreement, was a receipt of
      $965. This agreement was terminated on December 29, 1999, with the Company
      receiving $1,238 upon termination. Such amount is included within other
      income on the accompanying consolidated statements of income.

      FOREIGN CURRENCY RISK - The Company's British subsidiary, Sheffield,
      generates significant sales to customers outside of Great Britain whereby
      Sheffield invoices and receives payment from those customers in their
      local currencies. This creates foreign currency risk for Sheffield as the
      value of such currencies in British Pounds may be higher or lower when
      such transactions are actually settled. To manage this risk, Sheffield
      uses forward foreign exchange contracts to hedge receipts and payments of
      foreign currencies related to sales to its customers and purchases from
      its vendors outside of Great Britain. When Sheffield accepts an order from
      a customer that will be invoiced in a currency other than British Pounds
      (anticipated sales), it enters into a forward foreign exchange contract to
      sell such currency and receive British Pounds at a fixed rate during some
      specified future period that is expected to approximate the customer's
      payment date. Upon shipment of the product to the customer, the sale and
      receivable are recorded in British Pounds in the amount of the contract.
      When Sheffield purchases materials or equipment from a vendor that bills
      it in foreign currency, Sheffield will also enter into a

                                    - F-25 -


<PAGE>

      forward foreign exchange contract to sell British Pounds and purchase that
      foreign currency to settle the payable.

      At June 30, 1999 and 2000, the Company's foreign subsidiaries, primarily
      Sheffield, have the following net contracts to sell the following
      currencies and has no significant un-hedged foreign currency exposure
      related to sales and purchase transactions:

<TABLE>
<CAPTION>

                                                        JUNE 30, 1999                         JUNE 30, 2000
                                            ----------------------------------    ------------------------------
                                                  LOCAL          APPROXIMATE            LOCAL       APPROXIMATE
                                                CURRENCY          VALUE(1)            CURRENCY        VALUE(1)
                                            ------------        ------------         ----------     ------------
<S>                                        <C>                  <C>                  <C>             <C>
U.S. Dollars                                     25,740          $ 25,060              17,860         $ 17,851
Deutsche Marks                                   15,975             8,877               8,165            3,968
French Francs                                    38,225             6,133              19,022            2,757
Swiss Francs                                        496               320                  64               39
Italian Lira                                  3,564,490             1,959           2,229,242            1,095
Canadian Dollars                                    560               362               1,344              905
Dutch Guilder                                     1,854               897
Swedish Krona                                     6,018               718               4,000              452
Spanish Pesata                                   72,463               464              65,980              377
Austrian Schilling                                5,204               425
Japanese Yen                                      9,807                80                 757                7
Danish Krona                                      1,519               216
Belgian Franc                                     8,601               231
Finish Marka                                         21                 4                 106               17
Norwegian Kroner                                  3,609               451
Euro                                                653               712               4,134            3,930
                                                                 ----------                           ---------
Total                                                            $ 46,909                             $ 31,398
                                                                 ==========                           =========
</TABLE>



        (1)  The approximate value is the value of the local currencies
             translated first into the foreign subsidiaries' functional
             currency, at the June 30, 1999 and 2000 spot rates, respectively,
             and then translated to U.S. dollars at the June 30, 1999 and 2000
             spot rates.

      The Company also has foreign currency exposure with respect to its net
      investment in Sheffield. This exposure is to changes in the British Pound
      and affects the translation of the investment into U.S. Dollars in
      consolidation. To manage a portion of this exposure, the Company entered
      into a combined interest rate currency swap ("CIRCUS") in April 1998. The
      CIRCUS was an amortizing principal swap that fixed the exchange rate on
      the periodic and final principal cash exchanges and initially required the
      payment of interest on 24,002 British Pounds by the Company at a fixed
      rate of 6.82% and the receipt of interest on 40,000 U.S. Dollars at a
      floating rate tied to LIBOR rates. The currency portion of the CIRCUS was
      designated as an effective hedge of a portion of the Company's net
      investment in Sheffield. The interest portion of the CIRCUS was also
      effective and was designated as a hedge of the 40,000 U.S. Dollars LIBOR
      debt.

      In September 1998, the Company terminated the CIRCUS and entered into a
      separate interest rate swap (described in INTEREST RATE RISK above) and a
      separate amortizing principal currency swap. The termination of the CIRCUS
      resulted in a loss of $900 on the interest portion, which was deferred and
      amortized to interest expense over the remaining term of the underlying
      debt obligation to which it was

                                  - F-26 -

<PAGE>


      originally designated until such debt was retired on December 29, 1999.
      The retirement of this debt triggered the recognition of the remaining
      $557 of deferred loss. This loss was recorded as a reduction of other
      income.

      This currency swap entered into in September 1998, like the currency
      portion of the CIRCUS, was an amortizing principal swap that fixed the
      exchange rate on the periodic and final principal cash exchanges. The
      currency swap initially required the payment of interest on 24,002 British
      Pounds by the Company at a fixed rate of 6.82% and the receipt of interest
      by the Company on 40,000 U.S. Dollars at a fixed rate of 5.00%. The
      currency swap was designated as an effective hedge of a portion of the
      Company's net investment in Sheffield and was recorded as an adjustment to
      the accumulated foreign currency translation adjustment account and as a
      component of other assets. At June 30, 1999, the currency swap had a
      carrying value of $1,513 and a fair value, based on amounts that would be
      paid or received by the Company to terminate the swap, of $(188). On June
      23, 2000, the Company terminated the currency swap, with the Company
      receiving $1,549 upon termination. Based upon this receipt and the
      currency swap's carrying value of $3,283 upon termination, a deferred gain
      of $1,549 is recorded within the accumulated foreign currency translation
      adjustment account. This deferred gain will only be recognized within
      operations if and when the Company sells the Sheffield subsidiary.

      FAIR VALUE OF FINANCIAL INSTRUMENTS - As of June 30, 1999 and 2000, the
      carrying value of cash and cash equivalents approximates fair value of
      those instruments due to their liquidity and short-term nature.

      Based on borrowing rates currently available to the Company and the
      remaining terms, the carrying value of debt obligations as of June 30,
      1999 and 2000 approximates fair value.

      The estimated fair values of the Company's financial instruments have been
      determined by the Company using available market information and
      appropriate valuation methodologies. However, considerable judgement is
      necessarily required in interpreting market data to develop estimates of
      fair value. Accordingly, the estimates presented herein are not
      necessarily indicative of the amounts that the Company could realize in a
      current market exchange. The use of different market assumptions and/or
      estimation methodologies may have a material effect on the estimated fair
      value amounts.

13.   STOCKHOLDERS' EQUITY

      In fiscal year 2000, the Company's Board of Directors established a
      Stockholder Rights Plan and distributed to stockholders, one preferred
      stock purchase right for each outstanding share of common stock. Under
      certain circumstances, a right may be exercised to purchase one
      one-thousandth of a share of Series A Participating Cumulative Preferred
      Stock at an exercise price of $30, subject to adjustment. The rights
      become exercisable on the business day following the tenth business day
      after the commencement of a tender offer for at least 20% of the Company's
      common stock or a public announcement that a party or group has acquired
      at least 20% of the Company's common stock. Generally, after the rights
      become exercisable, the holders may purchase that number of shares having
      a market value equal to twice the exercise price, for an amount in cash
      equal to the exercise price. If the Company's Board of Directors elects,
      it may exchange all of the outstanding rights for shares of common stock
      on a one-for-one basis. If the Company is a party to certain merger or
      business combination transactions, or transfers 50% or more of its assets
      or earnings power, and certain other events occur, each right will entitle
      its holders, other than the acquiring person, to buy for the exercise
      price a number of shares of common stock of the Company, or of the other
      party to the transaction, having a value equal to twice the exercise price
      of the right. The rights expire on March 28, 2010, and may be redeemed by
      the Company for $.01 per right at any time

                                 - F-27 -

<PAGE>


      until ten business days following the date of the public announcement
      of the acquisition of 20% or more o fthe Company's common stock or the
      commencement date of a tender offer for at least 20% of the Company's
      common stock. The Company is authorized by the Board of Directors to
      issue 2,000,000 shares of preferred stock, none of which have been
      issued. The Company has designated 10,000 shares of the preferred stock
      as Series A Participating Cumulative Preferred Stock for the purpose of
      the Stockholder Rights Plan. The Stockholder Rights Plan is subject to
      stockholder ratification at the Company's fiscal year 2000 annual
      meeting, which is scheduled for November 17, 2000.

      In August 1998, the Company announced that its Board of Directors had
      authorized a stock repurchase program of up to 1,200,000 shares of the
      Company's common stock. During the remainder of fiscal year 1999, the
      Company repurchased 586,700 shares under this program for $6,048. The
      Company accounts for these shares as treasury stock and has recorded them
      at cost. On February 18, 2000, the Board of Directors terminated the stock
      repurchase program. The Company's Credit Agreement and the Note Purchase
      Agreement (Note 10) each restrict certain payments by the Company, such as
      stock repurchases, from exceeding certain limits.

      The 1993 Atchison Casting Corporation Employee Stock Purchase Plan (the
      "Purchase Plan") was adopted by the Board of Directors on August 10, 1993
      and approved by the Company's stockholders on September 27, 1993. An
      aggregate of 400,000 shares of common stock were initially made available
      for purchase by employees upon the exercise of options under the Purchase
      Plan. On the first day of every option period (option periods are
      three-month periods beginning on January 1, April 1, July 1 or October 1
      and ending on the next March 31, June 30, September 30 or December 31,
      respectively), each eligible employee is granted a nontransferable option
      to purchase common stock from the Company on the last day of the option
      period. As of the last day of an option period, employee contributions
      (authorized payroll deductions) during such option period will be used to
      purchase full and partial shares of common stock. The price for stock
      purchased under each option is 90% of the stock's fair market value on the
      first day or the last day of the option period, whichever is lower. During
      the years ended June 30, 1998, 1999 and 2000, 15,793, 33,033 and 36,371
      common shares, respectively, were purchased by employees under the
      Purchase Plan. At June 30, 2000, 253,669 shares remained available for
      grant.

                                 - F-28 -

<PAGE>


      The Atchison Casting 1993 Incentive Stock Plan (the "Incentive Plan") was
      adopted by the Board of Directors on August 10, 1993 and approved by the
      Company's stockholders on September 27, 1993. At the annual meeting in
      November 1997, the Company's stockholders approved increasing the number
      of options available for grant under the Incentive Plan by 400,000. The
      Incentive Plan allows the Company to grant stock options to employees to
      purchase up to 700,000 shares of common stock at prices that are not less
      than the fair market value at the date of grant. The options vest equally
      over a three year period from the date of grant and remain exercisable for
      a term of not more than 10 years after the date of grant. The Incentive
      Plan provides that no options may be granted more than 10 years after the
      date of approval by the stockholders. Activity in the Incentive Plan for
      the three years ended June 30, 2000, is summarized in the following table:

<TABLE>
<CAPTION>
                                                                                                        WEIGHTED
                                                                                                         AVERAGE
                                                                  SHARES        PRICE RANGE             PRICE PER
                                                                UNDER OPTION      PER SHARE               SHARE
<S>                                                             <C>             <C>                      <C>
Outstanding, July 1, 1997                                         229,999       $12.88-19.13             $ 14.13

  Issued                                                           33,333        15.75-18.63               16.56
  Exercised                                                       (18,060)       12.88-14.50               13.58
  Surrendered                                                     (11,873)       13.38-14.50               13.70
                                                                ----------

Outstanding, June 30, 1998                                        233,399        12.88-19.13               14.54

  Issued                                                          119,000         8.50-18.00               11.01
  Surrendered                                                     (24,366)        9.88-18.63               14.95
                                                                ----------

Outstanding, June 30, 1999                                        328,033         8.50-19.1                13.23

  Issued                                                           66,500         7.06-10.38                9.39
  Surrendered                                                     (12,300)       10.38-14.13               13.01
                                                                ---------
Outstanding, June 30, 2000                                        382,233         7.06-19.13               12.57
                                                                ---------

</TABLE>

      of June 30, 1998, 1999 and 2000, there were 164,044, 191,633 and 235,067
      options, respectively, exercisable under the Incentive Plan. The
      weighted-average exercise price for options exercisable at June 30, 1998,
      1999 and 2000 are $13.88, $14.09 and $13.91, respectively.

      At June 30, 2000, options to purchase 292,107 shares were authorized but
      not granted. The weighted average remaining contractual life of options
      outstanding under the Incentive Plan at June 30, 1998, 1999 and 2000 is
      7.0 years, 7.1 years, and 6.7 years, respectively.


                                 - F-29 -


<PAGE>


      On November 18, 1994, the Company's stockholders approved the Atchison
      Casting Non-Employee Director Option Plan (the "Director Option Plan").
      The Director Option Plan provides that each non-employee director of the
      Company who served in such capacity on April 15, 1994 and each
      non-employee director upon election or appointment to the Board of
      Directors thereafter shall automatically be granted an option to purchase
      10,000 shares of the Company's common stock. No person shall be granted
      more than one such option pursuant to the Director Option Plan. An
      aggregate of 100,000 shares were reserved for purchase under the plan. The
      price for stock purchased under the plan is the fair market value at the
      date of grant. The options under this plan have a 6 month vesting period
      from the date of grant and remain exercisable for a term of not more than
      10 years after the date of grant. Activity in the Director Option Plan for
      the three years ended June 30, 2000, is summarized in the following table:


<TABLE>
<CAPTION>

                                                                                                  WEIGHTED
                                                                                                   AVERAGE
                                                                  SHARES          PRICE           PRICE PER
                                                               UNDER OPTION     PER SHARE           SHARE
<S>                                                            <C>              <C>               <C>
Outstanding, July 1, 1997                                         40,000          $13.38            $13.38

  Issued                                                          10,000           19.13             19.13
  Exercised                                                      (10,000)          13.38             13.38
                                                                ---------

Outstanding, June 30, 1998                                        40,000        13.38-19.13          14.81
                                                                ---------
Outstanding, June 30, 1999                                        40,000        13.38-19.13          14.81
                                                                ---------
  Issued                                                          10,000            8.75              8.75
                                                                ---------
Outstanding, June 30, 2000                                        50,000         8.75-19.13          13.60
                                                                =========

</TABLE>


      As of June 30, 1998, 1999 and 2000, there were 40,000 options exercisable
      under the Director Option Plan. The weighted-average exercise price for
      options exercisable at June 30, 1998, 1999 and 2000 is $14.81.

      At June 30, 2000, options to purchase 30,000 shares were authorized but
      not granted. The weighted average remaining contractual life of options
      outstanding under the Director Option Plan at June 30, 1998, 1999 and 2000
      is 6.6 years, 5.6 years, and 5.6 years, respectively.

                                   - F-30 -

<PAGE>

The following table illustrates the range of exercise prices and the weighted
average remaining contractual lives for options outstanding under both the
Incentive Plan and Director Option Plan as of June 30, 2000:

<TABLE>
<CAPTION>

                                                         OPTIONS OUTSTANDING                              OPTIONS EXERCISABLE
                                     ---------------------------------------------------------     -------------------------------
                                       NUMBER         WEIGHTED AVERAGE        WEIGHTED AVERAGE      NUMBER        WEIGHTED AVERAGE
                                    OUTSTANDING           REMAINING              EXERCISE          EXERCISABLE        EXERCISE
  RANGE OF EXERCISE PRICES          AT 6/30/00       CONTRACTUAL LIFE              PRICE           AT 6/30/00           PRICE
<S>                                 <C>              <C>                       <C>                 <C>            <C>
$13.38                                 125,533            4 years                 $ 13.38           125,533         $ 13.38
 14.13-14.75                            51,000            5 years                   14.39            51,000           14.39
 12.88-15.75                            28,000            6 years                   14.93            28,000           14.93
 16.63-19.13                            40,200            7 years                   17.68            33,533           17.76
  9.88                                  20,000            8 years                    9.88             6,667            9.88
 18.06                                  20,000            8 years                   18.06             6,667           18.06
  8.50-10.38                           127,500            9 years                    9.61            23,667            9.45
  8.75-8.88                             20,000           10 years                    7.91                 -               -
                                      --------                                                      -------
                                       432,233                                                      275,067
                                      ========                                                      =======
</TABLE>

The Company applies APB No. 25 in accounting for its stock option plans,
under which no compensation cost has been recognized for stock option awards.
Had compensation cost for the stock option plans been determined in
accordance with the fair value accounting method prescribed under SFAS No.
123, the Company's net income per share on a pro forma basis would have been
as follows:

<TABLE>
<CAPTION>

                                      1998             1999              2000
<S>                                 <C>               <C>              <C>
Net income:
  As reported                       $ 12,765          $  9,806         $  2,456
  Pro forma                           12,578             9,630            2,132
Net income per share:
  As reported:
    Basic                               1.56              1.26             0.32
    Diluted                             1.55              1.26             0.32
  Pro forma:
    Basic                               1.54              1.24             0.28
    Diluted                             1.53              1.24             0.28
</TABLE>

The SFAS No. 123 fair value method of accounting is not required to be
applied to options granted prior to July 1, 1995, therefore, the pro forma
compensation cost may not be representative of that to be expected in future
years.



                                       - F - 31 -

<PAGE>

For the purpose of computing the pro forma effects of stock option grants
under the fair value accounting method, the fair value of each stock option
grant was estimated on the date of the grant using the Black Scholes option
pricing model. For the Incentive Plan, the weighted average grant-date fair
value of stock options granted during fiscal year 1998, 1999 and 2000 was
$10.07, $6.87 and $5.92 per share, respectively. For the Director Option
Plan, the weighted average grant-date fair value of stock options granted
during fiscal year 1998 and 2000 was $11.55 and $5.66 per share,
respectively. No options were issued under the Director Option Plan in fiscal
year 1999. The following weighted average assumptions were used for grants
under both option plans during the years ended June 30, 1998, 1999 and 2000:

<TABLE>
<CAPTION>

                                    1998          1999          2000
<S>                                <C>           <C>           <C>
Risk-free interest rate             5.2%          5.3%          5.9%
Expected life                      10 years      10 years      10 years
Expected volatility                  36%           36%           41%
Dividend yield                        Nil           Nil          Nil
</TABLE>

For the Purchase Plan, the weighted average grant-date fair value of options
granted under the plan was $2.99, $1.81 and $1.57, respectively, for the
years ended June 30, 1998, 1999 and 2000. The following weighted average
assumptions were used for grants under the Purchase Plan during the years
ended June 30, 1998, 1999 and 2000:

<TABLE>
<CAPTION>

                                     1998          1999          2000
<S>                                <C>           <C>           <C>
Risk-free interest rate              5.1 %         4.4 %         5.2 %
Expected life                      3 months      3 months      3 months
Expected volatility                   36%           36%           41%
Dividend yield                          Nil           Nil          Nil
</TABLE>

14.   EARNINGS PER SHARE

      Following is a reconciliation of basic and diluted EPS for the years ended
      June 30, 1998, 1999 and 2000, respectively.

<TABLE>
<CAPTION>

                                          1998                        1999                           2000
                             ----------------------------  -----------------------------   -----------------------------
                                      WEIGHTED   EARNINGS            WEIGHTED   EARNINGS            WEIGHTED    EARNINGS
                              NET     AVERAGE      PER       NET     AVERAGE      PER       NET     AVERAGE       PER
                             INCOME    SHARES     SHARE    INCOME     SHARES     SHARE     INCOME    SHARES      SHARE
<S>                          <C>      <C>        <C>       <C>       <C>        <C>        <C>      <C>         <C>
Basic EPS                    $12,765  8,167,285   $1.56    $9,806    7,790,781   $1.26     $2,456   7,648,616   $0.32
Effect of dilutive
  securities-stock options               51,401   (0.01)                                                1,695
                             -------  ---------   -----    ------    ---------   -----     ------    --------   -----
Diluted EPS                  $12,765  8,218,686   $1.55    $9,806    7,790,781   $1.26     $2,456    7,650,311  $0.32
                             =======  =========   =====    ======    =========   =====     ======    =========  =====
</TABLE>



                                       - F - 32 -

<PAGE>

15.   QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

      Quarterly financial information for the periods ended June 30, 2000 and
1999 are as follows:

<TABLE>
<CAPTION>

                                                    YEAR ENDED JUNE 30, 1999
                                    -------------------------------------------------------
                                    FIRST         SECOND        THIRD (1)        FOURTH (2)
<S>                                <C>           <C>           <C>               <C>
Net sales                          $ 116,576      $ 122,955     $ 119,533         $116,495
Gross profit                          13,921         18,747        17,535           17,569
Operating income                       2,701          6,810         4,590           11,195
Net income                               337          2,708         1,265            5,496
Earnings per common share:
  Basic                                 0.04           0.35          0.17             0.72
  Diluted                               0.04           0.35          0.17             0.72
</TABLE>

<TABLE>
<CAPTION>
                                                    YEAR ENDED JUNE 30, 2000
                                    -----------------------------------------------------
                                    FIRST       SECOND (3)      THIRD (4)      FOURTH (5)
<S>                                <C>          <C>            <C>             <C>
Net sales                          $ 109,693    $ 115,711      $ 124,745       $118,152
Gross profit                          12,713       15,031         13,692         12,117
Operating income                       3,102        4,658          2,730         (9,268)
Net income                               612        1,144          7,845         (7,145)
Earnings per common share:
  Basic                                 0.08         0.15           1.03          (0.93)
  Diluted                               0.08         0.15           1.03          (0.93)
</TABLE>

(1)   The third quarter contains a $750 charge recorded in connection with an
      industrial accident that occurred on February 25, 1999 at the Company's
      subsidiary, Jahn Foundry, which decreased net income by $450 or $0.06
      per share (Note 23).

(2)   The fourth quarter contains a $3,500 revision to the flood damage
      reconstruction reserve which increased net income by $2,086 or $0.27
      per share. The flood damage reconstruction reserve relates to the July
      1993 Missouri River Flood (Note 22).

(3)   The second quarter contains a $681 gain on the termination of an
      interest rate swap agreement, which increased net income by $412 or
      $.05 per share (Note 12).

(4)   The third quarter contains a $7,786 deferred income tax benefit
      relating to the resolution of the Company's tax treatment of certain
      flood insurance proceeds received in 1995 and 1996, which increased net
      income by $7,786, or $1.02 per share (Note 11).

(5)   The fourth quarter contains a $3,373 impairment charge and $227 of
      other costs recorded in connection with the closure of Claremont, which
      decreased net income by $2,268 or $.30 per share (Note 2). The fourth
      quarter also contains a $6,883 impairment charge recorded in connection
      with the write-down of PrimeCast fixed assets, which decreased net
      income by $4,336 or $.56 per share (Note 3). In addition, the fourth
      quarter contains a $402 gain on the termination of an interest rate
      swap agreement, which increased net income by $243 or $.03 per share
      (Note 12).

The aggregate total of the individual quarterly amounts may not equal the
amount reported for the fiscal year due to rounding.



                                       - F - 33 -

<PAGE>

16.   EMPLOYEE BENEFIT PLANS

      The Company sponsors separate defined benefit pension plans for certain of
      its salaried and hourly employees. Employees are eligible to participate
      on the date of employment with vesting after five years of service.
      Benefits for hourly employees are determined based on years of credited
      service and employee earnings.

      Pension expense for the defined benefit plans is presented below:

<TABLE>
<CAPTION>

                                             1998           1999            2000
<S>                                        <C>            <C>             <C>
Service costs                              $ 1,018        $  7,734        $ 6,824
Interest costs                              14,980           2,851         15,376
Actual return on net assets                 (8,263)        (15,272)       (40,543)
Net deferral items                           5,141          (3,012)        22,269
                                           -------        --------        --------
                                           $   747        $  4,430        $ 3,926
                                           =======        ========        ========
</TABLE>

The pension plans' assets (primarily U.S. Government securities, common stock
and corporate bonds) are deposited with a bank. A comparison of the projected
benefit obligation and plan assets at fair value as of June 30, 1999 and 2000 is
presented below.



                                       - F - 34 -

<PAGE>

<TABLE>
<CAPTION>

                                                              1999                                     2000
                                             ---------------------------------------     --------------------------------
                                                  ASSETS             ACCUMULATED             ASSETS           ACCUMULATED
                                                  EXCEED              BENEFITS               EXCEED             BENEFITS
                                                ACCUMULATED            EXCEED             ACCUMULATED            EXCEED
                                                 BENEFITS              ASSETS               BENEFITS             ASSETS
<S>                                             <C>                  <C>                  <C>                  <C>
CHANGE IN PROJECTED BENEFIT OBLIGATION

Projected benefit obligation at                 $ (217,524)          $ (24,379)            $(230,530)          $(10,983)
  beginning of year
Service cost                                        (7,066)               (668)               (6,496)              (328)
Interest cost                                      (13,334)             (1,646)              (14,613)              (763)
Actuarial (loss) gain                                  583                (107)               (3,196)             1,116
Plan amendments                                       (305)               (673)
Foreign currency exchange rate                      11,101                  38                 8,093                  8
  changes
Participant contributions                                                                     (1,739)
Benefits paid                                       10,250               2,217                 6,707                491
                                                ----------            --------              --------            -------

Projected benefit obligation at end
  of year                                         (216,295)            (25,218)             (241,774)           (10,459)
                                                ----------            --------              --------            -------

CHANGE IN PLAN ASSETS

Fair value of plan assets at                       228,851              19,910               235,859              8,323
  beginning of year
Actual return on plan assets                        15,803                (531)               39,967                576
Participant contributions                                                                      1,739
Employer contribution                                3,698                 599                 3,750                463
Foreign currency exchange rate                     (11,644)                (37)               (8,993)                (7)
  changes
Benefits paid                                      (10,250)             (2,217)               (6,707)              (491)
                                                ----------            --------              --------            -------

Fair value of plan assets at end of                226,458              17,724               265,615              8,864
  year

Plan assets in excess (deficiency) of               10,163              (7,494)               23,841             (1,595)
  projected benefit obligation
Unrecognized prior service costs                       422                 699                   426                600
Unrecognized net obligation                            102                (113)                  132               (161)
Unrecognized net (gain)/loss                        (1,570)              3,355               (17,015)              (663)
Additional liability                                                      (828)                                    (122)
                                                ----------            --------              --------            -------

Accrued pension asset (liability)               $    9,117            $ (4,381)             $  7,384            $(1,941)
                                                ==========            ========              ========            ========

THE ACTUARIAL VALUATION WAS PREPARED
  ASSUMING:
  Discount rate                                       7.00%                                    7.75%
  Expected long-term rate of return
    on plan assets                                    9.00%                                    9.00%
  Salary increases per year                           5.00%                                    5.00%
</TABLE>


                                       - F - 35 -

<PAGE>

      In accordance with SFAS No. 87, "EMPLOYERS' ACCOUNTING FOR PENSIONS", the
      Company has recorded an additional minimum pension liability for
      underfunded plans of $828 and $122 at June 30, 1999 and 2000,
      respectively, representing the excess of unfunded accumulated benefit
      obligations over previously recorded pension cost liabilities. A
      corresponding amount is recognized as an intangible asset except to the
      extent that these additional liabilities exceed related unrecognized prior
      service cost and net transition obligation, in which case the increase in
      liabilities is charged directly to stockholders' equity as a component of
      other comprehensive income.

      In addition, the Company sponsors a defined contribution 401(k) benefit
      plan covering certain of its employees who have attained age 21 and have
      completed one year of service. The Company matches 75% of employee
      contributions up to 8% of an employee's salary. Employees vest in the
      Company matching contributions after five years. The Company's
      contribution was $535, $519 and $1,387 for the years ended June 30, 1998,
      1999 and 2000, respectively.

      The Company's subsidiaries, Prospect Foundry, LA Die Casting and Jahn
      Foundry contributed $345, $302 and $320 for the years ended June 30, 1998,
      1999 and 2000, respectively, to multiemployer pension plans for employees
      covered by a collective bargaining agreement. These plans are not
      administered by the Company and contributions are determined in accordance
      with provisions of negotiated labor contracts. Information with respect to
      the Company's proportionate share of the excess of the actuarially
      computed value of vested benefits over the total of the pension plans' net
      assets is not available from the plans' administrators. The Multiemployer
      Pension Plan Amendments Act of 1980 (the "Act") significantly increased
      the pension responsibilities of participating employers. Under the
      provisions of the Act, if the plans terminate or the Company withdraws,
      the Company may be subject to a substantial "withdrawal liability". As of
      the date of the most current unaudited information submitted by the plan's
      administrators (December 31, 1999), no withdrawal liabilities exist.

      The Company also has various other profit sharing plans. Costs of such
      plans charged against earnings were $913, $1,234 and $907 for the years
      ended June 30, 1998, 1999 and 2000, respectively.



                                       - F - 36 -

<PAGE>

17.   POSTRETIREMENT OBLIGATION OTHER THAN PENSION

      The Company provides certain health care and life insurance benefits to
      certain of its retired employees. SFAS No. 106, "EMPLOYERS' ACCOUNTING FOR
      POSTRETIREMENT BENEFITS OTHER THAN PENSIONS," requires the Company to
      accrue the estimated cost of retiree benefit payments during the years the
      employee provides services. The Company funds these benefits on a
      pay-as-you-go basis. The accumulated postretirement benefit obligation and
      fair value of plan assets as of June 30, 1999 and 2000 are as follows:

<TABLE>
<CAPTION>
                                                                      1999          2000
      <S>                                                           <C>          <C>
      CHANGE IN ACCUMULATED POSTRETIREMENT BENEFIT
        OBLIGATION

      Accumulated postretirement benefit obligation
        at beginning of year                                        $ 9,643       $ 9,864
      Service cost                                                      480           516
      Interest cost                                                     643           744
      Actuarial (gain) loss                                            (455)          371
      Benefits paid                                                    (447)         (324)

      Accumulated postretirement benefit obligation
        at end of year                                                9,864        11,171
                                                                    -------       -------

      Fair value of plan assets at end of year
                                                                    -------       -------

      Accumulated postretirement benefit obligation
        in excess of plan assets                                      9,864        11,171
      Unrecognized net loss                                          (2,301)       (2,555)
      Unrecognized prior service cost                                   715           583
                                                                    -------       -------

      Accrued pension liability                                     $ 8,278       $ 9,199
                                                                    =======       =======
</TABLE>

Net postretirement benefit cost for the years ended June 30, 1998, 1999 and
2000 consisted of the following components:

<TABLE>
<CAPTION>
                                                                 1998           1999            2000
      <S>                                                       <C>            <C>            <C>
      Service cost - benefits earned during the year            $ 386          $  480         $  516
      Interest cost on accumulated benefit obligation             599             643            744
      Amortization of prior service cost                         (132)           (132)          (132)
      Amortization of loss                                         69             138            116
                                                                -----          ------         ------

                                                                $ 922          $1,129         $1,244
                                                                =====          ======         ======
</TABLE>

      The assumed health care cost trend rate used in measuring the accumulated
      postretirement benefit obligation for pre-age 65 and post-age 65 benefits
      as of June 30, 2000 was 9.1% decreasing each successive year until it
      reaches 6.0% in 2020, after which it remains constant. A
      one-percentage-point increase in the assumed health care cost trend rate
      for each year would increase the accumulated postretirement benefit
      obligation as of June 30, 2000 by approximately $1,616 (14.5%) and the
      aggregate



                                       - F - 37 -

<PAGE>

      of the service and interest cost components of the net periodic
      postretirement benefit cost for the year then ended by approximately $213
      (16.9%). A one-percentage-point decrease in the assumed health care cost
      trend rate for each year would decrease the accumulated postretirement
      benefit obligation as of June 30, 2000 by approximately $1,306 (11.7%) and
      the aggregate of the service and interest cost components of the net
      periodic postretirement benefit cost for the year then ended by
      approximately $169 (13.4%). The assumed discount rate used in determining
      the accumulated postretirement benefit obligation as of June 30, 1998,
      1999 and 2000 was 6.75%, 7.5% and 8.0%, respectively, and the assumed
      discount rate used in determining the service cost and interest cost for
      the years ended June 30, 1998, 1999 and 2000 was 7.75%, 7.5% and 8.0%,
      respectively.

18.   OPERATING LEASES

      The Company leases certain buildings, equipment, automobiles and trucks,
      all accounted for as operating leases, on an as needed basis to fulfill
      general purposes. Total rental expense was $1,006, $1,675 and $3,862 for
      the years ended June 30, 1998, 1999 and 2000, respectively. Long-term,
      noncancelable operating leases having an initial or remaining term in
      excess of one year require minimum rental payments as follows:

<TABLE>
<CAPTION>
          <S>                         <C>
          2001                        $ 4,664
          2002                          4,572
          2003                          4,125
          2004                          3,745
          2005                          3,477
</TABLE>

19.   MAJOR CUSTOMERS

      Net sales to and customer accounts receivable from major customers are as
      follows:

<TABLE>
<CAPTION>

                                                   AMOUNT OF NET SALES
                                  -----------------------------------------------------
                                     1998               1999               2000
<S>                               <C>                <C>                <C>
Customer A                        $  27,713          $  25,219          $  24,826
Customer B                           39,999             53,276             46,677
                                  ---------          ---------          ---------

                                  $  67,712          $  78,495          $  71,503
                                  -========          =========          =========
</TABLE>

<TABLE>
<CAPTION>

                                                          CUSTOMER
                                                          ACCOUNTS
                                                         RECEIVABLE
                                               -------------------------------
                                                    1999                2000
<S>                                             <C>                <C>
Customer A                                      $  2,912           $  2,916
Customer B                                         7,189              4,191
                                                --------           --------

                                                $ 10,101           $  7,107
                                                ========           ========
</TABLE>



                                       - F - 38 -

<PAGE>

20.   SEGMENT AND GEOGRAPHIC INFORMATION

      Due to the nature of the Company's products and services, its production
      processes, the type or class of customer for its products and services,
      and the methods used to distribute products and provide services, the
      Company is considered to have a single operating segment for reporting
      purposes. Due to the many casting products produced by the Company, it is
      not practicable to disclose revenues by casting or forging product.

      The Company operates in four countries, the United States, Great Britain,
      Canada and France. Revenues from external customers derived from
      operations in each of these countries for the years ended June 30, 1998,
      1999 and 2000 are as follows and long-lived assets located in each of
      these countries as of June 30, 1999 and 2000 are as follows:

<TABLE>
<CAPTION>

                                                                        REVENUES
                                      ---------------------------------------------------------------------------
                                         UNITED            GREAT
                                         STATES           BRITAIN         CANADA          FRANCE            TOTAL
          <S>                          <C>               <C>             <C>              <C>            <C>
          1998                         $ 310,235         $ 37,607        $ 25,926         $              $  373,768
          1999                           293,691          132,154          45,178           4,536           475,559
          2000                           296,174          114,183          17,706          40,238           468,301
</TABLE>

<TABLE>
<CAPTION>

                                                                     LONG-LIVED ASSETS
                                        ---------------------------------------------------------------------------
                                         UNITED             GREAT
                                         STATES            BRITAIN        CANADA          FRANCE            TOTAL
          <S>                          <C>               <C>              <C>             <C>            <C>
          1999                         $ 145,877         $ 29,045         $ 22,952        $  181         $  198,055
          2000                           135,148           29,854           21,026           678            186,706
</TABLE>

21.   ADDITIONAL CASH FLOWS INFORMATION

<TABLE>
<CAPTION>

                                                                             1998            1999            2000
<S>                                                                        <C>             <C>             <C>
Cash paid during the year for:
  Interest                                                                 $ 3,915         $ 8,235         $ 9,398
  Income taxes                                                               7,731           5,751              56
Supplemental schedule of noncash investing and financing
  activities:
  Recording of other asset related to pension liability                        365             421             706
  Recording of additional pension liability                                   (365)           (421)           (706)
  Unexpended bond funds                                                       (519)
</TABLE>

22.   FLOOD RESERVE

      In 1996, the Company received an insurance settlement for losses incurred
      as a result of the July 1993 Missouri River flood. At that time the
      Company established a reserve to be used for future repairs due to
      long-term flood damage to the Company's foundry. Since that time the
      Company has been charging the reserve balance for costs incurred resulting
      from those repairs.



                                       - F - 39 -

<PAGE>

      During 1999, management updated its analysis of the required repairs by
      performing its periodic re-evaluation of the effects of the flood based
      on current information. As a result, management committed to a revised
      repair plan, which included several remaining projects. These projects
      and their final estimated costs to complete represent the remaining
      flood reserve balance that is considered necessary. The amount of the
      reserve balance, over and above the estimated costs of such identified
      projects, was considered to be excess and was reversed. Such excess
      amounted to $3,500 and was included in other income in the fourth
      quarter of fiscal year 1999. Any future repairs outside the scope of
      the projects identified, if any, will be charged to repairs and
      maintenance as incurred. As of June 30, 1999 and 2000, the Company has
      $1,197 and $645 recorded, respectively, as reserved for future flood
      repairs, which have been classified as accrued expenses.

23.   CONTINGENCIES

      An accident, involving an explosion and fire, occurred on February 25,
      1999 at Jahn Foundry, located in Springfield, Massachusetts. Nine
      employees were injured and there have been three fatalities. The damage
      was confined to the shell molding area and the boiler room. The other
      areas of the foundry are operational. Molds are currently being
      produced at other foundries, as well as Jahn Foundry, while the repairs
      are made. The new shell molding department is scheduled to be in
      operation this fall.

      The Company carries insurance for property and casualty damages (over
      $475 million of coverage), business interruption (approximately $115
      million of coverage), general liability ($51 million of coverage) and
      workers' compensation (up to full statutory liability) for itself and
      its subsidiaries. The Company recorded charges of $450 ($750 before
      tax) during the third quarter of fiscal year 1999, primarily reflecting
      the deductibles under the Company's various insurance policies. At this
      time, there can be no assurance that the Company's ultimate costs and
      expenses resulting from the accident will not exceed available
      insurance coverage by an amount which could be material to its
      consolidated financial statements.

      A civil action has commenced in the Massachusetts State Court on behalf
      of the estates of deceased workers, their families, injured workers and
      their families, against the supplier of a chemical compound used in
      Jahn Foundry's manufacturing process. Counsel for the plaintiffs
      informally have indicated a desire to explore whether any facts would
      support adding the Company to that litigation as a jointly and
      severally liable defendant. The supplier of the chemical compound,
      Borden Chemical, Inc., filed a Third Party Complaint against Jahn
      Foundry in the Massachusetts State Court on February 2, 2000. The
      Company's comprehensive general liability insurance carrier has
      retained counsel on behalf of Jahn Foundry and the Company and is
      monitoring the situation on behalf of the Company. It is too early to
      assess the potential liability for such a claim, which in any event the
      Company would aggressively defend. The plaintiff's counsel has
      informally raised the possibility of seeking to make a double recovery
      under the workers' compensation policy in force for Jahn Foundry,
      contending that there was willful misconduct on Jahn Foundry's part
      leading to the accident. Such recovery, if pursued and made, would be
      of a material nature. It is too early to assess the potential liability
      for such a claim, which in any event Jahn Foundry would aggressively
      defend.

      The Company, its property insurance carrier and its insurance broker
      dispute the amount of property insurance available for property damages
      suffered in this accident. It is too early in the process of
      calculating the loss to estimate the amount in dispute. Management
      believes that the probability of any loss resulting from the dispute
      property insurance coverage is remote. The Company currently believes
      this dispute will be resolved during fiscal year 2001. If this dispute
      cannot be resolved amicably, the



                                       - F - 40 -

<PAGE>

      Company would vigorously pursue its remedies against both parties. As
      of June 30, 2000, the Company has received approximately $20,000 of
      insurance advances and has incurred charges approximating $14,000
      related to the explosion and fire related damages, which are recorded
      in accrued expenses and other current assets, respectively, within the
      consolidated balance sheets.

      Following the accident, the Occupational Safety and Health
      Administration ("OSHA") conducted an investigation of the accident. On
      August 24, 1999, OSHA issued a citation describing violations of the
      Occupational Safety and Health Act of 1970, which primarily related to
      housekeeping, maintenance and other specific, miscellaneous items.
      Neither of the two violations, specifically addressing conditions
      related to the explosion and fire, were classified as serious or
      willful. Without admitting any wrongdoing, Jahn Foundry entered into a
      settlement with OSHA that addresses the alleged work place safety
      issues and agreed to pay $149 in fines.

      In addition, the Company is a defendant in various matters and is
      exposed to claims encountered in the normal course of business. In the
      opinion of management, the resolution of these matters will not have a
      material effect on the Company's consolidated financial statements.

24.   CREDIT AGREEMENT NEGOTIATIONS

      As described in Note 10, the Company has obtained a waiver of
      compliance of the covenants related to the Cash Flow Leverage Ratio and
      Fixed Charge Coverage Ratio through September 30, 2000 from Harris and
      a waiver of compliance of the covenant related to the Fixed Charge
      Coverage Ratio through September 30, 2000 from the insurance company.
      Absent another waiver from each of these creditors, management does not
      believe that the Company will be in compliance with such covenants
      subsequent to September 30, 2000, and accordingly, has classified as
      current the Harris revolving credit facility and the senior notes with
      the insurance company as of June 20, 2000. Management is currently in
      negotiations with Harris and two other financial institutions to
      extend, renegotiate or replace the current credit agreements on a
      long-term basis. The Company has received nonbinding commitments to
      provide long-term financing from each of these three financial
      institutions and is currently evaluating such commitments. Management
      believes that it will be successful in obtaining a long-term credit
      facility after September 30, 2000, but prior to December 31, 2000;
      however, no assurance can be given that management will be successful
      in these negotiations.

                                        ******



                                       - F - 41 -


<PAGE>

                                  EXHIBIT INDEX

     Exhibit
     -------

      3.1         Articles of Incorporation of Atchison Casting Corporation, a
                  Kansas corporation (incorporated by reference to Exhibit 4.1
                  of the Company's Quarterly Report on Form 10-Q for the quarter
                  ended December 31, 1994)

      3.2         Amended and Restated By-Laws of Atchison Casting Corporation,
                  a Kansas corporation (incorporated by reference to Exhibit 3.2
                  of the Company's Current Report on Form 8-K filed May 19,
                  2000)

      4.0         Long-term debt instruments of the Company in amounts not
                  exceeding 10% of the total assets of the Company and its
                  subsidiaries on a consolidated basis will be furnished to the
                  Commission upon request

      4.1(a)      The Amended and Restated Credit Agreement dated as of April 3,
                  1998, among the Company, the Banks party thereto and Harris
                  Trust and Savings Bank, as Agent (incorporated by reference to
                  Exhibit 4.1(a) of the Company's Current Report on Form 8-K
                  filed April 16, 1998)

      4.1(b)      Pledge and Security Agreement dated as of April 3, 1998,
                  between the Company and Harris Trust and Savings Bank, as
                  Agent (incorporated by reference to Exhibit 4.1(b) of Form 8-K
                  filed April 16, 1998)

      4.1(c)      First Amendment to Amended and Restated Credit Agreement dated
                  as of October 7, 1998, among the Company, the Banks party
                  thereto and Harris Trust and Savings Bank, as Agent
                  (incorporated by reference to Exhibit 4.1 of the Company's
                  Quarterly Report on Form 10-Q for the quarter ended September
                  30, 1998)

      4.1(d)      Second Amendment to the Amended and Restated Credit Agreement
                  dated as of April 23, 1999, among the Company, the Banks party
                  thereto, and Harris Trust and Savings Bank, as Agent
                  (incorporated by reference to Exhibit 4 of the Company's
                  Quarterly Report on Form 10-Q for the quarter ended March 31,
                  1999)

      4.1(e)      Third Amendment to the Amended and Restated Credit Agreement
                  dated as of August 20, 1999, among the Company, the Banks
                  party thereto, and Harris Trust and Savings Bank, as Agent
                  (incorporated by reference to Exhibit 4.1(e) of the Company's
                  Form 10-K for the year ended June 30, 1999)

      4.1(f)      Fourth Amendment and Waiver to the Amended and Restated Credit
                  Agreement dated as of November 5, 1999, among the Company, the
                  Banks party thereto, and Harris Trust and Savings Bank, as
                  Agent (incorporated by reference to Exhibit 4.2 of the
                  Company's Quarterly Report on Form 10-Q for the quarter ended
                  September 30, 1999)

      4.1(g)      Fifth Amendment to the Amended and Restated Credit Agreement
                  dated as of December 21, 1999, among the Company, the Banks
                  party thereto, and Harris Trust and Savings Bank, as Agent
                  (incorporated by reference to Exhibit 4.2 of the Company's
                  Quarterly Report on Form 10-Q for the quarter ended December
                  31, 1999)

<PAGE>

                                  EXHIBIT INDEX

     Exhibit
     -------

      4.1(h)      Sixth Amendment to the Amended and Restated Credit Agreement
                  dated as of February 15, 1999, among the Company, the Banks
                  party thereto, and Harris Trust and Savings Bank, as Agent
                  (incorporated by reference to Exhibit 4.1 of the Company's
                  Quarterly Report on Form 10-Q for the quarter ended March 31,
                  2000)

      4.1(i)      Seventh Amendment to the Amended and Restated Credit Agreement
                  dated as of May 1, 2000, among the Company, the Banks party
                  thereto, and Harris Trust and Savings Bank, as Agent
                  (incorporated by reference to Exhibit 4.3 of the Company's
                  Quarterly Report on Form 10-Q for the quarter ended March 31,
                  2000)

      4.1(j)      Eighth Amendment to the Amended and Restated Credit Agreement
                  dated as of June 30, 2000, among the Company, the Banks party
                  thereto, and Harris Trust and Savings Bank, as Agent

      4.1(k)      Ninth Amendment to the Amended and Restated Credit Agreement
                  dated as of July 31, 2000, among the Company, the Banks party
                  thereto, and Harris Trust and Savings Bank, as Agent

      4.2         Specimen stock certificate (incorporated by reference to
                  Exhibit 4.3 of Amendment No. 2 to Form S-2 Registration
                  Statement No. 333-25157 filed May 19, 1997)

      4.3         Rights Agreement, dated as of March 28, 2000 between Atchison
                  Casting Corporation and American Stock Transfer & Trust
                  Company, as Rights Agent (incorporated by reference to
                  Exhibit 1 of the Company's Form 8-A Registration Statement
                  filed March 28, 2000)

     10.1(a)*     Employment Agreement between the Company and Hugh H. Aiken
                  dated as of June 14, 1991 (incorporated by reference to
                  Exhibit 10.1 of Form S-1 Registration Statement No. 33-67774
                  filed August 23, 1993)

     10.1(b)*     Amendment No. 1 dated as of September 27, 1993 to Employment
                  Agreement between the Company and Hugh H. Aiken (incorporated
                  by reference to Exhibit 10.1(b) of Amendment No. 1 to Form S-1
                  Registration Statement No. 33-67774 filed September 27, 1993)

     10.1(c)*     Amendment No.2 dated as of September 10, 1998 to Employment
                  Agreement between the Company and Hugh H. Aiken (incorporated
                  by reference to Exhibit 10.1 of the Company's Quarterly Report
                  on Form 10-Q for the quarter ended September 30, 1998)

     10.2*        Atchison Casting 1993 Incentive Stock Plan (incorporated by
                  reference to Exhibit 10.7 of Form S-1 Registration Statement
                  No. 33-67774 filed August 23, 1993)

     10.3         Confidentiality and Noncompetition Agreements by and among the
                  Company and executive officers of the Company (incorporated by
                  reference to Exhibit 10.8 of Form S-1 Registration Statement
                  No. 33-67774 filed August 23, 1993)

<PAGE>

                                  EXHIBIT INDEX

     Exhibit
     -------

     10.4*        Atchison Casting Non-Employee Director Option Plan
                  (incorporated by reference to Exhibit 10.7 of the Company's
                  Annual Report on Form 10-K for the year ended June 30, 1994)

     10.5*        Plan for conversion of subsidiary stock to Atchison Casting
                  Corporation stock (incorporated by reference to Exhibit 10.3
                  of the Company's Quarterly Report on Form 10-Q for the quarter
                  ended September 30, 1994)

     10.6         The Share Exchange Agreement dated April 6, 1998 in respect of
                  the ordinary shares of Sheffield by and among David Fletcher
                  and others, ACUK and the Company (incorporated by reference to
                  Exhibit 10.1 of Form 8-K filed April 16, 1998)

     10.7(a)*     Service Agreement between Sheffield and David Fletcher dated
                  November 1, 1988 (incorporated by reference to Exhibit
                  10.10(a) of the Company's Annual Report on Form 10-K for the
                  year ended June 30, 1998)

     10.7(b)*     Novation Agreement between Sheffield and David Fletcher dated
                  May 2, 1996. (incorporated by reference to Exhibit 10.10(b) of
                  the Company's Annual Report on Form 10-K for the year ended
                  June 30, 1998)

     10.7(c)*     Letter Agreement between Sheffield and David Fletcher dated
                  May 2, 1996. (incorporated by reference to Exhibit 10.10(c) of
                  the Company's Annual Report on Form 10-K for the year ended
                  June 30, 1998)

     21.1         Subsidiaries of the Company

     23.1         Consent of Deloitte & Touche LLP

     27.1         Financial Data Schedule - Fiscal year ended FY 2000

     27.2         Restated Financial Data Schedule - Fiscal year ended FY 1999


     *  Represents a management contract or a compensatory plan or arrangement.