<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, 1999
                                       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 9, 1999 was
$63,827,463.

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 9, 1999: 7,636,901
Shares

                       DOCUMENTS INCORPORATED BY REFERENCE

         Portions of the Annual Proxy Statement for the Annual Meeting of
Stockholders to be held November 19, 1999, are incorporated by reference into
Part III.

<PAGE>

                                     PART I

ITEM 1.   BUSINESS

GENERAL

    Atchison Casting Corporation ("Atchison" or "ACC") 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
$475.6 million for the fiscal year ended June 30, 1999, resulting in a compound
annual growth rate of 36.2%. The Company is not currently contemplating any
major acquisitions. The Company's primary focus in fiscal 2000 will 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 500, including companies such as Caterpillar, Gardner
Denver, General Motors, General Electric, Siemens (formerly Westinghouse),
General Dynamics, Shell, British Steel, Nucor, GEC-Alstom, Ingersoll-Dresser,
John Deere, DaimlerChrysler, 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



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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.

COMPANY STRATEGY

    ACC is pursuing 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. No major acquisitions are currently
contemplated during fiscal 2000. ACC's primary focus during fiscal 2000 will
be on the integration and improvement of existing operations.

    STRATEGIC ACQUISITIONS

    ACQUIRE LEADERS AND BUILD CRITICAL MASS. The Company initially seeks to
acquire foundries that are 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 seeks to
acquire foundries that add 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



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industry. Currently, the Company serves more than ten major end-user
markets, compared to three in 1991.

    DIVERSIFY GEOGRAPHICALLY. The Company also seeks to acquire foundries which
would expand the operations to other major world economies. Sheffield and
Founderie 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      Well regarded in turbine industry. Build position in power
     & Machine Company                                   generation, pump and valve markets. 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 expand ability 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.
</TABLE>



                                                    4

<PAGE>

<TABLE>
<CAPTION>
                                          DATE
     MANUFACTURING UNIT                 ACQUIRED                            STRATEGIC PURPOSE
    -------------------------------    ------------   --------------------------------------------------------------
<S>                                    <C>           <C>
    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.

    Fonderie d'Autun                   02/25/99      Establish additional operations in Europe.

</TABLE>

    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 both existing and acquired foundries.
In addition to sales people added through acquisitions, the Company has
incrementally increased the sales force by 31%. 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, New Holland 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 facilities.

    INTRODUCE ADVANCED TECHNOLOGY. As part of its acquisition strategy, 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




                                           5

<PAGE>

finished castings. The Company intends to implement this new technology in
all of its foundries and, to date, fourteen of ACC's foundries have
implemented or are in the process of implementing this technology. 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; and (v) equipment for
measuring the nitrogen content of steel, which helps in casting quality
improvement. 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. Once an acquisition has been completed, ACC
makes its volume purchasing programs available to the newly acquired foundry.
ACC has realized meaningful cost savings by achieving purchasing efficiencies
for acquired 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 by adding
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. As another example, 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.

INDUSTRY TRENDS

    The American Foundrymen's Society estimates that global casting production
was 60.9 million metric tons in 1997 of which steel castings accounted for
approximately 5.5 million tons, iron castings for approximately 46.8 million
tons and nonferrous castings for approximately 8.6 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 23% of the world market.




                                        6
<PAGE>

    The U.S. casting industry is estimated to have had shipments of
approximately 14.9 million tons in 1998, of which steel castings accounted for
approximately 1.4 million tons, iron castings for approximately 10.8 million
tons and non-ferrous castings for approximately 2.7 million tons. Recent
estimates forecast an approximate 2-3% decline in shipments in each of 1999 and
2000. Forecasts for years 2002 and 2003 project the shipments to grow to 14.2
million tons and 14.9 million tons, respectively. 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:

    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. As
the industry has consolidated, capacity utilization has increased from
approximately 45% in 1982 to more than 85% 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




                                      7
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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.

    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 Ltd. ("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 4.1%, 7.0% and 18.7% of the Company's net sales in
fiscal 1997, fiscal 1998 and fiscal 1999, 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 31.4%, 23.1% and 18.0% of the Company's net sales in fiscal 1997,
fiscal 1998 and fiscal 1999, 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 50
years. The Company further penetrated this market through the purchase of London
Precision. Rail products produced by the Company accounted for 5.2%, 6.6% and
11.4% of the Company's net sales in fiscal 1997, fiscal 1998 and fiscal 1999,
respectively. In fiscal 1999, General Motors accounted for more than 10% of net
sales.

    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, Cooper Energy, Hydril,
Solar, Nordstrom, Ingersoll-Dresser Pumps and Amclyde are among the Company's
many energy-related customers. Energy products produced by the Company accounted
for 14.3%, 8.9% and 8.8% of the Company's net sales in fiscal 1997, fiscal 1998
and fiscal 1999, 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 1.6%, 10.4% and 8.7% of the
Company's net sales in fiscal 1997, fiscal 1998 and fiscal 1999, respectively.




                                     8
<PAGE>

    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 Westinghouse, General Electric, GEC-Alsthom,
Sulzer, Siemens, Kvaerner, Goulds Pumps and Neles Controls. Utility products
produced by the Company accounted for 13.1%, 9.9% and 6.6% of the Company's net
sales in fiscal 1997, fiscal 1998 and fiscal 1999, respectively.

    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 military casting market has
declined sharply, but ACC has been able to replace this volume by targeting new
products such as turbines, compressors, pumps and valves. Customers in this
market include General Dynamics, Litton, Bath Iron Works, Boeing, 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. ACC has been a minor supplier to this market since 1992. The
acquisition of the castings division of Beloit Corporation in July 1997 made ACC
a significant supplier of castings to this market.

    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 and Claremont
Foundry, Inc. ("Claremont") cast 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 and pool
tables. Customers include California Amplifier, RC Design, Care Free of Colorado
and Printronix.

    For financial information about geographic areas, see footnote 18 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




                                    9
<PAGE>

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, 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, 1999, the Company's backlog was approximately $178.9
million, as compared to backlog of approximately $198.2 million at June 30,
1998. The backlog is scheduled for delivery in fiscal 2000 except for
approximately $21.2 million, of which $14.7 million is scheduled for delivery in
fiscal 2001. 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.




                                      10

<PAGE>


    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 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 rotating 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.



                                       11
<PAGE>

    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, ACC purchased
Quaker Alloy, which specialized 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.



                                     12
<PAGE>

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-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. The new Fabrication-to-Casting Design Center at its Atchison,
Kansas faciltiy is a leading example for the use and benefits of new casting
design technology.

    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         1999        UTILIZATION
      ------------------  ----------------  --------------------------  -------------  ---------------  ------------
      <S>                 <C>               <C>                         <C>            <C>              <C>
      Atchison/St. Joe    Carbon, low       Mining and construction,       30,000          25,946          86.5%
      Division            alloy and         rail, military, valve,
                          stainless         turbine and compressor
                          steel

      Amite               Carbon and low    Marine, mining and             14,000          4,694           33.5%
                          alloy steel       construction

      Prospect            Gray and          Construction,                  12,500          8,443           67.5%
                          ductile iron      agricultural, trucking,
                                            hydraulic, power
                                            transmission and machine
                                            tool

      Quaker Alloy        Carbon, low       Pump and valve                 6,000           1,566           26.1%
                          alloy and
                          stainless
                          steel

      Canadian Steel      Carbon, low       Hydroelectric and steel        6,000           2,697           45.0%
                          alloy and         mill
                          stainless steel
</TABLE>



                                                       13


<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         1999        UTILIZATION
      ------------------  ----------------  --------------------------  -------------  ---------------  ------------
      <S>                 <C>               <C>                         <C>            <C>              <C>
      Kramer              Carbon, low       Pump impellers and             1,450            918            63.3%
                          alloy and         casings
                          stainless
                          steel, gray
                          and ductile
                          iron

      Empire              Carbon and low    Pump and valve                 4,800           1,440           30.0%
                          alloy steel
                          and gray,
                          ductile and
                          nickel
                          resistant
                          iron

      La Grange           Gray, ductile     Mining and construction        14,000          9,690           69.2%
                          and compacted     and transportation
                          graphite iron

      G&C                 Gray and          Fluid power (hydraulic         12,000          7,432           61.9%
                          ductile iron      control valves)

      LA Die Casting      Aluminum and      Communications,                2,400           1,078           44.9%
                          zinc               recreation and computer

      Canada Alloy        Carbon, low       Power generation, pulp         2,500           1,632           65.3%
                          alloy and         and paper machinery,
                          stainless steel   pump and valve



      Pennsylvania        Carbon and        Power generation, pump         3,700           1,496           40.4%
         Steel Foundry    stainless         and valve
         and Machine      steel
         Company

      Jahn Foundry        Gray iron         Automotive, air                11,000          6,475           58.9%
                                            conditioning and
                                            agricultural

      PrimeCast           Gray and          Paper-making machinery         19,840          10,795          54.4%
                          ductile iron
                          and stainless
                          steel

      Inverness           Aluminum          Automotive, furniture          12,500           7,639          61.1%
                                            and appliances

      Forgemasters        Iron and Steel    Steel and aluminum             31,000          26,189          84.5%
      Rolls                                 rolling

</TABLE>



                                                        14

<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         1999        UTILIZATION
      ------------------  ----------------  --------------------------  -------------  ---------------  ------------
      <S>                 <C>               <C>                         <C>            <C>              <C>
      Sheffield           Iron and Steel    Oil and gas, ingot,           113,000          42,403          37.5%
      Forgemasters                          petrochemical, power
      Engineering                           generation
      Limited

      Claremont           Steel             Mining and mass transit        6,000            1,968          32.8%

      Autun               Iron              Heating and boiler             30,000          12,534          41.8%
                                            castings
                                                                        -------------  ---------------  ------------
              Totals                                                      332,690          175,035         52.6%
                                                                       --------------  ---------------  ------------
                                                                       --------------  ---------------  ------------

</TABLE>


<TABLE>
<CAPTION>
                                                                                          MACHINING
                                                                                            HOURS
                                                                          ESTIMATED*       12 MONTHS
                                                                            ANNUAL           ENDED        ESTIMATED*
          MACHINING           METALS                                      MACHINING         JUNE 30,       CAPACITY
            UNIT             MACHINED          MAJOR APPLICATIONS           HOURS             1999        UTILIZATION
      ------------------  ----------------  --------------------------  -------------  ---------------  --------------
      <S>                 <C>               <C>                         <C>            <C>              <C>

      London Precision     Carbon, low       Mining and construction,       156,000         183,000         117.3%
                           alloy,            rail, military, valve,
                           stainless         turbine and compressor
                           steel, iron
                           and aluminum
</TABLE>

--------

     * 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.



                                        15


<PAGE>


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, Sheffield Forgemasters Engineering Ltd.
("Forgemasters Engineering") has also been certified to ISO 9001, which
represents compliance with international standards for quality assurance. Quaker
Alloy, La Grange, Canada Alloy, Jahn Foundry, Pennsylvania Steel Foundry &
Machine Company ("Pennsylvania Steel"), Inverness, London Precision,
Forgemasters Rolls and Canadian Steel have each been certified to ISO 9002.
Other ACC foundries are preparing for ISO certification.

EMPLOYEE AND LABOR RELATIONS

    As of June 30, 1999, the Company had approximately 4,500 full-time
employees. Since its inception, the Company has had one work stoppage. The
Company's hourly employees are covered by collective bargaining agreements
with several unions at fifteen 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. Several of the contracts
at the Company's U.K. facilities have expired. The Company is not aware of
any threat of work stoppage at the present time. The labor laws of France
prevent the Company from learning the number of employees in the union at
Autun.


                                    16

<PAGE>

<TABLE>
<CAPTION>
                                                                                                     APPROXIMATE
                                                                                                      NUMBER OF
   MANUFACTURING                                                                    DATE OF          MEMBERS (AS
       UNIT                NAME OF PRINCIPAL UNION          EFFECTIVE DATE        EXPIRATION        OF 06/30/99)
--------------------  -----------------------------------  ------------------   ----------------  -----------------
<S>                   <C>                                  <C>                  <C>               <C>
Atchison/St. Joe      United Steelworkers of America,          05/11/99            05/12/02             449
                      Local 6943

Prospect              Glass, Molders, Pottery,                 06/01/99            08/31/00             170
                      Plastics & Allied Workers
                      International, Local 63B

Quaker Alloy          United Steelworkers of                   05/15/99            07/15/03             132
                      America, Local 7274

Canadian Steel        Metallurgistes Unis                      02/12/96            02/12/01             112
                      d'Amerique, Local 6859

Empire                United Steelworkers of                   03/01/97            02/28/02             110
                      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             88
                      Machine Workers of America,
                      Local 714

LA Die Casting        United Automobile, Aircraft,             12/13/97            12/08/00             47
                      Agricultural Implement
                      Workers of America, Local 509

Canada Alloy          United Steelworkers of                   04/04/97            04/03/02             75
                      America, Local 5699

Pennsylvania          United Steelworkers of                   10/24/98            10/24/01             64
Steel                 America, Local 6541

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

PrimeCast             Glass, Molders, Pottery,                 08/04/96            08/04/00             112
                      Plastics and Allied Workers
                      International, Local 320

Inverness             United Paperworker's                     02/05/97            08/05/01             211
                      International, Local 7363

Sheffield             Steel and Industrial Managers             7/1/97             12/31/98              4
 Forgemasters         Association
 Engineering
 Limited
                      Iron and Steel Trades                     7/1/97             12/31/98             62
                      Confederation


                      Electrical, Engineering and               7/1/97             12/31/98             18
                      plumbing Trades Union

</TABLE>




                                                      17

<PAGE>


<TABLE>
<CAPTION>
                                                                                                     APPROXIMATE
                                                                                                      NUMBER OF
   MANUFACTURING                                                                    DATE OF          MEMBERS (AS
       UNIT                NAME OF PRINCIPAL UNION          EFFECTIVE DATE        EXPIRATION        OF 06/30/99)
--------------------  -----------------------------------  ------------------   ----------------  -----------------
<S>                   <C>                                  <C>                  <C>               <C>
Sheffield             Manufacturing Science and Finance         7/1/97             12/31/98             39
 Forgemasters
 Engineering
 Limited (cont.)
                      General Municipal and Boilermakers        7/1/97             12/31/98             61

                      Allied Engineering and Electrical         7/1/97             12/31/98             136
                      Union

                      Transport and General Workers             7/1/97             12/31/98              9
                      Union

                      Amalgamated Metal and                     2/1/98              1/31/99             13
                      Steelworkers Union

                      Union of Construction, allied             7/1/97             12/31/98              3
                      Trades and Technicians

Forgemasters          Amalgamated Engineering and
 Rolls                Electrical Union
                      -        Sheffield                        1/1/98             12/31/99             75
                      -        Crewe                            1/8/97              9/30/99             211
                      -        Coatbridge                       1/1/98             12/31/99             39

                      Iron and Steel Trades
                      Confederation
                      -        Sheffield                        1/1/98             12/31/99             11

                      General and Municipal Workers
                      Union
                      -        Sheffield                        1/1/98             12/31/99              1

                      Transport and General Workers
                      Union
                      -        Sheffield                        1/1/98             12/31/99              4

                      Manufacturing Science and Finance
                      -        Crewe                            1/1/98              9/30/99             24

</TABLE>





                                                      18

<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..........................     55     Chairman of the Board, President, Chief Executive Officer
                                                            and Director


Thomas K. Armstrong, Jr................     45     Chief Operating Officer - North America


David Fletcher.........................     53     Group Vice President - Europe

John R. Kujawa.........................     44     Group Vice President - Large Steel Castings Group

Donald J. Marlborough..................     63     Group Vice President - Iron Castings Group

Kevin T. McDermed......................     39     Vice President, Chief Financial Officer, Treasurer and
                                                            Secretary

James Stott............................     57     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 Group 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.






                                    19
<PAGE>

    JOHN R. KUJAWA has been Group Vice President - Large Steel Castings Group
since August 1999. Prior to this he was Group 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 Group Vice President - Iron Castings Group
since August 1999. Prior to this he was Group Vice President-Canadian Steel, La
Grange and Canada Alloy 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
Group 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 1999, 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 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,





                                    20

<PAGE>

respectively. The Company believes that it is in material compliance with
applicable environmental laws and regulations and is not aware of any
material outstanding violations or citations with respect thereto at any of
its facilities, which would have a material adverse effect on the Company's
financial condition and results of operations.

    A Phase 1 environmental site assessment has been performed at each of the
Company's facilities prior to acquisition, and no environmental condition has
been identified that the Company believes would cause a material adverse effect
on the Company's results of operations and financial condition. 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 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.

    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 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. The 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.

    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.


                                        21

<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                   282,000
                                                              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
                                       Canada

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,             Steel foundry                                83,000
                                       Ontario, Canada

Pennsylvania Steel                     Hamburg, PA            Steel foundry                               158,618

Jahn Foundry                           Springfield, MA        Iron foundry                                207,689

PrimeCast                              South Beloit, IL       Iron foundry                                325,000
                                       and Beloit, WI
</TABLE>

                                      22

<PAGE>

<TABLE>
<CAPTION>
                                                                                                 FLOOR SPACE IN
               NAME                         LOCATION                 PRINCIPAL USE                  SQ. FEET
------------------------------------   -------------------    -----------------------------    -------------------
<S>                                    <C>                    <C>                              <C>
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

Sheffield Forgemasters Engineering     Sheffield, England     Iron and steel foundry,                   1,225,247
Limited                                                       forge and machine shop

Claremont                              Claremont, NH          Steel Foundry                               110,000

London Precision                       London, Ontario,       Machine Shop                                 63,000
                                       Canada

Founderie d'Autun                      Autun, France          Iron foundry                                376,600
</TABLE>











                                      23

<PAGE>

ITEM 3.   LEGAL PROCEEDINGS

    An accident, involving an explosion and fire, occurred on February 25, 1999,
at Jahn Foundry Corp., a wholly-owned subsidiary of the Company located in
Springfield, Massachusetts. Nine employees were 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.

    Although no lawsuits have been filed, a number of attorneys representing the
injured and deceased employees have contacted Jahn Foundry regarding possible
litigation. The Company carries insurance for property and casualty damages,
business interruption, general liability and worker's compensation for itself
and its subsidiaries. The Company, its property insurance carrier and its
insurance broker dispute the amount of property insurance available for property
damages suffered in this accident. If this dispute cannot be resolved amicably,
the Company would vigorously pursue its remedies against both parties. The
Company recorded a charge 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.

    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 $148,500 in fines.






                                      24

<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 New York Stock Exchange for the periods indicated.

<TABLE>
<CAPTION>
                                                                                      HIGH        LOW
                                                                                      ----        ---
<S>                                                                                 <C>         <C>
Fiscal Year Ending June 30, 1998:
  First Quarter.........................................................            22          16 3/4
  Second Quarter........................................................            21 9/16     15 5/8
  Third Quarter.........................................................            17 3/16     15 3/8
  Fourth Quarter........................................................            20 1/8      15 3/8


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 (through September 9, 1999) ...........................             11 3/8      8 5/8
</TABLE>


    As of September 9, 1999, 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 8 of Notes to Consolidated
Financial Statements.


                                      25

<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 1,240, 620, 1,240 and 620
shares, respectively, of common stock on December 7, 1998, with a then-current
market value of $9.69 per share. Mr. David Belluck was provided at his election
805 shares of common stock on February 25, 1999, with a then-current market
value of $9.94 per share. Such transactions were exempt from registration under
the Securities Act of 1933, 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, 1995, 1996, 1997, 1998 and 1999 has been derived from
audited consolidated financial statements. The information below should be read
in conjunction with 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.
















                                                      26

<PAGE>

<TABLE>
<CAPTION>

                                                                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
                                                          ----------------------------------------------------------

                                                                         FISCAL YEAR ENDED JUNE 30,
                                                          ----------------------------------------------------------

STATEMENT OF OPERATIONS DATA:                                1995        1996        1997        1998        1999
                                                           --------    --------    --------    --------    --------
<S>                                                        <C>          <C>        <C>         <C>         <C>

Net Sales............................................      $141,579    $185,081    $245,769    $373,768    $475,559
Cost of Sales........................................       115,458     156,612     203,386     318,280     407,787
                                                           --------    --------    --------    --------    --------
     Gross Profit....................................        26,121      28,469      42,383      55,488      67,772
  Operating Expenses:
     Selling, General & Administrative...............        13,058      15,459      21,559      28,798      41,932
     Amortization of Intangibles.....................         1,392       1,508         632         850         544
     Other Income(1).................................         6,370      26,957           -           -           -
                                                           --------    --------    --------    --------    --------
        Operating Income.............................        18,041      38,459      20,192      25,840      25,296
 Interest Expense....................................         2,326       2,845       3,227       3,896       8,352
 Minority Interest in Net Income of Subsidiaries.....           280         225         270         448         237
                                                           --------    --------    --------    --------    --------
     Income Before Taxes.............................        15,435      35,389*     16,695*     21,496      16,707
 Income Taxes........................................         5,971      14,063       6,967       8,731       6,901
                                                           --------    --------    --------    --------    --------
     Net Income......................................        $9,464     $21,326      $9,728     $12,765      $9,806
                                                           --------    --------    --------    --------    --------
                                                           --------    --------    --------    --------    --------
Earnings Per Share:
   Basic.............................................         $1.73       $3.87       $1.68       $1.56       $1.26
                                                           --------    --------    --------    --------    --------
                                                           --------    --------    --------    --------    --------
   Diluted...........................................         $1.73       $3.87       $1.67       $1.55       $1.26
                                                           --------    --------    --------    --------    --------
                                                           --------    --------    --------    --------    --------
Net Income Per Share Excluding Other Income(1)
   Basic.............................................         $1.02       $0.92       $1.68       $1.56       $1.26
                                                           --------    --------    --------    --------    --------
                                                           --------    --------    --------    --------    --------
   Diluted...........................................         $1.02       $0.92       $1.67       $1.55       $1.26
                                                           --------    --------    --------    --------    --------
                                                           --------    --------    --------    --------    --------

Weighted Average Common Shares Outstanding
   Basic.............................................     5,477,881   5,510,410   5,796,281   8,167,285   7,790,781
   Diluted...........................................     5,484,745   5,516,597   5,830,695   8,218,686   7,790,781
SUPPLEMENTAL DATA:
 Depreciation and Amortization.......................        $6,067      $7,411      $8,667     $11,695     $13,400
 Capital Expenditures(2).............................        12,837      12,740      13,852      18,495      20,038
 Number of Operating Units at Period End ............             7           9          13          17          19
BALANCE SHEET DATA (AT PERIOD END):
 Working Capital.....................................       $27,727     $36,419     $57,231     $76,782     $85,636
 Total Assets........................................       130,287     162,184     213,408     346,139     375,766
 Long-Term Obligations...............................        34,920      34,655      27,758      87,272     104,607
 Total Stockholders' Equity..........................        52,698      74,654     122,731     135,614     139,069

</TABLE>

* Includes other income of $6.4 million and $27.0 million for fiscal 1995
  and fiscal 1996, respectively, consisting primarily of insurance proceeds
  related to the July 1993 Missouri River flood.


                                                      27

<PAGE>


(1) Other income consists of $6.4 million and $27.0 million ($3.9 million and
    $16.2 million net of tax or $0.71 and $2.95 per share), for fiscal 1995 and
    fiscal 1996, respectively, consisting primarily of insurance proceeds
    related to the July 1993 Missouri River flood. See "Management's Discussion
    and Analysis of Financial Condition and Results of Operations-General."

(2) During fiscal 1995, fiscal 1996, fiscal 1997, fiscal 1998 and fiscal 1999,
    the Company made capital expenditures of $8.1 million, $1.8 million, $1.4
    million, $589,000 and $791,000 respectively, in connection with the
    refurbishment of Amite. This 282,000 square foot facility was acquired in
    February 1993 and had been inactive for several years.














                                                      28

<PAGE>



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

GENERAL

    The Company has 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 $475.6 million for the fiscal year ended June
30, 1999.

    The Company is not currently contemplating any major acquisitions. The
Company's primary focus in fiscal 2000 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, 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>
                                                                          FY 1998             FY 1999
Operation                                           Date Acquired        Net Sales           Net Sales
-----------------------------------------------    ----------------  ------------------  -----------------
<S>                                                <C>               <C>                 <C>
                                                                       (In millions)      (In millions)
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>

    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.


                                                      29

<PAGE>

    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
Forgemasters Group Limited ("Sheffield") and London Precision Machine and Tool
Ltd. ("London Precision"). The contribution from London Precision and improved
results at the 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 Foundry, Inc. ("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").

    Selling, general and administrative expense ("SG&A") for fiscal 1999 was
$41.9 million, or 8.8% 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. Following
the July 1993 Missouri River flood, insurance proceeds related to property
damage were reserved for estimated future repairs. 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). Also included in SG&A was a charge of
$750,000 ($450,000, net of tax) related to an industrial accident at the
Company's subsidiary, Jahn Foundry Corp. ("Jahn") (see Liquidity and Capital
Resources). Excluding these non-recurring factors, SG&A for fiscal 1999 was
$44.7 million, or 9.4% of net sales.

    Amortization of certain intangibles for fiscal 1999 was $544,000 or 0.1% of
net sales, compared to $850,000, or 0.2% of net sales, in fiscal 1998. The
intangible assets consist of goodwill recorded in connection with certain of the
Company's acquisitions. Partially offsetting the expense relating to the
amortization of these assets is the amortization of the excess of acquired net
assets over cost (negative goodwill) recorded by the Company in connection with
the acquisitions of Canadian Steel Foundries, Ltd. ("Canadian Steel") and
Founderie d'Autun ("Autun").

    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.


                                                      30

<PAGE>

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

FISCAL YEAR ENDED JUNE 30, 1998 COMPARED TO FISCAL YEAR ENDED JUNE 30, 1997

    Net sales for fiscal 1998 were $373.8 million, representing an increase of
$128.0 million, or 52.0%, over net sales of $245.8 million in fiscal 1997. The
operations acquired by the Company since the beginning of fiscal 1997 generated
net sales of $33.8 million and $163.0 million in fiscal 1997 and fiscal 1998,
respectively, as follows:

<TABLE>
<CAPTION>
                                                                          FY 1997             FY 1998
Operation                                            Date Acquired       Net Sales           Net Sales
-----------------------------------------------    ----------------  ------------------  -----------------
<S>                                                 <C>               <C>                <C>
                                                                        (In millions)      (In millions)
LA Die Casting.................................        10/01/96              $ 7.1              $10.4
Canada Alloy...................................        10/26/96                6.4               10.0
Pennsylvania Steel.............................        10/31/96               14.9               15.8
Jahn...........................................        02/14/97                5.4               12.1
PrimeCast......................................        07/01/97                 --               33.9
Inverness......................................        10/06/97                 --               41.9
Sheffield......................................        04/06/98                 --               37.6
Claremont......................................        05/01/98                 --                1.3

</TABLE>

    Excluding net sales attributable to the operations acquired in fiscal 1997
and fiscal 1998, net sales for fiscal 1998 were $210.8 million, representing a
decrease of $1.2 million, or 0.6%, from net sales of $212.0 million in fiscal
1997. This 0.6% decrease in net sales was due primarily to decreases in net
sales to the energy, utility and military markets, partially offset by an
increase in net sales to the rail market.

    Gross profit for fiscal 1998 increased by $13.1 million, or 30.9%, to $55.5
million, or 14.9% of net sales, compared to $42.4 million, or 17.2% of net
sales, for fiscal 1997. The increase in gross profit was primarily attributable
to the increase in net sales. The decrease in gross profit as a percentage of
net sales is primarily attributable to: (i) a decrease in the absorption of
overhead resulting from a reduction in net sales at PrimeCast, Inc.
("PrimeCast"), La Grange Foundry Inc. ("La Grange"), Canadian Steel and Canada
Alloy, (ii) above average training expenses associated with the startup of new
customer jobs at Amite and (iii) increased warranty costs at Pennsylvania Steel
Foundry and Machine, Inc. ("Pennsylvania Steel"). In addition to these factors
were non-recurring costs associated with the installation of a new sand system
at the Atchison / St. Joe Division and a new molding line at Prospect.

    SG&A for fiscal 1998 was $28.8 million, or 7.7% of net sales, compared to
$21.6 million, or 8.8% of net sales, in fiscal 1997. The increase in SG&A was
primarily attributable to expenses associated with the operations acquired by
the Company in fiscal 1997 and fiscal 1998. The decrease in SG&A as a percentage
of net sales was primarily due to decreased expenses related to the Company's
management incentive bonus plans and decreased expenditures for outside
professional services.


                                                      31

<PAGE>

    Amortization of certain intangibles for fiscal 1998 was $850,000 or 0.2% of
net sales, compared to $632,000, or 0.3% of net sales, in fiscal 1997. The
intangible assets consist of goodwill recorded in connection with the
acquisitions of Prospect, Kramer International, Inc. ("Kramer"), Empire Steel
Castings, Inc. ("Empire"), The G&C Foundry Company ("G&C"), Los Angeles Die
Casting, Inc. ("LA Die Casting") and Inverness. Partially offsetting the expense
relating to the amortization of these assets is the amortization of the excess
of acquired net assets over cost (negative goodwill) recorded by the Company in
connection with the acquisition of Canadian Steel.

    Interest expense for fiscal 1998 increased to $3.9 million, or 1.0% of net
sales, from $3.2 million, or 1.3% of net sales, in fiscal 1997. The increase in
interest expense is primarily the result of an increase in the average amount of
indebtedness outstanding during fiscal 1998.

    Income tax expense for fiscal 1998 and fiscal 1997 reflected the combined
federal, state and provincial statutory rate of approximately 40% and 41%,
respectively. 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 increased from $9.7 million in
fiscal 1997 to $12.8 million in fiscal 1998.

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 1999
was $7.7 million, a decrease of $8.2 million from fiscal 1998. This decrease was
primarily attributable to other current asset balances primarily relating to
insurance claim receivables and cash advances to certain manufactures of
specialized equipment.

    Working capital was $85.6 million at June 30, 1999, as compared to $76.8
million at June 30, 1998. The increase primarily resulted from net additional
working capital of $9.1 million associated with the acquisitions of London
Precision and Autun.

    During fiscal 1999, the Company made capital expenditures of $20.0 million,
as compared to $18.5 million for fiscal 1998. 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 was used for
routine projects at each of the Company's facilities, primarily related to
productivity enhancing equipment, such as CNC pattern-cutting machines, machine
tools, sand reclamation systems and computer hardware and software modeling
systems. The Company expects to make approximately $24.0 million of capital
expenditures during fiscal 2000, including a new emission control system at the
Atchison/St. Joe Division, the modification of the mold line at Autun and
routine projects at each of the Company's facilities.

    On August 12, 1998, the Company announced that its Board of Directors had
authorized a stock repurchase program of up to 1.2 million common shares of its
then outstanding 8.2 million common shares. The stock repurchases may be made
from time to time at prevailing prices in the open market or in privately
negotiated transactions, depending on market conditions, the price of Company's
common stock and other factors. The Company will make such stock repurchases
using internally generated funds and borrowings under its credit facility. The
Company's Note Purchase Agreement


                                                      32

<PAGE>

allows repurchases of up to nearly $2.5 million of Company common stock
during fiscal 2000. Any share repurchases will be added to the Company's
treasury shares and will be available for reissuance in connection with the
Company's acquisitions, employee benefit plans or for other corporate
purposes. Through June 30, 1999, the Company had repurchased 586,700 shares
at a cost of $6.0 million.

    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.

    The Company preciously announced that it is contemplating the issue of up to
$60 million aggregate principal amount of unsecured, senior subordinated notes
through a private placement. The Company has currently placed the issue on hold
due to unfavorable market conditions. If consummated, the Company would use the
net proceeds of the offering to retire its bank term loan and to reduce
outstanding borrowings under its revolving credit facility

    Total indebtedness of the Company at June 30, 1999 was $113.4 million, as
compared to $93.3 million at June 30, 1999. This increase of $20.1 million
primarily reflects indebtedness incurred of $13.8 million to finance the
acquisition of London Precision and $6.0 million to repurchase 586,700 shares of
the Company's common stock. At June 30, 1999, $9.9 million was available for
borrowing under the Company's revolving credit facility.

    Effective September 1, 1998, the Company purchased 90% of the outstanding
capital stock of London Precision for U.S. $13.8 million in cash and related
expenses. On June 16, 1999, the Company purchased the remaining 10% of the
outstanding capital stock of London Precision for U.S. $1.8 million 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.


                                                      33

<PAGE>

    On February 25, 1999, Founderie d'Autun, a subsidiary of Atchison Casting UK
Limited, a 95% owned subsidiary of the Company, purchased the foundry division
assets of Compagnie Internationale du Chauffage ("CICH") located in Autun,
France. The Company received U.S. $5.8 million in cash and U.S. $5.5 million 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.

    An accident, involving an explosion and fire, occurred on February 25, 1999,
at Jahn Foundry Corp., a wholly-owned subsidiary of the Company located in
Springfield, Massachusetts. Nine employees were injured and there have been
three fatalities. The damage was confined to the shell molding area and boiler
room and 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.

    Although no lawsuits have been filed, a number of attorneys representing the
injured and deceased employees have contacted Jahn Foundry regarding possible
litigation. The Company carries insurance for property and casualty damages,
business interruption, general liability and worker's compensation for itself
and its subsidiaries. The Company, its property insurance carrier and its
insurance broker dispute the amount of property insurance available for property
damages suffered in this accident. If this dispute cannot be resolved amicably,
the Company would vigorously pursue its remedies against both parties. The
Company recorded a charge 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.

    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 $148,500 in fines.

    The Company believes that its operating cash flow and amounts available for
borrowing under its revolving credit facility will be adequate to fund its
capital expenditure and working capital requirements for the next two years.
However, the level of capital expenditure and working capital requirements may
be greater than currently anticipated as a result of the size and timing of
future acquisitions, or as a result of unforeseen expenditures relating to
compliance with environmental laws or the accident at Jahn. Acquisitions have
been financed with borrowings under the Company's bank credit facilities and
occasionally with common stock.

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


                                                      34

<PAGE>

 due to the stability of the countreis 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. Additional information regarding the
Compan'ys financial instruments is contained in Notes 8 and 10 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 1999 and 1998, 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 believes that the sensitivity analysis is
a better portrayal of its value at risk and is more readily understood than the
tabular presentation used in 1998, and, as a result, has changed to the
sensitivity analysis presented. 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, fixed and variable rate debt and interest rate swaps,
which are mainly exposed to changes in short-term interest rates (e.g., USD
LIBOR). 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 $200,000 in both fiscal 1999 and 1998.

    The Company's exposure to fluctuations in currency rates against the pound
sterling and Canadian dollar result from the Company's holdings in cash and
short-term investments and its 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 pound sterling and Canadian dollar (1999 only). 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 pound sterling and Canadian dollar (1999 only). Based
on the Company's holdings of financial instruments at June 30, 1999 and 1998, a
hypothetical 10% depreciation in the pound sterling (1998 and 1999) and the
Canadian dollar (1999 only) versus all other currencies would have a material
impact on the Company's earnings of approximately $2.7 million and $3.6 million
in fiscal 1999 and 1998, 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.


                                                      35

<PAGE>


INFLATION

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

YEAR 2000 COMPUTER ISSUES

    The Company has conducted a comprehensive review of its hardware and
software systems to identify those systems that could be affected by the "Year
2000" issue and has developed an implementation plan to resolve the identified
issues. The Company believes that, with replacement or modification of its
existing computer systems, updates by vendors and conversion to new software,
the Year 2000 issue will not pose significant operational problems for the
Company's computer systems. The Company expects to complete implementation of
computer systems that are Year 2000 compliant in the first quarter of fiscal
2000, although testing may continue in the second quarter of fiscal 2000. Based
on its review of non-information technology systems to date, the Company does
not anticipate the need to develop an extensive contingency plan for such
systems or to incur material costs in that regard.

    The Company relies on a number of customers and suppliers, including banks,
telecommunication providers, utilities, and other providers of goods and
services. The inability of these third parties to conduct their business for a
significant period of time due to the Year 2000 issue could have a material
adverse impact on the Company's operations. The Company is currently assessing
the Year 2000 compliance of its significant customers and suppliers. To date,
the Company has been advised by over two-thirds of its significant customers
that they will be Year 2000 compliant by the end of calendar 1999. There can be
no assurance that the systems of other companies that interact with the Company
will be sufficiently Year 2000 compliant. The Company's reliance on single
source suppliers, however, is minimal, and the Company seeks to limit sole
source supply relationships. The Company, however, has entered into national
service agreements for the supply of certain raw materials and freight service
from single sources. If the Company does not identify or fix all year 2000
problems in critical operations, or if a major supplier or customer is unable to
supply raw materials or receive the Company's product, the Company's results of
operations or financial condition could be materially impacted.

    Year 2000 project expenditures to date total approximately $2.2 million. The
Company expects to incur an additional $600,000 of additional costs. The Company
presently anticipates that it will complete its Year 2000 assessment and
remediation by September 30, 1999. However, there can be no assurance that the
Company will be successful in implementing its Year 2000 implementation plan
according to the anticipated schedule due to the potential lack of availability
of trained personnel and their ability to identify relevant computer codes,
among other uncertainties.

FORWARD-LOOKING STATEMENTS

    Statements above in the subsections entitled "General," "Liquidity and
Capital Resources," "Market Risk " and "Year 2000 Computer Issues" such as
"believes," "expects," "intends," "contemplating" and statements regarding
quarterly fluctuations, statements regarding the adequacy of funding for capital
expenditure and working capital requirements for the next two years 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


                                   36

<PAGE>

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 and the
markets served by the Company, the strength of the U.S. dollar, Canadian
dollar, British pound and the Euro, interest rates, inflation, the
availability of labor, the successful conclusion of contract negotiations,
the results of any litigation arising out of the accident at Jahn, 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.





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 1998 and fiscal 1999.

<TABLE>
<CAPTION>

                                    FISCAL 1998                                 FISCAL 1999
                                  QUARTERS ENDED                               QUARTERS ENDED
                     ------------------------------------------   ----------------------------------------------
                        SEPT.      DEC.      MAR.      JUNE         SEPT.       DEC.     MAR. (1)   JUNE (2)
                        -----      ----      ----      ----         -----       ----     -----      -----
                                    (unaudited)                                   (unaudited)

                                                (In thousands, except per share data)
<S>                      <C>       <C>      <C>       <C>           <C>        <C>        <C>         <C>
Net Sales.............   $68,796   $84,435  $91,623   $128,914      $116,576   $122,955   $119,533    $116,495
Gross Profit..........     9,212    12,663   14,120     19,493        13,921     18,747     17,535      17,569
Operating Income......     3,688     5,176    7,638      9,338         2,701      6,810      4,590      11,195
Net Income............   $ 1,825   $ 2,390  $ 3,913     $4,637          $337     $2,708     $1,265      $5,496
                         -------   -------  -------   --------      ---------  --------   --------     -------
                         -------   -------  -------   --------      ---------  --------   --------     -------
======================
Net Income Per Share

   Basic..............    $ 0.22    $ 0.29   $ 0.48     $ 0.57         $0.04      $0.35      $0.17       $0.72
                         -------   -------  -------   --------      ---------  --------   --------     -------
                         -------   -------  -------   --------      ---------  --------   --------     -------

   Diluted............    $ 0.22    $ 0.29   $ 0.48     $ 0.56         $0.04      $0.35      $0.17       $0.72
                         -------   -------  -------   --------      ---------  --------   --------     -------
                         -------   -------  -------   --------      ---------  --------   --------     -------

</TABLE>

(1) The third quarter contains a 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 $450,000, or $.06
    per share.


                                      37



<PAGE>

(2) The fourth quarter contains a 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.


                                    38



<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 Results of Operations and Financial Condition in this 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


                                  39


<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
1999 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 1999 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 1999 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 1999 Annual Meeting of Stockholders
to be filed pursuant to Regulation 14A.


                                    40


<PAGE>

                                     PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

<TABLE>
<CAPTION>

                                                                                    PAGE
                                                                                    NUMBER
    <S>                                                                             <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, 1998 and 1999                    F-2

              Consolidated Statements of Income For the Years                          F-4
              Ended June 30, 1997, 1998 and 1999

              Consolidated Statements of Comprehensive Income                          F-5
              For the Years Ended June 30, 1997, 1998 and 1999

              Consolidated Statements of Stockholders' Equity                          F-6
              For the Years Ended June 30, 1997, 1998 and 1999

              Consolidated Statements of Cash Flows For the Years                      F-7
              Ended June 30, 1997, 1998 and 1999

              Notes to Consolidated Financial Statements For the Years                 F-8
              Ended June 30, 1997, 1998 and 1999

</TABLE>

         (2)  No Financial Statement Schedules are required to be filed.

         (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

         No reports on Form 8-K were filed by the Company during the quarter
         ended June 30, 1999

    (c)  EXHIBITS

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

    (d)  FINANCIAL STATEMENTS SCHEDULES

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


                                   41

<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. 14, 1999

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. 14, 1999
          Hugh H. Aiken            President, Chief Executive
                                   Officer and Director
                                   (Principal Executive Officer)


    /s/ Stuart Z. Uram             Director                            Sept. 10, 1999
          Stuart Z. Uram


    /s/ David L. Belluck           Director                            Sept. 15, 1999
          David L. Belluck


    /s/ Ray H. Witt                Director                            Sept. 10, 1999
          Ray H. Witt


    /s/ John O. Whitney            Director                            Sept. 15, 1999
          John O. Whitney


    /s/ Kevin T. McDermed          Vice President, Chief               Sept. 14, 1999
          Kevin T. McDermed        Financial Officer, Treasurer
                                   and Secretary (Principal
                                   Financial Officer and Principal
                                   Accounting Officer)

</TABLE>


                                     42







<PAGE>


-------------------------------------------------------------------------------
                                 ATCHISON CASTING CORPORATION AND SUBSIDIARIES
                                 ----------------------------------------------
                                 CONSOLIDATED FINANCIAL STATEMENTS AS OF
                                 JUNE 30, 1998 AND 1999, AND FOR EACH OF THE
                                 THREE YEARS IN THE PERIOD ENDED JUNE 30, 1999,
                                 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

FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 30, 1997, 1998 AND 1999:

Consolidated Balance Sheets - June 30, 1998 and 1999                                                  F-2-F-3

Consolidated Statements of Income - Years Ended June 30, 1997, 1998 and 1999                          F-4

Consolidated Statements of Comprehensive Income - Years Ended June 30, 1997, 1998 and 1999            F-5

Consolidated Statements of Stockholders' Equity - Years Ended June 30, 1997, 1998 and 1999            F-6

Consolidated Statements of Cash Flows - Years Ended June 30, 1997, 1998 and 1999                      F-7

Notes to Consolidated Financial Statements                                                            F-8-F-33

</TABLE>

<PAGE>

INDEPENDENT AUDITORS' REPORT

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

We have audited the accompanying consolidated balance sheets of Atchison
Casting Corporation and subsidiaries (the "Company") as of June 30, 1998 and
1999 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, 1999. 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 generally accepted auditing
standards. 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 for 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, 1998
and 1999, and the results of its operations and its cash flows for each of
the three years in the period ended June 30, 1999 in conformity with
generally accepted accounting principles.



August 13, 1999
(August 24, 1999 with respect to the third paragraph of Note 21)


                                        F-1
<PAGE>

ATCHISON CASTING CORPORATION
AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
JUNE 30, 1998 AND 1999
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>

ASSETS                                                                                         1998              1999
<S>                                                                                     <C>                 <C>
CURRENT ASSETS:
  Cash and cash equivalents                                                               $   9,336         $   4,222
  Customer accounts receivable, net of allowance for doubtful
    accounts of $508 and $591 at June 30, 1998 and 1999, respectively                        88,469            83,235
  Inventories                                                                                62,146            68,777
  Deferred income taxes                                                                       3,186             1,988
  Other current assets                                                                        9,615            18,829
                                                                                         ----------        ----------

           Total current assets                                                             172,752           177,051

PROPERTY, PLANT AND EQUIPMENT, Net                                                          137,290           150,056

INTANGIBLE ASSETS, Net                                                                       25,424            32,846

DEFERRED FINANCING COSTS, Net                                                                   746               660

OTHER ASSETS                                                                                  9,927            15,153
                                                                                         ----------        ----------

TOTAL                                                                                     $ 346,139         $ 375,766
                                                                                         ----------        ----------
                                                                                         ----------        ----------

                                                                                                           (Continued)
</TABLE>


                                        F-2
<PAGE>

ATCHISON CASTING CORPORATION
AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
JUNE 30, 1998 AND 1999
(Dollars in thousands, except share data)
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>

LIABILITIES AND STOCKHOLDERS' EQUITY                                                        1998             1999
<S>                                                                                   <C>              <C>
CURRENT LIABILITIES:
  Accounts payable                                                                     $  37,259        $  39,452
  Accrued expenses                                                                        52,690           43,130
  Current maturities of long-term obligations                                              6,021            8,833
                                                                                      ----------       ----------

          Total current liabilities                                                       95,970           91,415

LONG-TERM OBLIGATIONS                                                                     87,272          104,607

DEFERRED INCOME TAXES                                                                     12,608           17,334

OTHER LONG-TERM OBLIGATIONS                                                                3,670            3,969

EXCESS OF FAIR VALUE OF ACQUIRED NET ASSETS OVER
  COST, Net of accumulated amortization of $882 and $1,776,
  at June 30, 1998 and 1999, respectively                                                    349            6,889

POSTRETIREMENT OBLIGATION OTHER
  THAN PENSION                                                                             7,596            8,278

MINORITY INTEREST IN SUBSIDIARIES                                                          3,060            4,205
                                                                                      ----------       ----------

          Total liabilities                                                              210,525          236,697
                                                                                      ----------       ----------

STOCKHOLDERS' EQUITY:
  Preferred stock, $.01 par value, 2,000,000 authorized
    shares; no shares issued and outstanding
  Common stock, $.01 par value, 19,300,000 authorized
    shares; 8,226,570 and 8,259,603 shares issued
    and outstanding at June 30, 1998 and 1999, respectively                                   82               83
  Class A common stock (non-voting), $.01 par
    value, 700,000 authorized shares; no shares
    issued and outstanding
  Additional paid-in capital                                                              80,957           81,216
  Retained earnings                                                                       55,205           65,011
  Accumulated foreign currency translation adjustment                                       (630)          (1,193)
                                                                                      ----------       ----------

                                                                                         135,614          145,117

  Less common stock held in treasury, 36,002 and 622,702 shares
    at June 30, 1998 and 1999, respectively                                                                (6,048)
                                                                                      ----------       ----------

           Total stockholders' equity                                                    135,614          139,069
                                                                                      ----------       ----------

TOTAL                                                                                  $ 346,139        $ 375,766
                                                                                      ----------       ----------
                                                                                      ----------       ----------

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


                                        F-3

<PAGE>


ATCHISON CASTING CORPORATION
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED JUNE 30, 1997, 1998 AND 1999
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                   1997              1998              1999
<S>                                                             <C>               <C>               <C>
NET SALES                                                       $ 245,769         $ 373,768         $ 475,559

COST OF GOODS SOLD                                                203,386           318,280           407,787
                                                                ---------         ---------         ---------

GROSS PROFIT                                                       42,383            55,488            67,772

OPERATING EXPENSES:
  Selling, general and administrative                              21,559            28,798            41,932
  Amortization of intangibles                                         632               850               544
                                                                ---------         ---------         ---------

     Total operating expenses                                      22,191            29,648            42,476
                                                                ---------         ---------         ---------

OPERATING INCOME                                                   20,192            25,840            25,296

INTEREST EXPENSE                                                    3,227             3,896             8,352

MINORITY INTEREST IN NET INCOME OF
  SUBSIDIARIES                                                        270               448               237
                                                                ---------         ---------         ---------

INCOME BEFORE INCOME TAXES                                         16,695            21,496            16,707

INCOME TAXES                                                        6,967             8,731             6,901
                                                                ---------         ---------         ---------

NET INCOME                                                      $   9,728         $  12,765         $   9,806
                                                                ---------         ---------         ---------
                                                                ---------         ---------         ---------

NET INCOME PER COMMON AND
  EQUIVALENT SHARES:
    BASIC                                                       $    1.68         $    1.56         $    1.26
                                                                ---------         ---------         ---------
                                                                ---------         ---------         ---------

    DILUTED                                                     $    1.67         $    1.55         $    1.26
                                                                ---------         ---------         ---------
                                                                ---------         ---------         ---------

WEIGHTED AVERAGE NUMBER OF COMMON
  AND EQUIVALENT SHARES OUTSTANDING:
    BASIC                                                       5,796,281         8,167,285         7,790,781
                                                                ---------         ---------         ---------
                                                                ---------         ---------         ---------

    DILUTED                                                     5,830,695         8,218,686         7,790,781
                                                                ---------         ---------         ---------
                                                                ---------         ---------         ---------
</TABLE>

See notes to consolidated financial statements.


                                        F-4

<PAGE>

ATCHISON CASTING CORPORATION
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
YEARS ENDED JUNE 30, 1997, 1998 AND 1999
(IN THOUSANDS)
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                     1997             1998               1999
<S>                                                                <C>             <C>                 <C>
NET INCOME                                                         $ 9,728          $ 12,765           $ 9,806

OTHER COMPREHENSIVE INCOME, BEFORE TAX:
  Foreign currency translation adjustments                            (152)             (498)             (563)
  Minimum pension liability adjustment                                 480
                                                                  ---------        ---------          --------

OTHER COMPREHENSIVE INCOME, BEFORE TAX                              10,056            12,267             9,243

INCOME TAX EXPENSE (BENEFIT) RELATED TO ITEMS OF
  OTHER COMPREHENSIVE INCOME -
  Minimum pension liability adjustment                                (187)
                                                                  ---------        ---------          --------
OTHER COMPREHENSIVE INCOME, NET OF TAX                            $  9,869          $ 12,267           $ 9,243
                                                                  ---------        ----------         --------
                                                                  ---------        ----------         --------
</TABLE>
See notes to consolidated financial statements.


                                        F-5

<PAGE>
ATCHISON CASTING CORPORATION
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED JUNE 30, 1997, 1998 AND 1999
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                           OTHER COMPREHENSIVE INCOME
                                                                        --------------------------------

                                                                                        ACCUMULATED
                                                                             MINIMUM      FOREIGN      COMMON
                                                     ADDITIONAL              PENSION      CURRENCY     STOCK
                                             COMMON   PAID-IN     RETAINED  LIABILITY   TRANSLATION   HELD IN
                                              STOCK   CAPITAL     EARNINGS  ADJUSTMENT   ADJUSTMENT   TREASURY  TOTAL
                                            --------- --------   ---------  ----------  ------------ --------- -------
<S>                                         <C>       <C>        <C>        <C>         <C>          <C>       <C>
Balance, July 1, 1996                         $ 56    $ 42,159    $ 32,712   $ (293)    $     20               $ 74,654
  Issuance of 2,610,203 shares                  25      38,080                                                   38,105
  Exercise of stock options (7,600 shares)                 103                                                      103
  Minimum pension liability adjustment,
    net of income tax expense of $187                                           293                                 293
  Foreign currency translation adjustment
    of investment in subsidiaries                                                           (152)                  (152)
  Net income                                                         9,728                                        9,728
                                              ----    --------    --------   ------     ---------              --------

Balance, June 30, 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                                                                         $(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
                                              ----    --------    --------   ------     ---------    --------  --------
                                              ----    --------    --------   ------     ---------    --------  --------
</TABLE>
See notes to consolidated financial statements.


                                        F-6

<PAGE>
ATCHISON CASTING CORPORATION
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED JUNE 30, 1997, 1998 AND 1999
(DOLLARS IN THOUSANDS)
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                                         1997        1998        1999
<S>                                                                                   <C>         <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                                                          $  9,728    $ 12,765     $ 9,806
  Adjustments to reconcile net income to net cash from
    operating activities:
    Depreciation and amortization                                                        8,667      11,695      13,400
    Minority interest in net income of subsidiaries                                        270         448         236
    Loss (gain) on disposal of capital assets                                               54         176        (190)
    Deferred income taxes                                                                1,816       1,394       4,151
    Changes in assets and liabilities (exclusive of effects of acquired companies):
      Receivables                                                                         (349)     13,071       6,376
      Inventories                                                                        1,231        (374)     (1,017)
      Other current assets                                                                 205        (719)     (9,685)
      Accounts payable                                                                     190      (6,854)        979
      Accrued expenses                                                                      23     (16,472)    (14,423)
      Postretirement obligation other than pension                                         430         467         682
      Other                                                                                 36         265      (2,596)
                                                                                     ---------    ---------    --------

           Cash provided by operating activities                                        22,301      15,862       7,719
                                                                                     ---------    ---------    --------

CASH FLOWS FROM  INVESTING ACTIVITIES:
  Capital expenditures                                                                 (13,852)    (18,495)    (20,038)
  Proceeds from sale of capital assets                                                      38       1,219       1,829
  Payment for purchase of net assets of subsidiaries,
    net of cash acquired                                                               (27,698)    (74,299)     (7,494)
  Assets held for resale                                                                   840
  (Advances) repayments under subordinated note receivable                                (800)        800
  Payment for investments in unconsolidated subsidiaries                                  (330)                   (150)
                                                                                     ---------    ---------    --------

           Cash used in investing activities                                           (41,802)    (90,775)    (25,853)
                                                                                     ---------    ---------    --------

CASH FLOWS FROM  FINANCING ACTIVITIES:
  Proceeds from issuance of common stock, net of costs                                  38,208         616         260
  Payments for repurchase of common stock                                                                       (6,048)
  Proceeds from sale (payments for purchase) of stock in subsidiaries                      178         (64)       (728)
  Proceeds from issuance of long-term obligations                                        1,293
  Payments on long-term obligations                                                     (1,343)       (979)     (6,528)
  Capitalized financing costs paid                                                        (214)       (409)       (108)
  Net borrowings (repayments) under revolving loan note                                 (6,521)     65,519      26,675
                                                                                     ---------    ---------    --------

           Cash provided by financing activities                                        31,601      64,683      13,523
                                                                                     ---------    ---------    --------

EFFECT OF EXCHANGE RATE ON CASH                                                            (12)       (253)       (503)

NET INCREASE (DECREASE ) IN CASH AND CASH
  EQUIVALENTS                                                                           12,088     (10,483)     (5,114)

CASH AND CASH EQUIVALENTS, Beginning of period                                           7,731      19,819       9,336
                                                                                     ---------    ---------    --------

CASH AND CASH EQUIVALENTS, End of period                                              $ 19,819    $  9,336     $ 4,222
                                                                                     ---------    ---------    --------
                                                                                     ---------    ---------    --------
</TABLE>
See notes to consolidated financial statements.


                                        F-7
<PAGE>

ATCHISON CASTING CORPORATION
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 1997, 1998 AND
1999 (DOLLARS IN THOUSANDS, EXCEPT PER 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 generally accepted accounting principles 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") and London
      Precision Machine & Tool Ltd. ("London Precision"). AFM, Quaker,
      Kramer, Empire, La Grange Foundry, Canada Alloy, Pennsylvania Steel,
      Jahn Foundry, PrimeCast, Claremont and London Precision are wholly
      owned subsidiaries. The Company owns 91.8%, 95.7%, 93.9%, 90.6%, 96.1%
      and 95.4% of the outstanding capital stock of Prospect Foundry,
      Canadian Steel, G&C, LA Die Casting, Inverness and ACUK, respectively.
      Sheffield Forgemasters Group, Ltd. ("Sheffield") and Fonderie d'Autun
      SA ("Autun") are wholly-owned subsidiaries of ACUK. 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.

      REVENUE RECOGNITION - Sales and related cost of sales are recognized
      upon shipment of products.


                                        F-8

<PAGE>

      CUSTOMER ACCOUNTS RECEIVABLE - Approximately 17%, 18% and 17% of the
      Company's business in 1997, 1998 and 1999, respectively, was with two
      major customers in the automotive, locomotive and general industrial
      markets. As of June 30, 1998 and 1999, 13% and 12%, 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 14% 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.

      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.

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

      LONG-LIVED ASSETS - The Company periodically reviews the continuing
      value of long-lived assets to determine if there has been an
      impairment. The basis of this valuation includes the continuing
      profitability of the acquired operations, their expected future
      undiscounted cash flows, the maintenance of a significant customer
      base and similar factors.

      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, 1999, the Company has letters of credit aggregating $2,903
      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 statements and tax basis of the
      Company's assets and liabilities in accordance with the liability
      method.

      STOCK 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.


                                        F-9

<PAGE>

      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 options, were
      exercised.

      NEW ACCOUNTING STANDARDS - SFAS No. 130, "REPORTING COMPREHENSIVE
      INCOME," was issued in June 1997. This Statement established standards
      for reporting and display of comprehensive income and its components
      (revenues, expenses, gains, and losses) in a full set of
      general-purpose financial statements. The Company adopted SFAS No. 130
      in fiscal 1999 and has restated all prior years for the adoption of
      this standard.

      In June 1997, the FASB issued SFAS No. 131, "DISCLOSURES ABOUT
      SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION". The Statement
      establishes standards for the way that public business enterprises
      report information about operating segments in annual financial
      statements and requires that those enterprises report selected
      information about operating segments in interim financial reports
      issued to shareholders. It also establishes standards for related
      disclosures about products and services, geographic areas and major
      customers. The Company adopted SFAS No. 131 in fiscal 1999.

      SFAS No. 132, "EMPLOYERS' DISCLOSURES ABOUT PENSION AND OTHER
      POSTRETIREMENT BENEFITS," was issued by the FASB in February 1998.
      This Statement revises employers' disclosures about pension and other
      postretirement benefit plans, but does not change the measurement or
      recognition of such plans. This Statement is effective for fiscal
      years beginning after December 15, 1997, including restatement of
      prior periods provided for comparative purposes. The Company adopted
      SFAS No. 132 in fiscal 1999.

      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. The Company has not yet completed its
      evaluation of the impact of SFAS No. 133 on the consolidated financial
      statements. The Company will be required to adopt SFAS No. 133 on July
      1, 2000.

2.    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.

      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 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-10

<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 ordinary 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
      indebtedness. 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.

      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 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, net" 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
      Sheet. This amount is being amortized over 4 years.


                                        F-11

<PAGE>

      The estimated fair values of assets and liabilities acquired in the
      1997, 1998 and 1999 acquisitions are summarized as follows:

<TABLE>
<CAPTION>
                                                                        1997            1998         1999
         <S>                                                         <C>            <C>            <C>
         Cash                                                        $   142        $ 10,244       $ 6,501
         Customer accounts receivable                                  7,835          61,669         2,748
         Inventories                                                   7,799          31,231         7,117
         Property, plant and equipment                                15,872          38,164         7,705
         Intangible assets, primarily goodwill                         4,336           4,666         8,427
         Other assets                                                    737          14,670            15
         Accounts payable and accrued expenses                        (5,535)        (75,775)       (7,489)
         Deferred income taxes                                        (2,141)          6,731        (1,269)
         Excess of fair value of acquired net assets over cost                                      (7,872)
         Other long-term obligations                                    (705)         (6,470)       (1,888)
         Long-term obligations                                          (500)           (587)
                                                                    ---------      ---------      --------

                                                                      27,840          84,543        13,995

         Cash acquired                                                  (142)        (10,244)       (6,501)
                                                                    ---------      ---------      --------

         Cash used in acquisitions                                   $ 27,698       $ 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.

<TABLE>
<CAPTION>
                                                                            1998              1999
                                                                                (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

</TABLE>

     3.    INVENTORIES

<TABLE>
<CAPTION>
                                                                           1998            1999
       <S>                                                              <C>               <C>
       Raw materials                                                     $ 11,152         $ 10,414
       Work-in-process                                                     37,939           41,431
       Finished goods                                                       7,385           12,736
       Deferred supplies                                                    5,670            4,196
                                                                         --------         --------

                                                                         $ 62,146         $ 68,777
                                                                         --------         --------
                                                                         --------         --------
</TABLE>


                                        F-12
<PAGE>

      Inventories as of June 30, 1998 and 1999 would have been higher by $314
      and $381, respectively, had the Company used the first-in, first-out
      method of valuing those inventories valued using the last-in, first-out
      method.

4.    PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
                                                      LIVES
                                                    (In Years)        1998              1999
      <S>                                           <C>         <C>              <C>
      Land                                                        $ 16,868         $ 15,686
      Improvements to land                            12-15          4,645            4,781
      Buildings and improvements                        35          29,298           31,817
      Machinery and equipment                          5-14        103,184          124,567
      Automobiles and trucks                            3            2,226            1,784
      Office furniture, fixtures and equipment         5-10          4,756            5,675
      Tooling and patterns                            1.5-6          4,582            4,445
                                                                ----------       ----------

                                                                   165,559          188,755
      Less accumulated depreciation                                 35,267           47,496
                                                                ----------       ----------

                                                                   130,292          141,259
      Construction in progress                                       6,998            8,797
                                                                ----------       ----------

                                                                 $ 137,290        $ 150,056
                                                                ----------       ----------
                                                                ----------       ----------

</TABLE>

      Depreciation expense was $7,903, $10,656 and $12,647 for the years ended
      June 30, 1997, 1998 and 1999, respectively.

5.    INTANGIBLE ASSETS
<TABLE>
<CAPTION>
                                                 LIVES
                                               (In Years)       1998            1999
        <S>                                    <C>            <C>             <C>
        Goodwill                                   25         $ 28,580        $ 37,440
        Less accumulated amortization                            3,156           4,594
                                                              --------        --------

                                                              $ 25,424        $ 32,846
                                                              --------        --------
                                                              --------        --------
</TABLE>

      Amortization expense was $911, $1,108  and $1,429 for the years ended
      June 30, 1997, 1998 and 1999, respectively.

6.    DEFERRED FINANCING COSTS

<TABLE>
<CAPTION>
                                                LIVES
                                              (IN YEARS)       1998          1999
        <S>                                   <C>            <C>           <C>
        Capitalized financing costs            3 to 10       $ 1,087       $ 1,045
        Less accumulated amortization                            341           385
                                                             -------       -------

                                                             $   746       $   660
                                                             -------       -------
                                                             -------       -------
</TABLE>


                                        F-13

<PAGE>

      Amortization of such costs, included in interest expense, was $129, $188
      and $194 for the years ended June 30, 1997, 1998 and 1999, respectively.

7.    ACCRUED EXPENSES

<TABLE>
<CAPTION>
                                                                1998            1999
        <S>                                                  <C>             <C>
        Accrued warranty                                     $ 16,339        $ 11,785
        Payroll, vacation and other compensation                9,491           8,688
        Accrued pension liability                               2,983           3,089
        Advances from customers                                 4,381           4,509
        Reserve for flood repairs                               5,932           1,197
        Reserve for workers' compensation and employee
          health care                                           3,570           2,570
        Taxes other than income                                   541             395
        Interest payable                                        1,076           1,145
        Other                                                   8,377           9,752
                                                             --------        --------

                                                             $ 52,690        $ 43,130
                                                             --------        --------
                                                             --------        --------
</TABLE>

8.    LONG-TERM OBLIGATIONS

      On May 1, 1996, the Company's La Grange Foundry subsidiary entered into
      a Loan Agreement with the Missouri Development Finance Board (the
      "Board"), providing for a loan of $5,100 to La Grange Foundry using the
      proceeds of the Board's Industrial Development Revenue Bonds, Series
      1996 (La Grange Foundry Inc. Project). Loans under the Loan Agreement
      will bear interest at rates that fluctuate weekly based upon the
      then-prevailing market rates for such securities. Loans under this Loan
      Agreement were used to finance the costs of acquiring, reconstructing,
      improving and equipping certain additions and improvements to the
      Company's La Grange Foundry manufacturing facilities. The Loan
      Agreement terminates on November 1, 2011.

      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 (the
      "Note Purchase Agreement") providing for an increase in permitted
      subsidiary indebtedness from $3,500 to $8,000.

      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.


                                        F-14

<PAGE>

      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. At June 30, 1998 and
      1999, $35,102 and $9,866, respectively, was available for borrowing
      under this facility after consideration of outstanding advances of
      $65,000 and $88,817 and letters of credit of $9,898 and $8,460,
      respectively (see Note 10).


                                        F-15

<PAGE>

      Long-term obligations consist of the following as of
      June 30, 1998 and1999:

<TABLE>
<CAPTION>
                                                                                              1998              1999
         <S>                                                                               <C>                <C>
         Unsecured, senior notes with an insurance company, maturing on
            July 30, 2004 and bearing interest at a fixed rate of 8.44% per year            $ 20,000           $ 17,143
         Unsecured, revolving credit facility with Harris, maturing on
           April 3, 2003, bearing interest at:
           LIBOR plus 1.50%, $63,000 and $40,000 at weighted average rates of 7.15% and
             6.47% at June 30, 1998 and 1999, respectively
           LIBOR plus 1.85%, $37,142 at 7.18% at June 30, 1999 Prime, $2,000 and $11,675
           at 8.50% and 7.75% at June 30, 1998
             and 1999, respectively                                                           65,000             88,817
         Term loan between G&C and the Ohio Department of Development,
            secured by certain assets of G&C, maturing on June 1, 1999,
            bearing interest at 5.00%                                                             31
         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%                                                          2,608              2,380
         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 3.80% and 3.87%
            at June 30, 1998 and 1999, respectively                                            5,100              5,100
         Term loan between Inverness and the City of Dowagiac, Michigan,
           secured by certain assets of Inverness, maturing on June 9, 1999,
           bearing interest at 7.11%                                                             554
                                                                                           ----------        ----------

                                                                                              93,293            113,440
         Less current maturities                                                               6,021              8,833
                                                                                           ----------        ----------

         Total long-term obligations                                                        $ 87,272          $ 104,607
                                                                                           ----------        ----------
                                                                                           ----------        ----------
</TABLE>

      The Credit Agreement with Harris and the Note Purchase Agreement with an
      insurance company 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, 1999 mature as follows:

<TABLE>
       <S>                                              <C>
       2000                                             $ 8,833
       2001                                               8,851
       2002                                               8,869
       2003                                              74,850
       2004                                               3,196
       Thereafter                                         8,841

</TABLE>


                                        F-16

<PAGE>

      The amounts of interest expense for the years ended June 30, 1997, 1998
      and 1999 consisted of the following:
<TABLE>
<CAPTION>
                                                             1997          1998           1999
       <S>                                                 <C>           <C>            <C>
       Senior notes with an insurance company               $ 1,688       $ 1,688        $ 1,467
       Credit facility with Harris                            1,236         2,020          6,194
       Amortization of deferred financing costs                 129           188            194
       Other                                                    174                          497
                                                           --------      --------       --------

                                                            $ 3,227       $ 3,896        $ 8,352
                                                           --------      --------       --------
                                                           --------      --------       --------

</TABLE>

9.    INCOME TAXES

      Income taxes for the years ended June 30, 1997, 1998 and 1999 are
      comprised of the following:
<TABLE>
<CAPTION>
                                                                                1997          1998           1999
          <S>                                                                <C>           <C>            <C>
          Current expense:
            Federal                                                           $ 3,601       $ 4,298        $ 1,002
            State and local                                                       867         1,410            410
            Foreign                                                               683           913          1,578
                                                                             --------      --------       --------

                                                                                5,151         6,621          2,990

          Deferred expense                                                      1,816         2,110          3,911
                                                                             --------      --------       --------

                                                                              $ 6,967       $ 8,731        $ 6,901
                                                                             --------      --------       --------
                                                                             --------      --------       --------

                                                                                1997          1998           1999

          Items giving rise to the provision for deferred income taxes:
            Postretirement (benefits) costs                                   $  (167)      $    10        $   (97)
            Accrued liabilities                                                   350           555            294
            Net operating loss carryforwards                                     (190)          313            754
            Pension costs                                                         (53)         (397)          (163)
            Deferred gain on flood proceeds                                       560                          975
            Depreciation and amortization                                         978         1,776          2,006
            Inventories                                                           406          (430)           179
            Valuation allowance                                                   190           128             56
            All other, net                                                       (258)          155            (93)
                                                                             --------      --------       --------

                                                                              $ 1,816       $ 2,110        $ 3,911
                                                                             --------      --------       --------
                                                                             --------      --------       --------

</TABLE>


                                        F-17
<PAGE>

      Following is a reconciliation between the total income taxes and the
      amount computed by multiplying income before income taxes plus the
      minority interest in net income of subsidiaries by the statutory federal
      income tax rate:
<TABLE>
<CAPTION>
                                     1997                         1998                        1999
                                    Amount          %            Amount         %            Amount         %
                                  ---------     ------        ---------     ------        ---------     ------
         <S>                      <C>            <C>           <C>           <C>           <C>           <C>
         Computed expected
           federal income tax
           expense                 $ 5,938        35.0          $ 7,680       35.0          $ 5,930       35.0
         State income taxes,
           net of federal benefit      717         4.2            1,139        5.2              743        4.4
         Non - U.S. taxes                                           (75)      (0.3)
         Permanent differences         310         1.8              344        1.6              475        2.8
         Other, net                      2                         (357)      (1.7)            (247)      (1.5)
                                  ---------      ------        ---------     ------        ---------     ------

                                   $ 6,967        41.0          $ 8,731       39.8          $ 6,901       40.7
                                  ---------      ------        ---------     ------        ---------     ------
                                  ---------      ------        ---------     ------        ---------     ------
</TABLE>

      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, 1998 and 1999 are comprised of the following:

<TABLE>
<CAPTION>
                                                           1998            1999
          <S>                                         <C>            <C>
          Deferred tax assets:
            Postretirement benefits                    $  2,839       $   3,105
            Accrued liabilities                           2,773           2,368
            Net operating loss carryforwards             18,655          18,115
            General business tax credits                    574             574
            Pension costs                                 1,386           1,549
            Flood wall capitalization                       429             429
            Other                                           349             206
                                                      ----------      ----------

                                                         27,005          26,346
            Valuation allowance                         (12,959)        (13,410)
                                                      ----------      ----------

                     Net deferred tax assets             14,046          12,936
                                                      ----------      ----------

          Deferred tax liabilities:
            Depreciation and amortization               (14,913)        (18,258)
            Deferred gain on flood proceeds              (6,811)         (7,786)
            Inventories                                  (1,160)         (1,343)
            Discharge of indebtedness                      (422)           (422)
            Other                                          (162)           (473)
                                                      ----------      ----------

                                                        (23,468)        (28,282)
                                                      ----------      ----------
          Total                                        $ (9,422)      $ (15,346)
                                                      ----------      ----------
                                                      ----------      ----------
</TABLE>


                                        F-18

<PAGE>

      SFAS No. 109 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.
      An allowance of $12,959 and $13,410 had been recorded as of June 30,
      1998 and 1999, respectively. The principal reason for the increase in
      the valuation allowance is attributable to separate company net
      operating losses which cannot be utilized for state income tax purposes.

      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 $1,470 and $9,505 of
      cumulative undistributed earnings of ACUK and London Precision for 1998
      and 1999, respectively. U.S. income taxes on such earnings, if
      ultimately remitted to the U.S., might be recoverable as foreign tax
      credits.

      The Company has federal net operating loss carryforwards totaling
      approximately $7,816 at June 30, 1999, which expire in the years 2007
      through 2012. The federal net operating loss carryforwards were
      acquired during the current year and are subject to the ownership
      change rules defined by section 382 of the Internal Revenue code. As
      the result of this event, the Company will be limited in its ability to
      use such net operating loss carry forwards. 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 $48,036 at June 30, 1999, which have no expiration date.
      The utilization of such net operating loss carryforwards are restricted
      to the earnings of specific foreign subsidiaries.

10.   FINANCIAL INSTRUMENTS

      The Company's financial instruments include cash, 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.

      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 other 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 (see
      Note 8) expose the Company to interest rate risk, such that when LIBOR
      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.


                                        F-19

<PAGE>
      A June 30, 1998 and 1999, Company had $65,000 and $88,817,
      respectively, of floating rate debt tied to LIBOR or Prime rates. In
      April 1998, the Company entered into a $15,000 notional amount interest
      rate swap agreement under which the Company will pay a fixed rate of
      5.92% and receive a LIBOR floating rate (5.67188% and 5.0000% at June
      30, 1998 and 1999, respectively). This agreement is a hedge against
      $15,000 of the $65,000 and $88,817 outstanding on the Company's
      unsecured revolving credit facility as of June 30, 1998 and 1999,
      respectively. At June 30, 1998 and 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 $77 and $67, respectively.

      In September 1998, the Company entered into a $40 million notional
      amount interest rate swap agreement under which the Company will pay a
      fixed rate of 5.00% and receive a LIBOR floating rate (5.3275% at June
      30, 1999). Under this agreement, the notional amount is amortized at
      $1,429 per quarter beginning March 31, 1999. At June 30, 1999, this
      agreement is a hedge against $37,142 of the $88,817 outstanding on the
      Company's unsecured 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, is a receipt of $965.

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


                                        F-20

<PAGE>



      At June 30, 1998 and 1999, 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, 1998                               JUNE 30, 1999
                                 ---------------------------------------     ---------------------------------------
                                                         APPROXIMATE                                APPROXIMATE
                                 LOCAL CURRENCY           VALUE(1)             LOCAL CURRENCY         VALUE(1)
                                  (IN THOUSANDS)                             (IN THOUSANDS)
         <S>                     <C>                     <C>                 <C>                    <C>
         U.S. Dollars                    28,239          $ 28,222                   25,740           $ 25,060
         Deutsche Marks                  17,754             9,816                   15,975              8,877
         French Francs                   20,792             3,429                   38,225              6,133
         Swiss Francs                        13                 9                      496                320
         Italian Lira                 3,425,686             1,923                3,564,490              1,959
         Canadian Dollars                 4,805             3,270                      560                362
         Dutch Guilder                    3,613             1,772                    1,854                897
         Swedish Krona                   14,009             1,755                    6,018                718
         Spanish Pesata                 224,713             1,464                   72,463                464
         Austrian Schilling              14,628             1,149                    5,204                425
         Japanese Yen                    63,300               453                    9,807                 80
         Danish Krona                     2,556               371                    1,519                216
         Belgian Franc                   66,123             1,773                    8,601                231
         Finish Marka                       340                62                       21                  4
         Irish Punt                         251               349
         Norwegian Kroner                                                            3,609                451
         Euro                                                                          653                712
                                                        ----------                                   ----------

         Total                                           $ 55,817                                     $ 46,909
                                                        ----------                                   ----------
                                                        ----------                                   ----------

</TABLE>

        (1)  The approximate value is the value of the local currencies
             translated first into the foreign subsidiaries' functional
             currency, at the June 30, 1998 and 1999 spot rates, respectively,
             and then translated to U.S. dollars at the June 30, 1998 and 1999
             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 is an amortizing principal swap that fixes the
      exchange rate on the periodic and final principal cash exchanges and
      initially requires 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 (5.67% at
      June 30, 1998). At June 30, 1998, the foreign currency portion of the
      CIRCUS is an effective hedge of a portion of the net investment in
      Sheffield, has a carrying value of $7, and is recorded as an adjustment
      to the cumulative translation adjustment account in other comprehensive
      income and in other assets. The fair value of the foreign currency
      portion of the CIRCUS, based on amounts that would be paid or received
      by the Company to terminate the currency portion of the CIRCUS is a
      payment of $90 at June 30, 1998. The interest portion of the CIRCUS
      does not qualify for hedge treatment and therefore is required to be
      marked-to-market through current earnings as other income or expense.
      At June 30, 1998, the interest portion of the CIRCUS has a fair value
      of $55 that is included in other assets and other income and represents
      the amount the Company would receive on the interest portion if the
      CIRCUS were terminated.


                                        F-21

<PAGE>

      In September 1999, 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 is being amortized to interest expense over the remaining
      term of the underlying debt obligation to which it was originally
      designated.

      This currency swap entered into in September 1998, like the currency
      portion of the CIRCUS, is an amortizing principal swap that fixes the
      exchange rate on the periodic and final principal cash exchanges. The
      currency swap initially requires 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 is designated as an effective hedge of a
      portion of the Company's net investment in Sheffield and is recorded as
      an adjustment to the cumulative translation adjustment account and as a
      component of other assets. At June 30, 1999, the currency swap has 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).

      FAIR VALUE OF FINANCIAL INSTRUMENTS - As of June 30, 1998 and 1999, 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,
      1998 and 1999 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.

11.   STOCKHOLDERS' EQUITY

      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 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. The Company's Credit Agreement and the Note Purchase Agreement
      (see Note 8) each restrict certain payments by the Company, such as stock
      repurchases, from exceeding certain limits.


                                        F-22

<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 become
      exercisable with respect to one-third of the shares subject to the options
      each year 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. The changes in outstanding options were as
      follows:

<TABLE>
<CAPTION>
                                           SHARES                PRICE RANGE
                                        UNDER OPTION              PER SHARE
         <S>                              <C>                   <C>
         Balance, June 30, 1996            212,200              $12.875-14.750

           Issued                           33,533               15.750-19.125
           Exercised                        (7,600)              13.375-14.500
           Surrendered                      (8,134)              13.375-14.500
                                          ---------

         Balance, June 30, 1997            229,999               12.875-19.125

           Issued                           33,333               15.750-18.625
           Exercised                       (18,060)              12.875-14.500
           Surrendered                     (11,873)              13.375-14.500
                                          ---------

         Balance, June 30, 1998            233,399               12.875-19.125

           Issued                          119,000                8.500-18.000
           Surrendered                     (24,366)               9.875-18.625

         Balance, June 30, 1999            328,033                8.500-19.125
                                          ---------
                                          ---------

         Exercisable
           June 30, 1999                   191,633               12.875-19.125
                                          ---------
                                          ---------

</TABLE>

      At June 30, 1999, options to purchase 346,307 shares were authorized but
      not granted.

      The weighted average exercise price of options outstanding under the
      Incentive Plan at June 30, 1997, 1998 and 1999 is $14.124, $14.536, and
      $13.227, respectively. The weighted average remaining life of options
      outstanding under the Incentive Plan at June 30, 1997, 1998 and 1999 is
      7.5 years, 7.0 years, and 7.1 years, respectively.


                                        F-23

<PAGE>

      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,
      1997, 1998 and 1999, 11,179, 15,793 and 33,033 common shares,
      respectively, were purchased by employees under the Purchase Plan. At
      June 30, 1999, 290,040 shares remained available for grant.

      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 changes in outstanding options
      were as follows:

<TABLE>
<CAPTION>
                                                  SHARES                PRICE
                                               UNDER OPTION           PER SHARE
         <S>                                   <C>                    <C>
         Balance, June 30, 1996                   40,000               $ 13.375
                                                 --------
                                                 --------

         Balance, June 30, 1997                   40,000                 13.375
                                                 --------
                                                 --------

         Balance, June 30, 1998                   40,000                 13.375
                                                 --------
                                                 --------

           Exercised                             (10,000)                13.375
                                                 --------
                                                 --------
           Issued                                 10,000                 19.125
                                                 --------
                                                 --------

         Balance, June 30, 1999                   40,000              13.375-19.125
                                                 --------
                                                 --------

</TABLE>

      At June 30, 1999, options to purchase 40,000 shares were authorized but
      not granted.

      The weighted average exercise price of options outstanding under the
      Director Option Plan at June 30, 1997, 1998 and 1999 is $13.375, $14.813,
      and $14.813, respectively. The weighted average remaining life of options
      outstanding under the Director Option Plan at June 30, 1997, 1998 and
      1999 is 6.8 years, 6.6 years, and 5.6 years, respectively.


                                        F-24

<PAGE>

      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 earnings per share on a pro forma basis would
      have been as follows:

<TABLE>
<CAPTION>
                                           1997           1998           1999
         <S>                            <C>            <C>            <C>
         Net income:
           As reported                  $ 9,728        $ 12,765       $ 9,806
           Pro forma                      9,353          12,578         9,630
         Net income per share:
           As reported:
             Basic                         1.68            1.56          1.26
             Diluted                       1.67            1.55          1.26
           Pro forma:
             Basic                         1.61            1.54          1.24
             Diluted                       1.60            1.53          1.24

</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. Compensation cost for 1999 includes options
      granted during the three-year period ended June 30, 1999.

      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
      Binomial Method pricing model. The weighted-average fair value of stock
      options granted during 1997, 1998 and 1999 was $10.40, $10.07 and $6.87
      per share, respectively. The following weighted average assumptions
      were used for grants during the years ended June 30, 1997, 1998 and
      1999:

<TABLE>
<CAPTION>
                                         1997            1998           1999
         <S>                           <C>             <C>            <C>
         Risk-free interest rate         6.3%            5.2%           5.3%
         Expected life                 10 years        10 years       10 years
         Expected volatility              37%             36%           36%
         Dividend yield                   Nil             Nil           Nil
</TABLE>

12.   EARNINGS PER SHARE

      In February 1997, the FASB issued SFAS No. 128, "EARNINGS PER SHARE".
      This Statement established new standards for computing and presenting
      earnings per share ("EPS") and applies to entities with publicly held
      common stock or potential common stock. It replaces the presentation of
      primary EPS with a presentation of basic EPS and also requires that
      entities with simple capital structures, that is, those with only
      common stock outstanding, shall present basic per-share amounts for
      income from continuing operations and for net income on the face of the
      statement of income. In addition the Statement requires dual
      presentation of basic and diluted EPS on the face of the statement of
      income for entities with complex capital structures and requires a
      reconciliation of the numerator and denominator of the basic EPS
      computation to the numerator and denominator of the diluted EPS
      computation.


                                        F-25

<PAGE>

      The Company was required to adopt SFAS No. 128 effective for the year
      ended June 30, 1998. EPS for the prior periods have been restated
      according to the new standard. Following is a reconciliation of basic
      and diluted EPS for the years ended June 30, 1997, 1998 and 1999,
      respectively.

<TABLE>
<CAPTION>
                                           1997                           1998                          1999
                               ----------------------------- -----------------------------  -----------------------------
                                        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             $ 9,728  5,796,281  $ 1.68  $ 12,765   8,167,285     $ 1.56   $ 9,806   7,790,781    $ 1.26

         Effect of dilutive
           securities - stock options      34,414   (0.01)               51,401      (0.01)
                               -------  ---------  ------  --------   ---------    --------  -------   ---------    ------

         Diluted EPS           $ 9,728  5,830,695  $ 1.67  $ 12,765   8,218,686    $  1.55   $ 9,806   7,790,781    $ 1.26
                               -------  ---------  ------  --------   ---------    --------  -------   ---------    ------
                               -------  ---------  ------  --------   ---------    --------  -------   ---------    ------

</TABLE>

13.   QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

      Quarterly financial information for the periods ended June 30, 1999 and
      1998 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, 1998
                                         -----------------------------------------------------------
                                             FIRST         SECOND         THIRD          FOURTH
                                         -------------- -------------  -------------  --------------
         <S>                             <C>            <C>            <C>            <C>
         Net sales                            $ 68,796      $ 84,435       $ 91,623       $ 128,914
         Gross profit                            9,212        12,663         14,120          19,493
         Operating income                        3,688         5,176          7,638           9,338
         Net income                              1,825         2,390          3,913           4,637
         Earnings per common share:
           Basic                                  0.22          0.29           0.48            0.57
           Diluted                                0.22          0.29           0.48            0.56

</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 (see Note 21).

     (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 (see Note 20).

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


                                        F-26

<PAGE>

14.   PENSION 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>
                                             1997          1998           1999
         <S>                                <C>           <C>            <C>
         Service costs                      $  929        $ 1,018        $  7,734
         Interest costs                      2,389          2,851          14,980
         Actual return on net assets        (3,308)        (8,263)        (15,272)
         Net deferral items                    810          5,141          (3,012)
                                            -------       --------       ---------

                                            $  820        $   747        $  4,430
                                            -------       --------       ---------
                                            -------       --------       ---------

</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,
      1998 and 1999 is presented below.


                                        F-27

<PAGE>

<TABLE>
<CAPTION>
                                                                 1998                                1999
                                               ---------------------------------   -----------------------------------
                                                    Assets         Accumulated          Assets           Accumulated
                                                    Exceed           Benefits           Exceed            Benefits
                                                  Accumulated         Exceed          Accumulated          Exceed
                                                   Benefits           Assets            Benefit            Assets
<S>                                               <C>              <C>                <C>                <C>
Change in Projected beneft obligation

Projected benefit obligation at                   $ (31,151)       $ (6,489)          $ (217,524)           $(24,379)
  beginning of year
Service Cost                                           (761)           (257)              (7,066)               (668)
Interest Cost                                        (2,345)           (506)             (13,334)             (1,646)
Actuarial (loss) gain                                (4,592)           (517)                 583                (107)
Plan Amendments                                                                             (305)               (673)
Foreign currency exchange rate changes                   21             145               11,101                  38
New acquisitions                                   (197,823)           (336)
Benefits paid                                         2,430             278               10,250               2,217
                                                   ---------         ---------           ---------          ---------

Projected benefit obligation at end
  of year                                          (234,221)         (7,682)            (216,295)            (25,218)
                                                   ---------         ---------           ---------          ---------

CHANGE IN PLAN ASSETS

Fair value of plan assets at beginning               30,578           5,783              228,851              19,910
  of year
Actual return on plan assets                          7,517             746               15,803                (531)
New acquisitions                                    205,501
Employer contribution                                 1,677             189                3,698                 599
Foreign currency exchange rate changes                  (53)           (190)             (11,644)                (37)
Benefits paid                                        (2,430)           (278)             (10,250)             (2,217)
Settlments                                             (280)
                                                   ---------         ---------           ---------          ---------
Fair value of plan assets at end of year            242,510           6,250              226,458              17,724

Projected benefit obligation in excess                8,289          (1,432)              10,163              (7,494)
  of plan assets
Unrecognized prior service costs                        105              74                  422                 699
Unrecognized net obligation                             196            (190)                 102                (113)
Unrecognized net (gain)/loss                           (809)            397               (1,570)              3,355
Additional liability                                                   (407)                                    (828)
                                                   ---------         ---------           ---------          ---------

Accrued Pension Asset (Liability)                   $ 7,781         $ (1,558)            $ 9,117            $ (4,381)
                                                   ---------         ---------           ---------          ---------
                                                   ---------         ---------           ---------          ---------

THE ACTUARIAL VALUATION WAS PREPARED
  ASSUMING:
  Discount rate                                        6.75 %                               7.00 %
  Expected long-term rate of return
    on plan assets                                     9.00 %                               9.00 %
  Salary increases per year                            5.00 %                               5.00 %

</TABLE>


                                        F-28

<PAGE>

      In accordance with SFAS No. 87, the Company has recorded an additional
      minimum pension liability for underfunded plans of $407 and $828 at June
      30, 1998 and 1999, 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 charges directly to stockholders'
      equity.

      In addition, the Company sponsors a defined contribution 401(k) benefit
      plan covering certain of its salaried 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 cost of the
      Company's contribution was $452, $535 and $519 for the years ended June
      30, 1997, 1998 and 1999, respectively.

      The Company's subsidiaries, Prospect Foundry, LA Die Casting and Jahn
      Foundry contributed $274, $345 and $302 for the fiscal years ended June
      30, 1997, 1998 and 1999, 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, 1998), no withdrawal liabilities exist.

      The Company also has various other profit sharing plans. Costs of such
      plans charged against earnings were $553, $913 and $1,234 for the years
      ended June 30, 1997, 1998 and 1999, respectively.


                                        F-29

<PAGE>

15.   POSTRETIREMENT OBLIGATION OTHER THAN PENSION

      The Company provides certain health care and life insurance benefits to
      certain of its retired employees. SFAS No. 106, "EMPLOYER'S 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, 1998 and 1999 is as follows:

<TABLE>
<CAPTION>
                                                                     1998          1999
         <S>                                                      <C>            <C>
         CHANGE IN ACCUMULATED POSTRETIREMENT BENEFIT
           OBLIGATION

         Accumulated postretirement benefit obligation
         at beginning of year                                      $ 7,686       $ 9,643
         Service cost                                                  386           480
         Interest cost                                                 599           643
         Actuarial (gain) loss                                       1,426          (455)
         Benefits paid                                                (454)         (447)
                                                                  ---------      --------

         Accumulated postretirement benefit obligation
         at end of year                                              9,643         9,864
                                                                  ---------      --------

         Fair value of plan assets at end of year
                                                                  ---------      --------
         Accumulated postretirement benefit obligation
         in excess of plan assets                                    9,643         9,864
         Unrecognized net loss                                      (2,894)       (2,301)
         Unrecognized prior service cost                               847           715
                                                                  ---------      --------

         Accrued Pension Asset (Liability)                         $ 7,596       $ 8,278
                                                                  ---------      --------
                                                                  ---------      --------

</TABLE>

      Net postretirement benefit cost for the years ended June 30, 1997, 1998
      and 1999 consisted of the following components:

<TABLE>
<CAPTION>

                                                                 1997        1998          1999
         <S>                                                    <C>         <C>          <C>
         Service cost - benefits earned during the year         $ 289       $ 386        $   480
         Interest cost on accumulated benefit obligation          429         599            643
         Amortization of prior service cost                      (132)       (132)          (132)
         Amortization of loss                                      63          69            138
                                                                ------      ------       --------

                                                                $ 649       $ 922        $ 1,129
                                                                ------      ------       --------
                                                                ------      ------       --------

</TABLE>

      The assumed health care cost trend rate used in measuring the accumulated
      postretirement benefit obligation for pre-age 65 benefits as of June 30,
      1999 was 8.4% decreasing each successive year until it reaches 5.5% in
      2019, after which it remains constant. The assumed rate used for post-age
      65 benefits was 8.4% decreasing each successive year until it reaches 5.5%
      in 2019. 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, 1999 by approximately $1,497 (15.2%) and
      the


                                        F-30

<PAGE>

      aggregate of the service and interest cost components of the net
      periodic postretirement benefit cost for the year then ended by
      approximately $200 (17.8%). 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, 1999 by approximately
      $1,206 (12.2%) and the aggregate of the service and interest cost
      components of the net periodic postretirement benefit cost for the year
      then ended by approximately $159 (14.2%). The assumed discount rate used
      in determining the accumulated postretirement obligation as of June 30,
      1997, 1998 and 1999 was 7.75%, 6.75% and 7.5%, respectively, and the
      assumed discount rate used in determining the service cost and interest
      cost for the years ended June 30, 1997, 1998 and 1999 was 7.5%, 7.75% and
      7.5%, respectively.

16.   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 $657, $1,006 and $1,675 for
      the years ended June 30, 1997, 1998 and 1999, respectively. Long-term,
      noncancelable operating leases having an initial or remaining term in
      excess of one year require minimum rental payments as follows:

<TABLE>
         <S>                                <C>
         2000                               $ 2,365
         2001                                 2,125
         2002                                 1,910
         2003                                 1,711
         2004                                 1,570

</TABLE>

17.   MAJOR CUSTOMERS

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

<TABLE>
<CAPTION>


                                        AMOUNT OF NET SALES
                                   -------------------------------------------
                                         1997             1998          1999
                                    ---------         --------       --------
         <S>                        <C>              <C>             <C>
         Customer A                  $ 30,232         $ 27,713       $ 25,219
         Customer B                    12,165           39,999         53,276
                                    ---------        ---------       --------

                                     $ 42,397         $ 67,712       $ 78,495
                                    ---------        ---------       --------
                                    ---------        ---------       --------
</TABLE>

<TABLE>
<CAPTION>
                                               CUSTOMER
                                               ACCOUNTS
                                              RECEIVABLE
                                   -------------------------------

                                        1998             1999
         <S>                        <C>              <C>
         Customer A                 $  4,283         $  2,912
         Customer B                    7,249            7,189
                                    ---------        ---------

                                    $ 11,532         $ 10,101
                                    ---------        ---------
                                    ---------        ---------

</TABLE>


                                        F-31

<PAGE>

18.   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.

      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, 1999,
      1998 and 1997 are as follows:

<TABLE>
<CAPTION>

                      UNITED            GREAT
                      STATES           BRITAIN          CANADA         FRANCE           TOTAL
         <S>        <C>              <C>              <C>            <C>             <C>
         1999       $ 293,691        $ 132,154        $ 45,178       $ 4,536         $ 475,559
         1998         310,235           37,607          25,926                         373,768
         1997         219,239                           26,530                         245,769

</TABLE>

      Long-lived assets located in each of these countries as of June 30, 1999
      and 1998 are as follows:

<TABLE>
<CAPTION>
                      UNITED           GREAT
                      STATES          BRITAIN         CANADA        FRANCE         TOTAL
         <S>        <C>              <C>            <C>             <C>          <C>
         1999       $ 143,668        $ 29,045       $ 22,952        $ 181        $ 195,846
         1998         142,807          24,460          5,367                       172,634

</TABLE>

19.   ADDITIONAL CASH FLOWS INFORMATION

<TABLE>
<CAPTION>
                                                                          1997          1998           1999
         <S>                                                            <C>           <C>            <C>
         Cash paid during the year for:
           Interest                                                     $ 3,346       $ 3,915        $ 8,235
           Income taxes                                                   4,269         7,731          5,751
         Supplemental schedule of noncash investing and financing
           activities:
           Minimum pension liability adjustment, net of income
             tax expense of $187, $0 and $0, respectively,
             recorded to stockholders' equity                              (293)
           Recording of other asset related to pension liability           (209)          365            421
           Recording of additional pension liability                        689          (365)          (421)
           Unexpended bond funds                                           (679)         (519)

</TABLE>

20.   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 used a portion of the insurance proceeds to establish a reserve
      to be used for future repairs due to flood damage. Since that time the
      Company has been charging the reserve balance for costs incurred
      resulting from those repairs.


                                        F-32

<PAGE>



      During 1999, management updated its analysis of the required repairs by
      performing its periodic reevaluation 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 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 as a reduction of selling, general
      and administrative expense in the fourth quarter of 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, 1998 and
      1999, the Company has $5,932 and $1,197 recorded, respectively, as
      reserves for future flood repairs, which have been classified as
      accrued expenses.

21.   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. Other areas
      of the foundry are operational. Molds are currently being produced at
      other foundries until repairs are made.

      Although no lawsuits have been filed, a number of attorneys
      representing the injured and deceased employees have contacted Jahn
      Foundry regarding possible litigation. The Company carries insurance
      for property and casualty damages, business interruption, general
      liability and worker's compensation for itself and its subsidiaries.
      The Company, its property insurance carrier and its insurance broker
      dispute the amount of property insurance coverage for property damages
      suffered in this accident. If this dispute cannot be resolved amicably,
      the Company would vigorously pursue its remedies against both parties.
      The Company recorded a charge of $450 ($750 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, results of operations, or cash flows.

      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.

      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 financial position, results of operations, or
      cash flows.

                                       ******


                                        F-33
<PAGE>

                                  EXHIBIT INDEX


<TABLE>
<CAPTION>

Exhibit
-------
<S>          <C>
 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         By-Laws of Atchison Casting Corporation, a Kansas corporation
             (incorporated by reference to Exhibit 4.2 of the Company's
             Quarterly Report on Form 10-Q for the quarter ended December 31,
             1994)

 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 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

4.2(a)       Note Purchase Agreement dated as of July 29, 1994 between the
             Company and Teachers Insurance and Annuity Association of America
             pursuant to which the Company's 8.44% Senior Notes due 2004 were
             issued (incorporated by reference to Exhibit 4.3 of the Company's
             Annual Report on Form 10-K for the year ended June 30, 1994)

4.2(b)       First Amendment dated as of March 8, 1996 to the Note Purchase
             Agreement dated July 29, 1994, between the Company and Teachers
             Insurance and Annuity Association of America (incorporated by
             reference to Exhibit 4.2 of the Company's Current Report on Form
             8-K dated March 25, 1996)

</TABLE>


<PAGE>

                                  EXHIBIT INDEX

<TABLE>
<CAPTION>

Exhibit
-------
<S>          <C>
 4.2(c)      Second Amendment dated as of May 24, 1996 to the Note Purchase
             Agreement dated July 29, 1994, between the Company and Teachers
             Insurance and Annuity Association of America (incorporated by
             reference to Exhibit 4.2(c) of the Company's Annual Report on Form
             10-K for the fiscal year ended June 30, 1996)

4.2(d)       Third Amendment dated as of April 3, 1998 to the Note Purchase
             Agreement dated July 29, 1994 between the Company and Teachers
             Insurance and Annuity Association of America (incorporated by
             reference to Exhibit 4.2 of Form 8-K filed April 16, 1998)

4.2(e)       Waiver dated as of October 12, 1998 to the Note Purchase
             Agreement dated July 29, 1994 between the Company and Teachers
             Insurance and Annuity Association of America (incorporated by
             reference to Exhibit 4.2 of the Company's Quarterly Report on
             Form 10-Q for the quarter ended September 30, 1998)

4.3          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)

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)

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)

</TABLE>


<PAGE>

                                  EXHIBIT INDEX

<TABLE>
<CAPTION>

Exhibit
-------
<S>          <C>
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 1999

</TABLE>
*  Represents a management contract or a compensatory plan or arrangement.