SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________________
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarter Ended July 3, 1994
Commission File No. 1-10348
_______________________________________
Precision Castparts Corp.
An Oregon Corporation
IRS Employer Identification No. 93-0460598
4600 S.E. Harney Drive
Portland, Oregon 97206-0898
Telephone: (503) 777-3881
_______________________________________
Indicate by checkmark 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
Number of shares of Common Stock, no par value, outstanding
as of August 15, 1994: 13,358,989
Page 1 of 9 Pages
Note: This 10-Q was filed electronically via EDGAR with the
Securities and Exchange Commission.
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PART 1: FINANCIAL INFORMATION
Item 1. Financial Statements
Precision Castparts Corp. and Subsidiaries
Consolidated Statements of Income (1)
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended
___________________________
July 3, 1994 June 27, 1993
___________________________
<S> <C> <C>
Net Sales $110,200 $101,400
Cost of Goods Sold 90,300 85,900
Selling and Administrative Expenses 8,000 7,900
Interest (Income) Expense, Net (200) 500
________ ________
Income Before Provision for Income Taxes12,100 7,100
Provision for Income Taxes (2) 4,600 100
________ ________
Income Before Cumulative Effect
of Accounting Change 7,500 7,000
Cumulative Effect of Change in Accounting
for Postretirement Benefits Other Than
Pensions(net of income tax benefit
of $1,800) (3) -- (2,900)
________ ________
Net Income $7,500 $ 4,100
======== ========
Income (Charge) Per Share: (4)
Before cumulative effect of
accounting change $ 0.57 $ 0.54
Cumulative effect of change in accounting
for postretirement benefits other
than pensions -- (0.22)
________ ________
Net Income Per Common Share $ 0.57 $ 0.32
======== ========
</TABLE>
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Precision Castparts Corp. and Subsidiaries
Consolidated Balance Sheets (1)
(In thousands)
<TABLE>
<CAPTION>
July 3, 1994April 3, 1994
_________________________
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 44,200 $ 55,200
Receivables 76,500 69,000
Inventories 77,400 74,000
Prepaid expenses 900 1,300
Current deferred tax asset 11,500 11,600
_________ ________
Total current assets 210,500 211,100
_________ ________
Property, Plant and Equipment, at cost 248,400
245,100
Less -- Accumulated depreciation (133,200) (128,600)
_________ ________
Net property, plant and equipment 115,200 116,500
Goodwill and Other Assets 23,100 15,300
_________ ________
$348,800 $342,900
========= ========
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities:
Notes payable $ 900 $ 1,000
Current portion of long-term debt 3,800 3,900
Accounts payable 17,000 17,900
Accrued liabilities 52,200 49,300
Income taxes payable 8,600 13,300
_________ ________
Total current liabilities 82,500 85,400
_________ ________
Long-Term Debt, excluding current portion7,000 10,800
Deferred Tax Liability 12,500 11,200
Accrued Retirement Benefits Obligation 6,300
6,000
Other Long-Term Liabilities 9,300 6,700
Shareholders' Investment:
Common stock 13,200 13,100
Paid-in capital 4,300 3,100
Retained earnings 212,800 206,100
Cumulative translation adjustment 900 500
_________ ________
Total shareholders' investment 231,200 222,800
_________ ________
$348,800 $342,900
========= ========
</TABLE>
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Precision Castparts Corp. and Subsidiaries
Consolidated Statements of Cash Flows (1)
(In thousands)
<TABLE>
<CAPTION>
Three Months Ended
___________________________
July 3, 1994 June 27, 1993
___________________________
<S> <C> <C>
Cash Flows from Operating Activities:
Net income $7,500 $ 4,100
Non-cash items included in income:
Depreciation and amortization 6,400 5,200
Deferred taxes 1,400 --
Cumulative effect of
accounting change (3) -- 4,700
Net (increase) decrease in
receivables, inventories and prepaids
over payables and accruals (14,300) 12,200
________ ________
Net cash provided by
operating activities 1,000 26,200
________ ________
Cash Flows from Investing Activities:
Purchase of PCC - Composites (5,100) --
Acquisition of property, plant
and equipment (3,200) (2,200)
Other investing activities, net (300) (1,500)
________ ________
Net cash (used by) investing
activities (8,600) (3,700)
________ ________
Cash Flows from Financing Activities:
Proceeds of long-term debt -- 50,000
Payment of long-term debt (3,900) (25,200)
Proceeds (payments) of notes
payable, net (100) 3,600
Repurchase of common stock -- (117,000)
Sale of common stock 1,300 300
Cash dividends (800) (400)
Other financing activities 100 --
________ ________
Net cash (used by)
financing activities (3,400) (88,700)
________ ________
Net (Decrease) in Cash and
Cash Equivalents (11,000) (66,200)
Cash and Cash Equivalents at
Beginning of Period 55,200 68,900
________ ________
Cash and Cash Equivalents at
End of Period $44,200 $ 2,700
======== ========
</TABLE>
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Notes to the Interim Financial Statements
(1) The consolidated interim financial statements have been
prepared by the Company, without audit and subject to
year-end adjustment, in accordance with generally
accepted accounting principles, except that certain
information and footnote disclosures made in the latest
annual report have been condensed or omitted for the
interim statements. Certain costs are estimated for
the full year and allocated in interim periods based on
estimates of operating time expired, benefit received,
or activity associated with the interim period. The
consolidated financial statements reflected all
adjustments which are, in the opinion of management,
necessary for fair representation.
(2) During the first quarter of fiscal 1994, the Company
recorded a $2.4 million tax benefit, equal to $0.18 per
share, as a result of reaching agreement with the
Internal Revenue Service concerning research and
development tax credits for fiscal years 1990 and 1991.
(3) In the first quarter of fiscal 1994, the Company
adopted Statement of Financial Accounting Standards
(SFAS) No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions." The
Company elected to immediately recognize the transition
obligation, resulting in a one-time charge of $4.7
million, equal to $2.9 million after tax, or $0.22 per
share.
(4) Earnings per share have been computed based on the
weighted average number of shares of common stock
outstanding during the periods. Net income per share
is based on 13,200,000 shares outstanding for the three
months ended July 3, 1994, and 13,000,000 shares
outstanding for the three months ended June 27, 1993.
Fully diluted amounts are not presented because they
are not materially different than amounts shown.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Sales for the first quarter of fiscal 1995 were $110.2
million, up from $101.4 million in the first quarter of last
year. Net income for the quarter of $7.5 million, or $0.57
per share, increased from net income of $4.1 million, or
$0.32 per share, in the same quarter a year ago.
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During the first quarter of last year, the Company recorded
a tax benefit of $2.4 million, equal to $0.18 per share, for
research and development credits for prior fiscal years.
Also during that quarter, the Company adopted the Statement
of Financial Accounting Standards No. 106 to account for the
future cost of retiree health benefits, and recorded a one-
time after tax charge of $2.9 million, equal to $0.22 per
share. Fiscal 1994 earnings, excluding the two unusual
items, would have been $0.36 per share.
In the first quarter of fiscal 1995, PCC acquired the assets
of ACC Electronics, Inc., a manufacturer of advanced
technology metal matrix composite parts, for a purchase
price of $5.1 million. The business operates as PCC
Composites, Inc., and is located in Pittsburgh,
Pennsylvania.
Results of Operations - Comparison Between Three Months
Ended July 3, 1994 and June 27, 1993
Sales increased $8.8 million (8.7%) compared with the first
quarter a year ago. The increases in sales came from
aircraft engine spares, European requirements for engine
components at PCC-France, increased demand for metal
injection molded components for disk drives, and from
medical products. New business for marine turbine
applications and space shuttle engine parts, and new engine
programs with Rolls-Royce and Pratt & Whitney - Canada also
helped to offset lower build rates for new jet engines.
Sales of aerospace and aircraft products accounted for 83%
of total sales, as compared with approximately 85% in the
first quarter of fiscal 1994. Sales of electronics and
computer products now account for nearly 4% of all sales as
compared with 2% last year.
Cost of goods sold for the first quarter of fiscal 1995 was
81.9%, reflecting improvement from the 84.7% reported in the
first quarter last year. The lower cost of sales as a
percent of sales in the first quarter of fiscal 1995
represents the sixth consecutive quarter of improving
margins. Cost reduction, cost efficiencies due to higher
sales volumes, and the effects of restructuring activities
are largely responsible for the improvements in margins.
Interest income in the first quarter of fiscal 1995 was $0.2
million, as compared with interest expense of $0.5 million
in the first quarter a year ago. The interest income in
fiscal 1995 resulted from the strong cash position at the
end of fiscal 1994.
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The effective tax rate in the first quarter of fiscal 1995
was 38%. This compares to last year's effective tax rate of
39.2%, before consideration of the benefit from research and
development tax credits of $2.4 million. The lower current
effective tax rate reflects the impact in last fiscal year
of restating the deferred tax liability for the increase in
federal tax rates from 34% to 35%.
Changes in Financial Condition and Liquidity
Total assets at July 3, 1994 were $348.8 million, an
increase of $5.9 million from April 3, 1994 levels.
Receivables increased $7.5 million from last year-end due to
higher sales volume and somewhat slower collections.
Inventory increased $3.4 million, consistent with the
increasing sales levels throughout the Company. Goodwill
and other assets increased $7.8 million, reflecting the
acquisition of PCC - Composites.
Cash from earnings of $15.3 million was nearly offset by
increases in working capital, yielding a net $1.0 million of
cash provided by operating activities. The $5.1 million in
cash used for the acquisition of PCC - Composites, capital
expenditures of $3.2 million, and debt reductions of $4.0
consumed $12.3 million in cash. As a result, cash was down
$11.0 million in the quarter to $44.2 million.
Total capitalization at July 3, 1994, was $242.9 million,
consisting of $11.7 million of debt and $231.2 million of
equity. The debt-to-equity ratio was 0.05 compared with
0.07 at the end of the prior fiscal year.
PCC believes that future capital requirements for property,
plant and equipment and dividend payments can be funded from
cash or additional borrowings. The Company continues to
evaluate potential acquisitions and believes acquisition
opportunities can be funded from cash, additional borrowings
or the issuance of stock.
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Page 8
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 6. Exhibits and Reports on Form 8-K
Item 6.(a) Exhibits
No exhibits filed for period ending July 3,
1994.
Item 6.(b) No reports on Form 8-K have been filed during
the quarter.
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Page 9
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned thereunto duly
authorized.
PRECISION CASTPARTS CORP.
Registrant
DATE: August 16, 1994 /s/ W.D. Larsson
______________________________
W.D. Larsson
Vice President-Finance and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
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