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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________
FORM 10-K
/X/ Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Fiscal Year Ended April 2, 1995
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 No. 1-10348
__________________
PRECISION CASTPARTS CORP.
(Exact name of registrant as specified in its charter)
STATE OF OREGON 93-0460598
(State or other jurisdiction (I.R.S. Employer Identification
of incorporation or No.)
organization)
4600 S.E. Harney Drive
Portland, Oregon 97206-0898
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number,
including area code: (503) 777-3881
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
Common Stock, New York Stock Exchange
without par value
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
None
__________________
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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 voting stock held by non
affiliates of the registrant as of June 2, 1995 was $547,658,836.
As of the close of business on June 2, 1995 Registrant had
20,267,497 shares of Common Stock, without par value,
outstanding.
Documents Incorporated by Reference
Exhibit 13, the "Financial Section of the 1995 Annual Report
to Shareholders of Precision Castparts Corp." for the year ended
April 2, 1995 is incorporated by reference in Parts II and IV and
appended hereto.
Portions of the Registrant's Proxy Statement dated June 29,
1995 in connection of the 1995 Annual Meeting of Shareholders are
incorporated by reference in Part III.
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FORM 10-K
ANNUAL REPORT
TABLE OF CONTENTS
PART I PAGE
Item 1. BUSINESS 1
Products 3
Sales and Distribution 7
Backlog 9
Competition 10
Research and Development 10
Employees 10
Patents and Trade Secrets 11
Materials and Supplies 11
Government Regulations 13
Environmental Compliance 13
Item 2. PROPERTIES 16
Item 3. LEGAL PROCEEDINGS 18
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS
Executive Officers of the Registrant 18
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS 19
Item 6. SELECTED FINANCIAL DATA 19
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 20
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 20
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE
REGISTRANT 20
Item 11. EXECUTIVE COMPENSATION 20
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT 20
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 21
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K 21
Signatures 25
Financial Statement Schedules 27
Report of Independent Accountants 28
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PART I
ITEM 1. BUSINESS
Precision Castparts Corp. (the "Company"), through its
Structurals Division ("Structurals Division") and its subsidiary
Precision Castparts Corp. - France, S.A. ("PCC-France"), is a
leading supplier to the aerospace industry of large, complex
structural investment castings as well as a leading supplier of
other investment castings from stainless steel and alloys of
nickel, cobalt and titanium. The Company is also one of the
largest manufacturers of precision cast airfoils through its
subsidiary PCC Airfoils, Inc. ("Airfoils Division"). The
Airfoils Division manufactures and sells blades and vanes used as
replacement parts and as original equipment in commercial and
military aircraft jet engines. Castings are also sold for use in
industrial gas turbine, automotive, medical and other commercial
applications.
The investment casting, or "lost wax" process, uses ceramic
molds to manufacture parts with complex shapes, closer tolerances
and finer surface finishes in producing metal parts as compared
to parts manufactured using other methods of casting. A wax or
plastic replica of the part, called the "pattern", is surrounded
by a ceramic material called the "investment" to create a mold.
When the mold is heated, the wax or plastic melts and runs out of
the mold. Molten metal is poured into the resulting cavity. When
the metal cools, the ceramic shell is removed and discarded.
After finishing operations and quality verification, the part is
ready for shipment. In certain airfoil and structural castings,
the wax pattern is formed around a core made of ceramic or other
material, which is later removed, to form complex hollow passages
in the finished casting for air cooling or for other purposes
such as transporting fluids.
The Company, through its subsidiary Advanced Forming
Technology, Inc. ("AFT"), is a leading producer of metal
injection molded ("MIM") parts. The MIM process is a relatively
new and fast-growing technology which is particularly suited to
high volume production of small complicated metal parts for
numerous industries. In the MIM process, powdered metal and
nonmetallic binders are mixed, heated and injected into a die.
Once solidified, the "green" or unfinished part is taken from the
die and placed in a staging fixture. The binder is removed
through either a thermal or solvent extraction, and the part is
sintered in a vacuum furnace, which changes the powdered metal
into a solid.
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On April 6, 1994, PCC acquired the assets of ACC Electronics,
Inc., a manufacturer of advanced technology metal matrix
composite parts, located in Pittsburgh, Pennsylvania. The
business, which is operated as PCC Composites, Inc., uses a
process called Pressure Infiltration Casting ("PIC") to combine
metals and ceramics to create Metal Matrix Composites ("MMCs").
PIC is a multi-step process where the metal is first melted in a
vacuum. Using an inert gas and controlled pressurization, the
metal is then forced into a pre-formed ceramic material to create
a composite. The part is directionally solidified, extracted
from the mold, and finished. MMCs are lightweight, have high
thermal conductivity, and offer tightly controlled thermal
expansion, properties which are believed to be valuable to
electronics and other manufacturing companies.
On March 8, 1995, the Company acquired 100 percent of the
stock of Quamco, Inc., which operates as PCC Specialty Products,
Inc. ("Specialty Products Division" or "SPD"). The Specialty
Products Division has five plants organized into three business
operations, as follows:
The Reed-Rico operation, consisting of the Holden, Bristol and
Gaffney plants, manufactures metalworking tools and machines used
in the cold forming of fasteners and other heading and threading
applications. Customers use the tools and machines made by SPD
to form cold metal stock into specific shapes without removing
material as is necessary with a machining or cutting process.
The resulting parts are used as fasteners in a variety of
industrial and consumer applications.
The Eldorado plant manufactures gundrilling tools and
machines. A gundrilling tool is made of a sharpened carbide tip
precisely aligned with a rigid steel shank. Using high-pressure
coolants, gundrilling tools and machines are used to drill
precise holes in a number of manufacturing processes.
The Merriman plant is distinctive in the powdered metal
industry for its proprietary process for manufacturing helical
and compound gears. These products are made by cold-compacting
powdered metal in a die under very high pressure. After forming,
the parts are sintered at high temperatures to provide the
necessary strength and, finally, are machined to obtain close
tolerances. This process produces higher quality gears than were
previously attainable under alternative means of manufacturing.
In addition, Merriman produces custom-engineered, permanently
self-lubricating bearings used for very high loads involving
intermittent movement in hostile operating environments.
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Products
Approximately 80 percent of PCC's business activity in fiscal
year 1995 was with companies in the aerospace industry. Primary
products for this industry are structural and airfoils investment
castings. The Company's structural investment castings are
stationary components that form portions of the fan, compressor,
combustion and turbine sections of the engine where strength and
structural integrity are critical. Many of the Company's
precision cast airfoils are rotating parts that operate in the
low and high pressure turbine sections of the engine under
extreme temperature and pressure conditions. Most aircraft jet
engines use both the Company's structural and airfoil castings.
The Company manufactures its castings to design specifications
established by its customers.
Aerospace Structural Castings. The Company's Structurals
Division manufactures large, complex structural castings, as well
as a variety of smaller structural castings. These castings are
sold primarily as original equipment to aircraft jet engine
manufacturers. The Structurals Division manufactures investment
castings in various metal alloys that are specified by customers.
As the design of new aircraft engines has emphasized increased
thrust and reduction of noise and exhaust emissions, engine
operating temperatures and pressures have increased. These
conditions require use of engine parts made of alloys that are
able to withstand these operating conditions and provide an
optimum strength-to-weight ratio. Many of these alloys are
particularly suited to investment casting.
The Company continues to experience strong demand from the
aerospace industry for structural parts made from alloys of
titanium, a metal which is lighter than other materials with
comparable performance characteristics. Although the maximum
operating temperature of titanium is lower than that for many
other alloys used in jet engines, there is increasing use of
titanium in all but the hotter parts of the engine because of the
considerable weight savings. Titanium is an exceptionally
difficult metal to cast; however, the Company has developed the
necessary technology and know-how to cast large, complex
investment castings in titanium alloys. The Company operates a
titanium alloy casting plant in Oregon, and also manufactures
titanium alloy castings at its plant in France.
Virtually every manufacturer of jet engines for commercial
aircraft has developed designs to meet the fuel efficiency,
emissions and noise reduction requirements of newly designed
aircraft. Many of these new generation engines, which are
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expected to be built through the next decade and beyond, make
significantly greater use of structural investment castings of
the type manufactured by the Company than did prior engine
designs.
General Electric Company ("GE") has used the Company's large,
complex castings on its jet engines for over 25 years. As the
Company has been able to cast larger and more complex parts, GE
has made increasing use of the Company's castings in its jet
engines. GE's CF6-80 series of engines, for wide-body aircraft
produced by The Boeing Company's Commercial Airplane Group
("Boeing"), Douglas Aircraft Company, a division of McDonnell-
Douglas Corporation ("McDonnell Douglas") and Airbus Industrie
("Airbus"), use a significant number of the Company's complex
structural castings. GE's GE90 jet engine, designed for use on
the new Boeing 777 and other next generation aircraft, uses a
significant number of the Company's complex structural castings.
The Pratt & Whitney Aircraft operation of United Technologies
Corporation ("P&W") has used the Company's complex structural
castings for over 20 years on its military engines, and for over
10 years on its commercial engines. P&W's newest engines, the
PW2000 series used on the Boeing 757 and McDonnell Douglas C-17,
and the PW4000 series used on the Boeing 747, 767 and 777, the
Airbus A300, A310 and A330, and the Douglas MD-11, make extensive
use of castings made by the Company.
Rolls-Royce ("R-R"), which manufactures the RB211-524 for the
Boeing 747 and 767 and the RB211-535 for the Boeing 757, has not
included large castings in its engines in the past. R-R's new
Trent series of engines, for use on the Airbus A330 and the
Boeing 777, uses large castings produced by the Company.
CFM International ("CFMI"), a joint venture of GE and SNECMA
of France, has developed the CFM56 series of engines for the
Boeing 737, E-3 and E-6, the Airbus A319, A320, A321 and A340,
and retrofits of the Boeing KC-135 and Douglas DC-8. A number of
the Company's structural castings are used in these engines.
The Company's structural castings are included in military jet
engines that currently power the F-14, F-15, F-16 and F-18
aircraft, and the next generation of military aircraft planned to
be produced in the mid to late 1990's. This includes engines for
the F-22 Advanced Tactical Fighter, and the C-17 transport for
the US Air Force. Cutbacks in military spending have reduced the
Company's sales to United States government end-users from 29
percent of sales in 1992 to 16 percent in 1995. Between 1994 and
1995, product sales for military applications declined nearly 20
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percent, or 5 percent of total sales. Sales and earnings in
future years could be impacted by further reductions in military
orders.
Castings made by the Company are also included in jet engines
currently used on or under development for a number of foreign
military aircraft, private passenger aircraft, and commercial and
military helicopters.
The Company has one plant in France which produces structural
investment castings from alloys of stainless steel, nickel,
cobalt-chromium and titanium. The French plant is the only
facility of this type in Western Europe with the means to cast
these different alloys in the same plant.
Airfoil Castings. The Company's Airfoils Division manufactures
precision cast airfoils including the stationary vanes and
rotating blades used in the turbine section of the aircraft jet
engines. This engine section is considered the "hot" section,
where temperatures may exceed 2,000 degrees F. These conditions
require use of super alloys and special casting techniques to
manufacture airfoil castings with internal cooling passageways
that provide both high performance and longer engine life. The
airfoil castings are made in accordance with customer
specifications and designs.
The Airfoils Division uses various casting technologies to
produce its turbine airfoils. Conventional casting processes are
employed to produce equiaxed airfoil castings, in which the metal
grains are oriented randomly throughout the casting. A more
advanced process enables the Company to produce directionally
solidified ("DS") airfoil castings, in which the metal grains are
aligned longitudinally. This alignment decreases the internal
stress on the weakest portion of a metal part where the various
grains adjoin, thereby providing increased strength and improved
efficiencies in engine performance over equiaxed parts. An even
more advanced process enables the Company to produce single
crystal airfoil castings, which consist of one large super alloy
crystal without grain boundaries. Single crystal castings provide
greater strength and performance characteristics than either
equiaxed or DS castings, as well as longer engine life. These
airfoils are used both in new and redesigned engines,
particularly in jet engines used in military applications where
performance requirements are highest and blade life is shorter
than in commercial engines.
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The Company's airfoils are qualified for use in most
commercial aircraft jet engines, including CFMI's CFM56 series,
P&W's PW4000, PW2000 and JT9D, as well as GE's CF6 series and the
GE90 engine. The Company also manufactures airfoils for many
military jet engines, including the F100, F101, F110, F117, F119,
F404 and F414.
Other Investment Casting Products. The Company's strategy for
continuing profitable growth has included pursuing new
opportunities for the Company's existing technologies. The
Company has been expanding its application of the investment
casting technology in markets such as industrial gas turbines,
automotive, medical prostheses and industrial applications. In
fiscal 1995, the growth in investment castings for non-aerospace
applications increased nearly 25 percent from the prior year,
which contributed to the Company's 37 percent overall increase in
non-aerospace sales from 1994 to 1995.
AFT Products. Metal injection molding ("MIM") is a technology
that enables the production of small, complex, net shape metal
parts at a significant cost savings over machining, investment
casting or other net shape and near net shape processes. It is a
hybrid manufacturing process which combines elements from various
other fabrication methods, including powder metal processing,
investment casting and plastic injection molding. MIM provides a
technological advantage over other fabrication methods in its
ability to produce small complex parts with thin wall sections,
sharp corners, edges and other interior details that cannot be
produced economically by other processes. AFT's MIM parts have
been used in electronic, medical, firearms, military ordnance,
automotive, fiber optic, aerospace, and other industrial
products.
Composite Products. PCC Composites' pressure infiltration
casting process produces lightweight, net shape metal matrix
composite parts with high thermal conductivity and tightly
controlled thermal expansion. These attributes, which
significantly increase heat dissipation, are important for
applications such as electronics. Extremely intricate shapes can
be produced with this manufacturing process, thereby broadening
its application to a number of general industrial uses.
SPD Products. Under the brand name "Reed-Rico," the Company
designs, manufactures and distributes heading tools, threading
tools, threading machines and attachments. Manufacturers use
these products to form a variety of fasteners and threaded parts.
Customers are mainly industrial companies who serve the
automotive, appliance, construction, farm equipment and aerospace
industries.
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Gundrilling tools and machines are distributed under the
"Eldorado" name. The gundrilling process is used to drill high
quality holes to very close tolerances. This process is widely
used in products such as turbine engines, engine blocks, cylinder
heads, transmission shafts, connecting rods and medical
prostheses.
The Company, at it's Merriman facility, manufactures and
distributes specialty powdered metal gears and other components
for the automotive, appliance, power tool and power transmission
industries. Merriman also designs, manufactures and distributes
bearings under the brand name "Lubrite." These bearings, which
are custom-engineered and permanently self-lubricating, are used
to help maintain structural integrity in hostile operating
environments such as off-shore drilling rigs, large commercial
buildings, bridges and rapid-transit vehicles.
Sales and Distribution
During the fiscal year ended April 2, 1995, the Company served
approximately 350 customers. A year ago, the Company did
business with approximately 200 customers. The increase in the
number of customers resulted primarily from the SPD acquisition.
The Company's major customers continue to be a relatively few
number of U.S. and European jet engine manufacturers. Most major
aerospace customers purchase both structural and airfoil
castings. Two customers, GE and P&W, accounted for approximately
38 and 46 percent of net sales during the Company's 1995 and 1994
fiscal years. In addition, sales to certain other customers
include parts which ultimately are included in GE and P&W
engines. Including these other sales, GE and P&W account for
approximately 67 percent of net sales in 1995 and 75 percent in
1994. No other customer accounted for more than 10 percent of
net sales.
The table below sets forth the relative contribution to sales
of components for the aerospace industry over the past three
years. Data for 1993 and 1994 has been restated to conform to
the 1995 classifications.
Fiscal Year
________________
Sales 1993 1994 1995
____ ____ ____
Aerospace 87% 84% 79%
Other 13% 16% 21%
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The relative importance of aerospace-related business
(particularly aircraft) subjects the Company's business to the
underlying trends within the aerospace industry. Historically,
both commercial and military aircraft sales have shown cyclical
patterns.
While the Company's large, complex structural castings are
generally designed as permanent engine parts and sold as original
equipment to the engine manufacturers, the airfoil components in
the engine have shorter useful lives and are replaced
periodically in the course of engine maintenance. As a result,
sales of the Airfoils Division are affected to a lesser degree by
the cyclical patterns of aircraft sales than are sales of the
Structurals Division. Based upon estimates provided by its major
customers, the Company believes that approximately 50 percent of
its sales of airfoils are used as replacement parts.
Fiscal 1995 saw the continuation of the downturn in the
aerospace industry. Worldwide, the industry has been adversely
affected by recessions, slower growth in revenue passenger miles,
debilitating airline price wars, and resulting cutbacks in demand
from the airline industry. Compounding the situation, demand for
military aircraft has lessened as a result of spending cuts.
Since approximately 80 percent or more of PCC's business has
historically come from the aerospace industry, that industry's
trends have had a direct effect on the Company. In 1995, the
Company's sales of investment castings for aerospace and aircraft
gas turbine engines declined $9.4 million (3%) from 1994. This
decline was more than offset by sales of other industrial and
commercial products, which increased $25.4 million (37%) in 1995,
reflecting the Company's continued diversification into non-
aerospace markets. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations in Exhibit 13, the
"Financial Section of the 1995 Annual Report to Shareholders of
Precision Castparts Corp."
The portion of the Company's net sales for United States
government end-use was 16 percent in 1995, 21 percent in 1994 and
24 percent in 1993. Annual sales to customers outside of the
United States, most of which are in western Europe, were $126.8
million in 1995, $107.2 million in 1994 and $111.7 million in
1993, accounting for 29 percent, 26 percent and 24 percent of the
Company's sales in those years.
The Company's sales of investment castings are made through
sales personnel located in each plant and through field sales
representatives located at U.S. and international locations near
the Company's major customers. Due to the sophisticated nature
of the product, the Company's sales effort requires that both
field sales representatives and other technical personnel work
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closely with customers to identify and assist in the development
of new castings and to provide other services which are necessary
to obtaining new and repeat production orders. Company
representatives are often on-site at customer locations to
support the Company's sales process.
MIM parts, composites parts, powdered metal parts and
industrial tools and machines are sold by both the Company's
sales forces and manufacturers' representatives in the U.S.,
Europe and Southeast Asia.
In fiscal 1992, PCC formed a joint venture with Hitachi
Metals, Ltd. for the manufacture of MIM parts in Japan. PCC owns
a 30 percent interest in this joint venture, which began
operations early in fiscal 1993. To date, this joint venture has
not had material sales or a significant effect on PCC's
consolidated results.
Backlog
The following table sets forth the Company's backlog of
unfilled orders believed to be firm at the end of each of its
last three fiscal years.
March 28, April 3, April 2,
1993 1994 1995
______ ______ ______
$367.3 $280.2 $313.2
The backlog reflects a change in customer order placement
patterns whereby orders are now placed closer to the required
delivery date than they were in prior years. Approximately 72.7
million in 1995, $82.0 million in 1994 and $109.0 million in 1993
of the Company's backlog in these years consisted of orders
scheduled for delivery more than one year in the future.
Sales to customers are made on individual purchase orders.
Most of the Company's orders are subject to termination by the
customer upon payment of the cost of work in process plus a
related profit factor. Historically, the Company has not
experienced significant order cancellations.
For fiscal 1996, the Company expects a continuation of the
down-cycle in the aerospace industry. However, further growth is
expected in non-aerospace markets. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations -
Outlook" in Exhibit 13, the "Financial Section of the 1995 Annual
Report to Shareholders of Precision Castparts Corp."
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Competition
The Company is subject to competition in all of the markets it
serves. Parts similar to those made by the Company can be made
by competitors using either the same types of manufacturing
processes or other forms of manufacturing. While the Company
believes its manufacturing processes, technology and experience
provide advantages to customers, such as high quality,
competitive prices, and physical properties which meet more
stringent demands, alternative forms of manufacturing can be used
to manufacture many of the parts made by the Company.
Despite intense competition, the Company believes it is the
number one or two supplier in all of its markets served. Several
factors, including many long-standing customer relationships,
technical expertise, state-of-the-art facilities and dedicated
employees, aid the Company in maintaining its competitive
advantages.
Research and Development
The Company maintains separate research and development
departments for its Airfoils Division and its Structurals
Division, where the majority of research occurs. The research
and development effort at these locations is directed at
developing new manufacturing processes and improving current
processes. Total research and development expenditures amounted
to $3.1 million in 1995, $5.2 million in 1994 and $4.3 million in
1993. A substantial amount of the Company's technological
capability is the result of engineering work performed in
connection with process development and production of new
castings pursuant to customer orders. This engineering work is
charged to the cost of the production and is not included in
research and development expenditures.
Employees
At April 2, 1995, the Company employed 5,166 people, including
1,996 people at the Structurals Division, 1,961 people at the
Airfoils Division, 263 people at PCC-France, 111 people at AFT,
24 people at PCC Composites, 794 people at SPD and 17 people in
corporate functions.
Approximately 550 of the employees at the Minerva Plant are
covered by a collective bargaining agreement with the Metal
Workers Alliance which expires in June of 1997. All employees of
PCC-France are covered by a collective bargaining agreement.
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Certain of the employees at the SPD Merriman plant are covered by
collective bargaining agreements. An agreement with the
International Association of Machinists ("IAM") covering
approximately 130 employees, expires June 30, 1995; and an
agreement with the Allied Workers International Union covering
fewer than 10 employees, expires July 31, 1995. Negotiations are
currently underway on a new contract with the IAM. Management
anticipates that new contracts will be successfully negotiated
with both of these unions. None of the Company's other employees
are covered by a collective bargaining agreement. On May 24,
1995, a petition was filed by the United Steelworkers of America
seeking to represent production and maintenance employees at the
Structurals Division. An election is scheduled to be conducted
by the National Labor Relations Board on July 27 - 28, 1995. At
this time, management does not have sufficient information to
determine the probable outcome of the unionizing activities, nor
the effect on operations, if any, in the event that the
Structurals Division employees were to be represented by the
union.
Patents and Trade Secrets
Prior to 1988, the Company had not applied for patents
covering its structural casting processes in the belief that
the processes are more securely protected by retaining the
information as trade secrets and avoiding the technical
disclosures required in patent applications. For similar
reasons, AFT has not applied for patents covering its MIM
process. The Company's trade secrets consist principally of
technology developed over years of experience in the manufacture
of complex structural investment castings and MIM parts. Since
1988, the Company has applied for or been issued a number of
patents relating to new technology and processes developed at the
Structurals and Airfoils Divisions.
In connection with its acquisitions of the Airfoils Division,
PCC Composites and SPD, the Company acquired a number of U.S. and
foreign patents. The Company also acquired certain rights and
obligations under license agreements. The Company receives no
significant royalty income from patents.
Materials and Supplies
The primary materials used by the Company are metal alloys,
tool grade steel, powdered metals, waxes, ceramics, X-ray film
and miscellaneous foundry and manufacturing supplies. These
materials have generally been available in adequate quantities to
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fill production needs, although prices for some items, primarily
metals, have fluctuated significantly in the past. In 1995, the
Structurals Division's primary supplier of X-ray film
discontinued operations. As a result, PCC filed for and received
an injunction to ensure a continuing supply of film until another
supplier could be qualified, and then entered an arbitration
proceeding with other customers of the film supplier, in which
proceeding the available film supplies were allocated among the
customers, including PCC. The Company believes that its
allocation of the film supply is sufficient for the transition
period to the new film supplier. The Structurals Division is
working with X-ray film suppliers and anticipates vendors will be
qualified and able to provide for the continuing needs of the
Division.
In addition to purchases of materials from outside suppliers,
the Company manufactures its own wax blends, ceramic blends, and
metal alloys. Many of the processes used in manufacturing these
materials were developed by the Company through its own research.
The Company's Structurals and Airfoils Divisions are each
highly integrated, including all facets of the production of
precision structural and airfoil investment castings. The
Company vacuum melts metals and other elements to create more
than 50 varieties of nickel- and cobalt-based alloy blends.
These superalloys are designed to endure extreme temperature and
stress conditions and are subjected to high purity standards.
The Company also blends the ceramic materials that are used in
forming shell molds and ceramic cores. The Company operates one
plant specializing in production of ceramic materials from basic
minerals such as zircon and fused silica. Another plant
manufactures the preformed ceramic cores that the Company uses in
its turbine airfoil castings to produce complex internal cavities
and air cooling passages that extend the life of airfoils and
improve engine performance. Currently, approximately half of the
preformed ceramic cores used by the Airfoils Division are
produced by the Company. The Structurals Division produces the
majority of its wax formulations, whereas the Airfoils Division
purchases most of its wax products from suppliers.
Commercial deposits of certain metals, such as cobalt, nickel,
chromium, columbium and molybdenum, which are required for the
alloys used in the Company's castings, are found only in a few
parts of the world. The availability and prices of these metals
are influenced by private or governmental cartels, changes in
world politics, unstable governments in exporting nations, and
inflation. Similarly, supplies of tool grade steel used by SPD
are also subject to variation in availability and pricing. These
changes in the supply and cost of metals generally affect all
companies using these materials, including the Company and its
competitors.
Page 12
</Page>
<PAGE>
Government Regulations
Certain of the Company's products are manufactured and sold
under U.S. government contracts or subcontracts. As are all
companies that provide products or services to the federal
government, the Company is directly and indirectly subject to
various federal rules, regulations and orders applicable to
government contractors. Certain of these government regulations
relate specifically to the vendor-vendee relationship with the
government, such as the bidding and pricing rules. Under
regulations of this type the Company must observe certain pricing
restrictions, produce and maintain detailed accounting data, and
meet various other requirements. The Company is also subject to
a number of regulations affecting the conduct of its business
generally. For example, the Company must adhere to standards
established by the Office of Federal Contract Compliance Programs
and the Occupational Safety and Health Act relating to labor
practices and occupational safety standards. Violation of
applicable government rules and regulations could result in civil
liability, in cancellation or suspension of existing contracts or
in ineligibility for future contracts or subcontracts funded in
whole or in part with federal funds.
Environmental Compliance
The Company generates, as do all investment casting
manufacturers, certain waste materials which must be disposed of,
including certain materials for which disposal requires
compliance with environmental protection laws and regulations.
The Company conducts its operations at industrial sites where
hazardous materials have been managed for many years, including
periods before careful management of these materials was required
or generally believed to be necessary. Consequently, the Company
is subject to various environmental laws that impose compliance
obligations and can create liability for historical releases of
hazardous substances.
During the period 1970-1973, the Company contracted for
disposal of certain industrial waste at the Pasco Landfill
located near Pasco, Washington. This landfill has been
designated as a Superfund Site under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980,
as amended. The Washington State Department of Ecology
("Ecology")notified the Company that is has determined that the
Company is a Potentially Liable Party ("PLP") for the Pasco
Landfill Superfund Site. The Company joined with approximately
40 other PLPs that sent industrial wastes to the site, as well as
with the owners, operators and other PLPs, to fund the initial
Remedial Investigation and Feasibility Study, which was completed
Page 13
</Page>
<PAGE>
and accepted by Ecology in March 1994. In April, 1995, the PLPs
and Ecology agreed on a Phase II Remedial Investigation/
Feasibility Study Work Plan to study potential remediation
alternatives.
In 1989, the Oregon Health Division (the "Health Division")
alleged that the Company discharged low level radioactive
material to the Portland city sewer in violation of the Company's
radioactive materials license. The City of Portland also has
alleged that the discharges violated the Company's discharge
permit. Although the Company contested the alleged violations,
it undertook extensive cleaning of portions of the sewer system
under a consent agreement with the City and the Health Division.
In 1994, the Health Division revived the alleged violation,
asserting that the issue was not fully resolved by the cleaning.
The Health Division has requested additional investigation and
further sewer cleaning. The Company continues to contest the
alleged violation, but is conducting an investigation of its
onsite sewer lines to determine whether additional cleaning is
necessary to prevent further discharge of radioactive materials
into the City's sewer.
In 1992 the Company's Oregon facilities were subject to a
multi-media inspection by the United States Environmental
Protection Agency ("EPA"). A multi-media inspection is a
comprehensive investigation of the Company's compliance with all
federal environmental laws. In December 1992, EPA issued a
notice of violation to the Company, alleging certain violations
of the Clean Air Act. Although the EPA has indicated an intent
to assess civil penalties in connection with this notice of
violation, the notice itself does not include a proposed penalty
amount. The Company has asserted defenses to the alleged
violations, and the EPA has taken no further action. The Company
cannot estimate the level of fines that could be assessed.
In fiscal year 1993, the Company recorded a provision of $9.9
million to provide for environmental clean-up. The Company
believes the remaining reserve is adequate for the identified
clean-up.
As a result of the acquisition of Quamco, Inc. (now SPD) in
March 1995, PCC acquired the properties and facilities of Quamco.
These properties and facilities had been operated as industrial
manufacturing facilities for many years and had used materials
now recognized as hazardous. Consequently, there are several
environmental remediation efforts in place at SPD facilities. In
the acquisition of SPD, PCC received certain environmental
indemnities from the prior owners. The prior owners of SPD have
Page 14
<PAGE>
<PAGE>
agreed to indemnify PCC for environmental losses incurred by
Quamco up to a maximum of $35.2 million if the claims are made
prior to May 15, 1996, subject to a $150,000 deductible for
claims relating to previously owned properties. A $150,000
deductible also applies to claims relating to the expansion of
scope of environmental remediation efforts on properties
currently owned by SPD. In future years, through March 8, 2000,
the indemnity is limited to an aggregate of $5.0 million. No
claims have been made to date. The Company believes its reserves
and the indemnities provided by the former owners of SPD are
adequate to protect the Company from any adverse economic effects
of environmental liabilities at SPD facilities.
Page 15
</Page>
<PAGE>
ITEM 2. PROPERTIES
The Company's manufacturing plants and administrative
offices, along with certain information concerning the
products and facilities at April 2, 1995, are as follows:
<TABLE>
<CAPTION>
Building
Space
Plant and Location Principal Products (sq. ft.)
<S> <C> <C>
STRUCTURALS DIVISION AND CORPORATE
Large Structurals
Business Operation Large castings 373,000*
Portland, Oregon
Titanium Business Operation Titanium castings 277,000*
Milwaukie, Oregon
Small Structurals Small and 204,000
Business Operation medium-sized
Clackamas, Oregon castings
Division Distribution Center Shipping and 47,000**
Clackamas, Oregon warehousing
Administrative Center Research and 52,000
Clackamas, Oregon development, division
administration and
corporate staff
AIRFOILS DIVISION
Minerva Plant Equiaxed, single 288,000
Minerva, Ohio crystal and DS
airfoils castings
Crooksville Plant Airfoils finishing 44,000
Crooksville, Ohio for Minerva Plant
SMP Plant Single crystal and 119,000
Wickliffe, Ohio DS airfoil castings
Douglas Plant Equiaxed airfoil 135,000
Douglas, Georgia castings
Mentor Plant Equiaxed, single 65,000**
Mentor, Ohio crystal and DS
airfoil castings
Page 16
</Page>
<PAGE>
SRI Plant Preformed ceramic 73,000
Cleveland, Ohio cores
Sanford Plant Ceramic materials 66,000
Sanford, North Carolina and core finishing
for SRI Plant
Prototype Foundry Research and 15,000
Minerva, Ohio development;
experimental
production
Administrative Offices Administration 13,000**
Beachwood, Ohio
SPECIALTY PRODUCTS DIVISION
Reed-Rico Holden Plant Threading tools and 144,000
Holden, Massachusetts machines
Reed-Rico Bristol Plant Heading tools 46,000
Bristol, Rhode Island
Reed-Rico Gaffney Plant Heading tools 10,000
Gaffney, South Carolina
Eldorado Plant Gundrilling tools 60,000
Milford, Connecticut and machines
Merriman Plant Powdered metal parts 193,000
Hingham, Massachusetts and self-lubricating
structural bearings
PCC - FRANCE
PCC-France Plant Medium and large 66,000
Ogeu, France sized castings,
Titanium castings
ADVANCED FORMING TECHNOLOGY
AFT Plant Powdered metal 40,000**
Longmont, Colorado injection molded
molded parts
PCC - COMPOSITES
PCC - Composites Plant Metal matrix 14,800**
Pittsburgh, Pennsylvania composite parts
* 76,000 sq. ft. of the Large Structurals Business Operation
plant and 55,000 sq. ft. of the Titanium Business Operation
plant are leased.
** Entire facility is leased.
Page 17
</Page>
<PAGE>
The majority of the Company's facilities are owned. The
Mentor plant is leased with an option to purchase; the current
lease term expires in 2000. The AFT plant lease expires in 1997.
The Company's existing manufacturing capacity is more than
adequate to meet current market demand for its products.
ITEM 3. LEGAL PROCEEDINGS
For a description of claims relating to environmental matters,
see "Item 1. Business -- Environmental Compliance."
Various lawsuits arising during the normal course of business
are pending against the Company. In the opinion of management,
the outcome of these lawsuits will have no significant effect on
PCC's consolidated financial position.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
Executive Officers of the Registrant (a)
</TABLE>
<TABLE>
<CAPTION>
Officer Position Held
Name Since Age With the Registrant
<C> <C> <C> <C>
William C. McCormick (b) 1985 61 Chairman, President
and Chief Executive
Officer
Peter G. Waite (c) 1980 51 Executive Vice
President-
Airfoils Division
Mark Donegan (d) 1992 38 Executive Vice
President-
Structurals
Division
William D. Larsson (e) 1980 50 Vice President and
Chief Financial
Officer
Roy M. Marvin (f) 1967 64 Vice President-
Administration and
Secretary
Page 18
</Page>
<PAGE>
<FN>
__________
(a) The officers serve for a term of one year and until their
successors are elected.
(b) Elected Chairman in 1994, President and Chief Executive
Officer in 1991 and Director in 1986. Served as President
and Chief Operating Officer from 1985-1991.
(c) Elected Executive Vice President -- Airfoils Division in
1986.
(d) Elected Executive Vice President -- Structurals Division in
1992.
(e) Elected Vice President -- Finance in 1980. Named Vice
President and Chief Financial Officer in 1993.
(f) Elected Secretary in 1983, Vice President -- Administration
in 1980, and Director in 1967. Served as Treasurer from
1967 - 1993.
</TABLE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
As of June 2, 1995, there were approximately 2290 shareholders
of record of the Company's common stock. The Company's common
stock is listed on the New York Stock Exchange under the symbol
PCP. It is also traded on the Midwest Stock Exchange, the
Pacific Stock Exchange and the Philadelphia Stock Exchange.
Additional information with respect to Market for the
Registrant's Common Stock and Related Stockholder Matters,
including dividends, is incorporated herein by reference to the
Five-Year Summary of Selected Financial Data and the Quarterly
Financial Information in Exhibit 13, the "Financial Section of
the 1995 Annual Report to Shareholders of Precision Castparts
Corp." The Company expects to continue to pay quarterly cash
dividends, subject to its earnings, financial condition and other
factors.
ITEM 6. SELECTED FINANCIAL DATA
Information with respect to Selected Financial Data is
incorporated herein by reference to the Five-Year Summary of
Selected Financial Data in Exhibit 13, the "Financial Section of
the 1995 Annual Report to Shareholders of Precision Castparts
Corp."
Page 19
</Page>
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Information with respect to Management's Discussion and
Analysis of Financial Condition and Results of Operations is
incorporated herein by reference to Management's Discussion and
Analysis of Financial Condition and Results of Operations in
Exhibit 13, the "Financial Section of the 1995 Annual Report to
Shareholders of Precision Castparts Corp."
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Information with respect to Financial Statements and
Supplementary Data is incorporated herein by reference to pages
32 through 62 of Exhibit 13, the "Financial Section of the 1995
Annual Report to Shareholders of Precision Castparts Corp."
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information with respect to Directors of the Company is
incorporated herein by reference to "Proposal 1: Election of
Directors" continuing through "Report of the Compensation
Committee on Executive Compensation" in the Company's Proxy
Statement dated June 29, 1995 for the 1995 Annual Meeting of
Shareholders of the Registrant. The information required by this
item with respect to the Company's executive officers follows
Part I, Item 4 of this document.
ITEM 11. EXECUTIVE COMPENSATION
Information with respect to Executive Compensation is
incorporated herein by reference to "Compensation of Executive
Officers" in the Proxy Statement dated June 29, 1995 for the 1995
Annual Meeting of Shareholders of the Registrant.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Information with respect to Security Ownership of Certain
Beneficial Owners and Management is incorporated herein by
reference to "Security Ownership of Certain Beneficial Owners"
and "Security Ownership of Directors and Executive Officers" in
the Proxy Statement dated June 29, 1995 for the 1995 Annual
Meeting of Shareholders of the Registrant.
Page 20
</Page>
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K
(a)(1) Financial Statements
The following financial statements incorporated by
reference from Exhibit 13, the "Financial Section of the
1995 Annual Report to Shareholders of Precision
Castparts Corp.," are filed as part of this report.
<TABLE>
<CAPTION>
Page in Exhibit 13,
the "Financial Section
of the 1995 Annual Report
to Shareholders
Statement of Precision Castparts Corp."
<S> <C>
Consolidated Statements of Income 32-33
Consolidated Balance Sheets 34-35
Consolidated Statements of Cash Flows 36-38
Consolidated Statements of Shareholders'
Investment 39-40
Notes to Financial Statements 41-58
Report of Independent Accountants 59
</TABLE>
(a)(2) Financial Statement Schedule
The following schedule is filed as part of this report:
Schedule II -- Valuation and Qualifying Accounts
Report of Independent Accountants on Financial Statement
Schedule
(b) A Current Report on Form 8-K was filed March 23, 1995
reporting under Item 2 thereof the acquisition of Quamco,
Inc. Amendment No. 1 on Form 8-K/A was filed on May 22, 1995
including the following financial statements:
1. Financial Statements of Business Acquisition
Report of Independent Public Accountants.
Page 21
</Page>
<PAGE>
Quamco, Inc. Consolidated Balance Sheets - October 30,
1994 and October 31, 1993.
Quamco, Inc., Consolidated Statements of Operations for
the Years Ended October 30, 1994 and October 31, 1993.
Quamco, Inc. Consolidated Statements of Cash Flows for
the Years Ended October 30, 1994 and October 31, 1993.
Quamco, Inc. Notes to Consolidated Financial Statements.
2. Interim Financial Statements
Quamco, Inc. Consolidated Balance Sheet - January 29,
1995 (unaudited).
Quamco, Inc. Consolidated Statement of Operations for
the Three Months Ended January 29, 1995 (unaudited).
Quamco, Inc. Consolidated Statement of Cash Flows for
the Three Months Ended January 29, 1995 (unaudited).
3. Pro Forma Financial Information
Pro Forma Combined Balance Sheet January 1, 1995
(unaudited).
Notes to Pro Forma Combined Balance Sheet (unaudited).
Pro Forma Combined Income Statements for the Year Ended
April 3, 1994 (unaudited) and the Nine Months Ended
January 1, 1995 (unaudited).
Notes to Pro Forma Combined Income Statements
(unaudited).
Page 22
</Page>
<PAGE>
(a)(3) Exhibits
<TABLE>
<S> <C> <C>
(3)A -- Restated Articles of Incorporation
of
Precision Castparts Corp.
(Incorporated herein by reference to Exhibit
(3)A in the Form 10-K dated April 3, 1994.)
(File number 1-10348)
(3)B -- Bylaws of Precision Castparts Corp.
(Incorporated herein by reference to Exhibit
(3)B in the Form 10-K dated April 3, 1994.)
(File number 1-10348)
(4) -- Note Purchase Agreement, dated as
of July 20, 1987 between Precision Castparts
Corp. and The Prudential Insurance Company of
America. (Incorporated herein by reference to
Exhibit (4) in the Form 10-K dated April 3,
1994.) (File number 1-10348)
(10)A -- Precision Castparts Corp.
Revised and Restated Stock Incentive Plan as
amended. (Incorporated herein by reference to
Exhibit (10)A in the Form 10-K dated April 3,
1994.) (File number 1-10348)
(10)B -- Precision Castparts Corp. Non-
Employee Directors' Stock Option Plan.
(Incorporated herein by reference to Exhibit
(10)B in the Form 10-K dated April 3, 1994.)
(File number 1-10348)
(10)C -- Precision Castparts Corp. 1994
Stock Incentive Plan. (Incorporated herein
by reference to Appendix A in Registrant's
June 20, 1994 Proxy Statement to
Shareholders.) (File number 1-10348)
(10)D -- Precision Castparts Corp.
Nonemployee Directors' Deferred Compensation
Plan dated January 1, 1995.
(10)E -- Precision Castparts Corp.
Executive Deferred Compensation Plan dated
January 1, 1995
Page 23
</Page>
<PAGE>
(11) -- Statement re Calculation of
Earnings Per Share for the Year Ended April
2, 1995.
(13) -- Financial Section of the 1995
Annual Report to Shareholders of Precision
Castparts Corp. for the year ended April 2,
1995.
(21) -- Subsidiaries of Precision Castparts
Corp.
(23) -- Consent of Independent Accountants.
(27) -- Financial Data Schedule
(b)
(c) See (a) (3) above.
(d) See (a) (2) above.
Page 24
</Page>
<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.
PRECISION CASTPARTS CORP.
By /s/ WILLIAM C. MCCORMICK
_____________________________
William C. McCormick
Chairman of the Board,
Director, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the Registrant in the capacities and on the dates
indicated.
</TABLE>
<TABLE>
<CAPTION>
Signature Title
____________________________________________________________
<S> <C>
As officers or directors of
PRECISION CASTPARTS CORP.
/s/ WILLIAM C. MCCORMICK Chairman of the Board,
___________________________ Director, President and Chief
William C. McCormick Executive Officer
/s/ WILLIAM D. LARSSON Vice President and Chief
___________________________ Financial Officer
William D. Larsson (Principal Financial and
Accounting Officer)
/s/ ROY M. MARVIN Director and Vice President-
___________________________ Administration and Secretary
Roy M. Marvin
/s/ PETER R. BRIDENBAUGH Director
___________________________
Peter R. Bridenbaugh
/s/ EDWARD H. COOLEY Director
___________________________
Edward H. Cooley
/s/ DON C. FRISBEE Director
___________________________
Don C. Frisbee
Page 25
</Page>
<PAGE>
/s/ DON R. GRABER Director
___________________________
Don R. Graber
/s/ HOWARD W. HILL Director
___________________________
Howard W. Hill
/s/ KENNETH H. PIERCE Director
___________________________
Kenneth H. Pierce
/s/ STEVEN G. ROTHMEIER Director
___________________________
Steven G. Rothmeier
/s/ DWIGHT A. SANGREY Director
___________________________
Dwight A. Sangrey
Page 26
</TABLE>
</Page>
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE II
PRECISION CASTPARTS CORP. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
For the years ended
(000's Omitted)
Column A Column B Column C Column D Column E Column F
________________________________________________________________________________
Additions Uncollectible Additions
Balance at Charged to Accounts due to Balance
Beginning Additions Written Business at End
Classification of Period at Cost Off Acquisitions of Period
________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
March 28, 1993
Reserve for Doubtful
Accounts $ 500 $ 200 $ 100 $ -- $ 600
======== ======== ======== ======== ========
April 3, 1994
Reserve for Doubtful
Accounts $ 600 $ 200 $ 100 $ -- $ 700
======== ======== ======== ======== ========
April 2, 1995
Reserve for Doubtful
Accounts $ 700 $ 100 $ 100 $ 500 $ 1,200
======== ======== ======== ======== ========
</TABLE>
Page 27
</Page>
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULE
To the Shareholders and Board of Directors of Precision Castparts
Corp.
Our audits of the consolidated financial statements referred
to in our report dated May 3, 1995 appearing on page 10 of the
Financial Section of the 1995 Annual Report to Shareholders of
Precision Castparts Corp. (which report and consolidated
financial statements are included as Exhibit 13 in this Annual
Report on Form 10-K) also included an audit of the Financial
Statement Schedule listed in Item 14(a)(2) of this Form 10-K. In
our opinion, this Financial Statement Schedule presents fairly,
in all material respects, the information set forth therein when
read in conjunction with the related consolidated financial
statements.
/s/ PRICE WATERHOUSE LLP
_________________________
PRICE WATERHOUSE LLP
Portland, Oregon
May 3, 1995
Page 28
</Page>
<PAGE>
INDEX TO EXHIBITS
EXHIBITS
<TABLE>
<C> <C> <C>
(3)A -- Restated Articles of Incorporation
of
Precision Castparts Corp.
(Incorporated herein by reference in the Form
10-K dated April, 1994.)
(3)B -- Bylaws of Precision Castparts Corp.
(Incorporated herein by reference in the Form
10-K dated April, 1994.)
(4) -- Note Purchase Agreement, dated as
of July 20, 1987 between Precision Castparts
Corp. and The Prudential Insurance Company of
America. (Incorporated herein by reference in
the Form 10-K dated April, 1994.)
(10)A -- Precision Castparts Corp.
Revised and Restated Stock Incentive Plan as
amended. (Incorporated herein by reference in
the Form 10-K dated April, 1994.)
(10)B -- Precision Castparts Corp. Non-
Employee Directors' Stock Option Plan.
(Incorporated herein by reference in the Form
10-K dated April, 1994.)
(10)C -- Precision Castparts Corp. 1994
Stock Incentive Plan. (Filed as Appendix A
in Registrant's June 20, 1994 Proxy Statement
to Shareholders.) (Incorporated herein by
reference in the Form 10-K dated April,
1994.)
(10)D -- Precision Castparts Corp.
Nonemployee Directors' Deferred Compensation
Plan dated January 1, 1995.
(10)E -- Precision Castparts Corp.
Executive Deferred Compensation Plan dated
January 1, 1995
(11) -- Statement re Calculation of
Earnings Per Share for the year ended
April 2, 1995.
Page 29
</Page>
<PAGE>
(13) -- Financial Section of the 1995
Annual Report to Shareholders of
Precision Castparts Corp. for the Year
Ended April 2, 1995.
(21) -- Subsidiaries of Precision
Castparts Corp.
(23) -- Consent of Independent
Accountants.
(27) -- Financial Data Schedule
(c) See (a) (3) above.
(d) See (a) (2) above.
</TABLE>
EXHIBIT (10)D
Precision Castparts Corp. Nonemployee Directors'
Deferred Compensation Plan dated January 1, 1995.
PDX2-14907.1 62232 0003
<PAGE>
CONFORMED COPY
PRECISION CASTPARTS CORP.
NONEMPLOYEE DIRECTORS' DEFERRED COMPENSATION PLAN
January 1, 1995
Precision Castparts Corp.
an Oregon corporation
4600 SE Harney Drive
Portland, Oregon 97206 Company
</Page>
<PAGE>
TABLE OF CONTENTS
Page
1. Plan Administration 1
2. Deferral Elections 1
3. Directors' Deferred Fee Accounts 2
4. Time and Manner of Payment 3
5. Death 4
6. Termination; Amendment 5
7. Claims Procedure 5
8. General Provisions 6
9. Definition of Change of Control 7
10. Effective Date 8
</Page>
<PAGE>
PRECISION CASTPARTS CORP.
NONEMPLOYEE DIRECTORS' DEFERRED COMPENSATION PLAN
January 1, 1995
Precision Castparts Corp.
an Oregon corporation
4600 SE Harney Drive
Portland, Oregon 97206 Company
Members of the Precision Castparts Corp. Board of
Directors who are not employees of Precision Castparts Corp. or
an affiliate (Nonemployee Directors) are paid cash retainers and
meeting fees, for service as directors of the Company (Directors'
Fees).
In order to provide greater incentives for qualified
persons to serve as Nonemployee Directors, the Company adopts
this plan to allow the Nonemployee Directors to elect from time
to time to defer receipt of Directors' Fees.
1. Plan Administration
The Compensation Committee of the Board of Directors of
the Company shall appoint one or more employees of the Company as
Administrator of the plan. The Administrator shall interpret and
administer the plan and for that purpose may make, amend or
revoke rules and regulations at any time. The Administrator
shall have absolute discretion to carry out responsibilities
established under this plan.
2. Deferral Elections
2.1 A Nonemployee Director may elect as provided below
to defer all or a specified part of the Directors' Fees payable
to the Director. An election shall be in writing on a form
provided by the Administrator and shall specify the time and
manner of payment of the deferred amounts in accordance with
other provisions of this plan.
2.2 An election to defer Directors' Fees received by
the Administrator on or before December 31 of any year shall be
effective for fees payable for the succeeding calendar year. A
new fee deferral election must be made for each calendar year.
</Page>
<PAGE>
Page 2
2.3 The Company may withhold from any deferral, or from
nondeferred fees payable at the same time, any amounts required
by applicable law and regulations.
3. Directors' Deferred Fee Accounts
3.1 The Company shall deduct from Directors' Fees and
credit to a Directors' Fee Deferral Account (the Account) each
Directors' Fee amount deferred under this plan. The Account
shall be credited as of the day the deferred Directors' Fee would
otherwise have been paid to the Director.
3.2 Until full payment of an Account balance has been
made to the Director or beneficiaries entitled to the amount
identified by the Account (the Participant), the Company shall
adjust the Account quarterly for investment performance as
follows:
3.2-1 The investment result shall be determined by
the Performance Option selected by the Participant.
3.2-2 Participants may make the Performance Option
selections under 3.2-3 as of January 1 and July 1 of any plan
year. A Performance Option selection shall either apply to all
amounts in a Participant's Account, or shall apply only to future
deferral amounts, as selected by the Participant. Selections
shall be made in writing on a form prescribed by the
Administrator and shall be effective as of the January 1 or
July 1 after receipt of the form by the Administrator.
3.2-3 Performance Options are designated by the
Compensation Committee of the Board of Directors of the Company.
Initial Performance Options are as follows:
(a) S&P 500 Index, as reported in
the Wall Street Journal.
(b) Company Common Stock, as
reported in the Wall Street Journal.
(c) Prime Rate plus 2 Percent, based
on the average of First Interstate Bank of
Oregon's prime rate in effect on the last
business day of each month in the quarter.
3.2-4 When the S&P 500 Index and the Company
Common Stock Performance Options have been selected, amounts
deferred during the quarter shall be credited as equivalent
shares at the closing price on the day of the deferral. Cash
dividends on
</Page>
<PAGE>
Page 3
Company Common Stock shall be applied to equivalent shares held
on the record date, and shall be credited as additional
equivalent shares based on the closing price on the dividend
payment date. Cash dividend yield on the S&P 500 Index shall be
applied to all deferrals under the S&P 500 Index Performance
Option during the quarter, prorated daily, and shall be credited
as additional equivalent shares at the end of the quarter based
on the S&P 500 Index closing price on the last day of the
quarter. All equivalent shares shall be revalued up or down to
the closing price on the last business day of the quarter.
3.2-5 When the Prime Rate plus 2 Percent
Performance Option has been selected, amounts deferred during a
quarter shall be adjusted as of the last day of the quarter based
on the quarter's average Prime Rate plus 2 Percent, prorated
daily.
3.3 Each Director's Account shall be maintained on the
books of the Company until full payment has been made to the
Participant entitled to the amount identified by the Account. No
funds shall be set aside or earmarked for the Account, which
shall be purely a bookkeeping device.
4. Time and Manner of Payment
4.1 Subject to 4.5, 5.1 and 6.3, the Account shall be
paid or payment commenced as of the January 31 next after one of
the following dates as selected under 4.3:
(a) The date the Director's service
on the Company's Board ends, or
(b) The expiration of a specified
deferral term (minimum five years) if earlier.
4.2 Subject to 4.5, 5.1 and 6.3, the Account shall be
paid in one of the following ways as selected under 4.3:
(a) In a single lump sum.
(b) In not more than five
substantially equal annual installments of
principal with Performance Option Adjustments.
For example, the first payment shall be one-
fifth of the balance on the December 31
preceding the first payment date, the second
shall be one-fourth of the balance on the
December 31 preceding the second payment date,
and so on. The final payment shall be the
remaining balance adjusted to the final
January 31 payment date.
</Page>
<PAGE>
Page 4
4.3 The time and manner of payment under 4.1 and 4.2
shall be selected by the Director as follows:
(a) The selection shall be made in
the deferral election.
(b) The selection shall be
irrevocable for the portion of the Account
attributable to amounts deferred under the
election in which the selection is made.
(c) If the time or method of payment
is different under different elections, the
Account shall be appropriately divided for
distribution.
(d) Other payment options may be
established by the Compensation Committee of
the Board of Directors of the Company, and made
available prospectively for selection by
Directors for future deferrals.
4.4 The Company may withhold from any payments any
income tax or other amounts as required by law.
4.5 If a Director's service on the Company's Board ends
involuntarily (by removal of the Director or by expiration of the
Director's term without reappointment) within 12 months after a
Change in Control as defined in 9, the Director's Account shall
be paid in one lump sum as soon as practical after the Directors'
service on the Company's Board ends, regardless of the otherwise
applicable election. If the payment is on a date other than the
end of a quarter, the Director's Account shall be adjusted based
on the applicable Performance Option as of the most recent month
end.
5. Death
5.1 A Director's Account shall be payable under 5.2 on
the Director's death regardless of the provisions of 4.
5.2 On death of a Director the Account shall be paid in
the following order of priority:
(a) To the surviving beneficiaries
designated by the Director in writing to the
Administrator in the Director's deferral
election(s), or if none then
(b) To the Director's surviving
spouse, or if none then
</Page>
<PAGE>
Page 5
(c) To the Director's surviving
children in equal shares, or if none then
(d) To the Director's estate.
5.3 The manner of payment under 5.2 shall be as
follows:
(a) Annual installments to the
surviving spouse of a Director who elected
installments but died before starting to
receive payments. The period selected for the
Director's payments shall govern the spouse's
payments. If the Director had already started
receiving installments, the surviving spouse
shall receive the installments for the
remainder of the term selected by the Director.
(b) A lump sum paid as soon as
practical to any other beneficiary.
5.4 On death of a surviving spouse receiving
installments under 5.3(a), the Account shall be paid in a single
sum to the spouse's estate as soon as practical after death.
6. Termination; Amendment
6.1 The Board of Directors of the Company may terminate
this plan effective the first day of any calendar year after
notice to the Nonemployee Directors. On termination, amounts in
an Account shall remain to the credit of the Account, shall
continue to be adjusted quarterly and shall be paid in accordance
with 4, 5 or 6, as applicable.
6.2 The Board of Directors of the Company may amend
this plan effective the first day of any calendar year after
notice to the Nonemployee Directors.
6.3 If the Internal Revenue Service rules that any
amounts deferred under this plan will be subject to current
income tax, all amounts to which the ruling is applicable shall
be paid within 30 days to all Participants with Accounts.
7. Claims Procedure
7.1 Any Participant claiming a benefit, requesting an
interpretation or ruling under the plan, or requesting
information under the plan shall present the request in writing
to the Administrator, who shall respond in writing as soon as
practicable.
</Page>
<PAGE>
Page 6
7.2 If the claim or request is denied, the written
notice of denial shall state the following:
(a) The reasons for denial, with
specific reference to the plan provisions on
which the denial is based.
(b) A description of any additional
material or information required and an
explanation of why it is necessary.
(c) An explanation of the plan's
review procedure.
7.3 The initial notice of denial shall normally be
given within 90 days after receipt of the claim. If special
circumstances require an extension of time, the claimant shall be
so notified and the time limited shall be 180 days.
7.4 Any person whose claim or request is denied or who
has not received a response within 30 days may request review by
notice in writing to the Administrator. The original decision
shall be reviewed by the Administrator which may, but shall not
be required to, grant the claimant a hearing. On review, whether
or not there is a hearing, the claimant may have representation,
examine pertinent documents and submit issues and comments in
writing.
7.5 The decision on review shall ordinarily be made
within 60 days. If an extension of time is required for a
hearing or other special circumstances, the claimant shall be so
notified and the time limit shall be 120 days. The decision
shall be in writing and shall state the reasons and the relevant
plan provisions. All decisions on review shall be final and bind
all parties concerned.
8. General Provisions
8.1 All amounts of deferred Directors' Fees under this
plan shall remain at all times the unrestricted assets of the
Company and the promise to pay the deferred amounts shall at all
times remain unfunded as to the Participants. The rights of
Participants under the plan shall only be as general creditors of
the Company.
8.2 Any notice under this plan shall be in writing or
by electronic means and shall be received when actually delivered
or, if mailed, when deposited postpaid as first class mail. Mail
</Page>
<PAGE>
Page 7
should be directed to the Company at the address stated in this
plan, to a Director at the address stated in the Director's
election, to a beneficiary entitled to benefits at the address
stated in the Director's beneficiary designation or to such other
address as either party may specify by notice to the other party.
8.3 The interests of a Director or beneficiary under
this plan are personal and no such interest may be assigned,
seized by legal process or in any way subjected to the claims of
any creditor.
9. Definition of Change of Control
For purposes of this Plan, a "change in control of the
Company" shall be deemed to have occurred if:
(a) Any "person," as such term is
used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended
(the "Exchange Act") (other than the Company,
any trustee or other fiduciary holding
securities under an employee benefit plan of
the Company, or any company owned, directly or
indirectly, by the stockholders of the Company
in substantially the same proportions as their
ownership of stock of the Company), is or
becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company
representing 20 percent or more of the combined
voting power of the Company's then outstanding
securities;
(b) During any period of two
consecutive years (not including any period
prior to the execution of this Agreement),
individuals who at the beginning of such period
constitute the Board of Directors of the
Company (the Board), and any new director
(other than a director designated by a person
who has entered into an agreement with the
Company to effect a transaction described in
clause (a), (c) or (d) of this Section) whose
election by the Board or nomination for
election by the Company's stockholders was
approved by a vote of at least two-thirds (2/3)
of the directors then still in office who
either were directors at the beginning of the
period or whose election or
</Page>
<PAGE>
Page 8
nomination for election was previously so
approved, cease for any reason to constitute at
least a majority thereof;
(c) The stockholders of the Company
approve a merger or consolidation of the
Company with any other company, other than
(1) a merger or consolidation which would
result in the voting securities of the Company
outstanding immediately prior thereto
continuing to represent (either by remaining
outstanding or by being converted into voting
securities of the surviving entity) more than
50 percent of the combined voting power of the
voting securities of the Company or such
surviving entity outstanding immediately after
such merger or consolidation or (2) a merger or
consolidation effected to implement a
recapitalization of the Company (or similar
transaction) in which no "person" (as
hereinabove defined) acquires more than 20
percent of the combined voting power of the
Company's then outstanding securities; or
(d) The stockholders of the Company
approve a plan of complete liquidation of the
Company or an agreement for the sale or
disposition by the Company of all or
substantially all of the Company's assets.
10. Effective Date
This plan shall be effective January 1, 1995.
PRECISION CASTPARTS CORP.
/s/ R. M. MARVIN
_________________________________
Executed: December 5, 1994
</Page>
EXHIBIT (10)E
Precision Castparts Corp. Executive Deferred
Compensation Plan dated January 1, 1995.
<PAGE>
CONFORMED COPY
PRECISION CASTPARTS CORP.
EXECUTIVE DEFERRED COMPENSATION PLAN
January 1, 1995
(As Amended Through Amendment No. 1)
Precision Castparts Corp.
an Oregon corporation
4600 SE Harney Drive
Portland, Oregon 97206 Company
</Page>
<PAGE>
TABLE OF CONTENTS
Page
1. Plan Administration 1
2. Eligibility; Deferral 1
3. Executive Deferred Compensation Accounts 3
4. Time and Manner of Payment 4
5. Death 6
6. Termination; Amendment 7
7. Claims Procedure 7
8. General Provisions 8
9. Definition of Change of Control 8
10. Effective Date 10
</Page>
<PAGE>
PRECISION CASTPARTS CORP.
EXECUTIVE DEFERRED COMPENSATION PLAN
January 1, 1995
(As Amended Through Amendment No. 1)
Precision Castparts Corp.
an Oregon corporation
4600 SE Harney Drive
Portland, Oregon 97206 Company
Precision Castparts Corp. (the Company) adopts this
Executive Deferred Compensation Plan (the Plan) to create a
deferred compensation arrangement for a select group of
management or highly compensated employees (Executives) whose
deferred compensation under the Company's other retirement plans
may be restricted by law or otherwise may not provide fully for
their retirement benefit needs. In order to help the Company
attract and retain key Executives, this plan of deferred
compensation is adopted effective January 1, 1995 on the terms
set forth below.
1. Plan Administration
1.1 The Plan shall apply to the Company and to any
Affiliate that employs an eligible employee. "Affiliate" means a
corporation or other entity that is more than 50% owned by the
Company.
1.2 The Compensation Committee of the Board of
Directors of the Company shall appoint one or more employees of
the Company as Administrator of the plan. The Administrator
shall interpret and administer the plan and for that purpose may
make, amend or revoke rules and regulations at any time. The
Administrator shall have absolute discretion to carry out
responsibilities established under this plan.
2. Eligibility; Deferral Elections
2.1 The following employees of the Company will be
eligible to participate in the plan, subject to 2.2:
(a) Executives currently covered under the
Company's Supplemental Retirement Plan for Executives.
</Page>
<PAGE>
Page 2
(b) Any additional Executives added by the
Compensation Committee of the Company's Board of
Directors.
2.2 Executives may be removed from eligibility
prospectively by the Compensation Committee.
2.3 An eligible Executive may elect as provided below
to defer a whole number percentage of the Executive's salary or
bonuses or both (Compensation). Different percentages may be
selected for salary and for bonuses, up to a maximum deferral
percentage set by the Compensation Committee. Initially, the
maximum deferral percentage is 25% for salary, 100% for bonuses.
The Compensation Committee may change the maximum deferral
percentage on or before December 31 to be effective for
succeeding calendar years. An eligible Executive may limit a
bonus deferral election to the portion of the percentage deferral
that exceeds a floor dollar amount designated by the Executive in
the deferral election, or to the lesser of a stated dollar amount
or a percentage of the bonus.
2.4 An election shall be in writing on a form provided
by the Administrator and shall specify the time and manner of
payment of the deferred amounts in accordance with other
provisions of this plan.
2.5 An election to defer Compensation shall be
effective as follows:
(a) A salary deferral election received by
the Administrator on or before December 31 of any year
shall be effective for the succeeding calendar year. A
new salary deferral election must be made for each
calendar year.
(b) Except as provided in (c), a bonus
deferral election must be received by the Administrator
by the last day of the fiscal year before the start of
the fiscal year to which the bonus refers. A bonus
deferral election shall be effective only for a single
bonus period. A new election must be made prior to each
bonus period. If no election is made, no deferrals
shall be made for the bonus period.
</Page>
<PAGE>
Page 3
(c) An initial bonus deferral election may be
submitted before January 1, 1995 to apply to the bonus,
if any, paid in 1995 for the first bonus period that
ends in 1995.
(d) In the first year in which an Executive
becomes eligible to participate in the Plan, the newly
eligible Executive may make an election to defer
compensation for services to be performed subsequent to
the election within 30 days after the date the Executive
first becomes eligible. The election shall be effective
at the beginning of the next calendar month.
2.6 The Company may withhold from any deferral any
amounts required by applicable law and regulations.
3. Executive Deferred Compensation Accounts
3.1 The Company shall deduct from an Executive's
Compensation as applicable and credit to an Executive Deferred
Compensation Account (the Account) each Compensation amount
deferred under this plan. The Account shall be credited as of
the day the Compensation would otherwise have been paid to the
Executive.
3.2 Until full payment of an Account balance has been
made to the Executive or beneficiaries entitled to the amount
identified by the Account (the Participant), the Company shall
adjust the Account quarterly for investment performance as
follows:
3.2-1 The investment result shall be determined by
the Performance Option selected by the Participant.
3.2-2 Participants may make the Performance Option
selections under 3.2-3 as of January 1 and July 1 of any plan
year. A Performance Option selection shall either apply to all
amounts in a Participant's Account, or shall apply only to future
deferral amounts, as selected by the Participant. Selections
shall be made in writing on a form prescribed by the
Administrator and shall be effective as of the January 1 or
July 1 after receipt of the form by the Administrator.
</Page>
<PAGE>
Page 4
3.2-3 Performance Options are designated by the
Compensation Committee of the Board of Directors of the Company.
Initial Performance Options are as follows:
(a) S&P 500 Index, as reported in the Wall
Street Journal.
(b) Company Common Stock, as reported in the
Wall Street Journal.
(c) Prime Rate plus 2 Percent, based on the
average of First Interstate Bank of Oregon's prime rate
in effect on the last business day of each month in the
quarter.
3.2-4 When the S&P 500 Index and the Company
Common Stock Performance Options have been selected, amounts
deferred during the quarter shall be credited as equivalent
shares at the closing price on the day of the deferral. Cash
dividends on Company Common Stock shall be applied to equivalent
shares held on the record date, and shall be credited as
additional equivalent shares based on the closing price on the
dividend payment date. Cash dividend yield on the S&P 500 Index
shall be applied to all deferrals under the S&P 500 Index
Performance Option during the quarter, prorated daily, and shall
be credited as additional equivalent shares at the end of the
quarter based on the S&P 500 Index closing price on the last day
of the quarter. All equivalent shares shall be revalued up or
down to the closing price on the last business day of the
quarter.
3.2-5 When the Prime Rate plus 2 Percent
Performance Option has been selected, amounts deferred during a
quarter shall be adjusted as of the last day of the quarter based
on the quarter's average Prime Rate plus 2 Percent, prorated
daily.
3.3 Each Executive's Account shall be maintained on the
books of the Company until full payment has been made to the
Participant entitled to the amount identified by the Account. No
funds shall be set aside or earmarked for the Account, which
shall be purely a bookkeeping device.
4. Time and Manner of Payment
4.1 Subject to 4.5, 5.1 and 6.3, the Account shall be
paid or payment commenced as of the January 31 next after one of
the following dates as selected under 4.3:
</Page>
<PAGE>
Page 5
(a) The date the Executive retires or
terminates employment with the Company, or
(b) The expiration of a specified deferral
term (minimum five years) if earlier.
4.2 Subject to 4.5, 5.1 and 6.3, the Account shall be
paid in one of the following ways as selected under 4.3:
(a) In a single lump sum.
(b) In not more than five substantially equal
annual installments of principal with Performance Option
Adjustments. For example, the first payment shall be
one-fifth of the balance on the December 31 preceding
the first payment date, the second shall be one-fourth
of the balance on the December 31 preceding the second
payment date, and so on. The final payment shall be the
remaining balance adjusted to the final January 31
payment date.
4.3 The time and manner of payment under 4.1 and 4.2
shall be selected by the Executive as follows:
(a) The selection shall be made in the
deferral election.
(b) The selection shall be irrevocable for
the portion of the Account attributable to amounts
deferred under the election in which the selection is
made.
(c) If the time or method of payment is
different under different elections, the Account shall
be appropriately divided for distribution.
(d) Other payment options may be established
by the Compensation Committee of the Board of Directors
of the Company, and made available prospectively for
selection by Executives for future deferrals.
4.4 The Company may withhold from any payments any
income tax or other amounts as required by law.
4.5 If an Executive's employment with the Company ends
involuntarily by termination of the Executive's employment within
</Page>
<PAGE>
Page 6
12 months after a Change in Control as defined in 9, the
Executive's Account shall be paid in one lump sum as soon as
practical after termination of employment, regardless of the
otherwise applicable election. If the payment is on a date other
than the end of a quarter, the Executive's Account shall be
adjusted based on the applicable Performance Option as of the
most recent month end.
5. Death
5.1 An Executive's Account shall be payable under 5.2
on the Executive's death regardless of the provisions of 4.
5.2 On death of an Executive the Account shall be paid
in the following order of priority:
(a) To the surviving beneficiaries designated
by the Executive in writing to the Administrator in the
Executive's deferral election(s), or if none then
(b) To the Executive's surviving spouse, or
if none then
(c) To the Executive's surviving children in
equal shares, or if none then
(d) To the Executive's estate.
5.3 The manner of payment under 5.2 shall be as
follows:
(a) Annual installments to the surviving
spouse of an Executive who elected installments but died
before starting to receive payments. The period
selected for the Executive's payments shall govern the
spouse's payments. If the Executive had already started
receiving installments, the surviving spouse shall
receive the installments for the remainder of the term
selected by the Executive.
(b) A lump sum paid as soon as practical to
any other beneficiary.
</Page>
<PAGE>
Page 7
5.4 On death of a surviving spouse receiving
installments under 5.3(a), the Account shall be paid in a single
sum to the spouse's estate as soon as practical after death.
6. Termination; Amendment
6.1 The Board of Directors of the Company may terminate
this plan effective the first day of any calendar year after
notice to the eligible Executives. On termination, amounts in an
Account shall remain to the credit of the Account, shall continue
to be adjusted quarterly and shall be paid in accordance with 4,
5 or 6, as applicable.
6.2 The Board of Directors of the Company may amend
this plan effective the first day of any calendar year after
notice to the eligible Executives.
6.3 If the Internal Revenue Service rules that any
amounts deferred under this plan will be subject to current
income tax, all amounts to which the ruling is applicable shall
be paid within 30 days to all Participants with Accounts.
7. Claims Procedure
7.1 Any Participant claiming a benefit, requesting an
interpretation or ruling under the plan, or requesting
information under the plan shall present the request in writing
to the Administrator, who shall respond in writing as soon as
practicable.
7.2 If the claim or request is denied, the written
notice of denial shall state the following:
(a) The reasons for denial, with specific
reference to the plan provisions on which the denial is
based.
(b) A description of any additional material
or information required and an explanation of why it is
necessary.
(c) An explanation of the plan's review
procedure.
7.3 The initial notice of denial shall normally be
given within 90 days after receipt of the claim. If special
circumstances require an extension of time, the claimant shall be
so notified and the time limited shall be 180 days.
</Page>
<PAGE>
Page 8
7.4 Any person whose claim or request is denied or who
has not received a response within 30 days may request review by
notice in writing to the Administrator. The original decision
shall be reviewed by the Administrator which may, but shall not
be required to, grant the claimant a hearing. On review, whether
or not there is a hearing, the claimant may have representation,
examine pertinent documents and submit issues and comments in
writing.
7.5 The decision on review shall ordinarily be made
within 60 days. If an extension of time is required for a
hearing or other special circumstances, the claimant shall be so
notified and the time limit shall be 120 days. The decision
shall be in writing and shall state the reasons and the relevant
plan provisions. All decisions on review shall be final and bind
all parties concerned.
8. General Provisions
8.1 All amounts of deferred Compensation under this
plan shall remain at all times the unrestricted assets of the
Company and the promise to pay the deferred amounts shall at all
times remain unfunded as to the Participants. The rights of
Participants under the plan shall only be as general creditors of
the Company.
8.2 Any notice under this plan shall be in writing or
by electronic means and shall be received when actually delivered
or, if mailed, when deposited postpaid as first class mail. Mail
should be directed to the Company at the address stated in this
plan, to a Director at the address stated in the Executive's
election, to a beneficiary entitled to benefits at the address
stated in the Executive's beneficiary designation or to such
other address as either party may specify by notice to the other
party.
8.3 The interests of an Executive or beneficiary under
this plan are personal and no such interest may be assigned,
seized by legal process or in any way subjected to the claims of
any creditor.
9. Definition of Change of Control
For purposes of this Plan, a "change in control of the
Company" shall be deemed to have occurred if:
</Page>
<PAGE>
Page 9
(a) Any "person," as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act") (other than the
Company, any trustee or other fiduciary holding
securities under an employee benefit plan of the
Company, or any company owned, directly or indirectly,
by the stockholders of the Company in substantially the
same proportions as their ownership of stock of the
Company), is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing
20 percent or more of the combined voting power of the
Company's then outstanding securities;
(b) During any period of two consecutive
years (not including any period prior to the execution
of this Agreement), individuals who at the beginning of
such period constitute the Board of Directors of the
Company (the Board), and any new director (other than a
director designated by a person who has entered into an
agreement with the Company to effect a transaction
described in clause (a), (c) or (d) of this Section)
whose election by the Board or nomination for election
by the Company's stockholders was approved by a vote of
at least two-thirds (2/3) of the directors then still in
office who either were directors at the beginning of the
period or whose election or nomination for election was
previously so approved, cease for any reason to
constitute at least a majority thereof;
(c) The stockholders of the Company approve a
merger or consolidation of the Company with any other
company, other than (1) a merger or consolidation which
would result in the voting securities of the Company
outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being
converted into voting securities of the surviving
entity) more than 50 percent of the combined voting
power of the voting securities of the Company or such
surviving entity outstanding immediately after such
merger or consolidation or (2) a merger or consolidation
effected to implement a recapitalization of the Company
(or similar transaction) in which no "person" (as
hereinabove defined) acquires more than 20 percent of
the combined voting power of the Company's then
outstanding securities; or
</Page>
<PAGE>
Page 10
(d) The stockholders of the Company approve a
plan of complete liquidation of the Company or an
agreement for the sale or disposition by the Company of
all or substantially all of the Company's assets.
10. Effective Date
This plan shall be effective January 1, 1995.
PRECISION CASTPARTS CORP.
/s/ R. M. MARVIN
__________________________________
Executed: December 5, 1994
AMENDMENT NO. 1 EXECUTED AS FOLLOWS EFFECTIVE JANUARY 1, 1995:
_____________________________________________________________
Adopted: March 24, 1995
PRECISION CASTPARTS CORP.
/s/ R. M. MARVIN
__________________________________
Executed: March 24, 1995
</Page>
Page 30
</Page>
<PAGE>
EXHIBIT 11
PRECISION CASTPARTS CORP.
CALCULATION OF EARNINGS PER SHARE
FOR THE YEAR ENDED APRIL 2, 1995
<TABLE>
<CAPTION>
Fully
Primary Diluted
Earnings Earnings Per
Per Share (1) Share
<S> <C> <C>
Weighted average number of shares
of common stock outstanding 20,000,389 20,000,389
Common stock equivalents:
Application of the "treasury stock"
method to stock option and purchase
plans -- 177,260
__________ __________
Weighted average number of shares
outstanding 20,000,389 20,177,649
========== ==========
Rounded to 20,000,000 20,200,000
========== ==========
Net income $29,000,000 $29,000,000
=========== ===========
Net income per share $1.45 $1.44
===== =====
<FN>
__________
(1) Accounting Principles Board Opinion No. 15, "Earnings
Per Share," allows companies to disregard dilution of
less than 3 percent in the computation of earnings per
share. Therefore, shares used in computing earnings per
share for financial reporting purposes are 20,000,000
shares.
</TABLE>
Page 31
</Page>
<PAGE>
EXHIBIT 13
Financial Section of the 1995 Annual Report to
Shareholders of Precision Castparts Corp.
Consolidated Statements of Income
Precision Castparts Corp. and Subsidiaries
(In thousands, except per share data)
<TABLE>
<CAPTION>
Fiscal Years Ended
____________________________________________________________
______
April 2, April 3, March 28,
1995 1994 1993
____________________________________________________________
______
<S> <C> <C> <C>
Net Sales $436,400 $420,400 $461,400
Cost of Goods Sold 359,500 351,700 393,100
Provision for:
Restructuring charges -- -- 27,200
Environmental charges -- -- 9,900
Selling and Administrative Expenses 31,600 30,200 31,900
Interest Expense (Income), net (1,500) 1,100 (600)
____________________________________________________________
______
Income (Loss) before Provision
for Income Taxes 46,800 37,400 (100)
Provision (Benefit) for Income
Taxes 17,800 12,300 (1,900)
____________________________________________________________
______
Income before Cumulative Effect
of Accounting Change 29,000 25,100 1,800
Cumulative Effect of Change in
Accounting for Postretirement
Page 32
</Page>
<PAGE>
Benefits Other Than Pensions
(net of tax benefit of $1,800) -- (2,900) --
____________________________________________________________
______
Net Income $29,000 $ 22,200 $ 1,800
____________________________________________________________
______
Income (Charge) per Share:
Before cumulative effect of
accounting change $ 1.45 $ 1.29 $ 0.07
Cumulative effect of change
in accounting for post-
retirement benefits other
than pensions -- (0.15) --
____________________________________________________________
______
Net Income per Common Share $ 1.45 $ 1.14 $ 0.07
____________________________________________________________
______
</TABLE>
See Notes to Financial Statements on pages 41 through 58.
Page 33
</Page>
<PAGE>
Consolidated Balance Sheets
Precision Castparts Corp. and Subsidiaries
(In thousands)
<TABLE>
<CAPTION>
____________________________________________________________
______
April 2, April 3,
Assets 1995 1994
____________________________________________________________
______
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 3,900 $ 55,200
Receivables, net of reserves of
$1,200 in 1995 and $700 in 1994 83,100 69,000
Inventories 90,900 74,000
Prepaid expenses 2,300 1,300
Deferred income taxes 9,900 11,600
____________________________________________________________
______
Total current assets 190,100 211,100
____________________________________________________________
______
Property, Plant and Equipment, at cost:
Land 6,800 3,500
Buildings and improvements 46,500 37,000
Machinery and equipment 216,800 201,500
Construction in progress 9,100 3,100
____________________________________________________________
______
279,200 245,100
Less-Accumulated depreciation (143,000) (128,600)
____________________________________________________________
______
Net property, plant and equipment 136,200 116,500
____________________________________________________________
______
Page 34
</Page>
<PAGE>
Goodwill and Other Assets 80,400 15,300
____________________________________________________________
______
$406,700 $342,900
____________________________________________________________
______
Liabilities and Shareholders' Investment
____________________________________________________________
______
Current Liabilities:
Notes payable $ 6,900 $ 1,000
Current portion of long-term debt 5,400 3,900
Accounts payable 25,600 17,900
Accrued liabilities 56,500 49,300
Income taxes payable 5,800 13,300
____________________________________________________________
______
Total current liabilities 100,200 85,400
____________________________________________________________
______
Long-Term Debt, excluding current portion 13,700 10,800
Deferred Income Taxes 16,700 11,200
Accrued Retirement Benefits Obligation 10,000 6,000
Other Long-Term Liabilities 7,700 6,700
Shareholders' Investment:
Common stock, $1 stated value 20,200 13,100
Paid-in capital 5,200 3,100
Retained earnings 230,700 206,100
Cumulative translation adjustments 2,300 500
____________________________________________________________
______
Total shareholders' investment 258,400 222,800
____________________________________________________________
______
$406,700 $342,900
____________________________________________________________
______
</TABLE>
See Notes to Financial Statements on pages 41 through 58.
Page 35
</Page>
<PAGE>
Consolidated Statements of Cash Flows
Precision Castparts Corp. and Subsidiaries
(In thousands)
<TABLE>
<CAPTION>
Fiscal Years Ended
____________________________________________________________
______
April 2, April 3, March 28,
1995 1994 1993
____________________________________________________________
______
Cash Flows from Operating Activities:
<S> <C> <C> <C>
Net income $29,000 $ 22,200 $ 1,800
Non-cash items included in income:
Depreciation and amortization 23,900 28,700 20,100
Deferred income taxes 4,300 (2,500) (10,700)
Provision for restructuring and
environmental charges -- -- 33,000
Cumulative effect of accounting
change -- 4,700 --
Changes in operating working capital,
excluding effects of acquisitions:
Receivables (3,300) 20,600 20,700
Inventories (4,300) 36,900 25,400
Payables, accruals & current taxes (5,200) 2,800 (25,400)
Other (4,200) 900 200
____________________________________________________________
______
Net cash provided by
operating activities 40,200 114,300 65,100
____________________________________________________________
______
Page 36
</Page>
<PAGE>
Cash Flows from Investing Activities:
Business acquisitions, net of
cash acquired (87,500) -- --
Acquisition of property,
plant and equipment (10,900) (7,400) (16,000)
Other investing activities, net 1,000 (600) 1,600
____________________________________________________________
_______
Net cash used by investing
activities (97,400) (8,000) (14,400)
____________________________________________________________
_______
Cash Flows from Financing Activities:
Proceeds of long-term debt -- 50,000 --
Payment of long-term debt (4,900) (53,900) (7,400)
Proceeds of notes payable 12,400 200 500
Payments of notes payable (6,500) -- --
Repurchase of common stock -- (117,000) --
Sale of common stock 9,200 3,100 2,400
Cash dividends (4,400) (2,300) (2,200)
Other financing activities, net 100 (100) (400)
____________________________________________________________
______
Net cash provided by (used by)
financing activities 5,900 (120,000) (7,100)
____________________________________________________________
______
Net Increase (Decrease) in Cash (51,300) (13,700) 43,600
Cash and Cash Equivalents at
Beginning of Year 55,200 68,900 25,300
____________________________________________________________
______
Cash and Cash Equivalents at
End of Year $ 3,900 $ 55,200 $68,900
____________________________________________________________
______
Page 37
</Page>
<PAGE>
Cash Paid During the Year for:
Interest $ 1,100 $ 1,200 $ 2,700
Income taxes, net of refunds
received $21,500 $ 8,400 $11,300
See Notes to Financial Statements on pages 41 through 58.
</TABLE>
Page 38
</Page>
<PAGE>
Consolidated Statements of Shareholders' Investment
Precision Castparts Corp. and Subsidiaries
(In thousands)
<TABLE>
<CAPTION>
___________________________________________________________________________
__________
Common Stock Cumulative
Outstanding Paid-in Retained Translation
Shares Amount Capital Earnings Adjustments
___________________________________________________________________________
__________
<S> <C> <C> <C> <C> <C>
Balance at March 29, 1992 26,700 $17,800 $80,000 $216,400 $1,200
Net income -- -- -- 1,800 --
Cash dividends -- -- -- (2,200) --
Sale of common stock
under employee stock plans 150 100 2,300 -- --
Repurchase of common stock(7,350) (4,900) (82,300) (29,800) --
Translation adjustments -- -- -- -- (500)
___________________________________________________________________________
__________
Balance at March 28, 1993 19,500 13,000 -- 186,200 700
Net income -- -- -- 22,200 --
Cash dividends -- -- -- (2,300) --
Sale of common stock
under employee stock plans 150 100 3,100 -- --
Translation adjustments -- -- -- -- (200)
___________________________________________________________________________
__________
Page 39
</Page>
<PAGE>
Balance at April 3, 1994 19,650 13,100 3,100 206,100 500
Net income -- -- -- 29,000 --
Cash dividends -- -- -- (4,400) --
Sale of common stock under
employee stock plans 550 400 8,800 -- --
Stock split -- 6,700 (6,700) -- --
Translation adjustments -- -- -- -- 1,800
___________________________________________________________________________
__________
Balance at April 2, 1995 20,200 $20,200 $5,200 $230,700 $2,300
___________________________________
__________________________________________________
</TABLE>
See Notes to Financial Statements on pages 41 through 58.
Page 40
</Page>
<PAGE>
Notes to Financial Statements
(In thousands, except share and per share data)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Principles of Consolidation
The consolidated financial statements include the
accounts of PCC and its wholly-owned subsidiaries after
elimination of intercompany accounts and transactions. PCC's
fiscal year is based on a 52-53 week year ending the Sunday
closest to March 31.
Cash and Cash Equivalents
Cash and cash equivalents include short-term
investments with an original maturity of three months or
less. These investments are available-for-sale with market
values approximating cost.
Valuation of Inventories
The LIFO inventory cost method is utilized for work in
process and metal inventories at most domestic operations.
The average inventory cost method is utilized for all other
inventories. Costs utilized for inventory valuation
purposes include labor, material and manufacturing overhead.
Inventories valued at the lower of current average cost or
market would have been $5,300, $4,200 and $4,300 higher than
those reported at April 2, 1995, April 3, 1994 and March 28,
1993. PCC uses the single pool dollar value method for
computing LIFO inventories; therefore, it is not possible to
present the breakdown of inventories between work in process
and raw materials.
Depreciation and Capitalization
Depreciation of plant and equipment is computed on the
straight-line or declining balance method based on the
estimated service lives. Estimated lives used are 20-30
years for buildings and improvements and 5-10 years for
machinery and equipment.
Additions are recorded at cost. Expenditures for
maintenance, repairs, and minor improvements are charged to
expense. Major improvements and additions are added to the
property accounts. When property is sold or retired, the
cost and accumulated depreciation are removed from the
accounts and the resulting gain or loss is included in
income.
Goodwill
Goodwill is amortized over 40 years. Cumulative
amortization was $1,700 as of April 2, 1995 and $900 as of
April 3, 1994.
Page 41
</Page>
<PAGE>
Provision for Restructuring
During the third quarter of fiscal 1993, the Company
recorded a provision for restructuring charges of $27,200
equal to $(0.63) per share. The restructuring charges,
which were in response to a significant and continuing
industry decline in demand for aerospace components,
provided for the estimated cost of employee severances,
plant and office consolidations and rearrangements, and
other operating asset write-offs at the Company's
Structurals and Airfoils Divisions.
Provision for Environmental Matters
PCC is engaged in several environmental investigations
and remediation efforts in the normal course of business.
In 1993, PCC established a provision of $9,900, equal to
$(0.23) per share, for elimination and clean-up of a
hazardous material used at one of the Company's
manufacturing sites in Oregon.
Derivative Financial Instruments
At various times, the Company uses derivative financial
instruments to limit exposure to changes in foreign currency
exchange rates, interest rates and prices of strategic raw
materials. Gains or losses on these contracts, which are
designed as hedge transactions, are measured upon
settlement. The Company has controls in place which limit
the use of derivative financial instruments and ensure all
such transactions receive appropriate management attention.
At year-end, there was no material off-balance-sheet risk
from derivative financial instruments.
Stock Split
In August, 1994, the Company effected a three-for-two
stock split by means of a stock dividend. Accordingly,
$6,700 representing the stated value for additional shares
issued was transferred from paid-in capital to common stock.
The number of shares and earnings per share for all prior
periods have been restated to reflect the effects of this
stock split.
Earnings per Share
Earnings per share have been computed based on the
weighted average number of shares of common stock and common
stock equivalents outstanding during the periods after
giving effect to the stock split discussed above. The
number of shares used for the earnings per share calculation
was 20,000,000 in 1995, 19,500,000 in 1994, and 26,800,000
in 1993. Common stock equivalents were not material in
these years. Fully diluted amounts are not presented
because they are not materially different than amounts
shown.
Page 42
</Page>
<PAGE>
ACQUISITIONS
On April 6, 1994, PCC acquired the assets of ACC
Electronics, Inc., a manufacturer of advanced technology
metal matrix composites parts, for a purchase price of
$5,100, plus assumption of outstanding debt and other
liabilities. Goodwill of $11,200 was recorded as a result
of this transaction. The business operates as PCC
Composites, Inc.
On March 8, 1995, PCC acquired 100 percent of the stock
of Quamco, Inc., a designer, manufacturer and marketer of
premium metalworking tools and machines, specialty powdered
metal parts, and other specialty industrial components. The
purchase price of $89,900, which included the assumption or
retirement of outstanding debt, resulted in the recognition
of $57,700 of goodwill and other intangible assets. The
transaction was financed from cash balances, the assumption
of $8,200 of outstanding debt, and $12,200 of bank
borrowings. The business operates as PCC Specialty
Products, Inc.
The following represents the pro forma results of
operations of the Company for the years ended April 2, 1995
and April 3, 1994, assuming the acquisitions had taken place
at the beginning of each fiscal year.
Fiscal Years Ended
_________________________________________________________
April 2, April 3,
1995 1994
_________________________________________________________
Net sales $513,100 $488,100
Net income $ 31,800 $ 26,100
Net income per share $ 1.59 $ 1.34
FAIR VALUE OF FINANCIAL INSTRUMENTS
Cash and cash equivalents, receivables, payables and
short-term borrowings are reflected in the financial
statements at cost which equals fair value because of the
short-term maturity of these instruments.
The fair value of long-term debt was estimated using
the Company's year-end incremental borrowing rate for
similar types of borrowing arrangements. The amounts
reported in the consolidated balance sheets for long-term
debt approximate fair value.
CONCENTRATION OF CREDIT RISK
Approximately 80 percent of PCC's business activity in
fiscal year 1995 was with companies in the aerospace
industry. Accordingly, PCC is exposed to a concentration of
credit risk for this portion of receivables. The Company
Page 43
</Page>
<PAGE>
has long-standing relationships with its aerospace customers
and management considers the credit risk to be low.
ACCRUED LIABILITIES
Accrued liabilities consisted of the following:
<TABLE>
<CAPTION>
__________________________________________________________________
April 2, April 3,
1995 1994
__________________________________________________________________
<S> <C> <C>
Salaries and wages payable $18,400 $13,000
Taxes other than income taxes 6,200 5,300
Restructuring liability 1,700 8,200
Other accrued liabilities 30,200 22,800
__________________________________________________________________
$56,500 $49,300
__________________________________________________________________
</TABLE>
NOTES PAYABLE
Notes payable of $6,900 consisted of notes
payable to banks, of which $6,000 related to the
purchase of PCC Specialty Products was repaid
subsequent to year-end.
Page 44
</Page>
<PAGE>
LONG-TERM DEBT
Long-term debt consisted of the following:
<TABLE>
<CAPTION>
__________________________________________________________________
April 2, April 3,
1995 1994
__________________________________________________________________
<S> <C> <C>
Notes payable, unsecured, 8.25%,
payable $3,000 annually through 1998 $ 9,000 $12,000
Industrial Development Revenue Bond,
variable interest rate not to exceed 12%,
4.15% at April 2, 1995, payable $1,400
annually through 2001 8,200 --
Other, 7.00% to 10.00%,
payable in various amounts
through 1998 1,900 2,700
__________________________________________________________________
19,100 14,700
Less-Current portion 5,400 3,900
__________________________________________________________________
$13,700 $10,800
__________________________________________________________________
</TABLE>
Page 45
</Page>
<PAGE>
The long-term debt agreements contain provisions
regarding working capital requirements, limitations on
additional borrowings, investments and the payment of
dividends. At April 2, 1995, PCC was in compliance with the
restrictive provisions of its loan agreements. Retained
earnings of $47,000 were available for payment of dividends
at April 2, 1995.
Long-term debt is payable in each fiscal year as
follows: $5,400 in 1996, $5,000 in 1997, $4,500 in 1998,
$1,400 in 1999, $1,400 in 2000 and $1,400 in 2001.
INCOME TAXES
In fiscal 1994, PCC retroactively adopted the
provisions of Statement of Financial Accounting Standards
(SFAS) No. 109, "Accounting for Income Taxes," for all
periods after March 31, 1986, by restating the financial
statements of prior periods.
Deferred income tax assets and liabilities on the
consolidated balance sheets reflect the net tax effects of
temporary differences between the carrying amounts of assets
and liabilities for financial reporting purposes and the
amounts used for income tax purposes.
Page 46
</Page>
<PAGE>
Income (loss) before provision for income taxes was:
<TABLE>
<CAPTION>
__________________________________________________________________
Fiscal Fiscal Fiscal
1995 1994 1993
<S> <C> <C> <C>
__________________________________________________________________
Domestic $46,600 $39,000 $1,100
Foreign 200 (1,600) (1,200)
__________________________________________________________________
Total pretax income (loss) $46,800 $37,400 $ (100)
__________________________________________________________________
</TABLE>
The provision for income taxes consisted of the following:
<TABLE>
<CAPTION>
__________________________________________________________________
Fiscal Fiscal Fiscal
1995 1994 1993
__________________________________________________________________
<S> <C> <C> <C>
Currently payable:
Federal income taxes, net of tax
credits $10,000 $16,800 $5,000
State income taxes 2,700 2,100 1,500
__________________________________________________________________
12,700 18,900 6,500
Change in deferred income taxes 5,100 (6,600) (8,400)
__________________________________________________________________
Page 47
</Page>
<PAGE>
Provision (benefit) for income taxes $17,800 $12,300 $(1,900)
__________________________________________________________________
</TABLE>
During the first quarter of fiscal 1994, PCC
recorded a $2,400 benefit, equal to $0.12 per
share, for the settlement of research and
development tax credits claimed in 1990 and 1991.
The income tax provision (benefit) is
different from the amount computed by applying the
federal statutory income tax rate of 35 percent in
1995 and 1994, and 34 percent in 1993 to income
before income taxes. The reasons for this
difference are as follows:
<TABLE>
<CAPTION>
__________________________________________________________________
Fiscal Fiscal Fiscal
1995 1994 1993
__________________________________________________________________
<S> <C> <C> <C>
Statutory federal tax on income $16,400 $13,100 $ --
Increase (decrease) as a result of:
State income taxes, net of federal
tax benefit 2,100 1,000 --
Research and development tax
credits -- (2,700) (1,300)
Valuation allowance -- 700 300
Foreign Sales Corporation benefit (900) (700) (700)
Effect of rate change on deferred
taxes -- 600 --
Other, net 200 300 (200)
Page 48
</Page>
<PAGE>
__________________________________________________________________
Provision (benefit) for income taxes $17,800 $12,300 $(1,900)
__________________________________________________________________
</TABLE>
Significant components of PCC's deferred tax
assets and liabilities were as follows:
<TABLE>
<CAPTION>
__________________________________________________________________
April 2, April 3,
1995 1994
__________________________________________________________________
<S> <C> <C>
Deferred tax assets arising from:
Expense accruals $15,500 $11,600
Inventory reserves 2,600 2,900
Postretirement benefits other
than pensions 2,100 2,000
Advance payments 2,300 2,700
Domestic and foreign net operating
and capital loss carryforwards 3,800 5,200
Other 600 300
Valuation allowances (3,800) (5,200)
__________________________________________________________________
Gross deferred tax assets 23,100 19,500
__________________________________________________________________
Deferred tax liabilities arising from:
Depreciation 20,700 12,200
Inventory basis differences 8,200 6,800
State tax accrual 700 --
Other 300 100
Page 49
</Page>
<PAGE>
__________________________________________________________________
Gross deferred tax liabilities 29,900 19,100
__________________________________________________________________
Net deferred tax asset (liability) $(6,800) $ 400
__________________________________________________________________
</TABLE>
The Company has provided valuation allowances
for domestic and foreign net operating and capital
loss carryforwards to reduce the related future
income tax benefits to zero. The portion of the
valuation allowance related to acquired net
operating losses was $1,100 at April 2, 1995 and
$2,500 at April 3, 1994. If realized, this will
be recorded as a reduction to goodwill.
EMPLOYEE BENEFIT PLANS:
Employee Pension Benefits
PCC has defined benefit pension plans
covering substantially all domestic employees.
Benefits generally are based on years of service
and compensation. PCC's funding policy is to
satisfy the funding requirements of the Employee
Retirement Income Security Act.
In determining the actuarial present value of
the projected benefit obligation, the following
assumptions were used: a discount rate of 8.50
percent in 1995, 7.25 percent in 1994 and 8.00
percent in 1993; a future compensation increase
rate of 5.00 percent in 1995 and 1994 and 6.00
percent in 1993; and an expected long-term rate of
return on assets of 9.00 percent in all years.
The year-to-year fluctuations in the discount rate
assumptions primarily reflect changes in interest
rates. The discount rates
Page 50
</Page>
<PAGE>
represent the expected yield on a portfolio of
high-grade (AA rated or equivalent) fixed-income
investments with cash flow streams sufficient to
satisfy benefit obligations under the plans when
due.
Net pension cost for each of the last three
fiscal years was as follows:
<TABLE>
<CAPTION>
__________________________________________________________________
Fiscal Fiscal Fiscal
1995 1994 1993
__________________________________________________________________
<S> <C> <C> <C>
Service costs of benefits earned $5,000 $ 5,200 $ 5,700
Interest cost on the projected
benefit obligation 5,200 4,800 4,200
Actual return on plan assets (4,300) (1,300) (5,500)
Net amortization and deferral of items
not reflected in earnings (600) (4,300) 700
Curtailment gain due to restructuring
activity, of which $4,000 in 1993
was netted in the provision for
restructuring charges -- (2,000) (5,100)
___________________________________________________________________
Net pension cost $5,300 $ 2,400 $ --
___________________________________________________________________
</TABLE>
The pension liability as of April 2, 1995
includes the assumption of liability related to
the pension plans of PCC Specialty Products as a
result of that acquisition. Reconciliation of the
funded status of the plans to the pension
liability was as follows:
Page 51
</Page>
<PAGE>
<TABLE>
<CAPTION>
__________________________________________________________________
Fiscal Fiscal Fiscal
1995 1994 1993
__________________________________________________________________
<S> <C> <C> <C>
Actuarial present value of
benefit obligations:
Vested benefit obligation $74,100 $ 49,700 $ 35,700
__________________________________________________________________
Accumulated benefit obligation $75,000 $ 50,600 $ 37,500
Effects of estimated future
pay increases 18,500 21,500 18,000
__________________________________________________________________
Projected benefit obligation 93,500 72,100 55,500
Plan assets at fair value 89,300 58,800 55,600
__________________________________________________________________
Funded status (4,200) (13,300) 100
Unrecognized asset at
transition (2,500) (2,800) (3,100)
Prior service cost not yet
recognized (500) (400) (500)
Unrecognized net loss 400 16,000 2,300
__________________________________________________________________
Accrued pension liability $(6,800) $ (500) $(1,200)
__________________________________________________________________
</TABLE>
Postretirement Benefits Other Than Pensions
PCC provides postretirement medical benefits
for eligible employees who have satisfied plan
eligibility provisions, which include age and/or
service requirements.
Page 52
</Page>
<PAGE>
In fiscal 1994, the Company adopted SFAS No. 106,
"Employers' Accounting for Postretirement Benefits
Other Than Pensions." Under SFAS No. 106, the
costs of retiree health care are accrued over
relevant service periods. Previously, these costs
were charged to expense as claims were paid. The
Company elected to immediately recognize the
transition obligation, resulting in a one-time
charge of $4,700 equal to $2,900 after tax, or
$0.15 per share. Postretirement medical benefits
which were recorded on a cash basis in 1993 were
not material and have not been restated.
Assumptions used in determining the net
periodic postretirement benefit cost and the
accrued postretirement benefit obligation included
a discount rate of 8.50 percent in 1995 and 7.25
percent in 1994 and a medical inflation rate of
10.00 percent in 1995 and 13.00 percent in 1994,
grading down to 5.00 percent after five and eight
years, respectively. The plans are unfunded.
The components of postretirement benefits
cost for 1995 and 1994 were as follows:
<TABLE>
<CAPTION>
__________________________________________________________
Fiscal Fiscal
1995 1994
__________________________________________________________
<S> <C> <C>
Service cost $153 $300
Interest cost 325 300
__________________________________________________________
Postretirement benefits cost $478 $600
__________________________________________________________
</TABLE>
Page 53
</Page>
<PAGE>
The postretirement benefit liability as of
April 2, 1995 includes the assumption of liability
related to the acquisition of PCC Specialty
Products. The accumulated postretirement benefits
obligation at April 2, 1995 and April 3, 1994 was
as follows:
<TABLE>
<CAPTION>
___________________________________________________________
April 2, April 3,
1995 1994
___________________________________________________________
Accumulated postretirement benefits obligation:
<S> <C> <C>
Retirees $2,900 $1,000
Eligible active plan participants 1,000 1,000
Other active plan participants 2,700 4,400
____________________________________________________________
6,600 6,400
Unrecognized net (gain)loss (700) 1,400
____________________________________________________________
Accrued postretirement benefits
liability $7,300 $5,000
____________________________________________________________
</TABLE>
Page 54
</Page>
<PAGE>
A one percent increase in the annual health care trend
rates would have increased the accumulated postretirement
benefits obligation at April 2, 1995 by $600 and at April 3,
1994 by $800 and increased the postretirement benefits cost
by $100 in each 1995 and 1994.
COMMITMENTS AND CONTINGENCIES
Various lawsuits arising during the normal course of
business are pending against PCC. In the opinion of
management, the outcome of these lawsuits will have no
significant effect on PCC's consolidated financial position.
REPURCHASE OF COMMON STOCK
At March 28, 1993, PCC was committed to repurchase
approximately 7,350,000 shares of common stock at $15.67 per
share. The repurchase price totaled $117,000, including
transaction and professional fees, and was paid on April 7,
1993. PCC funded the shares repurchase using $67,000 of its
own cash and $50,000 borrowed from a bank. In fiscal 1994,
the bank borrowing was repaid and the bank credit agreement
was terminated.
SHAREHOLDERS' INVESTMENT
Authorized shares of common stock without par value
consisted of 50,000,000 shares at April 2, 1995, April 3,
1994, and March 28, 1993. Authorized and unissued series A
no par serial preferred stock consisted of 1,000,000 shares
at April 2, 1995, April 3, 1994, and March 28, 1993.
PCC translates the balance sheet of its foreign
subsidiary using the exchange rate at the end of the year.
The statement of income is translated using the average
exchange rate for the year. The effects of such
translations are included in the equity account "cumulative
translation adjustments."
STOCK INCENTIVE PLANS
PCC has stock incentive plans for certain officers, key
salaried employees and directors. The officer and employee
stock incentive plans allow for the granting of stock
options, stock bonuses, stock appreciation rights, cash
bonus rights and sale of restricted stock. Awards under the
officer and employee stock incentive plans are determined by
the Compensation Committee of the Board of Directors. The
time limit within which options may be exercised and other
exercise terms are fixed by the Committee. The directors'
plan grants options for 1,000 shares annually to each
outside director. Option prices of the plans to date have
been at the fair market value on the date of grant. When
stock options are exercised, the proceeds (including any tax
benefits to the Company arising as a result of the exercise)
are credited to the appropriate
Page 55
</Page>
<PAGE>
common stock and paid-in capital accounts.
At April 2, 1995, 1,444,000 stock incentive
plan shares were available for future grants and
1,036,000 stock incentive shares were immediately
exercisable. The outstanding options for stock
incentive plan shares have expiration dates
ranging from 1995 to 2004.
Changes during 1995, 1994 and 1993 in stock
incentive plan shares outstanding and exercisable
were as follows:
<TABLE>
<CAPTION>
_______________________________________________________________
Shares Price
_______________________________________________________________
<S>
<C> <C>
Outstanding at March 29, 1992 1,436,000 $ 4 to $26
Granted 377,000 11 to 17
Exercised (26,000) 7 to 11
Expired or cancelled (201,000) 11 to 25
_______________________________________________________________
Outstanding at March 28, 1993 1,586,000 4 to 26
Granted 239,000 13 to 21
Exercised (251,000) 4 to 20
Expired or cancelled (246,000) 11 to 26
_______________________________________________________________
Outstanding at April 3, 1994 1,328,000 4 to 26
Granted 208,000 22 to 25
Exercised (465,000) 4 to 24
Expired or cancelled (39,000) 11 to 26
_______________________________________________________________
Outstanding at April 2, 1995 1,032,000 $11 to $26
_______________________________________________________________
</TABLE>
Page 56
</Page>
<PAGE>
SHAREHOLDER RIGHTS PLAN
In 1988, PCC adopted a shareholder rights plan and
declared a dividend distribution of one right for each
outstanding share of common stock. Under certain conditions,
each right may be exercised to purchase 1/100 of a share of
series A no par serial preferred stock at a purchase price of
$135, subject to adjustment. The rights will be exercisable
only (i) if a person or group has acquired, or obtained the
right to acquire, 20 percent or more of the outstanding
shares of common stock, (ii) following the commencement of a
tender or exchange offer for 20 percent or more of the
outstanding shares of common stock, or (iii) after the Board
of Directors of PCC declares any person who owns more than 10
percent of the outstanding common stock to be an Adverse
Person. Each right will entitle its holder to receive, upon
exercise, common stock (or, in certain circumstances, cash,
property or other security of PCC) having a value equal to
two times the exercise price of the right. If, after a
person acquires 20 percent or more of the outstanding shares
of common stock, PCC is acquired in a merger or other
business combination in which PCC does not survive or in
which its common stock is exchanged, each right will be
adjusted to entitle its holder to receive, upon exercise,
common stock of the acquiring company having a value equal to
two times the exercise price of the right. The rights expire
on December 16, 1998 and may be redeemed by PCC for $0.01 per
right at any time until a determination is made that any
person is an Adverse Person or 10 days following the time
that a person has acquired 20 percent or more of the
outstanding common stock, or in connection with certain
transactions approved by the Board of Directors. The rights
do not have voting or dividend rights, and until they become
exercisable, have no dilutive effect on the earnings of PCC.
SEGMENT INFORMATION
PCC manufactures and markets metal parts in one industry
segment. Principal customers are manufacturers of aircraft
jet engines, industrial and marine gas turbine engines and
other industrial products, including pumps, compressors,
automotive components, devices for surgical bone repair and
replacement, electronics, fasteners, firearms and consumer
appliances.
Net sales included sales to General Electric in the
amounts of $92,600 in 1995, $97,400 in 1994, and $116,800 in
1993 and sales to Pratt & Whitney in the amounts of $72,600
in 1995, $96,400 in 1994, and $122,900 in 1993. No other
customer accounted for more than 10 percent of net sales.
Page 57
</Page>
<PAGE>
Export sales from the United States of $108,900 in 1995,
$95,100 in 1994, and $93,000 in 1993 were made principally to
customers in Western Europe. Total net sales to customers
outside the United States were $126,800 in 1995, $107,200 in
1994, and $111,700 in 1993 or 29 percent, 26 percent, and 24
percent of the Company's sales in those years. Total net
sales and identifiable assets of PCC's foreign subsidiary
represent less than 10 percent of consolidated totals.
Report of Management
The management of PCC has prepared the consolidated
financial statements and related financial data contained in
this Annual Report. The financial statements were prepared
in accordance with generally accepted accounting principles
appropriate in the circumstances and reflect judgments and
estimates with appropriate consideration to materiality.
Management is responsible for the integrity and objectivity
of the financial statements and other financial data included
in the report.
PCC maintains a system of internal accounting controls
to provide reasonable assurance that assets are safeguarded
and that transactions are properly executed and recorded.
The system includes policies and procedures, internal audits
and reviews by Company officers.
Price Waterhouse LLP, certified public accountants,
provide an objective, independent review of management's
discharge of its obligation related to the fairness of
reporting operating results and financial condition. Price
Waterhouse LLP performs auditing procedures necessary in the
circumstances to render an opinion on the financial
statements contained in this report.
The Audit Committee of the Board of Directors is
composed solely of outside directors. The Committee meets
periodically and, when appropriate, separately with
representatives of the independent public accountants and the
internal auditors to monitor the activities of each.
/s/ WILLIAM C. MCCORMICK /s/ WILLIAM D. LARSSON
_________________________ _________________________
William C. McCormick William D. Larsson
Chairman, President Vice President and
and Chief Executive Chief Financial
Officer Officer
Page 58
</Page>
<PAGE>
Report of Independent Accountants
To the Shareholders and Board of Directors of Precision
Castparts Corp.:
In our opinion, the accompanying consolidated balance
sheets and the related consolidated statements of income,
cash flows and shareholders' investment present fairly, in
all material respects, the financial position of Precision
Castparts Corp. and its subsidiaries at April 2, 1995 and
April 3, 1994, and the results of their operations and their
cash flows for each of the three years in the period ended
April 2, 1995, in conformity with generally accepted
accounting principles. These financial statements are the
responsibility of the Company's management; our
responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of
these statements in accordance with generally accepted
auditing standards which 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, assessing the accounting principles used and
significant estimates made by management, and evaluating the
overall financial statement presentation. We believe that
our audits provide a reasonable basis for the opinion
expressed above.
/s/ PRICE WATERHOUSE LLP
____________________________
Price Waterhouse LLP
Portland, Oregon
May 3, 1995
Page 59
</Page>
<PAGE>
Five-Year Summary of Selected Financial Data
<TABLE>
<CAPTION>
(Unaudited)
(In thousands, except employee and per share data)
___________________________________________________________________________
__________
1995 1994 1993 1992 1991
___________________________________________________________________________
__________
<S> <C> <C> <C> <C> <C>
Net sales $ 436,400 $ 420,400 $ 461,400 $ 583,300 $ 538,300
Net income $ 29,000 $ 22,200 $ 1,800 $ 46,500 $ 32,300
Return on sales 6.6% 5.3% 0.4% 8.6% 6.0%
Return on beginning
shareholders' investment 13.0% 11.1% 0.6% 17.4% 14.2%
Net income per common share $ 1.45 $ 1.14 $ 0.07 $ 1.75 $ 1.24
Cash dividends declared
per common share $ 0.22 $ 0.12 $ 0.08 $ 0.08 $ 0.08
Average shares of common
stock outstanding (000) 20,000 19,500 26,800 26,600 26,100
Working capital $ 89,900 $ 125,700 $ 137,000 $ 187,100 $ 169,900
Total assets $ 406,700 $ 342,900 $ 424,300 $ 422,600 $ 421,900
Total debt $ 26,000 $ 15,700 $ 19,400 $ 26,200 $ 42,500
Total debt as a percent of equity 10.1% 7.0% 9.7% 8.3% 15.9%
Shareholders' investment $ 258,400 $ 222,800 $ 199,900 $ 315,400 $ 267,000
Book value per share $ 12.80 $ 11.31 $ 10.27 $ 11.82 $ 10.09
Capital expenditures $ 10,900 $ 7,400 $ 16,000 $ 28,800 $ 28,800
Number of employees 5,166 3,993 4,341 6,372 7,339
Number of shareholders of record 2,480 2,750 2,580 2,942 3,079
Backlog of orders $ 313,200 $ 280,200 $ 367,300 $ 523,500 $ 600,800
___________________________________________________________________________
__________
</TABLE>
The Selected Financial Data have been restated, as
appropriate, to reflect the three-for-two stock split,
effective August, 1994.
Page 60
</Page>
<PAGE>
Quarterly Financial Information
(Unaudited)
(In thousands, except per share data)
<TABLE>
______________________________________________________________________
__________
<CAPTION>
1995
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
______________________________________________________________________
__________
<S> <C> <C> <C> <C>
Net sales $110,200 $102,800 $102,400 $121,000
Gross profit $ 19,900 $ 18,700 $ 16,800 $ 21,500
Net income $ 7,500 $ 7,200 $ 6,400 $ 7,900
Net income per share $ 0.38 $ 0.36 $ 0.32 $ 0.39
Cash dividends per share $ 0.04 $ 0.06 $ 0.06 $ 0.06
Common stock prices:
High $ 24.25 $ 26.88 $ 27.50 $ 26.50
Low $ 20.58 $ 20.67 $ 18.00 $ 19.63
End $ 20.92 $ 25.63 $ 20.25 $ 26.13
______________________________________________________________________
__________
</TABLE>
<TABLE>
______________________________________________________________________
__________
<CAPTION>
1994 (1)
1st Quarter (2) 2nd Quarter 3rd Quarter 4th Quarter
______________________________________________________________________
__________
<S> <C> <C> <C> <C>
Net sales $101,400 $107,900 $103,600 $107,500
Gross profit $ 15,500 $ 16,700 $ 17,600 $ 18,900
Page 61
</Page>
<PAGE>
Income before cumulative
effect of accounting change $ 7,000 $ 5,500 $ 6,000 $ 6,600
Net income $ 4,100 $ 5,500 $ 6,000 $ 6,600
Net income per share $ 0.21 $ 0.28 $ 0.31 $ 0.34
Cash dividends per share $ 0.02 $ 0.02 $ 0.04 $ 0.04
Common stock prices:
High $ 15.58 $ 16.17 $ 19.33 $ 23.25
Low $ 13.17 $ 13.92 $ 16.00 $ 18.66
End $ 14.33 $ 16.00 $ 19.33 $ 22.41
______________________________________________________________________
__________
</TABLE>
The Quarterly Financial Information has been
restated, as appropriate, to reflect the three-for-
two stock split, effective August, 1994.
[FN]
__________
(1) For fiscal 1994, the Company adopted 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
$4,700, equal to $2,900 after tax, or $0.15 per
share.
(2) During the first quarter of fiscal 1994, the
Company recorded a $2,400 tax benefit, equal to
$0.12 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.
Page 62
</Page>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Business Overview
Sales in fiscal 1995 were up 4 percent to $436.4 million
from $420.4 million in fiscal 1994. Net income of $29.0
million in 1995 was up 31 percent from the prior fiscal year's
results of $22.2 million. The improvements in sales and net
income were achieved despite the continuation of the down-
cycle in the Company's largest market, the aerospace industry.
Beginning in calendar year 1992, deliveries of commercial
jet aircraft began a cyclical downturn. Although the rate of
decline in worldwide aircraft deliveries is slowing, the
overall volume of commercial aircraft deliveries is off nearly
50 percent from the peak of the cycle. This decline in
aircraft build rates, coupled with major reductions in
military spending during the same period, has resulted in
significant reductions in the demand for the Company's
aerospace products. To address this challenge, PCC set a
course to improve the cost structure and competitive position
of its aerospace operations, to identify growth opportunities
in other markets for the Company's existing technologies, and
to leverage and expand the Company's technical capabilities
and markets served through strategic acquisitions. In 1995,
PCC made advances in each of these targeted areas, as
summarized below:
The Company continued to improve its aerospace business
operations by increasing productivity and improving
product quality while reducing production cycle times.
This has provided the efficiencies necessary to maintain
profitability in an increasingly competitive marketplace.
During the year, the Company achieved further
diversification by expanding into new applications and
markets with its traditional metal forming technologies.
Sales growth opportunities for investment castings have
been found in a variety of non-aerospace markets such as
industrial gas turbines and automotive parts. In
addition, sales of metal injection molded parts increased
by 30 percent in fiscal 1995 with the majority of the
growth occurring in automotive, electronics, firearms
and consumer products markets.
Two acquisitions in fiscal 1995 significantly expanded
the metal forming technologies of the Company and
provided a base for even further diversification and
growth. The first of these acquisitions, PCC Composites,
which was completed on April 6, 1994, is a manufacturer
of metal matrix composite parts. PCC Composites provides
a new metal forming technology which the Company can use
to increase its
Page 63
</Page>
<PAGE>
involvement in the electronics and automotive markets.
The second acquisition, PCC Specialty Products, completed
on March 8, 1995, also expands the Company's metal
forming capabilities, and adds to the markets served by
the Company. PCC Specialty Products is a designer,
manufacturer and marketer of premium metalworking tools
and machines, specialty powdered metal parts, and other
specialty industrial components. The markets served by
PCC Specialty Products include general industrial,
appliance, industrial supply, farm equipment and
metalworking tools and machines.
Overall, fiscal 1995 was a challenging and successful
year for PCC. It was a year when the Company and its
employees continued to strengthen the Company's competitive
position in the base businesses despite difficult market
conditions in the aerospace industry, and it was a year when
actions were taken to realize the potential of new strategic
directions.
Fiscal 1995 Compared with Fiscal 1994
Sales for fiscal 1995 increased $16.0 million (4%) from
the prior year. Nearly half of the increase in sales resulted
from the acquisitions of PCC Composites and PCC Specialty
Products. Aerospace and aircraft gas turbine sales
represented 79 percent of total sales, down $9.4 million
compared with 1994, while sales of other industrial and
commercial products increased by $25.4 million, or 37 percent,
reflecting the Company's continued diversification into non-
aerospace markets. Sales to United States government end-
users were 16 percent of sales in 1995 and 21 percent in 1994.
This decline reflects both the impact of lower military
spending levels and the increasing diversification of PCC's
customer base.
Cost of sales as a percent of sales improved to 82
percent in 1995 from 84 percent in the prior year. This
improvement came largely from the higher volume of sales to
non-aerospace markets which yield relatively higher margins.
These higher margins were partially offset by increased
manufacturing costs related to development of new parts for
industrial gas turbine applications, metal matrix composite
applications and turbocharger wheels for the trucking
industry.
Selling and administrative costs remained at 7 percent of
sales in 1995. However, the Company expects that selling and
administrative costs will increase next year, both in terms of
total dollars and as a percent of sales, due to higher selling
expenses associated with the new acquisitions.
In 1995, the effective tax rate was 38 percent as
compared with an effective tax rate of 33 percent in 1994.
The 1994 effective tax rate included a 6 percentage point
reduction reflecting the net effect of a $2.7 million benefit
for research and development tax credits partially offset by
$0.6 million of tax expense related to adjustment of deferred
taxes to reflect the increase in federal tax rates from 34
percent to 35 percent.
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</Page>
<PAGE>
The Company's effective tax rate for fiscal 1996 is expected
to increase, reflecting higher amounts of non-deductible
goodwill amortization and lower amounts of tax free investment
income.
Net income of $29.0 million in 1995 was 31 percent higher
than the $22.2 million earned in the prior year. Income in
1994 reflected the $2.9 million after tax expense due to the
effect of the accounting change for postretirement benefits.
Earnings per share in 1995 were $1.45 based on 20.0 million
shares outstanding versus $1.14 based on 19.5 million shares
outstanding in the prior year. These earnings per share
results reflect a three-for-two stock split effective in
August, 1994.
Fiscal 1994 Compared with Fiscal 1993
Sales for fiscal 1994 declined $41.0 million (9%) from
$461.4 million in fiscal 1993 to $420.4 million in 1994.
Aerospace and aircraft gas turbine sales, which represented 84
percent of total sales, declined $49.5 million (12%) versus
1993. Sales of other industrial and commercial products
increased $8.5 million (14%) due to growth in the electronics
and industrial gas turbine markets. The aerospace and other
industrial and commercial products sales have been
reclassified in 1994 and 1993 to conform to the 1995
classifications. Sales to United States government end-users
were 21 percent of sales in 1994 and 24 percent in 1993.
Cost of sales as a percent of sales was 84 percent in
1994 compared to 85 percent in 1993. The improvement in cost
of sales resulted from cuts in operating costs, improvements
in product quality and reductions in product cycle times.
Workforce reductions of 8 percent in 1994 and nearly 40
percent since 1992 have provided a significant portion of the
operating cost improvements.
Results in 1993 included provisions for restructuring
charges of $27.2 million and environmental charges of $9.9
million.
Selling and administrative costs were 5 percent lower in
1994 than 1993, reflecting further reductions in personnel and
improved efficiencies.
The effective tax rate was 33 percent in 1994 before
consideration of the cumulative effect of the change in
accounting for postretirement benefits, which had an effective
tax rate of 38 percent. In 1993, the effective tax rate was
33 percent before consideration of restructuring and
environmental charges which had a tax benefit of 38 percent.
The 1994 effective tax rate included $2.7 million of research
and development tax credits. This benefit was partially
offset by the increase in the federal income tax rate from 34
percent in 1993 to 35 percent in 1994. Together, the tax
credit benefit and rate change expense reduced the effective
tax rate 6 percentage points.
Page 65
</Page>
<PAGE>
Net income was $22.2 million after consideration of the
effect of the accounting change in 1994, as compared with $1.8
million in 1993, after restructuring and environmental
charges. Earnings per share were $1.14 based on 19.5 million
shares outstanding in 1994 and $0.07 based on 26.8 million
shares in 1993. The Company repurchased 7.4 million shares of
stock in April, 1994. The shares and earnings per share have
been restated to reflect the effects of the stock split in
August, 1994.
Liquidity and Capital Resources
At April 2, 1995, total capitalization of $284.4 million
consisted of $26.0 million of debt and $258.4 million of
equity. The debt-to-equity ratio at the end of fiscal 1995
was 10 percent, up from 7 percent at the end of the prior
year, reflecting the borrowings and assumption of debt
associated with the acquisition of PCC Specialty Products in
March, 1995.
Operating and investing activities used $57.2 million of
cash in 1995. Cash of $87.5 million was expended for two
business acquisitions, while earnings generated $57.2 million
and changes in working capital consumed $17.0 million. During
1995, excluding additions related to business acquisitions,
receivables and inventories increased $7.6 million principally
due to the higher level of sales and the strategic purchase of
certain raw materials in excess of current requirements.
Payments of liabilities accounted for the majority of the
remaining cash expenditures related to working capital. Cash
and cash equivalents were $3.9 million at year-end, down $51.3
million from the beginning of the year.
At April 2, 1995, the Company had no committed bank
credit facilities, but believes that it has the ability to
enter into revolving credit or other types of borrowing
facilities, if needed.
PCC believes that future capital requirements for
property, plant and equipment and dividend payments can be
funded from existing 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.
Outlook
During the past three years, the aerospace industry has
been adversely affected by the depressed economic condition of
the airline industry and cutbacks in both domestic and foreign
military spending programs. This situation has reduced market
demand for the Company's products and has intensified the
competitive environment within the aerospace industry. PCC
has responded to these challenges by streamlining its
aerospace operations and diversifying through both additional
non-aerospace business development and acquisitions.
Page 66
</Page>
<PAGE>
The Company will continue to pursue a strategy of
diversification, including acquiring companies with similar or
complementary technologies, in order to grow and increase
shareholder value. In addition, by improving the aerospace
operations, the Company is well positioned to take advantage
of the gradual upturn in the aerospace market which is
expected to occur in the latter part of this decade. PCC
believes its future is very bright and looks forward to the
many opportunities which lie ahead.
Page 67
</Page>
<PAGE>
EXHIBIT 21
SUBSIDIARIES OF PRECISION CASTPARTS CORP.
<TABLE>
<CAPTION>
State of
Approximate Percentage Jurisdiction
of Voting Securities Incorporation
Name of Subsidiary Owned or Organization
______________________________________________________________
___
<S> <C> <C>
PCC Airfoils, Inc. 100% Ohio
PCC Specialty Products, Inc. 100% Delaware
Advanced Forming Technology, Inc. 100% Colorado
Precision Castparts Corp.
- France, S.A. 100% France
PCC Composites, Inc. 100% Pennsylvania
</TABLE>
Page 68
</Page>
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in
the Prospectus constituting part of the Registration Statement
on Form S-3 No. 2-95890, to the incorporation by reference in
the Prospectus constituting part of the Registration Statement
on Form S-3 No. 2-95855, to the incorporation by reference in
the Registration Statement on Form S-8 No. 33-32367, and to
the incorporation by reference in the Registration Statement
on Form S-8, No. 33-40559 of Precision Castparts Corp. of our
report dated May 3, 1995 which appears on page 10 of the
Financial Section of the 1995 Annual Report to Shareholders of
Precision Castparts Corp., which is incorporated in this
Annual Report on Form 10-K. We also consent to the
incorporation by reference of our report on the Financial
Statement Schedule, which appears in Item 14(a)2 in this
Annual Report on Form 10-K.
/s/ PRICE WATERHOUSE LLP
______________________________
PRICE WATERHOUSE LLP
Portland, Oregon
June 30, 1995
Page 69
</Page>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the April 2,
1995 financial statements and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> APR-02-1995
<PERIOD-START> APR-04-1994
<PERIOD-END> APR-02-1995
<CASH> 3900
<SECURITIES> 0
<RECEIVABLES> 84300
<ALLOWANCES> 1200
<INVENTORY> 90900
<CURRENT-ASSETS> 190100
<PP&E> 279200
<DEPRECIATION> 143000
<TOTAL-ASSETS> 406700
<CURRENT-LIABILITIES> 100200
<BONDS> 0
<COMMON> 20200
0
0
<OTHER-SE> 238200
<TOTAL-LIABILITY-AND-EQUITY> 406700
<SALES> 436400
<TOTAL-REVENUES> 436400
<CGS> 359500
<TOTAL-COSTS> 391100
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (1500)
<INCOME-PRETAX> 46800
<INCOME-TAX> 17800
<INCOME-CONTINUING> 29000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 29000
<EPS-PRIMARY> 1.45
<EPS-DILUTED> 1.45
</TABLE>
