SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________________
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarter Ended January 1, 1995
Commission File No. 1-10348
_______________________________________
Precision Castparts Corp.
An Oregon Corporation
IRS Employer Identification No. 93-0460598
4600 S.E. Harney Drive
Portland, Oregon 97206-0898
Telephone: (503) 777-3881
_______________________________________
Indicate by checkmark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No ______
Number of shares of Common Stock, no par value, outstanding
as of February 9, 1995: 20,172,742 shares
Exhibit Index at Page 8
Page 1 of 9 Pages
Note: This 10-Q was filed electronically via EDGAR with the
Securities and Exchange Commission.
</Page>
Page 2
PART 1: FINANCIAL INFORMATION
Item 1. Financial Statements
Precision Castparts Corp. and Subsidiaries
(In thousands, except share and per share data)
Consolidated Statements of Income
<TABLE>
<CAPTION>
Jan. 1, Jan. 2,
Three Months Ended 1995 1994
____________________________________________________________
<S> <C> <C>
Net Sales $102,400 $ 103,600
Cost of Goods Sold 85,600 86,000
Selling and Administrative Expenses 6,900 7,400
Interest (Income) Expense, Net (500) 100
____________________________________________________________
Income Before Provision for
Income Taxes 10,400 10,100
Provision for Income Taxes (1) 4,000 4,100
____________________________________________________________
Net Income $6,400 $ 6,000
===========================================================
Net Income Per Common Share $ 0.32 $ 0.31
===========================================================
</TABLE>
<TABLE>
<CAPTION>
Jan. 1, Jan. 2,
Nine Months Ended 1995 1994
____________________________________________________________
<S> <C> <C>
Net Sales $315,400 $312,900
Cost of Goods Sold 260,000 263,100
Selling and Administrative Expenses 22,400 22,500
Interest (Income) Expense, Net (1,100) 1,000
Income Before Provision for
Income Taxes 34,100 26,300
Provision for Income Taxes (1) 13,000 7,800
____________________________________________________________
Income Before Cumulative Effect
of Accounting Change 21,100 18,500
Cumulative Effect of Change in
Accounting for Postretirement Benefits
Other Than Pensions (net of income tax
benefit of $1,800) (2) -- (2,900)
____________________________________________________________
Net Income $21,100 $15,600
===========================================================
Income (Charge) Per Share: (3)
Before cumulative effect of
accounting change $ 1.06 $ 0.95
Cumulative effect of change in
accounting for postretirement
benefits other than pensions -- (0.15)
____________________________________________________________
Net Income Per Common Share $ 1.06 $ 0.80
============================================================
</TABLE>
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<PAGE>
Page 3
Precision Castparts Corp. and Subsidiaries
(In thousands)
Consolidated Balance Sheets
<TABLE>
<CAPTION>
Jan. 1, Apr. 3,
ASSETS 1995 1994
____________________________________________________________
<S> <C> <C>
Current Assets:
Cash and cash equivalents $59,400 $55,200
Receivables 74,100 69,000
Inventories 78,400 74,000
Prepaid expenses 1,600 1,300
Current deferred tax asset 11,900 11,600
____________________________________________________________
Total current assets 225,400 211,100
____________________________________________________________
Property, Plant and Equipment, at cost 250,300 245,100
Less - Accumulated depreciation (142,400) (128,600)
____________________________________________________________
Net property, plant and equipment 107,900 116,500
____________________________________________________________
Goodwill and Other Assets 24,800 15,300
____________________________________________________________
$358,100 $342,900
============================================================
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' INVESTMENT
____________________________________________________________
<S> <C> <C>
Current Liabilities:
Notes payable $ 700 $ 1,000
Current portion of long-term debt 3,500 3,900
Accounts payable 15,400 17,900
Accrued liabilities 50,900 49,300
Income taxes payable 5,300 13,300
____________________________________________________________
Total current liabilities 75,800 85,400
____________________________________________________________
Long-Term Debt, excluding current
portion 6,800 10,800
Deferred Tax Liability 12,000 11,200
Accrued Retirement Benefits Obligation 5,000 6,000
Other Long-Term Liabilities 8,100 6,700
Shareholders' Investment:
Common stock 20,200 13,100
Paid-in capital 5,000 3,100
Retained earnings 224,000 206,100
Cumulative translation adjustment 1,200 500
____________________________________________________________
Total shareholders' investment 250,400 222,800
____________________________________________________________
$358,100 $342,900
============================================================
</TABLE>
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<PAGE>
Page 4
Precision Castparts Corp. and Subsidiaries
(In thousands)
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Jan. 1, Jan. 2,
Nine Months Ended 1995 1994
____________________________________________________________
<S> <C> <C>
Cash Flows from Operating Activities:
Net income $21,100 $15,600
Non-cash items included in income:
Depreciation and amortization 18,600 19,300
Deferred taxes 500 3,000
Cumulative effect of accounting
change (2) -- 4,700
Net (increase) decrease in receivables,
inventories and prepaids over
payables and accruals (24,900) 28,300
____________________________________________________________
Net cash provided by
operating activities 15,300 70,900
____________________________________________________________
Cash Flows from Investing Activities:
Purchase of PCC Composites (5,100) --
Acquisition of property,
plant and equipment (7,600) (6,200)
Other investing activities, net 900 (200)
____________________________________________________________
Net cash (used by) investing
activities (11,800) (6,400)
____________________________________________________________
Cash Flows from Financing Activities:
Proceeds of long-term debt -- 50,000
Payment of long-term debt (4,400) (53,700)
Payments of notes payable, net (300) (500)
Repurchase of common stock -- (117,000)
Sale of common stock 9,000 1,900
Cash dividends (3,200) (1,600)
Other financing activities, net (400) --
____________________________________________________________
Net cash provided by (used by)
financing activities 700 (120,900)
____________________________________________________________
Net Increase (Decrease) in Cash
and Cash Equivalents 4,200 (56,400)
Cash and Cash Equivalents at
Beginning of Period 55,200 68,900
____________________________________________________________
Cash and Cash Equivalents at
End of Period $59,400 $12,500
============================================================
</TABLE>
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<PAGE>
Page 5
Notes to the Interim Financial Statements
(1) During the first quarter of fiscal 1994, the Company
recorded a $2.4 million 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.
(2) In the first quarter of fiscal 1994, the Company
adopted Statement of Financial Accounting Standards
(SFAS) No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions." The
Company elected to immediately recognize the transition
obligation, resulting in a one-time charge of $4.7
million, equal to $2.9 million after tax, or $0.15 per
share.
(3) Net income per share is based on 19,900,000 shares
outstanding for the nine months ended January 1, 1995
and 19,500,000 shares outstanding for the nine months
ended January 2, 1994.
(4) In August, 1994, the Board of Directors declared a
three-for-two stock split. Accordingly, $6.7 million
representing the stated value for additional shares
issued was transferred from additional paid-in capital
to common stock.
(5) Interim financial statements subject to year end audit.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
In the third quarter, sales of $102.4 million were slightly
lower than the $103.6 million reported for the same quarter
a year ago. Net income increased seven percent to $6.4
million, as compared with $6.0 million in the third quarter
of last year. On a per share basis, the earnings were $0.32
based on 19.9 million shares outstanding as compared with
last year's third quarter earnings of $0.31 based on 19.5
million shares.
Results of Operations - Comparison between Three Months
Ended January 1, 1995 and January 2, 1994
Sales declined $1.2 million, or one percent, from $103.6
million in the third quarter of last year to $102.4 million
in this year's third quarter. This decline reflected a
reduction in sales of spares for aircraft jet engines.
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Page 6
Higher sales levels of development castings, primarily for
industrial gas turbines, were not sufficient to overcome the
short-fall in sales to our major aircraft jet engine
customers.
Cost of goods sold as a percent of sales for the third
quarter of fiscal 1995 was 83.6%, slightly higher than the
83.0% reported in the third quarter last year. The higher
cost of sales in the third quarter of fiscal 1995 reflects
changes in the product sales mix. First, because of the
continued weakness in orders for airfoils spares, the mix of
sales shifted toward more structural castings. Second,
within the structural casting sales, the mix contained a
higher portion of new development castings, primarily for
industrial gas turbines.
Interest income in the third quarter of fiscal 1995 was $0.5
million, as compared with interest expense of $0.1 million
in the third quarter a year ago. The interest income in
fiscal 1995 resulted from investment of cash balances
throughout the quarter, partially offset by interest expense
on lower borrowings.
The effective tax rate in the third quarter of fiscal 1995
was 38%. This compares to last year's effective tax rate of
39.2%, before consideration of the benefit from research and
development tax credits of $2.4 million. The lower current
effective tax rate reflects the impact in last fiscal year
of restating the deferred tax liability for the increase in
federal tax rates from 34% to 35%.
Results of Operations - Comparison between Nine Months Ended
January 1, 1995 and January 2, 1994
Sales for the first nine months of fiscal 1995 were $315.4
million, $2.5 million or one percent higher than last year's
first nine months' sales of $312.9 million. Increased sales
of components for general industrial, ordnance and
electronics applications exceeded the declines in sales of
castings for aircraft jet engines, resulting in the higher
sales in fiscal 1995.
Cost of goods sold as a percent of sales was 82.4% for the
first nine months of fiscal 1995 compared with 84.1% for the
same period in fiscal 1994. This improvement in cost of
sales has come from cost reductions, cost efficiencies due
to higher sales volumes at AFT, and the effects of
restructuring activities.
</Page>
<PAGE>
Page 7
Interest income of $1.1 million was earned in the first nine
months of fiscal year 1995 as compared with interest expense
of $1.0 million for the same period a year earlier.
Interest income in fiscal 1995 resulted from the strong cash
position at the end of fiscal 1994 and lower levels of debt.
The effective tax rate for the first three quarters of
fiscal 1995 was 38%. This compares to last year's effective
tax rate of 39.2%, before consideration of the benefit from
research and development tax credits of $2.4 million. The
lower current effective tax rate reflects the impact in last
fiscal year of restating the deferred tax liability for the
increase in federal tax rates from 34% to 35%.
Changes in Financial Condition and Liquidity
Total assets at January 1, 1995 were $358.1 million, an
increase of $15.2 million from April 3, 1994 levels.
Receivables increased $5.1 million from last year-end due to
somewhat slower collections compared with the record high
collections achieved during the fourth quarter of last year.
Inventory increased $4.4 million, due to unexpected customer
push-outs and last quarter's purchases of cobalt in
anticipation of potential supply shortages and rising
prices. Goodwill and other assets increased $9.5 million,
primarily reflecting the acquisition of PCC - Composites in
the first quarter of fiscal 1995.
Cash from earnings of $40.2 million for the first nine
months of fiscal 1995, plus cash of $9.0 million from the
sale of common stock through stock option exercises,
provided for increased working capital of $24.9 million,
$7.6 million of capital expenditures, $5.1 million for the
purchase of PCC - Composites, $4.7 million of debt
repayments and $3.2 million of cash dividends. As a result,
cash increased $4.2 million since the end of fiscal 1994 to
a balance of $59.4 million.
Total capitalization at January 1, 1995, was $261.4 million,
consisting of $11.0 million of debt and $250.4 million of
equity. The debt-to-equity ratio was 0.04 compared with
0.07 at the end of the prior fiscal year.
The Company can fund the pending Quamco acquisition from
existing cash and additional borrowings. PCC believes it
can fund future requirements for capital spending, cash
dividends, additional acquisition opportunities and
potential stock repurchases from cash balances, additional
borrowings or the issuance of stock.
</Page>
<PAGE>
Page 8
PART 2. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security
Holders
None.
Item 5. Other Information
Item 5.(a) Press Release
On January 20, 1995, Precision Castparts Corp. announced
that it has reached definitive agreement today to acquire
Quamco, Inc., of Holden, Massachusetts. Quamco, currently
controlled by an investor group led by Overseas Partners,
Inc., is a designer, manufacturer and marketer of premium
metal working tools and machines. It also designs,
manufactures and markets specialty powdered metal parts and
other specialty industrial components. Products include
branded metal-working tools and machines used in the
coldforming of heads, threads, fasteners and related parts
for industrial applications; machines and tools used in
gundrilling applications; specialty powdered metal parts;
and other special industrial components, including self-
lubricating bearings. Quamco's net sales for its fiscal
year ended October 30, 1994, were $78.8 million.
The transaction is valued at $89.9 million, including the
purchase of all outstanding stock and the payment of, or
assumption of, existing debt. The acquisition is subject to
customary closing conditions.
Item 6. Exhibits and Reports on Form 8-K
Item 6.(a) Exhibits
Exhibit 27 Financial Data Schedule
Item 6.(b) No reports on Form 8-K have been filed during
the quarter.
</Page>
<PAGE>
Page 9
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned thereunto duly
authorized.
PRECISION CASTPARTS CORP.
Registrant
DATE: February 15, 1995 /s/ W.D. Larsson
______________________________
W.D. Larsson
Vice President-Finance and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
</Page>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the January
1, 1995 financial statements and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
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<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> APR-02-1995
<PERIOD-START> APR-04-1994
<PERIOD-END> JAN-01-1995
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<RECEIVABLES> 74800
<ALLOWANCES> 700
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0
0
<OTHER-SE> 230200
<TOTAL-LIABILITY-AND-EQUITY> 358100
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<CGS> 260000
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