<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________________
FORM 8-K/A
AMENDMENT NO. 1
Current Report Pursuant to Section 13 or 15(d) of the
Securities and Exchange Act of 1934
Date of Report (Date of Earliest Event Reported)
July 19, 1996
______________________________________
PRECISION CASTPARTS CORP.
(Exact name of registrant as specified in its charter)
State of Oregon 1-10348 93-0460598
(State or other (Commission (I.R.S. Employer
jurisdiction of File No.) Identification No.)
incorporation of
organization)
4600 S.E. Harney Drive
Portland, OR 97206-0898
Registrant's telephone number,
including area code: Telephone: (503) 777-3881
No Change
(Former name or address, if changed since last report)
______________________________________
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Item 7
Financial Statements and Exhibits
(a) Financial Statements of Business Acquisition
1. Report of Independent Public Accountants
2. AE Turbine Components, Ltd., Statement of
Operations and Divisional Equity for the year
Ended June 30, 1996
3. AE Turbine Components, Ltd., Consolidated
Balance Sheet as of June 30, 1996
4. AE Turbine Components, Ltd., Consolidated
Statement of Cash Flows for the year ended June
30, 1996
5. AETC Limited Notes to Consolidated Financial
Statements
(b) Pro Forma Financial Information
1. Pro Forma Combined Balance Sheet as of June 30,
1996 (unaudited)
2. Notes to Pro Forma Combined Balance Sheet
(unaudited)
3. Pro Forma Combined Income Statement for the
year ended March 31, 1996 and the three months
ended June 30, 1996 (unaudited)
4. Notes to Pro Forma Combined Income Statements
(unaudited)
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(c) Exhibits
(1) Contract Agreement among T&N plc, AE Turbine
Components Limited, T&N Export Services
Limited, Precision Castparts Corp., and AETC
Limited, Dated as of July 19, 1996. Schedules
that have been omitted will be furnished
supplementally to the Commission upon request
(Incorporated by Reference to Exhibit 1 to Form
8-K dated August 5, 1996 - File No. 1-10348)
(23) Consent of Price Waterhouse, LLP.
Item 7(a) Financial Statements of Business Acquisition
AE Turbine
Components, Ltd.
Financial Statements
For the Year Ended June 30, 1996
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Report of Independent Accountants
To the Board of Directors and
Management of Precision Castparts Corp.,
acquirors of AE Turbine Components, Ltd.
In our opinion, the accompanying balance sheet and the related
statements of operations and divisional equity and of cash
flows present fairly, in all material respects, the financial
position of AE Turbine Components, Ltd. (a branch of T&N plc)
at June 30, 1996 and the results of its operations and cash
flows for the year then ended 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 audit. We conducted our audit of
these statements in accordance with generally accepted
accounting principles 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 our audit
provides a reasonable basis for the opinion expressed above.
/s/ PRICE WATERHOUSE LLP
_____________________
Price Waterhouse LLP
Portland, Oregon
September 18, 1996
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AE Turbine Components, Ltd.
Statement of Operations and Divisional Equity
For the Year Ended June 30, 1996
(In Thousands, of U.S. $)
Net sales $ 73,100
Cost of goods sold 59,700
________
Gross margin 13,400
Selling and administrative expenses 6,600
Corporate charges from T&N 800
Interest expense on intercompany balance 6,600
________
Loss before income taxes benefit (600)
Income tax benefit 200
________
Net loss $ (400)
========
Divisional equity July 1, 1995 $ 47,400
Net loss (400)
Other changes in divisional equity (9,300)
________
Divisional equity June 30, 1996 $ 37,700
========
AE Turbine Components, Ltd.
Consolidated Balance Sheet
As of June 30, 1996
(In Thousands, of U.S. $)
Assets
Current assets:
Receivables, net of reserves of $2,000 $ 9,600
Inventories 10,500
Prepaid expenses 600
Current deferred tax asset 1,100
________
Total current assets 21,800
_________
Property, plant and equipment, at cost:
Land and buildings 14,200
Machinery and equipment 60,600
________
74,800
Less accumulated depreciation 43,600
________
Net property, plant and equipment 31,200
________
Total assets $ 53,000
========
The accompanying notes are an integral part of these
statements.
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Liabilities and Amounts due to Parent Company
Current liabilities:
Accounts payable $ 6,900
Accrued liabilities 7,400
________
Total current liabilities 14,300
Deferred tax liability 4,300
________
Total liabilities 18,600
Amounts due to parent 34,400
________
Total liabilities and amounts
due to parent $ 53,000
========
AE Turbine Components, Ltd.
Consolidated Statement of Cash Flows
For the Year Ended June 30, 1996
(In Thousands, of U.S. $)
Cash flows from operating activities:
Net loss $ (400)
Non-cash items included in income:
Depreciation 3,700
Change in operating working capital:
Receivables 3,500
Inventories 3,100
Payables and accruals 1,200
Other 400
________
Net cash provided by
operating activities 11,500
Cash flows from investing activities:
Acquisition of property, plant
and equipment (2,200)
________
Net cash used by investing activities (2,200)
Cash flows from financing activities:
Net change in amounts due to parent (9,300)
________
Net cash used by financing activities (9,300)
Net change in cash -
________
Cash and cash equivalents at beginning
of year -
________
Cash and cash equivalents at end of year $ -
========
The accompanying notes are an integral part of these
statements.
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1.Organization and Significant Accounting Policies
Basis of Presentation
AE Turbine Components, Ltd. ("AETC" or the "Company")
operates under an agency agreement as a branch of T&N plc.
The Company operates two plants in the United Kingdom and is
engaged in the manufacture of investment castings for the
aerospace and power generation industries. These financial
statements have been prepared from historical information
and are intended to represent the operations of AETC as
though carried on as a separate entity. However, the
financial statements may not be indicative of the results
that would have been attained if the Company had operated as
a separate legal entity.
Concentration of Credit Risk
At June 30, 1996, substantially all of the Company's trade
receivables were concentrated within the aerospace and
turbine power generation industries. Sales to Rolls Royce
and ABB were approximately $19,100 and $29,100 for the year
ended June 30, 1996, respectively. Trade receivables from
Rolls-Royce and ABB at June 30, 1996 were approximately
$4,800 and $4,000, respectively. Due to the concentration
of receivables within stable large manufacturers, the
Company does not believe that significant credit risk exists
in its receivables.
Revenue Recognition
Revenue is recognized upon shipment of product, offset by an
estimate for sales returns based upon historical return
percentages.
Valuation of Inventories
Inventories are stated at the lower of cost or market. Cost
is determined using the average cost method.
Depreciation and Capitalization
Depreciation of plant and equipment is generally computed
using the straight-line method based on the estimated
service lives. Estimated lives used are 10-40 years for
buildings and improvements and 5-14 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
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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.
Translation of Foreign Currencies
Foreign currency translation of the assets and liabilities
is computed using period-end currency exchange rates.
Income and expenses are translated using average exchange
rates for the period. Annual and cumulative translation
adjustments are not significant to the financial statements.
Certain Risks and Uncertainties
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results
could differ from those estimates.
2. Inventories
The June 30, 1996 inventories consisted of the following:
Raw materials $ 3,300
Work-in-progress 8,000
__________
11,300
Less: Obsolescence Reserve (800)
__________
$ 10,500
==========
As substantially all of the Company's products are
manufactured to customer specifications and shipped after
customer approval, no finished goods are maintained.
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3.Accrued liabilities
At June 30, 1996, accrued liabilities consisted of the
following:
Employee benefit costs $ 1,500
Employment taxes 800
Utilities 400
Agent and Royalties 1,300
VAT Liability 1,900
Other 1,500
________
Total $ 7,400
========
4. Related Party Transactions
Certain expenses incurred by T&N on behalf of and
attributable to AETC have been allocated to AETC based upon
relative amount of time devoted to AETC compared to that of
its other facilities. Allocated costs include management,
legal, audit, accounting, treasury, pension and other human
resources, as well as other general corporate costs and
amounted to approximately $800 for the year ended June 30,
1996. Management of AETC believes that the charges
allocated and the allocation method are reasonable; however,
amounts incurred if the Company were on a stand alone basis
could have differed from the amounts allocated due to
economies of scale and differing organizational and
management structures.
T&N provides certain social programs to its employees
including those at AETC. Benefits such as pension and
medical are provided through group T&N plans. Earnings are
charged with the cost of benefits earned at the time AETC
employees render service. The cost allocated by T&N
represents management's best estimate of AETC's portion of
the expected annual expense based upon investment yields,
wage escalation and retirement ages and includes gains and
losses representing the difference between actual and
estimated actuarial and asset return assumptions. Actual
results could differ from those
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allocated from the corporate plans. During the year ended
June 30, 1996, AETC was charged approximately $1,300 in
pension expense, which represented 10.5% of qualified
payroll.
The due to parent balance in these financial statements
comprise the excess of AETC's assets over its liabilities
and represents T&N's investment in AETC. Transactions
between T&N and AETC, as discussed above, are passed through
this intercompany account. T&N charges interest on the
monthly average balance in this account at a rate of 15%,
which has been reflected within the statement of operations
as interest expense. AETC may or may not have the ability
to refinance this debt on the same terms as those used
currently. Management believes that it is probable that
financing could be obtained which would have terms more
favorable than those charged by T&N if it were to obtain
financing from a third party on an arms length basis.
5. Taxes
Deferred income taxes result from temporary differences in
the financial bases and tax bases of assets and liabilities,
which result primarily from differences in depreciation
methods for buildings, plant and equipment. Permanent
differences between taxable and financial income are not
significant and therefore the use of the 33% U.K. statutory
tax rate is considered appropriate for purposes of
calculating the income tax provision.
6. Lease Commitments
The Company leases a production facility, automobiles and
office equipment under noncancellable operating leases.
Lease commitments for 1997 and 1998 are $ 800 and $600,
respectively, and $ 300, annually thereafter through 2008.
Management expects that in the normal course of business,
leases will be renewed or replaced as appropriate.
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Item 7(b) Pro Forma Financial Information
PRECISION CASTPARTS CORP.
PRO FORMA COMBINED BALANCE SHEET AND INCOME STATEMENT
On July 19, 1996, Precision Castparts Corp. ("PCC") purchased
substantially all of the assets of AE Turbine Components
Limited ("AETC") from AETC and its parent, T&N plc,
headquartered in Manchester, U.K. AETC is an European
manufacturer of investment castings for the aircraft engine
and industrial gas turbine markets. The purchase price was
41.0 million pounds, or $63.4 million dollars, subject to
adjustment. The transaction was financed from borrowings
under a Credit Agreement with Bank of America National Trust &
Savings Association, as Agent.
The unaudited pro forma combined income statements for the
year ended March 31, 1996, and the three months ended June 30,
1996, present the combined results of operations assuming the
purchase of the assets of AETC had been consummated at the
beginning of the period. The unaudited pro forma combined
balance sheet at June 30, 1996 presents the combined financial
position assuming the purchase of assets of AETC had been
consummated as of that date. The financial information of
AETC is as of or for the period ended June 30, 1996. The
financial information of AETC contains certain
reclassifications made to conform to PCC's classifications.
In accordance with SEC requirements, the pro forma includes
only the results of ongoing operations and excludes such
impacts as the effect of changes in accounting principles.
The following unaudited pro forma combined financial
information should be read in conjunction with historical
statements of PCC, as reported in its annual report on Form 10-
K and quarterly reports on Form 10-Q, and of AETC, as reported
in this filing on Form 8-K/A. The pro forma information is
presented for illustrative purposes only and is not
necessarily indicative of the operating results or financial
position that would have occurred had the purchase of the
assets of AETC been consummated in accordance with the
assumptions set forth above, nor is it necessarily indicative
of future operating results or financial position.
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<TABLE>
PRO FORMA COMBINED BALANCE SHEET
PRECISION CASTPARTS CORP.
AND AETC Limited
JUNE 30, 1996
($ in thousands)
(Unaudited)
<CAPTION>
Precision
Castparts Pro Forma Note Pro Forma
Corp. AETC Adjustments Reference Combined
<S> <C> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 3,600 $ - $ 6,200 (1) $ 9,800
Accounts receivables 102,000 9,600 1,600 (2) 113,200
Inventories 136,600 10,500 (600) (2) 146,500
Prepaid expenses and other 2,300 600 - 2,900
Current deferred tax asset 9,800 1,100 - 10,900
_________ _________ _________ _________
Total current assets 254,300 21,800 7,200 283,300
_________ _________ _________ _________
Property, Plant and Equipment 312,100 74,800 (43,900) (2) 343,000
Less - Accumulated Depreciation(157,900) (43,600) 43,600 (2) (157,900)
_________ _________ _________ _________
Net property, plant
and equipment 154,200 31,200 (300) 185,100
_________ _________ _________ _________
Non-current deferred tax asset - - 900 (5) 900
Goodwill, net and Other Assets 113,500 - 24,600 (2), (3) 138,100
_________ _________ _________ _________
$ 522,000 53,000 32,400 $ 607,400
========= ========= ========= =========
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LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities:
Notes payable $ 1,400 - - $ 1,400
Current portion of
long-term debt 1,900 - - 1,900
Accounts payable 41,300 6,900 (100) (2) 48,100
Accrued liabilities 51,000 7,400 1,400 (2) 59,800
Income taxes payable 12,200 - - 12,200
_________ _________ _________ _________
Total current liabilities 107,800 14,300 1,300 123,400
_________ _________ _________ _________
Long-Term Debt, excluding
current portion 46,900 - 69,800 (1) 116,700
Deferred Tax Liability 19,600 4,300 (4,300) (5) 19,600
Accrued Retirement
Benefits Obligation 13,400 - - 13,400
Other Long-Term Liabilities 20,100 - - 20,100
Due to Parent - 34,400 (34,400) (4) -
Shareholders' Investment:
Common stock 20,600 - - 20,600
Paid-in capital 14,900 - - 14,900
Retained earnings 277,100 - - 277,100
Cumulative translation
adjustment 1,600 - - 1,600
_________ _________ _________ _________
Total shareholders'
investment 314,200 - - 314,200
_________ _________ _________ _________
$ 522,000 53,000 $ 32,400 $ 607,400
========= ========= ========= =========
See accompanying notes to pro forma combined balance sheet.
</TABLE>
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PRECISION CASTPARTS CORP.
NOTES TO PRO FORMA COMBINED BALANCE SHEET
(1) Adjustment to record borrowings as needed to cover
the purchase price of AETC and to provide funds for
operations.
(2) Adjustment to restate reported assets acquired and
liabilities assumed at fair market value.
(3) Adjustment to record the estimated pro forma excess
purchase price paid and costs incurred to acquire
AETC of $24.6 million.
(4) Adjustment to eliminate amounts due to AETC's
parent.
(5) Adjustment to record the tax effect of the above pro
forma adjustments.
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<TABLE>
PRO FORMA COMBINED INCOME STATEMENT
FOR THE YEAR ENDED MARCH 31, 1996
PRECISION CASTPARTS CORP.
AND AETC LIMITED
($ in thousands, except per share data)
(Unaudited)
<CAPTION>
Precision
Castparts Pro Forma Note Pro Forma
Corp. AETC Adjustments Reference Combined
<S> <C> <C> <C> <C>
<C>
Net Sales $ 556,800 73,100 - $629,900
Cost of Goods Sold 446,100 59,700 600 (2) 506,400
_________ _________ _________ _________
Gross Margin 110,700 13,400 (600) 123,500
Selling and
Administrative
Expenses 46,900 7,400 (500) (3) 53,800
Interest Expense, net 100 6,600 (2,000) (1) 4,700
_________ _________ _________ _________
Income Before
Provision for
Income Taxes 63,700 (600) 1,900 65,000
Provision for
Income Taxes 22,600 (200) 600 (4) 23,000
_________ _________ _________ _________
Net Income $ 41,100 $ (400) $ 1,300 $ 42,000
========= ========= ========= =========
Net Income per
Common Share $ 2.02 $ 2.06
========= =========
Average number
of common shares
outstanding (in thousands) 20,400 20,400
See accompanying notes to pro forma combined income statements.
</TABLE>
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<TABLE>
PRO FORMA COMBINED INCOME STATEMENT
FOR THE THREE MONTHS ENDED JUNE 30, 1996
PRECISION CASTPARTS CORP.
AND AETC LIMITED
($ in thousands, except per share data)
(Unaudited)
<CAPTION>
Precision
Castparts AETC Pro Forma Note Pro Forma
Corp. Limited Adjustments Reference Combined
<S> <C> <C> <C> <C>
Net Sales $ 166,000 19,700 - $185,700
Cost of Goods Sold 134,100 15,500 200 (2) 149,800
_________ _________ _________ _________
Gross Margin 31,900 4,200 (200) 35,900
Selling and
Administrative
Expenses 12,600 1,900 (100) (3) 14,400
Interest Expense, net 300 1,600 (400) (1) 1,500
_________ _________ _________ _________
Income Before
Provision for
Income Taxes 19,000 700 300 20,000
Provision for
Income Taxes 7,700 200 100 (4) 8,000
_________ _________ _________ _________
Net Income $ 11,300 $ 500 $ 200 $ 12,000
========= ========= ========= =========
Net Income per
Common Share $ 0.55 $ 0.58
========= =========
Average number of common shares
outstanding (in thousands) 20,600 20,600
See accompanying notes to pro forma combined income statements.
</TABLE>
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PRECISION CASTPARTS CORP.
NOTES TO PRO FORMA COMBINED INCOME STATEMENT
(1) Adjustment to add estimated interest expense related
to debt incurred to acquire the assets of AETC. The
incremental interest expense was calculated at 6.6%
which represents PCC's borrowing rate under a UK
borrowing instrument.
(2) Adjustment to amortization of intangibles as a
result of PCC's purchase price allocation. The
amortization of goodwill arising from the purchase
transaction is amortized over forty years.
(3) Adjustment to reflect changes to operating costs as
a result of the acquisition.
(4) Adjustment to tax expense based on the pro forma
changes above.
Certain reclassifications have been made to conform to
PCC's reporting classifications.
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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: September 26, 1996 /s/ W.D. Larsson
________________________
Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
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Exhibit 23
Consent of Independent Accounts
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 September 18,
1996, relating to the consolidated financial statements of
AE Turbine Components, Ltd. (a branch of T&N plc), which
appears in the Current Report on Form 8-K/A dated September
26, 1996.
/s/ PRICE WATERHOUSE LLP
_______________________
Price Waterhouse LLP
Portland, Oregon
September 26, 1996
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