<PAGE>
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 December 31, 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 1, 1996: 20,520,335 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>
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>
Dec 31, Jan. 1,
Three Months Ended 1995 1995
____________________________________________________________
<S> <C> <C>
Net Sales $127,700 $102,400
Cost of Goods Sold 102,000 85,600
Selling and Administrative Expenses 10,900 6,900
Interest Income, Net (100) (500)
____________________________________________________________
Income Before Provision for Income Taxes14,900 10,400
Provision for Income Taxes (1) 3,100 4,000
____________________________________________________________
Net Income $ 11,800 $ 6,400
===========================================================
Net Income Per Common Share $ 0.58 $ 0.32
===========================================================
</TABLE>
<TABLE>
<CAPTION>
Dec. 31, Jan. 1,
Nine Months Ended 1995 1995
____________________________________________________________
<S> <C> <C>
Net Sales $398,900 $315,400
Cost of Goods Sold 318,300 260,000
Selling and Administrative Expenses 33,700 22,400
Interest Expense (Income), Net 100 (1,100)
____________________________________________________________
Income Before Provision for Income Taxes46,800 34,100
Provision for Income Taxes (1) 16,100 13,000
____________________________________________________________
Net Income $ 30,700 $ 21,100
============================================================
Net Income Per Common Share $ 1.51 $ 1.06
============================================================
</TABLE>
See Notes to Financial Statements on page 5.
</Page>
<PAGE>
Page 3
Precision Castparts Corp. and Subsidiaries
(In thousands)
Consolidated Balance Sheets
<TABLE>
<CAPTION>
Dec. 31, Apr. 2,
ASSETS 1995 1995
____________________________________________________________
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 12,600 $ 3,900
Receivables 84,100 83,100
Inventories 100,300 90,900
Prepaid expenses 1,000 2,300
Current deferred tax asset 9,300 9,900
____________________________________________________________
Total current assets 207,300 190,100
____________________________________________________________
Property, Plant and Equipment, at cost 289,300
279,200
Less - Accumulated depreciation (157,400) (143,000)
____________________________________________________________
Net property, plant and equipment 131,900 136,200
____________________________________________________________
Goodwill and Other Assets 77,300 80,400
____________________________________________________________
$416,500 $406,700
============================================================
</TABLE>
LIABILITIES AND SHAREHOLDERS' INVESTMENT
<TABLE>
____________________________________________________________
<S> <C> <C>
Current Liabilities:
Notes payable $ 1,000 $ 6,900
Current portion of long-term debt 4,700 5,400
Accounts payable 22,400 25,600
Accrued liabilities 49,100 56,500
Income taxes payable 3,400 5,800
____________________________________________________________
Total current liabilities 80,600 100,200
____________________________________________________________
Long-Term Debt, excluding
current portion 9,100 13,700
Deferred Tax Liability 15,700 16,700
Accrued Retirement Benefits Obligation 10,700
10,000
Other Long-Term Liabilities 8,400 7,700
Shareholders' Investment:
Common stock 20,400 20,200
Paid-in capital 11,600 5,200
Retained earnings 257,900 230,700
Cumulative translation adjustment 2,100 2,300
____________________________________________________________
Total shareholders' investment 292,000 258,400
____________________________________________________________
$416,500 $406,700
===========================================================
See Notes to Financial Statements on page 5.
</Page>
<PAGE>
Page 4
Precision Castparts Corp. and Subsidiaries
(In thousands)
Consolidated Statements of Cash Flows
<CAPTION>
Dec. 31, Jan. 1,
Nine Months Ended 1995 1995
____________________________________________________________
Cash Flows from Operating Activities:
<S> <C> <C>
Net income $30,700 $21,100
Non-cash items included in income:
Depreciation and amortization 17,000 18,600
Deferred taxes (300) 500
Net (increase) in receivables,
inventories and prepaids over
payables and accruals (20,400) (24,900)
___________________________________________________________
Net cash provided by
operating activities 27,000 15,300
___________________________________________________________
Cash Flows from Investing Activities:
Purchase of PCC Composites -- (5,100)
Acquisition of property,
plant and equipment (11,400) (7,600)
Other investing activities, net 800 900
___________________________________________________________
Net cash used by investing
activities (10,600) (11,800)
Cash Flows from Financing Activities:
Payment of long-term debt (4,900) (4,400)
Proceeds of notes payable 1,400 --
Payments of notes payable (7,300) (300)
Sale of common stock 6,700 9,000
Cash dividends (3,600) (3,200)
Other financing activities, net -- (400)
___________________________________________________________
Net cash (used by) provided by
financing activities (7,700) 700
___________________________________________________________
Net Increase in Cash
and Cash Equivalents 8,700 4,200
Cash and Cash Equivalents at
Beginning of Period 3,900 55,200
___________________________________________________________
Cash and Cash Equivalents at
End of Period $12,600 $59,400
===========================================================
See Notes to Financial Statements on page 5.
</Page>
<PAGE>
Page 5
Notes to the Interim Financial Statements
(1) During the third quarter of fiscal 1996, the Company
recorded a tax benefit of $2.2 million from the
settlement of a state tax issue, and a $0.4 million
benefit from a research and development tax credit, the
impact from the two items was equal to $0.13 per share.
(2) The consolidated interim financial statements have been
prepared by the Company, without audit and subject to
year-end adjustment, in accordance with generally
accepted accounting principles, except that certain
information and footnote disclosures made in the latest
annual report have been condensed or omitted for the
interim statements. Certain costs are estimated for
the full year and allocated in interim periods based on
estimates of operating time expired, benefit received,
or activity associated with the interim period. The
consolidated financial statements reflected all
adjustments which are, in the opinion of management,
necessary for fair representation.
(3) Earnings per share have been computed on the weighted
average number of shares of common stock outstanding
during the periods. Net income per share is based on
20,300,000 shares outstanding for the nine months ended
December 31, 1995, and 19,900,000 shares outstanding
for the nine months ended January 1, 1995. Fully
diluted amounts are not presented because they are not
materially different than amounts shown.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Sales for the third quarter were $127.7 million, up 25% from
$102.4 million in the same quarter last year. Net income
was $11.8 million, or $0.58 per share, for the quarter,
compared with net income of $6.4 million , or $0.32 per
share in the same quarter last year.
In the first quarter last year, Precision Castparts Corp.
(PCC) acquired the assets comprising the business of PCC
Composites, Inc. and in the fourth quarter of fiscal 1995,
PCC purchased the Specialty Products Division (SPD).
Results of Operations
Comparison between Three Months Ended December 31, 1995 and
January 1, 1995
The sales increase of $25.3 million as compared to the third
</Page>
<PAGE>
Page 6
quarter of last year was due to the acquisition of SPD in
the fourth quarter of 1995 and higher sales of spares for
aircraft jet engines and growth in non-aerospace sales.
Cost of goods sold as a percent of sales for the third
quarter of fiscal 1996 was 79.9%, reflecting improvement
from the 83.6% reported in the third quarter last year. The
lower cost of sales as a percent of sales in 1996 resulted
from the inclusion of SPD's operations and leverage from the
higher sales volume.
Selling and administrative costs were $10.9 million for the
third quarter of fiscal 1996, up $4.0 million from the $6.9
million for the third quarter of last year. The higher
level of selling and administrative expenses reflects the
addition of SPD operations in the current year.
Net interest income in the third quarter of fiscal 1996 was
$0.1 million, as compared with net interest income of $0.5
million in the third quarter a year ago. The decrease
reflects the lower cash balances resulting from the fourth
quarter fiscal 1995 acquisition of SPD.
The effective tax rate in the third quarter of fiscal 1996
was 20.8%. This compared to last year's effective tax rate
of 38.0%. The decrease was due primarily to a tax benefit
of $2.2 million from the settlement of a state tax issue and
a $0.4 million benefit from a research and development tax
credit. The non-recurring tax benefits accounted for
approximately half of the net income increase between years.
Results of Operations
Comparison between Nine Months Ended December 31, 1995 and
January 1, 1995
Sales for the first nine months of fiscal 1996 were $398.9
million, $83.5 million or 26.5% higher than last year's
first nine months sales of $315.4 million. Increased sales
were primarily the result of the acquisition of SPD in the
fourth quarter of fiscal 1995. The remaining improvement
was due to higher sales of spares for aircraft jet engines
and growth in non-aerospace sales.
Cost of goods sold as a percent of sales was 79.8% for the
first nine months of fiscal 1996 as compared to 82.4% for
the same period in fiscal 1995. This improvement in cost of
</Page>
<PAGE>
Page 7
goods sold was a result of the addition of SPD operations as
well as higher overall sales in fiscal 1996.
Selling and administrative costs increased $11.3 million to
$33.7 million for the nine months ended December 31, 1995,
as compared to $22.4 million for the same period last year.
The primary reason for the increase was due to SPD
operations in the current year.
Net interest expense of $0.1 million was recorded in the
first nine months of fiscal 1996 as compared with net
interest income of $1.1 million for the same period a year
earlier. This was due to the lower cash balances and higher
debt resulting from the fourth quarter fiscal 1995
acquisition of SPD.
The effective tax rate for the first three quarters of
fiscal 1996 was 34.5%. This compared to last year's
effective tax rate of 38.0%. The lower current effective
tax rate reflected the impact of two non-recurring tax
benefits in the third quarter of fiscal 1996 of $2.6
million.
Changes in Financial Condition and Liquidity
Total assets of $416.5 million at December 31, 1995,
represented a $9.8 million increase from the $406.7 million
balance at April 2, 1995. Inventories accounted for $9.4
million of the total asset increase, reflecting higher build
rates and changes in product shipment timing.
Cash from earnings for the nine months ended December 31,
1995, of $47.4 million, plus cash of $6.7 million from the
sale of common stock through stock option exercises,
provided for $20.4 million of increased working capital,
$11.4 million of capital expenditures and $3.6 million of
dividends. The favorable cash flow provided for $10.8
million of debt repayments and brought total cash balances
to $12.6 million.
Total capitalization at December 31, 1995, was $306.8
million, consisting of $14.8 million of debt and $292.0
million of equity. The debt to equity ratio was 0.05
compared with 0.10 at the end of the prior fiscal year.
The Company can fund the pending Carmet acquisition, as
discussed in 5(a), below, from existing cash and additional
borrowings on uncommitted lines of credit. PCC believes it
can fund future requirements for capital spending and cash
dividends from cash or additional borrowings. The Company
continues to evaluate potential acquisitions and believes
acquisition opportunities can be funded from cash,
additional borrowings or the issuance of stock.
</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 15, 1996, Precision Castparts Corp. announced
that it had agreed to acquire the stock of Carmet Company of
Duncan, South Carolina. Carmet, a tungsten carbide
manufacturer has its major manufacturing and machining
facility in Duncan as well as manufacturing facilities in
Gainesville, Georgia and Bad Axe, Michigan. Its largest
markets are cutting tool and cold-forming tooling
manufacturers.
The transaction is valued at $21.7 million subject to
adjustment. 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 5, 1996 /s/ W.D. Larsson
W.D. Larsson
Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
</Page>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the
December 31, 1995 financial statements and is qualified in its entirety
by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> APR-03-1995
<PERIOD-END> DEC-31-1995
<CASH> 12600
<SECURITIES> 0
<RECEIVABLES> 85100
<ALLOWANCES> 1000
<INVENTORY> 100300
<CURRENT-ASSETS> 207300
<PP&E> 289300
<DEPRECIATION> 157400
<TOTAL-ASSETS> 416500
<CURRENT-LIABILITIES> 80600
<BONDS> 0
<COMMON> 20400
0
0
<OTHER-SE> 271600
<TOTAL-LIABILITY-AND-EQUITY> 416500
<SALES> 398900
<TOTAL-REVENUES> 398900
<CGS> 318300
<TOTAL-COSTS> 318300
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 100
<INCOME-PRETAX> 46800
<INCOME-TAX> 16100
<INCOME-CONTINUING> 30700
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 30700
<EPS-PRIMARY> 1.51
<EPS-DILUTED> 1.51
</TABLE>
