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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________________
FORM 8-K
Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
Date of Report July 1, 1996
(Date of Earliest Event Reported)
_______________________________________
Precision Castparts Corp.
(Exact name of registrant as specified in its charter)
Oregon 1-10348 93-0460598
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation of File No.) Identification No.)
organization)
4600 S.E. Harney Drive
Portland, Oregon 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 5.
PRECISION CASTPARTS CORP. TO ACQUIRE NEWFLO CORPORATION
PORTLAND, Oregon -- July 1, 1996 -- Precision Castparts
Corp. (NYSE:PCP) has entered into an agreement to acquire
all of the stock of the NEWFLO Corporation of Austin, Texas,
a leader in the design, manufacturing, marketing, and
servicing of high quality, niche-oriented industrial fluid
management products, in a transaction valued at $300
million. The transaction value includes the assumption of
$100 million of subordinated debt registered under the
Securities Act of 1933 and the retirement of NEWFLO's senior
debt.
NEWFLO's product lines fall into three categories: fluid
handling industrial pumps, industrial valves, and fluid
measurement instruments. These types of products are
critical components in the energy market, industrial process
and water resources markets, and other markets including
electric power generation, commercial construction,
chemical, and the marine and mining industries. NEWFLO
markets its products under brand names including Newman's
(NEWCO), General Valve, Johnston Pump, PACO Pumps, Water
Specialties, Penberthy, Techno, and Barber. The company's
principal manufacturing facilities are located in Texas,
Pennsylvania, Illinois, California, and Alberta, Canada. In
addition, the company has numerous sales agents and support
personnel located around the world to serve the
international marketplace. NEWFLO's sales for calendar
1995, restated to include 12 months' sales for a recent
acquisition, were $216 million, and sales for the six months
ended June 30, 1996, are estimated at approximately $119
million.
"We look upon the addition of NEWFLO to Precision Castparts
with a great deal of enthusiasm and optimism," said William
C. McCormick, chairman, president, and chief executive
officer of Precision Castparts Corp. "For some time now, we
have been advancing our strategy of building a solid,
profitable future for PCC both through internal growth and
through acquisition. For most of PCC's existence, we have
been totally at the mercy of the aerospace market; this
acquisition will continue our efforts in mitigating that
situation. While we will continue to be a preeminent
aerospace supplier, we are using our current financial and
operating strengths to create a stronger, less volatile,
more diversified company for the future.
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"With this acquisition, we are solidifying our general
industrial business base. We acquired our Specialty Products
Division [SPD] in March 1995 and have since made two smaller
acquisitions to complement this division's strengths. The
general industrial market does not move through the same
business cycles as aerospace. This year, we are also
investing a significant amount of money to increase our
investment casting capacity for both the aerospace and the
industrial gas turbine markets.
"PCC's acquisition strategy has been in place for some time,
and NEWFLO meets all the criteria for acquisition that we
had previously established. Its products, which are number
one or two in many of their respective markets, incorporate
proprietary technology, serve niche markets, and generate
good operating margins. In addition, NEWFLO has positioned
itself through its worldwide marketing efforts, new product
introductions, and operational excellence to achieve a
continuing record of solid growth in sales and earnings.
Their international experience and sales capability should
prove valuable to us as we continue to penetrate overseas
markets with our metal-injection molding, composites, and
SPD products. The acquisition of NEWFLO is also expected to
be immediately accretive to PCC's earnings."
J. Jack Watson has served as the chairman, president, and
chief executive officer of NEWFLO Corporation since 1990.
He will continue as president of PCC's newest subsidiary.
"NEWFLO's operating companies have sold, maintained, and
replaced pumps, valves, and instruments for an average of
more than 50 years." said Watson. "This longevity has
created a large installed product base for service, repair,
and replacement; there is a strong customer loyalty to the
company's products. We truly believe that certain of our
products are among the best-selling in their respective
niche markets around the world.
"NEWFLO products are found worldwide, and we believe that
the demand for these products in the future will be growing
due to increased capital expenditures for industrial
facilities and infrastructure, for compliance with
environmental and safety regulations, and for oil and gas
production and transportation in both developed and emerging
countries. In addition to serving these growth markets, we
are less prone to the cyclicality of the industries that we
serve due to the substantial replacement and service
opportunities in the installed base.
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"Since 1987, we have pursued a strategy of growth through
acquisition and internal opportunities, and, similar to PCC,
our efforts have been directed toward applying our proven
operating skills to improve operating results. NEWFLO's
success has been founded on our continuing commitment to the
highest quality people, very low overhead, low cost
manufacturing, and competent global procurement."
The transaction is expected to close in four to six weeks,
after compliance with Hart-Scott-Rodino filing requirements.
Financing for the purchase of NEWFLO will come from a $400
million credit facility provided by Bank of America N.T. and
S.A. Goldman Sachs represented the selling shareholders in
this transaction.
Precision Castparts Corp. produces investment castings for
aerospace and power generation customers, manufactures
castings for automotive, medical, and other commercial
applications, provides metal-injection-molded parts to the
automotive and other markets, supplies metal-matrix
composites to the electronics industry, and makes
metalworking and gundrilling tools and machines, as well as
gears and bearings for a wide variety of industrial
customers.
This press release includes forward-looking statements that
are subject to a number of uncertainties, including but not
limited to the continued level of demand for NEWFLO's
products, smooth integration of NEWFLO into Precision
Castparts Corp., NEWFLO's continuing relationships with
existing customers and distributors, and the cyclicality and
growth potential of the markets served by NEWFLO. These
statements are within the safe harbor created by Section 27A
of the Securities Act of 1933, as amended.
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 hereunto duly
authorized.
PRECISION CASTPARTS CORP.
Dated July 1, 1996 /s/ W.D. Larsson
______________________________
W. D. Larsson
Vice President and
Chief Financial Officer
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