<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 June 29, 1997
Commission File No. 1-10348
_______________________________________
Precision Castparts Corp.
An Oregon Corporation
IRS Employer Identification No. 93-0460598
4650 S.W. Macadam Avenue
Suite 440
Portland, Oregon 97201-4254
Telephone: (503) 417-4800
_______________________________________
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 August 6, 1997: 24,127,099
Page 1 of 12 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
Consolidated Statements of Income
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended
___________________________
June 29, 1997 June 30, 1996
___________________________
<S> <C> <C>
Net Sales $317,000 $
166,000
Cost of Goods Sold 249,100 134,100
Selling and Administrative Expenses 30,000 12,600
Interest Expense, Net 5,000 300
________
________
Income Before Provision for
Income Taxes 32,900 19,000
Provision for Income Taxes 13,400 7,700
________
________
Net Income $ 19,500 $ 11,300
======== ========
Net Income Per Common Share $ 0.81 $ 0.55
======== ========
</TABLE>
See Notes to the Interim Financial Statements on page 6.
</Page>
<PAGE>
Page 3
Precision Castparts Corp. and Subsidiaries
Consolidated Balance Sheets
(In thousands)
<TABLE>
<CAPTION>
June 29,1997 March 30, 1997
____________________________
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 2,200 $ 10,100
Receivables 202,700 178,200
Inventories 232,800 235,800
Prepaid expenses 6,300 6,200
Current deferred tax asset 26,000 23,800
__________ __________
Total current assets 470,000 454,100
__________ __________
Property, Plant and Equipment, at cost 414,200 398,800
Less -- Accumulated depreciation (177,800) (169,700)
__________ __________
Net property, plant and equipment 236,400 229,100
Goodwill, net of amortization 377,000 379,500
Other Assets, net 7,800 7,400
__________ __________
$1,091,200 $1,070,100
========== ==========
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities:
Notes payable $ 21,000 $ 17,000
Current portion of long-term debt 24,600 22,500
Accounts payable 73,400 84,400
Accrued liabilities 103,300 101,900
Income taxes payable 30,000 23,100
__________ __________
Total current liabilities 252,300 248,900
__________ __________
Long-Term Debt, excluding
current portion 254,000 261,000
Deferred Tax Liability 12,300 12,200
Accrued Retirement Benefits Obligation 33,100 26,000
Other Long-Term Liabilities 12,600 17,600
__________ __________
Total liabilities 564,300 565,700
__________ __________
See Notes to the Interim Financial Statements on page 6.
</Page>
<PAGE>
Page 4
Shareholders' Investment:
Common stock 24,100 24,000
Paid-in capital 164,900 160,800
Retained earnings 337,400 319,400
Cumulative translation adjustment 500 200
__________ __________
Total shareholders' investment 526,900 504,400
__________ __________
$1,091,200 $1,070,100
========== ==========
</TABLE>
Precision Castparts Corp. and Subsidiaries
Consolidated Statements of Cash Flows
(In thousands)
<TABLE>
<CAPTION>
Three Months Ended
___________________________
June 29, 1997June 30, 1996
___________________________
<S> <C> <C>
Cash Flows from Operating Activities:
Net income $ 19,500 $ 11,300
Non-cash items included in income:
Depreciation and amortization 10,800 6,100
Deferred taxes (100) (1,300)
Changes in operating working capital,
excluding effects of acquisitions:
Receivables (24,800) (8,900)
Inventories 2,900 (5,300)
Prepaids (100) (100)
Payables, accruals & current taxes (3,300) (4,400)
Other operating activities, net 1,300 3,800
_________ _________
Net cash provided by
operating activities 6,200 1,200
_________ _________
See Notes to the Interim Financial Statements on page 6.
</Page>
<PAGE>
Page 5
Cash Flows from Investing Activities:
Business acquisitions, net of
cash acquired -- (42,200)
Acquisition of property, plant
and equipment (15,900) (8,600)
Other investing activities, net 1,100 200
_________ _________
Net cash used by investing
activities (14,800) (50,600)
_________ _________
Cash Flows from Financing Activities:
Proceeds of long-term debt -- 32,000
Payment of long-term debt (5,500) (6,500)
Proceeds of notes payable 4,000 700
Sale of common stock 4,200 1,100
Cash dividends (1,400) (1,200)
Other financing activities, net (600) 700
_________ _________
Net cash provided by
financing activities 700 26,800
_________ _________
Net Decrease in Cash and
Cash Equivalents (7,900) (22,600)
Cash and Cash Equivalents at
Beginning of Period 10,100 26,200
_________ _________
Cash and Cash Equivalents at
End of Period $ 2,200 $ 3,600
========= =========
</TABLE>
See Notes to the Interim Financial Statements on page 6.
</Page>
<PAGE>
Page 6
Notes to the Interim Financial Statements
(1) The consolidated interim financial statements have been
prepared by Precision Castparts Corp. ("PCC" or 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 reflect all
adjustments which are, in the opinion of management,
necessary for fair representation.
(2) Earnings per share have been computed based on the
weighted average number of shares of common stock
outstanding during the periods. Net income per share
is based on 24,000,000 shares outstanding for the three
months ended June 29, 1997, and 20,600,000 shares
outstanding for the three months ended June 30, 1996.
Fully diluted amounts are not presented because they
are not materially different than amounts shown.
(3) In the first quarter of last year, PCC acquired The
Olofsson Corporation ("Olofsson"). In the second
quarter of last year, the Company acquired Balo
Precision Parts, Inc. ("Balo"), AE Turbine Components,
Limited ("AETC"), NEWFLO Corporation (now operating as
"PCC Flow Technologies") and Astro Punch Corporation
("Astro Punch"). In the third and fourth quarters of
last year, the Company acquired Crown Pump Corp.
("Crown Pump")and OIC Valve ("OIC"), respectively.
The following represents the pro forma results of
operations for the Company and its material
acquisitions for the three months ended June 30, 1996,
as though the acquisitions had occurred at the
beginning of the fiscal year. Results for the three
months ended June 29, 1997 include the full quarter's
</Page>
<PAGE>
Page 7
results from acquisitions. The pro forma information
is not necessarily indicative of the results which
would have resulted had the acquisitions occurred at
the beginning of the fiscal year, nor is it necessarily
indicative of future results.
<TABLE>
<CAPTION>
Three Months Ended
___________________
June 30, 1996
___________________
<S> <C>
Revenues $255,900
========
Net Income $ 12,800
========
Earnings per share $ .62
========
</TABLE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Sales for the first quarter were $317.0 million, up 91
percent from $166.0 million in the same quarter last year.
Net income was $19.5 million, or $0.81 per share, for the
quarter, compared with net income of $11.3 million, or $0.55
per share in the same quarter last year.
Results of Operations - Comparison Between Three Months
Ended June 29, 1997 and June 30, 1996
Sales increased $151.0 million as compared to the first
quarter a year ago, primarily due to acquisitions completed
in fiscal 1997, coupled with strong demand in the aerospace
market.
Cost of goods sold as a percent of sales for the first
quarter of fiscal 1998 was 79 percent, an improvement from
the 81 percent reported in the first quarter last year.
Reflected in the fiscal 1998 results are higher margins
contributed by the acquisitions made in fiscal 1997,
partially offset by higher costs related to development of
industrial gas turbine ("IGT") products.
</Page>
<PAGE>
Page 8
Selling and administrative costs were $30.0 million for the
quarter, up $17.4 million from the $12.6 million a year ago.
The higher level of selling and administrative expenses
primarily reflects the addition of the new acquisitions
completed in fiscal 1997.
Net interest expense in the first quarter of fiscal 1998 was
$5.0 million, as compared with $0.3 million in the first
quarter a year ago. The higher expense reflects the lower
cash balances and higher debt this year as compared with a
year ago, as a result of borrowings to fund the acquisitions
as well as debt assumed in connection with the acquisitions.
The effective tax rate in the first quarter of fiscal 1998
was 40.8 percent approximating last year's effective tax
rate of 40.5 percent. The current fiscal year rate reflects
higher amounts of nondeductible goodwill amortization,
partially offset by utilization of tax benefits related to
prior period operating losses of a foreign subsidiary.
Changes in Financial Condition and Liquidity
Total assets of $1,091.2 million at June 29, 1997
represented a $21.1 million increase from the $1,070.1
million balance at March 30, 1997. Higher accounts
receivable and property, plant and equipment balances were
partially offset by a decrease in cash. Total
capitalization at June 29, 1997, was $826.5 million,
consisting of $299.6 million of debt and $526.9 million of
equity. The debt-to-capitalization ratio was 0.36 compared
with 0.37 at the end of the prior fiscal year.
Cash from earnings for the three months ended June 29, 1997
of $30.2 million, plus cash of $4.2 million from the sale of
common stock through stock option exercises was less than
cash requirements which consisted of $24.0 million for
increased working capital, $15.9 million for capital
expenditures, $1.5 million for repayments of both short and
long-term borrowings and $1.4 million for dividends. The
net decrease in the quarter's cash resulted in an ending
cash balance of $2.2 million, down $7.9 million from fiscal
1997 year end.
</Page>
<PAGE>
Page 9
At quarter end, the Company had a pending acquisition of the
assets of Pittler GmbH of Langen, Germany. This acquisition
was completed after quarter end in a cash transaction for
approximately $5.4 million and will be accounted for using
the purchase method. The Company used cash on hand and
borrowings on an existing bank credit facility. PCC
believes that future capital requirements for property,
plant and equipment and cash dividends 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 and the issuance of stock.
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The 1997 Annual Meeting of Shareholders of the Company
was held on August 6, 1997. At that meeting, the
shareholders elected three directors to serve terms of
three years; approved the 1998 Employee Stock Purchase
Plan; approved the Executive Performance Compensation
Plan; amended the 1987 Non-Employee Directors' Stock
Option Plan; and ratified the appointment of Price
Waterhouse LLP as auditors of the Company for the 1998
fiscal year. The number of votes cast for, against or
withheld, as well as the number of abstentions and
broker non-votes is included in the table below:
</Page>
<PAGE>
Page 10
<TABLE>
<CAPTION>
Votes
_________________________________________________________________________
Against Broker
Cast or Absten- Non-
Matter Voted Upon For Withheld tions Votes Total
________________________________________________________________________________
________________
<S> <C> <C> <C> <C> <C>
1. To elect three
directors to
serve terms of
three years
William C. McCormick 21,015,990 116,695 -- -- 21,132,685
Vernon E. Oechsle 20,855,615 277,070 -- -- 21,132,685
Steve C. Reidel 20,855,925 276,760 -- -- 21,132,685
2. To adopt the 1998
Employee Stock Purchase
Plan 20,969,440 85,177 78,068 -- 21,132,685
3. To adopt the Executive
Performance Compensation
Plan 19,976,424 1,058,722 97,539 -- 21,132,685
4. To amend the 1987 Non-
Employee Directors'
Stock Option Plan 19,732,273 1,290,264 110,148 -- 21,132,685
5. To ratify the
appointment of
Price Waterhouse LLP
as auditors of
the Company for
the 1998 fiscal year 21,091,292 11,234 30,159 -- 21,132,685
</TABLE>
</Page>
<PAGE>
Page 11
Item 6. Exhibits and Reports on Form 8-K
Item 6.(a) Exhibits
(10)B Precision Castparts Corp.
Revised and Restated Non-Employee
Directors' Stock Option Plan as amended.
(10)G Precision Castparts Corp.
Executive Performance Compensation Plan.
(10)L Precision Castparts Corp. 1998
Employee Stock Purchase Plan.
(27) Financial Data Schedule
Item 6.(b) Reports on Form 8-K
None.
Forward Looking Statements
Information included within this filing describing the
projected growth and future results and events constitutes
forward-looking statements. Actual results in future
periods may differ materially from the forward-looking
statements because of a number of risks and uncertainties,
including but not limited to fluctuations in the aerospace
cycle; the relative success of the Company's entry into new
markets, including the rapid ramp-up for industrial gas
turbine component production; competitive pricing; the
availability and cost of materials and supplies; relations
with the Company's employees; the Company's ability to
manage its operating costs and to integrate acquired
businesses in an effective manner; governmental regulations
and environmental matters; and risks associated with
international operations. Any forward-looking statements
should be considered in light of these factors.
</Page>
<PAGE>
Page 12
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: August 8, 1997 /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
June 29, 1997, financial statements and is qualified in its entirety
by reference to such financial statements.
</LEGEND>
<CIK> 0000079958
<NAME> PRECISION CASTPARTS CORP.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-29-1998
<PERIOD-START> MAR-31-1997
<PERIOD-END> JUN-29-1997
<CASH> 2200
<SECURITIES> 0
<RECEIVABLES> 205500
<ALLOWANCES> 2800
<INVENTORY> 232800
<CURRENT-ASSETS> 470000
<PP&E> 414200
<DEPRECIATION> 177800
<TOTAL-ASSETS> 1091200
<CURRENT-LIABILITIES> 252300
<BONDS> 0
0
0
<COMMON> 24100
<OTHER-SE> 502800
<TOTAL-LIABILITY-AND-EQUITY> 1091200
<SALES> 317000
<TOTAL-REVENUES> 317000
<CGS> 249100
<TOTAL-COSTS> 249100
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5000
<INCOME-PRETAX> 32900
<INCOME-TAX> 13400
<INCOME-CONTINUING> 19500
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 19500
<EPS-PRIMARY> .81
<EPS-DILUTED> .81
</TABLE>
<PAGE>
EXHIBIT (10)B
AMENDED
PRECISION CASTPARTS CORP.
NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
Precision Castparts Corp., an Oregon corporation (the
"Company"), recognizes that its continuing success depends upon
the initiative, ability and significant contributions of
non-employee directors. The Company believes that by affording
such non-employee directors the opportunity to purchase shares in
the common stock of the Company (the "Common Stock"), it will
enhance its ability to attract and retain such non-employee
directors and will provide an incentive for them to exert their
best efforts on its behalf.
The following plan (the "Plan") is therefore adopted:
1. Shares Subject to Option.
1.1 Options granted under the Plan shall be for authorized
but unissued or reacquired Common Stock of the Company.
1.2 Options may be granted under paragraph 5 for a total of
not more than 150,000 shares of Common Stock, subject to
adjustment under paragraph 8. Shares subject to options that are
terminated or expire without being exercised shall be added to
the shares remaining for future options.
2. Effective Date; Duration.
The Plan shall be effective August 5, 1987 and continue
until August 4, 2002, or until options have been granted covering
all of the available shares, whichever is earlier, unless sooner
terminated by the Company. Expiration or termination of the Plan
shall not affect outstanding options.
3. Eligibility; Non-Employee Directors.
Options may be granted under the Plan only to persons who
are or have been elected as Non-Employee Directors of the
Company. A "Non-Employee Director" is a director who is not
otherwise an employee of the Company or any of its subsidiaries
and has not been an employee of the Company or any of its
subsidiaries within two years of any date as of which a
determination of eligibility is made.
4. Administration.
4.1 The Plan shall be administered in accordance with the
express provisions of the Plan by the Board of Directors of the
Company (the "Board of Directors") with the advice of a
compensation committee appointed by the Board of Directors (the
"Committee"). The Board of Directors may delegate any of its
Page C-1
</Page>
<PAGE>
administrative duties to one or more agents and may retain
advisors to assist it.
4.2 The Board of Directors shall have general
responsibility to interpret and administer the Plan and shall
have authority to adopt such rules and to make such other
determinations not inconsistent with the Plan deemed necessary
for the administration of the Plan. Any decision of the Board of
Directors shall be final and bind all parties.
4.3 No director or Committee member shall participate in
the decision of any question relating exclusively to an option
granted to the director or member.
5. Option Grants.
On the date of each annual meeting of shareholders of the
Company beginning with the annual meeting held in 1987 ("Grant
Dates"), each Non-Employee Director elected at the annual meeting
or whose term continues after such meeting shall be automatically
granted an option to purchase 1,000 shares of Common Stock. If
the number of shares available for grant is insufficient to make
all automatic grants required on any Grant Date, the number of
shares for which options are granted to each Non-Employee
Director shall be proportionately reduced.
6. Terms of Options.
Each option granted under the Plan shall have the following
provisions:
6.1 Price. The exercise price of the option shall be the
closing price of a share of Common Stock on the Grant Date as
shown on the New York Stock Exchange Composite Transaction
Listing, as published in the Wall Street Journal. In the event
that the Common Stock is no longer listed on the New York Stock
Exchange or the price is no longer shown on the New York Stock
Exchange Composite Transaction Listing, then the Board of
Directors or the Committee shall substitute a comparable source
of closing price information.
6.2 Term. The term of the option shall be 10 years from
the Grant Date.
6.3 Time of Exercise; Option Year.
6.3.1 Until it expires or is terminated and except as
provided in 6.3.2 and 6.3.3, the option may be exercised from
time to time to purchase shares up to the following limits:
Page C-2
</Page>
<PAGE>
Years After Percent
Grant Date Exercisable
__________ __________
Less than 1 0
1 to 2 25
2 to 3 50
3 to 4 75
over 4 100
6.3.2 On death the exercise limit will be at least 50
percent.
6.3.3 If a director ceases to be a director by reason
of retirement at normal retirement date or does not stand for
reelection because of board policies relating to age, or a change
in control of the Company shall have occurred, all options
granted hereunder will be 100 percent exercisable. A "change in
control" shall 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 more than 20 percent 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, 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 of Directors 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
Page C-3
</Page>
<PAGE>
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.
6.3.4 The table in 6.3.1 is based on an Option Year.
An Option Year is a 12-month period starting on the Grant Date or
an anniversary of that date.
6.4 Continuation as Director.
6.4.1 If an optionee ceases to be a director for any
reason, an Option Reference Date will be established. Any portion
of the option that is not exercisable on the Option Reference
Date will lapse. The Option Reference Date will be fixed as
follows:
(a) If the termination is by death or disability,
the first day of the next Option Year will be the Option
Reference Date.
(b) In all other cases, the optionee's last day
as a director will be the Option Reference Date.
6.4.2 Any portion of the option that is exercisable on
the Option Reference Date may be exercised up to the earlier of
the last day of the term of the option or a date fixed as
follows:
(a) If the termination is by death or disability,
or by retirement under the Company's policy requiring retirement
of directors, one year after the last day as a director.
(b) In all other cases, one month after the
Option Reference Date.
6.5 Payment of Exercise Price. At the time of exercise of
an option, the full exercise price must be paid in cash or by
delivery of Common Stock valued at fair market value, which shall
be the closing price of a share of Common Stock as shown on the
New York Stock Exchange Composite Transaction Listing, as
published in the Wall Street Journal, on the trading day
immediately preceding the date of exercise or such other price as
would be determined by the method used under 6.1.
Page C-4
</Page>
<PAGE>
6.6 Nonassignability. The option may not be assigned or
transferred except on death, by will or operation of law. The
option may be exercised only by the optionee or by a successor or
representative after death.
7. Option Agreement.
Each option shall be evidenced by a stock option agreement
which shall set forth the number of shares for which the option
was granted, the provisions called for in paragraph 6 relating to
the option, and such other terms and conditions consistent with
the Plan as the Board of Directors shall determine from time to
time.
8. Changes in Capital Structure.
If any change is made in the outstanding Common Stock
without the Company's receiving any consideration, such as a
stock split, reverse stock split, stock dividend, or combination
or reclassification of the Common Stock, corresponding changes
shall be made in the number of shares remaining available for
option under paragraph 1 and in any outstanding options without
any further approval of the shareholders. The number of shares
for which automatic grants are made under paragraph 5 shall not
be adjusted. Fractional shares shall be disregarded. Any
adjustment required hereunder shall be made by the Board of
Directors whose determination shall be conclusive.
9. Limited Stock Appreciation Rights.
Concurrently with the grant of an option under the Plan (or,
in respect of options granted prior to the time that this Section
9 becomes effective, at the time that this Section 9 is approved
by the shareholders of the Company) the recipient of the option
(the "Related Options") shall be automatically granted a limited
stock appreciation right (a "limited right") with respect to the
Related Option granted pursuant to the Plan. A limited right
shall be exercisable to the same extent and upon the same terms
and conditions as the Related Option but may be exercised only
during a Limited Exercise Period which commences on or after the
expiration of six months following the date of grant of such
limited right. The term "Limited Exercise Period" shall mean any
90 day period beginning on the first day following a Change in
Control as defined in Section 6.3.3 above.
Upon any exercise of a limited right, the holder thereof
shall be entitled, with respect to each share covered by the
Related Option, to an amount in cash equal to the excess, if any,
of (1) the highest per share price paid for shares of stock of
the Company (or the equivalent value in the case of a transaction
described in Section 6.3.3(d) hereof) in the transaction
constituting the Change in Control, or, in the case of a Change
in Control described in Section 6.3.3(b) hereof which does not
occur in connection with a transaction described in Sections
Page C-5
</Page>
<PAGE>
6.3.3(a)(b)(c)(d) hereof, the average trading price of shares of
Stock of the Company on the New York Stock Exchange, such other
national securities exchange on which such shares are admitted to
trade or the National Association of Securities Dealers Automated
Quotation System if such shares are admitted for quotation
thereon, during the 30 day period ending on the date immediately
preceding the Change in Control, over (2) the exercise price per
share of the Related Option.
Upon any exercise of a limited right, the Related Option
shall be canceled to the extent of such exercise. Upon any
exercise of an option, the limited right granted with respect
thereto shall be canceled to the extent of such exercise. The
provisions of this Section 9 are intended to meet the applicable
requirements of Rule 16b-3 promulgated under Section 16 of the
Securities Exchange Act of 1934, as amended, and all
interpretations of this Section shall be made in a manner
consistent with and so as to comply with the requirements of such
Rule.
Notwithstanding anything in this Section 9 to the contrary,
no limited stock appreciation rights may be granted, and all
limited stock appreciation rights then outstanding shall expire,
upon the adoption by the Securities and Exchange Commission of a
final rule or regulation to the effect that the exercise of an
option under the Plan will be exempt from the application of
Section 16(b) of the Exchange Act.
10. Amendment or Termination of the Plan.
10.1 The Board of Directors may amend or terminate this
Plan at any time subject to 10.2.
10.2 Unless the amendment is approved by the shareholders,
no amendment shall be made to the Plan that would (a) increase
the total number of shares available for option grants under
paragraph 1 or the number of shares for which automatic grants
are made under paragraph 5, (b) increase the term for which
options are granted, (c) change the formula for determining the
exercise price of options to provide a lower exercise price,
(d) modify the requirements for eligibility under the Plan, or
(e) materially increase the benefits accruing under the Plan.
11. Shareholder Approval.
This Plan shall terminate unless at the 1987 Annual Meeting
of Shareholders, at which a quorum is present, more votes are
cast for approval of the Plan than are cast against approval of
the Plan.
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<PAGE>
EXHIBIT (10)G
PRECISION CASTPARTS CORP.
EXECUTIVE PERFORMANCE COMPENSATION PLAN
1. Establishment and Duration. Precision Castparts Corp. (the
"Company") hereby establishes the Precision Castparts Corp.
Executive Performance Compensation Plan (the "Plan") with the
intent of qualifying compensation paid under the Plan as
"performance-based compensation" within the meaning of Section
162(m) of the Internal Revenue Code of 1986 and the regulations
promulgated thereunder. The Plan is effective as of March 31,
1997, and shall remain in effect until the Company's Annual
Meeting of Shareholders in 2002 or until earlier terminated by
the Board of Directors of the Company; provided, however, that if
the shareholders do not approve the Plan at the Company's Annual
Meeting of Shareholders in 1997, the Plan shall automatically
terminate.
2. Administration. The Plan shall be administered by the
Compensation Committee (the "Committee") of the Board of
Directors of the Company, which shall be comprised solely of two
or more "outside directors" as defined in regulations promulgated
under Section 162(m) of the Internal Revenue Code of 1986. The
Committee may adopt guidelines to implement and administer the
Plan.
3. Eligible Participants. Not later than the 90th day after the
commencement of each fiscal year of the Company, the Committee
shall identify, by written resolution, the officers of the
Company who will participate in the Plan for such year and be
eligible to receive awards under the Plan (the "Performance
Compensation Awards"). Such identification may specify Plan
participants by name or by office or title.
4. Threshold Parameter.
(a) With respect to each fiscal year of the Company, the
Performance Compensation Award of an officer participating in the
Plan shall be dependent upon the achievement of the threshold
parameter for the year established in writing by the Committee
for that officer not later than the 90th day after the
commencement of the fiscal year.
(b) The threshold parameter applicable to a participating
officer for any fiscal year shall be established in writing by
the Committee and shall consist of an objectively determinable
level of performance of the Company or any subsidiary, division
or other unit of the Company based on one or more of the
following criteria: net income, operating income, gross margins,
earnings per share, revenues, market share, cash flow, generation
of free cash, working capital, retained earnings, stock price,
total stockholder return, operating expense ratios, return on
sales, return on equity, return on capital, return on assets,
Page B-1
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<PAGE>
return on investments, inventory turns, comparative performance
of one or more of the above criteria to the performance of other
corporations, or any of the above criteria before the effect of
acquisitions, divestitures, accounting changes, or restructuring
or other special charges (as determined by the Committee at the
time of establishing the threshold parameter).
5. Compensation Awards. No Performance Compensation Award will
be paid under the Plan unless the threshold parameter as
determined by the Committee is achieved.
6. Amount of Performance Compensation Award. If the threshold
parameter for a year is achieved, the amount of the Performance
Compensation Award earned by each participating officer with
respect to such year shall be $1,500,000; provided, however, that
the Committee, in its sole discretion, may cancel or reduce the
amount of such award based on such criteria as the Committee in
its sole discretion shall determine. The Committee may establish
in advance criteria in addition to the threshold parameter that
it intends to or agrees to apply in exercising its discretion to
cancel or reduce an award. The Committee may in its discretion at
any time prior to the payment of an award modify or waive any of
such additional criteria, but may not modify or waive the
threshold parameter.
7. Confirmation. Prior to the payment of any Performance
Compensation Award, the Committee shall certify in writing that
the threshold parameter has been satisfied and shall otherwise
determine any reduction in the amount of the award.
8. Termination of Employment. With respect to any person who
during a fiscal year was a participant in the Plan, but who as of
the end of such fiscal year is no longer an officer or employee
of the Company, the determination as to whether a Performance
Compensation Award will be paid to such person for such year
shall be at the sole discretion of the Committee, but in no case
shall a Performance Compensation Award be paid with respect to a
fiscal year unless the threshold parameter for that year is
achieved.
9. Employment Rights. Nothing in the Plan or any award pursuant
to the Plan shall confer upon any employee any right to be
continued in the employment of the Company or any subsidiary or
interfere in any way with the right of the Company or any
subsidiary by whom such employee is employed to terminate such
employee's employment at any time, for any reason, with or
without cause, or to decrease such employee's compensation or
benefits.
Page B-2
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<PAGE>
EXHIBIT (10)L
PRECISION CASTPARTS CORP.
1998 EMPLOYEE STOCK PURCHASE PLAN
1. Purpose of the Plan. Precision Castparts Corp. (the
"Company") believes that ownership of shares of its common stock
by its employees, and by the employees of its subsidiaries, is
desirable as an incentive to better performance and improvement
of profits, and as a means by which employees may share in the
Company's growth and success. The purpose of the Precision
Castparts Corp. 1998 Employee Stock Purchase Plan (the "Plan") is
to provide a convenient means for employees of the Company and
its subsidiaries to purchase the Company's stock.
2. Shares Reserved for the Plan. There are 1,000,000 shares of
the Company's authorized but unissued Common Stock (the "Common
Stock"), reserved for the Plan. The number of shares reserved is
subject to adjustment in the event of stock dividends, stock
splits, combinations of shares, recapitalizations or other
changes in the outstanding Common Stock. The determination of
whether an adjustment shall be made and the manner of any
adjustment shall be made by the Board of Directors of the Company
(the "Board of Directors") without any further approval from the
shareholders, which determination shall be conclusive.
3. Administration of the Plan. The Plan shall be administered
by the Employee Stock Purchase Plan Committee (the "Committee"),
which shall consist of three or more employees appointed by the
Board of Directors. The Board of Directors may at any time remove
any member of the Committee, with or without cause, fill
vacancies and appoint new members of the Committee. The Committee
shall have authority to promulgate rules and regulations for the
operation of the Plan, to adopt forms for use in connection with
the Plan, to decide any question of interpretation of the Plan or
rights arising under the Plan and generally to supervise the
administration of the Plan. The Committee may consult with
counsel for the Company on any matter arising under the Plan. All
determinations and decisions of the Committee shall be
conclusive. No member of the Committee shall receive any
compensation for serving as a member of the Committee.
4. Eligible Employees. Except as provided below, all full-time
employees of the Company and all full-time employees of any
domestic or foreign subsidiary corporation of the Company that is
designated by the Board of Directors as a participant in the Plan
(a "Participating Subsidiary") are eligible to participate in the
Plan. Any employee who, after receiving an option pursuant to the
Plan, would own or be deemed under section 425(d) of the Internal
Revenue Code of 1986, as amended (IRC) to own stock (including
stock that may be purchased under any outstanding options)
possessing five percent or more of the total combined voting
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<PAGE>
power or value of all classes of stock of the Company or, if
applicable, its parent or subsidiaries, shall be ineligible to
participate in the Plan. A full- time employee is one who is an
employee of the Company or of any Participating Subsidiary on the
date an option is granted pursuant to the Plan, excluding,
however, any employee whose customary employment is fewer than 20
hours per week or whose customary employment is for not more than
five months per calendar year or who is a collective bargaining
unit employee whose collective bargaining unit has rejected
participation in the Plan on behalf of employees in that unit.
Such rejection shall be effective until revoked by written notice
to the Company. An employee shall be treated as employed
continuously for all purposes of the Plan during any period not
exceeding 90 days during which he or she is on sick, military or
other bona fide leave of absence, including layoff.
5. Participation in the Plan. As of a specific date during the
first month of each calendar year, the Board of Directors may
make an option grant under the Plan to all, but not fewer than
all, eligible employees. The specific grant date selected by the
Board of Directors is referred to as the Offer Date. Shares
subject to the options, to the extent of exercise of the options
by eligible employees, shall be purchased on December 31 of the
year in which the Offer Date occurs (the "Purchase Date") or the
earlier Special Purchase Dates (as defined below) specified under
Section 12(c) with respect to certain retirees. To the extent
options granted under the Plan are not exercised by the Purchase
Date, the options shall expire and be of no further force or
effect.
Options granted pursuant to the Plan in any year shall give
each eligible employee the right to purchase in that calendar
year a number of shares of Common Stock having on the date of
grant (the "Grant Date") a fair market value of 10 percent of the
employee's straight-time annual wage or annual base salary, but
not more than 2,000 shares in any case. For example, an employee
who is an eligible employee on the Grant Date and whose pay rate
on the Grant Date is $25,000 per year would be entitled to
purchase shares on the Purchase Date worth up to $2,500 on the
Grant Date (10 percent of straight-time wage or base salary) but
not more than 2,000 shares.
No options may be granted pursuant to the Plan that would
allow an employee's right to purchase shares under all stock
purchase plans of the Company and its subsidiaries, to which IRC
section 423 applies, to accrue at a rate that exceeds $25,000 of
fair market value of shares (determined on the Grant Date) for
the calendar year in which the Grant Date occurs. For this
purpose, the right to purchase shares pursuant to an option
accrues on the Purchase Date or Special Purchase Date for certain
retirees, if applicable.
Page A-2
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<PAGE>
An employee may participate in the Plan with respect to all
or a portion of the shares covered by the option by submitting to
the Company, on a form supplied by the Company, a subscription
and payroll deduction authorization. The payroll deduction
authorization will authorize the employing corporation to deduct
a specific amount from each of the employee's regular paychecks
beginning with the payroll period after which the payroll
deduction authorization was submitted and continuing until the
last payroll period before the Purchase Date or until the
employee amends or terminates the payroll deduction
authorization. The employee may not specify a payroll deduction
amount that is less than 1 percent or greater than 10 percent of
the gross amount of the employee's straight-time wage or base
salary for each payroll period. After an employee has begun
participating in the Plan by initiating payroll deductions, the
employee may change the authorized payroll deduction percentage
at each pay period, and the change will be effective in the next
payroll period. An employee may suspend the deduction at any
time, and the suspension will be effective in the next payroll
period after the deduction is suspended. Accumulated deductions
will be refunded, without interest, within 30 days upon written
request. After suspension, deduction may be resumed, but not
until at least one month after the deduction was suspended. If an
employee's employment with the Company is terminated before the
Purchase Date, other than on account of death or retirement,
accumulated payroll deductions will be refunded, without
interest, within 30 days. On termination due to death or
retirement, the retiree or representative of the estate of the
deceased employee, if applicable, may elect to have the
accumulated payroll deductions refunded as described above.
Otherwise, the accumulated amount will be used to purchase shares
as described below.
6. Purchase of Shares. All amounts withheld from an employee's
pay pursuant to Section 5 shall be credited to an account
established for the employee under the Plan (the "employee's
account"). No interest will be paid on the accounts. The total
amount credited to an employee's account on the Purchase Date, or
the Special Purchase Date described below for certain retired
participants, if applicable, will be used to purchase full and
fractional shares under the Plan, subject to the applicable
limits on available shares. If the total amount in any employee's
account, or the aggregate of all employees' accounts, would
purchase shares in excess of the applicable limits, the excess
will be refunded to the employees affected by the limits.
7. Purchase Price. The price at which a share of Common Stock
may be purchased pursuant to the Plan shall be specified by the
Board of Directors at the time of option grant, but shall not be
less than the lower of (i) 85 percent of the fair market value of
a share of Common Stock for the Grant Date, or (ii) 85 percent of
the fair market value of a share of Common Stock for the Purchase
Date. Unless otherwise specified by the Board of Directors, the
fair market value of a share of Common Stock shall be the Closing
Page A-3
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<PAGE>
Price of a share of Common Stock as shown on the New York Stock
Exchange Composite Transactions Listing for such date, as
published in The Wall Street Journal. In the event that the
Common Stock is no longer listed on the New York Stock Exchange
or the price is no longer shown on the New York Stock Exchange
Composite Transactions Listing, then the Board of Directors or
the Committee shall substitute a comparable source of closing
price information.
8. Delivery and Custody of Shares. Full and fractional shares
determined as of the Purchase Date will be credited to each
employee's account within 30 days after the Purchase Date. Shares
purchased by employees pursuant to the Plan shall be held by the
Bank of New York or a successor custodian approved by the Board
of Directors (the "Custodian"). By appropriate instructions to
the Custodian on forms to be provided for the purpose, an
employee may obtain transfer into the employee's own name of all
or part of the whole shares held by the Custodian for the
employee's account, and delivery of those shares to the employee.
Any fractional shares held by the Custodian for the employee's
account will be settled for cash. Upon an employee's written
request to the Custodian, all or part of the employee's full and
fractional shares credited to an employee's account shall be sold
by the Custodian's discount brokerage company in accordance with
the twice-weekly or other established schedule for sale of such
shares. The employee shall pay the brokerage company's charge for
such sale.
9. Records and Statements. The Company shall keep records of
payroll deductions during the year and transmit the records to
the Custodian after the Purchase Date. Each employee shall
receive a quarterly statement within 30 days after the end of
each quarter which shows the share value and activity in the
employee's account. Participants will be furnished such other
reports and statements, and at such intervals, as the Board of
Directors shall determine from time to time.
10. Expenses of the Plan. The Company will pay all expenses,
except brokerage fees on sales of shares, incident to operation
of the Plan, including costs of record keeping, accounting fees,
legal fees, commissions and issue or transfer taxes on purchases
pursuant to the Plan.
11. Rights Not Transferable. Rights to purchase shares under
this Plan shall not be transferable or assignable by the employee
except by will or by the laws of descent and distribution of the
state or country of the employee's domicile at the time of death
and shall be exercisable during the employee's lifetime only by
the employee.
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<PAGE>
12. Limitations on Rights to Purchase Shares.
(a) Except as provided in Sections 12(b) and 12(c) of the
Plan, no shares may be purchased under the Plan unless the
purchaser is employed by the Company or a Participating
Subsidiary on the Purchase Date and shall have been so employed
continuously since the Grant Date.
(b) If the employee's employment by the Company or a
Participating Subsidiary is terminated by death, any shares
available for purchase by the employee may be purchased on the
Purchase Date. To the extent shares available for purchase by a
deceased employee are not purchased on the Purchase Date, all
further rights to purchase shares pursuant to the offering shall
cease and terminate.
(c) If the employee's employment by the Company or a
Participating Subsidiary is terminated by retirement on or before
September 30, in the year in which the Grant Date occurs, any
shares available for purchase by the employee may be purchased on
the last business day of the second full calendar month after the
month in which the employee's retirement date occurs (the
"Special Purchase Date"). To the extent shares available for
purchase by an employee retiring on or before September 30, in
the year in which the Grant Date occurs, are not purchased on the
Special Purchase Date, all further rights to purchase shares
pursuant to the offering shall cease and terminate, and
accumulated deductions will be refunded.
If an employee's employment by the Company or a
Participating Subsidiary is terminated by retirement after
September 30, in the year in which the Grant Date occurs, any
shares available for purchase by the employee may be purchased on
the Purchase Date. To the extent shares available for purchase by
an employee retiring after September 30, in the year in which the
Grant Date occurs are not purchased on the Purchase Date, all
further rights to purchase shares pursuant to the offering shall
cease and terminate.
For purposes of this provision, retirement means termination
of employment on or after the normal retirement date under the
Precision Castparts Corp. Retirement Plan (age 65 at January 1,
1998).
13. Dividends and Other Distributions. Dividends and other
distributions, if any, on shares held by the Custodian shall be
paid to the Custodian and held by it for the account of the
respective employees entitled to them. Cash dividends or
distributions paid to the Custodian shall be reinvested in
Company shares in proportion to the number of shares held in the
employees' accounts. Dividends and other distributions, if any,
on shares held directly by employees shall be issued currently to
the employees entitled to them.
Page A-5
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<PAGE>
14. Voting and Shareholder Communications. In connection with
voting on any matter submitted to the shareholders of the
Company, the Custodian shall vote the shares it holds for each
employee's account in accordance with instructions from the
employee or, if requested by an employee, shall furnish to the
employee a proxy authorizing the employee to vote the shares.
Copies of all general communications to shareholders of the
Company shall be sent to employees participating in the Plan.
Share voting shall apply to shares held in accounts beginning in
the calendar year after the Purchase Date.
15. Responsibility. Neither the Company, its Board of
Directors, any Participating Subsidiary, nor any officer or
employee of any of them shall be liable to any employee under the
Plan for any mistake of judgment or for any omission or wrongful
act unless resulting from willful misconduct or intentional
misfeasance.
16. Conditions and Approvals. The obligations of the Company
under the Plan shall be subject to compliance with all applicable
state and federal laws and regulations, the rules of any stock
exchange on which the Company's securities may be listed, and the
approval of federal and state authorities or agencies with
jurisdiction in the matter. The Company shall use its best
efforts to comply with such laws, regulations, and rules and to
obtain required approvals.
17. Amendment of the Plan. The Board of Directors may from time
to time amend the Plan in any and all respects, except that
without the affirmative vote of the holders of a majority of the
shares of the Company voting on the amendment at a validly held
meeting of shareholders, the Board of Directors may not
(a) increase the number of shares reserved for the Plan (except
for adjustments in the event of stock dividends, stock splits,
combinations of shares, recapitalizations, or other changes in
the outstanding Common Stock), (b) extend the term of the Plan,
(c) decrease the purchase price of shares offered pursuant to the
Plan, (d) materially increase benefits accruing to employees
under the Plan, or (e) materially modify eligibility requirements
under the Plan.
18. Termination of the Plan. The Plan shall terminate when all
of the shares reserved for purposes of the Plan have been
purchased, or December 31, 2007, whichever is earlier, provided
that the Board of Directors in its sole discretion may at any
time terminate the Plan without any obligation on account of such
termination, except that such termination shall not affect
outstanding rights to purchase shares. With the consent of the
shareholders, additional Common Stock may be reserved for the
Plan or the Plan may be readopted. Notwithstanding anything in
the Plan to the contrary, in the event of a change in control of
the Company, if the Board of Directors determines that the
operation or administration of the Plan could prevent
participating employees from obtaining the benefit of the timely
Page A-6
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<PAGE>
exercise of their options under the Plan, the Plan may be
terminated in any manner deemed by the Board of Directors to
provide equitable treatment to participating employees. Equitable
treatment may include, but is not limited to, (i) the setting by
the Board of Directors of an interim purchase date or (ii) the
payment to each participating employee of the amount of
contributions standing to such participating employee's account
as of the date of the change in control, plus, except in the case
of a participating employee who is subject to Section 16(b) of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), an additional amount equal to the product of (A) the
number of full shares of Common Stock that could have been
purchased for the participating employee immediately prior to the
change in control with the contributions standing to such
participating employee's account as of the date of the change in
control at the purchase price (determined under Section 7) as of
the Grant Date (the "Purchase Price") and (B) the excess, if any,
of the highest price paid per share of Common Stock in connection
with the change in control of the Company over the Purchase
Price.
For purposes of the Plan, a "change in control" of the
Company shall have occurred if:
(a) any "person," as such term is used in Sections
13(d) and 14(d) of 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 shareholders 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 more than 20 percent 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, 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 of Directors or
nomination for election by the Company's shareholders 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 shareholders 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
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<PAGE>
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 shareholders 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.
19. Tax Withholding. Each participant who has purchased shares
under the Plan shall immediately upon notification of the amount
due, if any, pay to the Company in cash amounts necessary to
satisfy any applicable federal, state and local tax withholding
determined by the Company to be required. If the Company
determines that additional withholding is required beyond any
amount deposited at the time of purchase, the participant shall
pay such amount to the Company on demand. If the participant
fails to pay the amount demanded, the Company may withhold that
amount from other amounts payable by the Company to the
participant, including salary, subject to applicable law.
20. Effective Date. This Plan shall become effective January 1,
1998 (the "Effective Date") provided that it shall not become
effective until it has been approved by the affirmative vote of
the holders of a majority of the shares of the Company.
Adopted: May 14, 1997.
Company PRECISION CASTPARTS CORP.
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