<PAGE>
Filed pursuant to Rule 424(b)(2)
Registration No. 333-41275
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED DECEMBER 8, 1997
$150,000,000
PRECISION CASTPARTS CORP.
[LOGO]
6.75% NOTES DUE DECEMBER 15, 2007
-------------
Interest on the Notes is payable on June 15 and December 15 of each year,
commencing June 15, 1998. The Notes will be redeemable, in whole or in part, at
the option of the Company at any time at a redemption price equal to the greater
of (i) 100% of the principal amount of such Notes or (ii) the sum of the present
values of the remaining scheduled payments of principal and interest (not
including the portion of any such payments of interest accrued as of the
redemption date) discounted to the redemption date on a semiannual basis
(assuming a 360-day year consisting of twelve 30-day months) at the Adjusted
Treasury Rate (as defined herein), plus, in each case, accrued and unpaid
interest thereon to the redemption date. The Notes will not be entitled to any
sinking fund. The Notes will be represented by one or more Global Debt
Securities registered in the name of The Depository Trust Company ("DTC") or its
nominee. Beneficial interests in the Global Debt Securities will be shown on,
and transfer thereof will be effected only through, records maintained by DTC
and its participants. Except as described herein, Notes in definitive form will
not be issued. The Notes will be issued only in denominations of $1,000 and
integral multiples thereof. See "Description of Notes."
------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT
OR THE PROSPECTUS TO WHICH IT RELATES. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
------------------
<TABLE>
<CAPTION>
INITIAL PUBLIC UNDERWRITING PROCEEDS TO
OFFERING PRICE(1) DISCOUNT(2) COMPANY(1)(3)
--------------------- --------------------- ---------------------
<S> <C> <C> <C>
Per Note.................................... 99.884% 0.65% 99.234%
Total....................................... $149,826,000 $975,000 $148,851,000
</TABLE>
- ------------------------
(1) Plus accrued interest, if any, from December 17, 1997.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.
(3) Before deducting estimated expenses of $590,250 payable by the Company.
------------------
The Notes offered hereby are offered severally by the Underwriters, as
specified herein, subject to receipt and acceptance by them and subject to their
right to reject any order in whole or in part. It is expected that the Notes
will be ready for delivery in book-entry form only through the facilities of DTC
in New York, New York, on or about December 17, 1997, against payment therefor
in immediately available funds.
GOLDMAN, SACHS & CO.
BANCAMERICA ROBERTSON STEPHENS
MORGAN STANLEY DEAN WITTER
------------
The date of this Prospectus Supplement is December 11, 1997.
<PAGE>
[PHOTO OF JET AIRCRAFT ENGINE]
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS THAT
STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE NOTES, INCLUDING OVER-
ALLOTMENT, STABILIZING AND SHORT-COVERING TRANSACTIONS IN THE NOTES, AND THE
IMPOSITION OF A PENALTY BID, IN CONNECTION WITH THE OFFERING. FOR A DESCRIPTION
OF THESE ACTIVITIES, SEE "UNDERWRITING."
<PAGE>
THE COMPANY
SUMMARY
Precision Castparts Corp. (the "Company") is a worldwide manufacturer of
complex metal components and products. The Company is the market leader in
manufacturing large, complex structural investment castings and is the leading
manufacturer of airfoil castings used in jet aircraft engines. In addition, the
Company has expanded into the industrial gas turbine, fluid management,
industrial metalworking tools and machines, powdered metal and other metal
products markets.
COMPANY STRATEGY
The Company's strategy consists of the following three key elements:
INCREASE OPERATING EFFICIENCY AND TECHNOLOGICAL ADVANTAGE. Since fiscal
1993, the Company has significantly reduced overhead costs, improved worker
productivity, shortened production cycle times and enhanced operating margins.
This has primarily been achieved by investing in new technologies and developing
more efficient manufacturing processes. The Company believes it maintains a
proprietary technological advantage in the high quality, high volume
manufacturing of complex metal components and products. In particular, the
Company believes it is currently the only manufacturer in the world that can
precision cast large, complex parts from a variety of metals and alloys in the
volumes and of the qualities that customers require. The Company strives to
maintain its advantage by investing in new technologies and developing new
proprietary manufacturing processes which are difficult for competitors to
duplicate.
DEVELOP NEW PRODUCTS AND MARKETS. The Company is aggressively pursuing new
product and market opportunities using the Company's existing metal-forming
technologies. The Company has identified attractive markets, such as industrial
gas turbines, where it believes its skills developed in precision casting can be
leveraged to enhance its market share. In addition, the Company is pursuing
growth opportunities in the manufacture of metal-injection-molded products for
applications including medical, electronics, hand tools and automotive parts.
The Company is also focusing on expanding its international sales, particularly
for its fluid management and general industrial product lines. The Company's
strategy is to continue to identify new products and markets where it can become
the leading supplier by utilizing its core competencies in metals, precision
metalworking and the management of complex manufacturing processes.
PURSUE SYNERGISTIC ACQUISITIONS. The Company's strategy of acquiring
businesses which leverage the Company's core competencies has led to the
completion of 11 acquisitions since March 1995 including the acquisition of J &
L Fiber Services, Inc. on October 31, 1997. The Company targets acquisitions
that (i) complement its core competencies in metals, precision metalworking and
the management of complex manufacturing processes, (ii) have strong growth
prospects and higher operating margins than its traditional product lines and
(iii) have leading positions in established market niches. The Company seeks to
acquire businesses with established market niches, proprietary technology and
the potential for significant growth and higher operating margins than the
Company's traditional product lines. The Company expects that recent
acquisitions, such as PCC Specialty Products and PCC Flow Technologies, will
enhance financial results and reduce the Company's exposure to the aerospace
cycle. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations-- Business Overview and Outlook."
The Company intends to continue focusing on increasing its operating
efficiencies and technological advantage, developing new products and markets,
and pursuing synergistic acquisitions. There is no assurance that the Company's
strategy or any element thereof will be implemented successfully.
S-3
<PAGE>
SALES HISTORY
The Company sells its complex metal components and products into five major
market areas: aerospace, general industrial and energy, industrial gas turbine,
automotive and other markets which include applications for markets such as
medical, firearms and ordnance. The relative size of sales to these markets is
shown below for fiscal 1995, 1996, and 1997.
<TABLE>
<CAPTION>
EDGAR REPRESENTATION OF
DATA POINTS USED IN
PRINTED GRAPHIC
FISCAL 1995 ACTUAL
<C> <C> <C>
Net Sales $436.4 million
Aerospace 79%
General Industrial and Energy 11%
Industrial Gas Turbine 4%
Automotive 1%
Other 5%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
FISCAL 1996 ACTUAL
<S> <C>
Net Sales $556.8 million
Aerospace 68%
General Industrial and Energy 16%
Industrial Gas Turbine 4%
Automotive 6%
Other 6%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
FISCAL 1997 ACTUAL
<S> <C>
Net Sales $972.8 million
Aerospace 53%
General Industrial and Energy 28%
Industrial Gas Turbine 7%
Automotive 7%
Other 5%
</TABLE>
PRODUCTS AND MARKETS
The Company's manufacturing of complex metal components and products
includes operations in four principal business areas: precision investment
castings, fluid management products, industrial metalworking tools and machines,
and powdered metal and other metal products.
PRECISION INVESTMENT CASTINGS
The Company is the market leader in manufacturing large, complex structural
investment castings and is the leading manufacturer of airfoil castings used in
jet aircraft engines. The Company manufactures investment castings for every
major jet aircraft engine program in production or under development by its key
customers. The Company is leveraging its experience and expertise in large,
complex structural and airfoil investment castings to manufacture castings for
industrial gas turbine ("IGT") engines used for power generation. In addition,
the Company makes investment castings for use in the automotive, medical
prostheses, satellite launch vehicle and general industrial markets.
Because of the complexity of the manufacturing process and the application
of proprietary technologies, the Company believes it currently is the only
manufacturer that can consistently produce the largest complex structural
investment castings in quantities sufficient to meet its customers' quality and
delivery requirements. The Company's emphasis on low cost, high quality products
and timeliness of delivery has enabled it to become one of the leading suppliers
of structural and airfoil castings for jet aircraft engines and to increase its
market share of IGT airfoil castings. Investment castings accounted for
approximately 66 percent of the Company's net sales in fiscal 1997 and a
majority of these products were sold to the aerospace market.
Trends in the commercial aerospace market are a critical determinant of
demand for the Company's precision investment casting products. Beginning in
1995, demand for investment castings strengthened, primarily due to increased
demand from the commercial aerospace industry, which had been in a
S-4
<PAGE>
cyclical downturn since 1991. The Company believes the principal causes of the
recent increase in new aircraft orders include increased demand for air travel
in Asia, the recent profitability of U.S. commercial airlines, which is being
driven by increased load factors, and government Stage III noise regulations
that require airlines to modernize their fleets. Airlines are responding to
these regulations by retrofitting existing aircraft or purchasing new jets.
In fiscal 1994, the Company began to focus on the manufacture of airfoil
castings for industrial gas turbines. The Company targeted this market because
it believes (i) the performance and reliability standards it has developed in
the manufacture of aerospace airfoil castings are applicable to the manufacture
of IGT airfoils, (ii) the worldwide market is large, approximately $500 million,
and (iii) the market is principally serviced by a single supplier. The Company's
IGT products consist primarily of airfoil castings for land-based gas turbines
used in electrical power generation and structural and airfoil castings for
aircraft-derivative gas turbine engines used for power generation and other land
and marine-based applications. Sales of products to the IGT market exceeded $68
million in fiscal 1997, more than double the amount in fiscal 1996, while the
first six months of fiscal 1998 include $38 million of sales to the IGT market.
FLUID MANAGEMENT PRODUCTS
The Company designs, manufactures, markets and services a broad range of
high quality, precision industrial fluid management products, including fluid
handling industrial valves, industrial pumps and fluid measuring instruments.
The Company's finished fluid management products are manufactured primarily from
castings, forgings and fabricated steel parts. These products are sold worldwide
under well-established brand names, including "General Valve," "NEWCO,"
"TECHNO," "Barber" and "OIC" valves, "Johnston," "PACO" and "Crown" pumps, and
"Water Specialties" and "Penberthy" measuring instruments, to a wide range of
end-user markets.
The Company entered the fluid management market with the acquisition of PCC
Flow Technologies, Inc. (formerly "NEWFLO Corporation") in July 1996. The
manufacturing process for fluid management products requires knowledge of
multiple metal-forming and processing technologies, including casting,
machining, welding, heat treating, assembly and processing of metal components.
Testing procedures, material management and traceability, and quality control
are also important aspects of the Company's operations. Fluid management
products accounted for approximately 17 percent of the Company's net sales in
fiscal 1997 and were sold primarily to the general industrial and energy
markets.
INDUSTRIAL METALWORKING TOOLS AND MACHINES
The Company maintains the number one or two position in its served markets
for industrial metalworking tools, and has leading market positions in the
manufacture of metalworking machines for general industrial markets. It entered
these markets in March 1995 with the acquisition of PCC Specialty Products, Inc.
(formerly "Quamco, Inc."). The Company has increased its presence in the
industrial metalworking tools and machines markets with three additional
acquisitions since 1995. Industrial metalworking tools and machines include
machine systems used for boring and turning processes primarily in the
automotive and general industrial markets, cold forming dies and related
machinery primarily used in the fastener industry and other metalworking tools
and machinery for industrial manufacturers. The Company believes it has been
able to maintain its leading market positions due to the quality of its
products, the continued development of new technologies to enable the high speed
manufacture of high quality fasteners, brand name recognition and excellent
customer service. Industrial metalworking tools and machines accounted for
approximately 10 percent of the Company's net sales in fiscal 1997 and were sold
primarily to the automotive and general industrial markets.
S-5
<PAGE>
POWDERED METAL AND OTHER METAL PRODUCTS
The Company is the largest producer of powdered metal parts manufactured by
metal-injection-molding, and is a leading manufacturer of specialty metal gears
and tungsten carbide cutting tools and wear parts that are made from powdered
metal using a compaction and sintering process. In addition, the Company
manufactures advanced technology, lightweight net shape metal-matrix-composite
parts that are made by combining aluminum and silicon carbide
("ALSiC-Registered Trademark-") using a patented pressure-
infiltration-casting-process. The Company believes these businesses have the
potential for rapid growth and complement the Company's core competencies in
metals, precision metalworking and the management of complex manufacturing
processes. Powdered metal and other metal products accounted for approximately 7
percent of the Company's net sales in fiscal 1997 and were sold primarily to the
general industrial and automotive markets.
RECENT DEVELOPMENTS
On October 31, 1997, the Company acquired J&L Fiber Services, Inc. ("J&L")
of Waukesha, Wisconsin, a world leader in the manufacture of refiner plates for
the pulp and paper industry, for a purchase price, subject to adjustments, of
$108 million. The Company financed the acquisition with borrowings under its
line of credit.
J&L was a subsidiary of Beloit Corporation ("Beloit"), a leading producer of
papermaking machinery. In its served markets, J&L is the market leader in North
America and Latin America and holds the number two market position in Europe and
Asia. The majority of J&L's refiner plate revenues is derived from the sale of
replacement parts for pulp and paper mills.
Refiner plates are metal castings designed to separate wood fibers
efficiently from the other components used in the pulping process. These plates,
containing a high degree of technology and design content, not only transport
pulp through the system, but also perform critical work on the pulp, which has a
direct impact on the ultimate quality of the paper products. J&L designs and
manufactures other metal products used in the pulping process as well, including
screen cylinders, milled bars, conical fillings and fabricated plates. J & L's
existing product portfolio will continue to be marketed by Beloit under a sales
representative agreement.
S-6
<PAGE>
SELECTED FINANCIAL DATA
The selected consolidated statement of operations and balance sheet data
shown below for, and as of the end of, each of the years in the three-year
period ended March 30, 1997 have been derived from the audited consolidated
financial statements of the Company. The selected consolidated statement of
operations and balance sheet data shown below for, and as of the end of, the six
months ended September 29, 1996 and September 28, 1997 have been derived from
the unaudited consolidated financial statements of the Company which, in the
opinion of management, include all adjustments (consisting of normal recurring
adjustments) necessary for a fair presentation of such interim periods. The pro
forma results for, and as of the end of, the six months ended September 30,
1996, is presented as though material fiscal 1997 acquisitions by the Company
had occurred at the beginning of the period. The pro forma financial data is not
necessarily indicative of the results which would have resulted had such
acquisitions occurred at the beginning of the period, nor is it necessarily
indicative of future results. The selected consolidated financial data should be
read in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations," and the consolidated financial statements
of the Company incorporated by reference herein. The results for the six months
ended September 28, 1997 are not necessarily indicative of results that may be
expected for the year ending March 29, 1998.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
----------------------------------
SEPT 29, 1996
FISCAL YEARS ----------------------
---------------------------------- PRO SEPT. 28,
1995 1996 1997 ACTUAL FORMA(1) 1997
---------- ---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA AND NUMBER OF EMPLOYEES)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales................................ $ 436,400 $ 556,800 $ 972,800 $ 410,900 $ 523,900 $ 635,100
Cost of goods sold....................... 359,500 446,100 765,500 327,300 411,000 497,300
Provision for:
Restructuring charges.................. -- -- 3,400 -- -- --
Selling and administrative expenses...... 31,600 46,900 91,500 36,000 53,800 60,900
Interest (income) expense, net........... (1,500) 100 16,700 5,800 14,100 9,500
---------- ---------- ---------- ---------- ---------- ----------
Income before provision for income
taxes.................................. 46,800 63,700 95,700 41,800 45,000 67,400
Provision for income taxes............... 17,800 22,600 39,200 17,200 19,200 27,200
---------- ---------- ---------- ---------- ---------- ----------
Net income............................... $ 29,000 $ 41,100 $ 56,500 $ 24,600 $ 25,800 $ 40,200
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
</TABLE>
S-7
<PAGE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED
--------------------------
SEPT 29, SEPT. 28,
1995 1996 1997 1996 1997
---------- ---------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital.................... $ 89,900 $ 125,800 $ 205,200 $ 211,300 $ 232,700
Total assets....................... 406,700 450,500 1,070,100 1,010,700 1,098,800
Total debt......................... 26,000 13,900 300,500 440,300 284,000
Shareholders' investment........... 258,400 303,100 504,400 328,200 546,700
OTHER DATA:
EBITDA (2)......................... $ 69,200 $ 86,700 $ 151,000 $ 62,500 $ 98,000
EBIT (2)........................... $ 45,300 $ 63,800 $ 115,800 $ 47,600 $ 76,900
Capital expenditures............... $ 10,900 $ 19,700 $ 52,800 $ 16,800 $ 34,500
Ratio of earnings to fixed
charges.......................... 53.0 58.9 6.3 8.1 7.3
Percentage of debt to total
capital, including short-term
debt............................. 9.1% 4.4% 37.3% 57.3% 34.2%
Current ratio (3).................. 1.9:1 2.3:1 1.8:1 2.0:1 1.9:1
Sales per employee (4)............. $ 104 $ 102 $ 127 $ 122 $ 133
Number of employees at end of
period........................... 5,166 5,646 9,280 8,631 9,698
</TABLE>
- ----------------
(1) Pro forma to reflect acquisitions made during the six months ended September
29, 1996. See the Company's Annual Report on Form 10-K for the fiscal year
ended March 30, 1997, as amended by Form 10-K/A filed July 9, 1997.
(2) EBITDA represents income before interest, income taxes, depreciation,
amortization and restructuring charges. EBIT represents income before
interest, income taxes and restructuring charges. Neither EBITDA nor EBIT is
intended to represent cash flow or any other measure of performance reported
in accordance with generally accepted accounting principles. The Company has
included EBITDA and EBIT as it understands that EBITDA and EBIT are used by
certain investors as measures of a company's ability to service debt.
(3) Current ratio represents the ratio of current assets to current liabilities.
(4) Sales per employee reflects annualized results for acquisitions made within
the period.
USE OF PROCEEDS
The net proceeds to the Company from the sale of the Notes are estimated to
be approximately $148.3 million. The Company expects to use approximately $105.3
million of the net proceeds to repay bank indebtedness (bearing interest at
5.99% and due on December 19, 1997) originally incurred to refinance the
Company's $100.0 million principal amount of 13 1/4% Subordinated Notes due 2002
issued by NEWFLO Corporation (the "NEWFLO Notes"), which were redeemed as of
November 15, 1997, and paid as of November 17, 1997, including the accrued
redemption premium on the NEWFLO Notes of $5.3 million. The remainder of the net
proceeds will be used to retire other indebtedness and for general corporate
purposes. See "Capitalization" below.
S-8
<PAGE>
CAPITALIZATION
The following table sets forth the consolidated short-term debt and
consolidated capitalization of the Company as of September 28, 1997 and as
adjusted to give effect to the redemption of the NEWFLO Notes and issuance and
sale of the Notes offered hereby and the application of the estimated net
proceeds therefrom as set forth under "Use of Proceeds." The table should be
read in conjunction with the consolidated financial statements of the Company
and related notes thereto incorporated by reference into this Prospectus. See
"Use of Proceeds," and "Selected Financial Data."
<TABLE>
<CAPTION>
SEPTEMBER 28, 1997
----------------------------
ACTUAL AS ADJUSTED(1)
----------- ---------------
(IN THOUSANDS)
<S> <C> <C>
Short-term debt:
Notes payable (2)................................................................. $ 17,000 $ --
Current portion of long-term debt................................................. 24,500 24,500
----------- ---------------
Total short-term debt........................................................... $ 41,500 $ 24,500
----------- ---------------
----------- ---------------
Long-term debt, excluding current portion:
Credit line (2)................................................................... $ 20,000 $ --
Term loan (2)..................................................................... 110,000 110,000
Senior unsecured notes offered hereby............................................. -- 150,000
NEWFLO Notes (3).................................................................... 100,000 --
Other debt.......................................................................... 12,500 12,500
----------- ---------------
Total long-term debt............................................................ 242,500 272,500
Total shareholders' investment.................................................. 546,700 546,700
----------- ---------------
Total capitalization............................................................ $ 789,200 $ 819,200
----------- ---------------
----------- ---------------
</TABLE>
- --------------
(1) Adjusted to give effect to the redemption of the NEWFLO Notes, the issuance
and sale of the Notes offered hereby, and the application of the estimated
net proceeds therefrom as described under "Use of Proceeds."
(2) Represents bank debt, committed and uncommitted (in the case of notes
payable), of varying dates of maturity. As of September 28, 1997, the notes
payable bore an effective interest rate per annum of 6.01% and the credit
line bore an effective interest rate per annum of 6.96%. Because of an
interest rate swap, the Company has effectively fixed the interest rate on
the term loan at 6.58% per annum, plus a margin based on the Company's
leverage ratio.
(3) The redemption of the NEWFLO Notes included a redemption premium of
approximately $5.3 million (see "Use of Proceeds," above). An amount equal
to the redemption premium was accrued as a liability in the consolidated
balance sheets of the Company upon the acquisition of PCC Flow Technologies
in July 1996. As a result, the payment of the redemption premium will be
reflected as a reduction to liabilities.
S-9
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
BUSINESS OVERVIEW AND OUTLOOK
During fiscal 1997 and the first six months of fiscal 1998, the Company
completed eight acquisitions for a total purchase price of $442.5 million. Also,
during the same time period, the Company experienced significant growth in
aerospace sales resulting from a recovery in that market, and the Company
continued its efforts to improve margins and expand the applications and markets
for its existing technologies.
The eight acquisitions completed in fiscal 1997 and the first six months of
fiscal 1998, along with growth in the Company's existing business operations,
resulted in a 75 percent increase in fiscal 1997 sales compared with fiscal
1996, and a 55 percent increase in the first six months of fiscal 1998 as
compared to the first six months a year ago. The acquisitions were accretive to
earnings, and complemented the Company's core competencies in metals, precision
metalworking and the management of complex manufacturing processes. The
acquisitions also added to the Company's presence in many of its traditional
markets, and in the case of NEWFLO and the follow-on acquisitions of Crown Pump
and OIC Valve, brought new applications and new markets to the Company. The
Company also enhanced its international presence through its acquisitions of
AETC, a company located in the United Kingdom, and Pittler, a company located in
Germany.
As anticipated, benefits of the aerospace industry recovery were realized in
both fiscal 1997 and the first six months of fiscal 1998, with sales to
aerospace customers up 38 percent and 47 percent from the respective prior
periods. While aerospace continues to be the primary market served by the
Company, its diversification into power generation, general industrial, energy
and automotive markets is expected to mitigate the impact of future cyclical
downturns in aerospace.
The Company continues to focus on improving the profitability of each of its
operations by becoming more efficient, by developing new applications for its
existing technologies and by finding new ways to serve customers' needs. In the
last eighteen months, these efforts resulted in continued improvements in the
Company's manufacturing processes and in significant expansion of its market
presence in industrial gas turbines. Sales of products to the IGT market
exceeded $68 million in fiscal 1997, more than double the amount in fiscal 1996,
while the first six months of fiscal 1998 include $38 million of sales to the
IGT market.
The Company expects continuing strong demand from aerospace and IGT
customers for the remaining half of fiscal 1998 as well as into fiscal 1999.
This demand will continue to put pressure on the Company's current production
capacity and will require further expansion of its equipment and facilities. The
demand for products sold to the general industrial, energy and automotive
markets, however, is expected to grow modestly worldwide. Through additional
market penetration and development, the Company expects that its sales to these
markets will grow at rates above the underlying economic growth.
RESULTS OF OPERATIONS
SIX MONTHS ENDED SEPTEMBER 28, 1997 COMPARED WITH THE SIX MONTHS ENDED
SEPTEMBER 29, 1996
Sales of $635.1 million for the first six months of fiscal 1998 increased
$224.2 million, or 55 percent, compared to the first six months a year ago. The
increase was due to improved sales in nearly all business areas, particularly to
the aerospace industry, as well as the impact from acquisitions made in both
fiscal 1997 and 1998. Excluding the effects of the acquisitions, sales increased
$86.0 million or 27 percent.
S-10
<PAGE>
Cost of goods sold as a percent of sales for the first half of fiscal 1998
was 78 percent, slightly lower than the 80 percent from the first half of last
year. Reflected in the fiscal 1998 results are higher margins contributed by a
number of the acquisitions, partially offset by higher costs related to the
development of industrial gas turbine products.
Selling and administrative costs were $60.9 million for the first six
months, or 10 percent of sales, compared to $36.0 million or 9 percent of sales,
a year ago. This increase reflects the effects of a full six months of fiscal
1997 acquisitions which operate with higher selling costs due to their related
advertising, trade show and sales commission costs.
Net interest expense in the first half of fiscal 1998 was $9.5 million, as
compared with $5.8 million in the first half a year ago. The increase reflects
the lower cash balances and higher debt this year compared with a year ago as a
result of borrowing to fund the fiscal 1997 and 1998 acquisitions, as well as
debt assumed in connection with these acquisitions.
The effective tax rate for the first six months of fiscal 1998 was 40
percent, slightly lower than the last year's effective tax rate of 41 percent.
The decrease reflects the utilization of tax benefits related to prior period
operating losses of a foreign subsidiary, partially offset by higher amounts of
nondeductible goodwill amortization.
Net income of $40.2 million in the first six months of fiscal 1998 was 63
percent higher than the $24.6 million earned in the first six months of fiscal
1997.
FISCAL 1997 COMPARED WITH FISCAL 1996
Sales of $972.8 million were $416.0 million, or 75 percent, higher than a
year ago. Excluding the effects of fiscal 1997 acquisitions, sales would have
increased approximately 25 percent from last year. The majority of the
improvement came from aerospace operations, which experienced significant
increases in demand during fiscal 1997.
Cost of sales as a percent of sales improved to 79 percent in fiscal 1997
from 80 percent in fiscal 1996. This improvement came from leveraging higher
aerospace sales, implementation of process improvements and the addition of
higher margin businesses as a result of the acquisitions, partially offset by
higher costs related to development of new IGT parts.
In the fourth quarter of fiscal 1997, the Company recorded a $3.4 million
restructuring charge to provide for the cost of moving people and equipment from
PCC Composites in Pennsylvania to AFT in Colorado. In addition, this
restructuring charge provided for the costs associated with closing the
Pennsylvania manufacturing facility. Combining the marketing capabilities,
technical expertise, and manufacturing know-how of the two divisions is expected
to create a stronger, more cost-effective platform for growth in both
metal-matrix and metal-injection-molded products.
Selling and administrative expenses as a percent of sales rose to 9 percent
from 8 percent in the prior year. This increase reflected the higher marketing
requirements and costs associated with distributor channels, commissioned sales
and trade shows of the acquired businesses.
Net interest expense in fiscal 1997 was $16.7 million, compared with $0.1
million in fiscal 1996. This increase reflected the higher level of debt
incurred and assumed during fiscal 1997 to finance acquisitions.
The effective tax rate for the year was 41 percent, compared with 35 percent
in the prior year. Fiscal 1997's rate reflected the impact of non-deductible
goodwill resulting from the acquisitions, whereas the fiscal 1996 rate included
the favorable impact of $2.6 million of non-recurring tax adjustments.
S-11
<PAGE>
Net income in fiscal 1997 was $56.5 million, which was 37 percent higher
than the $41.1 million reported in fiscal 1996, reflecting the impact of fiscal
1997's higher earnings from the Company's base businesses and accretion from
acquisitions.
FISCAL 1996 COMPARED WITH FISCAL 1995
Sales of $556.8 million represented a 28 percent increase from the prior
year. Excluding the effects of the components of PCC Specialty Products which
were acquired at the end of fiscal 1995, sales increased $39.1 million, or 9
percent, from fiscal 1995.
Cost of sales as a percent of sales improved from 82 percent in fiscal 1995
to 80 percent in fiscal 1996. This improvement came from the addition of PCC
Specialty Products, which generated higher margins compared with other Company
operations.
Selling and administrative costs increased to 8 percent in fiscal 1996 from
7 percent in the prior year. This increase was due to the addition of PCC
Specialty Products, which operated with relatively higher selling costs compared
with other Company operations.
For fiscal year 1996, the effective tax rate was 35 percent, compared to 38
percent in fiscal 1995. The reduction from the prior fiscal year was due to the
favorable impact of $2.6 million of non-recurring tax adjustments recorded in
the third quarter. These adjustments were comprised of $2.2 million from the
settlement of a state tax issue and $0.4 million from research and development
tax credits.
Net income in fiscal 1996 of $41.1 million was 42 percent higher than fiscal
1995's earnings of $29.0 million.
LIQUIDITY AND CAPITAL RESOURCES
Total assets of $1,098.8 million at September 28, 1997 represented a $28.7
million increase from the $1,070.1 at March 30, 1997. Total capitalization
including short-term debt at September 28, 1997 was $830.7 million, consisting
of $284.0 million of debt and $546.7 million of equity. The
debt-to-capitalization ratio including short-term debt at September 28, 1997 was
0.34 compared with 0.37 at the end of the prior fiscal year.
Cash from earnings for the six months ended September 28, 1997 of $63.2
million, plus cash of $6.6 million from the sale of common stock through stock
option exercises, was slightly less than cash requirements which consisted of
$34.5 million of capital expenditures, $16.4 million of debt repayment, $15.7
million of increased working capital, $5.3 million for the acquisition of PCC
Pittler and $2.9 million of cash dividends. The cash flow shortfall was funded
from available cash. As of September 28, 1997, cash and cash equivalents were
$8.7 million.
The Company is a party to a $400 million committed line of credit from a
syndicate of twelve banks, of which $230 million was available at September 28,
1997. The Company also entered into swap and cap agreements to hedge interest
rate exposures on borrowings under this facility.
Capital spending for the remainder of fiscal 1998 is expected to continue to
be significantly larger than fiscal 1997 due to a full year of capital spending
from recently acquired businesses and a continuation of spending for increased
IGT and aerospace manufacturing capacity. Management believes that the Company
can fund the requirements for capital spending, cash dividends and potential
acquisitions from cash balances, the existing line of credit, additional
borrowings or the issuance of stock.
FORWARD LOOKING STATEMENTS
Information included under "Management's Discussion and Analysis of
Financial Condition and Results of Operations," "Company Strategy" and elsewhere
herein relating to projected growth and future results and events constitutes
forward-looking statements and are subject to a number of risks
S-12
<PAGE>
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
and other factors described in the documents incorporated by reference herein.
S-13
<PAGE>
DESCRIPTION OF NOTES
GENERAL
The Notes will be issued as a series of Debt Securities under the Indenture
dated as of December 17, 1997 (the "Indenture"), between the Company and The
First National Bank of Chicago, as Trustee which is more fully described in the
accompanying Prospectus.
The Notes will be issued as unsecured obligations of the Company in an
aggregate principal amount of $150,000,000 and will mature on December 15, 2007.
The Notes will bear interest from December 17, 1997, payable semi-annually
in arrears on each June 15 and December 15, commencing June 15, 1998, at the
rate set forth on the cover page of this Prospectus Supplement, to the persons
in whose names the Notes are registered on the preceding June 1 and December 1,
respectively.
The principal of, premium, if any, and interest on the Notes will be
payable, the transfer of Notes will be registrable and the Notes may be
presented for exchange, at the office of the Trustee located at Mail Suite 0126,
One First National Plaza, Chicago, Illinois 60670, attention Corporate Trust
Services. So long as the Notes are represented by Book Entry Securities, the
interest payable on the Notes will be paid to Cede & Co., the nominee of DTC, or
its registered assigns as the registered owner of the Book Entry Securities, by
wire transfer of immediately available funds on each of the applicable interest
payment dates, not later than 2:30 p.m. Eastern Standard Time. If the Notes are
no longer represented by Book Entry Securities, payment of interest may, at the
option of the Company, be made by check mailed to the address of the Person
entitled thereto.
No sinking fund is provided for the Notes.
OPTIONAL REDEMPTION
The Notes will be redeemable, in whole or in part, at the option of the
Company at any time at a redemption price equal to the greater of (i) 100% of
the principal amount of such Notes or (ii) the sum of the present values of the
remaining scheduled payments of principal and interest thereon (not including
the portion of any such payments of interest accrued as of the redemption date)
discounted to the redemption date on a semiannual basis (assuming a 360-day year
consisting of twelve 30-day months) at the Adjusted Treasury Rate (determined on
the third Business Day preceding such redemption date), plus, in each case,
accrued and unpaid interest thereon to the redemption date.
"Adjusted Treasury Rate" means the arithmetic mean of the yields under the
heading "Week Ending" published in the Statistical Release most recently
published prior to the date of determination under the caption "Treasury
Constant Maturities" for the maturity (rounded to the nearest month)
corresponding to the remaining life to maturity, as of the redemption date, of
the principal being redeemed, plus 0.15%. If no maturity set forth under such
heading exactly corresponds to the maturity of such principal, yields for the
two published maturities most closely corresponding to the maturity of such
principal shall be calculated pursuant to the immediately preceding sentence,
and the Adjusted Treasury Rate shall be interpolated or extrapolated from such
yields on a straight-line basis, rounding in each of the relevant periods to the
nearest month.
"Statistical Release" means the statistical release designated "H.15(519)"
or any successor publication which is published weekly by the Federal Reserve
System and which establishes yields on actively-traded United States government
securities adjusted to constant maturities, or, if such statistical release is
not published at the time of any determination under the terms of the Notes,
then such other reasonably comparable index which shall be designated by the
Company.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each holder of the Notes to be redeemed.
S-14
<PAGE>
Unless the Company defaults in payment of the redemption price, on and after
the redemption date, interest will cease to accrue on the Notes or portions
thereof called for redemption.
BOOK-ENTRY, DELIVERY AND FORM
The Notes will be represented by a Book Entry Security that will be
deposited with, or on behalf of, DTC, the Depositary for the Notes, and
registered in the name of Cede & Co., the nominee of DTC.
DTC has advised the Company as follows: DTC is a limited-purpose trust
company organized under the New York Banking Law, a "banking organization"
within the meaning of the New York Banking Law, a member of the Federal Reserve
System, a "clearing corporation" within the meaning of the New York Uniform
Commercial Code and a "clearing agency" registered pursuant to the provisions of
Section 17A of the Securities Exchange Act of 1934. DTC was created to hold
securities of its participating organizations ("participants") and to facilitate
the clearance and settlement of securities transactions, such as transfers and
pledges, among its participants in such securities through electronic
computerized book-entry changes in accounts of the participants, thereby
eliminating the need for physical movement of securities certificates.
Participants include securities brokers and dealers (including the
Underwriters), banks, trust companies, clearing corporations and certain other
organizations, some of whom (and/or their representatives) own DTC. Access to
DTC's book-entry system is also available to others, such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a participant, either directly or indirectly. Persons who are
not participants may beneficially own securities held by DTC only through
participants.
Unless and until they are exchanged in whole or in part for certificated
notes, in definitive form, the Book Entry Security may not be registered for
transfer or exchange except as a whole by DTC to a nominee of DTC or by a
nominee of DTC to DTC or another nominee of DTC or by DTC or any such nominee to
a successor depository or a nominee of such successor depository.
A further description of DTC's procedures with respect to the Notes is set
forth in the accompanying Prospectus under the heading "Description of Debt
Securities--Book Entry Debt Securities."
DEFEASANCE
The Notes will be subject to defeasance and covenant defeasance as described
under "Defeasance of Offered Debt Securities or Certain Covenants in Certain
Circumstances" in the accompanying Prospectus.
S-15
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement
and the Pricing Agreement, the Company has agreed to sell to each of the
Underwriters named below, and each of the Underwriters has severally agreed to
purchase, the principal amount of Notes set forth opposite its name below:
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
UNDERWRITER OF NOTES
- ---------------------------------------------------------------------------- ----------------
<S> <C>
Goldman, Sachs & Co......................................................... $ 75,000,000
BancAmerica Robertson Stephens.............................................. 37,500,000
Morgan Stanley & Co. Incorporated........................................... 37,500,000
----------------
Total................................................................... $ 150,000,000
----------------
----------------
</TABLE>
Under the terms and conditions of the Underwriting Agreement and the Pricing
Agreement, the Underwriters are committed to take and pay for all of the Notes,
if any are taken.
The Underwriters propose to offer the Notes in part directly to the public
at the initial public offering price set forth on the cover page of this
Prospectus Supplement and in part to certain securities dealers at such price
less a concession of 0.40% of the principal amount of the Notes. The
Underwriters may allow, and such dealers may reallow, a concession not to exceed
0.25% of the principal amount of the Notes to certain brokers and dealers. After
the Notes are released for sale to the public, the offering price and other
selling terms may from time to time be varied by the Underwriters.
The Notes are a new issue of securities with no established trading market.
The Company has been advised by the Underwriters that they intend to make a
market in the Notes but are not obligated to do so and may discontinue market
making at any time without notice. No assurance can be given as to the liquidity
of the trading market for the Notes.
In connection with the offering, the Underwriters may purchase and sell the
Notes in the open market. These transactions may include over-allotment and
stabilizing transactions and purchases to cover short positions created by the
Underwriters in connection with the offering. Stabilizing transactions consist
of certain bids or purchases for the purpose of preventing or retarding a
decline in the market price of the Notes; and short positions created by the
Underwriters involve the sale by the Underwriters of a greater number of Notes
than they are required to purchase from the Company in the offering. The
Underwriters also may impose a penalty bid, whereby selling concessions allowed
to broker-dealers in respect of the securities sold in the offering may be
reclaimed by the Underwriters if such Notes are repurchased by the Underwriters
in stabilizing or covering transactions. These activities may stabilize,
maintain or otherwise affect the market price of the Notes, which may be higher
than the price that might otherwise prevail in the open market; and these
activities, if commenced, may be discontinued at any time. These transactions
may be effected in the over-the-counter market or otherwise.
The Company has agreed to indemnify the several Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended.
VALIDITY OF THE NOTES
Certain legal matters in connection with the Notes offered hereby will be
passed upon for the Company by Stoel Rives LLP, Portland, Oregon. The validity
of the Notes offered hereby will be passed upon for the Underwriters by Sullivan
& Cromwell, Los Angeles, California.
S-16
<PAGE>
$300,000,000
PRECISION CASTPARTS CORP.
DEBT SECURITIES
-------------
Precision Castparts Corp. (the "Company") may offer from time to time up to
$300,000,000 of its debt securities consisting of notes, debentures or other
evidences of indebtedness (the "Debt Securities"). The Debt Securities may be
offered as separate series in amounts, at prices and on terms to be determined
in light of market conditions at the time of sale and set forth in a Prospectus
Supplement or Prospectus Supplements.
The terms of each series of Debt Securities, including, where applicable,
the specific designation, aggregate principal amount, authorized denominations,
maturity, rate or rates and time or times of payment of any interest, any terms
for optional or mandatory redemption or payment of additional amounts or any
sinking fund provisions, any initial public offering price, the proceeds to the
Company and any other specific terms in connection with the offering and sale of
such series (the "Offered Debt Securities") will be set forth in a Prospectus
Supplement or Prospectus Supplements.
The Debt Securities may be sold directly by the Company, through agents
designated from time to time or to or through underwriters or dealers. See "Plan
of Distribution." If any agents of the Company or any underwriters are involved
in the sale of any Debt Securities in respect of which this Prospectus is being
delivered, the names of such agents or underwriters and any applicable
commissions or discounts will be set forth in a Prospectus Supplement. The net
proceeds to the Company from such sale also will be set forth in a Prospectus
Supplement. See "Plan of Distribution" for possible indemnification arrangements
for underwriters, dealers and agents.
------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------
This Prospectus may not be used to consummate sales of Debt Securities
unless accompanied by a Prospectus Supplement.
The date of this Prospectus is December 8, 1997.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy and information statements and other information
with the Securities and Exchange Commission (the "Commission"). Such reports,
proxy and information statements and other information can be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549, and at the following regional
offices of the Commission: New York Regional Office, 7 World Trade Center, New
York, New York 10048; and Chicago Regional Office, 1400 Citicorp Center, 500
West Madison Street, Chicago, Illinois 60661. Copies of such material can be
obtained from the Public Reference Section of the Commission, 450 Fifth Street,
N.W., Washington, D.C. 20549 at prescribed rates. In addition, the
aforementioned material can also be inspected at the offices of the New York
Stock Exchange, Inc., 20 Broad Street, New York, New York 10005. Such material
may also be accessed through an Internet Web site maintained by the Commission
at http://www.sec.gov.
The Company has filed with the Commission a Registration Statement on Form
S-3 (together with all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities Act").
This Prospectus does not contain all of the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. For further information, reference
is made to the Registration Statement, copies of which are available from the
Public Reference Section of the Commission at prescribed rates as described
above. Statements contained herein concerning the provisions of documents filed
with, or incorporated by reference in, the Registration Statement as exhibits
are necessarily summaries of such provisions and documents, and each such
statement is qualified in its entirety by reference to the copy of the
applicable document filed with the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission pursuant to
the Exchange Act are incorporated into this Prospectus by reference:
(i) the Company's Annual Report on Form 10-K for the fiscal year ended
March 30, 1997, as amended by Form 10-K/A filed July 9, 1997; and
(ii) the Company's Quarterly Reports on Form 10-Q for the quarters ended
June 29, 1997 and September 28, 1997.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering made hereby shall be deemed to be incorporated by
reference in this Prospectus and to be a part hereof from the date of the filing
of such documents. Any statement contained in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
The Company undertakes to provide without charge to each person, including
any beneficial owner, to whom a copy of this Prospectus has been delivered, on
written or oral request, a copy of any and all of the documents incorporated in
this Prospectus by reference, other than exhibits to such documents not
specifically incorporated by reference therein. Requests for such copies should
be directed to Precision Castparts Corp., at its principal executive offices
located at 4650 S.W. Macadam Avenue, Suite 440, Portland, Oregon 97201,
Attention: Director of Corporate Communications (telephone: (503) 417-4800).
2
<PAGE>
THE COMPANY
The Company is a worldwide manufacturer of complex metal components and
products. The Company is the market leader in manufacturing large, complex
structural investment castings and is the leading manufacturer of airfoil
castings used in jet aircraft engines. In addition, the Company has expanded
into the industrial gas turbine, fluid management, industrial metalworking tools
and machines, powdered metal and other metal products markets.
USE OF PROCEEDS
Unless otherwise indicated in a Prospectus Supplement, the net proceeds to
the Company from the issuance and sale of the Debt Securities will be used for
general corporate purposes, including the repayment of indebtedness that may be
incurred from time to time, working capital, future acquisitions and further
investments in subsidiaries.
RATIO OF EARNINGS TO FIXED CHARGES
The ratios of earnings to fixed charges of the Company for each of the five
fiscal years ended March 30, 1997 and for the six-month period ended September
28, 1997 were as follows:
<TABLE>
<CAPTION>
FISCAL YEARS
---------------------------------------------------------------
1993 1994 1995 1996 1997
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges...................... 1.0 18.8 53.0 58.9 6.3
<CAPTION>
SIX MONTHS ENDED
SEPT. 28,
1997
-----------------------
<S> <C>
Ratio of Earnings to Fixed Charges...................... 7.3
</TABLE>
For the purpose of computing such ratios, "earnings" represents the
aggregate of (a) income before income taxes and (b) fixed charges. "Fixed
charges" represents (a) consolidated interest charges, (b) the amortization of
debt discount and expense and premium on indebtedness and (c) the portion of
rental expense representative of an interest factor.
DESCRIPTION OF DEBT SECURITIES
The Debt Securities are to be issued under an Indenture (as amended or
supplemented from time to time, the "Indenture") between the Company and The
First National Bank of Chicago, as Trustee (the "Trustee"), a copy of which is
filed as an exhibit to the Registration Statement. The statements herein
relating to the Debt Securities and the following summaries of certain
provisions of the Indenture do not purport to be complete and are subject to,
and are qualified in their entirety by reference to, all the provisions of the
Indenture, including the definitions therein of certain terms, and the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"). Wherever
particular sections or defined terms of the Indenture are referred to in this
Prospectus or in a Prospectus Supplement, such sections or defined terms are
incorporated herein or therein by reference.
The following sets forth certain general terms and provisions of the Debt
Securities offered hereby. The particular terms of the Debt Securities offered
by any Prospectus Supplement and the extent, if any, to which such general terms
and provisions may not apply to the Offered Debt Securities will be described in
the Prospectus Supplement relating to such Offered Debt Securities (the
"Applicable Prospectus Supplement").
GENERAL
The Indenture does not limit the amount of Debt Securities that may be
issued thereunder and Debt Securities may be issued thereunder from time to time
in one or more series. The Debt Securities will be unsecured and unsubordinated
obligations of the Company and will rank equally and ratably, on a PARI PASSU
basis, with other unsecured and unsubordinated obligations of the Company,
including, without limitation, its obligations under the committed revolving
credit facility with Bank of America, as agent (the
3
<PAGE>
"Credit Agreement"). Certain subsidiaries of the Company are permitted to borrow
under the Credit Agreement, subject to limitations contained in the Credit
Agreement and the limitations contained in the Indenture (see "Certain Covenants
of the Company--Limitation on Debt of Restricted Subsidiaries," below). The
lenders under the Credit Agreement would have a prior claim as to the assets of
such subsidiaries for the repayment of such subsidiary loans.
Unless otherwise indicated in the Applicable Prospectus Supplement,
principal of, premium, if any, and interest on the Debt Securities will be
payable, and the transfer of Debt Securities will be registrable, at the office
or agency to be maintained by the Company in The City of New York and at any
other office or agency maintained by the Company for such purpose. (Sections
301, 305 and 1002) Unless otherwise indicated in the Applicable Prospectus
Supplement, the Debt Securities will be issued only in fully registered form
without coupons and in denominations of $1,000 or integral multiples thereof.
(Section 302) No service charge will be made for any registration of transfer or
exchange of the Debt Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge imposed in connection
therewith. (Section 305)
The Applicable Prospectus Supplement will describe the terms of the Offered
Debt Securities, including: (1) the title of the Offered Debt Securities; (2)
any limit on the aggregate principal amount of the Offered Debt Securities; (3)
the person or entity to whom any interest on the Offered Debt Securities shall
be payable, if other than the person in whose name that Security (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest; (4) the date or dates on which the principal of
and premium, if any, on the Offered Debt Securities is payable or the method of
determination thereof; (5) the rate or rates at which the Offered Debt
Securities shall bear interest, if any, or the method of calculating such rate
or rates of interest, the date or dates from which any such interest shall
accrue or the method by which such date or dates shall be determined, the
Interest Payment Dates on which any such interest shall be payable and the
Regular Record Date for interest payable on any Interest Payment Date; (6) the
place or places where the principal of, premium, if any, and interest on the
Offered Debt Securities shall be payable; (7) the period or periods within
which, the price or prices at which, the currency or currencies (including
currency units) in which and the other terms and conditions upon which the
Offered Debt Securities may be redeemed, in whole or in part, at the option of
the Company; (8) the obligation, if any, of the Company to redeem or purchase
the Offered Debt Securities pursuant to any sinking fund or analogous provisions
or at the option of a holder thereof and the period or periods within which, the
price or prices at which and the other terms and conditions upon which the
Offered Debt Securities shall be redeemed or purchased, in whole or in part,
pursuant to such obligation; (9) if other than denominations of $1,000 and any
integral multiple thereof, the denominations in which the Offered Debt
Securities shall be issuable; (10) the currency, currencies or currency units in
which payment of the principal of and any premium and interest on any Offered
Debt Securities shall be payable if other than the currency of the United States
of America and the manner of determining the equivalent thereof in the currency
of the United States of America; (11) if the amount of payments of principal of
or any premium or interest on any Offered Debt Securities may be determined with
reference to an index, formula or other method, the index, formula or other
method by which such amounts shall be determined; (12) if the principal of or
any premium or interest on any Offered Debt Securities is to be payable, at the
election of the Company or a holder thereof, in one or more currencies or
currency units other than that or those in which the Debt Securities are stated
to be payable, the currency, currencies or currency units in which payment of
the principal of and any premium and interest on the Offered Debt Securities as
to which such election is made shall be payable, and the periods within which
and the other terms and conditions upon which such election is to be made; (13)
if other than the principal amount thereof, the portion of the principal amount
of the Offered Debt Securities which shall be payable upon declaration of
acceleration of the maturity thereof or the method by which such portion may be
determined; (14) the applicability of the provisions described under
"--Defeasance of Offered Debt Securities or Certain Covenants in Certain
Circumstances"; (15) if the Offered Debt Securities will be issuable only in the
form of a Book Entry Security as described under "--Book Entry Debt Securities",
the Depositary
4
<PAGE>
or its nominee with respect to the Offered Debt Securities and the circumstances
under which the Book Entry Security may be registered for transfer or exchange
or authenticated and delivered in the name of a person or entity other than the
Depositary or its nominee; and (16) any additional, modified or different
covenants applicable to one or more particular series of Debt Securities; and
(17) other terms of the Offered Debt Securities. (Section 301)
Debt Securities may be issued under the Indenture as Original Issue Discount
Debt Securities to be offered and sold at a substantial discount below their
stated principal amount. Special Federal income tax, accounting and other
considerations applicable thereto will be described in the Prospectus Supplement
relating thereto. "Original Issue Discount Debt Security" means any Debt
Security which provides for an amount less than the principal amount thereof to
be due and payable upon a declaration of acceleration of the maturity thereof
upon the occurrence and continuance of an Event of Default. (Section 101)
If the purchase price of any of the Debt Securities is payable in one or
more foreign currencies or currency units, if any Debt Securities are
denominated in one or more foreign currencies or currency units or if the
principal of, premium, if any, or interest, if any, on any Debt Securities is
payable in one or more foreign currencies or currency units, the restrictions,
elections, material U.S. federal income tax considerations and other information
with respect to such issue of Debt Securities and such foreign currency or
currency units will be set forth in the Applicable Prospectus Supplement.
If any index is used to determine the amount of payments of principal of,
premium, if any, or interest, if any, on any series of Debt Securities, material
U.S. federal income tax, accounting and other considerations applicable thereto
will be described in the Applicable Prospectus Supplement.
BOOK ENTRY DEBT SECURITIES
The following description of Book Entry Securities will apply to any series
of Debt Securities except as otherwise provided in the Prospectus Supplement
relating thereto.
The Debt Securities of a series may be issued in the form of one or more
Book Entry Securities that will be deposited with or on behalf of a Depositary,
which will be a clearing agent registered under the Exchange Act. Book Entry
Securities will be registered in the name of the Depositary or a nominee of the
Depositary, will be deposited with such Depositary or nominee or a custodian
therefor and will bear a legend regarding the restrictions on exchanges and
registration of transfer thereof and any such other matters as may be provided
for pursuant to the Indenture. Unless and until it is exchanged in whole or in
part for Debt Securities in definitive certificated form, a Book Entry Security
may not be transferred or exchanged except as a whole by the Depositary for such
Book Entry Security to a nominee of such Depositary or by a nominee of such
Depositary to such Depositary or another nominee of such Depositary or by such
Depositary or any such nominee to a successor Depositary for such series or a
nominee of such successor Depositary, or except in the circumstances described
in the Applicable Prospectus Supplement. (Section 305)
Upon the issuance of any Book Entry Security, and the deposit of such Book
Entry Security with or on behalf of the Depositary for such Book Entry Security,
the Depositary will credit on its book-entry registration and transfer system
the respective principal amounts of the Debt Securities represented by such Book
Entry Security to the accounts of institutions ("participants") that have
accounts with the Depositary. The accounts to be credited will be designated by
the underwriters or agents engaging in the distribution of such Debt Securities
or by the Company, if such Debt Securities are offered and sold directly by the
Company. Ownership of beneficial interests in a Book Entry Security will be
limited to participants or persons that may hold interests through participants.
Ownership of beneficial interests in a Book Entry Security will be shown on, and
the transfer of that ownership will be effected only through, records maintained
by the Depositary for such Book Entry Security or by its nominee. Ownership of
beneficial interests in such Book Entry Security by persons who hold through
participants will be shown
5
<PAGE>
on, and the transfer of such beneficial interests within such participants will
be effected only through, records maintained by such participants. The laws of
some jurisdictions require that certain purchasers of securities take physical
delivery of such securities in definitive form. Such laws may impair the ability
to transfer beneficial interests in such a Book Entry Security.
So long as the Depositary for a Book Entry Security, or its nominee, is the
owner of such Book Entry Security, such Depositary or such nominee, as the case
may be, will be considered the sole owner or holder of the Debt Security
represented by such Book Entry Security for all purposes under the Indenture.
Accordingly, each person owning a beneficial interest in such Book Entry
Security must rely on the procedures of the Depositary and, if such person is
not a participant, on the procedures of the participant through which such
person owns its interest, to exercise any rights of a holder under such
Indenture. The Company understands that under existing industry practices, if it
requests any action of holders or if an owner of a beneficial interest in a Book
Entry Security desires to give or take any instruction or action which a holder
is entitled to give or take under the Indenture, the Depositary would authorize
the participants holding the relevant beneficial interests to give or take such
instruction or action, and such participants would authorize beneficial owners
owning through such participants to give or take such instruction or action or
would otherwise act upon the instructions of beneficial owners holding through
them.
Unless otherwise specified in the Applicable Prospectus Supplement, payments
with respect to principal, premium, if any, and interest, if any, on the Debt
Securities represented by a Book Entry Security registered in the name of the
Depositary or its nominee will be made to such Depositary or its nominee, as the
case may be, as the registered owner of such Book Entry Security. The Company
expects that the Depositary for any Debt Securities represented by a Book Entry
Security, upon receipt of any payment of principal or interest in respect of
such Book Entry Security, will credit immediately participants' accounts with
payments in amounts proportionate to their respective beneficial interests in
the Book Entry Security as shown on the records of the Depositary. The Company
also expects that payments by participants to owners of beneficial interests in
such Book Entry Security held through such participants will be governed by
standing instructions and customary practices, as is now the case with
securities in bearer form held for the accounts of customers or registered in
"street name", and will be the responsibility of such participants. None of the
Company, the Trustee or any agent of the Company or the Trustee shall have any
responsibility or liability for any aspect of the records relating to, or
payments made on account of, beneficial interests in any Book Entry Security, or
for maintaining, supervising or reviewing any records relating to such
beneficial interests.
A Book Entry Security shall be exchangeable for Debt Securities in
certificated registered form, of like tenor and of an equal aggregate principal
amount, only if (a) the Depositary notifies the Company that it is unwilling or
unable to continue as Depositary for such Book Entry Security or if at any time
the Depositary ceases to be a clearing agency registered under the Exchange Act,
(b) the Company in its sole discretion determines that such Book Entry Security
shall be exchangeable for Debt Securities in certificated registered form or (c)
there shall have occurred and be continuing an Event of Default with respect to
the Debt Securities. Any Book Entry Security that is exchangeable pursuant to
the preceding sentence shall be exchangeable for Debt Securities registered in
the name or names of such person or persons as the Depositary shall instruct the
Trustee. It is expected that such instructions may be based upon directions
received by the Depositary from its participants with respect to ownership of
beneficial interests in such Book Entry Security.
CERTAIN COVENANTS OF THE COMPANY
LIMITATION ON LIENS
Unless otherwise indicated in the Applicable Prospectus Supplement, the
Indenture shall provide the holders of the Offered Debt Securities the benefit
of the "Limitation on Liens" covenant described
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below. The "Limitation on Liens" covenant provides that the Company will not,
and will not permit any Restricted Subsidiary (as defined below) to, create,
incur, issue, assume or guarantee any indebtedness for money borrowed ("Debt")
secured by a Mortgage (as defined below) upon any Operating Property (as defined
below), or upon shares of capital stock or Debt issued by any Restricted
Subsidiary and owned by the Company or any Restricted Subsidiary, whether owned
at the date of the Indenture or thereafter acquired, without effectively
providing concurrently that the Debt Securities of each series then outstanding
are secured equally and ratably with or, at the option of the Company, prior to
such Debt so long as such Debt shall be so secured.
The foregoing restriction shall not apply to, and there shall be excluded
from Debt in any computation under such restriction, Debt secured by (i)
Mortgages on any property existing at the time of the acquisition thereof; (ii)
Mortgages on property of a corporation existing at the time such corporation is
merged into or consolidated with the Company or a Restricted Subsidiary or at
the time of a sale, lease or other disposition of the properties of such
corporation (or a division thereof) as an entirety or substantially as an
entirety to the Company or a Restricted Subsidiary, PROVIDED that any such
Mortgage does not extend to any property owned by the Company or any Restricted
Subsidiary immediately prior to such merger, consolidation, sale, lease or
disposition; (iii) Mortgages on property of a corporation existing at the time
such corporation becomes a Restricted Subsidiary; (iv) Mortgages in favor of the
Company or a Restricted Subsidiary; (v) Mortgages to secure all or part of the
cost of acquisition, construction, development or improvement of the underlying
property, or to secure Debt incurred to provide funds for any such purpose,
PROVIDED that the commitment of the creditor to extend the credit secured by any
such Mortgage shall have been obtained not later than 270 days after the later
of (a) the completion of the acquisition, construction, development or
improvement of such property or (b) the placing in operation of such property;
(vi) Mortgages in favor of the United States of America or any State thereof, or
any department, agency or instrumentality or political subdivision thereof, to
secure partial, progress, advance or other payments; and (vii) Mortgages
existing on the date of the Indenture or any extension, renewal, replacement or
refunding of any Debt secured by a Mortgage existing on the date of the
Indenture or referred to in clauses (i) to (iii) or (v), PROVIDED that the
principal amount of Debt secured thereby and not otherwise authorized by clauses
(i) to (iii) or (v) shall not exceed the principal amount of Debt, plus any
premium or fee payable in connection with any such extension, renewal,
replacement or refunding, so secured at the time of such extension, renewal,
replacement or refunding. (Section 1008)
Notwithstanding the restrictions described above, the Company and its
Restricted Subsidiaries may create, incur, issue, assume or guarantee Debt
secured by Mortgages without equally and ratably securing the Debt Securities of
each series then outstanding if, at the time of such creation, incurrence,
issuance, assumption or guarantee, after giving effect thereto and to the
retirement of any Debt which is concurrently being retired, the aggregate amount
of all outstanding Debt secured by Mortgages which would otherwise be subject to
such restrictions (other than any Debt secured by Mortgages permitted as
described in clauses (i) through (vii) of the immediately preceding paragraph)
plus all Attributable Debt in respect of Sale and Leaseback Transactions (as
defined below) with respect to Operating Properties (with the exception of such
transactions which are permitted under clauses (i) through (iv) of the first
sentence of the first paragraph under "--Limitation on Sale and Leaseback
Transactions" below) does not exceed 10% of Consolidated Net Tangible Assets (as
defined below).
LIMITATION ON SALE AND LEASEBACK TRANSACTIONS
Unless otherwise indicated in the Applicable Prospectus Supplement, the
Indenture shall provide the holders of the Offered Debt Securities the benefit
of the "Limitation on Sale and Leaseback" covenant discussed below. The
"Limitation on Sale and Leaseback" covenant provides that the Company will not,
and will not permit any Restricted Subsidiary to, enter into any Sale and
Leaseback Transaction with respect to any Operating Property unless: (i) the
Sale and Leaseback Transaction is solely with the Company or another Restricted
Subsidiary; (ii) the lease is for a period not in excess of
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twenty four months, including renewals; (iii) the Company or such Restricted
Subsidiary would (at the time of entering into such arrangement) be entitled as
described in clauses (i) through (vii) of the second preceding paragraph,
without equally and ratably securing the Debt Securities of each series then
outstanding, to create, incur, issue, assume or guarantee Debt secured by a
Mortgage on such Operating Property in the amount of the Attributable Debt
arising from such Sale and Leaseback Transaction; (iv) the Company or such
Restricted Subsidiary, within 270 days after the sale of such Operating Property
in connection with such Sale and Leaseback Transaction is completed, applies an
amount equal to the greater of (A) the net proceeds of the sale of such
Operating Property or (B) the fair market value of such Operating Property to
(1) the retirement of Debt Securities, other Funded Debt (as defined below) of
the Company ranking on a parity with the Debt Securities or Funded Debt of a
Restricted Subsidiary or (2) the purchase of Operating Property; or (v) the
Attributable Debt of the Company and its Restricted Subsidiaries in respect of
such Sale and Leaseback Transaction and all other Sale and Leaseback
Transactions entered into after the date of the Indenture (other than any such
Sale and Leaseback Transactions as would be permitted as described in clauses
(i) through (iv) of this sentence), plus the aggregate principal amount of Debt
secured by Mortgages on Operating Properties then outstanding (not including any
such Debt secured by Mortgages described in clauses (i) through (vii) of the
second preceding paragraph) which do not equally and ratably secure such
outstanding Debt Securities (or secure such outstanding Debt Securities on a
basis that is prior to other Debt secured thereby), would not exceed 10% of
Consolidated Net Tangible Assets. (Section 1009)
LIMITATION ON DEBT OF RESTRICTED SUBSIDIARIES
Unless otherwise indicated in the Applicable Prospectus Supplement, the
Indenture will provide that the Company will not permit any Restricted
Subsidiary to create, incur, issue, assume or guaranty any Debt, except: (i)
Debt outstanding on the date of the Indenture; (ii) Debt issued to and held by
the Company or a wholly owned Restricted Subsidiary; (iii) Debt created,
incurred, issued, assumed or guaranteed by a Person prior to the time the Person
became, merges into, or consolidates with such Person and thereby such Person
becomes a Restricted Subsidiary (which Debt was not incurred in anticipation of
such transaction and was outstanding prior to such transaction); (iv) Debt
incurred to provide funds for all or part of the cost of acquisition,
construction, development or improvement of property, PROVIDED that the
commitment of the creditor to extend the credit evidenced by such Debt shall
have been obtained not later than 270 days after the later of (a) the completion
of the acquisition, construction, development or improvement of such property or
(b) the placing in operation of such property; (v) Debt which is exchanged for,
or the proceeds of which are used to replace or refund, any Debt permitted to be
outstanding pursuant to clauses (i) through (iv) above (or any extension or
renewal thereof), in an aggregate principal amount not to exceed the principal
amount of the Debt so exchanged, replaced or refunded; and (vi) Debt not
otherwise permitted pursuant to clauses (i) through (v) above that, together
with any other outstanding Debt created, incurred, issued, assumed or guaranteed
pursuant to this clause (vi), has an aggregate principal amount at any time
outstanding that does not exceed 15% of Consolidated Net Tangible Assets.
(Section 1010)
CERTAIN DEFINITIONS
"Attributable Debt," in respect of any Sale and Leaseback Transaction,
means, as of the time of determination, the total obligation (discounted to
present value at the rate per annum equal to the discount rate which would be
applicable to a capital lease obligation with like term in accordance with
generally accepted accounting principles) of the lessee for rental payments
(other than amounts required to be paid on account of property taxes,
maintenance, repairs, insurance, water rates and other items which do not
constitute payments for property rights) during the remaining portion of the
initial term of the lease included in such Sale and Leaseback Transaction.
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"Consolidated Net Tangible Assets" means the aggregate amount of assets
(less applicable reserves and other properly deductible items) after deducting
therefrom (i) all current liabilities (excluding any indebtedness for money
borrowed having a maturity of less than 12 months from the date of the most
recent consolidated balance sheet of the Company but which by its terms is
renewable or extendable beyond 12 months from such date at the option of the
borrower), (ii) all Investments in Unrestricted Subsidiaries and (iii) all
goodwill, trade names, patents, unamortized debt discount and expense and any
other like intangibles, all as set forth on the most recent consolidated balance
sheet of the Company and computed in accordance with generally accepted
accounting principles.
"Funded Debt" means all Debt having a maturity of more than 12 months from
the date as of which the determination is made or having a maturity of 12 months
or less but by its terms being renewable or extendable beyond 12 months from
such date at the option of the borrower, but excluding any such Debt owed to the
Company or a Restricted Subsidiary.
"Mortgage" means, with respect to any property or assets, any mortgage or
deed of trust, pledge, hypothecation, assignment, security interest, lien,
encumbrance, or other security arrangement of any kind or nature whatsoever on
or with respect to such property or assets (including any conditional sale or
other title retention agreement having substantially the same economic effect as
any of the foregoing).
"Operating Property" means any real property or equipment located within the
United States and owned by, or leased to, the Company or any of its Restricted
Subsidiaries that has a market value in excess of 0.5% of Consolidated Net
Tangible Assets.
"Restricted Subsidiary" means any Subsidiary of the Company that owns
Operating Property that has a market value in excess of 1.0% of Consolidated Net
Tangible Assets.
"Sale and Leaseback Transaction" means any arrangement with any person
providing for the leasing to the Company or any Subsidiary of any Operating
Property, which Operating Property has been or is to be sold or transferred by
the Company or such Subsidiary to such person.
"Subsidiary" means any corporation of which at least a majority of the
outstanding stock having by the terms thereof ordinary voting power for the
election of directors of such corporation (irrespective of whether or not at the
time stock of any other class or classes of such corporation shall have or might
have voting power by reason of the happening of any contingency) is at the time
directly or indirectly owned by the Company, or by one or more other
Subsidiaries, or by the Company and one or more other Subsidiaries.
"Unrestricted Subsidiary" means any Subsidiary other than a Restricted
Subsidiary.
Unless otherwise indicated in the Applicable Prospectus Supplement, the
Indenture does not limit the amount of Debt that may be incurred by the Company
or its Subsidiaries or contain covenants specifically designed to protect
holders of Debt Securities in the event of a highly leveraged transaction,
restructuring, change in control, merger or similar transaction involving the
Company that may adversely affect holders of Debt Securities.
EVENTS OF DEFAULT
Any one of the following events will constitute an Event of Default under
the Indenture with respect to Debt Securities of any series: (a) failure to pay
any interest on any Debt Security of that series when due, continued for 30
days; (b) failure to pay principal of or any premium on any Debt Security of
that series when due; (c) failure to deposit any sinking fund payment, when due,
in respect of any Debt Security of that series; (d) failure to perform, or
breach of, any covenant or warranty of the Company in the Indenture with respect
to Debt Securities of that series continued for 60 days after written notice as
provided in the Indenture; (e) a default under any indebtedness for money
borrowed by the Company or any Subsidiary if (A) such default either (1) results
from the failure to pay the principal of any such indebtedness at its
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stated maturity or (2) relates to an obligation other than the obligation to pay
the principal of such indebtedness at its stated maturity and results in such
indebtedness becoming or being declared due and payable prior to the date on
which it would otherwise become due and payable, (B) the principal amount of
such indebtedness, together with the principal amount of any other such
indebtedness in default for failure to pay principal at stated maturity or the
maturity of which has been so accelerated, aggregates $10.0 million or more at
any one time outstanding and (C) such indebtedness is not discharged, or such
acceleration is not rescinded or annulled, within 10 business days after written
notice as provided in the Indenture; (f) certain events of bankruptcy,
insolvency or reorganization of the Company; or (g) any other Event of Default
provided with respect to Debt Securities of that series. (Section 501)
If an Event of Default (other than an Event of Default described in clause
(f) of the preceding paragraph) with respect to the Debt Securities of any
series at the time Outstanding shall occur and be continuing, either the Trustee
or the Holders of at least 25% in aggregate principal amount of the Outstanding
Debt Securities of that series may accelerate the maturity of all Debt
Securities of that series; provided, however, that after such acceleration, but
before a judgment or decree based on acceleration, the Holders of a majority in
aggregate principal amount of the Outstanding Debt Securities of that series
may, under certain circumstances, rescind and annul such acceleration if all
Events of Default, other than the non-payment of accelerated principal, have
been cured or waived as provided in the Indenture. If an Event of Default
described in clause (f) of the immediately preceding paragraph occurs, the
Outstanding Debt Securities will IPSO FACTO become immediately due and payable
without any declaration or other act on the part of the Trustee or any Holder.
(Section 502)
Reference is made to the Applicable Prospectus Supplement relating to any
series of Offered Debt Securities that are Original Issue Discount Debt
Securities for the particular provisions relating to acceleration of the Stated
Maturity of a portion of the principal amount of such series of Original Issue
Discount Debt Securities upon the occurrence of an Event of Default and the
continuation thereof.
The Indenture provides that, subject to the duty of the Trustee during
default to act with the required standard of care, the Trustee will be under no
obligation to exercise any of its rights or powers under the Indenture at the
request or direction of any of the holders of Debt Securities, unless such
holders shall have offered to the Trustee reasonable indemnity. (Section 603)
Subject to such provisions for the indemnification of the Trustee and to certain
other conditions, the holders of a majority in aggregate principal amount of the
Outstanding Debt Securities of any series will have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee, or exercising any trust or power conferred on the Trustee, with
respect to the Debt Securities of that series. (Section 512)
No holder of Debt Securities of any series will have any right to institute
any proceeding with respect to the Indenture or for any remedy thereunder,
unless such holder shall have previously given to the Trustee written notice of
a continuing Event of Default and unless the holders of at least 25% in
principal amount of the Outstanding Debt Securities of that series shall have
made written request, and offered reasonable indemnity, to the Trustee to
institute such proceeding as trustee, and the Trustee shall not have received
from the holders of a majority in aggregate principal amount of the Outstanding
Debt Securities of that series a direction inconsistent with such request and
shall have failed to institute such proceeding within 60 days. (Section 507)
However, such limitations do not apply to a suit instituted by a holder of Debt
Securities for enforcement of payment of the principal of and premium, if any,
or interest on such Debt Securities on or after the respective due dates
expressed in such Debt Securities. (Section 508)
The Company is required to furnish to the Trustee annually a statement as to
the performance by the Company of certain of its obligations under the Indenture
and as to any default in such performance. (Section 1004)
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MODIFICATION AND WAIVER
Modifications and amendments of the Indenture may be made by the Company and
the Trustee without the consent of the holders of any of the Debt Securities in
order (i) to evidence the succession of another entity to the Company and the
assumption of the covenants and obligations of the Company under the Debt
Securities and the Indenture by such successor to the Company; (ii) to add to
the covenants of the Company for the benefit of the holders of all or any series
of Debt Securities or to surrender any right or power conferred on the Company
by the Indenture; (iii) to add additional Events of Default with respect to any
series of Debt Securities; (iv) to add to or change any provisions to such
extent as may be necessary to permit or facilitate the issuance of Debt
Securities in bearer form or to facilitate the issuance of Book Entry
Securities; (v) to add to, change or eliminate any provision affecting only Debt
Securities not yet issued; (vi) to secure the Debt Securities; (vii) to
establish the form or terms of Debt Securities of any series; (viii) to evidence
and provide for successor Trustees or to add or change any provisions to such
extent as may be necessary to provide for or facilitate the appointment of a
separate Trustee or Trustees for specific series of Debt Securities; (ix) to
permit payment in respect of Debt Securities in bearer form in the United States
to the extent allowed by law; (x) to cure any ambiguity, to correct or
supplement any mistaken or inconsistent provisions or to make any other
provisions with respect to matters or questions arising under the Indenture,
PROVIDED that any such action (other than in respect of a mistaken provision)
does not adversely affect in any material respect the interests of any holder of
Debt Securities of any series then outstanding. (Section 901)
Modifications and amendments of the Indenture also may be made by the
Company and the Trustee with the consent of the holders of not less than a
majority in aggregate principal amount of the Outstanding Debt Securities of
each series issued under the Indenture and affected by the modification or
amendments; PROVIDED, HOWEVER, that no such modification or amendment may,
without the consent of the holders of all Debt Securities affected thereby, (i)
change the Stated Maturity of the principal amount of, or any installment of
principal of or interest on, any Debt Security; (ii) reduce the principal amount
of, or the premium, if any, or (except as otherwise provided in the Applicable
Prospectus Supplement) interest on any Debt Security (including in the case of
an Original Issue Discount Debt Security the amount payable upon acceleration of
the maturity thereof ); (iii) change the place or currency of payment of
principal of, premium, if any, or interest on any Debt Security; (iv) impair the
right to institute suit for the enforcement of any payment on any Debt Security
on or after the Stated Maturity thereof (or in the case of redemption, on or
after the Redemption Date); or (v) reduce the percentage in principal amount of
Outstanding Debt Securities of any series, the consent of whose holders is
required for modification or amendment of the Indenture or for waiver of
compliance with certain provisions of the Indenture or for waiver of certain
defaults. (Section 902)
The holders of at least a majority in aggregate principal amount of the
Outstanding Debt Securities of any series may, on behalf of all holders of Debt
Securities of that series, waive compliance by the Company with certain
restrictive provisions of the Indenture. (Section 1010) The holders of not less
than a majority in aggregate principal amount of the Outstanding Debt Securities
of any series may, on behalf of all holders of Debt Securities of that series,
waive any past default under the Indenture, except a default in the payment of
principal, premium or interest or in respect of a covenant or provision of the
Indenture that cannot be modified or amended without the consent of the holder
of each Outstanding Debt Security of such series affected thereby. (Section 513)
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Company may not consolidate with or merge with or into any other entity
or transfer or lease its assets substantially as an entirety to any entity,
unless (i) either the Company is the continuing corporation, or any successor or
purchaser is a corporation, partnership or trust organized under the laws of the
United States of America, any State thereof or the District of Columbia, and any
such successor or purchaser expressly assumes the Company's obligations on the
Debt Securities under a supplemental
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indenture, (ii) immediately after giving effect to the transaction, no Event of
Default, and no event which, after notice or lapse of time or both, would become
an Event of Default, shall have occurred and be continuing, (iii) if properties
or assets of the Company become subject to a Mortgage not permitted by the
Indenture, the Company or such successor entity, as the case may be, takes such
steps as shall be necessary effectively to secure the Debt Securities equally
and ratably with (or prior to) all Debt secured thereby, and (iv) if a
supplemental indenture is to be executed in connection with such consolidation,
merger, transfer or lease, the Company has delivered to the Trustee an officers'
certificate and an opinion of counsel stating compliance with these provisions.
(Section 801)
DEFEASANCE OF OFFERED DEBT SECURITIES OR CERTAIN COVENANTS IN CERTAIN
CIRCUMSTANCES
DEFEASANCE AND DISCHARGE
The Indenture provides that the terms of any series of Debt Securities may
provide that the Company, at the Company's option, will be discharged from any
and all obligations in respect of the Debt Securities of such series (except for
certain obligations to register the transfer or exchange of Debt Securities of
such series, to replace stolen, lost or mutilated Debt Securities of such
series, to maintain paying agencies and to hold moneys for payment in trust)
upon the deposit with the Trustee, in trust, of money and/or U.S. Government
Obligations which, through the payment of interest and principal thereof in
accordance with their terms, will provide money in an amount sufficient to pay
any installment of principal (and premium, if any) and interest on, and any
mandatory sinking fund payments in respect of, the Debt Securities of such
series on the Stated Maturity of such payments in accordance with the terms of
the Indenture and such Debt Securities. Such discharge may only occur if, among
other things, the Company has delivered to the Trustee an opinion of counsel to
the effect that the Company has received from, or there has been published by,
the United States Internal Revenue Service a ruling, or there has been a change
in tax law, in either case to the effect that such discharge will not be deemed,
or result in, a taxable event with respect to holders of the Debt Securities of
such series. (Sections 1302 and 1304)
DEFEASANCE OF CERTAIN COVENANTS
The Indenture provides that the terms of any series of Debt Securities may
provide the Company with the option to be released from certain restrictive
covenants described in this Prospectus under "--Certain Covenants of the
Company--Limitations on Liens", "--Certain Covenants of the Company-- Limitation
on Sale and Leaseback Transactions", "--Consolidation, Merger and Sale of
Assets" and any other covenants made applicable to any series of Debt Securities
as described in the Applicable Prospectus Supplement. The Company, in order to
exercise such option, will be required to deposit with the Trustee money and/or
U.S. Government Obligations which, through the payment of interest and principal
thereof in accordance with their terms, will provide money in an amount
sufficient to pay principal (and premium, if any) and interest on, and any
mandatory sinking fund payments in respect of, the Debt Securities of such
series on the Stated Maturity of such payments in accordance with the terms of
the Indenture and such Debt Securities. The Company will also be required to
deliver to the Trustee an opinion of counsel to the effect that the deposit and
related covenant defeasance will not cause the holders of the Debt Securities of
such series to recognize income, gain or loss for federal income tax purposes.
(Sections 1303 and 1304)
In the event the Company exercises this option and the Debt Securities of
such series are declared due and payable because of the occurrence of any Event
of Default, the amount of money and U.S. Government Obligations on deposit with
the Trustee will be sufficient to pay amounts due on the Debt Securities of such
series at the time of their Stated Maturity but may not be sufficient to pay
amounts due on the Debt Securities of such series at the time of the
acceleration resulting from such Event of Default. However, the Company shall
remain liable for such payments.
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The Applicable Prospectus Supplement will state if any defeasance provisions
will apply to the Offered Debt Securities.
CONCERNING THE TRUSTEE
The First National Bank of Chicago is the Trustee under the Indenture. The
Trustee may resign at any time or may be removed by the holders of at least a
majority in aggregate principal amount of the Outstanding Debt Securities. If
the Trustee resigns, is removed or becomes incapable of acting as Trustee or if
a vacancy occurs in the office of the Trustee for any cause, a successor Trustee
shall be appointed in accordance with the provisions of the Indenture.
PLAN OF DISTRIBUTION
The Company may sell the Debt Securities to one or more underwriters for
public offering and sale by them or may sell the Offered Debt Securities to
investors directly or through agents, which agents may be affiliated with the
Company. Any such underwriter or agent involved in the offer and sale of the
Offered Debt Securities will be named in the applicable Prospectus Supplement.
Sales of Offered Debt Securities offered pursuant to any applicable
Prospectus Supplement may be effected from time to time in one or more
transactions at a fixed price or prices which may be changed, at prices related
to the prevailing market prices at the time of sale or at negotiated prices. The
Company also may, from time to time, authorize underwriters acting as the
Company's agents to offer and sell the Offered Debt Securities upon the terms
and conditions set forth in the Applicable Prospectus Supplement. In connection
with the sale of Offered Debt Securities, underwriters may be deemed to have
received compensation from the Company in the form of underwriting discounts or
commissions and may also receive commissions from purchasers of Offered Debt
Securities for whom they may act as agent. Underwriters may sell Offered Debt
Securities to or through dealers, and such dealers may receive compensation in
the form of discounts, concessions or commissions from the underwriters and/ or
commissions from purchasers of Offered Debt Securities for whom they may act as
agent.
Any underwriting compensation paid by the Company to underwriters or agents
in connection with the offering of Offered Debt Securities, and any discounts,
concessions or commissions allowed by underwriters to participating dealers,
will be set forth in the applicable Prospectus Supplement. Underwriters, dealers
and agents participating in the distribution of the Offered Debt Securities may
be deemed to be underwriters, and any discounts, concessions or commissions
received by them and any profit realized by them on resale of the Offered Debt
Securities may be deemed to be underwriting discounts and commissions under the
Securities Act. Underwriters, dealers and agents may be entitled, under
agreements entered into with the Company, to indemnification against and
contribution toward certain civil liabilities, including liabilities under the
Securities Act. Any such indemnification arrangements will be described in the
Applicable Prospectus Supplement.
Unless otherwise specified in the Applicable Prospectus Supplement, each
series of Offered Debt Securities will be a new issue with no established
trading market. The Company may elect to list any series of Offered Debt
Securities on any exchange, but is not obligated to do so. It is possible that
one or more underwriters may make a market in a series of Offered Debt
Securities, but will not be obligated to do so and may discontinue any market
making at any time without notice. No assurance can be given as to the liquidity
of the trading market for the Offered Debt Securities.
Certain of the underwriters, agents and their affiliates may be customers
of, engage in transactions with and perform services for the Company in the
ordinary course of business.
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VALIDITY OF THE DEBT SECURITIES
Certain legal matters in connection with the Offered Debt Securities will be
passed upon for the Company by Stoel Rives LLP, Portland, Oregon. The validity
of the Offered Debt Securities will be passed upon for the underwriters or
agents by Sullivan & Cromwell, Los Angeles, California.
EXPERTS
The consolidated financial statements of the Company incorporated in this
Prospectus by reference to the Annual Report on Form 10-K of Precision Castparts
Corp. for the year ended March 30, 1997 have been so incorporated in reliance on
the report of Price Waterhouse LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
14
<PAGE>
[THREE PHOTOS:
IGT ENGINE,
LARGE STRUCTURAL CASTING
AND JOHNSTON VERTICAL PUMP]
<PAGE>
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED.THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO
BUY ANY SECURITIES OTHER THAN THE SECURITIES DESCRIBED IN THIS PROSPECTUS
SUPPLEMENT OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH
SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL.
NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR ANY
SALE MADE HEREUNDER OR THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN OR THEREIN IS CORRECT
AS OF ANY TIME SUBSEQUENT TO ITS DATE.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
PROSPECTUS SUPPLEMENT
The Company........................................ S-3
Selected Financial Data............................ S-7
Use of Proceeds.................................... S-8
Capitalization..................................... S-9
Management's Discussion and Analysis of Financial
Condition and Results of Operations............... S-10
Description of Notes............................... S-14
Underwriting....................................... S-16
Validity of the Notes.............................. S-16
PROSPECTUS
Available Information.............................. 2
Incorporation of Certain Documents by Reference.... 2
The Company........................................ 3
Use of Proceeds.................................... 3
Ratio of Earnings to Fixed Charges................. 3
Description of Debt Securities..................... 3
Plan of Distribution............................... 13
Validity of the Debt Securities.................... 14
Experts............................................ 14
</TABLE>
$150,000,000
PRECISION CASTPARTS CORP.
6.75% NOTES DUE
DECEMBER 15, 2007
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[LOGO]
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GOLDMAN, SACHS & CO.
BANCAMERICA ROBERTSON STEPHENS
MORGAN STANLEY DEAN WITTER
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