<PAGE>
Pursuant to Rule 424(b)(3)
PROSPECTUS Registration No. 333-33764
PRECISION CASTPARTS CORP.
OFFER FOR ALL OUTSTANDING 8.75% SENIOR NOTES DUE 2005
IN EXCHANGE FOR 8.75% SENIOR NOTES DUE 2005
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON MAY 24, 2000, UNLESS WE EXTEND IT.
KEY TERMS OF THE EXCHANGE OFFER
------------------------
- We are offering to exchange registered 8.75% Senior Notes due 2005 for all
of our old unregistered 8.75% Senior Notes due 2005.
- The terms of the new notes will be identical in all material respects to
the terms of the old notes, except that the registration rights and
related liquidated damages provisions, and the transfer restrictions
applicable to the old notes, will not be applicable to the new notes.
- Subject to the satisfaction or waiver of specified conditions, we will
exchange the new notes for all old notes that are validly tendered and not
withdrawn prior to the expiration of the exchange offer.
- Bank One Trust Company, N.A. is serving as the exchange agent. If you wish
to tender your old notes, you must complete, execute and deliver, among
other things, a letter of transmittal to the exchange agent no later than
5:00 p.m., New York City time, on the expiration date.
- You may withdraw tenders of old notes at any time prior to the expiration
of the exchange offer.
- Any outstanding notes not validly tendered will remain subject to existing
transfer restrictions.
- The exchange of the old notes for the new notes pursuant to the exchange
offer will not be a taxable event for United States federal income tax
purposes. See "United States Federal Income Tax Considerations."
- We will not receive any proceeds from the exchange offer.
- The new notes will not be listed on any securities exchange or included in
any automated quotation system.
- The new notes will have the same financial terms and covenants as the old
notes, and will be subject to the same business and financial risks.
SEE "RISK FACTORS" ON PAGE 18 OF THIS PROSPECTUS FOR A DISCUSSION OF RISKS
THAT YOU SHOULD CONSIDER BEFORE PARTICIPATING IN THE EXCHANGE OFFER.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED THE NOTES TO BE DISTRIBUTED IN THE EXCHANGE OFFER, NOR
HAVE ANY OF THESE ORGANIZATIONS DETERMINED THAT THIS PROSPECTUS IS TRUTHFUL OR
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this prospectus is April 24, 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Where You Can Find More Information......................... ii
Documents Incorporated By Reference......................... ii
Prospectus Summary.......................................... 1
Risk Factors................................................ 18
Forward Looking Statements.................................. 25
Use of Proceeds............................................. 25
Capitalization.............................................. 26
Unaudited Pro Forma Combined Financial Information.......... 27
The Exchange Offer.......................................... 32
Description of Certain Indebtedness......................... 42
Description of New Notes.................................... 45
United States Federal Income Tax Considerations............. 57
Plan of Distribution........................................ 59
Legal Matters............................................... 59
Experts..................................................... 59
</TABLE>
This prospectus incorporates business and financial information about our
company that is not included in or delivered with this prospectus. If you write
or call us, we will send you these documents, including exhibits, without
charge. You can contact us at:
Precision Castparts Corp.
4650 S.W. Macadam Ave., Suite 440
Portland, Oregon 97201
Attention: Director of Communications
Telephone: (503) 417-4850
IN ORDER TO RECEIVE TIMELY DELIVERY OF THE DOCUMENTS, YOU MUST REQUEST
INFORMATION NO LATER THAN MAY 17, 2000 (FIVE BUSINESS DAYS BEFORE THE EXPIRATION
OF THE OFFER). IF YOU REQUEST ANY INCORPORATED DOCUMENTS, WE WILL MAIL THEM TO
YOU BY FIRST CLASS MAIL, OR ANOTHER EQUALLY PROMPT MEANS, BY THE NEXT DAY AFTER
WE RECEIVE YOUR REQUEST.
SEE "WHERE YOU CAN FIND MORE INFORMATION" AND "DOCUMENTS INCORPORATED BY
REFERENCE" FOR MORE INFORMATION ABOUT THE DOCUMENTS REFERRED TO IN THIS
PROSPECTUS.
i
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements, and other
documents with the Securities and Exchange Commission under the Securities
Exchange Act of 1934. Our SEC filings are available to the public at the SEC's
website at HTTP://WWW.SEC.GOV. You may also read and copy any document we file
at the following SEC public reference rooms:
<TABLE>
<S> <C> <C>
Judiciary Plaza Citicorp Center 7 World Trade Center
450 Fifth Street, N.W. 500 West Madison Street Suite 1300
Washington, D.C. 20549 Chicago, Illinois 60621 New York, New York 10048
</TABLE>
You may obtain information regarding the operation of the Public Reference
Room by calling the SEC at 1-800-SEC-0330.
In addition, because our common stock is listed on the New York Stock
Exchange, you may read our reports, proxy statements, and other documents at the
offices of the New York Stock Exchange at 20 Broad Street, New York, New York
10005.
We have filed with the SEC a registration statement on Form S-4 under the
Securities Act of 1933, and the rules and regulations promulgated under the
Securities Act, with respect to the new notes offered for exchange under this
prospectus. This prospectus, which constitutes part of the registration
statement, does not contain all of the information set forth in the registration
statement and the attached exhibits and schedules. The statements contained in
this prospectus as to the contents of any contract, agreement or other document
that is filed as an exhibit to the registration statement are not necessarily
complete. Accordingly, each such statement is qualified in all respects by
reference to the full text of such contract, agreement or document filed as an
exhibit to the registration statement or otherwise filed with the SEC.
DOCUMENTS INCORPORATED BY REFERENCE
The SEC allows us to "incorporate by reference" certain documents, which
means that we can disclose important information to you by referring you to
those documents. The information in the documents incorporated by reference is
considered to be part of this prospectus, and information in documents that we
file later with the SEC will automatically update and supersede this
information. We incorporate by reference the documents listed below and any
future filings we will make with the SEC under Sections 13(a), 13(c), 14 and
15(d) of the Exchange Act after the date of this prospectus and prior to the
date on which the exchange offer is consummated:
- Our Annual Report on Form 10-K for the fiscal year ended March 28, 1999,
including the portions incorporated by reference from our 1999 Annual
Report to Shareholders and Proxy Statement in connection with our 1999
Annual Meeting of Shareholders;
- Our Quarterly Reports on Form 10-Q for the quarters ended June 27, 1999,
September 26, 1999, and December 26, 1999; and
- Our Current Report on Form 8-K filed on December 8, 1999, as amended on
February 7, 2000, and our Current Report on Form 8-K filed on
February 18, 2000.
We will provide you, at no charge, a copy of the documents we incorporate by
reference in this prospectus. To request a copy of any or all of these
documents, you should write or telephone us at the following address and
telephone number:
Precision Castparts Corp.
4650 S.W. Macadam Ave., Suite 440
Portland, Oregon 97201
Attention: Director of Communications
Telephone: (503) 417-4850
ii
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY HIGHLIGHTS THE INFORMATION CONTAINED ELSEWHERE IN OR
INCORPORATED BY REFERENCE INTO THIS PROSPECTUS. BECAUSE THIS IS ONLY A SUMMARY,
IT DOES NOT CONTAIN ALL OF THE INFORMATION THAT MAY BE IMPORTANT TO YOU. FOR A
MORE COMPLETE UNDERSTANDING OF THIS EXCHANGE OFFER, WE ENCOURAGE YOU TO READ
THIS ENTIRE PROSPECTUS AND THE DOCUMENTS TO WHICH WE REFER YOU. YOU SHOULD READ
THE FOLLOWING SUMMARY TOGETHER WITH THE MORE DETAILED INFORMATION AND
CONSOLIDATED FINANCIAL STATEMENTS AND THE NOTES TO THOSE STATEMENTS INCLUDED
ELSEWHERE IN OR INCORPORATED BY REFERENCE INTO THIS PROSPECTUS.
IN THIS PROSPECTUS, "PCC," "COMPANY," "WE," "OUR," AND "US" REFER TO
PRECISION CASTPARTS CORP. WITH RESPECT TO DESCRIPTIONS OF OUR BUSINESS CONTAINED
IN THIS PROSPECTUS, SUCH TERMS REFER TO PRECISION CASTPARTS CORP. AND OUR
SUBSIDIARIES.
PRECISION CASTPARTS CORP.
We are a worldwide manufacturer of complex metal components and products. We
are the market leader in manufacturing large, complex structural investment
castings and we are the leading manufacturer of airfoil investment castings used
in jet aircraft engines. In addition, we have expanded into the industrial gas
turbine ("IGT"), structural airframe, fluid management, industrial metalworking
tools and machines and other metal products markets. Wyman-Gordon Company
("Wyman-Gordon" or "WGC"), which we acquired in November 1999, is a market
leader in high-quality, technologically advanced forgings for aircraft engines
and a leading manufacturer of investment castings for the aerospace industry and
forgings for the IGT and energy markets.
Prior to our acquisition of Wyman-Gordon, our manufacturing of complex metal
components and products included operations in three principal business
segments: Precision Alloy Products, Fluid Management Products and Industrial
Products. The following charts set forth our total revenue and the percentage
revenue for each of these business segments for the periods shown:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
MARCH
------------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
PCC BY SEGMENT (IN MILLIONS)
Precision Alloy Products.................................... $ 961.4 $ 877.4 $691.4
Fluid Management Products................................... 306.4 260.6 161.8
Industrial Products......................................... 204.1 178.7 119.6
Total....................................................... $1,471.9 $1,316.7 $972.8
</TABLE>
[GRAPHIC MATERIAL OMITTED. THE GRAPHIC MATERIAL CONSISTS OF THREE PIE CHARTS
REFLECTING PCC'S REVENUES BY BUSINESS SEGMENT FOR THE FISCAL YEARS 1999, 1998
AND 1997. THE PIE CHARTS ARE DESCRIBED IN TABULAR FORM BELOW]
<TABLE>
<CAPTION>
BUSINESS SEGMENT FY99 FY98 FY97
- ---------------------------- -------- -------- --------
<S> <C> <C> <C>
Precision Alloy Products: 65% 66% 71%
Fluid Management Products: 21% 20% 17%
Industrial Products: 14% 14% 12%
</TABLE>
1
<PAGE>
In November 1999, we acquired Wyman-Gordon. Unlike PCC, Wyman-Gordon
historically reported its results of operations for business segments classified
by markets, rather than by product characteristics. Wyman-Gordon historically
operated in two principal markets: Aerospace Products and Energy Products. The
following charts set forth Wyman-Gordon's total revenues and the percentage of
revenue for each of its markets for the periods shown. The data below includes
revenues from Wyman-Gordon's titanium and large parts casting operations, which
we were required to divest by the Federal Trade Commission.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED MARCH
------------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
WGC BY MARKET (IN MILLIONS)
Aerospace Products.......................................... $705.8 $622.7 $475.1
Energy Products............................................. 117.2 101.4 97.1
Other Products.............................................. 26.3 28.8 36.5
Total....................................................... $849.3 $752.9 $608.7
</TABLE>
[GRAPHIC MATERIAL OMITTED. THE GRAPHIC MATERIAL CONSISTS OF THREE PIE CHARTS
REFLECTING WYMAN-GORDON'S REVENUES BY BUSINESS SEGMENT FOR THE FISCAL YEARS
1999, 1998 AND 1997. THE PIE CHARTS ARE DESCRIBED IN TABULAR FORM BELOW]
<TABLE>
<CAPTION>
BUSINESS SEGMENT FY99 FY98 FY97
- ---------------------------- -------- -------- --------
<S> <C> <C> <C>
Aerospace Products: 83% 83% 78%
Energy Products: 14% 13% 16%
Other Products: 3% 4% 6%
</TABLE>
Following the acquisition of Wyman-Gordon, we integrated Wyman-Gordon's
financial reporting with our financial reporting. We classified Wyman-Gordon's
operations into business segments according to product characteristics and
combined them with our existing business segments. As a result, we added Forged
Products as an additional business segment of our operations, and made certain
modifications to our other segments, including the transfer of a small portion
of our Precision Alloy Products segment to our Industrial Products Segment. In
light of these modifications, we relabeled our "Precision Alloy Products"
segment as "Investment Cast Products" to reflect the primary products produced
by that segment. Therefore, our operations now include four principal business
segments: Investment Cast Products, Forged Products, Fluid Management Products
and Industrial Products. Each of these four business segments is described
below.
INVESTMENT CAST PRODUCTS
Our Investment Cast Products segment includes our subsidiaries PCC
Structurals, Inc., PCC Airfoils, Inc. and Wyman-Gordon Investment
Castings, Inc. These three subsidiaries manufacture investment castings for
aircraft engines, IGT engines, airframes, medical prostheses and other
industrial applications. We primarily sell our Investment Cast Products to the
aerospace market.
INVESTMENT CASTINGS
We are the market leader in manufacturing large, complex structural
investment castings, and we are the leading manufacturer of airfoil investment
castings used in jet aircraft engines. We manufacture investment castings for
every available jet aircraft engine program in production or under development
2
<PAGE>
by our key customers. We are leveraging our experience and expertise in large,
complex structural and airfoil investment castings to manufacture castings for
IGT engines used for electric power generation and we have expanded into the
structural airframe market. In addition, we make investment castings for use in
the automotive, medical prosthesis, satellite launch vehicle and general
industrial markets.
Investment casting technology involves a technical, multi-step process that
uses ceramic molds in the manufacture of metal components with more complex
shapes, closer tolerances and finer surface finishes than parts manufactured
using other casting methods. The investment casting process begins with the
creation of a wax pattern of the part to be cast, along with pathways through
which molten metal flows into the ceramic mold. A ceramic shell is then formed
around the wax pattern followed by removal of the wax from the ceramic shell by
melting and draining the wax. Finally, molten metal is poured into the ceramic
shell, the shell is removed, and the part undergoes final processing and
inspection.
Because of the complexity of the manufacturing process and the application
of proprietary technologies, we believe we currently are the only manufacturer
that can consistently produce the largest complex structural investment castings
in quantities sufficient to meet our customers' quality and delivery
requirements. Our emphasis on low cost, high quality products and timely
delivery has enabled us to become one of the leading suppliers of structural and
airfoil castings for jet aircraft engines, to increase our market share of IGT
castings and to expand into the structural airframe market.
Trends in the commercial aerospace market are a critical determinant of
demand for our 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 cyclical downturn since 1991.
However, during fiscal 1999, demand decreased in the commercial aerospace market
as worldwide aircraft production reached its peak. The decrease in demand was
due in part to the decline in wide-body aircraft orders for the Asian market
where depressed economic conditions have curbed spending for new aircraft.
Large jet aircraft engines are manufactured by a small number of suppliers,
including General Electric, Pratt & Whitney, Rolls-Royce, and several joint
ventures. As a result, we believe a high level of customer service and strong
long-term customer relationships will continue to be important to achieving our
goals. We have been supplying castings for jet engines to GE for more than
25 years, and we have been supplying Pratt & Whitney (a division of United
Technologies) with castings for more than 20 years for its military jet engines
and more than 15 years for its commercial jet engines. In addition, we have
supplied small structural investment castings to Rolls Royce for more than
10 years and we have more recently begun supplying Rolls Royce with large,
structural castings for use in its new Trent series of aircraft jet engines. As
we have been able to cast larger and more complex parts, manufacturers of large
jet aircraft engines have made increasing use of our structural castings.
AEROSPACE STRUCTURAL CASTINGS
Our structural castings business includes the largest diameter stainless
steel, nickel-based superalloys and titanium investment castings in the world,
as well as a variety of smaller structural castings. These castings are
stationary components that form portions of the fan, compressor, combustion and
turbine sections of the jet aircraft engine, where strength and structural
integrity are critical. Structural investment castings are sold primarily as
original equipment to jet aircraft engine manufacturers.
We believe that trends in the manufacturing of aircraft jet engines will
continue to increase our revenues per engine. As the design of new generation
aircraft engines has emphasized increased thrust, higher fuel efficiency and
reduction of noise and exhaust emissions, engine operating temperatures and
pressures have increased. These conditions require the use of engine parts made
of alloys that are able to withstand extreme operating conditions and provide an
optimum strength-to-weight ratio. Many of
3
<PAGE>
these alloys are particularly suited for use in the investment castings we
manufacture. In addition, titanium, a metal with a lower melting temperature
than stainless steel or superalloys, is used in all but the hottest parts of the
engine because of its considerable weight savings. Titanium is an exceptionally
difficult metal to cast because of its reactivity to other elements. However, we
have developed the necessary technology and manufacturing processes to cast
large, complex investment castings in titanium alloys. Many new generation
engines, which are expected to be built through the next decade and beyond, make
significantly greater use of our products than did prior engine designs. We
manufacture structural investment castings for all three jet aircraft engines
used on the Boeing 777 aircraft, and we are the sole supplier of structural
investment castings for the GE90 jet engine. We also manufacture the
intermediate case and the tail bearing housing for the new Rolls Royce Trent
series of engines. These are the largest structural investment castings for jet
aircraft engines in the world.
We have also expanded into the structural airframes market. These airframe
components are manufactured primarily from titanium and aluminum alloys.
Aircraft manufacturers have begun to show substantial interest in using
investment castings for airframe applications such as aileron and flap hinges,
pylons (engine mounts) and wing spars and wing ribs.
AEROSPACE AIRFOIL CASTINGS
We manufacture precision cast airfoils, which include the stationary vanes
and rotating blades used in the turbine section of aircraft jet engines. This
engine section is considered the "hot" section, where temperatures may exceed
2,400 degrees Fahrenheit. These conditions require use of superalloys and
special casting techniques to manufacture airfoil castings with internal cooling
passageways that provide both high performance and longer engine life.
We use various casting technologies to produce turbine airfoils. We employ
conventional casting processes to produce equiaxed airfoil castings, in which
the metal grains are oriented randomly throughout the casting. A more advanced
process enables us to produce directionally solidified ("DS") airfoil castings,
in which the metal grains are aligned longitudinally. This alignment decreases
the internal stress on the weakest portion of a metal part where the various
grains adjoin, thereby providing increased strength and improved efficiencies in
engine performance over equiaxed parts. An even more advanced process enables us
to produce single crystal ("SX") airfoil castings, which consist of one large
superalloy crystal without grain boundaries. SX castings provide greater
strength and performance characteristics than either equiaxed or DS castings, as
well as longer engine life.
As engine sizes grow to generate greater thrust for larger aircraft, the
turbine sections of these engines must work harder and burn hotter. As a result,
the major aircraft engine manufacturers have increasingly been designing their
engines with DS and SX blades. The DS and SX cast airfoils we build, with their
complex cooling passages, have been instrumental in enabling these engines to
operate at higher temperatures. SX cast airfoils are used both in new and
redesigned engines, particularly in jet engines used in military applications
where performance requirements are higher, and blade life is shorter than in
commercial engines.
The demand for aerospace airfoil castings is determined primarily by the
number and type of engines required for new jet aircraft, the frequency of
engine repairs and the inventory levels of replacement parts maintained by the
principal jet aircraft engine manufacturers and repair centers. A jet engine's
airfoil components have shorter useful lives than structural investment castings
and are replaced periodically during engine maintenance. As a result, our sales
of aerospace airfoil castings are less affected by the cyclical patterns of the
aerospace industry than are our sales of structural investment castings. The
timing for replacement of aerospace airfoil castings principally depends on the
engine's time in service and the expected life of the airfoil casting. Based
upon information from our major customers, we believe that approximately
50 percent of our sales of cast airfoils are used as replacement parts.
4
<PAGE>
IGT CASTINGS
In fiscal 1994, we began to focus on the manufacture of airfoil castings for
IGT engines. We targeted this market because we believe (1) the performance and
reliability standards we have developed in the manufacture of aerospace airfoil
castings are applicable to the manufacture of IGT airfoils, (2) the worldwide
market for IGT airfoils is large (approximately $500 million) and growing, and
(3) there are a small number of suppliers in this market. Our IGT products
consist of airfoil castings and high-temperature combustion hardware used in
large, land-based gas turbines designed for electrical power generation. In
addition, we manufacture structural and airfoil castings for aircraft-
derivative gas turbine engines which are also used for power generation as well
as other industrial and military land and marine-based applications.
IGT manufacturers have significantly improved the efficiency and reduced the
pollution profiles of industrial gas turbines, principally by incorporating
component-level advances that are included not only in new engines but also in
the refurbishing and upgrading of existing turbines. We have leveraged our DS
and SX airfoil casting knowledge from the aerospace market into the IGT market
to produce blades and vanes that are better able to withstand the extreme heat
and stresses of new higher-temperature gas turbines. IGT engines are built with
investment castings that are similar, but generally larger, than blades and
vanes manufactured by us for the aerospace market. Because of their size, IGT
airfoils are more difficult to cast than smaller aerospace airfoils with the
same properties.
Since industrial gas turbines are primarily used in electrical power
generation, castings sales for new IGT engines are tied to the growth of global
electricity consumption, while demand for replacement parts depends on the size
and usage rate of the installed base. Gas turbine power generation has several
advantages over other power-generation methods, such as coal and nuclear-
powered facilities, including lower average capital cost, shorter installation
and regulatory approval time, ease of adding a new industrial gas turbine engine
to an existing power plant to increase output and the clean-burning
characteristics of natural gas. We believe these advantages have led to
increased demand for gas turbine engines.
OTHER INVESTMENT CASTING PRODUCTS
Our strategy for profitable growth also includes the pursuit of new
opportunities for our existing investment casting technology. We have been
expanding the application of our investment casting technology in the
automotive, medical prosthesis, satellite and general industrial markets by
manufacturing such products as turbocharger wheels, artificial hips and knees,
parts for satellite launch vehicles and impellers for pumps and compressors.
FORGED PRODUCTS
We are among the leading manufacturers of forged products for the aerospace,
industrial gas turbine, and energy markets. Our Forged Products segment was
added as a result of our acquisition of Wyman-Gordon and consists of the forging
operations of Wyman-Gordon. Forged Products' aerospace and IGT sales primarily
derive from the same large engine customers served by the Investment Cast
Products segment, with additional aerospace sales going to manufacturers of
landing gear and other airframe components. Similarly, the dynamics of the
aerospace and IGT markets, as described in the Investment Cast Products section,
above, are virtually the same for Forged Products.
5
<PAGE>
We manufacture components from sophisticated titanium and nickel alloys for
jet engines including fan discs, compressor discs, turbine discs, seals,
spacers, shafts, hubs and cases. Our airframe structural components are used on
both commercial and military aircraft and include landing gear beams, bulkheads,
wing spans, engine mounts, struts, wing hinges, wing and rail flaps and
housings. These parts may be made of titanium, steel, aluminum or other alloys.
We provide products for use in power plants worldwide as well as in oil and gas
industry applications. We produce rotating components, such as discs and
spacers, and valve components for land-based steam turbine and gas turbine
generators, and in addition, also manufacture shafts, cases, and compressor and
turbine discs for marine gas engines. We produce a variety of mechanical and
structural tubular forged products, primarily in the form of extruded seamless
pipe, for the domestic and international energy markets, which include nuclear
and fossil-fueled power-plants, cogeneration projects and retrofit and life
extension applications. For naval defense applications, we supply components for
propulsion systems for nuclear submarines and aircraft carriers as well as pump,
valve, structural and non-nuclear propulsion forgings.
The forging process involves heating metal and shaping it through pressing
or extrusion. These forged products can be produced from titanium, steel, or
high-temperature nickel alloys. Forging is conducted on hydraulic presses with
capacities ranging up to 55,000 tons.
We believe that we are the world leader in producing forged rotating
components for use in jet aircraft engines. These parts are forged from
purchased ingots that are converted to billets in our cogging presses and from
metal powders (primarily nickel alloys) that are produced, consolidated, and
extruded into billet entirely in our own facilities.
Forging comprises one of five different manufacturing processes, depending
on the raw materials and the product application. In open die forging, the metal
is pressed between dies that never completely surround the metal, thus allowing
it to be observed during the process. This manufacturing method is used to
create relatively simple, preliminary shapes to be processed further by
closed-die forging. Closed-die forging involves pressing heated metal into
required shapes and sizes determined by machined impressions in specially
prepared dies that completely surround the metal. This process allows the metal
to flow more easily within the die cavity and, thus, produces forgings with
superior surface finish and tighter tolerances, with enhanced repeatability of
the part shape.
The conventional, closed die, multi-ram process, which is employed on our
20,000 and 30,000 ton presses, enables us to produce complex forgings with
multiple cavities, such as valve bodies, in a single heating and pressing cycle.
Dies may be split on either a vertical or a horizontal plane, and shaped punches
may be operated by side rams, piercing rams, or both. This process also
optimizes grain flow and uniformity of deformation, as well as reducing
machining requirements.
Isothermal forging is a closed-die process in which the dies are heated to
the same temperature as the metal being forged, typically in excess of 1,900
degrees Fahrenheit. Because the dies may oxidize at these elevated temperatures,
the forging process is done in a vacuum or inert gas atmosphere. Our isothermal
press produces near-net shape components, requiring less machining by our
customers.
Finally, the extrusion process is capable of producing thick-wall, seamless
pipe, with outside diameters of up to 48 inches and wall thicknesses from 0.5
inches up to seven inches for applications in the oil and gas industry,
including tension leg platforms, riser systems, and production manifolds. Our
35,000-ton vertical extrusion press is one of the largest and most advanced in
the world. In addition to solid metals, powdered materials can be compacted and
extruded into forging billets with this press.
FLUID MANAGEMENT PRODUCTS
The Fluid Management Products segment includes all of the businesses within
PCC Flow Technologies, Inc. We entered the fluid management market in July 1996
with the acquisition of the NEWFLO Corporation. Subsequent acquisitions, which
included Crown Pumps, OIC Valves, Baronshire
6
<PAGE>
Engineering, Environment/One, TBV, Sterom, Reiss Engineering and Valtaco have
enabled PCC Flow Technologies to further expand its product lines and markets.
Our Fluid Management products are sold primarily to the general industrial and
energy markets.
We design, manufacture, market and service a broad range of high-quality
fluid-handling industrial valves and pumps. Our finished fluid management
products are manufactured primarily from castings, forgings and fabricated steel
parts. We sell these products worldwide to a wide range of end-user markets
under well-established brand names.
The manufacturing process for fluid management products requires knowledge
of multiple metalforming and processing technologies, including casting,
machining, welding, heat treating, assembly and processing of metal components.
Testing procedures, materials management and traceability, and quality control
are also important aspects of our operations.
We use our substantial knowledge of fluid management technologies, complex
metal component manufacturing techniques and our end-user markets to develop,
produce and sell engineered valves and pumps that we believe provide customer
benefits superior to those of other manufacturers. Many of the products we offer
are customized to end-user requirements or designed for specialized
applications. Our maintenance, repair and service centers, extensive
distribution network and inventory of products enable us to provide responsive
service and timely deliveries to customers, thereby enhancing the marketability
of our products. We believe our brand names, quality products and responsive
service network also lead to repeat orders, stable demand and customer loyalty.
VALVES
We manufacture and market specialty industrial and general purpose valves,
fittings and flanges, principally for the chemical, refining, energy, pulp and
paper, and marine markets. Our valve products consist primarily of multi-turn
industrial valves, check valves, quarter-turn industrial ball and plug valves,
double block and bleed dual expanding plug valves, four-way diverter valves and
valve operators, stainless steel butterfly valves and corrosion-resistant
titanium ball valves. We believe our General Valve positive shut-off, double
block and bleed valve and our Technocheck hinged check valves are among the most
technologically advanced products of these types sold in the fluid control
market.
PUMPS
We manufacture and market a complete line of general purpose and specialty
pumps for power, cogeneration, geothermal, municipal, residential and industrial
(including petroleum, chemical, mining, marine, and pulp and paper)
applications. We also supply repair parts and service for pumps. Our pump
products consist primarily of single-suction and double-suction centrifugal
pumps, submersible and non-clog pumps, booster pump systems, vertical turbine,
mixed-flow and axial-flow pumps and grinder pumps. We believe our Johnston
vertical turbine pumps, our PACO booster systems and "Smart Pumps" and our E/One
low-pressure sewer systems are among the leading products sold in the fluid-
handling market.
SERVICES
We maintain a number of service and repair facilities as well as stocking
warehouses in the U.S. and Canada which provide aftermarket maintenance, repair,
pre-sale modification services and inventory availability for our large
installed base of fluid management products, as well as repair and replacement
of fluid management products of other manufacturers. The market for replacement
units, repair parts and repair services generally offers us higher margins and
is less dependent on industry economic conditions than the market for equipment
for new industrial facilities. We believe approximately 43 percent of our sales
of fluid management products are derived from after-market service and repair
activities.
7
<PAGE>
INDUSTRIAL PRODUCTS
The Industrial Products segment includes our subsidiaries PCC Specialty
Products, Inc., J&L Fiber Services, Inc. and Advanced Forming Technology, Inc.
("AFT"). PCC Specialty Products manufactures a broad range of cold-forming
header and threader tools and gundrills, and manufactures machines for vertical
and horizontal boring, fastener production and gundrilling, principally for
automotive and other machine tool applications. Our tooling business includes
product lines manufactured by Reed-Rico, Astro Punch and Eldorado. Our machines
business includes product lines manufactured by Olofsson, PCC Pittler, Reed-Rico
and Eldorado. J&L Fiber Services produces refiner plates and screen cylinders
for use in the pulp and paper industry. AFT manufactures metal-injection-molded,
metal-matrix-composite, and ThixoFormed components for numerous industrial
applications. Our Industrial Products are sold primarily to the general
industrial, automotive and pulp and paper markets.
We maintain the number one or two position in our served markets for
industrial metalworking tools, and we have strong market positions in the
manufacture of metalworking machines for general industrial markets. We entered
these markets in March 1995 with the acquisition of Quamco, Inc. Since that
time, we have increased our presence in the industrial metalworking tools and
machines markets with three additional acquisitions. The acquisitions of
Olofsson and Astro Punch, both acquired in fiscal 1997, and PCC Pittler,
acquired in fiscal 1998, complemented our capabilities as a leading manufacturer
of highly engineered industrial metalworking tools and machines. In fiscal 1998,
we acquired J&L Fiber Services, Inc., a manufacturer of metal refiner plates and
screen cylinders for the pulp and paper industry.
We believe we have been able to maintain our leading market positions due to
the quality of our products, the continued development of new technologies,
brand name recognition and customer service.
METALWORKING TOOLS
We design, manufacture and distribute a wide variety of precision
metalworking tools to industrial companies that serve the automotive, appliance,
construction, farm equipment, medical and aerospace industries. Our industrial
metalworking tools consist primarily of heading, threading and gundrilling
tools. Our gundrilling tools are used to drill precision holes to very close
tolerances in such products as turbine engines, engine blocks, cylinder heads,
transmission shafts, connecting rods and medical prostheses.
METALWORKING MACHINES
We design, manufacture and distribute several types of metalworking machines
primarily for the automotive industry. Our industrial metalworking machines
include threading machines and attachments, gundrilling machines and
computer-controlled specialized machine systems for boring and turning
applications. Our threading machines and attachments are used to form a variety
of threaded parts and fasteners.
REFINER PLATES AND SCREEN CYLINDERS
We are the world leader in the design, manufacture and sale of refiner
plates to the pulp and paper production markets. Refiner plates, which are
highly engineered metal castings, are an integral part of the wood pulping
process. Refiner plates separate wood chips into component fibers as pulp is
transported through the system, and affect the ultimate quality of the paper
produced. In addition, we manufacture conventional and rebuildable screen
cylinders which are metal filtering devices inside pressure vessels that
separate the usable wood fiber from undesirable elements in the pulp slurry mix.
More than 90 percent of J&L Fiber Services' sales are used as replacement parts.
8
<PAGE>
METAL-INJECTION-MOLDED, METAL-MATRIX-COMPOSITE, AND THIXOFORMED COMPONENTS
We are the largest producer of powdered metal parts manufactured by a
metal-injection-molding ("MIM") process. We are also a leading supplier of
tungsten carbide cutting tools and wear parts manufactured by a powdered metal
press and sinter process. In addition, we manufacture advanced technology,
lightweight, net-shape, metal-matrix- composite parts that are made by combining
aluminum and silicon carbide ("AlSiC," a registered trademark of the Company)
using a patented pressure-infiltration-casting-process. We have also expanded
into ThixoForming, an advanced technology alternative to conventional die
casting in which materials such as magnesium, aluminum or zinc are injected in a
semi-solid (thixotropic) state into a mold under vacuum conditions. The result
is a high-density, complex component with superior materials properties and
precise dimensional tolerances as compared to a die-cast part. We believe these
businesses have the potential for rapid growth and complement our core
competencies in metals, precision metalworking and the management of complex
manufacturing processes.
The MIM process is particularly well-suited to high volume production of
small, complicated metal parts for numerous industries, including computer
peripherals, medical instruments, electronics, automotive, power tools and
firearms. We sell tungsten carbide parts to various industrial markets and we
use these parts internally in our gundrilling operations. Metal-matrix-composite
parts, which have high thermal conductivity and tightly controlled thermal
expansion characteristics, are used in electronic applications that require heat
dissipation and are used in automotive, telecommunication, aerospace and
computer products. ThixoFormed components are used in automotive, electronic and
other consumer products. We believe our broad range of products and highest
standards of craftsmanship offer growth opportunities in numerous industry
applications.
9
<PAGE>
SUMMARY OF THE TERMS OF THE EXCHANGE OFFER
<TABLE>
<S> <C>
OLD NOTES.................................... On March 3, 2000, we completed a private offering of
the old notes, which consist of $200,000,000
aggregate principal amount of 8.75% Senior Notes due
2005. In connection with the initial sale of the old
notes, we entered into a registration rights
agreement in which we agreed, among other things, to
deliver this prospectus to you and to complete an
exchange offer.
THE EXCHANGE OFFER........................... We are offering to issue up to $200,000,000 aggregate
principal amount of our 8.75% Notes due 2005, which
have been registered under the Securities Act, in
exchange for an equal aggregate principal amount of
our outstanding unregistered notes.
The terms of the new notes are identical in all
material respects to the terms of the old notes,
except that the registration rights and related
liquidated damages provisions, and the transfer
restrictions applicable to the old notes, are not
applicable to the new notes.
Old notes may be tendered only in $1,000 increments.
Subject to the satisfaction or waiver of specified
conditions, we will exchange the new notes for all
old notes that are validly tendered and not withdrawn
prior to the expiration of the exchange offer. We
will cause the exchange to be effected promptly after
the expiration of the exchange offer.
UPON COMPLETION OF THE EXCHANGE OFFER, THERE MAY BE
NO MARKET FOR THE OLD NOTES, AND IF YOU FAIL TO
EXCHANGE YOUR OLD NOTES, YOU MAY HAVE DIFFICULTY
RESELLING THEM.
RESALES OF THE NEW NOTES..................... Based upon interpretations by the staff of the SEC,
we believe that the new notes issued in the exchange
offer may be offered for sale, resold or otherwise
transferred by you, without compliance with the
registration and prospectus delivery requirements of
the Securities Act, if you:
- acquire the new notes in the ordinary course of
your business;
- are not engaging in and do not intend to engage in
a distribution of the new notes;
- do not have an arrangement or understanding with
any person to participate in a distribution of the
new notes;
- are not an affiliate of ours within the meaning of
Rule 405 under the Securities Act; and
- are not a broker-dealer that acquired the old
notes directly from us.
</TABLE>
10
<PAGE>
<TABLE>
<S> <C>
If any of these conditions is not satisfied and you
transfer any new notes without delivering a proper
prospectus or without qualifying for an exemption
from registration, you may incur liability under the
Securities Act.
In addition, if you are a broker-dealer seeking to
receive new notes for your own account in exchange
for old notes that you acquired as a result of
market-making or other trading activities, you must
acknowledge that you will deliver this prospectus in
connection with any offer to resell, or any resale or
other transfer of the new notes that you receive in
the exchange offer. See "Plan of Distribution."
EXPIRATION DATE.............................. The exchange offer will expire at 5:00 p.m., New York
City time, on May 24, 2000, unless we extend it.
WITHDRAWAL................................... You may withdraw the tender of your old notes at any
time prior to the expiration of the exchange offer.
We will return to you any of your old notes that are
not accepted for exchange for any reason, without
expense to you, promptly after the expiration or
termination of the exchange offer.
CONSEQUENCES OF FAILING TO EXCHANGE YOUR OLD
NOTES...................................... The exchange offer satisfies our obligations and your
rights under the registration rights agreement. After
the exchange offer is completed, you will not be
entitled to any registration rights with respect to
your old notes.
Therefore, if you do not exchange your old notes, you
will not be able to reoffer, resell or otherwise
dispose of your old notes unless:
- you comply with the registration and prospectus
delivery requirements of the Securities Act; or
- you qualify for an exemption from such Securities
Act registration requirements.
INTEREST ON THE NEW NOTES AND THE OLD
NOTES...................................... The new notes will bear interest at the rate of 8.75%
per annum from the most recent date on which interest
has been paid on the old notes or, if no interest has
been paid on the old notes, from March 3, 2000. Such
interest will be payable semi-annually on each March
15 and September 15, beginning September 15, 2000. No
interest will be paid on the old notes following
their acceptance for exchange. See "Description of
New Notes."
</TABLE>
11
<PAGE>
<TABLE>
<S> <C>
CONDITIONS TO THE EXCHANGE OFFER............. The exchange offer is subject to various conditions.
We reserve the right to terminate or amend the
exchange offer at any time before the expiration date
if various specified events occur. The exchange offer
is not conditioned upon any minimum principal amount
of outstanding old notes being tendered. See "The
Exchange Offer--Conditions of the Exchange Offer."
EXCHANGE AGENT............................... Bank One Trust Company, N.A. is serving as exchange
agent for the exchange offer. All executed letters of
transmittal should be directed to the exchange agent
at the following address:
By Mail or by Hand: Bank One Trust Company, N.A.
One North State Street, 9(th)
Floor
Chicago, Illinois 60602
Attention: Exchanges
By Facsimile for Eligible Institutions: (312)
407-8853
Questions and requests for assistance should be
directed to the exchange agent at (800) 524-9472
PROCEDURES FOR TENDERING OLD NOTES........... If you wish to tender your old notes, you must cause
the following to be transmitted to and received by
the exchange agent no later than 5:00 p.m., New York
City time, on the expiration date:
- a confirmation of the book-entry transfer of the
tendered old notes into the exchange agent's
account at The Depository Trust Company;
- a properly completed and duly executed letter of
transmittal in the form accompanying this
prospectus (with any required signature
guarantees) or, at the option of the tendering
holder in the case of a book entry tender, an
agent's message in lieu of such letter of
transmittal; and
- any other documents required by the letter of
transmittal.
GUARANTEED DELIVERY PROCEDURES............... If you wish to tender your old notes and you cannot
cause the old notes or any other required documents
to be transmitted to and received by the exchange
agent before 5:00 p.m., New York City time, on the
expiration date, you may tender your old notes
according to the guaranteed delivery procedures
described in this prospectus under the heading "The
Exchange Offer--Guaranteed Delivery Procedures."
</TABLE>
12
<PAGE>
<TABLE>
<S> <C>
SPECIAL PROCEDURES FOR BENEFICIAL OWNERS..... If you are the beneficial owner of old notes that are
registered in the name of your broker, dealer,
commercial bank, trust company, or other nominee, and
you wish to participate in the exchange offer, you
should promptly contact the person in whose name your
outstanding old notes are registered and instruct
that person to tender your old notes on your behalf.
See "The Exchange Offer--Procedures for Tendering."
REPRESENTATIONS OF TENDERING HOLDERS......... By tendering old notes pursuant to the exchange
offer, you will, in addition to other customary
representations, represent to us that you:
- are acquiring the new notes in the ordinary course
of business;
- are not engaging in a distribution of the new
notes;
- have no arrangement or understanding with any
person to participate in a distribution of the new
notes;
- are not an affiliate of ours, or if you are an
affiliate, you will comply with the registration
and prospectus delivery requirements of the
Securities Act; and
- are not a broker-dealer tendering old notes
acquired directly from us.
ACCEPTANCE OF OLD NOTES AND DELIVERY OF NEW
NOTES...................................... Subject to the satisfaction or waiver of the
conditions to the exchange offer, we will accept for
exchange any and all old notes that are properly
tendered and not withdrawn prior to 5:00 p.m., New
York City time, on the expiration date. We will cause
the exchange to be effected promptly after the
expiration of the exchange offer.
UNITED STATES FEDERAL INCOME TAX
CONSIDERATIONS............................. The exchange of old notes for new notes pursuant to
the exchange offer generally will not be a taxable
event for United States federal income tax purposes.
See "United States Federal Income Tax
Considerations."
APPRAISAL OR DISSENTERS' RIGHTS.............. You will have no appraisal or dissenters' rights in
connection with the exchange offer.
USE OF PROCEEDS.............................. We will not receive any proceeds from the issuance of
new notes pursuant to the exchange offer. We will pay
all expenses incident to the exchange offer.
</TABLE>
13
<PAGE>
SUMMARY OF THE TERMS OF THE NEW NOTES
The terms of the new notes will be identical in all material respects to the
terms of the old notes, except that the registration rights and related
liquidated damages provisions, and the transfer restrictions applicable to the
old notes, are not applicable to the new notes. The new notes will evidence the
same debt as the old notes. The new notes and the old notes will be governed by
the same indenture. For more complete information about the new notes, see the
"Description of New Notes" section of this prospectus.
<TABLE>
<S> <C>
ISSUER....................................... Precision Castparts Corp.
AGGREGATE AMOUNT............................. $200,000,000 principal amount of 8.75% Senior Notes
due 2005.
MATURITY..................................... The new notes will mature on March 15, 2005.
INTEREST RATE................................ The new notes will bear interest at the rate of 8.75%
per annum.
INTEREST PAYMENT DATES....................... We will pay interest on the new notes semi-annually
on March 15 and September 15, beginning
September 15, 2000.
REDEMPTION................................... The new notes are not subject to redemption.
RANKING...................................... The new notes will be our general unsecured
obligations. The new notes will rank PARI PASSU in
right of payment with all of our other unsubordinated
indebtedness and senior in right of payment to all of
our future subordinated indebtedness. The new notes
are not guaranteed by any of our subsidiaries. The
new notes will effectively be subordinated to
(1) any of our secured indebtedness to the extent of
the assets securing that indebtedness and (2) all
indebtedness for money borrowed and other liabilities
of our subsidiaries. As of December 26, 1999, we had
an aggregate amount of outstanding secured debt and
subsidiary debt of approximately $157 million and
$1,172 million of total consolidated indebtedness.
CERTAIN COVENANTS............................ We will issue the new notes under an indenture (the
"Indenture") with Bank One Trust Company, N.A.
(successor in interest to The First National Bank of
Chicago), as trustee. The Indenture among other
things, restricts our ability to:
- incur certain liens;
- enter into certain affiliate transactions;
- merge, consolidate or sell assets; and
- engage in sale and leaseback transactions.
See "Description of New Notes--Certain Covenants of
the Company"
</TABLE>
14
<PAGE>
<TABLE>
<S> <C>
USE OF PROCEEDS.............................. We will not receive any proceeds from the exchange
offer. For a description of the use of proceeds from
the offering of the old notes, see "Use of Proceeds."
FORM OF THE NEW NOTES........................ The new notes will be represented by one or more
permanent global securities in registered form
deposited with Bank One Trust Company, N.A., as
custodian, for the benefit of The Depository Trust
Company. You will not receive notes in registered
form unless one of the events set forth under the
heading "Description of New Notes--Book-Entry,
Delivery and Form" occurs. Instead, beneficial
interests in the new notes will be shown on, and
transfers of these interests will be effected only
through, records maintained in book-entry form by The
Depository Trust Company with respect to its
participants.
ABSENCE OF A PUBLIC MARKET FOR THE NEW
NOTES...................................... There has been no public market for the old notes,
and no active market for the new notes is currently
anticipated. We do not intend to apply for a listing
of the new notes on any securities exchange or
inclusion in any automated quotation system. We
cannot make any assurances regarding the liquidity of
the market for the new notes, the ability of holders
to sell their new notes or the price at which holders
may sell their new notes. See "Plan of Distribution."
TRUSTEE...................................... Bank One Trust Company, N.A. (successor in interest
to The First National Bank of Chicago) is serving as
the trustee under the Indenture.
</TABLE>
GENERAL
Precision Castparts Corp. is incorporated in Oregon. Our principal executive
offices are located at 4650 S. W. Macadam Ave., Suite 440, Portland, Oregon
97201. Our telephone number is (503) 417-4800.
15
<PAGE>
SUMMARY OF HISTORICAL CONSOLIDATED FINANCIAL DATA
We derived the following summary consolidated statements of operations data
and consolidated balance sheet data from both our audited and unaudited
consolidated financial statements and related notes. Our unaudited consolidated
statements of operations data for the nine months ended December 27, 1998 and
December 26, 1999 and consolidated balance sheet data as of December 26, 1999
include all adjustments, consisting only of normal recurring adjustments, which
management considers necessary for a fair presentation of results for these
unaudited periods. The results of operations for the nine months ended
December 26, 1999 are not necessarily indicative of the results of operations
that may be expected for the year ending April 2, 2000. The results of
operations for the nine months ended December 26, 1999 include approximately
five weeks of operations of Wyman-Gordon.
You should read the summary consolidated financial data presented below in
conjunction with the "Management's Discussion and Analysis of Financial
Condition and Results of Operations," our consolidated financial statements with
related notes and the other financial information contained or incorporated by
reference in our Annual Report on Form 10-K for the fiscal year ended March 28,
1999, our Quarterly Report on Form 10-Q for the quarter ended December 26, 1999
and our Current Report on Form 8-K filed on December 8, 1999, as amended on
February 7, 2000, which we incorporate by reference in this prospectus. See
"Documents Incorporated By Reference." In addition, you should read our
unaudited pro forma combined financial information with related notes included
elsewhere in this prospectus.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
FISCAL YEARS ---------------------------
-------------------------------------------------------- DECEMBER 27 DECEMBER 26
1995 1996 1997 1998 1999 1998 1999
-------- -------- -------- ---------- ---------- ------------ ------------
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales................................ $436,400 $556,800 $972,800 $1,316,700 $1,471,900 $1,094,600 $1,121,600
Cost of goods sold....................... 359,500 446,100 765,500 1,025,100 1,134,000 838,900 872,300
Provision for restructuring and other.... -- -- 3,400 8,600 13,100 -- 11,000
Selling and administrative expenses...... 31,600 46,900 91,500 127,000 146,400 112,400 119,100
Interest (income) expense, net........... (1,500) 100 16,700 20,700 27,600 20,700 24,800
Provision for income taxes............... 17,800 22,600 39,200 49,200 47,500 47,200 36,100
-------- -------- -------- ---------- ---------- ---------- ----------
Net income............................... $ 29,000 $ 41,100 $ 56,500 $ 86,100 $ 103,300 $ 75,400 $ 58,300
======== ======== ======== ========== ========== ========== ==========
Net income per common share
Basic.................................. $ 1.45 $ 2.02 $ 2.59 $ 3.56 $ 4.23 $ 3.10 $ 2.38
Diluted................................ $ 1.44 $ 2.00 $ 2.57 $ 3.53 $ 4.22 $ 3.08 $ 2.37
Weighted average shares outstanding
Basic.................................. 20,000 20,400 21,800 24,200 24,400 24,300 24,500
Diluted................................ 20,100 20,600 22,000 24,400 24,500 24,500 24,600
Cash dividends declared per common
share.................................. $ 0.22 $ 0.24 $ 0.24 $ 0.24 $ 0.24 $ 0.18 $ 0.18
OTHER DATA:
EBIT(1).................................. $ 45,300 $ 63,800 $112,400 $ 156,000 $ 178,400 $ 143,300 $ 119,200
EBITDA(1)................................ $ 69,200 $ 86,700 $147,600 $ 199,500 $ 232,500 $ 183,100 $ 168,000
Adjusted EBIT(1)......................... $ 45,300 $ 63,800 $115,800 $ 164,600 $ 191,500 $ 143,300 $ 130,200
Adjusted EBITDA(1)....................... $ 69,200 $ 86,700 $151,000 $ 208,100 $ 245,600 $ 183,100 $ 179,000
Capital expenditures..................... $ 10,900 $ 19,700 $ 52,800 $ 82,900 $ 74,800 $ 56,100 $ 30,500
Ratio of earnings to fixed charges(2).... 25.6x 31.1x 5.7x 6.2x 5.6x 6.0x 4.3x
Percentage of debt to total capital,
including short-term debt.............. 9.1% 4.4% 37.3% 38.5% 37.9% 39.0% 61.0%
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
DECEMBER 27,
FISCAL YEARS ---------------------------
---------------------------------------------------------- DECEMBER 27, DECEMBER 26,
1995 1996 1997 1998 1999 1998 1999
-------- -------- ---------- ---------- ---------- ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA (AT
PERIOD END):
Working capital(3).... $ 89,900 $125,800 $ 205,200 $ 246,000 $ 252,300 $ 258,500 $ (4,800)
Total assets.......... $406,700 $450,500 $1,070,100 $1,274,600 $1,449,600 $1,431,600 $2,461,200
Total debt............ $ 26,000 $ 13,900 $ 300,500 $ 372,200 $ 425,900 $ 426,600 $1,172,100
Shareholders'
investment.......... $258,400 $303,100 $ 504,400 $ 595,300 $ 697,400 $ 667,700 $ 749,700
</TABLE>
- ------------------------
(1) EBIT represents earnings before interest and income taxes. EBITDA represents
earnings before interest, income taxes, depreciation and amortization. Other
companies in our industry may calculate EBIT and EBITDA differently than we
do. Neither EBIT nor EBITDA is intended to represent cash flow or any other
measure of performance reported in accordance with generally accepted
accounting principles. We have included EBIT and EBITDA because we
understand that EBIT and EBITDA are used by certain investors as measures of
a company's ability to service debt. However, EBIT and EBITDA should not be
considered as an alternative to income from operations or to cash flows from
operating activities (as determined with generally accepted accounting
principles) and should not be construed as an indication of a company's
operating performance or as a measure of liquidity. Adjusted EBIT and
adjusted EBITDA are calculated by adding to EBIT and EBITDA the
restructuring and other non-recurring charges that we believe are not
indicative of our future operating performance.
(2) The ratio of earnings to fixed charges is computed by dividing earnings by
fixed charges. For this purpose, "earnings" include income before taxes and
fixed charges (adjusted for interest capitalized during the period). "Fixed
charges" include interest, whether expensed or capitalized, amortization of
debt expense and the portion of rental expense that is representative of the
interest factor in these rentals.
(3) At December 26, 1999, our balance sheet reflected negative working capital,
primarily due to the fact that the $300 million of outstanding borrowings
under the bridge credit agreement was classified as short-term borrowings.
17
<PAGE>
RISK FACTORS
THE NEW NOTES, LIKE THE OLD NOTES, ENTAIL RISK. IN DECIDING WHETHER TO
PARTICIPATE IN THE EXCHANGE OFFER, YOU SHOULD CONSIDER THE RISKS ASSOCIATED WITH
THE NATURE OF OUR BUSINESS AND THE RISK FACTORS RELATING TO THE EXCHANGE OFFER
IN ADDITION TO THE OTHER INFORMATION CONTAINED IN THIS PROSPECTUS. YOU SHOULD
CAREFULLY CONSIDER THE FOLLOWING FACTORS BEFORE MAKING A DECISION TO EXCHANGE
YOUR OLD NOTES FOR NEW NOTES. THE RISK FACTORS BELOW ARE NOT NECESSARILY
EXHAUSTIVE, AND WE ENCOURAGE YOU TO PERFORM YOUR OWN INVESTIGATION WITH RESPECT
TO THE NOTES AND OUR COMPANY.
IF YOU FAIL TO EXCHANGE YOUR OLD NOTES, YOU MAY BE UNABLE TO SELL THEM.
Because we did not register the old notes under the Securities Act or any
state securities laws, and we do not intend to register any remaining old notes
after the exchange offer, the old notes may only be transferred in limited
circumstances under the securities laws. If the holders of the old notes do not
exchange their notes in the exchange offer, they lose their right to have their
old notes registered under the Securities Act, subject to certain limitations. A
holder of old notes after the exchange offer may be unable to sell its old
notes.
THERE IS NO PUBLIC MARKET FOR THE NEW NOTES, SO YOU MAY BE UNABLE TO SELL THEM.
The new notes are new securities for which there is currently no market.
Consequently, the new notes will be relatively illiquid, and you may be unable
to sell them. We do not intend to apply for listing of the new notes on any
securities exchange or for the inclusion of the new notes in any automated
quotation system. Accordingly, we cannot assure you that a liquid market for the
new notes will develop.
YOU MUST TENDER THE OLD NOTES IN ACCORDANCE WITH PROPER PROCEDURES IN ORDER TO
ENSURE THE EXCHANGE WILL OCCUR.
The exchange of the old notes for the new notes can only occur if the proper
procedures, as detailed in this prospectus, are followed. The new notes will be
issued in exchange for the old notes only after timely receipt by the exchange
agent of the old notes or a book-entry confirmation, a properly completed and
executed letter of transmittal (or an agent's message in lieu thereof) and all
other required documentation. If you want to tender your old notes in exchange
for new notes, you should allow sufficient time to ensure timely delivery.
Neither we nor the exchange agent is under any duty to give you notification of
defects or irregularities with respect to tenders of old notes for exchange. Old
notes that are not tendered will continue to be subject to the existing transfer
restrictions. In addition, if you are an affiliate of ours or you tender the old
notes in the exchange offer in order to participate in a distribution of the new
notes, you will be required to comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any resale
transaction. For additional information, please refer to the sections entitled
"The Exchange Offer" and "Plan of Distribution."
IF A MARKET DEVELOPS FOR THE NEW NOTES, THE NOTES MIGHT TRADE AT VOLATILE
PRICES.
If a market develops for the new notes, the notes might trade at prices
higher or lower than their initial public offering price. The trading price
would depend on many factors, such as prevailing interest rates, the market for
similar securities, general economic conditions and our financial condition,
performance and prospects.
18
<PAGE>
OUR INDEBTEDNESS COULD ADVERSELY AFFECT OUR FINANCIAL HEALTH AND MAKE IT MORE
DIFFICULT FOR US TO FULFILL OUR OBLIGATIONS UNDER THE NEW NOTES.
At December 26, 1999, our total consolidated indebtedness was approximately
$1,172 million. We used all of the net proceeds from the sale of the old notes
to repay borrowings under a bridge credit agreement, which we used to finance a
portion of the acquisition of Wyman-Gordon. We repaid the remaining balance of
the bridge credit agreement with proceeds from the issuance of approximately
$100 million of additional commercial paper. Consequently, our total
consolidated indebtedness did not change significantly as a result of the
issuance of the old notes. See "Description of Certain Indebtedness."
Our indebtedness could have important consequences to you. For example, it
could:
- make it more difficult for us to satisfy our obligations with respect to
the new notes;
- increase our vulnerability to general adverse economic and industry
conditions;
- require us to dedicate a substantial portion of our cash flow from
operations to payments on our indebtedness, thereby reducing the
availability of our cash flow to fund acquisitions, working capital,
capital expenditures and other general corporate purposes;
- limit, along with the financial and other restrictive covenants in our
indebtedness, our ability to borrow a significant amount of additional
funds;
- limit, along with the financial and other restrictive covenants in our
indebtedness, our flexibility in planning for, or reacting to, changes in
our business and the industry in which we operate; and
- place us at a competitive disadvantage compared to our competitors that
have less debt.
We may be able to incur additional indebtedness in the future which could
intensify the risks listed above.
ALTHOUGH YOUR NEW NOTES ARE REFERRED TO AS "SENIOR NOTES," THEY WILL EFFECTIVELY
BE SUBORDINATED TO OUR SECURED DEBT AND THE DEBT OF OUR SUBSIDIARIES.
The new notes are unsecured and therefore will effectively be subordinated
to any secured debt we may incur to the extent of the value of the assets
securing such debt and to all indebtedness for money borrowed and other
liabilities of our subsidiaries. In the event of a bankruptcy or similar
proceeding involving us, our assets which serve as collateral will be available
to satisfy the obligations under any secured debt before any payments are made
on the new notes. We, and our creditors, may access the assets of our
subsidiaries only after adequate provision is made for the payment of our
subsidiaries' debts and liabilities. Assuming we had completed the offering of
the old notes on December 26, 1999, we would have had an aggregate amount of
outstanding secured debt and subsidiary debt of approximately $157 million and
$1,172 million of total consolidated indebtedness.
FAILURE TO SUCCESSFULLY INTEGRATE THE BUSINESSES OF WYMAN-GORDON INTO OUR
OPERATIONS COULD HARM OUR BUSINESS.
On November 24, 1999, we acquired approximately 98% of the outstanding
common stock of Wyman-Gordon Company pursuant to a cash tender offer. We
acquired the remaining common stock of Wyman-Gordon pursuant to a merger on
January 12, 2000. As a result of the merger, Wyman-Gordon became our wholly
owned subsidiary.
We cannot assure you that the Wyman-Gordon businesses will be integrated
successfully into our operations or prove profitable. In addition, due to the
nature of a public acquisition, our due diligence on Wyman-Gordon generally only
included a review of Wyman-Gordon's public filings and
19
<PAGE>
representations of Wyman-Gordon, which did not include indemnification or
similar provisions from any other person or entity. As a result, any undisclosed
liabilities, inaccurate assessments of disclosed liabilities or other unforeseen
significant factors could have an adverse effect on our operating results.
WE MAY MAKE ACQUISITIONS THAT COULD SUBJECT US TO A NUMBER OF OPERATIONAL RISKS.
We expect that we will continue to make acquisitions of, investments in, and
strategic alliances with complementary businesses, products and technologies to
enable us to add products and services for our core customer base and for
adjacent markets, and to expand each of our businesses geographically. However,
implementation of this strategy entails a number of risks, including:
- inaccurate assessment of undisclosed liabilities;
- entry into markets in which we may have limited or no experience;
- diversion of management's attention from our core businesses;
- potential loss of key employees or customers of the acquired businesses;
- difficulties in assimilating the operations and products of an acquired
business or in realizing projected efficiencies and cost savings; and
- increase in our indebtedness and a limitation in our ability to access
additional capital when needed.
While our acquisition strategy places emphasis on the ability of existing
management of the acquired businesses to continue to operate autonomously,
certain changes may need to be made to integrate the acquired businesses into
our operations, to assimilate many new employees and to implement reporting,
monitoring and forecasting procedures. Obtaining anticipated revenue synergies
or cost reductions are also a risk in many acquisitions.
We are also seeking to expand into additional markets through the
development of new product applications based on our existing metalforming
technologies, including efforts to increase our presence in the industrial gas
turbine and structural airframe markets. These efforts have required, and will
continue to require, us to make substantial investments, including increased
levels of research and development expenditures and a significant amount of
capital expenditures for new, expanded or improved production facilities. We
cannot assure you that we will be able to successfully manage the expansion into
new markets and products or that these efforts will not have an adverse impact
on our business.
OUR BUSINESS IS AFFECTED BY THE CYCLICALITY OF THE AEROSPACE INDUSTRY AND OTHER
INDUSTRIES.
The commercial aerospace industry is cyclical in nature, and the demand by
commercial airlines for new aircraft historically has been closely related to
the state of the U.S. and world economies. For example, the large number of
aircraft delivered in the early 1990s and the aerospace industry's widespread
losses created excess capacity in the air carrier system. During this period,
airlines and leasing companies deferred existing new aircraft orders and to a
lesser degree canceled orders. These deferrals and cancellations adversely
affected the volume and price of orders placed with the manufacturers of
commercial aircraft engine components, including us. Although commercial
aircraft deliveries have increased since 1996 and the U.S. airline industry has
been relatively strong in recent years, we cannot assure you that the improved
operating performance of the commercial airlines will continue or that
deliveries of large commercial aircraft will not decline in the future.
Moreover, many industry analysts have forecasted deliveries of large commercial
aircraft to decrease over the near term. Any developments in the commercial
aerospace market resulting in a reduction in the rate of future aircraft
deliveries, including cancellations and deferrals of scheduled deliveries, could
have a material adverse effect on our business.
20
<PAGE>
OUR BUSINESS IS DEPENDENT ON A SMALL NUMBER OF CUSTOMERS.
A substantial portion of our business is conducted with a relatively small
number of large aerospace customers, including GE, United Technologies and Rolls
Royce. GE accounted for approximately 11% (17% pro forma) of our fiscal 1999 net
sales, United Technologies accounted for approximately 9% (9% pro forma) of our
fiscal 1999 net sales and Rolls Royce accounted for approximately 8% (7% pro
forma) of our fiscal 1999 net sales. We have made significant price concessions
to aerospace customers in recent years, and we expect customer pressure for
pricing concessions will continue.
Direct sales to the U.S. military and sales to defense contractors
constituted approximately 13% (14% pro forma) of our fiscal 1999 net sales. U.S.
defense spending in markets we serve has been declining since the 1980s, and
continued reductions in defense budgets or military aircraft procurement could
adversely affect our business.
OUR BUSINESS IS DEPENDENT ON CERTAIN RAW MATERIALS.
We do not have fixed price contracts or arrangements for some of the
supplies and raw materials that we purchase, including certain metals and steel.
Commercial deposits of certain metals, such as cobalt, nickel, titanium and
molybdenum, that are required for the alloys used in our precision castings and
forgings, are found in only a few parts of the world. The availability and
prices of these metals may be influenced by private or government cartels,
changes in world politics, unstable governments in exporting nations and
inflation. Similarly, supplies of tool grade steel used in our operations may
also be subject to variation in availability and pricing. Shortages of, and
price increases for, certain raw materials used in our operations have occurred
in the past and may occur in the future. Future shortages or price fluctuations
in raw materials could have a material adverse effect on our business. We do not
generally hedge against price increases of metals or other raw materials;
however, we have historically hedged a portion of our nickel requirements.
OUR BUSINESS IS AFFECTED BY CERTAIN GOVERNMENTAL REGULATIONS.
Some of our products are manufactured and sold under U.S. government
contracts or subcontracts. Consequently, we are directly and indirectly subject
to various federal rules, regulations and orders applicable to government
contractors. Violation of applicable government rules and regulations could
result in civil liability, in cancellation or suspension of existing contracts
or in ineligibility for future contracts or subcontracts funded in whole or in
part with federal funds. In addition, government contracts or subcontracts may
be canceled.
OUR BUSINESS IS SUBJECT TO ENVIRONMENTAL REGULATIONS AND RELATED LIABILITIES.
We are subject to federal, state and local environmental laws and
regulations concerning, among other things, wastewater, air emissions, toxic use
reduction and hazardous materials disposal. We conduct our operations at
industrial sites where hazardous materials have been managed for many years,
including periods before careful management of these materials was required or
generally believed to be necessary. Consequently, we are subject to various
environmental laws that impose compliance obligations and can create liability
for historical releases of hazardous substances. Environmental legislation and
regulations and related administrative policies have changed rapidly in recent
years. It is likely that we will be subject to increasingly stringent
environmental standards in the future (including those under the Clean Air Act
Amendments of 1990, the Clean Water Act Amendments of 1990, stormwater permit
program and toxic use reduction programs) and that we will be required to make
additional expenditures, which could be significant, relating to environmental
matters on an ongoing basis. We own properties or conduct or have conducted
operations at properties,
21
<PAGE>
including properties acquired in recent acquisitions, which have been
contaminated with hazardous substances and for which further investigation and
remediation is likely to be necessary.
Our financial statements include reserves for future costs arising from
environmental issues relating to these properties and our operations. Our actual
future expenditures, however, for installation of and improvements to
environmental control facilities, remediation of environmental conditions at our
properties and other similar matters cannot be conclusively determined. At
December 26, 1999, we had accrued aggregate environmental reserves of
$38.9 million, which included reserves for Wyman-Gordon environmental matters,
as well as our other subsidiaries. Although we have recorded these reserves for
environmental matters, we cannot assure you that these reserves are adequate to
cover the cost of remedial measures that may eventually be required by
environmental authorities with respect to known environmental matters or related
liabilities and the cost of claims that may be asserted by such authorities or
private parties in the future with respect to matters about which we are not yet
aware. Accordingly, the costs of environmental claims may exceed the amounts
reserved.
Our environmental reserves of $38.9 million at December 26, 1999 include
approximately $29.9 million of reserves accrued by Wyman-Gordon for cleanup
expenses and other costs associated with environmental issues. These reserves
include amounts for expected cleanup expenses for Wyman-Gordon's Worcester,
Massachusetts, facility which is substantially closed and is expected to be
sold, remediation projects at Wyman-Gordon's facilities in Houston, Texas, North
Grafton/Millbury, Massachusetts, Groton, Connecticut and Buffalo, New York, and
various Superfund sites. We cannot assure you that the actual costs of
remediation for Wyman-Gordon's environmental liabilities will not exceed the
amount presently accrued. The following paragraphs discuss the more significant
matters for which we have established reserves.
Pursuant to an agreement between Wyman-Gordon and the U.S. Air Force in
connection with Wyman-Gordon's acquisition of the North Grafton facility in
1982, Wyman-Gordon agreed to make expenditures totaling $20.8 million for
environmental management and remediation at that site, of which $3.3 million
remained as of May 31, 1999. Approximately one-half of the remaining Air Force
projects are capital in nature. These expenditures will not resolve all of
Wyman-Gordon's obligations to federal and state regulatory authorities, who are
not parties to the agreement. We expect to incur an additional amount to comply
with federal and state environmental requirements in connection with the
investigation and remediation of contamination at the North Grafton facility.
The North Grafton site is located in an area where regional groundwater has been
impacted with a number of contaminants, including chlorinated solvents. The
Massachusetts Department of Environmental Protection ("MADEP") also has asked
Wyman-Gordon to investigate contamination in a brook and pond near the facility.
Pursuant to a license from the Atomic Energy Commission, Wyman Gordon disposed
of magnesium thorium alloys, which are low-level radioactive waste, at the North
Grafton facility. At some point, further controls or remediation may be
necessary with respect to these wastes.
Wyman Gordon's Houston facility has used onsite landfills for the disposal
of various industrial wastes. It also operates a system of wastewater management
lagoons. As a result of onsite waste management and historic operations of the
facility, contamination has occurred in the soil and groundwater. We anticipate
substantial expenditures for remediation of contamination at the Houston
facility.
In 1998, we purchased Sterom, S.A., from the Romanian government. As part of
this acquisition, we committed to invest up to $3.6 million over five years to
investigate and cleanup contamination at the Sterom facility and to improve
environmental controls at the facility. We obtained a purchase price adjustment
to fund a substantial portion of these commitments.
Carmet Company is investigating the extent of chlorinated solvents
contamination discovered in the soil and groundwater at its plant in Bad Axe,
Michigan. Whether or not remediation will be necessary is not yet determined,
and Carmet may have defenses to liability for the contamination. We
22
<PAGE>
have asserted an indemnity claim against the former shareholders of Carmet for
recovery from an escrow account of all or a portion of the costs associated with
this and certain other environmental matters. The former shareholders have
disputed this indemnity claim and the claim is unresolved.
In 1989, the Oregon Health Division (OHD) alleged that our facility in
Portland, Oregon, discharged low level radioactive material to the Portland city
sewer in violation of our radioactive materials license. The City of Portland
also has alleged that the discharges violated our wastewater discharge permit.
Although we contested the alleged violations, we undertook extensive cleaning of
portions of the sewer system under a consent agreement with the City and OHD.
The extent to which other investigation or remedial work may be necessary,
however, is unknown.
On January 10, 2000, the State of Connecticut filed a complaint against
Wyman-Gordon Investment Casting, Inc. in the Superior Court Judicial District of
Hartford, Connecticut. The complaint alleges various violations by the
Wyman-Gordon's Groton, Connecticut, facility of its wastewater discharge permit
during the years 1995 through 1998. The complaint does not allege any violations
after 1998 or that any of the violations are ongoing. The state has indicated
that it will propose a civil penalty of $200,000.
We, together with numerous other parties, have been named a potentially
responsible party under the Comprehensive Environmental Response, Compensation
and Liability Act ("CERCLA") for the cleanup of the following Superfund sites:
Salco Disposal Site, Monroe, Michigan; Operating Industries, Monterey Park,
California; PSC Resources, Palmer, Massachusetts; Pasco County Landfill, Pasco,
Washington (for which our insurers have been paying defense costs); the Western
Processing Site, Kent, Washington; and the Gemme/Fournier site, Leicester,
Massachusetts (for which Wyman Gordon's insurers have been paying defense
costs). We have asserted indemnity and insurance claims for some of these sites
and expects to recover some portion of its losses for these sites. Except for
sites for which its insurer has acknowledged responsibility, we have not
recorded an asset for potential recoveries.
We or our subsidiaries also have potential liability associated with former
facilities. The Environmental Protection Agency has asserted a claim against
Wyman-Gordon for remedial action the agency has conducted at the former
Wyman-Gordon facility in Harvey, Illinois; EPA has proposed settlement of this
claim for $300,000. The current owner of a former Arwood facility in Rockleigh,
New Jersey has asserted claims for contamination at that property; Wyman-Gordon
is entitled to indemnity of one half the amount of this claim from an escrow
account established by Arwood Corporation from which Wyman-Gordon acquired
certain operations. In 1999, PCC Specialty Products, Inc. sold its former
Merriman facility in Hingham, Massachusetts. PCC Specialty Products, Inc. made
commitments to the new owner and the MADEP to undertake certain remedial action
with respect to contamination at this facility. In February, 2000, PCC Flow
Technologies, Inc. sold its Penberthy operations in Prophetstown, Illinois.
During the course of the transaction, Penberthy, Inc. discovered contamination
in the soil and groundwater. PCC Flow Technologies, Inc. is obligated to the
landlord and the new owner of the Penberthy business to undertake certain
investigation and remedial action at this former facility. We or our
subsidiaries also have potential liability for contamination at other former
facilities where we do not believe our liability will be material.
We have recorded reserves for each of the environmental matters described
above, as well as other less significant matters. Nevertheless, we cannot assure
you that these reserves are adequate to cover the cost of remedial measures that
may eventually be required by environmental authorities with respect to known
environmental matters or related liabilities and the cost of claims that may be
asserted by such authorities or private parties in the future with respect to
matters about which we are not yet aware. Accordingly, the costs of
environmental claims may exceed the amounts reserved.
Wyman-Gordon has notified its insurer of potential liabilities at its
Grafton and Worcester facilities and has asserted that it is entitled to recover
its costs under various historic insurance policies. We also have notified our
insurers of potential liabilities associated with the PCC Structurals facility
in Portland,
23
<PAGE>
Oregon. Although we believe we are entitled to coverage for a substantial
portion of our remediation costs at these sites, we do not yet know whether or
to what extent our insurer will contest the claims.
OUR BUSINESS IS SUBJECT TO RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS.
We are both a purchaser of products from, and a supplier to, businesses
located outside of the United States. We also have significant operations
located outside the United States. Certain risks are inherent in international
operations, including the risk of government financed competition, changes in
trade policies, tariff regulations, currency fluctuations and difficulties in
obtaining U.S. and other export and import licenses.
OUR BUSINESS INVOLVES RISKS ASSOCIATED WITH COMPLEX MANUFACTURING PROCESSES.
Our business involves complex manufacturing processes. Some of these
processes involve high pressures, hot metal and other materials and equipment
that present certain safety risks to workers employed at our manufacturing
facilities. Although we employ safety procedures in the design and operation of
our facilities, the potential exists for accidents involving death or serious
injury. The potential liability resulting from any such accident, to the extent
not covered by insurance, could have a material adverse effect on our business.
Any disruption of operations at any of our facilities could also have a material
adverse effect on our business.
24
<PAGE>
FORWARD-LOOKING STATEMENTS
This prospectus and the documents we incorporate herein by reference contain
forward-looking statements. In addition, from time to time, we or our
representatives may make forward-looking statements orally or in writing. We
base these forward-looking statements on our expectations and projections about
future events, which we derive from the information currently available to us.
Such forward-looking statements relate to future events or our future
performance, including:
- our financial performance;
- our growth in revenue and earnings;
- our cash flows from operations;
- our ability to refinance and repay indebtedness; and
- the integration of the Wyman-Gordon acquisition.
You can identify forward-looking statements by those that are not historical
in nature, particularly those that utilize terminology such as "may," "will,"
"should," "expect," "anticipate," "contemplate," "estimate," "believe," "plan,"
"project," "predict," "potential" or "continue" or the negative of these or
similar terms. In evaluating these forward-looking statements, you should
consider various factors, including the risk factors described in this
prospectus. Such factors may cause our actual results to differ materially from
any forward-looking statement.
Forward-looking statements are only predictions. The forward-looking events
discussed in this prospectus may not occur, and actual events and results may
differ materially and are subject to risks, uncertainties and assumptions about
us. We are not obligated to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
In light of these risks, uncertainties and assumptions, the forward-looking
events discussed in this prospectus might not occur.
USE OF PROCEEDS
The exchange offer is intended to satisfy our obligations under the
registration rights agreement that we entered into in connection with the
private offering of the old notes. We will not receive any cash proceeds from
the issuance of the new notes. The old notes that are surrendered in exchange
for the new notes will be retired and canceled and cannot be reissued. As a
result, the issuance of the new notes will not result in any increase or
decrease in our indebtedness. We have agreed to bear the expenses of the
exchange offer. No underwriter is being used in connection with the exchange
offer.
The net proceeds from the issuance and sale of the old notes was
approximately $197,989,000 (after deduction of initial purchaser's discounts and
estimated offering expenses payable by us). We used those net proceeds to repay
a portion of our borrowings under a bridge credit agreement, which we used to
finance a portion of our acquisition of Wyman-Gordon. We repaid the remaining
balance under the bridge credit agreement with existing cash balances and the
proceeds from the issuance of additional commercial paper. At the time of such
repayment, the borrowings under the bridge credit agreement bore interest at the
rate of 7.1%.
25
<PAGE>
CAPITALIZATION
The following table sets forth our capitalization (1) on an actual basis as
of December 26, 1999 and (2) on an as adjusted basis to give effect to the sale
by us of the old notes and the application of the proceeds therefrom, and the
issuance by us of approximately $100 million of additional commercial paper to
repay the remaining balance of our bridge credit agreement. See "Use of
Proceeds."
This table should be read together with the consolidated financial
statements and notes thereto incorporated by reference into this prospectus and
the unaudited pro forma combined financial information and notes thereto
included elsewhere in this prospectus.
<TABLE>
<CAPTION>
DECEMBER 26, 1999
------------------------
ACTUAL AS ADJUSTED
---------- -----------
(IN THOUSANDS)
<S> <C> <C>
Short-term borrowings:
Notes payable (1)......................................... $ 2,500 $ 2,500
Accounts receivable securitization (1).................... 142,900 142,900
Bridge credit agreement (1)............................... 300,000 --
Current portion of long-term debt......................... 10,500 10,500
Total short-term borrowings............................. $ 455,900 $ 155,900
Long-term debt, excluding current portion:
Commercial paper (1)...................................... $ 165,500 $ 265,500
Term loan (1)............................................. 400,000 400,000
6.75% Notes due fiscal 2008............................... 150,000 150,000
Notes..................................................... -- 200,000
Other debt................................................ 700 700
---------- ----------
Total long-term debt.................................... 716,200 1,016,200
---------- ----------
Shareholders' investment:
Common stock.............................................. 24,500 24,500
Additional paid-in capital................................ 179,500 179,500
Retained earnings......................................... 551,000 551,000
Cumulative translation adjustments........................ (5,300) (5,300)
---------- ----------
Total shareholders' investment.......................... 749,700 749,700
---------- ----------
Total long-term debt and shareholders' investment....... $1,465,900 $1,465,900
========== ==========
</TABLE>
- ------------------------
(1) Represents debt, committed and uncommitted (in the case of notes payable),
of varying dates of maturity. As of December 26, 1999, the notes payable
bore an effective interest rate per annum of 4.4%, the accounts receivable
securitization bore an effective interest rate of 6.6%, the bridge credit
agreement bore an effective interest rate of 7.1% and the term loan bore an
effective interest rate of 7.6%. Our outstanding commercial paper bore an
effective interest rate of 7.0% at December 26, 1999.
26
<PAGE>
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
The following unaudited pro forma combined financial information, including
the notes thereto, give effect to (1) the acquisition of Wyman-Gordon, (2) the
purchase of Wyman-Gordon's outstanding 8% notes due 2007, and (3) financing
referenced in Note 4(a) to the unaudited pro forma combined financial
information, and are qualified in their entirety by reference to, and should be
read in conjunction with, our historical consolidated financial statements and
Wyman-Gordon's historical consolidated financial statements incorporated by
reference into this prospectus. We report on the basis of a 52-53 week fiscal
year ending the Sunday closest to March 31, while Wyman-Gordon reported on the
basis of a 52-53 week fiscal year ending on the Saturday closest to May 31. The
unaudited pro forma combined statements of income data includes the fiscal year
ended March 28, 1999 for us and the fiscal year ended May 31, 1999 for
Wyman-Gordon and includes the nine months ended December 26, 1999 for us and
Wyman-Gordon. For the statements of income, the acquisition of Wyman-Gordon and
debt incurrences are treated as if they had taken place on the first day of the
periods presented. In combining the financial information, we have made certain
reclassifications to Wyman-Gordon's historical financial statements to conform
to our presentation. The unaudited pro forma combined statements of income data
do not reflect any adjustments for cost savings that may be realized as a result
of combining our operations with Wyman-Gordon's operations following the
acquisition of Wyman-Gordon.
We have prepared the unaudited pro forma combined financial statements based
upon currently available information and assumptions that we have deemed
appropriate. This pro forma information may not be indicative of what actual
results would have been, nor does such data purport to represent the combined
financial results of us and Wyman-Gordon for future periods. In addition, the
pro forma adjustments set forth in the following unaudited pro forma combined
financial information are estimated and may differ from final adjustments.
27
<PAGE>
UNAUDITED PRO FORMA COMBINED STATEMENTS OF INCOME DATA
<TABLE>
<CAPTION>
YEAR ENDED MARCH 28, 1999 FOR PCC AND
YEAR ENDED MAY 31, 1999 FOR WYMAN-GORDON
-----------------------------------------------------------
HISTORICAL PRO FORMA
--------------------- -----------------------------------
ADJUSTMENTS
WYMAN- INCREASE
PCC GORDON (DECREASE) NOTES COMBINED
---------- -------- ----------- -------- ----------
(DOLLARS AND SHARES IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales.................................. $1,471,900 $849,300 $(61,900) (1)(2) $2,259,300
Cost of goods sold......................... 1,134,000 715,900 (39,800) (1)(3) 1,810,100
Provision for restructuring charges and
other.................................... 13,100 13,800 (2,000) (1) 24,900
Selling and administrative expenses........ 146,400 57,900 (8,500) (1) 195,800
Interest expense, net...................... 27,600 14,200 48,300 (2)(4) 90,100
---------- -------- -------- ----------
Income before provision for income taxes... 150,800 47,500 (59,900) 138,400
Provision for income taxes................. 47,500 10,500 (9,400) (5) 48,600
---------- -------- -------- ----------
Net income................................. $ 103,300 $ 37,000 $(50,500) $ 89,800
========== ======== ======== ==========
Net income per share (basic)............... $ 4.23 $ 3.68
Net income per share (diluted)............. $ 4.22 $ 3.67
Weighted average shares outstanding
(basic).................................. 24,400 24,400
Weighted average shares outstanding
(diluted)................................ 24,500 24,500
OTHER FINANCIAL DATA:
EBIT....................................... $ 178,400 $ 61,700 $(11,600) (6) $ 228,500
EBITDA..................................... $ 232,500 $ 89,300 $ 900 (6) $ 322,700
Adjusted EBIT.............................. $ 191,500 $ 75,500 $(13,600) (6) $ 253,400
Adjusted EBITDA............................ $ 245,600 $103,100 $ (1,100) (6) $ 347,600
</TABLE>
28
<PAGE>
The following unaudited pro forma combined statements of income data for the
nine months ended December 26, 1999 includes the nine months ended December 26,
1999 for us and Wyman-Gordon. Because Wyman-Gordon's fiscal year ended on
May 31, 1999, two months of this nine-month period are also reflected in the
unaudited pro forma combined statements of income data for the companies' fiscal
years above. Wyman-Gordon's net sales and net income for this two-month period
were $142,900 and $13,500, respectively.
UNAUDITED PRO FORMA COMBINED STATEMENTS OF INCOME DATA
<TABLE>
<CAPTION>
NINE MONTHS ENDED DECEMBER 26, 1999 FOR PCC AND
NINE MONTHS ENDED DECEMBER 26, 1999 FOR WYMAN-GORDON
-----------------------------------------------------------
HISTORICAL PRO FORMA
--------------------- -----------------------------------
ADJUSTMENTS
WYMAN- INCREASE
PCC GORDON (DECREASE) NOTES COMBINED
---------- -------- ----------- -------- ----------
(DOLLARS AND SHARES IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales.................................. $1,064,300 $510,500 $(39,500) (1)(2) $1,535,300
Cost of goods sold......................... 825,600 432,800 (20,900) (1)(3) 1,237,500
Provisions for restructuring charges and
other.................................... 11,000 (1,400) -- 9,600
Environmental charges...................... -- 14,700 -- 14,700
Selling and administrative expenses........ 114,800 38,600 (4,800) (1) 148,600
Interest expense, net...................... 19,300 9,800 38,500 (2)(4) 67,600
---------- -------- -------- ----------
Income before provision for income taxes... 93,600 16,000 (52,300) 57,300
Provision for income taxes................. 34,600 700 (10,300) (5) 25,000
---------- -------- -------- ----------
Net income................................. $ 59,000 $ 15,300 $(42,000) $ 32,300
========== ======== ======== ==========
Net income per share (basic)............... $ 2.41 $ 1.32
Net income per share (diluted)............. $ 2.40 $ 1.31
Weighted average shares outstanding
(basic).................................. 24,500 24,500
Weighted average shares outstanding
(diluted)................................ 24,600 24,600
OTHER FINANCIAL DATA:
EBIT....................................... $ 112,900 $ 25,800 $(13,800) (6) $ 124,900
EBITDA..................................... $ 158,400 $ 48,300 $ (4,900) (6) $ 201,800
Adjusted EBIT.............................. $ 123,900 $ 39,100 $(13,800) (6) $ 149,200
Adjusted EBITDA............................ $ 169,400 $ 61,600 $ (4,900) (6) $ 226,100
</TABLE>
29
<PAGE>
PRECISION CASTPARTS CORP.
NOTES TO PRO FORMA COMBINED STATEMENTS OF INCOME
(1) Adjustments to reflect only the ongoing operating results of Wyman-Gordon,
primarily as a result of the Agreement Containing Consent Orders requiring
divestiture of certain Wyman-Gordon operations:
<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
MAY 31, 1999 DECEMBER 26, 1999
---------------- -----------------
<S> <C> <C>
Net sales................................. $ (58,900) $(36,900)
Cost of goods sold........................ (53,600) (31,300)
Provision for restructuring and other..... (2,000) --
Selling and administrative expenses....... (8,500) (4,800)
</TABLE>
(2) Reclassification to Wyman-Gordon's historical financial statements to
conform to PCC's presentation:
<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
MAY 31, 1999 DECEMBER 26, 1999
--------------- -----------------
<S> <C> <C>
Net sales.................................. $ (3,000) $(2,600)
Interest expense, net...................... (3,000) (2,600)
</TABLE>
(3) Adjusted to eliminate Wyman-Gordon's historical goodwill amortization and to
include amortization of new goodwill over a period of 40 years.
(4) Interest expense was adjusted to reflect the following:
<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
MAY 31, 1999 DECEMBER 26, 1999
------------ -----------------
<S> <C> <C>
Interest expense on new debt (a)............... $76,400 $56,200
Commitment and other fees...................... 1,700 1,300
Amortization of financing cost................. 1,500 1,200
Elimination of Wyman-Gordon interest income.... 3,000 2,600
Elimination of interest expense on debt under
PCC's prior credit agreement................. (17,100) (9,700)
Elimination of interest expense on Wyman-Gordon
debt......................................... (14,200) (10,500)
------- -------
Total........................................ $51,300 $41,100
======= =======
</TABLE>
(a) Interest expense on new debt as follows:
<TABLE>
<CAPTION>
AVERAGE AVERAGE YEAR ENDED
DEBT INSTRUMENT PRINCIPAL RATE MAY 31, 1999
- --------------- --------- -------- ------------
<S> <C> <C> <C>
Bridge Loan................................... $300,000 6.9% $20,800
Term Loan..................................... 400,000 7.2% 28,700
Receivables Securitization.................... 150,000 6.2% 9,300
Commercial Paper.............................. 276,100 6.4% 17,600
-------
Total..................................... $76,400
=======
</TABLE>
<TABLE>
<CAPTION>
AVERAGE AVERAGE NINE MONTHS ENDED
DEBT INSTRUMENT PRINCIPAL RATE DECEMBER 26, 1999
- --------------- --------- -------- -----------------
<S> <C> <C> <C>
Bridge Loan.............................. $300,000 7.0% $15,800
Term Loan................................ 400,000 7.3% 21,800
Receivables Securitization............... 150,000 6.3% 7,000
Commercial Paper......................... 238,600 6.5% 11,600
-------
Total................................ $56,200
=======
</TABLE>
30
<PAGE>
The average interest rates were computed using average LIBOR rates for the
appropriate periods plus applicable spreads ranging from 25 to 125 basis
points, depending on the debt instruments. Additionally, two swaps were in
place to partially fix the interest rates of the debt. The first swap has an
annual average notional balance of $412,500 swapped at a fixed rate of 6.5%,
while the second swap has an annual average notional balance of $225,000
swapped at a fixed rate of 6.1%. The costs of these swaps were allocated to
the applicable debt instruments, thereby increasing the average interest
rates.
For the year ended March 28, 1999, a 1/8 of 1 percent change in the interest
rate would result in a change in interest expense of approximately $600.
Additionally, for the nine months ended December 26, 1999, a 1/8 of
1 percent change in the interest rate would result in a change in interest
expense of approximately $300.
(5) Income tax expense was adjusted to reflect the expected statutory tax rates
of PCC as follows:
<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
MAY 31, 1999 DECEMBER 29, 1999
------------ -----------------
<S> <C> <C>
Effective tax rates............................ 35.1% 43.6%
</TABLE>
(6) EBIT represents earnings before interest and income taxes. EBITDA represents
earnings before interest, income taxes, depreciation and amortization. Other
companies in our industry may calculate EBIT and EBITDA differently than we
do. Neither EBIT nor EBITDA is intended to represent cash flow or any other
measure of performance reported in accordance with generally accepted
accounting principles. We have included EBIT and EBITDA because we
understand that EBIT and EBITDA are used by certain investors as measures of
a company's ability to service debt. However, EBIT and EBITDA should not be
considered as an alternative to income from operations or to cash flows from
operating activities (as determined with generally accepted accounting
principles) and should not be construed as an indication of a company's
operating performance or as a measure of liquidity.
Pro forma adjustments to EBIT represents the adjustments described in Notes
(1), (2) and (3). Pro forma adjustments to EBITDA represent the adjustments
described in Notes (1) and (2), the amortization of financing costs
described in Note (4) and the elimination of depreciation expense on
divested Wyman-Gordon operations.
Adjusted EBIT and adjusted EBITDA are calculated by adding to EBIT and
EBITDA the restructuring and other charges that we believe are non-recurring
and are not indicative of our future operating performance.
31
<PAGE>
THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
We initially sold the old notes in a private offering on March 3, 2000 to
Banc of America Securities LLC, ABN AMRO Incorporated, Banc One Capital
Markets, Inc., BNY Capital Markets, Inc., First Union Securities, Inc. Scotia
Capital Inc., U.S. Bancorp Piper Jaffray Inc. and Wachovia Securities, Inc.
pursuant to a purchase agreement dated February 29, 2000 between us and them.
These initial purchasers of the old notes resold them to qualified institutional
buyers in reliance on, and subject to the restrictions imposed under, Rule 144A
under the Securities Act. As of the date of this prospectus, $200 million
aggregate principal amount of old notes are outstanding.
In connection with the private offering of the old notes, we entered into a
registration rights agreement dated March 3, 2000 (the "Registration Rights
Agreement"), with the initial purchasers, in which we agreed, among other
things, to:
(1) file with the SEC on or before May 31, 2000 an exchange offer
registration statement under the Securities Act relating to an exchange
offer for the old notes;
(2) use our best efforts to cause such exchange offer registration statement
to be declared effective under the Securities Act on or before
August 30, 2000;
(3) upon the effectiveness of the registration statement, commence the
exchange offer and offer the holders of the old notes the opportunity to
exchange their old notes for a like principal amount of new notes and to
keep the exchange offer open for not less than 30 days (or longer if
required by applicable federal and state securities laws) after the date
on which notice of the exchange offer is mailed to the holders of the old
notes; and
(4) use our best efforts to complete the exchange offer and issue the new
notes on or prior to the date that is 30 business days (or longer if
required by applicable federal and state securities laws) after the date
on which the exchange offer registration statement was declared effective
by the SEC.
We are making the exchange offer to satisfy our obligations and your
registration rights under the Registration Rights Agreement. A copy of the
Registration Rights Agreement has been filed as an exhibit to the registration
statement filed with the SEC in connection with the exchange offer. You may
request a copy of the Registration Rights Agreement at our address set forth
under "Documents Incorporated by Reference."
EFFECT OF THE EXCHANGE OFFER
Based on several no-action letters issued by the staff of the SEC to third
parties in unrelated transactions, we believe that you may offer for resale,
resell or otherwise transfer any new notes issued to you in the exchange offer
without further registration under the Securities Act or delivery of a
prospectus if you:
- are acquiring the new notes in the ordinary course of your business;
- are not participating, do not intend to participate and have no
arrangement or understanding with any person to participate, in a
distribution of the new notes;
- are not an affiliate of ours as defined in Rule 405 under the Securities
Act; and
- are not a broker-dealer who acquired old notes from us.
32
<PAGE>
If you do not satisfy these criteria:
- you will not be able to rely on the interpretations of the staff of the
SEC in connection with any offer for resale, resale or other transfer of
new notes; and
- you must comply with the registration and prospectus delivery requirements
of the Securities Act, or have an exemption available to you, in
connection with any offer for resale, resale or other transfer of the new
notes.
Each broker-dealer that receives new notes for its own account in exchange
for old notes it acquired as a result of market-making or other trading
activities, may be a statutory underwriter and must acknowledge that it will
deliver a prospectus in connection with any resale of its new notes. This will
not be an admission by the broker-dealer that it is an underwriter within the
meaning of the Securities Act. See "Plan of Distribution."
TERMS OF THE EXCHANGE OFFER
- We will accept all old notes validly tendered and not withdrawn prior to
5:00 p.m., New York City time, on the expiration date of the exchange
offer. You should read "--Expiration Date; Extensions; Amendments" below
for an explanation of how the expiration date may be amended.
- We will issue and deliver $1,000 principal amount of new notes in exchange
for each $1,000 principal amount of outstanding old notes accepted in the
exchange offer. Holders may exchange some or all of their old notes in
minimum denominations of $1,000 and integral multiples of $1,000 in excess
thereof.
- By tendering old notes in exchange for new notes and by signing the letter
of transmittal (or delivering an agent's message in lieu thereof), you
will be representing that, among other things:
(1) any new notes to be received by you will be acquired in the ordinary
course of your business;
(2) you are not engaged in, and do not intend to engage in, and you have no
arrangement or understanding with any person to participate in, a
distribution of the new notes;
(3) you acknowledge and agree that any person who is a broker-dealer or is
participating in the exchange offer for the purpose of distributing the
new notes must comply with the registration and prospectus delivery
requirements of the Securities Act;
(4) you understand that a secondary resale transaction described in
clause (3) above and any resales of new notes obtained by you in exchange
for old notes acquired by you directly from us or an affiliate of ours
should be covered by an effective registration statement containing the
selling securityholder information required by Item 507 or Item 508, as
applicable, of Regulation S-K promulgated by the SEC; and
(5) you are not an affiliate (as defined in Rule 405 under the Securities
Act) of ours.
- The terms of the new notes are identical in all material respects to the
terms of the old notes, except that the registration rights and related
liquidated damages provisions, and the transfer restrictions applicable to
the old notes are not applicable to the new notes. The new notes will
evidence the same debt as the old notes and will be entitled to the
benefits of the indenture governing the old notes.
- In connection with the exchange offer, holders of the old notes do not
have any appraisal or dissenters' rights under law or the indenture
governing the old notes.
- We are sending this prospectus and the letter of transmittal to all
registered holders of old notes as of the close of business on April 24,
2000.
33
<PAGE>
- We are not conditioning the exchange offer upon the tender of any minimum
amount of old notes.
- The exchange offer is subject to the condition that the exchange offer not
violate applicable law, rules or regulations or applicable interpretations
of the staff of the SEC. See "--Conditions of the Exchange Offer."
- We may accept tendered old notes by giving oral (promptly confirmed in
writing) or written notice to the exchange agent. The exchange agent will
act as your agent for the purpose of receiving the new notes from us and
delivering them to you.
- You will not be required to pay brokerage commissions or fees or, subject
to the instructions in the letter of transmittal, transfer taxes with
respect to the exchange of old notes. We will pay all charges and expenses
in connection with the exchange offer other than taxes specified under
"--Transfer Taxes."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The exchange offer will expire at 5:00 p.m., New York City time, on,
May 24, 2000, unless we, in our sole discretion, extend it. We may extend the
exchange offer at any time and from time to time by giving oral (promptly
confirmed in writing) or written notice to the exchange agent and by making a
public announcement of the extension before 9:00 a.m., New York City time, on
the next business day after the previously scheduled expiration date. We may
also accept all properly tendered old notes as of the expiration date and extend
the expiration date in respect of the remaining outstanding old notes. We may,
in our sole discretion:
- amend the terms of the exchange offer in any manner;
- delay acceptance of, or refuse to accept, any old notes not previously
accepted;
- extend the exchange offer; or
- terminate the exchange offer.
We will give prompt notice of any amendment to the registered holders of the
old notes. If we materially amend the exchange offer, we will promptly disclose
the amendment in a manner reasonably calculated to inform you of the amendment
and we will extend the exchange offer to the extent required by law.
PROCEDURES FOR TENDERING
Only a holder of old notes may tender them in the exchange offer. For
purposes of the exchange offer, the term "holder" or "registered holder"
includes any participant in The Depository Trust Company whose name appears on a
security position listing as a holder of old notes.
To tender in the exchange offer, you must cause the following to be
transmitted to and received by the exchange agent no later than 5:00 p.m., New
York City time, on the expiration date:
- a confirmation of the book-entry transfer of the tendered old notes into
the exchange agent's account at The Depository Trust Company;
- a properly completed and duly executed letter of transmittal in the form
accompanying this prospectus (with any required signature guarantees) or,
at the option of the tendering holder in the case of a book-entry tender,
an agent's message in lieu of such letter of transmittal; and
- any other documents required by the letter of transmittal.
34
<PAGE>
If you wish to tender your old notes and you cannot cause the old notes or
any other required documents to be transmitted to and received by the exchange
agent before 5:00 p.m., New York City time, on the expiration date, you may
tender your old notes according to the guaranteed delivery procedures described
in this section under the heading "--Guaranteed Delivery Procedures."
Any beneficial owner of old notes that are registered in the name of a
broker, dealer, commercial bank, trust company, or other nominee who wishes to
participate in the exchange offer should promptly contact the person through
which it beneficially owns such old notes and instruct that person to tender old
notes on behalf of such beneficial owner. See "Instructions Forming Part of the
Terms and Conditions of the Exchange Offer" included with the letter of
transmittal. If the beneficial owner wishes to tender on his or her own behalf,
such owner must, prior to completing and executing the letter of transmittal and
delivering such beneficial owner's old notes, either make appropriate
arrangements to register ownership of the old notes in such owner's name or
obtain a properly completed bond power from the registered holder. The transfer
of registered ownership may take considerable time.
The tender by a holder of old notes will constitute an agreement between
such holder, us and the exchange agent in accordance with the terms and subject
to the conditions specified in this prospectus and in the letter of transmittal.
If a holder tenders less than all the old notes held, the holder should fill in
the amount of old notes being tendered in the appropriate box on the letter of
transmittal. The exchange agent will deem the entire amount of old notes
delivered to it to have been tendered unless the holder has indicated otherwise.
The method of delivery of the letter of transmittal and all other required
documents to the exchange agent is at your election and risk. Instead of
delivery by mail, we recommend that you use an overnight or hand delivery
service. IN ALL CASES, YOU SHOULD ALLOW SUFFICIENT TIME TO ENSURE DELIVERY TO
THE EXCHANGE AGENT PRIOR TO THE EXPIRATION DATE. DO NOT SEND YOUR LETTER OF
TRANSMITTAL OR OTHER REQUIRED DOCUMENTS TO US.
SIGNATURE REQUIREMENTS AND SIGNATURE GUARANTEE
You must arrange for an "eligible institution" to guarantee your signature
on the letter of transmittal or a notice of withdrawal, unless the old notes are
tendered:
- by a registered holder of such old notes; or
- for the account of an eligible guarantor institution.
The following are "eligible institutions":
- a member firm of a registered national securities exchange or of the
National Association of Securities Dealers, Inc.;
- a commercial bank or trust company having an office or correspondent in
the United States; or--an "eligible guarantor institution" within the
meaning of Rule 17Ad-15 under the Exchange Act.
If a letter of transmittal is signed by a person other than the registered
holder of any old notes listed in the letter of transmittal, the old notes must
be endorsed or accompanied by a properly completed bond power and signed by the
registered holder as the registered holder's name appears on the old notes.
If trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, sign or endorse any required documents, they should so indicate when
signing, and unless waived by us, submit evidence satisfactory to us of their
authority to so act with the letter of transmittal.
35
<PAGE>
BOOK-ENTRY TRANSFER
The exchange agent will make a request promptly after the date of this
prospectus to establish an account with respect to the old notes. Subject to the
establishment of the account, any financial institution that is a participant in
The Depository Trust Company's system may make book-entry delivery of old notes
by causing The Depository Trust Company to transfer them into the exchange
agent's account with respect to the old notes. However, the exchange agent will
only exchange the old notes so tendered after a timely confirmation of their
book-entry transfer into the exchange agent's account, and timely receipt of an
agent's message and any other documents required by the letter of transmittal.
The term "agent's message" means a message, transmitted by The Depository
Trust Company to, and received by, the exchange agent and forming part of the
confirmation of a book-entry transfer, which states that:
- The Depository Trust Company has received an express acknowledgment from a
participant tendering old notes stating the aggregate principal amount of
old notes which have been tendered by such participant;
- the participant has received the letter of transmittal and agrees to be
bound by its terms; and
- we may enforce such agreement against the participant.
Although you may effect delivery of old notes through The Depository Trust
Company into the exchange agent's account at The Depository Trust Company, you
must provide the exchange agent a completed and executed letter of transmittal
with any required signature guarantee (or an agent's message in lieu thereof)
and all other required documents prior to the expiration date. If you comply
with the guaranteed delivery procedures described below, you must provide the
letter of transmittal (or an agent's message in lieu thereof) to the exchange
agent within the time period provided. DELIVERY OF DOCUMENTS TO THE DEPOSITORY
TRUST COMPANY DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
GUARANTEED DELIVERY PROCEDURES
If you wish to tender your old notes and (1) you cannot deliver the letter
of transmittal or any other required documents to the exchange agent prior to
the expiration date or (2) you cannot complete the procedure for book-entry
transfer on a timely basis, you may instead effect a tender if:
- you make the tender through an eligible guarantor institution;
- prior to the expiration date, the exchange agent receives from such
eligible guarantor institution a properly completed and duly executed
notice of guaranteed delivery (by facsimile transmittal, mail or hand
delivery) specifying the name and address of the holder and the principal
amount of such old notes tendered, stating that the tender is being made,
and guaranteeing that, within three New York Stock Exchange trading days
after the date of execution of the notice of guaranteed delivery, the old
notes being tendered, a properly completed and duly executed letter of
transmittal or a confirmation of a book-entry transfer into the exchange
agent's account at The Depository Trust Company and an agent's message and
any other documents required by the letter of transmittal, will be
deposited by the eligible guarantor institution with the exchange agent;
and
- the exchange agent receives such old notes and letter of transmittal or
confirmation of a book-entry transfer into its account at The Depository
Trust Company and an agent's message and all other documents required by
the letter of transmittal within three New York Stock Exchange trading
days after the date of execution of the notice of guaranteed delivery.
36
<PAGE>
WITHDRAWAL OF TENDERS
Except as otherwise provided in this prospectus, you may withdraw tendered
old notes at any time before 5:00 p.m., New York City time, on the expiration
date. To do so, you must provide the exchange agent with a written or facsimile
transmission notice of withdrawal before 5:00 p.m., New York City time, on the
expiration date.
Any notice of withdrawal must:
- identify the old notes to be withdrawn (including the principal amount of
the old notes and the name and number of the account at The Depository
Trust Company to be credited); and
- be signed by you in the same manner as the original signature on your
letter of transmittal (including any required signature guarantee) or be
accompanied by documents of transfer sufficient to permit the registrar to
register the transfer of the withdrawn old notes into your name.
We will determine all questions as to the validity, form and eligibility
(including time of receipt) of all withdrawal notices. Our determination shall
be final and binding on all parties. We will not deem any old notes so withdrawn
to be validly tendered for purposes of the exchange offer and will not issue new
notes with respect to them unless the holder of the old notes so withdrawn
validly retenders them. You may retender withdrawn old notes by following one of
the procedures described above under "--Procedures for Tendering" at any time
prior to the expiration date.
DETERMINATION OF VALIDITY
We will determine all questions as to the validity, form, eligibility
(including time of receipt), acceptance and withdrawal of the tendered old notes
in our sole discretion. Our determination will be final and binding. We may
reject any and all old notes that are not properly tendered or any old notes of
which our acceptance would, in the opinion of our counsel, be unlawful. We also
may waive any irregularities or conditions of tender as to particular old notes.
Our interpretation of the terms and conditions of the exchange offer (including
the instructions in the letter of transmittal) will be final and binding on all
parties. Unless waived, you must cure any defects or irregularities in
connection with tenders of old notes within such time as we shall determine.
Although we intend to notify tendering holders of defects or irregularities
with respect to tenders of old notes, neither we nor anyone else has any duty to
do so. Neither we nor anyone else shall incur any liability for failure to give
such notification. Your old notes will not be deemed tendered until you have
cured or we have waived any irregularities. As soon as practicable following the
expiration date, the exchange agent will return any old notes that we reject due
to improper tender or otherwise unless you cured all defects or irregularities
or we waive them.
We reserve the right in our sole discretion:
- to purchase or make offers for any old notes that remain outstanding
subsequent to the expiration date;
- to terminate the exchange offer, as set forth in "--Conditions of the
Exchange Offer"; and
- to the extent permitted by applicable law, to purchase old notes in the
open market, in privately negotiated transactions or otherwise.
The terms of any such purchases or offers may differ from the terms of the
exchange offer.
37
<PAGE>
CONDITIONS OF THE EXCHANGE OFFER
Notwithstanding any other term of the exchange offer, we will not be
required to accept for exchange, or to issue new notes for, any old notes, and
we may terminate or amend the exchange offer as provided herein before the
acceptance of old notes, if the exchange offer violates applicable law, rules or
regulations or an applicable interpretation of the staff of the SEC.
If we reasonably determine that such condition (that the exchange offer not
violate applicable law, rules, regulations or interpretation of the staff of the
SEC) is not satisfied, we may (1) refuse to accept any old notes and return all
tendered old notes to the tendering holders or (2) extend the exchange offer and
retain all old notes tendered prior to the expiration of the exchange offer,
subject, however, to the rights of holders to withdraw such old notes (see
"--Withdrawal of Tenders").
ACCEPTANCE OF OLD NOTES FOR EXCHANGE; DELIVERY OF NEW NOTES
Upon satisfaction or waiver of all of the conditions to the exchange offer,
we will accept, promptly after the expiration date, all old notes that have been
validly tendered and not withdrawn, and will issue the applicable new notes in
exchange for such old notes promptly after our acceptance of such old notes. For
purposes of the exchange offer, we will be deemed to have accepted validly
tendered old notes for exchange when, as, and if we have given written notice of
such acceptance to the exchange agent.
For each old note accepted for exchange, the holder of the old note will
receive a new note having a principal amount equal to that of the surrendered
old note. The new notes will bear interest from the most recent date to which
interest has been paid on the old notes or, if no interest has been paid on the
old notes, from March 3, 2000. Accordingly, registered holders of new notes on
the relevant record date for the first interest payment date following the
completion of the exchange offer will receive interest accruing from the most
recent date to which interest has been paid or, if no interest has been paid,
from March 3, 2000. Old notes accepted for exchange will cease to accrue
interest from and after the date on which they are accepted for exchange.
Holders whose old notes are accepted for exchange will not receive any payment
for accrued interest on the old notes otherwise payable on any interest payment
date if the record date occurs on or after date on which they are accepted for
exchange and will be deemed to have waived their rights to receive the accrued
interest on the old notes.
If any tendered old notes are not accepted for any reason or if old notes
are submitted for a greater principal amount than the holder desires to
exchange, such unaccepted or non-exchanged old notes will be returned without
expense to the tendering holder of the old notes or, if the old notes were
tendered by book-entry transfer, the non-exchanged old notes will be credited to
an account maintained with the book-entry transfer facility. In either case, the
return of such old notes will be effected promptly after the expiration or
termination of the exchange offer.
REGISTRATION RIGHTS; LIQUIDATED DAMAGES
Pursuant to the terms of the Registration Rights Agreement, we agreed to use
our best efforts to complete the exchange offer and issue the new notes in
exchange for the old notes. The following description is a summary of the
material provisions of the Registration Rights Agreement. It does not restate
that agreement in its entirety. We urge you to read the Registration Rights
Agreement. Certain defined terms used in this description but not defined herein
have the meanings assigned to them in the Registration Rights Agreement.
If:
(1) we are not permitted to consummate the exchange offer because the
exchange offer is not permitted by any applicable law or applicable
interpretation of the staff of the SEC; or
38
<PAGE>
(2) any holder of Transfer Restricted Securities notifies us prior to the
20(th) day following consummation of the exchange offer that:
(a) it is prohibited by law or SEC policy from participating in the
exchange offer; or
(b) that it may not resell the new notes acquired by it in the exchange
offer to the public without delivering a prospectus and the
prospectus contained in the Exchange Offer Registration Statement is
not appropriate or available for such resales; or
(c) that it is a broker-dealer and holds old notes acquired directly from
us or an affiliate of ours,
we will file with the SEC a Shelf Registration Statement to cover resales of the
Transfer Restricted Securities by the holders thereof who satisfy certain
conditions relating to the provision of information in connection with the Shelf
Registration Statement.
For purposes of the preceding, "Transfer Restricted Securities" means each
note until:
(1) the date on which such note has been exchanged by a person other than a
broker-dealer for a new note in the exchange offer;
(2) following the exchange by a broker-dealer in the exchange offer of an
old note for a new note, the date on which such new note is sold to a
purchaser who receives from such broker-dealer on or prior to the date of
such sale a copy of this prospectus;
(3) the date on which such note has been effectively registered under the
Securities Act and disposed of in accordance with the Shelf Registration
Statement; or
(4) the date on which such note is distributed to the public pursuant to
Rule 144 under the Securities Act.
If:
(1) we fail to file any of the registration statements required by the
Registration Rights Agreement on or before the date specified for such
filing; or
(2) any of such registration statements is not declared effective by the SEC
on or prior to the date specified for such effectiveness (the
"Effectiveness Target Date"); or
(3) we fail to consummate the exchange offer within 30 business days of the
Effectiveness Target Date with respect to the Exchange Offer Registration
Statement; or
(4) the Shelf Registration Statement or the Exchange Offer Registration
Statement is declared effective but thereafter ceases to be effective or
usable in connection with resales of Transfer Restricted Securities
during the period specified in the Registration Rights Agreement (each
such event referred to in clauses (1) through (4) above, a "Registration
Default"),
then we will pay Liquidated Damages to each holder of Transfer Restricted
Securities with respect to the first 90-day period immediately following the
occurrence of the first Registration Default in an amount equal to $0.05 per
week per $1,000 principal amount of Transfer Restricted Securities held by such
holder for each week or portion thereof that the Registration Default continues.
The amount of Liquidated Damages will increase by an additional $0.05 per
week per $1,000 principal amount of Transfer Restricted Securities with respect
to each subsequent 90-day period until all Registration Defaults have been
cured, up to a maximum amount of Liquidated Damages for all Registration
Defaults of $0.50 per week per $1,000 principal amount of Transfer Restricted
Securities; provided that we shall in no event be required to pay Liquidated
Damages for more than one Registration Default at any given time. Following the
cure of all Registration Defaults, the accrual of Liquidated Damages will cease.
39
<PAGE>
Holders of Transfer Restricted Securities will be required to make certain
representations (as described in the Registration Rights Agreement) in order to
participate in the exchange offer and will be required to deliver certain
information to be used in connection with the Shelf Registration Statement and
to provide comments on the Shelf Registration Statement within the time periods
set forth in the Registration Rights Agreement in order to have their Transfer
Restricted Securities included in the Shelf Registration Statement and benefit
from the provisions regarding Liquidated Damages set forth above. By acquiring
Transfer Restricted Securities, a holder will be deemed to have agreed to
indemnify us against certain losses arising out of information furnished by such
holder in writing for inclusion in any Shelf Registration Statement. Holders of
Transfer Restricted Securities will also be required to suspend their use of the
prospectus included in the Shelf Registration Statement under certain
circumstances upon receipt of written notice from us to that effect.
EXCHANGE AGENT
We have appointed Bank One Trust Company, N.A. as the exchange agent for the
exchange offer. Bank One Trust Company, N.A. (as successor in interest to The
First National Bank of Chicago) also acts as trustee under the indenture. You
should send all executed letters of transmittal to the exchange agent and direct
all communications with the exchange agent, including requests for assistance or
for additional copies of this prospectus or of the letter of transmittal as
follows:
DELIVERY TO: BANK ONE TRUST COMPANY, N.A., EXCHANGE AGENT
By Mail or By Hand
Bank One Trust Company, N.A.
One North State Street, 9(th) Floor
Chicago, IL 60602
Attention: Exchanges
By Facsimile for Eligible Institutions:
(312) 407-8853
Facsimile Confirmation:
(800) 524-9472
For Information:
(800) 524-9472
IF YOU DELIVER THE LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMIT INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH
ABOVE, SUCH DELIVERY OR INSTRUCTIONS WILL NOT BE EFFECTIVE.
FEES AND EXPENSES
We will bear all expenses of the exchange offer. We are making the principal
solicitation pursuant to the exchange offer by mail. Our officers and employees
and our affiliates may also make solicitations in person, by telegraph,
telephone or facsimile transmission.
We have not retained any dealer-manager in connection with the exchange
offer and will not make any payments to brokers, dealers or other persons
soliciting acceptances of the exchange offer. We, however, will pay the exchange
agent reasonable and customary fees for its services and will reimburse its
reasonable out-of-pocket costs and expenses and will indemnify the exchange
agent for all losses and claims incurred by it as a result of the exchange
offer. We may also pay brokerage houses and other custodians, nominees and
fiduciaries the reasonable out-of-pocket expenses incurred by them in
40
<PAGE>
forwarding copies of this prospectus, letters of transmittal and related
documents to the beneficial owners of the old notes and in handling or
forwarding tenders for exchange.
TRANSFER TAXES
We will pay any transfer taxes applicable to the exchange of old notes
pursuant to the exchange offer. If, however, a transfer tax is imposed for any
reason other than the exchange of old notes pursuant to the exchange offer, then
the amount of any of these transfer taxes (whether imposed on the registered
holder thereof or any other person) will be payable by the tendering holder.
For example, the tendering holder will pay transfer taxes, if:
- new notes for principal amounts not tendered, or accepted for exchange are
to be registered or issued in the name of any person other than the
registered holder of the old notes tendered; or
- tendered old notes are registered in the name of any person other than the
person signing the letter of transmittal.
If you do not submit satisfactory evidence of payment of taxes for which you
are liable or exemption from them with your letter of transmittal, we will bill
you for the amount of these transfer taxes directly.
ACCOUNTING TREATMENT
We will record the new notes at the same carrying value as the old notes,
which is the principal amount as reflected in our accounting records on the date
of the exchange. Accordingly, we will not recognize any gain or loss for
accounting purposes. We will capitalize the expenses of the exchange offer for
accounting purposes. We will classify these expenses as prepaid expenses and
include them in other assets on our balance sheet. We will amortize these
expenses on a straight line basis over the life of the new notes.
CONSEQUENCES OF FAILURE TO EXCHANGE OLD NOTES
Holders of old notes who do not exchange their old notes for new notes
pursuant to the exchange offer will continue to be subject to the restrictions
on transfer of such old notes. The old notes were originally issued in a
transaction exempt from registration under the Securities Act, and may be
offered, sold, pledged, or otherwise transferred only:
- in the United States to a person whom the seller reasonably believes is a
qualified institutional buyer (as defined in Rule 144A under the
Securities Act);
- outside the United States in an offshore transaction in accordance with
Rule 904 under the Securities Act;
- pursuant to an exemption from registration under the Securities Act
provided by Rule 144, if available; or
- pursuant to an effective registration statement under the Securities Act.
The offer, sale, pledge or other transfer of old notes must also be made in
accordance with any applicable securities laws of any state of the United
States, and the seller must notify any purchaser of the old notes of the
restrictions on transfer described above. We do not currently anticipate that we
will register the old notes under the Securities Act.
APPRAISAL OR DISSENTERS' RIGHTS
Holders of the old notes will not have appraisal or dissenters' rights in
connection with the exchange offer.
41
<PAGE>
DESCRIPTION OF CERTAIN INDEBTEDNESS
The following is a summary of the important terms of our debt arrangements:
CREDIT AGREEMENTS.
Prior to our acquisition of Wyman-Gordon, we maintained an Amended and
Restated Credit Agreement with Bank of America, N.A., as agent, and other bank
lenders. In connection with the acquisition of Wyman-Gordon we negotiated two
new credit agreements with Bank of America, as agent, and other bank lenders
which replaced the prior credit agreement.
SYNDICATE CREDIT AGREEMENT.
We have executed a syndicate credit agreement with Bank of America, N.A., as
administrative agent and letter of credit issuing bank, and other bank lenders.
This unsecured credit agreement provides a term loan of $400 million and a
revolving loan commitment of $400 million, each of which matures on
November 26, 2005.
INTEREST RATE. Loans under the syndicate credit agreement bear interest, at
our option, at (A) a rate equal to the Offshore Rate, as defined in the
syndicate credit agreement, plus a margin of between .75% and 2.00%, or (B) the
higher of (i) the agent's reference rate or (ii) the federal funds rate plus
.50%, plus (iii) a margin of between 0% and 1.00%. The margins applicable to
loans under this credit agreement vary depending on our credit rating, subject
to certain minimum levels (1.50% for Offshore Rate loans and .50% for other
loans) for the first six months after the closing date under the credit
agreement. We will also pay fees for letters of credit issued and the unused
commitments under the syndicate credit agreement; these fees also vary depending
on our credit rating and are similarly subject to certain minimum levels for the
first six months after the closing date under the syndicate credit agreement. As
of December 26, 1999, the outstanding balance on the term loan was $400 million
and there was no outstanding balance on the revolving loan. The amount available
for borrowing under the revolving loan, however, is effectively reduced by the
amount of our outstanding commercial paper.
COVENANTS. The syndicate credit agreement includes a number of customary
financial, affirmative and negative covenants that regulate our operations. For
example, we are required to meet certain financial tests, including:
- a minimum net worth;
- a minimum fixed charge coverage ratio; and
- a maximum funded debt to EBITDA ratio.
In addition, negative covenants restrict, among other things, the incurrence
of indebtedness by our subsidiaries, liens, acquisitions, sales of assets and
other fundamental changes, investments, contingent obligations, changes in
business and accounting changes.
EVENTS OF DEFAULT. The syndicate credit agreement also includes customary
events of default, including payment defaults, covenant defaults, cross defaults
to other indebtedness of a minimum amount, bankruptcy and insolvency events,
certain events under the Employee Retirement Income Security Act of 1974,
defaults in satisfaction of judgments, and change of control.
BRIDGE CREDIT AGREEMENT
We executed a bridge credit agreement with Bank of America, N.A. that
provided for an unsecured 364-day term loan of up to $300 million. We repaid all
outstanding borrowings under the bridge credit agreement following the issuance
of the old notes. No additional amounts are available for borrowing under the
bridge credit agreement.
42
<PAGE>
COMMERCIAL PAPER.
We have issued commercial paper in the form of unsecured notes. At
December 26, 1999, $165.5 million of commercial paper was outstanding.
6.75% NOTES DUE DECEMBER 15, 2007.
We currently have outstanding $150,000,000 of 6.75% notes issued pursuant to
an Indenture dated December 17, 1997. These notes are our unsecured,
unsubordinated obligations and rank PARI PASSU with all of our other unsecured
and unsubordinated indebtedness, including the new notes. The 6.75% notes are
not guaranteed by any of our subsidiaries. The 6.75% notes, which mature
December 15, 2007, bear interest at the fixed rate of 6.75% per annum.
COVENANTS. The Indenture under which the 6.75% notes were issued contains
covenants restricting our ability to:
- incur certain liens;
- enter into certain affiliate transactions;
- merge, consolidate or sell assets; or
- engage in sale and leaseback transactions.
The Indenture also requires us to maintain our corporate existence, pay taxes
and certain other claims and pay principal and interest on the 6.75% notes.
EVENTS OF DEFAULT. The Indenture contains events of default, including
failure to pay principal of, interest on (subject to 30 days grace) or premium
on the 6.75% notes, covenant defaults, cross defaults to other indebtedness of a
minimum amount, certain bankruptcy and insolvency events and any specific
defaults provided in the securities issued pursuant to the Indenture.
The new notes will be issued pursuant to and benefit from the same
Indenture, but will be a separate series of securities outstanding under that
Indenture.
ACCOUNTS RECEIVABLE SECURITIZATION.
We and Precision Receivables Corp. a special purpose finance subsidiary that
we formed for this transaction have executed a Credit and Security Agreement
with Wachovia Bank, N.A. and Blue Ridge Asset Funding Corporation (a
multi-seller commercial paper conduit administered by Wachovia) that provides
for a 364-day revolving loan of up to $150 million (the "Accounts Receivable
Securitization"). This facility is secured by a portion of the accounts
receivable originated by our principal operating subsidiaries (including Wyman
Gordon and its principal operating subsidiaries), which the subsidiaries have
sold to us and we in turn have sold or contributed to Precision Receivables. We
structured the transaction as a loan, and, as such, it is reflected on our
consolidated balance sheet (but the assets of Precision Receivables are intended
to be available first to satisfy its obligations under the Credit and Security
Agreement). Borrowings under this facility can be made only once each month and
only in accordance with a borrowing base formula applicable to the accounts
receivable held by Precision Receivables. The maturity of the Accounts
Receivable Securitization can be extended with all parties' consent in
increments of up to 364 days at a time. At December 26, 1999, $142.9 million was
outstanding on the Accounts Receivable Securitization loan.
INTEREST RATE. Loans under the Accounts Receivable Securitization are
expected to bear interest at a rate equivalent to the rate paid by Blue Ridge
from time to time on its commercial paper having a like maturity, and taking
into account any placement agent or commercial paper dealer fees paid by Blue
Ridge. If selected by Precision Receivables, if Blue Ridge is unable to sell its
commercial paper,
43
<PAGE>
or if certain other events described in the Credit and Security Agreement occur,
loans under the Accounts Receivable Securitization will bear interest at a
Eurodollar rate plus a margin specified in the fee letter between the parties or
at an alternative base rate without any applicable margin. We also pay certain
fees relating to the Accounts Receivable Securitization pursuant to our
agreement with Wachovia and Blue Ridge.
COVENANTS. The agreements relating to the Accounts Receivable
Securitization include a number of customary affirmative and negative covenants
that regulate our operations and those of our subsidiaries that are party to the
transaction, but which do not materially add to the restrictions imposed on us
and our subsidiaries by the syndicate credit agreement or the Indenture for the
6.75% notes. In addition, such agreements include affirmative and negative
covenants relating to the accounts receivable sold and contributed to Precision
Receivables that are customary for accounts receivable secured financings and
covenants designed to protect the separate corporate existence and solvency of
Precision Receivables that are typical for securitization transactions. The
latter covenants include strict restrictions on the business that Precision
Receivables can engage in, the liabilities it can incur, and the manner in which
it is administered and governed.
EVENTS OF DEFAULT. The agreements relating to the Accounts Receivable
Securitization also include customary events of default, including payment
defaults, covenant defaults (including the covenants that relate to the accounts
receivable sold and contributed to Precision Receivables and that relate to the
separate corporate existence and solvency of Precision Receivables), cross
defaults to other indebtedness of a minimum amount, bankruptcy and insolvency
defaults, certain events under the Employee Retirement Income Security Act of
1974, defaults in satisfaction of judgments, and change of control. In addition,
it shall be an event of default if any event occurs that materially impairs the
ability of the originators of the accounts receivable sold and contributed to
Precision Receivables to originate accounts receivable, or if Precision
Receivables fails each month to meet certain three-month rolling average ratio
tests that relate to dilution of the amount (E.G., as a result of defective or
rejected goods, cash discounts, or tariffs), and delinquencies and defaults in
payment, of its accounts receivable.
SUBSIDIARY CREDIT FACILITIES.
Certain of our subsidiaries have credit agreements with financial
institutions in connection with working capital and letter of credit facilities.
We guarantee certain of these facilities. These facilities are not, individually
or in the aggregate, material in amount, and none contain covenants or other
restrictions which are material to our operations.
44
<PAGE>
DESCRIPTION OF NEW NOTES
The new Notes will be issued under an existing Indenture (as amended or
supplemented from time to time, the "Indenture") dated as of December 17, 1997
between the Company and Bank One Trust Company, N.A. (successor in interest to
The First National Bank of Chicago), as Trustee (the "Trustee"), a copy of which
may be obtained from the Company. The statements herein relating to the new
Notes and the following summaries of 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, such sections or defined terms are
incorporated herein by reference. Certain defined terms used in this description
but not defined below under "Certain Definitions" or otherwise herein have the
meanings assigned to them in the Indenture.
The following sets forth certain general terms and provisions of the new
Notes, which are identical in all material respects to the terms of the old
notes, except that the registration rights and related liquidated damages
provisions, and the transfer restrictions applicable to the old notes, are not
applicable to the new Notes. The new Notes will be a separate series of
securities under the Indenture, and certain covenants applicable to the new
Notes are less restrictive in certain respects than the covenants applicable to
the Company's outstanding 6.75% Notes due December 15, 2007. The more
restrictive covenants will continue to apply to the Company as long as the 6.75%
Notes are outstanding; however, the following discussion describes the covenants
that will apply only to the new Notes.
GENERAL
The new Notes will be issued as a series of Securities under the Indenture.
The Indenture does not limit the amount of notes, debentures or other evidences
of indebtedness ("Debt Securities") that may be issued under the Indenture, and
Debt Securities may be issued thereunder from time to time in one or more
series. On December 17, 1997, a series of Debt Securities aggregating
$150 million principal amount was issued under the Indenture. The old notes are
also a series of securities under the Indenture. The new Notes will be issued as
unsecured obligations of the Company. The aggregate principal amount of this
series of Debt Securities may be increased in the future at the option of the
Company in compliance with the covenants of the Indenture.
The new Notes will bear interest at the rate of 8.75% per annum from
March 3, 2000, payable semi-annually in arrears, on each March 15 and
September 15, commencing September 15, 2000, to the Persons in whose names the
new Notes are registered on the preceding March 1 and September 1, respectively.
The principal of, premium, if any, and interest on the new Notes will be
payable, the transfer of new Notes will be registrable and the new Notes may be
presented for exchange, at the office of the Trustee located at Mail Suite 0126,
1 Bank One Plaza, Chicago, Illinois 60670, Attention: Corporate Trust Services.
So long as the new Notes are represented by one or more Global Notes, the
interest payable on the new Notes will be paid to Cede & Co., the nominee of
DTC, or its registered assigns as the registered owner of the Global Notes, by
wire transfer of immediately available funds on each of the applicable interest
payment dates, no later than 2:30 p.m. Eastern Standard Time. If the new Notes
are no longer represented by Global Notes, payment of interest may, at the
option of the Company, be made by check mailed to the address of the Person
entitled thereto. See "Book-Entry, Delivery and Form Same Day Settlement and
Payment."
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 the new Notes in the event
45
<PAGE>
of a highly leveraged transaction, restructuring, change in control, merger or a
similar transaction involving the Company that may adversely affect holders the
new Notes.
No sinking fund is provided for the new Notes.
REDEMPTION
The new Notes are not subject to redemption by the Company.
CERTAIN COVENANTS OF THE COMPANY
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Company may not consolidate with or merge with or into any other Person
or convey, transfer or lease its properties and assets substantially as an
entirety to any Person, unless:
(1) either the Company is the continuing corporation, or the successor
Person or purchaser shall be a corporation, partnership or trust
organized and validly existing 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 under
the Registration Rights Agreement and on the new Notes under a
supplemental indenture;
(2) 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;
(3) if, as a result of any such consolidation or merger or such conveyance,
transfer or lease, the Person formed by or resulting or surviving
therefrom or which shall have received the properties and assets of the
Company substantially as an entirety would have outstanding any Debt
secured by any Mortgage on any Operating Property, or on any shares of
stock or Debt of any Restricted Subsidiary, which Debt could not at such
time be incurred by such Person under the covenant described below under
"Limitation on Liens" without equally and ratably securing the new Notes,
the Company, or such Person, prior to such consolidation, merger,
conveyance, transfer or lease, will secure the new Notes then
Outstanding, equally and ratably with (or prior to) the Debt secured by
such Mortgage; and
(4) 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.
LIMITATIONS ON LIENS
The Company will not, and will not permit any Restricted Subsidiary to,
create, incur, issue, assume or guarantee any indebtedness for money borrowed
("Debt") secured by a Mortgage upon any Operating Property, 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 under the Indenture 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:
(1) Mortgages on any property existing at the time of the acquisition
thereof;
(2) 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
46
<PAGE>
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;
(3) Mortgages on property of a corporation existing at the time such
corporation becomes a Restricted Subsidiary;
(4) Mortgages in favor of the Company or a Restricted Subsidiary;
(5) 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 no 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;
(6) 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
(7) 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 (1) to
(3) or (5), PROVIDED that the principal amount of the Debt secured
thereby and not otherwise authorized by clauses (1) to (3) or (5) 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.
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 such Debt secured by Mortgages which would otherwise be subject to such
restrictions (other than any Debt secured by Mortgages permitted as described in
clauses (1) through (7) of the immediately preceding paragraph) plus all
Attributable Debt in respect of Sale and Leaseback Transactions with respect to
Operating Properties (with the exception of such transactions which are
permitted under clauses (1) through (4) of the first sentence of the first
paragraph under "Limitation on Sale and Leaseback Transactions" below) does not
exceed 12% of Consolidated Net Assets.
LIMITATION ON SALE AND LEASEBACK TRANSACTIONS
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:
(1) the Sale and Leaseback Transaction is solely with the Company or another
Restricted Subsidiary;
(2) the lease is for a period not in excess of twenty-four months, including
renewals;
(3) the Company or such Restricted Subsidiary would (at the time of entering
into such arrangement) be entitled as described in clauses (1) through
(7) of the second paragraph under the heading "Limitation on Liens,"
without equally and ratably securing the Debt Securities of each series
then outstanding under the Indenture, to create, incur, issue, assume
47
<PAGE>
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;
(4) 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 (i) the
retirement of Debt Securities, other Funded Debt of the Company ranking
on a parity with the Debt Securities or Funded Debt of a Restricted
Subsidiary or (ii) the purchase of Operating Property; or
(5) 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 (1) through (4) 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 (1) though (7) of the second paragraph
under the heading "Limitation on Liens") 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 12% of Consolidated Net Assets.
LIMITATION ON DEBT OF RESTRICTED SUBSIDIARIES
The Company will not permit any Restricted Subsidiary to create, incur,
issue, assume or guaranty any Debt, except:
(1) Debt outstanding on the date of the Indenture;
(2) Debt issued to and held by the Company or a wholly owned Restricted
Subsidiary;
(3) Debt created, incurred, issued, assumed or guaranteed by a Person prior
to the time the Person became, merged into, or consolidated 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);
(4) 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;
(5) 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 (1) through (4) 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
(6) Debt not otherwise permitted pursuant to clauses (1) through (5) above
that, together with any other outstanding Debt created, incurred, issued,
assumed or guaranteed pursuant to this clause (6), has an aggregate
principal amount at any time outstanding that does not exceed 12% of
Consolidated Net Assets.
EVENTS OF DEFAULT
Any one of the following events will constitute an Event of Default with
respect to the new Notes:
(1) failure to pay any interest on any new Note when due, continued for
30 days;
48
<PAGE>
(2) failure to pay principal of or any premium on any new Note when due;
(3) failure to perform, or breach of, any covenant or warranty of the
Company in the Indenture with respect to the new Notes continued for
60 days after written notice as provided in the Indenture;
(4) default under any indebtedness for money borrowed by the Company or any
Subsidiary if:
(A) such default either (i) results from the failure to pay the principal
of any such indebtedness at its stated maturity or (ii) relates to
any 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, 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;
(5) certain events of bankruptcy, insolvency or reorganization of the
Company; or
(6) failure to pay Liquidated Damages payable on any new Notes when due,
continued for 30 days.
If an Event of Default (other than an event of Default described in
clause (5) of the preceding paragraph) with respect to the Notes 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 Notes that are Outstanding may
accelerate the maturity of all new Notes; PROVIDED, however, that after such
acceleration, but before a judgment or decree based on acceleration, the holders
of a majority in aggregate principle amount of the Notes that are Outstanding
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 (5) of the immediately preceding paragraph occurs, the new
Notes that are Outstanding will IPSO FACTO become immediately due and payable
without any declaration or other act on the part of the Trustee or any holder.
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 Notes, unless such holders shall have offered to the Trustee
reasonable indemnity. 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 Notes that are Outstanding 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 new Notes.
No holder of new Notes 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 Notes
that are Outstanding 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 Notes that are Outstanding a direction inconsistent with
such request and shall have failed to institute such proceeding
49
<PAGE>
within 60 days. However, such limitations do not apply to a suit instituted by a
holder of new Notes for enforcement of payment of the principal of and premium
and Liquidated Damages, if any, or interest on such new Notes.
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.
DEFEASANCE OF NOTES OR CERTAIN COVENANTS IN CERTAIN CIRCUMSTANCES
DEFEASANCE AND DISCHARGE
The Company may, at the Company's option, be discharged from any and all
obligations in respect of the new Notes (except for certain obligations to
register the transfer or exchange of new Notes, to replace stolen, lost or
mutilated new Notes, 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 and Liquidated
Damages, if any) and interest on, the new Notes on the Stated Maturity of such
payments in accordance with the terms of the Indenture and such new Notes. Such
discharge may occur only 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 new Notes.
DEFEASANCE OF CERTAIN COVENANTS
The Company may, at the Company's option, 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," "Certain Covenants of the Company
Consolidation, Merger and Sale of Assets" and certain other covenants made
applicable to the new Notes. 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 and Liquidated Damages, if any) and interest on, the new Notes on the
Stated Maturity of such payments in accordance with the terms of the Indenture
and such new Notes. 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 new Notes to recognize income, gain
or loss for federal income tax purposes.
In the event the Company exercises this option and the new Notes are
declared due and payable because of the occurrence of any Event of Default, the
amount of money and/or U.S. Government Obligations on deposit with the Trustee
will be sufficient to pay amounts due on the Notes at the time of their Stated
Maturity but may not be sufficient to pay amounts due on the new Notes at the
time of the acceleration resulting from such Event of Default. However, the
Company shall remain liable for such payments.
50
<PAGE>
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
issued under the Indenture (including the new Notes) in order:
(1) 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 Indenture by such successor to the Company;
(2) 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;
(3) to add additional Events of Default with respect to any series of Debt
Securities;
(4) 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 Global Notes;
(5) to add to, change or eliminate any provision affecting only Debt
Securities not yet issued;
(6) to secure the Debt Securities;
(7) to establish the form or terms of Debt Securities of any series;
(8) 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;
(9) to permit payment in respect of Debt Securities in bearer form in the
United States to the extent allowed by law;
(10) 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.
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:
(1) change the Stated Maturity of the principal amount of, or any
installment of principal of or interest on, any Debt Security;
(2) 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);
(3) change the place or currency of payment of principal or premium or
Liquidated Damages, if any, or interest on any Debt Security;
(4) 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
51
<PAGE>
(5) 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.
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. 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 Liquidated Damages 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.
CONCERNING THE TRUSTEE
Bank One Trust Company, N.A. (formerly known as 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 Notes. 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.
ADDITIONAL INFORMATION
You may obtain a copy of the Indenture without charge by writing to
Precision Castparts Corp., 4650 S.W. Macadam Avenue, Suite 440, Portland, OR
97201-4254, Attention: Director of Communications.
BOOK-ENTRY, DELIVERY AND FORM
Except as set forth below, the new Notes will be issued in the form of
registered global notes (the "Global Notes") in minimum denominations of $1,000
and integral multiples of $1,000 in excess thereof. The Global Notes will be
deposited upon issuance with the Trustee as custodian for The Depository Trust
Company ("DTC"), in New York, New York, and registered in the name of DTC or its
nominee, in each case for credit to an account of a direct or indirect
participant in DTC as described below.
Except as set forth below, the Global Notes may be transferred, in whole and
not in part, only to another nominee of DTC or to a successor of DTC or its
nominee. Beneficial interests in the Global Notes may not be exchanged for Notes
in certificated form except in the limited circumstances described below. See
"Exchange of Global Notes for Certificated Notes." Except in the limited
circumstances described below, owners of beneficial interests in the Global
Notes will not be entitled to receive physical delivery of new Notes in
certificated form. Transfers of beneficial interests in the Global Notes will be
subject to the applicable rules and procedures of DTC and its direct or indirect
participants, which may change from time to time.
DEPOSITORY PROCEDURES
The following description of the operations and procedures of DTC is
provided solely as a matter of convenience. These operations and procedures are
solely within the control of DTC and are subject to changes by DTC. The Company
takes no responsibility for these operations and procedures and urges investors
to contact DTC or their participants directly to discuss these matters.
52
<PAGE>
DTC has advised the Company that DTC is a limited-purpose trust company
created to hold securities for its participating organizations (collectively,
the "Participants") and to facilitate the clearance and settlement of
transactions in those securities between Participants through electronic
book-entry changes in accounts of its Participants. The Participants include
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations. Access to DTC's system is also available to
other entities such as banks, brokers, dealers and trust companies that clear
through or maintain a custodial relationship with a Participant, either directly
or indirectly (collectively, the "Indirect Participants"). Persons who are not
Participants may beneficially own securities held by or on behalf of DTC only
through the Participants or the Indirect Participants. The ownership interests
in, and transfers of ownership interests in, each security held by or on behalf
of DTC are recorded on the records of the Participants and Indirect
Participants.
DTC has also advised the Company that, pursuant to procedures established by
it:
(1) upon deposit of the Global Notes, DTC will credit the accounts of
Participants with portions of the principal amount of the Global Notes; and
(2) ownership of these interests in the Global Notes will be shown on, and the
transfer of ownership thereof will be effected only through, records
maintained by DTC (with respect to the Participants) or by the Participants
and the Indirect Participants (with respect to other owners of beneficial
interests in the Global Notes).
Holders of new Notes, who are Participants in DTC's system may hold their
interests therein directly through DTC. Holders of new Notes who are not
Participants may hold their interests indirectly through organizations that are
Participants in DTC. The laws of some states require that certain Persons take
physical delivery in definitive form of securities that they own. Consequently,
the ability to transfer beneficial interests in a Global Note to such Persons
will be limited to that extent. Because DTC can act only on behalf of
Participants, which in turn act on behalf of Indirect Participants, the ability
of a Person having beneficial interests in a Global Note to pledge such
interests to Persons that do not participate in the DTC system, or otherwise
take actions in respect of such interests, may be affected by the lack of a
physical certificate evidencing such interests.
EXCEPT AS DESCRIBED BELOW, OWNERS OF INTERESTS IN THE GLOBAL NOTES WILL NOT
HAVE NEW NOTES REGISTERED IN THEIR NAMES, WILL NOT RECEIVE PHYSICAL DELIVERY OF
NEW NOTES IN CERTIFICATED FORM AND WILL NOT BE CONSIDERED THE REGISTERED OWNERS
OR "HOLDERS" THEREOF UNDER THE INDENTURE FOR ANY PURPOSE.
Payments in respect of the principal of, and interest and premium and
Liquidated Damages, if any, on a Global Note registered in the name of DTC or
its nominee will be payable to DTC in its capacity as the registered Holder
under the Indenture. Under the terms of the Indenture, the Company and the
Trustee will treat the Persons in whose names the new Notes, including the
Global Notes, are registered as the owners thereof for the purpose of receiving
payments and for all other purposes. Consequently, neither the Company, the
Trustee nor any agent of the Company or the Trustee has or will have any
responsibility or liability for:
(1) any aspect of DTC's records or any Participant's or Indirect Participant's
records relating to or payments made on account of beneficial ownership
interest in the Global Notes or for maintaining, supervising or reviewing
any of DTC's records or any Participant's or Indirect Participant's records
relating to the beneficial ownership interests in the Global Notes; or
(2) any other matter relating to the actions and practices of DTC or any of its
Participants or Indirect Participants.
DTC has advised the Company that its current practice, upon receipt of any
payment in respect of securities such as the new Notes (including principal and
interest), is to credit the accounts of the relevant Participants with the
payment on the payment date unless DTC has reason to believe it will
53
<PAGE>
not receive payment on such payment date. Each relevant Participant is credited
with an amount proportionate to its beneficial ownership of an interest in the
principal amount of the relevant security as shown on the records of DTC.
Payments by the Participants and the Indirect Participants to the beneficial
owners of Notes will be governed by standing instructions and customary
practices and will be the responsibility of the Participants or the Indirect
Participants and will not be the responsibility of DTC, the Trustee or the
Company. Neither the Company nor the Trustee will be liable for any delay by DTC
or any of its Participants in identifying the beneficial owners of the new
Notes, and the Company and the Trustee may conclusively rely on and will be
protected in relying on instructions from DTC or its nominee for all purposes.
Subject to the transfer restrictions set forth under "Notice to Investors,"
transfers between Participants in DTC will be effected in accordance with DTC's
procedures, and will be settled in same-day funds.
DTC has advised the Company that it will take any action permitted to be
taken by a holder of Notes only at the direction of one or more Participants to
whose account DTC has credited the interests in the Global Notes and only in
respect of such portion of the aggregate principal amount of the Notes as to
which such Participant or Participants has or have given such direction.
However, if there is an Event of Default under the Notes, DTC reserves the right
to exchange the Global Notes for legended Notes in certificated form, and to
distribute such Notes to its Participants.
EXCHANGE OF GLOBAL NOTES FOR CERTIFICATED NOTES
A Global Note is exchangeable for definitive Notes in registered
certificated form ("Certificated Notes") if:
(1) DTC (a) notifies the Company that it is unwilling or unable to continue as
depositary for the Global Notes and the Company fails to appoint a successor
depositary or (b) has ceased to be a clearing agency registered under the
Exchange Act;
(2) the Company, at its option, notifies the Trustee in writing that it elects
to cause the issuance of the Certificated Notes; or
(3) there shall have occurred and be continuing a Default or Event of Default
with respect to the Notes.
In addition, beneficial interests in a Global Note may be exchanged for
Certificated Notes upon prior written notice given to the Trustee by or on
behalf of DTC in accordance with the Indenture. In all cases, Certificated Notes
delivered in exchange for any Global Note or beneficial interests in Global
Notes will be registered in the names, and issued in any approved denominations,
requested by or on behalf of the depositary (in accordance with its customary
procedures).
SAME DAY SETTLEMENT AND PAYMENT
The Company will make payments in respect of the new Notes represented by
the Global Notes (including principal, premium, if any, interest and Liquidated
Damages, if any) by wire transfer of immediately available funds to the accounts
specified by the Global Note Holder. The Company will make all payments of
principal, interest and premium and Liquidated Damages, if any, with respect to
Certificated Notes by wire transfer of immediately available funds to the
accounts specified by the holders thereof or, if no such account is specified,
by mailing a check to each such Holder's registered address. The new Notes are
expected to be eligible to trade in DTC's Same-Day Funds Settlement System, and
any permitted secondary market trading activity in such new Notes will,
therefore, be required by DTC to be settled in immediately available funds. The
Company expects that secondary trading in any Certificated Notes will also be
settled in immediately available funds.
54
<PAGE>
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.
"COMMISSION" means the Securities and Exchange Commission, as from time to
time constituted, created under the Securities Exchange Act of 1934, or, if at
any time after the execution of this instrument such Commission is not existing
and performing the duties now assigned to it under the Trust Indenture Act, then
the body performing such duties at such time.
"CONSOLIDATED ASSETS" means the aggregate of all assets of the Company
(including the value of all existing Sale and Leaseback Transactions and any
assets resulting from the capitalization of other long-term lease obligations in
accordance with generally accepted accounting principals ("GAAP")), appearing on
the most recent available consolidated balance sheet of the Company at their net
book values, after deducting related depreciation, amortization and other
valuation reserves, all prepared in accordance with GAAP.
"CONSOLIDATED CURRENT LIABILITIES" means the aggregate of the current
liabilities of the Company appearing on the most recent available consolidated
balance sheet of the Company, all in accordance with GAAP. In no event shall
Consolidated Current Liabilities include any obligation of the Company or its
Subsidiaries issued under a revolving credit or similar agreement if the
obligation issued under such agreement matures by its terms within 12 months
from the date thereof but by the terms of such agreement such obligation may be
renewed or extended or the amount thereof reborrowed or refunded at the option
of the Company or any Subsidiary for a term in excess of 12 months from the date
of determination.
"CONSOLIDATED NET ASSETS" means Consolidated Assets after deduction of
Consolidated Current Liabilities.
"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 any 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).
55
<PAGE>
"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.
"PERSON" means any individual, corporation, partnership, joint venture,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"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.
56
<PAGE>
UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
This section discusses the material U.S. federal income tax consequences
resulting from the ownership of the notes by an initial beneficial owner. This
section addresses only initial beneficial owners who hold the notes as capital
assets and does not address holders that may be subject to special tax rules,
such as financial institutions, insurance companies, dealers in securities,
persons that mark-to-market their securities, persons that hold notes as part of
a "straddle," "hedge" or "synthetic security transaction" (including a
"conversion" transaction), persons with a "functional currency" other than the
U.S. dollar, some retirement plans and tax-exempt organizations. This section is
based upon U.S. federal tax laws and Treasury regulations as now in effect and
as currently interpreted and does not take into account possible changes in
these tax laws or these interpretations, any of which may be applied
retroactively. It does not include any description of the tax laws of any state,
local or foreign government that may be applicable to the notes or a holder of
the notes.
THIS SECTION DOES NOT DISCUSS ALL ASPECTS OF U.S. FEDERAL INCOME TAXATION
THAT MAY BE RELEVANT TO A PARTICULAR HOLDER OF THE NOTES IN LIGHT OF THE
HOLDER'S PARTICULAR CIRCUMSTANCES AND INCOME TAX SITUATION. EACH HOLDER OF THE
NOTES SHOULD CONSULT ITS OWN TAX ADVISOR AS TO THE SPECIFIC TAX CONSEQUENCES TO
THE HOLDER OF THE EXCHANGE OF OLD NOTES FOR NEW NOTES AND THE OWNERSHIP AND
DISPOSITION OF THE NOTES, INCLUDING THE APPLICATION AND EFFECT OF STATE, LOCAL,
FOREIGN AND OTHER TAX LAWS OR CHANGES TO THOSE LAWS.
THE EXCHANGE
The exchange of the old notes for new notes pursuant to the exchange offer
will not be treated as an "exchange" for U.S. federal income tax purposes
because the new notes will not differ materially either in kind or extent from
the old notes and because the exchange will occur by operation of the terms of
the old notes. Instead, the new notes received by a holder will be treated as a
continuation of the old notes in the hands of the holder. As a result, there
generally will be no U.S. federal income tax consequences to holders who
exchange old notes for the new notes pursuant to the exchange offer.
U.S. TAXATION OF NON-U.S. HOLDERS
The following summary is based upon existing United States federal income
tax law, which is subject to change, possibly retroactively. This summary does
not address non-U.S. holders that hold notes in connection with a U.S. trade or
business. This summary does not discuss all aspects of United States federal
income taxation which may be important to particular non-U.S. holders in light
of their individual circumstances, such as investors subject to special tax
rules (E.G., financial institutions, insurance companies, broker-dealers,
tax-exempt organizations and U.S. expatriates) or persons holding the notes as a
part of a straddle, hedge, or synthetic security transaction for United States
federal income tax purposes, or that have a functional currency other than the
United States dollar, all of whom may be subject to tax rules that differ
significantly from those described below. In addition, this summary does not
discuss any foreign, state, or local income tax considerations or any taxes
other than income taxes. This summary assumes that investors will hold their
notes as "capital assets" (generally, property held for investment) under the
United States Internal Revenue Code of 1986, as amended (the "Code"). You are
urged to consult with your tax advisor regarding the United States federal,
state, local, and foreign income and other tax considerations of the purchase,
ownership, and disposition of the notes.
INTEREST
Interest paid by us to a non-U.S. holder that is not engaged in trade or
business within the United States will not be subject to United States federal
income or withholding tax provided that
57
<PAGE>
(1) such holder does not actually or constructively own 10% or more of the total
combined voting power of all of our classes of stock entitled to vote,
(2) such holder is not a controlled foreign corporation that is related to us
through stock ownership, and
(3) the requirements of section 871(h)(5) of the Code are satisfied as described
below under the heading "Owner Statement Requirement."
A non-U.S. holder that does not qualify for the exemption from withholding
tax above generally will be subject to withholding of U.S. federal income tax at
the rate of 30% on payments of interest on the notes. An income tax treaty may
provide for an exemption from, or a lower rate of, withholding tax, if
applicable certification requirements are satisfied.
GAIN ON DISPOSITION
A non-U.S. holder who is not engaged in a U.S. trade or business generally
will not be subject to United States federal income tax on gain recognized on a
sale, redemption, or other disposition of a note unless the non-U.S. holder is a
nonresident alien individual, such holder is present in the United States for
183 or more days during the taxable year in which such gain is realized, and
certain other requirements are met.
OWNER STATEMENT REQUIREMENT
Section 871(h)(5) of the Code requires that either the beneficial owner of a
note or a securities clearing organization, bank or other financial institution
that holds customers' securities in the ordinary course of its trade or business
(a "Financial Institution") and that holds a note on behalf of such owner
file a statement with us or our agent to the effect that the beneficial owner is
a non-U.S. holder in order to avoid withholding of United States federal income
tax. Under current regulations, this requirement will be satisfied if we or our
agent receive (1) a properly executed Internal Revenue Service Form W-8 (or
suitable substitute form) (an "Owner's Statement") from the beneficial owner of
a note in which such owner certifies, under penalties of perjury, that such
owner is a non-U.S. holder and provides such owner's name and address, or (2) a
statement from the Financial Institution holding the note on behalf of the
beneficial owner in which the Financial Institution certifies, under penalties
of perjury, that it has received the Owner's Statement, together with a copy of
the Owner's Statement. The beneficial owner must inform us or our agent (or, in
the case of a statement described in clause (2) of the immediately preceding
sentence, the Financial Institution) within 30 days of any change in information
on the Owner's Statement. New regulations, generally effective for payments
after December 31, 2000, include additional certification procedures and special
rules for payments to foreign partnerships.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Current United States federal income tax law provides that in the case of
payments of interest to non-U.S. holders, the 31% backup withholding tax and
information reporting will not apply to payments made outside the United States
by us or a paying agent on a note if an Owner's Statement is received or an
exemption has otherwise been established; provided in each case that we or the
paying agent, as the case may be, does not have actual knowledge that the payee
is not a non-U.S. holder. Special rules may apply with respect to the payment of
the proceeds from the sale of a note to or through foreign offices of certain
brokers. New Treasury regulations, generally effective for payments after
December 31, 2000, may alter the details of the certification procedures. Any
amounts withheld from payment under the backup withholding rules will be allowed
as a credit against a holder's U.S. federal income tax liability and may entitle
such holder to a refund, provided that the required information is furnished to
the Internal Revenue Service.
58
<PAGE>
PLAN OF DISTRIBUTION
Each broker-dealer that receives new notes for its own account in connection
with the exchange offer must acknowledge that it will deliver a prospectus in
connection with any resale of such new notes. This prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of new notes received in exchange for old notes where
such old notes were acquired as a result of market-making activities or other
trading activities. We have agreed that for a period ending on the earlier of
(1) 180 days after the date of this prospectus and
(2) the date on which a broker-dealer is no longer required to deliver a
prospectus in connection with market-making or other trading activities,
we will make available and provide promptly upon reasonable request this
prospectus, in a form meeting the requirements of the Securities Act, to any
broker-dealer for use in connection with any such resale.
We will receive no proceeds in connection with the exchange offer. Exchange
notes received by broker-dealers for their own account in the exchange offer may
be sold from time to time in one or more transactions in the over-the-counter
market, in negotiated transactions, through the writing of options on the new
notes or a combination of these methods of resale, at market prices prevailing
at the time of resale, at prices related to the prevailing market prices or
negotiated prices. A resale may be made directly to purchasers or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from the broker-dealer and/or the purchasers of new notes. Any
broker-dealer that resells new notes that were received by it for its own
account in the exchange offer and any broker or dealer that participates in a
distribution of the new notes may be an underwriter within the meaning of the
Securities Act, and any profit on the resale of exchange notes and any
commissions or concessions received by these persons may be underwriting
compensation under the Securities Act. The letter of transmittal states that by
acknowledging that it will deliver, and by delivering, a prospectus, a
broker-dealer will not be considered to admit that it is an underwriter.
We have agreed to pay all expenses incident to our performance of, or
compliance with, the Registration Rights Agreement and will indemnify the
holders of Transfer Restricted Securities (including any broker-dealers), and
certain parties related to such holders, against certain liabilities including
liabilities under the Securities Act.
LEGAL MATTERS
The validity of the issuance of the new notes will be passed upon for us by
Stoel Rives LLP, Portland, Oregon.
EXPERTS
The consolidated financial statements incorporated in this prospectus by
reference to the Annual Report on Form 10-K of Precision Castparts Corp. and
subsidiaries as of March 28, 1999 and March 29, 1998 and for each of the three
years in the period ended March 28, 1999 have been audited by
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
Ernst & Young LLP, independent auditors, have audited the consolidated
financial statements of Wyman-Gordon Company as of May 31, 1999 and 1998, and
for each of the three years in the period ended May 31, 1999, as set forth in
their report, which is included in our Current Report on Form 8-K filed
December 8, 1999, as amended February 7, 2000. Our Form 8-K is incorporated by
reference in this prospectus. The consolidated financial statements of
Wyman-Gordon Company are incorporated by reference in reliance on Ernst & Young
LLP's report, given on their authority as experts in accounting and auditing.
59
