UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) November 24, 1999
PRECISION CASTPARTS CORP.
(Exact name of registrant as specified in its charter)
State of Oregon 1-10348 93-0460598
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(State or other jurisdiction of (Commission (IRS Employer
incorporation or organization) File No.) Identification No.)
4650 SW Macadam, Suite 440, Portland, Oregon 97201-4254
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(Address of principal executive offices) (Zip Code)
(503) 417-4800
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(Registrant's telephone number, including area code)
No Change
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(Former name, former address and former fiscal year,
if changed since last report)
<PAGE>
Item 2. Acquisition or Disposition of Assets
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On November 24, 1999, Precision Castparts Corp. ("PCC") purchased 98% of the
outstanding shares of common stock of Wyman-Gordon Company ("Wyman-Gordon")
pursuant to a cash tender offer. PCC acquired the remaining outstanding shares
of common stock of Wyman-Gordon pursuant to a merger on January 12, 2000. The
transaction, financed from borrowings under Credit Agreements with Bank of
America, N.A., as Agent, was valued at approximately $784 million, based on the
number of shares acquired in the tender offer and merger at $20 per share ($731
million), PCC's tender for and subsequent payment of Wyman-Gordon's 8% Senior
Notes due 2007 ($150 million), less Wyman-Gordon's cash ($97 million) and
excluding transaction and financing costs. Wyman-Gordon is a manufacturer of
forgings and investment castings, principally for the aerospace industry. PCC
intends that Wyman-Gordon will continue this business after the acquisition.
Item 7. Financial Statement and Exhibits
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(a) Financial Statements of Businesses Acquired
1. Report of Ernst & Young LLP, Independent Auditors*
2. Wyman-Gordon Company Consolidated Statements of Income - Years Ended May
31, 1999, 1998 and 1997*
3. Wyman-Gordon Company Consolidated Balance Sheet - May 31, 1999 and 1998*
4. Wyman-Gordon Company Consolidated Statements of Cash Flows - Years ended
May 31, 1999, 1998 and 1997*
5. Wyman-Gordon Company Consolidated Statements of Stockholders' Equity -
Years ended May 31, 1999, 1998 and 1997*
6. Wyman-Gordon Company Consolidated Statements of Comprehensive Income -
Years ended May 31, 1999, 1998 and 1997*
7. Wyman-Gordon Company Notes to Consolidated Financial Statements*
8. Wyman-Gordon Company Consolidated Condensed Statements of Income
(unaudited) - Three Months ended August 31, 1999 and 1998*
9. Wyman-Gordon Company Consolidated Condensed Balance Sheets - August 31,
1999 (unaudited) and May 31, 1999*
10. Wyman-Gordon Company Consolidated Condensed Statements of Cash Flows
(unaudited) - Three Months Ended August 31, 1999 and 1998*
2
<PAGE>
11. Wyman-Gordon Company Notes to Interim Consolidated Condensed Financial
Statements*
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* Previously filed.
(b) Pro Forma Financial Information
1. Unaudited Pro Forma Combined Statement of Income for the year ended March
28, 1999 for Precision Castparts Corp. and the year ended May 31, 1999 for
Wyman-Gordon Company.
2. Unaudited Pro Forma Combined Statements of Income for the six months ended
September 26, 1999 for Precision Castparts Corp. and the six months ended
August 31, 1999 for Wyman Gordon Company.
3. Notes to Unaudited Pro Forma Combined Statements of Income.
4. Unaudited Pro Forma Combined Balance Sheet at September 26, 1999 for
Precision Castparts Corp. and at August 31, 1999 for Wyman-Gordon Company.
5. Notes to Unaudited Pro Forma Combined Balance Sheet.
3
<PAGE>
Precision Castparts Corp.
Pro Forma Combined Statements of Income and Balance Sheet
On November 24, 1999, Precision Castparts Corp. ("PCC") purchased 98% of the
outstanding shares of common stock of Wyman-Gordon Company ("Wyman-Gordon")
pursuant to a cash tender offer. PCC acquired the remaining outstanding shares
of common stock of Wyman-Gordon pursuant to a merger on January 12, 2000.
PCC reports 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 include the fiscal year ended March 28, 1999 for PCC and
the fiscal year ended May 31, 1999 for Wyman-Gordon and includes the six months
ended September 26, 1999 for PCC and the six months ended August 31, 1999 for
Wyman-Gordon. For the statements of income, the acquisition of Wyman-Gordon and
debt incurrences and repayments are treated as if they had taken place at the
beginning of the earliest period presented. The unaudited pro forma combined
balance sheet at September 26, 1999 includes PCC's balance sheet as of that date
and Wyman-Gordon's balance sheet as of August 31, 1999 and treats the
Wyman-Gordon acquisition as if it had taken place on September 26, 1999. In
combining the financial information, PCC has made certain reclassifications to
Wyman-Gordon's historical financial statements to conform to PCC's presentation.
In accordance with SEC requirements, the unaudited pro forma statements of
income include only the results of ongoing operations.
The following unaudited pro forma combined financial information should be read
in conjunction with PCC's historical statements, as reported in PCC's annual
report on Form 10-K and quarterly reports on Form 10-Q, and of Wyman-Gordon as
reported in the Form 8-K filed December 8, 1999 and in this filing on Form
8-K/A. The pro forma information is based on estimated pro forma adjustments,
which are subject to change. The pro forma information is presented for
illustrative purposes only and is not necessarily indicative of the operating
results or financial position that would have occurred had the acquisition of
Wyman-Gordon been consummated in accordance with the assumptions set forth
above, nor is it necessarily indicative of future operating results or financial
position.
4
<PAGE>
<TABLE>
<CAPTION>
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
Year Ended March 28, 1999 for PCC
and Year Ended May 31, 1999 for Wyman-Gordon
---------------------------------------------------------------------------
Historical Pro Forma
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Wyman Pro forma
PCC -Gordon Adjustments Notes Combined
----------- ----------- ----------- ----------- -----------
(dollars in thousands)
<S> <C> <C> <C> <C> <C>
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 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
</TABLE>
<TABLE>
<CAPTION>
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
Six Months Ended September 26, 1999 for PCC
and Six Months Ended August 31, 1999 for Wyman-Gordon
---------------------------------------------------------------------------
Historical Pro Forma
--------------------------- -------------------------------------------
Wyman Pro forma
PCC -Gordon Adjustments Notes Combined
----------- ----------- ----------- ----------- -----------
(dollars in thousands)
<S> <C> <C> <C> <C> <C>
Net sales $ 716,900 $ 386,000 $ (29,300) (1) (2) $ 1,073,600
Cost of goods sold 556,600 316,500 (18,200) (1) (3) 854,900
Provision for restructuring and other - (1,500) - (1,500)
Selling and administrative expenses 74,900 27,100 (3,500) (1) 98,500
Interest expense, net 13,000 7,200 24,200 (2) (4) 44,400
----------- ----------- ----------- -----------
Income before provision for
income taxes 72,400 36,700 (31,800) 77,300
Provision for income taxes 26,800 8,200 (3,300) (5) 31,700
----------- ----------- ----------- -----------
Net income $ 45,600 $ 28,500 $ (28,500) $ 45,600
=========== =========== =========== ===========
Net income per share (basic) $ 1.86 $ 1.86
Net income per share (diluted) $ 1.85 $ 1.85
Weighted average shares outstanding
(basic) 24,500 24,500
Weighted average shares outstanding
(diluted) 24,600 24,600
</TABLE>
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<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 Six Months Ended
May 31, 1999 August 31, 1999
------------ ----------------
<S> <C> <C>
Net sales $ (58,900) $ (27,600)
Cost of goods sold (53,600) (25,100)
Provision for restructuring and other (2,000) -
Selling and administrative expenses (8,500) (3,500)
</TABLE>
(2) Reclassification to Wyman-Gordon's historical financial statements to
conform to PCC's presentation:
<TABLE>
<CAPTION>
Year Ended Six Months Ended
May 31, 1999 August 31, 1999
------------ ----------------
<S> <C> <C>
Net sales $ (3,000) $ (1,700)
Interest expense, net (3,000) (1,700)
</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 Six Months Ended
March 28, 1999 September 26, 1999
-------------- ------------------
<S> <C> <C>
Interest expense on new debt (a) $ 76,400 $ 38,200
Commitment and other fees 1,700 900
Amortization of financing costs 1,500 800
Elimination of Wyman-Gordon interest income 3,000 1,700
Elimination of interest expense on old PCC debt (17,100) (8,600)
Elimination of interest expense on Wyman-Gordon debt (14,200) (7,100)
------------ ------------
Total $ 51,300 $ 25,900
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</TABLE>
(a) Interest expense on new debt as follows:
<TABLE>
<CAPTION>
Interest Expense
--------------------------------
Average Average Year Ended Six Months Ended
Debt Instrument Principal Rate May 31, 1999 August 31, 1999
------------------------- --------- ------- ------------ ----------------
<S> <C> <C> <C> <C>
Bridge Loan $ 300,000 6.93% $ 20,800 $ 10,400
Term Loan 400,000 7.18% 28,700 14,400
Receivable Securitization 150,000 6.17% 9,300 4,600
Commercial Paper 276,100 6.39% 17,600 8,800
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Total $ 76,400 $ 38,200
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</TABLE>
The average interest rates were computed using an average LIBOR rate of
5.40% 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 average
notional balance of $412,500 swapped at a fixed rate of 6.48%, while the
second swap has an average notional balance of $225,000 swapped at a fixed
rate of 6.05%. 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 six months ended September 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:
Year Ended Six Months Ended
May 31, 1999 August 31, 1999
------------ ----------------
Effective tax rates 35.1% 41.0%
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<PAGE>
<TABLE>
<CAPTION>
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
At September 26, 1999 for PCC
and at August 31, 1999 for Wyman-Gordon
---------------------------------------------------------------------------
Historical Pro Forma
--------------------------- -------------------------------------------
Wyman Pro forma
PCC -Gordon Adjustments Notes Combined
----------- ----------- ----------- ----------- -----------
(dollars in thousands)
<S> <C> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and equivalents............... $ 31,600 $ 74,900 $ (82,700) (1) (2) (3) $ 23,800
Receivables........................ 253,200 156,100 (13,100) (1) (2) 396,200
Inventories........................ 248,100 95,100 (11,900) (1) (2) 331,300
Prepaid expenses and other......... 7,600 4,400 40,000 (2) 52,000
Deferred income taxes.............. 26,200 6,400 36,100 (1) (4) 68,700
----------- ----------- ----------- -----------
Total current assets............ 566,700 336,900 (31,600) 872,000
Property, plant and equipment,
at cost: 579,600 522,100 (357,600) (1) (2) 744,100
Less-accumulated depreciation..... (250,700) (308,500) 308,500 (1) (2) (250,700)
Net property, plant and
equipment.................... 328,900 213,600 (49,100) 493,400
Goodwill, net of accumulated
amortization........................ 519,300 18,400 550,900 (5) 1,088,600
Other assets.......................... 38,600 12,100 (2,300) (1) (2) (6) 48,400
----------- ----------- ----------- -----------
Total assets................... $ 1,453,500 $ 581,000 $ 467,900 $ 2,502,400
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities:
Short-term borrowings.............. $ 16,300 $ - $ 450,000 (7) $ 466,300
Current portion of long-term debt.. 44,000 1,000 (43,500) (2) (8) 1,500
Accounts payable................... 98,100 46,900 (1,200) (2) 143,800
Accrued liabilities................ 118,200 47,900 42,500 (1) (2) (9) 208,600
Income taxes payable............... 11,000 12,300 300 (2) 23,600
----------- ----------- ----------- -----------
Total current liabilities...... 287,600 108,100 448,100 843,800
Long-term debt, excluding current
portion............................. 341,900 164,300 277,800 (2) (3) (8) 784,000
Deferred income taxes................. 25,100 - (12,500) (1) (4) 12,600
Accrued retirement benefits
obligation.......................... 40,300 43,000 - 83,300
Other long-term liabilities........... 17,500 20,200 (100) (1) 37,600
Shareholders' investment.............. 741,100 245,400 (245,400) (10) 741,100
----------- ----------- ----------- -----------
Total liabilities and shareholders'
investment....................... $ 1,453,500 $ 581,000 $ 467,900 $ 2,502,400
=========== =========== =========== ===========
Notes to Unaudited Proforma Combined Balance Sheet
(1) Adjustment to restate reported assets acquired and liabilities assumed at estimated fair market value.
(2) Adjustments to reclassify net Wyman-Gordon assets held for sale to Prepaid expenses and other. Net assets held
for sale consists primarily of assets and liabilities to be divested in accordance with the Agreement Containing
Consent Orders (which was filed as an exhibit to PCC's Form 10-Q for the quarter ended September 26, 1999).
7
<PAGE>
(3) Cash was adjusted to reflect payment of acquisition costs of $17,600, tender premium expense of $10,800 to
retire Wyman-Gordon debt, financing costs of $9,200 on new debt and $41,100 used to repay existing debt (see (8)
below).
(4) Deferred income taxes were provided for at a rate of 40.0% based on the existing Wyman-Gordon balances and the
other pro forma adjustments.
(5) Goodwill was adjusted to eliminate $18,400 of existing Wyman-Gordon goodwill, and to record the excess of
purchase cost over the estimated fair value of the Wyman-Gordon net assets acquired and liabilities assumed.
(6) Adjustments to Other assets include the capitalization of $9,200 of financing costs and the write-off of $3,500
of existing Wyman-Gordon financing fees.
(7) Short-term borrowings were adjusted to reflect the following:
Proceeds from new Bridge Loan $ 300,000
Proceeds from Receivable Securitization 150,000
-----------
Total adjustment to short-term borrowings $ 450,000
===========
(8) Long-term debt was adjusted to reflect the following:
Proceeds from new Term Loan $ 400,000
Payment of existing Wyman-Gordon debt (159,700)
Payment of existing PCC debt (80,000)
Proceeds from issuance of commercial paper 79,600
-----------
Total adjustment excluding adjustment(2) $ 239,900
===========
(9) Pursuant to EITF 95-3, PCC has estimated certain employee severance costs anticipated in connection with
consolidation of the businesses.
(10) The adjustment reflects the elimination of the former shareholders' investment in Wyman-Gordon
</TABLE>
8
<PAGE>
(c) Exhibits
(2) Agreement and Plan of Merger among Precision Castparts Corp., WGC
Acquisition Corp. and Wyman-Gordon Company dated as of May 17, 1999.
Incorporated by reference to Exhibit 3 to Precision Castparts Corp.'s
Quarterly Report on Form 10-Q for the quarter ended June 27, 1999.*
(23) Consent of Ernst & Young LLP.*
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* Previously filed.
9
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: February 4, 2000
PRECISION CASTPARTS CORP.
WILLIAM D. LARSSON
------------------------------------------
William D. Larsson
Vice President and Chief Financial Officer
10
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
----------- -----------
(2) Agreement and Plan of Merger among Precision Castparts
Corp., WGC Acquisition Corp. and Wyman-Gordon Company
dated as of May 17, 1999. Incorporated by reference to
Exhibit 3 to Precision Castparts Corp.'s Quarterly
Report on Form 10-Q for the quarter ended June 27,
1999.*
(23) Consent of Ernst & Young LLP.*
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* Previously filed.
