<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarter Ended October 1, 2000
Commission File No. 1-10348
---------------------------
PRECISION CASTPARTS CORP.
An Oregon Corporation
IRS Employer Identification No. 93-0460598
4650 S.W. Macadam Avenue
Suite 440
Portland, Oregon 97201-4254
Telephone: (503) 417-4800
-------------------------
Indicate by checkmark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
Number of shares of Common Stock, no par value, outstanding as of November 3,
2000: 49,652,609
Page 1 of 15 Pages
Note: This 10-Q was filed electronically via EDGAR with the Securities and
Exchange Commission.
<PAGE>
Page 2
PART 1: FINANCIAL INFORMATION
Item 1. Financial Statements
Precision Castparts Corp. and Subsidiaries
Consolidated Statements of Income
(Unaudited)
(In millions, except per share data)
<TABLE>
<CAPTION>
Three Months Ended
-----------------------------
10/1/00 9/26/99
-----------------------------
<S> <C> <C>
Sales $ 566.4 $ 357.9
Cost of goods sold 441.9 277.5
Selling and administrative expenses 53.5 37.5
Interest expense, net 20.5 6.2
------------ ------------
Income before provision for income taxes 50.5 36.7
Provision for income taxes 19.7 13.4
------------ ------------
Net income $ 30.8 $ 23.3
============ ============
Net income per common share (Basic) $ 0.62 $ 0.48
============ ============
Net income per common share (Diluted) $ 0.61 $ 0.47
============ ============
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended
-----------------------------
10/1/00 9/26/99
-----------------------------
<S> <C> <C>
Sales $ 1,115.9 $ 716.9
Cost of goods sold 869.5 556.6
Selling and administrative expenses 107.6 74.9
Interest expense, net 41.1 13.0
------------ ------------
Income before provision for income taxes 97.7 72.4
Provision for income taxes 38.6 26.8
------------ ------------
Net income $ 59.1 $ 45.6
============ ============
Net income per common share (Basic) $ 1.20 $ 0.93
============ ============
Net income per common share (Diluted) $ 1.17 $ 0.93
============ ============
</TABLE>
Net income per common share data for the periods ended 09/26/99 has been
restated for the effects of a 2-for-1 stock split in September, 2000.
See Notes to the Interim Financial Statements on page 6.
<PAGE>
Page 3
Precision Castparts Corp. and Subsidiaries
Consolidated Balance Sheets
<TABLE>
<CAPTION>
(In millions) 10/1/00 4/2/00
(Unaudited)
------------ ------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 20.2 $ 17.6
Receivables 362.8 330.7
Inventories 364.6 337.3
Prepaid expenses 25.5 23.7
Deferred income taxes 42.5 42.6
------------ ------------
Total current assets 815.6 751.9
------------ ------------
Property, plant and equipment, at cost 798.2 763.8
Less - Accumulated depreciation (297.3) (264.5)
------------ ------------
Net property, plant and equipment 500.9 499.3
------------ ------------
Goodwill, net 1,072.9 1,059.6
Deferred income taxes 33.9 33.9
Other assets 69.9 71.0
------------ ------------
$ 2,493.2 $ 2,415.7
============ ============
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current liabilities:
Short-term borrowings $ 151.4 $ 143.5
Long-term debt currently due 70.0 40.2
Accounts payable 171.7 152.8
Accrued liabilities 214.3 212.3
Income taxes payable 32.3 42.7
------------ ------------
Total current liabilities 639.7 591.5
------------ ------------
Long-term debt 864.3 884.5
Pension and other postretirement benefit obligations 114.6 113.9
Other long-term liabilities 53.8 51.9
------------ ------------
Total liabilities 1,672.4 1,641.8
------------ ------------
Shareholders' investment:
Common stock 49.6 49.2
Paid-in capital 163.4 157.6
Retained earnings 631.2 576.5
Cumulative translation adjustments (23.4) (9.4)
------------ ------------
Total shareholders' investment 820.8 773.9
------------ ------------
$ 2,493.2 $ 2,415.7
============ ============
</TABLE>
Equity at 4/2/00 has been restated for the effects of a 2-for-1 stock split in
September, 2000.
See Notes to the Interim Financial Statements on page 6.
<PAGE>
Page 4
Precision Castparts Corp. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
(In millions)
<TABLE>
<CAPTION>
Six Months Ended
------------------------------
10/1/00 9/26/99
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 59.1 $ 45.6
Non-cash items included in income:
Depreciation and amortization 51.6 30.2
Deferred income taxes 0.1 --
Changes in operating working capital, excluding effects of acquisitions:
Receivables (22.9) 1.2
Inventories (21.7) 5.4
Payables, accruals and current taxes (2.6) (19.2)
Other (2.2) 0.5
------------ ------------
Net cash provided by operating activities 61.4 63.7
------------ ------------
Cash flows from investing activities:
Business acquisitions, net of cash acquired (37.7) --
Capital expenditures (34.1) (20.5)
Other 9.8 (0.8)
------------------------------
Net cash used by investing activities (62.0) (21.3)
------------------------------
Cash flows from financing activities:
Net change in short-term borrowings 7.9 (0.9)
Issuance of long-term debt 23.3 --
Repayment of long-term debt (15.8) (22.8)
Proceeds from exercise of stock options 6.2 0.8
Cash dividends (4.4) (2.9)
Other (14.0) 0.2
------------ ------------
Net cash provided by (used by) financing activities 3.2 (25.6)
------------ ------------
Net increase in cash and cash equivalents 2.6 16.8
Cash and cash equivalents at beginning of period 17.6 14.8
------------ ------------
Cash and cash equivalents at end of period $ 20.2 $ 31.6
============ ============
</TABLE>
See Notes to the Interim Financial Statements on page 6.
<PAGE>
Page 5
Precision Castparts Corp. and Subsidiaries
Consolidated Statements of Comprehensive Income
(Unaudited)
(In millions)
<TABLE>
<CAPTION>
Three Months Ended
------------------------------
10/1/00 9/26/99
------------ ------------
<S> <C> <C>
Net income $ 30.8 $ 23.3
Other comprehensive income (expense):
Foreign currency translation adjustments (8.1) 1.9
------------ ------------
Total comprehensive income $ 22.7 $ 25.2
============ ============
<CAPTION>
Six Months Ended
------------------------------
10/1/00 9/26/99
------------ ------------
Net income $ 59.1 $ 45.6
Other comprehensive income (expense):
Foreign currency translation adjustments (14.0) 0.2
------------ ------------
Total comprehensive income $ 45.1 $ 45.8
============ ============
</TABLE>
See Notes to the Interim Financial Statements on page 6.
<PAGE>
Page 6
NOTES TO THE INTERIM FINANCIAL STATEMENTS
(In millions, except per share data)
(1) BASIS OF PRESENTATION
The consolidated interim financial statements have been prepared by
Precision Castparts Corp. ("PCC" or the "Company"), without audit and
subject to year-end adjustment, in accordance with generally accepted
accounting principles, except that certain information and footnote
disclosures made in the latest annual report have been condensed or
omitted for the interim statements. Certain costs are estimated for the
full year and allocated in interim periods based on estimates of
operating time expired, benefit received, or activity associated with
the interim period. The consolidated financial statements reflect all
adjustments that are, in the opinion of management, necessary for a
fair representation of the results for the interim periods. Certain
reclassifications have been made to prior year amounts to conform to
the current year presentation.
(2) ACQUISITIONS AND DISPOSITIONS OF BUSINESSES
ACQUISITIONS
The following acquisitions were accounted for by the purchase method of
accounting and, accordingly, the results of operations have been
included in the Consolidated Statements of Income since the acquisition
dates. All of the acquisitions were cash transactions. Pro forma
information is provided for the fiscal 2000 Wyman-Gordon acquisition
due to its size.
FISCAL 2001
The Company completed three acquisitions during the first quarter.
Fastener Engineering Group, of Rockford, Illinois, a designer and
manufacturer of wire-processing equipment, is operated as part of the
Industrial Products segment. The purchase price of $5.3 million
generated $1.1 million of goodwill, which is being amortized on a
straight-line basis over 40 years.
ConVey Engineering, located in Germany, is a manufacturer of
double-eccentric heavy-duty valves and is included in the operations of
the Fluid Management Products segment. The purchase price of $0.5
million generated $0.5 million of goodwill, which is being amortized on
a straight-line basis over 40 years.
Aero, the aerospace division of United Engineering Forgings, is located
in Lincoln, England. Aero, a manufacturer of forged aircraft engine
discs, shafts and engine-mounting brackets has been renamed
Wyman-Gordon Lincoln and is included in the operations of the Forged
Products segment. The purchase price of $34.3 million generated $23.9
million of goodwill, which is being amortized on a straight-line basis
over 40 years.
FISCAL 2000
During the third quarter, 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 $784.0
million, reflecting shares acquired in the tender offer and merger at
$20 per share ($731.0 million), PCC's tender for and subsequent payment
of Wyman-Gordon's 8% Senior Notes due 2007 ($150.0 million), less
Wyman-Gordon's cash ($97.0 million). The transaction generated goodwill
of approximately $571.0 million. Wyman-Gordon, headquartered in
Grafton, Massachusetts, is the market leader in high-quality,
technologically advanced forgings for aircraft engine components, and
is also a leading manufacturer of investment castings for the aerospace
industry and forgings for the IGT and energy markets. Wyman-Gordon's
casting businesses operate as part of the Investment Cast Products
segment, and the forging businesses comprise the Forged Products
segment.
<PAGE>
Page 7
Pursuant to an FTC consent order regarding PCC's purchase of
Wyman-Gordon, Wyman-Gordon divested the large cast parts operation
located in Groton, Connecticut, and divested the titanium investment
casting operation located in Albany, Oregon.
The following represents the pro forma results of the ongoing
operations for PCC and Wyman-Gordon as though the acquisition of
Wyman-Gordon had occurred at the beginning of the period shown. The pro
forma information, however, is not necessarily indicative of the
results that would have occurred had the acquisition been completed at
the beginning of the period presented, nor is it necessarily indicative
of future results.
<TABLE>
<CAPTION>
Six Months Ended
----------------
9/26/99
-------
<S> <C>
Sales $ 1,048.1
Net income $ 47.0
Net income per share:
Basic $ 0.96
Diluted $ 0.96
</TABLE>
Results for the six months ended October 1, 2000 include the full
quarter's results from acquisitions.
During the third quarter, PCC acquired the stock of Valtaco, which is
headquartered in Switzerland. Valtaco manufactures quarter-turn,
three-piece ball valves and sells these valves along with complementary
valve products through subsidiaries in Switzerland, Germany and
Scotland. The purchase price of $7.0 million generated $4.2 million of
goodwill. Valtaco operates as part of the Fluid Management Products
segment.
During the third quarter, PCC acquired the assets of Reiss Engineering,
which is located in England. Reiss manufactures quarter-turn knife gate
valves and operates as part of the Fluid Management Products segment.
The purchase price of $2.7 million generated $1.9 million of goodwill.
During the fourth quarter, PCC acquired the stock of Technova AG,
headquartered in Switzerland, and its two subsidiaries. Technova AG
manufactures high-performance engineered plastic or polymer lined
valves for systems designed to handle corrosive and/or abrasive fluids
and pure liquids. The subsidiaries are sales and distribution
operations, which are located in Germany and the U.S. The purchase
price of $14.0 million generated $8.0 million of goodwill. The Company
also acquired a small U.S.-based distributor, MMG, for $0.3 million.
Technova and MMG operate as part of the Fluid Management Products
segment.
DISPOSITIONS
During the third quarter, pursuant to the FTC consent order, the
Company divested the large cast parts operation of Wyman-Gordon.
During the fourth quarter, the Company sold the titanium castings
operation of Wyman-Gordon as required under the FTC Consent Order for
$26.6 million. Prior to completing this transaction, the Company
purchased the minority interest in the titanium casting operation from
Titanium Metals Corporation (TIMET). Also during the fourth quarter,
the Company sold the Water Specialties business
<PAGE>
Page 8
for $12.7 million and the Penberthy business for $20.0 million. Water
Specialties and Penberthy were considered to be non-core to the Fluid
Management Segment. These dispositions resulted in no significant gain
or loss for the Company.
(3) EARNINGS PER SHARE
<TABLE>
<CAPTION>
Three Months Ended
------------------------------------------------------------
10/1/00 9/26/99
------------------------------------------------------------
Basic Diluted Basic Diluted
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net Income $ 30.8 $ 30.8 $ 23.3 $ 23.3
Average shares outstanding 49.5 49.5 49.0 49.0
Common shares issuable -- 1.3 -- 0.2
------------ ------------ ------------ ------------
Average shares outstanding
assuming dilution 49.5 50.8 49.0 49.2
------------ ------------ ------------ ------------
Net income per common share $ 0.62 $ 0.61 $ 0.48 $ 0.47
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended
------------------------------------------------------------
10/1/00 9/26/99
------------------------------------------------------------
Basic Diluted Basic Diluted
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net Income $ 59.1 $ 59.1 $ 45.6 $ 45.6
Average shares outstanding 49.4 49.4 49.0 49.0
Common shares issuable -- 1.1 -- 0.2
------------ ------------ ------------ ------------
Average shares outstanding
assuming dilution 49.4 50.5 49.0 49.2
------------ ------------ ------------ ------------
Net income per common share $ 1.20 $ 1.17 $ 0.93 $ 0.93
============ ============ ============ ============
</TABLE>
<PAGE>
Page 9
(4) SEGMENT INFORMATION
<TABLE>
<CAPTION>
Three Months Ended
-----------------------------
10/1/00 9/26/99
------------ ------------
<S> <C> <C>
Sales
Investment Cast Products $ 282.1 $ 225.0
Forged Products 155.4 --
Fluid Management Products 77.3 75.3
Industrial Products 51.6 57.6
------------ ------------
Consolidated sales $ 566.4 $ 357.9
============ ============
Operating income
Investment Cast Products $ 49.0 $ 38.1
Forged Products 23.8 --
Fluid Management Products 3.3 6.1
Industrial Products 2.8 3.4
Corporate expense (7.9) (4.7)
------------ ------------
Operating income 71.0 42.9
Interest expense, net 20.5 6.2
------------ ------------
Consolidated income before
provision for income taxes $ 50.5 $ 36.7
============ ============
<CAPTION>
Six Months Ended
-----------------------------
10/1/00 9/26/99
------------ ------------
<S> <C> <C>
Sales
Investment Cast Products $ 560.8 $ 460.8
Forged Products 301.2 --
Fluid Management Products 152.6 148.6
Industrial Products 101.3 107.5
------------ ------------
Consolidated sales $ 1,115.9 $ 716.9
============ ============
Operating income
Investment Cast Products $ 97.4 $ 75.3
Forged Products 45.7 --
Fluid Management Products 5.9 11.0
Industrial Products 4.6 6.6
Corporate expense (14.8) (7.5)
------------ ------------
Operating income 138.8 85.4
Interest expense, net 41.1 13.0
------------ ------------
Consolidated income before
provision for income taxes $ 97.7 $ 72.4
============ ============
</TABLE>
<PAGE>
Page 10
(5) FINANCING ARRANGEMENTS
During the first quarter, the 8.75% Notes due fiscal 2005 issued under
Rule 144A with registration rights were exchanged for 8.75% Notes due
2005 as registered under the Securities Act of 1933, as amended.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
CONSOLIDATED RESULTS OF OPERATIONS - COMPARISON BETWEEN THREE MONTHS
ENDED OCTOBER 1, 2000 AND SEPTEMBER 26, 1999
Sales of $566.4 million for the second quarter of fiscal 2001 were up
58.3 percent from $357.9 million in the same quarter last year.
Operating income of $71.0 million was up 65.5 percent from $42.9
million in the second quarter last year. Net income was $30.8 million,
or $0.61 per share (diluted), for the quarter, compared with net income
of $23.3 million, or $0.47 per share (diluted) in the same quarter last
year, restated for the 2-for-1 stock split effective September 2000.
Sales, net income and earnings per share for the second quarter were
all record highs for the Company.
Net interest expense for the second quarter of fiscal 2001 was $20.5
million, as compared with $6.2 million for the second quarter last
year. The higher expense was primarily due to increased debt levels
used to fund the acquisition of Wyman-Gordon in fiscal 2000 and the
three acquisitions completed during the first quarter of fiscal 2001.
The effective tax rate for the second quarter of fiscal 2001 was 39
percent, as compared with 36.5 percent for the second quarter last
year. The increase in the rate for the current year is primarily due to
non-deductible goodwill related to the acquisition of Wyman-Gordon.
RESULTS OF OPERATIONS BY SEGMENT - COMPARISON BETWEEN THREE MONTHS
ENDED OCTOBER 1, 2000 AND SEPTEMBER 26, 1999
With the acquisition of Wyman-Gordon, PCC reorganized the Company's
business segments along its four major product lines. Financial results
are reported in the following four segments: Investment Cast Products,
Forged Products, Fluid Management Products and Industrial Products.
Investment Cast Products
Investment Cast Products increased sales in the second quarter of
fiscal 2001 by 25.4 percent versus the same quarter last year from
$225.0 million to $282.1 million. Operating income for the segment
improved by 28.6 percent, from $38.1 million in the second quarter a
year ago to $49.0 million in fiscal 2001. The increase in sales is due
to the addition of Wyman-Gordon's castings businesses, which were
acquired in the third quarter of fiscal 2000, and the rapid growth in
the industrial gas turbine market. Increased sales in aluminum
castings, such as aircraft doors and thrust reverser cascades, in large
titanium castings for aircraft and small castings for the microturbine
market also added to the increase in sales. The favorable operating
income resulted from the higher sales level coupled with higher margins
related to IGT programs and continued realization of increased
synergies resulting from the acquisition of Wyman-Gordon's casting
operations.
Forged Products
Forged Products' sales amounted to $155.4 million for the quarter,
with an operating income of $23.8 million. Since this segment
consists entirely of operations purchased as part of the
Wyman-Gordon acquisition in the third quarter of fiscal 2000 and the
acquisition of Wyman-Gordon Lincoln in the first quarter of fiscal
2001, there are no comparative second quarter results. The segment's
sales and operating income have improved consecutively each quarter
since being acquired in November, 1999. This improvement is
attributable to the strong growth in the industrial gas turbine
market, strong sales of extruded seamless pipe for the power
generation and deep-sea drilling markets,
<PAGE>
Page 11
and the acquisition of Wyman-Gordon Lincoln during the first quarter of
fiscal 2001. The segment's operating income also continues to improve
as a result of significant cost savings realized after the Company's
acquisition of Wyman-Gordon.
Fluid Management Products
Fluid Management Products' sales improved slightly from $75.3 million
in the second quarter of fiscal 2000 to $77.3 million this year.
Operating income declined, dropping from $6.1 million last year to $3.3
million in the second quarter of this year. The sales increase was due
to improved sales in the industrial gas turbine and construction
markets, and though not contributing to the quarter's results, the oil
and gas market has started to show signs of recovery. The decline in
operating income was due to lower profits in Europe, where pricing and
volume issues negatively impacted the quarter and due to softness in
both the petrochemical and oil and gas markets.
Industrial Products
Industrial Products' sales of $51.6 million for the second quarter of
fiscal 2001 declined from the $57.6 million in the comparable prior
year period. Operating income fell by 17.6 percent, from $3.4 million
in the second quarter of fiscal 2000 to $2.8 million in the second
quarter of this year. The decline was due to lower sales in the pulp
and paper market coupled with the continuation of poor market
conditions in the machine tool business in Europe. The introduction of
a new machine tool line in the U.S. and strong sales of
metal-injection-molded products, partially offset the decline.
CONSOLIDATED RESULTS OF OPERATIONS - COMPARISON BETWEEN SIX MONTHS
ENDED OCTOBER 1, 2000 AND SEPTEMBER 26, 1999
Sales of $1,115.9 million for the first six months of fiscal 2001 were
up 55.7 percent from $716.9 million in the same period last year.
Operating income of $138.8 million was up 62.5 percent from $85.4
million in fiscal 2000. Net income was $59.1 million, or $1.17 per
share (diluted), for the first half of fiscal 2001, compared with net
income of $45.6 million, or $0.93 per share (diluted) in the same
period last year.
Net interest expense for the six months ended October 1, 2000 was $41.1
million, as compared with $13.0 million for the same period last year.
The higher expense was primarily due to increased debt levels used to
fund the acquisition of Wyman-Gordon in fiscal 2000 and the three
acquisitions completed during the first quarter of fiscal 2001.
The effective tax rate for the first six months of fiscal 2001 was 39.5
percent, as compared with 37.0 percent for the six months ended
September 26, 1999. The increase in the rate for the current year is
primarily due to non-deductible goodwill related to the acquisition of
Wyman-Gordon.
RESULTS OF OPERATIONS BY SEGMENT - COMPARISON BETWEEN SIX MONTHS ENDED
OCTOBER 1, 2000 AND SEPTEMBER 26, 1999
Investment Cast Products
Investment Cast Products' sales were $560.8 million for the first six
months of fiscal 2001 compared to $460.8 million in the same period
last year. Operating income for the segment improved by 29.3 percent,
from $75.3 million a year ago to $97.4 million in fiscal 2001. The
increase in sales was due to the addition of Wyman-Gordon's casting
operations, which was acquired in the third quarter of last year, the
rapid growth of the industrial gas turbine market and the improvement
of aircraft engine sales. In addition, sales of airframe components
and aluminum castings are starting to have an impact on top-line
growth.
<PAGE>
Page 12
Operating margins were favorably impacted by the strong market
conditions, specifically in the industrial gas turbine market.
Operating margins were also higher than the first six months of fiscal
2000 as a result of the realization of synergies related to the
acquisition of Wyman-Gordon.
Forged Products
Forged Products' sales amounted to $301.2 million for the first six
months of fiscal 2001, with operating income of $45.7 million. Since
this segment consists entirely of operations purchased as part of the
Wyman-Gordon acquisition in the third quarter of fiscal 2000, there are
no comparative six-month results. Forged Products, which serves the
same major markets as Investment Cast Products, is also experiencing
the recovery in its aerospace business as well as increased demand in
the industrial gas turbine market. The increased volume coupled with
higher productivity, and manufacturing and administrative synergies
related to the acquisition of Wyman-Gordon, have contributed to strong
operating margins in this segment.
Fluid Management Products
Fluid Management Products' sales rose from $148.6 million for the first
six months of fiscal 2000 to $152.6 million this year, an increase of
2.7 percent. Operating income declined, moving from $11.0 million last
year to $5.9 million for the first half of fiscal 2001. The sales
improvement is due to higher sales in the construction and industrial
gas turbine markets coupled with acquisitions completed in the latter
half of fiscal 2000. Operating margins were adversely impacted by lower
sales in the oil and gas market, pricing and volume issues in Europe
and ramp-up costs related to anticipated volume increases.
Industrial Products
Industrial Products reported sales of $101.3 million for the first half
of fiscal 2001 as compared to last year's sales of $107.5 million, a
5.8 percent decrease. Operating income decreased $2.0 million to $4.6
million in the first half of this year from $6.6 million a year ago.
Pricing pressures in the machine tool market remain intense,
particularly in Europe as a result of intense competition from Asian
manufacturers. Lower sales in the pulp and paper market, which
traditionally has higher margins than the other markets in the
Industrial Products segment, has negatively impacted both top and
bottom-line performance. Restructuring efforts in Europe, which were
started in the fourth quarter of last year and have continued this
year, have started to provide cost improvements.
CHANGES IN FINANCIAL CONDITION AND LIQUIDITY
Total assets of $2,493.2 million at October 1, 2000 represented a $77.5
million increase from the $2,415.7 million balance at April 2, 2000.
Total capitalization at October 1, 2000, was $1,906.5 million,
consisting of $1,085.7 million of debt and $820.8 million of equity.
The debt-to-capitalization ratio reduced from 58 to 57 percent over the
same quarter from a year ago.
Cash from earnings for the six months ended October 1, 2000 of $110.8
million, plus cash of $6.2 million from the sale of common stock
through stock option exercises was less than cash requirements which
consisted of $49.4 million for increased working capital, $37.7 million
for business acquisitions, $34.1 million for capital expenditures, and
$4.4 million for dividends. The cash shortfall was funded by $15.4
million of net borrowings resulting in an ending cash balance of $20.2
million, up $2.6 million from fiscal 2000 year end. Management believes
that the Company can fund the requirements for working capital, capital
spending, cash dividends and potential acquisitions from cash balances,
borrowing from existing or new bank credit facilities, issuance of
public or privately placed debt securities, or the issuance of stock.
<PAGE>
Page 13
FORWARD-LOOKING STATEMENTS
Information included within this filing describing the projected growth
and future results and events constitutes forward-looking statements,
within the meaning of the Private Securities Litigation Reform Act of
1995. Actual results in future periods may differ materially from the
forward-looking statements because of a number of risks and
uncertainties, including but not limited to fluctuations in the
aerospace, energy and general industrial cycles; the relative success
of the Company's entry into new markets, including the rapid ramp-up
of production for industrial gas turbine and airframe components;
competitive pricing; the availability and cost of materials and
supplies; relations with the Company's employees; the Company's ability
to manage its operating costs and to integrate acquired businesses in
an effective manner; governmental regulations and environmental
matters; risks associated with international operations and world
economies; the relative stability of certain foreign currencies;
successful introduction of new products; and implementation of new
technologies. Any forward-looking statements should be considered in
light of these factors. The Company undertakes no obligation to
publicly release any forward-looking information to reflect anticipated
or unanticipated events or circumstances after the date of this
document.
<PAGE>
Page 14
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
(a) The Company held its Annual Meeting of Shareholders
on August 16, 2000.
(b) The Shareholders voted as follows on the following
matters:
1. Election of Directors. The voting results
for each nominee is as follows:
<TABLE>
<CAPTION>
Nominee Votes For Votes Withheld
------- --------- --------------
<S> <C> <C>
William C. McCormick 17,969,542 3,936,342
Vernon E. Oechsle 21,748,725 157,159
</TABLE>
Mr. McCormick and Mr. Oechsle were elected to serve
terms of three years.
2. The appointment of PricewaterhouseCoopers
LLP as auditors of the Company was ratified by a
count of 21,852,091 votes for, 15,657 votes withheld
or against, and 38,136 votes abstaining.
<PAGE>
Page 15
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
(11) Computation of Per Share Earnings*
(27) Financial Data Schedule
* Data required by Statement of Financial Accounting Standards No. 128,
Earnings per Share, is provided in Note 3 to the Consolidated Financial
Statements in this Report. During September 2000, PCC effected a
2-for-1 stock split. All current and past financial information has
been restated to reflect this.
b. Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,the
registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
PRECISION CASTPARTS CORP.
Registrant
DATE: November 14, 2000 /s/ W.D. Larsson
-----------------
W.D. Larsson
Senior Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
