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 September 26, 2004

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 97239-4254

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   ý  No   o

 

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).

 

Yes   ý  No   o

 

Number of shares of Common Stock, no par value, outstanding as of October 29, 2004: 65,150,330

 

Note:     This 10-Q was filed electronically via EDGAR with the Securities and Exchange Commission.

 

 

PART 1:  FINANCIAL INFORMATION

 

Item 1.  Financial Statements

 

Precision Castparts Corp. and Subsidiaries

Consolidated Statements of Operations

(Unaudited)

(In millions, except per share data)

 

		Three Months Ended
		9/26/04			9/28/03
Net sales		$	697.5		$	412.5
Cost of goods sold		537.3			314.9
Selling and administrative expenses		59.4			33.6
Provision for restructuring		—			8.4
Interest expense, net		14.8			12.5
Income before income taxes and minority interest		86.0			43.1
Income tax expense		28.5			15.7
Minority interest		(0.3		)	(0.1		)
Net income from continuing operations		57.2			27.3
Net loss from discontinued operations		(240.2		)	(12.8		)
Net (loss) income		$	(183.0	)	$	14.5
Net income (loss) per common share – basic:
Net income from continuing operations		$	0.88		$	0.52
Net loss from discontinued operations		(3.70		)	(0.25		)
		$	(2.82	)	$	0.27
Net income (loss) per common share – diluted:
Net income from continuing operations		$	0.86		$	0.51
Net loss from discontinued operations		(3.62		)	(0.24		)
		$	(2.76	)	$	0.27
Average common shares outstanding:
Basic		64.9			52.9
Diluted		66.2			54.0

 

See Notes to the Interim Consolidated Financial Statements on page 6.

 

2

 

		Six Months Ended
		9/26/04			9/28/03
Net sales		$	1,365.6		$	825.9
Cost of goods sold		1,056.3			638.4
Selling and administrative expenses		118.0			59.6
Provision for restructuring		—			8.4
Interest expense, net		29.4			25.4
Income before income taxes and minority interest		161.9			94.1
Income tax expense		53.4			33.7
Minority interest in earnings of consolidated entities		(0.8		)	(0.3		)
Net income from continuing operations		107.7			60.1
Net loss from discontinued operations		(237.1		)	(11.3		)
Net (loss) income		$	(129.4	)	$	48.8
Net income (loss) per common share – basic:
Net income from continuing operations		$	1.66		$	1.14
Net loss from discontinued operations		(3.66		)	(0.22		)
		$	(2.00	)	$	0.92
Net income (loss) per common share – diluted:
Net income from continuing operations		$	1.63		$	1.12
Net loss from discontinued operations		(3.59		)	(0.21		)
		$	(1.96	)	$	0.91
Average common shares outstanding:
Basic		64.8			52.9
Diluted		66.0			53.8

 

See Notes to the Interim Consolidated Financial Statements on page 6.

 

3

 

Precision Castparts Corp. and Subsidiaries

Consolidated Balance Sheets

(In millions)

 

		(Unaudited)
		9/26/04				3/28/04
ASSETS
Current assets:
Cash and cash equivalents		$		162.2		$	80.3
Receivables, net		426.4				389.0
Inventories		480.4				453.6
Prepaid expenses		13.8				16.3
Income tax receivable		4.7				29.0
Deferred income taxes		47.7				50.8
Discontinued operations		158.6				168.5
Total current assets		1,293.8				1,187.5
Property, plant and equipment, at cost		1,236.5				1,219.1
Less - accumulated depreciation		(557.3			)	(514.7		)
Net property, plant and equipment		679.2				704.4
Goodwill, net		1,416.7				1,401.8
Acquired intangible assets, net		5.7				6.1
Deferred income taxes		19.1				23.3
Other assets		86.5				88.9
Discontinued operations		105.3				344.2
		$	3,606.3			$	3,756.2
LIABILITIES AND SHAREHOLDERS’ INVESTMENT
Current liabilities:
Short-term borrowings		$	7.7			$	14.8
Long-term debt currently due		278.8				238.5
Accounts payable		300.5				255.2
Accrued liabilities		309.5				284.3
Income taxes payable		35.0				34.3
Discontinued operations		27.6				85.7
Total current liabilities		959.1				912.8
Long-term debt		767.7				823.0
Pension and other postretirement benefit obligations		215.0				230.4
Other long-term liabilities		52.4				52.3
Discontinued operations		21.7				23.1
Total liabilities		2,015.9				2,041.6
Shareholders’ investment:
Common stock		65.0				64.7
Paid-in capital		726.9				717.7
Retained earnings		828.0				961.2
Accumulated comprehensive loss:
Foreign currency translation		47.8				48.4
Derivatives qualifying as hedges		—				(0.1		)
Minimum pension liability		(77.3			)	(77.3		)
Total shareholders’ investment		1,590.4				1,714.6
		$	3,606.3			$	3,756.2

 

See Notes to the Interim Consolidated Financial Statements on page 6.

 

4

 

Precision Castparts Corp. and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

(In millions)

 

		Six Months Ended
		9/26/04			9/28/03
Cash flows from operating activities:
Net income from continuing operations		$	107.7		$	60.1
Non-cash items included in income:
Depreciation and amortization		47.0			36.4
Deferred income taxes		14.1			1.1
Tax benefit from stock option exercises		2.8			1.2
Changes in assets and liabilities, excluding effects of acquisitions and dispositions of businesses:
Receivables		(37.4		)	1.6
Inventories		(28.0		)	(18.6		)
Other current assets		26.8			19.6
Payables, accruals and current taxes		3.0			(17.0		)
Other non-current assets and liabilities		(19.0		)	(13.7		)
Net cash provided by operating activities		117.0			70.7
Cash flows from investing activities:
Capital expenditures		(25.4		)	(23.1		)
Acquisitions of businesses		(1.4		)	—
Proceeds from sales of businesses		—			14.3
Other		1.2			3.4
Net cash used by investing activities		(25.6		)	(5.4		)
Cash flows from financing activities:
Net change in short-term borrowings		(5.0		)	(23.4		)
Repayment of long-term debt		(15.0		)	(40.0		)
Proceeds from exercise of stock options		6.7			4.9
Cash dividends		(3.8		)	(3.1		)
Other		1.7			(5.1		)
Net cash used by financing activities		(15.4		)	(66.7		)
Effect of exchange rate changes on cash and cash equivalents		1.9			(0.1		)
Net cash provided by discontinued operations		4.0			3.4
Net increase in cash and cash equivalents		81.9			1.9
Cash and cash equivalents at beginning of period		80.3			28.7
Cash and cash equivalents at end of period		$	162.2		$	30.6

 

See Notes to the Interim Consolidated Financial Statements on page 6.

 

5

 

Notes to the Interim Consolidated Financial Statements

(Unaudited)

(In millions, except share and per share data)

 

(1)              Basis of Presentation

 

The interim consolidated financial statements have been prepared by Precision Castparts Corp. (“PCC” or the “Company”), without audit and subject to year-end adjustment, in accordance with generally accepted accounting principles, except that certain information and footnote disclosures made in the latest annual report have been condensed or omitted for the interim statements.  Certain costs are estimated for the full year and allocated in interim periods based on estimates of operating time expired, benefit received, or activity associated with the interim period.  The consolidated financial statements reflect all adjustments, which are, in the opinion of management, necessary for a fair representation of the results for the interim periods.  All adjustments are of a normal recurring nature.  Certain reclassifications have been made to prior year amounts to conform to the current year presentation.

 

(2)                                 Stock-based compensation

 

The Company accounts for stock-based employee compensation in accordance with the provisions of APB Opinion No. 25, “Accounting for Stock Issued to Employees,” and related interpretations.  No stock-based employee compensation cost is reflected in net income, as all stock options are granted with exercise prices equal to the market value of the underlying common stock on the grant dates.  The following table illustrates the effect on net income and earnings per share if the Company had elected to recognize compensation expense based on the fair value of the stock options granted at the grant dates as prescribed by SFAS No. 123, “Accounting for Stock-Based Compensation.”

 

		Three Months Ended						Six Months Ended
		9/26/04			9/28/03			9/26/04			9/28/03
Net (loss) income as reported		$	(183.0	)	$	14.5		$	(129.4	)	$	48.8
Deduct: Stock-based compensation, net of tax, as determined under fair value based method for all awards		(2.1		)	(1.7		)	(4.2		)	(5.4		)
Pro forma net (loss) income		$	(185.1	)	$	12.8		$	(133.6	)	$	43.4
Net (loss) income per share – basic:
Reported		$	(2.82	)	$	0.27		$	(2.00	)	$	0.92
Pro forma		$	(2.85	)	$	0.24		$	(2.06	)	$	0.82
Net (loss) income per share – diluted:
Reported		$	(2.76	)	$	0.27		$	(1.96	)	$	0.91
Pro forma		$	(2.80	)	$	0.24		$	(2.02	)	$	0.81

 

6

 

(3)                                 Acquisition

 

On December 9, 2003, PCC acquired 100 percent of the outstanding shares of common stock of SPS Technologies, Inc. (“SPS”).  The results of SPS’s operations have been included in the consolidated financial statements since that date.  The aggregate purchase price was $728.8 million, which included $294.2 million of cash, PCC common stock valued at $425.1 million, and $9.5 million of cash paid for transaction fees.  The value of the 9.3 million shares of common stock issued was determined based on the quoted market price of PCC’s common stock on and around the date of the close of the transaction.

 

SPS is a supplier of fasteners and other metal products to the aerospace, automotive, and general industrial and other markets.  SPS’s former Specialty Materials and Alloys group operates as part of the Investment Cast Products segment.  A new segment, Fastener Products, comprises most of SPS’s former Aerospace Fasteners and Engineered Fasteners groups.  SPS’s former tool group operates as part of the Industrial Products segment.  In addition, three former SPS businesses – Magnetics, Mohawk, and Dacar – were classified as held for sale in the third quarter of fiscal 2004, and their results are included in discontinued operations.

 

The following summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition.  Since the date of acquisition, the allocated goodwill increased by $8.1 million, primarily due to revised estimates of the fair value of the businesses classified as held for sale.

 

		12/9/03
Current assets		$	354.7
Property, plant and equipment		214.5
Goodwill		645.4
Intangible assets		6.3
Other assets		19.8
Total assets acquired		1,240.7
Notes payable and current portion long-term debt		19.4
Other current liabilities		188.4
Long-term debt		186.7
Other long-term liabilities		117.4
Total liabilities assumed		511.9
Net assets acquired		$	728.8

 

The $6.3 million of acquired intangible assets includes the following:

 

					Weighted-
					Average
		Amount			Useful Life
Patents		$	3.0		8.0 years
Proprietary Technology		2.3			15.0 years
Tradenames		0.8			15.0 years
Long-term customer agreements		0.2			1.8 years
		$	6.3

 

7

 

The $645.4 million of goodwill was assigned to the Company’s segments as follows:

 

Investment Cast Products		$	170.0
Fastener Products		436.8
Industrial Products		22.3
Businesses held for sale		16.3
		$	645.4

 

The goodwill is not deductible for tax purposes.

 

The following represents the pro forma results of the ongoing operations for PCC and SPS for the three and six months ended September 28, 2003 as though the acquisition of SPS had occurred at the beginning of the period.  The pro forma information is not necessarily indicative of the results that would have occurred had the acquisition been completed at the beginning of the periods presented, nor is it necessarily indicative of future results.

 

		Three Months Ended						Six Months Ended
		9/26/04			9/28/03			9/26/04			9/28/03
Net sales		$	697.5		$	638.2		$	1,365.6		$	1,293.6
Net (loss) income		$	(183.0	)	$	19.9		$	(129.4	)	$	60.9
Net (loss) income per share – basic		$	(2.82	)	$	0.32		$	(2.00	)	$	0.98
Net (loss) income per share – diluted		$	(2.76	)	$	0.31		$	(1.96	)	$	0.97

 

(4)                                 Discontinued Operations

 

In the second quarter of fiscal 2005, the Company entered into agreements to sell the pumps and valves businesses of PCC Flow Technologies and reclassified the businesses held for sale from the Fluid Management Products segment to discontinued operations.  It was determined that these businesses did not fit with the Company’s core competencies and strategic objectives.  The E-One sewer and detection system operation of the Fluid Management Products segment was retained and is now included in the Industrial Products segment.  PCC’s decision to sell the pumps and valves businesses in the second quarter of fiscal 2005 resulted in a charge of $245.0 million in the current quarter, of which $219.1 million was associated with the write-down of goodwill.  The remainder related to the write-down of inventory, other amortizable assets and machinery and equipment to fair value less cost to sell.  Approximately $240.0 million of the charge was non-cash.

 

In the third quarter of fiscal 2004, three businesses acquired in the SPS transaction-Magnetics, Mohawk, and Dacar-were classified as held for sale and their results were included in discontinued operations. They were classified as discontinued operations because they were deemed to be non-core to the Company.  Dacar was sold in late September 2004 and the Magnetics and Mohawk businesses are currently being marketed.

 

In the second quarter of fiscal 2004, the Company decided to sell Newmans, a valve distribution company of PCC Flow Technologies. It was determined that Newmans’ distribution business did not fit with PCC’s manufacturing-focused operations and was not performing to the Company’s expectations. The Company’s decision to sell Newmans resulted in a charge of $19.2 million related to the write-down of remaining inventory and property, plant and equipment to fair value less cost to sell, the write-down of account receivable and other current assets to net realizable value, and incremental costs directly related to the closure or sale of the businesses, such as pension, severance and lease termination costs.  The Newmans business was sold in the third quarter of fiscal 2004.

 

8

 

In fiscal 2003, PCC incurred charges associated with the closure or sale of certain businesses of PCC Flow Technologies and the Industrial Products segment. The PCC Olofsson and Eldorado machine businesses were closed and the Eldorado gundrill tooling business was sold. In addition, the Company sold its controlling interest in Design Technologies International (“DTI”) and certain intangible assets of Olofsson to minority shareholders of DTI. The closure or sale of these operations was in response to a steady and continual decline in the machine tool industry. In addition, PCC closed STW Composites (“STW”) as it was deemed to be a non-core business to PCC. PCC also entered into agreements to sell Barber Industries and Fastener Engineers & Lewis Machine (“FELM”) and began actively marketing PCC Superior Fabrication for sale in the fourth quarter. Barber Industries and FELM were both sold during the first quarter and PCC Superior Fabrication was sold in the fourth quarter of fiscal 2004. The performance of these businesses was not consistent with the Company’s long-term strategy for profitable growth.

 

The operating results of these businesses are presented in the Company’s Consolidated Statements of Income as discontinued operations, net of income tax, and all prior periods have been reclassified. The components of discontinued operations for the periods presented are as follows:

 

		Three Months Ended						Six Months Ended
		9/26/04			9/28/03			9/26/04			9/28/03
Net sales		$	98.6		$	71.5		$	198.1		$	142.6
Cost of goods sold		75.5			55.2			152.8			108.1
Selling and administrative expenses		15.3			15.7			31.9			30.0
Interest expense		0.1			—			0.2			—
Restructuring		—			0.1			—			0.1
Net income from discontinued operations before income taxes and minority interest		7.7			0.5			13.2			4.4
Income tax expense		2.8			0.6			4.8			2.8
Minority Interest		—			—			—			(0.1		)
Net income (loss) from discontinued operations		4.9			(0.1		)	8.4			1.5
Loss on disposal		245.1			12.7			245.5			12.8
Net loss from discontinued operations		$	(240.2	)	$	(12.8	)	$	(237.1	)	$	(11.3	)

 

9

 

The following major classes of assets and liabilities are included in discontinued operations in the Consolidated Balance Sheets after adjustment for write-downs to fair value less cost to sell:

 

		9/26/04			3/28/04
Assets of discontinued operations
Current assets		$	158.6		$	168.5
Net property, plant and equipment		86.0			92.8
Other assets		19.3			251.4
		$	263.9		$	512.7
Liabilities of discontinued operations
Short-term borrowings		$	—		$	0.9
Long-term debt currently due		—			0.1
Other current liabilities		27.6			84.7
Long-term debt		—			0.2
Other liabilities		21.7			22.9
		$	49.3		$	108.8

 

(5)              Restructuring Charges

 

No charges related to restructuring activities were recorded in the first or second quarters of fiscal 2005.  During fiscal 2004, PCC recorded provisions for restructuring and impairment of long-lived assets totaling $10.9 million.  These charges are summarized below:

 

The Company recorded $8.4 million of restructuring charges in the second quarter of fiscal 2004 primarily for severance associated with headcount reductions of approximately 435 employees at PCC’s investment castings operations in the United Kingdom and the Company’s forging operations in the United Kingdom and Houston, Texas.  The reductions were in response to reduced demand for commercial aerospace and industrial gas turbine products.

 

The Company recorded $0.3 million of restructuring charges in the fourth quarter of fiscal 2004 to provide for severance associated with the consolidation of the Reed-Rico thread-rolling facility in Holden, Massachusetts, into the newly acquired SPS thread-rolling operations in Shannon, Ireland.  The restructuring plans called for termination of approximately 100 employees through the second quarter of fiscal 2005.  In conjunction with the consolidation of the Reed-Rico and SPS thread-rolling operations, equipment at Reed-Rico was written down to net realizable value, resulting in an impairment charge of $2.2 million.

 

The following table provides a rollforward of amounts included in accrued liabilities for restructuring reserves:

 

		Balance at 3/28/04			Cash payments			Non-cash adjustments			Balance at 9/26/04
Severance		$	4.7		$	(2.0	)	$	(0.3	)	$	2.4
Other		0.3			—			—			0.3
		$	5.0		$	(2.0	)	$	(0.3	)	$	2.7

 

10

 

(6)              Inventories

 

Inventories consisted of the following:

 

		9/26/04			3/28/04
Finished goods		$	127.1		$	136.1
Work-in-process		210.8			186.2
Raw materials and supplies		115.5			103.6
		453.4			425.9
LIFO provision		27.0			27.7
Total inventory		$	480.4		$	453.6

 

(7)              Goodwill and Acquired Intangibles

 

Effective April 1, 2002, the Company adopted Statement of Financial Accounting Standards (“SFAS”) No. 142, “Goodwill and Other Intangible Assets.”  This statement changed the accounting for goodwill and indefinite-lived intangible assets from an amortization approach to an impairment-only approach.  The SFAS No. 142 goodwill impairment model is a two-step approach that must be completed at least annually.  The first step of the model requires a comparison of the book value of net assets to the estimated fair value of the related operations that have goodwill assigned to them.  If fair value is determined to be less than book value, a second step is performed to compute the amount of impairment.  In this process, the fair value of goodwill is determined, based in part on the fair value of the operations used in the first step.  The fair value of goodwill is then compared to its carrying value.  If the fair value of goodwill is less than the carrying value, the shortfall represents the amount of goodwill impairment.

 

The Company completed its goodwill assessment test during the second quarter of fiscal 2005, and it was determined that the fair value of the related operations was greater than book value other than for the pumps and valves businesses of PCC Flow Technologies.  As a result, no write-down for impairment of goodwill was required except for the write-down of goodwill associated with the decision to sell the pumps and valves businesses of PCC Flow Technologies.  See Note 4 for further discussion.

 

The changes in the carrying amount of goodwill by reportable segment for the six months ended September 26, 2004, were as follows:

 

		Balance at 3/28/04				Acquired			Currency Translation and Other			Balance at 9/26/04
Investment Cast Products		$		296.5		$	0.8		$	(0.1	)	$	297.2
Forged Products		512.0				1.0			(1.3		)	511.7
Fastener Products		424.0				14.4			—			438.4
Industrial Products		169.3				—			0.1			169.4
Total		$	1,401.8			$	16.2		$	(1.3	)	$	1,416.7

 

11

 

The gross carrying amount and accumulated amortization of the Company’s acquired intangible assets were as follows:

 

		9/26/04						3/28/04
		Gross Carrying Amount			Accumulated Amortization			Gross Carrying Amount			Accumulated Amortization
Patents		$	3.0		$	0.5		$	3.0		$	0.2
Proprietary technology		2.4			0.1			2.4			0.1
Tradenames		0.8			—			0.8			—
Long-term customer agreements		0.2			0.1			0.2			—
		$	6.4		$	0.7		$	6.4		$	0.3

 

Amortization expense for acquired intangible assets during the second quarter of fiscal 2005 was $0.2 million.  Amortization expense related to finite-lived intangible assets is projected to total $0.9 million for fiscal 2005.  Projected amortization expense for the succeeding five fiscal years is as follows:

 

		Estimated
		Amortization
Fiscal Year		Expense
2006		$	0.7
2007		$	0.6
2008		$	0.5
2009		$	0.4
2010		$	0.4

 

(8)              Guarantees

 

In the ordinary course of business, the Company warrants its products against defects in design, materials and workmanship over various time periods.  The warranty accrual as of September 26, 2004 and March 28, 2004 is immaterial to the financial position of the Company, and the change in the accrual for the current quarter is immaterial to the Company’s results of operations and cash flows.

 

In conjunction with certain transactions, primarily divestitures, the Company may provide routine indemnifications (e.g., retention of previously existing environmental and tax liabilities) with terms that range in duration and often are not explicitly defined.  Where appropriate, an obligation for such indemnifications is recorded as a liability.  Because the obligated amounts of these types of indemnifications often are not explicitly stated, the overall maximum amount of the obligation under such indemnifications cannot be reasonably estimated.  Other than obligations recorded as liabilities at the time of divestiture, the Company has not historically made significant payments for these indemnifications.

 

12

 

(9)              Earnings per share

 

The weighted average number of shares outstanding used to compute earnings per share were as follows:

 

		Three Months Ended				Six Months Ended
		9/26/04		9/28/03		9/26/04		9/28/03
Basic weighted average shares outstanding		64.9		52.9		64.8		52.9
Dilutive stock options		1.3		1.1		1.2		0.9
Average shares outstanding assuming dilution		66.2		54.0		66.0		53.8

 

Basic earnings per share are calculated based on the weighted average number of shares outstanding.  Diluted earnings per share are computed based on that same number of shares plus additional dilutive shares representing stock distributable under stock option and employee stock purchase plans computed using the treasury stock method.

 

For the three and six months ending September 26, 2004, stock options to purchase 0.02 and 0.9 million shares of common stock, respectively, were not dilutive.  For both the three and six months ended September 28, 2003, stock options to purchase 0.9 shares of common stock were not dilutive.  These shares were excluded from the computation of diluted earnings per share because to do so would have been antidilutive.  These options could be dilutive in the future.

 

(10)       Comprehensive (Loss) Income

 

Comprehensive (loss) income consisted of the following:

 

		Three Months Ended						Six Months Ended
		9/26/04			9/28/03			9/26/04			9/28/03
Net (loss) income		$	(183.0	)	$	14.5		$	(129.4	)	$	48.8
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments		(0.3		)	6.3			(0.6		)	21.9
Unrealized gain (loss) on derivatives:
Periodic revaluations, net of income tax of $0, $0, $0 and $0.3		—			0.1			—			(0.7		)
Reclassified to income, net of income tax of $0, $0.6, $0 and $1.2		(0.1		)	1.7			(0.1		)	3.3
		(0.1		)	1.8			(0.1		)	2.6
Total comprehensive (loss) income		$	(183.4	)	$	22.6		$	(130.1	)	$	73.3

 

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(11)       Pensions and Other Postretirement Benefit Plans

 

The Company and its subsidiaries sponsor many domestic and foreign defined benefit pension plans.  In addition, the Company offers postretirement medical benefits for certain eligible employees. These plans are more fully described in the “Notes to the Consolidated Financial Statements” included in the Company’s Annual Report on Form 10-K for the year ended March 28, 2004.

 

The net periodic benefit cost for the Company’s pension plans consisted of the following components:

 

		Three Months Ended						Six Months Ended
		9/26/04			9/28/03			9/26/04			9/28/03
Service cost		$	6.3		$	5.0		$	14.0		$	10.0
Interest cost		13.0			11.1			27.8			22.2
Expected return on plan assets		(12.8		)	(9.7		)	(27.4		)	(19.4		)
Recognized net actuarial loss		2.5			2.1			5.2			4.2
Amortization of prior service cost		0.3			0.3			0.7			0.6
Settlement/curtailment loss		—			1.0			—			2.0
Net periodic benefit cost		$	9.3		$	9.8		$	20.3		$	19.6

 

The net periodic benefit cost of postretirement benefits other than pensions consisted of the following components:

 

		Three Months Ended						Six Months Ended
		9/26/04			9/28/03			9/26/04			9/28/03
Service cost		$	0.1		$	0.1		$	0.2		$	0.2
Interest cost		0.9			1.1			2.1			2.2
Net periodic benefit cost		$	1.0		$	1.2		$	2.3		$	2.4

 

The Company made contributions of $19.5 million to the defined benefit pension plans during the second quarter of fiscal year 2005.  Projected contributions are expected to total approximately $90 million for fiscal year 2005.

 

(12)       New Accounting Pronouncements

 

There are no new accounting standards that have not been adopted by the Company.

 

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