Item 1 - Business
General
PCC Flow Technologies, Inc. ("the Company"), previously known as NEWFLO Corporation, was acquired on July 31, 1996, by Precision Castparts Corp. ("PCC"), a world wide manufacturer of complex metal structural investment castings and the leading manufacturer of airfoils castings used in jet aircraft engines. PCC is traded on the New York Stock Exchange. The Company serves a wide variety of customers worldwide with high quality fluid management products and after sales services necessary for the efficient operation of their facilities. The Company designs, manufacturers, markets and services a broad range of high quality, precision industrial fluid management products, including fluid handling industrial valves, industrial pumps and fluid measuring instruments. The Company's finished fluid management products are manufactured primarily from castings, forgings, and fabricated steel parts. These products are sold worldwide under well established brand names, including "NEWCO" , "General", "Barber" and "TECHNO" valves, "Johnston" and "PACO" pumps, and "Water Specialties" and "Penberthy" measuring instruments, to a wide range of end-user markets. Principal end-user markets served by the Company include energy, industrial process, water resources, electric power, commercial construction, chemical, marine, mining and other niche markets.
Item 1 is being filed with the reduced disclosure format pursuant to compliance by the Registrant with conditions set forth in General Instruction J(1)(a) and (b) and J(2)(d) of Form 10-K.
Item 2
Item 2 - Properties
The Company's headquarters are located in Austin, Texas. In addition, the Company maintains various facilities throughout the United States and Canada, and has offices in Singapore. The Company's facilities are as follows:
Item 2 - Properties (continued)
NOTES: (1) Property subleased to a third party.
The Company considers all of its facilities to be in good operating condition and adequate for the business conducted therein, appropriately utilized in line with past experience and to have sufficient production capacity for sales growth in the future without substantial additional capital expenditure requirements.
Item 3
Item 3 - Legal Proceedings
Environmental
The Company is subject to federal, state and local environmental laws and regulations relating to protection of the environment, including among other things, those relating to air emissions, wastewater discharges, storage, handling and transportation of certain materials, and solid and hazardous waste disposal. The Company believes that it is currently in compliance in all material respects with these applicable requirements.
Item 3 - Legal Proceedings (continued)
In connection with the acquisition of Johnston Pump/General Valve, Inc. ("JP/GV"), the Company acquired property containing hazardous materials which may require remediation. In October 1991, the Company established reserves for known environmental matters based upon investigations conducted by the Company, its environmental consultants, and federal regulatory agencies. In January 1995, JP/GV was notified by the EPA that the EPA does not plan to ask JP/GV to participate in the cleanup of the regional ground water contamination. During 1995, the Company engaged the services of a nationally known environmental consultant to visit every location and evaluate all known environmental matters. The Company has established reserves in connection with the sites and it believes these reserves to be adequate based, in part, upon conclusions of the Company's environmental consultants. To date, the Company's costs with respect to the sites have not been material, and the Company does not anticipate any material adverse effect on its business or financial condition as a result of its involvement with the sites. The Company also believes that it has established adequate reserves for all identified remediation matters at its currently owned and leased properties, based on investigations conducted by the Company and its environmental consultants. There can be no assurance, however, that such reserves will be sufficient or that future expenditures with respect to the sites or other environmental matters would not have a material adverse effect on the Company's business or financial condition.
Legal
The Company is involved in various legal proceedings incidental to its business, including product liability, worker's compensation, and other general liability actions for which the Company carries insurance, as well as related litigation for wrongful discharge and other employer/employee litigation. In the opinion of the management of the Company, no such legal proceedings will have a material adverse effect on financial position or results of operations of the Company.
Prior to the acquisition by PCC, the Company (then known as NEWFLO Corporation) and subsidiaries, General Valve Company, H & H Valve Company and Newman's Valve Ltd. were named as defendants in Marello Valve Ltd. vs. General Valve, Brian Warren, NEWFLO Corporation, et al. (Ontario Court of Justice, Ontario Canada 96-CU-10728CM, filed July 9, 1996). The suit alleges that General Valve breached the exclusivity terms of a distributor agreement with Marello Valve Ltd. and terminated the distributor agreement without proper notice, and that NEWFLO Corporation, Brian Warren (an employee of General Valve) and the other defendants induced General Valve to commit a breach. The complaint seeks damages from General Valve, NEWFLO Corporation and Brian Warren relating to breach of contract in an aggregate amount of $66.8 million (Canadian). The Company has filed a Statement of Defense d enying the allegations. The Company believes that the claims asserted by Marello Valve Ltd. can be successfully defended and that the matter will not have a material adverse effect on the Company or the results of its operations.
Item 4
Item 4 - Submission of Matters to A Vote of Security Holder
Item 4 is being filed with the reduced disclosure format pursuant to compliance by the Registrant with conditions set forth in General Instruction J(1)(a) and (b) and J(2)(c) of Form 10-K.
PART II
Item 5
Item 5 - Market for the Registrant's Common Equity Securities and Related Stockholder Matters
There is no established public market for the Company's common stock. See Item 12: "Security Ownership of Certain Beneficial Owners and Management" for a discussion of the ownership of the Company.
Item 6
Item 6 - Selected Financial Data
Item 6 is being filed with the reduced disclosure format pursuant to compliance by the Registrant with conditions set forth in General Instruction J(1)(a) and (b) and J(2)(a) of Form 10-K.
Item 7
Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with the consolidated audited financial statements contained in the Form 10-K filed with the Securities and Exchange Commission for the fiscal year ended December 31, 1995, and the consolidated financial statements which are included in Item 8
Item 9 - Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
On July 31, 1996, 100% of the outstanding capital stock of NEWFLO Corporation was purchased by PCC from its shareholders consisting of individual and institutional investors. As a result of the Change in Control of Registrant, the certifying accountant was changed to Price Waterhouse LLP, certifying accountant for PCC. There were no disagreements with the prior auditors, Ernst & Young LLP, and there had been no adverse opinions, disclaimers, qualifications or modifications to audit opinions.
PART III
Item 10
Item 10 - Executive Officers and Directors of Registrant
Item 10 is being filed with the reduced disclosure format pursuant to compliance by the Registrant with conditions set forth in General Instruction J(1)(a) and (b) and J(2)(c) of Form 10-K.
Item 11
Item 11 - Executive Compensation
Item 11 is being filed with the reduced disclosure format pursuant to compliance by the Registrant with conditions set forth in General Instruction J(1)(a) and (b) and J(2)(c) of Form 10-K.
Item 12
Item 12 - Security Ownership of Certain Beneficial Owners and Management
Item 12 is being filed with the reduced disclosure format pursuant to compliance by the Registrant with conditions set forth in General Instruction J(1)(a) and (b) and J(2)(c) of Form 10-K.
Item 13
Item 13 - Certain Relationships and Related Transactions
Item 13 is being filed with the reduced disclosure format pursuant to compliance by the Registrant with conditions set forth in General Instruction J(1)(a) and (b) and J(2)(c) of Form 10-K
PART IV
Item 14
Item 14 - Exhibits, Financial Statement Schedules and Reports on Form 8-K
A. (1) Financial Statements
The financial statements filed as part of this report are listed on the Index to the Consolidated Statements on page 10.
(2) Financial Statement Schedules
All schedules for the periods ended December 31, 1996, July 30, 1996, December 31, 1995 and 1994, have been omitted because the information is not applicable, or is not material, or because the information required is included in the financial statements or the notes thereto.
(3) Exhibits
Index to Exhibits
Item 14 - A(3) Exhibits required by Item 601 of Regulation S-K and additional exhibits.
The file number of PCC Flow Technologies, Inc., the Registrant, and for exhibits incorporated by reference is 33-56256, and/or 1-10348 for the parent company Precision Castparts Corp.
Exhibit Number
3.1 Amended and Restated Certificate of Incorporation; previously filed as Exhibit 3.1, with NEWFLO's S-1, filed with the Commission on June 12, 1992, and herein incorporated by reference.
3.2 Amended and Restated Bylaws; previously filed as Exhibit 3.3, with NEWFLO's S-1, filed with the Commission on June 12, 1992, an herein incorporated by reference.
3.3 Certificate of Amendment to Amended and Restated Certificate of Incorporation of NEWFLO Corporation, dated August 7, 1996.
10.8 Form of Employment Agreement, dated as of November 11, 1991, between NEWFLO and Brian W. Warren; previously filed as Exhibit 10.9, with NEWFLO's S-1, filed with the Commission on June 12, 1992, and herein incorporated by reference.
Exhibit Number
10.9 Employment and Non-Competition Agreement, dated as of January 1, 1992 between Penberthy and Normand M. Simard; previously filed as Exhibit 10.9, with NEWFLO's S-4, filed with the Commission on December 23, 1992, and herein incorporated by reference.
10.13 Employment and Non-Competition Agreement, dated as of September 30, 1993, between H&H Valve and William Ross, filed with the Commission on March 30, 1994, and herein incorporated by reference.
10.14 Employment and Non-Competition Agreement, dated as of September 30, 1993, between H&H Valve and J. M. Heinen, filed with the Commission on March 30, 1994, and herein incorporated by reference.
10.34 Executed Supply and Distribution Agreement, dated February 12, 1993, by and between Penberthy, Inc. and Axel Johnson (Canada) Inc., including its Penberthy Canada and Brian Controls divisions, filed with the Commission on March 30, 1994, and herein incorporated by reference.
10.35 Executed Trademark License Agreement, dated as of February 12, 1993, between Axel Johnson (Canada) Inc. and Penberthy, Inc., filed with the Commission on March 30, 1994, and herein incorporated by reference.
10.48 Form of Employment and Non-Interference Agreement, dated as of May 2, 1994, between NEWFLO Corporation and John D. Lilla, filed with the Commission on March 30, 1995, and herein incorporated by reference.
10.58 Form of Employment and Non-Interference Agreement, dated May 2, 1994, as amended April 12, 1995, between NEWFLO Corporation and Kathleen Mathews; previously filed with the Commission on March 30, 1995 as Exhibit 10.39, and herein incorporated by reference.
10.59 Form of Employment and Non-Competition Agreement, dated January 1, 1992, as amended January 2, 1995, between Flow Technologies, Inc. and Robert K. Elders; previously filed with the Commission on March 29, 1993 as Exhibit 10.7, and herein incorporated by reference.
10.63 Purchase and sale agreement between NEWFLO Corporation and Precision Castparts Corp. previously filed with the Commission on July 31, 1996 by Parent (Registrant file Number 1-10348) on Form 8K and herein incorporated by reference.
10.64 Asset purchase agreement between Barber Industries, Ltd. and 662200 Alberta Ltd. dated January 31, 1996.
20.1 Report of Independent Auditors dated February 23, 1996 previously filed with the Commission on March 29, 1996 on Form 10K and herein incorporated by reference.
27 Financial Data Schedule
B. Reports on Form 8-K
Reports on Form 8K have been filed by Registrant during of the period covered by this report on:
August 15, 1996 September 30, 1996 October 10, 1996
C. Exhibits
See Item 14A(3) above.
D. Financial Statement Schedule
See Item 14A(1) and Item 14A(2) above.
Signatures
Pursuant to the requirements of Section 13 or 15(d) 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.
Dated: March 31, 1997
PCC Flow Technologies, Inc.
By: /s/ William C.McCormick ---------------------------------- William C. McCormick (Director and Chairman of the Board)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:
/s/ William C. McCormick Director and Chairman March 31, 1997 - --------------------------- of the Board William C. McCormick
/s/ William D. Larsson Director and Chief March 31, 1997 - ----------------------------- Financial Officer William D. Larsson
/s/ David W. Norris Director and President March 31, 1997 - ----------------------------- David W. Norris