PORTLAND, Ore., Feb. 17, 2006 (PRIMEZONE) -- The Audit Committee of the Board of Directors of Precision Castparts Corp. (NYSE:PCP) has completed its independent investigation into previously disclosed reports of accounting irregularities at its Wyman-Gordon Houston and J&L Fiber Services operations, and, with the completion of this investigation, the Company has today filed its second and third quarter Form 10Q reports.
While findings from the investigation determined that inappropriate accounting occurred at both locations, as the result of both deliberate and inadvertent acts by non-executive employees, the Company concluded, with the concurrence of the Audit Committee, that the impact of correcting the identified errors, which affected fiscal years 2001 through the first quarter of fiscal 2006, were not material to any quarter or annual period in which the errors occurred or to the second quarter of fiscal 2006 in which a cumulative adjustment would be recorded. Consequently, no restatement of the Company's previously filed financial statements was required.
The correction of the errors identified during the investigation resulted in a decrease to pre-tax income of $3.8 million, net income of $1.9 million, and earnings per share of $0.01 per share (diluted). These amounts were recorded as a cumulative adjustment in the second quarter of fiscal 2006.
The Company has taken immediate action to address the cause of these errors, including termination of certain involved individuals, the development of improved policies and procedures, and enhancement of internal controls. In addition, high-level reviews at nine additional locations were performed as part of the independent investigation. The findings at these additional locations did not result in identification of any issues that required adjustment.
"We appreciate all the time and effort that has gone into this investigation, and we accept the conclusions of the Audit Committee and its independent advisors," said Mark Donegan, chairman and chief executive officer of Precision Castparts Corp. "These issues have driven us to review and enhance internal processes and controls throughout the Company, and in PCC style, we will aggressively implement organizational and policy changes that strengthen our financial reporting systems going forward."
Precision Castparts Corp. is a worldwide, diversified manufacturer of complex metal components and products. It serves the aerospace, power generation, automotive, and general industrial and other markets. PCC is the market leader in manufacturing large, complex structural investment castings, airfoil castings, and forged components used in jet aircraft engines and industrial gas turbines. The Company is also a leading producer of highly engineered, critical fasteners for aerospace, automotive, and other markets.
Information included within this press release describing 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, power generation, automotive, and other general industrial cycles; the relative success of the Company's entry into new markets; competitive pricing; the financial viability of the Company's significant customers; the availability and cost of energy, materials, supplies, insurance, and pension benefits; equipment failures; 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; and implementation of new technologies and process improvement. 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.
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