UNITED STATES

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 28, 2008

Commission File No. 1-10348

Precision Castparts Corp.

An Oregon Corporation

IRS Employer
Identification No. 93-0460598

4650 S.W. Macadam Avenue

Suite 400

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  x    No   ̈

Indicate by check mark whether the registrant is
a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of large accelerated filer, accelerated filer and smaller reporting company in
Rule 12b-2 of the Exchange Act.



|                           |  |                      |  |                                             |  |                             
|-------------------------- |  | -------------------- |  | ------------------------------------------- |  | ----------------------------
|Large accelerated filer  x |  | Accelerated filer   ̈ |  | Non-accelerated filer   ̈                    |  | Smaller reporting company   ̈
|                           |  |                      |  | (Do not check if smaller reporting
company) |  |                             

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act).    Yes   ̈    No  x

Number of shares of Common Stock, no par value, outstanding as of October 30, 2008: 139,420,685

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

Condensed Consolidated Statements of Income

(Unaudited)

(In millions, except per share data)



|                                                       |  |                    |         |   |         |   |         |  
|------------------------------------------------------ |  | ------------------ | ------- | - | ------- | - | ------- | -
|                                                       |  | Three Months Ended |        
|                                                       |  | 9/28/08            |         |   | 9/30/07 |  
|Net sales                                              |  | $                  | 1,819.5 |   |         | $ | 1,718.7 |  
|Cost of goods sold                                     |  |                    | 1,318.3 |   |         |   | 1,254.1 |  
|Selling and administrative expenses                    |  |                    | 96.0    |   |         |   | 96.6    |  
|Interest expense                                       |  |                    | 4.6     |   |         |   | 14.6    |  
|Interest income                                        |  |                    | (2.8    | ) |         |   | (1.0    | )
|                                                       |  |                    |         |   |         |   |         |  
|Income before income taxes and minority interest       |  |                    | 403.4   |   |         |   | 354.4   |  
|Income tax expense                                     |  |                    | 137.5   |   |         |   | 120.3   |  
|Minority interest in earnings of consolidated entities |  |                    | (0.2    | ) |         |   | (0.3    | )
|                                                       |  |                    |         |   |         |   |         |  
|Net income from continuing operations                  |  |                    | 265.7   |   |         |   | 233.8   |  
|Net income from discontinued operations                |  |                    | 3.6     |   |         |   | 1.6     |  
|                                                       |  |                    |         |   |         |   |         |  
|Net income                                             |  | $                  | 269.3   |   |         | $ | 235.4   |  
|                                                       |  |                    |         |   |         |   |         |  
|Net income per common share  basic:                   |  |                    |         |   |         |   |         |  
|Net income from continuing operations                  |  | $                  | 1.91    |   |         | $ | 1.70    |  
|Net income from discontinued operations                |  |                    | 0.02    |   |         |   | 0.01    |  
|                                                       |  |                    |         |   |         |   |         |  
|                                                       |  | $                  | 1.93    |   |         | $ | 1.71    |  
|                                                       |  |                    |         |   |         |   |         |  
|Net income per common share  diluted:                 |  |                    |         |   |         |   |         |  
|Net income from continuing operations                  |  | $                  | 1.89    |   |         | $ | 1.67    |  
|Net income from discontinued operations                |  |                    | 0.02    |   |         |   | 0.01    |  
|                                                       |  |                    |         |   |         |   |         |  
|                                                       |  | $                  | 1.91    |   |         | $ | 1.68    |  
|                                                       |  |                    |         |   |         |   |         |  
|Weighted average common shares outstanding:            |  |                    |         |   |         |   |         |  
|Basic                                                  |  |                    | 139.4   |   |         |   | 137.9   |  
|Diluted                                                |  |                    | 140.7   |   |         |   | 140.1   |  

See Notes to the Condensed Consolidated Financial Statements.



2



---

Precision Castparts Corp. and Subsidiaries

Condensed Consolidated Statements of Income

(Unaudited)

(In millions, except per share data)



|                                                       |  |                  |         |   |         |   |         |  
|------------------------------------------------------ |  | ---------------- | ------- | - | ------- | - | ------- | -
|                                                       |  | Six Months Ended |        
|                                                       |  | 9/28/08          |         |   | 9/30/07 |  
|Net sales                                              |  | $                | 3,654.4 |   |         | $ | 3,369.0 |  
|Cost of goods sold                                     |  |                  | 2,625.7 |   |         |   | 2,461.7 |  
|Selling and administrative expenses                    |  |                  | 199.4   |   |         |   | 187.4   |  
|Interest expense                                       |  |                  | 9.5     |   |         |   | 29.0    |  
|Interest income                                        |  |                  | (4.5    | ) |         |   | (2.8    | )
|                                                       |  |                  |         |   |         |   |         |  
|Income before income taxes and minority interest       |  |                  | 824.3   |   |         |   | 693.7   |  
|Income tax expense                                     |  |                  | 283.4   |   |         |   | 235.2   |  
|Minority interest in earnings of consolidated entities |  |                  | (0.3    | ) |         |   | (0.6    | )
|                                                       |  |                  |         |   |         |   |         |  
|Net income from continuing operations                  |  |                  | 540.6   |   |         |   | 457.9   |  
|Net income from discontinued operations                |  |                  | 4.5     |   |         |   | 3.9     |  
|                                                       |  |                  |         |   |         |   |         |  
|Net income                                             |  | $                | 545.1   |   |         | $ | 461.8   |  
|                                                       |  |                  |         |   |         |   |         |  
|Net income per common share  basic:                   |  |                  |         |   |         |   |         |  
|Net income from continuing operations                  |  | $                | 3.88    |   |         | $ | 3.33    |  
|Net income from discontinued operations                |  |                  | 0.03    |   |         |   | 0.02    |  
|                                                       |  |                  |         |   |         |   |         |  
|                                                       |  | $                | 3.91    |   |         | $ | 3.35    |  
|                                                       |  |                  |         |   |         |   |         |  
|Net income per common share  diluted:                 |  |                  |         |   |         |   |         |  
|Net income from continuing operations                  |  | $                | 3.84    |   |         | $ | 3.27    |  
|Net income from discontinued operations                |  |                  | 0.03    |   |         |   | 0.03    |  
|                                                       |  |                  |         |   |         |   |         |  
|                                                       |  | $                | 3.87    |   |         | $ | 3.30    |  
|                                                       |  |                  |         |   |         |   |         |  
|Weighted average common shares outstanding:            |  |                  |         |   |         |   |         |  
|Basic                                                  |  |                  | 139.3   |   |         |   | 137.7   |  
|Diluted                                                |  |                  | 140.8   |   |         |   | 139.9   |  

See Notes to the Condensed Consolidated Financial Statements.



3



---

Precision Castparts Corp. and Subsidiaries

Condensed Consolidated Balance Sheets

(Unaudited)

(In millions)



|                                                       |  |         |         |   |         |   |         |  
|------------------------------------------------------ |  | ------- | ------- | - | ------- | - | ------- | -
|                                                       |  | 9/28/08 |         |   | 3/30/08 |  
|ASSETS                                                 |  |         |         |   |         |   |         |  
|Current assets:                                        |  |         |         |   |         |   |         |  
|Cash and cash equivalents                              |  | $       | 532.3   |   |         | $ | 221.3   |  
|Receivables, net                                       |  |         | 1,026.3 |   |         |   | 1,027.9 |  
|Inventories                                            |  |         | 1,111.5 |   |         |   | 992.9   |  
|Prepaid expenses                                       |  |         | 22.5    |   |         |   | 22.0    |  
|Deferred income taxes                                  |  |         | 83.3    |   |         |   | 84.8    |  
|Discontinued operations                                |  |         | 7.2     |   |         |   | 23.4    |  
|                                                       |  |         |         |   |         |   |         |  
|Total current assets                                   |  |         | 2,783.1 |   |         |   | 2,372.3 |  
|                                                       |  |         |         |   |         |   |         |  
|Property, plant and equipment, at cost                 |  |         | 2,046.4 |   |         |   | 1,995.2 |  
|Less - accumulated depreciation                        |  |         | (912.8  | ) |         |   | (869.0  | )
|                                                       |  |         |         |   |         |   |         |  
|Net property, plant and equipment                      |  |         | 1,133.6 |   |         |   | 1,126.2 |  
|                                                       |  |         |         |   |         |   |         |  
|Goodwill                                               |  |         | 2,210.2 |   |         |   | 2,282.4 |  
|Acquired intangible assets, net                        |  |         | 89.9    |   |         |   | 55.4    |  
|Other assets                                           |  |         | 206.8   |   |         |   | 203.3   |  
|Discontinued operations                                |  |         | 5.2     |   |         |   | 10.5    |  
|                                                       |  |         |         |   |         |   |         |  
|                                                       |  | $       | 6,428.8 |   |         | $ | 6,050.1 |  
|                                                       |  |         |         |   |         |   |         |  
|LIABILITIES AND SHAREHOLDERS EQUITY                   |  |         |         |   |         |   |         |  
|Current liabilities:                                   |  |         |         |   |         |   |         |  
|Long-term debt currently due and short-term borrowings |  | $       | 49.8    |   |         | $ | 20.1    |  
|Accounts payable                                       |  |         | 646.8   |   |         |   | 689.4   |  
|Accrued liabilities                                    |  |         | 399.1   |   |         |   | 420.0   |  
|Income taxes payable                                   |  |         | 81.6    |   |         |   | 65.6    |  
|Discontinued operations                                |  |         | 6.4     |   |         |   | 9.7     |  
|                                                       |  |         |         |   |         |   |         |  
|Total current liabilities                              |  |         | 1,183.7 |   |         |   | 1,204.8 |  
|                                                       |  |         |         |   |         |   |         |  
|Long-term debt                                         |  |         | 259.2   |   |         |   | 334.9   |  
|Pension and other postretirement benefit obligations   |  |         | 281.5   |   |         |   | 275.4   |  
|Other long-term liabilities                            |  |         | 93.0    |   |         |   | 142.8   |  
|Deferred tax liability                                 |  |         | 70.0    |   |         |   | 46.5    |  
|Discontinued operations                                |  |         | 1.9     |   |         |   | 0.7     |  
|Commitments and contingencies (See Notes)              |  |         |         |   |         |   |         |  
|Shareholders equity:                                  |  |         |         |   |         |   |         |  
|Common stock                                           |  |         | 139.4   |   |         |   | 139.0   |  
|Paid-in capital                                        |  |         | 1,057.9 |   |         |   | 1,016.6 |  
|Retained earnings                                      |  |         | 3,410.1 |   |         |   | 2,873.4 |  
|Accumulated other comprehensive (loss) income          |  |         | (67.9   | ) |         |   | 16.0    |  
|                                                       |  |         |         |   |         |   |         |  
|Total shareholders equity                             |  |         | 4,539.5 |   |         |   | 4,045.0 |  
|                                                       |  |         |         |   |         |   |         |  
|                                                       |  | $       | 6,428.8 |   |         | $ | 6,050.1 |  
|                                                       |  |         |         |   |         |   |         |  

See Notes to the Condensed Consolidated Financial Statements.



4



---

Precision Castparts Corp. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In millions)



|                                                                                                     |  |                  |        |   |         |   |        |  
|---------------------------------------------------------------------------------------------------- |  | ---------------- | ------ | - | ------- | - | ------ | -
|                                                                                                     |  | Six Months Ended |       
|                                                                                                     |  | 9/28/08          |        |   | 9/30/07 |  
|Operating activities:                                                                                |  |                  |        |   |         |   |        |  
|Net income                                                                                           |  | $                | 545.1  |   |         | $ | 461.8  |  
|Net income from discontinued operations                                                              |  |                  | (4.5   | ) |         |   | (3.9   | )
|Non-cash items:                                                                                      |  |                  |        |   |         |   |        |  
|Depreciation and amortization                                                                        |  |                  | 73.2   |   |         |   | 63.9   |  
|Stock-based compensation expense                                                                     |  |                  | 17.2   |   |         |   | 18.1   |  
|Deferred income taxes                                                                                |  |                  | 28.6   |   |         |   | 6.6    |  
|Excess tax benefits from share-based payment arrangements                                            |  |                  | (10.2  | ) |         |   | (20.4  | )
|Changes in assets and liabilities, excluding effects of acquisitions and dispositions of businesses: |  |                  |        |   |         |   |        |  
|Receivables                                                                                          |  |                  | 1.6    |   |         |   | (97.6  | )
|Inventories                                                                                          |  |                  | (120.4 | ) |         |   | 6.6    |  
|Other current assets                                                                                 |  |                  | (0.5   | ) |         |   | (3.2   | )
|Payables, accruals and current taxes                                                                 |  |                  | (30.2  | ) |         |   | (26.0  | )
|Retirement benefit obligations                                                                       |  |                  | 8.4    |   |         |   | (44.2  | )
|Other non-current assets and liabilities                                                             |  |                  | (33.0  | ) |         |   | (21.6  | )
|Net cash provided (used) by operating activities of discontinued operations                          |  |                  | 1.9    |   |         |   | (1.6   | )
|                                                                                                     |  |                  |        |   |         |   |        |  
|Net cash provided by operating activities                                                            |  |                  | 477.2  |   |         |   | 338.5  |  
|                                                                                                     |  |                  |        |   |         |   |        |  
|Investing activities:                                                                                |  |                  |        |   |         |   |        |  
|Acquisitions of businesses                                                                           |  |                  | (21.2  | ) |         |   | (254.2 | )
|Capital expenditures                                                                                 |  |                  | (104.4 | ) |         |   | (107.6 | )
|Dispositions of businesses and other                                                                 |  |                  | 18.9   |   |         |   | 3.9    |  
|Net cash used by investing activities of discontinued operations                                     |  |                  |       |   |         |   | (0.8   | )
|                                                                                                     |  |                  |        |   |         |   |        |  
|Net cash used by investing activities                                                                |  |                  | (106.7 | ) |         |   | (358.7 | )
|                                                                                                     |  |                  |        |   |         |   |        |  
|Financing activities:                                                                                |  |                  |        |   |         |   |        |  
|Net change in commercial paper and short-term borrowings                                             |  |                  |       |   |         |   | (0.2   | )
|Net change in long-term debt                                                                         |  |                  | (46.0  | ) |         |   | 39.1   |  
|Common stock issued                                                                                  |  |                  | 12.0   |   |         |   | 16.6   |  
|Excess tax benefits from share-based payment arrangements                                            |  |                  | 10.2   |   |         |   | 20.4   |  
|Cash dividends                                                                                       |  |                  | (8.4   | ) |         |   | (8.3   | )
|Other                                                                                                |  |                  |       |   |         |   | (0.1   | )
|Net cash provided by financing activities of discontinued operations                                 |  |                  |       |   |         |   | 0.5    |  
|                                                                                                     |  |                  |        |   |         |   |        |  
|Net cash (used) provided by financing activities                                                     |  |                  | (32.2  | ) |         |   | 68.0   |  
|                                                                                                     |  |                  |        |   |         |   |        |  
|Effect of exchange rate changes on cash and cash equivalents                                         |  |                  | (27.3  | ) |         |   | 14.3   |  
|                                                                                                     |  |                  |        |   |         |   |        |  
|Net increase in cash and cash equivalents                                                            |  |                  | 311.0  |   |         |   | 62.1   |  
|Cash and cash equivalents at beginning of period                                                     |  |                  | 221.3  |   |         |   | 150.4  |  
|                                                                                                     |  |                  |        |   |         |   |        |  
|Cash and cash equivalents at end of period                                                           |  | $                | 532.3  |   |         | $ | 212.5  |  
|                                                                                                     |  |                  |        |   |         |   |        |  

See Notes to the Condensed Consolidated Financial Statements.



5



---

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

(In millions, except share and per share data)



|(1) | Basis of Presentation
|--- | ---------------------

The condensed 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 accounting principles generally accepted in the United States of America,
except that certain information and footnote disclosures made in the latest annual report on Form 10-K 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 condensed 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. Certain reclassifications have been made to prior year amounts to conform to the current year presentation. The year-end condensed balance sheet data was derived from audited financial
statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America.



|(2) | Stock-based compensation
|--- | ------------------------

During the three and six months ended
September 28, 2008 and September 30, 2007, we recorded stock-based compensation expense under our stock option, employee stock purchase, deferred stock unit and deferred compensation plans. A detailed description of the awards under these
plans and the respective accounting treatment is included in the Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended March 30, 2008.

The following table sets forth total stock-based compensation expense and related tax benefit recognized in our Condensed Consolidated Statements of Income:



|                                                          |  |                    |      |   |                  |   |      |         |  |   |         |   |  |   |      |  
|--------------------------------------------------------- |  | ------------------ | ---- | - | ---------------- | - | ---- | ------- |  | - | ------- | - |  | - | ---- | -
|                                                          |  | Three Months Ended |      |   | Six Months Ended |  
|                                                          |  | 9/28/08            |      |   | 9/30/07          |   |      | 9/28/08 |  |   | 9/30/07 |  
|Cost of goods sold                                        |  | $                  | 3.1  |   |                  | $ | 2.5  |         |  | $ | 6.2     |   |  | $ | 4.9  |  
|Selling, general and administrative                       |  |                    | 4.8  |   |                  |   | 7.2  |         |  |   | 11.0    |   |  |   | 13.2 |  
|                                                          |  |                    |      |   |                  |   |      |         |  |   |         |   |  |   |      |  
|Stock-based compensation expense before income taxes      |  |                    | 7.9  |   |                  |   | 9.7  |         |  |   | 17.2    |   |  |   | 18.1 |  
|Income tax benefit                                        |  |                    | (2.2 | ) |                  |   | (3.1 | )       |  |   | (5.0    | ) |  |   | (5.7 | )
|                                                          |  |                    |      |   |                  |   |      |         |  |   |         |   |  |   |      |  
|Total stock-based compensation expense after income taxes |  | $                  | 5.7  |   |                  | $ | 6.6  |         |  | $ | 12.2    |   |  | $ | 12.4 |  
|                                                          |  |                    |      |   |                  |   |      |         |  |   |         |   |  |   |      |  



|(3) | Business Acquisition
|--- | --------------------

On July 5, 2007, we acquired Caledonian
Alloys Group Limited (Caledonian) for approximately $208.1 million in cash, of which $165.1 million was paid at close, and $21.2 million in the second quarter of fiscal 2009. We expect to pay one additional contingent payment of
approximately $21.2 million in the second quarter of fiscal 2010. Caledonian is a market leader in providing nickel superalloy and titanium revert management solutions for the aerospace and industrial gas turbine (IGT) industries. Revert
includes metal chips, casting gates, bar ends, forging flash, and other byproducts from casting, forging, and fastener manufacturing processes that can be re-melted and reused. The acquisition of Caledonian provides us with the infrastructure and
capabilities needed to create a closed loop system for the retention and reuse of internally-generated revert. In addition, Caledonian provides access to new sources of material outside the Company and helps determine optimal utilization of revert
streams throughout our melting operations worldwide. Headquartered in Livingston, Scotland, Caledonian employs approximately 300 people and operates nine revert processing facilities in six countries. The Caledonian acquisition is a stock purchase
for tax purposes and operates as part of the Forged Products segment. This transaction resulted in $154.8 million of goodwill (which is not deductible for tax purposes) and other intangibles. The impact of this acquisition was not material to our
consolidated results of operations; consequently, pro forma information has not been included.



6



---

|(4) | Discontinued Operations
|--- | -----------------------

In the first quarter of fiscal 2009, we
sold the stock of our Technova entities, a foreign operation held for sale from the Flow Technologies pumps and valves business. The transaction resulted in a gain of approximately $3.0 million.

In the fourth quarter of fiscal 2008, we entered into an agreement to sell the Unbrako fastener business headquartered in Shannon, Ireland. The sale was completed in the
second quarter of fiscal 2009, resulting in a gain of approximately $3.5 million. Unbrako was reclassified from the Fastener Products segment to discontinued operations in the fourth quarter of fiscal 2008.

Also in the fourth quarter of fiscal 2008, we decided to dispose of the Kladno alloy manufacturing business located in the Czech Republic. Kladno primarily supplied
steel ingots to Wyman-Gordons Grafton, Massachusetts operation. Kladno was reclassified from the Forged Products segment to discontinued operations in the fourth quarter of fiscal 2008.

These businesses meet the criteria as a component of an entity under Statement of Financial Accounting Standards (SFAS) No. 144, Accounting for
the Impairment or Disposal of Long-Lived Assets. Accordingly, any operating results of these businesses are presented in the Companys Condensed Consolidated Statements of Income as discontinued operations, net of income tax, and all
prior periods have been reclassified. In addition, gains and losses on operations discontinued in prior periods are also included below.

The net income
from discontinued operations in the current quarter consists primarily of the gain from the sale of the Unbrako fastener business. The net income from discontinued operations in the second quarter of last year principally reflects operating income
from the Unbrako, Rescal, and SMA businesses, partially offset by operating losses from the Kladno business and miscellaneous expenses associated with the Flow Technologies pumps & valves business. The components of discontinued operations
for the periods presented are as follows:



|                                                                                                  |  |                    |      |   |                  |   |      |         |  |   |         |   |  |   |      |  
|------------------------------------------------------------------------------------------------- |  | ------------------ | ---- | - | ---------------- | - | ---- | ------- |  | - | ------- | - |  | - | ---- | -
|                                                                                                  |  | Three Months Ended |      |   | Six Months Ended |  
|                                                                                                  |  | 9/28/08            |      |   | 9/30/07          |   |      | 9/28/08 |  |   | 9/30/07 |  
|Net sales                                                                                         |  | $                  | 6.5  |   |                  | $ | 18.9 |         |  | $ | 12.5    |   |  | $ | 43.2 |  
|Cost of goods sold                                                                                |  |                    | 8.4  |   |                  |   | 14.6 |         |  |   | 16.5    |   |  |   | 33.2 |  
|Selling and administrative expenses                                                               |  |                    | (2.0 | ) |                  |   | 1.5  |         |  |   | (1.6    | ) |  |   | 3.4  |  
|                                                                                                  |  |                    |      |   |                  |   |      |         |  |   |         |   |  |   |      |  
|Income (loss) from operations before income taxes                                                 |  |                    | 0.1  |   |                  |   | 2.8  |         |  |   | (2.4    | ) |  |   | 6.6  |  
|Income tax expense                                                                                |  |                    | 0.2  |   |                  |   | 1.1  |         |  |   |        |   |  |   | 2.1  |  
|                                                                                                  |  |                    |      |   |                  |   |      |         |  |   |         |   |  |   |      |  
|Net (loss) income from operations                                                                 |  |                    | (0.1 | ) |                  |   | 1.7  |         |  |   | (2.4    | ) |  |   | 4.5  |  
|Gain (loss) on disposal, net of $(0.2), $0.3, $(0.3) and $0.2 tax (expense) benefit, respectively |  |                    | 3.7  |   |                  |   | (0.1 | )       |  |   | 6.9     |   |  |   | (0.6 | )
|                                                                                                  |  |                    |      |   |                  |   |      |         |  |   |         |   |  |   |      |  
|Net income from discontinued operations                                                           |  | $                  | 3.6  |   |                  | $ | 1.6  |         |  | $ | 4.5     |   |  | $ | 3.9  |  
|                                                                                                  |  |                    |      |   |                  |   |      |         |  |   |         |   |  |   |      |  



7



---

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



|                                       |  |         |      |         |   |     
|-------------------------------------- |  | ------- | ---- | ------- | - | ----
|                                       |  | 9/28/08 |      | 3/30/08
|Assets of discontinued operations      |  |         |      |         |   |     
|Current assets                         |  | $       | 7.2  |         | $ | 23.4
|Net property, plant and equipment      |  |         | 3.9  |         |   | 10.0
|Other assets                           |  |         | 1.3  |         |   | 0.5 
|                                       |  |         |      |         |   |     
|                                       |  | $       | 12.4 |         | $ | 33.9
|                                       |  |         |      |         |   |     
|Liabilities of discontinued operations |  |         |      |         |   |     
|Current liabilities                    |  | $       | 6.4  |         | $ | 9.7 
|Other liabilities                      |  |         | 1.9  |         |   | 0.7 
|                                       |  |         |      |         |   |     
|                                       |  | $       | 8.3  |         | $ | 10.4
|                                       |  |         |      |         |   |     



|(5) | Inventories
|--- | -----------

Inventories consisted of the following:



|                           |  |         |         |   |         |   |         |  
|-------------------------- |  | ------- | ------- | - | ------- | - | ------- | -
|                           |  | 9/28/08 |         |   | 3/30/08 |  
|Finished goods             |  | $       | 224.5   |   |         | $ | 240.0   |  
|Work-in-process            |  |         | 561.9   |   |         |   | 542.6   |  
|Raw materials and supplies |  |         | 339.5   |   |         |   | 264.7   |  
|                           |  |         |         |   |         |   |         |  
|                           |  |         | 1,125.9 |   |         |   | 1,047.3 |  
|LIFO provision             |  |         | (14.4   | ) |         |   | (54.4   | )
|                           |  |         |         |   |         |   |         |  
|Total inventory            |  | $       | 1,111.5 |   |         | $ | 992.9   |  
|                           |  |         |         |   |         |   |         |  



|(6) | Goodwill and Acquired Intangibles
|--- | ---------------------------------

We perform our annual goodwill
assessment test during the second quarter of each fiscal year. For fiscal 2009, it was determined that the fair value of the related operations was greater than book value and that there was no impairment of goodwill.

The changes in the carrying amount of goodwill by reportable segment for the six months ended September 28, 2008, were as follows:



|                         |  |                   |         |                               |   |       |                   |  |   |        
|------------------------ |  | ----------------- | ------- | ----------------------------- | - | ----- | ----------------- |  | - | -------
|                         |  | Balance at3/30/08 |         | CurrencyTranslationand Other* |   |       | Balance at9/28/08
|Investment Cast Products |  | $                 | 349.1   |                               | $ | (2.0  | )                 |  | $ | 347.1  
|Forged Products          |  |                   | 884.4   |                               |   | (69.7 | )                 |  |   | 814.7  
|Fastener Products        |  |                   | 1,048.9 |                               |   | (0.5  | )                 |  |   | 1,048.4
|                         |  |                   |         |                               |   |       |                   |  |   |        
|Total                    |  | $                 | 2,282.4 |                               | $ | (72.2 | )                 |  | $ | 2,210.2
|                         |  |                   |         |                               |   |       |                   |  |   |        



|* | Includes final purchase price allocations of Caledonian and McWilliams Forge Company, Inc. acquisitions, which increased acquired intangibles and decreased goodwill.
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------



8



---

The gross carrying amount and accumulated amortization of our acquired intangible assets were as follows:



|                                 |  |                     |      |                         |   |                     |  |                         |      |  |   |    
|-------------------------------- |  | ------------------- | ---- | ----------------------- | - | ------------------- |  | ----------------------- | ---- |  | - | ---
|                                 |  | 9/28/08             |      | 3/30/08                
|                                 |  | GrossCarryingAmount |      | AccumulatedAmortization |   | GrossCarryingAmount |  | AccumulatedAmortization
|Patents                          |  | $                   | 9.7  |                         | $ | 3.9                 |  | $                       | 9.7  |  | $ | 3.3
|Proprietary technology           |  |                     | 2.3  |                         |   | 0.7                 |  |                         | 2.3  |  |   | 0.7
|Tradenames                       |  |                     | 0.5  |                         |   | 0.3                 |  |                         | 0.5  |  |   | 0.3
|Long-term customer relationships |  |                     | 12.7 |                         |   | 1.6                 |  |                         | 9.4  |  |   | 0.5
|Backlog                          |  |                     | 6.1  |                         |   | 3.7                 |  |                         | 2.7  |  |   | 1.7
|                                 |  |                     |      |                         |   |                     |  |                         |      |  |   |    
|                                 |  | $                   | 31.3 |                         | $ | 10.2                |  | $                       | 24.6 |  | $ | 6.5
|                                 |  |                     |      |                         |   |                     |  |                         |      |  |   |    
|Unamortized intangible assets:   |  |                     |      |                         |   |                     |  |                         |      |  |   |    
|Tradenames                       |  | $                   | 68.8 |                         |   |                     |  | $                       | 37.3 |  |   |    
|                                 |  |                     |      |                         |   |                     |  |                         |      |  |   |    

Amortization expense for acquired intangible assets for the three and six months ended September 28, 2008 was
$1.9 million and $3.7 million, respectively. Amortization expense related to finite-lived intangible assets is projected to total $7.6 million for fiscal 2009. Projected amortization expense for the succeeding five fiscal years is as follows:



|            |  |                              |    
|----------- |  | ---------------------------- | ---
|Fiscal Year |  | EstimatedAmortizationExpense
|2010        |  | $                            | 4.3
|2011        |  |                              | 3.4
|2012        |  |                              | 2.5
|2013        |  |                              | 2.2
|2014        |  |                              | 2.2



|(7) | Guarantees
|--- | ----------

In the ordinary course of business, we generally
warrant that our products will conform to our customers specifications over various time periods. The warranty accrual as of September 28, 2008 and March 30, 2008 is immaterial to our financial position, and the change in the accrual
for the current quarter is immaterial to our results of operations and cash flows.

In conjunction with certain transactions, primarily divestitures, we
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, we have not historically made significant payments for these indemnifications.



9



---

|(8) | Earnings per share
|--- | ------------------

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



|                                                        |  |                    |  |                  |  |         |  |        
|------------------------------------------------------- |  | ------------------ |  | ---------------- |  | ------- |  | -------
|                                                        |  | Three Months Ended |  | Six Months Ended
|                                                        |  | 9/28/08            |  | 9/30/07          |  | 9/28/08 |  | 9/30/07
|Basic weighted average shares outstanding               |  | 139.4              |  | 137.9            |  | 139.3   |  | 137.7  
|Dilutive stock options and employee stock purchase plan |  | 1.3                |  | 2.2              |  | 1.5     |  | 2.2    
|                                                        |  |                    |  |                  |  |         |  |        
|Average shares outstanding assuming dilution            |  | 140.7              |  | 140.1            |  | 140.8   |  | 139.9  
|                                                        |  |                    |  |                  |  |         |  |        

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.

Stock options to purchase 1.1 million shares of common stock for the three and six months ended September 28, 2008, were not dilutive. Stock options to
purchase 0.1 million shares of common stock for the three and six months ended September 30, 2007, 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.



|(9) | Comprehensive Income
|--- | --------------------

Total comprehensive income consisted of the
following:



|                                                                                                                                                        |  |                    |       |   |                  |   |       |         |  |   |         |   |  |   |       |  
|------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------ | ----- | - | ---------------- | - | ----- | ------- |  | - | ------- | - |  | - | ----- | -
|                                                                                                                                                        |  | Three Months Ended |       |   | Six Months Ended |  
|                                                                                                                                                        |  | 9/28/08            |       |   | 9/30/07          |   |       | 9/28/08 |  |   | 9/30/07 |  
|Net income                                                                                                                                              |  | $                  | 269.3 |   |                  | $ | 235.4 |         |  | $ | 545.1   |   |  | $ | 461.8 |  
|Other comprehensive (loss) income, net of tax:                                                                                                          |  |                    |       |   |                  |   |       |         |  |   |         |   |  |   |       |  
|Unrealized translation adjustments                                                                                                                      |  |                    | (91.3 | ) |                  |   | 14.9  |         |  |   | (88.0   | ) |  |   | 33.6  |  
|Pension and postretirement obligations                                                                                                                  |  |                    | 0.3   |   |                  |   |      |         |  |   | 1.8     |   |  |   |      |  
|Unrealized gain (loss) on derivatives:                                                                                                                  |  |                    |       |   |                  |   |       |         |  |   |         |   |  |   |       |  
|Periodic revaluations (net of income tax expense (benefit) of $0.5, $(0.5), $1.6 and $(0.2), respectively)                                              |  |                    | 0.8   |   |                  |   | (1.0  | )       |  |   | 4.1     |   |  |   | (0.6  | )
|Reclassification to net income of previously deferred (losses) gains (net of income tax (benefit) expense of $(0.6), $0, $(1.4) and $0.1,
respectively) |  |                    | (0.7  | ) |                  |   | 0.4   |         |  |   | (1.8    | ) |  |   | 0.5   |  
|                                                                                                                                                        |  |                    |       |   |                  |   |       |         |  |   |         |   |  |   |       |  
|Other comprehensive (loss) income                                                                                                                       |  |                    | (90.9 | ) |                  |   | 14.3  |         |  |   | (83.9   | ) |  |   | 33.5  |  
|                                                                                                                                                        |  |                    |       |   |                  |   |       |         |  |   |         |   |  |   |       |  
|Total comprehensive income                                                                                                                              |  | $                  | 178.4 |   |                  | $ | 249.7 |         |  | $ | 461.2   |   |  | $ | 495.3 |  
|                                                                                                                                                        |  |                    |       |   |                  |   |       |         |  |   |         |   |  |   |       |  

Accumulated other comprehensive (loss) income consisted of the following:



|                                                         |  |         |        |   |         |   |        |  
|-------------------------------------------------------- |  | ------- | ------ | - | ------- | - | ------ | -
|                                                         |  | 9/28/08 |        |   | 3/30/08 |  
|Cumulative unrealized foreign currency translation gains |  | $       | 69.9   |   |         | $ | 157.9  |  
|Pension and postretirement obligations                   |  |         | (136.5 | ) |         |   | (138.3 | )
|Unrealized loss on derivatives                           |  |         | (1.3   | ) |         |   | (3.6   | )
|                                                         |  |         |        |   |         |   |        |  
|Accumulated other comprehensive (loss) income            |  | $       | (67.9  | ) |         | $ | 16.0   |  
|                                                         |  |         |        |   |         |   |        |  



10



---

|(10) | Fair Value Measurements
|---- | -----------------------

On March 31, 2008, we adopted SFAS
No. 157, Fair Value Measurements (SFAS No. 157), as it relates to financial assets and financial liabilities. SFAS No. 157 defines fair value, establishes a framework for measuring fair value in accordance with
generally accepted accounting principles, and expands disclosures about fair value measurements. In February 2008, the Financial Accounting Standards Board (FASB) issued FSP No. 157-2, Effective Date of FASB Statement
No. 157, which delayed the effective date of SFAS No. 157 for all nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at
least annually). The adoption of SFAS No. 157 as it relates to financial assets and financial liabilities did not have a material impact on our consolidated financial position, results of operations or cash flows.

SFAS No. 157 defines fair value as the exchange price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or
most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. SFAS No. 157 also establishes a fair value hierarchy which requires an entity to maximize the use of observable
inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:



|        |  |                                                                                                                                                                                                                                                                                                       
|------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Level 1 |  | Quoted prices in active markets for identical assets or liabilities.                                                                                                                                                                                                                                  
|        | 
|Level 2 |  | Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can
be corroborated by observable market data for substantially the full term of the assets or liabilities.
|        | 
|Level 3 |  | Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.                                                                                                                                                       

Assets and liabilities measured at fair value on a recurring basis



|                     |  |                               |   |                                 |   |         |  |   |   |  |   |    
|-------------------- |  | ----------------------------- | - | ------------------------------- | - | ------- |  | - | - |  | - | ---
|September 28, 2008  
|                     |  | Fair Value Measurements Using |   | Assets/Liabilitiesat Fair Value
|(in millions)        |  | Level 1                       |   | Level 2                         |   | Level 3 | 
|Assets:              |  |                               |   |                                 |   |         |  |   |   |  |   |    
|Derivative contracts |  | $                             |  |                                 | $ | 2.1     |  | $ |  |  | $ | 2.1
|Liabilities:         |  |                               |   |                                 |   |         |  |   |   |  |   |    
|Derivative contracts |  | $                             |  |                                 | $ | 3.3     |  | $ |  |  | $ | 3.3

Derivative contracts consist of foreign currency forward contracts accounted for as either cash flow hedges or
fair value hedges. Cash flow hedges are used to hedge the variability in cash flows from forecasted receipts or expenditures denominated in currencies other than the functional currency. Fair value hedges are used to hedge against the risk of change
in the fair value of sales and purchase commitments denominated in foreign currencies attributable to fluctuations in exchange rates.

Derivative
contracts value is determined using a pricing model with inputs that are observable in the market or can be derived principally from or corroborated by observable market data. There were no changes in our valuation techniques used to measure
assets and liabilities at fair value on a recurring basis.

We believe that there is no significant credit risk associated with the potential
non-performance of any counterparty to perform under the terms of any derivative financial instrument.

On March 31, 2008, we adopted SFAS
No. 159, The Fair Value Option for Financial Assets and Financial Liabilities. SFAS No. 159 permits entities to elect to measure eligible financial instruments at fair value on an instrument-by-instrument basis. The adoption of
SFAS No. 159 had no impact on our consolidated financial position, results of operations or cash flows as we did not elect to measure any eligible financial instruments at fair value under this guidance.



11



---

|(11) | Pensions and Other Postretirement Benefit Plans
|---- | -----------------------------------------------

We sponsor many
domestic and foreign defined benefit pension plans. In addition, we offer postretirement medical benefits for certain eligible employees. These plans are more fully described in the Notes to the Consolidated Financial Statements included
in our Annual Report on Form 10-K for the year ended March 30, 2008.

The net periodic benefit cost for our pension plans consisted of the following
components:



|                                   |  |                    |       |   |                  |   |       |         |  |   |         |   |  |   |       |  
|---------------------------------- |  | ------------------ | ----- | - | ---------------- | - | ----- | ------- |  | - | ------- | - |  | - | ----- | -
|                                   |  | Three Months Ended |       |   | Six Months Ended |  
|                                   |  | 9/28/08            |       |   | 9/30/07          |   |       | 9/28/08 |  |   | 9/30/07 |  
|Service cost                       |  | $                  | 10.7  |   |                  | $ | 9.0   |         |  | $ | 20.4    |   |  | $ | 18.6  |  
|Interest cost                      |  |                    | 26.1  |   |                  |   | 19.5  |         |  |   | 49.9    |   |  |   | 40.4  |  
|Expected return on plan assets     |  |                    | (32.3 | ) |                  |   | (24.8 | )       |  |   | (61.7   | ) |  |   | (51.4 | )
|Recognized net actuarial loss      |  |                    | 0.9   |   |                  |   | 2.9   |         |  |   | 2.7     |   |  |   | 6.1   |  
|Amortization of prior service cost |  |                    | 1.9   |   |                  |   | 0.8   |         |  |   | 2.7     |   |  |   | 1.6   |  
|                                   |  |                    |       |   |                  |   |       |         |  |   |         |   |  |   |       |  
|Net periodic benefit cost          |  | $                  | 7.3   |   |                  | $ | 7.4   |         |  | $ | 14.0    |   |  | $ | 15.3  |  
|                                   |  |                    |       |   |                  |   |       |         |  |   |         |   |  |   |       |  

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



|                                             |  |                    |      |   |                  |   |      |         |  |         |     |  |   |      |  
|-------------------------------------------- |  | ------------------ | ---- | - | ---------------- | - | ---- | ------- |  | ------- | --- |  | - | ---- | -
|                                             |  | Three Months Ended |      |   | Six Months Ended |  
|                                             |  | 9/28/08            |      |   | 9/30/07          |   |      | 9/28/08 |  | 9/30/07 |    
|Service cost                                 |  | $                  | 0.4  |   |                  | $ | 0.4  |         |  | $       | 0.8 |  | $ | 0.8  |  
|Interest cost                                |  |                    | 2.1  |   |                  |   | 1.9  |         |  |         | 4.2 |  |   | 3.8  |  
|Recognized net actuarial (gain) loss         |  |                    | (0.1 | ) |                  |   |     |         |  |         | 0.1 |  |   |     |  
|Amortization of prior service cost (benefit) |  |                    | 0.2  |   |                  |   | (0.1 | )       |  |         | 0.1 |  |   | (0.2 | )
|                                             |  |                    |      |   |                  |   |      |         |  |         |     |  |   |      |  
|Net periodic benefit cost                    |  | $                  | 2.6  |   |                  | $ | 2.2  |         |  | $       | 5.2 |  | $ | 4.4  |  
|                                             |  |                    |      |   |                  |   |      |         |  |         |     |  |   |      |  

We made contributions to the defined benefit pension plans of $3.8 million and $7.7 million for the three and six
months ended September 28, 2008, respectively. Projected contributions are expected to total approximately $26.4 million for fiscal year 2009, of which approximately $11.0 million will be voluntary.



|(12) | Commitments and contingencies
|---- | -----------------------------

Various lawsuits arising during the
normal course of business are pending against us. In the opinion of management, the outcome of these lawsuits, either individually or in the aggregate, will not have a material adverse effect on our consolidated financial position, results of
operations, or cash flows.



12



---

|(13) | New Accounting Pronouncements
|---- | -----------------------------

In October 2008, the FASB issued FSP
No. FAS 157-3, Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active (FSP No. FAS 157-3). This FSP clarifies the application of SFAS No. 157 as it relates to the valuation of
financial assets in a market that is not active for those financial assets. This FSP is effective immediately and includes prior periods for which financial statements have not been issued. We currently do not hold any financial assets for which
there is an inactive market, and as such there is no impact on our consolidated financial position, results of operations or cash flows.

In May 2008, the
FASB issued SFAS No. 162, The Hierarchy of Generally Accepted Accounting Principles (SFAS No. 162). SFAS No. 162 identifies the sources of accounting principles and establishes the framework for selecting the
principles used in the preparation of financial statements that are presented in conformity with Generally Accepted Accounting Principles (GAAP). SFAS No. 162 will be effective 60 days following the SECs approval of the Public
Company Accounting Oversight Board (PCAOB) amendments to AU Section 411, The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles. The adoption will not have a material impact on our
consolidated financial position, results of operations or cash flows.

In April 2008, the FASB issued FSP No. FAS 142-3, Determination of the Useful
Life of Intangible Assets (FSP No. FAS 142-3). This FSP amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS
No. 142, Goodwill and Other Intangible Assets (SFAS 142). The objective of this FSP is to improve the consistency between the useful life of a recognized intangible asset under SFAS 142 and the period of expected cash
flows used to measure the fair value of the asset under SFAS No. 141(R), and other U.S. GAAP. This FSP is effective for periods beginning in the first quarter of fiscal 2010, and will be applied prospectively to intangible assets acquired after
the effective date.

On March 19, 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities-an
amendment of FASB Statement No. 133 (SFAS No. 161). This new standard requires enhanced disclosures for derivative instruments, including those used in hedging activities. SFAS No. 161 is effective for periods
beginning in the fourth quarter of fiscal 2009. The adoption of SFAS No. 161 will not have a material impact on our consolidated financial position, results of operations or cash flows.

On December 4, 2007, the FASB issued SFAS No. 141(Revised), Business Combinations (SFAS No. 141(R)), and SFAS No. 160,
Noncontrolling Interests in Consolidated Financial Statements-an amendment of ARB No. 51 (SFAS No. 160). These new standards are the U.S. GAAP outcome of a joint project with the International Accounting Standards
Board. SFAS No. 141(R) and SFAS No. 160 introduce significant changes in the accounting for and reporting of business acquisitions and noncontrolling interests in a subsidiary. SFAS No. 141(R) and SFAS No. 160 continue the
movement toward the greater use of fair values in financial reporting and increased transparency through expanded disclosures. SFAS No. 141(R) changes how business acquisitions are accounted for, including expensing acquisition costs as
incurred, and will impact financial statements at the acquisition date and in subsequent periods. SFAS No. 160 requires noncontrolling interests (previously referred to as minority interests) to be reported as a component of equity, which
changes the accounting for transactions with noncontrolling interest holders. SFAS No. 141(R) and SFAS No. 160 are effective for business combinations for which the acquisition date is on or after the beginning of our fiscal year 2010. We
are currently evaluating the impact of the adoption of SFAS No. 141(R) and SFAS No. 160 on our consolidated financial position, results of operations and cash flows.



13



---

|(14) | Segment Information
|---- | -------------------

Information regarding segments is presented in
accordance with SFAS No. 131, Disclosure about Segments of an Enterprise and Related Information. Based on the criteria outlined in SFAS No. 131, our operations are classified into three reportable business segments: Investment
Cast Products, Forged Products and Fastener Products. The Investment Cast Products and Forged Products segments are comprised of one or more operating segments, which are aggregated in accordance with paragraph 17 of SFAS No. 131 in our
determination of reportable segments.



|                                                              |  |                    |         |   |         |   |         |  
|------------------------------------------------------------- |  | ------------------ | ------- | - | ------- | - | ------- | -
|                                                              |  | Three Months Ended |        
|                                                              |  | 9/28/08            |         |   | 9/30/07 |  
|Net sales:                                                    |  |                    |         |   |         |   |         |  
|Investment Cast Products                                      |  | $                  | 612.0   |   |         | $ | 531.1   |  
|Forged Products                                               |  |                    | 781.1   |   |         |   | 813.0   |  
|Fastener Products                                             |  |                    | 426.4   |   |         |   | 374.6   |  
|                                                              |  |                    |         |   |         |   |         |  
|Consolidated net sales                                        |  | $                  | 1,819.5 |   |         | $ | 1,718.7 |  
|                                                              |  |                    |         |   |         |   |         |  
|Segment operating income (loss):                              |  |                    |         |   |         |   |         |  
|Investment Cast Products                                      |  | $                  | 156.1   |   |         | $ | 125.6   |  
|Forged Products                                               |  |                    | 153.1   |   |         |   | 176.4   |  
|Fastener Products                                             |  |                    | 119.6   |   |         |   | 91.0    |  
|Corporate expense                                             |  |                    | (23.6   | ) |         |   | (25.0   | )
|                                                              |  |                    |         |   |         |   |         |  
|Total segment operating income                                |  |                    | 405.2   |   |         |   | 368.0   |  
|Interest expense                                              |  |                    | 4.6     |   |         |   | 14.6    |  
|Interest income                                               |  |                    | (2.8    | ) |         |   | (1.0    | )
|                                                              |  |                    |         |   |         |   |         |  
|Consolidated income before income taxes and minority interest |  | $                  | 403.4   |   |         | $ | 354.4   |  
|                                                              |  |                    |         |   |         |   |         |  
|                                                              | 
|                                                              |  | Six Months Ended   |        
|                                                              |  | 9/28/08            |         |   | 9/30/07 |  
|Net sales:                                                    |  |                    |         |   |         |   |         |  
|Investment Cast Products                                      |  | $                  | 1,209.7 |   |         | $ | 1,040.5 |  
|Forged Products                                               |  |                    | 1,597.6 |   |         |   | 1,586.5 |  
|Fastener Products                                             |  |                    | 847.1   |   |         |   | 742.0   |  
|                                                              |  |                    |         |   |         |   |         |  
|Consolidated net sales                                        |  | $                  | 3,654.4 |   |         | $ | 3,369.0 |  
|                                                              |  |                    |         |   |         |   |         |  
|Segment operating income (loss):                              |  |                    |         |   |         |   |         |  
|Investment Cast Products                                      |  | $                  | 307.1   |   |         | $ | 245.2   |  
|Forged Products                                               |  |                    | 335.9   |   |         |   | 345.9   |  
|Fastener Products                                             |  |                    | 234.5   |   |         |   | 177.6   |  
|Corporate expense                                             |  |                    | (48.2   | ) |         |   | (48.8   | )
|                                                              |  |                    |         |   |         |   |         |  
|Total segment operating income                                |  |                    | 829.3   |   |         |   | 719.9   |  
|Interest expense                                              |  |                    | 9.5     |   |         |   | 29.0    |  
|Interest income                                               |  |                    | (4.5    | ) |         |   | (2.8    | )
|                                                              |  |                    |         |   |         |   |         |  
|Consolidated income before income taxes and minority interest |  | $                  | 824.3   |   |         | $ | 693.7   |  
|                                                              |  |                    |         |   |         |   |         |  



14



---

|(15) | Subsequent Events
|---- | -----------------

On September 29, 2008 (the first day of our
fiscal third quarter), we acquired Airdrome Holdings, LLC (Airdrome), which consists of Airdrome Precision Components (APC) and AF Aerospace Ltd. (AFA), for approximately $57.8 million in cash. APC, located in
Long Beach, California, is a leading supplier of hydraulic and pneumatic fluid fittings primarily for airframe applications. AFA, located in Rugby, England, manufactures a variety of machined components for aerospace applications, including fittings
and other fluid conveyance products, ultra-high tensile bolts, and machined details. Fluid fittings, manufactured in nickel, titanium, and stainless steel alloys, are the critical connectors for hoses transporting fuel, hydraulic fluid, and
pneumatic pressure throughout an aircraft. Airdromes results will be reported as part of the Fastener Products segment.

On October 6, 2008, we
agreed to acquire Fatigue Technology, Inc. (FTI), headquartered in Seattle, Washington. FTI pioneered the cold expansion process in 1969, and is the technology leader in fatigue life extension for both metal and composite airframe
fastener holes. The acquisition is expected to be completed in the third quarter of fiscal 2009, after which FTIs results will be reported as part of the Fastener Products segment.



|(16) | Condensed Consolidating Financial Statements
|---- | --------------------------------------------

Certain of our
subsidiaries guarantee our registered securities consisting of $200 million 5.6% Senior Notes due 2013, as well as our private notes, bank credit facilities and commercial paper (CP). The following condensed consolidating financial
statements present, in separate columns, financial information for (i) Precision Castparts Corp. (on a parent only basis) with its investment in its subsidiaries recorded under the equity method, (ii) guarantor subsidiaries that guarantee
the Companys public and private notes, bank credit facilities and CP on a combined basis, with any investments in non-guarantor subsidiaries recorded under the equity method, (iii) direct and indirect non-guarantor subsidiaries on a
combined basis, (iv) the eliminations necessary to arrive at the information for the Company and its subsidiaries on a consolidated basis, and (v) the Company on a consolidated basis, in each case for balance sheets as of
September 28, 2008 and March 30, 2008, statements of income for the three and six months ended September 28, 2008 and September 30, 2007 and statements of cash flows for the six months ended September 28, 2008 and
September 30, 2007. The public and private notes, bank facility and CP are fully and unconditionally guaranteed on a joint and several basis by each guarantor subsidiary. The guarantor subsidiaries include our domestic subsidiaries within the
Investment Cast Products, Forged Products and Fastener Products segments that are 100% owned, directly or indirectly, by the Company within the meaning of Rule 3-10(h)(1) of Regulation S-X. There are no contractual restrictions limiting
transfers of cash from guarantor and non-guarantor subsidiaries to the Company. The condensed consolidating financial information is presented herein, rather than separate financial statements for each of the guarantor subsidiaries, because
guarantors are 100% owned and the guarantees are full and unconditional, joint and several.

The condensed consolidating statements of cash flows for the
six months ended September 30, 2007 have been restated to correct the presentation of transactions that are settled, on a net basis, through our intercompany payables and receivables. We had previously presented intercompany payables and
receivables transactions between PCC (parent) and our guarantor and non-guarantor subsidiaries as operating activities. The transactions should have been presented in investing and financing activities. As any changes in the classification between
operating, investing and financing are eliminated in consolidation, there is no impact on the consolidated statement of cash flows for the six months ended September 30, 2007.



15



---

Condensed Consolidating Statements of Income

Three Months Ended September 28, 2008

(Unaudited)



|                                                      |  |                         |        |   |                       |   |         |                           |  |   |              |   |  |       |        |   |  |   |         |  
|----------------------------------------------------- |  | ----------------------- | ------ | - | --------------------- | - | ------- | ------------------------- |  | - | ------------ | - |  | ----- | ------ | - |  | - | ------- | -
|                                                      |  | PrecisionCastpartsCorp. |        |   | GuarantorSubsidiaries |   |         | Non-GuarantorSubsidiaries |  |   | Eliminations |   |  | Total |       
|Net sales                                             |  | $                       |       |   |                       | $ | 1,479.1 |                           |  | $ | 412.5        |   |  | $     | (72.1  | ) |  | $ | 1,819.5 |  
|Cost of goods sold                                    |  |                         | 3.1    |   |                       |   | 1,065.7 |                           |  |   | 321.6        |   |  |       | (72.1  | ) |  |   | 1,318.3 |  
|Selling and administrative expenses                   |  |                         | 20.6   |   |                       |   | 50.8    |                           |  |   | 24.6         |   |  |       |       |   |  |   | 96.0    |  
|Other (income) expense                                |  |                         | (0.3   | ) |                       |   | (2.3    | )                         |  |   | 2.6          |   |  |       |       |   |  |   |        |  
|Interest (income) expense, net                        |  |                         | (15.1  | ) |                       |   | 17.5    |                           |  |   | (0.6         | ) |  |       |       |   |  |   | 1.8     |  
|Equity in earnings of subsidiaries                    |  |                         | (273.2 | ) |                       |   | (5.0    | )                         |  |   |             |   |  |       | 278.2  |   |  |   |        |  
|                                                      |  |                         |        |   |                       |   |         |                           |  |   |              |   |  |       |        |   |  |   |         |  
|Income (loss) before income tax and minority interest |  |                         | 264.9  |   |                       |   | 352.4   |                           |  |   | 64.3         |   |  |       | (278.2 | ) |  |   | 403.4   |  
|Income tax (benefit) expense                          |  |                         | (4.4   | ) |                       |   | 121.0   |                           |  |   | 20.9         |   |  |       |       |   |  |   | 137.5   |  
|Minority interest                                     |  |                         |       |   |                       |   |        |                           |  |   | (0.2         | ) |  |       |       |   |  |   | (0.2    | )
|                                                      |  |                         |        |   |                       |   |         |                           |  |   |              |   |  |       |        |   |  |   |         |  
|Net income (loss) from continuing operations          |  |                         | 269.3  |   |                       |   | 231.4   |                           |  |   | 43.2         |   |  |       | (278.2 | ) |  |   | 265.7   |  
|Net income from discontinued operations               |  |                         |       |   |                       |   | 0.3     |                           |  |   | 3.3          |   |  |       |       |   |  |   | 3.6     |  
|                                                      |  |                         |        |   |                       |   |         |                           |  |   |              |   |  |       |        |   |  |   |         |  
|Net income (loss)                                     |  | $                       | 269.3  |   |                       | $ | 231.7   |                           |  | $ | 46.5         |   |  | $     | (278.2 | ) |  | $ | 269.3   |  
|                                                      |  |                         |        |   |                       |   |         |                           |  |   |              |   |  |       |        |   |  |   |         |  



16



---

Condensed Consolidating Statements of Income

Three Months Ended September 30, 2007

(Unaudited)



|                                                      |  |                         |        |   |                       |   |         |                           |  |   |              |   |  |       |        |   |  |   |         |  
|----------------------------------------------------- |  | ----------------------- | ------ | - | --------------------- | - | ------- | ------------------------- |  | - | ------------ | - |  | ----- | ------ | - |  | - | ------- | -
|                                                      |  | PrecisionCastpartsCorp. |        |   | GuarantorSubsidiaries |   |         | Non-GuarantorSubsidiaries |  |   | Eliminations |   |  | Total |       
|Net sales                                             |  | $                       |       |   |                       | $ | 1,398.4 |                           |  | $ | 392.2        |   |  | $     | (71.9  | ) |  | $ | 1,718.7 |  
|Cost of goods sold                                    |  |                         | 2.6    |   |                       |   | 1,022.2 |                           |  |   | 301.2        |   |  |       | (71.9  | ) |  |   | 1,254.1 |  
|Selling and administrative expenses                   |  |                         | 22.4   |   |                       |   | 55.2    |                           |  |   | 19.0         |   |  |       |       |   |  |   | 96.6    |  
|Other (income) expense                                |  |                         | (0.5   | ) |                       |   |        |                           |  |   | 0.5          |   |  |       |       |   |  |   |        |  
|Interest (income) expense, net                        |  |                         | (10.3  | ) |                       |   | 29.1    |                           |  |   | (5.2         | ) |  |       |       |   |  |   | 13.6    |  
|Equity in earnings of subsidiaries                    |  |                         | (244.1 | ) |                       |   | (14.0   | )                         |  |   |             |   |  |       | 258.1  |   |  |   |        |  
|                                                      |  |                         |        |   |                       |   |         |                           |  |   |              |   |  |       |        |   |  |   |         |  
|Income (loss) before income tax and minority interest |  |                         | 229.9  |   |                       |   | 305.9   |                           |  |   | 76.7         |   |  |       | (258.1 | ) |  |   | 354.4   |  
|Income tax (benefit) expense                          |  |                         | (5.5   | ) |                       |   | 103.2   |                           |  |   | 22.6         |   |  |       |       |   |  |   | 120.3   |  
|Minority interest                                     |  |                         |       |   |                       |   | 1.1     |                           |  |   | (1.4         | ) |  |       |       |   |  |   | (0.3    | )
|                                                      |  |                         |        |   |                       |   |         |                           |  |   |              |   |  |       |        |   |  |   |         |  
|Net income (loss) from continuing operations          |  |                         | 235.4  |   |                       |   | 203.8   |                           |  |   | 52.7         |   |  |       | (258.1 | ) |  |   | 233.8   |  
|Net income from discontinued operations               |  |                         |       |   |                       |   | 0.2     |                           |  |   | 1.4          |   |  |       |       |   |  |   | 1.6     |  
|                                                      |  |                         |        |   |                       |   |         |                           |  |   |              |   |  |       |        |   |  |   |         |  
|Net income (loss)                                     |  | $                       | 235.4  |   |                       | $ | 204.0   |                           |  | $ | 54.1         |   |  | $     | (258.1 | ) |  | $ | 235.4   |  
|                                                      |  |                         |        |   |                       |   |         |                           |  |   |              |   |  |       |        |   |  |   |         |  



17



---

Condensed Consolidating Statements of Income

Six Months Ended September 28, 2008

(Unaudited)



|                                                      |  |                         |        |   |                       |   |         |                           |  |   |              |   |  |       |        |   |  |   |         |  
|----------------------------------------------------- |  | ----------------------- | ------ | - | --------------------- | - | ------- | ------------------------- |  | - | ------------ | - |  | ----- | ------ | - |  | - | ------- | -
|                                                      |  | PrecisionCastpartsCorp. |        |   | GuarantorSubsidiaries |   |         | Non-GuarantorSubsidiaries |  |   | Eliminations |   |  | Total |       
|Net sales                                             |  | $                       |       |   |                       | $ | 2,922.9 |                           |  | $ | 887.2        |   |  | $     | (155.7 | ) |  | $ | 3,654.4 |  
|Cost of goods sold                                    |  |                         | 6.2    |   |                       |   | 2,074.3 |                           |  |   | 700.9        |   |  |       | (155.7 | ) |  |   | 2,625.7 |  
|Selling and administrative expenses                   |  |                         | 41.9   |   |                       |   | 107.7   |                           |  |   | 49.8         |   |  |       |       |   |  |   | 199.4   |  
|Other (income) expense                                |  |                         | (1.3   | ) |                       |   | (2.3    | )                         |  |   | 3.6          |   |  |       |       |   |  |   |        |  
|Interest (income) expense, net                        |  |                         | (29.6  | ) |                       |   | 35.3    |                           |  |   | (0.7         | ) |  |       |       |   |  |   | 5.0     |  
|Equity in earnings of subsidiaries                    |  |                         | (553.8 | ) |                       |   | (15.1   | )                         |  |   |             |   |  |       | 568.9  |   |  |   |        |  
|                                                      |  |                         |        |   |                       |   |         |                           |  |   |              |   |  |       |        |   |  |   |         |  
|Income (loss) before income tax and minority interest |  |                         | 536.6  |   |                       |   | 723.0   |                           |  |   | 133.6        |   |  |       | (568.9 | ) |  |   | 824.3   |  
|Income tax (benefit) expense                          |  |                         | (8.5   | ) |                       |   | 250.8   |                           |  |   | 41.1         |   |  |       |       |   |  |   | 283.4   |  
|Minority interest                                     |  |                         |       |   |                       |   |        |                           |  |   | (0.3         | ) |  |       |       |   |  |   | (0.3    | )
|                                                      |  |                         |        |   |                       |   |         |                           |  |   |              |   |  |       |        |   |  |   |         |  
|Net income (loss) from continuing operations          |  |                         | 545.1  |   |                       |   | 472.2   |                           |  |   | 92.2         |   |  |       | (568.9 | ) |  |   | 540.6   |  
|Net income from discontinued operations               |  |                         |       |   |                       |   | 0.4     |                           |  |   | 4.1          |   |  |       |       |   |  |   | 4.5     |  
|                                                      |  |                         |        |   |                       |   |         |                           |  |   |              |   |  |       |        |   |  |   |         |  
|Net income (loss)                                     |  | $                       | 545.1  |   |                       | $ | 472.6   |                           |  | $ | 96.3         |   |  | $     | (568.9 | ) |  | $ | 545.1   |  
|                                                      |  |                         |        |   |                       |   |         |                           |  |   |              |   |  |       |        |   |  |   |         |  



18



---

Condensed Consolidating Statements of Income

Six Months Ended September 30, 2007

(Unaudited)



|                                                      |  |                         |        |   |                       |   |         |                           |  |   |              |   |  |       |        |   |  |   |         |  
|----------------------------------------------------- |  | ----------------------- | ------ | - | --------------------- | - | ------- | ------------------------- |  | - | ------------ | - |  | ----- | ------ | - |  | - | ------- | -
|                                                      |  | PrecisionCastpartsCorp. |        |   | GuarantorSubsidiaries |   |         | Non-GuarantorSubsidiaries |  |   | Eliminations |   |  | Total |       
|Net sales                                             |  | $                       |       |   |                       | $ | 2,734.6 |                           |  | $ | 766.3        |   |  | $     | (131.9 | ) |  | $ | 3,369.0 |  
|Cost of goods sold                                    |  |                         | 6.6    |   |                       |   | 1,995.7 |                           |  |   | 591.3        |   |  |       | (131.9 | ) |  |   | 2,461.7 |  
|Selling and administrative expenses                   |  |                         | 43.8   |   |                       |   | 107.9   |                           |  |   | 35.7         |   |  |       |       |   |  |   | 187.4   |  
|Other (income) expense                                |  |                         | (0.9   | ) |                       |   |        |                           |  |   | 0.9          |   |  |       |       |   |  |   |        |  
|Interest (income) expense, net                        |  |                         | (17.4  | ) |                       |   | 57.8    |                           |  |   | (14.2        | ) |  |       |       |   |  |   | 26.2    |  
|Equity in earnings of subsidiaries                    |  |                         | (481.4 | ) |                       |   | (24.1   | )                         |  |   |             |   |  |       | 505.5  |   |  |   |        |  
|                                                      |  |                         |        |   |                       |   |         |                           |  |   |              |   |  |       |        |   |  |   |         |  
|Income (loss) before income tax and minority interest |  |                         | 449.3  |   |                       |   | 597.3   |                           |  |   | 152.6        |   |  |       | (505.5 | ) |  |   | 693.7   |  
|Income tax (benefit) expense                          |  |                         | (12.5  | ) |                       |   | 204.2   |                           |  |   | 43.5         |   |  |       |       |   |  |   | 235.2   |  
|Minority interest                                     |  |                         |       |   |                       |   | 2.3     |                           |  |   | (2.9         | ) |  |       |       |   |  |   | (0.6    | )
|                                                      |  |                         |        |   |                       |   |         |                           |  |   |              |   |  |       |        |   |  |   |         |  
|Net income (loss) from continuing operations          |  |                         | 461.8  |   |                       |   | 395.4   |                           |  |   | 106.2        |   |  |       | (505.5 | ) |  |   | 457.9   |  
|Net income from discontinued operations               |  |                         |       |   |                       |   | 0.8     |                           |  |   | 3.1          |   |  |       |       |   |  |   | 3.9     |  
|                                                      |  |                         |        |   |                       |   |         |                           |  |   |              |   |  |       |        |   |  |   |         |  
|Net income (loss)                                     |  | $                       | 461.8  |   |                       | $ | 396.2   |                           |  | $ | 109.3        |   |  | $     | (505.5 | ) |  | $ | 461.8   |  
|                                                      |  |                         |        |   |                       |   |         |                           |  |   |              |   |  |       |        |   |  |   |         |  



19



---

Condensed Consolidating Balance Sheets

September 28, 2008

(Unaudited)



|                                                       |  |                         |         |   |                       |   |         |                           |  |              |         |  |       |          |   |  |   |         |  
|------------------------------------------------------ |  | ----------------------- | ------- | - | --------------------- | - | ------- | ------------------------- |  | ------------ | ------- |  | ----- | -------- | - |  | - | ------- | -
|                                                       |  | PrecisionCastpartsCorp. |         |   | GuarantorSubsidiaries |   |         | Non-GuarantorSubsidiaries |  | Eliminations |         |  | Total |         
|Assets                                                 |  |                         |         |   |                       |   |         |                           |  |              |         |  |       |          |   |  |   |         |  
|Current assets:                                        |  |                         |         |   |                       |   |         |                           |  |              |         |  |       |          |   |  |   |         |  
|Cash and cash equivalents                              |  | $                       | 364.1   |   |                       | $ | 13.1    |                           |  | $            | 155.1   |  | $     |         |   |  | $ | 532.3   |  
|Receivables                                            |  |                         | 45.8    |   |                       |   | 1,699.5 |                           |  |              | 171.5   |  |       | (890.5   | ) |  |   | 1,026.3 |  
|Inventories                                            |  |                         |        |   |                       |   | 857.6   |                           |  |              | 253.9   |  |       |         |   |  |   | 1,111.5 |  
|Prepaid expenses                                       |  |                         | 0.8     |   |                       |   | 9.9     |                           |  |              | 11.8    |  |       |         |   |  |   | 22.5    |  
|Income tax receivable                                  |  |                         |        |   |                       |   |        |                           |  |              |        |  |       |         |   |  |   |        |  
|Deferred income taxes                                  |  |                         | 24.2    |   |                       |   | 32.0    |                           |  |              | 27.1    |  |       |         |   |  |   | 83.3    |  
|Discontinued operations                                |  |                         |        |   |                       |   |        |                           |  |              | 64.9    |  |       | (57.7    | ) |  |   | 7.2     |  
|                                                       |  |                         |         |   |                       |   |         |                           |  |              |         |  |       |          |   |  |   |         |  
|Total current assets                                   |  |                         | 434.9   |   |                       |   | 2,612.1 |                           |  |              | 684.3   |  |       | (948.2   | ) |  |   | 2,783.1 |  
|                                                       |  |                         |         |   |                       |   |         |                           |  |              |         |  |       |          |   |  |   |         |  
|Property, plant and equipment, net                     |  |                         | 40.7    |   |                       |   | 803.2   |                           |  |              | 289.7   |  |       |         |   |  |   | 1,133.6 |  
|Goodwill, net                                          |  |                         |        |   |                       |   | 1,650.4 |                           |  |              | 559.8   |  |       |         |   |  |   | 2,210.2 |  
|Deferred income taxes                                  |  |                         | 26.2    |   |                       |   |        |                           |  |              |        |  |       | (26.2    | ) |  |   |        |  
|Investments in subsidiaries                            |  |                         | 5,413.1 |   |                       |   | 435.4   |                           |  |              | 1.7     |  |       | (5,850.2 | ) |  |   |        |  
|Other assets                                           |  |                         | 129.6   |   |                       |   | 87.5    |                           |  |              | 64.2    |  |       | 15.4     |   |  |   | 296.7   |  
|Discontinued operations                                |  |                         |        |   |                       |   |        |                           |  |              | 5.2     |  |       |         |   |  |   | 5.2     |  
|                                                       |  |                         |         |   |                       |   |         |                           |  |              |         |  |       |          |   |  |   |         |  
|                                                       |  | $                       | 6,044.5 |   |                       | $ | 5,588.6 |                           |  | $            | 1,604.9 |  | $     | (6,809.2 | ) |  | $ | 6,428.8 |  
|                                                       |  |                         |         |   |                       |   |         |                           |  |              |         |  |       |          |   |  |   |         |  
|Liabilities and Shareholders Investment                |  |                         |         |   |                       |   |         |                           |  |              |         |  |       |          |   |  |   |         |  
|Current liabilities:                                   |  |                         |         |   |                       |   |         |                           |  |              |         |  |       |          |   |  |   |         |  
|Long-term debt currently due and short-term borrowings |  | $                       | 48.7    |   |                       | $ | 0.9     |                           |  | $            | 0.2     |  | $     |         |   |  | $ | 49.8    |  
|Accounts payable                                       |  |                         | 994.2   |   |                       |   | 460.8   |                           |  |              | 140.0   |  |       | (948.2   | ) |  |   | 646.8   |  
|Accrued liabilities                                    |  |                         | 25.1    |   |                       |   | 287.7   |                           |  |              | 87.4    |  |       | (1.1     | ) |  |   | 399.1   |  
|Income taxes payable                                   |  |                         | 41.4    |   |                       |   | 2.4     |                           |  |              | 37.8    |  |       |         |   |  |   | 81.6    |  
|Discontinued operations                                |  |                         |        |   |                       |   |        |                           |  |              | 6.4     |  |       |         |   |  |   | 6.4     |  
|                                                       |  |                         |         |   |                       |   |         |                           |  |              |         |  |       |          |   |  |   |         |  
|Total current liabilities                              |  |                         | 1,109.4 |   |                       |   | 751.8   |                           |  |              | 271.8   |  |       | (949.3   | ) |  |   | 1,183.7 |  
|                                                       |  |                         |         |   |                       |   |         |                           |  |              |         |  |       |          |   |  |   |         |  
|Long-term debt                                         |  |                         | 252.3   |   |                       |   | 6.7     |                           |  |              | 0.2     |  |       |         |   |  |   | 259.2   |  
|Pension and other postretirement benefit obligations   |  |                         | 142.1   |   |                       |   | 135.3   |                           |  |              | 4.1     |  |       |         |   |  |   | 281.5   |  
|Deferred tax liability                                 |  |                         |        |   |                       |   | 78.6    |                           |  |              | 17.6    |  |       | (26.2    | ) |  |   | 70.0    |  
|Other long-term liabilities                            |  |                         | 1.3     |   |                       |   | 80.2    |                           |  |              | 11.5    |  |       |         |   |  |   | 93.0    |  
|Discontinued operations                                |  |                         |        |   |                       |   |        |                           |  |              | 1.9     |  |       |         |   |  |   | 1.9     |  
|Commitments and contingencies (See Notes)              |  |                         |         |   |                       |   |         |                           |  |              |         |  |       |          |   |  |   |         |  
|Shareholders equity:                                  |  |                         |         |   |                       |   |         |                           |  |              |         |  |       |          |   |  |   |         |  
|Common stock and paid-in capital                       |  |                         | 1,197.2 |   |                       |   | 2,352.3 |                           |  |              | 920.0   |  |       | (3,272.2 | ) |  |   | 1,197.3 |  
|Retained earnings                                      |  |                         | 3,410.1 |   |                       |   | 2,231.3 |                           |  |              | 367.2   |  |       | (2,598.5 | ) |  |   | 3,410.1 |  
|Accumulated other comprehensive loss                   |  |                         | (67.9   | ) |                       |   | (47.6   | )                         |  |              | 10.6    |  |       | 37.0     |   |  |   | (67.9   | )
|                                                       |  |                         |         |   |                       |   |         |                           |  |              |         |  |       |          |   |  |   |         |  
|Total shareholders investment                         |  |                         | 4,539.4 |   |                       |   | 4,536.0 |                           |  |              | 1,297.8 |  |       | (5,833.7 | ) |  |   | 4,539.5 |  
|                                                       |  |                         |         |   |                       |   |         |                           |  |              |         |  |       |          |   |  |   |         |  
|                                                       |  | $                       | 6,044.5 |   |                       | $ | 5,588.6 |                           |  | $            | 1,604.9 |  | $     | (6,809.2 | ) |  | $ | 6,428.8 |  
|                                                       |  |                         |         |   |                       |   |         |                           |  |              |         |  |       |          |   |  |   |         |  



20



---

Condensed Consolidating Balance Sheets

March 30, 2008

(Unaudited)



|                                                       |  |                         |         |                       |   |         |                           |  |              |         |  |       |          |   |  |   |        
|------------------------------------------------------ |  | ----------------------- | ------- | --------------------- | - | ------- | ------------------------- |  | ------------ | ------- |  | ----- | -------- | - |  | - | -------
|                                                       |  | PrecisionCastpartsCorp. |         | GuarantorSubsidiaries |   |         | Non-GuarantorSubsidiaries |  | Eliminations |         |  | Total
|ASSETS                                                 |  |                         |         |                       |   |         |                           |  |              |         |  |       |          |   |  |   |        
|Current assets:                                        |  |                         |         |                       |   |         |                           |  |              |         |  |       |          |   |  |   |        
|Cash and cash equivalents                              |  | $                       | 69.6    |                       | $ | 0.8     |                           |  | $            | 150.9   |  | $     |         |   |  | $ | 221.3  
|Receivables, net                                       |  |                         | 35.1    |                       |   | 1,159.9 |                           |  |              | 564.1   |  |       | (731.2   | ) |  |   | 1,027.9
|Inventories                                            |  |                         |        |                       |   | 721.4   |                           |  |              | 271.5   |  |       |         |   |  |   | 992.9  
|Prepaid expenses                                       |  |                         | 3.1     |                       |   | 8.3     |                           |  |              | 10.6    |  |       |         |   |  |   | 22.0   
|Deferred income taxes                                  |  |                         | 29.1    |                       |   | 30.3    |                           |  |              | 25.4    |  |       |         |   |  |   | 84.8   
|Discontinued operations                                |  |                         |        |                       |   | 11.6    |                           |  |              | 69.1    |  |       | (57.3    | ) |  |   | 23.4   
|                                                       |  |                         |         |                       |   |         |                           |  |              |         |  |       |          |   |  |   |        
|Total current assets                                   |  |                         | 136.9   |                       |   | 1,932.3 |                           |  |              | 1,091.6 |  |       | (788.5   | ) |  |   | 2,372.3
|                                                       |  |                         |         |                       |   |         |                           |  |              |         |  |       |          |   |  |   |        
|Property, plant and equipment, net                     |  |                         | 42.2    |                       |   | 786.0   |                           |  |              | 298.0   |  |       |         |   |  |   | 1,126.2
|Goodwill                                               |  |                         |        |                       |   | 1,659.9 |                           |  |              | 622.5   |  |       |         |   |  |   | 2,282.4
|Deferred income taxes                                  |  |                         | 55.1    |                       |   |        |                           |  |              |        |  |       | (55.1    | ) |  |   |       
|Investments in subsidiaries                            |  |                         | 4,954.3 |                       |   | 421.0   |                           |  |              |        |  |       | (5,375.3 | ) |  |   |       
|Other assets                                           |  |                         | 121.5   |                       |   | 86.6    |                           |  |              | 36.5    |  |       | 14.1     |   |  |   | 258.7  
|Discontinued operations                                |  |                         |        |                       |   |        |                           |  |              | 10.5    |  |       |         |   |  |   | 10.5   
|                                                       |  |                         |         |                       |   |         |                           |  |              |         |  |       |          |   |  |   |        
|                                                       |  | $                       | 5,310.0 |                       | $ | 4,885.8 |                           |  | $            | 2,059.1 |  | $     | (6,204.8 | ) |  | $ | 6,050.1
|                                                       |  |                         |         |                       |   |         |                           |  |              |         |  |       |          |   |  |   |        
|LIABILITIES AND SHAREHOLDERS EQUITY                   |  |                         |         |                       |   |         |                           |  |              |         |  |       |          |   |  |   |        
|Current liabilities:                                   |  |                         |         |                       |   |         |                           |  |              |         |  |       |          |   |  |   |        
|Long-term debt currently due and short-term borrowings |  | $                       | 19.0    |                       | $ | 0.9     |                           |  | $            | 0.2     |  | $     |         |   |  | $ | 20.1   
|Accounts payable                                       |  |                         | 699.3   |                       |   | 483.8   |                           |  |              | 294.8   |  |       | (788.5   | ) |  |   | 689.4  
|Accrued liabilities                                    |  |                         | 27.3    |                       |   | 294.2   |                           |  |              | 99.6    |  |       | (1.1     | ) |  |   | 420.0  
|Income taxes payable                                   |  |                         | 32.7    |                       |   | 2.4     |                           |  |              | 30.5    |  |       |         |   |  |   | 65.6   
|Deferred income taxes                                  |  |                         |        |                       |   |        |                           |  |              |        |  |       |         |   |  |   |       
|Discontinued operations                                |  |                         |        |                       |   |        |                           |  |              | 9.7     |  |       |         |   |  |   | 9.7    
|                                                       |  |                         |         |                       |   |         |                           |  |              |         |  |       |          |   |  |   |        
|Total current liabilities                              |  |                         | 778.3   |                       |   | 781.3   |                           |  |              | 434.8   |  |       | (789.6   | ) |  |   | 1,204.8
|                                                       |  |                         |         |                       |   |         |                           |  |              |         |  |       |          |   |  |   |        
|Long-term debt                                         |  |                         | 327.3   |                       |   | 7.3     |                           |  |              | 0.3     |  |       |         |   |  |   | 334.9  
|Pension and other postretirement benefit obligations   |  |                         | 133.9   |                       |   | 135.1   |                           |  |              | 6.4     |  |       |         |   |  |   | 275.4  
|Deferred income taxes                                  |  |                         |        |                       |   | 82.0    |                           |  |              | 19.6    |  |       | (55.1    | ) |  |   | 46.5   
|Other long-term liabilities                            |  |                         | 25.5    |                       |   | 82.5    |                           |  |              | 34.8    |  |       |         |   |  |   | 142.8  
|Discontinued operations                                |  |                         |        |                       |   |        |                           |  |              | 0.7     |  |       |         |   |  |   | 0.7    
|Commitments and contingencies (See Notes)              |  |                         |         |                       |   |         |                           |  |              |         |  |       |          |   |  |   |        
|Shareholders equity:                                  |  |                         |         |                       |   |         |                           |  |              |         |  |       |          |   |  |   |        
|Common stock and paid-in capital                       |  |                         | 1,155.6 |                       |   | 2,084.4 |                           |  |              | 1,201.3 |  |       | (3,285.7 | ) |  |   | 1,155.6
|Retained earnings                                      |  |                         | 2,873.4 |                       |   | 1,758.7 |                           |  |              | 270.9   |  |       | (2,029.6 | ) |  |   | 2,873.4
|Accumulated other comprehensive income (loss)          |  |                         | 16.0    |                       |   | (45.5   | )                         |  |              | 90.3    |  |       | (44.8    | ) |  |   | 16.0   
|                                                       |  |                         |         |                       |   |         |                           |  |              |         |  |       |          |   |  |   |        
|Total shareholders equity                             |  |                         | 4,045.0 |                       |   | 3,797.6 |                           |  |              | 1,562.5 |  |       | (5,360.1 | ) |  |   | 4,045.0
|                                                       |  |                         |         |                       |   |         |                           |  |              |         |  |       |          |   |  |   |        
|                                                       |  | $                       | 5,310.0 |                       | $ | 4,885.8 |                           |  | $            | 2,059.1 |  | $     | (6,204.8 | ) |  | $ | 6,050.1
|                                                       |  |                         |         |                       |   |         |                           |  |              |         |  |       |          |   |  |   |        



21



---

Condensed Consolidating Statements of Cash Flows

Six Months Ended September 28, 2008

(Unaudited)



|                                                                            |  |                         |       |   |                       |   |        |                           |  |   |              |   |  |       |        |   |  |   |        |  
|--------------------------------------------------------------------------- |  | ----------------------- | ----- | - | --------------------- | - | ------ | ------------------------- |  | - | ------------ | - |  | ----- | ------ | - |  | - | ------ | -
|                                                                            |  | PrecisionCastpartsCorp. |       |   | GuarantorSubsidiaries |   |        | Non-GuarantorSubsidiaries |  |   | Eliminations |   |  | Total |       
|Net cash provided by operating activities                                   |  | $                       | 30.5  |   |                       | $ | 343.4  |                           |  | $ | 103.3        |   |  | $     |       |   |  | $ | 477.2  |  
|                                                                            |  |                         |       |   |                       |   |        |                           |  |   |              |   |  |       |        |   |  |   |        |  
|Acquisitions of businesses                                                  |  |                         | (21.2 | ) |                       |   |       |                           |  |   |             |   |  |       |       |   |  |   | (21.2  | )
|Capital expenditures                                                        |  |                         | (1.0  | ) |                       |   | (69.7  | )                         |  |   | (33.7        | ) |  |       |       |   |  |   | (104.4 | )
|Intercompany advances                                                       |  |                         |      |   |                       |   | (312.6 | )                         |  |   | 5.8          |   |  |       | 306.8  |   |  |   |       |  
|Intercompany loans                                                          |  |                         | (4.6  | ) |                       |   |       |                           |  |   |             |   |  |       | 4.6    |   |  |   |       |  
|Dispositions of businesses and other                                        |  |                         | 15.6  |   |                       |   | 2.2    |                           |  |   | 1.1          |   |  |       |       |   |  |   | 18.9   |  
|Net cash (used) provided by investing activities of discontinued operations |  |                         |      |   |                       |   | (0.4   | )                         |  |   | 0.5          |   |  |       | (0.1   | ) |  |   |       |  
|                                                                            |  |                         |       |   |                       |   |        |                           |  |   |              |   |  |       |        |   |  |   |        |  
|Net cash (used) provided by investing activities                            |  |                         | (11.2 | ) |                       |   | (380.5 | )                         |  |   | (26.3        | ) |  |       | 311.3  |   |  |   | (106.7 | )
|                                                                            |  |                         |       |   |                       |   |        |                           |  |   |              |   |  |       |        |   |  |   |        |  
|Net change in long-term debt                                                |  |                         | (45.3 | ) |                       |   | (0.6   | )                         |  |   | (0.1         | ) |  |       |       |   |  |   | (46.0  | )
|Common stock issued                                                         |  |                         | 12.0  |   |                       |   |       |                           |  |   |             |   |  |       |       |   |  |   | 12.0   |  
|Excess tax benefits from share-based payment arrangements                   |  |                         | 10.2  |   |                       |   |       |                           |  |   |             |   |  |       |       |   |  |   | 10.2   |  
|Cash dividends                                                              |  |                         | (8.4  | ) |                       |   |       |                           |  |   |             |   |  |       |       |   |  |   | (8.4   | )
|Intercompany advances                                                       |  |                         | 306.7 |   |                       |   |       |                           |  |   |             |   |  |       | (306.7 | ) |  |   |       |  
|Intercompany loans                                                          |  |                         |      |   |                       |   | 50.0   |                           |  |   | (44.8        | ) |  |       | (5.2   | ) |  |   |       |  
|Net cash (used) provided by financing activities of discontinued operations |  |                         |      |   |                       |   |       |                           |  |   | (0.6         | ) |  |       | 0.6    |   |  |   |       |  
|                                                                            |  |                         |       |   |                       |   |        |                           |  |   |              |   |  |       |        |   |  |   |        |  
|Net cash provided (used) by financing activities                            |  |                         | 275.2 |   |                       |   | 49.4   |                           |  |   | (45.5        | ) |  |       | (311.3 | ) |  |   | (32.2  | )
|                                                                            |  |                         |       |   |                       |   |        |                           |  |   |              |   |  |       |        |   |  |   |        |  
|Effect of exchange rate changes on cash and cash equivalents -              |  |                         |      |   |                       |   |       |                           |  |   | (27.3        | ) |  |       |       |   |  |   | (27.3  | )
|                                                                            |  |                         |       |   |                       |   |        |                           |  |   |              |   |  |       |        |   |  |   |        |  
|Net increase in cash and cash equivalents                                   |  |                         | 294.5 |   |                       |   | 12.3   |                           |  |   | 4.2          |   |  |       |       |   |  |   | 311.0  |  
|Cash and cash equivalents at beginning of period                            |  |                         | 69.6  |   |                       |   | 0.8    |                           |  |   | 150.9        |   |  |       |       |   |  |   | 221.3  |  
|                                                                            |  |                         |       |   |                       |   |        |                           |  |   |              |   |  |       |        |   |  |   |        |  
|Cash and cash equivalents at end of period                                  |  | $                       | 364.1 |   |                       | $ | 13.1   |                           |  | $ | 155.1        |   |  | $     |       |   |  | $ | 532.3  |  
|                                                                            |  |                         |       |   |                       |   |        |                           |  |   |              |   |  |       |        |   |  |   |        |  



22



---

Condensed Consolidating Statements of Cash Flows

Six Months Ended September 30, 2007

(Unaudited)



|                                                                            |  |                         |        |   |                       |   |        |                           |  |   |              |   |  |       |        |   |  |   |        |  
|--------------------------------------------------------------------------- |  | ----------------------- | ------ | - | --------------------- | - | ------ | ------------------------- |  | - | ------------ | - |  | ----- | ------ | - |  | - | ------ | -
|                                                                            |  | PrecisionCastpartsCorp. |        |   | GuarantorSubsidiaries |   |        | Non-GuarantorSubsidiaries |  |   | Eliminations |   |  | Total |       
|Net cash (used) provided by operating activities                            |  | $                       | (102.5 | ) |                       | $ | 319.6  |                           |  | $ | 122.5        |   |  | $     | (1.1   | ) |  | $ | 338.5  |  
|                                                                            |  |                         |        |   |                       |   |        |                           |  |   |              |   |  |       |        |   |  |   |        |  
|Acquisitions of businesses                                                  |  |                         | (113.3 | ) |                       |   | 1.2    |                           |  |   | (142.1       | ) |  |       |       |   |  |   | (254.2 | )
|Capital expenditures                                                        |  |                         | (13.1  | ) |                       |   | (73.0  | )                         |  |   | (21.5        | ) |  |       |       |   |  |   | (107.6 | )
|Intercompany advances                                                       |  |                         |       |   |                       |   | (255.8 | )                         |  |   | (46.5        | ) |  |       | 302.3  |   |  |   |       |  
|Intercompany receivables securitization                                     |  |                         |       |   |                       |   |       |                           |  |   | (1.1         | ) |  |       | 1.1    |   |  |   |       |  
|Intercompany loans                                                          |  |                         | (143.3 | ) |                       |   |       |                           |  |   |             |   |  |       | 143.3  |   |  |   |       |  
|Other                                                                       |  |                         | 0.9    |   |                       |   | 1.3    |                           |  |   | 1.7          |   |  |       |       |   |  |   | 3.9    |  
|Net cash provided (used) by investing activities of discontinued operations |  |                         |       |   |                       |   | 0.3    |                           |  |   | (0.2         | ) |  |       | (0.9   | ) |  |   | (0.8   | )
|                                                                            |  |                         |        |   |                       |   |        |                           |  |   |              |   |  |       |        |   |  |   |        |  
|Net cash (used) provided by investing activities                            |  |                         | (268.8 | ) |                       |   | (326.0 | )                         |  |   | (209.7       | ) |  |       | 445.8  |   |  |   | (358.7 | )
|                                                                            |  |                         |        |   |                       |   |        |                           |  |   |              |   |  |       |        |   |  |   |        |  
|Net change in commercial paper and short-term borrowings                    |  |                         |       |   |                       |   | (0.2   | )                         |  |   |             |   |  |       |       |   |  |   | (0.2   | )
|Net change in long-term debt                                                |  |                         | 39.6   |   |                       |   | (0.4   | )                         |  |   | (0.1         | ) |  |       |       |   |  |   | 39.1   |  
|Common stock issued                                                         |  |                         | 16.6   |   |                       |   |       |                           |  |   |             |   |  |       |       |   |  |   | 16.6   |  
|Excess tax benefits from share-based payment arrangements                   |  |                         | 20.4   |   |                       |   |       |                           |  |   |             |   |  |       |       |   |  |   | 20.4   |  
|Cash dividends                                                              |  |                         | (8.3   | ) |                       |   |       |                           |  |   |             |   |  |       |       |   |  |   | (8.3   | )
|Intercompany advances                                                       |  |                         | 301.4  |   |                       |   |       |                           |  |   |             |   |  |       | (301.4 | ) |  |   |       |  
|Intercompany loans                                                          |  |                         |       |   |                       |   |       |                           |  |   | 144.0        |   |  |       | (144.0 | ) |  |   |       |  
|Other                                                                       |  |                         | 1.8    |   |                       |   | (0.6   | )                         |  |   | (1.3         | ) |  |       |       |   |  |   | (0.1   | )
|Net cash (used) provided by financing activities of discontinued operations |  |                         |       |   |                       |   |       |                           |  |   | (0.2         | ) |  |       | 0.7    |   |  |   | 0.5    |  
|                                                                            |  |                         |        |   |                       |   |        |                           |  |   |              |   |  |       |        |   |  |   |        |  
|Net cash provided (used) by financing activities                            |  |                         | 371.5  |   |                       |   | (1.2   | )                         |  |   | 142.4        |   |  |       | (444.7 | ) |  |   | 68.0   |  
|                                                                            |  |                         |        |   |                       |   |        |                           |  |   |              |   |  |       |        |   |  |   |        |  
|Effect of exchange rate changes on cash and cash equivalents                |  |                         |       |   |                       |   |       |                           |  |   | 14.3         |   |  |       |       |   |  |   | 14.3   |  
|                                                                            |  |                         |        |   |                       |   |        |                           |  |   |              |   |  |       |        |   |  |   |        |  
|Net increase (decrease) in cash and cash equivalents                        |  |                         | 0.2    |   |                       |   | (7.6   | )                         |  |   | 69.5         |   |  |       |       |   |  |   | 62.1   |  
|Cash and cash equivalents at beginning of period                            |  |                         | 18.1   |   |                       |   | 7.6    |                           |  |   | 124.7        |   |  |       |       |   |  |   | 150.4  |  
|                                                                            |  |                         |        |   |                       |   |        |                           |  |   |              |   |  |       |        |   |  |   |        |  
|Cash and cash equivalents at end of period                                  |  | $                       | 18.3   |   |                       | $ |       |                           |  | $ | 194.2        |   |  | $     |       |   |  | $ | 212.5  |  
|                                                                            |  |                         |        |   |                       |   |        |                           |  |   |              |   |  |       |        |   |  |   |        |  



23



---

|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations
|------- | -------------------------------------------------------------------------------------

Consolidated Results of Operations - Comparison Between the Three Months Ended September 28, 2008 and September 30, 2007



|                                                            |         |                    |         |         |                     |   |         |   |  |   |       |   |  |        |   
|----------------------------------------------------------- | ------- | ------------------ | ------- | ------- | ------------------- | - | ------- | - |  | - | ----- | - |  | ------ | --
|                                                            |         | Three Months Ended |         |         | Increase/(Decrease) |  
|(In millions, except per share data)                        |         | 9/28/08            |         |         | 9/30/07             |   |         | $ |  |   | %     |  
|Net sales                                                   |         | $                  | 1,819.5 |         |                     | $ | 1,718.7 |   |  | $ | 100.8 |   |  | 5.9    | % 
|Cost of goods sold                                          |         |                    | 1,318.3 |         |                     |   | 1,254.1 |   |  |   | 64.2  |   |  | 5.1    |   
|Selling and administrative expenses                         |         |                    | 96.0    |         |                     |   | 96.6    |   |  |   | (0.6  | ) |  | (0.6   | ) 
|Interest expense                                            |         |                    | 4.6     |         |                     |   | 14.6    |   |  |   | (10.0 | ) |  | (68.5  | ) 
|Interest income                                             |         |                    | (2.8    | )       |                     |   | (1.0    | ) |  |   | (1.8  | ) |  | (180.0 | ) 
|                                                            |         |                    |         |         |                     |   |         |   |  |   |       |   |  |        |   
|Income before income taxes and minority interest            |         |                    | 403.4   |         |                     |   | 354.4   |   |  |   | 49.0  |   |  | 13.8   |   
|Income tax expense                                          |         |                    | 137.5   |         |                     |   | 120.3   |   |  |   | 17.2  |   |  | 14.3   |   
|Effective tax rate                                          |         |                    | 34.1    | %       |                     |   | 33.9    | % |  |   |       |   |  |        |   
|Minority interest                                           |         |                    | (0.2    | )       |                     |   | (0.3    | ) |  |   | 0.1   |   |  | 33.3   |   
|                                                            |         |                    |         |         |                     |   |         |   |  |   |       |   |  |        |   
|Net income from continuing operations                       |         |                    | 265.7   |         |                     |   | 233.8   |   |  |   | 31.9  |   |  | 13.6   |   
|Net income from discontinued operations                     |         |                    | 3.6     |         |                     |   | 1.6     |   |  |   | 2.0   |   |  | 125.0  |   
|                                                            |         |                    |         |         |                     |   |         |   |  |   |       |   |  |        |   
|Net income                                                  |         | $                  | 269.3   |         |                     | $ | 235.4   |   |  | $ | 33.9  |   |  | 14.4   | % 
|                                                            |         |                    |         |         |                     |   |         |   |  |   |       |   |  |        |   
|Net income per share from continuing operations  diluted   |         | $                  | 1.89    |         |                     | $ | 1.67    |   |  | $ | 0.22  |   |  | 13.2   | % 
|Net income per share from discontinued operations  diluted |         |                    | 0.02    |         |                     |   | 0.01    |   |  |   | 0.01  |   |  | 100.0  |   
|                                                            |         |                    |         |         |                     |   |         |   |  |   |       |   |  |        |   
|Net income per share - diluted                              |         | $                  | 1.91    |         |                     | $ | 1.68    |   |  | $ | 0.23  |   |  | 13.7   | % 
|                                                            |         |                    |         |         |                     |   |         |   |  |   |       |   |  |        |   
|                                                            |         |                   
|Average market price of key metals (per pound)              |         | Three Months Ended |         |         | Increase/(Decrease) |  
|                                                            | 9/28/08 |                    |         | 9/30/07 |                     |   | $       |   |  | % |      
|Nickel                                                      |         | $                  | 8.74    |         |                     | $ | 13.76   |   |  | $ | (5.02 | ) |  | (36    | )%
|London Metals Exchange1                                     |         |                    |         |         |                     |   |         |   |  |   |       |   |  |        |   
|Titanium                                                    |         | $                  | 3.52    |         |                     | $ | 6.74    |   |  | $ | (3.22 | ) |  | (48    | )%
|Ti 6-4 bulk, Metalprices.com                                |         |                    |         |         |                     |   |         |   |  |   |       |   |  |        |   
|Cobalt                                                      |         | $                  | 35.23   |         |                     | $ | 26.90   |   |  | $ | 8.33  |   |  | 31     | % 
|Metal Bulletin COFM.8 Index1                                |         |                    |         |         |                     |   |         |   |  |   |       |   |  |        |   



|1 | Source:Bloomberg
|- | ----------------



24



---

|                          |         |                    |         |                     |   |       |   |   |       |  |     |  
|------------------------- | ------- | ------------------ | ------- | ------------------- | - | ----- | - | - | ----- |  | --- | -
|Intercompany sales1       |         | Three Months Ended |         | Increase/(Decrease) |  
|                          | 9/28/08 |                    | 9/30/07 |                     | $ |       | % |  
|Investment Cast Products2 |         | $                  | 111.2   |                     | $ | 33.2  |   | $ | 78.0  |  | 235 | %
|Forged Products3          |         |                    | 215.4   |                     |   | 169.5 |   |   | 45.9  |  | 27  |  
|Fastener Products4        |         |                    | 29.7    |                     |   | 24.1  |   |   | 5.6   |  | 23  |  
|                          |         |                    |         |                     |   |       |   |   |       |  |     |  
|Total intercompany sales  |         | $                  | 356.3   |                     | $ | 226.8 |   | $ | 129.5 |  | 57  | %
|                          |         |                    |         |                     |   |       |   |   |       |  |     |  



|1 | Intercompany sales consist of each segments total intercompany sales, including intercompany sales within a
segment and between segments.
|- | ------------------------------------------------------------------------------------------------------------------------------------------



|2 | Investment Cast Products: Includes sales between segments of $6.6 million and $10.1 million for the second quarter of
fiscal 2009 and 2008, respectively.
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------



|3 | Forged Products: Includes sales between segments of $11.9 million and $7.5 million for the second quarter of fiscal 2009
and 2008, respectively.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------



|4 | Fastener Products: Includes sales between segments of $0.9 million and $2.6 million for the second quarter of fiscal
2009 and 2008, respectively.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------

Sales for the second quarter of fiscal 2009 were $1,819.5 million, up $100.8 million from $1,718.7 million
in the same quarter last year. The increase in sales was principally driven by continuing strong conditions in our core aerospace and power generation markets, partially offset by seasonal maintenance and unplanned production outages due to
Hurricane Ike and repair to an isothermal forging press. Contractual material pass-through pricing (based on contractual pricing calculations that are driven by market prices shown in the table above which generally lag by three months to one year)
increased sales by approximately $105.4 million this year versus approximately $114.5 million last year. With regard to growth in the commercial aircraft industry, forecasts from the Airline Monitor as of July 2008 indicate aircraft deliveries are
expected to increase approximately 8 percent in calendar year 2008 and approximately 9 percent in calendar year 2009. These forecasts were published prior to the start of the recent labor issues at Boeing, which will impact the timing of deliveries,
and prior to the recent downturn in the US and global financial markets. We are unable to predict the impact of current economic conditions on future aircraft orders or timing of deliveries; however, these factors may reduce our sales for the
remainder of fiscal 2009. Due to manufacturing lead times, our production volumes are approximately 6 to 9 months ahead of aircraft deliveries.

Net income
from continuing operations for the second quarter of fiscal 2009 was $265.7 million, or $1.89 per share (diluted). By comparison, net income from continuing operations for the second quarter of fiscal 2008 was $233.8 million, or $1.67 per share
(diluted). Net income (after discontinued operations) for the second quarter of fiscal 2009 was $269.3 million, or $1.91 per share (diluted), compared with net income of $235.4 million, or $1.68 per share (diluted), in the same period last year.

Interest and Income Tax

Net interest expense
for the second quarter of fiscal 2009 was $1.8 million, compared with $13.6 million for the second quarter last year. The lower net expense is primarily due to significantly reduced debt levels and higher interest income resulting from increased
cash balances compared to the same quarter last year.

The effective tax rate for the second quarter of fiscal 2009 was 34.1 percent, 0.2 percentage points
higher than the 33.9 percent effective rate in the same quarter last year. The slight increase in the rate compared to last year was primarily due to reduced tax incentives in foreign jurisdictions and a decrease in benefits from the federal
research and development tax credit, partially offset by a reduction in liabilities for uncertain tax positions in the current quarter.



25



---

Restructuring

We regularly assess our cost structure to ensure that operations are properly sized for prevailing market conditions, taking into consideration current and forecasted conditions in the markets we serve. There were no restructuring or asset
impairment charges in the periods presented.

Business Acquisition

On July 5, 2007, we acquired Caledonian Alloys for approximately $208.1 million in cash, of which $165.1 million was paid at close and $21.2 million in the second quarter of fiscal 2009. We expect to pay one
additional contingent payment of approximately $21.2 million in the second quarter of fiscal 2010. Caledonian is a market leader in providing nickel superalloy and titanium revert management solutions for the aerospace and IGT industries. Revert
includes metal chips, casting gates, bar ends, forging flash, and other byproducts from casting, forging, and fastener manufacturing processes that can be re-melted and reused. Headquartered in Livingston, Scotland, Caledonian employs approximately
300 people and operates nine revert processing facilities in six countries. The Caledonian acquisition is a stock purchase for tax purposes and operates as part of the Forged Products segment.

Discontinued Operations

Our financial statements were
impacted by activities relating to the planned divestiture of a number of our businesses. These businesses have been accounted for under Statement of Financial Accounting Standards (SFAS) No. 144, Accounting for the Impairment
or Disposal of Long-Lived Assets. Accordingly, any operating results of these businesses are presented in the Condensed Consolidated Statements of Income as discontinued operations, net of tax, and all prior periods have been reclassified.

In the first quarter of fiscal 2009, we sold the stock of our Technova entities, a foreign operation held for sale from the Flow Technologies pumps and
valves business. This transaction resulted in a gain of approximately $3.0 million.

In the fourth quarter of fiscal 2008, we entered into an agreement to
sell the Unbrako fastener business headquartered in Shannon, Ireland. The sale was completed in the second quarter of fiscal 2009, resulting in a gain of approximately $3.5 million. Unbrako was reclassified from the Fastener Products segment to
discontinued operations in the fourth quarter of fiscal 2008.

Also in the fourth quarter of fiscal 2008, we decided to dispose of the Kladno alloy
manufacturing business located in the Czech Republic. Kladno primarily supplied steel ingots to Wyman-Gordons Grafton, Massachusetts operation. Kladno was reclassified from the Forged Products segment to discontinued operations in the fourth
quarter of fiscal 2008.

Net income from discontinued operations was $3.6 million, or $0.02 per share (diluted) in the second quarter of fiscal 2009
compared with net income of $1.6 million, or $0.01 per share (diluted), in the same quarter last year. The net income from discontinued operations in the current quarter consists primarily of the gain from the sale of the Unbrako fastener business.
The net income from discontinued operations in the second quarter of last year principally reflects operating income from the Unbrako, Rescal, and SMA businesses, partially offset by operating losses from the Kladno business and miscellaneous
expenses associated with the Flow Technologies pumps & valves businesses.



26



---

Subsequent Events

On September 29, 2008 (the first day of our fiscal third quarter), we acquired Airdrome Holdings, LLC (Airdrome), which consists of Airdrome Precision Components (APC) and AF Aerospace Ltd. (AFA),
for approximately $57.8 million in cash. APC, located in Long Beach, California, is a leading supplier of hydraulic and pneumatic fluid fittings primarily for airframe applications. AFA, located in Rugby, England, manufactures a variety of machined
components for aerospace applications, including fittings and other fluid conveyance products, ultra-high tensile bolts, and machined details. Fluid fittings, manufactured in nickel, titanium, and stainless steel alloys, are the critical connectors
for hoses transporting fuel, hydraulic fluid, and pneumatic pressure throughout an aircraft. Airdromes results will be reported as part of the Fastener Products segment.

On October 6, 2008, we agreed to acquire Fatigue Technology, Inc. (FTI), headquartered in Seattle, WA. FTI pioneered the cold expansion process in 1969, and is the technology leader in fatigue life
extension for both metal and composite airframe fastener holes. The acquisition is expected to be completed in the third quarter of fiscal 2009, after which FTIs results will be reported as part of the Fastener Products segment.



27



---

Results of Operations by Segment  Comparison Between the Three Months Ended September 28, 2008 and
September 30, 2007



|                                                 |  |                    |         |   |                     |   |         |   |  |   |       |   |  |       |  
|------------------------------------------------ |  | ------------------ | ------- | - | ------------------- | - | ------- | - |  | - | ----- | - |  | ----- | -
|                                                 |  | Three Months Ended |         |   | Increase/(Decrease) |  
|(In millions, except per share data)             |  | 9/28/08            |         |   | 9/30/07             |   |         | $ |  |   | %     |  
|Net sales:                                       |  |                    |         |   |                     |   |         |   |  |   |       |   |  |       |  
|Investment Cast Products                         |  | $                  | 612.0   |   |                     | $ | 531.1   |   |  | $ | 80.9  |   |  | 15.2  | %
|Forged Products                                  |  |                    | 781.1   |   |                     |   | 813.0   |   |  |   | (31.9 | ) |  | (3.9  | )
|Fastener Products                                |  |                    | 426.4   |   |                     |   | 374.6   |   |  |   | 51.8  |   |  | 13.8  |  
|                                                 |  |                    |         |   |                     |   |         |   |  |   |       |   |  |       |  
|Consolidated net sales                           |  | $                  | 1,819.5 |   |                     | $ | 1,718.7 |   |  | $ | 100.8 |   |  | 5.9   | %
|                                                 |  |                    |         |   |                     |   |         |   |  |   |       |   |  |       |  
|Segment operating income (loss):                 |  |                    |         |   |                     |   |         |   |  |   |       |   |  |       |  
|Investment Cast Products                         |  | $                  | 156.1   |   |                     | $ | 125.6   |   |  | $ | 30.5  |   |  | 24.3  | %
|% of sales                                       |  |                    | 25.5    | % |                     |   | 23.6    | % |  |   |       |   |  |       |  
|Forged Products                                  |  |                    | 153.1   |   |                     |   | 176.4   |   |  |   | (23.3 | ) |  | (13.2 | )
|% of sales                                       |  |                    | 19.6    | % |                     |   | 21.7    | % |  |   |       |   |  |       |  
|Fastener Products                                |  |                    | 119.6   |   |                     |   | 91.0    |   |  |   | 28.6  |   |  | 31.4  |  
|% of sales                                       |  |                    | 28.0    | % |                     |   | 24.3    | % |  |   |       |   |  |       |  
|Corporate expense                                |  |                    | (23.6   | ) |                     |   | (25.0   | ) |  |   | 1.4   |   |  | (5.6  | )
|                                                 |  |                    |         |   |                     |   |         |   |  |   |       |   |  |       |  
|Consolidated segment operating income            |  |                    | 405.2   |   |                     |   | 368.0   |   |  | $ | 37.2  |   |  | 10.1  | %
|% of sales                                       |  |                    | 22.3    | % |                     |   | 21.4    | % |  |   |       |   |  |       |  
|Interest expense, net                            |  |                    | 1.8     |   |                     |   | 13.6    |   |  |   |       |   |  |       |  
|                                                 |  |                    |         |   |                     |   |         |   |  |   |       |   |  |       |  
|Income before income taxes and minority interest |  | $                  | 403.4   |   |                     | $ | 354.4   |   |  |   |       |   |  |       |  
|                                                 |  |                    |         |   |                     |   |         |   |  |   |       |   |  |       |  

Investment Cast Products

Investment Cast Products sales increased 15.2 percent from $531.1 million in the second quarter of fiscal 2008 to $612.0 million this year. Operating income increased 24.3 percent from $125.6 million in the
second quarter of fiscal 2008 to $156.1 million in the same quarter this year, while operating income as a percent of sales increased from 23.6 percent to 25.5 percent of sales. The year-over-year increase in sales reflects solid demand in the
commercial aerospace markets in addition to continuing strength and increased customer penetration in the global IGT markets. Sales also include approximately $23.8 million of contractual pricing related to pass-through of increased material costs
in the second quarter of fiscal 2009 compared to $23.3 million in the same period last year. The increase in operating income reflected the impact of higher sales volume, cost reductions and improved productivity. The improvement in operating
margins as a percentage of sales was mainly due to effective leverage from higher sales volumes and improved manufacturing performance. Contractual material pass-through pricing diluted operating margins by 1.0 percentage point in the second quarter
of fiscal 2009 compared to 1.1 percentage points in the same period a year ago.

Sales from this segment are expected to benefit from steady demand in the
power generation market. In order to meet demand, we have been investing in two capacity projects; the Deer Creek facility expansion which was completed during the current quarter and the new Renaissance Park facility in Painesville, Ohio, which is
expected to be completed in the fourth quarter. The impact of the Boeing strike, which was recently settled, will have an adverse effect during the second half of the fiscal year. We currently cannot estimate what the total impact will be, but
expect demand in commercial aerospace to resume over the coming months as aircraft production ramps up.



28



---

Forged Products

Forged Products sales were $781.1 million for the quarter, a decrease of 3.9 percent, compared to sales of $813.0 million in the second quarter of fiscal 2008. Operating income decreased 13.2 percent from $176.4 million in the second
quarter of fiscal 2008 to $153.1 million in the same quarter this year, while operating income as a percent of sales decreased from 21.7 percent to 19.6 percent of sales. The decrease in sales from the prior year reflects the decline in external
selling prices of nickel alloy from the segments three primary mills, which negatively impacted external sales by approximately $48 million in the current quarter versus a year ago. Nickel prices decreased approximately 36 percent on the
London Metal Exchange (LME) compared to the same quarter last year. In addition, the second quarter was negatively impacted by downtime for seasonal maintenance, production and shipping delays resulting from Hurricane Ike, and the unplanned outage
of an isothermal forging press. These declines were partially offset by a 24 percent increase in extruded pipe sales, driven by improved throughput to meet the robust demand. The Forged Products segment continued to dedicate more resources for
internal production, which impacts top-line revenues. Intercompany sales for this segment, which includes sales within and between segments, increased from $169.5 million in second quarter of fiscal 2008 to $215.4 million in the current quarter;
these sales are eliminated in consolidation. Operating income was negatively impacted in the second quarter due to planned maintenance downtime, Hurricane Ike, and damage to an isothermal forging press. These effects were partially offset by
increased sales of power generation products and from successful implementation of cost-reduction initiatives. Contractual pricing related to pass-through of increased raw material costs (based on contractual metal pricing calculations that are
driven by market prices which generally lag by three months to one year) accounted for approximately $78.7 million of sales in the second quarter of fiscal 2009 compared to $87.5 million in the same period last year, which diluted operating margins
by 2.2 percentage points in the current quarter compared to 2.6 percentage points the same period a year ago.

Sales within the Forged Products segment are
expected to moderately increase in the second half of fiscal 2009 compared to the first half of the year, consistent with growth in the commercial aerospace markets as well as continuing growth in seamless pipe and other power generation markets.
Sales in the second half of the fiscal year will be negatively impacted by the recently settled Boeing strike due to order pushouts, although we cannot estimate at this time what the total impact will be. We expect demand to resume over the coming
months as aircraft production ramps up. In addition, the segment is expected to further increase its internal supply of materials, which has a negative impact on sales and a positive impact on costs.

Fastener Products

The Fastener Products segment reported
$426.4 million of sales with operating income of $119.6 million, or 28.0 percent of sales, in the second quarter of fiscal 2009, compared to sales of $374.6 million and operating income of $91.0 million, or 24.3 percent of sales, in the second
quarter of fiscal 2008. The increase in sales primarily resulted from aerospace sales growing $47.8 million, or 19% compared to the prior year. Sales at our general industrial operations are holding steady, while sales from the automotive businesses
continue to decline as a result of a depressed North American automotive market. Operating income as a percent of sales benefited from increased leverage from higher sales volume and continued efforts to reduce costs and improve manufacturing
processes throughout the segment.

As with our other reportable segments, projected sales within the Fastener Products segment in the second half of the
fiscal year will be impacted by the Boeing strike, which was recently settled. We currently cannot estimate what the total impact will be, but expect demand to resume over the coming months as aircraft production ramps up.



29



---

Consolidated Results of Operations - Comparison Between the Six Months Ended September 28, 2008 and
September 30, 2007



|                                                            |         |                  |         |         |                     |   |         |   |  |   |       |   |  |       |   
|----------------------------------------------------------- | ------- | ---------------- | ------- | ------- | ------------------- | - | ------- | - |  | - | ----- | - |  | ----- | --
|                                                            |         | Six Months Ended |         |         | Increase/(Decrease) |  
|(In millions, except per share data)                        |         | 9/28/08          |         |         | 9/30/07             |   |         | $ |  |   | %     |  
|Net sales                                                   |         | $                | 3,654.4 |         |                     | $ | 3,369.0 |   |  | $ | 285.4 |   |  | 8.5   | % 
|Cost of goods sold                                          |         |                  | 2,625.7 |         |                     |   | 2,461.7 |   |  |   | 164.0 |   |  | 6.7   |   
|Selling and administrative expenses                         |         |                  | 199.4   |         |                     |   | 187.4   |   |  |   | 12.0  |   |  | 6.4   |   
|Interest expense                                            |         |                  | 9.5     |         |                     |   | 29.0    |   |  |   | (19.5 | ) |  | (67.2 | ) 
|Interest income                                             |         |                  | (4.5    | )       |                     |   | (2.8    | ) |  |   | (1.7  | ) |  | (60.7 | ) 
|                                                            |         |                  |         |         |                     |   |         |   |  |   |       |   |  |       |   
|Income before income taxes and minority interest            |         |                  | 824.3   |         |                     |   | 693.7   |   |  |   | 130.6 |   |  | 18.8  |   
|Income tax expense                                          |         |                  | 283.4   |         |                     |   | 235.2   |   |  |   | 48.2  |   |  | 20.5  |   
|Effective tax rate                                          |         |                  | 34.4    | %       |                     |   | 33.9    | % |  |   |       |   |  |       |   
|Minority interest                                           |         |                  | (0.3    | )       |                     |   | (0.6    | ) |  |   | 0.3   |   |  | 50.0  |   
|                                                            |         |                  |         |         |                     |   |         |   |  |   |       |   |  |       |   
|Net income from continuing operations                       |         |                  | 540.6   |         |                     |   | 457.9   |   |  |   | 82.7  |   |  | 18.1  |   
|Net income from discontinued operations                     |         |                  | 4.5     |         |                     |   | 3.9     |   |  |   | 0.6   |   |  | 15.4  |   
|                                                            |         |                  |         |         |                     |   |         |   |  |   |       |   |  |       |   
|Net income                                                  |         | $                | 545.1   |         |                     | $ | 461.8   |   |  | $ | 83.3  |   |  | 18.0  | % 
|                                                            |         |                  |         |         |                     |   |         |   |  |   |       |   |  |       |   
|Net income per share from continuing operations  diluted   |         | $                | 3.84    |         |                     |   | 3.27    |   |  | $ | 0.06  |   |  | 17.4  | % 
|Net income per share from discontinued operations  diluted |         |                  | 0.03    |         |                     |   | 0.03    |   |  |   |      |   |  |      |   
|                                                            |         |                  |         |         |                     |   |         |   |  |   |       |   |  |       |   
|Net income per share - diluted                              |         | $                | 3.87    |         |                     | $ | 3.30    |   |  | $ | 0.06  |   |  | 17.3  | % 
|                                                            |         |                  |         |         |                     |   |         |   |  |   |       |   |  |       |   
|                                                            |         |                 
|Average market price of key metals (per pound)              |         | Six Months Ended |         |         | Increase/(Decrease) |  
|                                                            | 9/28/08 |                  |         | 9/30/07 |                     |   | $       |   |  | % |      
|Nickel                                                      |         | $                | 10.25   |         |                     | $ | 17.16   |   |  | $ | (6.91 | ) |  | (40   | )%
|London Metals Exchange1                                     |         |                  |         |         |                     |   |         |   |  |   |       |   |  |       |   
|Titanium                                                    |         | $                | 4.08    |         |                     | $ | 7.64    |   |  | $ | (3.56 | ) |  | (47   | )%
|Ti 6-4 bulk, Metalprices.com                                |         |                  |         |         |                     |   |         |   |  |   |       |   |  |       |   
|Cobalt                                                      |         | $                | 41.58   |         |                     | $ | 28.08   |   |  | $ | 13.50 |   |  | 48    | % 
|Metal Bulletin COFM.8 Index1                                |         |                  |         |         |                     |   |         |   |  |   |       |   |  |       |   



|1 | Source:Bloomberg
|- | ----------------



30



---

|                          |         |                  |         |                     |   |       |   |   |       |  |     |  
|------------------------- | ------- | ---------------- | ------- | ------------------- | - | ----- | - | - | ----- |  | --- | -
|Intercompany sales1       |         | Six Months Ended |         | Increase/(Decrease) |  
|                          | 9/28/08 |                  | 9/30/07 |                     | $ |       | % |  
|Investment Cast Products2 |         | $                | 144.3   |                     | $ | 61.7  |   | $ | 82.6  |  | 134 | %
|Forged Products3          |         |                  | 439.1   |                     |   | 277.8 |   |   | 161.3 |  | 58  |  
|Fastener Products4        |         |                  | 60.8    |                     |   | 50.0  |   |   | 10.8  |  | 22  |  
|                          |         |                  |         |                     |   |       |   |   |       |  |     |  
|Total intercompany sales  |         | $                | 644.2   |                     | $ | 389.5 |   | $ | 254.7 |  | 65  | %
|                          |         |                  |         |                     |   |       |   |   |       |  |     |  



|1 | Intercompany sales consist of each segments total intercompany sales, including intercompany sales within a
segment and between segments.
|- | ------------------------------------------------------------------------------------------------------------------------------------------



|2 | Investment Cast Products: Includes sales between segments of $13.3 million and $14.9 million for the first six months of
fiscal 2009 and 2008, respectively.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------



|3 | Forged Products: Includes sales between segments of $20.6 million and $11.9 million for the first six months of fiscal
2009 and 2008, respectively.
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------



|4 | Fastener Products: Includes sales between segments of $1.5 million and $4.9 million for the first six months of fiscal
2009 and 2008, respectively.
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------

Sales for the first six months of fiscal 2009 were $3,654.4 million, up $285.4 million from $3,369.0
million in the same period last year. The increase in sales benefited from continuing strong conditions in our core aerospace and power generation markets. Contractual material pass-through pricing (based on contractual pricing calculations that are
driven by market prices shown in the table above which generally lag by three months to one year) remained relatively flat, increasing sales by approximately $220.9 million this year versus approximately $222.0 million last year. With regard to
growth in the commercial aircraft industry, forecasts from the Airline Monitor as of July 2008 indicate aircraft deliveries are expected to increase approximately 8 percent in calendar year 2008 and approximately 9 percent in calendar year 2009.
These forecasts were published prior to the start of the recent labor issues at Boeing, which will impact the timing of deliveries, and prior to the recent downturn in the US and global financial markets. We are unable to predict the impact of
current economic conditions on future aircraft orders or timing of deliveries; however, these factors may reduce our sales for the remainder of fiscal 2009. Due to manufacturing lead times, our production volumes are approximately 6 to 9 months
ahead of aircraft deliveries.

Net income from continuing operations for the first six months of fiscal 2009 was $540.6 million, or $3.84 per share
(diluted), compared to net income from continuing operations for the first six months of fiscal 2008 of $457.9 million, or $3.27 per share (diluted). Net income (after discontinued operations) for the first six months of fiscal 2009 was $545.1
million, or $3.87 per share (diluted), compared with net income of $461.8 million, or $3.30 per share (diluted), in the same period last year.

Interest and Income Tax

Net interest expense for the six months ended September 28, 2008 was $5.0 million, as compared with
$26.2 million for the same period last year. The lower net expense is primarily due to significantly reduced debt levels and higher interest income resulting from increased cash balances compared to the same period last year.

The effective tax rate for the first half of fiscal 2009 was 34.4 percent, 0.5 percentage points higher than the 33.9 percent effective tax rate in the same period last
year. The increase in the tax rate was primarily due to reduced tax incentives in foreign jurisdictions, a decrease in benefits from the federal research and development tax credit, and favorable audit settlements recognized in the first six months
of fiscal 2008.

Discontinued Operations

The
net income from discontinued operations was $4.5 million, or $0.03 per share (diluted), for the six months ended September 28, 2008 compared with net income of $3.9 million, or $0.03 per share diluted), in the same period last year. The net
income from discontinued operations in the first six months of fiscal 2009 consists primarily of the gain from the sale of the Unbrako fastener business and the Technova business, partially offset by operating losses from the Kladno business. The
net income from discontinued operations in the same period of last year principally reflects operating income from the Unbrako, Rescal, and SMA businesses, partially offset by operating losses from the Kladno business and miscellaneous expenses
associated with the Flow Technologies pumps & valves businesses.



31



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Results of Operations by Segment  Comparison Between the Six Months Ended September 28, 2008 and
September 30, 2007



|                                                 |  |                  |         |   |                      |   |         |   |  |   |       |   |  |      |  
|------------------------------------------------ |  | ---------------- | ------- | - | -------------------- | - | ------- | - |  | - | ----- | - |  | ---- | -
|                                                 |  | Six Months Ended |         |   | Increase/(Decrease)) |  
|                                                 |  | 9/28/08          |         |   | 9/30/07              |   |         | $ |  |   | %     |  
|Net sales:                                       |  |                  |         |   |                      |   |         |   |  |   |       |   |  |      |  
|Investment Cast Products                         |  | $                | 1,209.7 |   |                      | $ | 1,040.5 |   |  | $ | 169.2 |   |  | 16.3 | %
|Forged Products                                  |  |                  | 1,597.6 |   |                      |   | 1,586.5 |   |  |   | 11.1  |   |  | 0.7  |  
|Fastener Products                                |  |                  | 847.1   |   |                      |   | 742.0   |   |  |   | 105.1 |   |  | 14.2 |  
|                                                 |  |                  |         |   |                      |   |         |   |  |   |       |   |  |      |  
|Consolidated net sales                           |  | $                | 3,654.4 |   |                      | $ | 3,369.0 |   |  | $ | 285.4 |   |  | 8.5  | %
|                                                 |  |                  |         |   |                      |   |         |   |  |   |       |   |  |      |  
|Operating income (loss):                         |  |                  |         |   |                      |   |         |   |  |   |       |   |  |      |  
|Investment Cast Products                         |  | $                | 307.1   |   |                      | $ | 245.2   |   |  | $ | 61.9  |   |  | 25.2 | %
|% of sales                                       |  |                  | 25.4    | % |                      |   | 23.6    | % |  |   |       |   |  |      |  
|Forged Products                                  |  |                  | 335.9   |   |                      |   | 345.9   |   |  |   | (10.0 | ) |  | (2.9 | )
|% of sales                                       |  |                  | 21.0    | % |                      |   | 21.8    | % |  |   |       |   |  |      |  
|Fastener Products                                |  |                  | 234.5   |   |                      |   | 177.6   |   |  |   | 56.9  |   |  | 32.0 |  
|% of sales                                       |  |                  | 27.7    | % |                      |   | 23.9    | % |  |   |       |   |  |      |  
|Corporate expense                                |  |                  | (48.2   | ) |                      |   | (48.8   | ) |  |   | 0.6   |   |  | (1.2 | )
|                                                 |  |                  |         |   |                      |   |         |   |  |   |       |   |  |      |  
|Consolidated segment operating income            |  |                  | 829.3   |   |                      |   | 719.9   |   |  | $ | 109.4 |   |  | 15.2 | %
|% of sales                                       |  |                  | 22.7    | % |                      |   | 21.4    | % |  |   |       |   |  |      |  
|Interest expense, net                            |  |                  | 5.0     |   |                      |   | 26.2    |   |  |   |       |   |  |      |  
|                                                 |  |                  |         |   |                      |   |         |   |  |   |       |   |  |      |  
|Income before income taxes and minority interest |  | $                | 824.3   |   |                      | $ | 693.7   |   |  |   |       |   |  |      |  
|                                                 |  |                  |         |   |                      |   |         |   |  |   |       |   |  |      |  

Investment Cast Products

Investment Cast Products sales increased 16.3 percent from $1,040.5 million in the first six months of fiscal 2008 to $1,209.7 million this year. Operating income for the segment increased 25.2 percent, from
$245.2 million, or 23.6 percent of sales, a year ago to $307.1 million, or 25.4 percent of sales, in the first six months of fiscal 2009. The increase in sales was driven by continued strength in the aerospace and IGT markets. The increase in
operating income reflected the impact of the higher sales volume and operating improvements. The improvement in operating margins as a percentage of sales was mainly due to the leverage from higher sales volume and improved manufacturing
performance. The first six months of fiscal 2009 included approximately $51.4 million related to contractual pass-through of material costs versus approximately $49.5 million in the same period last year, diluting operating margins by 1.1 percentage
points in the first half of fiscal 2009 compared to 1.2 percentage points in the same period a year ago.

Forged Products

Forged Products sales were $1,597.6 million for the first six months of fiscal 2009, an increase of 0.7 percent, compared to sales of $1,586.5 million in the same
period last year. Operating income decreased 2.9 percent from $345.9 million, or 21.8 percent of sales, in the first half of fiscal 2008 to $335.9 million, or 21.0 percent of sales, this year. Current period results include six months of sales from
the acquisition of Caledonian compared to three months in the prior year, contributing approximately $17.0 million of incremental sales year-over-year. The slight increase in sales also reflects increased demand for aerospace products and extruded
pipe in the base businesses, partially offset by significantly lower external selling prices of alloy from the segments three primarily mills, primarily nickel, which decreased approximately 40 percent on the London Metal Exchange (LME)
compared to the same period last year. In addition, top-line revenues were impacted by greater intercompany sales, which increased 58 percent over the prior year. Operating income was negatively impacted in the second quarter of fiscal 2009 due to
planned maintenance downtime, Hurricane Ike, and damage to an isothermal forging press. These effects were partially offset by increased sales of power generation products and from successful implementation of cost-reduction initiatives. The first
six months of fiscal 2009 included approximately $162.8 million related to contractual pass-through of higher material costs versus approximately $165.0 million in the same period last year, diluting operating margins by 2.5 percentage points in the
first half of fiscal 2009 compared to 2.4 percentage points in the same period a year ago. Contractual metal pricing calculations are driven by market prices which generally lag by three months to one year.



32



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Fastener Products

The Fastener Products segment reported $847.1 million of sales with operating income of $234.5 million, or 27.7 percent of sales, in the first half of fiscal 2009, compared to sales of $742.0 million and operating income of $177.6 million,
or 23.9 percent of sales in the same period last year. The increase in sales was driven by continued strength in the aerospace markets, resulting in an 18.8 percent increase in aerospace sales over the same period a year ago. This increase was
partially offset by a decline in automotive fastener sales, driven by slowing North American automobile production. Operating income as a percent of sales benefited from the higher margin aerospace business and the impact of continued cost take-outs
and improved manufacturing processes throughout the segment.

Changes in Financial Condition and Liquidity

Total assets of $6,428.8 million at September 28, 2008 represented a $378.7 million increase from the $6,050.1 million balance at March 30, 2008, principally
reflecting $311.0 million of higher cash balances and a $118.6 million increase in inventories to support revenue growth. Total capitalization at September 28, 2008 was $4,848.5 million, consisting of $309.0 million of debt and $4,539.5 million
of equity. The debt-to-capitalization ratio declined to 6.4% at September 28, 2008 from 8.1% at the end of fiscal 2008.

Cash as of September 28,
2008 was $532.3 million, up $311.0 million from the end of fiscal 2008, and total debt was $309.0 million, down $46.0 million since the end of fiscal 2008. The combined increase in cash and decrease in debt of $357.0 million reflects cash generation
from operations of $484.0 million and $22.2 million from the issuance of common stock and related tax benefits, partially offset by capital expenditures of $104.4 million, $21.2 million related to the Caledonian acquisition, and cash dividends of
$8.4 million.

Capital spending during fiscal 2009, which is anticipated to be approximately $250 million, will principally provide for additional capacity
expansion, cost reduction, and equipment upgrades throughout the company. We expect to contribute approximately $26.4 million to the defined benefit pension plans during fiscal year 2009, of which approximately $11.0 million is expected to be
voluntary. In addition, we expect to contribute approximately $11.0 million to the other postretirement benefit plans during fiscal year 2009.

We believe
we will be able to meet our short- and longer-term liquidity needs for working capital, pension and other postretirement benefit obligations, capital spending, cash dividends, scheduled repayment of debt and potential acquisitions from cash
generated from operations, borrowing from our existing $1.0 billion revolving credit facility or new bank credit facilities, issuance of public or privately placed debt securities, or the issuance of equity instruments.



33



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Forward-Looking Statements

Information included within this Form 10-Q 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, power generation, general industrial and automotive cycles; the
relative success of our entry into new markets; competitive pricing; the financial viability of our significant customers; the impact on the Company of customer labor disputes; demand, timing, and market acceptance of new commercial and military
programs; the availability and cost of energy, materials, supplies, and insurance; the cost of pension and postretirement medical benefits; equipment failures; relations with our employees; our ability to manage our 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; the impact of adverse weather
conditions or natural disasters; and implementation of new technologies and process improvements. Any forward-looking statements should be considered in light of these factors. We undertake no obligation to update any forward-looking information to
reflect anticipated or unanticipated events or circumstances after the date of this document.



|Item 3. | Quantitative and Qualitative Disclosures About Market Risk
|------- | ----------------------------------------------------------

There
have been no material changes to our market risk exposure since March 30, 2008.



|Item 4. | Controls and Procedures
|------- | -----------------------

PCC management, including the Chief
Executive Officer and Chief Financial Officer, have conducted an evaluation of the effectiveness of disclosure controls and procedures as of the end of the period covered by this report pursuant to Exchange Act Rule 13a-15(b). Based on that
evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in reports filed with the Securities and
Exchange Commission is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commissions rules and forms, and is accumulated and communicated to Company management, including its
principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. There have been no changes in internal control over financial reporting that occurred during the last fiscal quarter that
have materially affected, or are reasonably likely to materially affect, the Companys internal control over financial reporting.



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PART II. OTHER INFORMATION



|Item 1. | Legal Proceedings
|------- | -----------------

In October 2008, the West Virginia Department of
Environmental Protection (DEP) filed a lawsuit in the Circuit Court of Cabell County alleging that a Special Metals Corporation subsidiary placed off-site hazardous waste water from its Burnaugh, Kentucky facility into two non-permitted
sumps at its Huntington, West Virginia facility. The waste water was transported in 26 shipments over a three-day period in May-June 2007. The complaint acknowledges the subsidiarys eventual proper treatment and disposal of the waste water.
The complaint does not allege any harm to the environment. The DEP seeks a fine of up to $25,000 per day in statutory civil penalties for each violation, in addition to attorney fees and costs. We are currently investigating the incident and believe
that any resulting judgment or settlement will not have a material adverse effect on our consolidated financial position, results of operations or cash flows.



|Item 1A. | Risk Factors
|-------- | ------------

We may encounter difficulties associated with
integration of acquired businesses and fail to realize anticipated benefits, and acquisitions could subject us to a number of operational risks.

In
July 2007, we completed the acquisition of Caledonian Alloys Group Limited. We expect that we will continue to make acquisitions of, investments in, and strategic alliances with complementary businesses, products and technologies to enable us to add
products and services for our core customer base and for related markets, and to expand each of our businesses geographically. The success of those and prior transactions will depend on our ability to integrate assets and personnel and to apply our
manufacturing processes and controls to the acquired businesses. Although our acquisition strategy generally emphasizes the retention of key management of the acquired businesses and an ability of the acquired business to continue to operate
independently, various changes may be required to integrate the acquired businesses into our operations, to assimilate many new employees and to implement reporting, monitoring and forecasting procedures. Implementation of this strategy entails a
number of other risks, including:



| |  |  | inaccurate assessment of undisclosed liabilities;
| | - |  | -------------------------------------------------



| |  |  | entry into markets in which we may have limited or no experience;
| | - |  | -----------------------------------------------------------------



| |  |  | diversion of managements attention from our core businesses;
| | - |  | -------------------------------------------------------------



| |  |  | difficulties in realizing projected efficiencies, synergies and cost savings; and
| | - |  | ---------------------------------------------------------------------------------



| |  |  | increase in our indebtedness and a limitation in our ability to access additional capital when needed.
| | - |  | ------------------------------------------------------------------------------------------------------

Our failure to adequately address these acquisition risks could cause us to fail to realize the benefits we anticipated from the transactions.

We operate in cyclical markets.

A significant portion of our
revenues are derived from the highly cyclical aerospace and power generation markets. Our sales to the aerospace industry constituted 55 percent of our total sales in fiscal 2008. Our power generation sales constituted 24 percent of our total sales
in fiscal 2008.

The commercial aerospace industry is historically driven by the demand from commercial airlines for new aircraft. The U.S. and
international commercial aviation industries continue to face challenges arising from competitive pressures and increased fuel costs. Demand for commercial aircraft is further influenced by airline industry profitability, trends in airline passenger
traffic, by the state of U.S. and world economies, the ability of aircraft purchasers to obtain required financing and numerous other factors including the effects of terrorism and health and safety concerns. The military aerospace cycle is highly
dependent on U.S. and foreign government funding; however, it is also driven by the effects of terrorism, a changing global political environment, U.S. foreign policy, the retirement of older aircraft and technological improvements to new engines
that increase reliability. Accordingly, the timing, duration and severity of cyclical upturns and downturns cannot be forecast with certainty. A future downturn or reduction in demand could have a material adverse effect on our business.

The power generation market is also cyclical in nature. Demand for power generation products is global and is affected by the state of the U.S. and world economies,
the availability of financing to power generation project sponsors and the political environments of numerous countries. The availability of fuels and related prices also have a large impact on demand. Reductions in demand for our power generation
products could have a material adverse effect on our business.



35



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In addition to the aerospace and power generation markets, we sell products and services to customers in the automotive,
medical, oil and gas, chemical and petrochemical, pulp and paper, and other general industrial markets. Each of these markets is cyclical in nature. Customer demand for our products or services in these markets may fluctuate widely depending upon
U.S. and world economic conditions, the availability of financing and industry-specific factors. Cyclical declines or sustained weakness in any of these markets could have a material adverse effect on our business.

Our business is dependent on a small number of direct and indirect customers.

A substantial portion of our business is conducted with a relatively small number of large direct customers, including General Electric Company, United Technologies Corporation and Rolls Royce plc. General Electric
accounted for approximately 12 percent of our total sales for fiscal 2008. No other customer accounted for more than 10 percent of total sales; however, United Technologies and Rolls Royce are also considered key customers. A financial hardship
experienced by any one of these three customers, the loss of any of them, or a reduction in or substantial delay of orders from any of them, could have a material adverse effect on our business.

Additionally, a significant portion of our aerospace products are ultimately used in the production of new commercial aircraft. There are only two primary manufacturers
of large commercial aircraft in the world. A significant portion of our aerospace sales are dependent on the number of new aircraft built by these two manufacturers, which is in turn dependent on a number of factors over which we have little or no
control. Those factors include the demand for new aircraft from airlines around the globe and factors that impact their manufacturing capabilities such as the availability of raw materials and manufactured components, changes in the regulatory
environment and labor relations between the aircraft manufacturers and their work forces. A significant interruption or slow down of the number of new aircraft built by these manufacturers could have a material adverse effect on our business.

Sales to the military sector constituted approximately 12 percent of our fiscal 2008 sales. Defense spending is subject to appropriations and to political
pressures that influence which programs are funded and those which are cancelled. Reductions in domestic or foreign defense budgets or military aircraft procurement or delays in funding could adversely affect our business.

Our business depends, in part, on the demand for and market acceptance of new commercial and military aircraft programs.

The success of our business will depend, in part, on the success of new commercial and military aircraft programs including the Boeing 787 and the Airbus A380
programs. We are currently under contract to supply components for a number of new commercial, general aviation, and military aircraft programs. Cancellation, reductions or delays of orders or contracts by our customers on any of these programs
could have a material adverse effect on our business.

The competitive nature of our business results in pressure for price concessions to our
customers and increased pressure to reduce our costs.

We are subject to substantial competition in all of the markets we serve, and we expect this
competition to continue. As a result, we have made significant long term price concessions to our customers in the aerospace and power generation markets from time to time, and we expect customer pressure for further long term price concessions to
continue. Maintenance of our profitability will depend, in part, on our ability to sustain a cost structure that enables us to be cost-competitive. If we are unable to adjust our costs relative to our pricing, or if we are unable to continue to
compete effectively, our business will suffer. Our effectiveness in managing our cost structure will be a key determinate of future profitability and competitiveness.



36



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Our business is dependent on a number of raw materials that are subject to volatility in price and availability.

We use a number of raw materials in our products, including certain metals such as cobalt, titanium, nickel, tantalum and molybdenum, which are
found in only a few parts of the world and are available from a limited number of suppliers. The availability and costs of these metals may be influenced by private or government cartels, changes in world politics, unstable governments in exporting
nations and inflation. These metals are required for the alloys used or manufactured in our investment castings, forged products and fasteners segments. We have escalation clauses for nickel, titanium and other metals in a number of our long-term
contracts with major customers, but we are not usually able to fully offset the effects of changes in raw material costs. We also employ price-in-effect metal pricing in our alloy production businesses to lock-in the current cost of
metal at the time of production. The ability of key metal suppliers to meet quality and delivery requirements can also impact our ability to meet commitments to customers. Future shortages or price fluctuations in raw materials could result in
decreased sales as well as margins, or otherwise adversely affect our business. The enactment of new or increased import duties on raw materials imported by us could also increase the costs to us of obtaining the raw materials and might adversely
affect our business.

Our business is affected by federal rules, regulations and orders applicable to government contractors.

A number of our products are manufactured and sold under U.S. government contracts or subcontracts. Consequently, we are directly and indirectly subject to various
federal rules, regulations and orders applicable to government contractors. From time to time, we are also subject to government inquiries and investigations of our business practices due to our participation in government programs. These inquiries
and investigations are costly and consuming of internal resources. Violation of applicable government rules and regulations could result in civil liability, in cancellation or suspension of existing contracts or in ineligibility for future contracts
or subcontracts funded in whole or in part with federal funds, any of which could have a material adverse effect.

Our business is subject to
environmental regulations and related liabilities and liabilities associated with chemicals and substances in the workplace.

We are subject to
various federal and state environmental laws and regulations concerning, among other things, water discharges, air emissions, hazardous material and waste management and environmental cleanup. Environmental laws and regulations continue to evolve
and we may become subject to increasingly stringent environmental standards in the future (particularly under air quality and water quality laws). We are required to comply with environmental laws and the terms and conditions of multiple
environmental permits. Failure to comply with these laws or permits could result in fines and penalties or the need to install pollution control equipment that could be costly. We also may be required to make additional expenditures, which could be
significant, relating to environmental matters on an ongoing basis. We also own properties, or conduct or have conducted operations at properties, where hazardous materials have been used for many years, including during periods before careful
management of these materials was required or generally believed to be necessary. Consequently, we will continue to be subject to environmental laws that impose liability for historical releases of hazardous substances.

Our financial statements include reserves for future costs arising from environmental issues relating to our properties and operations. Our accruals for known
environmental liabilities represent our best estimate of our probable future obligations for the investigation and remediation of known contaminated sites. Our accruals include asserted and unasserted claims. Our actual future expenditures, however,
relating to compliance and cleanup of environmental conditions at our properties cannot be conclusively determined. The estimate of our environmental costs is based on currently available facts, present laws and regulations and current technology
and take into consideration our prior experience in site investigation and remediation, the data available for each site, and the professional judgment of our environmental specialists and consultants. Although recorded liabilities include our best
estimate of all probable costs, our total costs for the final settlement of each site cannot be predicted with certainty due to the variety of factors that make potential costs associated with contaminated sites inherently uncertain, such as: the
nature and extent of site contamination, available remediation alternatives, the extent to which remedial actions will be required, the time period over which costs will be incurred, the number and economic viability of other responsible parties,
and whether we have any opportunity of contribution from third parties, including recovery from insurance policies. In addition, sites that are in the early stages of investigation are subject to greater uncertainties than mature sites that are
close to completion. Although the sites we identify vary across the spectrum, approximately half of our sites could be considered at an early stage of the investigation and remediation process. Therefore, our cost estimates and the accruals
associated with those sites are subject to greater uncertainties. Environmental contingent liabilities are often resolved over a long period of time and the timing of expenditures depends on a number of factors that vary by site. We expect that we
will



37



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expend present accruals over many years and that remediation of all currently known sites will be completed within 30 years. While it is possible that a
significant portion of the accrued costs as of September 28, 2008 may be paid out over the next ten years, we anticipate that no individual site will be considered to be material. We cannot ensure that our reserves are adequate to cover the
total cost of remedial measures that may eventually be required by environmental authorities with respect to known environmental matters or the cost of claims that may be asserted in the future with respect to environmental matters about which we
are not yet aware. Accordingly, the costs of environmental claims may exceed the amounts reserved.

We have been named as a PRP at sites identified by the
EPA and state regulatory agencies for investigation and remediation under CERCLA and similar state statutes. Under CERCLA, and under similar state statutes, potentially responsible parties are jointly and severally liable, and therefore we will
continue to be potentially liable to the government or third parties for the full cost of remediating contamination at our facilities or former facilities or at third-party sites where we have been designated a PRP. We are party to various
cost-sharing arrangements with other PRPs at certain sites. In addition to PRPs, some of these arrangements involve one or more regulatory agencies. These cost-sharing arrangements generally require all PRPs to post financial assurance of the
performance of the obligations. Our estimates of current reserves factor in these cost sharing arrangements and an assessment of the likelihood that such parties will fulfill their obligations at such sites. In estimating our current reserves for
environmental matters, we have assumed that we will not bear the entire cost of remediation of every site to the exclusion of other PRPs, who may be jointly and severally liable. In the unlikely event that we are required to fully fund the
remediation of a site, the statutory framework would allow us to pursue rights of contribution from other PRPs. It is also possible that we will be designated a PRP at additional sites in the future.

Like many other industrial companies in recent years, we are defendants in lawsuits alleging personal injury as a result of exposure to chemicals and substances in the
workplace, including asbestos. To date, we have been dismissed from a number of these suits and have settled a number of others. The outcome of litigation such as this is difficult to predict and a judicial decision unfavorable to us could be
rendered, possibly having a material adverse effect on our business.

Our business is subject to risks associated with international operations.

We purchase products from and supply products to businesses located outside of the United States. We also have significant operations located
outside the United States. In fiscal 2008, approximately 20 percent of our total sales were attributable to our non-U.S. subsidiaries. A number of risks inherent in international operations could have a material adverse effect on our international
operations and, consequently, on our results of operations, including:



| |  |  | currency fluctuations;
| | - |  | ----------------------



| |  |  | difficulties in staffing and managing multi-national operations;
| | - |  | ----------------------------------------------------------------



| |  |  | general economic and political uncertainties and potential for social unrest in countries in which we operate;
| | - |  | --------------------------------------------------------------------------------------------------------------



| |  |  | limitations on our ability to enforce legal rights and remedies;
| | - |  | ----------------------------------------------------------------



| |  |  | restrictions on the repatriation of funds;
| | - |  | ------------------------------------------



| |  |  | changes in trade policies;
| | - |  | --------------------------



| |  |  | tariff regulations;
| | - |  | -------------------



| |  |  | difficulties in obtaining export and import licenses; and
| | - |  | ---------------------------------------------------------



| |  |  | the risk of government financed competition.
| | - |  | --------------------------------------------

Any lower than expected rating of our bank debt and debt securities could adversely affect our business.

Two rating agencies,
Moodys and Standard & Poors (S&P), rate our debt securities. S&P upgraded our debt rating and Moodys maintained our debt rating during fiscal 2008. However, if the rating agencies were to reduce their
current ratings, our interest expense would increase and the instruments governing our indebtedness could impose additional restrictions on our ability to make capital expenditures or otherwise limit our flexibility in planning for, or reacting to,
changes in our business and the industries in which we operate or our ability to take advantage of potential business opportunities. These modifications also could require us to meet more stringent financial ratios and tests or could require us to
grant a security interest in our assets to secure the indebtedness. Our ability to comply with covenants contained in the instruments governing our existing and future indebtedness may be affected by events and circumstances beyond our control. If
we breach any of these covenants, one or more events of default, including cross-defaults between multiple components of our indebtedness, could result. These events of default could permit our creditors to declare all amounts owing to be
immediately due and payable, and terminate any commitments to make further extensions of credit.



38



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Our business involves risks associated with complex manufacturing processes.

Our manufacturing processes depend on certain sophisticated and high-value equipment, such as some of our forging presses for which there may be only limited or no
production alternatives. Unexpected failures of this equipment could result in production delays, revenue loss and significant repair costs. In addition, equipment failures could result in injuries to our employees. Moreover, the competitive nature
of our businesses requires us to continuously implement process changes intended to achieve product improvements and manufacturing efficiencies. These process changes may at times result in production delays, quality concerns and increased costs.
Any disruption of operations at our facilities due to equipment could have a material adverse effect on our business.

We could be faced with labor
shortages, disruptions or stoppages if our relations with our union employees were to deteriorate.

Our operations rely heavily on maintaining good
relations with our employees, and any labor shortage, disruption or stoppage caused by any deterioration in employee relations or difficulties in the renegotiation of labor contracts could reduce our operating margins and income. Approximately 25
percent of our employees are affiliated with unions or covered by collective bargaining agreements. We expect to negotiate nine collective bargaining agreements affecting approximately 11 percent of the workforce during fiscal 2009. Failure to
negotiate a new labor agreement when required could result in a work stoppage. Although we believe that our labor relations have generally been satisfactory, it is possible that we could become subject to additional work rules imposed by agreements
with labor unions, or that work stoppages or other labor disturbances could occur in the future, any of which could reduce our operating margins and income and place us at a disadvantage relative to non-union competitors.

Product warranty and product liability risks could adversely affect our operating results.

We produce many critical parts for commercial and military aircraft. Failure of our parts could give rise to substantial product liability claims. We maintain insurance addressing this risk, but there can be no
assurance that the insurance coverage will be adequate or will continue to be available on terms acceptable to us. We manufacture our parts to strict contractually-established standards and tolerances using complex manufacturing processes. If we
fail to meet the contractual requirements for a product we may be subject to product warranty costs and claims. These costs are generally not insured. We are parties to legal proceedings and other contingencies, the outcomes of which cannot be
predicted with certainty. We estimate material loss contingencies and establish reserves based on our analysis of the contingencies in accordance with Generally Accepted Accounting Principles (GAAP). Developments in the legal proceedings
may affect our assessment and estimates recorded as a liability or reserve and could result in an adverse effect on our results of operations in the period in which a liability would be recognized. See Item 3. Legal Proceedings in
this Form 10-K.

We could be required to make additional contributions to our defined benefit pension and postretirement benefit plans as a result of
adverse changes in interest rates, the capital markets and pension investments.

Our estimates of liabilities and expenses for pensions and other
postretirement benefits incorporate significant assumptions including the rate used to discount the future estimated liability, the long-term rate of return on plan assets and several assumptions relating to the employee workforce (salary increases,
medical costs, retirement age and mortality). Our results of operations, liquidity, or shareholders equity in a particular period could be affected by a decline in the rate of return on plan assets, the rate used to discount the future
estimated liability, or changes in employee workforce assumptions. We may have to contribute more to various pension plans and record higher pension-related expenses in future periods as a result of decreases in the value of investments held by
these plans.



|Item 2. | Unregistered Sale of Equity Securities and Use of Proceeds
|------- | ----------------------------------------------------------

None.



|Item 3. | Defaults Upon Senior Securities
|------- | -------------------------------

None.



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|Item 4. | Submission of Matters to a Vote of Security Holders
|------- | ---------------------------------------------------



|(a) | The Company held its Annual Meeting of Shareholders on August 12, 2008.
|--- | -----------------------------------------------------------------------



|(c) | The Shareholders voted as follows on the following matters:
|--- | -----------------------------------------------------------



| | 1. | Election of Directors. The voting results for each nominee are as follows:
| | -- | --------------------------------------------------------------------------



|                |  |             |  |               
|--------------- |  | ----------- |  | --------------
|Nominee         |  | Votes For   |  | Votes Withheld
|Don R. Graber   |  | 111,417,787 |  | 10,953,424    
|Lester L. Lyles |  | 119,858,606 |  | 2,512,605     

Mr. Graber and Mr. Lyles were elected to serve three-year terms.



| | 2. | Approval of the 2008 Employee Stock Purchase Plan. The voting result is as follows:
| | -- | -----------------------------------------------------------------------------------



|            |  |               |  |               
|----------- |  | ------------- |  | --------------
|Votes For   |  | Votes Against |  | Votes Withheld
|105,532,322 |  | 1,320,220     |  | 1,519,896     



| | 3. | Approval of Amendments to the 2001 Stock Incentive Plan. The voting result is as follows:
| | -- | -----------------------------------------------------------------------------------------



|           |  |               |  |               
|---------- |  | ------------- |  | --------------
|Votes For  |  | Votes Against |  | Votes Withheld
|95,274,521 |  | 11,410,845    |  | 1,687,072     



| | 4. | Ratify Independent Registered Public Accounting Firm. The voting result is as follows:
| | -- | --------------------------------------------------------------------------------------



|            |  |               |  |               
|----------- |  | ------------- |  | --------------
|Votes For   |  | Votes Against |  | Votes Withheld
|120,832,626 |  | 173,303       |  | 1,365,282     



|Item 5. | Other Information
|------- | -----------------

None.



|Item 6. | Exhibits
|------- | --------

(a) Exhibits



|     |  |                                                                                                                                                   
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------
|     | 
|10.1 |  | 2001 Stock Incentive Plan, as amended (Incorporated herein by reference to Exhibit 10.1 to the Form 8-K filed August 15, 2008.)                   
|     | 
|10.2 |  | Separation Agreement with Chris Ayers, dated July 29, 2008 (Incorporated herein by reference to Exhibit 10.1 to the Form 8-K filed July 30, 2008.)
|     | 
|10.3 |  | Supplemental Retirement Income Benefit for William D. Larsson.                                                                                    
|     | 
|31.1 |  | Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                           
|     | 
|31.2 |  | Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                           
|     | 
|32.1 |  | Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                           
|     | 
|32.2 |  | Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                           



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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 thereunto duly authorized.



|                       |  |  |  |                                                                                                              
|---------------------- |  |  |  | -------------------------------------------------------------------------------------------------------------
|                       |  |  |  | PRECISION CASTPARTS CORP. Registrant                                                                         
|                       |  | 
|DATE: November 7, 2008 |  |  |  | /s/ Shawn R. Hagel                                                                                           
|                       |  |  |  | Shawn R. Hagel Senior Vice President and
Chief Financial Officer (Principal Financial and Accounting
Officer)



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