<PAGE> 1
Form 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (Fee Required)
For the fiscal year ended June 3, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (No Fee Required)
For the transition period from to
Commission file number 0-3085
WYMAN-GORDON COMPANY
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 04-1992780
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
244 WORCESTER STREET, BOX 8001, GRAFTON, MASSACHUSETTS 01536-8001
(Address of Principal Executive Offices) (Zip Code)
508-839-4441
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
None None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $1 Par Value
(Title of Class)
Indicate by a check mark 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, and
(2) has been subject to such filing requirements for the past 90
days. Yes X No
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
Aggregate market value of the voting stock held by non-
affiliates of the registrant as of July 29, 1995: $154,481,750
Indicate the number of shares outstanding of each of the
registrant's classes of common stock, as of the latest practicable
date.
CLASS OUTSTANDING AT JULY 29, 1995
Common Stock, $1 Par Value 35,113,540 Shares
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DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's "Fiscal 1995 Annual Report to
Stockholders" are incorporated into Parts I, II & IV.
Portions of the Registrant's "Proxy Statement for Annual
Meeting of Stockholders" on October 18, 1995 are incorporated into
Parts III & IV.
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PART I
ITEM 1. BUSINESS
GENERAL
Wyman-Gordon Company, founded in 1883, is a leading
manufacturer of highly engineered, technically advanced components
for both the commercial and defense aerospace market and the
commercial power generation market. The Company uses die forging,
extrusion and investment casting processes to produce metal
components to exacting customer specifications for technically
demanding applications such as jet turbine engines, airframes and
land-based gas turbine engines. The Company also extrudes seamless
heavy-wall steel pipe for use primarily in commercial power
generation plants, and designs and produces prototype aircraft
using composite technologies. The Company produces components for
most of the major commercial and U.S. defense aerospace programs.
Metallurgical skills, a unique asset base and a broad offering of
capabilities allow the Company to serve competing customers
effectively and to lead the development and use of new metal
technologies for its customers' uses.
Wyman-Gordon Company's acquisition of Cameron Forged Products
Company from Cooper Industries, Inc. in May 1994 united two of the
country's largest and most technically advanced forgings companies
and had a pervasive impact on Wyman-Gordon Company. As a result of
the acquisition, the Company has broadened its revenue base and
expanded into new markets. The Company is also realizing
substantial operating and processing efficiencies through the
consolidation of systems and facilities and the reduction of
personnel performing duplicate functions.
MARKETS AND PRODUCTS
The principal markets served by the Company are aerospace and
power generation. Revenue by market for the respective periods
were as follows (000's omitted):
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
JUNE 3, 1995 MAY 28, 1994 (1)
% OF % OF
REVENUE TOTAL REVENUE TOTAL
<S> <C> <C> <C> <C>
Aerospace $300,143 76% $188,518 84%
Power generation 60,038 15 10,112 4
Other 36,458 9 26,064 12
Total $396,639 100% $224,694 100%
</TABLE>
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<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1993 DECEMBER 31, 1992
% OF % OF
REVENUE TOTAL REVENUE TOTAL
<S> <C> <C> <C> <C>
Aerospace $205,077 85% $263,961 88%
Power generation 9,214 4 12,717 4
Other 25,470 11 22,203 8
Total $239,761 100% $298,881 100%
</TABLE>
[FN]
(1) Revenues for the year ended May 28, 1994 are being presented
for comparative purposes only.
AEROSPACE
The Company produces products utilized in general aviation,
defense and business jet aircraft. The Company manufactures
numerous forged and cast components for jet engines produced by all
of the major manufacturers, including General Electric, Pratt &
Whitney, and Rolls-Royce. The Company's forged engine parts
include fan discs, compressor discs, turbine discs, seals, spacers,
shafts, hubs and cases. Cast engine parts include thrust
reversers, valves and fuel system parts such as combustion chamber
swirl guides. Jet engines may produce in excess of 100,000 pounds
of thrust and may subject parts produced by the Company to
temperatures reaching 1,350 degrees Fahrenheit. Components for
such extreme conditions require precision manufacturing and
expertise with high-purity titanium and nickel-based superalloys.
Rotating parts such as fan, compressor and turbine discs must be
manufactured to precise quality specifications.
The Company manufactures forged and cast structural parts for
fixed-wing aircraft and helicopters. These products include wing
spars, engine mounts, struts, landing gear beams, landing gear,
wing hinges, wing and tail flaps, housings, and bulkheads. These
parts may be made of titanium, steel, aluminum and other alloys, as
well as composite materials. The Company also produces dynamic
rotor forgings for helicopters. Forging is particularly well-
suited for airframe parts because of its ability to impart greater
proportional strength to metal than other manufacturing processes.
Investment casting can produce complex shapes to precise,
repeatable dimensions.
The Company has been a major supplier for many years of the
beams that support the main landing gear assemblies on the Boeing
747 and has begun shipment of main landing gear beams for the new
Boeing 777 widebody. The Company forges landing gear and other
airframe structural components for the Boeing 747, 757, 767 and
777, the McDonnell Douglas MD-11 and the Airbus A330 and A340. The
Company produces structural forgings for the F-15, F-16 and F-18
fighter aircraft and the Sikorsky Black Hawk helicopter. The
Company also produces large, one-piece bulkheads for Lockheed and
Boeing for the F-22 next generation air superiority fighter
aircraft.
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POWER GENERATION
The Company is a major supplier of extruded seamless heavy
wall pipe for the critical piping systems in commercial power
plants worldwide, both fossil fuel and nuclear as well as offshore
petrochemical applications. The Company believes it is the leading
U.S. supplier, and also a leading U.K. supplier, of large diameter,
seamless heavy wall pipe. The Company produces steam turbine
generator, gas turbine generator and forged valve components for
land-based power generation applications. The Company also
manufactures shafts, cases, compressor and turbine discs for marine
gas turbines.
OTHER PRODUCTS
The Company supplies products to builders of military
missiles. Examples of these products include breech block and
breech rings for large cannon and forged steel casings for bombs,
rockets and expendable launch vehicles. The Company participates
in a variety of U.S. Government programs including the Standard,
Harm, Patriot and Aegis programs. For naval defense applications,
the Company supplies components for propulsion systems for nuclear
submarine and aircraft carriers as well as pump, valve, structural
and non nuclear propulsion forgings.
The Company also manufactures extruded missile, rocket and
bomb cases and supplies extruded products for nuclear submarines
and aircraft carriers including heavy wall piping for nuclear
propulsion systems, torpedo tubes and catapult launch tubes.
The Company's investment castings operations produce products
for commercial applications such as: components for golf clubs,
pistol frames, bicycles, food processing equipment, diesel turbo-
chargers, land-based military equipment such as tanks, and various
other applications.
The Company also supplies extruded powders for other
superalloy powder manufacturers. The Company is actively seeking
to identify alternative applications for its capabilities, such as
in the automotive and other commercial markets.
CUSTOMERS
The Company has approximately 150 active customers that
purchase forgings, approximately 550 active customers that purchase
investment castings and approximately 20 active customers that
purchase composite structures. The Company's principal customers
are similar across all of these production processes. Five
customers accounted for 50% of the Company's revenues for the year
ended June 3, 1995, 51% for the five months ended May 28, 1994, 56%
and 53% for the two years ended December 31, 1993 and 1992,
respectively. General Electric Company ("GE") and United
Technologies Corporation ("UT") (Pratt & Whitney and Sikorsky
Divisions) each accounted for more than 10% of revenues for the
year ended June 3, 1995, the five months ended May 28, 1994 and the
two years ended December 31, 1993 and 1992, respectively, as
follows:
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<TABLE>
<CAPTION>
($000's omitted)
FIVE
YEAR MONTHS
ENDED ENDED YEAR ENDED
JUNE 3, MAY 28, DECEMBER 31,
1995 % 1994 % 1993 % 1992 %
<S> <C> <C> <C> <C> <C> <C> <C> <C>
GE $101,261 26 $17,226 20 $55,585 23 $62,740 21
UT 58,873 15 13,930 16 37,060 16 48,920 17
</TABLE>
Boeing Company, McDonnell Douglas Corporation and Rolls Royce
PLC are also significant customers of the Company.
The Company has organized its operations into product groups
which focus on specific customers or groups of customers with
similar needs. The Company has become actively involved with its
aerospace customers through joint development relationships and
cooperative research and development, engineering, quality control,
just-in-time inventory control and computerized design programs.
This involvement begins with the design of the tooling and
processes to manufacture the customer's components to its precise
specifications.
MARKETING AND SALES
The Company markets its products principally through its own
sales engineers and makes only limited use of manufacturers'
representatives. Substantially all sales are made directly to
original equipment manufacturers.
The Company's sales are not subject to significant seasonal
fluctuations.
A substantial portion of the Company's revenues are derived
from long-term, fixed price contracts with major engine and
aircraft manufacturers. These contracts are typically
"requirements" contracts under which the purchaser commits to
purchase a given portion of its requirements of a particular
component from the Company. Actual purchase quantities are
typically not determined until shortly before the year in which
products are to be delivered.
BACKLOG
The backlog of unfilled orders from customers in the various
markets served by the Company has been as follows (000's omitted):
<TABLE>
<CAPTION>
JUNE 3, 1995 MAY 28, 1994
% OF % OF
BACKLOG TOTAL BACKLOG TOTAL
<S> <C> <C> <C> <C>
Aerospace $382,982 82% $342,007 88%
Power generation 57,248 12 33,700 9
Other 28,531 6 13,700 3
Total $468,761 100% $389,407 100%
</TABLE>
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At June 3, 1995 approximately $365.0 million of total backlog
was scheduled to be shipped within one year and the remainder in
subsequent years, although there can be no assurances that products
ordered will not be subject to schedule changes.
MANUFACTURING PROCESSES
The Company employs three manufacturing processes: forging,
investment casting and composites production.
FORGING
Forging is the process by which desired shapes, metallurgical
characteristics, and mechanical properties are imparted to metal by
heating and shaping it through pressing or extrusion. The Company
forges alloys of titanium, aluminum and steel as well as high
temperature nickel-based superalloys.
The Company manufactures most of its forgings at its
facilities in Grafton and Worcester, Massachusetts, near Houston,
Texas and Livingston, Scotland. The Company also operates a
superalloy powder metal facility in Brighton, Michigan and vacuum
arc remelting facilities in Houston, Texas and Millbury,
Massachusetts which produce steel, nickel and titanium ingots, and
a plasma arc melting facility for the production of high quality
titanium ingots and nickel powder in Millbury, Massachusetts. The
Company has six large closed die hydraulic forging presses rated as
follows: 18,000 ton, 35,000 ton and 50,000 ton in Grafton
Massachusetts; 29,000 ton and 35,000 ton in Houston, Texas and
30,000 ton in Livingston, Scotland. The 35,000 ton vertical
extrusion press in Houston can be modified to a 55,000 ton
hydraulic forging press. The Company also operates an open die
cogging press rated at 2,000 tons at its Grafton, Massachusetts
location and a hydraulic isothermal forging press rated at 8,000
tons at its Worcester, Massachusetts location. The Company
operated forging hammers rated at 35,000 pounds at its Worcester,
Massachusetts location. Such hammers will be idled during
September 1995. The majority of this facility's production has
been transferred to other Company facilities in Massachusetts and
Texas.
The Company employs all major forging processes, including the
following:
OPEN-DIE FORGING. In this process, the metal is forged
between dies that never completely surround the metal, thus
allowing the metal to be observed during the process. Typically,
open-die forging is used to create relatively simple, preliminary
shapes to be further processed by closed die forging.
CLOSED-DIE FORGING. Closed-die forging involves pressing
heated metal into the required shapes and size determined by
machined impressions in specially prepared dies which exert three
dimensional control on the metal. In hot-die forging, a type of
closed-die process, the dies are heated to a temperature
approaching the transformation temperature of the materials being
forged so as to allow the metal to flow more easily within the die
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cavity which produces forgings with superior surface conditions,
metallurgical structures, tighter tolerances, enhanced
repeatability of the part shapes and greater metallurgical control.
Both titanium and nickel-based superalloys are forged using this
process, in which the dies are heated to a temperature of
approximately 1,300 degrees Fahrenheit.
CONVENTIONAL/MULTI-RAM. The closed-die, multiple-ram process
featured on the Company's 30,000 ton press enables the Company to
produce extremely complex forgings with multiple cavities in a
single heating and pressing cycle. Dies may be split either on a
vertical or a horizontal plane and shaped punches may be operated
by side rams, piercing rams, or both. Multi-ram forging enables
the Company to produce a wide variety of shapes, sizes, and
configurations utilizing less input weight. The process also
optimizes grain flow and uniformity of deformation, reduces
machining requirements, and minimizes overall costs.
ISOTHERMAL FORGING. Isothermal forging is a closed-die
process in which the dies are heated to the same temperature as the
metal being forged, typically in excess of 1,900 degrees
Fahrenheit. The forged material typically consists of nickel-based
superalloy powders. Because of the extreme temperatures necessary
for forming these alloys, the dies must be made of refractory metal
(such as molybdenum) so that the die retains its strength and shape
during the forging process. Because the dies may oxidize at these
elevated temperatures, the forging process is carried on in a
vacuum or inert gas atmosphere. The Company's isothermal press
also allows it to produce near-net shape components (requiring less
machining by the customer) made from titanium alloys, which can be
an important competitive advantage in times of high titanium
prices. The Company carries on this process in its 8,000-ton
isothermal press.
EXTRUSION. The Company's 35,000 ton vertical extrusion press
is one of the largest and most advanced presses in the world.
Extrusions are produced for applications in the oil and gas
industry, including tension leg platforms, riser systems and
production manifolds. It is supported by manipulators capable of
handling work pieces weighing up to 20 tons, rotary hearth furnaces
and a 14,000 ton blocking press. It is capable of producing heavy
wall seamless pipe with outside diameters up to 48 inches and wall
thicknesses from 1/2 inch up to 7 inches or more. Solid extrusions
can be manufactured from 6 to 32 inches in diameter. Typical
lengths vary from 10 to 45 feet. Powder materials can also be
compacted and extruded into forging billets utilizing this press.
The 30,000 ton press has similar extrusion capabilities in addition
to its multi-ram forging capabilities.
TITANIUM AND SUPERALLOY PRODUCTION. The Company utilizes
vacuum arc remelting technology to produce titanium alloy suitable
for structural and turbine aerospace applications. Titanium
produced in this manner is utilized in both the Company's forging
and castings operations.
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The Company's Brighton, Michigan powder metal facility has the
capability to atomize, process, and consolidate (by hot isostatic
pressing) superalloy metal powders for use in aerospace, medical
implant, petrochemical, hostile environment oil and gas drilling
and production, and other high technology applications. This
facility has an annual production capacity of up to 500,000 pounds
of superalloy powder. In addition, the Company has the capacity to
consolidate powdered metals by extrusion using its 30,000 ton and
35,000 ton presses. Extruded billets are further processed and
either sold to other forge shops or forged into critical jet engine
components on the Company's 8,000 ton isothermal press.
The Company's Plasma Arc Melting facility (PAM) in Millbury,
Massachusetts is capable of producing high quality titanium ingot
and nickel-based superalloy powder. The Company is currently
pursuing certifications by certain customers for use of this
technology in high performance jet engines.
The Company believes that its vacuum arc remelt ("VAR") shop
in Houston, Texas is one of the finest facilities of its kind in
the world. This facility, with its five computer-controlled VAR
furnaces, accepts electrodes up to 42 inches in diameter and
weighing up to 40,000 pounds. The Houston VAR furnaces are used to
remelt purchased electrodes into high purity alloys for internal
use in severe applications. In addition, the VAR furnaces are used
for toll melting. These vacuum metallurgy techniques provide
consistently high levels of purity, low gas content, and precise
control over the solidification process. This minimizes
segregation in complex alloys and results in improved mechanical
properties, as well as hot and cold workability.
The Company has entered into a joint venture with Pratt &
Whitney and certain Australian investors to produce nickel-based
superalloy ingots in Perth, Australia. These ingots will be
utilized as raw materials for the Company's forging and casting
products.
SUPPORT OPERATIONS. The Company manufactures its own forging
dies out of high-strength steel and molybdenum. These dies can
weigh in excess of 100 tons and can be up to 25 feet in length. In
manufacturing its dies, the Company takes its customers' drawings
and engineers the dies using CAD/CAM equipment and sophisticated
metal flow computer models that simulate metal flow during the
forging process. This activity improves die design and process
control and permits the Company to enhance the metallurgical
characteristics of the forging.
The Company also has machine shops at its three major forging
locations with computer aided profiling equipment, vertical turret
lathes and other equipment that it employs to rough machine
products to a shape allowing inspection of the products. The
Company also operates rotary and car-bottom heat treating furnaces
that enhance the performance characteristics of the forgings.
These furnaces have sufficient capacity to handle all the Company's
forged products. The Company subjects its products to extensive
quality inspection and contract qualification procedures involving
zyglo, chemical etching, ultrasonic, red dye, and electrical
conductivity testing facilities.
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TESTING. Because the Company's products are for high
performance end uses rigorous testing is necessary and is performed
internally by Company engineers. Throughout the manufacturing
process, numerous tests and inspections are performed to insure the
final quality of each product; statistical process control ("SPC")
techniques are also applied throughout the entire manufacturing
process.
INVESTMENT CASTINGS
The Company's investment castings operations use modern,
automated, high volume production equipment and both air-melt and
vacuum-melt furnaces to produce a wide variety of complex
investment castings. Castings are made of a range of metal alloys
including aluminum, magnesium, steel, titanium and nickel-based
superalloys.
The Company's castings operations are conducted in facilities
located in Connecticut, New Hampshire, Nevada and California.
These plants house air and vacuum-melt furnaces, wax injection
machines and investment dipping tanks. Because of the growth in
demand for the Company's high quality titanium castings, the
Company is in the process of restarting its Franklin, New Hampshire
facility which it mothballed in 1993. The Company has ordered a
new state-of-the-art titanium melting furnace for installation in
the Franklin plant. Additionally, the Company has expanded its
Groton, Connecticut facility for the production of high quality
titanium castings.
Investment castings are produced in four major stages. First,
molten wax is injected into an aluminum mold, known as a "tool," in
the shape of the ultimate component to be produced. These tools
are produced to the specifications of the customer and are
primarily purchased from outside die makers, although the Company
maintains internal tool-making capabilities. In the second stage,
the wax patterns are mechanically coated with a sand and silicate-
bonded slurry in a process known as investment. This forms a
ceramic shell which is subsequently air-dried under controlled
environmental conditions. The wax inside this shell is then melted
and removed in a high temperature steam autoclave and the molten
wax is recycled. In the third, or foundry stage, metal is melted
in an electric furnace in either an air or vacuum environment and
poured into the ceramic shell. After cooling, the ceramic shells
are removed by vibration. The metal parts are then cleaned in a
high temperature caustic bath, followed by water rinsing. In the
fourth, or finishing stage, the castings are finished to remove
excess metal. The final product then undergoes a lengthy series of
testing (radiography, fluorescent penetrant, magnetic particle and
dimensional) to ensure quality and consistency.
COMPOSITES
The Company's composites operation, Scaled Composites, Inc.,
plans, designs, fabricates and tests composite airframe structures
for the aerospace market. Customers include Lawrence Livermore
Laboratories and Orbital Sciences Corp.
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FACILITIES
The following table sets forth certain information with
respect to the Company's major facilities at June 3, 1995. The
Company believes that its facilities are well-maintained, are
suitable to support the Company's business and are adequate for the
Company's present and anticipated needs. At June 3, 1995, the
Company's forging, investment castings and composites facilities
were operating at approximately 60%, 70% and 90% of their total
productive capacity, respectively.
<TABLE>
<CAPTION>
APPROX.
SQUARE OWNED/
LOCATION FOOTAGE PRIMARY FUNCTION LEASED
<S> <C> <C> <C>
FORGINGS:
Brighton, Michigan 34,500 Superalloy Powder
Production Owned
Grafton, Massachusetts 85,420 Administrative Offices Owned
Grafton, Massachusetts 843,200 Forging Owned
Houston, Texas 1,283,800 Forging Owned
Houston, Texas 433,000 Currently idle Leased
Livingston, Scotland 405,200 Forging Owned
Livingston, Scotland 112,000 Currently idle Owned
Millbury, Massachusetts 104,125 Research and Owned
Development,
Metals Production
Worcester, Massachusetts 43,200 Currently idle Owned
Worcester, Massachusetts 22,300 Forging Owned
Worcester, Massachusetts 301,400 Closing September 1995 Owned
CASTINGS:
Carson City, Nevada 46,000 Casting Owned
Franklin, New Hampshire 43,200 Casting Owned
Groton, Connecticut
(2 plants) 162,550 Casting Owned
San Leandro, California 45,000 Casting Owned
Tilton, New Hampshire 94,000 Casting Owned
COMPOSITES:
Mojave, California 67,000 Composites Owned
</TABLE>
RAW MATERIALS
Raw materials used by the Company in its forgings and castings
include alloys of titanium, nickel, steel, aluminum, magnesium and
other high-temperature alloys. The composites operation uses high
strength fibers such as fiberglass or graphite, as well as
materials such as foam and epoxy, to fabricate composite
structures. The major portion of metal requirements for forged and
cast products are purchased from major non-ferrous metal suppliers
producing forging and casting quality material as needed to fill
customer orders. The Company has two or more sources of supply for
all significant raw materials. The Company satisfies some of its
nickel and titanium requirements internally by producing titanium
alloy from titanium scrap and "sponge". The Company's powder metal
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facility and PAM units produce nickel-based superalloy powder and
high quality titanium ingot as demand for the Company's products
grew during its 1995 fiscal year and prices of raw materials rose.
The Company has experienced delays in the delivery of its raw
materials.
The titanium and nickel-based superalloys utilized by the
Company have a relatively high dollar value. Accordingly, the
Company attempts to recover and recycle scrap materials such as
machine turnings, forging flash, scrapped forgings, test pieces and
casting sprues, risers and gates.
In the event of customer cancellation, the Company may, under
certain circumstances, obtain reimbursement from the customer if
the material cannot be diverted to other uses. Costs of material
already on hand, along with any conversion costs incurred, have
generally been billed to the customer unless transferable to
another order. As demand for the Company's products grew during
its 1995 fiscal year, and prices of raw materials rose, the Company
experienced certain raw material shortages and production delays.
Although this situation improved during the second half of fiscal
1995, it had a negative impact on overall revenues.
ENERGY USAGE
The Company is a large consumer of energy. Energy is required
primarily for heating metals to be forged and melting metals to be
cast, melting of ingots, heat-treating materials after forging and
casting, operating forging presses, melting furnaces, die-sinking,
mechanical manipulation and pollution control equipment and space
heating. The Company uses natural gas, oil and electricity in
varying amounts at its manufacturing facilities. Supplies of
natural gas, oil and electricity have been sufficient and there is
no anticipated shortage for the future.
EMPLOYEES
As of June 3, 1995, the Company had approximately 3,100
employees of whom 850 were executive, administrative, engineering,
research, sales and clerical and 2,250 production and craft.
Approximately 61% of the production and craft employees, consisting
of employees in the forging business, are represented by unions.
The Company has entered into collective bargaining agreements with
these union employees as follows:
<TABLE>
<CAPTION>
NUMBER OF
EMPLOYEES
COVERED BY
BARGAINING INITIATION EXPIRATION
LOCATION AGREEMENTS DATE DATE
<S> <C> <C> <C>
Grafton and Worcester,
Massachusetts 562 March 29, 1995 March 29, 1997
Houston, Texas 537 August 11, 1995 August 10, 1998
Livingston, Scotland 255 December 1, 1993 November 30, 1995
February 1, 1994 January 31, 1996
Total 1,354
</TABLE>
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The Company believes it has good relations with its employees
although it experienced a one week strike in August 1995 in
connection with the negotiation of its current collective bargaining
agreement with the union representing most of its factory workforce
in Houston, Texas.
RESEARCH AND PATENTS
The Company maintains research and development departments at
both Millbury, Massachusetts and Houston, Texas which are engaged in
applied research and development work primarily relating to the
Company's forging operations. The Company works closely with
customers, universities and government technical agencies in
developing advanced forging and casting materials and processes.
The Company's composites operation conducts research and development
related to aerospace composite structures at the Mojave, California
facility. The Company spent approximately $2.2 million, $0.7
million, $2.8 million, and $3.0 million on applied research and
development work during the year ended June 3, 1995, the five months
ended May 28, 1994, and the years ended December 31, 1993 and 1992.
Although the Company owns patents covering certain of its processes,
the Company does not consider that these patents are of material
importance to the Company's business as a whole. Most of the
Company's products are manufactured to customer specifications and,
consequently, the Company has few proprietary products.
COMPETITION
Most of the Company's production capabilities are possessed in
varying degrees by other companies in the industry, including both
domestic and foreign manufacturers. Competition is intense among
the companies currently involved in the industry. Competitive
advantages are afforded to those with high quality products, low
cost manufacturing, excellent customer service and delivery and
engineering and production expertise. The Company considers that it
is in a leading position in these areas.
ENVIRONMENTAL REGULATIONS
The Company is subject to extensive, stringent and changing
federal, state and local environmental laws and regulations,
including those regulating the use, handling, storage, discharge and
disposal of hazardous substances and the remediation of alleged
environmental contamination. Accordingly, the Company is involved
from time to time in administrative and judicial inquiries and
proceedings regarding environmental matters. Nevertheless, the
Company believes that compliance with these laws and regulations
will not have a material adverse effect on the Company's operations
as a whole. The Company continues to design and implement a system
of programs and facilities for the management of its raw materials,
production processes and industrial waste to promote compliance with
environmental requirements. In the fourth quarter of 1991, the
Company recorded a pre-tax charge of $7.0 million with respect to
environmental investigation and remediation costs at the Grafton
facility and a pre-tax charge of $5.0 million against potential
environmental remediation costs upon the eventual sale of the
Worcester facility. Pursuant to an agreement entered into with the
U.S. Air Force upon the acquisition of the Grafton facility from the
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federal government in 1982, the Company has agreed to make
additional expenditures for environmental management and remediation
projects at that site during the period 1982 through 1999,
approximately $6,100,000 of which remain as of June 3, 1995. The
Company, together with numerous other parties, has been alleged to
be a potentially responsible party ("PRP") at the following four
federal or state superfund sites: Operating Industries, Monterey
Park, California; Cedartown Municipal Landfill, Cedartown, Georgia;
PSC Resources, Palmer, Massachusetts; and the Gemme site, Leicester,
Massachusetts. The Company believes that any liability it may incur
with respect to these sites will not be material.
At the Gemme site a proposed agreement would allocate 33% of
the clean-up costs to the Company. An insurance company is
defending the Company's interests and the Company believes that any
recovery against the Company would be covered by insurance. A
consulting firm retained by the PRP group has recently made a
preliminary remediation cost estimate of $0.3 million to $9.9
million.
The Company's Grafton, Massachusetts plant location is included
in the U.S. Nuclear Regulatory Commission's ("NRC") May 1992 Site
Decommissioning Management Plan for low-level radioactive waste.
The NRC conducted a long-range dose assessment in 1992 and
determining that the site should be remediated. However, the
Company believes that the NRC's draft assessment was flawed and has
challenged that draft assessment. The Company has provided $1.5
million for the estimated cost of the remediation. The Company
believes that it may have meritorious claims for reimbursement from
the U.S. Air Force in respect of any liabilities it may have for
such remediation.
PRODUCT LIABILITY EXPOSURE
The Company produces many critical engine and structural parts
for commercial and military aircraft. As a result, the Company
faces an inherent business risk of exposure to product liability
claims. The Company maintains insurance against product liability
claims, but there can be no assurance that such coverage will
continue to be available on terms acceptable to the Company or that
such coverage will be adequate for liabilities actually incurred.
The Company has not experienced any material loss from product
liability claims and believes that its insurance coverage is
adequate to protect it against any claims to which it may be
subject.
LEGAL PROCEEDINGS
At June 3, 1995, the Company was involved in certain legal
proceedings arising in the normal course of its business. The
Company believes the outcome of these matters will not have a
material adverse effect on the Company.
-14-<PAGE>
<PAGE> 15
EXECUTIVE OFFICERS OF THE REGISTRANT
The following table set forth certain biographical information
with respect to executive officers of the Company.
<TABLE>
<CAPTION>
NAME POSITION AGE
<S> <C> <C>
John M. Nelson Chairman of the Board of Directors 64
David P. Gruber President, Chief Executive Officer 53
and Director
Andrew C. Genor Vice President, Chief Financial
Officer and Treasurer 53
Sanjay N. Shah Vice President Corporate Strategy 44
Planning & Business Development
J. Douglas Whelan President, Forging Division 56
Wallace F. Whitney, Jr. Vice President, General Counsel
and Clerk 52
Frank J. Zugel President, Investment Castings
Division 50
</TABLE>
John M. Nelson was elected Chairman of the Company in May 1994
having previously served as the Company's Chairman of the Board and
Chief Executive Officer since May 1991. Prior to joining the
Company, he served for many years in a series of executive
positions with Norton Company, a manufacturer of abrasives and
ceramics based in Worcester, Massachusetts, and was Norton's
Chairman and Chief Executive Officer from 1988 to 1990 and its
President and Chief Operating Officer from 1986 to 1988. Mr.
Nelson is also Chairman of the Board of Directors of the TJX
Companies, Inc., a Director of Brown & Sharpe Manufacturing
Company, Cambridge Biotechnology, Inc., Commerce Holdings, Inc. and
Stocker & Yale, Inc. He is also Chairman of the Board of Trustees
of Worcester Polytechnic Institute and Vice President of the
Worcester Art Museum.
David P. Gruber was elected President and Chief Executive
Officer of the Company in May 1994 having served as President and
Chief Operating Officer since October 1991. Prior to joining the
Company, Mr. Gruber served as Vice President, Advanced Ceramics, of
Compagnie de Saint Gobain (which acquired Norton Company in 1990),
a position he held with Norton Company since 1987. Mr. Gruber
previously held various executive and technical positions with
Norton Company since 1978. He is a Trustee of the Manufacturers'
Alliance for Productivity and Innovation, and is a member of the
Mechanical Engineering Advisory Committee of Worcester Polytechnic
Institute.
-15-<PAGE>
<PAGE> 16
Andrew C. Genor joined the Company as Vice President, Chief
Financial Officer and Treasurer in January 1995. Prior to joining
the Company, Mr. Genor was Chief Financial and Operating Officer of
HNSX Supercomputers, Inc., a Company he co-founded in 1987 to
provide support to supercomputer users and vendors. Prior to that
time, he spent 20 years at Honeywell, Inc., including service as
Vice President and Corporate Treasurer and Vice President, Finance,
Administration and Business Development for Honeywell Europe.
Sanjay N. Shah was elected Vice President, Corporate Strategy
Planning and Business Development in May 1994 having previously
served as Vice President and Assistant General Manager of the
Company's Aerospace Forgings Division. He has held a number of
executive, research, engineering and manufacturing positions at the
Company since joining the Company in 1975.
J. Douglas Whelan joined the Company in March 1994 and was
elected President, Forgings Division in May 1994. Prior to joining
the Company he had served for a short time as the President of
Ladish Co., Inc., a forging Company in Cudahy, Wisconsin, and prior
thereto had been Vice President, Operations of the Cameron Forged
Products Division of Cooper Industries, Inc. with which company and
its predecessors he had been employed since 1965 in various
executive and managerial capacities.
Wallace F. Whitney, Jr. joined the Company in 1991. Prior to
that time, he had been Vice President, General Counsel and
Secretary of Norton Company since 1988, where he had been employed
in various legal capacities since 1973.
Frank J. Zugel joined the Company in June 1993. He was
elected President Investment Castings Division in May 1994. Prior
to joining the Company, he had served as President of Stainless
Steel Products, Inc., a metal fabricator for aerospace
applications, since 1992 and before then as Vice President of
Pacific Scientific Company, a supplier of components to the
aerospace industry, since 1988.
None of the executive officers has any family relationship
with any other executive officer. All officers are elected
annually.
ITEM 2. PROPERTIES
The response to ITEM 2. PROPERTIES incorporates by reference
the paragraphs captioned "Facilities" included in ITEM 1. BUSINESS.
ITEM 3. LEGAL PROCEEDINGS
The response to ITEM 3. LEGAL PROCEEDINGS incorporates by
reference the paragraphs captioned "Environmental Regulations" and
"Legal Proceedings" included in ITEM 1. BUSINESS.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders
during the fourth quarter of fiscal 1995.
-16-<PAGE>
<PAGE> 17
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The response to ITEM 5. MARKET FOR THE REGISTRANT'S COMMON
EQUITY AND RELATED STOCKHOLDER MATTERS incorporates by reference
the "Market and Dividend Information" section of the Company's
Annual Report to Stockholders.
ITEM 6. SELECTED FINANCIAL DATA
The response to ITEM 6. SELECTED FINANCIAL DATA incorporates
by reference the "Consolidated Financial Review" section of the
Company's 1995 Annual Report to Stockholders. Also incorporated by
reference is the "Accounting and Tax Matters" section of the
Company's 1995 Annual Report to Stockholders.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The response to ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS incorporates by
reference the "Management's Discussion" section of the Company's
1995 Annual Report to Stockholders.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The response to ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA incorporates by reference the following sections of the
Company's 1995 Annual Report:
Consolidated Statements of Operations
Consolidated Balance Sheets
Consolidated Statements of Cash Flows
Consolidated Statement of Stockholder Equity
Notes to Consolidated Financial Statements
Report of Independent Auditors
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
-17-<PAGE>
<PAGE> 18
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information regarding executive officers is incorporated
by reference to PART I, ITEM 1. BUSINESS, under the caption
"Executive Officers of the Registrant." Other information required
by Items 401 and 405 of Regulation S-K is incorporated by reference
to the following sections of the Company's "Proxy Statement for
Annual Meeting of Stockholders" on October 18, 1995.
Election of Directors
Nominees for Three-Year Term
Continuing Directors
Securities and Exchange Commission Reports
ITEM 11. EXECUTIVE COMPENSATION
The response to ITEM 11. EXECUTIVE COMPENSATION incorporates
by reference the following sections of the Company's "Proxy
Statement for Annual Meeting of Stockholders" on October 18, 1995.
Election of Directors
Nominees for a Three-Year Term
Continuing Directors
Committees of the Board
Meetings of the Board
Compensation Committee Report
Executive Compensation
Pension Benefits
Agreements with Management
Proposal for Approval of Long-Term Incentive Plan
Proposal for Approval of Employee Stock Purchase Plan
Proposal for Approval of the Wyman-Gordon Company Non-Employee
Director Stock Option Plan
Proposal for the Approval of the Performance Share Agreement
-18-<PAGE>
<PAGE> 19
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The response to ITEM 12. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT incorporates by reference the
information of the following sections of the "Proxy Statement for
Annual Meeting of Stockholders" on October 18, 1995.
Election of Directors
Nominees of a Three-Year Term
Continuing Directors
Shares of Company Stock Beneficially Owned by Certain Owners
and by Management
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The response to ITEM 13. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS incorporates by reference the following sections of
the Company's "Proxy Statement for Annual Meeting of Stockholders"
on October 18, 1995.
Nominees for Three-Year Term
Continuing Directors
Compensation Committee Report
Executive Compensation
Agreements with Management
-19-<PAGE>
<PAGE> 20
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
EXHIBITS
The exhibit listing required by Item 601 of Regulation S-K is
included on page E-1.
FINANCIAL STATEMENTS
The following financial statements, together with the report
thereon of Ernst & Young dated June 26, 1995 appearing in the
Company's Fiscal 1995 Annual Report to Stockholders are
incorporated by reference in this Form 10-K:
Consolidated Statements of Operations and Retained Earnings
Consolidated Balance Sheets
Consolidated Statements of Cash Flows
Consolidated Statements of Stockholders Equity
Notes to Consolidated Financial Statements
SCHEDULES
The following additional financial data should be read in
conjunction with the consolidated financial statements in the
Company's Fiscal 1995 Annual Report to Stockholders. Other
schedules have been omitted because they are inapplicable or are
not required.
PAGE
II - Valuation and Qualifying Accounts S-1
REPORTS ON FORM 8-K
No reports on Form 8-K were filed with the Commission during
the fourth quarter of fiscal 1995.
-20-<PAGE>
<PAGE> 21
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual
Report (Form 10-K) of Wyman-Gordon Company and Subsidiaries of our
report dated June 26, 1995, included in the Fiscal 1995 Annual
Report to Stockholders of Wyman-Gordon Company and subsidiaries.
Our audits also included the financial statement schedule of
Wyman-Gordon Company listed in Item 14. This schedule is the
responsibility of the Company's management. Our responsibility is
to express an opinion based on our audits. In our opinion, the
financial statement schedule referred to above, when considered in
relation to the basic financial statements taken as a whole,
present fairly in all material respects the information set forth
therein.
We also consent to the incorporation by reference in the
Registration Statements (Form S-8, File Numbers 2-56547, 2-75980,
33-26980 and 33-48068) pertaining to the Wyman-Gordon Company
Executive Long-Term Incentive Program (1975) - Amendment No. 6, the
Wyman-Gordon Company Stock Purchase Plan, the Wyman-Gordon Company
Savings/Investment Plan and the Wyman-Gordon Company Long-Term
Incentive Plan and in the related Prospectuses of our report dated
June 26, 1995, with respect to the consolidated financial
statements of Wyman-Gordon Company and Subsidiaries incorporated by
reference in the Annual Report (Form 10-K) for the year ended June
3, 1995.
Boston, Massachusetts ERNST & YOUNG LLP
August 29, 1995
-21-<PAGE>
<PAGE> 22
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Wyman-Gordon Company
(REGISTRANT)
By /S/ ANDREW C. GENOR September 1, 1995
Andrew C. Genor Date
Vice President, Chief Financial Officer
and Treasurer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated.
<TABLE>
<CAPTION>
<S> <C> <C>
/S/ JOHN M. NELSON Chairman of the September 1, 1995
John M. Nelson Board of Directors Date
/S/ DAVID P. GRUBER President, September 1, 1995
David P. Gruber Chief Executive Officer Date
and Director
/S/ ANDREW C. GENOR Vice President, September 1, 1995
Andrew C. Genor Chief Financial Officer Date
and Treasurer and
Principal Financial Officer
/S/ JEFFREY B. LAVIN Assistant Corporate September 1, 1995
Jeffrey B. Lavin Controller and Principal Date
Accounting Officer
/S/ E. PAUL CASEY Director September 1, 1995
E. Paul Casey Date
/S/ DEWAIN K. CROSS Director September 1, 1995
Dewain K. Cross Date
/S/ WARNER S. FLETCHER Director September 1, 1995
Warner S. Fletcher Date
/S/ ROBERT G. FOSTER Director September 1, 1995
Robert G. Foster Date
</TABLE>
-22-<PAGE>
<PAGE> 23
<TABLE>
<CAPTION>
<S> <C> <C>
/S/ M HOWARD JACOBSON Director September 1, 1995
M Howard Jacobson Date
/S/ JUDITH S. KING Director September 1, 1995
Judith S. King Date
/S/ GEORGE S. MUMFORD, JR. Director September 1, 1995
George S. Mumford, Jr. Date
/S/ H. JOHN RILEY, JR. Director September 1, 1995
H. John Riley, Jr. Date
/S/ JON C. STRAUSS Director September 1, 1995
Jon C. Strauss Date
/S/ CHARLES A. ZRAKET Director September 1, 1995
Charles A. Zraket Date
</TABLE>
-23-<PAGE>
<PAGE> 24
<TABLE>
<CAPTION>
WYMAN-GORDON COMPANY AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(000's omitted)
CHARGED CHARGED
BALANCE AT TO COSTS TO OTHER DEDUCT- BALANCE
BEGINNING AND ACCOUNTS IONS AT END
DESCRIPTION OF PERIOD EXPENSES DESCRIBE DESCRIBE OF PERIOD
<S> <C> <C> <C> <C> <C>
YEAR ENDED JUNE 3, 1995
Accumulated
Amortization
of Goodwill $8,354 $ 705 - - $9,059
FIVE MONTHS ENDED MAY 28, 1994
Accumulated
Amortization
of Goodwill $7,630 $ 724 - - $8,354
YEAR ENDED DECEMBER 31, 1993
Accumulated
Amortization
of Goodwill $6,482 $1,148 - - $7,630
YEAR ENDED DECEMBER 31, 1992
Accumulated
Amortization
of Goodwill $5,266 $1,216 - - $6,482
</TABLE>
S-1<PAGE>
<PAGE> 25
<TABLE>
<CAPTION>
EXHIBIT INDEX
EXHIBIT DESCRIPTION PAGE
<S> <C> <C>
3A Restated Articles of Organization of E-5
Wyman-Gordon Company.
3B Bylaws of Wyman-Gordon Company, as amended E-6
through May 24, 1994.
4A Amended and Restated Rights Agreement, dated -
as of January 10, 1994 between the Company and
State Street Bank & Trust Company, as Rights
Agent - incorporated by reference to Exhibit 1
to the Company's Report on Form 8-A/A dated
January 21, 1994.
4B Indenture dated as of March 16, 1993 among -
Wyman-Gordon Company, its Subsidiaries and
State Street Bank and Trust Company as Trustee
with respect to Wyman-Gordon Company's 10 3/4%
Senior Notes due 2003 - incorporated by
reference to Exhibit 4C to the Company's
Report on Form-10K for the year ended
December 31, 1992.
4C 10 3/4% Senior Notes due 2003. Supplemental -
Indenture dated May 19, 1994 - incorporated
by reference to Exhibit 5 to the Company's
Report on Form 8-K dated May 26, 1994.
4D 10 3/4% Senior Notes due 2003. Second -
Supplemental Indenture and Guarantee dated
May 27, 1994 - incorporated by reference to
the Company's Report on Form 8-K dated
May 26, 1994.
4E Instruments defining the rights of holders -
of long-term debt are omitted pursuant to
paragraph (b)(4)(iii) of Regulation S-K
Item 601. The Company agrees to furnish such
instruments to the Commission upon request.
10A Wyman-Gordon Company Executive Long-Term -
Incentive Program, as amended February 17, 1988
- incorporated by reference to Appendix A to
the Company's Proxy Statement dated March 25,
1988.
10B Wyman-Gordon Company Long-Term Incentive Plan - -
incorporated by reference to Appendix A to the
Company's Proxy Statement dated April 1, 1992.
</TABLE>
E-1<PAGE>
<PAGE> 26
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION PAGE
<S> <C> <C>
10C John M. Nelson employment agreement dated -
May 21, 1991 - incorporated by reference to
Exhibit 10C to the Company's Report on
Form 10-K for the year ended December 31, 1991.
10D David P. Gruber executive severance agreement -
dated October 16, 1991 - incorporated by
reference to Exhibit 10G to the Company's
Report on Form 10-K for the year ended
December 31, 1991.
10E Sanjay N. Shah executive severance agreement -
dated July 12, 1991 - incorporated by reference
to Exhibit 10I to the Company's Report on
Form 10-K for the year ended December 31, 1991.
10F Wallace F. Whitney executive severance agreement -
dated July 12, 1991 - incorporated by reference
to Exhibit 10L to the Company's Report on
Form 10-K for the year ended December 31, 1991.
10G Stock Purchase Agreement dated as of January 10, -
1994 between Cooper Industries, Inc. and the
Company incorporated by reference to Annex A
to the Company's preliminary Proxy Statement
filed with the Securities and Exchange
Commission on March 8, 1994.
10H Investment Agreement dated as of January 10, -
1994 between Cooper Industries, Inc. and the
Company incorporated by reference to Annex B
to the Company's preliminary Proxy Statement
filed with the Securities and Exchange
Commission on March 8, 1994.
10I Amendment dated May 26, 1994 to Investment -
Agreement dated as of January 10, 1994,
between the Company and Cooper - incorporated
by reference to the Company's Report on
Form 8-K dated May 26, 1994.
10J Revolving Credit Agreement dated as of May 20, -
1994 among Wyman-Gordon Receivables Corporation,
the Financial Institutions Parties Hereto and
Shawmut Bank N.A. as Issuing Bank, as Facility
Agent and as Collateral Agent - incorporated by
reference to the Company's Report on Form 8-K
dated May 26, 1994.
</TABLE>
E-2<PAGE>
<PAGE> 27
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION PAGE
<S> <C> <C>
10K Receivables Purchase and Sale Agreement dated -
as of May 20, 1994 among Wyman-Gordon Company,
Wyman-Gordon Investment Castings, Inc. and
Precision Founders Inc. as the Sellers, Wyman-
Gordon Company as the Servicer and Wyman-Gordon
Receivables Corporation as the Purchaser -
incorporated by reference to the Company's
Report on Form 8-K dated May 26, 1994.
10L Employment Agreement effective March 24, 1994 -
between Wyman-Gordon Company and David P. Gruber
- incorporated by reference to the Company's
Report on Form 8-K dated May 26, 1994.
10M Employment Agreement effective March 4, 1994 -
between Wyman-Gordon Company and J. Douglas
Whelan - incorporated by reference to the
Company's Report on Form 8-K dated May 26, 1994.
10N Performance Share Agreement under the Wyman- -
Gordon Company Long-Term Incentive Plan between
the Company and David P. Gruber dated as of
May 24, 1994 - incorporated by reference to the
Company's Report on Form 8-K dated May 26, 1994.
10O Executive Severance Agreement between the -
Company and J. Douglas Whelan dated as of
May 1, 1994 - incorporated by reference to
the Company's Report on Form 8-K dated
May 26, 1994.
10P Executive Severance Agreement between the E-7
Company and Andrew C. Genor dated January 18,
1995.
10Q Long-term Incentive Plan dated July 19, 1995 -
- incorporated by reference to Appendix A of
the Company's "Proxy Statement for Annual
Meeting of Stockholders" on October 18, 1995.
10R Wyman-Gordon Company Non-Employee Director -
Stock Option Plan dated January 18, 1995 -
incorporated by reference to Appendix C of
the Company's "Proxy Statement for Annual
Meeting of Stockholders" on October 18, 1995.
13 1995 Annual Report (such report, except for E-8
those portions thereof which are expressly
incorporated by reference in this Report on
Form 10-K, is furnished for the information
of the Commission and is not to be deemed
"filed" as part of the Company's Report on
Form 10-K).
</TABLE>
E-3<PAGE>
<PAGE> 28
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION PAGE
<S> <C> <C>
21 List of Subsidiaries E-9
23 Consent of Ernst & Young LLP 21
27 Financial Data Schedule E-10
</TABLE>
NOTE: Exhibits not physically located in this Form 10-K can be
obtained from the Company upon written request to the Clerk at the
address on the cover of this Form 10-K at a cost of $.25 per page.
E-4
<PAGE> 1
EXHIBIT 3.A
THE COMMONWEALTH OF MASSACHUSETTS
William Francis Galvin
Secretary of the Commonwealth
Federal Identification No. 04-1992780
One Ashburton Place, Boston, MA 02108
RESTATED ARTICLES OF ORGANIZATION
General Laws, Chapter 156B, Section 74
This certificate must be submitted to the Secretary of the
Commonwealth within sixty days after the date of the vote of
stockholders adopting the restated articles of organization. The
fee for filing this certificate is prescribed by General Laws,
Chapter 156B, Section 114. Make check payable to the
Commonwealth of Massachusetts.
We, David P. Gruber, President and Wallace F. Whitney, Jr.,
Esq., Clerk of Wyman-Gordon Company located at 244 Worcester
Street, North Grafton, MA 01536 do hereby certify that the
following restatement of the articles of organization of the
corporation was duly adopted at a meeting held on July 19, 1995,
by vote of the Board of Directors pursuant to the third sentence
of Chapter 156B, Section 74.
1. The name of which the corporation shall be known is:
WYMAN-GORDON COMPANY
2. The purpose for which the corporation is formed are as
follows:
(SEE ATTACHED CONTINUATION SHEETS)
3. The total number of shares and the par value, if any, of
each class of stock which the corporation is authorized to
issue is as follows:
<TABLE>
<CAPTION>
WITHOUT PAR VALUE WITH PAR VALUE
CLASS NUMBER NUMBER
OF STOCK OF SHARES OF SHARES PAR VALUE
<S> <C> <C> <C> <C>
Preferred 5,000,000 None --
Common None 70,000,000 $1.00
</TABLE>
4. If more than one class is authorized, a description of each
of the different classes of stock with, if any, the
preferences, voting powers, qualifications, special or
relative rights or privileges as to each class thereof and
any series now established:
(SEE ATTACHED CONTINUATION SHEETS)
5. The restrictions, if any, imposed by the articles of
organization upon the transfer of shares of stock of any
class are as follows:
NONE
E-5<PAGE>
<PAGE> 2
6. Other lawful provisions, if any, for the conduct and
regulation of the business and affairs of the corporation,
for its voluntary dissolution, or for limiting, defining, or
regulating the powers of the corporation, or of its
directors or stockholders, or of any class of stockholders:
(SEE ATTACHED CONTINUATION SHEETS)
-2-<PAGE>
<PAGE> 3
RESTATED ARTICLES OF ORGANIZATION
OF WYMAN-GORDON COMPANY
CONTINUATION SHEETS
ARTICLE 2
To manufacture, buy, sell, import, export and in any way
deal in drop forgings, forgings of all kinds, castings,
machinery, tools, metal work of any kind and any and all things
made in whole or in part from metals. To carry on a general
forging business. To carry on a general manufacturing business
and to do all things necessary or incidental to any of the above
purposes or powers. To carry on the general business of
merchants and dealers in any or all things manufactured by the
company or used or acquired in connection with such manufacture.
To acquire personal property of any kind and any amount, and real
property, so far as the same may be necessary or desirable in
connection with any of the foregoing powers, and to sell,
mortgage, pledge, lease or otherwise dispose of such personal and
real property. To acquire, hold, use, sell and deal in patented
articles, patent rights, patents, licenses under patents, trade-
marks, trade names, processes and formulae. To acquire, hold and
dispose of its own stock and securities and stocks, bonds or
securities of any other corporations and associations. To carry
on the business heretofore conducted by The Wyman and Gordon
Company, a Massachusetts corporation. To do any and all acts
desirable in connection with or incidental to any of the above
powers or purposes or calculated to enhance the value of the
company s business or property.
ARTICLE 4
Shares of Preferred Stock may be issued from time to time in
one or more series, each such series to have such distinctive
designation or title as may be fixed by the Board of Directors
prior to the issuance of any shares of such series. Each such
series of Preferred Stock shall have such preferences, voting
powers, qualifications, restrictions, and special or relative
rights or privileges, and to the fullest extent now or hereafter
permitted under Massachusetts law, as shall be stated in such
resolution or resolutions providing for the issuance of shares of
Preferred Stock as may be adopted from time to time by the Board
of Directors in accordance with the laws of the Commonwealth of
Massachusetts.
ARTICLE 6
(a) The Board of Directors may make, amend or repeal the
Bylaws in whole or in part except with respect to any
provision thereof which by law the Articles of
Organization or the Bylaws requires action by the
Stockholders.
3<PAGE>
<PAGE> 4
(b) No director of the Company shall have any personal
liability to the Company or its Stockholders for
monetary damages for breach of fiduciary duty as a
director notwithstanding any provision of law imposing
such liability; provided, however, that this
Article 6(b) shall not eliminate or limit the liability
of a director (i) for any breach of the director s duty
of loyalty to the Company or its Stockholders, (ii) for
acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law,
(iii) under section 61 or 62 of Chapter 156B of the
Massachusetts General Laws, or (iv) for any transaction
from which the director derived an improper personal
benefit. The preceding sentence shall not eliminate or
limit the liability of a director for any act or
omission occurring prior to the date upon which this
Article 6(b) becomes effective. No amendment to or
repeal of this Article 6(b) shall apply to or have any
effect on the elimination pursuant hereto of liability
or alleged liability of any director of the Company for
or with respect to any acts or omissions of such
director occurring prior to such amendment or repeal.
Nothing in this Article 6(b) shall limit any lawful
right to indemnification existing independently of this
Article.
(c) No Business Combination (as hereinafter defined) shall
be consummated or effected unless such Business
Combination shall have been approved by the affirmative
vote of the holders of not less than eighty-five
percent (85%) of the total voting power of all
outstanding shares of voting stock of the Company,
voting as a single class. Such vote shall be required
notwithstanding the fact that no vote for such a
transaction may be required by law or that approval by
some lesser percentage of stockholders may be specified
by law or in any agreement with any national securities
exchange or otherwise; provided, however, that such
eighty-five percent (85%) vote shall not be required,
and the provisions of Massachusetts law relating to the
vote required for the approval of stockholders, if any,
shall apply to any such Business Combination if either
of the following conditions is satisfied:
1. The aggregate amount of the cash and the Fair
Market Value (as hereinafter defined) of the
property, securities or other consideration to be
received per share of capital stock of the Company
incident to the consummation of such Business
Combination by a holder of such stock, other than
an Interested Stockholder (as hereinafter defined)
involved in such Business Combination, is not less
than the highest of (a) the Highest Per Share
Price or the Highest Equivalent Price (as those
terms are hereinafter defined), paid by such
Interested Stockholder in acquiring any of its
holdings of the Company's capital stock during the
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<PAGE> 5
five-year period preceding the announcement of
such Business Combination; (b) a price that
includes the same or a greater premium over the
market price of such capital stock immediately
prior to the announcement of such Business
Combination as the greatest premium over market
price paid by such Interested Stockholder in the
purchase of any shares of any class of the
Company's capital stock during the five-year
period preceding the announcement of such Business
Combination; or (c) the Highest Per Share Price or
the Highest Equivalent Price that such Interested
Stockholder shall, during the five-year period
preceding the announcement of such Business
Combination, have offered to the stockholders of
the Company for any shares of the Company's
capital stock or indicated in writing that it
would be prepared to offer under specified
conditions; or
2. The Continuing Directors (as hereinafter defined)
shall have expressly approved such Business
Combination by a two-thirds vote either in advance
of or subsequent to the acquisition of outstanding
shares of capital stock of the Company that caused
the Interested Stockholder involved to become an
Interested Stockholder. In determining whether or
not to approve any such Business Combination, the
Continuing Directors may give due consideration to
all factors they consider relevant, including
without limitation (a) the long-term and
short-term effects on the profitability of the
Company, (b) its social, legal, environmental and
economic effects, both short-term and long-term,
on the employees of the Company and its
subsidiaries and on the communities and the
geographic areas in which the Company and its
subsidiaries operate or are located, and on any of
the business and properties of the Company and its
subsidiaries, and (c) the adequacy of the
consideration offered in relation not only to the
current market price of the Company's outstanding
securities, but also to the current value of the
Company in a freely negotiated transaction and the
Continuing Directors' estimate of the Company's
future value (including the unrealized value of
its properties and assets) as an independent going
concern.
(d) Prior to the consummation of any Business combination
and prior to any vote of the Company s stockholders
under Section (c) of this Article 6, a proxy statement
or information statement complying with the
requirements of the Securities Exchange Act of 1934, as
amended, shall have been mailed to all stockholders of
the Company for the purpose of informing the Company's
stockholders about such proposed Business Combination
and, if their approval is required by Section (c) of
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<PAGE> 6
this Article 6, for the purpose of soliciting
stockholder approval of such Business Combination.
Such proxy statement or information statement shall
contain at the front thereof, in a prominent place, a
statement by the Continuing Directors of their position
on the advisability (or inadvisability) of the proposed
Business Combination.
(e) For the purpose of Sections (c), (d), (e) and (f) of
this Article 6:
1. The term "Business Combination" shall mean (a) any
merger, consolidation or share exchange of the
Company or any of its subsidiaries with or into an
Interested Stockholder, in each case irrespective
of which corporation or company is to be the
surviving entity, (b) any sale, lease, exchange,
mortgage, pledge, transfer or other disposition to
or with an Interested Stockholder (in a single
transaction or a series of related transactions)
of all or a substantial part of the assets of the
Company (including without limitation any
securities of a subsidiary of the Company) or all
or a substantial part of the assets of any of its
subsidiaries; (c) any sale, lease, exchange,
mortgage, pledge, transfer or other disposition to
or with the Company, or to or with any of its
subsidiaries (in a single transaction or series of
related transactions) of all or a substantial part
of the assets of an Interested Stockholder;
(d) the issuance or transfer by the Company or any
of its subsidiaries of any securities or the
Company or any of its subsidiaries to an
Interested Stockholder (other than an issuance or
transfer of securities which is effected on a
pro-rata basis to all stockholders of the
Company); (e) any acquisition by the Company or
any of its subsidiaries of any securities issued
by an Interested Stockholder; (f) any
recapitalization or reclassification of shares of
any class of voting stock of the Company or any
merger or consolidation of the Company with any of
its subsidiaries which would have the effect,
directly or indirectly, of increasing the
proportionate share of the outstanding shares of
any class of capital stock or the Company (or any
securities convertible into any class of such
capital stock) owned by any Interested
Stockholder; (g) any merger or consolidation of
the Company with any of its subsidiaries after
which the provisions of Sections (c), (d), (e) and
(f) of this Article 6 shall not appear in the
articles of organization (or the equivalent
charter documents) of the surviving entity;
(h) any plan or proposal for the liquidation or
dissolution of the Company; and (i) any agreement,
contract or other arrangement providing for any of
the transactions described in this definition of
Business Combination.
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<PAGE> 7
2. The term Interested Stockholder shall mean any
individual, corporation, partnership or other
person or entity which, as of the record date for
the determination of stockholders entitled to
notice of and to vote on any Business Combination,
or immediately prior to the consummation of any
such Business Combination, is a Beneficial Owner
(as defined in Rule 13d-3 of the General Rules and
Regulations under the Securities Exchange Act of
1934 as in effect at the date of the adoption of
the provisions contained in Sections (c), (d), (e)
and (f) of this Article 6 by the stockholders of
the Company) (the Exchange Act ) of shares of any
class or series of capital stock of the Company
which, when combined with the shares of such class
or series of stock of which any Affiliates or
Associates (as defined in Rule 12b-2 under the
Exchange Act) of such individual, corporation,
partnership or other person or entity are
Beneficial Owners, amount to ten percent (10%) or
more of the outstanding shares of such class or
series of stock and any Affiliate or Associate of
any such Interested Stockholder. Notwithstanding
the foregoing, Cooper Industries, Inc. ( Cooper )
and its Affiliates and Associates (together, the
Cooper Group ) shall not be deemed to be an
Interested Stockholder for so long as (A) the
Cooper Group beneficially owns at least 10% or
more of the outstanding shares of Common Stock
continuously from and after the Closing Date (as
defined in the Stock Purchase Agreement, dated as
of January 10, 1994, between Cooper and the
Company) and (B) the Cooper Group does not acquire
beneficial ownership of any shares of Common Stock
in breach of the Investment Agreement, dated as of
January 10, 1994, between Cooper and the Company
(other than an inadvertent breach which is
remedied as promptly as practical by a transfer of
the shares of Common Stock so acquired to a person
or entity which is not a member of the Cooper
Group).
3. The term Continuing Director shall mean any
director of the Company who was a director on
February 22, 1989, and any other director whose
election as a director was recommended or approved
by a majority of Continuing Directors.
4. Any action required to be taken by vote of the
Continuing Directors shall be effective only if
taken at a meeting at which a Continuing Director
Quorum is present. A Continuing Director Quorum
shall mean two-thirds of the Continuing Directors
capable of exercising the powers conferred upon
them under the provisions of these Articles of
Organization or the Bylaws of the Company or by
law.
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<PAGE> 8
5. Whether or not any proposed sale, lease, exchange,
mortgage, pledge, transfer or other disposition of
part of the assets of any entity involves a
substantial part of the assets of such entity
shall be conclusively determined by a two-thirds
vote of the Continuing Directors; provided,
however, that any such determination shall be
effective only if made at a meeting at which a
Continuing Director Quorum was present; and
provided further that assets involved in any
single transaction or series of related transac-
tions having an aggregate Fair Market Value of
more than fifteen percent (15%) of the total
consolidated assets of an entity and its
subsidiaries as at the end of such entity's last
full fiscal year prior to such determination shall
always be deemed to constitute a substantial
part.
6. For the purposes of Subsection 1 of Section (c) of
this Article 6, the term other consideration to
be received shall include, without limitation,
Common Stock or other capital stock of the Company
retained by stockholders of the Company other than
any Interested Stockholders or parties to such
Business Combination in the event of a Business
Combination in which the Company is the surviving
corporation.
7. An Interested Stockholder shall be deemed to
have acquired a share of the capital stock of the
Company at the time when such Interested
Stockholder became the Beneficial Owner thereof.
With respect to shares owned by Affiliates or
Associates of an Interested Stockholder or other
persons whose ownership is attributed to an
Interested Stockholder under the foregoing
definition of Interested Stockholder, for purposes
of Subsection 8 of this Section (e), such
Interested Stockholder shall be deemed to have
purchased such shares at the higher of (a) the
price paid upon the acquisition thereof by the
Affiliate, Associate or other person who owns such
shares, or (b) the market price of the shares in
question at the time when the Interested
Stockholder became the Beneficial Owner thereof.
8. The terms Highest Per Share Price and Highest
Equivalent Price shall mean the following: If
there is only one class of capital stock of the
Company issued and outstanding, the Highest Per
Share Price shall mean the highest price that can
be determined to have been paid or offered to be
paid during the preceding five years by the
Interested Stockholder involved for any share or
shares of that class of capital stock. If there is
more than one class of capital stock of the
Company issued and outstanding, the Highest
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<PAGE> 9
Equivalent Price shall mean with respect to each
class and series of capital stock of the Company,
the amount determined by two-thirds of the
Continuing Directors, on whatever basis they
believe to be appropriate, to be the highest per
share price equivalent to the highest price that
can be determined to have been paid or offered to
be paid during the preceding five years by the
Interested Stockholder involved or any Affiliate
or Associate of such Interested Stockholder for
any share or shares of any other class or series
of capital stock of the Company. In determining
the Highest Per Share Price and Highest Equivalent
Price, all purchases by such Interested
Stockholder or any such Affiliate or Associate
shall be taken into account regardless of whether
the shares were purchased before or after such
Interested Stockholder became an Interested
Stockholder. The Highest Per Share Price and the
Highest Equivalent Price shall include any
brokerage commissions, transfer taxes and
soliciting dealers fees paid by such Interested
Stockholder or any such Affiliate or Associate
with respect to the shares of capital stock of the
Company acquired by such Interested Stockholder or
such Affiliate or Associate. In the event any
Business Combination involving an Interested
Stockholder shall be proposed, the Continuing
Directors shall determine the Highest Equivalent
Price for each class and series of the capital
stock of the Company of which there are shares
issued and outstanding.
9. The term Fair Market Value shall mean (a) in the
case of stock, the highest closing sale price
during the thirty day period immediately preceding
the date in question of a share of such stock on
the Composite Tape for New York Stock Exchange
Listed Stocks, or, if such stock is not quoted on
the Composite Tape, on the New York Stock
Exchange, or if such stock is not listed on the
New York Stock Exchange, on the principal United
States securities exchange registered under the
Exchange Act on which such stock is listed, or if
such stock is not listed on any such exchange, the
highest closing bid quotation with respect to a
share of such stock during the thirty day period
preceding the date in question on the National
Association of Securities Dealers, Inc. Automated
Quotations System or any system then in use, or,
if no such quotations are available, the fair
market value on the date in question of a share of
such stock as determined by a two-thirds vote of
the Continuing Directors, and (b) in the case of
property on the date in question as determined by
a two-thirds vote of the Continuing Directors;
provided, however, that any determination made by
the Continuing Directors pursuant to this
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<PAGE> 10
Subsection 9 shall be effective only if made at a
meeting at which a Continuing Director Quorum was
present; and provided further that in the event
the number of Continuing Directors in office shall
be less than a Continuing Director Quorum, any
determination of fair market value that would
otherwise be made by a vote of the Continuing
Directors shall be made by a court of competent
jurisdiction.
(f) No proposal to amend or repeal Sections (c), (d), (e)
or (f) of this Article 6 may be authorized and approved
except by the affirmative vote of the holders of voting
stock entitling them to exercise eighty-five percent
(85%) of the voting power of the Company voting
together as a class, unless required to vote separately
by law or by other provisions of those Articles of
Organization or by the terms of the stock entitling
them to vote and, if a proposal upon which holders of
shares of a particular class or classes are so required
to vote separately, then by the affirmative vote of the
holders of shares entitling them to exercise
eighty-five percent (85%) of the voting power of each
such class or classes; provided, however, that the
provisions of this Section (f) shall not apply to any
such amendment or repeal of this Article 6 that has
been favorably recommended to the stockholders by
resolution of the Board of Directors adopted by a
two-thirds vote of the Continuing Directors at a
meeting at which a Continuing Director Quorum was
present, in which case any such amendment or repeal of
Sections (c), (d), (e) or (f) of this Article 6 may be
authorized and approved by the affirmative vote of such
number of the holders of voting stock as may be
required by law.
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<PAGE> 11
We further certify that the foregoing restated articles of
organization effect no amendments to the article of organization
of the corporation as heretofore amended, except amendments to
the following article: NONE
IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have
hereto signed our names this 31st day of July in the year 1995:
/S/ DAVID P. GRUBER WALLACE F. WHITNEY, JR. ESQ.
David P. Gruber Wallace F. Whitney, Jr. Esq
President Clerk
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<PAGE> 12
THE COMMONWEALTH OF MASSACHUSETTS
RESTATED ARTICLES OF ORGANIZATION
(General Laws, Chapter 156B, Section 74)
I hereby approve the within restated articles of
organization and, the filing fee in the amount of $200.00 having
been paid, said articles are deemed to have been filed with me
this 31st day of July, 1995.
/S/ WILLIAM FRANCIS GALVIN
William Francis Galvin
Secretary of the Commonwealth
TO BE FILLED IN BY CORPORATION
Photo copy of restated articles of organization to be sent to:
Wallace F. Whitney, Jr., Esq.
Wyman-Gordon Company
244 Worcester Street, Box 8001
No. Grafton, MA 01536
Telephone: 508-839-4441
Copy Mailed
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<PAGE> 1
WYMAN-GORDON COMPANY EXHIBIT 3.B
BYLAWS May 24, 1994
ARTICLE I OFFICES
1. PRINCIPAL OFFICE
The principal office for the transaction of the business of
the Corporation shall be located in the City of Worcester,
Commonwealth of Massachusetts.
2. OTHER OFFICES
The Corporation may also establish offices at such other
places, both within and without the Commonwealth of
Massachusetts, as the Board of Directors may from time to
time determine or the business of the Corporation may
require.
ARTICLE II MEETING OF STOCKHOLDERS
1. PLACE OF MEETINGS
All meetings of stockholders shall be held at the principal
office of the Corporation or at any other place within the
United States which may be (a) designated by the Board of
Directors, or (b) consented to by the written consent of all
stockholders entitled to vote thereat, given either before
or after the meeting and filed with the Clerk of the
Corporation.
2. ANNUAL MEETINGS
Unless otherwise determined by the Board of Directors, the
annual meeting of stockholders shall be held on the third
Wednesday of October in each year at an hour fixed by the
Board of Directors or the Chief Executive Officer. Should
said third Wednesday in October fall upon a legal holiday
and the Board of Directors not have established a different
date for such annual meeting, however, said annual meeting
shall be held at the same time and place on the next day
thereafter ensuing which is not a legal holiday. At each
such annual meeting Directors shall be elected, reports of
officers of the Corporation shall be considered, and any
other business may be transacted which is within the power
of the stockholders.
3. SPECIAL MEETINGS
Special meetings of the stockholders, for any purpose
whatsoever, may be called at any time either by the Chief
Executive Officer or by the Board of Directors, to be held
at such a time as he or they may designate. In addition, a
special meeting of the stockholders shall be called by the
Clerk (or in the case of his death, absence, incapacity or
refusal to act, by any other officer of the Corporation)
upon written application of one or more stockholders holding
not less than one-tenth of the issued and outstanding
capital stock of the Corporation. The officer forthwith
shall cause notice to be given as provided in the next
section that a meeting will be held at a time, fixed by the
officer, not less than 10 nor more than 60 days after the
receipt of the request.
E-6<PAGE>
<PAGE> 2
4. NOTICE OF MEETINGS
The Clerk shall, not less than seven days prior to any
meeting of stockholders, give written notice to all
stockholders, entitled to vote thereat, stating the place,
date and hour of such meeting, and the purposes of the
meeting. Such notice shall be given to any stockholder (a)
by leaving such notice with the stockholder, or at his
residence or usual place of business, or (b) by mail,
postage prepaid, addressed to the stockholder at his address
as it is shown upon the records of the Corporation.
5. QUORUM
A majority of the shares of stock issued and outstanding and
at the time entitled to vote represented at a meeting in
person or by proxy shall constitute a quorum for the
transaction of business except as otherwise provided in the
Articles of Organization.
6. VOTING
Each vote at a stockholders meeting shall be by voice vote
or by ballot as determined by the officer presiding at the
meeting; provided, however, that all elections for Directors
must be by ballot upon demand made before the voting begins
by a stockholder entitled to vote thereon.
7. PROXIES
Every person entitled to vote or execute consents shall have
the right to do so either in person or by one or more agents
authorized by a written proxy executed by such person or his
duly authorized agent and filed with the Clerk of the
Corporation. A proxy with respect to stock held in the name
of two or more persons shall be valid if executed by any one
of them unless at or prior to exercise of the proxy the
Corporation receives a specific written notice to the
contrary from any one of them. A proxy purporting to be
executed by or on behalf of a stockholder shall be deemed
valid unless challenged at or prior to its exercise and the
burden of proving invalidity shall rest on the challenger.
8. ADJOURNED MEETINGS AND NOTICE THEREOF
Any meeting of stockholders, annual or special, whether or
not a quorum is present, may be adjourned from time to time
by the vote of a majority of the shares, the holders of
which are either present in person or represented by proxy
thereat, but in the absence of a quorum no other business
may be transacted at such meeting.
When any meeting of stockholders, either annual or special,
is adjourned for thirty (30) days or more, notice of the
adjourned meeting shall be given as in the case of an
original meeting. Except as provided above, it shall not be
necessary to give any notice of an adjournment or of the
business to be transacted at an adjourned meeting, other
than by announcement at the meeting at which such
adjournment is taken.
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<PAGE> 3
9. ACTION WITHOUT MEETING
Any action which may be taken at a meeting of stockholders,
except approval of an agreement for merger or consolidation
of the Corporation with other corporations, may be taken
without a meeting if authorized by a writing signed by all
of the persons who would be entitled to vote upon such
action at a meeting, and filed with the Clerk of the
Corporation.
ARTICLE III DIRECTORS
1. POWERS
Subject to limitations imposed by law or the Articles of
Organization, all corporate powers shall be exercised by or
under the authority of, and the business and affairs of the
Corporation shall be controlled by, the Board of Directors.
In the exercise of its powers, the Board may appoint an
executive committee and other committees, and may delegate
to the executive committee any of the powers and authority
of the Board in the management of the business and affairs
of the Corporation, except the powers expressly reserved to
the Directors in Section 55 of the Massachusetts Business
Corporation Law. The executive committee shall be composed
of three or more Directors.
2. NUMBER AND CLASSIFICATION OF DIRECTORS
The number of Directors of the Corporation shall not be less
than seven nor more than thirteen, as determined from time
to time by the Directors, and the number shall be nine until
otherwise so determined. The Board of Directors shall be
divided into three classes in respect of term of office,
each class to contain as near as may be one-third of the
whole number of the Board. Of the Board of Directors
elected at the last annual meeting of stockholders held
prior to the adoption of this Bylaw, the members of Class I
shall serve until the annual meeting of stockholders held in
the year following their election, the members of Class II
shall serve until the annual meeting of stockholders held
two years following their election, and the members of Class
III shall serve until the annual meeting of stockholders
held three years following their election; provided,
however, that in each case Directors shall continue to serve
until their successors shall be elected and shall qualify.
At each annual meeting of stockholders following the
adoption of this Bylaw, one class of Directors shall be
elected to serve until the annual meeting of stockholders
held three years next following and until their successors
shall be elected and shall qualify. If any annual meeting
of stockholders is not held or Directors are not elected
thereat, Directors may be elected at any special meeting of
stockholders.
Directors need not be stockholders of the Corporation.
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<PAGE> 4
4. VACANCIES
In case a vacancy shall occur from any cause in the Board of
Directors or in any other office, including action by the
Directors to increase the number of Directors in accordance
with Section 2 of this Article III, the remaining Directors
then in office may elect a person to fill such vacancy for
the balance of the term of the office vacated, except that,
in the case of an increase in the number of Directors, such
vacancy may be filled only until the next annual meeting of
stockholders, at which time the vacancy shall be filled by
vote of the stockholders. In case of a vacancy or vacancies
in the Board of Directors being unfilled, the remaining
Directors shall exercise all the powers of the Board.
A vacancy in the Board of Directors shall be deemed to exist
in the case of the death, resignation or removal of any
Director, or if the authorized number of Directors is
increased, or if the stockholders fail, at any annual or
special meeting of stockholders at which any Director is
elected, to elect the full authorized number of Directors to
be voted for at that meeting. The Board of Directors may
declare vacant the office of a Director if, within 30 days
after notice of his first election to the Board of
Directors, he does not accept the office either in writing
or by attending a meeting of the Board of Directors.
The stockholders may elect a Director or Directors at any
time to fill any vacancy or vacancies not filled by the
remaining Director or Directors. If the Board of Directors
accepts the resignation of a Director tendered to take
effect at a future time, the Board, or if the Board has not
acted, the stockholders, shall have the power to elect a
successor to take office when the resignation is to become
effective.
5. REMOVAL
Any Director of the Corporation may be removed with or
without cause at any regular meeting of the stockholders or
at a special meeting called for the purpose, and by vote of
the holders of a majority of the stock outstanding and
entitled to vote, or may be removed with or without cause by
the Board of Directors.
No reduction of the authorized number of Directors shall
have the effect of removing any Director prior to the
expiration of his term of office.
6. QUORUM
A majority of the authorized number of Directors shall
constitute a quorum of the Board for the transaction of
business. Every act or decision done or made by a majority
of the Directors present at a meeting duly held at which a
quorum is present shall be regarded as the act of the Board
of Directors, unless a greater number be required by law.
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<PAGE> 5
7. PLACE OF DIRECTORS' MEETINGS
Meetings of the Board of Directors shall be held at the
principal office of the Corporation, or at any place within
or without the Commonwealth of Massachusetts which has been
designated from time to time by resolution of the Board or
by written consent of all the members of the Board.
8. ORGANIZATION MEETINGS
Immediately following each annual meeting of stockholders
the Board of Directors shall hold a regular meeting for the
purpose of organizing, electing officers, and transacting
other business. No notice need be given of such meetings of
the Board of Directors.
9. REGULAR MEETINGS
Regular meetings of the Board of Directors shall be held at
such day and hour as shall be from time to time determined
by the Board. If said day shall fall upon a holiday, such
meeting shall be held on the next succeeding business day
thereafter. No notice need be given of such regular
meetings of the Board of Directors.
10. SPECIAL MEETINGS
Special meetings of the Board of Directors for any purpose
or purposes shall be called by the Chief Executive Officer
or, if he is absent or unable or refuses to act, by the
President if the Chairman of the Board is the Chief
Executive Officer, by any corporate Vice President, or by
any two Directors.
Written notice of the time and place of special meetings
shall be delivered to each Director in person or by
telephone, or sent to each Director by mail or other form of
written communication, charges prepaid, addressed to him at
his address as it is shown upon the records of the
Corporation, or, if it is not so shown and if it is not
readily ascertainable, addressed to him at the city or place
where the meetings of the Directors are regularly held.
Notices mailed or telegraphed shall be deposited in the
United States mail or delivered to the telegraph company at
the place where the principal office of the Corporation is
located at least 48 hours prior to the time of the holding
of the meeting; and notices given personally or by telephone
shall be given at least 24 hours prior to the time of the
holding of the meeting.
11. NOTICE OF ADJOURNMENT
Notice of the time and place of holding an adjourned meeting
need not be given to absent Directors if the time and place
are fixed at the meeting adjourned.
12. WAIVER OF NOTICE; CONSENT TO MEETING
The transactions of any meeting of the Board of Directors,
however called and noticed or whenever held, shall be as
valid as though had at a meeting duly held after regular
call and notice if a quorum is present and if, either before
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<PAGE> 6
or after the meeting, each of the Directors not present
signs a waiver of notice or a consent to hold such meeting,
or an approval of the minutes thereof. All such waivers,
consents or approvals shall be filed with the corporate
records and made a part of the minutes of the meeting.
13. ADJOURNMENT
A quorum of the Directors may adjourn any meeting of the
Board of Directors to meet again at a stated day and hour;
and in the absence of a quorum, a majority of the Directors
present may adjourn from time to time until the time fixed
for the next regular meeting of the Board.
14. ACTION WITHOUT MEETING
Any action required or permitted to be taken by the Board of
Directors may be taken without a meeting, if all members of
the Board shall individually or collectively consent in
writing to such action. Such written consent or consents
shall be filed with the minutes of the proceedings of the
Board. Such action, by written consent, shall have the same
force and effect as a unanimous vote of such Directors at a
meeting of the Board of Directors.
Directors of the Company may participate in meetings of the
Board of Directors or any committee designated thereby by
means of a conference telephone or similar communications
equipment by means of which all persons participating in the
meeting can hear each other at the same time and
participation by such means shall constitute presence in
person at a meeting.
15. FEES AND COMPENSATION
Directors shall receive such fees and compensation, if any,
for their services as may be determined by vote of the
Board, and shall receive reimbursement of reasonable
expenses incurred in attending meetings of the Directors or
committees thereof or otherwise in connection with attention
to the affairs of the Corporation. No Director who receives
a salary as an officer or employee of the Corporation or any
subsidiary thereof shall receive any remuneration as a
Director or member of any committee of the Directors.
ARTICLE IV OFFICERS
1. OFFICERS
The officers of the Corporation shall be a President, a
Treasurer and a Clerk. The Corporation may also have, at
the discretion of the Board of Directors, a Chairman of the
Board, one or more corporate Vice Presidents, one or more
Assistant Treasurers and one or more Assistant Clerks, each
of whom shall be elected by the Board of Directors in
accordance with the provisions of Section 2 of this Article.
Other officers may be appointed in accordance with the
provisions of Section 3 of this Article; provided, however,
that no such appointed officer shall be deemed to be a
corporate officer. One person may hold two or more offices,
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<PAGE> 7
except that the offices of President and Treasurer shall not
be held by the same person. The Chief Executive Officer of
the Corporation shall be the President or the Chairman of
the Board, as determined by the Board of Directors.
2. ELECTION
The officers of the Corporation, except such officers as may
be appointed in accordance with the provisions of Sections 3
or 5 of this Article, shall be chosen annually by the Board
of Directors, and each shall hold his office until he shall
resign or shall be removed or otherwise disqualified to
serve, or his successor shall be elected and qualified.
3. APPOINTED OFFICERS
The Board of Directors may appoint and may empower the Chief
Executive Officer to appoint, such other officers as the
business of the Corporation may require, including without
limitation, divisional vice presidents (who shall not be
corporate officers). Each such appointed officer shall hold
office for such period, have such authority and perform such
duties as are provided in the Bylaws or as the Board of
Directors or the Chief Executive Officer may from time to
time determine.
4. REMOVAL AND RESIGNATION
Any officer or agent may be removed, either with or without
cause, by a majority of the Directors at the time in office,
at any regular or special meeting of the Board, or, except
in case of an officer elected by the Board of Directors, by
the Chief Executive Officer or by any officer upon whom such
power of removal may be conferred by the Board of Directors.
Any officer or agent may resign at any time by giving
written notice to the Board of Directors or the Chief
Executive Officer, or the Clerk of the Corporation. Any
such resignation shall take effect on the date of the
receipt of such notice or at any later time specified
therein; and, unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to
make it effective.
5. VACANCIES
A vacancy in any office because of death, resignation,
removal, disqualification or any other cause shall be filled
in the manner prescribed in the Bylaws for regular
appointments to such office.
6. CHAIRMAN OF THE BOARD
The Chairman of the Board, if any, shall, if present,
preside at all meetings of the Board of Directors, and
exercise and perform such other powers and duties as may be
from time to time assigned to him by the Board of Directors.
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7. CHIEF EXECUTIVE OFFICER
Subject to the supervision and control of the Board of
Directors, the Chief Executive Officer shall have general
control of the business and financial affairs of the
Corporation, shall have the general powers and duties of
management usually vested in the chief executive officer of
a corporation, and shall have such other powers and perform
such other duties as are delegated to him by the Corporation
or the Board of Directors or as may be imposed by law. He
shall preside at all meetings of the stockholders and, in
the absence of a Chairman of the Board who has not been
designated Chief Executive Officer, at all meetings of the
Board of Directors. He shall be ex officio a member of the
executive committee and any other standing committees, other
than the stock option committee and the compensation
committee.
8. PRESIDENT
Subject to the supervision and control of the Board of
Directors, the President shall have the general powers and
duties of management usually vested in the president of a
corporation and shall have such other powers and duties as
are delegated to him by the Corporation or the Board of
Directors or as may be imposed by law. Unless the Chairman
of the Board is specifically designated by the Board of
Directors as the Chief Executive Officer, the President
shall be the Chief Executive Officer of the Corporation with
all of the powers and duties specified in Section 7 of this
Article. If the Chairman of the Board is the Chief
Executive Officer, the President, shall, in his absence or
disability or in case of a vacancy in his office, perform
all the duties of the Chief Executive Officer, and when so
acting shall have all the powers of, and be subject to all
the restrictions upon, the Chief Executive Officer.
9. VICE PRESIDENT
In the absence or disability of the President, or in case of
a vacancy in his office, the corporate Vice Presidents, if
any, in order of their rank as fixed by the Board of
Directors, or if not ranked, the Vice President designated
by the Board of Directors, shall perform all the duties of
the President, and when so acting shall have all the powers
of, and be subject to all the restrictions upon, the
President. The Vice Presidents shall have such other powers
and perform such other duties as from time to time may be
prescribed for them respectively by the Board of Directors.
10. TREASURER
Subject to the supervision and control of the Chief
Executive Officer, the Treasurer shall have general charge
of the financial affairs of the Corporation and have the
custody of the funds and of all the valuable papers of the
Corporation. He shall keep the accounts of the Corporation
in a clear manner and shall at all times when requested by
the Directors or the Chief Executive Officer exhibit a true
statement of the affairs of the Corporation. The Assistant
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or each of the Assistant Treasurers, in the absence or
inability of the Treasurer, or in case of a vacancy in his
office, may perform such part or all of the duties of the
Treasurer as may be specified from time to time by the
Directors or the Chief Executive Officer, and the written
statement of any Assistant Treasurer as to such absence,
inability or vacancy shall conclusively determine the fact
so stated. The Treasurer shall, if required by the
Directors or the Chief Executive Officer, give a bond for
the faithful discharge of his duties at the expense of the
Corporation with satisfactory sureties and in such penal
sums as may be required by the Directors. The Assistant
Treasurer or Treasurers shall also, if required by the
Directors or the Chief Executive Officer, give a bond in
like manner for the faithful discharge of their duties. The
Treasurer and Assistant Treasurers shall perform such other
duties as may be delegated to them respectively by the
Corporation or the Chief Executive Officer or may be imposed
by law.
11. CLERK
The Clerk shall attend all meetings of the Board of
Directors, the stockholders and the executive committee, if
any, and if so directed by the Board of Directors, any other
committee which may be constituted, and shall keep, or cause
to be kept, at the principal office or such other place as
the Board of Directors may direct, a book of minutes of all
such meetings, showing the time of and place at which such
meetings are held; whether regular or special; and if
special, how authorized; the notice thereof given; the names
of those present at Directors' or committee meetings; the
number of shares present or represented at stockholders'
meetings; and a record of the proceedings of such meetings.
In absence of the Clerk or an Assistant Clerk, a Temporary
Clerk shall be appointed to keep the records of any meeting.
The Clerk shall keep, or cause to be kept, at the principal
office or at the office of the Corporation's transfer agent,
a stock book, or a duplicate stock book, showing the names
of the stockholders and their addresses; the number and
classes of shares held by each; the number and date of
certificates issued for the same; and the number and date of
cancellation of every certificate surrendered for
cancellation.
The Clerk shall give, or cause to be given, notice of all
the meetings of stockholders and of the Board of Directors
required by these Bylaws to be given, and shall have such
other powers and perform such other duties as may be
prescribed by the Board of Directors. He shall keep in safe
custody the seal of the Corporation and, when authorized by
the Board of Directors, shall affix the same to any
instrument requiring it and, when so affixed, it shall be
attested by his signature or by the signature of an
Assistant Clerk.
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The Assistant or each of the Assistant Clerks, in the
absence or inability of the Clerk, or in case of a vacancy
in his office, may perform such part or all of the duties of
the Clerk as may be specified from time to time by the
Directors or the Chief Executive Officer, and the written
statement of any Assistant Clerk as to such absence,
inability or vacancy shall conclusively determine the fact
so stated.
ARTICLE V INDEMNIFICATION
1. RIGHT OF INDEMNIFICATION
Every person who is or was a Director, officer or employee
of this Corporation or of any other corporation which he
served at the request of the Corporation and in which the
Corporation owns or owned shares of capital stock or of
which it is a creditor shall have a right to be indemnified
by this Corporation against all reasonable expenses incurred
by him in connection with or resulting from any action, suit
or proceeding in which he may become involved as a party or
otherwise by reason of his being or having been a Director,
officer or employee of the Corporation or such other
corporation, provided (a) said action, suit or proceeding
shall be prosecuted to a final determination and he shall be
vindicated on the merits, or (b) in the absence of such
final determination vindicating him on the merits, the Board
of Directors shall determine that he acted in good faith in
the reasonable belief that his action was in the best
interests of the Corporation or such other corporation and
that he cooperated effectively with the Corporation in the
defense and disposition of any said action, suit or
proceeding, said determinations to be made by the Board of
Directors acting through a quorum of disinterested
directors, or in its absence on the opinion of the counsel.
2. DEFINITIONS
For purposes of Section 1 of this Article V: (a) "reasonable
expenses" shall include but not be limited to reasonable
counsel fees and disbursements, amounts of any judgment,
fine or penalty, and reasonable amounts paid in settlement,
but in no event shall "reasonable expenses" include any item
for which indemnification would be contrary to law; (b)
"action, suit or proceeding" shall include every claim,
action, suit or proceeding, whether civil or criminal,
derivative or otherwise, administrative, judicial or
legislative, any appeal relating thereto, and shall include
any reasonable apprehension or threat of such a claim,
action, suit or proceeding; and (c) a settlement plea of
nolo contendere, consent judgment, adverse civil judgment,
or conviction shall not of itself create a presumption that
the person seeking indemnification did not act in good faith
in the reasonable belief that his action was in the best
interests of this Corporation or such other corporation, but
the Board of Directors shall be bound by a civil judgment or
conviction which adjudges that the person did not act in
good faith in the reasonable belief that his action was in
the best interests of this Corporation or such other
corporation.
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3. PERSONS ENTITLED TO INDEMNIFICATION
The right of indemnification shall extend to any person
otherwise entitled to it under this Article V whether or not
that person continues to be a Director or officer of this
Corporation at the time such liability or expense shall be
incurred. The right of indemnification shall extend to the
legal representatives and heirs of any person otherwise
entitled to indemnification. If a person meets the
requirements of this Article V with respect to some matters
in an action, suit or proceeding, but not with respect to
others, he shall be entitled to indemnification as to the
former. Advances against liability and expenses may be made
by the Corporation on terms fixed by the Board of Directors
subject to an obligation to repay if indemnification proves
unwarranted.
4. BYLAW NOT EXCLUSIVE
This Article V shall not exclude any other rights of
indemnification or other rights to which any Director,
officer or employee may be entitled by contract, by vote of
the Board of Directors, or as a matter of law. If any
clause, provision or application of this Article V shall be
determined to be invalid, the other clauses, provisions or
applications of these Bylaws shall not be affected but shall
remain in full force and effect. The provisions of this
Article V shall be applicable to actions, suits or
proceedings commenced after the adoption hereof, whether
arising from acts or omissions occurring before or after the
adoption hereof.
ARTICLE VI MISCELLANEOUS
1. RECORD DATE AND CLOSING STOCK BONDS
The Board of Directors may fix a time in the future as a
record date for the determination of stockholders entitled
to notice of and to vote at any meeting of stockholders or
entitled to receive any dividend or distribution, or any
allotment of rights, or to exercise rights in respect to any
change, conversion or exchange of shares. The record date
so fixed shall be not more than 60 days prior to the date of
the meeting or event for the purposes of which it is fixed.
When a record date is so fixed, only stockholders of record
on that date are entitled to notice of and to vote at the
meeting or to receive the dividend, distribution, or
allotment of rights, or to exercise the rights, as the case
may be, notwithstanding any transfer of any shares on the
books of the Corporation after the record date.
The Board of Directors may close the books of the
Corporation against transfers of shares during the whole or
any part of a period not more than 60 days prior to the date
of a meeting of stockholders, the date when the right to any
dividend, distribution, or allotment of rights vests, or the
effective date of any change, conversion or exchange of
shares.
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2. INSPECTION OF CORPORATE RECORDS
The stock book or duplicate stock book and minutes of
proceedings of the incorporators and stockholders shall be
open to inspection upon the written demand of any
stockholder at any reasonable time, and for a purpose
reasonably related to his interests as a stockholder. Such
records shall be exhibited at any meeting of stockholders
upon the demand by the holders of ten percent of the shares
represented at the meeting. Such inspection may be made in
person or by an agent or attorney, and shall include the
right to make extracts. Demand of inspection other than at
a meeting of stockholders shall be made in writing upon the
President or Clerk of the Corporation.
Every Director shall have the right, at any reasonable time,
to inspect all books, records, documents of every kind, and
the physical properties of the Corporation and of its
subsidiary corporations, domestic or foreign; provided,
however, that in the case of foreign subsidiary corporations
such right shall extend only to such books, records,
documents and properties as are kept or located in the
Commonwealth of Massachusetts.
3. CERTIFICATES FOR SHARES
Certificates representing shares of common stock of the
Corporation shall be of such form as the Board of Directors
may approve and shall state the name of the record holder of
the shares represented thereby; the number of the
certificate; the date of issuance of the certificate; the
number of shares for which it is issued; the par value, if
any, or a statement that such shares are without par value;
a statement of the rights, privileges, preferences and
restrictions, if any; a statement as to redemption or
conversion, if any; a statement of liens or restrictions
upon transfer or voting, if any; if the shares be
assessable, or, if the assessments are collectible by
personal action, a plain statement of such facts.
4. EXECUTION OF CERTIFICATES
Every certificate for shares must be signed by the President
or a Vice President and the Treasurer, or an Assistant
Treasurer, and may be by facsimiles of the signatures of the
President and Treasurer or by a facsimile of the signature
of the President and the written signature of its Treasurer
or an Assistant Treasurer. No certificate for shares
authenticated by a facsimile of a signature shall be valid
until countersigned by the transfer agent.
5. TRANSFER OF STOCK
Prior to due presentment for registration of transfer, the
Corporation may treat the registered owner of shares as the
person exclusively entitled to vote, to receive
notifications and otherwise to exercise all the rights and
powers of a stockholder. Shares may be transferred on the
books of the Corporation only by the person named in the
certificate as the owner thereof, or by his agent, attorney,
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or legal representative, upon surrender to the Clerk of the
Corporation or, at the discretion of the Board of Directors,
to any transfer agent, of a certificate, duly endorsed or
accompanied by proper evidence of succession, assignment or
authority to transfer. A new certificate shall thereupon be
issued to the person entitled thereto and the old
certificate shall be cancelled.
6. LOST CERTIFICATES
New certificates for shares or other securities of the
Corporation may be issued for and in the place of any such
instrument theretofore issued which is alleged to have been
lost, destroyed or wrongfully taken. The Directors may, in
their discretion, require the owner of such instrument, or
his legal representative, to give the Corporation a bond or
other security in an adequate amount as indemnity against
any claim that may be made against the Corporation. A new
instrument may be issued, however, without requiring any
bond or other security when, in the judgment of the
Directors, it is proper to do so.
7. CORPORATE SEAL
A corporate seal shall be provided and adopted by the Board
of Directors and shall contain the name of the Corporation
and such other wording as the Board may deem suitable or as
may be required by law.
8. FISCAL YEAR
Except as from time to time otherwise determined by the
Board of Directors, the fiscal year of the Corporation shall
begin on the first day of June and end on the last day of
May next succeeding.
9. ISSUANCE OF STOCK
Any unissued capital stock from time to time authorized
under the Articles of Organization may be issued by a vote
of the Board of Directors.
10. EXECUTION OF CONTRACTS
The Board of Directors may authorize any officer or
officers, agents or agents, to enter into any contract or
execute any instrument in the name of and on behalf of the
Corporation, and such authority may be general or confined
to specific instances; and unless so authorized by the Board
of Directors, no officer, agent or employee shall have any
power or authority to bind the Corporation by any contract
or engagement or to pledge its credit or to render it liable
for any purpose or in any amount.
11. REPRESENTATION OF SHARES OF OTHER CORPORATIONS
The Chairman of the Board, the President, any corporate Vice
President and the Treasurer of this Corporation, or any one
of them, are authorized to vote, represent and exercise on
behalf of this Corporation all rights incident to any and
all shares of any other corporation or corporations standing
in the name of this Corporation. The authority herein
granted to said officers to vote or represent on behalf of
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this Corporation any and all shares held by this Corporation
in any other corporation or corporations may be exercised by
such officers in person or by any person authorized so to do
by proxy or power or attorney duly executed by said
officers.
12. INSPECTION OF BYLAWS
The Corporation shall keep in its principal office for the
transaction of business the original or a copy of these
Bylaws as amended or otherwise altered to date, certified by
the Clerk, which shall be open to inspection by the
stockholders at all reasonable times during office hours.
13. CONSTRUCTION AND DEFINITIONS
Unless the context otherwise requires, the general
provisions, rules of construction and definitions contained
in the Massachusetts Business Corporation Law shall govern
the construction of these Bylaws. The Article and Section
captions used in these Bylaws are for reference only and are
not part of the Bylaws and shall not be used in construing
or interpreting these Bylaws.
14. EXEMPTION FROM MASSACHUSETTS CONTROL SHARE ACQUISITIONS LAW
The provisions of Chapter 110D of the Massachusetts General
Laws shall not apply to control share acquisitions of the
Company.
ARTICLE VII AMENDMENTS
1. POWER OF STOCKHOLDERS
New Bylaws may be adopted or these Bylaws may be amended or
repealed by the vote of stockholders entitled to exercise a
majority of the voting power of the Corporation, except as
otherwise provided by the Articles of Organization.
2. POWER OF DIRECTORS
Subject to the right of stockholders to adopt, amend or
repeal Bylaws, these Bylaws may be amended or repealed by
the Board of Directors, and new Bylaws may be adopted, at
any regular or special meeting thereof.
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EXHIBIT 10.P
EXECUTIVE SEVERANCE AGREEMENT
This AGREEMENT ("Agreement") dated January 18, 1995, by
and between Wyman-Gordon Company, a Massachusetts corporation (the
"Company"), and Andrew C. Genor (the "Executive").
W I T N E S S E T H
WHEREAS, the Company desires to have the services of the
Executive as its Vice President, Chief Financial Officer and
Treasurer; and
WHEREAS, the Executive is willing to serve the Company as
its Vice President, Chief Financial Officer and Treasurer, but
desires assurance that he will not be materially disadvantaged by a
change in control of the Company;
NOW, THEREFORE, in consideration of the Executive's
service to the Company and the mutual agreements herein contained,
the Company and the Executive hereby agree, as follows:
ARTICLE I
ELIGIBILITY FOR BENEFITS
Section 1.1 Qualifying Termination. The Company shall
not be required to provide any benefits to the Executive pursuant
to this Agreement unless a Qualifying Termination occurs before the
Agreement expires in accordance with Section 6.1 hereof. For
purposes of this Agreement, a Qualifying Termination shall occur
only if
(a) a Change in Control occurs, and
(b) within three years after the Change in Control,
(i) The Company terminates the Executive's
employment other than for Cause; or
(ii) the Executive terminates his employment with
the Company for Good Reason;
provided, that a Qualifying Termination shall not occur if the
Executive's employment with the Company terminates by reason of the
Executive's Disability, death, or retirement. For the purposes
hereof "retirement" shall mean any termination of employment which
occurs at or after age 65.
Section 1.2 Change in Control. Except as provided a
below, a Change in Control shall be deemed to occur when and only
when the first of the following events occurs:
(a) the acquisition (including by purchase, exchange,
merger or other business combination, or any combination
of the foregoing) by any individuals, firms, corporations
or other entities, other than a Major Stockholder on the
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date of this Agreement, acting in concert ("Person"),
together with all Affiliates and Associates of such
Person, of beneficial ownership of securities of the
Company representing 20 percent or more of the combined
voting power of the Company's then outstanding voting
securities; or
(b) members of the Incumbent Board cease to constitute a
majority of the Board of Directors.
Notwithstanding the foregoing, a Change in Control shall not be
deemed to occur pursuant to paragraph (a), above, (i) solely
because 20 percent or more of the combined voting power of the
Company's outstanding securities is acquired by one or more
employee benefit plans maintained by the Company, or (ii) if the
Executive is included among the individuals, firms, corporations or
other entities that, acting in concert, acquire the Company's
securities. For purposes of this Section 1.2, the terms
"Affiliates" and "Associates shall have the meanings set forth in
Rule 12b-2 of the General Rules and Regulations promulgated under
the Securities Exchange Act of 1934 (the Exchange Act"); the terms
"beneficial ownership" and "beneficially owned" shall have the
meaning set forth in section 13(d) of the Exchange Act, as amended,
and in Rule 13d-3 promulgated thereunder, the term "Major
Stockholder" shall mean all shares beneficially owned by the Fuller
Foundation, the Stoddard Charitable Trust, and descendants of Harry
G. Stoddard and their spouses; the term "Board of Directors" shall
mean the Board of Directors of the Company and the term "Incumbent
Board" shall mean (i) the members of the Board of Directors on the
date hereof, to the extent that they continue to serve as members
of the Board of Directors, and (ii) any individual who becomes a
member of the Board of Directors after the date hereof, if his
election or nomination for election as a director was approved by a
vote of at least three quarters of the then Incumbent Board, but
excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of either an actual or
threatened election contest (as such terms are used in Rule 14a-11
of Regulation 14A promulgated under the Exchange Act) or other
actual or threatened solicitation of proxies or consents by or on
behalf of a person other than the Board of Directors.
Section 1.3. Termination for Cause. The Company shall have
Cause to terminate the Executive's employment with the Company for
purposes of Section 1.1 hereof only if the Executive (a) engages in
unlawful acts intended to result in the substantial personal
enrichment of the Executive at the Company's expense or (b) engages
(except (i) by reason of incapacity due to illness or injury or
(ii) in connection with an actual or anticipated termination of
employment by the Executive for Good Reason) in a material
violation of his responsibilities to the Company that results in a
material injury to the Company.
Section 1.4 Termination for Good Reason. The Executive
shall have a Good Reason for terminating employment with the
Company only if one or more of the following occurs after a Change
in Control:
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(a) a change in the Executive's status or position
(including for this purpose a change in the principal
place of the Executive's employment on a basis that does
not conform with the Company's present policies for
executive relocation, but excluding required travel on
the Company's business to an extent substantially
consistent with the Executive's present business travel
obligations) with the Company that, in the Executive's
reasonable judgment, represents an adverse change from
the Executive's status or position in effect immediately
before the Change in Control;
(b) the assignment to the Executive of any duties or
responsibilities that, in the Executive's reasonable
judgment, are inconsistent with the Executive's status or
position in effect immediately before the Change in
Control;
(c) layoff or involuntary termination of the Executive's
employment, except in connection with the termination of
the Executive's employment for Cause or as a result of
the Executive's Disability, death or retirement;
(d) a reduction by the Company in the Executive's total
compensation as in effect at the time of the Change in
Control (which shall be deemed, for this purpose, to be
equal to his base salary plus the most recent award that
he has earned under the Company's Incentive Compensation
Plan, as amended from time to time, or any successor
thereto (the "ICP")) or as the same may be increased
from time to time;
(e) the failure by the Company to continue in effect any
Plan in which the Executive is participating at the time
of the Change in Control (or plans or arrangements
providing the Executive with substantially equivalent
benefits) other than as a result of the normal expiration
of any such Plan in accordance with its terms as in
effect at the time of the Change in Control;
(f) any action or inaction by the Company that would
adversely affect the Executive's continued participation
in any Plan on at least as favorable a basis as was the
case at the time of the Change in Control, or that would
materially reduce the Executive's benefits in the future
under the Plan or deprive him of any material benefits
that he enjoyed at the time of the Change in Control,
except to the extent that such action or inaction by the
Company is required by the terms of the Plan as in effect
immediately before the Change in Control, or is necessary
to comply with applicable law or to preserve the
qualification of the Plan under section 401(a) of the
Internal Revenue Code, and except to the extent that the
Company provides the Executive with substantially
equivalent benefits;
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(g) the Company's failure to obtain the express assumption of
this Agreement by any successor to the Company as provided by
Section 6.3 hereof;
(h) any material violation by the Company of any agreement
(including this Agreement) between it and the Executive; or
(i) the failure by the Company, without the Executive's
consent, to pay to him any portion of his current
compensation, or to pay to the Executive any portion of any
deferred compensation, within 30 days of the date the
Executive notifies the Company that any such compensation
payment is past due.
Notwithstanding the foregoing, no action by the Company shall give
rise to a Good Reason if it results from the Executive's
termination for Cause, death or retirement, and no action by the
Company specified in paragraphs (a) through (d) of the preceding
sentence shall give rise to a Good Reason if it results from the
Executive's Disability. A Good Reason shall not be deemed to be
waived by reason of the Executive's continued employment as long as
the termination of the Executive's employment occurs within the
time prescribed by Section 1.1(b) hereof. For purposes of this
Section 1.4, "Plan" means any compensation plan, such as an
incentive or stock option plan, or any employee benefit plan, such
as a thrift, pension, profit-sharing, stock bonus, long-term
performance award, medical, disability, accident, or life insurance
plan, or any other plan, program or policy of the Company that is
intended to benefit employees.
Section 1.5 Disability. For purposes of this Agreement,
"Disability" shall mean illness or injury that prevents the
Executive from performing his duties (as they existed immediately
before the illness or injury) on a full-time basis for six
consecutive months.
Section 1.6 Notice. If a Change in Control occurs, the
Company shall notify the Executive of the occurrence of the Change
in Control within two weeks after the Change in Control.
ARTICLE II
BENEFITS AFTER A QUALIFYING TERMINATION
Section 2.1 Basic Severance Payment. If the Executive
incurs a Qualifying Termination following a Change in Control that
occurs on or before termination of this Agreement as provided in
Section 6.1 hereof, the Company shall pay within 30 days after the
date of the Qualifying Termination to the Executive a single lump
sum cash amount equal to his Total Annual Compensation multiplied
by the lesser of (a) 2.50 or (b) .0833 multiplied by the number of
full months remaining between termination and his attaining age 65.
"Total Annual Compensation" shall mean the sum of annual base
salary in effect immediately preceding termination or the Change of
Control, whichever is higher, and annual incentive compensation
earned under the "ICP" (annualized in the case of less than a full
year's service) in the last full fiscal year immediately preceding
termination or the Change of Control, whichever is higher.
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Section 2.2 Insurance. If the Executive incurs a Qualifying
Termination following a Change in Control that occurs on or before
termination of this Agreement as provided in Section 6.1 hereof,
the Company shall provide the Executive, at the Company's expense,
for a period beginning on the date of the Qualifying Termination,
the same medical, accident, disability, life and any other
insurance coverage as was provided to him by the Company
immediately before the Change in Control (or, if greater, as in
effect immediately before the Qualifying Termination occurs); such
coverage shall end upon the earlier of (a) the expiration of 24
months after the Qualifying Termination or (b) with respect to each
coverage, the date on which the Executive first becomes eligible
for insurance coverage of a similar nature provided by a firm that
employs his following the Qualifying Termination.
Section 2.3 Executive Long-Term Incentive Program. If
the Executive incurs a Qualifying Termination following a Change in
Control that occurs on or before termination of this Agreement as
provided in Section 6.1 hereof, all of the options to purchase
common stock of the Company (and the alternative common stock
appreciation rights) granted to the Executive prior to termination
of this Agreement as provided in Section 6.1 hereof, under the
Executive Long-Term Incentive Program shall become exercisable in
accordance with the terms set forth in the applicable Certificate
of Grant except that such options (and the alternative common stock
appreciation rights) shall be exercised within three years after
the Qualifying Termination.
Section 2.4 Nonduplication. Nothing in this Agreement
shall require the Company to make any payment or to provide any
benefit or service credit that the Company is otherwise required to
provide under any other contract, agreement, policy, plan, or
arrangement.
ARTICLE III
EFFECT OF SEVERANCE POLICY
Section 3.1 Effect on Severance Policy. If the
Executive becomes entitled to receive benefits hereunder, the
Executive shall not be entitled to any benefits under any other
Company severance policy.
ARTICLE IV
TAX MATTERS
Section 4.1 Withholding. The Company may withhold from
any amount payable to the Executive hereunder all federal, state or
other taxes that the Company may reasonably determine are required
to be withheld pursuant to any applicable law or regulation.
Section 4.2 Certain Additional Payments by the Company.
Anything in this Agreement to the contrary notwithstanding, in the
event it shall be determined that any payment or distribution by
the Company to or for the benefit of the Executive that is
considered paid or payable or distributed or distributable in
connection with a Change in Control (a "Payment"), would be subject
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<PAGE> 6
to the excise tax imposed by Section 4999 of the Internal Revenue
Code of 1986, as amended (the "Code") or any interest or penalties
are incurred by the Executive with respect to such excise tax (such
excise tax, together with any such interest and penalties, being
collectively the "Excise Tax"), then the Executive shall be
entitled to receive an additional payment (a "Gross-Up Payment") in
an amount such that after payment by the Executive of all taxes on
the Gross-Up Payment (including, without limitation, any income
taxes and Excise Tax imposed upon the Gross-Up Payment and any
interest or penalties imposed with respect to such taxes), the
Executive retains an amount of the Gross-Up Payment equal to the
Excise Tax imposed upon the Payments (as determined without regard
to the Gross-Up Payment). All determinations required to be made
under this Section 4.2, including whether a Gross-Up Payment is
required and the amount of such Gross-Up Payment, shall be made by
a nationally recognized independent accounting firm selected by the
Company (the "Accounting Firm") which shall provide detailed
supporting calculations to the Company and the Executive within 30
business days following the date of the Qualifying Termination, if
applicable, or such earlier time as the Company may request. All
fees and expenses of the Accounting Firm shall borne by the
Company. The Gross-Up Payment; if any, as determined pursuant to
this Section 4.2, shall be paid to the Executive within ten days
following receipt by the Company of the Accounting Firm's
determination. The Accounting Firm shall either make the
determination that a Payment is subject to the Excise Tax or it
shall furnish the Executive with an opinion that failure to report
the Excise Tax on the Executive's applicable Federal income tax
return would not result in the imposition of a negligence or
similar penalty, and, in the latter case (subject to the last
sentence of this paragraph), no Gross-Up Payment shall be required.
Any determination by the Accounting Firm shall be binding upon the
Company and the Executive. As a result of the uncertainty in the
applicable of Section 4999 of the Code, it is possible that Gross-
Up Payments which will not have been made by the Company should
have been made (an "Underpayment") or that Gross-Up Payments which
have been made by the Company should not have been made (an
"Overpayment") or that Gross-Up Payments which have been made by
the Company should not have been made (an "Overpayment"),
consistent with the calculations required to be made hereunder.
The Accounting firm shall determine the amount of any Underpayment
or Overpayment that has occurred and (i) an amount equal to any
such Underpayment shall be promptly paid by the Company to or for
the benefit of the Executive and (ii) any amount refunded to the
Executive as a result of such Overpayment shall be promptly paid by
the Executive to the Company in an amount which will result in the
Executive being made whole on an after-tax basis.
ARTICLE V
COLLATERAL MATTERS
Section 5.1 Nature of Payments. All payments to the
Executive under this Agreement shall be considered either payments
in consideration of his continued service to the Company or
severance payments in consideration of his past services thereto.
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Section 5.2 Legal Expenses. The Company shall pay all
legal fees and expenses that the Executive may incur as a result of
the Company's contesting the validity, the enforceability or the
Executive's interpretation of, or determinations under, this
Agreement.
Section 5.3 Mitigation. The Executive shall not be
required to mitigate the amount of any payment provided for in this
Agreement either by seeking other employment or otherwise. The
amount of any payment provided for herein shall not be reduced by
any remuneration that the Executive may earn from employment with
another employer or otherwise following his Qualifying Termination.
Section 5.4 Authority. The execution of this Agreement
has been authorized by the Board of Directors of the Company.
ARTICLE VI
GENERAL PROVISIONS
Section 6.1 Term of Agreement. This Agreement shall be
come effective on the date hereof and shall continue in effect
until the earliest of (a) December 31, 1996 if no Change in Control
has occurred before that date; provided, however, that commencing
on January 1, 1997 and each January 1 thereafter, the term of this
Agreement shall automatically be extended for an additional year
unless, not later than January 30 of the same year, the Company
shall have given notice that it does not wish to extend this
Agreement; (b) the termination of the Executive's employment with
the Company for any reason prior to a Change in Control; (c) the
Company's termination of the Executive's employment for Cause, or
the Executive's resignation for other than Good Reason, following a
Change in Control and the Company's and the Executive's fulfillment
of all of their obligations hereunder; and (d) the expiration
following a Change in Control of three years and the fulfillment by
the Company and the Executive of all of their obligations
hereunder. Furthermore, nothing in this Article VI shall cause
this Agreement to terminate before both the Company and the
Executive have fulfilled all of their obligations hereunder.
Section 6.2 Governing Law. Except as otherwise
expressly provided herein, this Agreement and the rights and
obligations hereunder shall be construed and enforced in accordance
with the laws of The Commonwealth of Massachusetts.
Section 6.3 Successor to the Company. This Agreement
shall inure to the benefit of and shall be binding upon and
enforceable by the Company and any successor thereto, including,
without limitation, any corporation or corporations acquiring
directly or indirectly all or substantially all of the business or
assets of the Company, whether by merger, consolidation, sale or
otherwise, but shall not otherwise be assignable by the Company.
Without limitations of the foregoing sentence, the Company shall
require any successor (whether direct or indirect, by merger,
consolidation, sale or otherwise) to all of substantially all of
the business or assets of the Company, by agreement in form
satisfactory to the Executive, expressly, absolutely and
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<PAGE> 8
unconditionally to assume and to agree to perform this Agreement in
the same manner and to the same extent as the Company would have
been required to perform it if no such succession had taken place.
As used in this Agreement, "Company" shall mean the Company as
heretofore defined and any successor to all or substantially all of
its business or assets that executes and delivers the agreement
provided for in this Section 6.3 or that becomes bound by this
Agreement either pursuant to this Agreement or by operation of law.
Section 6.4 Successor to the Executive. This Agreement
shall inure to the benefit of and shall be binding upon and
enforceable by the Executive and his personal and legal
representatives, executors, administrators, heirs, distributees,
legatees and, subject to the Section 6.6 hereof, his designees
("Successors"). If the Executive should die while amounts are or
may be payable to him under this Agreement, references hereunder to
the "Executive" shall, where appropriate, be deemed to refer to
this Successors; provided that nothing in this Section 6.5 shall
supersede the terms of any plan or arrangement (other than this
Agreement) that is affected by this Agreement.
Section 6.5 Nonalienability. No right of or amount
payable to the Executive under this Agreement shall be subject in
any manner to anticipation, alienation, sale, transfer, assignment,
pledge, hypothecation, encumbrance, charge, execution, attachment,
levy or similar process or to setoff against any obligations or to
assignment by operation of law. Any attempt, voluntary or
involuntary, to effect any action specified in the immediately
preceding sentence shall be void. However, this Section 6.6 shall
not prohibit the Executive from designating one or more persons, on
a form satisfactory to the Company, to receive amounts payable to
him under this Agreement in the event that he should die before
receiving them.
Section 6.6 Notices. All notices provided for in this
Agreement shall be in writing. Notices to the Company shall be
deemed given when personally delivered or sent by certified or
registered mail or overnight delivery services to Wyman-Gordon
Company, 244 Worcester Street, No. Grafton, Massachusetts 01613,
Attention: Company Clerk. Notices to the Executive shall be
deemed given when personally delivered or sent by certified or
registered mail or overnight delivery service to the last address
for the Executive shown on the records of the Company. Either the
Company or the Executive may, be notice to the other, designate an
address other than the foregoing for the receipt of subsequent
notices.
Section 6.7 Amendment. No amendment to this Agreement shall
be effective unless in writing and signed by both the Company and
the Executive.
Section 6.8 Waivers. No waiver of any provision of this
Agreement shall be valid unless approved in writing by the party
giving such waiver. No waiver of a breach under any provision of
this Agreement shall be deemed to be a waiver of such provision or
any other provision of this Agreement or any subsequent breach. No
failure on the part of either the Company or the Executive to
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<PAGE> 9
exercise, and no delay in exercising, any right or remedy conferred
by law or this Agreement shall operate as waiver of such right or
remedy, and no exercise or waiver, in whole or in part, or any
right or remedy conferred by law or herein shall operate as a
waiver of any other right or remedy.
Section 6.9. Severability. If any provision of this
Agreement shall be held invalid or unenforceable in whole or in
part, such invalidity or unenforceability shall not affect any
other provision of this Agreement or part thereof, each of which
shall remain in full force and effect.
Section 6.10. Captions. The captions to the respective
articles and sections of this Agreement are intended for
convenience of reference only and have no substantive significance.
Section 6.11. Counterparts. This Agreement may be
executed in a number of counterparts, each of which shall be deemed
to be an original but all of which together shall constitute a
single instrument.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
ATTEST: WYMAN-GORDON COMPANY
/s/ WALLACE F. WHITNEY, JR. By: /s/ DAVID P. GRUBER
Wallace F. Whitney, Jr. David P. Gruber, President
and Chief Executive Officer
ATTEST:
/s/ WALLACE F. WHITNEY, JR. /s/ ANDREW C. GENOR
Wallace F. Whitney, Jr. Andrew C. Genor
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<PAGE> 1
EXHIBIT 13
WYMAN-GORDON COMPANY ANNUAL REPORT 1995
Wyman-Gordon Company
1995 Annual Report for the fiscal year ended June 3, 1995
112th year of operation
On the Front and Back Covers:
Paul Stewart, a die sinker at the company's Grafton, MA forging
facility, performs an in-process inspection of impressions in a
die used to forge a mid-fuselage titanium bulkhead for the F-22
New Generation Air Superiority Fighter. Its size - the largest
titanium closed-die forging ever produced by the company - and
complex geometry made this single-piece bulkhead a major
challenge to design and produce.
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ABOUT THE COMPANY
Wyman-Gordon is a leading manufacturer of high quality,
technology advanced forging and investment casting components,
and composite airframe structures for the commercial aviation,
commercial power and defense industries. The company employs
approximately three thousand people in eleven plants in the
United States and one in Scotland.
TABLE OF CONTENTS
Financial Highlights
Letter to Stockholders
Company Highlights
Management's Discussion
Consolidated Financial Statements
Notes to Consolidated Financial Statements
Corporate Information
Investor Information
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<PAGE> 3
<TABLE>
<CAPTION>
WYMAN-GORDON COMPANY AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS
(In millions, except per-share data)
TWELVE MONTHS ENDED
JUNE 3, 1995 MAY 28, 1994(a)
<S> <C> <C>
Revenues $396.6 $224.7
Income (loss) from operations 13.7 (63.7)
EBITDA 30.2 (45.4)
Net Income (loss) 1.0 (72.4)
Working Capital 93.1 91.7
Total Assets 369.1 394.7
Stockholders' equity 80.9 72.5
Order Backlog 468.8 389.4
Shares Outstanding 35.0 34.5
Per-share data:
Net Income (loss) $ .03 $(4.02)
Stockholders' equity $ 2.30 $ 2.10
Market Price $11.00 $ 6.25
</TABLE>
[FN]
(a) 1994 amounts exclude Cameron revenues and operating results,
but include Cameron backlog and assets, and $35.0 million of
restructuring, disposal and other charges (pre-tax).
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TO OUR STOCKHOLDERS
During the past year, we achieved many of our goals in the
transformation of Wyman-Gordon Company. We are working on the
priorities that drive sustainable growth and profitability:
maintaining strong customer positions in the commercial aircraft
industry; continuing cost reduction; focusing our factories to
improve accuracy, speed, service and quality; and enhancing our
ability to work with challenging metals to meet customer needs
and open new market opportunities.
We have accomplished the very important first step of being
profitable at low business levels. It was a year that saw the
beginning of what many observe as a slow, steady recovery in the
commercial aviation business which will continue and accelerate
throughout the last half of the 1990s. Recent successful cost
reduction efforts have positioned us to realize major benefits as
the market improves.
We and our customers are seeing the anticipated economic,
manufacturing and competitive advantages from the acquisition of
Cameron Forged Products Company. Together we are a much stronger
company than either would be standing alone. Wyman-Gordon
enhanced its core strengths in metallurgy and added new skills,
facilities and processes. Dramatic productivity gains are
already evident, and cost reductions total over $25 million. We
have unique talent for manufacturing large dimensional forged
parts that ever-larger aircraft and engines require. For
example, Boeing's new 777 widebody aircraft and the GE90, Pratt &
Whitney 4086 and Rolls Royce Trent 800 engines which power it,
will contribute to our anticipated success.
Our investment casting division, which pursued a similar
course of integration and synergy savings several years ago,
achieved strong revenue growth, improved profitability and cash
generation. We also continue to be encouraged by the profits and
cash flows generated by our Scaled Composites division.
While the aerospace market will continue to be central to
our success, we are actively engaging new market opportunities
such as heavy wall seamless steel pipe for commercial power
plants, and large forged components and investment castings for
land-based gas turbines. The Wyman-Gordon of the future will
continue to be built on core strengths: the technologies of
metals, processed by world class manufacturing operations.
Customers will receive fully-machined and ready-to-assemble parts
having extremely high reliability, very short production cycles
and competitive values.
Wyman-Gordon will endeavor to provide stockholders with
financial returns which compare favorably with those which bring
about investment grade debt ratings. Such returns are achievable
and we will strive to reach them.
We are most appreciative of the support and sacrifices of
Wyman-Gordon employees throughout the company. Their efforts and
contributions to our overall improvement have been impressive.
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The following pages describe the strengths of our company
and will convey the optimism that we hold about the future.
/S/ JOHN M. NELSON /S/ DAVID P. GRUBER
John M. Nelson David P. Gruber
Chairman President and Chief Executive
Officer
(A picture of John M. Nelson and David P. Gruber is located under
their titles)
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COMPANY HIGHLIGHTS
LEADERSHIP
Leadership is claimed by many companies, achieved by few.
And if it is achieved, fewer still are able to sustain it.
Wyman-Gordon has been the number one supplier of forgings to the
aerospace industry for decades; its leadership as the prime
producer of forged parts traces back almost to the beginnings of
aviation. Its mastery of metals brought leadership, abetted by
unrivaled ability to process titanium alloys, nickel-based
superalloys, steel and aluminum. A unique manufacturing
infrastructure - of talent, experience and equipment - enables
Wyman-Gordon to forge large structural airframe and engine
components, an advantage which enables it to satisfy current
requirements for larger parts.
The company is the world leader in the production of nickel-
based powder billet used to forge aircraft engine turbine discs.
Further, we are the only totally integrated company in the world
which produces this powder, extrudes it into billet and forges it
isothermally into aircraft engine components.
We possess unique castings capabilities and offer the widest
choice of alloys in the investment castings industry, ranging
from titanium and nickel-based superalloys to magnesium and
aluminum. Parts can be cast that weigh as little as a gram or as
much as 600 pounds. An adeptness in geometric complexity,
another hallmark of our investment castings business, is leading
to new opportunities in the aerospace market and in recreational
and other commercial performance products markets.
Our Scaled Composites subsidiary is the world leader in
design and rapid development of composite airframe structures.
(A picture of D'Lena Brooks, a member of the dimensional layout
team at the company's Groton, CT investment castings facility,
observes inspection of a 30 inch diameter as-cast combustor dome
by a computerized coordinate measuring machine. The use of a
high temperature metal alloy and demanding dimensional profile
requirements presented engineering challenges. Using rapid
prototyping techniques to eliminate conventional blueprint and
tooling methods, prototyping was completed in two weeks and
delivery was made only eleven weeks after the part was ordered,
at costs which were favorable to alternative manufacturing
processes.)
(A caption above a graph states: Wyman-Gordon's leadership is
clearly demonstrated by recent successes in reducing industrial
accident rates. A comprehensive safety program and increased
employee training have led to these notable results. The
company's safety record now outpaces the Forging Industry and
U.S. Industrial averages.)
(A graph is shown for Industrial Accidents per 200,000 man-hours
worked. Forging Industry Average is 7.5 from 1991 to 1995; U.S.
Industrial Average is 6.8 in 1991 and 1992 and 4.2 thereafter;
Wyman-Gordon's performance was 3.8 in 1991, 4.0 in 1992, 3.7 in
1993, 1.3 in 1994, and 1.0 in 1995)
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METALLURGY
Wyman-Gordon is a materials engineering company. We
engineer metals from basic raw materials through melting,
conversion, investment casting and forging to meet the most
exacting structural and mechanical properties required by our
customers.
Our engineers have mastered the controls necessary to
formulate titanium alloys at our Millbury, Massachusetts
facility, nickel-base powder alloys at our Brighton, Michigan
facility and nickel-base superalloys at our jointly owned melting
facility in Western Australia.
These carefully formulated materials are then subjected to
the same exacting controls, when they are processed in our
investment casting facilities or deformed on our forging presses
to develop the optimum microstructures and strengths throughout
the required shape. These shapes are subsequently heat treated
to produce the desired balance of mechanical properties and
residual stress. The control of this entire metallurgical
process assures that our customers receive product that is
consistent in mechanical properties and stable through their
machining operations.
As we increase the speed of product through our facilities
through cycle time and batch size reduction, we know it is
imperative that key controls are established, monitored and
verified to assure consistency and reproducibility through total
process control.
These challenges are presented daily to our metallurgical,
design and process engineers as they process a variety of
materials such as aluminum, titanium, nickel-base, both
conventionally melted and atomized into powder, and steel close
die forgings, investment castings and seamless extruded pipe. At
Wyman-Gordon, we process these metals into finished shapes using
closed-die forging, investment casting or extrusion. This
metallurgical process experience and versatility provide an
increasing breadth of market with strong technical support.
(Phase diagrams, such as this titanium-aluminum binary diagram,
shown below this caption, are one of many tools used by our
metallurgists. Their use facilitates the development of
thermomechanical processing routes to enhance the mechanical
properties and producibility of alloys such as Ti6Al-4V. This
alloy is 89% titanium, 6% aluminum, 4% vanadium and 1% other
elements.)
(A picture of Calvin Tubbs, a pipe processor in our Houston, TX
forging facility checks the dimensions of a P91 steel seamless
extruded pipe. This pipe is part of a multi-million dollar order
being prepared for shipment to Korea Heavy Industries &
Construction Company, for use in six new fossil-fueled power
plants being constructed in South Korea.)
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PROCESS
The addition of Cameron Forged Products Company to the
Wyman-Gordon world presented an opportunity to consolidate
forging operations with resulting significant economies not
feasible before the acquisition. Best practice management of
products and processes has been undertaken to ensure that each
part is made at the plant most conducive to its efficient
production, where specific capabilities assure best quality and
lowest cost manufacture. As a result, there is a continuing
improvement of forging operations, with accompanying efficiencies
and economic benefits.
Focusing our factories on the products they each make best
has led to plant specialization and to the grouping of related
product manufacturing across our forging and casting operations.
Set up time reductions have brought about more immediate
validation of process and continuous improvement. Tangible
benefits from these measures are significant improvements in lot
sizes, cycle times, inventory levels, tooling expenses and
quality.
We are taking actions to align the company's forging and
investment castings operations with the best practices known in
the world - practices which improve quality, inventory turns,
cycle times, productivity, delivery performance and customer
satisfaction. This entrepreneurial spirit underscores our
company's resolution to be the best, quickest, most responsive
supplier, one that customers will value highly and rely upon, and
one that offers them best products, fastest delivery and the best
value - a winning combination. Wyman-Gordon's goal for all
plants is world class status, and we have made substantial
progress toward this goal.
(A picture of Terry Dyer, a sourcing technical leader at GE
Aircraft Engines and Taylor Norris, Wyman-Gordon manager of
continuous improvement programs, conduct a Kaizen action workout
at our ultrasonic facility in Houston, TX. In process is a stage
1 HPT disk for GE's CF6-80C2 engine. Cooperative continuous
improvement efforts with our customers have contributed greatly
to operating advances beneficial both to our customers and to
Wyman-Gordon.)
(A caption above a graph states: Process improvements are
instrumental in allowing the production of increasing volumes
without corresponding personnel additions. In our Houston
forging facility, for example, cycle time reductions have been
consistent and dramatic. These "best practices" are being
implemented in our Grafton forging facility also.)
(A graph is shown for the company's Average Production Cycle in
Weeks. 21 in 1991, 17 in 1992, 16 in 1993, 9 in 1994, 7 in 1995)
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CUSTOMERS
Our customers are increasingly expecting the closest
collaboration with their suppliers. The term "team" aptly
describes the bond which exists between Wyman-Gordon engineers,
other support employees and our customers. We are partners in
problem-solving, especially in the design of new products. The
development of a series of single-piece large titanium bulkheads
with Lockheed Martin/Boeing for the F-22 new generation air
superiority fighter aircraft demonstrates the effectiveness of a
partnership approach to customer support.
Wyman-Gordon engineers saw an opportunity to produce a
single piece bulkhead as a replacement for an assembly of four
parts. Working with the customer, a new one-piece design was
accepted, qualified and produced, yielding a better product at
much lower cost. Lockheed Martin recognized Wyman-Gordon with
its "Outstanding F-22 Team Supplier Award," noting the close and
effective collaboration of employees from both companies.
Similar cooperative efforts with General Electric Company
were successful in developing parts for the GE90 jet engine, and
the GE land-based gas turbine engine series. A long, cooperative
program with Pratt & Whitney led to the development of a new,
critical shaft for the PW 4086 turbine jet engine. And close
work with Rolls Royce facilitated development of a critical fan
disk for the Trent 800 turbine jet engine.
Our goal is simple: to be the supplier of choice, essential
to a customer's success; creating an interdependence between us
in an atmosphere of mutual trust. We know too that being the low
cost supplier is an equally critical part of customer
relationships, and we have made significant progress to bring the
greatest value to our customers.
(A caption above the pie chart states: With the addition of
Cameron, Wyman-Gordon made a major advance toward becoming a more
essential supplier of choice for our customers.)
(A pie chart shows Sales by Market with dollars in millions for
1995 and 1994. 1995 shows Power generation $60.0, Other $36.5,
Aerospace $300.1,; 1994 shows Power generation $10.1, Other
$26.1, Aerospace $188.5)
(A pictures shows at Lockheed/Martin's production facility in
Fort Worth, TX, assembly worker Francisco Delgado drills one of
approximately 1,500 fastener holes on the inlet duct of Wyman-
Gordon-produced F-22 bulkhead. All four of the large single-
piece titanium bulkheads used in Lockheed/Martin's F-22 assembly
are supplied by Wyman-Gordon fully machined and painted, "ready-
to-assemble.")
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POSITIONING
Fundamental and permanent changes in traditional markets and
in ways of doing business characterize the atmosphere of the mid-
1990s. The company has "right-sized" itself, adjusting to
diminished markets. It is clearly stronger and better positioned
to capitalize on traditional strengths in anticipation of
recovering markets. The synergies of combining forging
operations of Wyman-Gordon and Cameron Forged Products Company
are yielding cost savings, process improvements, expanded
capabilities and a wider global reach.
A favorable market outlook for large engine and structural
parts complements our special capabilities to produce these
products. The larger part capabilities also generate
opportunities in promising markets such as land-based gas turbine
power generation. Our wide array of presses and computerized
process controls facilitate the reliable production of parts for
the largest engines through the smallest auxiliary power units.
Wyman-Gordon's ongoing positioning efforts include the
establishment of business relationships domestically and in
China, Turkey and Russia with companies whose capabilities
complement ours. We expect to be instrumental in supporting our
customers' advances into aerospace and power markets in the Far
East.
Faster cycle times, on-time delivery and parts delivered
fully-machined and ready-to-assemble will support customer needs
and drive profitability. Our conviction to be world class in all
that we do is supported by significant investments in facilities,
process improvements and training.
Wyman-Gordon has achieved profitability in a difficult
market environment. Recovering markets, leading metallurgical
skills, highly efficient operations, a low cost structure,
committed employees, solid customer relationships and new product
development will lead to superior financial results in the
future.
(A picture of Sue Zanauskas, shipping supervisor in Grafton, MA
facility, inspects a titanium fan shaft for a jet turbine engine.
Five titanium hemisphere forgings in the background and a steel
disk for a land-based gas turbine engine in the foreground make
up an assortment of products processed in the company's Grafton,
MA and Livingston, Scotland facilities.)
(A caption above the 1995 Profitability Trend graph states: In
1995, stockholders saw consistent enhancement of profitability
and return on capital as the synergy savings from the Cameron
integration were realized.)
(A graph of 1995 Profitability Trend shows EBIT/Average
Capitalization, -2% in Q1, 2% in Q2, 9% in Q3, 22% in Q4;
EBITDA/Revenues, 4% in Q1, 6% in Q2, 9% in Q3, 12% in Q4)
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(A quote stands alone on a page states: "During the past year,
we achieved many of our goals in the transformation of Wyman-
Gordon Company. We are working on the priorities that drive
sustainable growth and profitability: maintaining strong customer
positions in the commercial aircraft industry; continuing cost
reduction; focusing our factories to improve accuracy, speed,
service and quality; and enhancing our ability to work with
challenging metals to meet customer needs and open new market
opportunities.")
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MANAGEMENT'S DISCUSSION
PRODUCTS AND MARKETS
Wyman-Gordon Company is a leading producer of highly
engineered, technically advanced components for both the
commercial and defense aerospace market and the commercial power
generation market. The company uses die forging, extrusion and
investment casting processes to produce metal components to
exacting customer specifications for technically demanding
applications such as jet turbine engines, airframes and land-
based gas turbine engines. The company also extrudes seamless
heavy-wall steel pipe for use primarily in commercial power
generation plants, and designs and produces prototype aircraft
using composite technologies. The company produces components
for most of the major commercial and U.S. defense aerospace
programs. Metallurgical skills, a unique asset base and a broad
offering of capabilities allow the company to serve competing
customers effectively and to lead the development and use of new
metal technologies for its customers' uses.
The company is the leading producer of rotating components
for use in turbine aircraft engines. These parts are forged from
purchased ingots converted to billet in the company's cogging
presses and from superalloy metal powders which are produced,
consolidated and extruded into billet entirely at the company's
own facilities. Forging is conducted in Massachusetts, Texas and
Scotland on a number of hydraulic presses which are rated from
8,000 to 55,000 tons capacity. The company forges these engine
components primarily from alloys of high-temperature nickel.
Additionally, the company uses modern, automated, high-volume
production equipment and both air-melt and vacuum-melt furnaces
in its investment casting operations to produce complex non-
rotating jet engine parts from high-temperature nickel-based
alloys.
Structural airframe components are produced from alloys of
steel, aluminum and titanium on the company's forging presses and
by its investment casting process. The company often designs new
parts, stretching metallurgical and manufacturing capabilities to
new levels in accommodating customer needs for larger, stronger
structural parts forged from new superalloy metals. These parts
are produced mostly at the company's Massachusetts forging plant.
The company's investment casting capabilities, described
previously, are employed in the production of smaller, nearer
net-shape structural parts for aircraft.
The company supplies the domestic and international power
generation markets with a variety of mechanical and structural
tubular forged products, primarily in the form of extruded
seamless pipe. The power generation market for such product
includes nuclear and fossil fueled power plants, as well as co-
generation projects and retrofit and life extension applications.
Additionally, ordnance and other military applications are
available for this product. Aluminum, steel, titanium and
superalloys are extruded at the company's Houston, Texas forging
facility. Here the world's largest vertical extrusion press
-12-<PAGE>
<PAGE> 13
extrudes pipe up to 48 inches in diameter and 7 inches in wall
thickness and bar stock from 6 to 32 inches in diameter. Lengths
of pipe and bar stock vary from 10 to 45 feet with a maximum
forged weight of 20 tons. Similar equipment and capabilities are
in operation at the company's Livingston, Scotland forging
facility. Additionally, the Houston press extrudes powder
billets for use in aircraft turbine engine forgings.
The company's composite operation, Scaled Composites, Inc.,
plans, designs, fabricates and tests composite airframe
structures for the aerospace market.
Revenues by market for the respective periods were as
follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
JUNE 3, 1995 MAY 28, 1994
% OF % OF
REVENUE TOTAL REVENUE TOTAL
(000's omitted)
<S> <C> <C> <C> <C>
Aerospace $300,143 76% $188,518 84%
Power generation 60,038 15 10,112 4
Other 36,458 9 26,064 12
Total $396,639 100% $224,694 100%
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1993 DECEMBER 31, 1992
% OF % OF
REVENUE TOTAL REVENUE TOTAL
(000's omitted)
<S> <C> <C> <C> <C>
Aerospace $205,077 85% $263,961 88%
Power generation 9,214 4 12,717 4
Other 25,470 11 22,203 8
Total $239,761 100% $298,881 100%
</TABLE>
-13-<PAGE>
<PAGE> 14
The backlog of unfilled orders from customers in the various
markets has been as follows:
<TABLE>
<CAPTION>
JUNE 3, 1995 MAY 28, 1994
% OF % OF
BACKLOG TOTAL BACKLOG TOTAL
(000's omitted)
<S> <C> <C> <C> <C>
Aerospace $382,982 82% $342,007 88%
Power generation 57,248 12 33,700 9
Other 28,531 6 13,700 3
Total $468,761 100% $389,407 100%
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1993 DECEMBER 31, 1992
% OF % OF
BACKLOG TOTAL BACKLOG TOTAL
(000's omitted)
<S> <C> <C> <C> <C>
Aerospace $234,221 91% $290,479 94%
Power generation 12,044 5 9,290 3
Other 9,994 4 9,910 3
Total $256,259 100% $309,679 100%
</TABLE>
-14-<PAGE>
<PAGE> 15
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
YEAR ENDED JUNE 3, 1995 COMPARED TO YEAR ENDED MAY 28, 1994
Wyman-Gordon Company's acquisition of Cameron Forged
Products Company from Cooper Industries, Inc. in May 1994 united
two of the country's largest and most technically advanced
forgings companies and had a pervasive impact on Wyman-Gordon
Company during fiscal 1995. As a result of the acquisition, the
company has broadened its revenue base and expanded into new
markets. The company is also realizing substantial operating and
processing efficiencies through the consolidation of systems and
facilities and the reduction of personnel performing duplicate
functions.
Wyman-Gordon Company's revenues increased during the year
ended June 3, 1995 ("fiscal 1995") as compared to the year ended
May 28, 1994 ("fiscal 1994") to $396.6 million in fiscal 1995
from $224.7 million in fiscal 1994, or 76.5%. The increase in
revenues is the result of (1) the acquisition of Cameron (68.8%)
and (2) higher sales volume at the company's forgings and
castings divisions during fiscal 1995 as compared to fiscal 1994
(7.7%). The acquisition of Cameron provides a broader revenue
base in the company's traditional markets of commercial and
defense aerospace as well as providing diversification into the
power generation market. Capacity limitations on the part of the
company's suppliers resulted in raw material shortages and
production delays. Although this situation improved during the
second half of fiscal 1995, it had a negative impact on overall
revenues. Additionally, $4.7 million of revenues for fiscal 1994
were from Wyman-Gordon Composites, Inc. which was sold by the
company during November 1993.
The company's gross margins were 12.5% in fiscal 1995, a
significant improvement from 3.1% in fiscal 1994. Higher
production volumes, particularly in the company's castings
division, productivity gains in factory operations and
realization of certain synergy benefits associated with the
integration of Cameron with Wyman-Gordon's forgings operations
are among the factors that contributed to this higher ratio.
Also, the gross margins at the company's composites divisions for
fiscal 1995 were well above fiscal 1994 levels. These favorable
impacts identified above were offset somewhat by production
delays resulting from raw material shortages experienced most
significantly in the first half of fiscal 1995. Gross margins
benefited from LIFO credits of $6.2 million in fiscal 1995 as
compared to $8.1 million in fiscal 1994. Gross margin in fiscal
1994 was negatively impacted by significant charges amounting to
$8.7 million related mainly to a change in accounting estimate
for workers' compensation of $4.2 million and excess inventories
of $2.8 million.
-15-<PAGE>
<PAGE> 16
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
YEAR ENDED JUNE 3, 1995 COMPARED TO YEAR ENDED MAY 28, 1994
(Continued)
Selling, general and administrative expenses improved as a
percentage of revenues in fiscal 1995 to 9.2% from 15.8% in
fiscal 1994. The change is largely due to $7.6 million of
significant charges incurred during fiscal 1994. Absent the
significant charges, fiscal 1994 selling, general and
administrative expenses were 12.4% of sales. The remaining
improvement is the result of certain savings associated with the
integration of Cameron with Wyman-Gordon's forgings operations,
and higher revenues.
During fiscal 1995, the company recognized $1.4 million of
other charges for its 25% equity share of the losses of its
Australian Joint Venture for the production of nickel-based
superalloy.
In fiscal 1994, the company recognized other charges of
$35.0 million which included $24.1 million for Cameron
integration costs, $6.5 million for castings division
restructuring costs, $2.0 million for anticipated environmental
charges, and $2.4 million related to the disposition of
production facilities. After a year of evaluating the combined
forgings operations and concluding that most of the integration
activities had been completed or were adequately provided for
within the remaining integration restructuring reserves, the
company determined that the total integration restructuring cost
estimate could be lowered. As a result, the company took into
income an integration restructuring credit of $2.1 million.
Interest expense remained relatively constant in fiscal 1995
as compared to fiscal 1994. Fiscal 1995 includes higher
financing fees associated with the May 1994 inception of a
receivables backed credit facility. Fiscal 1994 interest expense
includes the write-off of deferred financing fees associated with
the company's former revolving credit agreement.
Fiscal 1994 miscellaneous, net includes a $3.3 million gain
on the sale of marketable securities.
-16-<PAGE>
<PAGE> 17
RESULTS OF OPERATIONS AND FINANCIAL CONDITION (Continued)
FIVE MONTHS ENDED MAY 28, 1994 ("FIVE MONTHS 1994") COMPARED TO
FIVE MONTHS ENDED MAY 29, 1993 ("FIVE MONTHS 1993")
Revenues for the Five Months 1994 decreased $15.1 million
(or 14.8%) from the comparable period of 1993. This decline in
revenues was primarily attributable to continued sluggishness in
the aerospace industry. Also, $4.6 million in Five Months 1993
revenues were from Wyman-Gordon Composites, Inc. which was sold
by the company during November 1993.
The company's gross margins were a negative 5.7% for Five
Months 1994 as compared to positive 9.7% in the Five Months 1993.
Customer invoked pricing pressures coupled with lower production
volume continued to have a negative impact on margins.
Additionally, gross margins were negatively affected by several
significant charges totalling $8.7 million recorded in the Five
Months 1994 and are identified as: (1) $4.2 million charge for a
change in accounting estimate for workers' compensation, (2) $0.6
million charge recognized on futures contract hedging losses, (3)
$2.8 million charge for excess inventory and (4) $1.1 million of
other charges. Gross margins benefited from an inventory LIFO
credit of $3.1 million in the Five Months 1994 as compared to
$2.9 million in the same period of 1993. Excluding the benefit
of the LIFO credit and significant charges, the company's gross
margins were 0.1% and 6.9% in the Five Months 1994 and 1993,
respectively.
Selling, general and administrative expenses were $18.3
million or 21.1% as a percent of revenues for the Five Months
1994 as compared to $10.5 million or 10.3% as a percent of
revenues in the same period of 1993. The increase in selling,
general and administrative expenses is due to significant charges
totalling $7.6 million recorded in the Five Months 1994 and are
identified as follows: (1) $4.2 million of employee benefit
related accruals including $1.4 million from changes in an
accounting estimate for workers' compensation, (2) $2.9 million
for resolution of contractual matters and (3) $0.5 million of
other charges. Excluding the effect of significant charges, the
company's selling, general and administrative expenses for the
Five Months 1994 were $10.7 million or 12.3% as a percent of
revenues as compared to $10.5 million or 10.3% as a percent of
revenues in the same period of 1993.
The company recorded restructuring charges of $30.6 million
during the Five Months 1994. No such charges were recognized
during the corresponding period of 1993. These charges include
$24.1 million of planned costs of integrating the company's
forgings operations with those of Cameron Forged Products Company
which the company acquired on May 26, 1994. Restructuring
charges of $5.2 million relate to the closure of a castings
facility and $1.3 million to asset write-downs.
-17-<PAGE>
<PAGE> 18
RESULTS OF OPERATIONS AND FINANCIAL CONDITION (Continued)
FIVE MONTHS ENDED MAY 28, 1994 ("FIVE MONTHS 1994") COMPARED TO
FIVE MONTHS ENDED MAY 29, 1993 ("FIVE MONTHS 1993") (Continued)
The company recorded a $2.0 million environmental charge
which represents anticipated future environmental expenses
related to the company's Grafton, Massachusetts facility.
Interest expense was $5.4 million in the Five Months 1994 as
compared to $4.7 million for the same period of 1993. Interest
expense increased $0.7 million for the Five Months 1994 as
compared to the same period of 1993 due to a higher interest rate
and higher average debt during the Five Months 1994 as compared
to the same period of 1993. Additionally, the company wrote-off
financing fees relating to prior credit facilities amounting to
$1.2 million and $1.7 million in the Five Months 1994 and 1993,
respectively.
YEAR ENDED DECEMBER 31, 1993 COMPARED TO YEAR ENDED DECEMBER 31,
1992
Revenues for 1993 decreased $59.1 million or 19.8% from
1992. This decline in revenues was primarily attributable to
continued sluggishness in the commercial aerospace industry
during 1993.
Gross margins in 1993 were $20.7 million or 8.6% of revenues
as compared to $55.6 million or 18.6% of revenues in 1992. The
decline in gross margins during 1993 as compared to 1992 is a
result of (1) lower production volume, (2) lower LIFO credits
recorded in 1993 as compared to 1992 and (3) competitive pricing
which continued to place pressure on the company's gross margins.
LIFO inventory credits, which include both LIFO liquidation and
deflation effects, of $7.9 million and $22.8 million were
recognized in 1993 and 1992, respectively.
Selling, general and administrative expenses decreased to
$26.6 million in 1993 from $28.3 million in 1992, but increased
as a percent of revenues from 9.4% in 1992 to 11.1% in 1993
resulting from the revenue decline. The decrease in selling,
general and administrative expenses is mainly due to lower
payroll costs from reductions in personnel.
In November 1993, the company sold substantially all of the
net assets and business operations of its Wyman-Gordon
Composites, Inc. operations. The company recorded a non-cash
charge on the sale in 1993 of $2.5 million.
Interest expense increased to $10.8 million in 1993 from
$7.5 million in 1992 primarily as a result of higher interest
rates on the 10.75% Senior Notes due 2003 as compared to that on
the debt retired with the proceeds of the Senior Notes. The
average debt balance was $87.7 million and $84.8 million in 1993
and 1992, respectively. The company also wrote off $1.7 million
in bank fees related to the company's prior credit facility
during 1993.
-18-<PAGE>
<PAGE> 19
RESULTS OF OPERATIONS AND FINANCIAL CONDITION (Continued)
YEAR ENDED DECEMBER 31, 1993 COMPARED TO YEAR ENDED DECEMBER 31,
1992 (Continued)
Miscellaneous income was $2.2 million in 1993 and $2.0
million in 1992. Miscellaneous income in 1993 reflects primarily
the gain of $3.3 million on the sale of marketable securities.
Miscellaneous income in 1992 reflects primarily the gain of $0.9
million on the sale of marketable securities and a gain of $0.6
million from a settlement of an overfunded pension plan
terminated in a prior year.
LIQUIDITY AND CAPITAL RESOURCES
During fiscal 1994, the company recognized costs to be
incurred for the integration of Cameron totalling $24.1 million
of which $12.7 million were estimated to require cash outlays.
Additionally, the company estimated $12.2 million in cash outlays
from direct costs associated with the acquisition and
integration. Therefore, combined reserves for Cameron
integration costs totalled $36.3 million of which $24.9 million
were estimated to require cash. During May 1994, $11.4 million
of non-cash asset write-offs were charged to these reserves.
During fiscal 1995, the company incurred $11.1 million in charges
on the integration of Cameron which were charged to these
reserves, $6.7 million of which required the use of cash.
Additionally, the company reduced its estimates of costs to be
incurred for the integration of Cameron and direct costs
associated with the acquisition by a total of $7.3 million. Such
reduction is reflected by an adjustment in the purchase price of
$5.2 million and a credit to income of $2.1 million on the fiscal
1995 Statement of Operations. See Footnote F to the Consolidated
Financial Statements for a summary of cash outlays relating to
restructuring charges.
As of June 3, 1995, the company estimates the remaining cash
requirements for the integration of Cameron and direct costs
associated with the acquisition to be $8.6 million, and expects
to spend approximately $6.5 million in fiscal 1996 and $2.1
million thereafter.
The 1991 restructuring plan is substantially complete. The
company incurred cash charges of $2.7 million during fiscal 1995
and expects to expend an additional $3.8 million over the next
several years, approximately $1.9 million in fiscal 1996 and $1.9
million thereafter. For fiscal 1996 and thereafter, these
expenditures include consolidation and reconfiguration of
existing facilities of $1.7 million in fiscal 1996 and $0.6
million thereafter, and payments under a deferred compensation
agreement of approximately $1.5 million.
As of June 3, 1995, the company expects to spend $1.8
million in fiscal 1996 and $15.1 million thereafter on non-
capitalizable environmental activities. The company has completed
all environmental projects within establish timetables and is
continuing to do so at the present time.
-19-<PAGE>
<PAGE> 20
RESULTS OF OPERATIONS AND FINANCIAL CONDITION (Continued)
LIQUIDITY AND CAPITAL RESOURCES (Continued)
The company from time to time expends cash on capital
expenditures for more cost effective operations, environmental
projects and joint development programs with customers. Capital
expenditures amounted to $18.7 million, $2.4 million, $13.9
million and $11.2 million for the year ended June 3, 1995, the
five months ended May 28, 1994 and the years ended December 31,
1993 and 1992, respectively. Capital expenditures in the
foreseeable future are expected to increase somewhat from fiscal
year 1995 levels.
As of June 3, 1995, the company had invested $4.1 million in
cash towards its share of the capital requirements of its
Australian joint venture for the production of nickel-based
superalloy. The company is committed to invest an additional
$3.4 million to the joint venture. The joint venture has entered
into a credit agreement with an Australian bank. The company has
guaranteed 25% of the joint venture's obligations under the
credit agreement. This guarantee expires at such time as the
joint venture demonstrates its ability to produce commercially
acceptable products.
On May 20, 1994, the company entered into a revolving
receivables-backed credit facility (the "Receivables Financing
Program") among the company, certain subsidiaries and Wyman-
Gordon Receivables Company ("WGRC") and a Revolving Credit
Agreement dated as of May 20, 1994 among WGRC, the financial
institutions party thereto and the Issuing Banks Facility Agent
and Collateral Agent. The aggregate maximum borrowing capacity
under the Receivables Financing Program is $65.0 million, with a
letter of credit sub-limit of $35.0 million. The term of the
Receivables Financing Program is five years, with an evergreen
feature. As of June 3, 1995, under this credit facility, the
total availability based on eligible receivables was $44.8
million, there were no borrowings and letters of credit amounting
to $10.0 million were outstanding.
Wyman-Gordon Limited, the company's subsidiary located in
Livingston, Scotland, entered into a credit agreement effective
November 28, 1994. The maximum borrowing capacity under the U.K.
Credit Agreement is 3.0 million pound sterling with a separate
letter of credit limit or guarantee of 1.0 million pound
sterling. The term of the U.K. Credit Agreement is one year with
an evergreen feature. There were 2.4 million pound sterling or
$3.8 million of borrowings outstanding at June 3, 1995 and the
company had issued 0.4 million pound sterling or $0.6 million of
letters of credit or guarantees under the U.K. Credit Agreement.
The primary sources of liquidity available to the company in
fiscal 1996 to fund operations, anticipated expenditures in
connection with the integration of Cameron, planned capital
expenditures and planned environmental expenditures include
available cash ($13.9 million at June 3, 1995), borrowing
availability under the company's Receivables Financing Program,
cash generated by operations and reductions in working capital
requirements through planned inventory reductions and accounts
receivable management.
-20-<PAGE>
<PAGE> 21
RESULTS OF OPERATIONS AND FINANCIAL CONDITION (Continued)
LIQUIDITY AND CAPITAL RESOURCES (Continued)
Cash from operations and debt are expected to be the
company's primary sources of liquidity beyond fiscal 1996. The
company believes that it has adequate resources to provide for
its operations and the funding of restructuring, integration,
capital and environmental expenditures.
The company's current plans to improve operating results
include completing the integration of Cameron, further reductions
of personnel and various other cost reduction measures. Programs
to expand the company's revenue base include participation in new
aerospace programs and expansion of participation in the land-
based gas turbine and extruded pipe markets and other markets in
which the company has not traditionally participated. The
company anticipates that, in addition to the growth in commercial
aviation, the aging current commercial airline fleet will require
future orders for its replacement.
IMPACT OF INFLATIONS
The company's earnings may be affected by changes in price
levels and in particular, changes in the price of basic metals.
The company's contracts generally provide for fixed prices for
finished products with limited protection against cost increases.
The company would therefore be affected by changes in prices of
the raw materials during the term of any such contract. The
company attempts to minimize this risk by entering into fixed
price arrangements with raw material suppliers.
ACCOUNTING AND TAX MATTERS
In March 1995, the Financial Accounting Standards Board
issued Statement No. 121, "Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to be Disposed of" ("SFAS
121") which must be adopted by the company no later than fiscal
1997. SFAS 121 prescribes the accounting for the impairment of
long-lived assets that are to be held and used in the business
and similar assets to be disposed of. The company has not
determined the impact of adopting SFAS 121 on its financial
position or results of operations.
Effective January 1, 1994, the Company adopted Statement of
Financial Accounting Standards No. 112, "Employers' Accounting
for Postemployment Benefits" ("SFAS 112"). This standard
provides that the company follow an accrual method of accounting,
rather than on the as-incurred basis formerly used for benefits
payable to employees when they leave the company for reasons
other than retirement. The adoption, including the cumulative
effect, has not had a material affect on earnings or the
financial position of the company.
The company is seeking refunds of prior year's federal taxes
paid, which, if fully realized, could have a material favorable
impact on the company's financial position. A reasonable
estimation of the potential recovery cannot be made at this time
and, accordingly, no adjustment has been made in the financial
statements with respect to the claim.
-21-<PAGE>
<PAGE> 22
RESULTS OF OPERATIONS AND FINANCIAL CONDITION (Continued)
MARKET AND DIVIDEND INFORMATION
Wyman-Gordon Company's common stock, par value $1.00 per
share, is traded in the over-the-counter market and prices of its
common stock appear daily in the NASDAQ national market quotation
system. The table below lists the quarterly price range per
share for January 1, 1993 through June 3, 1995. The quarterly
price range per share is based on the high and low sales prices.
The company has not paid dividends since the fourth quarter of
1991. At June 3, 1995 there were approximately 1,600 holders of
record of the company's common stock.
FIVE YEAR ENDED
YEAR ENDED MONTHS ENDED DECEMBER 31,
JUNE 3, 1995 MAY 28, 1994 1993
HIGH LOW HIGH LOW HIGH LOW
First quarter $ 7 $5 3/4 $7 1/8 $4 5/8 $6 3/4 $4 5/8
Second quarter 6 1/2 5 3/8 6 1/2 4 1/2 5 1/4 4
Third quarter 6 3/8 4 3/4 N/A N/A 5 1/8 3 1/2
Fourth quarter 12 3/8 5 3/4 N/A N/A 5 1/8 4
-22-<PAGE>
<PAGE> 23
WYMAN-GORDON COMPANY
REPORT OF INDEPENDENT AUDITORS
To the Stockholders of Wyman-Gordon Company:
We have audited the accompanying consolidated balance sheets
of Wyman-Gordon Company and Subsidiaries as of June 3, 1995 and
May 28, 1994, and the related consolidated statements of
operations, stockholders' equity and cash flows for the year
ended June 3, 1995, for the five months ended May 28, 1994, and
for each of the two years in the period ended December 31, 1993.
These consolidated financial statements are the responsibility of
the company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of Wyman-Gordon Company and Subsidiaries at
June 3, 1995 and May 28, 1994, and the consolidated results of
their operations and their cash flows for the year ended June 3,
1995, for the five months ended May 28, 1994, and for each of the
two years in the period ended December 31, 1993 in conformity
with generally accepted accounting principles.
As discussed in Notes I and J to the consolidated financial
statements, in 1993 the company changed its method of accounting
for postretirement benefits other than pensions and income taxes.
/s/ERNST & YOUNG LLP
Boston, Massachusetts
June 26, 1995
-23-<PAGE>
<PAGE> 24
REPORT OF MANAGEMENT
To the Stockholders of Wyman-Gordon Company:
We have prepared the financial statements and other sections
of this annual report and are responsible for all information and
representations contained therein. Such financial information
was prepared in accordance with generally accepted accounting
principles appropriate in the circumstances, based on our best
estimates and judgements.
Wyman-Gordon maintains accounting and internal control
systems which are designed to provide reasonable assurance that
assets are safeguarded from loss or unauthorized use and to
produce records adequate for preparation of financial
information. These systems are established and monitored in
accordance with written policies which set forth management's
responsibility for proper internal accounting controls and the
adequacy of these controls subject to continuing independent
review by our external auditors, Ernst & Young LLP.
To assure the effective administration of internal control,
we carefully select and train our employees, develop and
disseminate written policies and procedures and provide
appropriate communication channels. We believe that it is
essential for the company to conduct its business affairs in
accordance with the highest ethical standards.
The financial statements have been audited by Ernst & Young
LLP, Independent Auditors, in accordance with generally accepted
auditing standards. In connection with their audit, Ernst &
Young LLP has developed an understanding of our accounting and
financial controls, and conducted such tests and related
procedures as it considers necessary to render their opinion on
the financial statements.
The financial data contained in this annual report were
subject to review by the Audit Committee of the Board of
Directors. The Audit Committee meets periodically during the year
with Ernst & Young LLP and with management to review accounting,
auditing, internal control and financial reporting matters.
We believe that our policies and procedures provide
reasonable assurance that operations are conducted in conformity
with applicable laws and with our commitment to a high standard
of business conduct.
/S/ DAVID P. GRUBER
David P. Gruber
President and
Chief Executive Officer
/S/ ANDREW C. GENOR
Andrew C. Genor
Vice President, Chief Financial
Officer and Treasurer
-24-<PAGE>
<PAGE> 25
Wyman-Gordon Company and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FIVE
YEAR YEAR MONTHS
ENDED ENDED ENDED
JUNE 3, MAY 28, MAY 28,
1995 1994 1994
(Unaudited)
(000's omitted, except per share data)
<S> <C> <C> <C>
Revenue $396,639 $224,694 $ 86,976
Cost of goods sold 347,251 217,816 91,907
Selling, general and
administrative expenses 36,380 35,532 18,324
Other charges (credits) (710) 33,003 30,550
Environmental charge - 2,000 2,000
382,921 288,351 142,781
Income (loss) from operations 13,718 (63,657) (55,805)
Other deductions (income):
Interest expense 11,027 11,135 5,383
Miscellaneous, net 1,652 (2,389) 182
12,679 8,746 5,565
Income (loss) before cumulative
effect of changes in accounting
principles 1,039 (72,403) (61,370)
Cumulative effect of changes in
accounting principles - - -
Net income (loss) $ 1,039 $(72,403) $(61,370)
INFORMATION PER SHARE
Income (loss) before cumulative
effect of changes in accounting
principles $ .03 $ (4.02) $ (3.32)
Cumulative effect of changes in
accounting principles - - -
Net income (loss) $ .03 $ (4.02) $ (3.32)
Shares used to compute earnings
per share 35,148 17,992 18,490
</TABLE>
The accompanying Notes to the Consolidated Financial Statements
are an integral part of these financial statements.
-25-<PAGE>
<PAGE> 26
Wyman-Gordon Company and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
(Continued)
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1993 1992
(000's omitted, except per share data)
<S> <C> <C>
Revenue $239,761 $298,881
Cost of goods sold 219,088 243,291
Selling, general and
administrative expenses 26,648 28,315
Other charges (credits) 2,453 -
Environmental charge - -
248,189 271,606
Income (loss) from operations (8,428) 27,275
Other deductions (income):
Interest expense 10,823 7,521
Miscellaneous, net (2,247) (2,041)
8,576 5,480
Income (loss) before cumulative
effect of changes in accounting
principles (17,004) 21,795
Cumulative effect of changes in
accounting principles (43,000) -
Net income (loss) $(60,004) $ 21,795
INFORMATION PER SHARE
Income (loss) before cumulative
effect of changes in accounting
principles $ (.95) $ 1.21
Cumulative effect of changes in
accounting principles (2.39) -
Net income (loss) $ (3.34) $ 1.21
Shares used to compute earnings
per share 17,965 18,078
</TABLE>
The accompanying Notes to the Consolidated Financial Statements
are an integral part of these financial statements.
-26-<PAGE>
<PAGE> 27
Wyman-Gordon Company and Subsidiaries
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 3, MAY 28,
1995 1994
(000's omitted)
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 13,856 $ 42,179
Accounts receivable 79,219 77,019
Inventories 78,813 65,737
Prepaid expenses 15,671 15,192
Total current assets 187,559 200,127
Property, plant and equipment, net 141,397 139,689
Intangible assets 25,295 27,759
Other assets 14,813 27,172
Total assets $369,064 $394,747
LIABILITIES
Borrowings due within one year $ 3,915 $ 77
Obligation to Cooper Industries - 20,561
Accounts payable 34,729 27,650
Accrued liabilities and other 55,853 60,151
Total current liabilities 94,497 108,439
Restructuring, integration, disposal
and environmental 19,648 26,201
Long-term debt 90,308 90,385
Pension liability 9,589 14,462
Deferred income taxes and other 21,699 30,929
Postretirement benefits 52,468 51,848
STOCKHOLDERS' EQUITY
Preferred stock, no par value: Authorized
5,000,000 shares; none issued - -
Common stock, par value $1.00 per share:
Authorized 70,000,000 shares; issued
37,052,720 and 36,902,720 shares at
June 3, 1995 and May 28, 1994 37,053 36,903
Capital in excess of par value 40,118 43,884
Retained earnings 39,700 38,661
Equity adjustments 63 (5,408)
Treasury stock, 2,044,178 shares at
June 3, 1995 and 2,354,540 shares
at May 28, 1994 (36,079) (41,557)
Total stockholders' equity 80,855 72,483
Total liabilities and stockholders'
equity $369,064 $394,747
</TABLE>
The accompanying Notes to the Consolidated Financial Statements
are an integral part of these financial statements.
-27-<PAGE>
<PAGE> 28
Wyman-Gordon Company and Subsidiaries
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR YEAR
ENDED ENDED
JUNE 3, MAY 28,
1995 1994
(000's omitted) (Unaudited)
<S> <C> <C>
OPERATING ACTIVITIES:
Net income (loss) $ 1,039 $(72,403)
Adjustments to reconcile net income (loss) to
net cash provided (used) by operating activities:
Depreciation and amortization 18,122 15,888
Loss from disposal of production facilities - 2,453
Environmental and other charges (credits) (2,100) 32,550
Losses of equity investment 1,390 -
Cumulative effect of changes in accounting
principles - -
Changes in assets and liabilities net of
purchase price activity:
Accounts receivable (2,200) 9,545
Inventories (13,076) 16,219
Prepaid expenses and other assets 11,542 5,078
Accrued restructuring, integration,
disposal and environmental (14,646) (8,224)
Income and other taxes 628 (623)
Accounts payable and accrued liabilities 7,073 5,515
Deferred income taxes - 1,009
Net cash provided (used) by operating
activities 7,772 7,007
INVESTING ACTIVITIES:
Investment in acquired subsidiaries (3,591) (3,450)
Capital expenditures (18,714) (11,888)
Deferred program costs - 16,408
Proceeds from disposal of production
facilities - 4,345
Proceeds from sale of fixed assets 1,563 62
Other, net (415) 4,071
Net cash provided (used) by investing
activities (21,157) 9,548
FINANCING ACTIVITIES:
Cash received from Cooper Industries for
factored accounts receivable - 20,561
Cash paid to Cooper Industries for
factored accounts receivable (20,561) -
Payment of debt (77) (77)
Issuance of debt 3,838 -
Net proceeds from issuance of common stock 1,862 572
Net cash provided (used) by financing
activities (14,938) 21,056
Increase (decrease) in cash (28,323) 37,611
Cash, beginning of period 42,179 4,568
Cash, end of period $ 13,856 $ 42,179
</TABLE>
The accompanying Notes to the Consolidated Financial Statements
are an integral part of these financial statements.
-28-<PAGE>
<PAGE> 29
Wyman-Gordon Company and Subsidiaries
CONSOLIDATED STATEMENT OF CASH FLOWS (Continued)
<TABLE>
<CAPTION>
FIVE MONTHS YEAR
ENDED ENDED
MAY 28, DEC. 31,
1994 1993
(000's omitted)
<S> <C> <C>
OPERATING ACTIVITIES:
Net income (loss) $(61,370) $(60,004)
Adjustments to reconcile net income (loss) to
net cash provided (used) by operating activities:
Depreciation and amortization 6,782 15,569
Loss from disposal of production facilities - 2,453
Environmental and other charges (credits) 32,550 -
Losses of equity investment - -
Cumulative effect of changes in accounting
principles - 43,000
Changes in assets and liabilities net of
purchase price activity:
Accounts receivable 3,228 15,139
Inventories 4,215 8,474
Prepaid expenses and other assets 2,255 (7,114)
Accrued restructuring, integration,
disposal and environmental (1,352) (9,653)
Income and other taxes 585 (940)
Accounts payable and accrued liabilities 6,429 311
Deferred income taxes 1,009 (58)
Net cash provided (used) by operating
activities (5,669) 7,177
INVESTING ACTIVITIES:
Investment in acquired subsidiaries (3,450) -
Capital expenditures (2,404) (13,866)
Deferred program costs 16,063 (22)
Proceeds from disposal of production
facilities - 4,345
Proceeds from sale of fixed assets - 393
Other, net 2,137 1,650
Net cash provided (used) by investing
activities 12,346 (7,500)
FINANCING ACTIVITIES:
Cash received from Cooper Industries for
factored accounts receivable 20,561 -
Cash paid to Cooper Industries for
factored accounts receivable - -
Payment of debt (77) (70,077)
Issuance of debt - 84,680
Net proceeds from issuance of common stock 201 537
Net cash provided (used) by financing
activities 20,685 15,140
Increase (decrease) in cash 27,362 14,817
Cash, beginning of period 14,817 -
Cash, end of period $ 42,179 $ 14,817
</TABLE>
The accompanying Notes to the Consolidated Financial Statements
are an integral part of these financial statements.
-29-<PAGE>
<PAGE> 30
Wyman-Gordon Company and Subsidiaries
CONSOLIDATED STATEMENT OF CASH FLOWS (Continued)
<TABLE>
<CAPTION>
YEAR
ENDED
DEC. 31,
1992
(000's omitted)
<S> <C>
OPERATING ACTIVITIES:
Net income (loss) $ 21,795
Adjustments to reconcile net income (loss) to
net cash provided (used) by operating activities:
Depreciation and amortization 15,875
Loss from disposal of production facilities -
Environmental and other charges (credits) -
Losses of equity investment -
Cumulative effect of changes in accounting
principles -
Changes in assets and liabilities net of
purchase price activity:
Accounts receivable 14,699
Inventories 16,345
Prepaid expenses and other assets 986
Accrued restructuring, integration,
disposal and environmental (25,735)
Income and other taxes 2,789
Accounts payable and accrued liabilities (15,951)
Deferred income taxes -
Net cash provided (used) by operating
activities 30,803
INVESTING ACTIVITIES:
Investment in acquired subsidiaries (3,700)
Capital expenditures (11,156)
Deferred program costs (2,086)
Proceeds from disposal of production
facilities 451
Proceeds from sale of fixed assets 2,282
Other, net 742
Net cash provided (used) by investing
activities (13,467)
FINANCING ACTIVITIES:
Cash received from Cooper Industries for
factored accounts receivable -
Cash paid to Cooper Industries for
factored accounts receivable -
Payment of debt (22,077)
Issuance of debt -
Net proceeds from issuance of common stock 220
Net cash provided (used) by financing
activities (21,857)
Increase (decrease) in cash (4,521)
Cash, beginning of period 4,521
Cash, end of period $ -
</TABLE>
The accompanying Notes to the Consolidated Financial Statements
are an integral part of these financial statements.
-30-<PAGE>
<PAGE> 31
Wyman-Gordon Company and Subsidiaries
CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
<TABLE>
<CAPTION>
Common Stock Capital in
Shares Par Excess of Retained
Issued Value Par Value Earnings
(000's omitted)
<S> <C> <C> <C> <C>
Balance, December 31, 1991 20,403 $20,403 $16,616 $138,240
Net income 21,795
Stock plans (567)
Pension equity adjustment
Balance, December 31, 1992 20,403 20,403 16,049 160,035
Net loss (60,004)
Stock plans (984)
Savings/Investment Plan
match (769)
Pension equity adjustment
Balance, December 31, 1993 20,403 20,403 14,296 100,031
Net loss (61,370)
Stock plans (429)
Savings/Investment Plan
match (171)
Pension equity adjustment
Issuance of common stock 16,500 16,500 30,188
Balance, May 28, 1994 36,903 36,903 43,884 38,661
Net income 1,039
Stock plans 150 150 (2,354)
Savings/Investment Plan
match (1,412)
Pension equity adjustment
Currency translation
Balance, June 3, 1995 37,053 $37,053 $40,118 $ 39,700
</TABLE>
The accompanying Notes to the Consolidated Financial Statements are
an integral part of these financial statements.
-31-<PAGE>
<PAGE> 32
Wyman-Gordon Company and Subsidiaries
CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
(Continued)
<TABLE>
<CAPTION>
Equity Treasury
Adjustments Stock
(000's omitted)
<S> <C> <C>
Balance, December 31, 1991 $ (1,788) $(45,383)
Net income
Stock plans 735
Pension equity adjustment (535)
Balance, December 31, 1992 (2,323) (44,648)
Net loss
Stock plans 1,250
Savings/Investment Plan
match 1,040
Pension equity adjustment (1,700)
Balance, December 31, 1993 (4,023) (42,358)
Net loss
Stock plans 546
Savings/Investment Plan
match 255
Pension equity adjustment (1,385)
Issuance of common stock
Balance, May 28, 1994 (5,408) (41,557)
Net income
Stock plans 3,355
Savings/Investment Plan
match 2,123
Pension equity adjustment 3,952
Currency translation 1,519
Balance, June 3, 1995 $ 63 $(36,079)
</TABLE>
The accompanying Notes to the Consolidated Financial Statements are an
integral part of these financial statements.
-32-<PAGE>
<PAGE> 33
Wyman-Gordon Company and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The company is engaged principally in the design,
engineering, production and marketing of high-technology forged
and investment cast metal and composite components used for a
wide variety of aerospace and power generation applications.
On May 24, 1994, the company's Board of Directors voted to
change the company's fiscal year end from one which ended on
December 31 to one which ends on the Saturday nearest to May 31.
On May 26, 1994, the Company acquired Cameron Forged
Products Company ("Cameron") from Cooper Industries. The
accompanying consolidated financial statements include the
accounts of Cameron from the date of the acquisition. Cameron's
operating results from May 26, 1994 to May 28, 1994 are not
material to the consolidated statement of operations for the five
month period ended May 28, 1994. The unaudited statement of
operations and cash flows for the year ended May 28, 1994 are
presented for comparative purposes only.
PRINCIPLES OF CONSOLIDATION: The consolidated financial
statements include the accounts of the company and all
subsidiaries. All intercompany accounts and transactions have
been eliminated.
REVENUE RECOGNITION: Sales and income are recognized at the time
products are shipped.
RECLASSIFICATIONS: Where appropriate, prior year amounts have
been reclassified to permit comparison.
CASH AND CASH EQUIVALENTS: Cash equivalents include short-term
investments with maturities of less than three months at the time
of investment.
INVENTORIES: Inventories are valued at both the lower of first-
in, first-out (FIFO) cost or market, or for certain forgings and
castings raw material and work-in-process inventories, the
last-in, first-out (LIFO) method. On certain orders, usually
involving lengthy raw material procurement and production cycles,
progress payments are reflected as a reduction of inventories.
Product repair costs are expensed as incurred.
LONG-TERM, FIXED PRICE CONTRACTS: A substantial portion of the
company's revenues is derived from long-term, fixed price
contracts with major engine and aircraft manufacturers. These
contracts are typically "requirements" contracts under which the
purchaser commits to purchase a given portion of its requirements
of a particular component from the company. Actual purchase
quantities are typically not determined until shortly before the
year in which products are to be delivered. Losses on such
contracts are provided when available information indicates that
-33-<PAGE>
<PAGE> 34
Wyman-Gordon Company and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
the sales price is less than a fully allocated cost projection.
As part of the company's acquisition of Cameron on May 26, 1994,
loss reserves on backlog and long-term pricing agreements are
included on the balance sheet (see Footnote C).
DEPRECIABLE ASSETS: Property, plant and equipment, including
significant renewals and betterments, are capitalized at cost and
are depreciated on the straight-line method. Generally,
depreciable lives range from 10 to 20 years for land
improvements, 10 to 40 years for buildings and 5 to 15 years for
machinery and equipment. Tooling production costs are primarily
classified as machinery and equipment and are capitalized at cost
less associated revenue and depreciated over 5 years.
BANK FEES: Bank fees and related costs of obtaining credit
facilities are recorded as other assets and amortized over the
term of the facilities.
EARNINGS (LOSS) PER SHARE: Per-share data are computed based on
the weighted average number of common shares outstanding during
each year. Common stock equivalents related to outstanding stock
options are included in per-share computations unless their
inclusion would be antidilutive.
CONCENTRATION OF CREDIT RISK: Financial instruments that
potentially subject the company to concentration of credit risk
consist primarily of temporary cash investments and trade
receivables. The company restricts investment of temporary cash
investments to financial institutions with high credit standing.
The company has approximately 550 active customers. However, the
company's accounts receivable are concentrated with a small
number of Fortune 500 companies with whom the company has long-
standing relationships. Accordingly, management considers credit
risk to be low. Five customers accounted for 50.0% of the
company's revenues during the year ended June 3, 1995, 50.6% for
the five months ended May 28, 1994, 55.6% for the year ended
December 31, 1993 and 52.7% for the year ended December 31, 1992.
General Electric Company ("GE")and United Technologies
Corporation "UT") each accounted for more than 10% of the
company's revenues as follows:
-34-<PAGE>
<PAGE> 35
Wyman-Gordon Company and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
<TABLE>
<CAPTION>
($000's omitted)
FIVE
YEAR MONTHS
ENDED ENDED YEAR ENDED
JUNE 3, MAY 28, DECEMBER 31,
1995 % 1994 % 1993 % 1992 %
<S> <C> <C> <C> <C> <C> <C> <C> <C>
GE $101,261 26 $17,226 20 $55,585 23 $62,740 21
UT 58,873 15 13,930 16 37,060 16 48,920 17
</TABLE>
CURRENCY TRANSLATION: For foreign operations, the local currency
is the functional currency. Assets and liabilities are
translated at year-end exchange rates, and statement of
operations items are translated at the average exchange rates for
the year. Translation adjustments are reported in equity
adjustments as a separate component of stockholders' equity which
also includes exchange gains and losses on certain intercompany
balances of a long-term investment nature.
RESEARCH AND DEVELOPMENT: Research and development expenses,
including related depreciation, amounted to $2,213,000, $733,000,
$2,778,000 and $3,013,000 for the year ended June 3, 1995, five
months ended May 28, 1994 and for the years ended December 31,
1993 and 1992, respectively.
INTANGIBLE ASSETS: Intangible assets consists primarily of costs
of acquired businesses in excess of net assets acquired and are
amortized on a straightline basis over periods up to 35 years.
B. ACQUISITION
On May 26, 1994, the company acquired all of the outstanding
stock of Cameron from Cooper Industries Inc. for 16,500,000
shares of the company's common stock valued at $46,687,000,
direct costs of $3,050,000, a note payable to Cooper Industries,
Inc. of $3,186,000 net of discount of $1,414,000, $400,000 in
cash at closing and a final cash settlement of $3,591,000.
Cameron and its subsidiaries operate forging facilities in
Houston, Texas and Livingston, Scotland, as well as a powder
metal operation in Brighton, Michigan. The integration of
Cameron's operations with the company's is progressing
substantially as planned. The acquisition was accounted for as a
purchase transaction. The company's results of operations for
fiscal 1995 include the accounts of Cameron. The final
allocation of the purchase price of this transaction is reflected
in the May 28, 1994 balance sheet as follows:
-35-<PAGE>
<PAGE> 36
Wyman-Gordon Company and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
<TABLE>
<CAPTION>
(000's omitted)
<S> <C>
Cost of acquisition:
Issuance of 16,500 shares of common
stock to Cooper, direct expenses of
$3,050 and $3,591 final price
adjustment $53,328
Note payable to Cooper net of discount
of $1,414 (included in other long-term
liabilities on the balance sheet) 3,186
Cash paid to Cooper at closing 400
56,914
Estimated costs to integrate Cameron into
the company 6,993
$63,907
Allocation of cost of acquisition:
Fair value of property, plant and equipment $81,183
Less excess of fair value of net assets
acquired over purchase price (30,712)
50,471
Other assets acquired and liabilities assumed 13,436
$63,907
</TABLE>
The allocation of the cost of the acquisition has been made
on the basis of the fair market value of the individual assets
and liabilities acquired. Direct costs of the acquisition of
Cameron and liabilities assumed are $5,200,000 and $900,000,
respectively, lower than originally estimated at May 28, 1994.
The Unaudited Pro Forma Combined financial data of the
company with Cameron as though Cameron had been acquired as of
the beginning of each period presented are as follows:
<TABLE>
<CAPTION>
FIVE MONTHS
ENDED YEAR ENDED
MAY 28, DECEMBER 31,
1994 1993
(000's omitted, except per-share data)
<S> <C> <C>
Revenue $151,834 $389,295
Income (loss) before
cumulative effect of
changes in accounting
principles $(71,525) $(39,271)
Net income (loss) $(71,525) $(82,271)
Income (loss) per share
before cumulative effect
of changes in accounting
principles $ (2.07) $ (1.14)
Net income (loss) per share $ (2.07) $ (2.38)
</TABLE>
-36-<PAGE>
<PAGE> 37
Wyman-Gordon Company and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
C. BALANCE SHEET INFORMATION
Components of selected captions in the consolidated balance
sheets follow:
<TABLE>
<CAPTION>
JUNE 3, May 28,
1995 1994
(000's omitted)
<S> <C> <C>
PROPERTY, PLANT AND EQUIPMENT:
Land, buildings and improvements $100,399 $ 92,150
Machinery and equipment 278,691 272,429
Under construction 6,282 4,722
385,372 369,301
Less accumulated depreciation 243,975 229,612
$141,397 $139,689
INTANGIBLE ASSETS:
Pension intangible $ 5,568 $ 6,527
Costs in excess of net assets
acquired 28,786 29,586
Less: Accumulated amortization (9,059) (8,354)
$ 25,295 $ 27,759
OTHER ASSETS:
Cash surrender value of company-
owned life insurance policies $ 7,974 $ 12,341
Other 6,839 14,831
$ 14,813 $ 27,172
ACCRUED LIABILITIES AND OTHER:
Accrued payroll and benefits $ 11,511 $ 9,900
Restructuring, integration,
disposal and environmental
reserves 10,219 19,082
Payroll and other taxes 3,139 2,511
Loss on long-term contracts 7,407 8,334
Other 23,577 20,324
$ 55,853 $ 60,151
DEFERRED INCOME TAXES AND OTHER:
Deferred income taxes $ 2,623 $ 2,623
Loss on long-term contracts 3,413 12,000
Other long-term liabilities 15,663 16,306
$ 21,699 $ 30,929
</TABLE>
-37-<PAGE>
<PAGE> 38
Wyman-Gordon Company and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
D. INVENTORIES
Inventories consisted of the following:
<TABLE>
<CAPTION>
JUNE 3, MAY 28,
1995 1994
(000's omitted)
<S> <C> <C>
Raw material $26,440 $13,706
Work-in-process 54,310 54,570
Other 3,228 2,286
83,978 70,562
Less progress payments 5,165 4,825
$78,813 $65,737
</TABLE>
If all inventories valued at LIFO cost had been valued at
FIFO cost or market which approximates current replacement cost,
inventories would have been $21,584,000 and $27,758,000 higher
than reported at June 3, 1995 and May 28, 1994, respectively.
LIFO inventory quantities were reduced in each of the
periods presented below, resulting in the liquidation of LIFO
inventories carried at the lower costs prevailing in prior years
compared with the cost of current purchases which has a favorable
effect on income from operations. Inflation and deflation have
negative and positive effects on income from operations,
respectively. The effects of lower quantities, inflation or
deflation were as follows:
<TABLE>
<CAPTION>
FIVE
YEAR MONTHS
ENDED ENDED YEAR ENDED
JUNE 3, MAY 28, DECEMBER 31,
1995 1994 1993 1992
(000's omitted)
<S> <C> <C> <C> <C>
Lower quantities $ 7,567 $2,050 $5,469 $18,388
(Inflation) deflation (1,393) 1,085 4,450 2,448
Net increase to income
from operations $ 6,174 $3,135 $9,919 $20,836
</TABLE>
-38-<PAGE>
<PAGE> 39
Wyman-Gordon Company and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
E. SHORT-TERM AND LONG-TERM DEBT
Short-term and long-term debt consisted of the following:
<TABLE>
<CAPTION>
JUNE 3, MAY 28,
1995 1994
(000's omitted)
<S> <C> <C>
Borrowings due within one year:
Current portion of long-term debt $ 77 $ 77
Borrowings under U.K. Credit
Agreement 3,838 -
Total borrowings due within
one year $ 3,915 $ 77
Long-term debt:
Senior Notes $90,000 $90,000
Other 308 385
Total long-term debt $90,308 $90,385
</TABLE>
During 1993, the company issued $90,000,000 of 10 3/4%
Senior Notes due March 2003 (the "Senior Notes") under an
indenture between the company and a bank as trustee. The Senior
Notes pay interest semi-annually. The Senior Notes are general
unsecured obligations of the company, are non-callable for a five
year period, and are senior to any future subordinated
indebtedness of the company. The indenture contains certain
covenants including limitations on indebtedness, restrictive
payments including dividends, liens, and disposition of assets.
The estimated fair value of the Senior Notes was $86,400,000
and $88,200,000 at June 3, 1995 and May 28, 1994 based on third
party valuations.
On May 20, 1994, the company initiated, through a new
subsidiary, Wyman-Gordon Receivables Corporation ("WGRC"), a
revolving credit agreement with a group of five banks
("Receivables Financing Program"). WGRC is a separate corporate
entity from Wyman-Gordon Company and its other subsidiaries, with
its own separate creditors. WGRC's business is the purchase of
accounts receivable from Wyman-Gordon Company and certain of its
subsidiaries ("Sellers"), and neither WGRC on the one hand nor
the Sellers (or subsidiaries or affiliates of the Sellers) on the
other have agreed to pay or make their assets available to pay
creditors of others. WGRC's creditors have a claim on its assets
prior to those assets becoming available to any creditors of any
of the Sellers. The facility provides for a total commitment by
the banks of up to $65,000,000, including a letter of credit
subfacility of up to $35,000,000.
-39-<PAGE>
<PAGE> 40
Wyman-Gordon Company and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
There were no borrowings outstanding at June 3, 1995 and May
28, 1994, but the company had issued $10,009,000 and $5,139,000
of letters of credit under the Receivables Financing Program,
respectively. As of June 3, 1995 and May 28, 1994, total
availability based on eligible receivables was $44,816,000 and
$15,418,000, respectively. Cameron's accounts receivable became
eligible on October 21, 1994.
Wyman-Gordon Limited, the company's subsidiary located in
Livingston, Scotland, entered into a credit agreement ("U.K.
Credit Agreement") with a bank ("the Bank") effective November
28, 1994. The maximum borrowing capacity under the U.K. Credit
Agreement is 3,000,000 pound sterling with a separate letter of
credit or guarantee limit of 1,000,000 pound sterling.
Borrowings bear interest at 1% over the Bank's base rate. In the
event that borrowings by way of overdraft are allowed to exceed
the agreed limit, interest on the excess borrowings will be
charged at the rate of 2% over the Bank's base rate. The company
is obligated to pay a commitment fee of .75% on letters of credit
issued under the U.K. Credit Agreement. The U.K. Credit
Agreement is secured by a debenture from Wyman-Gordon Limited and
is senior to any intercompany loans. The term of the U.K. Credit
Agreement is one year with an evergreen feature. There were
2,415,000 pound sterling or $3,838,000 borrowings outstanding at
June 3, 1995 and the company had issued pound sterling 380,000 or
$604,000 of letters of credit or guarantees under the U.K. Credit
Agreement.
For the year ended June 3, 1995, the weighted average
interest rate on short-term borrowings was 7.3%.
Annual maturities of long-term debt in the next five years
amount to $77,000 per year and $90,000,000 thereafter. The
company's promissory note to Cooper Industries, Inc. in the
principal amount of $4,600,000, will be payable in annual
installments beginning on June 30, 1997 and each June 30
thereafter until paid in full in amounts provided under the terms
of the "Stock Purchase Agreement" with Cooper Industries, Inc.
<TABLE>
<CAPTION>
FIVE
YEAR MONTHS
ENDED ENDED YEAR ENDED
JUNE 3, MAY 28, DECEMBER 31,
1995 1994 1993 1992
(000's omitted)
<S> <C> <C> <C> <C>
Interest on debt $ 9,929 $3,973 $ 8,741 $5,171
Capitalized interest (397) (152) (544) (218)
Amortization of
financing fees and
other 1,495 1,562 2,626 2,568
Interest expense $11,027 $5,383 $10,823 $7,521
</TABLE>
Total interest paid approximates "Interest on debt" stated
in the table above.
-40-<PAGE>
<PAGE> 41
Wyman-Gordon Company and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
F. RESTRUCTURING OF OPERATIONS
1991 RESTRUCTURING:
During 1991, the company incurred charges of $87,966,000 and
$11,498,000 in connection with a restructuring program primarily
at its forging operations and disposition of its automotive
crankshaft forging division, respectively.
A significant portion of this charge related to the
consolidation of forging operations, including severance and
other personnel costs. The company has nearly completed its 1991
restructuring plan. Some consolidation activities still remain
to be completed requiring cash outlays of approximately
$1,700,000 and $600,000 in fiscal 1996 and 1997, respectively.
Deferred compensation of approximately $1,500,000 will be payable
over the next several years under the terms of a severance
agreement. The divestiture of the company's automotive
crankshaft forging division is virtually complete with minor
costs remaining.
1993 DISPOSITION:
In 1993, the company sold substantially all of the net
assets and business operations of Wyman-Gordon Composites, Inc.
and recorded a non-cash charge on the sale in the fourth quarter
of 1993 of $2,453,000.
1994 RESTRUCTURING:
The company recorded a charge of $6,450,000 in May 1994,
$5,200,000 for closing a castings facility, of which $1,100,000
required cash, and $1,250,000 to write-down castings fixed assets
to their net realizable value. The non-cash items amounting to
$5,350,000 were charged against the reserve in May 1994. A
$600,000 cash charge was made against the reserve in fiscal 1995
and cash charges of $500,000 are expected to be incurred in
fiscal 1996.
1994 CAMERON INTEGRATION COSTS:
Based on the company's plans for the integration of Cameron,
in May 1994, the company recorded an integration restructuring
charge totalling $24,100,000 which consisted of estimated cash
costs of $12,700,000 and estimated non-cash charges of
$11,400,000 for asset revaluations. Cash costs include
relocating machinery, equipment, tooling and dies of the company
as well as relocation and severance costs related to personnel of
the company. Non-cash charges included the write-down of certain
assets of the company, including portions of metal production
facilities and certain forging, machining and testing equipment
to net realizable value as a result of consolidating certain
systems and facilities, idling certain machinery and equipment,
and eliminating certain processes, departments and operations as
a result of the acquisition.
-41-<PAGE>
<PAGE> 42
Wyman-Gordon Company and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In the fourth quarter of fiscal 1995, after a year of
evaluating the combined forgings operations and concluding that
most of its integration activities had been completed or were
adequately provided for within the remaining integration
restructuring reserves, the company determined that severance and
other personnel costs were $1,900,000 lower and movement of
machinery, equipment and tooling and dies costs were $2,500,000
lower than originally estimated. Additionally, the company had
originally identified certain machinery and equipment expected to
become redundant as a result of the integration of Cameron's
operations with those of the company's. These redundancies were
$2,300,000 higher than the company's original estimates. As a
result, the company took into income from operations, an
integration restructuring credit in the amount of $2,100,000. At
June 3, 1995, the company estimates the remaining integration
activities will require cash outlays of approximately $4,100,000
in fiscal 1996 and $1,600,000 thereafter. Most of these future
expenditures represent costs associated with consolidation and
reconfiguration of production facilities and relocation or
severance costs.
CAMERON PURCHASE CASH COSTS:
Included as part of the Cameron purchase price allocation
the company recorded $12,200,000 for direct cash costs related to
the acquisition and integration of Cameron for relocation of
Cameron machinery and dies, severance of Cameron personnel and
other costs. At June 3, 1995, it was determined that the cash
costs of the acquisition were $5,200,000 lower than originally
estimated. The company made $4,100,000 of cash charges against
these reserves in fiscal 1995, and the remaining activities will
require estimated cash outlays of $2,900,000.
A summary of charges made or estimated to be made against
restructuring, integration and disposal reserves is as follows:
-42-<PAGE>
<PAGE> 43
Wyman-Gordon Company and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
<TABLE>
<CAPTION>
YEAR
ENDED
DEC. 31,
TOTAL 1991
(000's omitted)
<S> <C> <C>
1991 RESTRUCTURING:
CASH:
Consolidation and reconfiguration of
facilities $32,600 $ 700
Severance and deferred compensation 6,400 -
Total cash charges 39,000 700
NON-CASH:
Asset revaluation 56,000 51,900
Total 1991 Other Charges $95,000 $52,600
1993 DISPOSITION:
NON-CASH:
Disposition of production facilities $ 2,453 $ -
Total 1993 Other Charges $ 2,453 $ -
1994 RESTRUCTURING:
1994 RESTRUCTURING:
CASH:
Casting facility closure $ 1,100 $ -
NON-CASH:
Casting facility closure 4,100 -
Other 1,250 -
Total non-cash charges 5,350 -
Total 1994 Restructuring 6,450 -
1994 CAMERON INTEGRATION COSTS:
CASH:
Movement of machinery, equipment and
tooling and dies 4,300 -
Severance and other personnel costs 4,000 -
Total cash charges 8,300 -
NON-CASH:
Asset revaluation 13,700 -
Credits to reserves 2,100 -
Total non-cash charges 15,800 -
Total 1994 Cameron integration costs 24,100 -
Total 1994 Other Charges $30,550 $ -
CAMERON PURCHASE CASH COSTS:
Cost of relocating Cameron's machinery and
equipment and tooling and dies $ 3,200 $ -
Severance of Cameron personnel 3,800 -
Total Cameron Purchase Cash Costs $ 7,000 $ -
1995 OTHER CHARGES:
NON-CASH:
Credits to 1994 Cameron integration costs $(2,100) $ -
Total 1995 Other Charges $(2,100) $ -
Total Cash $55,400 $ 700
Total Non-cash $77,503 $51,900
</TABLE>
-43-<PAGE>
<PAGE> 44
Wyman-Gordon Company and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
<TABLE>
<CAPTION>
YEAR YEAR
ENDED ENDED
DEC. 31, DEC. 31,
1992 1993
(000's omitted)
<S> <C> <C>
1991 RESTRUCTURING:
CASH:
Consolidation and reconfiguration of
facilities $21,100 $ 4,800
Severance and deferred compensation 2,200 2,000
Total cash charges 23,300 6,800
NON-CASH:
Asset revaluation 2,400 1,700
Total 1991 Other Charges $25,700 $ 8,500
1993 DISPOSITION:
NON-CASH:
Disposition of production facilities $ - $ 2,453
Total 1993 Other Charges $ - $ 2,453
1994 RESTRUCTURING:
1994 RESTRUCTURING:
CASH:
Casting facility closure $ - $ -
NON-CASH:
Casting facility closure - -
Other - -
Total non-cash charges - -
Total 1994 Restructuring - -
1994 CAMERON INTEGRATION COSTS:
CASH:
Movement of machinery, equipment and
tooling and dies - -
Severance and other personnel costs - -
Total cash charges - -
NON-CASH:
Asset revaluation - -
Credits to reserves - -
Total non-cash charges - -
Total 1994 Cameron integration costs - -
Total 1994 Other Charges $ - $ -
CAMERON PURCHASE CASH COSTS:
Cost of relocating Cameron's machinery and
equipment and tooling and dies $ - $ -
Severance of Cameron personnel - -
Total Cameron Purchase Cash Costs $ - $ -
1995 OTHER CHARGES:
NON-CASH:
Credits to 1994 Cameron integration costs $ - $ -
Total 1995 Other Charges $ - $ -
Total Cash $23,300 $ 6,800
Total Non-cash $ 2,400 $ 4,153
</TABLE>
-44-<PAGE>
<PAGE> 45
Wyman-Gordon Company and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
<TABLE>
<CAPTION>
FIVE MONTHS YEAR
ENDED ENDED
MAY 28, JUNE 3,
1994 1995
(000's omitted)
<S> <C> <C>
1991 RESTRUCTURING:
CASH:
Consolidation and reconfiguration of
facilities $ 1,400 $ 2,300
Severance and deferred compensation 300 400
Total cash charges 1,700 2,700
NON-CASH:
Asset revaluation - -
Total 1991 Other Charges $ 1,700 $ 2,700
1993 DISPOSITION:
NON-CASH:
Disposition of production facilities $ - $ -
Total 1993 Other Charges $ - $ -
1994 RESTRUCTURING:
1994 RESTRUCTURING:
CASH:
Casting facility closure $ - $ 600
NON-CASH:
Casting facility closure 4,100 -
Other 1,250 -
Total non-cash charges 5,350 -
Total 1994 Restructuring 5,350 600
1994 CAMERON INTEGRATION COSTS:
CASH:
Movement of machinery, equipment and
tooling and dies - 800
Severance and other personnel costs - 1,800
Total cash charges - 2,600
NON-CASH:
Asset revaluation 11,400 2,300
Credits to reserves - 2,100
Total non-cash charges 11,400 4,400
Total 1994 Cameron integration costs 11,400 7,000
Total 1994 Other Charges $16,750 $ 7,600
CAMERON PURCHASE CASH COSTS:
Cost of relocating Cameron's machinery and
equipment and tooling and dies $ - $ 1,700
Severance of Cameron personnel - 2,400
Total Cameron Purchase Cash Costs $ - $ 4,100
1995 OTHER CHARGES:
NON-CASH:
Credits to 1994 Cameron integration costs $ - $(2,100)
Total 1995 Other Charges $ - $(2,100)
Total Cash $ 1,700 $10,000
Total Non-cash $16,750 $ 2,300
</TABLE>
-45-<PAGE>
<PAGE> 46
Wyman-Gordon Company and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
<TABLE>
<CAPTION>
YEAR
ENDED
JUNE 1, THERE-
1996 AFTER
(000's omitted)
<S> <C> <C>
1991 RESTRUCTURING:
CASH:
Consolidation and reconfiguration of
facilities $ 1,700 $ 600
Severance and deferred compensation 200 1,300
Total cash charges 1,900 1,900
NON-CASH:
Asset revaluation - -
Total 1991 Other Charges $ 1,900 $ 1,900
1993 DISPOSITION:
NON-CASH:
Disposition of production facilities $ - $ -
Total 1993 Other Charges $ - $ -
1994 RESTRUCTURING:
1994 RESTRUCTURING:
CASH:
Casting facility closure $ 500 $ -
NON-CASH:
Casting facility closure - -
Other - -
Total non-cash charges - -
Total 1994 Restructuring 500 -
1994 CAMERON INTEGRATION COSTS:
CASH:
Movement of machinery, equipment and
tooling and dies 2,100 1,400
Severance and other personnel costs 2,000 200
Total cash charges 4,100 1,600
NON-CASH:
Asset revaluation - -
Credits to reserves - -
Total non-cash charges - -
Total 1994 Cameron integration costs 4,100 1,600
Total 1994 Other Charges $ 4,600 $ 1,600
CAMERON PURCHASE CASH COSTS:
Cost of relocating Cameron's machinery and
equipment and tooling and dies $ 1,100 $ 400
Severance of Cameron personnel 1,300 100
Total Cameron Purchase Cash Costs $ 2,400 $ 500
1995 OTHER CHARGES:
NON-CASH:
Credits to 1994 Cameron integration costs $ - $ -
Total 1995 Other Charges $ - $ -
Total Cash $ 8,900 $ 4,000
Total Non-cash $ - $ -
</TABLE>
-46-<PAGE>
<PAGE> 47
Wyman-Gordon Company and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
G. ENVIRONMENTAL MATTERS
The company is subject to extensive, stringent and changing
federal, state and local environmental laws and regulations,
including those regulating the use, handling, storage, discharge
and disposal of hazardous substances and the remediation of
alleged environmental contamination. Nevertheless, the company
believes that compliance with these laws and regulations will not
have a material adverse effect on the company's operations as a
whole. In 1991, the company recorded a charge of $7,000,000 with
respect to environmental investigation and remediation costs at
one of the company's facilities. During the five months ended
May 28, 1994, the company provided an additional $2,000,000 to
the current estimated cost of remediation. Additionally, a
charge of $5,000,000 against potential environmental remediation
costs upon the eventual sale of another facility was included in
the 1991 restructuring charge.
Pursuant to an agreement entered into with the U.S. Air
Force upon the acquisition of a facility from the federal
government in 1982, the company agreed to make additional
expenditures for environmental management and remediation
projects at that site during the period 1982 through 1999.
Approximately $6,100,000 of future expenditures remain as of June
3, 1995. The company, together with numerous other parties, has
also been alleged to be a potentially responsible party at four
federal or state Superfund sites. The company does not believe
that liabilities related to such sites will be material in the
aggregate.
The company's Grafton, Massachusetts plant location is
included in the U.S. Nuclear Regulatory Commission's ("NRC") May
1992 Site Decommissioning Management Plan for low-level
radioactive waste as a "Priority C" (lowest priority) site. The
NRC conducted a long range dose assessment in 1992, and concluded
that the site should be remediated. However, the company
believes the NRC's draft assessment was flawed and has challenged
that draft assessment. The company has provided $1,500,000 for
the estimated cost of the remediation. The company believes that
it may have meritorious claims for reimbursement from the U.S.
Air Force in respect of any liabilities it may have for such
remediation.
The company has been named in a suit which relates to the
clean-up of a privately owned site in Massachusetts formerly used
as an impoundment lagoon from which hazardous material is alleged
to have spilled. A proposed agreement would allocate 33% of the
clean-up costs to the company. An insurance company is defending
the company's interests, and the company believes that any
recovery against the company would be covered by insurance. A
consulting firm retained by the PRP group has recently made a
preliminary remediation cost estimate of $300,000 to $9,900,000,
depending on the level of toxicity found and the method of
remediation ultimately used.
-47-<PAGE>
<PAGE> 48
Wyman-Gordon Company and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
H. BENEFIT PLANS
The company and its subsidiaries have pension plans covering
substantially all employees. Benefits are generally based on
years of service and a fixed monthly rate or average earnings
during the last years of employment. Pension plan assets are
invested in equity and fixed income securities, pooled funds
including real estate funds and annuities. Company contributions
are determined based upon the funding requirements of U.S. and
other governmental laws and regulations.
A reconciliation between the amounts recorded on the
consolidated balance sheets and the summary tables of the funding
status of the pension plans are as follows:
<TABLE>
<CAPTION>
JUNE 3, MAY 28,
1995 1994
(000's omitted)
<S> <C> <C>
Pension liability per balance sheet $(9,589) $(14,462)
Prepaid pension expense included in
prepaid expenses in the balance
sheet 1,639 2,769
UK pension liability 789 750
Net pension liability $(7,161) $(10,943)
</TABLE>
U.S. PENSION PLANS
Pension expense for the U.S. pension plans included the
following components:
<TABLE>
<CAPTION>
FIVE
YEAR MONTHS
ENDED ENDED YEAR ENDED
JUNE 3, MAY 28, DECEMBER 31,
1995 1994 1993 1992
(000's omitted)
<S> <C> <C> <C> <C>
Service cost $ 2,938 $ 917 $ 1,720 $ 1,937
Interest cost on
projected benefit
obligation 10,842 4,373 10,955 11,083
Actual return on assets (8,205) (2,248) (18,107) (6,849)
Net amortization and
deferral of actuarial
gains (losses) (1,385) (1,798) 8,208 (3,403)
Net pension expense $ 4,190 $ 1,244 $ 2,776 $ 2,768
Assumed long-term rate
of return on plan
assets 9.0% 9.0% 9.0% 9.0%
</TABLE>
-48-<PAGE>
<PAGE> 49
Wyman-Gordon Company and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
A summary of the funding status of the U.S. pension plans
and a reconciliation to the amounts recorded in the consolidated
balance sheets are as follows:
<TABLE>
<CAPTION>
JUNE 3, 1995
(000's omitted)
ASSETS ACCUMULATED
EXCEEDING BENEFITS
ACCUMULATED EXCEEDING
BENEFITS ASSETS TOTAL
<S> <C> <C> <C>
Actuarial present value of
benefit obligations:
Vested $ 82,042 $ 46,202 $128,244
Nonvested 349 324 673
Accumulated benefit obligation 82,391 46,526 128,917
Impact of forecasted salary
increases during future
periods 5,737 339 6,076
Projected benefit obligation
for employee service to date 88,128 46,865 134,993
Current fair market value of
plan assets 101,933 30,967 132,900
Excess (shortfall) of plan
assets over (under) projected
benefit obligation 13,805 (15,898) (2,093)
Unrecognized net (gain) loss (10,261) 1,771 (8,490)
Unrecognized net (asset)
obligation at transition (455) 4,912 4,457
Unrecognized prior service cost 5,290 2,456 7,746
Adjustment required to
recognize minimum liability - (8,800) (8,800)
Net periodic pension cost
April 1, 1995 to June 3, 1995 (48) (650) (698)
Contributions April 1, 1995 to
June 3, 1995 - 717 717
Net prepaid pension expense
(pension liability) $ 8,331 $(15,492) $ (7,161)
Estimated annual increase in
future salaries 3-5%
Weighted average discount rate 9.0%
</TABLE>
A measurement date of March 31 has been used for determining
the disclosure information. Expense recognition and contributions
received during the period April 1 through fiscal year-end are then
recognized to bring the accrued or prepaid expense to June 3, 1995
and May 28, 1994 balances.
-49-<PAGE>
<PAGE> 50
Wyman-Gordon Company and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
<TABLE>
<CAPTION>
MAY 28, 1994
(000's omitted)
ASSETS ACCUMULATED
EXCEEDING BENEFITS
ACCUMULATED EXCEEDING
BENEFITS ASSETS TOTAL
<S> <C> <C> <C>
Actuarial present value of
benefit obligations:
Vested $ 91,533 $ 50,639 $142,172
Nonvested 341 398 739
Accumulated benefit obligation 91,874 51,037 142,911
Impact of forecasted salary
increases during future
periods 6,798 235 7,033
Projected benefit obligation
for employee service to date 98,672 51,272 149,944
Current fair market value of
plan assets 103,349 31,390 134,739
Excess (shortfall) of plan
assets over (under) projected
benefit obligation 4,677 (19,882) (15,205)
Unrecognized net (gain) loss (1,274) 5,121 3,847
Unrecognized net (asset)
obligation at transition (522) 5,965 5,443
Unrecognized prior service cost 5,706 2,860 8,566
Adjustment required to
recognize minimum liability - (13,712) (13,712)
Net periodic pension cost
April 1, 1994 to May 28, 1994 34 (507) (473)
Contributions April 1, 1994 to
May 28, 1994 - 591 591
Net prepaid pension expense
(pension liability) $ 8,621 $(19,564) $(10,943)
Estimated annual increase in
future salaries 3-5%
Weighted average discount rate 7.5%
</TABLE>
-50-<PAGE>
<PAGE> 51
Wyman-Gordon Company and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
U.K. PENSION PLAN
Pension expense for the U.K. pension plan included the
following:
<TABLE>
<CAPTION>
YEAR ENDED
JUNE 3, 1995
(000's omitted)
<S> <C>
Service cost $ 692
Interest cost 1,189
Expected return on assets (1,084)
Net pension expense $ 797
</TABLE>
The U.K. pension plan's assets and liabilities were rolled
over from the former Cameron plan during fiscal 1995. The funded
status of the U.K. pension plan is as follows:
<TABLE>
<CAPTION>
JUNE 3, 1995
(000's omitted)
<S> <C>
Fair value of plan assets $14,682
Projected benefit obligation 15,247
Plan assets less than projected
benefit obligation (565)
Unrecognized net gain loss 498
Accrued pension cost $ (67)
Accumulated benefits $13,472
Vested benefits $13,472
Assumed long-term rate of return
on plan assets 9.0%
Weighted average discount rate 9.0%
Rate of salary increase 6.0%
</TABLE>
The company also maintains a 401K plan for most full-time
salaried employees. Employer contributions to the defined
contribution plan are made at the company's discretion and are
reviewed periodically. Such contributions amounted to $136,000
for the year ended June 3, 1995, $591,000 for the five months
ended May 28, 1994, and $134,000 and $375,000 for the years ended
December 31, 1993 and 1992, respectively. Additionally, for the
year ended June 3, 1995, the five months ended May 28, 1994 and
the years ended December 31, 1993 and 1992, the company
contributed 120,261; 14,432; 58,927 and 0 shares of common stock
from Treasury to its defined contribution plan, respectively, and
recorded expense relating thereto of $711,000, $84,000, $271,000
and $0, respectively.
-51-<PAGE>
<PAGE> 52
Wyman-Gordon Company and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
I. OTHER POSTRETIREMENT BENEFITS
In addition to providing pension benefits, the company and
its subsidiaries provide most retired employees with health care
and life insurance benefits. The majority of these health care
and life insurance benefits are provided through insurance
companies, some of whose premiums are computed on a cost plus
basis. The annual cost of these benefits on the expense-as-
incurred basis amounted to $4,849,000 in 1992.
Effective January 1, 1993, the company adopted SFAS No. 106,
"Employers' Accounting for Postretirement Benefits Other Than
Pensions." This standard requires companies to accrue
postretirement benefits during the years the employees are
working and earning benefits for retirement, as contrasted to the
expense-as-incurred basis that the company followed in 1992 and
prior years. The company elected to recognize the cumulative
effect of the accounting change, resulting in a non-cash
reduction in earnings in 1993 of $43,000,000 or $2.39 per share.
Most of the Forgings Division and Corporate retirees and
full-time employees are or become eligible for these
postretirement health care and life insurance benefits if they
meet minimum age and service requirements. There are certain
retirees for which company cost and liability are affected by
future increases in health care cost. The liabilities have been
developed assuming a medical trend rate for growth in future
health care claim levels from the assumed 1994 level. The change
to the accumulated postretirement benefit obligation for each
1.0% change in these assumptions is $850,000. The change in the
annual SFAS 106 expense for each 1.0% change in these assumptions
is $78,000. The weighted average discount rate used in
determining the amortization of the accumulated postretirement
benefit obligation was 9.0% and 7.5% at June 3, 1995 and May 28,
1994, respectively, and the average remaining service life was 20
years.
Net periodic benefit expense consists of the following
components:
<TABLE>
<CAPTION>
FIVE
YEAR MONTHS
ENDED ENDED YEAR ENDED
JUNE 3, MAY 28, DECEMBER 31,
1995 1994 1993
($000's omitted)
<S> <C> <C> <C>
Service cost $ 350 $ 85 $ 170
Interest on the
accumulated benefit
obligation 3,990 1,540 3,660
Total postretirement
benefit expense $4,340 $1,625 $3,830
</TABLE>
-52-<PAGE>
<PAGE> 53
Wyman-Gordon Company and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The company has no plans for funding the liability and will
continue to pay for retiree medical costs as they occur. The
components of the accumulated postretirement benefit obligation
are as follows:
<TABLE>
<CAPTION>
JUNE 3, MAY 28,
1995 1994
(000's omitted)
<S> <C> <C>
Accumulated postretirement
benefit obligation:
Retirees $41,323 $43,285
Fully eligible active plan
participants 5,180 5,239
Other active plan participants 7,023 6,778
53,526 55,302
Plan assets at fair value - -
Accumulated postretirement benefit
obligation in excess of plan assets 53,526 55,302
Unrecognized net gain (loss) from
past experience different from
that assumed and from changes
in assumptions 901 (3,454)
Prior service cost not yet recognized
in net periodic postretirement
benefit cost (2,000) -
Accrued postretirement benefit cost $52,427 $51,848
</TABLE>
J. FEDERAL, FOREIGN AND STATE INCOME TAXES
As of January 1, 1993, the company adopted financial
Accounting Standards Board Statement No. 109, "Accounting for
Income Taxes" ("SFAS 109"). As permitted under SFAS 109, the
company has elected not to restate the financial statements of
prior years. The impact of this change on the results of
operations for the year ended December 31, 1993 was immaterial.
The company has not recognized an income tax benefit
(provision) during the year ended June 3, 1995, the five months
ended May 28, 1994, or the years ended December 31, 1993 and
1992, respectively.
The company received income tax refunds of $0, $138,000,
$282,000 and $3,725,000 during the years ended June 3, 1995, the
five months ended May 28, 1994, and the years ended December 31,
1993 and 1992, respectively.
-53-<PAGE>
<PAGE> 54
Wyman-Gordon Company and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The benefit (provision) for income taxes is at a rate other
than the federal statutory tax rate for the following reasons:
<TABLE>
<CAPTION>
FIVE
YEAR MONTHS
ENDED ENDED YEAR ENDED
JUNE 3, MAY 28, DECEMBER 31,
1995 1994 1993 1992
(000's omitted)
<S> <C> <C> <C> <C>
U.S. federal statutory
tax rate $ (363) $ 21,480 $ 5,781 $(7,410)
Recognition of previously
unrecognized deferred
tax assets 1,749 - - 7,410
Tax carryforwards without
current tax benefits
(foreign in 1995 and
U.S. federal in 1994
and 1993) (1,386) (21,480) (5,781) -
Income tax benefit
(provision) $ - $ - $ - $ -
</TABLE>
Tax net operating loss carryforwards of $67,000,000 begin
expiring in the year 2006. The company has experienced
significant operating losses and there is no assurance that the
net operating loss carryforwards will be utilized, therefore, a
valuation allowance of $67,731,000 and $69,716,000 at June 3,
1995 and May 28, 1994 has been recognized, respectively.
The principal components of deferred tax assets and
liabilities were as follows:
<TABLE>
<CAPTION>
JUNE 3, 1995 MAY 28, 1994
(000's omitted)
<S> <C> <C>
DEFERRED TAX ASSETS
Provision for postretirement
benefits $21,512 $21,228
Net operating loss carryforwards 23,585 19,230
Restructuring provisions 26,602 35,804
Other 6,496 5,768
78,195 82,030
Valuation allowance (67,731) (69,716)
10,464 12,314
DEFERRED TAX LIABILITIES
Accelerated depreciation 9,393 10,069
Other 3,694 4,868
13,087 14,937
Net deferred tax liability $ 2,623 $ 2,623
</TABLE>
-54-<PAGE>
<PAGE> 55
Wyman-Gordon Company and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The net deferred tax liability is included in "Deferred
income taxes and other" on the accompanying consolidated balance
sheets.
The company is seeking refunds of prior year's federal taxes
paid, which, if fully realized, could have a material favorable
impact on the company's financial position. A reasonable
estimation of the potential recovery cannot be made at this time
and, accordingly, no adjustment has been made in the financial
statements with respect to the claim.
K. STOCK OPTION PLANS
The company's Long-Term Incentive Plan (the "Plan") is
administered by the Management Resources and Compensation
Committee of the Board (the "Committee"), which has plenary
authority to interpret the Plan and to adopt rules relating
thereto. The Committee may also determine the number, frequency
and timing of awards, as well as the type of award and its
exercise price, if any, prescribe any performance criteria to be
met and any restrictions on exercise and determine any other
terms or conditions, including schedules for vesting and
exercisability and the conditions under which vesting and
exercisability may be accelerated, such as in the event of a
change in control of the company.
The Committee may grant awards in the form of non-qualified
stock options or incentive stock options to those key employees
of the company and its subsidiaries, including executive
officers, it selects to purchase in the aggregate up to 1,750,000
shares of newly issued or treasury common stock. The exercise
price of non-qualified stock options may not be less than 50% of
the fair market value of such shares on the date of grant or, in
the case of incentive stock options, 100% of the fair market
value on the date of grant. Awards of stock appreciation rights
("SAR's") may also be granted, either in tandem with grants of
stock options (and exercisable as an alternative to the exercise
of stock options) or separately.
In addition, the Committee may grant other awards that
consist of or are denominated in or payable in shares or that are
valued by reference to shares, including, for example, restricted
shares, phantom shares, performance units, performance bonus
awards or other awards payable in cash, shares or a combination
thereof at the Committee's discretion. During fiscal 1995,
awards of 150,000 shares of the company's common stock were made
subject to restrictions based upon continued employment for a
period of five years and the performance of the company.
Compensation expense totalling $330,000 relating to the awards
was recorded during the year ended June 3, 1995.
-55-<PAGE>
<PAGE> 56
Wyman-Gordon Company and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The 1975 Executive Long-Term Incentive Program (the
"Program"), as amended, provided for the granting of stock
options, alternative common stock appreciation rights and
performance bonus award units to key employees of the company and
its subsidiaries. The 1975 program expired on December 31, 1992,
except as to outstanding grants.
Option activity under the 1975 Program and the 1991 Plan in
the year ended June 3, 1995, the five months ended May 28, 1994
and the years ended December 31, 1993 and 1992 was as follows:
<TABLE>
<CAPTION>
OPTION
PRICE RANGE SHARES
<S> <C> <C>
Outstanding at December 31, 1991 3.75 - 29.00 1,839,246
Granted 5.00 321,502
Terminated 3.75 (185,001)
Exercised 3.75 (16,666)
Cancelled 3.75 - 29.00 (65,895)
Outstanding at December 31, 1992 3.75 - 29.00 1,893,186
Granted 5.00 - 6.00 285,500
Terminated 3.75 - 29.00 (372,480)
Exercised 3.75 (70,831)
Outstanding at December 31, 1993 1,735,375
Granted 5.13 - 5.63 88,008
Terminated 3.75 - 19.00 (28,185)
Exercised 3.75 - 5.00 (30,943)
Outstanding at May 28, 1994 1,764,255
Granted 5.63 - 10.63 365,000
Terminated 3.75 - 21.50 (103,922)
Exercised 3.75 - 6.25 (190,098)
Outstanding at June 3, 1995 1,835,235
</TABLE>
Options for 1,203,000; 930,000; 867,000 and 677,000 shares,
were exercisable at June 3, 1995, May 28, 1994 and December 31,
1993 and 1992, respectively. At June 3, 1995, 105,000 shares
were available for future grants.
-56-<PAGE>
<PAGE> 57
Wyman-Gordon Company and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
L. STOCK PURCHASE RIGHTS
In August 1988, the company adopted a Rights Agreement (the
"Rights Agreement"), and in October 1988, the company declared a
dividend distribution of one common stock purchase Right on each
outstanding share of common stock. The Rights will become
exercisable at a purchase price of $50 each on the distribution
date which occurs if a person or group acquires or makes an offer
to acquire 20% or more of the company's common stock.
In the event that at any time following the distribution
date, (i) a person or group becomes the beneficial owner of 20%
or more of the then outstanding shares of common stock (except
pursuant to an offer for all outstanding shares of common stock
which the continuing Directors determine to be fair to and
otherwise in the best interests of the company and its
stockholders), (ii) the company is not the surviving corporation
in a merger and its common stock is not changed or exchanged,
(iii) an acquiring person engages in one or more self-dealing
transactions as set forth in the Rights Agreement, or (iv) during
such time as there is an acquiring person, an event occurs which
results in such person's ownership interest being increased by
more than 1%, each holder of a Right will thereafter have the
right to receive, upon exercise of the Right and payment of the
purchase price, common stock or a combination of common stock,
cash, preferred stock or debt having a value equal to two times
the purchase price of the Right. Alternatively, in such event
and with the approval of the continuing Directors, each holder of
a Right will have the right, or may be permitted only, to receive
shares of common stock having a value equal to the purchase price
upon surrender of the Right to the company and without payment of
the purchase price. Notwithstanding any of the foregoing,
following the occurrence of any of the events set forth in this
paragraph, all Rights that are beneficially owned by the
acquiring person will be null and void. However, Rights are not
exercisable following the occurrence of any of the events set
forth above until such time as the Rights are no longer
redeemable by the company.
In the event that, at any time following the date on which a
person or group acquires 20% or more of the company's outstanding
shares (i) the company is acquired in a merger or other business
combination transaction in which the company is not the surviving
corporation (other than certain exceptions mentioned in the
Rights agreement) or (ii) 50% or more of the company's assets or
earning power is sold or transferred, each holder of a Right
which has not been previously voided shall thereafter have the
right to receive, upon exercise, common stock of the acquiring
company having a value equal to two times the purchase price of
the Right. The Rights may generally be redeemed by the company
at a price of $.02 per Right and they expire in November 1998.
-57-<PAGE>
<PAGE> 58
Wyman-Gordon Company and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
M. COMMITMENTS AND CONTINGENCIES
At June 3, 1995, certain lawsuits arising in the normal
course of business were pending. The company denies all material
allegations of these complaints. In the opinion of management,
the outcome of legal matters will not have a material adverse
effect on the company's financial position, results of operations
or liquidity.
As of June 3, 1995, the company had invested $4,100,000 in
cash towards its share of the capital requirements of its
Australian joint venture for the production of nickel-based
superalloy. The company is committed to an additional investment
of $3,400,000 to the joint venture. The joint venture has
entered into a credit agreement with an Australian bank. The
company has guaranteed 25% of the joint venture's obligations
under the credit agreement totalling $17,300,000. This guarantee
expires at such time as the joint venture demonstrates its
ability to produce commercially acceptable products.
The company had foreign exchange contracts totalling
$11,600,000 at June 3, 1995. These contracts hedge certain
normal operating purchase and sales transactions. The exchange
contracts generally mature within six months and require the
company to exchange U.K. pounds for non-U.K. currencies or non-
U.K. currencies for U.K. pounds. Translation and transaction
gains and losses included in fiscal 1995's Consolidated
Statements of Operations were not significant.
-58-<PAGE>
<PAGE> 59
Wyman-Gordon Company and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
N. GEOGRAPHIC AND OTHER INFORMATION
Prior to May 28, 1994 the company operated solely in the
United States. Transfers between U.S. and international
operations, principally inventory transfers, are charged to the
receiving organization at prices sufficient to recover
manufacturing costs and provide a reasonable return.
Certain information on a geographic basis follows:
<TABLE>
<CAPTION>
FIVE
YEAR MONTHS
ENDED ENDED
JUNE 3, MAY 28,
1995 1994
(000's omitted)
<S> <C> <C>
REVENUES FROM UNAFFILIATED
CUSTOMERS:
United States (including
direct export sales) $365,666 $ 86,976
United Kingdom 30,973 -
$396,639 $ 86,976
INTER AREA TRANSFERS:
United States $ 373 $ -
United Kingdom 2,528 -
$ 2,901 $ -
EXPORT SALES:
United States direct export sales $ 81,208 $ 13,254
INCOME (LOSS) FROM OPERATIONS:
United States $ 14,931 $(55,805)
United Kingdom (1,213) -
$ 13,718 $(55,805)
IDENTIFIABLE ASSETS
(EXCLUDING INTERCOMPANY):
United States $289,649 $312,462
United Kingdom 47,547 39,457
General corporate 31,868 42,828
$369,064 $394,747
</TABLE>
-59-<PAGE>
<PAGE> 60
Wyman-Gordon Company and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
O. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
Selected quarterly financial data for fiscal 1995 and fiscal
1994 were as follows:
<TABLE>
<CAPTION>
QUARTER FIRST SECOND THIRD FOURTH
(000's omitted, except per-share data)
<S> <C> <C> <C> <C>
YEAR ENDED JUNE 3, 1995
Revenue $95,725 $94,974 $96,238 $109,702
Cost of goods sold 86,150 85,105 83,623 92,373
Other charges (credits) and
environmental charges - - - (710)
Income (loss) from
operations 3 768 3,620 9,327
Net income (loss) (3,321) (2,021) 556 5,825
Net income (loss) per share (.10) (.06) .02 .17
YEAR ENDED MAY 28, 1994
Revenue $58,452 $56,233 $50,896 $ 59,113
Cost of goods sold 50,433 53,014 50,375 63,994
Other charges (credits) and
environmental charges - 2,366 87 32,550
Income (loss) from
operations 1,886 (6,298) (8,447) (50,798)
Net income (loss) (816) (5,642) (11,282) (54,663)
Net income (loss) per share (.05) (.31) (.63) (3.02)
</TABLE>
[FN]
(a) Income (loss) from operations during the third quarter of
the year ended May 28, 1994 reflects charges of $2,400
resulting from a change in estimated cash surrender values
provided by the company's insurance actuaries on company-
owned life insurance policies.
(b) Income (loss) from operations during the fourth quarter of
the year ended May 28, 1994 reflects significant charges
amounting to $17,450,000.
-60-<PAGE>
<PAGE> 61
Wyman-Gordon Company and Subsidiaries
Consolidated Financial Review
<TABLE>
<CAPTION>
FIVE
YEAR MONTHS
ENDED ENDED
JUNE 3, MAY 28,
1995 1994
(Unaudited)
(000's omitted, except per-share data and ratios)
<S> <C> <C>
OPERATIONS
Revenue $396,639 $ 86,976
Cost of goods sold 347,251 91,907
Other charges (credits) and environmental
charges (710) 32,550
Interest expense 11,027 5,383
Income tax benefit (expense) - -
Income (loss) before cumulative effect of
changes in accounting principles 1,039 (61,370)
Cumulative effect of changes in accounting
principles (a) - -
Net income (loss) 1,039 (61,370)
Earnings before interest, taxes, depreciation
and amortization and changes in accounting
principles 30,188 (49,205)
Dividends paid - -
Depreciation 17,417 6,058
Capital expenditures 18,714 2,404
Backlog 468,721 389,407
FINANCIAL POSITION
Inventories 78,813 65,737
Borrowings due within one year 3,915 77
Working capital 93,062 91,688
Working capital ratio 2.0 1.8
Property, plant and equipment, net $141,397 $139,689
Total assets 369,064 394,747
Long-term debt 90,308 90,385
Net long-term debt to total
capitalization (c) 44.7% 42.2%
Stockholders' equity $ 80,855 $ 72,483
Total capital 171,163 162,868
MEASURES OF PROFITABILITY
Income (loss) as a percent of:
Revenues (b) .3% (70.6)%
Average stockholders' equity during
the year (b) 1.4 (76.3)
PER SHARE DATA
Income (loss) per share $ .03 $ (3.32)
Income (loss) before cumulative effect of
changes in accounting principles .03 (3.32)
Cumulative effect of changes in accounting
principles (a) - -
Net income (loss) .03 (3.32)
Dividends paid - -
Stockholders' equity 2.30 3.92
AVERAGE SHARES OUTSTANDING 35,148 18,490
</TABLE>
-61-<PAGE>
<PAGE> 62
Wyman-Gordon Company and Subsidiaries
Consolidated Financial Review (Continued)
<TABLE>
<CAPTION>
YEAR YEAR
ENDED ENDED
DEC. 31, DEC. 31,
1993 1992
(000's omitted, except per-share data and ratios)
<S> <C> <C>
OPERATIONS
Revenue $239,761 $298,881
Cost of goods sold 219,088 243,291
Other charges (credits) and environmental
charges - -
Interest expense 10,823 7,521
Income tax benefit (expense) - -
Income (loss) before cumulative effect of
changes in accounting principles (17,004) 21,795
Cumulative effect of changes in accounting
principles (a) (43,000) -
Net income (loss) (60,004) 21,795
Earnings before interest, taxes, depreciation
and amortization and changes in accounting
principles 9,388 45,191
Dividends paid - -
Depreciation 14,421 14,659
Capital expenditures 13,866 11,156
Backlog 256,259 309,679
FINANCIAL POSITION
Inventories 36,092 48,462
Borrowings due within one year 77 77
Working capital 90,685 96,057
Working capital ratio 4.0 3.7
Property, plant and equipment, net $104,040 $107,906
Total assets 286,634 295,156
Long-term debt 90,461 70,538
Net long-term debt to total
capitalization (c) 42.3% 32.1%
Stockholders' equity $ 88,349 $149,516
Total capital 178,810 220,054
MEASURES OF PROFITABILITY
Income (loss) as a percent of:
Revenues (b) (7.1)% 7.3%
Average stockholders' equity during
the year (b) (14.3) 15.7
PER SHARE DATA
Income (loss) per share $ (.95) $ 1.21
Income (loss) before cumulative effect of
changes in accounting principles (.95) 1.21
Cumulative effect of changes in accounting
principles (a) (2.39) -
Net income (loss) (3.34) 1.21
Dividends paid - -
Stockholders' equity 4.91 8.37
AVERAGE SHARES OUTSTANDING 17,936 17,848
</TABLE>
-62-<PAGE>
<PAGE> 63
Wyman-Gordon Company and Subsidiaries
Consolidated Financial Review (Continued)
<TABLE>
<CAPTION>
YEAR YEAR
ENDED ENDED
DEC. 31, DEC. 31,
1991 1990
(000's omitted, except per-share data and ratios)
<S> <C> <C>
OPERATIONS
Revenue $355,390 $405,381
Cost of goods sold 327,028 349,086
Other charges (credits) and environmental
charges 106,464 -
Interest expense 10,472 8,727
Income tax benefit (expense) 26,070 (5,702)
Income (loss) before cumulative effect of
changes in accounting principles (99,681) 8,696
Cumulative effect of changes in accounting
principles (a) - -
Net income (loss) (99,681) 8,696
Earnings before interest, taxes, depreciation
and amortization and changes in accounting
principles (89,960) 50,599
Dividends paid 5,349 14,265
Depreciation 24,196 24,825
Capital expenditures 10,192 13,563
Backlog 386,905 392,857
FINANCIAL POSITION
Inventories 60,428 70,131
Borrowings due within one year 2,077 28,110
Working capital 110,859 124,030
Working capital ratio 2.7 2.7
Property, plant and equipment, net $120,259 $192,530
Total assets 339,154 421,886
Long-term debt 90,615 73,892
Net long-term debt to total
capitalization (c) 39.4% 22.0%
Stockholders' equity $128,088 $232,157
Total capital 218,703 306,049
MEASURES OF PROFITABILITY
Income (loss) as a percent of:
Revenues (b) (28.0)% 2.2%
Average stockholders' equity during
the year (b) (55.3) 3.7
PER SHARE DATA
Income (loss) per share $ (5.59) $ .49
Income (loss) before cumulative effect of
changes in accounting principles (5.59) .49
Cumulative effect of changes in accounting
principles (a) - -
Net income (loss) (5.59) .49
Dividends paid .30 .80
Stockholders' equity 7.18 13.02
AVERAGE SHARES OUTSTANDING 17,831 17,831
</TABLE>
-63-<PAGE>
<PAGE> 64
Wyman-Gordon Company and Subsidiaries
Consolidated Financial Review (Continued)
[FN]
(a) Effective January 1, 1993, the Company adopted Statement of
Financial Accounting Standards No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions"
("SFAS 106"), and No. 109, "Accounting for Income Taxes"
("SFAS 109"). SFAS 106 requires postretirement benefit
obligations to be accounted for on an accrual basis rather
than the "expense-as-incurred" basis formerly used. The
company elected to recognize the cumulative effect of these
accounting changes.
(b) Excludes the cumulative effect of changes in accounting
principles in 1993.
(c) May 28, 1994 considers the Obligation to Cooper Industries as
an offset to the $42,179,000 cash balance.
-64-<PAGE>
<PAGE> 65
<TABLE>
<CAPTION>
WYMAN-GORDON COMPANY AND SUBSIDIARIES
CORPORATE INFORMATION
<S> <C> <C>
DIRECTORS Judith S. King CORPORATE OFFICERS
Community Volunteer
John M. Nelson and Personal Invest- John M. Nelson
Chairman ments Chairman
E. Paul Casey George S. Mumford, Jr. David P. Gruber
Chairman Professor President and
Metapoint Partners Tufts University Chief Executive
Officer
Dewain K. Cross H. John Riley, Jr.
Retired Senior Vice President and Chief Andrew C. Genor
President, Finance Executive Officer Vice President,
Cooper Industries, Cooper Industries, Chief Financial
Inc. Inc. Officer and
Treasurer
Warner S. Fletcher Jon C. Strauss
Attorney and Director Chief Financial Sanjay N. Shah
Fletcher, Tilton & Officer Vice President,
Whipple, P.C. Howard Hughes Corporate Strategy
Medical Institute Planning and
Robert G. Foster Business Develop-
President and Director Charles A. Zraket ment
Commonwealth Former President and
BioVentures, Inc. CEO J. Douglas Whelan
The MITRE Corporation President,
Russell E. Fuller Forgings Division
Chairman HONORARY DIRECTOR
REFCO, Inc. Wallace F. Whitney,
Joseph R. Carter Jr.
David P. Gruber Former Chairman Vice President,
President and Chief Wyman-Gordon Company General Counsel
Executive Officer and Clerk
M Howard Jacobson Frank J. Zugel
Senior Advisor President, Invest-
Bankers Trust ment Castings
Division
</TABLE>
-65-<PAGE>
<PAGE> 66
WYMAN-GORDON COMPANY AND SUBSIDIARIES
INVESTOR AND STOCKHOLDER INFORMATION
COMMON STOCK
Wyman-Gordon Company common stock is listed by the NASDAQ
under the abbreviated ticket symbol "WYMN".
TRANSFER AGENT AND REGISTRAR
The company's transfer agent and registrar, responsible for
stockholder records and issuance of stock certificates, is State
Street Bank and Trust Company, Corporate Stock Transfer Department,
P.O. Box 8200, Boston, MA 02266-8200, 1-800-426-5523. Report
changes of address directly to State Street Bank & Trust Company.
CORPORATE OFFICES
The company's principal corporate offices are located at 244
Worcester Street, North Grafton, MA 01536, 508-839-4441; Fax 508-
839-7500.
INDEPENDENT AUDITORS
Ernst & Young LLP, 200 Clarendon Street, Boston, MA 02116
FINANCIAL AND INVESTOR COMMUNICATIONS
Wyman-Gordon Investor Relations provides information to
stockholders and the financial community. We encourage inquiries
and will provide services which include:
* fulfilling requests for quarterly and annual reports,
form 10Q, form 10K, copies of press releases and other
company information.
* meetings with securities analyst and fund managers.
* presentations to securities analyst groups and
conferences.
Contact us by writing to Wyman-Gordon Investor Relations at
our corporate offices listed above, or by calling Mr. Gerard J.
Gould, Manager of Investor Relations at 508-839-8014. The clerk of
the corporation is Mr. Wallace F. Whitney, Jr. who can be reached
at the company's corporate address listed above or at 508-839-8110.
The company's form 10K, annual report and other recent
information are also available by accessing Wyman-Gordon's Internet
Home Page at: http://www.streetnet.com.
ANNUAL MEETING
The annual meeting of the company's stockholders will be held
on Wednesday, October 18, 1995 at Mechanics Hall in Worcester, MA.
A formal notice of the meeting together with a proxy statement has
been mailed to stockholders with this Annual Report.
-66-<PAGE>
<PAGE> 67
WYMAN-GORDON COMPANY
CORPORATE OFFICES
Grafton, Massachusetts
FORGINGS
Grafton, Massachusetts
Millbury, Massachusetts
Worcester, Massachusetts
Houston, Texas
Brighton, Michigan
Livingston, Scotland
INVESTMENT CASTINGS
Groton, Connecticut
Tilton, New Hampshire
Franklin, New Hampshire
San Leandro, California
Carson City, Nevada
COMPOSITES
Mojave, California
-67-
<PAGE> 1
WYMAN-GORDON COMPANY
FISCAL 1995 FORM 10-K
EXHIBIT 21
WYMAN-GORDON COMPANY AND SUBSIDIARIES
The following is a list of Wyman-Gordon's subsidiaries as of
June 3, 1995:
<TABLE>
<CAPTION>
PLACE OF
INCORPORATION
NAME OF SUBSIDIARY OR ORGANIZATION
<S> <C>
W-G Rome Corporation Georgia
Cameron Pipeline, Inc. Texas
Precision Founders, Inc. California
Reisner Metals, Inc. California
Wyman-Gordon Composites, Inc. Delaware
Wyman-Gordon FISC Limited Virgin Islands
Wyman-Gordon Composite Technologies, Inc. California
Scaled Composites, Inc. California
Wyman-Gordon Investment Castings, Inc. Delaware
Wyman-Gordon Receivables Corporation Delaware
Wyman-Gordon Securities Corporation Massachusetts
Wyman-Gordon Forgings, Inc. Delaware
Wyman-Gordon Limited United Kingdom
</TABLE>
E-9
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-03-1995
<PERIOD-START> MAY-29-1994
<PERIOD-END> JUN-03-1995
<CASH> 13,856
<SECURITIES> 44
<RECEIVABLES> 77,453
<ALLOWANCES> 0
<INVENTORY> 78,813
<CURRENT-ASSETS> 187,559
<PP&E> 385,372
<DEPRECIATION> 243,975
<TOTAL-ASSETS> 369,064
<CURRENT-LIABILITIES> 94,497
<BONDS> 90,308
<COMMON> 37,053
0
0
<OTHER-SE> 43,802
<TOTAL-LIABILITY-AND-EQUITY> 369,064
<SALES> 393,552
<TOTAL-REVENUES> 396,639
<CGS> 347,251
<TOTAL-COSTS> 347,251
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11,027
<INCOME-PRETAX> 1,039
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,039
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,039
<EPS-PRIMARY> 0.03
<EPS-DILUTED> 0.03
</TABLE>
