<PAGE> 1
Form 10-K/A
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] AMENDMENT TO APPLICATION OR REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 3, 1995 (No Fee Required)
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)
AMENDMENT NO. 1
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. [ ]
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<PAGE> 2
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
DOCUMENTS INCORPORATED BY REFERENCE
None
-2-<PAGE>
<PAGE> 3
PART II
ITEM 6. SELECTED FINANCIAL DATA
Wyman-Gordon Company and Subsidiaries
Selected Financial Data
<TABLE>
<CAPTION>
FIVE
YEAR MONTHS
ENDED ENDED
JUNE 3, MAY 28,
1995 1994
(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)
Dividends paid - -
Depreciation 17,417 6,058
Backlog 468,721 389,407
CASH FLOW
Earnings before interest, taxes,
depreciation and amortization and
changes in accounting principles (d) 30,188 (49,205)
Capital expenditures 18,714 2,404
Net cash provided (used) by operating
activities 7,772 (5,669)
Net cash provided (used) by investing
activities (21,157) 12,346
Net cash provided (used) by financing
activities (14,938) 20,685
FINANCIAL POSITION
Inventories 78,813 65,737
Borrowings due within one year 3,915 77
Working capital 93,062 91,688
Working capital ratio (e) 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 (f) 171,163 162,868
</TABLE>
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<PAGE> 4
Wyman-Gordon Company and Subsidiaries
Selected Financial Data (Continued)
<TABLE>
<CAPTION>
FIVE
YEAR MONTHS
ENDED ENDED
JUNE 3, MAY 28,
1995 1994
(000's omitted, except per-share data and ratios)
<S> <C> <C>
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>
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<PAGE> 5
Wyman-Gordon Company and Subsidiaries
Selected Financial Data (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
Dividends paid - -
Depreciation 14,421 14,659
Backlog 256,259 309,679
CASH FLOW
Earnings before interest, taxes,
depreciation and amortization and
changes in accounting principles (d) 9,388 45,191
Capital expenditures 13,866 11,156
Net cash provided (used) by operating
activities 7,177 30,803
Net cash provided (used) by investing
activities (7,500) (13,467)
Net cash provided (used) by financing
activities 15,140 (21,857)
FINANCIAL POSITION
Inventories 36,092 48,462
Borrowings due within one year 77 77
Working capital 90,685 96,057
Working capital ratio (e) 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 (f) 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
</TABLE>
-4-<PAGE>
<PAGE> 6
Wyman-Gordon Company and Subsidiaries
Selected Financial Data (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>
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>
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<PAGE> 7
Wyman-Gordon Company and Subsidiaries
Selected Financial Data (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
Dividends paid 5,349 14,265
Depreciation 24,196 24,825
Backlog 386,905 392,857
CASH FLOW
Earnings before interest, taxes,
depreciation and amortization and
changes in accounting principles (d) (89,960) 50,599
Capital expenditures 10,192 13,563
Net cash provided (used) by operating
activities 19,003 59,382
Net cash provided (used) by investing
activities (2,111) (69,393)
Net cash provided (used) by financing
activities (19,015) 12,794
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 (e) 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 (f) 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
</TABLE>
-5-<PAGE>
<PAGE> 8
Wyman-Gordon Company and Subsidiaries
Selected Financial Data (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>
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>
-5A-<PAGE>
<PAGE> 9
Wyman-Gordon Company and Subsidiaries
Selected Financial Data (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) Net long-term debt to total capitalization equals the net of
long-term debt minus cash as of the end of the period divided
by total capital which equals long-term debt plus
stockholders' equity. May 28, 1994 considers the Obligation
to Cooper Industries as an offset to the $42,179,000 cash
balance.
(d) Earnings before interest, depreciation and amortization and
changes in accounting principles ("EBITDA") is presented
because it may be used as an indicator of a company's ability
to service debt. The Company believes that EBITDA, while
providing useful information, should not be considered in
isolation or as a substitute for net income as an indicator
of operating performance or as an alternative to cash flow as
a measure of liquidity, in each case determined in accordance
with generally accepted accounting principles.
(e) Working capital ratio equals current assets divided by
current liabilities.
(f) Total capital equals long-term debt plus stockholders'
equity.
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<PAGE> 10
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
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. Our audit
also included the financial statement schedule listed in the Index
at Item 14. These consolidated financial statements and schedule
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. Also, in our opinion,
the related financial statement schedule, when considered in
relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth
therein.
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
-7-<PAGE>
<PAGE> 11
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.
-8-<PAGE>
<PAGE> 12
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.
-9-<PAGE>
<PAGE> 13
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.
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<PAGE> 14
Wyman-Gordon Company and Subsidiaries
CONSOLIDATED STATEMENTS 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.
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<PAGE> 15
Wyman-Gordon Company and Subsidiaries
CONSOLIDATED STATEMENTS 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.
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<PAGE> 16
Wyman-Gordon Company and Subsidiaries
CONSOLIDATED STATEMENTS 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.
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<PAGE> 17
Wyman-Gordon Company and Subsidiaries
CONSOLIDATED STATEMENTS 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.
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<PAGE> 18
Wyman-Gordon Company and Subsidiaries
CONSOLIDATED STATEMENTS 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.
-15-<PAGE>
<PAGE> 19
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, Inc. 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
-16-<PAGE>
<PAGE> 20
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:
-17-<PAGE>
<PAGE> 21
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.
On a periodic basis, the company estimates the future
undiscounted cash flows of the business to which the costs of
acquired businesses in excess of net assets acquired relate in
order to ensure that the carrying value of such intangible asset
has not been impaired.
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:
-18-<PAGE>
<PAGE> 22
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>
-19-<PAGE>
<PAGE> 23
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>
-20-<PAGE>
<PAGE> 24
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>
-21-<PAGE>
<PAGE> 25
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.
-22-<PAGE>
<PAGE> 26
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.
-23-<PAGE>
<PAGE> 27
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.
-24-<PAGE>
<PAGE> 28
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:
-25-<PAGE>
<PAGE> 29
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>
-26-<PAGE>
<PAGE> 30
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>
-27-<PAGE>
<PAGE> 31
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>
-28-<PAGE>
<PAGE> 32
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>
-29-<PAGE>
<PAGE> 33
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 and established a
$3,500,000 purchase accounting reserve related to environmental
issues at Cameron. 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. As of June 3, 1995, aggregate environmental reserves
amounted to $16,967,000 and have been provided for expected
cleanup expenses estimated between $6,000,000 and $7,000,000 upon
the planned sale of a facility, certain environmental issues at
Cameron amounting to approximately $3,500,000 and the exposures
noted in the following paragraphs, which include certain
capitalizable amounts for environmental management and
remediation projects.
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.
-30-<PAGE>
<PAGE> 34
Wyman-Gordon Company and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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.
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>
-31-<PAGE>
<PAGE> 35
Wyman-Gordon Company and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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>
-32-<PAGE>
<PAGE> 36
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.
-33-<PAGE>
<PAGE> 37
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>
-34-<PAGE>
<PAGE> 38
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 401(k) 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.
-35-<PAGE>
<PAGE> 39
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>
-36-<PAGE>
<PAGE> 40
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.
-37-<PAGE>
<PAGE> 41
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>
-38-<PAGE>
<PAGE> 42
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.
-39-<PAGE>
<PAGE> 43
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.
-40-<PAGE>
<PAGE> 44
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.
-41-<PAGE>
<PAGE> 45
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 enters into various foreign exchange contracts
to manage its foreign exchange risks. Through its foreign
currency hedging activities, the company seeks to minimize the
risk that the eventual cash flows resulting from purchase and
sale transactions denominated in other than the functional
currency of the operating unit will be affected by changes in
exchange rates. Foreign currency transaction exposures generally
are the responsibility of the company's individual operating
units to manage as an integral part of their business. The
company hedges its foreign currency transaction exposures based
on judgment, generally through the use of forward exchange
contracts. Gains and losses on the company's currency
transaction hedges are recognized as an adjustment to the
underlying hedged transactions. Deferred gains and losses on
foreign exchange contracts were not significant at June 3, 1995.
The company had foreign exchange contracts totalling $11,600,000
at June 3, 1995. Such contracts include forward contracts of
$9,100,000 for the sale of U.K. pounds and $2,500,000 for the
purchase of U.K. pounds. 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.
-42-<PAGE>
<PAGE> 46
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>
-43-<PAGE>
<PAGE> 47
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.
-44-<PAGE>
<PAGE> 48
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
FINANCIAL STATEMENTS
The following financial statements, together with the report
thereon of Ernst & Young LLP dated June 26, 1995 are incorporated
by reference to Item 8. Financial Statements and Supplemental
Data in this Form 10-K/A:
Consolidated Statements of Operations
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 listed
above. 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.
-45-<PAGE>
<PAGE> 49
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the
Registration Statements (Form S-8, File Numbers 2-56547, 2-75980,
33-26980, 33-48068 and 33-64503) 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, the Wyman-Gordon Company
Long-Term Incentive Plan and Wyman-Gordon Company Employee Stock
Purchase Plan and in the related Prospectuses of our report dated
June 26, 1995, with respect to the consolidated financial
statements and schedule of Wyman-Gordon Company and subsidiaries
for the year ended June 3, 1995, included in this Form 10-K/A.
/S/ ERNST & YOUNG LLP
Boston, Massachusetts
December 5, 1995
-46-<PAGE>
<PAGE> 50
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 December 7, 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 December 7, 1995
John M. Nelson Board of Directors Date
/S/ DAVID P. GRUBER President, December 7, 1995
David P. Gruber Chief Executive Officer Date
and Director
/S/ ANDREW C. GENOR Vice President, December 7, 1995
Andrew C. Genor Chief Financial Officer Date
and Treasurer and
Principal Financial Officer
/S/ JEFFREY B. LAVIN Assistant Corporate December 7, 1995
Jeffrey B. Lavin Controller and Principal Date
Accounting Officer
/S/ E. PAUL CASEY Director December 7, 1995
E. Paul Casey Date
/S/ DEWAIN K. CROSS Director December 7, 1995
Dewain K. Cross Date
/S/ WARNER S. FLETCHER Director December 7, 1995
Warner S. Fletcher Date
/S/ ROBERT G. FOSTER Director December 7, 1995
Robert G. Foster Date
</TABLE>
-47-<PAGE>
<PAGE> 51
<TABLE>
<CAPTION>
<S> <C> <C>
/S/ M HOWARD JACOBSON Director December 7, 1995
M Howard Jacobson Date
/S/ JUDITH S. KING Director December 7, 1995
Judith S. King Date
/S/ GEORGE S. MUMFORD, JR. Director December 7, 1995
George S. Mumford, Jr. Date
/S/ H. JOHN RILEY, JR. Director December 7, 1995
H. John Riley, Jr. Date
/S/ JON C. STRAUSS Director December 7, 1995
Jon C. Strauss Date
/S/ CHARLES A. ZRAKET Director December 7, 1995
Charles A. Zraket Date
</TABLE>
-48-<PAGE>
<PAGE> 52
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
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
S-1<PAGE>
<PAGE> 53
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION PAGE
<S> <C> <C>
23 Consent of Ernst & Young LLP 46
NOTE: Exhibits not physically located in this Form 10-K/A can be
obtained from the Company upon written request to the Clerk at the
address on the cover of this Form 10-K/A at a cost of $.25 per
page.
E-1
</TABLE>
