<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
{ X } QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 3, 1994
OR
{ } TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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 (I.R.S. Employer
incorporation or organization) Identification No.)
244 WORCESTER STREET, BOX 8001, NO. GRAFTON, MASSACHUSETTS 01536-8001
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 508-839-4441
Indicate by 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 (or for such shorter period that the
registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past
90 days.
Yes X No
Indicate the number of shares outstanding of each of
the issuer's classes of common stock, as of the latest
practicable date.
<TABLE>
<CAPTION>
Outstanding at
Class December 3, 1994
<S> <C>
Common Stock, $1 Par Value 34,763,931
</TABLE>
Page 1 of 14<PAGE>
<PAGE> 2
Part I.
Item 1. FINANCIAL STATEMENTS
WYMAN-GORDON COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
Dec. 3, Nov. 27, Dec. 3, Nov. 27,
1994 1993 1994 1993
(000's omitted, except per share data)
<S> <C> <C> <C> <C>
Revenue $94,974 $56,233 $190,700 $114,685
Less:
Cost of goods sold 85,105 53,014 171,255 103,447
Selling, general and
administrative expenses 9,101 7,151 18,674 13,284
Disposition of production
facilities - 2,366 - 2,366
$94,206 $62,531 $189,929 $119,097
Income (loss) from
operations 768 (6,298) 771 (4,412)
Other deductions:
Interest on debt 2,309 2,096 4,696 4,412
Amortization of financing
fees and other costs 275 234 787 459
Miscellaneous, net 205 (2,986) 631 (2,825)
2,789 (656) 6,114 2,046
Net loss $(2,021) $(5,642) $ (5,343) $ (6,458)
Net loss per share $ (.06) $ (.31) $ (.15) $ (.36)
Average shares outstanding 34,750 17,954 34,734 17,942
</TABLE>
The accompanying notes to the consolidated condensed financial
statements are an integral part of these financial statements.
-2-<PAGE>
<PAGE> 3
WYMAN-GORDON COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
December 3, May 28,
1994 1994
(000's omitted)
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 9,272 $ 42,179
Accounts receivable 81,795 77,019
Inventories 69,691 76,671
Prepaid expenses 7,647 11,275
Total current assets 168,405 207,144
Property, plant and equipment, at cost 376,929 368,368
Less accumulated depreciation 237,195 229,612
Net property, plant and equipment 139,734 138,756
Intangible assets 20,080 21,232
Pension intangible 6,527 6,527
Other assets 27,525 27,172
$362,271 $400,831
LIABILITIES
Current maturities of long-term debt $ 77 $ 77
Obligation to Cooper Industries - 20,561
Accounts payable 40,818 45,134
Other accrued liabilities 17,075 22,252
Accrued restructuring, integration,
disposal and environmental 16,598 20,415
Total current liabilities 74,568 108,439
Restructuring, integration, disposal
and environmental 28,324 29,945
Long-term debt 90,385 90,385
Pension liability 17,937 17,912
Deferred income tax and other 29,789 29,819
Postretirement benefits 52,736 51,848
STOCKHOLDERS' EQUITY
Preferred stock - none issued - -
Common stock issued
December 3, 1994 - 37,052,720 shares
May 28, 1994 - 36,902,720 shares 37,053 36,903
Capital in excess of par value 43,023 43,884
Retained earnings 28,852 33,253
108,928 114,040
Less treasury stock at cost
December 3, 1994 - 2,288,789 shares
May 28, 1994 - 2,354,540 shares 40,396 41,557
68,532 72,483
$362,271 $400,831
</TABLE>
The accompanying notes to the consolidated condensed financial
statements are an integral part of these financial statements.
-3-<PAGE>
<PAGE> 4
WYMAN-GORDON COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six Months Ended
December 3, November 27,
1994 1993
(000's omitted)
<S> <C> <C>
Operating activities:
Net loss $ (5,343) $(6,458)
Adjustments to reconcile net loss
to net cash provided (used) by
operating activities:
Depreciation and amortization 9,151 7,991
Changes in assets and liabilities net
of purchase price activity:
Accounts receivable (4,776) 12,737
Inventories 6,980 7,472
Prepaid expenses and other assets 3,275 1,537
Accrued restructuring, disposal
and environmental (5,437) (5,093)
Income and other taxes 875 (248)
Accounts payable and accrued
liabilities (8,710) (4,728)
Net cash provided (used) by operating
activities (3,985) 13,210
Investing activities:
Capital expenditures (8,922) (6,378)
Deferred program costs - 1,418
Other, net 561 2,070
Net cash used by investing
activities (8,361) (2,890)
Financing activities:
Net cash paid to Cooper Industries for
Cameron accounts receivable factored
at acquisition (21,807) -
Net cash received from Cameron accounts
receivable factored at acquisition 1,246 -
Net cash used by financing
activities (20,561) -
Increase (Decrease) in cash (32,907) 10,320
Cash, beginning of year 42,179 4,568
Cash, end of period $ 9,272 $14,888
</TABLE>
The accompanying notes to the consolidated condensed financial
statements are an integral part of these financial statements.
-4-<PAGE>
<PAGE> 5
WYMAN-GORDON COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
December 3, 1994
Note A - Basis of Presentation
In the opinion of the Company, the accompanying unaudited
consolidated condensed financial statements contain all
adjustments necessary to present fairly its financial position at
December 3, 1994 and its results of operations for the three
months and six months ended December 3, 1994 and November 27,
1993 and cash flows for the six months ended December 3, 1994 and
November 27, 1993. All such adjustments are of a normal
recurring nature.
The accompanying unaudited consolidated condensed financial
statements have been prepared in accordance with Article 10 of
Securities and Exchange Commission Regulation S-X and therefore,
do not include all information and footnotes necessary for a fair
presentation of the financial position, results of operations and
cash flows in conformity with generally accepted accounting
principles. In conjunction with its December 31, 1993 Annual
Report on Form 10-K, the Company filed audited consolidated
financial statements which included all information and footnotes
necessary for a fair presentation of its financial position at
December 31, 1993 and December 31, 1992 and its results of
operations and cash flows for the years ended December 31, 1993,
1992 and 1991 in conformity with generally accepted accounting
principles. Where appropriate, prior period amounts have been
reclassified to permit comparison.
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.
Accordingly, the Company filed a transition report on Form 10-Q
for the five month transition period ended May 28, 1994.
On May 26, 1994, the Company completed the acquisition of
Cameron Forged Products Company ("Cameron"). The accompanying
consolidated condensed statements of operations for the three
months and six months ended December 3, 1994, balance sheets as
of December 3, 1994 and May 28, 1994 and statement of cash flows
for the six months ended December 3, 1994 include the accounts of
Cameron.
-5-<PAGE>
<PAGE> 6
WYMAN-GORDON COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Continued)
December 3, 1994
Note B - Inventories
Inventories consisted of:
<TABLE>
<CAPTION>
December 3, 1994 May 28, 1994
(000's omitted)
<S> <C> <C>
Raw material $23,237 $15,548
Work-in-process 45,394 59,746
Supplies 6,057 6,202
74,688 81,496
Less progress payments 4,997 4,825
$69,691 $76,671
</TABLE
If all inventories valued at LIFO cost had been valued at
first-in, first-out (FIFO) cost or market which approximates
current replacement cost, inventories would have been $27,786,000
and $29,799,000 higher than reported at December 3, 1994 and May
28, 1994, respectively.
LIFO inventory credits to cost of goods sold in the three
months ended December 3, 1994 and November 27, 1993 were $951,000
and $1,973,000, respectively.
LIFO inventory credits to cost of goods sold in the six
months ended December 3, 1994 and November 27, 1993 were
$2,013,000 and $3,946,000, respectively.
Note C - Cameron Integration Costs
During the five month transition period ended May 28, 1994,
the Company recorded charges of $24,100,000 for the integration
of Cameron of which $10,700,000 was estimated to require cash
outlays. Additionally, the Company estimated $12,200,000 in cash
outlays from direct costs associated with the acquisition and
integration of Cameron. As of December 3, 1994, the activity
charged against the reserves has been as anticipated and there
have been no significant changes to the original estimates.
-6-<PAGE>
<PAGE> 7
WYMAN-GORDON COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Continued)
December 3, 1994
Note D - Loss on long-term contracts and agreements
In accordance with the Company's policy of recognizing
losses on backlog and long-term pricing agreements, loss reserves
of $13,616,000 and $19,000,000 are included in the accompanying
balance sheets at December 3, 1994 and May 28, 1994 as follows:
</TABLE>
<TABLE>
<CAPTION>
December 3, May 28,
1994 1994
(000's omitted)
<S> <C> <C>
Other short-term liabilities $ 4,194 $ 7,000
Other long-term liabilities 9,422 12,000
Total $13,616 $19,000
</TABLE>
These loss reserves were assumed as part of the acquisition
of Cameron on May 26, 1994.
Note E - Commitments and contingencies
At December 3, 1994, 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.
-7-<PAGE>
<PAGE> 8
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND CHANGES IN FINANCIAL CONDITION
Results of Operations
The principal markets served by the Company are commercial
aerospace and defense equipment. Revenue by market for the
respective periods were as follows (000's omitted):
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
December 3, 1994 November 27, 1993
% of % of
Amount Total Amount Total
<S> <C> <C> <C> <C>
Commercial Aerospace $61,521 65% $28,679 51%
Defense equipment 28,794 30% 24,743 44%
Other 4,659 5% 2,811 5%
$94,974 100% $56,233 100%
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended Six Months Ended
December 3, 1994 November 27, 1993
% of % of
Amount Total Amount Total
<S> <C> <C> <C> <C>
Commercial Aerospace $124,901 65% $ 59,636 52%
Defense equipment 57,825 30% 49,315 43%
Other 7,974 5% 5,734 5%
$190,700 100% $114,685 100%
</TABLE>
Three Months Ended December 3, 1994 vs. Three Months Ended
November 27, 1993
Revenues for the three months ended December 3, 1994
increased $38.7 million or 68.9% from the comparable period of
the prior year. This increase in revenues is attributable to the
Company's acquisition of Cameron Forged Products Company from
Cooper Industries during May 1994. Capacity limitations on the
part of the Company's suppliers resulting in raw material
shortages, continued to have a negative impact on revenues during
the second quarter of fiscal 1995. Additionally, $2.3 million of
revenues for the same period of the prior year were from Wyman-
Gordon Composites, Inc. which was sold by the Company during
November 1993.
The Company's gross margins were 10.4% of sales for the
second quarter of fiscal 1995 as compared to 5.7% for the same
period of the prior year. The improvement was mainly due to $1.7
million or 3.0% of sales of one-time charges which negatively
-8-<PAGE>
<PAGE> 9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND CHANGES IN FINANCIAL CONDITION (Continued)
Three Months Ended December 3, 1994 vs. Three Months Ended
November 27, 1993 (Continued)
impacted the second quarter of fiscal 1994. Lower production
volumes resulting from raw material shortages had a negative
impact on margins during the second quarter of fiscal 1995.
Customer invoked pricing pressures had a negative impact on
margins in both fiscal 1995 and fiscal 1994. However, margins
improved in the second quarter of fiscal 1995 as compared to the
same period of the prior year resulting from improvements to
operations and realization of synergy benefits associated with
the integration of Cameron. Gross margins benefitted from an
inventory LIFO credit of $1.0 million or 1.0% of revenues for the
second quarter of fiscal 1995 as compared to $2.0 million or 3.5%
of revenues for the same period of the prior year. Excluding the
benefit of the LIFO credit, the Company's gross margins were 9.4%
for the second quarter of fiscal 1995 as compared to 2.2% for the
same period of the prior year.
Selling, general and administrative expenses were $9.1
million or 9.6% of revenues in the second quarter of fiscal 1995
as compared to $7.1 million or 12.7% of revenues for the same
period of the prior year. The increase in selling, general and
administrative expense is attributable to the Company's newly
acquired operations in May 1994. However, selling, general and
administrative expense as a percent of sales declined reflecting
the realization of certain savings associated with the
integration of Cameron with Wyman-Gordon's Forging operations and
lower costs associated with Company-owned Life Insurance
policies.
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 fiscal 1994 of $2.4 million.
Interest expense was $2.3 million for the second quarter of
fiscal 1995 as compared to $2.1 million for the same period of
the prior year.
Amortization of financing fees and other costs increased
from $0.2 million during the second quarter of the prior fiscal
year to $0.3 million during the same period of fiscal 1995.
Fiscal 1995 includes fees from the newly created receivables
backed credit facility and bond fees.
Miscellaneous, net expense was $0.2 million in the second
quarter of fiscal 1995 as compared to miscellaneous, net income
of $3.0 million during the same period of the prior year. The
income recognized in the second quarter of fiscal 1994 resulted
from a $3.3 million gain on the sale of marketable securities.
-9-<PAGE>
<PAGE> 10
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND CHANGES IN FINANCIAL CONDITION (Continued)
Six Months Ended December 3, 1994 vs. Six Months Ended
November 27, 1993
Revenues for the six months ended December 3, 1994 increased
$76.0 million or 66.3% from the comparable period of the prior
year. This increase in revenues is attributable to the Company's
acquisition of Cameron Forged Products Company from Cooper
Industries during May 1994. Capacity limitations on the part of
the Company's suppliers resulting in raw material shortages, had
a negative impact on revenues during the first six months of
fiscal 1995. Additionally, $4.7 million of revenues for the same
period of the prior year were from Wyman-Gordon Composites, Inc.
which was sold by the Company during November 1993.
The Company's gross margins were 10.2% of sales for the
first six months of fiscal 1995 as compared to 9.8% for the same
period of the prior year. Lower production volumes resulting
from raw material shortages had a negative impact on margins
during fiscal 1995. Customer invoked pricing pressures had a
negative impact on margins during both fiscal 1995 and fiscal
1994. However, margins improved during the first six months of
fiscal 1995 as compared to the same period of the prior year due
to improvements to operations and realization of certain synergy
benefits associated with the integration of Cameron. Gross
margins benefitted from an inventory LIFO credit of $2.0 million
or 1.1% of revenues for the first six months of fiscal 1995 as
compared to $3.9 million or 3.4% of revenues for the same period
of the prior year. Excluding the benefit of the LIFO credit, the
Company's gross margins were 9.1% for the first six months of
fiscal 1995 as compared to 6.4% for the same period of the prior
year.
Selling, general and administrative expenses were $18.7
million or 9.8% of revenues in the first six months of fiscal
1995 as compared to $13.3 million or 11.6% of revenues for the
same period of the prior year. The increase in selling, general
and administrative expense is attributable to the Company's newly
acquired operations in May 1994. However, selling, general and
administrative expense as a percent of sales declined reflecting
the integration of Cameron with Wyman-Gordon's Forging operations
and lower costs associated with Company-owned Life Insurance
policies.
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 $2.4 million.
Interest expense was $4.7 million for the first six months
of fiscal 1995 as compared to $4.4 million for the same period of
the prior year.
-10-<PAGE>
<PAGE> 11
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND CHANGES IN FINANCIAL CONDITION (Continued)
Six Months Ended December 3, 1994 vs. Six Months Ended
November 27, 1993 (Continued)
Amortization of financing fees and other costs increased
from $0.5 million during the first six months of the prior fiscal
year to $0.8 million during the same period of fiscal 1995.
Fiscal 1995 includes fees from the newly created receivables
backed credit facility and bond fees.
Miscellaneous, net expense was $0.6 million in the first six
months of fiscal 1995 as compared to miscellaneous, net income of
$2.8 million during the same period of the prior year. The
income recognized in the first six months of fiscal 1994 was from
a $3.3 million gain on the sale of marketable securities.
Liquidity and Capital Resources
The decrease in the Company's cash from $42.2 million to
$9.3 million was primarily the result of $20.6 million paid to
Cooper Industries for Cameron accounts receivable factored at
acquisition. Cash used by operations of $4.0 million resulted
from increases in working capital items of $7.9 million offset by
depreciation and amortization of $9.2 million, and the $5.3
million net loss.
The Company from time to time expends cash on capital
expenditures for environmental compliance, more cost effective
operations and joint development programs with the Company's
customers. Capital expenditures amounted to $13.9 million, $11.2
million and $10.2 million in the years ended December 31, 1993,
1992 and 1991, respectively. Capital expenditures in the
foreseeable future are not expected to vary materially from
historical levels.
During the five month transition period ended May 28, 1994,
the Company recognized costs to be incurred for the integration
of Cameron totalling $24.1 million of which, $10.7 million will
require cash outlays. Additionally, the Company estimated $12.2
million in cash outlays from direct costs associated with the
acquisition and integration of Cameron Forged Products Company.
As of December 3, 1994, the activity against the reserves has
been as anticipated and there have been no significant changes to
the original estimates.
The Company expects to spend $1.0 million in the remainder
of fiscal 1995 and $13.4 million thereafter on environmental
activities. The Company has completed all environmental projects
within established timetables and is continuing to do so at the
present time.
-11-<PAGE>
<PAGE> 12
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND CHANGES IN FINANCIAL CONDITION (Continued)
Liquidity and Capital Resources (Continued)
In connection with its 1991 restructuring, the Company
expects to spend approximately $1.8 million in the remainder of
fiscal 1995 and $2.7 million thereafter. As of December 3, 1994,
the activity against the reserves has been as anticipated and
there have been no significant changes to the original estimates.
The primary sources of liquidity available in fiscal 1995 to
fund the Company's operations, anticipated expenditures in
connection with the integration of Cameron, its 1991
restructuring, planned capital expenditures and planned
environmental expenditures include available cash ($9.3 million
at December 3, 1994), borrowing capacity 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.
Cash from operations and borrowing capacity under the
Company's receivables financing program are expected to be the
Company's primary sources of liquidity beyond fiscal 1995. The
Company believes that it has adequate resources to provide for
its operations and the funding of restructuring, integration of
Cameron and capital and environmental expenditures.
-12-<PAGE>
<PAGE> 13
Part II.
Item 6. EXHIBITS AND REPORTS FILED ON FORM 8-K
(a) Exhibits
The following exhibits are being filed as part of this Form
10-Q:
Exhibit No. Description
27 Financial Data Schedule for the Six Months Ended
December 3, 1994
(b) No reports on Form 8-K have been filed with the Commission
during the period covered by this report.
-13-<PAGE>
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
WYMAN-GORDON COMPANY
Date: 1/13/95 By: /s/ DAVID P. GRUBER
David P. Gruber
President and
Chief Executive Officer
Date: 1/13/95 By: /s/ JEFFREY B. LAVIN
Jeffrey B. Lavin
Assistant Corporate Controller
-14-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Wyman-Gordon Company & Subsidiaries
Article 5 of Regulation S-X
YTD 12/03/94
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-03-1995
<PERIOD-START> MAY-29-1994
<PERIOD-END> DEC-03-1994
<CASH> 9,272
<SECURITIES> 499
<RECEIVABLES> 79,971
<ALLOWANCES> 0
<INVENTORY> 69,691
<CURRENT-ASSETS> 168,405
<PP&E> 376,929
<DEPRECIATION> 237,195
<TOTAL-ASSETS> 362,271
<CURRENT-LIABILITIES> 74,568
<BONDS> 90,385
<COMMON> 37,053
0
0
<OTHER-SE> 31,479
<TOTAL-LIABILITY-AND-EQUITY> 362,271
<SALES> 188,489
<TOTAL-REVENUES> 190,700
<CGS> 171,756
<TOTAL-COSTS> 171,756
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,696
<INCOME-PRETAX> (5,343)
<INCOME-TAX> 0
<INCOME-CONTINUING> (5,343)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,343)
<EPS-PRIMARY> (.15)
<EPS-DILUTED> (.15)
</TABLE>
