<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 2, 1995
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 2, 1995
<S> <C>
Common Stock, $1 Par Value 35,204,629
</TABLE>
Page 1 of 16<PAGE>
<PAGE> 2
PART I.
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
WYMAN-GORDON COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
DEC. 2, DEC. 3, DEC. 2, DEC. 3,
1995 1994 1995 1994
(000's omitted, except per share data)
<S> <C> <C> <C> <C>
Revenue $118,080 $94,974 $232,157 $190,700
Less:
Cost of goods sold 99,113 85,105 195,012 171,255
Selling, general and
administrative expenses 9,473 9,101 18,669 18,674
Other charges - - 900 -
$108,586 $94,206 $214,581 $189,929
Income from operations 9,494 768 17,576 771
Other deductions:
Interest expense 2,768 2,546 5,540 5,215
Miscellaneous, net 676 243 885 899
3,444 2,789 6,425 6,114
Net income (loss) $ 6,050 $(2,021) $ 11,151 $ (5,343)
Net income (loss) per share $ .17 $ (.06) $ .31 $ (.15)
Shares used to compute
earnings (loss) per share 36,092 35,041 36,010 35,046
</TABLE>
The accompanying notes to the consolidated condensed financial
statements are an integral part of these financial statements.
-2-<PAGE>
<PAGE> 3
<TABLE>
WYMAN-GORDON COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
<CAPTION>
DECEMBER 2, JUNE 3,
1995 1995
(000's omitted)
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 17,799 $ 13,856
Accounts receivable 79,329 79,219
Inventories 85,490 78,813
Prepaid expenses 11,128 15,671
Total current assets 193,746 187,559
Property, plant and equipment, at cost 389,095 385,372
Less accumulated depreciation 251,941 243,975
Net property, plant and equipment 137,154 141,397
Intangible assets 24,943 25,295
Other assets 16,193 14,813
$372,036 $369,064
LIABILITIES
Borrowings due within one year $ 1,732 $ 3,915
Accounts payable 33,807 34,729
Accrued liabilities and other 41,224 45,634
Accrued restructuring, integration,
disposal and environmental 7,989 10,219
Total current liabilities 84,752 94,497
Restructuring, integration, disposal
and environmental 18,128 19,648
Long-term debt 90,308 90,308
Pension liability 9,560 9,589
Deferred income tax and other 24,779 21,699
Postretirement benefits 52,470 52,468
STOCKHOLDERS' EQUITY
Preferred stock - none issued - -
Common stock issued - 37,052,720 shares 37,053 37,053
Capital in excess of par value 37,784 40,118
Retained earnings 49,726 39,763
124,563 116,934
Less treasury stock at cost
December 2, 1995 - 1,848,091 shares
June 3, 1995 - 2,044,178 shares (32,524) (36,079)
92,039 80,855
$372,036 $369,064
</TABLE>
The accompanying notes to the consolidated condensed financial
statements are an integral part of these financial statements.
-3-<PAGE>
<PAGE> 4
<TABLE>
WYMAN-GORDON COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
<CAPTION>
SIX MONTHS ENDED
DECEMBER 2, DECEMBER 3,
1995 1994
(000's omitted)
<S> <C> <C>
Operating activities:
Net income (loss) $11,151 $ (5,343)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation and amortization 8,372 9,151
Provision for equity investment 900 -
Changes in assets and liabilities:
Accounts receivable (109) (4,776)
Inventories (6,678) 6,980
Prepaid expenses and other assets 2,263 3,275
Accrued restructuring, disposal
and environmental (3,750) (5,437)
Income and other taxes 2,933 875
Accounts payable and accrued
liabilities (5,182) (8,710)
Net cash provided (used) by
operating activities 9,900 (3,985)
Investing activities:
Capital expenditures (6,782) (8,922)
Proceeds from sale of fixed assets 1,664 603
Other, net 123 (491)
Net cash used by investing
activities (4,995) (8,810)
Financing activities:
Cash paid to Cooper Industries for
factored accounts receivable - (20,561)
Payment of borrowings due within
one year (2,183) -
Net proceeds from issuance of
common stock 1,221 449
Net cash used by financing
activities (962) (20,112)
Increase (Decrease) in cash 3,943 (32,907)
Cash, beginning of year 13,856 42,179
Cash, end of period $17,799 $ 9,272
</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 2, 1995
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 2, 1995 and its results of operations for the three
months and six months ended December 2, 1995 and December 3, 1994
and cash flows for the six months ended December 2, 1995 and
December 3, 1994. 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 June 3, 1995 Annual Report
on Form 10-K/A, the Company filed audited consolidated financial
statements which included all information and footnotes necessary
for a fair presentation of its financial position at June 3, 1995
and May 28, 1994 and its results of operations and cash flows for
the year ended June 3, 1995, the five months ended May 28, 1994
and the years ended December 31, 1993 and 1992 in conformity with
generally accepted accounting principles. Where appropriate,
prior period amounts have been reclassified to permit comparison.
NOTE B - INVENTORIES
Inventories consisted of:
<TABLE>
<CAPTION>
DECEMBER 2, 1995 JUNE 3, 1995
(000's omitted)
<S> <C> <C>
Raw material $30,419 $26,440
Work-in-process 56,859 54,310
Supplies 3,653 3,228
90,931 83,978
Less progress payments 5,441 5,165
$85,490 $78,813
</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 $21,584,000 higher than
reported at December 2, 1995 and June 3, 1995.
LIFO inventory credits to cost of goods sold in the three months
ended December 3, 1994 were $951,000. LIFO inventory credits to cost
of goods sold in the six months ended December 3, 1994 were
$2,013,000.
-5-<PAGE>
<PAGE> 6
WYMAN-GORDON COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Continued)
December 2, 1995
NOTE C - COMMITMENTS AND CONTINGENCIES
At December 2, 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 December 2, 1995, the Company had invested $4.5
million in cash towards its share of the capital requirements of
its Australian Joint Venture for the production of nickel-based
superalloy. The Company is committed to an additional investment
of $3.0 million to the joint venture. The joint venture has
entered into a credit agreement with an Australian bank. The
Company has guaranteed 25.0% of the joint venture's obligations
under the credit agreement totalling $17.3 million. This
guarantee expires at such time as the joint venture demonstrates
its ability to produce commercially acceptable products.
The Company is subject to extensive, stringent and changing
federal, state and local environmental laws and regulations,
including those regulating the use, handling, storage, discharge
and disposal of hazardous substances and the remediation of
alleged environmental contamination. Accordingly, the Company is
involved from time to time in administrative and judicial
inquiries and proceedings regarding environmental matters.
Nevertheless, the Company believes that compliance with these
laws and regulations will not have a material adverse effect on
the Company's operations as a whole.
The Company had foreign exchange contracts totalling $8.6
million at December 2, 1995. These contracts hedge certain
normal operating purchase and sales transactions. The exchange
contracts generally mature within six months and require the
Company to exchange U.K. pounds for non-U.K. currencies or non-
U.K. currencies for U.K. pounds. Transaction gains and losses
included in the Consolidated Condensed Statements of Operations
for the three month and six month periods ended December 2, 1995
and December 3, 1994, respectively, were not material.
-6-<PAGE>
<PAGE> 7
ITEM 2.
<TABLE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The principal markets served by the Company are aerospace
and power generation. Revenue by market for the respective
periods was as follows (millions):
<CAPTION>
THREE MONTHS ENDED THREE MONTHS ENDED
DECEMBER 2, 1995 DECEMBER 3, 1994
% OF % OF
AMOUNT TOTAL AMOUNT TOTAL
<S> <C> <C> <C> <C>
Aerospace $ 89.8 76% $ 72.2 76%
Power generation 21.9 19% 14.2 15%
Other 6.4 5% 8.6 9%
$118.1 100% $ 95.0 100%
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED SIX MONTHS ENDED
DECEMBER 2, 1995 DECEMBER 3, 1994
% OF % OF
AMOUNT TOTAL AMOUNT TOTAL
<S> <C> <C> <C> <C>
Aerospace $172.0 74% $144.9 76%
Power generation 44.7 19% 28.6 15%
Other 15.4 7% 17.2 9%
$232.2 100% $190.7 100%
</TABLE>
RESULTS OF OPERATIONS AND FINANCIAL CONDITION THREE MONTHS ENDED
DECEMBER 2, 1995 ("second quarter of fiscal year 1996") COMPARED
TO THREE MONTHS ENDED DECEMBER 3, 1994 ("second quarter of fiscal
year 1995")
The Company's revenue increased 24.3% to $118.1 million in
the second quarter of fiscal year 1996 from $95.0 million in the
second quarter of fiscal year 1995 due to higher sales volume at
the Company's Forgings and Castings Divisions. These sales
volume increases during the second quarter of fiscal year 1996 as
compared to the second quarter of fiscal year 1995 are reflected
by market as follows: a $17.6 million (24.4%) increase in
aerospace, a $7.7 million (53.8%) increase in power generation
and a $2.1 million (25.2%) decrease in other. Revenues in the
second quarter of fiscal year 1995 were limited by raw material
shortages and production delays caused by capacity constraints of
the Company's suppliers. The revenue increases mentioned above
have occurred while the Company's backlog has grown to $487.8
million at December 2, 1995 from $418.4 million at December 3,
1994.
-7-<PAGE>
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
RESULTS OF OPERATIONS AND FINANCIAL CONDITION THREE MONTHS ENDED
DECEMBER 2, 1995 ("second quarter of fiscal year 1996") COMPARED
TO THREE MONTHS ENDED DECEMBER 3, 1994 ("second quarter of fiscal
year 1995")(Continued)
The Company's gross margins were 16.1% in the second quarter
of fiscal year 1996 as compared to 10.4% in the second quarter of
fiscal year 1995. This improvement resulted from higher
production volumes and productivity gains resulting from the
Company's efforts toward focusing forging production of rotating
parts for jet engines in its Houston, Texas facility and forging
production of airframe structures and large turbine parts in its
Grafton, Massachusetts facility. Additionally, continuing
realization of cost reductions from synergies associated with the
integration of Cameron Forged Products Company ("Cameron")
contributed to this higher ratio. Gross margins benefitted from
LIFO credits of $0.9 million during the second quarter of fiscal
year 1995. There were no LIFO credits recorded during the second
quarter of fiscal year 1996.
Selling, general and administrative expenses increased 4.1%
to $9.5 million during the second quarter of fiscal year 1996
from $9.1 million during the second quarter of fiscal year 1995.
However, selling, general and administrative expenses as a
percentage of revenues improved to 8.0% in the second quarter of
fiscal year 1996 from 9.6% in the second quarter of fiscal year
1995. The improvement as a percent of revenues is the result of
cost reductions associated with the integration of Cameron with
the Company's Forgings operations and higher revenues.
Interest expense was $2.8 million in the second quarter of
fiscal year 1996 as compared to $2.5 million in the second
quarter of fiscal year 1995. The increase in interest expense
during the second quarter of fiscal 1996 as compared to the same
period of fiscal 1995 is due to interest on borrowings on the
Company's U.K. Credit Agreement.
The Company recorded no provision for income taxes in the
second quarters of fiscal years 1996 and 1995.
Net income was $6.1 million, or $.17 per share, in the
second quarter of fiscal year 1996 and net loss was $(2.0)
million, or $(.06) per share in the second quarter of fiscal year
1995. The $8.1 million improvement results from the items
described above.
-8-<PAGE>
<PAGE> 9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
RESULTS OF OPERATIONS AND FINANCIAL CONDITION SIX MONTHS ENDED
DECEMBER 2, 1995 ("first six months of fiscal year 1996")
COMPARED TO SIX MONTHS ENDED DECEMBER 3, 1994 ("first six months
of fiscal year 1995")
The Company's revenue increased 21.7% to $232.2 million in
the first six months of fiscal year 1996 from $190.7 million in
the first six months of fiscal year 1995 due to higher sales
volume at the Company's Forgings and Castings Divisions. These
sales volume increases during the first six months of fiscal year
1996 as compared to the first six months of fiscal year 1995 are
reflected by market as follows: a $27.0 million (18.7%) increase
in aerospace, a $16.1 million (56.4%) increase in power
generation and a $1.7 million (10.0%) decrease in other.
Revenues in the first six months of fiscal years 1996 and 1995
were limited by raw material shortages and production delays
caused by capacity constraints of the Company's suppliers. While
the severity of the raw material shortages was not as extensive
during the first six months of fiscal year 1996 as compared to
the first six months of fiscal year 1995, the Company is
continuing to focus upon its ability to receive raw material such
that there is no disruption to its production schedule. The
revenue increases mentioned above have occurred while the
Company's backlog has grown to $487.8 million at December 2, 1995
from $418.4 million at December 3, 1994.
The Company's gross margins were 16.0% in the first six
months of fiscal year 1996 as compared to 10.2% in the first six
months of fiscal year 1995. This improvement resulted from
higher production volumes and productivity gains resulting from
the Company's efforts toward focusing forging production of
rotating parts for jet engines in its Houston, Texas facility and
forging production of airframe structures and large turbine parts
in its Grafton, Massachusetts facility. Additionally, continuing
realization of cost reductions from synergies associated with the
integration of Cameron contributed to this higher ratio. Gross
margins benefitted from LIFO credits of $2.0 million during the
first six months of fiscal year 1995. There were no LIFO credits
recorded during the first six months of fiscal year 1996.
Selling, general and administrative expenses remained
constant at $19.7 million for the first six months of both fiscal
1996 and fiscal 1995. However, selling, general and
administrative expenses as a percentage of revenues improved to
8.0% in the first six months of fiscal year 1996 from 9.8% in the
first six months of fiscal year 1995. The improvement as a
percent of revenues is the result of cost reductions associated
with the integration of Cameron with the Company's Forgings
operations and higher revenues.
-9-<PAGE>
<PAGE> 10
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
RESULTS OF OPERATIONS AND FINANCIAL CONDITION SIX MONTHS ENDED
DECEMBER 2, 1995 ("first six months of fiscal year 1996")
COMPARED TO SIX MONTHS ENDED DECEMBER 3, 1994 ("first six months
of fiscal year 1995")(Continued)
During the first six months of fiscal year 1996, the Company
provided $0.8 million in order to recognize its 25.0% share of
the net losses of its Australian Joint Venture and to reserve for
amounts loaned to the Australian Joint Venture during the first
quarter of fiscal year 1996. Additionally, the Company provided
$0.1 million relating to expenditures for an investment in an
additional joint venture.
Interest expense was $5.0 million in the first six months of
fiscal year 1996 as compared to $4.7 million during the first six
months of fiscal year 1995. The increase in interest expense
during the first six months of fiscal 1996 as compared to the
first six months of fiscal 1995 is due to interest on borrowings
on the Company's U.K. Credit Agreement.
The Company recorded no provision for income taxes in the
first six months of fiscal years 1996 and 1995.
Net income was $11.2 million, or $.31 per share, in the
first six months of fiscal year 1996 and net loss was $(5.3)
million, or $(.15) per share in the first six months of fiscal
year 1995. The $16.5 million improvement results from the items
described above.
LIQUIDITY AND CAPITAL RESOURCES
The increase in the Company's cash of $3.9 million to $17.8
million at December 2, 1995 from $13.9 million at June 3, 1995
resulted from cash provided by operating activities of $9.9
million offset by cash used by investing activities of $5.0
million and cash used by financing activities of $1.0 million.
As of June 3, 1995, the Company estimated the remaining cash
requirements for the integration of Cameron and direct costs
associated with the acquisition of Cameron to be $8.6 million.
Of such amount, the Company expects to spend approximately $6.5
million during its fiscal year ending June 1, 1996 ("fiscal year
1996") and $2.1 million thereafter. In the first six months of
fiscal year 1996, spending related to the integration of Cameron
and associated direct costs amounted to $2.6 million.
The 1991 restructuring plan is substantially complete. The
Company expects to expend an additional $3.8 million over the
next several years related to the 1991 restructuring plan,
approximately $1.9 million in fiscal year 1996 and $1.9 million
thereafter. In the first six months of fiscal year 1996,
spending related to the 1991 restructure plan amounted to $0.7
million.
-10-<PAGE>
<PAGE> 11
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
LIQUIDITY AND CAPITAL RESOURCES
As of June 3, 1995, the Company expected to spend $1.8
million in fiscal year 1996 and $15.1 million thereafter on non-
capitalizable environmental activities. In the first six months
of fiscal year 1996, no amounts were expended for non-
capitalizable environmental projects and the Company currently
believes that expenditures will not exceed $0.6 million during
fiscal year 1996, however, total future expenditures are still
estimated to be $16.9 million. The Company has completed all
environmental projects within established timetables and is
continuing to do so at the present time.
The Company from time to time expends cash on capital
expenditures for more cost effective operations, environmental
projects and joint development programs with customers. Capital
expenditures amounted to $18.7 million for the year ended June 3,
1995 ("fiscal year 1995"). Capital expenditures in the
foreseeable future are expected to increase somewhat from fiscal
year 1995 levels. In the first six months of fiscal year 1996,
capital expenditures amounted to $6.8 million.
As of December 2, 1995, the Company had invested $4.5
million in cash towards its share of the capital requirements of
the Australian Joint Venture for the production of nickel-based
superalloy. The Company is committed to invest an additional
$3.0 million in the Joint Venture. The Australian Joint Venture
has entered into a credit agreement with an Australian bank under
which it has $17.3 million in borrowings outstanding. The
Company has guaranteed 25.0% of the Australian Joint Venture's
obligations under the credit agreement. This guarantee expires
at such time as the Australian Joint Venture demonstrates its
ability to produce commercially acceptable products. The book
value of the Company's investment in the Australian Joint Venture
as of December 2, 1995 is approximately $2.3 million. The
Australian Joint Venture has not generated sufficient cash flow
to service its debt, and if the operations do not become
profitable in the future, the Company may be required to make
further provisions or to write-off all or a portion of the
remaining book value of its investment and repay up to 25.0% of
the Australian Joint Venture's $17.3 million debt, which is
guaranteed by the Company.
The Company's revolving receivables-backed credit facility
(the "Receivables Financing Program") among the Company, certain
subsidiaries and Wyman-Gordon Receivables Company ("WGRC") and a
Revolving Credit Agreement among WGRC and the financial
institutions party thereto provide the Company with an aggregate
maximum borrowing capacity under the Receivables Financing
Program of $65.0 million, with a letter of credit sub-limit of
$35.0 million. The term of the Receivables Financing Program is
-11-<PAGE>
<PAGE> 12
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
LIQUIDITY AND CAPITAL RESOURCES, (Continued)
five years, with an evergreen feature. As of December 2, 1995,
under the credit facility, the total availability based on
eligible receivables was $40.5 million, there were no borrowings
and letters of credit amounting to $9.5 million were outstanding.
Wyman-Gordon Limited, the Company's subsidiary located in
Livingston, Scotland, entered into a credit agreement ("the U.K.
Credit Agreement"). The maximum borrowing capacity under the
U.K. Credit Agreement is 3.0 million pounds sterling with a
separate letter of credit or guarantee limit of 2.0 million
pounds sterling. The term of the U.K. Credit Agreement is one
year with an evergreen feature. There were 1.1 million pounds
sterling or $1.7 million of borrowings outstanding at December 2,
1995 and the Company had issued 1.9 million pounds sterling or
$2.9 million of letters of credit or guarantees under the U.K.
Credit Agreement.
The primary sources of liquidity available to the Company in
fiscal year 1996 to fund operations, anticipated expenditures in
connection with the integration of Cameron, planned capital
expenditures and planned environmental expenditures include
available cash ($17.8 million at December 2, 1995), borrowing
availability under the Company's Receivables Financing Program,
cash generated by operations and reductions in working capital
requirements through planned inventory reductions and accounts
receivable management.
Cash from operations, reductions of working capital
requirements and debt are expected to be the Company's primary
sources of liquidity beyond fiscal year 1996. The Company
believes that it has adequate resources to provide for its
operations and the funding of restructuring, integration, capital
and environmental expenditures.
The Company's current plans to improve operating results
include completing the integration of Cameron, further reductions
of personnel and various other cost reduction measures. Programs
to expand the Company's revenue base include participation in new
aerospace programs and expansion of participation in the land-
based gas turbine and extruded pipe markets and other markets in
which the Company has not traditionally participated. The
Company anticipates that, in addition to the growth in commercial
aviation, the aging current commercial airline fleet will require
future orders for its replacement.
-12-<PAGE>
<PAGE> 13
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
IMPACT OF INFLATION
The Company's earnings may be affected by changes in price
levels and in particular, changes in the price of basic metals.
The Company's contracts generally provide for fixed prices for
finished products with limited protection against cost increases.
The Company would therefore be affected by changes in prices of
the raw materials during the term of any such contract. The
Company attempts to minimize this risk by entering into fixed
price arrangements with raw material suppliers.
ACCOUNTING AND TAX MATTERS
In March 1995, the Financial Accounting Standards Board
issued Statement No. 121, "Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to be Disposed of" ("SFAS
121") which must be adopted by the Company no later than fiscal
year 1997. SFAS 121 prescribes the accounting for the impairment
of long-lived assets that are to be held and used in the business
and similar assets to be disposed of. The Company has not
determined the impact of adopting SFAS 121 on its financial
position or results of operations.
In December 1995, the Financial Accounting Standards Board
Issued Statement No. 123, "Accounting for Stock-Based
Compensation" ("SFAS 123") which must be adopted by the Company
no later than fiscal year 1997. SFAS 123 prescribes the
accounting and disclosure of compensation of all stock-based
awards to employees. The Company has not determined the impact
of adopting SFAS 123 on its financial position or results of
operations.
As of June 3, 1995, the Company had net operating loss
carryforwards ("NOLS") of approximately $67.0 million, which
begin expiring in year 2006. The Company is seeking to utilize a
substantial portion of such NOLS to obtain a refund in excess of
$20.0 million of prior years' taxes. To the extent that the
Company is not successful in recovering a refund of prior years'
taxes, the NOLS will be available to offset future taxable
income, if any. 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 for such refund.
The Company has purchased and is named as beneficiary on
approximately 1,650 life insurance policies with an aggregate
cash surrender value of approximately $10.1 million as of
December 2, 1995, issued by Confederation Life Insurance Company
(U.S.), which is currently in rehabilitation. Confederation Life
Insurance Company is continuing to pay benefits under the
policies but has ceased to redeem cash surrender values. No
assurances can be given regarding to what extent the Company will
be able to realize such cash surrender values in the future.
-13-<PAGE>
<PAGE> 14
PART II.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On October 18, 1995, the Company held the annual meeting of
stockholders. The holders of approximately 73% of the 35,145,325
shares of common stock outstanding as of the record date were
represented at the meeting either in person or by proxy. The
following are the voting results from the meeting:
1. The stockholders elected the following directors of the
Company, each for a three year term expiring in 1998 and
until his successor is elected and qualified:
VOTES
VOTES WITHHELD
DIRECTOR IN FAVOR AUTHORITY
Dewain K. Cross 25,382,775 203,694
Russell E. Fuller 25,382,140 204,329
David P. Gruber 25,385,382 201,087
John M. Nelson 25,384,568 201,901
H. John Riley 25,386,546 199,923
2. The stockholders approved the Wyman-Gordon Long-Term
Incentive Plan with 23,103,575 votes in favor, 402,220 votes
against, 98,032 abstentions and 1,982,642 broker non-votes.
3. The stockholders approved the Wyman-Gordon Company Employee
Stock Purchase Plan with 23,405,236 votes in favor, 154,495
votes against, 44,096 abstentions and 1,982,642 broker non-
votes.
4. The stockholders approved the Wyman-Gordon Company Non-
Employee Director Stock Option Plan with 22,845,353 votes in
favor, 678,227 votes against, 80,247 abstentions and
1,982,642 broker non-votes.
5. The stockholders approved the Wyman-Gordon Company
Performance Share Agreement between David P. Gruber and the
Company with 24,836,745 votes in favor, 413,504 votes
against, 130,305 abstentions and 205,915 broker non-votes.
6. The stockholders approved the selection of Ernst & Young,
LLP independent public accountants, as the Company's
auditors for the year 1996, with 25,504,663 votes in favor,
21,935 votes against, 59,871 abstentions, and no broker non-
votes.
-14-<PAGE>
<PAGE> 15
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:
<TABLE>
<CAPTION>
Exhibit No. Description
<S> <C>
27 Financial Data Schedule for the Six Months Ended
December 2, 1995
</TABLE>
(b) No reports on Form 8-K have been filed with the Commission
during the period covered by this report.
-15-<PAGE>
<PAGE> 16
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: 1/11/96 By: /s/ ANDREW C. GENOR
Andrew C. Genor
Vice President,
Chief Financial Officer and Treasurer
Date: 1/11/96 By: /s/ JEFFREY B. LAVIN
Jeffrey B. Lavin
Assistant Corporate Controller
-16-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-01-1996
<PERIOD-START> JUN-04-1995
<PERIOD-END> DEC-02-1995
<CASH> 17,799
<SECURITIES> 7
<RECEIVABLES> 78,566
<ALLOWANCES> 0
<INVENTORY> 85,490
<CURRENT-ASSETS> 193,746
<PP&E> 389,095
<DEPRECIATION> 251,941
<TOTAL-ASSETS> 372,036
<CURRENT-LIABILITIES> 84,752
<BONDS> 90,308
<COMMON> 37,053
0
0
<OTHER-SE> 54,986
<TOTAL-LIABILITY-AND-EQUITY> 372,036
<SALES> 230,930
<TOTAL-REVENUES> 232,157
<CGS> 195,012
<TOTAL-COSTS> 195,012
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,540
<INCOME-PRETAX> 11,151
<INCOME-TAX> 0
<INCOME-CONTINUING> 11,151
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,151
<EPS-PRIMARY> 0.31
<EPS-DILUTED> 0.31
</TABLE>
