<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 November 30, 1998
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 NOVEMBER 30, 1998
<S> <C>
Common Stock, $1 Par Value 36,509,804
</TABLE>
Page 1 of 25<PAGE>
<PAGE> 2
PART I.
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
WYMAN-GORDON COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
NOV. 30, NOV. 30, NOV. 30, NOV. 30,
1998 1997 1998 1997
(000's omitted, except per share data)
<S> <C> <C> <C> <C>
Revenue $238,829 $189,370 $428,493 $369,378
Less:
Cost of goods sold 197,551 157,422 358,618 304,185
Selling, general and
administrative expenses 14,358 13,177 27,839 26,572
Other charges(credits) - (3,000) (5,000) (4,900)
211,909 167,599 381,457 325,857
Income from operations 26,920 21,771 47,036 43,521
Other deductions:
Interest expense 3,562 2,791 7,093 5,682
Miscellaneous, net 211 392 465 722
3,773 3,183 7,558 6,404
Income before income taxes 23,147 18,588 39,478 37,117
Provision for income taxes 8,101 5,252 12,581 11,922
Net income $ 15,046 $ 13,336 $ 26,897 $ 25,195
Net income per share:
Basic $ .41 $ .37 $ .74 $ .70
Diluted $ .41 $ .36 $ .73 $ .67
Shares used to compute
net income per share:
Basic 36,545 36,364 36,541 36,258
Diluted 37,015 37,495 37,085 37,500
</TABLE>
The accompanying notes to the interim 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>
NOVEMBER 30, MAY 31,
1998 1998
(Unaudited)
(000's omitted)
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 74,451 $ 64,561
Accounts receivable 153,298 124,658
Inventories 135,367 133,134
Prepaid expenses 8,138 6,710
Total current assets 371,254 329,063
Property, plant and equipment, net 209,208 197,363
Intangible and other assets 28,085 25,184
Total assets $608,547 $551,610
LIABILITIES
Borrowings due within one year $ 559 $ 3,017
Accounts payable 86,881 51,590
Accrued liabilities and other 45,390 50,692
Total current liabilities 132,830 105,299
Restructuring, integration, disposal
and environmental 16,906 17,314
Long-term debt 165,283 162,573
Pension liability 2,922 2,908
Deferred income tax and other 13,960 14,066
Postretirement benefits 43,596 44,630
Total liabilities 375,497 346,790
STOCKHOLDERS' EQUITY
Preferred stock - none issued - -
Common stock issued - 37,052,720 shares 37,053 37,053
Capital in excess of par value 27,913 28,037
Retained earnings 175,806 148,847
Accumulated other comprehensive income 2,287 1,465
Less treasury stock at cost
November 30, 1998 - 542,916 shares
May 31, 1998 - 543,077 shares (10,009) (10,582)
Total stockholders' equity 233,050 204,820
Total liabilities and stockholders'
equity $608,547 $551,610
</TABLE>
The accompanying notes to the interim 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
(Unaudited)
<CAPTION>
SIX MONTHS ENDED
NOVEMBER 30, NOVEMBER 30,
1998 1997
(000's omitted)
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 26,897 $ 25,195
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 13,684 11,185
Deferred income taxes - 6,500
Gain on sale of operating assets (5,000) -
Changes in assets and liabilities:
Accounts receivable (28,665) (5,741)
Inventories (2,233) (24,335)
Prepaid expenses and other assets (4,636) (3,935)
Accrued restructuring, integration
disposal and environmental (982) (1,758)
Income and other taxes payable 8,421 279
Accounts payable and accrued
and other liabilities 23,301 (13,846)
Net cash provided (used) by
operating activities 30,787 (6,456)
INVESTING ACTIVITIES:
Capital expenditures (26,071) (22,688)
Proceeds from sale of fixed assets 5,591 471
Other, net 1,435 1,169
Net cash provided (used) by
investing activities (19,045) (21,048)
FINANCING ACTIVITIES:
Payment to Cooper Industries, Inc. (2,300) (2,300)
Net proceeds from issuance of
common stock 1,812 8,683
Repurchase of Common Stock (1,364) (4,603)
Net cash provided (used) by
financing activities (1,852) 1,780
Increase (decrease) in cash 9,890 (25,724)
Cash, beginning of year 64,561 51,971
Cash, end of period $ 74,451 $ 26,247
</TABLE>
The accompanying notes to the interim consolidated condensed
financial statements are an integral part of these financial
statements.
-4-<PAGE>
<PAGE> 5
WYMAN-GORDON COMPANY AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
November 30, 1998
(Unaudited)
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
November 30, 1998 and its results of operations and cash flows
for the six months ended November 30, 1998 and November 30, 1997.
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 May 31, 1998 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 May 31, 1998
and 1997 and its results of operations and cash flows for the
years ended May 31, 1998, 1997, and 1996, in conformity with
generally accepted accounting principles. Where appropriate,
prior period amounts have been reclassified to permit comparison.
NOTE B - ADOPTION OF RECENT ACCOUNTING STANDARDS
Effective February 28, 1998, the Company adopted Statement
of Financial Accounting Standards No. 128, "Earnings per Share"
("SFAS 128"). SFAS 128 replaces the previously reported primary
and fully diluted earnings per share. Unlike primary earnings
per share, basic earnings per share excludes any dilutive effects
of options. Diluted earnings per share is very similar to the
previously reported fully diluted earnings per share. All
earnings per share amounts for all periods have been presented
and, where necessary, restated to conform to the SFAS 128
requirements. There is no material impact on earnings per share
for the six months ended November 30, 1998 and 1997 calculated
under SFAS 128.
Effective June 1, 1998, the Company adopted SFAS No. 130,
"Reporting Comprehensive Income" ("SFAS 130"). SFAS 130
establishes new rules for reporting and disclosure of
comprehensive income, which is composed of net earnings and
certain items of other comprehensive income as defined in the
Statement, for all periods presented; however, the adoption of
SFAS 130 had no impact on the Company's net income or
stockholders' equity. The components of other comprehensive
income, both individually and in the aggregate, were not material
for the six month periods ended November 30, 1998 and 1997.
-5-<PAGE>
<PAGE> 6
WYMAN-GORDON COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Continued)
November 30, 1998
(Unaudited)
NOTE B - ADOPTION OF RECENT ACCOUNTING STANDARDS, Continued
In June 1997, the Financial Accounting Standards Board
issued Statement No. 131, "Disclosures about Segments of an
Enterprise and Related Information" ("SFAS 131"). The
implementation of SFAS 131 will require the disclosure of segment
information utilizing the approach that the Company uses to
manage its internal organization. The Company is currently
assessing the impact that the new standard will have on its
financial statements. Implementation of this Standard is
required for the year ending May 31, 1999.
In February 1998, the Financial Accounting Standards Board
issued Statement No. 132, "Employers' Disclosures about Pensions
and Other Post Retirement Benefits" ("SFAS 132"). SFAS 132
standardizes disclosure requirements of Statement Nos. 87,
"Employers' Accounting for Pensions", and 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions". It
does not change the measurement or recognition of those plans.
Implementation of this Standard is required for the year ending
May 31, 1999.
NOTE C - INVENTORIES
Inventories consisted of:
<TABLE>
<CAPTION>
NOVEMBER 30, 1998 MAY 31, 1998
(000's omitted)
<S> <C> <C>
Raw material $ 42,750 $ 50,050
Work-in-process 97,575 92,136
Other 3,839 4,221
144,164 146,407
Less progress payments (8,797) (13,273)
$135,367 $133,134
</TABLE>
If all inventories valued at LIFO cost had been valued at
the lower of first-in, first-out (FIFO) cost or market, which
approximates current replacement cost, inventories would have
been $18,262,000 higher than reported at November 30, 1998 and
May 31, 1998.
There were no LIFO inventory credits or charges to cost of
goods sold in the three and six months ended November 30, 1998 or
November 30, 1997.
-6-<PAGE>
<PAGE> 7
WYMAN-GORDON COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Continued)
November 30, 1998
(Unaudited)
NOTE D - LONG-TERM DEBT
On December 15, 1997, the Company issued $150,000,000 of 8%
Senior Notes due 2007 ("8% Senior Notes") under an indenture
between the Company and a bank as trustee. The 8% Senior Notes
were issued at a price of 99.323% of face value and pay interest
semi-annually in arrears on June 15 and December 15 of each year,
commencing June 15, 1998. The 8% 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 Company used approximately
$90,750,000 of the net proceeds from the sale of the 8% Senior
Notes to repurchase $84,725,000 (94%) of its outstanding 10 3/4%
Senior Notes due 2003 ("10 3/4% Senior Notes").
NOTE E - NET INCOME PER SHARE
There were no adjustments required to be made to net income
for purposes of computing basic and diluted net income per share.
A reconciliation of the average number of common shares
outstanding used in the calculation of basic and diluted net
income per share is as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
NOV. 30, NOV. 30, NOV. 30, NOV. 30,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Shares used to compute
basic net income per
share 36,545 36,364 36,541 36,258
Dilutive effect of
stock options 470 1,131 544 1,242
Shares used to compute
diluted net income
per share 37,015 37,495 37,085 37,500
</TABLE>
-7-<PAGE>
<PAGE> 8
WYMAN-GORDON COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Continued)
November 30, 1998
(Unaudited)
NOTE F - STOCKHOLDER'S EQUITY
On October 21, 1998, the Company's Board of Directors
unanimously adopted a shareholder rights agreement under which
preferred share purchase rights were distributed as a dividend on
shares of Wyman-Gordon Company's common stock. The rights will
be exercisable only if a person or group acquires 15 percent or
more of the Company's common stock or announces a tender offer,
the consummation of which would result in ownership by a person
or group of 15 percent or more of the common stock or the
determination by the Board of Directors that any person is an
"Adverse Person." Each right entitles the registered holder
thereof to purchase from the Company a unit consisting of one
ten-thousandth of a share of Series B Junior Participating
Cumulative Preferred Stock, at a cash exercise price of $75 per
unit. The dividend distribution was made on November 30, 1998,
payable to stockholders of record on that date. The rights will
expire on November 30, 2008, subject to earlier redemption or
exchange by Wyman-Gordon Company as described in the plan. The
rights distribution is not taxable to stockholders.
On August 28, 1998, the Company's Board of Directors
authorized a stock repurchase program to acquire up to 2 million
shares of Wyman-Gordon Company's common stock. The shares may be
purchased from time-to-time in the open market. As of November
30, 1998, the Company had purchased 200,000 shares under this
program.
NOTE G - COMMITMENTS AND CONTINGENCIES
At November 30, 1998, certain lawsuits arising in the normal
course of business were pending. In the opinion of management,
the outcome of these legal matters will not have a material
adverse effect on the Company's financial position and results of
operations.
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.
-8-<PAGE>
<PAGE> 9
WYMAN-GORDON COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Continued)
November 30, 1998
(Unaudited)
NOTE G - COMMITMENTS AND CONTINGENCIES, Continued
The Company had foreign exchange contracts totaling
approximately $32,948,000 at November 30, 1998. These contracts
hedge certain normal operating purchase and sales transactions.
The foreign 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 Income for the three and six months ended November
30, 1998 and November 30, 1997 were not material.
On December 22, 1996, a serious industrial accident occurred
at the Houston, Texas facility of Wyman-Gordon Forgings, Inc.
("WGFI"), a wholly-owned subsidiary of the Company, in which
eight employees were killed and two others were injured.
The injured workers and the decedents' families have
asserted claims against the Company and WGFI. Both the Company
and WGFI have also received claims from several employees of a
subcontractor claiming to have been injured at the time of the
accident as well as from another WGFI employee who was not a
member of the crew.
To date, the Company and WGFI have settled all claims of
four of the decedents' families on terms acceptable to the
Company and its insurance carriers. The Company and WGFI have
also settled most of the claims of the subcontractor employees.
The Company thus far has been unable to achieve settlements with
the other claimants, and on October 24, 1997 a lawsuit was filed
in the District Court of Harris County, Texas, on behalf of three
of the decedents' families against the Company, WGFI and Cooper-
Cameron Corporation. Three WGFI employees, a person claiming to
be a child of the eighth decedent, and three subcontractor
employees have subsequently filed lawsuits against the Company,
WGFI and Cooper-Cameron Corporation. Trial of the principal
lawsuit is currently set for January 25, 1999. The Texas statute
of limitations for the bringing of additional claims has expired,
but the statute contains exceptions, such as for minors, that
would enable claimants to commence lawsuits in the future.
In general under Texas statutory law, an employee's
exclusive remedy against an employer for an on-the-job injury is
the benefits of the Texas Workers' Compensation Act. WGFI, the
employer of the deceased employees, has workers' compensation
insurance coverage and the injured employees and beneficiaries of
the deceased employees are receiving workers' compensation
payments. Under applicable law, however, statutory beneficiaries
-9-<PAGE>
<PAGE> 10
WYMAN-GORDON COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Continued)
November 30, 1998
(Unaudited)
NOTE G - COMMITMENTS AND CONTINGENCIES, Continued
of WGFI employees killed in the course and scope of their
employment may recover punitive (but not compensatory) damages in
excess of workers compensation benefits. However, to do so, they
must prove that the employer was grossly negligent. The
protection of the workers compensation exclusive remedy provision
may not extend to the Company as parent corporation of WGFI.
Therefore, with regard to the October 24, 1997 lawsuit and any
future lawsuits brought on behalf of those killed or injured in
the Houston accident or their families against the Company, if
(i) the court finds that the Company had a legal duty to WGFI and
its employees, (ii) the evidence supports a finding that the
Company acted negligently in its duty to WGFI and its employees
and (iii) such negligence had a causal connection with the
accident, the plaintiffs might be able to recover compensatory
damages against the Company. If it is shown that the Company's
conduct amounted to gross neglect, and that conduct is found to
be a cause of the accident, the plaintiffs may be able to recover
punitive damages against the Company.
It is not possible at this time to determine the extent, if
any, to which WGFI or the Company could be held liable in
connection with the accident. While the Company maintains
general liability and employer's liability insurance for itself
and its subsidiaries under various policies and has tendered the
defense of the various claims to its insurance carriers, there
can be no assurance that the full insurance coverage will be
available or that the pending and threatened claims can be
settled for an aggregate amount within insurance coverage limits.
The Company anticipates that, as with the currently pending
lawsuits, any additional lawsuits will include claims for alleged
compensatory as well as punitive damages that in the aggregate
could substantially exceed the Company's available insurance
coverage. The Company intends to vigorously defend all lawsuits
that have been or may be filed relating to the accident.
However, if one or more such lawsuits were to be prosecuted
successfully by the plaintiffs and a judgment were to be obtained
by one or more plaintiffs in such lawsuits and sustained on
appeal, litigation costs, including the cost of pursuing any
appeals, and the cost of paying such a judgment, to the extent
not covered by insurance, could have a material adverse effect on
the Company's financial condition and the results of operations,
particularly if any such judgment includes awards for punitive
damages.
-10-<PAGE>
<PAGE> 11
WYMAN-GORDON COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Continued)
November 30, 1998
(Unaudited)
NOTE G - COMMITMENTS AND CONTINGENCIES, Continued
On September 25, 1997, the Company received a subpoena from
the United States Department of Justice informing it that the
Department of Defense and other federal agencies had commenced an
investigation with respect to the manufacture and sale of
investment castings at the Company's Tilton, New Hampshire
facility. The focus of the investigation is whether the Company
failed to comply with required quality control procedures for
cast aerospace parts and whether the Company shipped cast
components that did not meet applicable specifications. The
Company is cooperating fully with the investigation, and in
addition, has substantially completed its own investigation,
which has identified certain departures from Company policies and
procedures which have been addressed. The federal investigation
may result in criminal or civil charges being brought against the
Company. Based on the Company's own investigation, the Company
does not believe that the federal investigation is likely to
result in a material adverse impact on the Company's financial
condition or results of operations, although no assurance as to
the outcome or impact of that investigation can be given.
NOTE H - OTHER CHARGES (CREDITS)
In the six months ended November 30, 1998, the Company
recorded other credits of $5,000,000 resulting from the sale of
the operating assets of the Company's Millbury, Massachusetts
vacuum remelting facility which produced titanium ingots for
further processing into finished forgings to Titanium Metals
Corporation "TIMET".
In the six months ended November 30, 1997, the Company
recorded other credits of $4,900,000. Such other credits include
a credit of $1,900,000 resulting from the disposal of a building
held for sale, a credit of $4,000,000 for the recovery of cash
surrender value of certain company-owned life insurance policies
and a charge of $1,000,000 to provide for costs as a result of
the shutdown of the 29,000 ton press at the Company's Houston,
Texas forging facility.
-11-<PAGE>
<PAGE> 12
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
"FORWARD-LOOKING INFORMATION IS SUBJECT TO RISK AND UNCERTAINTY"
Certain statements in Management's Discussion and Analysis
of Financial Condition and Results of Operations contain
"forward-looking" information (as defined in the Private
Securities Litigation Reform Act of 1995). The words "believe,"
"expect," "anticipate," "intend," "estimate", "assume" and other
similar expressions which are predictions of or indicate future
events and trends and which do not relate to historical matters
identify forward-looking statements. In addition, information
concerning raw material prices and availability, customer orders
and pricing, and industry cyclicality and their impact on gross
margins and business trends as well as liquidity and sales volume
are forward-looking statements. Reliance should not be placed on
forward-looking statements because they involve known and unknown
risks, uncertainties and other factors, which are in some cases
beyond the control of the Company and may cause the actual
results, performance or achievements of the Company to differ
materially from anticipated future results, performance or
achievements expressed or implied by such forward-looking
statements.
Certain factors that might cause such differences include,
but are not limited to, the following: The Company's ability to
successfully negotiate long-term contracts with customers and raw
materials suppliers at favorable prices and other terms
acceptable to the Company, the Company's ability to obtain
required raw materials and to supply its customers on a timely
basis and the cyclicality of the aerospace industry.
For further discussion identifying important factors that
could cause actual results to differ materially from those
anticipated in forward-looking statements, see the Company's SEC
filings, in particular see the Company's Annual Report on Form
10-K for the fiscal year ended May 31, 1998 Part I, Item 1 -
"Business - The Company," "Customers," "Marketing and Sales,"
"Backlog," "Raw Materials," "Energy Usage," "Employees,"
"Competition," "Environmental Regulations," "Product Liability
Exposure" and "Legal Proceedings".
RECENT DEVELOPMENTS
On December 18, 1998, the Company's shares commenced trading
on the New York Stock Exchange under the ticker symbol "WYG".
-12-<PAGE>
<PAGE> 13
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
RESULTS OF OPERATIONS
The principal markets served by the Company are aerospace
and energy. Revenue by market for the respective periods was as
follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
NOVEMBER 30, 1998 NOVEMBER 30, 1997
(000's omitted)
% OF % OF
AMOUNT TOTAL AMOUNT TOTAL
<S> <C> <C> <C> <C>
Aerospace $203,964 85% $153,305 81%
Energy 30,412 13% 28,602 15%
Other 4,453 2% 7,463 4%
$238,829 100% $189,370 100%
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED
NOVEMBER 30, 1998 NOVEMBER 30, 1997
(000's omitted)
% OF % OF
AMOUNT TOTAL AMOUNT TOTAL
<S> <C> <C> <C> <C>
Aerospace $354,473 83% $299,052 81%
Energy 61,312 14% 55,269 15%
Other 12,708 3% 15,057 4%
$428,493 100% $369,378 100%
</TABLE>
RESULTS OF OPERATIONS THREE MONTHS ENDED NOVEMBER 30, 1998
("second quarter of fiscal year 1999") COMPARED TO THREE MONTHS
ENDED NOVEMBER 30, 1997 ("second quarter of fiscal year 1998")
The Company's revenue increased 26.1% to $238.8 million in
the second quarter of fiscal year 1999 from $189.4 million in the
second quarter of fiscal year 1998 due to increased throughput at
the Company's Houston and Grafton facilities as a result of
recent equipment refurbishment and enhancements to, and
reorganization of, the Grafton facility. Furthermore, a portion
of the increase in revenue is attributable to the acquisition of
International Extruded Products ("IXP") in April, 1998 and
entering into a castings joint venture with TIMET in July, 1998.
These revenue increases during the second quarter of fiscal year
1999 as compared to the second quarter of fiscal year 1998 are
reflected by market as follows: a $50.7 million (33.0%) increase
in aerospace, a $1.8 million (6.3%) increase in energy and a $3.0
million (40.3%) decrease in other. The increase in aerospace
market revenues were the result of an increase in aerospace
turbine sales volume due to significant throughput
-13-<PAGE>
<PAGE> 14
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
RESULTS OF OPERATIONS THREE MONTHS ENDED NOVEMBER 30, 1998
("second quarter of fiscal year 1999") COMPARED TO THREE MONTHS
ENDED NOVEMBER 30, 1997 ("second quarter of fiscal year 1998")
(Continued)
improvements on the Company's 29,000 ton press, increased
structural sales generated from the joint venture with TIMET and
throughput improvements generated from the reorganization of the
Grafton facility. The increase in energy revenue was a result of
higher shipments of extruded pipe, produced by IXP, during the
second quarter of fiscal year 1999 as compared to the second
quarter of fiscal year 1998. Revenues in the second quarter of
fiscal year 1998 were limited due to lower than anticipated
productivity of recent equipment and personnel additions,
unanticipated repairs of equipment and inconsistencies in raw
material deliveries corresponding to customer requirements.
The Company's backlog continues to be strong with $900.1
million at November 30, 1998 compared to $1,030.1 million at May
31, 1998 and $973.4 million at November 30, 1997. The Company
attributes the decrease from May 31, 1998 to November 30, 1998 to
the following factors: 1.) customer required adjustments to build
rates; 2.) reduction in lead times in the supply chain; 3.)
initiatives by customers to reduce inventory levels. The Company
anticipates a decline in backlog since it does not expect to
receive customer orders at the same rates as in the recent past.
Additionally, the Company believes that capacity enhancements,
equipment refurbishments and additions installed by the Company
will enable the Company to meet its customer demands more timely.
Of the Company's total current backlog, $700.6 million is
shippable in the next twelve months. Because of the additional
production capacity generated from equipment enhancements,
refurbishments and additions, the Company believes that it will
be able to fulfill those twelve-month requirements.
The Company's gross margin was 17.3% in the second quarter
of fiscal year 1999 as compared to 16.9% in the second quarter of
fiscal year 1998. The increase in gross margin is the result of
significant throughput improvements and increased production
efficiency from the Company's Houston, Grafton and Worcester
facilities as a result of recent equipment repairs and
enhancements and reorganization of the Company's Grafton
facility. Although gross margins improved in the second quarter
of fiscal year 1999, they were negatively impacted by lower
margins generated in the Company's Livingston, Scotland forging
plant. Gross margin in the second quarter of fiscal year 1998
was negatively affected by production inefficiency costs related
to personnel additions and the re-installation and start-up of
two major forge presses.
-14-<PAGE>
<PAGE> 15
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
RESULTS OF OPERATIONS THREE MONTHS ENDED NOVEMBER 30, 1998
("second quarter of fiscal year 1999") COMPARED TO THREE MONTHS
ENDED NOVEMBER 30, 1997 ("second quarter of fiscal year 1998")
(Continued)
Selling, general and administrative expenses increased 9.0%
to $14.4 million during the second quarter of fiscal year 1999
from $13.2 million during the second quarter of fiscal year 1998.
Selling, general and administrative expenses as a percentage of
revenues improved to 6.0% in the second quarter of fiscal year
1999 from 6.9% in the second quarter of fiscal year 1998. The
improvement as a percent of revenues was primarily the result of
higher revenues. The second quarter of fiscal year 1998 included
$1.2 million of non-cash compensation expense associated with the
Company's performance share program. Selling, general and
administrative expenses for the second quarter of fiscal year 1999
were in line with the Company's higher revenues.
During the second quarter of fiscal year 1998, the Company
recorded net other credits of $3.0 million which included other
credits of $4.0 million for the recovery of cash surrender value
of certain company-owned life insurance policies and other charges
of $1.0 million to provide for costs as a result of the shutdown
of the 29,000 ton press at the Company's Houston, Texas forging
facility.
Interest expense increased $0.8 million to $3.6 million in
the second quarter of fiscal year 1999 compared to $2.9 million in
the second quarter of fiscal year 1998. The increase results
primarily from an issuance of $150.0 million of 8% Senior Notes
offset by repayment of $84.7 million of 10 3/4% Senior Notes.
The Company recorded a provision for income taxes of $8.1
million in the second quarter of fiscal year 1999. The Company
recorded a provision for income taxes of $5.3 million in the
second quarter of fiscal year 1998.
Net income was $15.0 million, or $.41 per share (diluted), in
the second quarter of fiscal year 1999 and $13.3 million, or $.36
per share (diluted), in the second quarter of fiscal year 1998.
RESULTS OF OPERATIONS SIX MONTHS ENDED NOVEMBER 30, 1998 ("first
six months of fiscal year 1999") COMPARED TO SIX MONTHS ENDED
NOVEMBER 30, 1997 ("first six months of fiscal year 1998")
The Company's revenue increased 16.0% to $428.5 million in
the first six months of fiscal year 1999 from $369.4 million in
the first six months of fiscal year 1998 due to increased
throughput at the Company's Houston and Grafton facilities as a
result of recent equipment refurbishment and enhancements to, and
reorganization of, the Grafton facility. Furthermore, a portion
of the increase in revenue is attributable to the acquisition of
-15-<PAGE>
<PAGE> 16
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
RESULTS OF OPERATIONS SIX MONTHS ENDED NOVEMBER 30, 1998 ("first
six months of fiscal year 1999") COMPARED TO SIX MONTHS ENDED
NOVEMBER 30, 1997 ("first six months of fiscal year 1998")
(Continued)
IXP in April, 1998 and entering into a castings joint venture with
TIMET in July, 1998. These revenue increases during the first six
months of fiscal year 1999 as compared to the first six months of
fiscal year 1998 are reflected by market as follows: a $55.4
million (18.5%) increase in aerospace, a $6.0 million (10.9%)
increase in energy and a $2.3 million (15.6%) decrease in other.
The increase in aerospace market revenues was the result of an
increase in aerospace turbine sales volume due to significant
throughput improvements on the Company's 29,000 ton press,
increased structural sales from the joint venture with TIMET and
throughput improvements generated from the reorganization of the
Grafton facility. Although aerospace revenues were higher during
the first six months of fiscal year 1999 compared to the first six
months of fiscal year 1998, aerospace revenues were negatively
impacted in the first three months of fiscal year 1999 by the
overhang of production inefficiencies relating to the recent re-
commissioning of the Company's 29,000 ton press. The increase in
energy revenue was a result of higher shipments of extruded pipe,
produced by IXP, during the first six months of fiscal year 1999
as compared to the first six months of fiscal year 1998. Revenues
in the first six months of fiscal year 1998 were limited due to
lower than anticipated productivity of equipment and personnel
additions, unanticipated repairs of equipment and inconsistencies
in raw material deliveries corresponding to customer requirements.
The Company's backlog continues to be strong with $900.1
million at November 30, 1998 compared to $1,030.1 million at May
31, 1998 and $973.4 million at November 30, 1997. The Company
attributes the decrease from May 31, 1998 to November 30, 1998 to
the following factors: 1.) customer required adjustments to build
rates; 2.) reduction in lead times in the supply chain; 3.)
initiatives by customers to reduce inventory levels. The Company
anticipates a decline in backlog since it does not expect to
receive customer orders at the same rates as in the recent past.
Additionally, the Company believes that capacity enhancements,
equipment refurbishments and additions installed by the Company
will enable the Company to meet its customer demands more timely.
Of the Company's total current backlog, $700.6 million is
shippable in the next twelve months. Because of the additional
production capacity generated from equipment enhancements,
refurbishments and additions, the Company believes that it will be
able to fulfill those twelve-month requirements.
-16-<PAGE>
<PAGE> 17
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
RESULTS OF OPERATIONS SIX MONTHS ENDED NOVEMBER 30, 1998 ("first
six months of fiscal year 1999") COMPARED TO SIX MONTHS ENDED
NOVEMBER 30, 1997 ("first six months of fiscal year 1998")
(Continued)
The Company's gross margin was 16.3% in the first six months
of fiscal year 1999 as compared to 17.7% in the first six months
of fiscal year 1998. The Company has estimated that gross margin
in the first six months of fiscal year 1999 was negatively
affected by approximately 0.7% as a result of production
inefficiencies resulting from the recent re-commissioning of the
Company's 29,000 ton press. Additionally, gross margins in the
first six months of fiscal year 1999 were negatively impacted by
production inefficiencies at the Company's Groton, Connecticut
casting plant and lower margins generated in the Livingston,
Scotland forging plant. Gross margin in the first six months of
fiscal year 1998 was negatively affected by production
inefficiency costs related to personnel additions and the re-
installation and start-up of two major forge presses.
Selling, general and administrative expenses increased 4.8%
to $27.8 million during the first six months of fiscal year 1999
from $26.6 million during the first six months of fiscal year
1998. Selling, general and administrative expenses as a
percentage of revenues improved to 6.5% in the first six months
of fiscal year 1999 from 7.2% in the first six months of fiscal
year 1998. The first six months of fiscal year 1998 included
$3.0 million of non-cash compensation expense associated with the
Company's performance share program. Selling, general and
administrative expenses for the first six months of fiscal year
1999 were in line with the Company's expectation of higher
revenues.
During the first six months of fiscal year 1999, the Company
recorded other credits of $5.0 million resulting from the sale of
the operating assets of the Company's Millbury, Massachusetts
facility to TIMET.
During the first six months of fiscal year 1998, the Company
recorded net other credits of $4.9 million. Such other credits
include other credits of $1.9 million resulting from the disposal
of a building held for sale and $4.0 million for the recovery of
cash surrender value of certain company-owned life insurance
policies and other charges of $1.0 million to provide for costs
as a result of the shutdown of the 29,000 ton press at the
Company's Houston, Texas forging facility.
Interest expense increased $1.4 million to $7.1 million in
the first six months of fiscal year 1999 compared to $5.7 million
in the first six months of fiscal year 1998. The increase
results primarily from an issuance of $150.0 million of 8% Senior
Notes offset by repayment of $84.7 million of 10 3/4% Senior
Notes.
-17-<PAGE>
<PAGE> 18
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
RESULTS OF OPERATIONS SIX MONTHS ENDED NOVEMBER 30, 1998 ("first
six months of fiscal year 1999") COMPARED TO SIX MONTHS ENDED
NOVEMBER 30, 1997 ("first six months of fiscal year 1998")
(Continued)
The Company recorded a provision for income taxes of $12.6
million in the first six months of fiscal year 1999. The
provision was recorded net of a $1.4 million tax benefit related
to reduction in the tax asset reserve for the capital loss
related to the Company's investment in an Australian joint
venture. The Company recorded a provision for income taxes of
$11.9 million in the first six months of fiscal year 1998.
Net income was $26.9 million, or $.73 per share (diluted),
in the first six months of fiscal year 1999 and $25.2 million, or
$.67 per share (diluted), in the first six months of fiscal year
1998.
LIQUIDITY AND CAPITAL RESOURCES
The $9.9 million increase in the Company's cash to $74.5
million at November 30, 1998 from $64.6 million at May 31, 1998
resulted primarily from cash provided by operating activities of
$30.8 million, issuance of common stock of $1.8 million in
connection with employee compensation and benefit plans, $5.6
million of proceeds from the sale of fixed assets and $1.4
million generated from other, net investing activities, offset by
capital expenditures of $26.0 million, $1.4 million repurchase of
common stock and $2.3 million payment to Cooper Industries, Inc.
("Cooper"). The $2.3 million payment to Cooper was the final
payment made in accordance with the Company's promissory note
payable to Cooper under the terms of the Stock Purchase Agreement
with Cooper related to the acquisition of Cameron Forged Products
Company in May 1994.
The $14.6 million increase in the Company's working capital
to $238.4 million at November 30, 1998 from $223.8 million at May
31, 1998 resulted primarily from (in millions):
<TABLE>
<CAPTION>
<S> <C>
Net Income $ 26.9
Decrease in:
Long-term restructuring, integration
disposal and environmental (0.4)
Long-term benefit liabilities (1.0)
Deferred taxes and other (0.1)
Increase in:
Intangible and other assets (2.9)
Long-term debt 2.7
Property, plant and equipment, net (11.8)
Other changes in stockholders' equity 0.8
Issuance of common stock 0.4
Increase in working capital $ 14.6
</TABLE>
-18-<PAGE>
<PAGE> 19
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
LIQUIDITY AND CAPITAL RESOURCES, Continued
Earnings before interest, taxes, depreciation, amortization
and other charges (credits) ("EBITDA") increased $6.2 million to
$55.3 million in the first six months of fiscal year 1999 from
$49.1 million in the first six months of fiscal year 1998. The
increase in EBITDA reflects increased volume from significant
throughput improvements and increased production efficiency from
the Company's Houston, Grafton and Worcester facilities as a
result of recent equipment repairs and enhancements and
reorganization of the Company's Grafton facility.
EBITDA should not be considered 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.
Investors should be aware that EBITDA as shown above may not be
comparable to similarly titled measures presented by other
companies, and comparisons could be misleading unless all
companies and analysts calculate this measure in the same
fashion.
As of May 31, 1998, the Company estimated the remaining cash
requirements for the 1997 restructuring to be $3.7 million. Of
such amount, the Company expects to spend approximately $2.5
million during fiscal year 1999 and $1.2 million thereafter. In
the first six months of fiscal year 1999, spending related to the
1997 restructuring amounted to $0.7 million.
The Company expects to spend $1.2 million in fiscal year
1999 and $15.3 million thereafter on non-capitalizable
environmental activities. In the first six months of fiscal year
1999, $0.2 million was expended for non-capitalizable
environmental projects.
The Company from time to time expends cash on capital
expenditures for more cost-effective operations, environmental
projects and joint development programs with customers. In the
first six months of fiscal year 1999, capital expenditures
amounted to $26.0 million and are expected to be approximately
$40.0 to $45.0 million in fiscal year 1999.
On December 15, 1997, the Company issued $150.0 million of
8% Senior Notes due 2007 under an indenture between the Company
and a bank as trustee. The 8% Senior Notes were issued at a
price of 99.323% of face value and pay interest semi-annually in
arrears on June 15 and December 15 of each year, commencing June
15, 1998. The 8% 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 Company used approximately $90.7 million of the net proceeds
from the sale of the 8% Senior Notes to repurchase $84.7 million
(94%) of its outstanding 10 3/4% Senior Notes due 2003.
-19-<PAGE>
<PAGE> 20
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
LIQUIDITY AND CAPITAL RESOURCES, Continued
The Company's revolving receivables-backed credit facility
(the "Receivables Financing Program") provides the Company with
an aggregate maximum borrowing capacity of $65.0 million (subject
to a borrowing base), with a letter of credit sub-limit of $35.0
million. The term of the Receivables Financing Program is five
years with a renewal option. As of November 30, 1998, the total
availability under the Receivables Financing Program was $56.7
million, there were no borrowings and letters of credit amounting
to $8.3 million were outstanding.
Wyman-Gordon Limited, the Company's subsidiary located in
Livingston, Scotland, entered into a credit agreement ("the U.K.
Credit Agreement") with Clydesdale Bank PLC ("Clydesdale")
effective June 22, 1998. The maximum borrowing capacity under
the U.K. Credit Agreement is 2.0 million pounds sterling
(approximately $3.2 million) with a separate letter of credit and
guarantee limits of 1.0 million pounds sterling (approximately
$1.6 million) each. The term of the U.K. Credit Agreement is one
year with a renewal option. There were no borrowings outstanding
at November 30, 1998. Wyman-Gordon Limited had outstanding 1.0
million pounds sterling (approximately $1.6 million) of letters
of credit or guarantees under the U.K. Credit Agreement.
The primary sources of liquidity available to the Company to
fund operations and other future expenditures include available
cash ($74.5 million at November 30, 1998), 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. The Company believes that it has adequate resources
to provide for its operations and the funding of restructuring,
integration, capital and environmental expenditures.
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 and, where
possible, negotiating price escalators into its customer
contracts to offset a portion of raw material cost increases.
-20-<PAGE>
<PAGE> 21
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
ACCOUNTING AND TAX MATTERS
Effective February 28, 1998, the Company adopted Statement
of Financial Accounting Standards No. 128, "Earnings per Share"
("SFAS 128"). SFAS 128 replaces the previously reported primary
and fully diluted earnings per share. Unlike primary earnings
per share, basic earnings per share excludes any dilutive effects
of options. Diluted earnings per share is very similar to the
previously reported fully diluted earnings per share. All
earnings per share amounts for all periods have been presented
and, where necessary, restated to conform to the SFAS 128
requirements. There is no material impact on earnings per share
for the six month periods ended November 30, 1998 and 1997
calculated under SFAS 128.
Effective June 1, 1998, the Company adopted SFAS No. 130,
"Reporting Comprehensive Income" ("SFAS 130"). SFAS 130
establishes new rules for reporting and disclosure of
comprehensive income, which is composed of net earnings and
certain items of other comprehensive income as defined in the
Statement, for all periods presented; however, the adoption of
SFAS 130 had no impact on the Company's net income or
stockholders' equity. The components of other comprehensive
income, both individually and in the aggregate, were not material
for the six month periods ended November 30, 1998 and 1997.
In June 1997, the Financial Accounting Standards Board
issued Statement No. 131, "Disclosures about Segments of an
Enterprise and Related Information" ("SFAS 131"). The
implementation of SFAS 131 will require the disclosure of segment
information utilizing the approach that the Company uses to
manage its internal organization. The Company is currently
assessing the impact that the new standard will have on its
financial statements. Implementation of this Standard is
required for the year ending May 31, 1999.
In February 1998, the Financial Accounting Standards Board
issued Statement No. 132, "Employers' Disclosures about Pensions
and Other Post Retirement Benefits" ("SFAS 132"). SFAS 132
standardizes disclosure requirements of Statement Nos. 87,
"Employers' Accounting for Pensions", and 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions". It
does not change the measurement or recognition of those plans.
Implementation of this Standard is required for the year ending
May 31, 1999.
-21-<PAGE>
<PAGE> 22
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
YEAR 2000
The Year 2000 computer issue is the result of computer
programs being written using two digits rather than four to
define the applicable year. Any of the computer programs in the
Company's computer systems and plant equipment systems that have
time-sensitive software may recognize a date using "00" as the
year 1900 rather than the year 2000. This could result in a
system failure or miscalculation causing disruptions of
operations, including, among other things, a temporary inability
to process transactions, send invoices or engage in similar
normal business activities.
The Company's overall Year 2000 project approach and status
is as follows:
<TABLE>
<CAPTION>
ESTIMATED
DESCRIPTION STAGE OF TIMETABLE FOR
OF APPROACH COMPLETION COMPLETION
<S> <C> <C>
Computer Systems:
Assess systems for possible
Year 2000 impact 100% Completed
Modify or replace non-compliant
systems 60% May 31, 1999
Test systems with system clocks
set at current date 60% May 31, 1999
Test systems off-line with
system clocks set at various
Year 2000 related critical
dates 60% May 31, 1999
Plant Equipment:
Computer-dependent plant
equipment assessment and
compliance procedures
performed 40% May 31, 1999
</TABLE>
The Company has completed a comprehensive inventory of
substantially all computer systems and programs. All hardware
required for stand alone testing of systems has been installed in
order to perform off-line testing for Year 2000 program
compliance. The Company has identified all software supplied by
outside vendors that is not Year 2000 compliant. With respect to
approximately 95% of such non-compliant software the Company has
acquired the most recent release and is currently testing such
versions for Year 2000 compliance. All software developed in-
house has been reviewed and necessary modifications are in
process.
-22-<PAGE>
<PAGE> 23
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
YEAR 2000, Continued
In addition to assessing the Company's Year 2000 readiness,
the Company has contacted and sent questionnaires regarding Year
2000 readiness to most of its suppliers. Detailed audits of the
Company's key suppliers are currently being coordinated in order
to assess their Year 2000 systems readiness.
The Company is using both internal and external resources to
reprogram, or replace, and test software for Year 2000
modifications. The Year 2000 project is 50% complete and the
Company anticipates completing the project by mid-1999.
Maintenance or modification costs will be expensed as incurred,
while the costs of new information technology will be capitalized
and amortized in accordance with Company policy. The Company
estimates it will cost approximately $1.6 million to make its
computer-dependent plant equipment Year 2000 compliant. The
total estimated cost of the Year 2000 computer project, including
software modifications, consultants, replacement costs for non-
compliant systems and internal personnel costs, based on
presently available information, is not material to the financial
operations of the Company and is estimated at approximately $2.4
million. However, if such modifications and conversions are not
made, or are not completed in time, the Year 2000 computer issue
could have a material impact on the operations of the Company.
The Company is currently assessing Year 2000 contingency
plans. The Company has multiple business systems at different
locations. In case of the failure of a system at one location,
the Company's contingency plan is to evaluate the use of an
alternate compliant business system at another location. The
Company will continue to assess possible contingency plan
solutions.
The forecast costs and the date on which the Company
believes it will complete its Year 2000 computer modifications
are based on its best estimates, which, in turn, were based on
numerous assumptions of future events, including third-party
modification plans, continued availability of resources and other
factors. The Company cannot be sure that these estimates will be
achieved and actual results could differ materially from those
anticipated.
OTHER MATTERS
On December 22, 1996, a serious industrial accident occurred
at the Houston, Texas facility of Wyman-Gordon Forgings, Inc.
("WGFI"), a wholly-owned subsidiary of the Company. See Note G on
page 8 for further discussion.
-23-<PAGE>
<PAGE> 24
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:
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
<S> <C>
27 Financial Data Schedule for the Six Months Ended
November 30, 1998
</TABLE>
(b) On December 4, 1998, the Company filed a Form 8-A with the
Commission to report the change of its shares listing from
NASDAQ to the NYSE commencing December 18, 1998.
On October 29, 1998, the Company filed a Form 8-K with the
Commission to report the adoption of certain amendments to
the Company's By-laws and a Shareholder Rights Agreement.
On August 11, 1998, the Company filed a Form 8-K with the
Commission to report that it and Titanium Metals Corporation
completed a transaction in which the parties have combined
their respective titanium castings businesses into a
jointly-owned venture.
-24-<PAGE>
<PAGE> 25
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: 1/11/99 By: /S/ EDWARD J. DAVIS
Edward J. Davis
Vice President,
Chief Financial Officer
and Treasurer
Date: 1/11/99 By: /S/ DAVID J. SULZBACH
David J. Sulzbach
Vice President,
Finance and Corporate Controller
-25-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAY-31-1999
<PERIOD-START> JUN-01-1998
<PERIOD-END> NOV-30-1998
<CASH> 74,451
<SECURITIES> 7
<RECEIVABLES> 153,298
<ALLOWANCES> 0
<INVENTORY> 135,367
<CURRENT-ASSETS> 371,254
<PP&E> 503,834
<DEPRECIATION> 294,626
<TOTAL-ASSETS> 608,547
<CURRENT-LIABILITIES> 132,830
<BONDS> 165,283
0
0
<COMMON> 37,053
<OTHER-SE> 195,997
<TOTAL-LIABILITY-AND-EQUITY> 608,547
<SALES> 423,256
<TOTAL-REVENUES> 428,493
<CGS> 358,618
<TOTAL-COSTS> 358,618
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,093
<INCOME-PRETAX> 39,478
<INCOME-TAX> 12,581
<INCOME-CONTINUING> 26,897
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 26,897
<EPS-PRIMARY> 0.74
<EPS-DILUTED> 0.73
</TABLE>
