<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 February 28, 1999
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 FEBRUARY 28, 1999
<S> <C>
Common Stock, $1 Par Value 35,464,254
</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 NINE MONTHS ENDED
FEB. 28, FEB. 28, FEB. 28, FEB. 28,
1999 1998 1999 1998
(000's omitted, except per share data)
<S> <C> <C> <C> <C>
Revenue $211,223 $181,764 $639,716 $551,142
Less:
Cost of goods sold 188,506 159,229 547,125 463,415
Selling, general and
administrative expenses 14,650 12,958 42,488 39,529
Other charges(credits) 18,990 - 13,990 (4,900)
222,146 172,187 603,603 498,044
Income(loss)from operations (10,923) 9,577 36,113 53,098
Other deductions:
Interest expense 3,549 3,319 10,642 8,999
Miscellaneous, net 148 66 612 790
3,697 3,385 11,254 9,789
Income (loss) before
income taxes (14,620) 6,192 24,859 43,309
Provision (benefit) for
income taxes (5,263) 2,229 7,318 14,151
Income (loss) before
extraordinary item (9,357) 3,963 17,541 29,158
Extraordinary item - net of
income tax benefit of
$2,920,306 - (5,192) - (5,192)
Net income (loss) $ (9,357) $ (1,229) $ 17,541 $ 23,966
Basic net income per share:
Income (loss) before
extraordinary item $ (.26) $ .11 $ .48 $ .80
Net income (loss) $ (.26) $ (.03) $ .48 $ .66
Diluted net income per share:
Income (loss) before
extraordinary item $ (.26) $ .11 $ .48 $ .78
Net income (loss) $ (.26) $ (.03) $ .48 $ .64
Shares used to compute
net income per share:
Basic 35,995 36,314 36,326 36,279
Diluted 35,995 37,074 36,798 37,360
</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>
FEBRUARY 28, MAY 31,
1999 1998
(Unaudited)
(000's omitted)
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 61,630 $ 64,561
Accounts receivable 144,311 124,658
Inventories 116,719 133,134
Prepaid expenses 8,031 6,710
Total current assets 330,691 329,063
Property, plant and equipment, net 211,557 197,363
Intangible and other assets 29,018 25,184
Total assets $571,266 $551,610
LIABILITIES
Borrowings due within one year $ 963 $ 3,017
Accounts payable 62,121 51,590
Accrued liabilities and other 56,139 50,692
Total current liabilities 119,223 105,299
Restructuring, integration, disposal
and environmental 16,662 17,314
Long-term debt 164,438 162,573
Pension liability 2,893 2,908
Deferred income tax and other 13,830 14,066
Postretirement benefits 42,579 44,630
Total liabilities 359,625 346,790
STOCKHOLDERS' EQUITY
Preferred stock - none issued - -
Common stock issued - 37,052,720 shares 37,053 37,053
Capital in excess of par value 27,491 28,037
Retained earnings 166,450 148,847
Accumulated other comprehensive income 550 1,465
Less treasury stock at cost
February 28, 1999 - 1,588,466 shares
May 31, 1998 - 543,077 shares (19,903) (10,582)
Total stockholders' equity 211,641 204,820
Total liabilities and stockholders'
equity $571,266 $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>
NINE MONTHS ENDED
FEBRUARY 28, FEBRUARY 28,
1999 1998
(000's omitted)
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 17,541 $ 23,966
Adjustments to reconcile net income
to net cash provided by operating
activities:
Extraordinary loss on debt
retirement - 5,192
Depreciation and amortization 20,518 17,172
Deferred income taxes - 6,500
Gain on sale of operating assets (5,000) -
Other charges 23,145 -
Changes in assets and liabilities:
Accounts receivable (19,678) (8,626)
Inventories 16,415 (48,009)
Prepaid expenses and other assets (5,638) (371)
Accrued restructuring, integration
disposal and environmental (3,083) (2,520)
Income and other taxes payable (4,384) (1,195)
Accounts payable and accrued
other liabilities (339) (11,400)
Net cash provided (used) by
operating activities 39,497 (19,291)
INVESTING ACTIVITIES:
Capital expenditures (37,927) (32,755)
Proceeds from sale of fixed assets 5,684 660
Other, net 1,983 752
Net cash provided (used) by
investing activities (30,260) (31,343)
FINANCING ACTIVITIES:
Payment to Cooper Industries, Inc. (2,300) (2,300)
Net borrowings (repayments) of debt - 55,043
Net proceeds from issuance of
common stock 3,234 9,784
Repurchase of Common Stock (13,102) (4,603)
Net cash provided (used) by
financing activities (12,168) 57,924
Increase (decrease) in cash (2,931) 7,290
Cash, beginning of year 64,561 51,971
Cash, end of period $ 61,630 $ 59,261
</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
February 28, 1999
(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
February 28, 1999 and its results of operations and cash flows
for the nine months ended February 28, 1999 and February 28,
1998. 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 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 nine month periods ended February 28, 1999 and 1998.
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. Implementation of this
standard is required for the year ending May 31, 1999.
-5-<PAGE>
<PAGE> 6
WYMAN-GORDON COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Continued)
February 28, 1999
(Unaudited)
NOTE B - ADOPTION OF RECENT ACCOUNTING STANDARDS, Continued
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>
FEBRUARY 28, 1999 MAY 31, 1998
(000's omitted)
<S> <C> <C>
Raw material $ 35,951 $ 50,050
Work-in-process 85,325 92,136
Other 2,363 4,221
123,639 146,407
Less progress payments (6,920) (13,273)
$116,719 $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 February 28, 1999 and
May 31, 1998.
There were no LIFO inventory credits or charges to cost of
goods sold in the three and nine months ended February 28, 1999
or February 28, 1998.
-6-<PAGE>
<PAGE> 7
WYMAN-GORDON COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Continued)
February 28, 1999
(Unaudited)
NOTE D - NET INCOME PER SHARE
There were no adjustments required to be made to net income
(loss) 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 NINE MONTHS ENDED
FEB. 28, FEB. 28, FEB. 28, FEB. 28,
1999 1998 1999 1998
(000's omitted)
<S> <C> <C> <C> <C>
Shares used to compute
basic net income per
share 35,995 36,314 36,326 36,279
Dilutive effect of
stock options - 760 472 1,081
Shares used to compute
diluted net income
per share 35,995 37,074 36,798 37,360
</TABLE>
NOTE E - 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 the 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.
-7-<PAGE>
<PAGE> 8
WYMAN-GORDON COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Continued)
February 28, 1999
(Unaudited)
NOTE E - STOCKHOLDER'S EQUITY, Continued
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. As of February 28,
1999, the Company had purchased 1.3 million shares under this
program. Since the original authorization, the Board of
Directors authorized a 2.0 million share increase in the
repurchase program and 2.7 million shares are now available for
repurchase.
NOTE F - COMMITMENTS AND CONTINGENCIES
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 totaling
approximately $27,283,000 at February 28, 1999. 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 nine months ended February
28, 1999 and February 28, 1998 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 brought
lawsuits against the Company and WGFI. Both the Company and WGFI
have also been named as defendants in lawsuits brought by 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.
-8-<PAGE>
<PAGE> 9
WYMAN-GORDON COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Continued)
February 28, 1999
(Unaudited)
NOTE F - COMMITMENTS AND CONTINGENCIES, Continued
The Company and WGFI have settled the claims of four
decedents' families and various other claimants on terms
acceptable to the Company and its insurance carriers. Recently,
the Company reached agreement with the families of three
additional decedents and an injured employee which represents the
major portion of the unsettled claims. Settlement of these
claims is subject to the execution of mutually satisfactory
releases.
The amounts to be paid in settlement of all cases will
exceed the Company s available liability insurance for the period
covering the December 22, 1996 accident. The Company has
recorded a charge of $13.8 million in the third quarter of fiscal
year 1999 to cover its share of the costs of defending the
lawsuits and funding the agreed settlements and its best estimate
of future defense and settlement costs. The Company believes
that the charge it has recorded will be sufficient to cover such
costs and that in the event the Company were required to make
payments in excess of such charge, such payments would not be
likely to have a material adverse impact on the Company s
financial condition or results of operations, although no
assurance as to the outcome or impact of the remaining litigation
can be given.
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 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.
At February 28, 1999, 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.
-9-<PAGE>
<PAGE> 10
WYMAN-GORDON COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Continued)
February 28, 1999
(Unaudited)
NOTE G - OTHER CHARGES (CREDITS)
In the nine months ended February 28, 1999, the Company
recorded other charges of $13,990,000. Such other charges
include a charge of $13,800,000 to provide for the Company's best
estimate of the combined current and future defense and
settlement costs associated with the Houston industrial accident,
$4,100,000 to provide for the costs of Company-wide workforce
reductions, a charge of $1,090,000 to reduce the carrying value
and dispose of certain assets of the Company's titanium Castings
operations and a credit 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 nine months ended February 28, 1998, 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.
-10-<PAGE>
<PAGE> 11
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 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".
-11-<PAGE>
<PAGE> 12
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS, Continued
RECENT DEVELOPMENTS
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. Due to
recent settlement proceedings, the Company recorded a charge of
$13.8 million during the third quarter of fiscal year 1999 to
cover its share of the costs of defending the lawsuits, funding
agreed settlements and its best estimate of future defense and
settlement costs. See Note F on page 8 for further discussion.
During the third quarter of fiscal year 1999, the Company
also recorded the following one-time charges: a $5.8 million
charge to cost of goods sold related to sales commitments under
contractual agreements with certain customers that will result in
losses, a $4.1 million charge to provide for the costs of
company-wide workforce reductions and a $1.1 million charge to
reduce the carrying value and dispose of certain assets of the
Company's titanium castings operations.
During the first quarter of fiscal year 1999, the Company
recorded a $5.0 million gain resulting from the sale of the
operating assets of the Company's Millbury, Massachusetts
facility to TIMET.
Notwithstanding the impact of the items noted above, gross
margin, net income (loss) and diluted earnings per share would
have been as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
FEBRUARY 28, 1999 FEBRUARY 28, 1999
(000's omitted except per share data)
EXCLUDING EXCLUDING
OTHER OTHER
CHARGES CHARGES
(CREDITS) (CREDITS)
AND AND
AS ONE-TIME AS ONE-TIME
STATED CHARGES STATED CHARGES
<S> <C> <C> <C> <C>
Revenues $211,223 $211,223 $639,716 $639,716
Gross margin $ 22,717 $ 28,542 $ 92,591 $ 98,416
Net income (loss) $ (9,357) $ 6,521 $ 17,541 $ 30,219
Net income (loss)
per diluted
share $ (.26) $ .18 $ .48 $ .82
</TABLE>
-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
FEBRUARY 28, 1999 FEBRUARY 28, 1998
(000's omitted)
% OF % OF
AMOUNT TOTAL AMOUNT TOTAL
<S> <C> <C> <C> <C>
Aerospace $171,022 81% $146,080 80%
Energy 30,272 14% 27,554 15%
Other 9,929 5% 8,130 5%
$211,223 100% $181,764 100%
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED
FEBRUARY 28, 1999 FEBRUARY 28, 1998
(000's omitted)
% OF % OF
AMOUNT TOTAL AMOUNT TOTAL
<S> <C> <C> <C> <C>
Aerospace $525,495 82% $445,132 81%
Energy 91,584 14% 82,823 15%
Other 22,637 4% 23,187 4%
$639,716 100% $551,142 100%
</TABLE>
RESULTS OF OPERATIONS THREE MONTHS ENDED FEBRUARY 28, 1999
("third quarter of fiscal year 1999") COMPARED TO THREE MONTHS
ENDED FEBRUARY 28, 1998 ("third quarter of fiscal year 1998")
The Company's revenue increased 16.2% to $211.2 million in
the third quarter of fiscal year 1999 from $181.8 million in the
third 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. 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 third quarter of
fiscal year 1999 as compared to the third quarter of fiscal year
1998 are reflected by market as follows: a $24.9 million (17.1%)
increase in aerospace, a $2.7 million (9.9%) increase in energy
and a $1.8 million (22.1%) increase in other. The increase in
aerospace market revenues was 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 FEBRUARY 28, 1999
("third quarter of fiscal year 1999") COMPARED TO THREE MONTHS
ENDED FEBRUARY 28, 1998 ("third quarter of fiscal year 1998")
(Continued)
improvements on the Company's 29,000 ton press, the 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
third quarter of fiscal year 1999 as compared to the third
quarter of fiscal year 1998. Revenues in the third 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 $846.0
million at February 28, 1999 compared to $1,030.1 million at May
31, 1998 and $1,013.2 million at February 28, 1998. The Company
attributes the decrease from May 31, 1998 to February 28, 1999 to
the following factors: 1.) customer volume adjustments to align
with revised 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, $645.0 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 10.8% in the third quarter of
fiscal year 1999 as compared to 12.4% in the third quarter of
fiscal year 1998. Gross margin was negatively impacted by 2.7%
as a result of a one-time charge of $5.8 million related to sales
commitments under contractual agreements with certain customers
that will result in losses. In the third quarter of fiscal year
1999, the Company's evaluation projected that the fully allocated
costs to produce certain 1) aerospace structural products in our
Grafton, Massachusetts and 2) aerospace turbine products in its
Groton, Connecticut, facilities, exceeded sales prices provided
to complete the remainder of these long-term, fixed price
contracts. Excluding the $5.8 million charge discussed above,
gross margin was 13.5% in the third quarter of fiscal year 1999.
Higher production volumes and increased production efficiencies
from the Company's Grafton facility favorably impacted gross
margins in the third quarter of fiscal year 1999. Although gross
margins improved in the third quarter of fiscal year 1999
compared to the third quarter of fiscal year 1998, they were
-14-<PAGE>
<PAGE> 15
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
RESULTS OF OPERATIONS THREE MONTHS ENDED FEBRUARY 28, 1999 ("third
quarter of fiscal year 1999") COMPARED TO THREE MONTHS ENDED
FEBRUARY 28, 1998 ("third quarter of fiscal year 1998")
(Continued)
negatively impacted by higher overtime and outsourcing costs
related to the reduction of overdue aerospace products and
underabsorption in the energy product line at the Company's
Houston, Texas facility and by lower margins generated in the
Company's Livingston, Scotland forging plant. Gross margin in the
third quarter of fiscal year 1998 was negatively affected by an
estimated 5.4% due to underabsorption and inefficiencies
associated with the Company's 29,000 ton press being taken out of
service for repairs.
Selling, general and administrative expenses increased 13.1%
to $14.7 million during the third quarter of fiscal year 1999 from
$13.0 million during the third quarter of fiscal year 1998.
Selling, general and administrative expenses as a percentage of
revenues decreased to 6.9% in the third quarter of fiscal year
1999 from 7.1% in the third quarter of fiscal year 1998. Although
selling, general and administrative expenses as a percentage of
revenue improved, the increase in expense was the result of the
acquisition of IXP in April, 1998 and entering into a castings
joint venture with TIMET in July, 1998.
During the third quarter of fiscal year 1999, the Company
recorded other charges of $19.0 million which included charges of
$13.8 million to provide for the Company's best estimate of the
combined current and future defense and settlement costs
associated with the Houston industrial accident, $4.1 million to
provide for the costs of company-wide workforce reductions and
other charges of $1.1 million to reduce the carrying value and
dispose of certain assets of the Company's titanium castings
operations.
Interest expense increased $0.2 million to $3.5 million in
the third quarter of fiscal year 1999 compared to $3.3 million in
the third quarter of fiscal year 1998. The increase results
primarily from an increase in debt associated with the acquisition
of IXP in April, 1998.
The Company recorded a benefit for income taxes of $5.3
million in the third quarter of fiscal year 1999. The Company
recorded a provision for income taxes of $2.2 million in the third
quarter of fiscal year 1998.
Excluding combined restructuring and one-time charges of
$24.8 million, net income for the third quarter of fiscal year
1999 was $6.5 million or $.18 per diluted share versus net income
before extraordinary items of $4.0 million or $.11 per diluted
share in third quarter of fiscal year 1998. An extraordinary
charge of $5.2 was recorded in the third quarter of fiscal year
1998 in connection with the extinguishment of $85.0 million of
debt.
-15-<PAGE>
<PAGE> 16
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
RESULTS OF OPERATIONS THREE MONTHS ENDED FEBRUARY 28, 1999 ("third
quarter of fiscal year 1999") COMPARED TO THREE MONTHS ENDED
FEBRUARY 28, 1998 ("third quarter of fiscal year 1998")
(Continued)
Net income (loss) after restructuring and one-time charges
was $(9.4) million or $(.26) per diluted share in the third
quarter of fiscal year 1999 compared to the third quarter of
fiscal year 1998 net income (loss), including extraordinary item,
of $(1.2) million or $(.03) per diluted share.
RESULTS OF OPERATIONS NINE MONTHS ENDED FEBRUARY 28, 1999 ("first
nine months of fiscal year 1999") COMPARED TO NINE MONTHS ENDED
FEBRUARY 28, 1998 ("first nine months of fiscal year 1998")
The Company's revenue increased 16.1% to $639.7 million in
the first nine months of fiscal year 1999 from $551.1 million in
the first nine 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
IXP in April, 1998 and entering into a castings joint venture with
TIMET in July, 1998. These revenue increases during the first nine
months of fiscal year 1999 as compared to the first nine months of
fiscal year 1998 are reflected by market as follows: a $80.4
million (18.1%) increase in aerospace, a $8.8 million (10.6%)
increase in energy and a $0.6 million (2.4%) 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 nine months of fiscal year 1999 compared to the first
nine 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
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 nine months of fiscal year
1999 as compared to the first nine months of fiscal year 1998.
Revenues in the first nine 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 $846.0
million at February 28, 1999 compared to $1,030.1 million at May
31, 1998 and $1,013.2 million at February 28, 1998. The Company
attributes the decrease from May 31, 1998 to February 28, 1999 to
-16-<PAGE>
<PAGE> 17
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
RESULTS OF OPERATIONS NINE MONTHS ENDED FEBRUARY 28, 1999 ("first
nine months of fiscal year 1999") COMPARED TO NINE MONTHS ENDED
FEBRUARY 28, 1998 ("first nine months of fiscal year 1998")
(Continued)
the following factors: 1.) customer volume adjustments to align
with revised 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, $645.0 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 14.5% in the first nine
months of fiscal year 1999 as compared to 15.9% in the first nine
months of fiscal year 1998. Gross margin was negatively impacted
by 0.9% as a result of a one-time charge of $5.8 million in the
third quarter of fiscal year 1999 related to sales commitments
under contractual agreements with certain customers that will
result in losses. The Company has estimated that gross margin in
the first nine months of fiscal year 1999 was negatively affected
by approximately $3.1 million, or 0.5%, as a result of production
inefficiencies incurred in the first three months of fiscal year
1999 resulting from the recommissioning of the Company's 29,000
ton press. Additionally, gross margins in the first nine months
of fiscal year 1999 were negatively impacted by approximately
1.3% primarily relating to overtime and outsourcing costs related
to overdues, fixed cost escalations, and underabsorption in the
Company's energy product line. Gross margin in the first nine
months of fiscal year 1998 was negatively affected by the impact
of the Company's 29,000 ton press being taken out of service for
repairs and 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 7.5%
to $42.5 million during the first nine months of fiscal year 1999
from $39.5 million during the first nine months of fiscal year
1998. Selling, general and administrative expenses as a
percentage of revenues improved to 6.6% in the first nine months
of fiscal year 1999 from 7.2% in the first nine months of fiscal
year 1998. The first nine 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 nine months of fiscal year
1999 were impacted by the acquisition of IXP in April, 1998 and
entering into a castings joint venture with TIMET in July, 1998.
-17-<PAGE>
<PAGE> 18
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
RESULTS OF OPERATIONS NINE MONTHS ENDED FEBRUARY 28, 1999 ("first
nine months of fiscal year 1999") COMPARED TO NINE MONTHS ENDED
FEBRUARY 28, 1998 ("first nine months of fiscal year 1998")
(Continued)
During the first nine months of fiscal year 1999, the
Company recorded other charges of $14.0 million. Such other
charges include a charge of $13.8 million to provide for the
Company's best estimate of the combined current and future
defense and settlement costs associated with the Houston
industrial accident, $4.1 million to provide for the costs of
company-wide workforce reductions and other charges of $1.1
million to reduce the carrying value and dispose of certain
assets of the Company's titanium casting operations, offset by a
$5.0 million gain resulting from the sale of the operating assets
of the Company's Millbury, Massachusetts facility to TIMET.
During the first nine 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 $1.6 million to $10.6 million in
the first nine months of fiscal year 1999 compared to $9.0
million in the first nine 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.
The Company recorded a provision for income taxes of $7.3
million in the first nine 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
$14.2 million in the first nine months of fiscal year 1998.
Excluding combined restructuring and one-time charges
(credits) of $19.8 million, net income in the first nine months
of fiscal year 1999 was $30.2 million or $.82 per diluted share
versus net income before extraordinary item and other credits of
$24.6 million or $.66 per diluted share in the first nine months
of fiscal year 1998.
Net income was $17.5 million, or $.48 per diluted share in
the first nine months of fiscal year 1999 and $24.0 million, or
$.64 per diluted share in the first nine months of fiscal year
1998.
-18-<PAGE>
<PAGE> 19
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
LIQUIDITY AND CAPITAL RESOURCES
The $2.9 million decrease in the Company's cash to $61.6
million at February 28, 1999 from $64.6 million at May 31, 1998
resulted primarily from cash provided by operating activities of
$39.5 million, issuance of common stock of $3.2 million in
connection with employee compensation and benefit plans, $5.7
million of proceeds from the sale of fixed assets and $2.0
million generated from other, net investing activities, offset by
capital expenditures of $37.9 million, $13.1 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 $12.3 million decrease in the Company's working capital
to $211.5 million at February 28, 1999 from $223.8 million at May
31, 1998 resulted primarily from (in millions):
<TABLE>
<CAPTION>
<S> <C>
Net Income $ 17.5
Decrease in:
Long-term restructuring, integration
disposal and environmental (0.6)
Long-term benefit liabilities (2.1)
Deferred taxes and other (0.2)
Net repurchase of common stock (9.9)
Other changes in stockholders' equity (0.9)
Increase in:
Intangible and other assets (3.8)
Long-term debt 1.9
Property, plant and equipment, net (14.2)
Decrease in working capital $(12.3)
</TABLE>
Earnings before interest, taxes, depreciation, amortization
and other charges (credits) ("EBITDA") increased $5.4 million to
$70.0 million in the first nine months of fiscal year 1999 from
$64.6 million in the first nine months of fiscal year 1998. The
increase in EBITDA reflects increased volume as a result of
throughput improvements and improved production efficiency from
the Company's Grafton facility as a result of recent equipment
repairs and enhancements and reorganization of the 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.
-19-<PAGE>
<PAGE> 20
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
LIQUIDITY AND CAPITAL RESOURCES, Continued
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 $1.9
million during fiscal year 1999 and $1.6 million thereafter. In
the first nine months of fiscal year 1999, spending related to
the 1997 restructuring amounted to $1.2 million.
The Company expects to spend $1.4 million in fiscal year
1999 and $15.1 million thereafter on non-capitalizable
environmental activities. In the first nine months of fiscal
year 1999, $0.7 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 nine months of fiscal year 1999, capital expenditures
amounted to $37.9 million and are expected to be approximately
$43.0 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.
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 February 28, 1999, the total
availability under the Receivables Financing Program was $55.3
million, there were no borrowings and letters of credit amounting
to $9.7 million were outstanding.
-20-<PAGE>
<PAGE> 21
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
LIQUIDITY AND CAPITAL RESOURCES, Continued
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 February 28, 1999. Wyman-Gordon Limited had outstanding 1.1
million pounds sterling (approximately $1.7 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 ($61.6 million at February 28, 1999), 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.
ACCOUNTING AND TAX MATTERS
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 nine month periods ended February 28, 1999 and 1998.
-21-<PAGE>
<PAGE> 22
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
ACCOUNTING AND TAX MATTERS, 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. 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.
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>
DESCRIPTION STAGE OF ESTIMATED TIMETABLE
OF APPROACH COMPLETION FOR COMPLETION
<S> <C> <C>
Computer Systems:
Assess systems for possible
Year 2000 impact 100% Completed
Modify or replace non-compliant
systems 80% September 30, 1999
Test systems with system clocks
set at current date 80% September 30, 1999
Test systems off-line with
system clocks set at various
Year 2000 related critical dates 80% September 30, 1999
Plant Equipment:
Computer-dependent plant
equipment assessment and
compliance procedures performed 80% September 30, 1999
</TABLE>
-22-<PAGE>
<PAGE> 23
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
YEAR 2000, Continued
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 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.
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 80% complete and the
Company anticipates completing the project by September 30, 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 $1.2 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 $2.0 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.
-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 Nine Months Ended
February 28, 1999
</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.
On April 1, 1999, the Company filed a Form 8-K with the
Commission to report the resignation of Edward J. Davis as the
Company's Vice President, Chief Financial Officer and
Treasurer.
On April 9, 1999, the Company filed a Form 8-K with the
Commission to report settlement proceedings associated with
the previously reported industrial accident on December 22,
1996.
-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: 4/13/99 By: /S/ WALLACE F. WHITNEY, JR
Wallace F. Whitney, Jr.
Vice President,
General Counsel and Clerk
Date: 4/13/99 By: /S/ DAVID J. SULZBACH
David J. Sulzbach
Vice President,
Finance, Corporate Controller
and Principal Accounting Officer
-25-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAY-31-1999
<PERIOD-START> JUN-01-1998
<PERIOD-END> FEB-28-1999
<CASH> 61,630
<SECURITIES> 7
<RECEIVABLES> 143,965
<ALLOWANCES> 0
<INVENTORY> 116,719
<CURRENT-ASSETS> 330,691
<PP&E> 506,469
<DEPRECIATION> 294,912
<TOTAL-ASSETS> 571,266
<CURRENT-LIABILITIES> 119,223
<BONDS> 164,438
0
0
<COMMON> 37,053
<OTHER-SE> 174,588
<TOTAL-LIABILITY-AND-EQUITY> 571,266
<SALES> 631,447
<TOTAL-REVENUES> 639,716
<CGS> 547,125
<TOTAL-COSTS> 547,125
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,642
<INCOME-PRETAX> 24,859
<INCOME-TAX> 7,318
<INCOME-CONTINUING> 17,541
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 17,541
<EPS-PRIMARY> .48
<EPS-DILUTED> .48
</TABLE>
