0000108703-95-000005.txt : 19950905 0000108703-95-000005.hdr.sgml : 19950905 ACCESSION NUMBER: 0000108703-95-000005 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19950603 FILED AS OF DATE: 19950901 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: WYMAN GORDON CO CENTRAL INDEX KEY: 0000108703 STANDARD INDUSTRIAL CLASSIFICATION: METAL FORGING & STAMPINGS [3460] IRS NUMBER: 041992780 STATE OF INCORPORATION: MA FISCAL YEAR END: 0528 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-03085 FILM NUMBER: 95569803 BUSINESS ADDRESS: STREET 1: 244 WORCHESTER ST STREET 2: BOX 8001 CITY: NORTH GRAFTON STATE: MA ZIP: 01536 BUSINESS PHONE: 5088394441 10-K 1 WYMAN-GORDON CO. FORM 10-K 1 Form 10-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (Fee Required) For the fiscal year ended June 3, 1995 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (No Fee Required) For the transition period from to Commission file number 0-3085 WYMAN-GORDON COMPANY (Exact name of registrant as specified in its charter) MASSACHUSETTS 04-1992780 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 244 WORCESTER STREET, BOX 8001, GRAFTON, MASSACHUSETTS 01536-8001 (Address of Principal Executive Offices) (Zip Code) 508-839-4441 (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: NAME OF EACH EXCHANGE TITLE OF EACH CLASS ON WHICH REGISTERED None None Securities registered pursuant to Section 12(g) of the Act: Common Stock, $1 Par Value (Title of Class) Indicate by a check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] Aggregate market value of the voting stock held by non- affiliates of the registrant as of July 29, 1995: $154,481,750 Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date. CLASS OUTSTANDING AT JULY 29, 1995 Common Stock, $1 Par Value 35,113,540 Shares -1- 2 DOCUMENTS INCORPORATED BY REFERENCE Portions of the Registrant's "Fiscal 1995 Annual Report to Stockholders" are incorporated into Parts I, II & IV. Portions of the Registrant's "Proxy Statement for Annual Meeting of Stockholders" on October 18, 1995 are incorporated into Parts III & IV. -2- 3 PART I ITEM 1. BUSINESS GENERAL Wyman-Gordon Company, founded in 1883, is a leading manufacturer of highly engineered, technically advanced components for both the commercial and defense aerospace market and the commercial power generation market. The Company uses die forging, extrusion and investment casting processes to produce metal components to exacting customer specifications for technically demanding applications such as jet turbine engines, airframes and land-based gas turbine engines. The Company also extrudes seamless heavy-wall steel pipe for use primarily in commercial power generation plants, and designs and produces prototype aircraft using composite technologies. The Company produces components for most of the major commercial and U.S. defense aerospace programs. Metallurgical skills, a unique asset base and a broad offering of capabilities allow the Company to serve competing customers effectively and to lead the development and use of new metal technologies for its customers' uses. Wyman-Gordon Company's acquisition of Cameron Forged Products Company from Cooper Industries, Inc. in May 1994 united two of the country's largest and most technically advanced forgings companies and had a pervasive impact on Wyman-Gordon Company. As a result of the acquisition, the Company has broadened its revenue base and expanded into new markets. The Company is also realizing substantial operating and processing efficiencies through the consolidation of systems and facilities and the reduction of personnel performing duplicate functions. MARKETS AND PRODUCTS The principal markets served by the Company are aerospace and power generation. Revenue by market for the respective periods were as follows (000's omitted):
YEAR ENDED YEAR ENDED JUNE 3, 1995 MAY 28, 1994 (1) % OF % OF REVENUE TOTAL REVENUE TOTAL Aerospace $300,143 76% $188,518 84% Power generation 60,038 15 10,112 4 Other 36,458 9 26,064 12 Total $396,639 100% $224,694 100%
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YEAR ENDED YEAR ENDED DECEMBER 31, 1993 DECEMBER 31, 1992 % OF % OF REVENUE TOTAL REVENUE TOTAL Aerospace $205,077 85% $263,961 88% Power generation 9,214 4 12,717 4 Other 25,470 11 22,203 8 Total $239,761 100% $298,881 100%
[FN] (1) Revenues for the year ended May 28, 1994 are being presented for comparative purposes only. AEROSPACE The Company produces products utilized in general aviation, defense and business jet aircraft. The Company manufactures numerous forged and cast components for jet engines produced by all of the major manufacturers, including General Electric, Pratt & Whitney, and Rolls-Royce. The Company's forged engine parts include fan discs, compressor discs, turbine discs, seals, spacers, shafts, hubs and cases. Cast engine parts include thrust reversers, valves and fuel system parts such as combustion chamber swirl guides. Jet engines may produce in excess of 100,000 pounds of thrust and may subject parts produced by the Company to temperatures reaching 1,350 degrees Fahrenheit. Components for such extreme conditions require precision manufacturing and expertise with high-purity titanium and nickel-based superalloys. Rotating parts such as fan, compressor and turbine discs must be manufactured to precise quality specifications. The Company manufactures forged and cast structural parts for fixed-wing aircraft and helicopters. These products include wing spars, engine mounts, struts, landing gear beams, landing gear, wing hinges, wing and tail flaps, housings, and bulkheads. These parts may be made of titanium, steel, aluminum and other alloys, as well as composite materials. The Company also produces dynamic rotor forgings for helicopters. Forging is particularly well- suited for airframe parts because of its ability to impart greater proportional strength to metal than other manufacturing processes. Investment casting can produce complex shapes to precise, repeatable dimensions. The Company has been a major supplier for many years of the beams that support the main landing gear assemblies on the Boeing 747 and has begun shipment of main landing gear beams for the new Boeing 777 widebody. The Company forges landing gear and other airframe structural components for the Boeing 747, 757, 767 and 777, the McDonnell Douglas MD-11 and the Airbus A330 and A340. The Company produces structural forgings for the F-15, F-16 and F-18 fighter aircraft and the Sikorsky Black Hawk helicopter. The Company also produces large, one-piece bulkheads for Lockheed and Boeing for the F-22 next generation air superiority fighter aircraft. -4- 5 POWER GENERATION The Company is a major supplier of extruded seamless heavy wall pipe for the critical piping systems in commercial power plants worldwide, both fossil fuel and nuclear as well as offshore petrochemical applications. The Company believes it is the leading U.S. supplier, and also a leading U.K. supplier, of large diameter, seamless heavy wall pipe. The Company produces steam turbine generator, gas turbine generator and forged valve components for land-based power generation applications. The Company also manufactures shafts, cases, compressor and turbine discs for marine gas turbines. OTHER PRODUCTS The Company supplies products to builders of military missiles. Examples of these products include breech block and breech rings for large cannon and forged steel casings for bombs, rockets and expendable launch vehicles. The Company participates in a variety of U.S. Government programs including the Standard, Harm, Patriot and Aegis programs. For naval defense applications, the Company supplies components for propulsion systems for nuclear submarine and aircraft carriers as well as pump, valve, structural and non nuclear propulsion forgings. The Company also manufactures extruded missile, rocket and bomb cases and supplies extruded products for nuclear submarines and aircraft carriers including heavy wall piping for nuclear propulsion systems, torpedo tubes and catapult launch tubes. The Company's investment castings operations produce products for commercial applications such as: components for golf clubs, pistol frames, bicycles, food processing equipment, diesel turbo- chargers, land-based military equipment such as tanks, and various other applications. The Company also supplies extruded powders for other superalloy powder manufacturers. The Company is actively seeking to identify alternative applications for its capabilities, such as in the automotive and other commercial markets. CUSTOMERS The Company has approximately 150 active customers that purchase forgings, approximately 550 active customers that purchase investment castings and approximately 20 active customers that purchase composite structures. The Company's principal customers are similar across all of these production processes. Five customers accounted for 50% of the Company's revenues for the year ended June 3, 1995, 51% for the five months ended May 28, 1994, 56% and 53% for the two years ended December 31, 1993 and 1992, respectively. General Electric Company ("GE") and United Technologies Corporation ("UT") (Pratt & Whitney and Sikorsky Divisions) each accounted for more than 10% of revenues for the year ended June 3, 1995, the five months ended May 28, 1994 and the two years ended December 31, 1993 and 1992, respectively, as follows: -5- 6
($000's omitted) FIVE YEAR MONTHS ENDED ENDED YEAR ENDED JUNE 3, MAY 28, DECEMBER 31, 1995 % 1994 % 1993 % 1992 % GE $101,261 26 $17,226 20 $55,585 23 $62,740 21 UT 58,873 15 13,930 16 37,060 16 48,920 17
Boeing Company, McDonnell Douglas Corporation and Rolls Royce PLC are also significant customers of the Company. The Company has organized its operations into product groups which focus on specific customers or groups of customers with similar needs. The Company has become actively involved with its aerospace customers through joint development relationships and cooperative research and development, engineering, quality control, just-in-time inventory control and computerized design programs. This involvement begins with the design of the tooling and processes to manufacture the customer's components to its precise specifications. MARKETING AND SALES The Company markets its products principally through its own sales engineers and makes only limited use of manufacturers' representatives. Substantially all sales are made directly to original equipment manufacturers. The Company's sales are not subject to significant seasonal fluctuations. A substantial portion of the Company's revenues are derived from long-term, fixed price contracts with major engine and aircraft manufacturers. These contracts are typically "requirements" contracts under which the purchaser commits to purchase a given portion of its requirements of a particular component from the Company. Actual purchase quantities are typically not determined until shortly before the year in which products are to be delivered. BACKLOG The backlog of unfilled orders from customers in the various markets served by the Company has been as follows (000's omitted):
JUNE 3, 1995 MAY 28, 1994 % OF % OF BACKLOG TOTAL BACKLOG TOTAL Aerospace $382,982 82% $342,007 88% Power generation 57,248 12 33,700 9 Other 28,531 6 13,700 3 Total $468,761 100% $389,407 100%
-6- 7 At June 3, 1995 approximately $365.0 million of total backlog was scheduled to be shipped within one year and the remainder in subsequent years, although there can be no assurances that products ordered will not be subject to schedule changes. MANUFACTURING PROCESSES The Company employs three manufacturing processes: forging, investment casting and composites production. FORGING Forging is the process by which desired shapes, metallurgical characteristics, and mechanical properties are imparted to metal by heating and shaping it through pressing or extrusion. The Company forges alloys of titanium, aluminum and steel as well as high temperature nickel-based superalloys. The Company manufactures most of its forgings at its facilities in Grafton and Worcester, Massachusetts, near Houston, Texas and Livingston, Scotland. The Company also operates a superalloy powder metal facility in Brighton, Michigan and vacuum arc remelting facilities in Houston, Texas and Millbury, Massachusetts which produce steel, nickel and titanium ingots, and a plasma arc melting facility for the production of high quality titanium ingots and nickel powder in Millbury, Massachusetts. The Company has six large closed die hydraulic forging presses rated as follows: 18,000 ton, 35,000 ton and 50,000 ton in Grafton Massachusetts; 29,000 ton and 35,000 ton in Houston, Texas and 30,000 ton in Livingston, Scotland. The 35,000 ton vertical extrusion press in Houston can be modified to a 55,000 ton hydraulic forging press. The Company also operates an open die cogging press rated at 2,000 tons at its Grafton, Massachusetts location and a hydraulic isothermal forging press rated at 8,000 tons at its Worcester, Massachusetts location. The Company operated forging hammers rated at 35,000 pounds at its Worcester, Massachusetts location. Such hammers will be idled during September 1995. The majority of this facility's production has been transferred to other Company facilities in Massachusetts and Texas. The Company employs all major forging processes, including the following: OPEN-DIE FORGING. In this process, the metal is forged between dies that never completely surround the metal, thus allowing the metal to be observed during the process. Typically, open-die forging is used to create relatively simple, preliminary shapes to be further processed by closed die forging. CLOSED-DIE FORGING. Closed-die forging involves pressing heated metal into the required shapes and size determined by machined impressions in specially prepared dies which exert three dimensional control on the metal. In hot-die forging, a type of closed-die process, the dies are heated to a temperature approaching the transformation temperature of the materials being forged so as to allow the metal to flow more easily within the die -7- 8 cavity which produces forgings with superior surface conditions, metallurgical structures, tighter tolerances, enhanced repeatability of the part shapes and greater metallurgical control. Both titanium and nickel-based superalloys are forged using this process, in which the dies are heated to a temperature of approximately 1,300 degrees Fahrenheit. CONVENTIONAL/MULTI-RAM. The closed-die, multiple-ram process featured on the Company's 30,000 ton press enables the Company to produce extremely complex forgings with multiple cavities in a single heating and pressing cycle. Dies may be split either on a vertical or a horizontal plane and shaped punches may be operated by side rams, piercing rams, or both. Multi-ram forging enables the Company to produce a wide variety of shapes, sizes, and configurations utilizing less input weight. The process also optimizes grain flow and uniformity of deformation, reduces machining requirements, and minimizes overall costs. ISOTHERMAL FORGING. Isothermal forging is a closed-die process in which the dies are heated to the same temperature as the metal being forged, typically in excess of 1,900 degrees Fahrenheit. The forged material typically consists of nickel-based superalloy powders. Because of the extreme temperatures necessary for forming these alloys, the dies must be made of refractory metal (such as molybdenum) so that the die retains its strength and shape during the forging process. Because the dies may oxidize at these elevated temperatures, the forging process is carried on in a vacuum or inert gas atmosphere. The Company's isothermal press also allows it to produce near-net shape components (requiring less machining by the customer) made from titanium alloys, which can be an important competitive advantage in times of high titanium prices. The Company carries on this process in its 8,000-ton isothermal press. EXTRUSION. The Company's 35,000 ton vertical extrusion press is one of the largest and most advanced presses in the world. Extrusions are produced for applications in the oil and gas industry, including tension leg platforms, riser systems and production manifolds. It is supported by manipulators capable of handling work pieces weighing up to 20 tons, rotary hearth furnaces and a 14,000 ton blocking press. It is capable of producing heavy wall seamless pipe with outside diameters up to 48 inches and wall thicknesses from 1/2 inch up to 7 inches or more. Solid extrusions can be manufactured from 6 to 32 inches in diameter. Typical lengths vary from 10 to 45 feet. Powder materials can also be compacted and extruded into forging billets utilizing this press. The 30,000 ton press has similar extrusion capabilities in addition to its multi-ram forging capabilities. TITANIUM AND SUPERALLOY PRODUCTION. The Company utilizes vacuum arc remelting technology to produce titanium alloy suitable for structural and turbine aerospace applications. Titanium produced in this manner is utilized in both the Company's forging and castings operations. -8- 9 The Company's Brighton, Michigan powder metal facility has the capability to atomize, process, and consolidate (by hot isostatic pressing) superalloy metal powders for use in aerospace, medical implant, petrochemical, hostile environment oil and gas drilling and production, and other high technology applications. This facility has an annual production capacity of up to 500,000 pounds of superalloy powder. In addition, the Company has the capacity to consolidate powdered metals by extrusion using its 30,000 ton and 35,000 ton presses. Extruded billets are further processed and either sold to other forge shops or forged into critical jet engine components on the Company's 8,000 ton isothermal press. The Company's Plasma Arc Melting facility (PAM) in Millbury, Massachusetts is capable of producing high quality titanium ingot and nickel-based superalloy powder. The Company is currently pursuing certifications by certain customers for use of this technology in high performance jet engines. The Company believes that its vacuum arc remelt ("VAR") shop in Houston, Texas is one of the finest facilities of its kind in the world. This facility, with its five computer-controlled VAR furnaces, accepts electrodes up to 42 inches in diameter and weighing up to 40,000 pounds. The Houston VAR furnaces are used to remelt purchased electrodes into high purity alloys for internal use in severe applications. In addition, the VAR furnaces are used for toll melting. These vacuum metallurgy techniques provide consistently high levels of purity, low gas content, and precise control over the solidification process. This minimizes segregation in complex alloys and results in improved mechanical properties, as well as hot and cold workability. The Company has entered into a joint venture with Pratt & Whitney and certain Australian investors to produce nickel-based superalloy ingots in Perth, Australia. These ingots will be utilized as raw materials for the Company's forging and casting products. SUPPORT OPERATIONS. The Company manufactures its own forging dies out of high-strength steel and molybdenum. These dies can weigh in excess of 100 tons and can be up to 25 feet in length. In manufacturing its dies, the Company takes its customers' drawings and engineers the dies using CAD/CAM equipment and sophisticated metal flow computer models that simulate metal flow during the forging process. This activity improves die design and process control and permits the Company to enhance the metallurgical characteristics of the forging. The Company also has machine shops at its three major forging locations with computer aided profiling equipment, vertical turret lathes and other equipment that it employs to rough machine products to a shape allowing inspection of the products. The Company also operates rotary and car-bottom heat treating furnaces that enhance the performance characteristics of the forgings. These furnaces have sufficient capacity to handle all the Company's forged products. The Company subjects its products to extensive quality inspection and contract qualification procedures involving zyglo, chemical etching, ultrasonic, red dye, and electrical conductivity testing facilities. -9- 10 TESTING. Because the Company's products are for high performance end uses rigorous testing is necessary and is performed internally by Company engineers. Throughout the manufacturing process, numerous tests and inspections are performed to insure the final quality of each product; statistical process control ("SPC") techniques are also applied throughout the entire manufacturing process. INVESTMENT CASTINGS The Company's investment castings operations use modern, automated, high volume production equipment and both air-melt and vacuum-melt furnaces to produce a wide variety of complex investment castings. Castings are made of a range of metal alloys including aluminum, magnesium, steel, titanium and nickel-based superalloys. The Company's castings operations are conducted in facilities located in Connecticut, New Hampshire, Nevada and California. These plants house air and vacuum-melt furnaces, wax injection machines and investment dipping tanks. Because of the growth in demand for the Company's high quality titanium castings, the Company is in the process of restarting its Franklin, New Hampshire facility which it mothballed in 1993. The Company has ordered a new state-of-the-art titanium melting furnace for installation in the Franklin plant. Additionally, the Company has expanded its Groton, Connecticut facility for the production of high quality titanium castings. Investment castings are produced in four major stages. First, molten wax is injected into an aluminum mold, known as a "tool," in the shape of the ultimate component to be produced. These tools are produced to the specifications of the customer and are primarily purchased from outside die makers, although the Company maintains internal tool-making capabilities. In the second stage, the wax patterns are mechanically coated with a sand and silicate- bonded slurry in a process known as investment. This forms a ceramic shell which is subsequently air-dried under controlled environmental conditions. The wax inside this shell is then melted and removed in a high temperature steam autoclave and the molten wax is recycled. In the third, or foundry stage, metal is melted in an electric furnace in either an air or vacuum environment and poured into the ceramic shell. After cooling, the ceramic shells are removed by vibration. The metal parts are then cleaned in a high temperature caustic bath, followed by water rinsing. In the fourth, or finishing stage, the castings are finished to remove excess metal. The final product then undergoes a lengthy series of testing (radiography, fluorescent penetrant, magnetic particle and dimensional) to ensure quality and consistency. COMPOSITES The Company's composites operation, Scaled Composites, Inc., plans, designs, fabricates and tests composite airframe structures for the aerospace market. Customers include Lawrence Livermore Laboratories and Orbital Sciences Corp. -10- 11 FACILITIES The following table sets forth certain information with respect to the Company's major facilities at June 3, 1995. The Company believes that its facilities are well-maintained, are suitable to support the Company's business and are adequate for the Company's present and anticipated needs. At June 3, 1995, the Company's forging, investment castings and composites facilities were operating at approximately 60%, 70% and 90% of their total productive capacity, respectively.
APPROX. SQUARE OWNED/ LOCATION FOOTAGE PRIMARY FUNCTION LEASED FORGINGS: Brighton, Michigan 34,500 Superalloy Powder Production Owned Grafton, Massachusetts 85,420 Administrative Offices Owned Grafton, Massachusetts 843,200 Forging Owned Houston, Texas 1,283,800 Forging Owned Houston, Texas 433,000 Currently idle Leased Livingston, Scotland 405,200 Forging Owned Livingston, Scotland 112,000 Currently idle Owned Millbury, Massachusetts 104,125 Research and Owned Development, Metals Production Worcester, Massachusetts 43,200 Currently idle Owned Worcester, Massachusetts 22,300 Forging Owned Worcester, Massachusetts 301,400 Closing September 1995 Owned CASTINGS: Carson City, Nevada 46,000 Casting Owned Franklin, New Hampshire 43,200 Casting Owned Groton, Connecticut (2 plants) 162,550 Casting Owned San Leandro, California 45,000 Casting Owned Tilton, New Hampshire 94,000 Casting Owned COMPOSITES: Mojave, California 67,000 Composites Owned
RAW MATERIALS Raw materials used by the Company in its forgings and castings include alloys of titanium, nickel, steel, aluminum, magnesium and other high-temperature alloys. The composites operation uses high strength fibers such as fiberglass or graphite, as well as materials such as foam and epoxy, to fabricate composite structures. The major portion of metal requirements for forged and cast products are purchased from major non-ferrous metal suppliers producing forging and casting quality material as needed to fill customer orders. The Company has two or more sources of supply for all significant raw materials. The Company satisfies some of its nickel and titanium requirements internally by producing titanium alloy from titanium scrap and "sponge". The Company's powder metal -11- 12 facility and PAM units produce nickel-based superalloy powder and high quality titanium ingot as demand for the Company's products grew during its 1995 fiscal year and prices of raw materials rose. The Company has experienced delays in the delivery of its raw materials. The titanium and nickel-based superalloys utilized by the Company have a relatively high dollar value. Accordingly, the Company attempts to recover and recycle scrap materials such as machine turnings, forging flash, scrapped forgings, test pieces and casting sprues, risers and gates. In the event of customer cancellation, the Company may, under certain circumstances, obtain reimbursement from the customer if the material cannot be diverted to other uses. Costs of material already on hand, along with any conversion costs incurred, have generally been billed to the customer unless transferable to another order. As demand for the Company's products grew during its 1995 fiscal year, and prices of raw materials rose, the Company experienced certain raw material shortages and production delays. Although this situation improved during the second half of fiscal 1995, it had a negative impact on overall revenues. ENERGY USAGE The Company is a large consumer of energy. Energy is required primarily for heating metals to be forged and melting metals to be cast, melting of ingots, heat-treating materials after forging and casting, operating forging presses, melting furnaces, die-sinking, mechanical manipulation and pollution control equipment and space heating. The Company uses natural gas, oil and electricity in varying amounts at its manufacturing facilities. Supplies of natural gas, oil and electricity have been sufficient and there is no anticipated shortage for the future. EMPLOYEES As of June 3, 1995, the Company had approximately 3,100 employees of whom 850 were executive, administrative, engineering, research, sales and clerical and 2,250 production and craft. Approximately 61% of the production and craft employees, consisting of employees in the forging business, are represented by unions. The Company has entered into collective bargaining agreements with these union employees as follows:
NUMBER OF EMPLOYEES COVERED BY BARGAINING INITIATION EXPIRATION LOCATION AGREEMENTS DATE DATE Grafton and Worcester, Massachusetts 562 March 29, 1995 March 29, 1997 Houston, Texas 537 August 11, 1995 August 10, 1998 Livingston, Scotland 255 December 1, 1993 November 30, 1995 February 1, 1994 January 31, 1996 Total 1,354
-12- 13 The Company believes it has good relations with its employees although it experienced a one week strike in August 1995 in connection with the negotiation of its current collective bargaining agreement with the union representing most of its factory workforce in Houston, Texas. RESEARCH AND PATENTS The Company maintains research and development departments at both Millbury, Massachusetts and Houston, Texas which are engaged in applied research and development work primarily relating to the Company's forging operations. The Company works closely with customers, universities and government technical agencies in developing advanced forging and casting materials and processes. The Company's composites operation conducts research and development related to aerospace composite structures at the Mojave, California facility. The Company spent approximately $2.2 million, $0.7 million, $2.8 million, and $3.0 million on applied research and development work during the year ended June 3, 1995, the five months ended May 28, 1994, and the years ended December 31, 1993 and 1992. Although the Company owns patents covering certain of its processes, the Company does not consider that these patents are of material importance to the Company's business as a whole. Most of the Company's products are manufactured to customer specifications and, consequently, the Company has few proprietary products. COMPETITION Most of the Company's production capabilities are possessed in varying degrees by other companies in the industry, including both domestic and foreign manufacturers. Competition is intense among the companies currently involved in the industry. Competitive advantages are afforded to those with high quality products, low cost manufacturing, excellent customer service and delivery and engineering and production expertise. The Company considers that it is in a leading position in these areas. ENVIRONMENTAL REGULATIONS 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 continues to design and implement a system of programs and facilities for the management of its raw materials, production processes and industrial waste to promote compliance with environmental requirements. In the fourth quarter of 1991, the Company recorded a pre-tax charge of $7.0 million with respect to environmental investigation and remediation costs at the Grafton facility and a pre-tax charge of $5.0 million against potential environmental remediation costs upon the eventual sale of the Worcester facility. Pursuant to an agreement entered into with the U.S. Air Force upon the acquisition of the Grafton facility from the -13- 14 federal government in 1982, the Company has agreed to make additional expenditures for environmental management and remediation projects at that site during the period 1982 through 1999, approximately $6,100,000 of which remain as of June 3, 1995. The Company, together with numerous other parties, has been alleged to be a potentially responsible party ("PRP") at the following four federal or state superfund sites: Operating Industries, Monterey Park, California; Cedartown Municipal Landfill, Cedartown, Georgia; PSC Resources, Palmer, Massachusetts; and the Gemme site, Leicester, Massachusetts. The Company believes that any liability it may incur with respect to these sites will not be material. At the Gemme site a proposed agreement would allocate 33% of the clean-up costs to the Company. An insurance company is defending the Company's interests and the Company believes that any recovery against the Company would be covered by insurance. A consulting firm retained by the PRP group has recently made a preliminary remediation cost estimate of $0.3 million to $9.9 million. The Company's Grafton, Massachusetts plant location is included in the U.S. Nuclear Regulatory Commission's ("NRC") May 1992 Site Decommissioning Management Plan for low-level radioactive waste. The NRC conducted a long-range dose assessment in 1992 and determining that the site should be remediated. However, the Company believes that the NRC's draft assessment was flawed and has challenged that draft assessment. The Company has provided $1.5 million for the estimated cost of the remediation. The Company believes that it may have meritorious claims for reimbursement from the U.S. Air Force in respect of any liabilities it may have for such remediation. PRODUCT LIABILITY EXPOSURE The Company produces many critical engine and structural parts for commercial and military aircraft. As a result, the Company faces an inherent business risk of exposure to product liability claims. The Company maintains insurance against product liability claims, but there can be no assurance that such coverage will continue to be available on terms acceptable to the Company or that such coverage will be adequate for liabilities actually incurred. The Company has not experienced any material loss from product liability claims and believes that its insurance coverage is adequate to protect it against any claims to which it may be subject. LEGAL PROCEEDINGS At June 3, 1995, the Company was involved in certain legal proceedings arising in the normal course of its business. The Company believes the outcome of these matters will not have a material adverse effect on the Company. -14- 15 EXECUTIVE OFFICERS OF THE REGISTRANT The following table set forth certain biographical information with respect to executive officers of the Company.
NAME POSITION AGE John M. Nelson Chairman of the Board of Directors 64 David P. Gruber President, Chief Executive Officer 53 and Director Andrew C. Genor Vice President, Chief Financial Officer and Treasurer 53 Sanjay N. Shah Vice President Corporate Strategy 44 Planning & Business Development J. Douglas Whelan President, Forging Division 56 Wallace F. Whitney, Jr. Vice President, General Counsel and Clerk 52 Frank J. Zugel President, Investment Castings Division 50
John M. Nelson was elected Chairman of the Company in May 1994 having previously served as the Company's Chairman of the Board and Chief Executive Officer since May 1991. Prior to joining the Company, he served for many years in a series of executive positions with Norton Company, a manufacturer of abrasives and ceramics based in Worcester, Massachusetts, and was Norton's Chairman and Chief Executive Officer from 1988 to 1990 and its President and Chief Operating Officer from 1986 to 1988. Mr. Nelson is also Chairman of the Board of Directors of the TJX Companies, Inc., a Director of Brown & Sharpe Manufacturing Company, Cambridge Biotechnology, Inc., Commerce Holdings, Inc. and Stocker & Yale, Inc. He is also Chairman of the Board of Trustees of Worcester Polytechnic Institute and Vice President of the Worcester Art Museum. David P. Gruber was elected President and Chief Executive Officer of the Company in May 1994 having served as President and Chief Operating Officer since October 1991. Prior to joining the Company, Mr. Gruber served as Vice President, Advanced Ceramics, of Compagnie de Saint Gobain (which acquired Norton Company in 1990), a position he held with Norton Company since 1987. Mr. Gruber previously held various executive and technical positions with Norton Company since 1978. He is a Trustee of the Manufacturers' Alliance for Productivity and Innovation, and is a member of the Mechanical Engineering Advisory Committee of Worcester Polytechnic Institute. -15- 16 Andrew C. Genor joined the Company as Vice President, Chief Financial Officer and Treasurer in January 1995. Prior to joining the Company, Mr. Genor was Chief Financial and Operating Officer of HNSX Supercomputers, Inc., a Company he co-founded in 1987 to provide support to supercomputer users and vendors. Prior to that time, he spent 20 years at Honeywell, Inc., including service as Vice President and Corporate Treasurer and Vice President, Finance, Administration and Business Development for Honeywell Europe. Sanjay N. Shah was elected Vice President, Corporate Strategy Planning and Business Development in May 1994 having previously served as Vice President and Assistant General Manager of the Company's Aerospace Forgings Division. He has held a number of executive, research, engineering and manufacturing positions at the Company since joining the Company in 1975. J. Douglas Whelan joined the Company in March 1994 and was elected President, Forgings Division in May 1994. Prior to joining the Company he had served for a short time as the President of Ladish Co., Inc., a forging Company in Cudahy, Wisconsin, and prior thereto had been Vice President, Operations of the Cameron Forged Products Division of Cooper Industries, Inc. with which company and its predecessors he had been employed since 1965 in various executive and managerial capacities. Wallace F. Whitney, Jr. joined the Company in 1991. Prior to that time, he had been Vice President, General Counsel and Secretary of Norton Company since 1988, where he had been employed in various legal capacities since 1973. Frank J. Zugel joined the Company in June 1993. He was elected President Investment Castings Division in May 1994. Prior to joining the Company, he had served as President of Stainless Steel Products, Inc., a metal fabricator for aerospace applications, since 1992 and before then as Vice President of Pacific Scientific Company, a supplier of components to the aerospace industry, since 1988. None of the executive officers has any family relationship with any other executive officer. All officers are elected annually. ITEM 2. PROPERTIES The response to ITEM 2. PROPERTIES incorporates by reference the paragraphs captioned "Facilities" included in ITEM 1. BUSINESS. ITEM 3. LEGAL PROCEEDINGS The response to ITEM 3. LEGAL PROCEEDINGS incorporates by reference the paragraphs captioned "Environmental Regulations" and "Legal Proceedings" included in ITEM 1. BUSINESS. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS There were no matters submitted to a vote of security holders during the fourth quarter of fiscal 1995. -16- 17 PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS The response to ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS incorporates by reference the "Market and Dividend Information" section of the Company's Annual Report to Stockholders. ITEM 6. SELECTED FINANCIAL DATA The response to ITEM 6. SELECTED FINANCIAL DATA incorporates by reference the "Consolidated Financial Review" section of the Company's 1995 Annual Report to Stockholders. Also incorporated by reference is the "Accounting and Tax Matters" section of the Company's 1995 Annual Report to Stockholders. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The response to ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS incorporates by reference the "Management's Discussion" section of the Company's 1995 Annual Report to Stockholders. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The response to ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA incorporates by reference the following sections of the Company's 1995 Annual Report: Consolidated Statements of Operations Consolidated Balance Sheets Consolidated Statements of Cash Flows Consolidated Statement of Stockholder Equity Notes to Consolidated Financial Statements Report of Independent Auditors ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. -17- 18 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The information regarding executive officers is incorporated by reference to PART I, ITEM 1. BUSINESS, under the caption "Executive Officers of the Registrant." Other information required by Items 401 and 405 of Regulation S-K is incorporated by reference to the following sections of the Company's "Proxy Statement for Annual Meeting of Stockholders" on October 18, 1995. Election of Directors Nominees for Three-Year Term Continuing Directors Securities and Exchange Commission Reports ITEM 11. EXECUTIVE COMPENSATION The response to ITEM 11. EXECUTIVE COMPENSATION incorporates by reference the following sections of the Company's "Proxy Statement for Annual Meeting of Stockholders" on October 18, 1995. Election of Directors Nominees for a Three-Year Term Continuing Directors Committees of the Board Meetings of the Board Compensation Committee Report Executive Compensation Pension Benefits Agreements with Management Proposal for Approval of Long-Term Incentive Plan Proposal for Approval of Employee Stock Purchase Plan Proposal for Approval of the Wyman-Gordon Company Non-Employee Director Stock Option Plan Proposal for the Approval of the Performance Share Agreement -18- 19 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The response to ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT incorporates by reference the information of the following sections of the "Proxy Statement for Annual Meeting of Stockholders" on October 18, 1995. Election of Directors Nominees of a Three-Year Term Continuing Directors Shares of Company Stock Beneficially Owned by Certain Owners and by Management ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The response to ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS incorporates by reference the following sections of the Company's "Proxy Statement for Annual Meeting of Stockholders" on October 18, 1995. Nominees for Three-Year Term Continuing Directors Compensation Committee Report Executive Compensation Agreements with Management -19- 20 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K EXHIBITS The exhibit listing required by Item 601 of Regulation S-K is included on page E-1. FINANCIAL STATEMENTS The following financial statements, together with the report thereon of Ernst & Young dated June 26, 1995 appearing in the Company's Fiscal 1995 Annual Report to Stockholders are incorporated by reference in this Form 10-K: Consolidated Statements of Operations and Retained Earnings Consolidated Balance Sheets Consolidated Statements of Cash Flows Consolidated Statements of Stockholders Equity Notes to Consolidated Financial Statements SCHEDULES The following additional financial data should be read in conjunction with the consolidated financial statements in the Company's Fiscal 1995 Annual Report to Stockholders. Other schedules have been omitted because they are inapplicable or are not required. PAGE II - Valuation and Qualifying Accounts S-1 REPORTS ON FORM 8-K No reports on Form 8-K were filed with the Commission during the fourth quarter of fiscal 1995. -20- 21 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in this Annual Report (Form 10-K) of Wyman-Gordon Company and Subsidiaries of our report dated June 26, 1995, included in the Fiscal 1995 Annual Report to Stockholders of Wyman-Gordon Company and subsidiaries. Our audits also included the financial statement schedule of Wyman-Gordon Company listed in Item 14. This schedule is the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein. We also consent to the incorporation by reference in the Registration Statements (Form S-8, File Numbers 2-56547, 2-75980, 33-26980 and 33-48068) pertaining to the Wyman-Gordon Company Executive Long-Term Incentive Program (1975) - Amendment No. 6, the Wyman-Gordon Company Stock Purchase Plan, the Wyman-Gordon Company Savings/Investment Plan and the Wyman-Gordon Company Long-Term Incentive Plan and in the related Prospectuses of our report dated June 26, 1995, with respect to the consolidated financial statements of Wyman-Gordon Company and Subsidiaries incorporated by reference in the Annual Report (Form 10-K) for the year ended June 3, 1995. Boston, Massachusetts ERNST & YOUNG LLP August 29, 1995 -21- 22 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Wyman-Gordon Company (REGISTRANT) By /S/ ANDREW C. GENOR September 1, 1995 Andrew C. Genor Date Vice President, Chief Financial Officer and Treasurer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
/S/ JOHN M. NELSON Chairman of the September 1, 1995 John M. Nelson Board of Directors Date /S/ DAVID P. GRUBER President, September 1, 1995 David P. Gruber Chief Executive Officer Date and Director /S/ ANDREW C. GENOR Vice President, September 1, 1995 Andrew C. Genor Chief Financial Officer Date and Treasurer and Principal Financial Officer /S/ JEFFREY B. LAVIN Assistant Corporate September 1, 1995 Jeffrey B. Lavin Controller and Principal Date Accounting Officer /S/ E. PAUL CASEY Director September 1, 1995 E. Paul Casey Date /S/ DEWAIN K. CROSS Director September 1, 1995 Dewain K. Cross Date /S/ WARNER S. FLETCHER Director September 1, 1995 Warner S. Fletcher Date /S/ ROBERT G. FOSTER Director September 1, 1995 Robert G. Foster Date
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/S/ M HOWARD JACOBSON Director September 1, 1995 M Howard Jacobson Date /S/ JUDITH S. KING Director September 1, 1995 Judith S. King Date /S/ GEORGE S. MUMFORD, JR. Director September 1, 1995 George S. Mumford, Jr. Date /S/ H. JOHN RILEY, JR. Director September 1, 1995 H. John Riley, Jr. Date /S/ JON C. STRAUSS Director September 1, 1995 Jon C. Strauss Date /S/ CHARLES A. ZRAKET Director September 1, 1995 Charles A. Zraket Date
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WYMAN-GORDON COMPANY AND SUBSIDIARIES SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS (000's omitted) CHARGED CHARGED BALANCE AT TO COSTS TO OTHER DEDUCT- BALANCE BEGINNING AND ACCOUNTS IONS AT END DESCRIPTION OF PERIOD EXPENSES DESCRIBE DESCRIBE OF PERIOD YEAR ENDED JUNE 3, 1995 Accumulated Amortization of Goodwill $8,354 $ 705 - - $9,059 FIVE MONTHS ENDED MAY 28, 1994 Accumulated Amortization of Goodwill $7,630 $ 724 - - $8,354 YEAR ENDED DECEMBER 31, 1993 Accumulated Amortization of Goodwill $6,482 $1,148 - - $7,630 YEAR ENDED DECEMBER 31, 1992 Accumulated Amortization of Goodwill $5,266 $1,216 - - $6,482
S-1 25
EXHIBIT INDEX EXHIBIT DESCRIPTION PAGE 3A Restated Articles of Organization of E-5 Wyman-Gordon Company. 3B Bylaws of Wyman-Gordon Company, as amended E-6 through May 24, 1994. 4A Amended and Restated Rights Agreement, dated - as of January 10, 1994 between the Company and State Street Bank & Trust Company, as Rights Agent - incorporated by reference to Exhibit 1 to the Company's Report on Form 8-A/A dated January 21, 1994. 4B Indenture dated as of March 16, 1993 among - Wyman-Gordon Company, its Subsidiaries and State Street Bank and Trust Company as Trustee with respect to Wyman-Gordon Company's 10 3/4% Senior Notes due 2003 - incorporated by reference to Exhibit 4C to the Company's Report on Form-10K for the year ended December 31, 1992. 4C 10 3/4% Senior Notes due 2003. Supplemental - Indenture dated May 19, 1994 - incorporated by reference to Exhibit 5 to the Company's Report on Form 8-K dated May 26, 1994. 4D 10 3/4% Senior Notes due 2003. Second - Supplemental Indenture and Guarantee dated May 27, 1994 - incorporated by reference to the Company's Report on Form 8-K dated May 26, 1994. 4E Instruments defining the rights of holders - of long-term debt are omitted pursuant to paragraph (b)(4)(iii) of Regulation S-K Item 601. The Company agrees to furnish such instruments to the Commission upon request. 10A Wyman-Gordon Company Executive Long-Term - Incentive Program, as amended February 17, 1988 - incorporated by reference to Appendix A to the Company's Proxy Statement dated March 25, 1988. 10B Wyman-Gordon Company Long-Term Incentive Plan - - incorporated by reference to Appendix A to the Company's Proxy Statement dated April 1, 1992.
E-1 26
EXHIBIT DESCRIPTION PAGE 10C John M. Nelson employment agreement dated - May 21, 1991 - incorporated by reference to Exhibit 10C to the Company's Report on Form 10-K for the year ended December 31, 1991. 10D David P. Gruber executive severance agreement - dated October 16, 1991 - incorporated by reference to Exhibit 10G to the Company's Report on Form 10-K for the year ended December 31, 1991. 10E Sanjay N. Shah executive severance agreement - dated July 12, 1991 - incorporated by reference to Exhibit 10I to the Company's Report on Form 10-K for the year ended December 31, 1991. 10F Wallace F. Whitney executive severance agreement - dated July 12, 1991 - incorporated by reference to Exhibit 10L to the Company's Report on Form 10-K for the year ended December 31, 1991. 10G Stock Purchase Agreement dated as of January 10, - 1994 between Cooper Industries, Inc. and the Company incorporated by reference to Annex A to the Company's preliminary Proxy Statement filed with the Securities and Exchange Commission on March 8, 1994. 10H Investment Agreement dated as of January 10, - 1994 between Cooper Industries, Inc. and the Company incorporated by reference to Annex B to the Company's preliminary Proxy Statement filed with the Securities and Exchange Commission on March 8, 1994. 10I Amendment dated May 26, 1994 to Investment - Agreement dated as of January 10, 1994, between the Company and Cooper - incorporated by reference to the Company's Report on Form 8-K dated May 26, 1994. 10J Revolving Credit Agreement dated as of May 20, - 1994 among Wyman-Gordon Receivables Corporation, the Financial Institutions Parties Hereto and Shawmut Bank N.A. as Issuing Bank, as Facility Agent and as Collateral Agent - incorporated by reference to the Company's Report on Form 8-K dated May 26, 1994.
E-2 27
EXHIBIT DESCRIPTION PAGE 10K Receivables Purchase and Sale Agreement dated - as of May 20, 1994 among Wyman-Gordon Company, Wyman-Gordon Investment Castings, Inc. and Precision Founders Inc. as the Sellers, Wyman- Gordon Company as the Servicer and Wyman-Gordon Receivables Corporation as the Purchaser - incorporated by reference to the Company's Report on Form 8-K dated May 26, 1994. 10L Employment Agreement effective March 24, 1994 - between Wyman-Gordon Company and David P. Gruber - incorporated by reference to the Company's Report on Form 8-K dated May 26, 1994. 10M Employment Agreement effective March 4, 1994 - between Wyman-Gordon Company and J. Douglas Whelan - incorporated by reference to the Company's Report on Form 8-K dated May 26, 1994. 10N Performance Share Agreement under the Wyman- - Gordon Company Long-Term Incentive Plan between the Company and David P. Gruber dated as of May 24, 1994 - incorporated by reference to the Company's Report on Form 8-K dated May 26, 1994. 10O Executive Severance Agreement between the - Company and J. Douglas Whelan dated as of May 1, 1994 - incorporated by reference to the Company's Report on Form 8-K dated May 26, 1994. 10P Executive Severance Agreement between the E-7 Company and Andrew C. Genor dated January 18, 1995. 10Q Long-term Incentive Plan dated July 19, 1995 - - incorporated by reference to Appendix A of the Company's "Proxy Statement for Annual Meeting of Stockholders" on October 18, 1995. 10R Wyman-Gordon Company Non-Employee Director - Stock Option Plan dated January 18, 1995 - incorporated by reference to Appendix C of the Company's "Proxy Statement for Annual Meeting of Stockholders" on October 18, 1995. 13 1995 Annual Report (such report, except for E-8 those portions thereof which are expressly incorporated by reference in this Report on Form 10-K, is furnished for the information of the Commission and is not to be deemed "filed" as part of the Company's Report on Form 10-K).
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EXHIBIT DESCRIPTION PAGE 21 List of Subsidiaries E-9 23 Consent of Ernst & Young LLP 21 27 Financial Data Schedule E-10
NOTE: Exhibits not physically located in this Form 10-K can be obtained from the Company upon written request to the Clerk at the address on the cover of this Form 10-K at a cost of $.25 per page. E-4 EX-3 2 EX 3.A RESTATED ARTICLES OF ORGANIZATION 1 EXHIBIT 3.A THE COMMONWEALTH OF MASSACHUSETTS William Francis Galvin Secretary of the Commonwealth Federal Identification No. 04-1992780 One Ashburton Place, Boston, MA 02108 RESTATED ARTICLES OF ORGANIZATION General Laws, Chapter 156B, Section 74 This certificate must be submitted to the Secretary of the Commonwealth within sixty days after the date of the vote of stockholders adopting the restated articles of organization. The fee for filing this certificate is prescribed by General Laws, Chapter 156B, Section 114. Make check payable to the Commonwealth of Massachusetts. We, David P. Gruber, President and Wallace F. Whitney, Jr., Esq., Clerk of Wyman-Gordon Company located at 244 Worcester Street, North Grafton, MA 01536 do hereby certify that the following restatement of the articles of organization of the corporation was duly adopted at a meeting held on July 19, 1995, by vote of the Board of Directors pursuant to the third sentence of Chapter 156B, Section 74. 1. The name of which the corporation shall be known is: WYMAN-GORDON COMPANY 2. The purpose for which the corporation is formed are as follows: (SEE ATTACHED CONTINUATION SHEETS) 3. The total number of shares and the par value, if any, of each class of stock which the corporation is authorized to issue is as follows:
WITHOUT PAR VALUE WITH PAR VALUE CLASS NUMBER NUMBER OF STOCK OF SHARES OF SHARES PAR VALUE Preferred 5,000,000 None -- Common None 70,000,000 $1.00
4. If more than one class is authorized, a description of each of the different classes of stock with, if any, the preferences, voting powers, qualifications, special or relative rights or privileges as to each class thereof and any series now established: (SEE ATTACHED CONTINUATION SHEETS) 5. The restrictions, if any, imposed by the articles of organization upon the transfer of shares of stock of any class are as follows: NONE E-5 2 6. Other lawful provisions, if any, for the conduct and regulation of the business and affairs of the corporation, for its voluntary dissolution, or for limiting, defining, or regulating the powers of the corporation, or of its directors or stockholders, or of any class of stockholders: (SEE ATTACHED CONTINUATION SHEETS) -2- 3 RESTATED ARTICLES OF ORGANIZATION OF WYMAN-GORDON COMPANY CONTINUATION SHEETS ARTICLE 2 To manufacture, buy, sell, import, export and in any way deal in drop forgings, forgings of all kinds, castings, machinery, tools, metal work of any kind and any and all things made in whole or in part from metals. To carry on a general forging business. To carry on a general manufacturing business and to do all things necessary or incidental to any of the above purposes or powers. To carry on the general business of merchants and dealers in any or all things manufactured by the company or used or acquired in connection with such manufacture. To acquire personal property of any kind and any amount, and real property, so far as the same may be necessary or desirable in connection with any of the foregoing powers, and to sell, mortgage, pledge, lease or otherwise dispose of such personal and real property. To acquire, hold, use, sell and deal in patented articles, patent rights, patents, licenses under patents, trade- marks, trade names, processes and formulae. To acquire, hold and dispose of its own stock and securities and stocks, bonds or securities of any other corporations and associations. To carry on the business heretofore conducted by The Wyman and Gordon Company, a Massachusetts corporation. To do any and all acts desirable in connection with or incidental to any of the above powers or purposes or calculated to enhance the value of the company s business or property. ARTICLE 4 Shares of Preferred Stock may be issued from time to time in one or more series, each such series to have such distinctive designation or title as may be fixed by the Board of Directors prior to the issuance of any shares of such series. Each such series of Preferred Stock shall have such preferences, voting powers, qualifications, restrictions, and special or relative rights or privileges, and to the fullest extent now or hereafter permitted under Massachusetts law, as shall be stated in such resolution or resolutions providing for the issuance of shares of Preferred Stock as may be adopted from time to time by the Board of Directors in accordance with the laws of the Commonwealth of Massachusetts. ARTICLE 6 (a) The Board of Directors may make, amend or repeal the Bylaws in whole or in part except with respect to any provision thereof which by law the Articles of Organization or the Bylaws requires action by the Stockholders. 3 4 (b) No director of the Company shall have any personal liability to the Company or its Stockholders for monetary damages for breach of fiduciary duty as a director notwithstanding any provision of law imposing such liability; provided, however, that this Article 6(b) shall not eliminate or limit the liability of a director (i) for any breach of the director s duty of loyalty to the Company or its Stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under section 61 or 62 of Chapter 156B of the Massachusetts General Laws, or (iv) for any transaction from which the director derived an improper personal benefit. The preceding sentence shall not eliminate or limit the liability of a director for any act or omission occurring prior to the date upon which this Article 6(b) becomes effective. No amendment to or repeal of this Article 6(b) shall apply to or have any effect on the elimination pursuant hereto of liability or alleged liability of any director of the Company for or with respect to any acts or omissions of such director occurring prior to such amendment or repeal. Nothing in this Article 6(b) shall limit any lawful right to indemnification existing independently of this Article. (c) No Business Combination (as hereinafter defined) shall be consummated or effected unless such Business Combination shall have been approved by the affirmative vote of the holders of not less than eighty-five percent (85%) of the total voting power of all outstanding shares of voting stock of the Company, voting as a single class. Such vote shall be required notwithstanding the fact that no vote for such a transaction may be required by law or that approval by some lesser percentage of stockholders may be specified by law or in any agreement with any national securities exchange or otherwise; provided, however, that such eighty-five percent (85%) vote shall not be required, and the provisions of Massachusetts law relating to the vote required for the approval of stockholders, if any, shall apply to any such Business Combination if either of the following conditions is satisfied: 1. The aggregate amount of the cash and the Fair Market Value (as hereinafter defined) of the property, securities or other consideration to be received per share of capital stock of the Company incident to the consummation of such Business Combination by a holder of such stock, other than an Interested Stockholder (as hereinafter defined) involved in such Business Combination, is not less than the highest of (a) the Highest Per Share Price or the Highest Equivalent Price (as those terms are hereinafter defined), paid by such Interested Stockholder in acquiring any of its holdings of the Company's capital stock during the -4- 5 five-year period preceding the announcement of such Business Combination; (b) a price that includes the same or a greater premium over the market price of such capital stock immediately prior to the announcement of such Business Combination as the greatest premium over market price paid by such Interested Stockholder in the purchase of any shares of any class of the Company's capital stock during the five-year period preceding the announcement of such Business Combination; or (c) the Highest Per Share Price or the Highest Equivalent Price that such Interested Stockholder shall, during the five-year period preceding the announcement of such Business Combination, have offered to the stockholders of the Company for any shares of the Company's capital stock or indicated in writing that it would be prepared to offer under specified conditions; or 2. The Continuing Directors (as hereinafter defined) shall have expressly approved such Business Combination by a two-thirds vote either in advance of or subsequent to the acquisition of outstanding shares of capital stock of the Company that caused the Interested Stockholder involved to become an Interested Stockholder. In determining whether or not to approve any such Business Combination, the Continuing Directors may give due consideration to all factors they consider relevant, including without limitation (a) the long-term and short-term effects on the profitability of the Company, (b) its social, legal, environmental and economic effects, both short-term and long-term, on the employees of the Company and its subsidiaries and on the communities and the geographic areas in which the Company and its subsidiaries operate or are located, and on any of the business and properties of the Company and its subsidiaries, and (c) the adequacy of the consideration offered in relation not only to the current market price of the Company's outstanding securities, but also to the current value of the Company in a freely negotiated transaction and the Continuing Directors' estimate of the Company's future value (including the unrealized value of its properties and assets) as an independent going concern. (d) Prior to the consummation of any Business combination and prior to any vote of the Company s stockholders under Section (c) of this Article 6, a proxy statement or information statement complying with the requirements of the Securities Exchange Act of 1934, as amended, shall have been mailed to all stockholders of the Company for the purpose of informing the Company's stockholders about such proposed Business Combination and, if their approval is required by Section (c) of -5- 6 this Article 6, for the purpose of soliciting stockholder approval of such Business Combination. Such proxy statement or information statement shall contain at the front thereof, in a prominent place, a statement by the Continuing Directors of their position on the advisability (or inadvisability) of the proposed Business Combination. (e) For the purpose of Sections (c), (d), (e) and (f) of this Article 6: 1. The term "Business Combination" shall mean (a) any merger, consolidation or share exchange of the Company or any of its subsidiaries with or into an Interested Stockholder, in each case irrespective of which corporation or company is to be the surviving entity, (b) any sale, lease, exchange, mortgage, pledge, transfer or other disposition to or with an Interested Stockholder (in a single transaction or a series of related transactions) of all or a substantial part of the assets of the Company (including without limitation any securities of a subsidiary of the Company) or all or a substantial part of the assets of any of its subsidiaries; (c) any sale, lease, exchange, mortgage, pledge, transfer or other disposition to or with the Company, or to or with any of its subsidiaries (in a single transaction or series of related transactions) of all or a substantial part of the assets of an Interested Stockholder; (d) the issuance or transfer by the Company or any of its subsidiaries of any securities or the Company or any of its subsidiaries to an Interested Stockholder (other than an issuance or transfer of securities which is effected on a pro-rata basis to all stockholders of the Company); (e) any acquisition by the Company or any of its subsidiaries of any securities issued by an Interested Stockholder; (f) any recapitalization or reclassification of shares of any class of voting stock of the Company or any merger or consolidation of the Company with any of its subsidiaries which would have the effect, directly or indirectly, of increasing the proportionate share of the outstanding shares of any class of capital stock or the Company (or any securities convertible into any class of such capital stock) owned by any Interested Stockholder; (g) any merger or consolidation of the Company with any of its subsidiaries after which the provisions of Sections (c), (d), (e) and (f) of this Article 6 shall not appear in the articles of organization (or the equivalent charter documents) of the surviving entity; (h) any plan or proposal for the liquidation or dissolution of the Company; and (i) any agreement, contract or other arrangement providing for any of the transactions described in this definition of Business Combination. -6- 7 2. The term Interested Stockholder shall mean any individual, corporation, partnership or other person or entity which, as of the record date for the determination of stockholders entitled to notice of and to vote on any Business Combination, or immediately prior to the consummation of any such Business Combination, is a Beneficial Owner (as defined in Rule 13d-3 of the General Rules and Regulations under the Securities Exchange Act of 1934 as in effect at the date of the adoption of the provisions contained in Sections (c), (d), (e) and (f) of this Article 6 by the stockholders of the Company) (the Exchange Act ) of shares of any class or series of capital stock of the Company which, when combined with the shares of such class or series of stock of which any Affiliates or Associates (as defined in Rule 12b-2 under the Exchange Act) of such individual, corporation, partnership or other person or entity are Beneficial Owners, amount to ten percent (10%) or more of the outstanding shares of such class or series of stock and any Affiliate or Associate of any such Interested Stockholder. Notwithstanding the foregoing, Cooper Industries, Inc. ( Cooper ) and its Affiliates and Associates (together, the Cooper Group ) shall not be deemed to be an Interested Stockholder for so long as (A) the Cooper Group beneficially owns at least 10% or more of the outstanding shares of Common Stock continuously from and after the Closing Date (as defined in the Stock Purchase Agreement, dated as of January 10, 1994, between Cooper and the Company) and (B) the Cooper Group does not acquire beneficial ownership of any shares of Common Stock in breach of the Investment Agreement, dated as of January 10, 1994, between Cooper and the Company (other than an inadvertent breach which is remedied as promptly as practical by a transfer of the shares of Common Stock so acquired to a person or entity which is not a member of the Cooper Group). 3. The term Continuing Director shall mean any director of the Company who was a director on February 22, 1989, and any other director whose election as a director was recommended or approved by a majority of Continuing Directors. 4. Any action required to be taken by vote of the Continuing Directors shall be effective only if taken at a meeting at which a Continuing Director Quorum is present. A Continuing Director Quorum shall mean two-thirds of the Continuing Directors capable of exercising the powers conferred upon them under the provisions of these Articles of Organization or the Bylaws of the Company or by law. -7- 8 5. Whether or not any proposed sale, lease, exchange, mortgage, pledge, transfer or other disposition of part of the assets of any entity involves a substantial part of the assets of such entity shall be conclusively determined by a two-thirds vote of the Continuing Directors; provided, however, that any such determination shall be effective only if made at a meeting at which a Continuing Director Quorum was present; and provided further that assets involved in any single transaction or series of related transac- tions having an aggregate Fair Market Value of more than fifteen percent (15%) of the total consolidated assets of an entity and its subsidiaries as at the end of such entity's last full fiscal year prior to such determination shall always be deemed to constitute a substantial part. 6. For the purposes of Subsection 1 of Section (c) of this Article 6, the term other consideration to be received shall include, without limitation, Common Stock or other capital stock of the Company retained by stockholders of the Company other than any Interested Stockholders or parties to such Business Combination in the event of a Business Combination in which the Company is the surviving corporation. 7. An Interested Stockholder shall be deemed to have acquired a share of the capital stock of the Company at the time when such Interested Stockholder became the Beneficial Owner thereof. With respect to shares owned by Affiliates or Associates of an Interested Stockholder or other persons whose ownership is attributed to an Interested Stockholder under the foregoing definition of Interested Stockholder, for purposes of Subsection 8 of this Section (e), such Interested Stockholder shall be deemed to have purchased such shares at the higher of (a) the price paid upon the acquisition thereof by the Affiliate, Associate or other person who owns such shares, or (b) the market price of the shares in question at the time when the Interested Stockholder became the Beneficial Owner thereof. 8. The terms Highest Per Share Price and Highest Equivalent Price shall mean the following: If there is only one class of capital stock of the Company issued and outstanding, the Highest Per Share Price shall mean the highest price that can be determined to have been paid or offered to be paid during the preceding five years by the Interested Stockholder involved for any share or shares of that class of capital stock. If there is more than one class of capital stock of the Company issued and outstanding, the Highest -8- 9 Equivalent Price shall mean with respect to each class and series of capital stock of the Company, the amount determined by two-thirds of the Continuing Directors, on whatever basis they believe to be appropriate, to be the highest per share price equivalent to the highest price that can be determined to have been paid or offered to be paid during the preceding five years by the Interested Stockholder involved or any Affiliate or Associate of such Interested Stockholder for any share or shares of any other class or series of capital stock of the Company. In determining the Highest Per Share Price and Highest Equivalent Price, all purchases by such Interested Stockholder or any such Affiliate or Associate shall be taken into account regardless of whether the shares were purchased before or after such Interested Stockholder became an Interested Stockholder. The Highest Per Share Price and the Highest Equivalent Price shall include any brokerage commissions, transfer taxes and soliciting dealers fees paid by such Interested Stockholder or any such Affiliate or Associate with respect to the shares of capital stock of the Company acquired by such Interested Stockholder or such Affiliate or Associate. In the event any Business Combination involving an Interested Stockholder shall be proposed, the Continuing Directors shall determine the Highest Equivalent Price for each class and series of the capital stock of the Company of which there are shares issued and outstanding. 9. The term Fair Market Value shall mean (a) in the case of stock, the highest closing sale price during the thirty day period immediately preceding the date in question of a share of such stock on the Composite Tape for New York Stock Exchange Listed Stocks, or, if such stock is not quoted on the Composite Tape, on the New York Stock Exchange, or if such stock is not listed on the New York Stock Exchange, on the principal United States securities exchange registered under the Exchange Act on which such stock is listed, or if such stock is not listed on any such exchange, the highest closing bid quotation with respect to a share of such stock during the thirty day period preceding the date in question on the National Association of Securities Dealers, Inc. Automated Quotations System or any system then in use, or, if no such quotations are available, the fair market value on the date in question of a share of such stock as determined by a two-thirds vote of the Continuing Directors, and (b) in the case of property on the date in question as determined by a two-thirds vote of the Continuing Directors; provided, however, that any determination made by the Continuing Directors pursuant to this -9- 10 Subsection 9 shall be effective only if made at a meeting at which a Continuing Director Quorum was present; and provided further that in the event the number of Continuing Directors in office shall be less than a Continuing Director Quorum, any determination of fair market value that would otherwise be made by a vote of the Continuing Directors shall be made by a court of competent jurisdiction. (f) No proposal to amend or repeal Sections (c), (d), (e) or (f) of this Article 6 may be authorized and approved except by the affirmative vote of the holders of voting stock entitling them to exercise eighty-five percent (85%) of the voting power of the Company voting together as a class, unless required to vote separately by law or by other provisions of those Articles of Organization or by the terms of the stock entitling them to vote and, if a proposal upon which holders of shares of a particular class or classes are so required to vote separately, then by the affirmative vote of the holders of shares entitling them to exercise eighty-five percent (85%) of the voting power of each such class or classes; provided, however, that the provisions of this Section (f) shall not apply to any such amendment or repeal of this Article 6 that has been favorably recommended to the stockholders by resolution of the Board of Directors adopted by a two-thirds vote of the Continuing Directors at a meeting at which a Continuing Director Quorum was present, in which case any such amendment or repeal of Sections (c), (d), (e) or (f) of this Article 6 may be authorized and approved by the affirmative vote of such number of the holders of voting stock as may be required by law. -10- 11 We further certify that the foregoing restated articles of organization effect no amendments to the article of organization of the corporation as heretofore amended, except amendments to the following article: NONE IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have hereto signed our names this 31st day of July in the year 1995: /S/ DAVID P. GRUBER WALLACE F. WHITNEY, JR. ESQ. David P. Gruber Wallace F. Whitney, Jr. Esq President Clerk -11- 12 THE COMMONWEALTH OF MASSACHUSETTS RESTATED ARTICLES OF ORGANIZATION (General Laws, Chapter 156B, Section 74) I hereby approve the within restated articles of organization and, the filing fee in the amount of $200.00 having been paid, said articles are deemed to have been filed with me this 31st day of July, 1995. /S/ WILLIAM FRANCIS GALVIN William Francis Galvin Secretary of the Commonwealth TO BE FILLED IN BY CORPORATION Photo copy of restated articles of organization to be sent to: Wallace F. Whitney, Jr., Esq. Wyman-Gordon Company 244 Worcester Street, Box 8001 No. Grafton, MA 01536 Telephone: 508-839-4441 Copy Mailed -12- EX-3 3 EX 3.B BYLAWS 1 WYMAN-GORDON COMPANY EXHIBIT 3.B BYLAWS May 24, 1994 ARTICLE I OFFICES 1. PRINCIPAL OFFICE The principal office for the transaction of the business of the Corporation shall be located in the City of Worcester, Commonwealth of Massachusetts. 2. OTHER OFFICES The Corporation may also establish offices at such other places, both within and without the Commonwealth of Massachusetts, as the Board of Directors may from time to time determine or the business of the Corporation may require. ARTICLE II MEETING OF STOCKHOLDERS 1. PLACE OF MEETINGS All meetings of stockholders shall be held at the principal office of the Corporation or at any other place within the United States which may be (a) designated by the Board of Directors, or (b) consented to by the written consent of all stockholders entitled to vote thereat, given either before or after the meeting and filed with the Clerk of the Corporation. 2. ANNUAL MEETINGS Unless otherwise determined by the Board of Directors, the annual meeting of stockholders shall be held on the third Wednesday of October in each year at an hour fixed by the Board of Directors or the Chief Executive Officer. Should said third Wednesday in October fall upon a legal holiday and the Board of Directors not have established a different date for such annual meeting, however, said annual meeting shall be held at the same time and place on the next day thereafter ensuing which is not a legal holiday. At each such annual meeting Directors shall be elected, reports of officers of the Corporation shall be considered, and any other business may be transacted which is within the power of the stockholders. 3. SPECIAL MEETINGS Special meetings of the stockholders, for any purpose whatsoever, may be called at any time either by the Chief Executive Officer or by the Board of Directors, to be held at such a time as he or they may designate. In addition, a special meeting of the stockholders shall be called by the Clerk (or in the case of his death, absence, incapacity or refusal to act, by any other officer of the Corporation) upon written application of one or more stockholders holding not less than one-tenth of the issued and outstanding capital stock of the Corporation. The officer forthwith shall cause notice to be given as provided in the next section that a meeting will be held at a time, fixed by the officer, not less than 10 nor more than 60 days after the receipt of the request. E-6 2 4. NOTICE OF MEETINGS The Clerk shall, not less than seven days prior to any meeting of stockholders, give written notice to all stockholders, entitled to vote thereat, stating the place, date and hour of such meeting, and the purposes of the meeting. Such notice shall be given to any stockholder (a) by leaving such notice with the stockholder, or at his residence or usual place of business, or (b) by mail, postage prepaid, addressed to the stockholder at his address as it is shown upon the records of the Corporation. 5. QUORUM A majority of the shares of stock issued and outstanding and at the time entitled to vote represented at a meeting in person or by proxy shall constitute a quorum for the transaction of business except as otherwise provided in the Articles of Organization. 6. VOTING Each vote at a stockholders meeting shall be by voice vote or by ballot as determined by the officer presiding at the meeting; provided, however, that all elections for Directors must be by ballot upon demand made before the voting begins by a stockholder entitled to vote thereon. 7. PROXIES Every person entitled to vote or execute consents shall have the right to do so either in person or by one or more agents authorized by a written proxy executed by such person or his duly authorized agent and filed with the Clerk of the Corporation. A proxy with respect to stock held in the name of two or more persons shall be valid if executed by any one of them unless at or prior to exercise of the proxy the Corporation receives a specific written notice to the contrary from any one of them. A proxy purporting to be executed by or on behalf of a stockholder shall be deemed valid unless challenged at or prior to its exercise and the burden of proving invalidity shall rest on the challenger. 8. ADJOURNED MEETINGS AND NOTICE THEREOF Any meeting of stockholders, annual or special, whether or not a quorum is present, may be adjourned from time to time by the vote of a majority of the shares, the holders of which are either present in person or represented by proxy thereat, but in the absence of a quorum no other business may be transacted at such meeting. When any meeting of stockholders, either annual or special, is adjourned for thirty (30) days or more, notice of the adjourned meeting shall be given as in the case of an original meeting. Except as provided above, it shall not be necessary to give any notice of an adjournment or of the business to be transacted at an adjourned meeting, other than by announcement at the meeting at which such adjournment is taken. -2- 3 9. ACTION WITHOUT MEETING Any action which may be taken at a meeting of stockholders, except approval of an agreement for merger or consolidation of the Corporation with other corporations, may be taken without a meeting if authorized by a writing signed by all of the persons who would be entitled to vote upon such action at a meeting, and filed with the Clerk of the Corporation. ARTICLE III DIRECTORS 1. POWERS Subject to limitations imposed by law or the Articles of Organization, all corporate powers shall be exercised by or under the authority of, and the business and affairs of the Corporation shall be controlled by, the Board of Directors. In the exercise of its powers, the Board may appoint an executive committee and other committees, and may delegate to the executive committee any of the powers and authority of the Board in the management of the business and affairs of the Corporation, except the powers expressly reserved to the Directors in Section 55 of the Massachusetts Business Corporation Law. The executive committee shall be composed of three or more Directors. 2. NUMBER AND CLASSIFICATION OF DIRECTORS The number of Directors of the Corporation shall not be less than seven nor more than thirteen, as determined from time to time by the Directors, and the number shall be nine until otherwise so determined. The Board of Directors shall be divided into three classes in respect of term of office, each class to contain as near as may be one-third of the whole number of the Board. Of the Board of Directors elected at the last annual meeting of stockholders held prior to the adoption of this Bylaw, the members of Class I shall serve until the annual meeting of stockholders held in the year following their election, the members of Class II shall serve until the annual meeting of stockholders held two years following their election, and the members of Class III shall serve until the annual meeting of stockholders held three years following their election; provided, however, that in each case Directors shall continue to serve until their successors shall be elected and shall qualify. At each annual meeting of stockholders following the adoption of this Bylaw, one class of Directors shall be elected to serve until the annual meeting of stockholders held three years next following and until their successors shall be elected and shall qualify. If any annual meeting of stockholders is not held or Directors are not elected thereat, Directors may be elected at any special meeting of stockholders. Directors need not be stockholders of the Corporation. -3- 4 4. VACANCIES In case a vacancy shall occur from any cause in the Board of Directors or in any other office, including action by the Directors to increase the number of Directors in accordance with Section 2 of this Article III, the remaining Directors then in office may elect a person to fill such vacancy for the balance of the term of the office vacated, except that, in the case of an increase in the number of Directors, such vacancy may be filled only until the next annual meeting of stockholders, at which time the vacancy shall be filled by vote of the stockholders. In case of a vacancy or vacancies in the Board of Directors being unfilled, the remaining Directors shall exercise all the powers of the Board. A vacancy in the Board of Directors shall be deemed to exist in the case of the death, resignation or removal of any Director, or if the authorized number of Directors is increased, or if the stockholders fail, at any annual or special meeting of stockholders at which any Director is elected, to elect the full authorized number of Directors to be voted for at that meeting. The Board of Directors may declare vacant the office of a Director if, within 30 days after notice of his first election to the Board of Directors, he does not accept the office either in writing or by attending a meeting of the Board of Directors. The stockholders may elect a Director or Directors at any time to fill any vacancy or vacancies not filled by the remaining Director or Directors. If the Board of Directors accepts the resignation of a Director tendered to take effect at a future time, the Board, or if the Board has not acted, the stockholders, shall have the power to elect a successor to take office when the resignation is to become effective. 5. REMOVAL Any Director of the Corporation may be removed with or without cause at any regular meeting of the stockholders or at a special meeting called for the purpose, and by vote of the holders of a majority of the stock outstanding and entitled to vote, or may be removed with or without cause by the Board of Directors. No reduction of the authorized number of Directors shall have the effect of removing any Director prior to the expiration of his term of office. 6. QUORUM A majority of the authorized number of Directors shall constitute a quorum of the Board for the transaction of business. Every act or decision done or made by a majority of the Directors present at a meeting duly held at which a quorum is present shall be regarded as the act of the Board of Directors, unless a greater number be required by law. -4- 5 7. PLACE OF DIRECTORS' MEETINGS Meetings of the Board of Directors shall be held at the principal office of the Corporation, or at any place within or without the Commonwealth of Massachusetts which has been designated from time to time by resolution of the Board or by written consent of all the members of the Board. 8. ORGANIZATION MEETINGS Immediately following each annual meeting of stockholders the Board of Directors shall hold a regular meeting for the purpose of organizing, electing officers, and transacting other business. No notice need be given of such meetings of the Board of Directors. 9. REGULAR MEETINGS Regular meetings of the Board of Directors shall be held at such day and hour as shall be from time to time determined by the Board. If said day shall fall upon a holiday, such meeting shall be held on the next succeeding business day thereafter. No notice need be given of such regular meetings of the Board of Directors. 10. SPECIAL MEETINGS Special meetings of the Board of Directors for any purpose or purposes shall be called by the Chief Executive Officer or, if he is absent or unable or refuses to act, by the President if the Chairman of the Board is the Chief Executive Officer, by any corporate Vice President, or by any two Directors. Written notice of the time and place of special meetings shall be delivered to each Director in person or by telephone, or sent to each Director by mail or other form of written communication, charges prepaid, addressed to him at his address as it is shown upon the records of the Corporation, or, if it is not so shown and if it is not readily ascertainable, addressed to him at the city or place where the meetings of the Directors are regularly held. Notices mailed or telegraphed shall be deposited in the United States mail or delivered to the telegraph company at the place where the principal office of the Corporation is located at least 48 hours prior to the time of the holding of the meeting; and notices given personally or by telephone shall be given at least 24 hours prior to the time of the holding of the meeting. 11. NOTICE OF ADJOURNMENT Notice of the time and place of holding an adjourned meeting need not be given to absent Directors if the time and place are fixed at the meeting adjourned. 12. WAIVER OF NOTICE; CONSENT TO MEETING The transactions of any meeting of the Board of Directors, however called and noticed or whenever held, shall be as valid as though had at a meeting duly held after regular call and notice if a quorum is present and if, either before -5- 6 or after the meeting, each of the Directors not present signs a waiver of notice or a consent to hold such meeting, or an approval of the minutes thereof. All such waivers, consents or approvals shall be filed with the corporate records and made a part of the minutes of the meeting. 13. ADJOURNMENT A quorum of the Directors may adjourn any meeting of the Board of Directors to meet again at a stated day and hour; and in the absence of a quorum, a majority of the Directors present may adjourn from time to time until the time fixed for the next regular meeting of the Board. 14. ACTION WITHOUT MEETING Any action required or permitted to be taken by the Board of Directors may be taken without a meeting, if all members of the Board shall individually or collectively consent in writing to such action. Such written consent or consents shall be filed with the minutes of the proceedings of the Board. Such action, by written consent, shall have the same force and effect as a unanimous vote of such Directors at a meeting of the Board of Directors. Directors of the Company may participate in meetings of the Board of Directors or any committee designated thereby by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other at the same time and participation by such means shall constitute presence in person at a meeting. 15. FEES AND COMPENSATION Directors shall receive such fees and compensation, if any, for their services as may be determined by vote of the Board, and shall receive reimbursement of reasonable expenses incurred in attending meetings of the Directors or committees thereof or otherwise in connection with attention to the affairs of the Corporation. No Director who receives a salary as an officer or employee of the Corporation or any subsidiary thereof shall receive any remuneration as a Director or member of any committee of the Directors. ARTICLE IV OFFICERS 1. OFFICERS The officers of the Corporation shall be a President, a Treasurer and a Clerk. The Corporation may also have, at the discretion of the Board of Directors, a Chairman of the Board, one or more corporate Vice Presidents, one or more Assistant Treasurers and one or more Assistant Clerks, each of whom shall be elected by the Board of Directors in accordance with the provisions of Section 2 of this Article. Other officers may be appointed in accordance with the provisions of Section 3 of this Article; provided, however, that no such appointed officer shall be deemed to be a corporate officer. One person may hold two or more offices, -6- 7 except that the offices of President and Treasurer shall not be held by the same person. The Chief Executive Officer of the Corporation shall be the President or the Chairman of the Board, as determined by the Board of Directors. 2. ELECTION The officers of the Corporation, except such officers as may be appointed in accordance with the provisions of Sections 3 or 5 of this Article, shall be chosen annually by the Board of Directors, and each shall hold his office until he shall resign or shall be removed or otherwise disqualified to serve, or his successor shall be elected and qualified. 3. APPOINTED OFFICERS The Board of Directors may appoint and may empower the Chief Executive Officer to appoint, such other officers as the business of the Corporation may require, including without limitation, divisional vice presidents (who shall not be corporate officers). Each such appointed officer shall hold office for such period, have such authority and perform such duties as are provided in the Bylaws or as the Board of Directors or the Chief Executive Officer may from time to time determine. 4. REMOVAL AND RESIGNATION Any officer or agent may be removed, either with or without cause, by a majority of the Directors at the time in office, at any regular or special meeting of the Board, or, except in case of an officer elected by the Board of Directors, by the Chief Executive Officer or by any officer upon whom such power of removal may be conferred by the Board of Directors. Any officer or agent may resign at any time by giving written notice to the Board of Directors or the Chief Executive Officer, or the Clerk of the Corporation. Any such resignation shall take effect on the date of the receipt of such notice or at any later time specified therein; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. 5. VACANCIES A vacancy in any office because of death, resignation, removal, disqualification or any other cause shall be filled in the manner prescribed in the Bylaws for regular appointments to such office. 6. CHAIRMAN OF THE BOARD The Chairman of the Board, if any, shall, if present, preside at all meetings of the Board of Directors, and exercise and perform such other powers and duties as may be from time to time assigned to him by the Board of Directors. -7- 8 7. CHIEF EXECUTIVE OFFICER Subject to the supervision and control of the Board of Directors, the Chief Executive Officer shall have general control of the business and financial affairs of the Corporation, shall have the general powers and duties of management usually vested in the chief executive officer of a corporation, and shall have such other powers and perform such other duties as are delegated to him by the Corporation or the Board of Directors or as may be imposed by law. He shall preside at all meetings of the stockholders and, in the absence of a Chairman of the Board who has not been designated Chief Executive Officer, at all meetings of the Board of Directors. He shall be ex officio a member of the executive committee and any other standing committees, other than the stock option committee and the compensation committee. 8. PRESIDENT Subject to the supervision and control of the Board of Directors, the President shall have the general powers and duties of management usually vested in the president of a corporation and shall have such other powers and duties as are delegated to him by the Corporation or the Board of Directors or as may be imposed by law. Unless the Chairman of the Board is specifically designated by the Board of Directors as the Chief Executive Officer, the President shall be the Chief Executive Officer of the Corporation with all of the powers and duties specified in Section 7 of this Article. If the Chairman of the Board is the Chief Executive Officer, the President, shall, in his absence or disability or in case of a vacancy in his office, perform all the duties of the Chief Executive Officer, and when so acting shall have all the powers of, and be subject to all the restrictions upon, the Chief Executive Officer. 9. VICE PRESIDENT In the absence or disability of the President, or in case of a vacancy in his office, the corporate Vice Presidents, if any, in order of their rank as fixed by the Board of Directors, or if not ranked, the Vice President designated by the Board of Directors, shall perform all the duties of the President, and when so acting shall have all the powers of, and be subject to all the restrictions upon, the President. The Vice Presidents shall have such other powers and perform such other duties as from time to time may be prescribed for them respectively by the Board of Directors. 10. TREASURER Subject to the supervision and control of the Chief Executive Officer, the Treasurer shall have general charge of the financial affairs of the Corporation and have the custody of the funds and of all the valuable papers of the Corporation. He shall keep the accounts of the Corporation in a clear manner and shall at all times when requested by the Directors or the Chief Executive Officer exhibit a true statement of the affairs of the Corporation. The Assistant -8- 9 or each of the Assistant Treasurers, in the absence or inability of the Treasurer, or in case of a vacancy in his office, may perform such part or all of the duties of the Treasurer as may be specified from time to time by the Directors or the Chief Executive Officer, and the written statement of any Assistant Treasurer as to such absence, inability or vacancy shall conclusively determine the fact so stated. The Treasurer shall, if required by the Directors or the Chief Executive Officer, give a bond for the faithful discharge of his duties at the expense of the Corporation with satisfactory sureties and in such penal sums as may be required by the Directors. The Assistant Treasurer or Treasurers shall also, if required by the Directors or the Chief Executive Officer, give a bond in like manner for the faithful discharge of their duties. The Treasurer and Assistant Treasurers shall perform such other duties as may be delegated to them respectively by the Corporation or the Chief Executive Officer or may be imposed by law. 11. CLERK The Clerk shall attend all meetings of the Board of Directors, the stockholders and the executive committee, if any, and if so directed by the Board of Directors, any other committee which may be constituted, and shall keep, or cause to be kept, at the principal office or such other place as the Board of Directors may direct, a book of minutes of all such meetings, showing the time of and place at which such meetings are held; whether regular or special; and if special, how authorized; the notice thereof given; the names of those present at Directors' or committee meetings; the number of shares present or represented at stockholders' meetings; and a record of the proceedings of such meetings. In absence of the Clerk or an Assistant Clerk, a Temporary Clerk shall be appointed to keep the records of any meeting. The Clerk shall keep, or cause to be kept, at the principal office or at the office of the Corporation's transfer agent, a stock book, or a duplicate stock book, showing the names of the stockholders and their addresses; the number and classes of shares held by each; the number and date of certificates issued for the same; and the number and date of cancellation of every certificate surrendered for cancellation. The Clerk shall give, or cause to be given, notice of all the meetings of stockholders and of the Board of Directors required by these Bylaws to be given, and shall have such other powers and perform such other duties as may be prescribed by the Board of Directors. He shall keep in safe custody the seal of the Corporation and, when authorized by the Board of Directors, shall affix the same to any instrument requiring it and, when so affixed, it shall be attested by his signature or by the signature of an Assistant Clerk. -9- 10 The Assistant or each of the Assistant Clerks, in the absence or inability of the Clerk, or in case of a vacancy in his office, may perform such part or all of the duties of the Clerk as may be specified from time to time by the Directors or the Chief Executive Officer, and the written statement of any Assistant Clerk as to such absence, inability or vacancy shall conclusively determine the fact so stated. ARTICLE V INDEMNIFICATION 1. RIGHT OF INDEMNIFICATION Every person who is or was a Director, officer or employee of this Corporation or of any other corporation which he served at the request of the Corporation and in which the Corporation owns or owned shares of capital stock or of which it is a creditor shall have a right to be indemnified by this Corporation against all reasonable expenses incurred by him in connection with or resulting from any action, suit or proceeding in which he may become involved as a party or otherwise by reason of his being or having been a Director, officer or employee of the Corporation or such other corporation, provided (a) said action, suit or proceeding shall be prosecuted to a final determination and he shall be vindicated on the merits, or (b) in the absence of such final determination vindicating him on the merits, the Board of Directors shall determine that he acted in good faith in the reasonable belief that his action was in the best interests of the Corporation or such other corporation and that he cooperated effectively with the Corporation in the defense and disposition of any said action, suit or proceeding, said determinations to be made by the Board of Directors acting through a quorum of disinterested directors, or in its absence on the opinion of the counsel. 2. DEFINITIONS For purposes of Section 1 of this Article V: (a) "reasonable expenses" shall include but not be limited to reasonable counsel fees and disbursements, amounts of any judgment, fine or penalty, and reasonable amounts paid in settlement, but in no event shall "reasonable expenses" include any item for which indemnification would be contrary to law; (b) "action, suit or proceeding" shall include every claim, action, suit or proceeding, whether civil or criminal, derivative or otherwise, administrative, judicial or legislative, any appeal relating thereto, and shall include any reasonable apprehension or threat of such a claim, action, suit or proceeding; and (c) a settlement plea of nolo contendere, consent judgment, adverse civil judgment, or conviction shall not of itself create a presumption that the person seeking indemnification did not act in good faith in the reasonable belief that his action was in the best interests of this Corporation or such other corporation, but the Board of Directors shall be bound by a civil judgment or conviction which adjudges that the person did not act in good faith in the reasonable belief that his action was in the best interests of this Corporation or such other corporation. -10- 11 3. PERSONS ENTITLED TO INDEMNIFICATION The right of indemnification shall extend to any person otherwise entitled to it under this Article V whether or not that person continues to be a Director or officer of this Corporation at the time such liability or expense shall be incurred. The right of indemnification shall extend to the legal representatives and heirs of any person otherwise entitled to indemnification. If a person meets the requirements of this Article V with respect to some matters in an action, suit or proceeding, but not with respect to others, he shall be entitled to indemnification as to the former. Advances against liability and expenses may be made by the Corporation on terms fixed by the Board of Directors subject to an obligation to repay if indemnification proves unwarranted. 4. BYLAW NOT EXCLUSIVE This Article V shall not exclude any other rights of indemnification or other rights to which any Director, officer or employee may be entitled by contract, by vote of the Board of Directors, or as a matter of law. If any clause, provision or application of this Article V shall be determined to be invalid, the other clauses, provisions or applications of these Bylaws shall not be affected but shall remain in full force and effect. The provisions of this Article V shall be applicable to actions, suits or proceedings commenced after the adoption hereof, whether arising from acts or omissions occurring before or after the adoption hereof. ARTICLE VI MISCELLANEOUS 1. RECORD DATE AND CLOSING STOCK BONDS The Board of Directors may fix a time in the future as a record date for the determination of stockholders entitled to notice of and to vote at any meeting of stockholders or entitled to receive any dividend or distribution, or any allotment of rights, or to exercise rights in respect to any change, conversion or exchange of shares. The record date so fixed shall be not more than 60 days prior to the date of the meeting or event for the purposes of which it is fixed. When a record date is so fixed, only stockholders of record on that date are entitled to notice of and to vote at the meeting or to receive the dividend, distribution, or allotment of rights, or to exercise the rights, as the case may be, notwithstanding any transfer of any shares on the books of the Corporation after the record date. The Board of Directors may close the books of the Corporation against transfers of shares during the whole or any part of a period not more than 60 days prior to the date of a meeting of stockholders, the date when the right to any dividend, distribution, or allotment of rights vests, or the effective date of any change, conversion or exchange of shares. -11- 12 2. INSPECTION OF CORPORATE RECORDS The stock book or duplicate stock book and minutes of proceedings of the incorporators and stockholders shall be open to inspection upon the written demand of any stockholder at any reasonable time, and for a purpose reasonably related to his interests as a stockholder. Such records shall be exhibited at any meeting of stockholders upon the demand by the holders of ten percent of the shares represented at the meeting. Such inspection may be made in person or by an agent or attorney, and shall include the right to make extracts. Demand of inspection other than at a meeting of stockholders shall be made in writing upon the President or Clerk of the Corporation. Every Director shall have the right, at any reasonable time, to inspect all books, records, documents of every kind, and the physical properties of the Corporation and of its subsidiary corporations, domestic or foreign; provided, however, that in the case of foreign subsidiary corporations such right shall extend only to such books, records, documents and properties as are kept or located in the Commonwealth of Massachusetts. 3. CERTIFICATES FOR SHARES Certificates representing shares of common stock of the Corporation shall be of such form as the Board of Directors may approve and shall state the name of the record holder of the shares represented thereby; the number of the certificate; the date of issuance of the certificate; the number of shares for which it is issued; the par value, if any, or a statement that such shares are without par value; a statement of the rights, privileges, preferences and restrictions, if any; a statement as to redemption or conversion, if any; a statement of liens or restrictions upon transfer or voting, if any; if the shares be assessable, or, if the assessments are collectible by personal action, a plain statement of such facts. 4. EXECUTION OF CERTIFICATES Every certificate for shares must be signed by the President or a Vice President and the Treasurer, or an Assistant Treasurer, and may be by facsimiles of the signatures of the President and Treasurer or by a facsimile of the signature of the President and the written signature of its Treasurer or an Assistant Treasurer. No certificate for shares authenticated by a facsimile of a signature shall be valid until countersigned by the transfer agent. 5. TRANSFER OF STOCK Prior to due presentment for registration of transfer, the Corporation may treat the registered owner of shares as the person exclusively entitled to vote, to receive notifications and otherwise to exercise all the rights and powers of a stockholder. Shares may be transferred on the books of the Corporation only by the person named in the certificate as the owner thereof, or by his agent, attorney, -12- 13 or legal representative, upon surrender to the Clerk of the Corporation or, at the discretion of the Board of Directors, to any transfer agent, of a certificate, duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer. A new certificate shall thereupon be issued to the person entitled thereto and the old certificate shall be cancelled. 6. LOST CERTIFICATES New certificates for shares or other securities of the Corporation may be issued for and in the place of any such instrument theretofore issued which is alleged to have been lost, destroyed or wrongfully taken. The Directors may, in their discretion, require the owner of such instrument, or his legal representative, to give the Corporation a bond or other security in an adequate amount as indemnity against any claim that may be made against the Corporation. A new instrument may be issued, however, without requiring any bond or other security when, in the judgment of the Directors, it is proper to do so. 7. CORPORATE SEAL A corporate seal shall be provided and adopted by the Board of Directors and shall contain the name of the Corporation and such other wording as the Board may deem suitable or as may be required by law. 8. FISCAL YEAR Except as from time to time otherwise determined by the Board of Directors, the fiscal year of the Corporation shall begin on the first day of June and end on the last day of May next succeeding. 9. ISSUANCE OF STOCK Any unissued capital stock from time to time authorized under the Articles of Organization may be issued by a vote of the Board of Directors. 10. EXECUTION OF CONTRACTS The Board of Directors may authorize any officer or officers, agents or agents, to enter into any contract or execute any instrument in the name of and on behalf of the Corporation, and such authority may be general or confined to specific instances; and unless so authorized by the Board of Directors, no officer, agent or employee shall have any power or authority to bind the Corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or in any amount. 11. REPRESENTATION OF SHARES OF OTHER CORPORATIONS The Chairman of the Board, the President, any corporate Vice President and the Treasurer of this Corporation, or any one of them, are authorized to vote, represent and exercise on behalf of this Corporation all rights incident to any and all shares of any other corporation or corporations standing in the name of this Corporation. The authority herein granted to said officers to vote or represent on behalf of -13- 14 this Corporation any and all shares held by this Corporation in any other corporation or corporations may be exercised by such officers in person or by any person authorized so to do by proxy or power or attorney duly executed by said officers. 12. INSPECTION OF BYLAWS The Corporation shall keep in its principal office for the transaction of business the original or a copy of these Bylaws as amended or otherwise altered to date, certified by the Clerk, which shall be open to inspection by the stockholders at all reasonable times during office hours. 13. CONSTRUCTION AND DEFINITIONS Unless the context otherwise requires, the general provisions, rules of construction and definitions contained in the Massachusetts Business Corporation Law shall govern the construction of these Bylaws. The Article and Section captions used in these Bylaws are for reference only and are not part of the Bylaws and shall not be used in construing or interpreting these Bylaws. 14. EXEMPTION FROM MASSACHUSETTS CONTROL SHARE ACQUISITIONS LAW The provisions of Chapter 110D of the Massachusetts General Laws shall not apply to control share acquisitions of the Company. ARTICLE VII AMENDMENTS 1. POWER OF STOCKHOLDERS New Bylaws may be adopted or these Bylaws may be amended or repealed by the vote of stockholders entitled to exercise a majority of the voting power of the Corporation, except as otherwise provided by the Articles of Organization. 2. POWER OF DIRECTORS Subject to the right of stockholders to adopt, amend or repeal Bylaws, these Bylaws may be amended or repealed by the Board of Directors, and new Bylaws may be adopted, at any regular or special meeting thereof. -14- EX-10 4 EX 10.P EXECUTIVE SEVERANCE AGREEMENT 1 EXHIBIT 10.P EXECUTIVE SEVERANCE AGREEMENT This AGREEMENT ("Agreement") dated January 18, 1995, by and between Wyman-Gordon Company, a Massachusetts corporation (the "Company"), and Andrew C. Genor (the "Executive"). W I T N E S S E T H WHEREAS, the Company desires to have the services of the Executive as its Vice President, Chief Financial Officer and Treasurer; and WHEREAS, the Executive is willing to serve the Company as its Vice President, Chief Financial Officer and Treasurer, but desires assurance that he will not be materially disadvantaged by a change in control of the Company; NOW, THEREFORE, in consideration of the Executive's service to the Company and the mutual agreements herein contained, the Company and the Executive hereby agree, as follows: ARTICLE I ELIGIBILITY FOR BENEFITS Section 1.1 Qualifying Termination. The Company shall not be required to provide any benefits to the Executive pursuant to this Agreement unless a Qualifying Termination occurs before the Agreement expires in accordance with Section 6.1 hereof. For purposes of this Agreement, a Qualifying Termination shall occur only if (a) a Change in Control occurs, and (b) within three years after the Change in Control, (i) The Company terminates the Executive's employment other than for Cause; or (ii) the Executive terminates his employment with the Company for Good Reason; provided, that a Qualifying Termination shall not occur if the Executive's employment with the Company terminates by reason of the Executive's Disability, death, or retirement. For the purposes hereof "retirement" shall mean any termination of employment which occurs at or after age 65. Section 1.2 Change in Control. Except as provided a below, a Change in Control shall be deemed to occur when and only when the first of the following events occurs: (a) the acquisition (including by purchase, exchange, merger or other business combination, or any combination of the foregoing) by any individuals, firms, corporations or other entities, other than a Major Stockholder on the E-7 2 date of this Agreement, acting in concert ("Person"), together with all Affiliates and Associates of such Person, of beneficial ownership of securities of the Company representing 20 percent or more of the combined voting power of the Company's then outstanding voting securities; or (b) members of the Incumbent Board cease to constitute a majority of the Board of Directors. Notwithstanding the foregoing, a Change in Control shall not be deemed to occur pursuant to paragraph (a), above, (i) solely because 20 percent or more of the combined voting power of the Company's outstanding securities is acquired by one or more employee benefit plans maintained by the Company, or (ii) if the Executive is included among the individuals, firms, corporations or other entities that, acting in concert, acquire the Company's securities. For purposes of this Section 1.2, the terms "Affiliates" and "Associates shall have the meanings set forth in Rule 12b-2 of the General Rules and Regulations promulgated under the Securities Exchange Act of 1934 (the Exchange Act"); the terms "beneficial ownership" and "beneficially owned" shall have the meaning set forth in section 13(d) of the Exchange Act, as amended, and in Rule 13d-3 promulgated thereunder, the term "Major Stockholder" shall mean all shares beneficially owned by the Fuller Foundation, the Stoddard Charitable Trust, and descendants of Harry G. Stoddard and their spouses; the term "Board of Directors" shall mean the Board of Directors of the Company and the term "Incumbent Board" shall mean (i) the members of the Board of Directors on the date hereof, to the extent that they continue to serve as members of the Board of Directors, and (ii) any individual who becomes a member of the Board of Directors after the date hereof, if his election or nomination for election as a director was approved by a vote of at least three quarters of the then Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a person other than the Board of Directors. Section 1.3. Termination for Cause. The Company shall have Cause to terminate the Executive's employment with the Company for purposes of Section 1.1 hereof only if the Executive (a) engages in unlawful acts intended to result in the substantial personal enrichment of the Executive at the Company's expense or (b) engages (except (i) by reason of incapacity due to illness or injury or (ii) in connection with an actual or anticipated termination of employment by the Executive for Good Reason) in a material violation of his responsibilities to the Company that results in a material injury to the Company. Section 1.4 Termination for Good Reason. The Executive shall have a Good Reason for terminating employment with the Company only if one or more of the following occurs after a Change in Control: -2- 3 (a) a change in the Executive's status or position (including for this purpose a change in the principal place of the Executive's employment on a basis that does not conform with the Company's present policies for executive relocation, but excluding required travel on the Company's business to an extent substantially consistent with the Executive's present business travel obligations) with the Company that, in the Executive's reasonable judgment, represents an adverse change from the Executive's status or position in effect immediately before the Change in Control; (b) the assignment to the Executive of any duties or responsibilities that, in the Executive's reasonable judgment, are inconsistent with the Executive's status or position in effect immediately before the Change in Control; (c) layoff or involuntary termination of the Executive's employment, except in connection with the termination of the Executive's employment for Cause or as a result of the Executive's Disability, death or retirement; (d) a reduction by the Company in the Executive's total compensation as in effect at the time of the Change in Control (which shall be deemed, for this purpose, to be equal to his base salary plus the most recent award that he has earned under the Company's Incentive Compensation Plan, as amended from time to time, or any successor thereto (the "ICP")) or as the same may be increased from time to time; (e) the failure by the Company to continue in effect any Plan in which the Executive is participating at the time of the Change in Control (or plans or arrangements providing the Executive with substantially equivalent benefits) other than as a result of the normal expiration of any such Plan in accordance with its terms as in effect at the time of the Change in Control; (f) any action or inaction by the Company that would adversely affect the Executive's continued participation in any Plan on at least as favorable a basis as was the case at the time of the Change in Control, or that would materially reduce the Executive's benefits in the future under the Plan or deprive him of any material benefits that he enjoyed at the time of the Change in Control, except to the extent that such action or inaction by the Company is required by the terms of the Plan as in effect immediately before the Change in Control, or is necessary to comply with applicable law or to preserve the qualification of the Plan under section 401(a) of the Internal Revenue Code, and except to the extent that the Company provides the Executive with substantially equivalent benefits; -3- 4 (g) the Company's failure to obtain the express assumption of this Agreement by any successor to the Company as provided by Section 6.3 hereof; (h) any material violation by the Company of any agreement (including this Agreement) between it and the Executive; or (i) the failure by the Company, without the Executive's consent, to pay to him any portion of his current compensation, or to pay to the Executive any portion of any deferred compensation, within 30 days of the date the Executive notifies the Company that any such compensation payment is past due. Notwithstanding the foregoing, no action by the Company shall give rise to a Good Reason if it results from the Executive's termination for Cause, death or retirement, and no action by the Company specified in paragraphs (a) through (d) of the preceding sentence shall give rise to a Good Reason if it results from the Executive's Disability. A Good Reason shall not be deemed to be waived by reason of the Executive's continued employment as long as the termination of the Executive's employment occurs within the time prescribed by Section 1.1(b) hereof. For purposes of this Section 1.4, "Plan" means any compensation plan, such as an incentive or stock option plan, or any employee benefit plan, such as a thrift, pension, profit-sharing, stock bonus, long-term performance award, medical, disability, accident, or life insurance plan, or any other plan, program or policy of the Company that is intended to benefit employees. Section 1.5 Disability. For purposes of this Agreement, "Disability" shall mean illness or injury that prevents the Executive from performing his duties (as they existed immediately before the illness or injury) on a full-time basis for six consecutive months. Section 1.6 Notice. If a Change in Control occurs, the Company shall notify the Executive of the occurrence of the Change in Control within two weeks after the Change in Control. ARTICLE II BENEFITS AFTER A QUALIFYING TERMINATION Section 2.1 Basic Severance Payment. If the Executive incurs a Qualifying Termination following a Change in Control that occurs on or before termination of this Agreement as provided in Section 6.1 hereof, the Company shall pay within 30 days after the date of the Qualifying Termination to the Executive a single lump sum cash amount equal to his Total Annual Compensation multiplied by the lesser of (a) 2.50 or (b) .0833 multiplied by the number of full months remaining between termination and his attaining age 65. "Total Annual Compensation" shall mean the sum of annual base salary in effect immediately preceding termination or the Change of Control, whichever is higher, and annual incentive compensation earned under the "ICP" (annualized in the case of less than a full year's service) in the last full fiscal year immediately preceding termination or the Change of Control, whichever is higher. -4- 5 Section 2.2 Insurance. If the Executive incurs a Qualifying Termination following a Change in Control that occurs on or before termination of this Agreement as provided in Section 6.1 hereof, the Company shall provide the Executive, at the Company's expense, for a period beginning on the date of the Qualifying Termination, the same medical, accident, disability, life and any other insurance coverage as was provided to him by the Company immediately before the Change in Control (or, if greater, as in effect immediately before the Qualifying Termination occurs); such coverage shall end upon the earlier of (a) the expiration of 24 months after the Qualifying Termination or (b) with respect to each coverage, the date on which the Executive first becomes eligible for insurance coverage of a similar nature provided by a firm that employs his following the Qualifying Termination. Section 2.3 Executive Long-Term Incentive Program. If the Executive incurs a Qualifying Termination following a Change in Control that occurs on or before termination of this Agreement as provided in Section 6.1 hereof, all of the options to purchase common stock of the Company (and the alternative common stock appreciation rights) granted to the Executive prior to termination of this Agreement as provided in Section 6.1 hereof, under the Executive Long-Term Incentive Program shall become exercisable in accordance with the terms set forth in the applicable Certificate of Grant except that such options (and the alternative common stock appreciation rights) shall be exercised within three years after the Qualifying Termination. Section 2.4 Nonduplication. Nothing in this Agreement shall require the Company to make any payment or to provide any benefit or service credit that the Company is otherwise required to provide under any other contract, agreement, policy, plan, or arrangement. ARTICLE III EFFECT OF SEVERANCE POLICY Section 3.1 Effect on Severance Policy. If the Executive becomes entitled to receive benefits hereunder, the Executive shall not be entitled to any benefits under any other Company severance policy. ARTICLE IV TAX MATTERS Section 4.1 Withholding. The Company may withhold from any amount payable to the Executive hereunder all federal, state or other taxes that the Company may reasonably determine are required to be withheld pursuant to any applicable law or regulation. Section 4.2 Certain Additional Payments by the Company. Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any payment or distribution by the Company to or for the benefit of the Executive that is considered paid or payable or distributed or distributable in connection with a Change in Control (a "Payment"), would be subject -5- 6 to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code") or any interest or penalties are incurred by the Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, being collectively the "Excise Tax"), then the Executive shall be entitled to receive an additional payment (a "Gross-Up Payment") in an amount such that after payment by the Executive of all taxes on the Gross-Up Payment (including, without limitation, any income taxes and Excise Tax imposed upon the Gross-Up Payment and any interest or penalties imposed with respect to such taxes), the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments (as determined without regard to the Gross-Up Payment). All determinations required to be made under this Section 4.2, including whether a Gross-Up Payment is required and the amount of such Gross-Up Payment, shall be made by a nationally recognized independent accounting firm selected by the Company (the "Accounting Firm") which shall provide detailed supporting calculations to the Company and the Executive within 30 business days following the date of the Qualifying Termination, if applicable, or such earlier time as the Company may request. All fees and expenses of the Accounting Firm shall borne by the Company. The Gross-Up Payment; if any, as determined pursuant to this Section 4.2, shall be paid to the Executive within ten days following receipt by the Company of the Accounting Firm's determination. The Accounting Firm shall either make the determination that a Payment is subject to the Excise Tax or it shall furnish the Executive with an opinion that failure to report the Excise Tax on the Executive's applicable Federal income tax return would not result in the imposition of a negligence or similar penalty, and, in the latter case (subject to the last sentence of this paragraph), no Gross-Up Payment shall be required. Any determination by the Accounting Firm shall be binding upon the Company and the Executive. As a result of the uncertainty in the applicable of Section 4999 of the Code, it is possible that Gross- Up Payments which will not have been made by the Company should have been made (an "Underpayment") or that Gross-Up Payments which have been made by the Company should not have been made (an "Overpayment") or that Gross-Up Payments which have been made by the Company should not have been made (an "Overpayment"), consistent with the calculations required to be made hereunder. The Accounting firm shall determine the amount of any Underpayment or Overpayment that has occurred and (i) an amount equal to any such Underpayment shall be promptly paid by the Company to or for the benefit of the Executive and (ii) any amount refunded to the Executive as a result of such Overpayment shall be promptly paid by the Executive to the Company in an amount which will result in the Executive being made whole on an after-tax basis. ARTICLE V COLLATERAL MATTERS Section 5.1 Nature of Payments. All payments to the Executive under this Agreement shall be considered either payments in consideration of his continued service to the Company or severance payments in consideration of his past services thereto. -6- 7 Section 5.2 Legal Expenses. The Company shall pay all legal fees and expenses that the Executive may incur as a result of the Company's contesting the validity, the enforceability or the Executive's interpretation of, or determinations under, this Agreement. Section 5.3 Mitigation. The Executive shall not be required to mitigate the amount of any payment provided for in this Agreement either by seeking other employment or otherwise. The amount of any payment provided for herein shall not be reduced by any remuneration that the Executive may earn from employment with another employer or otherwise following his Qualifying Termination. Section 5.4 Authority. The execution of this Agreement has been authorized by the Board of Directors of the Company. ARTICLE VI GENERAL PROVISIONS Section 6.1 Term of Agreement. This Agreement shall be come effective on the date hereof and shall continue in effect until the earliest of (a) December 31, 1996 if no Change in Control has occurred before that date; provided, however, that commencing on January 1, 1997 and each January 1 thereafter, the term of this Agreement shall automatically be extended for an additional year unless, not later than January 30 of the same year, the Company shall have given notice that it does not wish to extend this Agreement; (b) the termination of the Executive's employment with the Company for any reason prior to a Change in Control; (c) the Company's termination of the Executive's employment for Cause, or the Executive's resignation for other than Good Reason, following a Change in Control and the Company's and the Executive's fulfillment of all of their obligations hereunder; and (d) the expiration following a Change in Control of three years and the fulfillment by the Company and the Executive of all of their obligations hereunder. Furthermore, nothing in this Article VI shall cause this Agreement to terminate before both the Company and the Executive have fulfilled all of their obligations hereunder. Section 6.2 Governing Law. Except as otherwise expressly provided herein, this Agreement and the rights and obligations hereunder shall be construed and enforced in accordance with the laws of The Commonwealth of Massachusetts. Section 6.3 Successor to the Company. This Agreement shall inure to the benefit of and shall be binding upon and enforceable by the Company and any successor thereto, including, without limitation, any corporation or corporations acquiring directly or indirectly all or substantially all of the business or assets of the Company, whether by merger, consolidation, sale or otherwise, but shall not otherwise be assignable by the Company. Without limitations of the foregoing sentence, the Company shall require any successor (whether direct or indirect, by merger, consolidation, sale or otherwise) to all of substantially all of the business or assets of the Company, by agreement in form satisfactory to the Executive, expressly, absolutely and -7- 8 unconditionally to assume and to agree to perform this Agreement in the same manner and to the same extent as the Company would have been required to perform it if no such succession had taken place. As used in this Agreement, "Company" shall mean the Company as heretofore defined and any successor to all or substantially all of its business or assets that executes and delivers the agreement provided for in this Section 6.3 or that becomes bound by this Agreement either pursuant to this Agreement or by operation of law. Section 6.4 Successor to the Executive. This Agreement shall inure to the benefit of and shall be binding upon and enforceable by the Executive and his personal and legal representatives, executors, administrators, heirs, distributees, legatees and, subject to the Section 6.6 hereof, his designees ("Successors"). If the Executive should die while amounts are or may be payable to him under this Agreement, references hereunder to the "Executive" shall, where appropriate, be deemed to refer to this Successors; provided that nothing in this Section 6.5 shall supersede the terms of any plan or arrangement (other than this Agreement) that is affected by this Agreement. Section 6.5 Nonalienability. No right of or amount payable to the Executive under this Agreement shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, hypothecation, encumbrance, charge, execution, attachment, levy or similar process or to setoff against any obligations or to assignment by operation of law. Any attempt, voluntary or involuntary, to effect any action specified in the immediately preceding sentence shall be void. However, this Section 6.6 shall not prohibit the Executive from designating one or more persons, on a form satisfactory to the Company, to receive amounts payable to him under this Agreement in the event that he should die before receiving them. Section 6.6 Notices. All notices provided for in this Agreement shall be in writing. Notices to the Company shall be deemed given when personally delivered or sent by certified or registered mail or overnight delivery services to Wyman-Gordon Company, 244 Worcester Street, No. Grafton, Massachusetts 01613, Attention: Company Clerk. Notices to the Executive shall be deemed given when personally delivered or sent by certified or registered mail or overnight delivery service to the last address for the Executive shown on the records of the Company. Either the Company or the Executive may, be notice to the other, designate an address other than the foregoing for the receipt of subsequent notices. Section 6.7 Amendment. No amendment to this Agreement shall be effective unless in writing and signed by both the Company and the Executive. Section 6.8 Waivers. No waiver of any provision of this Agreement shall be valid unless approved in writing by the party giving such waiver. No waiver of a breach under any provision of this Agreement shall be deemed to be a waiver of such provision or any other provision of this Agreement or any subsequent breach. No failure on the part of either the Company or the Executive to -8- 9 exercise, and no delay in exercising, any right or remedy conferred by law or this Agreement shall operate as waiver of such right or remedy, and no exercise or waiver, in whole or in part, or any right or remedy conferred by law or herein shall operate as a waiver of any other right or remedy. Section 6.9. Severability. If any provision of this Agreement shall be held invalid or unenforceable in whole or in part, such invalidity or unenforceability shall not affect any other provision of this Agreement or part thereof, each of which shall remain in full force and effect. Section 6.10. Captions. The captions to the respective articles and sections of this Agreement are intended for convenience of reference only and have no substantive significance. Section 6.11. Counterparts. This Agreement may be executed in a number of counterparts, each of which shall be deemed to be an original but all of which together shall constitute a single instrument. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. ATTEST: WYMAN-GORDON COMPANY /s/ WALLACE F. WHITNEY, JR. By: /s/ DAVID P. GRUBER Wallace F. Whitney, Jr. David P. Gruber, President and Chief Executive Officer ATTEST: /s/ WALLACE F. WHITNEY, JR. /s/ ANDREW C. GENOR Wallace F. Whitney, Jr. Andrew C. Genor -9- EX-13 5 WYMAN-GORDON CO. 1995 ANNUAL REPORT 1 EXHIBIT 13 WYMAN-GORDON COMPANY ANNUAL REPORT 1995 Wyman-Gordon Company 1995 Annual Report for the fiscal year ended June 3, 1995 112th year of operation On the Front and Back Covers: Paul Stewart, a die sinker at the company's Grafton, MA forging facility, performs an in-process inspection of impressions in a die used to forge a mid-fuselage titanium bulkhead for the F-22 New Generation Air Superiority Fighter. Its size - the largest titanium closed-die forging ever produced by the company - and complex geometry made this single-piece bulkhead a major challenge to design and produce. E-8 2 ABOUT THE COMPANY Wyman-Gordon is a leading manufacturer of high quality, technology advanced forging and investment casting components, and composite airframe structures for the commercial aviation, commercial power and defense industries. The company employs approximately three thousand people in eleven plants in the United States and one in Scotland. TABLE OF CONTENTS Financial Highlights Letter to Stockholders Company Highlights Management's Discussion Consolidated Financial Statements Notes to Consolidated Financial Statements Corporate Information Investor Information -2- 3
WYMAN-GORDON COMPANY AND SUBSIDIARIES FINANCIAL HIGHLIGHTS (In millions, except per-share data) TWELVE MONTHS ENDED JUNE 3, 1995 MAY 28, 1994(a) Revenues $396.6 $224.7 Income (loss) from operations 13.7 (63.7) EBITDA 30.2 (45.4) Net Income (loss) 1.0 (72.4) Working Capital 93.1 91.7 Total Assets 369.1 394.7 Stockholders' equity 80.9 72.5 Order Backlog 468.8 389.4 Shares Outstanding 35.0 34.5 Per-share data: Net Income (loss) $ .03 $(4.02) Stockholders' equity $ 2.30 $ 2.10 Market Price $11.00 $ 6.25
[FN] (a) 1994 amounts exclude Cameron revenues and operating results, but include Cameron backlog and assets, and $35.0 million of restructuring, disposal and other charges (pre-tax). -3- 4 TO OUR STOCKHOLDERS During the past year, we achieved many of our goals in the transformation of Wyman-Gordon Company. We are working on the priorities that drive sustainable growth and profitability: maintaining strong customer positions in the commercial aircraft industry; continuing cost reduction; focusing our factories to improve accuracy, speed, service and quality; and enhancing our ability to work with challenging metals to meet customer needs and open new market opportunities. We have accomplished the very important first step of being profitable at low business levels. It was a year that saw the beginning of what many observe as a slow, steady recovery in the commercial aviation business which will continue and accelerate throughout the last half of the 1990s. Recent successful cost reduction efforts have positioned us to realize major benefits as the market improves. We and our customers are seeing the anticipated economic, manufacturing and competitive advantages from the acquisition of Cameron Forged Products Company. Together we are a much stronger company than either would be standing alone. Wyman-Gordon enhanced its core strengths in metallurgy and added new skills, facilities and processes. Dramatic productivity gains are already evident, and cost reductions total over $25 million. We have unique talent for manufacturing large dimensional forged parts that ever-larger aircraft and engines require. For example, Boeing's new 777 widebody aircraft and the GE90, Pratt & Whitney 4086 and Rolls Royce Trent 800 engines which power it, will contribute to our anticipated success. Our investment casting division, which pursued a similar course of integration and synergy savings several years ago, achieved strong revenue growth, improved profitability and cash generation. We also continue to be encouraged by the profits and cash flows generated by our Scaled Composites division. While the aerospace market will continue to be central to our success, we are actively engaging new market opportunities such as heavy wall seamless steel pipe for commercial power plants, and large forged components and investment castings for land-based gas turbines. The Wyman-Gordon of the future will continue to be built on core strengths: the technologies of metals, processed by world class manufacturing operations. Customers will receive fully-machined and ready-to-assemble parts having extremely high reliability, very short production cycles and competitive values. Wyman-Gordon will endeavor to provide stockholders with financial returns which compare favorably with those which bring about investment grade debt ratings. Such returns are achievable and we will strive to reach them. We are most appreciative of the support and sacrifices of Wyman-Gordon employees throughout the company. Their efforts and contributions to our overall improvement have been impressive. -4- 5 The following pages describe the strengths of our company and will convey the optimism that we hold about the future. /S/ JOHN M. NELSON /S/ DAVID P. GRUBER John M. Nelson David P. Gruber Chairman President and Chief Executive Officer (A picture of John M. Nelson and David P. Gruber is located under their titles) -5- 6 COMPANY HIGHLIGHTS LEADERSHIP Leadership is claimed by many companies, achieved by few. And if it is achieved, fewer still are able to sustain it. Wyman-Gordon has been the number one supplier of forgings to the aerospace industry for decades; its leadership as the prime producer of forged parts traces back almost to the beginnings of aviation. Its mastery of metals brought leadership, abetted by unrivaled ability to process titanium alloys, nickel-based superalloys, steel and aluminum. A unique manufacturing infrastructure - of talent, experience and equipment - enables Wyman-Gordon to forge large structural airframe and engine components, an advantage which enables it to satisfy current requirements for larger parts. The company is the world leader in the production of nickel- based powder billet used to forge aircraft engine turbine discs. Further, we are the only totally integrated company in the world which produces this powder, extrudes it into billet and forges it isothermally into aircraft engine components. We possess unique castings capabilities and offer the widest choice of alloys in the investment castings industry, ranging from titanium and nickel-based superalloys to magnesium and aluminum. Parts can be cast that weigh as little as a gram or as much as 600 pounds. An adeptness in geometric complexity, another hallmark of our investment castings business, is leading to new opportunities in the aerospace market and in recreational and other commercial performance products markets. Our Scaled Composites subsidiary is the world leader in design and rapid development of composite airframe structures. (A picture of D'Lena Brooks, a member of the dimensional layout team at the company's Groton, CT investment castings facility, observes inspection of a 30 inch diameter as-cast combustor dome by a computerized coordinate measuring machine. The use of a high temperature metal alloy and demanding dimensional profile requirements presented engineering challenges. Using rapid prototyping techniques to eliminate conventional blueprint and tooling methods, prototyping was completed in two weeks and delivery was made only eleven weeks after the part was ordered, at costs which were favorable to alternative manufacturing processes.) (A caption above a graph states: Wyman-Gordon's leadership is clearly demonstrated by recent successes in reducing industrial accident rates. A comprehensive safety program and increased employee training have led to these notable results. The company's safety record now outpaces the Forging Industry and U.S. Industrial averages.) (A graph is shown for Industrial Accidents per 200,000 man-hours worked. Forging Industry Average is 7.5 from 1991 to 1995; U.S. Industrial Average is 6.8 in 1991 and 1992 and 4.2 thereafter; Wyman-Gordon's performance was 3.8 in 1991, 4.0 in 1992, 3.7 in 1993, 1.3 in 1994, and 1.0 in 1995) -6- 7 METALLURGY Wyman-Gordon is a materials engineering company. We engineer metals from basic raw materials through melting, conversion, investment casting and forging to meet the most exacting structural and mechanical properties required by our customers. Our engineers have mastered the controls necessary to formulate titanium alloys at our Millbury, Massachusetts facility, nickel-base powder alloys at our Brighton, Michigan facility and nickel-base superalloys at our jointly owned melting facility in Western Australia. These carefully formulated materials are then subjected to the same exacting controls, when they are processed in our investment casting facilities or deformed on our forging presses to develop the optimum microstructures and strengths throughout the required shape. These shapes are subsequently heat treated to produce the desired balance of mechanical properties and residual stress. The control of this entire metallurgical process assures that our customers receive product that is consistent in mechanical properties and stable through their machining operations. As we increase the speed of product through our facilities through cycle time and batch size reduction, we know it is imperative that key controls are established, monitored and verified to assure consistency and reproducibility through total process control. These challenges are presented daily to our metallurgical, design and process engineers as they process a variety of materials such as aluminum, titanium, nickel-base, both conventionally melted and atomized into powder, and steel close die forgings, investment castings and seamless extruded pipe. At Wyman-Gordon, we process these metals into finished shapes using closed-die forging, investment casting or extrusion. This metallurgical process experience and versatility provide an increasing breadth of market with strong technical support. (Phase diagrams, such as this titanium-aluminum binary diagram, shown below this caption, are one of many tools used by our metallurgists. Their use facilitates the development of thermomechanical processing routes to enhance the mechanical properties and producibility of alloys such as Ti6Al-4V. This alloy is 89% titanium, 6% aluminum, 4% vanadium and 1% other elements.) (A picture of Calvin Tubbs, a pipe processor in our Houston, TX forging facility checks the dimensions of a P91 steel seamless extruded pipe. This pipe is part of a multi-million dollar order being prepared for shipment to Korea Heavy Industries & Construction Company, for use in six new fossil-fueled power plants being constructed in South Korea.) -7- 8 PROCESS The addition of Cameron Forged Products Company to the Wyman-Gordon world presented an opportunity to consolidate forging operations with resulting significant economies not feasible before the acquisition. Best practice management of products and processes has been undertaken to ensure that each part is made at the plant most conducive to its efficient production, where specific capabilities assure best quality and lowest cost manufacture. As a result, there is a continuing improvement of forging operations, with accompanying efficiencies and economic benefits. Focusing our factories on the products they each make best has led to plant specialization and to the grouping of related product manufacturing across our forging and casting operations. Set up time reductions have brought about more immediate validation of process and continuous improvement. Tangible benefits from these measures are significant improvements in lot sizes, cycle times, inventory levels, tooling expenses and quality. We are taking actions to align the company's forging and investment castings operations with the best practices known in the world - practices which improve quality, inventory turns, cycle times, productivity, delivery performance and customer satisfaction. This entrepreneurial spirit underscores our company's resolution to be the best, quickest, most responsive supplier, one that customers will value highly and rely upon, and one that offers them best products, fastest delivery and the best value - a winning combination. Wyman-Gordon's goal for all plants is world class status, and we have made substantial progress toward this goal. (A picture of Terry Dyer, a sourcing technical leader at GE Aircraft Engines and Taylor Norris, Wyman-Gordon manager of continuous improvement programs, conduct a Kaizen action workout at our ultrasonic facility in Houston, TX. In process is a stage 1 HPT disk for GE's CF6-80C2 engine. Cooperative continuous improvement efforts with our customers have contributed greatly to operating advances beneficial both to our customers and to Wyman-Gordon.) (A caption above a graph states: Process improvements are instrumental in allowing the production of increasing volumes without corresponding personnel additions. In our Houston forging facility, for example, cycle time reductions have been consistent and dramatic. These "best practices" are being implemented in our Grafton forging facility also.) (A graph is shown for the company's Average Production Cycle in Weeks. 21 in 1991, 17 in 1992, 16 in 1993, 9 in 1994, 7 in 1995) -8- 9 CUSTOMERS Our customers are increasingly expecting the closest collaboration with their suppliers. The term "team" aptly describes the bond which exists between Wyman-Gordon engineers, other support employees and our customers. We are partners in problem-solving, especially in the design of new products. The development of a series of single-piece large titanium bulkheads with Lockheed Martin/Boeing for the F-22 new generation air superiority fighter aircraft demonstrates the effectiveness of a partnership approach to customer support. Wyman-Gordon engineers saw an opportunity to produce a single piece bulkhead as a replacement for an assembly of four parts. Working with the customer, a new one-piece design was accepted, qualified and produced, yielding a better product at much lower cost. Lockheed Martin recognized Wyman-Gordon with its "Outstanding F-22 Team Supplier Award," noting the close and effective collaboration of employees from both companies. Similar cooperative efforts with General Electric Company were successful in developing parts for the GE90 jet engine, and the GE land-based gas turbine engine series. A long, cooperative program with Pratt & Whitney led to the development of a new, critical shaft for the PW 4086 turbine jet engine. And close work with Rolls Royce facilitated development of a critical fan disk for the Trent 800 turbine jet engine. Our goal is simple: to be the supplier of choice, essential to a customer's success; creating an interdependence between us in an atmosphere of mutual trust. We know too that being the low cost supplier is an equally critical part of customer relationships, and we have made significant progress to bring the greatest value to our customers. (A caption above the pie chart states: With the addition of Cameron, Wyman-Gordon made a major advance toward becoming a more essential supplier of choice for our customers.) (A pie chart shows Sales by Market with dollars in millions for 1995 and 1994. 1995 shows Power generation $60.0, Other $36.5, Aerospace $300.1,; 1994 shows Power generation $10.1, Other $26.1, Aerospace $188.5) (A pictures shows at Lockheed/Martin's production facility in Fort Worth, TX, assembly worker Francisco Delgado drills one of approximately 1,500 fastener holes on the inlet duct of Wyman- Gordon-produced F-22 bulkhead. All four of the large single- piece titanium bulkheads used in Lockheed/Martin's F-22 assembly are supplied by Wyman-Gordon fully machined and painted, "ready- to-assemble.") -9- 10 POSITIONING Fundamental and permanent changes in traditional markets and in ways of doing business characterize the atmosphere of the mid- 1990s. The company has "right-sized" itself, adjusting to diminished markets. It is clearly stronger and better positioned to capitalize on traditional strengths in anticipation of recovering markets. The synergies of combining forging operations of Wyman-Gordon and Cameron Forged Products Company are yielding cost savings, process improvements, expanded capabilities and a wider global reach. A favorable market outlook for large engine and structural parts complements our special capabilities to produce these products. The larger part capabilities also generate opportunities in promising markets such as land-based gas turbine power generation. Our wide array of presses and computerized process controls facilitate the reliable production of parts for the largest engines through the smallest auxiliary power units. Wyman-Gordon's ongoing positioning efforts include the establishment of business relationships domestically and in China, Turkey and Russia with companies whose capabilities complement ours. We expect to be instrumental in supporting our customers' advances into aerospace and power markets in the Far East. Faster cycle times, on-time delivery and parts delivered fully-machined and ready-to-assemble will support customer needs and drive profitability. Our conviction to be world class in all that we do is supported by significant investments in facilities, process improvements and training. Wyman-Gordon has achieved profitability in a difficult market environment. Recovering markets, leading metallurgical skills, highly efficient operations, a low cost structure, committed employees, solid customer relationships and new product development will lead to superior financial results in the future. (A picture of Sue Zanauskas, shipping supervisor in Grafton, MA facility, inspects a titanium fan shaft for a jet turbine engine. Five titanium hemisphere forgings in the background and a steel disk for a land-based gas turbine engine in the foreground make up an assortment of products processed in the company's Grafton, MA and Livingston, Scotland facilities.) (A caption above the 1995 Profitability Trend graph states: In 1995, stockholders saw consistent enhancement of profitability and return on capital as the synergy savings from the Cameron integration were realized.) (A graph of 1995 Profitability Trend shows EBIT/Average Capitalization, -2% in Q1, 2% in Q2, 9% in Q3, 22% in Q4; EBITDA/Revenues, 4% in Q1, 6% in Q2, 9% in Q3, 12% in Q4) -10- 11 (A quote stands alone on a page states: "During the past year, we achieved many of our goals in the transformation of Wyman- Gordon Company. We are working on the priorities that drive sustainable growth and profitability: maintaining strong customer positions in the commercial aircraft industry; continuing cost reduction; focusing our factories to improve accuracy, speed, service and quality; and enhancing our ability to work with challenging metals to meet customer needs and open new market opportunities.") -11- 12 MANAGEMENT'S DISCUSSION PRODUCTS AND MARKETS Wyman-Gordon Company is a leading producer of highly engineered, technically advanced components for both the commercial and defense aerospace market and the commercial power generation market. The company uses die forging, extrusion and investment casting processes to produce metal components to exacting customer specifications for technically demanding applications such as jet turbine engines, airframes and land- based gas turbine engines. The company also extrudes seamless heavy-wall steel pipe for use primarily in commercial power generation plants, and designs and produces prototype aircraft using composite technologies. The company produces components for most of the major commercial and U.S. defense aerospace programs. Metallurgical skills, a unique asset base and a broad offering of capabilities allow the company to serve competing customers effectively and to lead the development and use of new metal technologies for its customers' uses. The company is the leading producer of rotating components for use in turbine aircraft engines. These parts are forged from purchased ingots converted to billet in the company's cogging presses and from superalloy metal powders which are produced, consolidated and extruded into billet entirely at the company's own facilities. Forging is conducted in Massachusetts, Texas and Scotland on a number of hydraulic presses which are rated from 8,000 to 55,000 tons capacity. The company forges these engine components primarily from alloys of high-temperature nickel. Additionally, the company uses modern, automated, high-volume production equipment and both air-melt and vacuum-melt furnaces in its investment casting operations to produce complex non- rotating jet engine parts from high-temperature nickel-based alloys. Structural airframe components are produced from alloys of steel, aluminum and titanium on the company's forging presses and by its investment casting process. The company often designs new parts, stretching metallurgical and manufacturing capabilities to new levels in accommodating customer needs for larger, stronger structural parts forged from new superalloy metals. These parts are produced mostly at the company's Massachusetts forging plant. The company's investment casting capabilities, described previously, are employed in the production of smaller, nearer net-shape structural parts for aircraft. The company supplies the domestic and international power generation markets with a variety of mechanical and structural tubular forged products, primarily in the form of extruded seamless pipe. The power generation market for such product includes nuclear and fossil fueled power plants, as well as co- generation projects and retrofit and life extension applications. Additionally, ordnance and other military applications are available for this product. Aluminum, steel, titanium and superalloys are extruded at the company's Houston, Texas forging facility. Here the world's largest vertical extrusion press -12- 13 extrudes pipe up to 48 inches in diameter and 7 inches in wall thickness and bar stock from 6 to 32 inches in diameter. Lengths of pipe and bar stock vary from 10 to 45 feet with a maximum forged weight of 20 tons. Similar equipment and capabilities are in operation at the company's Livingston, Scotland forging facility. Additionally, the Houston press extrudes powder billets for use in aircraft turbine engine forgings. The company's composite operation, Scaled Composites, Inc., plans, designs, fabricates and tests composite airframe structures for the aerospace market. Revenues by market for the respective periods were as follows:
YEAR ENDED YEAR ENDED JUNE 3, 1995 MAY 28, 1994 % OF % OF REVENUE TOTAL REVENUE TOTAL (000's omitted) Aerospace $300,143 76% $188,518 84% Power generation 60,038 15 10,112 4 Other 36,458 9 26,064 12 Total $396,639 100% $224,694 100%
YEAR ENDED YEAR ENDED DECEMBER 31, 1993 DECEMBER 31, 1992 % OF % OF REVENUE TOTAL REVENUE TOTAL (000's omitted) Aerospace $205,077 85% $263,961 88% Power generation 9,214 4 12,717 4 Other 25,470 11 22,203 8 Total $239,761 100% $298,881 100%
-13- 14 The backlog of unfilled orders from customers in the various markets has been as follows:
JUNE 3, 1995 MAY 28, 1994 % OF % OF BACKLOG TOTAL BACKLOG TOTAL (000's omitted) Aerospace $382,982 82% $342,007 88% Power generation 57,248 12 33,700 9 Other 28,531 6 13,700 3 Total $468,761 100% $389,407 100%
DECEMBER 31, 1993 DECEMBER 31, 1992 % OF % OF BACKLOG TOTAL BACKLOG TOTAL (000's omitted) Aerospace $234,221 91% $290,479 94% Power generation 12,044 5 9,290 3 Other 9,994 4 9,910 3 Total $256,259 100% $309,679 100%
-14- 15 RESULTS OF OPERATIONS AND FINANCIAL CONDITION YEAR ENDED JUNE 3, 1995 COMPARED TO YEAR ENDED MAY 28, 1994 Wyman-Gordon Company's acquisition of Cameron Forged Products Company from Cooper Industries, Inc. in May 1994 united two of the country's largest and most technically advanced forgings companies and had a pervasive impact on Wyman-Gordon Company during fiscal 1995. As a result of the acquisition, the company has broadened its revenue base and expanded into new markets. The company is also realizing substantial operating and processing efficiencies through the consolidation of systems and facilities and the reduction of personnel performing duplicate functions. Wyman-Gordon Company's revenues increased during the year ended June 3, 1995 ("fiscal 1995") as compared to the year ended May 28, 1994 ("fiscal 1994") to $396.6 million in fiscal 1995 from $224.7 million in fiscal 1994, or 76.5%. The increase in revenues is the result of (1) the acquisition of Cameron (68.8%) and (2) higher sales volume at the company's forgings and castings divisions during fiscal 1995 as compared to fiscal 1994 (7.7%). The acquisition of Cameron provides a broader revenue base in the company's traditional markets of commercial and defense aerospace as well as providing diversification into the power generation market. Capacity limitations on the part of the company's suppliers resulted in raw material shortages and production delays. Although this situation improved during the second half of fiscal 1995, it had a negative impact on overall revenues. Additionally, $4.7 million of revenues for fiscal 1994 were from Wyman-Gordon Composites, Inc. which was sold by the company during November 1993. The company's gross margins were 12.5% in fiscal 1995, a significant improvement from 3.1% in fiscal 1994. Higher production volumes, particularly in the company's castings division, productivity gains in factory operations and realization of certain synergy benefits associated with the integration of Cameron with Wyman-Gordon's forgings operations are among the factors that contributed to this higher ratio. Also, the gross margins at the company's composites divisions for fiscal 1995 were well above fiscal 1994 levels. These favorable impacts identified above were offset somewhat by production delays resulting from raw material shortages experienced most significantly in the first half of fiscal 1995. Gross margins benefited from LIFO credits of $6.2 million in fiscal 1995 as compared to $8.1 million in fiscal 1994. Gross margin in fiscal 1994 was negatively impacted by significant charges amounting to $8.7 million related mainly to a change in accounting estimate for workers' compensation of $4.2 million and excess inventories of $2.8 million. -15- 16 RESULTS OF OPERATIONS AND FINANCIAL CONDITION YEAR ENDED JUNE 3, 1995 COMPARED TO YEAR ENDED MAY 28, 1994 (Continued) Selling, general and administrative expenses improved as a percentage of revenues in fiscal 1995 to 9.2% from 15.8% in fiscal 1994. The change is largely due to $7.6 million of significant charges incurred during fiscal 1994. Absent the significant charges, fiscal 1994 selling, general and administrative expenses were 12.4% of sales. The remaining improvement is the result of certain savings associated with the integration of Cameron with Wyman-Gordon's forgings operations, and higher revenues. During fiscal 1995, the company recognized $1.4 million of other charges for its 25% equity share of the losses of its Australian Joint Venture for the production of nickel-based superalloy. In fiscal 1994, the company recognized other charges of $35.0 million which included $24.1 million for Cameron integration costs, $6.5 million for castings division restructuring costs, $2.0 million for anticipated environmental charges, and $2.4 million related to the disposition of production facilities. After a year of evaluating the combined forgings operations and concluding that most of the integration activities had been completed or were adequately provided for within the remaining integration restructuring reserves, the company determined that the total integration restructuring cost estimate could be lowered. As a result, the company took into income an integration restructuring credit of $2.1 million. Interest expense remained relatively constant in fiscal 1995 as compared to fiscal 1994. Fiscal 1995 includes higher financing fees associated with the May 1994 inception of a receivables backed credit facility. Fiscal 1994 interest expense includes the write-off of deferred financing fees associated with the company's former revolving credit agreement. Fiscal 1994 miscellaneous, net includes a $3.3 million gain on the sale of marketable securities. -16- 17 RESULTS OF OPERATIONS AND FINANCIAL CONDITION (Continued) FIVE MONTHS ENDED MAY 28, 1994 ("FIVE MONTHS 1994") COMPARED TO FIVE MONTHS ENDED MAY 29, 1993 ("FIVE MONTHS 1993") Revenues for the Five Months 1994 decreased $15.1 million (or 14.8%) from the comparable period of 1993. This decline in revenues was primarily attributable to continued sluggishness in the aerospace industry. Also, $4.6 million in Five Months 1993 revenues were from Wyman-Gordon Composites, Inc. which was sold by the company during November 1993. The company's gross margins were a negative 5.7% for Five Months 1994 as compared to positive 9.7% in the Five Months 1993. Customer invoked pricing pressures coupled with lower production volume continued to have a negative impact on margins. Additionally, gross margins were negatively affected by several significant charges totalling $8.7 million recorded in the Five Months 1994 and are identified as: (1) $4.2 million charge for a change in accounting estimate for workers' compensation, (2) $0.6 million charge recognized on futures contract hedging losses, (3) $2.8 million charge for excess inventory and (4) $1.1 million of other charges. Gross margins benefited from an inventory LIFO credit of $3.1 million in the Five Months 1994 as compared to $2.9 million in the same period of 1993. Excluding the benefit of the LIFO credit and significant charges, the company's gross margins were 0.1% and 6.9% in the Five Months 1994 and 1993, respectively. Selling, general and administrative expenses were $18.3 million or 21.1% as a percent of revenues for the Five Months 1994 as compared to $10.5 million or 10.3% as a percent of revenues in the same period of 1993. The increase in selling, general and administrative expenses is due to significant charges totalling $7.6 million recorded in the Five Months 1994 and are identified as follows: (1) $4.2 million of employee benefit related accruals including $1.4 million from changes in an accounting estimate for workers' compensation, (2) $2.9 million for resolution of contractual matters and (3) $0.5 million of other charges. Excluding the effect of significant charges, the company's selling, general and administrative expenses for the Five Months 1994 were $10.7 million or 12.3% as a percent of revenues as compared to $10.5 million or 10.3% as a percent of revenues in the same period of 1993. The company recorded restructuring charges of $30.6 million during the Five Months 1994. No such charges were recognized during the corresponding period of 1993. These charges include $24.1 million of planned costs of integrating the company's forgings operations with those of Cameron Forged Products Company which the company acquired on May 26, 1994. Restructuring charges of $5.2 million relate to the closure of a castings facility and $1.3 million to asset write-downs. -17- 18 RESULTS OF OPERATIONS AND FINANCIAL CONDITION (Continued) FIVE MONTHS ENDED MAY 28, 1994 ("FIVE MONTHS 1994") COMPARED TO FIVE MONTHS ENDED MAY 29, 1993 ("FIVE MONTHS 1993") (Continued) The company recorded a $2.0 million environmental charge which represents anticipated future environmental expenses related to the company's Grafton, Massachusetts facility. Interest expense was $5.4 million in the Five Months 1994 as compared to $4.7 million for the same period of 1993. Interest expense increased $0.7 million for the Five Months 1994 as compared to the same period of 1993 due to a higher interest rate and higher average debt during the Five Months 1994 as compared to the same period of 1993. Additionally, the company wrote-off financing fees relating to prior credit facilities amounting to $1.2 million and $1.7 million in the Five Months 1994 and 1993, respectively. YEAR ENDED DECEMBER 31, 1993 COMPARED TO YEAR ENDED DECEMBER 31, 1992 Revenues for 1993 decreased $59.1 million or 19.8% from 1992. This decline in revenues was primarily attributable to continued sluggishness in the commercial aerospace industry during 1993. Gross margins in 1993 were $20.7 million or 8.6% of revenues as compared to $55.6 million or 18.6% of revenues in 1992. The decline in gross margins during 1993 as compared to 1992 is a result of (1) lower production volume, (2) lower LIFO credits recorded in 1993 as compared to 1992 and (3) competitive pricing which continued to place pressure on the company's gross margins. LIFO inventory credits, which include both LIFO liquidation and deflation effects, of $7.9 million and $22.8 million were recognized in 1993 and 1992, respectively. Selling, general and administrative expenses decreased to $26.6 million in 1993 from $28.3 million in 1992, but increased as a percent of revenues from 9.4% in 1992 to 11.1% in 1993 resulting from the revenue decline. The decrease in selling, general and administrative expenses is mainly due to lower payroll costs from reductions in personnel. In November 1993, the company sold substantially all of the net assets and business operations of its Wyman-Gordon Composites, Inc. operations. The company recorded a non-cash charge on the sale in 1993 of $2.5 million. Interest expense increased to $10.8 million in 1993 from $7.5 million in 1992 primarily as a result of higher interest rates on the 10.75% Senior Notes due 2003 as compared to that on the debt retired with the proceeds of the Senior Notes. The average debt balance was $87.7 million and $84.8 million in 1993 and 1992, respectively. The company also wrote off $1.7 million in bank fees related to the company's prior credit facility during 1993. -18- 19 RESULTS OF OPERATIONS AND FINANCIAL CONDITION (Continued) YEAR ENDED DECEMBER 31, 1993 COMPARED TO YEAR ENDED DECEMBER 31, 1992 (Continued) Miscellaneous income was $2.2 million in 1993 and $2.0 million in 1992. Miscellaneous income in 1993 reflects primarily the gain of $3.3 million on the sale of marketable securities. Miscellaneous income in 1992 reflects primarily the gain of $0.9 million on the sale of marketable securities and a gain of $0.6 million from a settlement of an overfunded pension plan terminated in a prior year. LIQUIDITY AND CAPITAL RESOURCES During fiscal 1994, the company recognized costs to be incurred for the integration of Cameron totalling $24.1 million of which $12.7 million were estimated to require cash outlays. Additionally, the company estimated $12.2 million in cash outlays from direct costs associated with the acquisition and integration. Therefore, combined reserves for Cameron integration costs totalled $36.3 million of which $24.9 million were estimated to require cash. During May 1994, $11.4 million of non-cash asset write-offs were charged to these reserves. During fiscal 1995, the company incurred $11.1 million in charges on the integration of Cameron which were charged to these reserves, $6.7 million of which required the use of cash. Additionally, the company reduced its estimates of costs to be incurred for the integration of Cameron and direct costs associated with the acquisition by a total of $7.3 million. Such reduction is reflected by an adjustment in the purchase price of $5.2 million and a credit to income of $2.1 million on the fiscal 1995 Statement of Operations. See Footnote F to the Consolidated Financial Statements for a summary of cash outlays relating to restructuring charges. As of June 3, 1995, the company estimates the remaining cash requirements for the integration of Cameron and direct costs associated with the acquisition to be $8.6 million, and expects to spend approximately $6.5 million in fiscal 1996 and $2.1 million thereafter. The 1991 restructuring plan is substantially complete. The company incurred cash charges of $2.7 million during fiscal 1995 and expects to expend an additional $3.8 million over the next several years, approximately $1.9 million in fiscal 1996 and $1.9 million thereafter. For fiscal 1996 and thereafter, these expenditures include consolidation and reconfiguration of existing facilities of $1.7 million in fiscal 1996 and $0.6 million thereafter, and payments under a deferred compensation agreement of approximately $1.5 million. As of June 3, 1995, the company expects to spend $1.8 million in fiscal 1996 and $15.1 million thereafter on non- capitalizable environmental activities. The company has completed all environmental projects within establish timetables and is continuing to do so at the present time. -19- 20 RESULTS OF OPERATIONS AND FINANCIAL CONDITION (Continued) LIQUIDITY AND CAPITAL RESOURCES (Continued) The company from time to time expends cash on capital expenditures for more cost effective operations, environmental projects and joint development programs with customers. Capital expenditures amounted to $18.7 million, $2.4 million, $13.9 million and $11.2 million for the year ended June 3, 1995, the five months ended May 28, 1994 and the years ended December 31, 1993 and 1992, respectively. Capital expenditures in the foreseeable future are expected to increase somewhat from fiscal year 1995 levels. As of June 3, 1995, the company had invested $4.1 million in cash towards its share of the capital requirements of its Australian joint venture for the production of nickel-based superalloy. The company is committed to invest an additional $3.4 million to the joint venture. The joint venture has entered into a credit agreement with an Australian bank. The company has guaranteed 25% of the joint venture's obligations under the credit agreement. This guarantee expires at such time as the joint venture demonstrates its ability to produce commercially acceptable products. On May 20, 1994, the company entered into a revolving receivables-backed credit facility (the "Receivables Financing Program") among the company, certain subsidiaries and Wyman- Gordon Receivables Company ("WGRC") and a Revolving Credit Agreement dated as of May 20, 1994 among WGRC, the financial institutions party thereto and the Issuing Banks Facility Agent and Collateral Agent. The aggregate maximum borrowing capacity under the Receivables Financing Program is $65.0 million, with a letter of credit sub-limit of $35.0 million. The term of the Receivables Financing Program is five years, with an evergreen feature. As of June 3, 1995, under this credit facility, the total availability based on eligible receivables was $44.8 million, there were no borrowings and letters of credit amounting to $10.0 million were outstanding. Wyman-Gordon Limited, the company's subsidiary located in Livingston, Scotland, entered into a credit agreement effective November 28, 1994. The maximum borrowing capacity under the U.K. Credit Agreement is 3.0 million pound sterling with a separate letter of credit limit or guarantee of 1.0 million pound sterling. The term of the U.K. Credit Agreement is one year with an evergreen feature. There were 2.4 million pound sterling or $3.8 million of borrowings outstanding at June 3, 1995 and the company had issued 0.4 million pound sterling or $0.6 million of letters of credit or guarantees under the U.K. Credit Agreement. The primary sources of liquidity available to the company in fiscal 1996 to fund operations, anticipated expenditures in connection with the integration of Cameron, planned capital expenditures and planned environmental expenditures include available cash ($13.9 million at June 3, 1995), borrowing availability under the company's Receivables Financing Program, cash generated by operations and reductions in working capital requirements through planned inventory reductions and accounts receivable management. -20- 21 RESULTS OF OPERATIONS AND FINANCIAL CONDITION (Continued) LIQUIDITY AND CAPITAL RESOURCES (Continued) Cash from operations and debt are expected to be the company's primary sources of liquidity beyond fiscal 1996. The company believes that it has adequate resources to provide for its operations and the funding of restructuring, integration, capital and environmental expenditures. The company's current plans to improve operating results include completing the integration of Cameron, further reductions of personnel and various other cost reduction measures. Programs to expand the company's revenue base include participation in new aerospace programs and expansion of participation in the land- based gas turbine and extruded pipe markets and other markets in which the company has not traditionally participated. The company anticipates that, in addition to the growth in commercial aviation, the aging current commercial airline fleet will require future orders for its replacement. IMPACT OF INFLATIONS The company's earnings may be affected by changes in price levels and in particular, changes in the price of basic metals. The company's contracts generally provide for fixed prices for finished products with limited protection against cost increases. The company would therefore be affected by changes in prices of the raw materials during the term of any such contract. The company attempts to minimize this risk by entering into fixed price arrangements with raw material suppliers. ACCOUNTING AND TAX MATTERS In March 1995, the Financial Accounting Standards Board issued Statement No. 121, "Accounting for the Impairment of Long- Lived Assets and for Long-Lived Assets to be Disposed of" ("SFAS 121") which must be adopted by the company no later than fiscal 1997. SFAS 121 prescribes the accounting for the impairment of long-lived assets that are to be held and used in the business and similar assets to be disposed of. The company has not determined the impact of adopting SFAS 121 on its financial position or results of operations. Effective January 1, 1994, the Company adopted Statement of Financial Accounting Standards No. 112, "Employers' Accounting for Postemployment Benefits" ("SFAS 112"). This standard provides that the company follow an accrual method of accounting, rather than on the as-incurred basis formerly used for benefits payable to employees when they leave the company for reasons other than retirement. The adoption, including the cumulative effect, has not had a material affect on earnings or the financial position of the company. The company is seeking refunds of prior year's federal taxes paid, which, if fully realized, could have a material favorable impact on the company's financial position. A reasonable estimation of the potential recovery cannot be made at this time and, accordingly, no adjustment has been made in the financial statements with respect to the claim. -21- 22 RESULTS OF OPERATIONS AND FINANCIAL CONDITION (Continued) MARKET AND DIVIDEND INFORMATION Wyman-Gordon Company's common stock, par value $1.00 per share, is traded in the over-the-counter market and prices of its common stock appear daily in the NASDAQ national market quotation system. The table below lists the quarterly price range per share for January 1, 1993 through June 3, 1995. The quarterly price range per share is based on the high and low sales prices. The company has not paid dividends since the fourth quarter of 1991. At June 3, 1995 there were approximately 1,600 holders of record of the company's common stock. FIVE YEAR ENDED YEAR ENDED MONTHS ENDED DECEMBER 31, JUNE 3, 1995 MAY 28, 1994 1993 HIGH LOW HIGH LOW HIGH LOW First quarter $ 7 $5 3/4 $7 1/8 $4 5/8 $6 3/4 $4 5/8 Second quarter 6 1/2 5 3/8 6 1/2 4 1/2 5 1/4 4 Third quarter 6 3/8 4 3/4 N/A N/A 5 1/8 3 1/2 Fourth quarter 12 3/8 5 3/4 N/A N/A 5 1/8 4 -22- 23 WYMAN-GORDON COMPANY REPORT OF INDEPENDENT AUDITORS To the Stockholders of Wyman-Gordon Company: We have audited the accompanying consolidated balance sheets of Wyman-Gordon Company and Subsidiaries as of June 3, 1995 and May 28, 1994, and the related consolidated statements of operations, stockholders' equity and cash flows for the year ended June 3, 1995, for the five months ended May 28, 1994, and for each of the two years in the period ended December 31, 1993. These consolidated financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Wyman-Gordon Company and Subsidiaries at June 3, 1995 and May 28, 1994, and the consolidated results of their operations and their cash flows for the year ended June 3, 1995, for the five months ended May 28, 1994, and for each of the two years in the period ended December 31, 1993 in conformity with generally accepted accounting principles. As discussed in Notes I and J to the consolidated financial statements, in 1993 the company changed its method of accounting for postretirement benefits other than pensions and income taxes. /s/ERNST & YOUNG LLP Boston, Massachusetts June 26, 1995 -23- 24 REPORT OF MANAGEMENT To the Stockholders of Wyman-Gordon Company: We have prepared the financial statements and other sections of this annual report and are responsible for all information and representations contained therein. Such financial information was prepared in accordance with generally accepted accounting principles appropriate in the circumstances, based on our best estimates and judgements. Wyman-Gordon maintains accounting and internal control systems which are designed to provide reasonable assurance that assets are safeguarded from loss or unauthorized use and to produce records adequate for preparation of financial information. These systems are established and monitored in accordance with written policies which set forth management's responsibility for proper internal accounting controls and the adequacy of these controls subject to continuing independent review by our external auditors, Ernst & Young LLP. To assure the effective administration of internal control, we carefully select and train our employees, develop and disseminate written policies and procedures and provide appropriate communication channels. We believe that it is essential for the company to conduct its business affairs in accordance with the highest ethical standards. The financial statements have been audited by Ernst & Young LLP, Independent Auditors, in accordance with generally accepted auditing standards. In connection with their audit, Ernst & Young LLP has developed an understanding of our accounting and financial controls, and conducted such tests and related procedures as it considers necessary to render their opinion on the financial statements. The financial data contained in this annual report were subject to review by the Audit Committee of the Board of Directors. The Audit Committee meets periodically during the year with Ernst & Young LLP and with management to review accounting, auditing, internal control and financial reporting matters. We believe that our policies and procedures provide reasonable assurance that operations are conducted in conformity with applicable laws and with our commitment to a high standard of business conduct. /S/ DAVID P. GRUBER David P. Gruber President and Chief Executive Officer /S/ ANDREW C. GENOR Andrew C. Genor Vice President, Chief Financial Officer and Treasurer -24- 25 Wyman-Gordon Company and Subsidiaries CONSOLIDATED STATEMENTS OF OPERATIONS
FIVE YEAR YEAR MONTHS ENDED ENDED ENDED JUNE 3, MAY 28, MAY 28, 1995 1994 1994 (Unaudited) (000's omitted, except per share data) Revenue $396,639 $224,694 $ 86,976 Cost of goods sold 347,251 217,816 91,907 Selling, general and administrative expenses 36,380 35,532 18,324 Other charges (credits) (710) 33,003 30,550 Environmental charge - 2,000 2,000 382,921 288,351 142,781 Income (loss) from operations 13,718 (63,657) (55,805) Other deductions (income): Interest expense 11,027 11,135 5,383 Miscellaneous, net 1,652 (2,389) 182 12,679 8,746 5,565 Income (loss) before cumulative effect of changes in accounting principles 1,039 (72,403) (61,370) Cumulative effect of changes in accounting principles - - - Net income (loss) $ 1,039 $(72,403) $(61,370) INFORMATION PER SHARE Income (loss) before cumulative effect of changes in accounting principles $ .03 $ (4.02) $ (3.32) Cumulative effect of changes in accounting principles - - - Net income (loss) $ .03 $ (4.02) $ (3.32) Shares used to compute earnings per share 35,148 17,992 18,490
The accompanying Notes to the Consolidated Financial Statements are an integral part of these financial statements. -25- 26 Wyman-Gordon Company and Subsidiaries CONSOLIDATED STATEMENTS OF OPERATIONS (Continued)
YEAR ENDED DECEMBER 31, 1993 1992 (000's omitted, except per share data) Revenue $239,761 $298,881 Cost of goods sold 219,088 243,291 Selling, general and administrative expenses 26,648 28,315 Other charges (credits) 2,453 - Environmental charge - - 248,189 271,606 Income (loss) from operations (8,428) 27,275 Other deductions (income): Interest expense 10,823 7,521 Miscellaneous, net (2,247) (2,041) 8,576 5,480 Income (loss) before cumulative effect of changes in accounting principles (17,004) 21,795 Cumulative effect of changes in accounting principles (43,000) - Net income (loss) $(60,004) $ 21,795 INFORMATION PER SHARE Income (loss) before cumulative effect of changes in accounting principles $ (.95) $ 1.21 Cumulative effect of changes in accounting principles (2.39) - Net income (loss) $ (3.34) $ 1.21 Shares used to compute earnings per share 17,965 18,078
The accompanying Notes to the Consolidated Financial Statements are an integral part of these financial statements. -26- 27 Wyman-Gordon Company and Subsidiaries CONSOLIDATED BALANCE SHEETS
JUNE 3, MAY 28, 1995 1994 (000's omitted) ASSETS Cash and cash equivalents $ 13,856 $ 42,179 Accounts receivable 79,219 77,019 Inventories 78,813 65,737 Prepaid expenses 15,671 15,192 Total current assets 187,559 200,127 Property, plant and equipment, net 141,397 139,689 Intangible assets 25,295 27,759 Other assets 14,813 27,172 Total assets $369,064 $394,747 LIABILITIES Borrowings due within one year $ 3,915 $ 77 Obligation to Cooper Industries - 20,561 Accounts payable 34,729 27,650 Accrued liabilities and other 55,853 60,151 Total current liabilities 94,497 108,439 Restructuring, integration, disposal and environmental 19,648 26,201 Long-term debt 90,308 90,385 Pension liability 9,589 14,462 Deferred income taxes and other 21,699 30,929 Postretirement benefits 52,468 51,848 STOCKHOLDERS' EQUITY Preferred stock, no par value: Authorized 5,000,000 shares; none issued - - Common stock, par value $1.00 per share: Authorized 70,000,000 shares; issued 37,052,720 and 36,902,720 shares at June 3, 1995 and May 28, 1994 37,053 36,903 Capital in excess of par value 40,118 43,884 Retained earnings 39,700 38,661 Equity adjustments 63 (5,408) Treasury stock, 2,044,178 shares at June 3, 1995 and 2,354,540 shares at May 28, 1994 (36,079) (41,557) Total stockholders' equity 80,855 72,483 Total liabilities and stockholders' equity $369,064 $394,747
The accompanying Notes to the Consolidated Financial Statements are an integral part of these financial statements. -27- 28 Wyman-Gordon Company and Subsidiaries CONSOLIDATED STATEMENT OF CASH FLOWS
YEAR YEAR ENDED ENDED JUNE 3, MAY 28, 1995 1994 (000's omitted) (Unaudited) OPERATING ACTIVITIES: Net income (loss) $ 1,039 $(72,403) Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities: Depreciation and amortization 18,122 15,888 Loss from disposal of production facilities - 2,453 Environmental and other charges (credits) (2,100) 32,550 Losses of equity investment 1,390 - Cumulative effect of changes in accounting principles - - Changes in assets and liabilities net of purchase price activity: Accounts receivable (2,200) 9,545 Inventories (13,076) 16,219 Prepaid expenses and other assets 11,542 5,078 Accrued restructuring, integration, disposal and environmental (14,646) (8,224) Income and other taxes 628 (623) Accounts payable and accrued liabilities 7,073 5,515 Deferred income taxes - 1,009 Net cash provided (used) by operating activities 7,772 7,007 INVESTING ACTIVITIES: Investment in acquired subsidiaries (3,591) (3,450) Capital expenditures (18,714) (11,888) Deferred program costs - 16,408 Proceeds from disposal of production facilities - 4,345 Proceeds from sale of fixed assets 1,563 62 Other, net (415) 4,071 Net cash provided (used) by investing activities (21,157) 9,548 FINANCING ACTIVITIES: Cash received from Cooper Industries for factored accounts receivable - 20,561 Cash paid to Cooper Industries for factored accounts receivable (20,561) - Payment of debt (77) (77) Issuance of debt 3,838 - Net proceeds from issuance of common stock 1,862 572 Net cash provided (used) by financing activities (14,938) 21,056 Increase (decrease) in cash (28,323) 37,611 Cash, beginning of period 42,179 4,568 Cash, end of period $ 13,856 $ 42,179
The accompanying Notes to the Consolidated Financial Statements are an integral part of these financial statements. -28- 29 Wyman-Gordon Company and Subsidiaries CONSOLIDATED STATEMENT OF CASH FLOWS (Continued)
FIVE MONTHS YEAR ENDED ENDED MAY 28, DEC. 31, 1994 1993 (000's omitted) OPERATING ACTIVITIES: Net income (loss) $(61,370) $(60,004) Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities: Depreciation and amortization 6,782 15,569 Loss from disposal of production facilities - 2,453 Environmental and other charges (credits) 32,550 - Losses of equity investment - - Cumulative effect of changes in accounting principles - 43,000 Changes in assets and liabilities net of purchase price activity: Accounts receivable 3,228 15,139 Inventories 4,215 8,474 Prepaid expenses and other assets 2,255 (7,114) Accrued restructuring, integration, disposal and environmental (1,352) (9,653) Income and other taxes 585 (940) Accounts payable and accrued liabilities 6,429 311 Deferred income taxes 1,009 (58) Net cash provided (used) by operating activities (5,669) 7,177 INVESTING ACTIVITIES: Investment in acquired subsidiaries (3,450) - Capital expenditures (2,404) (13,866) Deferred program costs 16,063 (22) Proceeds from disposal of production facilities - 4,345 Proceeds from sale of fixed assets - 393 Other, net 2,137 1,650 Net cash provided (used) by investing activities 12,346 (7,500) FINANCING ACTIVITIES: Cash received from Cooper Industries for factored accounts receivable 20,561 - Cash paid to Cooper Industries for factored accounts receivable - - Payment of debt (77) (70,077) Issuance of debt - 84,680 Net proceeds from issuance of common stock 201 537 Net cash provided (used) by financing activities 20,685 15,140 Increase (decrease) in cash 27,362 14,817 Cash, beginning of period 14,817 - Cash, end of period $ 42,179 $ 14,817
The accompanying Notes to the Consolidated Financial Statements are an integral part of these financial statements. -29- 30 Wyman-Gordon Company and Subsidiaries CONSOLIDATED STATEMENT OF CASH FLOWS (Continued)
YEAR ENDED DEC. 31, 1992 (000's omitted) OPERATING ACTIVITIES: Net income (loss) $ 21,795 Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities: Depreciation and amortization 15,875 Loss from disposal of production facilities - Environmental and other charges (credits) - Losses of equity investment - Cumulative effect of changes in accounting principles - Changes in assets and liabilities net of purchase price activity: Accounts receivable 14,699 Inventories 16,345 Prepaid expenses and other assets 986 Accrued restructuring, integration, disposal and environmental (25,735) Income and other taxes 2,789 Accounts payable and accrued liabilities (15,951) Deferred income taxes - Net cash provided (used) by operating activities 30,803 INVESTING ACTIVITIES: Investment in acquired subsidiaries (3,700) Capital expenditures (11,156) Deferred program costs (2,086) Proceeds from disposal of production facilities 451 Proceeds from sale of fixed assets 2,282 Other, net 742 Net cash provided (used) by investing activities (13,467) FINANCING ACTIVITIES: Cash received from Cooper Industries for factored accounts receivable - Cash paid to Cooper Industries for factored accounts receivable - Payment of debt (22,077) Issuance of debt - Net proceeds from issuance of common stock 220 Net cash provided (used) by financing activities (21,857) Increase (decrease) in cash (4,521) Cash, beginning of period 4,521 Cash, end of period $ -
The accompanying Notes to the Consolidated Financial Statements are an integral part of these financial statements. -30- 31 Wyman-Gordon Company and Subsidiaries CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
Common Stock Capital in Shares Par Excess of Retained Issued Value Par Value Earnings (000's omitted) Balance, December 31, 1991 20,403 $20,403 $16,616 $138,240 Net income 21,795 Stock plans (567) Pension equity adjustment Balance, December 31, 1992 20,403 20,403 16,049 160,035 Net loss (60,004) Stock plans (984) Savings/Investment Plan match (769) Pension equity adjustment Balance, December 31, 1993 20,403 20,403 14,296 100,031 Net loss (61,370) Stock plans (429) Savings/Investment Plan match (171) Pension equity adjustment Issuance of common stock 16,500 16,500 30,188 Balance, May 28, 1994 36,903 36,903 43,884 38,661 Net income 1,039 Stock plans 150 150 (2,354) Savings/Investment Plan match (1,412) Pension equity adjustment Currency translation Balance, June 3, 1995 37,053 $37,053 $40,118 $ 39,700
The accompanying Notes to the Consolidated Financial Statements are an integral part of these financial statements. -31- 32 Wyman-Gordon Company and Subsidiaries CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY (Continued)
Equity Treasury Adjustments Stock (000's omitted) Balance, December 31, 1991 $ (1,788) $(45,383) Net income Stock plans 735 Pension equity adjustment (535) Balance, December 31, 1992 (2,323) (44,648) Net loss Stock plans 1,250 Savings/Investment Plan match 1,040 Pension equity adjustment (1,700) Balance, December 31, 1993 (4,023) (42,358) Net loss Stock plans 546 Savings/Investment Plan match 255 Pension equity adjustment (1,385) Issuance of common stock Balance, May 28, 1994 (5,408) (41,557) Net income Stock plans 3,355 Savings/Investment Plan match 2,123 Pension equity adjustment 3,952 Currency translation 1,519 Balance, June 3, 1995 $ 63 $(36,079)
The accompanying Notes to the Consolidated Financial Statements are an integral part of these financial statements. -32- 33 Wyman-Gordon Company and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The company is engaged principally in the design, engineering, production and marketing of high-technology forged and investment cast metal and composite components used for a wide variety of aerospace and power generation applications. On May 24, 1994, the company's Board of Directors voted to change the company's fiscal year end from one which ended on December 31 to one which ends on the Saturday nearest to May 31. On May 26, 1994, the Company acquired Cameron Forged Products Company ("Cameron") from Cooper Industries. The accompanying consolidated financial statements include the accounts of Cameron from the date of the acquisition. Cameron's operating results from May 26, 1994 to May 28, 1994 are not material to the consolidated statement of operations for the five month period ended May 28, 1994. The unaudited statement of operations and cash flows for the year ended May 28, 1994 are presented for comparative purposes only. PRINCIPLES OF CONSOLIDATION: The consolidated financial statements include the accounts of the company and all subsidiaries. All intercompany accounts and transactions have been eliminated. REVENUE RECOGNITION: Sales and income are recognized at the time products are shipped. RECLASSIFICATIONS: Where appropriate, prior year amounts have been reclassified to permit comparison. CASH AND CASH EQUIVALENTS: Cash equivalents include short-term investments with maturities of less than three months at the time of investment. INVENTORIES: Inventories are valued at both the lower of first- in, first-out (FIFO) cost or market, or for certain forgings and castings raw material and work-in-process inventories, the last-in, first-out (LIFO) method. On certain orders, usually involving lengthy raw material procurement and production cycles, progress payments are reflected as a reduction of inventories. Product repair costs are expensed as incurred. LONG-TERM, FIXED PRICE CONTRACTS: A substantial portion of the company's revenues is derived from long-term, fixed price contracts with major engine and aircraft manufacturers. These contracts are typically "requirements" contracts under which the purchaser commits to purchase a given portion of its requirements of a particular component from the company. Actual purchase quantities are typically not determined until shortly before the year in which products are to be delivered. Losses on such contracts are provided when available information indicates that -33- 34 Wyman-Gordon Company and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) the sales price is less than a fully allocated cost projection. As part of the company's acquisition of Cameron on May 26, 1994, loss reserves on backlog and long-term pricing agreements are included on the balance sheet (see Footnote C). DEPRECIABLE ASSETS: Property, plant and equipment, including significant renewals and betterments, are capitalized at cost and are depreciated on the straight-line method. Generally, depreciable lives range from 10 to 20 years for land improvements, 10 to 40 years for buildings and 5 to 15 years for machinery and equipment. Tooling production costs are primarily classified as machinery and equipment and are capitalized at cost less associated revenue and depreciated over 5 years. BANK FEES: Bank fees and related costs of obtaining credit facilities are recorded as other assets and amortized over the term of the facilities. EARNINGS (LOSS) PER SHARE: Per-share data are computed based on the weighted average number of common shares outstanding during each year. Common stock equivalents related to outstanding stock options are included in per-share computations unless their inclusion would be antidilutive. CONCENTRATION OF CREDIT RISK: Financial instruments that potentially subject the company to concentration of credit risk consist primarily of temporary cash investments and trade receivables. The company restricts investment of temporary cash investments to financial institutions with high credit standing. The company has approximately 550 active customers. However, the company's accounts receivable are concentrated with a small number of Fortune 500 companies with whom the company has long- standing relationships. Accordingly, management considers credit risk to be low. Five customers accounted for 50.0% of the company's revenues during the year ended June 3, 1995, 50.6% for the five months ended May 28, 1994, 55.6% for the year ended December 31, 1993 and 52.7% for the year ended December 31, 1992. General Electric Company ("GE")and United Technologies Corporation "UT") each accounted for more than 10% of the company's revenues as follows: -34- 35 Wyman-Gordon Company and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
($000's omitted) FIVE YEAR MONTHS ENDED ENDED YEAR ENDED JUNE 3, MAY 28, DECEMBER 31, 1995 % 1994 % 1993 % 1992 % GE $101,261 26 $17,226 20 $55,585 23 $62,740 21 UT 58,873 15 13,930 16 37,060 16 48,920 17
CURRENCY TRANSLATION: For foreign operations, the local currency is the functional currency. Assets and liabilities are translated at year-end exchange rates, and statement of operations items are translated at the average exchange rates for the year. Translation adjustments are reported in equity adjustments as a separate component of stockholders' equity which also includes exchange gains and losses on certain intercompany balances of a long-term investment nature. RESEARCH AND DEVELOPMENT: Research and development expenses, including related depreciation, amounted to $2,213,000, $733,000, $2,778,000 and $3,013,000 for the year ended June 3, 1995, five months ended May 28, 1994 and for the years ended December 31, 1993 and 1992, respectively. INTANGIBLE ASSETS: Intangible assets consists primarily of costs of acquired businesses in excess of net assets acquired and are amortized on a straightline basis over periods up to 35 years. B. ACQUISITION On May 26, 1994, the company acquired all of the outstanding stock of Cameron from Cooper Industries Inc. for 16,500,000 shares of the company's common stock valued at $46,687,000, direct costs of $3,050,000, a note payable to Cooper Industries, Inc. of $3,186,000 net of discount of $1,414,000, $400,000 in cash at closing and a final cash settlement of $3,591,000. Cameron and its subsidiaries operate forging facilities in Houston, Texas and Livingston, Scotland, as well as a powder metal operation in Brighton, Michigan. The integration of Cameron's operations with the company's is progressing substantially as planned. The acquisition was accounted for as a purchase transaction. The company's results of operations for fiscal 1995 include the accounts of Cameron. The final allocation of the purchase price of this transaction is reflected in the May 28, 1994 balance sheet as follows: -35- 36 Wyman-Gordon Company and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(000's omitted) Cost of acquisition: Issuance of 16,500 shares of common stock to Cooper, direct expenses of $3,050 and $3,591 final price adjustment $53,328 Note payable to Cooper net of discount of $1,414 (included in other long-term liabilities on the balance sheet) 3,186 Cash paid to Cooper at closing 400 56,914 Estimated costs to integrate Cameron into the company 6,993 $63,907 Allocation of cost of acquisition: Fair value of property, plant and equipment $81,183 Less excess of fair value of net assets acquired over purchase price (30,712) 50,471 Other assets acquired and liabilities assumed 13,436 $63,907
The allocation of the cost of the acquisition has been made on the basis of the fair market value of the individual assets and liabilities acquired. Direct costs of the acquisition of Cameron and liabilities assumed are $5,200,000 and $900,000, respectively, lower than originally estimated at May 28, 1994. The Unaudited Pro Forma Combined financial data of the company with Cameron as though Cameron had been acquired as of the beginning of each period presented are as follows:
FIVE MONTHS ENDED YEAR ENDED MAY 28, DECEMBER 31, 1994 1993 (000's omitted, except per-share data) Revenue $151,834 $389,295 Income (loss) before cumulative effect of changes in accounting principles $(71,525) $(39,271) Net income (loss) $(71,525) $(82,271) Income (loss) per share before cumulative effect of changes in accounting principles $ (2.07) $ (1.14) Net income (loss) per share $ (2.07) $ (2.38)
-36- 37 Wyman-Gordon Company and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) C. BALANCE SHEET INFORMATION Components of selected captions in the consolidated balance sheets follow:
JUNE 3, May 28, 1995 1994 (000's omitted) PROPERTY, PLANT AND EQUIPMENT: Land, buildings and improvements $100,399 $ 92,150 Machinery and equipment 278,691 272,429 Under construction 6,282 4,722 385,372 369,301 Less accumulated depreciation 243,975 229,612 $141,397 $139,689 INTANGIBLE ASSETS: Pension intangible $ 5,568 $ 6,527 Costs in excess of net assets acquired 28,786 29,586 Less: Accumulated amortization (9,059) (8,354) $ 25,295 $ 27,759 OTHER ASSETS: Cash surrender value of company- owned life insurance policies $ 7,974 $ 12,341 Other 6,839 14,831 $ 14,813 $ 27,172 ACCRUED LIABILITIES AND OTHER: Accrued payroll and benefits $ 11,511 $ 9,900 Restructuring, integration, disposal and environmental reserves 10,219 19,082 Payroll and other taxes 3,139 2,511 Loss on long-term contracts 7,407 8,334 Other 23,577 20,324 $ 55,853 $ 60,151 DEFERRED INCOME TAXES AND OTHER: Deferred income taxes $ 2,623 $ 2,623 Loss on long-term contracts 3,413 12,000 Other long-term liabilities 15,663 16,306 $ 21,699 $ 30,929
-37- 38 Wyman-Gordon Company and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) D. INVENTORIES Inventories consisted of the following:
JUNE 3, MAY 28, 1995 1994 (000's omitted) Raw material $26,440 $13,706 Work-in-process 54,310 54,570 Other 3,228 2,286 83,978 70,562 Less progress payments 5,165 4,825 $78,813 $65,737
If all inventories valued at LIFO cost had been valued at FIFO cost or market which approximates current replacement cost, inventories would have been $21,584,000 and $27,758,000 higher than reported at June 3, 1995 and May 28, 1994, respectively. LIFO inventory quantities were reduced in each of the periods presented below, resulting in the liquidation of LIFO inventories carried at the lower costs prevailing in prior years compared with the cost of current purchases which has a favorable effect on income from operations. Inflation and deflation have negative and positive effects on income from operations, respectively. The effects of lower quantities, inflation or deflation were as follows:
FIVE YEAR MONTHS ENDED ENDED YEAR ENDED JUNE 3, MAY 28, DECEMBER 31, 1995 1994 1993 1992 (000's omitted) Lower quantities $ 7,567 $2,050 $5,469 $18,388 (Inflation) deflation (1,393) 1,085 4,450 2,448 Net increase to income from operations $ 6,174 $3,135 $9,919 $20,836
-38- 39 Wyman-Gordon Company and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) E. SHORT-TERM AND LONG-TERM DEBT Short-term and long-term debt consisted of the following:
JUNE 3, MAY 28, 1995 1994 (000's omitted) Borrowings due within one year: Current portion of long-term debt $ 77 $ 77 Borrowings under U.K. Credit Agreement 3,838 - Total borrowings due within one year $ 3,915 $ 77 Long-term debt: Senior Notes $90,000 $90,000 Other 308 385 Total long-term debt $90,308 $90,385
During 1993, the company issued $90,000,000 of 10 3/4% Senior Notes due March 2003 (the "Senior Notes") under an indenture between the company and a bank as trustee. The Senior Notes pay interest semi-annually. The Senior Notes are general unsecured obligations of the company, are non-callable for a five year period, and are senior to any future subordinated indebtedness of the company. The indenture contains certain covenants including limitations on indebtedness, restrictive payments including dividends, liens, and disposition of assets. The estimated fair value of the Senior Notes was $86,400,000 and $88,200,000 at June 3, 1995 and May 28, 1994 based on third party valuations. On May 20, 1994, the company initiated, through a new subsidiary, Wyman-Gordon Receivables Corporation ("WGRC"), a revolving credit agreement with a group of five banks ("Receivables Financing Program"). WGRC is a separate corporate entity from Wyman-Gordon Company and its other subsidiaries, with its own separate creditors. WGRC's business is the purchase of accounts receivable from Wyman-Gordon Company and certain of its subsidiaries ("Sellers"), and neither WGRC on the one hand nor the Sellers (or subsidiaries or affiliates of the Sellers) on the other have agreed to pay or make their assets available to pay creditors of others. WGRC's creditors have a claim on its assets prior to those assets becoming available to any creditors of any of the Sellers. The facility provides for a total commitment by the banks of up to $65,000,000, including a letter of credit subfacility of up to $35,000,000. -39- 40 Wyman-Gordon Company and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) There were no borrowings outstanding at June 3, 1995 and May 28, 1994, but the company had issued $10,009,000 and $5,139,000 of letters of credit under the Receivables Financing Program, respectively. As of June 3, 1995 and May 28, 1994, total availability based on eligible receivables was $44,816,000 and $15,418,000, respectively. Cameron's accounts receivable became eligible on October 21, 1994. Wyman-Gordon Limited, the company's subsidiary located in Livingston, Scotland, entered into a credit agreement ("U.K. Credit Agreement") with a bank ("the Bank") effective November 28, 1994. The maximum borrowing capacity under the U.K. Credit Agreement is 3,000,000 pound sterling with a separate letter of credit or guarantee limit of 1,000,000 pound sterling. Borrowings bear interest at 1% over the Bank's base rate. In the event that borrowings by way of overdraft are allowed to exceed the agreed limit, interest on the excess borrowings will be charged at the rate of 2% over the Bank's base rate. The company is obligated to pay a commitment fee of .75% on letters of credit issued under the U.K. Credit Agreement. The U.K. Credit Agreement is secured by a debenture from Wyman-Gordon Limited and is senior to any intercompany loans. The term of the U.K. Credit Agreement is one year with an evergreen feature. There were 2,415,000 pound sterling or $3,838,000 borrowings outstanding at June 3, 1995 and the company had issued pound sterling 380,000 or $604,000 of letters of credit or guarantees under the U.K. Credit Agreement. For the year ended June 3, 1995, the weighted average interest rate on short-term borrowings was 7.3%. Annual maturities of long-term debt in the next five years amount to $77,000 per year and $90,000,000 thereafter. The company's promissory note to Cooper Industries, Inc. in the principal amount of $4,600,000, will be payable in annual installments beginning on June 30, 1997 and each June 30 thereafter until paid in full in amounts provided under the terms of the "Stock Purchase Agreement" with Cooper Industries, Inc.
FIVE YEAR MONTHS ENDED ENDED YEAR ENDED JUNE 3, MAY 28, DECEMBER 31, 1995 1994 1993 1992 (000's omitted) Interest on debt $ 9,929 $3,973 $ 8,741 $5,171 Capitalized interest (397) (152) (544) (218) Amortization of financing fees and other 1,495 1,562 2,626 2,568 Interest expense $11,027 $5,383 $10,823 $7,521
Total interest paid approximates "Interest on debt" stated in the table above. -40- 41 Wyman-Gordon Company and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) F. RESTRUCTURING OF OPERATIONS 1991 RESTRUCTURING: During 1991, the company incurred charges of $87,966,000 and $11,498,000 in connection with a restructuring program primarily at its forging operations and disposition of its automotive crankshaft forging division, respectively. A significant portion of this charge related to the consolidation of forging operations, including severance and other personnel costs. The company has nearly completed its 1991 restructuring plan. Some consolidation activities still remain to be completed requiring cash outlays of approximately $1,700,000 and $600,000 in fiscal 1996 and 1997, respectively. Deferred compensation of approximately $1,500,000 will be payable over the next several years under the terms of a severance agreement. The divestiture of the company's automotive crankshaft forging division is virtually complete with minor costs remaining. 1993 DISPOSITION: In 1993, the company sold substantially all of the net assets and business operations of Wyman-Gordon Composites, Inc. and recorded a non-cash charge on the sale in the fourth quarter of 1993 of $2,453,000. 1994 RESTRUCTURING: The company recorded a charge of $6,450,000 in May 1994, $5,200,000 for closing a castings facility, of which $1,100,000 required cash, and $1,250,000 to write-down castings fixed assets to their net realizable value. The non-cash items amounting to $5,350,000 were charged against the reserve in May 1994. A $600,000 cash charge was made against the reserve in fiscal 1995 and cash charges of $500,000 are expected to be incurred in fiscal 1996. 1994 CAMERON INTEGRATION COSTS: Based on the company's plans for the integration of Cameron, in May 1994, the company recorded an integration restructuring charge totalling $24,100,000 which consisted of estimated cash costs of $12,700,000 and estimated non-cash charges of $11,400,000 for asset revaluations. Cash costs include relocating machinery, equipment, tooling and dies of the company as well as relocation and severance costs related to personnel of the company. Non-cash charges included the write-down of certain assets of the company, including portions of metal production facilities and certain forging, machining and testing equipment to net realizable value as a result of consolidating certain systems and facilities, idling certain machinery and equipment, and eliminating certain processes, departments and operations as a result of the acquisition. -41- 42 Wyman-Gordon Company and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) In the fourth quarter of fiscal 1995, after a year of evaluating the combined forgings operations and concluding that most of its integration activities had been completed or were adequately provided for within the remaining integration restructuring reserves, the company determined that severance and other personnel costs were $1,900,000 lower and movement of machinery, equipment and tooling and dies costs were $2,500,000 lower than originally estimated. Additionally, the company had originally identified certain machinery and equipment expected to become redundant as a result of the integration of Cameron's operations with those of the company's. These redundancies were $2,300,000 higher than the company's original estimates. As a result, the company took into income from operations, an integration restructuring credit in the amount of $2,100,000. At June 3, 1995, the company estimates the remaining integration activities will require cash outlays of approximately $4,100,000 in fiscal 1996 and $1,600,000 thereafter. Most of these future expenditures represent costs associated with consolidation and reconfiguration of production facilities and relocation or severance costs. CAMERON PURCHASE CASH COSTS: Included as part of the Cameron purchase price allocation the company recorded $12,200,000 for direct cash costs related to the acquisition and integration of Cameron for relocation of Cameron machinery and dies, severance of Cameron personnel and other costs. At June 3, 1995, it was determined that the cash costs of the acquisition were $5,200,000 lower than originally estimated. The company made $4,100,000 of cash charges against these reserves in fiscal 1995, and the remaining activities will require estimated cash outlays of $2,900,000. A summary of charges made or estimated to be made against restructuring, integration and disposal reserves is as follows: -42- 43 Wyman-Gordon Company and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
YEAR ENDED DEC. 31, TOTAL 1991 (000's omitted) 1991 RESTRUCTURING: CASH: Consolidation and reconfiguration of facilities $32,600 $ 700 Severance and deferred compensation 6,400 - Total cash charges 39,000 700 NON-CASH: Asset revaluation 56,000 51,900 Total 1991 Other Charges $95,000 $52,600 1993 DISPOSITION: NON-CASH: Disposition of production facilities $ 2,453 $ - Total 1993 Other Charges $ 2,453 $ - 1994 RESTRUCTURING: 1994 RESTRUCTURING: CASH: Casting facility closure $ 1,100 $ - NON-CASH: Casting facility closure 4,100 - Other 1,250 - Total non-cash charges 5,350 - Total 1994 Restructuring 6,450 - 1994 CAMERON INTEGRATION COSTS: CASH: Movement of machinery, equipment and tooling and dies 4,300 - Severance and other personnel costs 4,000 - Total cash charges 8,300 - NON-CASH: Asset revaluation 13,700 - Credits to reserves 2,100 - Total non-cash charges 15,800 - Total 1994 Cameron integration costs 24,100 - Total 1994 Other Charges $30,550 $ - CAMERON PURCHASE CASH COSTS: Cost of relocating Cameron's machinery and equipment and tooling and dies $ 3,200 $ - Severance of Cameron personnel 3,800 - Total Cameron Purchase Cash Costs $ 7,000 $ - 1995 OTHER CHARGES: NON-CASH: Credits to 1994 Cameron integration costs $(2,100) $ - Total 1995 Other Charges $(2,100) $ - Total Cash $55,400 $ 700 Total Non-cash $77,503 $51,900
-43- 44 Wyman-Gordon Company and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
YEAR YEAR ENDED ENDED DEC. 31, DEC. 31, 1992 1993 (000's omitted) 1991 RESTRUCTURING: CASH: Consolidation and reconfiguration of facilities $21,100 $ 4,800 Severance and deferred compensation 2,200 2,000 Total cash charges 23,300 6,800 NON-CASH: Asset revaluation 2,400 1,700 Total 1991 Other Charges $25,700 $ 8,500 1993 DISPOSITION: NON-CASH: Disposition of production facilities $ - $ 2,453 Total 1993 Other Charges $ - $ 2,453 1994 RESTRUCTURING: 1994 RESTRUCTURING: CASH: Casting facility closure $ - $ - NON-CASH: Casting facility closure - - Other - - Total non-cash charges - - Total 1994 Restructuring - - 1994 CAMERON INTEGRATION COSTS: CASH: Movement of machinery, equipment and tooling and dies - - Severance and other personnel costs - - Total cash charges - - NON-CASH: Asset revaluation - - Credits to reserves - - Total non-cash charges - - Total 1994 Cameron integration costs - - Total 1994 Other Charges $ - $ - CAMERON PURCHASE CASH COSTS: Cost of relocating Cameron's machinery and equipment and tooling and dies $ - $ - Severance of Cameron personnel - - Total Cameron Purchase Cash Costs $ - $ - 1995 OTHER CHARGES: NON-CASH: Credits to 1994 Cameron integration costs $ - $ - Total 1995 Other Charges $ - $ - Total Cash $23,300 $ 6,800 Total Non-cash $ 2,400 $ 4,153
-44- 45 Wyman-Gordon Company and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FIVE MONTHS YEAR ENDED ENDED MAY 28, JUNE 3, 1994 1995 (000's omitted) 1991 RESTRUCTURING: CASH: Consolidation and reconfiguration of facilities $ 1,400 $ 2,300 Severance and deferred compensation 300 400 Total cash charges 1,700 2,700 NON-CASH: Asset revaluation - - Total 1991 Other Charges $ 1,700 $ 2,700 1993 DISPOSITION: NON-CASH: Disposition of production facilities $ - $ - Total 1993 Other Charges $ - $ - 1994 RESTRUCTURING: 1994 RESTRUCTURING: CASH: Casting facility closure $ - $ 600 NON-CASH: Casting facility closure 4,100 - Other 1,250 - Total non-cash charges 5,350 - Total 1994 Restructuring 5,350 600 1994 CAMERON INTEGRATION COSTS: CASH: Movement of machinery, equipment and tooling and dies - 800 Severance and other personnel costs - 1,800 Total cash charges - 2,600 NON-CASH: Asset revaluation 11,400 2,300 Credits to reserves - 2,100 Total non-cash charges 11,400 4,400 Total 1994 Cameron integration costs 11,400 7,000 Total 1994 Other Charges $16,750 $ 7,600 CAMERON PURCHASE CASH COSTS: Cost of relocating Cameron's machinery and equipment and tooling and dies $ - $ 1,700 Severance of Cameron personnel - 2,400 Total Cameron Purchase Cash Costs $ - $ 4,100 1995 OTHER CHARGES: NON-CASH: Credits to 1994 Cameron integration costs $ - $(2,100) Total 1995 Other Charges $ - $(2,100) Total Cash $ 1,700 $10,000 Total Non-cash $16,750 $ 2,300
-45- 46 Wyman-Gordon Company and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
YEAR ENDED JUNE 1, THERE- 1996 AFTER (000's omitted) 1991 RESTRUCTURING: CASH: Consolidation and reconfiguration of facilities $ 1,700 $ 600 Severance and deferred compensation 200 1,300 Total cash charges 1,900 1,900 NON-CASH: Asset revaluation - - Total 1991 Other Charges $ 1,900 $ 1,900 1993 DISPOSITION: NON-CASH: Disposition of production facilities $ - $ - Total 1993 Other Charges $ - $ - 1994 RESTRUCTURING: 1994 RESTRUCTURING: CASH: Casting facility closure $ 500 $ - NON-CASH: Casting facility closure - - Other - - Total non-cash charges - - Total 1994 Restructuring 500 - 1994 CAMERON INTEGRATION COSTS: CASH: Movement of machinery, equipment and tooling and dies 2,100 1,400 Severance and other personnel costs 2,000 200 Total cash charges 4,100 1,600 NON-CASH: Asset revaluation - - Credits to reserves - - Total non-cash charges - - Total 1994 Cameron integration costs 4,100 1,600 Total 1994 Other Charges $ 4,600 $ 1,600 CAMERON PURCHASE CASH COSTS: Cost of relocating Cameron's machinery and equipment and tooling and dies $ 1,100 $ 400 Severance of Cameron personnel 1,300 100 Total Cameron Purchase Cash Costs $ 2,400 $ 500 1995 OTHER CHARGES: NON-CASH: Credits to 1994 Cameron integration costs $ - $ - Total 1995 Other Charges $ - $ - Total Cash $ 8,900 $ 4,000 Total Non-cash $ - $ -
-46- 47 Wyman-Gordon Company and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) G. ENVIRONMENTAL MATTERS The company is subject to extensive, stringent and changing federal, state and local environmental laws and regulations, including those regulating the use, handling, storage, discharge and disposal of hazardous substances and the remediation of alleged environmental contamination. Nevertheless, the company believes that compliance with these laws and regulations will not have a material adverse effect on the company's operations as a whole. In 1991, the company recorded a charge of $7,000,000 with respect to environmental investigation and remediation costs at one of the company's facilities. During the five months ended May 28, 1994, the company provided an additional $2,000,000 to the current estimated cost of remediation. Additionally, a charge of $5,000,000 against potential environmental remediation costs upon the eventual sale of another facility was included in the 1991 restructuring charge. Pursuant to an agreement entered into with the U.S. Air Force upon the acquisition of a facility from the federal government in 1982, the company agreed to make additional expenditures for environmental management and remediation projects at that site during the period 1982 through 1999. Approximately $6,100,000 of future expenditures remain as of June 3, 1995. The company, together with numerous other parties, has also been alleged to be a potentially responsible party at four federal or state Superfund sites. The company does not believe that liabilities related to such sites will be material in the aggregate. The company's Grafton, Massachusetts plant location is included in the U.S. Nuclear Regulatory Commission's ("NRC") May 1992 Site Decommissioning Management Plan for low-level radioactive waste as a "Priority C" (lowest priority) site. The NRC conducted a long range dose assessment in 1992, and concluded that the site should be remediated. However, the company believes the NRC's draft assessment was flawed and has challenged that draft assessment. The company has provided $1,500,000 for the estimated cost of the remediation. The company believes that it may have meritorious claims for reimbursement from the U.S. Air Force in respect of any liabilities it may have for such remediation. The company has been named in a suit which relates to the clean-up of a privately owned site in Massachusetts formerly used as an impoundment lagoon from which hazardous material is alleged to have spilled. A proposed agreement would allocate 33% of the clean-up costs to the company. An insurance company is defending the company's interests, and the company believes that any recovery against the company would be covered by insurance. A consulting firm retained by the PRP group has recently made a preliminary remediation cost estimate of $300,000 to $9,900,000, depending on the level of toxicity found and the method of remediation ultimately used. -47- 48 Wyman-Gordon Company and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) H. BENEFIT PLANS The company and its subsidiaries have pension plans covering substantially all employees. Benefits are generally based on years of service and a fixed monthly rate or average earnings during the last years of employment. Pension plan assets are invested in equity and fixed income securities, pooled funds including real estate funds and annuities. Company contributions are determined based upon the funding requirements of U.S. and other governmental laws and regulations. A reconciliation between the amounts recorded on the consolidated balance sheets and the summary tables of the funding status of the pension plans are as follows:
JUNE 3, MAY 28, 1995 1994 (000's omitted) Pension liability per balance sheet $(9,589) $(14,462) Prepaid pension expense included in prepaid expenses in the balance sheet 1,639 2,769 UK pension liability 789 750 Net pension liability $(7,161) $(10,943)
U.S. PENSION PLANS Pension expense for the U.S. pension plans included the following components:
FIVE YEAR MONTHS ENDED ENDED YEAR ENDED JUNE 3, MAY 28, DECEMBER 31, 1995 1994 1993 1992 (000's omitted) Service cost $ 2,938 $ 917 $ 1,720 $ 1,937 Interest cost on projected benefit obligation 10,842 4,373 10,955 11,083 Actual return on assets (8,205) (2,248) (18,107) (6,849) Net amortization and deferral of actuarial gains (losses) (1,385) (1,798) 8,208 (3,403) Net pension expense $ 4,190 $ 1,244 $ 2,776 $ 2,768 Assumed long-term rate of return on plan assets 9.0% 9.0% 9.0% 9.0%
-48- 49 Wyman-Gordon Company and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) A summary of the funding status of the U.S. pension plans and a reconciliation to the amounts recorded in the consolidated balance sheets are as follows:
JUNE 3, 1995 (000's omitted) ASSETS ACCUMULATED EXCEEDING BENEFITS ACCUMULATED EXCEEDING BENEFITS ASSETS TOTAL Actuarial present value of benefit obligations: Vested $ 82,042 $ 46,202 $128,244 Nonvested 349 324 673 Accumulated benefit obligation 82,391 46,526 128,917 Impact of forecasted salary increases during future periods 5,737 339 6,076 Projected benefit obligation for employee service to date 88,128 46,865 134,993 Current fair market value of plan assets 101,933 30,967 132,900 Excess (shortfall) of plan assets over (under) projected benefit obligation 13,805 (15,898) (2,093) Unrecognized net (gain) loss (10,261) 1,771 (8,490) Unrecognized net (asset) obligation at transition (455) 4,912 4,457 Unrecognized prior service cost 5,290 2,456 7,746 Adjustment required to recognize minimum liability - (8,800) (8,800) Net periodic pension cost April 1, 1995 to June 3, 1995 (48) (650) (698) Contributions April 1, 1995 to June 3, 1995 - 717 717 Net prepaid pension expense (pension liability) $ 8,331 $(15,492) $ (7,161) Estimated annual increase in future salaries 3-5% Weighted average discount rate 9.0%
A measurement date of March 31 has been used for determining the disclosure information. Expense recognition and contributions received during the period April 1 through fiscal year-end are then recognized to bring the accrued or prepaid expense to June 3, 1995 and May 28, 1994 balances. -49- 50 Wyman-Gordon Company and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
MAY 28, 1994 (000's omitted) ASSETS ACCUMULATED EXCEEDING BENEFITS ACCUMULATED EXCEEDING BENEFITS ASSETS TOTAL Actuarial present value of benefit obligations: Vested $ 91,533 $ 50,639 $142,172 Nonvested 341 398 739 Accumulated benefit obligation 91,874 51,037 142,911 Impact of forecasted salary increases during future periods 6,798 235 7,033 Projected benefit obligation for employee service to date 98,672 51,272 149,944 Current fair market value of plan assets 103,349 31,390 134,739 Excess (shortfall) of plan assets over (under) projected benefit obligation 4,677 (19,882) (15,205) Unrecognized net (gain) loss (1,274) 5,121 3,847 Unrecognized net (asset) obligation at transition (522) 5,965 5,443 Unrecognized prior service cost 5,706 2,860 8,566 Adjustment required to recognize minimum liability - (13,712) (13,712) Net periodic pension cost April 1, 1994 to May 28, 1994 34 (507) (473) Contributions April 1, 1994 to May 28, 1994 - 591 591 Net prepaid pension expense (pension liability) $ 8,621 $(19,564) $(10,943) Estimated annual increase in future salaries 3-5% Weighted average discount rate 7.5%
-50- 51 Wyman-Gordon Company and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) U.K. PENSION PLAN Pension expense for the U.K. pension plan included the following:
YEAR ENDED JUNE 3, 1995 (000's omitted) Service cost $ 692 Interest cost 1,189 Expected return on assets (1,084) Net pension expense $ 797
The U.K. pension plan's assets and liabilities were rolled over from the former Cameron plan during fiscal 1995. The funded status of the U.K. pension plan is as follows:
JUNE 3, 1995 (000's omitted) Fair value of plan assets $14,682 Projected benefit obligation 15,247 Plan assets less than projected benefit obligation (565) Unrecognized net gain loss 498 Accrued pension cost $ (67) Accumulated benefits $13,472 Vested benefits $13,472 Assumed long-term rate of return on plan assets 9.0% Weighted average discount rate 9.0% Rate of salary increase 6.0%
The company also maintains a 401K plan for most full-time salaried employees. Employer contributions to the defined contribution plan are made at the company's discretion and are reviewed periodically. Such contributions amounted to $136,000 for the year ended June 3, 1995, $591,000 for the five months ended May 28, 1994, and $134,000 and $375,000 for the years ended December 31, 1993 and 1992, respectively. Additionally, for the year ended June 3, 1995, the five months ended May 28, 1994 and the years ended December 31, 1993 and 1992, the company contributed 120,261; 14,432; 58,927 and 0 shares of common stock from Treasury to its defined contribution plan, respectively, and recorded expense relating thereto of $711,000, $84,000, $271,000 and $0, respectively. -51- 52 Wyman-Gordon Company and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) I. OTHER POSTRETIREMENT BENEFITS In addition to providing pension benefits, the company and its subsidiaries provide most retired employees with health care and life insurance benefits. The majority of these health care and life insurance benefits are provided through insurance companies, some of whose premiums are computed on a cost plus basis. The annual cost of these benefits on the expense-as- incurred basis amounted to $4,849,000 in 1992. Effective January 1, 1993, the company adopted SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions." This standard requires companies to accrue postretirement benefits during the years the employees are working and earning benefits for retirement, as contrasted to the expense-as-incurred basis that the company followed in 1992 and prior years. The company elected to recognize the cumulative effect of the accounting change, resulting in a non-cash reduction in earnings in 1993 of $43,000,000 or $2.39 per share. Most of the Forgings Division and Corporate retirees and full-time employees are or become eligible for these postretirement health care and life insurance benefits if they meet minimum age and service requirements. There are certain retirees for which company cost and liability are affected by future increases in health care cost. The liabilities have been developed assuming a medical trend rate for growth in future health care claim levels from the assumed 1994 level. The change to the accumulated postretirement benefit obligation for each 1.0% change in these assumptions is $850,000. The change in the annual SFAS 106 expense for each 1.0% change in these assumptions is $78,000. The weighted average discount rate used in determining the amortization of the accumulated postretirement benefit obligation was 9.0% and 7.5% at June 3, 1995 and May 28, 1994, respectively, and the average remaining service life was 20 years. Net periodic benefit expense consists of the following components:
FIVE YEAR MONTHS ENDED ENDED YEAR ENDED JUNE 3, MAY 28, DECEMBER 31, 1995 1994 1993 ($000's omitted) Service cost $ 350 $ 85 $ 170 Interest on the accumulated benefit obligation 3,990 1,540 3,660 Total postretirement benefit expense $4,340 $1,625 $3,830
-52- 53 Wyman-Gordon Company and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The company has no plans for funding the liability and will continue to pay for retiree medical costs as they occur. The components of the accumulated postretirement benefit obligation are as follows:
JUNE 3, MAY 28, 1995 1994 (000's omitted) Accumulated postretirement benefit obligation: Retirees $41,323 $43,285 Fully eligible active plan participants 5,180 5,239 Other active plan participants 7,023 6,778 53,526 55,302 Plan assets at fair value - - Accumulated postretirement benefit obligation in excess of plan assets 53,526 55,302 Unrecognized net gain (loss) from past experience different from that assumed and from changes in assumptions 901 (3,454) Prior service cost not yet recognized in net periodic postretirement benefit cost (2,000) - Accrued postretirement benefit cost $52,427 $51,848
J. FEDERAL, FOREIGN AND STATE INCOME TAXES As of January 1, 1993, the company adopted financial Accounting Standards Board Statement No. 109, "Accounting for Income Taxes" ("SFAS 109"). As permitted under SFAS 109, the company has elected not to restate the financial statements of prior years. The impact of this change on the results of operations for the year ended December 31, 1993 was immaterial. The company has not recognized an income tax benefit (provision) during the year ended June 3, 1995, the five months ended May 28, 1994, or the years ended December 31, 1993 and 1992, respectively. The company received income tax refunds of $0, $138,000, $282,000 and $3,725,000 during the years ended June 3, 1995, the five months ended May 28, 1994, and the years ended December 31, 1993 and 1992, respectively. -53- 54 Wyman-Gordon Company and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The benefit (provision) for income taxes is at a rate other than the federal statutory tax rate for the following reasons:
FIVE YEAR MONTHS ENDED ENDED YEAR ENDED JUNE 3, MAY 28, DECEMBER 31, 1995 1994 1993 1992 (000's omitted) U.S. federal statutory tax rate $ (363) $ 21,480 $ 5,781 $(7,410) Recognition of previously unrecognized deferred tax assets 1,749 - - 7,410 Tax carryforwards without current tax benefits (foreign in 1995 and U.S. federal in 1994 and 1993) (1,386) (21,480) (5,781) - Income tax benefit (provision) $ - $ - $ - $ -
Tax net operating loss carryforwards of $67,000,000 begin expiring in the year 2006. The company has experienced significant operating losses and there is no assurance that the net operating loss carryforwards will be utilized, therefore, a valuation allowance of $67,731,000 and $69,716,000 at June 3, 1995 and May 28, 1994 has been recognized, respectively. The principal components of deferred tax assets and liabilities were as follows:
JUNE 3, 1995 MAY 28, 1994 (000's omitted) DEFERRED TAX ASSETS Provision for postretirement benefits $21,512 $21,228 Net operating loss carryforwards 23,585 19,230 Restructuring provisions 26,602 35,804 Other 6,496 5,768 78,195 82,030 Valuation allowance (67,731) (69,716) 10,464 12,314 DEFERRED TAX LIABILITIES Accelerated depreciation 9,393 10,069 Other 3,694 4,868 13,087 14,937 Net deferred tax liability $ 2,623 $ 2,623
-54- 55 Wyman-Gordon Company and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The net deferred tax liability is included in "Deferred income taxes and other" on the accompanying consolidated balance sheets. The company is seeking refunds of prior year's federal taxes paid, which, if fully realized, could have a material favorable impact on the company's financial position. A reasonable estimation of the potential recovery cannot be made at this time and, accordingly, no adjustment has been made in the financial statements with respect to the claim. K. STOCK OPTION PLANS The company's Long-Term Incentive Plan (the "Plan") is administered by the Management Resources and Compensation Committee of the Board (the "Committee"), which has plenary authority to interpret the Plan and to adopt rules relating thereto. The Committee may also determine the number, frequency and timing of awards, as well as the type of award and its exercise price, if any, prescribe any performance criteria to be met and any restrictions on exercise and determine any other terms or conditions, including schedules for vesting and exercisability and the conditions under which vesting and exercisability may be accelerated, such as in the event of a change in control of the company. The Committee may grant awards in the form of non-qualified stock options or incentive stock options to those key employees of the company and its subsidiaries, including executive officers, it selects to purchase in the aggregate up to 1,750,000 shares of newly issued or treasury common stock. The exercise price of non-qualified stock options may not be less than 50% of the fair market value of such shares on the date of grant or, in the case of incentive stock options, 100% of the fair market value on the date of grant. Awards of stock appreciation rights ("SAR's") may also be granted, either in tandem with grants of stock options (and exercisable as an alternative to the exercise of stock options) or separately. In addition, the Committee may grant other awards that consist of or are denominated in or payable in shares or that are valued by reference to shares, including, for example, restricted shares, phantom shares, performance units, performance bonus awards or other awards payable in cash, shares or a combination thereof at the Committee's discretion. During fiscal 1995, awards of 150,000 shares of the company's common stock were made subject to restrictions based upon continued employment for a period of five years and the performance of the company. Compensation expense totalling $330,000 relating to the awards was recorded during the year ended June 3, 1995. -55- 56 Wyman-Gordon Company and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The 1975 Executive Long-Term Incentive Program (the "Program"), as amended, provided for the granting of stock options, alternative common stock appreciation rights and performance bonus award units to key employees of the company and its subsidiaries. The 1975 program expired on December 31, 1992, except as to outstanding grants. Option activity under the 1975 Program and the 1991 Plan in the year ended June 3, 1995, the five months ended May 28, 1994 and the years ended December 31, 1993 and 1992 was as follows:
OPTION PRICE RANGE SHARES Outstanding at December 31, 1991 3.75 - 29.00 1,839,246 Granted 5.00 321,502 Terminated 3.75 (185,001) Exercised 3.75 (16,666) Cancelled 3.75 - 29.00 (65,895) Outstanding at December 31, 1992 3.75 - 29.00 1,893,186 Granted 5.00 - 6.00 285,500 Terminated 3.75 - 29.00 (372,480) Exercised 3.75 (70,831) Outstanding at December 31, 1993 1,735,375 Granted 5.13 - 5.63 88,008 Terminated 3.75 - 19.00 (28,185) Exercised 3.75 - 5.00 (30,943) Outstanding at May 28, 1994 1,764,255 Granted 5.63 - 10.63 365,000 Terminated 3.75 - 21.50 (103,922) Exercised 3.75 - 6.25 (190,098) Outstanding at June 3, 1995 1,835,235
Options for 1,203,000; 930,000; 867,000 and 677,000 shares, were exercisable at June 3, 1995, May 28, 1994 and December 31, 1993 and 1992, respectively. At June 3, 1995, 105,000 shares were available for future grants. -56- 57 Wyman-Gordon Company and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) L. STOCK PURCHASE RIGHTS In August 1988, the company adopted a Rights Agreement (the "Rights Agreement"), and in October 1988, the company declared a dividend distribution of one common stock purchase Right on each outstanding share of common stock. The Rights will become exercisable at a purchase price of $50 each on the distribution date which occurs if a person or group acquires or makes an offer to acquire 20% or more of the company's common stock. In the event that at any time following the distribution date, (i) a person or group becomes the beneficial owner of 20% or more of the then outstanding shares of common stock (except pursuant to an offer for all outstanding shares of common stock which the continuing Directors determine to be fair to and otherwise in the best interests of the company and its stockholders), (ii) the company is not the surviving corporation in a merger and its common stock is not changed or exchanged, (iii) an acquiring person engages in one or more self-dealing transactions as set forth in the Rights Agreement, or (iv) during such time as there is an acquiring person, an event occurs which results in such person's ownership interest being increased by more than 1%, each holder of a Right will thereafter have the right to receive, upon exercise of the Right and payment of the purchase price, common stock or a combination of common stock, cash, preferred stock or debt having a value equal to two times the purchase price of the Right. Alternatively, in such event and with the approval of the continuing Directors, each holder of a Right will have the right, or may be permitted only, to receive shares of common stock having a value equal to the purchase price upon surrender of the Right to the company and without payment of the purchase price. Notwithstanding any of the foregoing, following the occurrence of any of the events set forth in this paragraph, all Rights that are beneficially owned by the acquiring person will be null and void. However, Rights are not exercisable following the occurrence of any of the events set forth above until such time as the Rights are no longer redeemable by the company. In the event that, at any time following the date on which a person or group acquires 20% or more of the company's outstanding shares (i) the company is acquired in a merger or other business combination transaction in which the company is not the surviving corporation (other than certain exceptions mentioned in the Rights agreement) or (ii) 50% or more of the company's assets or earning power is sold or transferred, each holder of a Right which has not been previously voided shall thereafter have the right to receive, upon exercise, common stock of the acquiring company having a value equal to two times the purchase price of the Right. The Rights may generally be redeemed by the company at a price of $.02 per Right and they expire in November 1998. -57- 58 Wyman-Gordon Company and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) M. COMMITMENTS AND CONTINGENCIES At June 3, 1995, certain lawsuits arising in the normal course of business were pending. The company denies all material allegations of these complaints. In the opinion of management, the outcome of legal matters will not have a material adverse effect on the company's financial position, results of operations or liquidity. As of June 3, 1995, the company had invested $4,100,000 in cash towards its share of the capital requirements of its Australian joint venture for the production of nickel-based superalloy. The company is committed to an additional investment of $3,400,000 to the joint venture. The joint venture has entered into a credit agreement with an Australian bank. The company has guaranteed 25% of the joint venture's obligations under the credit agreement totalling $17,300,000. This guarantee expires at such time as the joint venture demonstrates its ability to produce commercially acceptable products. The company had foreign exchange contracts totalling $11,600,000 at June 3, 1995. These contracts hedge certain normal operating purchase and sales transactions. The exchange contracts generally mature within six months and require the company to exchange U.K. pounds for non-U.K. currencies or non- U.K. currencies for U.K. pounds. Translation and transaction gains and losses included in fiscal 1995's Consolidated Statements of Operations were not significant. -58- 59 Wyman-Gordon Company and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) N. GEOGRAPHIC AND OTHER INFORMATION Prior to May 28, 1994 the company operated solely in the United States. Transfers between U.S. and international operations, principally inventory transfers, are charged to the receiving organization at prices sufficient to recover manufacturing costs and provide a reasonable return. Certain information on a geographic basis follows:
FIVE YEAR MONTHS ENDED ENDED JUNE 3, MAY 28, 1995 1994 (000's omitted) REVENUES FROM UNAFFILIATED CUSTOMERS: United States (including direct export sales) $365,666 $ 86,976 United Kingdom 30,973 - $396,639 $ 86,976 INTER AREA TRANSFERS: United States $ 373 $ - United Kingdom 2,528 - $ 2,901 $ - EXPORT SALES: United States direct export sales $ 81,208 $ 13,254 INCOME (LOSS) FROM OPERATIONS: United States $ 14,931 $(55,805) United Kingdom (1,213) - $ 13,718 $(55,805) IDENTIFIABLE ASSETS (EXCLUDING INTERCOMPANY): United States $289,649 $312,462 United Kingdom 47,547 39,457 General corporate 31,868 42,828 $369,064 $394,747
-59- 60 Wyman-Gordon Company and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) O. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) Selected quarterly financial data for fiscal 1995 and fiscal 1994 were as follows:
QUARTER FIRST SECOND THIRD FOURTH (000's omitted, except per-share data) YEAR ENDED JUNE 3, 1995 Revenue $95,725 $94,974 $96,238 $109,702 Cost of goods sold 86,150 85,105 83,623 92,373 Other charges (credits) and environmental charges - - - (710) Income (loss) from operations 3 768 3,620 9,327 Net income (loss) (3,321) (2,021) 556 5,825 Net income (loss) per share (.10) (.06) .02 .17 YEAR ENDED MAY 28, 1994 Revenue $58,452 $56,233 $50,896 $ 59,113 Cost of goods sold 50,433 53,014 50,375 63,994 Other charges (credits) and environmental charges - 2,366 87 32,550 Income (loss) from operations 1,886 (6,298) (8,447) (50,798) Net income (loss) (816) (5,642) (11,282) (54,663) Net income (loss) per share (.05) (.31) (.63) (3.02)
[FN] (a) Income (loss) from operations during the third quarter of the year ended May 28, 1994 reflects charges of $2,400 resulting from a change in estimated cash surrender values provided by the company's insurance actuaries on company- owned life insurance policies. (b) Income (loss) from operations during the fourth quarter of the year ended May 28, 1994 reflects significant charges amounting to $17,450,000. -60- 61 Wyman-Gordon Company and Subsidiaries Consolidated Financial Review
FIVE YEAR MONTHS ENDED ENDED JUNE 3, MAY 28, 1995 1994 (Unaudited) (000's omitted, except per-share data and ratios) OPERATIONS Revenue $396,639 $ 86,976 Cost of goods sold 347,251 91,907 Other charges (credits) and environmental charges (710) 32,550 Interest expense 11,027 5,383 Income tax benefit (expense) - - Income (loss) before cumulative effect of changes in accounting principles 1,039 (61,370) Cumulative effect of changes in accounting principles (a) - - Net income (loss) 1,039 (61,370) Earnings before interest, taxes, depreciation and amortization and changes in accounting principles 30,188 (49,205) Dividends paid - - Depreciation 17,417 6,058 Capital expenditures 18,714 2,404 Backlog 468,721 389,407 FINANCIAL POSITION Inventories 78,813 65,737 Borrowings due within one year 3,915 77 Working capital 93,062 91,688 Working capital ratio 2.0 1.8 Property, plant and equipment, net $141,397 $139,689 Total assets 369,064 394,747 Long-term debt 90,308 90,385 Net long-term debt to total capitalization (c) 44.7% 42.2% Stockholders' equity $ 80,855 $ 72,483 Total capital 171,163 162,868 MEASURES OF PROFITABILITY Income (loss) as a percent of: Revenues (b) .3% (70.6)% Average stockholders' equity during the year (b) 1.4 (76.3) PER SHARE DATA Income (loss) per share $ .03 $ (3.32) Income (loss) before cumulative effect of changes in accounting principles .03 (3.32) Cumulative effect of changes in accounting principles (a) - - Net income (loss) .03 (3.32) Dividends paid - - Stockholders' equity 2.30 3.92 AVERAGE SHARES OUTSTANDING 35,148 18,490
-61- 62 Wyman-Gordon Company and Subsidiaries Consolidated Financial Review (Continued)
YEAR YEAR ENDED ENDED DEC. 31, DEC. 31, 1993 1992 (000's omitted, except per-share data and ratios) OPERATIONS Revenue $239,761 $298,881 Cost of goods sold 219,088 243,291 Other charges (credits) and environmental charges - - Interest expense 10,823 7,521 Income tax benefit (expense) - - Income (loss) before cumulative effect of changes in accounting principles (17,004) 21,795 Cumulative effect of changes in accounting principles (a) (43,000) - Net income (loss) (60,004) 21,795 Earnings before interest, taxes, depreciation and amortization and changes in accounting principles 9,388 45,191 Dividends paid - - Depreciation 14,421 14,659 Capital expenditures 13,866 11,156 Backlog 256,259 309,679 FINANCIAL POSITION Inventories 36,092 48,462 Borrowings due within one year 77 77 Working capital 90,685 96,057 Working capital ratio 4.0 3.7 Property, plant and equipment, net $104,040 $107,906 Total assets 286,634 295,156 Long-term debt 90,461 70,538 Net long-term debt to total capitalization (c) 42.3% 32.1% Stockholders' equity $ 88,349 $149,516 Total capital 178,810 220,054 MEASURES OF PROFITABILITY Income (loss) as a percent of: Revenues (b) (7.1)% 7.3% Average stockholders' equity during the year (b) (14.3) 15.7 PER SHARE DATA Income (loss) per share $ (.95) $ 1.21 Income (loss) before cumulative effect of changes in accounting principles (.95) 1.21 Cumulative effect of changes in accounting principles (a) (2.39) - Net income (loss) (3.34) 1.21 Dividends paid - - Stockholders' equity 4.91 8.37 AVERAGE SHARES OUTSTANDING 17,936 17,848
-62- 63 Wyman-Gordon Company and Subsidiaries Consolidated Financial Review (Continued)
YEAR YEAR ENDED ENDED DEC. 31, DEC. 31, 1991 1990 (000's omitted, except per-share data and ratios) OPERATIONS Revenue $355,390 $405,381 Cost of goods sold 327,028 349,086 Other charges (credits) and environmental charges 106,464 - Interest expense 10,472 8,727 Income tax benefit (expense) 26,070 (5,702) Income (loss) before cumulative effect of changes in accounting principles (99,681) 8,696 Cumulative effect of changes in accounting principles (a) - - Net income (loss) (99,681) 8,696 Earnings before interest, taxes, depreciation and amortization and changes in accounting principles (89,960) 50,599 Dividends paid 5,349 14,265 Depreciation 24,196 24,825 Capital expenditures 10,192 13,563 Backlog 386,905 392,857 FINANCIAL POSITION Inventories 60,428 70,131 Borrowings due within one year 2,077 28,110 Working capital 110,859 124,030 Working capital ratio 2.7 2.7 Property, plant and equipment, net $120,259 $192,530 Total assets 339,154 421,886 Long-term debt 90,615 73,892 Net long-term debt to total capitalization (c) 39.4% 22.0% Stockholders' equity $128,088 $232,157 Total capital 218,703 306,049 MEASURES OF PROFITABILITY Income (loss) as a percent of: Revenues (b) (28.0)% 2.2% Average stockholders' equity during the year (b) (55.3) 3.7 PER SHARE DATA Income (loss) per share $ (5.59) $ .49 Income (loss) before cumulative effect of changes in accounting principles (5.59) .49 Cumulative effect of changes in accounting principles (a) - - Net income (loss) (5.59) .49 Dividends paid .30 .80 Stockholders' equity 7.18 13.02 AVERAGE SHARES OUTSTANDING 17,831 17,831
-63- 64 Wyman-Gordon Company and Subsidiaries Consolidated Financial Review (Continued) [FN] (a) Effective January 1, 1993, the Company adopted Statement of Financial Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions" ("SFAS 106"), and No. 109, "Accounting for Income Taxes" ("SFAS 109"). SFAS 106 requires postretirement benefit obligations to be accounted for on an accrual basis rather than the "expense-as-incurred" basis formerly used. The company elected to recognize the cumulative effect of these accounting changes. (b) Excludes the cumulative effect of changes in accounting principles in 1993. (c) May 28, 1994 considers the Obligation to Cooper Industries as an offset to the $42,179,000 cash balance. -64- 65
WYMAN-GORDON COMPANY AND SUBSIDIARIES CORPORATE INFORMATION DIRECTORS Judith S. King CORPORATE OFFICERS Community Volunteer John M. Nelson and Personal Invest- John M. Nelson Chairman ments Chairman E. Paul Casey George S. Mumford, Jr. David P. Gruber Chairman Professor President and Metapoint Partners Tufts University Chief Executive Officer Dewain K. Cross H. John Riley, Jr. Retired Senior Vice President and Chief Andrew C. Genor President, Finance Executive Officer Vice President, Cooper Industries, Cooper Industries, Chief Financial Inc. Inc. Officer and Treasurer Warner S. Fletcher Jon C. Strauss Attorney and Director Chief Financial Sanjay N. Shah Fletcher, Tilton & Officer Vice President, Whipple, P.C. Howard Hughes Corporate Strategy Medical Institute Planning and Robert G. Foster Business Develop- President and Director Charles A. Zraket ment Commonwealth Former President and BioVentures, Inc. CEO J. Douglas Whelan The MITRE Corporation President, Russell E. Fuller Forgings Division Chairman HONORARY DIRECTOR REFCO, Inc. Wallace F. Whitney, Joseph R. Carter Jr. David P. Gruber Former Chairman Vice President, President and Chief Wyman-Gordon Company General Counsel Executive Officer and Clerk M Howard Jacobson Frank J. Zugel Senior Advisor President, Invest- Bankers Trust ment Castings Division
-65- 66 WYMAN-GORDON COMPANY AND SUBSIDIARIES INVESTOR AND STOCKHOLDER INFORMATION COMMON STOCK Wyman-Gordon Company common stock is listed by the NASDAQ under the abbreviated ticket symbol "WYMN". TRANSFER AGENT AND REGISTRAR The company's transfer agent and registrar, responsible for stockholder records and issuance of stock certificates, is State Street Bank and Trust Company, Corporate Stock Transfer Department, P.O. Box 8200, Boston, MA 02266-8200, 1-800-426-5523. Report changes of address directly to State Street Bank & Trust Company. CORPORATE OFFICES The company's principal corporate offices are located at 244 Worcester Street, North Grafton, MA 01536, 508-839-4441; Fax 508- 839-7500. INDEPENDENT AUDITORS Ernst & Young LLP, 200 Clarendon Street, Boston, MA 02116 FINANCIAL AND INVESTOR COMMUNICATIONS Wyman-Gordon Investor Relations provides information to stockholders and the financial community. We encourage inquiries and will provide services which include: * fulfilling requests for quarterly and annual reports, form 10Q, form 10K, copies of press releases and other company information. * meetings with securities analyst and fund managers. * presentations to securities analyst groups and conferences. Contact us by writing to Wyman-Gordon Investor Relations at our corporate offices listed above, or by calling Mr. Gerard J. Gould, Manager of Investor Relations at 508-839-8014. The clerk of the corporation is Mr. Wallace F. Whitney, Jr. who can be reached at the company's corporate address listed above or at 508-839-8110. The company's form 10K, annual report and other recent information are also available by accessing Wyman-Gordon's Internet Home Page at: http://www.streetnet.com. ANNUAL MEETING The annual meeting of the company's stockholders will be held on Wednesday, October 18, 1995 at Mechanics Hall in Worcester, MA. A formal notice of the meeting together with a proxy statement has been mailed to stockholders with this Annual Report. -66- 67 WYMAN-GORDON COMPANY CORPORATE OFFICES Grafton, Massachusetts FORGINGS Grafton, Massachusetts Millbury, Massachusetts Worcester, Massachusetts Houston, Texas Brighton, Michigan Livingston, Scotland INVESTMENT CASTINGS Groton, Connecticut Tilton, New Hampshire Franklin, New Hampshire San Leandro, California Carson City, Nevada COMPOSITES Mojave, California -67- EX-21 6 WYMAN-GORDON CO. & SUBSIDIARIES 1 WYMAN-GORDON COMPANY FISCAL 1995 FORM 10-K EXHIBIT 21 WYMAN-GORDON COMPANY AND SUBSIDIARIES The following is a list of Wyman-Gordon's subsidiaries as of June 3, 1995:
PLACE OF INCORPORATION NAME OF SUBSIDIARY OR ORGANIZATION W-G Rome Corporation Georgia Cameron Pipeline, Inc. Texas Precision Founders, Inc. California Reisner Metals, Inc. California Wyman-Gordon Composites, Inc. Delaware Wyman-Gordon FISC Limited Virgin Islands Wyman-Gordon Composite Technologies, Inc. California Scaled Composites, Inc. California Wyman-Gordon Investment Castings, Inc. Delaware Wyman-Gordon Receivables Corporation Delaware Wyman-Gordon Securities Corporation Massachusetts Wyman-Gordon Forgings, Inc. Delaware Wyman-Gordon Limited United Kingdom
E-9 EX-27 7 FINANCIAL DATA SCHEDULE
5 12-MOS JUN-03-1995 MAY-29-1994 JUN-03-1995 13,856 44 77,453 0 78,813 187,559 385,372 243,975 369,064 94,497 90,308 37,053 0 0 43,802 369,064 393,552 396,639 347,251 347,251 0 0 11,027 1,039 0 1,039 0 0 0 1,039 0.03 0.03