-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Jm2lwyot5qELJjxH5HyBF070WWYPd5Fgn7k1tLcVpJasVuNHUZY3PROTsR5IoW4W WySIqJTqSTfyB0wb9ack3g== 0000108703-95-000009.txt : 19951208 0000108703-95-000009.hdr.sgml : 19951208 ACCESSION NUMBER: 0000108703-95-000009 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950603 FILED AS OF DATE: 19951207 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/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-03085 FILM NUMBER: 95599935 BUSINESS ADDRESS: STREET 1: 244 WORCHESTER ST STREET 2: BOX 8001 CITY: NORTH GRAFTON STATE: MA ZIP: 01536 BUSINESS PHONE: 5088394441 10-K/A 1 WYMAN-GORDON COMPANY FORM 10-K/A 1 Form 10-K/A SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 (Mark One) [X] AMENDMENT TO APPLICATION OR REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended June 3, 1995 (No Fee Required) 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) AMENDMENT NO. 1 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. [ ] -1- 2 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 DOCUMENTS INCORPORATED BY REFERENCE None -2- 3 PART II ITEM 6. SELECTED FINANCIAL DATA Wyman-Gordon Company and Subsidiaries Selected Financial Data
FIVE YEAR MONTHS ENDED ENDED JUNE 3, MAY 28, 1995 1994 (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) Dividends paid - - Depreciation 17,417 6,058 Backlog 468,721 389,407 CASH FLOW Earnings before interest, taxes, depreciation and amortization and changes in accounting principles (d) 30,188 (49,205) Capital expenditures 18,714 2,404 Net cash provided (used) by operating activities 7,772 (5,669) Net cash provided (used) by investing activities (21,157) 12,346 Net cash provided (used) by financing activities (14,938) 20,685 FINANCIAL POSITION Inventories 78,813 65,737 Borrowings due within one year 3,915 77 Working capital 93,062 91,688 Working capital ratio (e) 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 (f) 171,163 162,868
-3- 4 Wyman-Gordon Company and Subsidiaries Selected Financial Data (Continued)
FIVE YEAR MONTHS ENDED ENDED JUNE 3, MAY 28, 1995 1994 (000's omitted, except per-share data and ratios) 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
-3A- 5 Wyman-Gordon Company and Subsidiaries Selected Financial Data (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 Dividends paid - - Depreciation 14,421 14,659 Backlog 256,259 309,679 CASH FLOW Earnings before interest, taxes, depreciation and amortization and changes in accounting principles (d) 9,388 45,191 Capital expenditures 13,866 11,156 Net cash provided (used) by operating activities 7,177 30,803 Net cash provided (used) by investing activities (7,500) (13,467) Net cash provided (used) by financing activities 15,140 (21,857) FINANCIAL POSITION Inventories 36,092 48,462 Borrowings due within one year 77 77 Working capital 90,685 96,057 Working capital ratio (e) 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 (f) 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
-4- 6 Wyman-Gordon Company and Subsidiaries Selected Financial Data (Continued)
YEAR YEAR ENDED ENDED DEC. 31, DEC. 31, 1993 1992 (000's omitted, except per-share data and ratios) 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
-4A- 7 Wyman-Gordon Company and Subsidiaries Selected Financial Data (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 Dividends paid 5,349 14,265 Depreciation 24,196 24,825 Backlog 386,905 392,857 CASH FLOW Earnings before interest, taxes, depreciation and amortization and changes in accounting principles (d) (89,960) 50,599 Capital expenditures 10,192 13,563 Net cash provided (used) by operating activities 19,003 59,382 Net cash provided (used) by investing activities (2,111) (69,393) Net cash provided (used) by financing activities (19,015) 12,794 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 (e) 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 (f) 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
-5- 8 Wyman-Gordon Company and Subsidiaries Selected Financial Data (Continued)
YEAR YEAR ENDED ENDED DEC. 31, DEC. 31, 1991 1990 (000's omitted, except per-share data and ratios) 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
-5A- 9 Wyman-Gordon Company and Subsidiaries Selected Financial Data (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) Net long-term debt to total capitalization equals the net of long-term debt minus cash as of the end of the period divided by total capital which equals long-term debt plus stockholders' equity. May 28, 1994 considers the Obligation to Cooper Industries as an offset to the $42,179,000 cash balance. (d) Earnings before interest, depreciation and amortization and changes in accounting principles ("EBITDA") is presented because it may be used as an indicator of a company's ability to service debt. The Company believes that EBITDA, while providing useful information, should not be considered in isolation or as a substitute for net income as an indicator of operating performance or as an alternative to cash flow as a measure of liquidity, in each case determined in accordance with generally accepted accounting principles. (e) Working capital ratio equals current assets divided by current liabilities. (f) Total capital equals long-term debt plus stockholders' equity. -6- 10 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 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. Our audit also included the financial statement schedule listed in the Index at Item 14. These consolidated financial statements and schedule 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. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein. 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 -7- 11 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. -8- 12 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. -9- 13 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. -10- 14 Wyman-Gordon Company and Subsidiaries CONSOLIDATED STATEMENTS 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. -11- 15 Wyman-Gordon Company and Subsidiaries CONSOLIDATED STATEMENTS 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. -12- 16 Wyman-Gordon Company and Subsidiaries CONSOLIDATED STATEMENTS 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. -13- 17 Wyman-Gordon Company and Subsidiaries CONSOLIDATED STATEMENTS 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. -14- 18 Wyman-Gordon Company and Subsidiaries CONSOLIDATED STATEMENTS 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. -15- 19 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, Inc. 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 -16- 20 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: -17- 21 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. On a periodic basis, the company estimates the future undiscounted cash flows of the business to which the costs of acquired businesses in excess of net assets acquired relate in order to ensure that the carrying value of such intangible asset has not been impaired. 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: -18- 22 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)
-19- 23 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
-20- 24 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
-21- 25 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. -22- 26 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. -23- 27 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. -24- 28 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: -25- 29 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
-26- 30 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
-27- 31 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
-28- 32 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 $ - $ -
-29- 33 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 and established a $3,500,000 purchase accounting reserve related to environmental issues at Cameron. 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. As of June 3, 1995, aggregate environmental reserves amounted to $16,967,000 and have been provided for expected cleanup expenses estimated between $6,000,000 and $7,000,000 upon the planned sale of a facility, certain environmental issues at Cameron amounting to approximately $3,500,000 and the exposures noted in the following paragraphs, which include certain capitalizable amounts for environmental management and remediation projects. 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. -30- 34 Wyman-Gordon Company and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 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. 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)
-31- 35 Wyman-Gordon Company and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 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%
-32- 36 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. -33- 37 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%
-34- 38 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 401(k) 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. -35- 39 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
-36- 40 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. -37- 41 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
-38- 42 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. -39- 43 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. -40- 44 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. -41- 45 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 enters into various foreign exchange contracts to manage its foreign exchange risks. Through its foreign currency hedging activities, the company seeks to minimize the risk that the eventual cash flows resulting from purchase and sale transactions denominated in other than the functional currency of the operating unit will be affected by changes in exchange rates. Foreign currency transaction exposures generally are the responsibility of the company's individual operating units to manage as an integral part of their business. The company hedges its foreign currency transaction exposures based on judgment, generally through the use of forward exchange contracts. Gains and losses on the company's currency transaction hedges are recognized as an adjustment to the underlying hedged transactions. Deferred gains and losses on foreign exchange contracts were not significant at June 3, 1995. The company had foreign exchange contracts totalling $11,600,000 at June 3, 1995. Such contracts include forward contracts of $9,100,000 for the sale of U.K. pounds and $2,500,000 for the purchase of U.K. pounds. 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. -42- 46 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
-43- 47 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. -44- 48 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K FINANCIAL STATEMENTS The following financial statements, together with the report thereon of Ernst & Young LLP dated June 26, 1995 are incorporated by reference to Item 8. Financial Statements and Supplemental Data in this Form 10-K/A: Consolidated Statements of Operations 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 listed above. 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. -45- 49 CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS We consent to the incorporation by reference in the Registration Statements (Form S-8, File Numbers 2-56547, 2-75980, 33-26980, 33-48068 and 33-64503) 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, the Wyman-Gordon Company Long-Term Incentive Plan and Wyman-Gordon Company Employee Stock Purchase Plan and in the related Prospectuses of our report dated June 26, 1995, with respect to the consolidated financial statements and schedule of Wyman-Gordon Company and subsidiaries for the year ended June 3, 1995, included in this Form 10-K/A. /S/ ERNST & YOUNG LLP Boston, Massachusetts December 5, 1995 -46- 50 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 December 7, 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 December 7, 1995 John M. Nelson Board of Directors Date /S/ DAVID P. GRUBER President, December 7, 1995 David P. Gruber Chief Executive Officer Date and Director /S/ ANDREW C. GENOR Vice President, December 7, 1995 Andrew C. Genor Chief Financial Officer Date and Treasurer and Principal Financial Officer /S/ JEFFREY B. LAVIN Assistant Corporate December 7, 1995 Jeffrey B. Lavin Controller and Principal Date Accounting Officer /S/ E. PAUL CASEY Director December 7, 1995 E. Paul Casey Date /S/ DEWAIN K. CROSS Director December 7, 1995 Dewain K. Cross Date /S/ WARNER S. FLETCHER Director December 7, 1995 Warner S. Fletcher Date /S/ ROBERT G. FOSTER Director December 7, 1995 Robert G. Foster Date
-47- 51
/S/ M HOWARD JACOBSON Director December 7, 1995 M Howard Jacobson Date /S/ JUDITH S. KING Director December 7, 1995 Judith S. King Date /S/ GEORGE S. MUMFORD, JR. Director December 7, 1995 George S. Mumford, Jr. Date /S/ H. JOHN RILEY, JR. Director December 7, 1995 H. John Riley, Jr. Date /S/ JON C. STRAUSS Director December 7, 1995 Jon C. Strauss Date /S/ CHARLES A. ZRAKET Director December 7, 1995 Charles A. Zraket Date
-48- 52 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 53 EXHIBIT INDEX
EXHIBIT DESCRIPTION PAGE 23 Consent of Ernst & Young LLP 46 NOTE: Exhibits not physically located in this Form 10-K/A can be obtained from the Company upon written request to the Clerk at the address on the cover of this Form 10-K/A at a cost of $.25 per page. E-1
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