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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
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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.
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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.
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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:
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($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%
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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
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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.
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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.
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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.
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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
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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
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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
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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-
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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-
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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-
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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
-22-
23
/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
-23-
24
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).
E-3
28
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