SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended July 2, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-5075
EG&G, Inc.
(Exact name of registrant as specified in its charter)
Massachusetts 04-2052042
(State or other jurisdiction of (I.R.S. employer identification no.)
incorporation or organization)
45 William Street, Wellesley, Massachusetts 02181
(Address of principal executive offices)(Zip Code)
(617) 237-5100
(Registrant's telephone number, including area code)
NONE
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
------- -------
Number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date:
Class Outstanding at July 30, 1995
Common Stock, $1 par value 52,493,000
(Excluding treasury shares)
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
--------------------
EG&G, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
For the Three and Six Months Ended July 2, 1995 and July 3, 1994
(Unaudited)
<TABLE>
<CAPTION>
(In Thousands Except Per Share Data)
----------------------------------
Three Months Ended Six Months Ended
------------------ ----------------
July 2, July 3, July 2, July 3,
1995 1994 1995 1994
-------- ------- ------- -------
<S> <C> <C> <C> <C>
Sales:
Products $207,300 $185,710 $403,680 $359,122
Services 134,951 144,170 276,801 296,505
-------- -------- -------- --------
Total Sales 342,251 329,880 680,481 655,627
-------- -------- -------- --------
Costs and Expenses:
Cost of sales:
Products 135,309 117,863 264,592 231,803
Services 116,222 126,319 240,078 259,053
-------- -------- -------- --------
Total cost of sales 251,531 244,182 504,670 490,856
Research and development
expenses 9,587 9,647 20,361 19,164
Selling, general and
administrative expenses 60,698 61,039 119,342 117,920
-------- -------- -------- --------
Total Costs and Expenses 321,816 314,868 644,373 627,940
-------- -------- -------- --------
Operating Income From
Continuing Operations 20,435 15,012 36,108 27,687
Other Income (Expense), Net (Note 2) (167) (433) (367) (454)
-------- -------- -------- --------
Income From Continuing Operations
Before Income Taxes 20,268 14,579 35,741 27,233
Provision for Income Taxes 7,925 5,602 14,046 10,443
-------- -------- -------- --------
Income From Continuing Operations 12,343 8,977 21,695 16,790
Income From Discontinued Operations,
Net of Income Taxes (Note 3) 4,033 7,446 8,370 13,986
-------- -------- -------- --------
Net Income $ 16,376 $ 16,423 $ 30,065 $ 30,776
======== ======== ======== ========
</TABLE>
<PAGE>
EG&G, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS (Continued)
For the Three and Six Months Ended July 2, 1995 and July 3, 1994
<TABLE>
<CAPTION>
(In Thousands Except Per Share Data)
----------------------------------
Three Months Ended Six Months Ended
------------------ ----------------
July 2, July 3, July 2, July 3,
1995 1994 1995 1994
-------- ------- ------- -------
<S> <C> <C> <C> <C>
Earnings Per Share:
Income From Continuing Operations $.23 $.16 $.40 $.30
Income From Discontinued Operations,
Net of Income Taxes .08 .14 .16 .26
---- ---- ---- ----
Net Income $.31 $.30 $.56 $.56
==== ==== ==== ====
Cash Dividends Per Common Share $.14 $.14 $.28 $.28
==== ==== ==== ====
Weighted Average Shares of Common Stock
Outstanding 52,881 55,121 53,649 55,421
</TABLE>
The accompanying unaudited notes are an integral part of these consolidated
financial statements.
<PAGE>
EG&G, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
As of July 2, 1995 and January 1, 1995
(Dollars in Thousands Except Per Share Data)
------------------------------------------
<TABLE>
<CAPTION>
July 2, January 1,
1995 1995
------- ----------
(Unaudited)
---------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 60,825 $ 66,424
Accounts receivable (Note 4) 207,464 226,268
Inventories (Note 5) 121,520 123,299
Other (Note 7) 59,194 56,635
Net assets of discontinued operations (Note 3) - 8,852
-------- --------
Total Current Assets 449,003 481,478
-------- --------
Property, Plant and Equipment:
At cost (Note 6) 400,592 364,801
Accumulated depreciation and amortization (260,425) (243,139)
-------- --------
Net Property, Plant and Equipment 140,167 121,662
-------- --------
Investments (Note 7) 12,920 16,515
Intangible Assets (Note 8) 132,109 127,312
Other Assets (Note 8) 55,862 46,162
-------- --------
Total Assets $790,061 $793,129
======== ========
</TABLE>
<PAGE>
EG&G, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET (Continued)
As of July 2, 1995 and January 1, 1995
(Dollars in Thousands Except Per Share Data)
------------------------------------------
<TABLE>
<CAPTION>
July 2, January 1,
1995 1995
------- ----------
<S> <C> <C>
Current Liabilities:
Short-term debt $ 51,696 $ 59,988
Accounts payable 70,595 66,132
Accrued restructuring costs (Note 9) 13,406 21,532
Accrued expenses (Note 10) 139,299 134,170
Net liabilities of discontinued operations (Note 3) 1,902 -
-------- --------
Total Current Liabilities 276,898 281,822
-------- --------
Long-Term Liabilities 71,160 65,941
-------- --------
Contingencies
Stockholders' Equity:
Preferred stock - $1 par value, authorized
1,000,000 shares; none outstanding - -
Common stock - $1 par value, authorized
100,000,000 shares; issued 60,102,000 shares 60,102 60,102
Retained earnings 474,095 459,738
Cumulative translation adjustments 30,780 10,785
Unrealized gain on marketable investments (Note 7) 1,655 3,337
Cost of shares held in treasury;
7,412,000 shares at July 2, 1995 and
4,978,000 shares at January 1, 1995 (124,629) (88,596)
-------- --------
Total Stockholders' Equity 442,003 445,366
-------- --------
Total Liabilities and Stockholders' Equity $790,061 $793,129
======== ========
</TABLE>
The accompanying unaudited notes are an integral part of these consolidated
financial statements.
<PAGE>
EG&G, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Six Months Ended July 2, 1995 and July 3, 1994
(Unaudited)
---------
<TABLE>
<CAPTION>
(In Thousands)
------------
Six Months Ended
-----------------------
July 2, July 3,
1995 1994
-------- --------
<S> <C> <C>
Cash Flows Provided by Operating Activities:
Net income $ 30,065 $ 30,776
Deduct net income from discontinued operations (8,370) (13,986)
-------- --------
Income from continuing operations 21,695 16,790
Adjustments to reconcile income from continuing
operations to net cash provided by continuing
operations:
Depreciation and amortization 18,580 17,737
Changes in assets and liabilities:
Decrease in accounts receivable 22,688 2,357
Decrease (increase) in inventories 5,577 (5,704)
Increase (decrease) in accounts payable 2,412 (965)
Decrease in accrued restructuring costs (8,126) -
Increase (decrease) in accrued expenses 2,773 (5,155)
Change in prepaid and deferred taxes (1,657) (200)
Change in prepaid expenses and other (5,731) (18,709)
-------- --------
Net Cash Provided by Continuing Operations 58,211 6,151
Net Cash Provided by Discontinued Operations 19,124 16,591
-------- --------
Net Cash Provided by Operating Activities 77,335 22,742
-------- --------
Cash Flows Used in Investing Activities:
Capital expenditures (26,928) (21,253)
Proceeds from sales of investment securities 4,538 3,393
Other (1,236) (176)
-------- --------
Net Cash Used in Investing Activities (23,626) (18,036)
-------- --------
</TABLE>
<PAGE>
EG&G, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS (Continued)
For the Six Months Ended July 2, 1995 and July 3, 1994
(Unaudited)
---------
<TABLE>
<CAPTION>
(In Thousands)
------------
Six Months Ended
-----------------------
July 2, July 3,
1995 1994
-------- --------
<S> <C> <C>
Cash Flows Used in Financing Activities:
Increase (decrease) in commercial paper (4,911) 9,967
Other debt proceeds (payments) (3,718) 759
Purchases of common stock (36,193) (19,139)
Cash dividends (15,158) (15,576)
Other (390) 1,166
-------- --------
Net Cash Used in Financing Activities (60,370) (22,823)
-------- --------
Effect of Exchange Rate Changes on Cash
and Cash Equivalents 1,062 1,450
-------- --------
Net Decrease in Cash and Cash Equivalents (5,599) (16,667)
Cash and cash equivalents at beginning of period 66,424 72,185
-------- --------
Cash and cash equivalents at end of period $ 60,825 $ 55,518
======== ========
</TABLE>
The accompanying unaudited notes are an integral part of these consolidated
financial statements.
<PAGE>
EG&G, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) Basis of Presentation
--------------------------
The consolidated financial statements included herein have been prepared
by the Company, without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission. Certain information and
footnote disclosures normally included in financial statements prepared
in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations. The
Company believes, however, that the disclosures are adequate to make the
information presented not misleading. It is suggested that these
consolidated financial statements be read in conjunction with the
financial statements and the notes thereto included in the Company's
latest annual report on Form 10-K. The balance sheet amounts as of
January 1, 1995 in this report were extracted from the Company's audited
1994 financial statements included in the latest annual report on
Form 10-K.
In the opinion of management, the unaudited consolidated financial
statements included herein contain all adjustments, consisting only of
normal recurring accruals, necessary to present fairly the financial
position as of July 2, 1995 and the results of operations for the three
and six months ended July 2, 1995 and July 3, 1994 and the cash flows
for the six months then ended. The results of operations are not
necessarily to be considered indicative of the results for the entire
year.
The Company changed its method of depreciation for certain classes of
plant and equipment purchased after January 1, 1995 from an accelerated
method to the straight-line method for financial reporting purposes.
The Company believes that the straight-line method more appropriately
reflects the timing of the economic benefits to be received from these
assets, which consist mainly of manufacturing equipment. The Company
also changed its convention for calculating depreciation expense during
the year in which an asset is acquired. Previously, the Company used
the half-year convention; starting in 1995, the Company commences
depreciation in the month the asset is placed in service. In the second
quarter of 1995, the effect of applying these new methods was to reduce
depreciation expense by $1.4 million, and to increase income from
continuing operations and net income by $0.9 million and net income per
share by $.02. For six months, the effect was to reduce depreciation
expense by $3.1 million, and to increase income from continuing
operations and net income by $1.9 million and net income per share by
$.04. The reductions in depreciation expense represent the differences
in current year depreciation expense between the old and new methods.
<PAGE>
EG&G, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(2) Other Income (Expense), Net
--------------------------------
Other income (expense), net, consisted of the following:
<TABLE>
<CAPTION>
(In Thousands)
------------
Three Months Ended Six Months Ended
------------------ ------------------
July 2, July 3, July 2, July 3,
1995 1994 1995 1994
------- ------- ------- -------
<S> <C> <C> <C> <C>
Interest and
dividend income $ 1,076 $ 614 $ 2,135 $ 1,453
Interest expense (1,967) (1,145) (3,560) (2,110)
Gains (losses) on
investments, net (155) (19) 745 (39)
Other 879 117 313 242
------- ------- ------- -------
$ (167) $ (433) $ (367) $ (454)
======= ======= ======= =======
</TABLE>
(3) Discontinued Operations
---------------------------
The former Department of Energy (DOE) Support segment is presented as
discontinued operations in accordance with Accounting Principles Board
Opinion No. 30.
Summary operating results of the discontinued operations were as
follows:
<TABLE>
<CAPTION>
(In Thousands)
------------
Three Months Ended Six Months Ended
------------------ -----------------
July 2, July 3, July 2, July 3,
1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Sales $277,137 $316,117 $523,291 $666,856
Costs and expenses 270,933 304,662 510,414 645,340
-------- -------- -------- --------
Income from discontinued
operations before
income taxes 6,204 11,455 12,877 21,516
Provision for income taxes 2,171 4,009 4,507 7,530
-------- -------- -------- --------
Income from discontinued
operations, net of
income taxes $ 4,033 $ 7,446 $ 8,370 $ 13,986
======== ======== ======== ========
</TABLE>
<PAGE>
EG&G, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
Net assets (liabilities) of discontinued operations consisted of the
following:
<TABLE>
<CAPTION>
(In Thousands)
------------
July 2, January 1,
1995 1995
-------- ----------
<S> <C> <C>
Accounts receivable,
primarily unbilled $ 7,881 $15,717
Operating current
liabilities (9,892) (6,934)
Other current assets 109 69
------- -------
$(1,902) $ 8,852
======= =======
</TABLE>
(4) Accounts Receivable
------------------------
Accounts receivable as of July 2, 1995 and January 1, 1995 included
unbilled receivables of $48 million and $57 million, respectively, due
primarily from U.S. Government agencies. Accounts receivable were net
of reserves for doubtful accounts of $5.2 million and $5.8 million as of
July 2, 1995 and January 1, 1995, respectively.
(5) Inventories
----------------
Inventories consisted of the following:
<TABLE>
<CAPTION>
(In Thousands)
------------
July 2, January 1,
1995 1995
-------- ----------
<S> <C> <C>
Finished goods $ 32,344 $ 35,304
Work in process 33,578 28,551
Raw materials 55,598 59,444
-------- --------
$121,520 $123,299
======== ========
</TABLE>
<PAGE>
EG&G, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(6) Property, Plant and Equipment, at Cost
-------------------------------------------
Property, plant and equipment consisted of the following:
<TABLE>
<CAPTION>
(In Thousands)
------------
July 2, January 1,
1995 1995
-------- ----------
<S> <C> <C>
Land $ 17,043 $ 15,877
Buildings and leasehold improvements 112,184 95,938
Machinery and equipment 271,365 252,986
-------- --------
$400,592 $364,801
======== ========
</TABLE>
(7) Investments
----------------
Investments consisted of the following:
<TABLE>
<CAPTION>
(In Thousands)
------------
July 2, January 1,
1995 1995
------- ----------
<S> <C> <C>
Marketable investments $12,398 $14,187
Other investments 3,988 6,330
Joint venture investments 5,350 5,314
------- -------
21,736 25,831
Less investments classified
as other current assets (8,816) (9,316)
------- -------
$12,920 $16,515
======= =======
</TABLE>
At July 2, 1995, marketable investments, all classified as available for
sale, had an aggregate market value of $12.4 million and gross unrealized
holding gains of $2.5 million. Unrealized holding gains, net of deferred
taxes, of $1.7 million and $3.3 million were reported as a separate
component of stockholders' equity at July 2, 1995 and January 1, 1995,
respectively. In the first six months of 1995, proceeds and gross
realized gains from sales of available-for-sale securities were
$2.2 million and $2 million, respectively. Average cost was the basis
for computing the realized gains. Marketable investments of $4.7 million
and other investments of $4.1 million were classified as other current
assets at July 2, 1995.
<PAGE>
EG&G, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(8) Intangible and Other Assets
---------------------------------
The increase in intangible assets resulted from the effect of translating
goodwill denominated in non-U.S. currencies at current exchange rates,
partially offset by current year amortization.
The majority of the increase in other assets was due to an increase in
prepaid pension expense.
(9) Accrued Restructuring Costs
--------------------------------
The decrease in accrued restructuring costs resulted from cash outlays of
$8.1 million in the first six months of 1995, mainly for employee
termination costs.
(10) Accrued Expenses
----------------------
Accrued expenses consisted of the following:
<TABLE>
<CAPTION>
(In Thousands)
------------
July 2, January 1,
1995 1995
-------- ----------
<S> <C> <C>
Payroll $ 12,226 $ 12,789
Employee benefits 50,803 48,535
Federal, non-U.S. and state
income taxes 23,789 17,243
Other 52,481 55,603
-------- --------
$139,299 $134,170
======== ========
</TABLE>
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
---------------------------------------------------------------
Results of Operations
---------------------
EG&G, INC. AND SUBSIDIARIES
Results of Operations
---------------------
The following industry segment information is presented as an aid to a
better understanding of the Company's operating results:
<TABLE>
<CAPTION>
(In Thousands)
------------
Three Months Ended Six Months Ended
--------------------------- -----------------------------
July 2, July 3, Increase July 2, July 3, Increase
1995 1994 (Decrease) 1995 1994 (Decrease)
-------- -------- -------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Sales:
Technical Services $141,457 $149,253 $(7,796) $290,622 $305,674 $(15,052)
Instruments 71,333 71,074 259 141,175 133,929 7,246
Mechanical Components 63,517 58,386 5,131 123,307 114,425 8,882
Optoelectronics 65,944 51,167 14,777 125,377 101,599 23,778
-------- -------- ------- -------- -------- --------
$342,251 $329,880 $12,371 $680,481 $655,627 $ 24,854
======== ======== ======= ======== ======== ========
Operating Income From Continuing
Operations:
Technical Services $ 11,426 $ 12,334 $ (908) $ 22,536 $ 24,633 $ (2,097)
Instruments 2,851 2,579 272 6,095 3,113 2,982
Mechanical Components 7,118 4,284 2,834 13,137 7,791 5,346
Optoelectronics 6,314 3,921 2,393 8,634 7,471 1,163
General Corporate
Expenses (7,274) (8,106) 832 (14,294) (15,321) 1,027
-------- ------- ------- -------- -------- --------
$ 20,435 $ 15,012 $ 5,423 $ 36,108 $ 27,687 $ 8,421
======== ======== ======= ======== ======== ========
</TABLE>
The discussion that follows is a summary analysis of the major changes in
operating results by industry segment that occurred for the three and six
months ended July 2, 1995 compared to the three and six months ended
July 3, 1994.
Second Quarter 1995 Compared to Second Quarter 1994
Sales
Sales from continuing operations were $342 million in the second quarter
of 1995, a 4% increase over the 1994 level. In Technical Services, the
$7.8 million decline reflects the continuing reduction in government
contract funding, including the phase down of the Superconducting Super
Collider Laboratory contract, in 1995. Instruments' sales were
<PAGE>
EG&G, INC. AND SUBSIDIARIES
Management's Discussion and Analysis (Continued)
approximately the same in both periods as the increase caused by changes
in foreign exchange rates was offset by decreases due to the divestiture
of two product lines under the 1994 repositioning plan. The
$5.1 million increase in Mechanical Components resulted mainly from
higher demand for products servicing the aerospace and industrial
process seal businesses. In Optoelectronics, the $14.8 million increase
was due primarily to $8 million of sales of IC Sensors, acquired at the
end of the third quarter of 1994, and higher shipments of flash
products.
Operating Income From Continuing Operations
Operating income from continuing operations was $20.4 million in the
second quarter of 1995, a 36% increase over the 1994 level. In
Technical Services, the $0.9 million decrease resulted from the start-up
costs for the environmental services and systems business and the
effects of the lower sales levels. In Instruments, cost reductions of
$1.7 million resulting from the 1994 repositioning plan were partially
offset by inventory provisions at one operation and the effects of
changes in foreign exchange rates. The Mechanical Components' increase
of $2.8 million resulted primarily from the higher sales level, the
absence of start-up costs for the transportation business incurred in
1994 and cost reductions from the repositioning plan. In
Optoelectronics, the $2.4 million increase resulted primarily from
higher sales of flash products and cost reductions of $0.7 million from
the repositioning plan. The $0.8 million decrease in general corporate
expenses was mainly the result of cost reductions under the 1994
repositioning plan.
Six Months 1995 Compared To Six Months 1994
Sales
Sales for the first six months of 1995 were $680 million, a 4% increase
over the 1994 level. In Technical Services, the $15.1 million decrease
was primarily due to reduced government contract funding, including the
phase down of the Superconducting Super Collider Laboratory contract,
during 1995. Partially offsetting this decrease were increased revenues
from the chemical weapons disposal contract at Tooele, that is now in
its testing phase. Instruments' sales increased $7.2 million primarily
due to the effects of changes in foreign exchange rates and higher
security instruments sales, offset partially by a $5 million decrease
due to the divestiture of two product lines under the 1994 repositioning
plan. Higher product demand, primarily in the industrial process seal
and aerospace businesses, resulted in the $8.9 million increase in
Mechanical Components. In Optoelectronics, the $23.8 million increase
was due primarily to $14.3 million of sales of IC Sensors and higher
shipments of flash products.
<PAGE>
EG&G, INC. AND SUBSIDIARIES
Management's Discussion and Analysis (Continued)
Operating Income From Continuing Operations
Operating income from continuing operations was $36.1 million for the
six months of 1995, a 30% increase over the 1994 level. In Technical
Services, the $2.1 million decrease resulted primarily from an estimated
provision for a legal judgement, start-up costs for the environmental
services and systems business and the effects of the lower sales levels.
The Instruments' $3 million increase was primarily due to cost
reductions of $3.2 million resulting from the 1994 repositioning plan
and margin on higher sales. These increases were partially offset by
the effects of changes in foreign exchange rates, inventory provisions
at one operation and expenses associated with the expansion of the food
monitoring business. The Mechanical Components' increase of
$5.3 million resulted primarily from higher sales, lower inventory and
receivable provisions, lower costs associated with new programs and
$0.6 million of cost reductions from the repositioning plan. The
$1.2 million increase in Optoelectronics resulted primarily from higher
sales and $1 million of cost reductions from the repositioning plan.
These increases were partially offset by decreases due to the completion
of a government contract in September 1994 and lower sales of power
supplies. The $1 million decrease in general corporate expenses was
mainly the result of cost reductions under the 1994 repositioning plan.
Depreciation Change: The Company changed its method of depreciation for
certain classes of plant and equipment purchased after January 1, 1995,
from an accelerated method to the straight-line method for financial
reporting purposes. The Company believes that the straight-line method
more appropriately reflects the timing of the economic benefits to be
received from these assets, which consist mainly of manufacturing
equipment. The Company also changed its convention for calculating
depreciation expense during the year in which an asset is acquired.
Previously, the Company used the half-year convention; starting in 1995,
the Company commences depreciation in the month the asset is placed in
service. In the second quarter of 1995, the effect of applying these
new methods was to reduce depreciation expense by $1.4 million, and to
increase income from continuing operations and net income by
$0.9 million and net income per share by $.02. For the six months, the
effect was to reduce depreciation expense by $3.1 million, and to
increase income from continuing operations and net income by
$1.9 million and net income per share by $.04. The reductions in
depreciation expense represent the differences in current year
depreciation expense between the old and new methods. Most of this
difference occurred in the Optoelectronics segment. Depreciation and
amortization for the six months of 1995 was slightly higher than the six
months of 1994 because the effect of the changes in methods was offset
by the effect of higher capital expenditures and the inclusion of IC
Sensors' depreciation in 1995.
<PAGE>
EG&G, INC. AND SUBSIDIARIES
Management's Discussion and Analysis (Continued)
Discontinued Operations: Income from discontinued operations, net of
income taxes, was $3.4 million lower for the quarter and $5.6 million
lower for the six months. The decreases reflected the expiration of the
Idaho contract in September 1994 and lower performance grades and
termination expenses for the Rocky Flats contract, which was terminated
on June 30, 1995. Future sales and income from discontinued operations
will continue to decrease as the remaining three DOE contracts expire in
1995 and 1996. Such sales and income are dependent upon work scopes and
fee pools that are negotiated annually with the DOE.
Liquidity and Capital Resources
-------------------------------
The Company's cash and cash equivalents decreased $5.6 million in the
first six months of 1995 while commercial paper borrowings decreased
$4.9 million. Net cash provided by continuing operations was
$58.2 million in 1995 compared to $6.2 million in 1994. In 1995,
accounts receivable were reduced by $22.7 million and inventories were
reduced by $5.6 million, reflecting the results of the aggressive
working capital reduction program. These reductions were partially
offset by $8.1 million in payments under the 1994 repositioning plan.
In addition, the Company's prepaid funding of its pension plan was $3.6
million lower in 1995 as compared to 1994.
Under the 1994 repositioning plan, cash outlays for the first six months
of 1995 were $8.1 million, mainly for employee termination costs,
bringing the total spent under the plan to $12.1 million. Future cash
outlays of $13.4 million for repositioning are expected to be incurred
mainly in 1995. During the first six months of 1995, the net work force
reduction was 238, bringing the total reduction to 434 employees to
date. The repositioning plan calls for a net work force reduction of
approximately 800 employees in continuing operations. The actions taken
have resulted in pre-tax savings of $3.3 million for the second quarter
and $5.8 million for the first six months of 1995.
For the first six months of 1995, capital expenditures were
$26.9 million, an increase of $5.7 million over the 1994 level. Capital
expenditures in 1995 are expected to exceed $80 million, more than twice
the 1994 level. These increases support new product development
initiatives, primarily in the Optoelectronics segment. Depreciation
expense in 1995 under the new methods is projected to be higher than in
1994 due to the higher level of capital expenditures. During the first
six months of 1995, the Company repurchased 2.4 million shares of its
common stock at a cost of $36.2 million under a stock repurchase
program. As of July 2, 1995, the Company had authorization to purchase
10.9 million additional shares under the program. The Company plans to
finance these activities with a combination of short-term and long-term
debt and cash flows from operations.
<PAGE>
Exhibits
--------
EG&G, INC. AND SUBSIDIARIES
Exhibit 27 - Financial data schedule
<PAGE>
PART II. OTHER INFORMATION
EG&G, INC. AND SUBSIDIARIES
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits incorporated by reference from Part I herein
Exhibit 27 - Financial data schedule
(b) Reports on Form 8-K
There were no reports on Form 8-K filed for the three months
ended July 2, 1995.
<PAGE>
EG&G, INC. AND SUBSIDIARIES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
EG&G, Inc.
By /s/ Thomas J. Sauser
-------------------------
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
Date August 15, 1995
---------------
<PAGE>
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<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUL-02-1995
<CASH> 60,825
<SECURITIES> 0
<RECEIVABLES> 207,464
<ALLOWANCES> 5,186
<INVENTORY> 121,520
<CURRENT-ASSETS> 449,003
<PP&E> 400,592
<DEPRECIATION> 260,425
<TOTAL-ASSETS> 790,061
<CURRENT-LIABILITIES> 276,898
<BONDS> 0
<COMMON> 60,102
0
0
<OTHER-SE> 381,901
<TOTAL-LIABILITY-AND-EQUITY> 790,061
<SALES> 680,481
<TOTAL-REVENUES> 680,481
<CGS> 264,592
<TOTAL-COSTS> 504,670
<OTHER-EXPENSES> 139,703
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,560
<INCOME-PRETAX> 35,741
<INCOME-TAX> 14,046
<INCOME-CONTINUING> 21,695
<DISCONTINUED> 8,370
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 30,065
<EPS-PRIMARY> .56
<EPS-DILUTED> .56
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