<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 15, 1995
REGISTRATION NO. 33-59675
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
EG&G, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
MASSACHUSETTS 04-2052042
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
</TABLE>
45 WILLIAM STREET
WELLESLEY, MASSACHUSETTS 02181
(617) 237-5100
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
MURRAY GROSS, ESQ.
EG&G, INC.
45 WILLIAM STREET
WELLESLEY, MASSACHUSETTS 02181
(617) 237-5100
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------
COPIES TO:
<TABLE>
<S> <C>
DAVID E. REDLICK, ESQ. DAVID C. CHAPIN, ESQ.
HALE AND DORR ROPES & GRAY
60 STATE STREET ONE INTERNATIONAL PLACE
BOSTON, MASSACHUSETTS 02109 BOSTON, MASSACHUSETTS 02110
(617) 526-6000 (617) 951-7000
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement, as determined
by market conditions and other factors.
If the only securities being registered on this form are to be offered
pursuant to dividend or interest reinvestment plans, please check the following
box / /
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION; DATED SEPTEMBER 15, 1995
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED , 1995
$
LOGO
% NOTES DUE
------------------------
Interest on the Notes is payable on and of each
year, commencing , 199 . The Notes are not redeemable prior to
maturity and will not be entitled to any sinking fund. The Notes will be
represented by one or more global Notes registered in the name of the nominee of
The Depository Trust Company (the "Depositary"). Beneficial interests in the
global Notes will be shown on, and transfers thereof will be effected only
through, records maintained by the Depositary and its participants. Except as
described herein, Notes in definitive form will not be issued. The Notes will be
issued only in denominations of $1,000 and integral multiples thereof. The Notes
will trade in the Depositary's Same-Day Funds Settlement System until maturity,
and secondary market trading activity for the Notes will therefore settle in
immediately available funds. All payments of principal and interest will be made
by the Company in immediately available funds. See "Description of Notes".
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH IT
RELATES. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
<TABLE>
<CAPTION>
INITIAL PUBLIC UNDERWRITING PROCEEDS TO
OFFERING PRICE(1) DISCOUNT(2) COMPANY(1)(3)
--------------------- --------------------- ---------------------
<S> <C> <C> <C>
Per Note........................ % % %
Total........................... $ $ $
</TABLE>
---------------
(1) Plus accrued interest, if any, from , 1995.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.
(3) Before deducting estimated expenses of $ payable by the Company.
------------------------
The Notes offered hereby are offered severally by the Underwriters, as
specified herein, subject to receipt and acceptance by them and subject to their
right to reject any order in whole or in part. It is expected that the Notes
will be ready for delivery in book-entry form only through the facilities of the
Depositary in New York, New York, on or about , 1995, against payment
therefor in immediately available funds.
GOLDMAN, SACHS & CO. MERRILL LYNCH & CO.
------------------------
The date of this Prospectus Supplement is , 1995.
<PAGE> 3
------------------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES
OFFERED HEREBY AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
USE OF PROCEEDS
The net proceeds from the sale of the Notes offered hereby are estimated to
be approximately $ . The Company intends to use up to $ of the net
proceeds to repay certain short-term indebtedness in an aggregate principal
amount of $ , which was incurred by the Company for general corporate
purposes, including the financing of open market repurchases, between
, 1995 and , 1995, of shares of its Common
Stock. Such indebtedness bears interest at rates ranging from % to %
per annum, and has maturity dates ranging from to . The
Company intends to use the remaining portion of the net proceeds for the
repurchase of additional shares of Common Stock and for other general corporate
purposes. Pending such uses, the net proceeds will be invested in short-term
investment-grade securities.
RESULTS FOR FIRST SIX MONTHS OF 1995
SELECTED CONSOLIDATED FINANCIAL DATA
The following table sets forth selected consolidated financial data of the
Company for the six months ended July 3, 1994 and July 2, 1995. These financial
data were prepared by management from the Company's unaudited financial
statements and include all adjustments, consisting only of normal recurring
accruals, necessary for a fair presentation of the results of operations,
financial position and cash flows of the Company for the periods and as of the
dates indicated. The results for the six months ended July 2, 1995 are not
necessarily indicative of results to be expected for the entire year. These
financial data should be read in conjunction with, and are qualified by
reference to, the consolidated financial statements and the related notes
contained in documents incorporated by reference in the accompanying Prospectus
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations" included therein and herein.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
-----------------------
JULY 3, JULY 2,
1994 1995
-------- --------
(IN THOUSANDS WHERE
APPLICABLE)
<S> <C> <C>
(UNAUDITED)
OPERATIONS:
Sales (from continuing operations)...................................................... $655,627 $680,481
Operating income from continuing operations............................................. 27,687 36,108(a)
Income from continuing operations....................................................... 16,790 21,695(a)
Income from discontinued operations, net of income taxes................................ 13,986 8,370
Net income.............................................................................. 30,776 30,065(a)
Per share:
Income from continuing operations..................................................... .30 .40
Income from discontinued operations, net of income taxes.............................. .26 .16
Net income............................................................................ .56 .56
FINANCIAL POSITION:
Working capital......................................................................... $217,586 $172,105
Total assets............................................................................ 790,091 790,061
Total debt.............................................................................. 56,275 52,406
Total long-term liabilities............................................................. 57,792 71,160
Stockholders' equity.................................................................... 491,087 442,003
Stockholders' equity per share.......................................................... 8.91 8.39
Debt/total capital...................................................................... 10.3% 10.6%
OTHER DATA:
Cash flows from continuing operations................................................... $ 6,151 $ 58,211
Cash flows from discontinued operations................................................. 16,591 19,124
Cash flows from operating activities.................................................... 22,742 77,335
Capital expenditures.................................................................... 21,253 26,928
Depreciation and amortization........................................................... 17,737 18,580
Cash dividends per common share......................................................... .28 .28
Weighted average common shares outstanding.............................................. 55,421 53,649
Ratio of earnings to fixed charges(b)................................................... 5.76x 5.89x
</TABLE>
---------------
(a) Effective January 2, 1995, the Company changed its depreciation methods from
accelerated to straight-line and half-year convention to actual month placed
in service. For the first six months of 1995, the effect of applying these
new methods
S-2
<PAGE> 4
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.
(b) Computed by dividing income from continuing operations before income taxes
and fixed charges and as adjusted for certain equity method investments, by
fixed charges. Fixed charges consist of interest on all indebtedness
(including capital lease obligations), amortization of debt expenses, and
the percentage of rental expense of operating leases which is deemed
representative of the interest factor.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
---------------------------
JULY 3, JULY 2,
1994 1995
--------- ---------
<S> <C> <C>
(IN THOUSANDS)
<CAPTION>
(UNAUDITED)
<S> <C> <C>
SALES FROM CONTINUING OPERATIONS:
Technical Services......................................... $ 305,674 $ 290,622
Instruments................................................ 133,929 141,175
Mechanical Components...................................... 114,425 123,307
Optoelectronics............................................ 101,599 125,377
--------- ---------
$ 655,627 $ 680,481
========= =========
OPERATING INCOME (LOSS) FROM CONTINUING OPERATIONS:
Technical Services......................................... $ 24,633 $ 22,536
Instruments................................................ 3,113 6,095
Mechanical Components...................................... 7,791 13,137
Optoelectronics............................................ 7,471 8,634
General Corporate Expenses................................. (15,321) (14,294)
--------- ---------
$ 27,687 $ 36,108
========= =========
</TABLE>
The discussion that follows is a summary analysis of the major changes in
operating results by industry segment that occurred for the six months ended
July 2, 1995 compared to the six months ended July 3, 1994.
SIX MONTHS 1995 COMPARED TO SIX MONTHS 1994
SALES FROM CONTINUING OPERATIONS. 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, which 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.
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 judgment, 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
S-3
<PAGE> 5
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. For the first six months of 1995, 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
first six months of 1995 was slightly higher than the first 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.
Discontinued Operations. Income from discontinued operations, net of
income taxes, was $5.6 million lower for the first six months of 1995. 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 Department of Energy
("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 the first six months
of 1995 compared to $6.2 million in the first six months of 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 the first six months of
1995 as compared to the first six months of 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 $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.
S-4
<PAGE> 6
RECENT DEVELOPMENTS
During the third quarter of 1995, through September 12, 1995, the Company
repurchased an additional 4.7 million shares of Common Stock at a cost of $87.5
million under its stock repurchase program. As of September 12, 1995, the
Company had authorization to purchase 6.2 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.
DESCRIPTION OF NOTES
GENERAL
The following description of the particular terms of the Notes offered
hereby (referred to in the accompanying Prospectus as the "Offered Debt
Securities") supplements, and to the extent inconsistent therewith replaces, the
description of the general terms and provisions of the Debt Securities set forth
in the accompanying Prospectus, to which description reference is hereby made.
Capitalized terms not defined herein have the meanings assigned to such terms in
the accompanying Prospectus.
The summary contained in this Prospectus Supplement of certain provisions
of the Indenture dated as of June 28, 1995, 1995 (the "Indenture") between the
Company and The First National Bank of Boston, as trustee (the "Trustee"), does
not purport to be complete and is subject to and qualified in its entirety by
reference to the Indenture and the Notes.
The Notes are unsecured obligations of the Company and will be limited to
$ million aggregate principal amount and will mature on . The
Notes will bear interest from , 1995 at the rate per annum set forth
on the cover page hereof, payable semi-annually on and
of each year, commencing , to the persons in whose names such Notes
are registered, subject to certain exceptions, at the close of business on the
or , as the case may be, next preceding such interest
payment date. Principal and interest will be payable, and transfer of the Notes
will be registrable, at the office of the Trustee, but payment of interest may
be made at the option of the Company by check mailed to the address of the
person entitled thereto as shown on the register of the Notes maintained by the
Registrar (the "Note Register"). The Notes will be issuable in denominations of
$1,000 and integral multiples thereof.
The Notes are not redeemable prior to maturity and will not be entitled to
any sinking fund. The discharge and defeasance provisions and the covenant
provisions described in the accompanying Prospectus under "Description of Debt
Securities" will apply to the Notes.
The Notes will be issued in the form of one or more fully registered global
Notes which will be deposited with, or on behalf of, the Depositary, located in
the Borough of Manhattan, The City of New York, and will be registered in the
name of the Depositary or a nominee of the Depositary.
Ownership of beneficial interests in a global Note will be limited to
participants and to persons that may hold interests through institutions that
have accounts with the Depositary ("participants"). Ownership of beneficial
interests by participants in a global Note will be shown on, and the transfer of
that ownership interest will be effected only through, records maintained by the
Depositary for such global Note. Ownership of beneficial interests in such
global Note by persons that hold through participants will be shown on, and the
transfer of that ownership interest within each participant will be effected
only through, records maintained by such participants.
Payment of principal of and interest on the Notes represented by any such
global Note will be made to the Depositary or its nominee, as the case may be,
as the sole registered owner and the sole holder of the Notes represented
thereby for all purposes under the Indenture. None of the Company, the Trustee
or any agent of the Company or the Trustee will have any responsibility or
liability for any aspect of the Depositary's records relating to or payments
made on account of beneficial ownership interests in a global Note representing
any Notes, any other aspect of the relationship between the Depositary and its
participants, the relationship between such participants
S-5
<PAGE> 7
and the owners of beneficial interests in a global Note owning through such
participants, or for maintaining, supervising or reviewing any of the
Depositary's records relating to such beneficial ownership interests.
The Company has been advised by the Depositary that upon receipt of any
payment of principal of or interest on any such global Note, the Depositary will
credit, on its book-entry registration and transfer system, the accounts of
participants with payments in amounts proportionate to their respective
beneficial interests in the principal amount of such global Note as shown on the
records of the Depositary. The accounts to be credited shall be designated by
the Underwriters. Payments by participants to owners of beneficial interests in
a global Note held through such participants will be governed by standing
instructions and customary practices, as is now the case with securities held
for customer accounts registered in "street name," and will be the sole
responsibility of such participants.
No global Note may be transferred except as a whole by the Depositary to a
nominee of the Depositary, by a nominee of the Depositary to the Depositary or
another nominee of the Depositary, or by the Depositary or any such nominee to a
successor of the Depositary or a nominee of such successor.
A global Note representing Notes is exchangeable for definitive Notes in
registered form, only if (i) the Depositary notifies the Company that it is
unwilling or unable to continue as Depositary for such global Note or if at any
time the Depositary ceases to be a clearing agency registered under the
Securities Exchange Act of 1934 (the "Exchange Act") and the Company does not
appoint a successor Depositary, or (ii) the Company in its sole discretion
determines that such global Note shall be exchangeable for definitive Notes in
registered form and notifies the Trustee thereof. Any global Note that is
exchangeable pursuant to the preceding sentence shall be exchangeable for
definitive Notes issuable in authorized denominations in registered form,
aggregating a like amount. Such definitive Notes shall be registered in the
names of the owners of the beneficial interests in such global Note as the
Depositary shall direct.
Except as provided above, owners of beneficial interests in such a global
Note will not be entitled to receive physical delivery of Notes in definitive
form and will not be considered the holders thereof for any purpose under the
Indenture, and no global Note representing Notes shall be exchangeable.
Accordingly, each person owning a beneficial interest in such a global Note must
rely on the procedures of the Depositary and, if such person is not a
participant, on the procedures of the participant through which such person owns
its interest, to exercise any rights of a holder under the Indenture or such
global Note. The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
limits and such laws may impair the ability to transfer beneficial interests in
a global Note.
The Depositary may grant proxies and otherwise authorize participants to
give or take any request, demand, authorization, direction, notice, consent,
waiver or other action which a holder is entitled to give or take under the
Indenture or a global Note. The Company understands that under existing industry
practices, in the event that the Company requests any action of holders or that
an owner of a beneficial interest in such a global Note desires to give or take
any action which a holder is entitled to give or take under the Indenture, the
Depositary would authorize the participants holding the relevant beneficial
interests to give or take such action, and such participants would authorize
beneficial owners owning through such participants to give or take such action
or would otherwise act upon the instructions of beneficial owners owning through
them.
The Depositary has advised the Company that the Depositary is a
limited-purpose trust company organized under the laws of the State of New York,
a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered under the Exchange Act. The Depositary was created to hold the
securities of its participants and to facilitate the clearance and settlement of
securities transactions among its participants in such securities through
electronic book-entry changes in accounts of the
S-6
<PAGE> 8
participants, thereby eliminating the need for physical movement of securities
certificates. The Depositary's participants include securities brokers and
dealers (including the Underwriters), banks, trust companies, clearing
corporations, and certain other organizations, some of whom (and/or their
representatives) own the Depositary. Access to the Depositary's book-entry
system is also available to others, such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a
participant, either directly or indirectly.
Settlement for the Notes will be made in immediately available funds. The
Notes will trade in the Depositary's Same-Day Funds Settlement System until
maturity, and therefore the Depositary will require secondary trading activity
in the Notes to be settled in immediately available funds. Secondary trading in
long-term notes and debentures of corporate issuers is generally settled in
clearing-house or next-day funds. No assurance can be given as to the effect, if
any, of settlement in immediately available funds on trading activity in the
Notes.
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement
and the Pricing Agreement, the Company has agreed to sell to each of the
Underwriters named below, and each of the Underwriters has severally agreed to
purchase, the principal amount of the Notes set forth opposite its name below.
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
UNDERWRITER OF NOTES
----------- ----------------
<S> <C>
Goldman, Sachs & Co. ........................................ $
Merrill Lynch, Pierce, Fenner & Smith
Incorporated....................................
-------------
Total........................................................ $
=============
</TABLE>
Under the terms and conditions of the Underwriting Agreement and the
Pricing Agreement, the Underwriters are committed to take and pay for all of the
Notes, if any are taken.
The Underwriters propose to offer the Notes in part directly to the public
at the initial public offering price set forth on the cover page of this
Prospectus Supplement and in part to certain securities dealers at such price
less a concession of % of the principal amount of the Notes. The
Underwriters may allow, and such dealers may reallow, a concession not to exceed
% of the principal amount of the Notes to certain brokers and dealers.
After the Notes are released for sale to the public, the offering price and
other selling terms may from time to time be varied by the Underwriters.
The Notes are a new issue of securities with no established trading market.
The Company has been advised by the Underwriters that they intend to make a
market in the Notes, but the Underwriters are not obligated to do so and may
discontinue market making at any time without notice. No assurance can be given
as to the liquidity of the trading market for the Notes.
The Company has agreed to indemnify the several Underwriters against
certain liabilities, including liabilities under the Securities Act of 1933.
The Underwriters have in the past provided, and may in the future provide,
investment banking and other related services to the Company and its affiliates.
LEGAL MATTERS
The legality of the Notes offered hereby will be passed upon for the
Company by Murray Gross, Esq., Vice President, General Counsel and Clerk of the
Company. In addition, certain legal matters relating to the offering of the
Notes will be passed upon for the Company by Hale and Dorr, Boston,
Massachusetts. Certain legal matters will be passed upon for the Underwriters by
Ropes & Gray, Boston, Massachusetts. As of August 31, 1995, Mr. Gross
beneficially owned 77,844 shares (including options to acquire 50,600 shares) of
Common Stock of the Company.
S-7
<PAGE> 9
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION; DATED SEPTEMBER 15, 1995
PROSPECTUS
$150,000,000
LOGO
DEBT SECURITIES
------------------------
EG&G, Inc. (the "Company" or "EG&G") may offer from time to time unsecured
debt securities ("Debt Securities") consisting of debentures, notes and/or other
evidences of unsecured indebtedness in one or more series, or any combination of
the foregoing, at an aggregate initial public offering price not to exceed
$150,000,000 (or its equivalent if some or all of the Debt Securities are
denominated in one or more foreign currencies or composite currencies), at
prices and on terms to be determined at or prior to the time of sale in light of
market conditions at the time of sale.
Specific terms of the particular series of Debt Securities in respect of
which this Prospectus is being delivered will be set forth in an accompanying
Prospectus Supplement, together with the terms of the offering of the Debt
Securities and the initial price and the net proceeds to the Company from the
sale thereof. The Prospectus Supplement will set forth with regard to the
particular series of Debt Securities, without limitation, the following: the
title, aggregate principal amount, ranking, if any, as senior debt or
subordinated debt, authorized denominations (which may be in United States
dollars, in any other currency or in a composite currency), maturity, rate, if
any (which may be fixed or variable), or method of calculation of interest and
dates for payment thereof, any exchangeability, conversion, redemption,
prepayment or sinking fund provisions, the currency or currencies or currency
unit or currency units in which principal, premium, if any, or interest, if any,
is payable, any listing on a securities exchange, any modifications of or
additions to the covenants described in this Prospectus and any other specific
terms in connection with the offering and sale of such series of Debt
Securities. The amounts payable by the Company in respect of Debt Securities may
be calculated by reference to the value, rate or price of one or more specified
commodities, currencies or indices to the extent set forth in the Prospectus
Supplement. The Prospectus Supplement will also contain information, where
applicable, about certain United States federal income tax considerations
relating to the Debt Securities covered by the Prospectus Supplement.
The Company may sell the Debt Securities directly, through agents
designated from time to time, or through underwriters or dealers. Such
underwriters may include Goldman, Sachs & Co. and Merrill Lynch & Co., or may be
a group of underwriters represented by firms including Goldman, Sachs & Co. and
Merrill Lynch & Co. Goldman, Sachs & Co. and Merrill Lynch & Co. may also act as
agents. If any agents of the Company or any underwriters or dealers are involved
in the sale of the Debt Securities in respect of which this Prospectus is being
delivered, the names of such agents, underwriters or dealers, the principal
amounts, if any, to be purchased by them, any applicable commissions and
discounts, and the net proceeds to the Company will be set forth in the
Prospectus Supplement. See "Plan of Distribution" for a discussion of
indemnification arrangements with any such agents, underwriters and dealers.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
The date of this Prospectus is , 1995.
<PAGE> 10
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission"). Reports, proxy and information statements and
other information filed by the Company can be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the following Regional Offices of the Commission:
Midwest Regional Office, Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661 and Northeast Regional Office, 7 World Trade Center,
Suite 1300, New York, New York 10048. Copies of such material may also be
obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549 at prescribed rates. The Company's Common
Stock is listed on the New York Stock Exchange, and reports, proxy and
information statements and other information concerning the Company may also be
inspected at the offices of the New York Stock Exchange, Inc., 20 Broad Street,
New York, New York 10005.
The Company has filed with the Commission a Registration Statement on Form
S-3 under the Securities Act of 1933, as amended (the "Securities Act"), with
respect to the Debt Securities offered hereby (the "Registration Statement").
This Prospectus does not contain all of the information set forth in the
Registration Statement and the exhibits thereto, as certain parts are omitted in
accordance with the rules and regulations of the Commission. Reference is made
to the Registration Statement and to the exhibits relating thereto, which may be
inspected, without charge, at the office of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549, and copies of which may be obtained from the
Commission at prescribed rates. Statements contained herein concerning the
provisions of any document are not necessarily complete and, in each instance,
reference is made to the copy of such document filed as an exhibit to the
Registration Statement or otherwise filed with the Commission. Each such
statement is qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated herein by reference:
(1) the Company's Annual Report on Form 10-K for the fiscal year ended
January 1, 1995;
(2) the Company's Quarterly Reports on Form 10-Q for the quarters
ended April 2, 1995 and July 2, 1995; and
(3) the Company's two Current Reports on Form 8-K, each dated January
25, 1995.
All documents subsequently filed by the Company with the Commission
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the
termination of the offering of the Debt Securities hereunder shall be deemed to
be incorporated by reference into this Prospectus and to be a part hereof from
the date of filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon the written or oral request of such person, a copy
of any or all of the foregoing documents incorporated by reference into this
Prospectus (without exhibits to such documents other than exhibits specifically
incorporated by reference into such documents). Requests for such copies should
be directed to the Vice President of Investor Relations of the Company, 45
William Street, Wellesley, Massachusetts 02181 (telephone: (617) 237-5100).
------------------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES
OFFERED HEREBY AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
2
<PAGE> 11
THE COMPANY
As used herein, the "Company" means EG&G, Inc. and its subsidiaries, unless
the context otherwise requires. The principal executive offices of the Company
are located at 45 William Street, Wellesley, Massachusetts 02181 and its
telephone number is (617) 237-5100.
INTRODUCTION
EG&G is a global technology company that produces instruments and
optoelectronic and mechanical components for manufacturers and end users in the
automotive, medical and aerospace industries. The Company also provides
engineering, scientific, environmental and management support services to a
broad range of government and industrial customers.
Over the past ten years, EG&G has undertaken a program to strengthen its
products businesses which serve commercial markets. Important steps in achieving
this goal have been (i) instituting cost reductions, (ii) improving
manufacturing processes and (iii) reengineering sales and distribution systems.
During this period, the Company also has divested certain nonstrategic
operations and has acquired businesses that bring desired technologies, skills
or market access. In 1994, the Company determined not to continue to bid for
management and operations contracts with the U.S. Department of Energy (the
"DOE"). The Company's existing management and operations contracts with the DOE
expire in 1995 and 1996.
EG&G conducts operations in four industry segments: Technical Services,
Instruments, Mechanical Components and Optoelectronics. The Company's sales and
operating income (loss) from continuing operations for each industry segment and
its general corporate expenses for the last five fiscal years were as follows:
<TABLE>
<CAPTION>
FISCAL YEARS ENDED
------------------------------------------------------------------
DECEMBER 30, DECEMBER 29, JANUARY 3, JANUARY 2, JANUARY 1,
1990 1991 1993 1994 1995
------------ ------------ ---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
SALES FROM CONTINUING
OPERATIONS:
Technical Services............. $ 522,724 $ 586,537 $ 608,864 $ 636,041 $ 613,588
Instruments.................... 208,263 230,196 226,900 237,223 273,088
Mechanical Components.......... 295,052 295,519 274,199 244,878 232,500
Optoelectronics................ 129,920 146,274 210,118 201,274 213,380
----------- ----------- ---------- ---------- ----------
$1,155,959 $1,258,526 $1,320,081 $1,319,416 $1,332,556
=========== =========== ========== ========== ==========
OPERATING INCOME (LOSS) FROM
CONTINUING OPERATIONS:
Technical Services............. $ 46,981 $ 55,601 $ 56,924 $ 68,762 $ 46,075
Instruments.................... 5,756 21,954 16,016 10,413 (49,580)
Mechanical Components.......... 27,175 28,426 21,835 24,408 18,766
Optoelectronics................ 11,116 7,140 3,905 11,474 8,674
General Corporate Expenses..... (23,491) (27,456) (29,895) (27,573) (34,882)
----------- ----------- ---------- ---------- ----------
$ 67,537 $ 85,665 $ 68,785 $ 87,484 $ (10,947)
=========== =========== ========== ========== ==========
</TABLE>
The operating loss from continuing operations for the fiscal year ended
January 1, 1995 included a goodwill write-down of $40.3 million and
restructuring charges of $30.4 million. The impact of these nonrecurring charges
on the operating income (loss) of each industry segment and on its general
corporate expenses was as follows: Technical Services -- $1.6 million;
Instruments -- $55.7 million; Mechanical Components -- $2.7 million;
Optoelectronics -- $9.7 million; and General Corporate Expenses -- $1 million.
3
<PAGE> 12
Set forth below is a brief summary of each of the Company's four industry
segments together with a description of certain of the more significant or
recently introduced products, services or operations.
TECHNICAL SERVICES
Through its Technical Services segment, EG&G supplies engineering,
scientific, environmental, management and technical support services to a broad
range of government and industry customers. These services include: analysis and
testing services for the automotive industry; base operations for the National
Aeronautics and Space Administration ("NASA") at the Kennedy Space Center
("KSC"); chemical weapons disposal and classified projects in aviation and
target detection for the U.S. Department of Defense ("DoD"); seized-property
administration for the U.S. Customs Service; technical support for the National
Science Foundation in Antarctica; consulting services in transportation;
physical security services for government agencies; and services and products
for the environmental market. The Company offers services in this segment under
trade names which include Automotive Research, Dynatrend, Structural Kinematics
and Washington Analytical Services Center. In fiscal 1994, this segment
represented 46% of the Company's total sales from continuing operations.
For the automobile, chemical additive and petroleum industries, EG&G
provides automobile durability, performance and emissions testing, and tests
fuels, lubricants and chemical additives. The Company performs automobile
durability and performance testing for all major U.S. and a number of foreign
automobile manufacturers.
As base operations contractor for the KSC, the Company provides
institutional, technical and maintenance support services. In particular, EG&G
manages KSC's 600 buildings, structures and facilities; tests new astronaut
rescue procedures and escape systems; fields a force of 200 uniformed security
personnel and a SWAT team; provides fire protection and medical services;
handles all propellant substances; and manages the shuttle landing facility. The
Company has been the base operations contractor at KSC since 1983 and is
currently in the second year of a four-year contract that has two three-year
renewal options at the discretion of the government.
EG&G's contracts with the DoD fall into two general categories: (i)
traditional defense activities, and (ii) decommissioning. EG&G's traditional
defense activities focus on such strategic areas as research and engineering
analyses in support of DoD advanced development programs. An example of a
decommissioning project is the operation of the U.S. Army's facility for the
disposal of lethal chemical agents and munitions in Tooele, Utah.
The Company also provides engineering and management services in a variety
of fields, including transportation, physical security and property management
for several government agencies. Government clients include the U.S. Departments
of Transportation, State and Treasury, the U.S. Customs Service and the
Environmental Protection Agency.
In 1994, the Company formed EG&G Environmental, Inc., a technology-based
systems integration company, to strengthen EG&G's presence in the environmental
services and systems market.
INSTRUMENTS
EG&G develops and manufactures instruments and systems for applications in
medical and clinical diagnostics; biochemical, medical and life science
research; industrial and pharmaceutical process measurement; environmental
monitoring; gas and oil field applications; airport and industrial security; and
food inspection. Many of these products feature the accurate generation,
detection and measurement of various segments of the electromagnetic spectrum.
EG&G's instruments provide a wide range of measurement capabilities and options
through the use of high-speed signal processing, image enhancement and a broad
utilization of detector technologies. The Company offers products in this
segment under trade names which include Astrophysics, Berthold,
4
<PAGE> 13
Ortec and Wallac. In fiscal 1994, this segment represented 21% of the Company's
total sales from continuing operations.
EG&G high performance bioanalytic and diagnostic instruments are used in
hospitals, clinics and pharmaceutical and medical research facilities. These
instruments are generally based on time-resolved fluorescence and
chemoluminescence technologies that use light measurement to analyze samples.
Because these light measurement technologies do not involve the use of
radioactive material, concerns about sample transport and waste disposal are not
present. Among other things, these instruments are used to screen blood for
thyroid dysfunction, fertility-related disorders, fetal defects and diseases in
newborns, and to detect relapse in patients who have been treated for cancer.
EG&G recently introduced AutoDelfia(R), an automated immunoassay fluorescence
diagnostic system. The Company also sells reagents for use in connection with
certain of these instruments.
Through its Instruments segment, EG&G also produces security screening
systems that employ x-ray technology and various supporting image-enhancing
techniques for non-intrusive inspection of baggage and packages at airport
portals, baggage processing areas, mail rooms, courthouses, schools and
buildings in general. In 1994, EG&G introduced two new security screening
products: the Z-ScanTM and a portable large cargo x-ray screening system. The
Z-Scan uses color images, x-rays and proprietary software to detect explosives,
narcotics or contraband in packages and luggage. The Z-Scan can process up to
1,200 bags an hour. The United Kingdom Department of Transport recently
certified the Z-Scan for detection of drugs and contraband in checked cargo. The
large cargo x-ray screening system allows non-intrusive inspection of boxes,
crates and containers in search of contraband, weapons and explosives. The
Company expects that this system will have applications at border crossings,
ports of entry, warehouses and airports.
EG&G instruments also include process inspection systems that combine x-ray
technology from the Company's Instruments segment and optical components from
the Company's Optoelectronics segment. These systems are used in food processing
and packaging plants to monitor, detect and remove foreign objects from raw and
processed food at various points on the production line. Such systems are also
used to check intravenous-medicine bags and automobile oil filters for leaks,
measure the fat content of meat and detect and separate nonbiodegradable PVCs
from recyclable plastics.
Based on its expertise in nuclear measurements, EG&G produces instruments
to detect, characterize and measure radiation, including a complete line of
radiation-protection measuring systems for laboratories, nuclear facilities and
environmental monitoring. The Company also offers industrial on-line level and
density measuring instruments for process control and measurement of liquids,
slurries or solids in containers, tanks and pipes.
MECHANICAL COMPONENTS
Through its Mechanical Components segment, EG&G produces advanced seals and
bellows products, valves, nozzles, metal ducting, motors and heat management
devices for the petrochemical and chemical processing, transportation, defense
and aerospace markets. The Company offers these products under trade names which
include Pressure Science, Rotron and Sealol. In fiscal 1994, this segment
represented 17% of the Company's total sales from continuing operations.
Products sold in this segment include blower systems, power-conversion
devices and other components for locomotives, transit cars and buses and defense
product applications. Many of these products were first developed by EG&G for
defense-related purposes and are now marketed and sold for commercial
applications.
EG&G also produces mechanical sealing components and systems, which use
welded metal bellows devices pioneered by the Company, for the process
industries. Such industries include pharmaceuticals, food processing, oil
refining and chemical and petrochemical processing. The Company expects that the
market for the Company's advanced zero leakage gas seals will grow as a result
of environmental legislation which requires manufacturers to significantly
reduce emissions.
5
<PAGE> 14
For aerospace applications, EG&G produces valves, advanced sealing
components, aircraft exhaust components and ducting.
OPTOELECTRONICS
Through its Optoelectronics segment, EG&G offers a broad variety of
components that emit and detect light in the spectrum from ultraviolet through
visible to the far infrared. These components range from simple photocells to
sophisticated imaging systems, light sources that include various types of
flashtubes and laser diodes, field instruments for fiber-optics and complex
devices for weapons' trigger systems. Applications include light sensors used in
automotive and commercial electronics, sensors used in smoke detectors and
medical imaging systems, and sophisticated arrays for communications and remote
sensing of the earth. The Company expects to make significant research and
development and capital expenditures in this segment over the next several
years. The Company offers products in this segment under trade names which
include Heimann Optoelectronics, IC Sensors, Reticon and Vactec. In fiscal 1994,
this segment represented 16% of the Company's total sales from continuing
operations.
Products of this segment include detectors of visible and non-visible
light, including high performance silicon photodiodes to detect and measure
light and other optical radiation for space, military, analytical and scientific
instrumentation. Light detectors are also used by the Company to produce a
family of products for fiber-optic cable manufacturing and field installation
and inspection. The Company also makes a wide variety of flashlamps for use in
photocopy and reprographic equipment, photo-typesetting systems, beacons,
indicators and laser systems and accessories. In addition, EG&G manufactures
power supplies for military high frequency electronic applications that are used
primarily for precision controlled switching of electric current in electronic
equipment.
In cooperation with the General Electric Company, EG&G is participating in
development of new technology for x-ray imaging. This technology is intended to
be commercialized for a new generation of electronic x-ray imaging detectors.
The technology is in the early stages of feasibility testing.
Through this segment, EG&G also produces micromachined sensors, which are
small silicon-wafer-based devices that combine a sensing function with
intelligent signal processing. The Company mass produces these micromachined
infrared sensors for consumer, medical and automotive applications and
manufactures high performance micromachined silicon sensors for missile-guidance
systems. In a joint venture, the Company is developing micromachined electronic
accelerometers for consumer and industrial applications.
DISCONTINUED OPERATIONS
Since its founding, the Company has provided services to the DOE and its
predecessor organizations. These services related primarily to nuclear energy
research and nuclear weapons production and testing. As a result of changing
procurement and administrative priorities at the DOE, to continue to provide
these services the Company would have been required to invest significant levels
of capital and accept broader liabilities and lower fees. In view of these
changes, the Company determined that it would not seek renewal of its four
contracts with the DOE and would not seek management and operations contracts at
other DOE sites. Accordingly, the Company is reporting its former DOE Support
segment as discontinued operations. Sales from discontinued operations were
$1.47 billion, $1.38 billion and $1.30 billion in fiscal 1992, fiscal 1993 and
fiscal 1994, respectively, and income from discontinued operations, net of
income taxes, was $39.0 million, $24.9 million and $26.5 million in fiscal 1992,
fiscal 1993 and fiscal 1994, respectively. Sales and income from these
discontinued operations will continue to decrease as the four remaining DOE
contracts expire in 1995 and 1996.
6
<PAGE> 15
USE OF PROCEEDS
The Company intends to use the net proceeds from the sale of the Debt
Securities for general corporate purposes, which may include the purchase of
shares of its Common Stock in open market or negotiated transactions and the
repayment of outstanding indebtedness. More detailed information concerning the
use of the proceeds from any particular offering of the Debt Securities will be
contained in the Prospectus Supplement relating to such offering.
SUMMARIZED CONSOLIDATED FINANCIAL DATA
The following table sets forth summarized consolidated financial data of
the Company for its three most recent fiscal years. The financial data set forth
below have been derived from the financial statements of the Company, which have
been audited by Arthur Andersen LLP, independent public accountants, as set
forth in their reports with respect thereto. These financial data should be read
in conjunction with, and are qualified by reference to, the consolidated
financial statements and the related notes contained in documents incorporated
by reference in this Prospectus and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" included herein.
<TABLE>
<CAPTION>
FISCAL YEARS ENDED
----------------------------------------
JANUARY 3, JANUARY 2, JANUARY 1,
1993 1994 1995
---------- ---------- ----------
(IN THOUSANDS WHERE APPLICABLE)
<S> <C> <C> <C>
OPERATIONS:
Sales (from continuing operations)............................................. $1,320,081 $1,319,416 $1,332,556
Operating income (loss) from continuing operations............................. 68,785 87,484 (10,947) (a)
Income (loss) from continuing operations....................................... 48,765 54,622 (32,107)
Income from discontinued operations, net of income taxes....................... 39,014 24,949 26,452
Income (loss) before cumulative effect of accounting changes................... 87,779 79,571 (5,655)
Net income (loss).............................................................. 87,779 59,071(b) (5,655) (d)
Per share:
Income (loss) from continuing operations..................................... .87 .97 (.58)
Income from discontinued operations, net of income taxes..................... .69 .44 .48
Income (loss) before cumulative effect of accounting changes................. 1.56 1.41 (.10)
Net income (loss)............................................................ 1.56 1.05(b) (.10) (d)
FINANCIAL POSITION:
Working capital................................................................ $ 247,518 $ 227,935 $ 199,656
Total assets................................................................... 746,577 764,887 793,129
Total debt..................................................................... 42,223 45,039 60,800
Total long-term liabilities.................................................... 40,827 54,177 65,941
Stockholders' equity........................................................... 473,636 477,534 445,366
Stockholders' equity per share................................................. 8.34 8.51 8.08
Debt/total capital............................................................. 8% 9% 12%
OTHER DATA:
Cash flows from continuing operations.......................................... $ 94,554 $ 76,217 $ 70,341
Cash flows from discontinued operations........................................ 33,253 35,920 25,542
Cash flows from operating activities........................................... 127,807 112,137 95,883
Capital expenditures........................................................... 22,446 27,860 37,277
Depreciation and amortization.................................................. 36,292 37,842 36,790
Cash dividends per common share................................................ .49 .52 .56
Weighted average common shares outstanding..................................... 56,385 56,504 55,271
Ratio of earnings to fixed charges(c).......................................... 5.71x 8.02x --(e)
</TABLE>
---------------
(a) Includes a goodwill write-down of $40.3 million and restructuring charges of
$30.4 million.
(b) Includes one-time after-tax charges of $20.5 million, or $.36 per share, due
to the Company's adoption of SFAS Nos. 106 and 109.
(c) Computed by dividing income from continuing operations before income taxes
and fixed charges and as adjusted for certain equity method investments, by
fixed charges. Fixed charges consist of interest on all indebtedness
(including capital lease obligations), amortization of debt expenses, and
the percentage of rental expense of operating leases which is deemed
representative of the interest factor. The ratio of earnings to fixed
charges for the fiscal years ended December 30, 1990 and December 29, 1991
was 5.06x and 6.45x, respectively.
(d) Excluding the effect of the nonrecurring items described in (a), net income
would have been $58.3 million, or $1.06 per share.
(e) The deficiency of earnings to cover fixed charges for the fiscal year ended
January 1, 1995 was $17.4 million. Excluding the effect of the nonrecurring
items described in (a), the ratio of earnings to fixed charges would have
been 5.50x.
7
<PAGE> 16
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The discussion that follows is a summary analysis of the major changes by
industry segment.
1994 COMPARED TO 1993
During the third quarter of 1994, three significant events occurred that
have a material effect on both the current financial results and the expected
future performance of the Company. First, the Company decided not to seek
renewal of its remaining four DOE contracts, although it intends to continue to
meet its obligations under the terms and conditions of the present contracts.
The Company will not compete for management and operations contracts at other
DOE facilities. Accordingly, the Company is reporting the former DOE Support
segment as discontinued operations for all periods presented in the Consolidated
Financial Statements incorporated herein by reference. Second, management
completed its review of the remaining operating segments' performance and
developed a plan to reposition these businesses to attain the Company's business
goals. The plan resulted in restructuring charges of $30.4 million in the third
quarter. Finally, the decline in the financial results of certain operating
elements within the Instruments segment, together with a strategic and
operational review of these operations, resulted in an evaluation of the related
goodwill for possible impairment. This evaluation resulted in a write-down of
goodwill of $39.2 million and a reduction in the estimated remaining useful life
of unamortized goodwill from 36 to 16 years. The Company also wrote off $1.1
million of a small Optoelectronics unit's goodwill. Additional information
related to these events is discussed below and in Notes 5, 8, and 10 to the
Consolidated Financial Statements incorporated herein by reference.
SALES FROM CONTINUING OPERATIONS
Sales from continuing operations for 1994 were $1,333 million, $13 million
higher than 1993 sales.
Technical Services: The $22 million decline resulted primarily from the
$32 million reduction in program expenditures under the new base operations
contract at the KSC. In addition, automotive testing sales declined $8 million
to more normal levels following increases in 1993 caused by the introduction of
new testing protocols. Partially offsetting these decreases were increased
billings of $21 million from the DoD chemical weapons disposal contract as it
moves into its testing phase.
Instruments: The $36 million increase resulted primarily from $31 million
of sales of Wallac, acquired late in the second quarter of 1993, and a $12
million increase in airport security product sales. These increases were
partially offset by a $4 million sales decrease in other businesses. These
businesses are to be sold under the repositioning plan and contributed sales of
$16 million in 1994.
Mechanical Components: The $12 million decrease was primarily due to the
absence of sales of an operation divested late in 1993.
Optoelectronics: The $12 million increase was due primarily to higher
shipments of flash products of $20 million, and $5 million of sales of IC
Sensors, acquired at the end of the third quarter. Partially offsetting the
increases was the absence of $5 million of sales from an operation divested late
in 1993 and a $4 million decrease in sales on a government contract that ended
in September 1994.
OPERATING INCOME (LOSS) FROM CONTINUING OPERATIONS
The operating loss from continuing operations in 1994 was $10.9 million,
compared to income of $87.5 million in 1993. The loss from continuing operations
included the $40.3 million write-down
8
<PAGE> 17
of goodwill and restructuring charges of $30.4 million resulting from
management's repositioning plan. The Wallac and IC Sensors acquisitions were the
main contributors to the $3.9 million increase in research and development
expenses. The $13.4 million increase in selling, general and administrative
expenses resulted mainly from Wallac and increased corporate expenses, offset by
cost reductions in the Instruments segment and the absence of expenses of
operations divested in 1993.
Restructuring Charges: During the third quarter of 1994, management
completed its review of the operating segments and developed a plan to
reposition these businesses to attain the Company's business goals. The plan
resulted in pre-tax restructuring charges of $30.4 million. The principal
actions in the repositioning plan include reduction of excess manufacturing
capacity, changes in distribution channels, consolidation and re-engineering of
support infrastructure, disposal of under-utilized assets, withdrawal from
certain unprofitable product lines, disposal of excess property and general cost
reductions. The repositioning plan will result in the termination of the jobs of
approximately 1,000 non-DOE employees; the net workforce reduction will be
approximately 800 non-DOE employees. The reduction through January 1, 1995 was
200 employees. These combined actions are expected to result in pre-tax savings
of approximately $17 million in 1995 and annualized pre-tax savings of
approximately $30 million starting in 1996. The major components of the
restructuring charges were $21 million of employee separation costs, $4.9
million of noncash charges to dispose of certain product lines and assets
through sale or abandonment and $4.5 million of charges to terminate lease and
other contractual obligations no longer required as a result of the
repositioning plan. The charges do not include additional costs associated with
the repositioning plan, such as voluntary early retirement programs, training,
consulting, purchases of equipment and relocation of employees and equipment.
These costs will be charged to operations or capitalized, as appropriate, when
incurred. The implementation of this plan commenced during the second half of
1994 with a cash outlay of $4 million for termination costs; $21.5 million of
additional cash outlays will occur, mainly in 1995.
Technical Services: The $22.7 million decrease resulted primarily from
reductions in the automotive testing business due to the $4.7 million impact of
lower sales and, to a lesser extent, from increased costs. A reduction at the
KSC of $5.1 million was due to the lower fee on the new base operations
contract. In addition, a $3.3 million decrease resulted from unfavorable 1994
contract adjustments compared to favorable 1993 contract settlements.
Restructuring charges of $1.6 million and early retirement costs also
contributed to the decrease. The repositioning plan is not expected to have a
significant direct impact on future results in this segment since cost
reductions primarily relate to operations with cost reimbursable contracts.
However, the Company does expect to be more competitive in bidding for future
procurements as a result of cost reductions.
Instruments: The Instruments loss of $49.6 million resulted primarily from
a goodwill write-down of $39.2 million related to the Berthold business acquired
in 1989, and restructuring charges of $16.5 million. The remainder of the
decrease resulted from costs associated with delays in the introduction of new
diagnostic products, the impact that the strengthening of the Finnish markka had
on Wallac's results, higher royalty expense and expenses related to the
closedown of a research and development project. Partially offsetting these
decreases were $2.5 million of cost reductions in the nuclear business. The
repositioning plan is expected to result in annualized cost reductions of
approximately $13 million starting in 1996.
Mechanical Components: The decrease of $5.6 million resulted from $2.7
million of restructuring charges, a provision for environmental remediation
costs of $1.3 million and increased start-up costs for the transportation
element of the electromechanical business. The repositioning plan is expected to
result in annualized cost savings of approximately $3 million starting in 1996.
Optoelectronics: Profits resulting from higher flash product shipments and
the continued benefit of cost reductions implemented in 1993 were offset by $8.6
million of restructuring charges and, to a lesser extent, the impact of lower
sales on a government contract. In addition, the results reflected a $1.1
million write-off of a small unit's goodwill. The repositioning plan is expected
to
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<PAGE> 18
result in annual cost savings of approximately $7 million starting in 1996.
However, the Company anticipates future increases in research and development
expenses and capital expenditures to support product development initiatives in
this segment.
General Corporate Expenses: The increase was due to $1 million of
restructuring charges, $1 million of consulting costs that were associated with
the repositioning plan, $1 million of separation costs incurred during the first
six months of the year plus general cost increases. The repositioning plan is
expected to result in annual savings of $7 million in Corporate and other
expenses starting in 1996.
Other: The net change in other income (expense) was due to the write-down
in the third quarter of certain investments by $1.8 million to their realizable
value as the result of the decision to restructure associated operations and to
liquidate the Company's position in investments no longer consistent with its
strategic direction. During the fourth quarter, the Company wrote down certain
investments by $2.7 million due to a reduction in their expected realizable
value based upon the deterioration in the financial condition of the
company/partnership.
The 1994 tax provision and effective rate for continuing operations were
significantly impacted by the goodwill write-down and the restructuring charges.
The Company has not recorded any tax benefit from the goodwill write-down and
approximately $11 million of the restructuring charges because these charges,
while tax deductible, will be incurred in tax jurisdictions where the Company
has existing operating loss carryforwards. At the present time, the Company
believes that it is more likely than not that these benefits will not be
realized.
In 1994, the Company increased its discount rates for employee benefit
plans as a result of the increase in long-term interest rates. The effects of
the higher discount rates were partially offset by an increase in the assumption
for compensation increases. The net result of these changes will not materially
affect the Company's results of operations.
Effective January 2, 1995, the Company will change its method of
depreciation for certain classes of plant and equipment from an accelerated
method to the straight-line method. The Company believes that the straight-line
method will more appropriately reflect the timing of the future economic
benefits to be received from these assets, which consist mainly of manufacturing
equipment.
Discontinued Operations: During the third quarter of 1994, the Company
announced a plan to exit the DOE business and decided not to seek renewal of its
remaining four DOE contracts, although it intends to continue to meet its
obligations under the terms and conditions of the present contracts. The Company
will not compete for management and operations contracts at other DOE
facilities. Accordingly, the Company is reporting the former DOE Support segment
as discontinued operations for all periods presented in the Consolidated
Financial Statements incorporated herein by reference. The Company's contract to
manage the Idaho National Engineering Laboratory expired September 30, 1994 and
contributed $240 million of sales and $7.3 million of operating income to
discontinued operations in 1994. The Company's Rocky Flats contract was
terminated on June 30, 1995.
The Company's remaining management and operations contracts with the DOE
have terms expiring as follows:
Reynolds Electrical and Engineering Co., Inc. -- December 31, 1995
EG&G Energy Measurements, Inc. -- December 31, 1995
EG&G Mound Applied Technologies, Inc. -- September 30, 1996
Expiration dates may be modified by the DOE in accordance with contract
terms.
Income from discontinued operations, net of income taxes, was $1.5 million
above the 1993 level. The increase resulted from a cost/productivity improvement
fee of $7.3 million earned at Rocky Flats offset partially by a fee reduction
reflecting the expiration of the Idaho contract in
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<PAGE> 19
September 1994. Future sales and income from discontinued operations will
decrease as the remaining DOE contracts expire in 1995 and 1996 and are
dependent upon work scopes and fee pools negotiated annually that are currently
under review by the DOE.
Environmental: The Company is conducting a number of environmental
investigations and remedial actions at current and former Company locations and,
along with other companies, has been named a potentially responsible party for
certain waste disposal sites. The Company accrues for environmental issues in
the accounting period that the Company's responsibility is established and when
the cost can be reasonably estimated. As of January 1, 1995, the Company had an
accrual of $2.4 million to reflect its estimated liability for environmental
remediation. As assessments and remediation activities progress at each
individual site, these liabilities are reviewed to reflect additional
information as it becomes available. There have been no environmental problems
to date that had or are expected to have a material effect on the Company's
financial position or results of operations. While it is reasonably possible
that a material loss exceeding the amounts recorded may have been incurred, the
preliminary stages of the investigations make it impossible for the Company to
reasonably estimate the range of potential exposure.
1993 COMPARED TO 1992
SALES FROM CONTINUING OPERATIONS
Sales of $1,319 million for 1993 were level with 1992 sales.
Technical Services: The $27 million increase resulted from an increase of
$24 million in automotive testing services caused primarily by the introduction
of new industry testing protocols, partially offset by a $10 million reduction
in contract billings at the KSC.
Instruments: The $10 million increase resulted from the $43 million of
sales of Wallac, acquired in June 1993, partially offset by reduced scientific,
industrial and security instruments sales reflecting sluggish market conditions,
lower foreign exchange rates and large orders shipped in 1992.
Mechanical Components: The $29 million decrease was attributable to a $21
million reduction in aerospace sales due primarily to continued softness in this
market and, to a lesser extent, the divestiture of two operations.
Optoelectronics: The $9 million decrease was due mainly to the completion
of several programs in 1992, partially offset by the sales of Heimann
Optoelectronics, which was acquired early in the second quarter of 1992.
OPERATING INCOME FROM CONTINUING OPERATIONS
Operating income from continuing operations was $87.5 million in 1993, a
27% increase over 1992.
Technical Services: The $11.8 million increase was due primarily to higher
sales and improved margins in the automotive testing services business. In
October 1993, the Company was selected by NASA to continue as the base
operations contractor at the KSC. The contract has a potential term of 10 years,
including options, contains reductions in contract value and has resulted in
reductions in the annual fee.
Instruments: The $5.6 million decrease resulted from lower sales of
scientific, industrial and security instruments partially offset by the income
associated with the Wallac acquisition.
Mechanical Components: Improved profitability resulting from cost
reduction programs in the industrial sealing and electromechanical businesses
more than offset the impact of lower aerospace sales, generating a $2.6 million
increase.
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<PAGE> 20
Optoelectronics: The $7.6 million increase was due to improved
profitability as a result of cost reductions at Heimann Optoelectronics. The
1992 results included a charge of $6.3 million for the write-down of the net
assets of two businesses to their estimated disposal value.
General Corporate Expenses: The $2.3 million decrease was due to the
absence of corporate management incentives in 1993.
Other: The net change in other income (expense) was an increase in income
of $3.1 million. This was primarily due to gains on investments. The 1993
effective tax rate of 38.3% for continuing operations was higher than the 26.9%
in 1992 primarily because the 1992 rate reflected a favorable adjustment of
prior estimated tax liabilities and the tax benefit resulting from the sale of
an investment in a hydroelectric power plant.
The Company reduced its discount rate for employee benefit plans in 1993 as
a result of the decrease in long-term interest rates. The effects of the lower
discount rates were partially offset by corresponding reductions in assumptions
for compensation increases and health care cost trend rates.
DISCONTINUED OPERATIONS: The $14.1 million decrease in income from
discontinued operations, net of income taxes, was primarily attributable to
Rocky Flat's lower grades and a reduction of available fee pool. In addition,
1992 results included a favorable profit adjustment due to higher than
anticipated performance grades at year-end 1991. Lower grades on the Idaho
contract also contributed, to a lesser extent, to the decrease.
ACCOUNTING CHANGES: During the first quarter of 1993, the Company adopted
Statement of Financial Accounting Standards (SFAS) No. 106 on accounting for
post-retirement benefits other than pensions for its U.S. retiree health
benefits and SFAS No. 109 on accounting for income taxes. The adoption of SFAS
No. 106 resulted in an after-tax charge of $13.2 million ($.23 per share) while
the charge for SFAS No. 109 was $7.3 million ($.13 per share). See Notes 12 and
13 to the Consolidated Financial Statements incorporated herein by reference for
additional disclosures.
FINANCIAL CONDITION
The Company's cash and cash equivalents decreased $5.8 million in 1994
while commercial paper borrowings increased $14.9 million. Net cash provided by
operating activities was $95.9 million in 1994, $112.1 million in 1993 and
$127.8 million in 1992. The net cash provided by discontinued operations in 1994
was lower than in 1993 due to a $10.1 million reduction in receivables in 1993,
which did not occur in 1994. The net cash provided by continuing operations was
lower in 1994 reflecting lower earnings, partially offset by a net reduction in
working capital. The net cash provided was principally used for capital
expenditures, acquisitions, cash dividends and in 1994 and 1993, for stock
repurchases in excess of proceeds from issuing stock. In 1994, lower purchases
of common stock and proceeds from issuing common stock were due to the
termination of an employee stock purchase plan in 1993.
The implementation of the repositioning plan commenced during 1994 with a
cash outlay of $4 million for termination costs with future cash outlays of
$21.5 million, mainly in 1995. Additional cash outlays of approximately $10
million will be required to support the repositioning plan in 1995. Proceeds
from asset dispositions, the liquidation of certain investments and pre-tax
repositioning savings in 1995 are anticipated to result in neutral or slightly
positive net cash flows from the repositioning plan by the end of 1995. The
repositioning plan is expected to improve annual cash flow by an estimated $20
million starting in 1996. In addition, the Company has implemented an aggressive
working capital reduction program.
Discontinued operations generated cash of $25.5 million in 1994. Future
cash flows from discontinued operations will decrease due to the expiration of
the Idaho contract in 1994 and the expiration of the remaining DOE contracts in
1995 and 1996.
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<PAGE> 21
Capital expenditures were $37.3 million in 1994, an increase of $9.4
million over the 1993 level, and are expected to exceed $80 million in 1995.
These increases support new product development initiatives, primarily in the
Optoelectronics segment. In the fourth quarter of 1993, the Board of Directors
authorized the purchase of up to a total of 5.5 million shares of the Company's
common stock through periodic purchases on the open market. The Company has
purchased 2.2 million shares under this program as of January 1, 1995, including
1.1 million shares purchased in the first quarter of 1994 at a cost of $19.1
million. No shares were purchased under the program during the last nine months
of 1994. On January 25, 1995, the Board of Directors authorized the purchase of
an additional 10 million shares. As a result, the Company had authorization as
of January 25, 1995 to purchase a total of 13.3 million shares. The Company will
finance these activities with a combination of short-term and long-term debt and
cash flows from operations. The Company believes it can take these actions and
maintain its product development and growth strategies.
The Company's credit facilities consist of a $175 million, 364-day
facility, which expires in March 1996, and a $75 million, three-year facility
which expires in March 1998. These agreements serve as backup facilities for
commercial paper borrowing by the Company, which has been its principal source
of debt financing. The Company did not draw down either of these credit
facilities during 1994.
The Company has only limited involvement with derivative financial
instruments and does not use them for trading purposes. The Company uses forward
exchange contracts to hedge certain foreign commitments and transactions
denominated in foreign currencies. The contract amount of forward exchange
contracts was $24.5 million as of January 1, 1995. The terms range from one to
three months, corresponding with expected collections or payments. There are no
cash requirements until maturity. Credit risk is minimal as the contracts are
with very large banks; any market risk is offset by the exposure on the
underlying hedged items. Gains and losses on forward contracts are deferred and
offset against foreign exchange gains and losses on the underlying hedged items.
DIVIDENDS
In January 1995, the Board of Directors declared a regular quarterly cash
dividend of 14 cents per share, resulting in an annual rate of 56 cents per
share for 1995. EG&G has paid cash dividends, without interruption, for 30 years
and continues to retain what management believes to be sufficient earnings to
support the funding requirements of its planned growth.
DESCRIPTION OF DEBT SECURITIES
The following description of the Debt Securities sets forth certain general
terms and provisions of the Debt Securities to which any Prospectus Supplement
may relate. The particular terms of the Debt Securities offered by any
Prospectus Supplement (the "Offered Debt Securities") and the extent, if any, to
which such general provisions may apply to the Debt Securities so offered will
be described in the Prospectus Supplement or Prospectus Supplements relating to
such Offered Debt Securities.
The Offered Debt Securities are to be issued under an Indenture dated as of
June 28, 1995, as amended and supplemented from time to time (collectively, the
"Indenture"), between the Company and The First National Bank of Boston, as
Trustee (the "Trustee"). A copy of the Indenture is filed as an exhibit to the
Registration Statement. The following summaries of certain provisions of the
Debt Securities and the Indenture do not purport to be complete and are subject
to, and are qualified in their entirety by reference to, all the provisions of
the Indenture, including the definition therein of certain terms. Section
numbers below refer to provisions of the Indenture.
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<PAGE> 22
GENERAL
The Debt Securities will be unsecured obligations of the Company.
The Indenture provides that the Company may establish the following terms
with respect to a particular series of Offered Debt Securities: (i) the title of
the Offered Debt Securities; (ii) any limit on the aggregate principal amount of
the Offered Debt Securities; (iii) the Person to whom any interest on an Offered
Debt Security shall be payable, if other than the registered holder; (iv) the
date or dates on which principal of the Offered Debt Securities is payable; (v)
the price (expressed as a percentage of the aggregate principal amount thereof)
at which the Offered Debt Securities will be issued; (vi) the date or dates on
which the Offered Debt Securities will mature; (vii) the rate or rates (which
may be fixed or variable) at which the Offered Debt Securities will bear
interest, if any; (viii) the date from which such interest, if any, will be
payable, the date on which payment of such interest, if any, will commence and
the Regular Record Dates for such Interest Payment Dates, if any; (ix) the place
or places where the principal of and any premium or interest on the Offered Debt
Securities shall be payable; (x) the dates, if any, on which the price or prices
at which the Offered Debt Securities will, pursuant to any mandatory sinking
fund provisions, or may, pursuant to any optional sinking fund provisions, be
redeemed by the Company, and the other detailed terms and provisions of any such
sinking fund; (xi) the date, if any, after which the price or prices at which
the Offered Debt Securities may, pursuant to any optional redemption provisions,
be redeemed at the option of the Company or of the Holder thereof and the other
detailed terms and provisions of such optional redemption; (xii) the
denominations if other than denominations of $1,000 and integral multiples
thereof in which the Offered Debt Securities shall be issuable; (xiii) the
currency or currencies of denomination and payment and the manner for
determining the outstanding amount of such Offered Debt Securities; (xiv) if the
currency or currencies of payment are at the Company's or Holder's election, the
manner in which such election may be made; (xv) if the amount of payments of
principal or any premium or interest on the Offered Debt Securities may be
determined with reference to an index, the manner in which such amounts shall be
determined; (xvi) if other than the principal amount thereof, the portion of the
principal amount of the Offered Debt Securities which shall be payable upon
acceleration of the maturity of such Offered Debt Securities; (xvii) the
application of defeasance provisions to the Offered Debt Securities and the
terms and provisions under which the Company may substitute money or U.S.
Government Obligations previously deposited pursuant to the terms of the
Indenture; (xviii) any additional restrictive covenants included for the benefit
of Holders of the Offered Debt Securities and any deletions or other changes to
the provisions of sections 801, 1006, 1007 and 1008 of the Indenture; (xix) any
additional Events of Default provided with respect to the Offered Debt
Securities and any deletions or other changes to the Events of Default contained
in the Indenture; (xx) whether the Offered Debt Securities will be issued in
whole or in part in the form of one or more Global Securities and, if so, the
Depositary for such Global Securities; and (xxi) any other terms of the Offered
Debt Securities. (Section 301)
Principal, premium, if any, and interest, if any, will be payable, and the
Debt Securities will be transferable, at the Place of Payment designated for
such Debt Securities, provided that payment of interest may, at the option of
the Company, be made by check mailed to the address of the Person entitled
thereto as it appears in the Security Register. (Sections 1001, 1002)
The Debt Securities will be issued only in fully registered form, without
coupons, and, unless otherwise indicated in the Prospectus Supplement or
Prospectus Supplements relating thereto, in denominations of $1,000 or any
integral multiple thereof. (Section 302) No service charge will be made for any
registration of transfer or exchange of the Offered Debt Securities, but the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith. (Section 305)
Debt Securities may be issued under the Indenture as Original Issue
Discount Securities to be offered and sold at a discount below their stated
principal amount. Federal income tax consequences and other special
considerations applicable to any such Original Issue Discount Securities
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<PAGE> 23
will be described in the Prospectus Supplement or Prospectus Supplements
relating thereto. "Original Issue Discount Security" means any security which
provides for an amount less than the principal amount thereof to be due and
payable upon a declaration of acceleration of the Maturity thereof. (Section
101)
The Debt Securities are obligations exclusively of the Company. Because the
operations of the Company are currently conducted primarily through
subsidiaries, the cash flow and the consequent ability to service debt of the
Company, including the Debt Securities, are dependent upon the earnings of its
subsidiaries and the distribution of those earnings to the Company or upon loans
or other payments of funds by those subsidiaries to the Company. Although the
Company exerts control over its subsidiaries as the ultimate parent entity of
each subsidiary, there can be no assurance that legal constraints or other
considerations will permit the Company's subsidiaries to make available to the
Company sufficient funds to satisfy the Company's payment obligations on the
Debt Securities. In addition, the Debt Securities will be effectively
subordinated to all liabilities, including trade payables, of the Company's
subsidiaries. Any right of the Company to receive assets of any of its
subsidiaries upon the liquidation or reorganization of the subsidiary (and the
consequent right of the holders of the Debt Securities to participate in those
assets) will be effectively subordinated to the claims of that subsidiary's
creditors (including trade creditors), except to the extent that the Company is
itself recognized as a creditor of such subsidiary.
Unless otherwise indicated in the Prospectus Supplement relating to the
Offered Debt Securities, the covenants contained in the Indenture and the
Offered Debt Securities would not necessarily afford Holders of the Offered Debt
Securities protection in the event of a highly leveraged or other transaction
involving the Company that may adversely affect Holders.
RESTRICTED AND UNRESTRICTED SUBSIDIARIES
The various restrictive provisions of the Indenture applicable to the
Company and its Restricted Subsidiaries do not apply to Unrestricted
Subsidiaries. The assets and indebtedness of Unrestricted Subsidiaries are not
consolidated with those of the Company and its Restricted Subsidiaries in
calculating Consolidated Net Tangible Assets under the Indenture and investments
by the Company or by its Restricted Subsidiaries in Unrestricted Subsidiaries
are excluded in computing Consolidated Net Tangible Assets. "Unrestricted
Subsidiaries" are those Subsidiaries which are designated as Unrestricted
Subsidiaries by the Board of Directors from time to time pursuant to the
Indenture (in each case, unless and until designated as Restricted Subsidiaries
by the Board of Directors pursuant to the Indenture) and any Subsidiary a
majority of the voting stock of which is owned by Unrestricted Subsidiaries.
"Restricted Subsidiaries" are all Subsidiaries other than Unrestricted
Subsidiaries. A "Wholly-owned Restricted Subsidiary" is a Restricted Subsidiary
all of the capital stock of which (except directors' qualifying shares) is owned
by the Company and its other Wholly-owned Restricted Subsidiaries. (Section 101)
An Unrestricted Subsidiary may not be designated a Restricted Subsidiary
unless the Company would be permitted immediately thereafter to incur additional
Secured Funded Debt under the terms of the Indenture. (Section 1008)
RESTRICTIONS ON SECURED FUNDED DEBT
The Company may not, and may not permit any Restricted Subsidiary to,
issue, assume, guarantee, incur or create any Secured Funded Debt without first
making effective provision whereby the Debt Securities having the benefit of the
restrictions on Secured Funded Debt shall be secured equally and ratably with
(or prior to) such Secured Funded Debt. The foregoing restriction does not
prevent (i) Secured Funded Debt of the Company or of a Restricted Subsidiary
owing to the Company or another Restricted Subsidiary, (ii) Secured Funded Debt
resulting from a Lien on property of the Company or any Restricted Subsidiary in
favor of the United States or any state or any instrumentality thereof to secure
partial, progress, advance or other payments, (iii) Secured Funded Debt secured
by a Lien on property of, or on any shares of stock or indebtedness of, any
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<PAGE> 24
Person at the time it becomes a Restricted Subsidiary, (iv) Secured Funded Debt
secured by a Lien on property, shares of stock or indebtedness existing at or
incurred within 120 days of the time of acquisition (including acquisition
through merger or consolidation) or lease thereof, (v) Secured Funded Debt
secured by a Lien incurred or assumed in connection with an issuance of revenue
bonds the interest on which is exempt from federal income tax pursuant to
Section 103(a) and related sections of the Internal Revenue Code of 1986, as
amended, (vi) as to any series of Offered Debt Securities, any Secured Funded
Debt existing on the date of issuance of the series, (vii) Secured Funded Debt
secured by a Lien on property of a corporation existing at the time such
corporation is merged or consolidated with the Company or a Restricted
Subsidiary or at the time of a sale, lease or other disposition of the
properties of a corporation as an entirety or substantially as an entirety to
the Company or a Restricted Subsidiary, (viii) Secured Funded Debt incurred to
purchase inventory, equipment or other property acquired or held by the Company
or any Restricted Subsidiary that is secured by a lien on the property so
acquired or to construct or improve any property of the Company or any
Restricted Subsidiary, (ix) Secured Funded Debt if immediately after its
incurrence the sum of the aggregate amount of all outstanding Secured Funded
Debt of the Company and its Restricted Subsidiaries incurred under this clause
(ix) together with all Attributable Debt of the Company and its Restricted
Subsidiaries in respect of Sale and Leaseback Transactions does not exceed 10%
of Consolidated Net Tangible Assets, and (x) any extension, renewal or
replacement (or successive extensions, renewals or replacements) in whole or in
part of any Secured Funded Debt described above. (Section 1006)
"Secured Funded Debt" means Funded Debt which is secured by a Lien upon any
assets of the Company or a Restricted Subsidiary. (Section 101)
"Funded Debt" means indebtedness of the Company or any Restricted
Subsidiary for borrowed money maturing more than 12 months after the time of
computation thereof, guaranties of indebtedness for borrowed money maturing more
than 12 months after the time of computation thereof of any other Person (except
guaranties in connection with the sale or discount of accounts receivable, trade
acceptances and other instruments arising in the ordinary course of business)
and indebtedness for borrowed money maturing more than 12 months after the time
of computation thereof secured by a Lien on property of the Company or any
Restricted Subsidiary, whether or not assumed by the Company or such Restricted
Subsidiary. Funded Debt does not include any amount in respect of obligations
under leases (or guaranties thereof), including Attributable Debt, or any
accrued liabilities with respect to any pension plans or post-retirement medical
plans, whether or not any such obligations would be included as liabilities on a
consolidated balance sheet of the Company and its Restricted Subsidiaries.
(Section 101)
"Attributable Debt" means, with respect to any Sale and Leaseback
Transaction (as defined below), (i) the balance sheet liability amount of any
capital lease entered into pursuant to such Sale and Leaseback Transaction
determined under generally accepted accounting principles, plus (ii) the present
value at the time of determination of (a) the amount of future minimum lease
payments under any operating lease entered into pursuant to such Sale and
Leaseback Transaction required to be disclosed by generally accepted accounting
principles, less (b) any amounts required to be paid on account of maintenance
and repairs, insurance, taxes, assessments, water rates and similar charges,
calculated using a discount rate equivalent to the Company's weighted average
cost of funds for borrowed money at the time of the commencement of each such
operating lease. (Section 101)
"Consolidated Net Tangible Assets" means the total amount of assets on a
consolidated balance sheet of the Company and its Restricted Subsidiaries (less
applicable reserves and other properly deductible items and after excluding any
investments made in Unrestricted Subsidiaries) after deducting (i) all
liabilities, including Attributable Debt and including all other amounts in
respect of obligations under leases (or guaranties thereof), which under
generally accepted accounting principles would be included on such balance
sheet, but excluding Funded Debt, accrued long-term liabilities with respect to
any pension plans or post-retirement medical plans, capital stock
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<PAGE> 25
and surplus, surplus reserves and provisions for deferred income taxes, and (ii)
goodwill, tradenames, trademarks, patents, unamortized debt discount and expense
and other intangible items. (Section 101)
"Lien" means any mortgage, pledge, lien, encumbrance, charge or security
agreement.
RESTRICTIONS ON SALE AND LEASEBACK TRANSACTIONS
Neither the Company nor any Restricted Subsidiary may enter into any Sale
and Leaseback Transaction involving any Principal Property unless (a) the
Company or such Restricted Subsidiary could create Secured Funded Debt on such
property pursuant to Section 1006 (see "Restriction on Secured Funded Debt"
above) in an amount at least equal to the Attributable Debt with respect to the
Sale and Leaseback Transaction without equally and ratably securing the Debt
Securities or (b) the Company, within 120 days, applies to the retirement of its
Secured Funded Debt an amount equal to the greater of (i) the net proceeds of
the sale of the Principal Property leased pursuant to such arrangement or (ii)
the fair value, as determined by the Company, of the Principal Property at the
time of the Sale and Leaseback Transaction. "Sale and Leaseback Transaction"
means any arrangement with any Person pursuant to which the Company or any
Restricted Subsidiary sells or transfers any Principal Property more than 120
days after the acquisition thereof or, if later, the completion of construction
and commencement of full operations thereof, to such Person and leases from such
Person the Principal Property so sold or transferred, other than a transaction
(a) between the Company and a Restricted Subsidiary or between Restricted
Subsidiaries, or (b) involving the taking back of a lease for a period for three
years or less. (Section 101) "Principal Property" is defined as any real
property of the Company or any Restricted Subsidiary, and any equipment located
at or comprising a part of any such property, having a net book value, as of the
date of determination, in excess of the greater of $20,000,000 and 5% of
Consolidated Net Tangible Assets of the Company. (Section 101)
RESTRICTIONS ON MERGER AND SALE OF ASSETS
The Company may not consolidate with or merge into any other Person, or
transfer all or substantially all of its properties and assets to another Person
or group of affiliated Persons, unless (i) either the Company shall be the
continuing corporation or the Person formed by or resulting from any such
consolidation or into which the Company is merged or which shall have received
the transfer of such properties and assets) shall be a corporation, partnership
or trust organized and validly existing under the laws of the United States or
any state thereof or the District of Columbia, and shall expressly assume all
obligations of the Company under the Indenture and the Debt Securities and the
performance and observance of the covenants of the Indenture, (ii) immediately
after giving effect to such transaction and the assumption of the Debt
Securities, no Event of Default and no event which, after notice or lapse of
time or both, would become an Event of Default, shall have occurred and be
continuing, and (iii) except in the case of a merger or consolidation of the
Company and a Restricted Subsidiary, either (a) the Holders of a majority in
aggregate principal amount of the Outstanding Debt Securities of each series
shall have consented thereto or (b) immediately thereafter, under the terms of
Section 1006(9) of the Indenture, the successor corporation would be permitted
to incur at least $1.00 of Secured Funded Debt without first making effective
provision whereby the Debt Securities shall be secured equally and ratably with
(or prior to) such Secured Funded Debt. (Section 801)
The Holders of at least a majority in principal amount of the Outstanding
Debt Securities of any series may on behalf of the Holders of the Debt
Securities of that series waive, insofar as that series is concerned, compliance
by the Company with certain restrictive provisions of the Indenture. (Section
1009)
17
<PAGE> 26
EVENTS OF DEFAULT
The Indenture defines an Event of Default with respect to any series of
Debt Securities as being any one of the following events: (i) default in any
payment of interest on such series, and the continuance of such default for a
period of 30 days; (ii) default in any payment of principal of (or premium, if
any, on) such series when due; (iii) default in the deposit of any sinking fund
payment with respect to such series when due; (iv) default for 90 days after
appropriate notice in performance, or breach, of any other covenant or warranty
in the Indenture (other than a covenant or warranty included in the Indenture
solely for the benefit of a series of Debt Securities other than that series);
(v) default under any bond, debenture, note or other evidence of indebtedness
for money borrowed by the Company (including a default with respect to Debt
Securities other than that series) or under any mortgage, indenture or
instrument under which any such indebtedness is issued or secured (including the
Indenture), which default results in indebtedness in excess of $15,000,000 in
aggregate principal amount becoming or being declared due and payable prior to
the date on which it would otherwise have become due and payable, without such
acceleration having been annulled or rescinded (or if such indebtedness is not
discharged) within 20 days after written notice as provided in the Indenture;
(vi) certain events of bankruptcy, insolvency or reorganization; or (vii) any
other Event of Default provided with respect to Debt Securities of that series.
(Section 501) In case an Event of Default shall occur and be continuing with
respect to any series of Debt Securities, the Trustee or the Holders of not less
than 25% in principal amount of the Outstanding Debt Securities of that series
may declare the principal amount of such series (or, if the Debt Securities of
that series are Original Issue Discount Securities, such portion of the
principal amount as may be specified in the terms of that series) to be due and
payable. (Section 502) Any Event of Default with respect to a particular series
of Debt Securities may be waived by the Holders of a majority in principal
amount of the Outstanding Debt Securities of such series, except (a) in each
case a failure to pay principal of, premium, if any, or interest on such Debt
Security or (b) in respect of a covenant or provision which under the Indenture
cannot be modified or amended without the consent of the Holder of each
Outstanding Debt Security of that series affected. (Section 513)
Reference is made to the Prospectus Supplement or Prospectus Supplements
relating to each series of Offered Debt Securities which are Original Issue
Discount Securities for the particular provisions relating to acceleration of
the Maturity of a portion of the principal amount of such Original Issue
Discount Securities upon the occurrence of an Event of Default and the
continuation thereof.
The Indenture requires the Company to file annually with the Trustee an
Officers' Certificate as to the absence of certain defaults under the terms of
the Indenture. (Section 1004) The Indenture provides that the Trustee may
withhold notice to the Holders of the Debt Securities of any default (except in
payment of principal, premium, if any, or interest or any sinking fund
installment) if it considers it in the interest of the Holders of the Debt
Securities to do so. (Section 602)
Subject to the provisions of the Indenture relating to the duties of the
Trustee in case an Event of Default shall occur and be continuing, the Indenture
provides that the Trustee shall be under no obligation to exercise any of its
rights or powers under the Indenture at the request, order or direction of the
Holders of the Debt Securities unless such Holders shall have offered to the
Trustee reasonable indemnity. (Section 603) Subject to such provisions for
indemnification and certain other rights of the Trustee, the Indenture provides
that the Holders of a majority in principal amount of the Outstanding Debt
Securities of any series affected shall have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee or exercising any trust or power conferred on the Trustee with respect
to the Debt Securities of such series. (Section 512)
No Holder of any Debt Security of any series will have any right to
institute any proceedings with respect to the Indenture or for the appointment
of a receiver or for any remedy thereunder, unless such Holder shall have
previously given to the Trustee written notice of a continuing Event of Default
18
<PAGE> 27
with respect to Debt Securities of that series and unless also the Holders of at
least 25% in aggregate principal amount of the Outstanding Debt Securities of
that series shall have made written request, and offered reasonable indemnity,
to the Trustee to institute such proceedings as trustee, the Trustee shall have
failed to institute such proceedings within 60 days thereafter and the Trustee
shall not have received during such 60-day period from the Holders of a majority
in principal amount of the Outstanding Debt Securities of that series a
direction inconsistent with such request. (Section 507) However, the Holder of
any Debt Security will have an absolute right to receive payment of the
principal of, premium, if any, and interest on such Debt Security on or after
the due dates expressed in such Debt Security and to institute suit for the
enforcement of any such payment. (Section 508)
DEFEASANCE AND DISCHARGE
Defeasance of Certain Covenants and Certain Events of Default. Unless the
terms of the Debt Securities of any series provide to the contrary, the Company
may omit to comply with certain restrictive covenants in Section 801
(Consolidation, Merger, Conveyance, Transfer or Lease), Section 1006 (Limitation
on Secured Funded Debt), Section 1007 (Limitation on Sale and Leasebacks),
Section 1008 (Limitation on Designation of Unrestricted Subsidiary as Restricted
Subsidiary), and the events described in clauses (iv) through (vii) under
"Events of Default" above shall not be deemed to be Events of Default under the
Indenture with respect to such series, if (a) the Company deposits with the
Trustee, in trust, money and/or U.S. Government Obligations which through the
payment of interest and principal in respect thereof in accordance with their
terms will provide money in an amount sufficient to pay and discharge (i) each
installment of principal (and premium, if any) and interest on the Outstanding
Debt Securities of such series on the Stated Maturity of such installment of
principal or interest and (ii) any mandatory (or, if applicable, optional)
sinking fund payments applicable to the Offered Debt Securities of such series
on the day on which such payments are due and payable, (b) no Event of Default
or event (including such deposit) which with notice or lapse of time would
become an Event of Default with respect to the Debt Securities of such series
shall have occurred and be continuing on the date of such deposit and (c) the
Company delivers to the Trustee an Opinion of Counsel, satisfying the
requirements of the Indenture, to the effect that the Holders of the Debt
Securities of such series will not recognize income, gain or loss for Federal
income tax purposes as a result of such defeasance and will be subject to
Federal income tax on the same amount, in the same manner and at the same times
as would have been the case if such defeasance had not occurred. (Section 403)
In such event, the obligations of the Company under the Indenture and the Debt
Securities other than with respect to the covenants referred to above and the
Events of Default other than the Events of Default referred to above shall
remain in full force and effect. In the alternative, upon compliance with the
provisions of Section 403 with respect to any series of Debt Securities, the
Company may elect to be deemed to have paid and discharged the entire
indebtedness represented by the Offered Debt Securities of such series and to
have satisfied its obligations under the Indenture, other than the rights of
Holders to receive payment from the trust funds held by the Trustee and the
Company's obligation to provide for the registration of Offered Debt Securities,
to replace mutilated, destroyed, lost and stolen Offered Debt Securities, to
apply properly any money held in trust by the Company and to maintain an office
where Offered Debt Securities may be presented for payment.
In the event the Company exercises its option to omit compliance with
certain covenants of the Indenture with respect to the Debt Securities of any
series as described above and the Debt Securities of such series are declared
due and payable because of the occurrence of any Event of Default other than
Events of Default described in clauses (iv) through (vii) under "Events of
Default" above, the amount of money and/or U.S. Government Obligations on
deposit with the Trustee will be sufficient to pay amounts due on the Debt
Securities of such series on their Stated Maturity or Redemption Date, but may
not be sufficient to pay amounts due on such Debt Securities at the time of the
acceleration resulting from such Event of Default.
19
<PAGE> 28
Substitution of Collateral. If the terms of a series of Debt Securities so
provide, the Company will be permitted at any time to withdraw any money or U.S.
Government Obligations deposited pursuant to the foregoing defeasance
provisions, provided that the Company in substitution therefor simultaneously
deposits money and/or U.S. Government Obligations which would then be sufficient
to satisfy the Company's payment obligations in respect of the Debt Securities
in the manner contemplated by such defeasance provisions.
PLAN OF DISTRIBUTION
The Company may sell the Debt Securities in and/or outside the United
States (i) through underwriters, (ii) through dealers acting as principal or as
agent, (iii) directly to a limited number of purchasers or to a single
purchaser, or (iv) through agents. The applicable Prospectus Supplement with
respect to the Offered Debt Securities will set forth the terms of the offering
of such Offered Debt Securities, including the name or names of any
underwriters, the purchase price of such Offered Debt Securities and the
proceeds to the Company from such sale, any delayed delivery arrangements, any
underwriting discounts and other items constituting underwriters' compensation,
the initial public offering price and any discounts or concessions allowed or
reallowed or paid to dealers. The initial public offering price and any
discounts or concessions allowed or reallowed or paid to dealers may be changed
from time to time.
If underwriters are used in the sale, the Offered Debt Securities will be
acquired by the underwriters for their own account and may be resold from time
to time in one or more transactions, including negotiated transactions, at a
fixed public offering price or at varying prices determined at the time of sale.
The Offered Debt Securities may be offered to the public either through
underwriting syndicates represented by one or more managing underwriters or
directly by one or more firms acting as underwriters. The underwriter or
underwriters with respect to a particular underwritten offering of Offered Debt
Securities will be named in the Prospectus Supplement relating to such offering
and, if an underwriting syndicate is used, the names of the managing underwriter
or underwriters will be set forth on the cover of such Prospectus Supplement.
Unless otherwise set forth in a Prospectus Supplement, the obligations of the
underwriters to purchase the Offered Debt Securities covered thereby will be
subject to conditions precedent, and the underwriters will be obligated to
purchase all such Offered Debt Securities if any are purchased.
If dealers are utilized in the sale of the Offered Debt Securities, the
Company will sell such Offered Debt Securities to the dealers acting as
principals or agents. The dealers may then resell such Offered Debt Securities
to the public at varying prices to be determined by such dealers at the time of
resale. The terms of the transaction will be set forth in the Prospectus
Supplement relating thereto to the extent required by the Securities Act.
The Debt Securities may be sold directly by the Company or through agents
designated by the Company from time to time. Any agent involved in the offer or
sale of the Offered Debt Securities will be named, and any commissions payable
by the Company to such agent will be set forth, in the Prospectus Supplement
relating thereto to the extent required by the Securities Act. Unless otherwise
indicated in the Prospectus Supplement, any such agent will be acting on a best
efforts basis for the period of its appointment.
The Debt Securities may be sold directly by the Company to institutional
investors or others, who may be deemed to be underwriters within the meaning of
the Securities Act with respect to any resale thereof. The terms of any such
sales, including the terms of any bidding or auction process, will be described
in the Prospectus Supplement relating thereto.
If so indicated in the applicable Prospectus Supplement, the Company will
authorize agents, underwriters or dealers to solicit offers from certain types
of institutions to purchase Offered Debt Securities from the Company at the
public offering price set forth in the Prospectus Supplement pursuant to delayed
delivery contracts providing for payment and delivery on a specific date in the
20
<PAGE> 29
future. Such contracts will be subject only to those conditions set forth in the
applicable Prospectus Supplement, and the Prospectus Supplement will set forth
the commission payable for solicitation of such contracts.
Agents, dealers and underwriters may be entitled under agreements entered
into with the Company to indemnification by the Company against certain civil
liabilities, including liabilities under the Securities Act, or to contribution
with respect to payments which such agents, dealers or underwriters may be
required to make in respect thereof. Agents, dealers and underwriters may be
customers of, engage in transactions with, or perform services for the Company
in the ordinary course of business or otherwise.
The Debt Securities may or may not be listed on a national securities
exchange. No assurances can be given that there will be an active trading market
for any of the Debt Securities.
EXPERTS
The financial statements and schedules of the Company included in the
Company's Annual Report on Form 10-K for the year ended January 1, 1995 and
incorporated by reference herein have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their reports with respect
thereto, and are incorporated by reference herein in reliance upon the authority
of said firm as experts in giving said reports. Reference is made to said report
with respect to the Company's financial statements, which includes an
explanatory paragraph with respect to the change in the methods of accounting
for postretirement benefits other than pensions and for income taxes in 1993 and
the method of accounting for marketable investments in 1994.
Future financial statements of the Company and the reports of Arthur
Andersen LLP also will be incorporated by reference in this Prospectus in
reliance upon the authority of that firm as experts in giving those reports to
the extent said firm has audited those financial statements and consented to the
use of their reports thereon.
21
<PAGE> 30
---------------------------------------------------------
---------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION AND REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY SECURITIES OTHER THAN THE SECURITIES DESCRIBED IN THIS PROSPECTUS
SUPPLEMENT OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH
SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL.
NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR ANY
SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT
THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR
THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO
THE DATE OF SUCH INFORMATION.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
Use of Proceeds......................... S-3
Results for First Six Months of 1995.... S-3
Description of Notes.................... S-6
Underwriting............................ S-8
Legal Matters........................... S-8
PROSPECTUS
Available Information................... 2
Incorporation of Certain Documents by
Reference............................. 2
The Company............................. 3
Use of Proceeds......................... 7
Summarized Consolidated Financial Data.. 7
Management's Discussion and Analysis of
Financial Condition and Results of
Operations............................ 8
Description of Debt Securities.......... 13
Plan of Distribution.................... 20
Experts................................. 21
</TABLE>
---------------------------------------------------------
---------------------------------------------------------
---------------------------------------------------------
---------------------------------------------------------
$
LOGO
% NOTES DUE
-----------------------------------------
PROSPECTUS SUPPLEMENT
-----------------------------------------
GOLDMAN, SACHS & CO.
MERRILL LYNCH & CO.
---------------------------------------------------------
---------------------------------------------------------
<PAGE> 31
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee.............. $ 51,725
Blue Sky fees and expenses....................................... 10,000*
Printing......................................................... 50,000*
Legal fees and expenses.......................................... 125,000*
Accounting fees and expenses..................................... 85,000*
Rating agencies' fees............................................ 120,000*
Trustees' fees and expenses...................................... 5,000*
Miscellaneous.................................................... 53,275*
--------
Total.................................................. $500,000*
=========
</TABLE>
---------------
* Estimated
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 67, Chapter 156B of the General Laws of the Commonwealth of
Massachusetts (the "Massachusetts Business Corporation Law") and Article V,
Section 9 of the Registrant's By-Laws, to which reference is hereby made,
contain provisions authorizing indemnification by the Registrant of directors,
officers, employees or agents against certain liabilities and expenses which
they may incur as directors, officers, employees or agents or the Registrant or
of certain other entities. Section 67, Chapter 156B of the Massachusetts
Business Corporation Law provides that the indemnification of directors,
officers, employees and agents of a corporation and persons who serve at the
corporation's request as directors, officers, employees and agents of another
organization may be provided to whatever extent as shall be specified by (i) the
Articles of Organization of the corporation or (ii) a By-law adopted by the
stockholders or (iii) a vote adopted by the holders of a majority of the shares
of stock entitled to vote on the election of directors. Unless otherwise
provided in the Articles of Organization or the By-laws, the indemnification of
any persons described above who are not directors of the corporation may be
provided by the corporation to the extent authorized by the directors. Such
indemnification may include payment by the corporation of expenses incurred in
defending a civil or criminal action or proceeding prior to the final
disposition of such action or proceeding, upon receipt of an undertaking by the
indemnified person to repay such payment if he shall be adjudicated to be not
entitled to indemnification under Section 67 of the Massachusetts Business
Corporation Law. Any indemnification may be provided although the person to be
indemnified is no longer an officer, director, employee or agent of the
corporation or of such other organization. Indemnification may not be provided
for any person with respect to any matter as to which that person shall have
been adjudicated in any proceeding to not have acted in good faith in the
reasonable belief that his action was in the best interest of the corporation.
Section 65 of the Massachusetts Business Corporation Law provides a
limitation on the imposition of liability under other sections of the
Massachusetts Business Corporation Law. Under this Section, a director, officer
or incorporator of a corporation is to perform his duties in good faith and in a
manner he reasonably believes to be in the best interests of the corporation and
with such care as an ordinarily prudent person in a like position would use
under similar circumstances. Such director, officer or incorporator is entitled
to rely on information, opinions, reports or records, including financial
statements, books of account and other financial records which are prepared by
or presented by or under the supervision of (1) one or more officers or
employees of the corporation whom the director, officer or incorporator
reasonably believes to be reliable and competent in the matters presented, or
(2) counsel, public accountants, or other persons as to
II-1
<PAGE> 32
matters which the director, officer or incorporator reasonably believes to be
within such a person's professional expert competence, or (3) in the case of a
director, a duly constituted committee of the board upon which he does not
serve, as to matters within its delegated authority, which committee the
director reasonably believes to merit confidence. If a director, officer or
incorporator performs his duties in the manner that is set forth above, that
fact shall be an absolute defense to any claim asserted against him except as
expressly provided by statute.
Section 13 of the Massachusetts Business Corporation Law provides that the
Articles of Organization of a corporation may contain a provision eliminating or
limiting the personal liability of a director to the corporation or its
stockholders for monetary damages for breach of a fiduciary duty as a director;
notwithstanding any provision of law imposing such liability; provided, however,
that such provision shall not eliminate or limit the liability of a director (i)
for any breach of the director's duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 61 or
62 of the Massachusetts Business Corporation Law or (iv) for any transaction
from which the director derived an improper personal benefit. Article Six of the
Restated Articles of Organization of the Registrant contains a provision
consistent with Section 13 of the Massachusetts Business Corporation Law and
provides that to the fullest extent permitted by the Massachusetts Business
Corporation Law, a director of the Registrant shall not be personally liable to
the Registrant or its stockholders for monetary damages for breach of fiduciary
duty as a director, notwithstanding any provision of law imposing such
liability.
Section 9 of Article V of the By-laws of the Registrant contains provisions
relating to the indemnification of directors and officers of the Registrant
which are consistent with Section 67 of the Massachusetts Business Corporation
Law. This Section provides that no indemnification will be provided to any
person who was or is a director or officer with respect to any matter as to
which such person shall have been finally adjudicated in any proceeding not to
have acted in good faith in the reasonable belief that his action was in the
best interest of the corporation; nor shall indemnification be provided where
the corporation is required or has undertaken to submit to a court the question
of whether or not indemnification by it is against public policy and it has been
finally adjudicated that such indemnification is against public policy;
provided, however, that, prior to such final adjudication, the corporation may
compromise and settle any such claims and liabilities and pay such expenses, if
such settlement or payment, or both, appears, in the judgment of a majority of
those members of the Board of Directors who are not directly involved in such
matters, to be in the best interest of the corporation as evidenced by a
resolution to that effect adopted after receipt by the corporation of a written
opinion of counsel, for the corporation that, based upon the facts available to
such counsel, such person has not acted in a manner that would prohibit
indemnification.
Section 67 of the Massachusetts Business Corporation Law also contains
provisions authorizing a corporation to obtain insurance on behalf of any
director, officer, employee or agent of the corporation against liabilities,
whether or not the corporation would have the power to indemnify against such
liabilities. The Registrant maintains directors' and officers' liability and
company reimbursement liability insurance. Subject to certain deductibles, such
insurance will pay up to $50,000,000 per year on claims for errors and omissions
against the Registrant's directors and officers and will reimburse the
Registrant for amounts paid to indemnify directors and officers against the
costs of such claims pursuant to the Registrant's By-Laws.
The Underwriting Agreement filed as Exhibit 1.1 to this Registration
Statement provides for the indemnification by the Underwriters of directors and
officers of the Registrant against certain liabilities.
II-2
<PAGE> 33
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT
----------- -------------------------------------------------------------------------------
<C> <S>
1.1* Form of Underwriting Agreement
4.1* Form of Indenture
5.1* Opinion of Murray Gross, Esq.
12.1 Computation of Ratio of Earnings to Fixed Charges
23.1 Consent of Arthur Andersen LLP
23.2* Consent of Murray Gross, Esq. (included in Exhibit 5.1)
23.3* Consent of Hale and Dorr
24.1* Powers of Attorney
25.1* Statement on Form T-1 of Eligibility and Qualification of Trustee
</TABLE>
---------------
* Previously filed.
ITEM 17. UNDERTAKINGS
The Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising after
the effective date of this Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this Registration Statement; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in this Registration Statement
or any material change to such information in this Registration
Statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), that are incorporated by reference in this
Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in this Registration Statement shall be deemed to be a
new registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
II-3
<PAGE> 34
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described in Item 15 above, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
II-4
<PAGE> 35
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Amendment to
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in Wellesley, Massachusetts on this 15th day of September,
1995.
EG&G, INC.
By: /s/ MURRAY GROSS
------------------------------------
Murray Gross
Vice President, General Counsel
and Clerk
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to Registration Statement has been signed below on this 15th day of September,
1995 by the following persons in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLE
------------------------------------------ ---------------------------------------
<S> <C>
JOHN M. KUCHARSKI* Chairman of the Board, President
------------------------------------------ and Chief Executive Officer
John M. Kucharski (principal executive officer)
THOMAS J. SAUSER* Senior Vice President and
------------------------------------------ Chief Financial Officer
Thomas J. Sauser (principal financial officer)
JOHN F. ALEXANDER, II* Vice President and
------------------------------------------ Corporate Controller
John F. Alexander, II (principal accounting officer)
Director
------------------------------------------
Robert F. Goldhammer
JOHN B. GRAY* Director
------------------------------------------
John B. Gray
KENT F. HANSEN* Director
------------------------------------------
Kent F. Hansen
GRETA MARSHALL* Director
------------------------------------------
Greta Marshall
</TABLE>
II-5
<PAGE> 36
<TABLE>
<CAPTION>
SIGNATURES TITLE
------------------------------------------ ---------------------------------------
<S> <C>
WILLIAM F. POUNDS* Director
------------------------------------------
William F. Pounds
SAMUEL RUBINOVITZ* Director
------------------------------------------
Samuel Rubinovitz
JOHN LARKIN THOMPSON* Director
------------------------------------------
John Larkin Thompson
G. ROBERT TOD* Director
------------------------------------------
G. Robert Tod
*By: /s/ MURRAY GROSS
-------------------------------------
Murray Gross
Attorney-in-Fact
</TABLE>
II-6
<PAGE> 1
EXHIBIT 12.1
EG&G, INC. AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
FISCAL YEARS ENDED SIX MONTHS ENDED
-------------------------------------------------------------- ---------------------
DEC. 30, DEC. 29, JAN. 3, JAN. 2, JAN. 1, JULY 3, JULY 2,
1990 1991 1993 1994 1995 1994 1995
-------- -------- -------- --------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS WHERE APPLICABLE)
Earnings:
Income (loss) from continuing
operations before income
taxes........................ $ 67,022 $ 80,828 $ 66,702 $ 88,492 $ (17,123) $ 27,233 $ 35,741
Add (subtract) adjustments for
investments accounted for
under the equity method...... (230) 2,885 (232) (814) (248) (176) (396)
Add fixed charges:
Interest on indebtedness..... 10,528 8,833 7,241 6,264 5,419 2,110 3,560
Portion of rents
representative of the
interest factor............ 5,933 6,533 6,867 6,233 6,433 3,574 3,661
-------- -------- -------- --------- --------- -------- --------
Income (loss) as adjusted........ $ 83,253 $ 99,079 $ 80,578 $ 100,175 $ (5,519) $ 32,741 $ 42,566
======== ======== ======== ========= ========= ======== ========
Fixed charges:
Interest on indebtedness..... $ 10,528 $ 8,833 $ 7,241 $ 6,264 $ 5,419 $ 2,110 $ 3,560
Portion of rents
representative of the
interest factor............ 5,933 6,533 6,867 6,233 6,433 3,574 3,661
-------- -------- -------- --------- --------- -------- --------
Total fixed charges.............. $ 16,461 $ 15,366 $ 14,108 $ 12,497 $ 11,852 $ 5,684 $ 7,221
======== ======== ======== ========= ========= ======== ========
Ratio of earnings to fixed
charges........................ 5.06x 6.45x 5.71x 8.02x * 5.76x 5.89x
======== ======== ======== ========= ======== ========
</TABLE>
---------------
* Earnings in the fiscal year ended January 1, 1995 were inadequate to cover
fixed charges by $17.4 million. Income (loss) from continuing operations
before income taxes for this fiscal year includes a goodwill write-down of
$40.3 million and restructuring charges of $30.4 million. Without this
write-down and these charges, the ratio of earnings to fixed charges would
have been 5.50x.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this Amendment No. 1 to this registration statement on Form S-3
(File No. 33-59675)of our reports dated January 25, 1995 included in EG&G,
Inc.'s Annual Report on Form 10-K for the fiscal year ended January 1, 1995 and
to all references to our Firm included in the Amendment No. 1 to this
Registration Statement.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
September 13, 1995
