UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported) July 23, 1997
EG&G, Inc.
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(Exact name of registrant as specified in its charter)
Massachusetts 1-5075 04-2052042
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(State or other (Commission File Number) (IRS Employer
jurisdiction of Identification No.)
incorporation)
45 William Street, Wellesley, Massachusetts 02181
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(Address of principal executive offices) (Zip Code)
(617) 237-5100
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(Registrant's telephone number, including area code)
Not applicable
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(Former name or former address, if changed since last report)
<PAGE>
Item 5. Other Events
On July 23, 1997, the Company issued a press release reporting on its financial
results for the second quarter of 1997 (see attached press release).
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
EG&G, Inc.
By /s/ John F. Alexander, II
----------------------------
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
Date: July 23, 1997
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EXHIBIT INDEX
Exhibit Number Exhibit Description
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(99) Press Release dated July 23, 1997
<PAGE>
FOR IMMEDIATE RELEASE For further information contact:
- --------------------- Deborah S. Lorenz, EG&G, Inc.
23 July 1997 Tel. (617) 431-4306
NYSE Symbol: EGG
Website: www.egginc.com
EG&G REPORTS SECOND QUARTER OPERATING EARNINGS OF
$.22 PER SHARE BEFORE A NON-CASH CHARGE OF $28.2 MILLION
Wellesley, Massachusetts.......EG&G, Inc., announced today that it has taken a
non-cash charge of $28.2 million pre-tax, $23.5 million after-tax or $.51 per
share for the second quarter. As a result of the charge, EG&G reported a second
quarter 1997 operating loss from continuing operations of $10.2 million,
compared to $21.4 million in operating income reported for the same period last
year. Sales from continuing operations increased to $368.7 million for the
second quarter as compared to $355.9 million for the second quarter of 1996. The
Company reported a second quarter loss from continuing operations of $.29 per
share. Net income from continuing operations before the non-recurring charge was
$.22 per share, which compares to $.30 per share for the same period in 1996.
The charge was prompted primarily by the failure of the Company's IC Sensors
division to meet its operating plan. This led to the development of a revised
operating plan to restructure and stabilize the business, which resulted in an
impairment charge of $26.7 million in the second quarter.
<PAGE>
EG&G REPORTS SECOND QUARTER OPERATING EARNINGS OF
$.22 PER SHARE BEFORE A NON-CASH CHARGE OF $28.2 MILLION
23 July 1997
Page 2 of 6
Commenting on the financial performance for the remainder of the year, EG&G
Chairman John M. Kucharski indicated that the Company's performance will
continue to improve in the third quarter and could well approach the $.30 level
of the third quarter last year and pointed to the substantial positive
seasonality which occurs each year in the fourth quarter. He also indicated that
if a series of divestitures of non-strategic businesses are completed by year
end, the second quarter charge could be more than offset by the gains from the
divestitures.
The Instruments business segment reported second quarter 1997 sales of $72.4
million compared to $78.8 million in the same period in 1996, and operating
income of $5.8 million versus $9.5 million in second quarter 1996. The
performance reflects a general softness in the European economy, especially in
Germany, as well as the absence of revenue from a divested unit. During the
quarter, 39 of the Company's explosives-detection systems were placed in Hong
Kong for use during the changeover ceremonies and subsequently in that city's
new airport.
During the second quarter, sales of the Mechanical Components segment rose to
$74.3 million from $69.2 million a year earlier. The increased sales levels came
largely from the aerospace business. The cost of consolidation of certain
operations as well as an unplanned warranty expense (totaling $1.5 million)
caused operating income to be off slightly to $7.2 million from $8.1 million in
1996.
In the Optoelectronics segment, sales were $65.8 million compared to $68.2
million in the comparable 1996 quarter, while operating income increased to $1.4
million before the charge. This compares to operating income of $0.9 million in
second quarter 1996. Significant operating problems at IC Sensors continued into
the second quarter, resulting in the business continuing to report a loss. As a
result, the Company recorded a charge of $26.7 million in the second quarter,
for a write-down of goodwill of $13.6 million and fixed assets of $13.1 million.
<PAGE>
EG&G REPORTS SECOND QUARTER OPERATING EARNINGS OF
$.22 PER SHARE BEFORE A NON-CASH CHARGE OF $28.2 MILLION
23 July 1997
Page 3 of 6
EG&G's Technical Services segment reported sales of $156.3 million compared to
$139.7 million in the 1996 second quarter. Operating income was $9.8 million
compared to $9.1 million in 1996 excluding a charge of $1.5 million to write off
goodwill of the Environmental Services Division as a result of its continuing
losses.
Technical Services benefited from increased demand for lubricant and automotive
structural testing services and revenue from a communications systems project.
The operating income level for the automotive testing business remained on plan,
while award fees from the operation of a chemical demilitarization facility were
below plan. In a recent development, EG&G was informed that "NASA and the Air
Force are seeking approval from their respective headquarters to consolidate and
recompete base operations requirements at Kennedy Space Center, Cape Canaveral
Air Station and certain functions at Patrick Air Force Base in an effort to
eliminate duplication and reduce costs. If approved, it is anticipated that any
resultant contract would be effective October 1, 1998."
Forward-Looking Information
All statements contained herein that refer to a time after June 29, 1997,
including the words expect, believe and plan, or statements referring to
improvements in performance during successive quarters, goals, the future or
future actions, continuing actions, trends, strategies, initiatives, challenges
or opportunities, or which otherwise are not purely historical, are
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995 and involve risks and uncertainties. It is
important to note that actual results could differ materially from those in the
forward-looking statements.
<PAGE>
EG&G REPORTS SECOND QUARTER OPERATING EARNINGS OF
$.22 PER SHARE BEFORE A NON-CASH CHARGE OF $28.2 MILLION
23 July 1997
Page 4 of 6
Factors Affecting Future Performance
Future performance of the Company's three product segments will be highly
dependent on the technological success, market acceptance and competitive
position of new program initiatives, including the amorphous silicon project and
the advanced micromachined sensors technology platform. Continued success in
improving operational efficiency will be required to offset increasing price
pressure in most of the Company's product offerings. Other factors affecting
future performance include the ability to operate with reducing backlogs due to
shorter customer order cycles, resolve pricing issues with selected customers
and attract and retain key personnel in a number of areas. The results of the
Optoelectronics segment are dependent on management's ability to restore IC
Sensors to profitability, requiring introduction of new products, improvement in
manufacturing yields and implementation of cost reductions, including the
successful transfer of assembly activities to lower-cost geographies.
In the Technical Services segment, future performance will continue to be
impacted by a highly competitive procurement environment, continuing changes in
federal budget priorities and rapidly changing customer requirements. "NASA and
the Air Force are seeking approval from their respective headquarters to
consolidate and recompete base operations requirements at the Kennedy Space
Center, Cape Canaveral Air Station and certain functions at Patrick Air Force
Base in an effort to eliminate duplication and reduce costs. If approved, it is
anticipated that any resultant contract would be effective October 1, 1998."
Movements in foreign exchange rates could affect operating results. Effective
tax rates in the future could be affected by changes in the geographical
distribution of income, utilization of net operating loss carry-forwards,
repatriation costs, and resolution of outstanding tax audit issues.
EG&G is a global technology company that provides complete systems, as well as
components to automotive, medical, aerospace, photography and other industries,
and delivers skilled support services to government and industrial customers.
Based in Wellesley, Massachusetts, EG&G has annual sales of more than $1.4
billion and more than 14,000 employees.
<PAGE>
CONSOLIDATED STATEMENT OF OPERATIONS
EG&G, Inc. and Subsidiaries
<TABLE>
<CAPTION>
Second Quarter Ended Six Months Ended
-------------------- ----------------
(In thousands except per share data) June 29, 1997 June 30, 1996 June 29, 1997 June 30, 1996
- ------------------------------------ ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Sales $368,672 $355,907 $715,678 $702,698
Costs and Expenses:
Cost of sales 278,988 260,080 538,627 516,461
Research and development expenses 11,919 11,414 23,073 22,375
Selling, general and administrative
expenses 59,799 62,999 119,457 122,523
Asset impairment charge 28,200 - 28,200 -
-------- -------- -------- --------
Total Costs and Expenses 378,906 334,493 709,357 661,359
-------- -------- -------- --------
Operating Income (Loss) From
Continuing Operations (10,234) 21,414 6,321 41,339
Other Income (Expense), Net (2,618) (1,059) (4,676) (2,954
-------- -------- -------- --------
Income (Loss) From Continuing
Operations Before Income taxes (12,852) 20,355 1,645 38,385
Provision for Income Taxes 538 6,212 5,467 12,360
-------- -------- -------- --------
Income (Loss) From Continuing
Operations (13,390) 14,143 (3,822) 26,025
Income From Discontinued Operations,
Net of Income Taxes 1,545 1,496 2,003 2,396
-------- -------- -------- --------
Net Income (Loss) $(11,845) $ 15,639 $ (1,819) $ 28,421
======== ======== ======== ========
Earnings (Loss) Per Share:
Continuing Operations $(.29) $ .30 $(.08) $ .55
Discontinued Operations .03 .03 .04 .05
----- ----- ----- -----
Net Income (Loss) $(.26) $ .33 $(.04) $ .60
===== ===== ===== =====
Weighted Average Shares of
Common Stock Outstanding 45,888 47,424 46,054 47,527
</TABLE>
All figures shown are subject to year-end audit.
Page 5 of 6
<PAGE>
SALES AND OPERATING INCOME (LOSS) FROM CONTINUING OPERATIONS
BY INDUSTRY SEGMENT
EG&G, Inc. and Subsidiaries
<TABLE>
<CAPTION>
Second Quarter Ended Six Months Ended
-------------------- ----------------
(In thousands) June 29, 1997 June 30, 1996 June 29, 1997 June 30, 1996
- -------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Instruments
Sales $ 72,350 $ 78,776 $144,024 $152,357
Operating Income 5,780 9,457 11,915 16,265
8.0% 12.0% 8.3% 10.7%
Mechanical Components
Sales $ 74,298 $ 69,240 $146,032 $137,781
Operating Income 7,248 8,130 14,863 15,357
9.8% 11.7% 10.2% 11.1%
Optoelectronics
Sales $ 65,767 $ 68,205 $124,872 $134,084
Operating Income Before Impairment 1,408 864 1,699 4,979
2.1% 1.3% 1.4% 3.7%
Asset Impairment Charge (26,700) - (26,700) -
Operating Income (Loss) After Impairment (25,292) 864 (25,001) 4,979
Technical Services
Sales $156,257 $139,686 $300,750 $278,476
Operating Income Before Impairment 9,834 9,113 18,155 17,563
6.3% 6.5% 6.0% 6.3%
Asset Impairment Charge (1,500) - (1,500) -
Operating Income After Impairment 8,334 9,113 16,655 17,563
General Corporate Expenses $ (6,304) $ (6,150) $(12,111) $(12,825)
Continuing Operations
Sales $368,672 $355,907 $715,678 $702,698
Operating Income Before Impairment 17,966 21,414 34,521 41,339
4.9% 6.0% 4.8% 5.9%
Asset Impairment Charge (28,200) - (28,200) -
Operating Income (Loss) After Impairment (10,234) 21,414 6,321 41,339
</TABLE>
OTHER FINANCIAL INFORMATION
EG&G, Inc. and Subsidiaries
<TABLE>
<CAPTION>
Six Months Ended
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(In thousands) June 29, 1997 June 30, 1996
- -------------- ------------- -------------
<S> <C> <C>
Purchases of Common Stock: 832 531
Number of shares $ 17,440 $ 12,032
Cost of shares
$ 63,548 $ 69,794
Cash and Cash Equivalents $184,905 $161,316
Total Debt
</TABLE>
All figures shown are subject to year-end audit.
Page 6 of 6
