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) October 22, 1997
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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 October 22, 1997, the Company issued a press release reporting on its
financial results for the third 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.
By /s/ John F. Alexander, II
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Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
Date: October 22, 1997
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EXHIBIT INDEX
Exhibit Number Exhibit Description
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(99) Press Release dated October 22, 1997
<PAGE>
FOR IMMEDIATE RELEASE For further information contact:
- --------------------- Deborah S. Lorenz, EG&G, Inc.
22 October 1997 Tel. (617) 431-4306
NYSE Symbol: EGG
Website: www.egginc.com
EG&G ANNOUNCES THIRD QUARTER 1997 RESULTS
Wellesley, Massachusetts......EG&G, Inc. today announced sales from continuing
operations of $358.4 million and earnings from continuing operations of $0.30
per share for the third quarter of 1997. Commenting on EG&G's third-quarter
performance, Chairman John M. Kucharski stated, "We continue to focus management
attention on our Optoelectronics segment and reaffirm our commitment to realign
the IC Sensors division and successfully execute our Optoelectronics plan. We
have made progress in each of those areas."
Third-quarter highlights include:
- ---------------------------------
Sales from continuing operations increased 1% to $358.4 million, compared
to $354.7 million in the third quarter of 1996. The quarter's sales reflect
strength in Technical Services and Mechanical Components offset by
decreases in the Optoelectronics and Instruments segments.
Third-quarter 1997 operating income from continuing operations decreased
12% to $20.3 million from $23.2 million reported for the same period last
year. The 1997 third-quarter results included planned restructuring and
integration costs which were partially offset by a gain from the sale of
the EG&G Birtcher division.
Other income for the third quarter included a cost of capital
reimbursement of $3.4 million relating to a cumulative investment in a
joint development program.
Of the four business segments, Technical Services posted the strongest
overall sales and operating income in the third quarter of 1997, primarily
due to strong performance in the automotive lubricant testing business and
delivery of completed communication systems. Sales increased by 8% to
$150.9 million, and operating income increased 40% to $9.2 million,
compared to the third quarter of 1996.
Third-quarter 1997 sales in the Mechanical Components business increased
5% to $70.4 million, while operating income increased 43% to $11.4 million,
compared with the same period in 1996. The increase in operating income
reflects a gain from the sale of the EG&G Birtcher division.
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EG&G REPORTS THIRD QUARTER RESULTS
22 October 1997
Page 2 of 5
In the Instruments business segment, sales decreased 10% to $70.7 million,
and operating income decreased 56% to $4.0 million, compared to 1996
levels. The Life Science Research (Diagnostics) division posted gains from
the introduction of a new product and a strong reagent business. This was
offset by decreases reflecting restructuring and integration costs,
combined with continued weakness in the markets served by two of our
divisions. X-ray inspection and security systems shipments continued soft
in the quarter.
Optoelectronics sales decreased 5% to $66.3 million, and operating income
decreased 41% to $2.9 million, compared to 1996 levels. The decreases
stemmed from operational issues in the imaging business, and costs
associated with the execution of the Optoelectronics restructuring and
integration plan.
EG&G reported several key accomplishments during the quarter, in agreements with
major customers and in further developing the growth initiatives within each
business segment. Recent activities include:
AUGUST 12: EG&G received an order from the U.S. Federal Aviation
Administration for 10 advanced explosives detection systems, the
Z-Scan(TM). The $3.2 million order includes an option for 10 additional
systems.
AUGUST 21: EG&G signed an agreement with GE Medical Systems to produce a
first-of-its-kind multi-purpose digital X-ray detector which will be the
basis for a family of GE medical products that produce filmless X-ray
images of the breast, chest, heart, blood vessels, bone and abdomen.
AUGUST 27: NASA's Marshall Space Flight Center in Huntsville, Alabama,
awarded EG&G Alabama, Inc., a support services contract. The contract -
which is divided into a one-year base and four one-year options is
estimated to be worth $77.8 million and could be worth $100 million if all
options are exercised.
SEPTEMBER 3: EG&G concluded a joint-venture agreement to manage operation
of Daimler-Benz' new, state-of-the-art automotive test site, the Papenburg
Proving Ground in Emsland, Germany. The agreement is with a wholly owned
Daimler-Benz subsidiary, Mercedes-Benz technology (Mbtech).
OCTOBER 20: EG&G Astrophysics appears in Industry Week Magazine as one of
10 finalists in the publication's search for America's Best Plants.
Criteria for selection included consistent superior product quality,
significant increases in productivity (EG&G Astrophysics increased
productivity by 300% since 1993), aggressive cost reduction and on-time
deliveries.
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EG&G REPORTS THIRD QUARTER RESULTS
22 October 1997
Page 3 of 5
OCTOBER 21: EG&G received a $20 million order from the Dutch Airport
Authority for two large-cargo inspection systems for installation at one of
Europe's busiest airports, Schiphol, Amsterdam. The recently acquired
technology, which has provided EG&G quick entry into the growing market for
large-cargo scanners, allows for fast X-ray inspection of trucks and
containers, without opening the cargo. The system reveals false
compartments that might contain smuggled goods, such as arms, drugs or
fraudulently manifested goods.
Forward-Looking Information
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All statements contained herein that refer to a time after September 28, 1997,
including the words will be, estimated to be, could be, expect, believe, will
continue, and plan, or statements referring to 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. There are a number of important
factors that could cause actual results to differ materially from those
indicated by such forward-looking statements, including the factors set forth
below.
Factors Affecting Future Performance
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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. Improved operational
efficiency will be required to offset increasing price pressure in most of the
Company's product offerings. Other factors affecting future performance include
lower sales and earnings caused by future divestitures, warranty costs and the
ability to operate with reducing backlogs resulting from shorter customer order
cycles, to resolve pricing issues with selected customers and attract and retain
key personnel in a number of areas. The future results of the Optoelectronics
segment are dependent on management's ability to restore IC Sensors to
profitability, the successful 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 consolidating the base operations contracts 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. It is
anticipated that any resultant contract would be effective October 1, 1998, and
the Company plans to participate in the recompetition for the new contract as
part of a team with additional members being Johnson Controls, Lockheed Martin
and ITT.
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 INC. 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 INC. HAS ANNUAL SALES OF MORE
THAN $1.4 BILLION AND MORE THAN 14,000 EMPLOYEES.
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EG&G REPORTS THIRD QUARTER RESULTS
22 October 1997
Page 4 of 5
CONSOLIDATED STATEMENT OF OPERATIONS
EG&G, Inc. and Subsidiaries
<TABLE>
<CAPTION>
Third Quarter Ended Nine Months Ended
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(In thousands except per share data) Sept. 28, 1997 Sept. 29, 1996 Sept. 28, 1997 Sept. 29, 1996
- ------------------------------------ -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Sales $358,368 $354,747 $1,074,046 $1,057,445
Costs and Expenses:
Cost of sales 266,726 262,845 805,353 779,306
Research and development expenses 10,744 8,756 33,817 31,131
Selling, general and administrative
expenses 60,569 59,945 180,026 182,468
Asset impairment charge - - 28,200 -
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Total Costs and Expenses 338,039 331,546 1,047,396 992,905
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Operating Income From
Continuing Operations 20,329 23,201 26,650 64,540
Other Income (Expense), Net 701 (2,255) (3,975) (5,209)
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Income From Continuing
Operations Before Income Taxes 21,030 20,946 22,675 59,331
Provision for Income Taxes 7,151 6,745 12,618 19,105
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Income From Continuing Operations 13,879 14,201 10,057 40,226
Income From Discontinued Operations,
Net of Income Taxes 711 1,436 2,714 3,832
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Net Income $ 14,590 $ 15,637 $ 12,771 $ 44,058
======== ======== ========== ==========
Earnings Per Share:
Continuing Operations $ .30 $ .30 $ .22 $ .85
Discontinued Operations .02 .03 .06 .08
----- ----- ----- -----
Net Income $ .32 $ .33 $ .28 $ .93
===== ===== ===== =====
Weighted Average Shares of
Common Stock Outstanding 45,602 47,316 45,903 47,457
</TABLE>
All figures shown are subject to year-end audit.
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<PAGE>
EG&G REPORTS THIRD QUARTER RESULTS
22 October 1997
Page 5 of 5
SALES AND OPERATING INCOME FROM CONTINUING OPERATIONS
BY INDUSTRY SEGMENT
EG&G, Inc. and Subsidiaries
<TABLE>
<CAPTION>
Third Quarter Ended Nine Months Ended
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(In thousands) Sept. 28, 1997 Sept. 29, 1996 Sept. 28, 1997 Sept. 29, 1996
- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Instruments
Sales $ 70,714 $ 78,543 $ 214,738 $ 230,900
Operating Income 3,976 9,095 15,891 25,360
5.6% 11.6% 7.4% 11.0%
Mechanical Components
Sales $ 70,420 $ 67,122 $ 216,452 $ 204,903
Operating Income 11,382 7,940 26,245 23,297
16.2% 11.8% 12.1% 11.4%
Optoelectronics
Sales $ 66,309 $ 69,663 $ 191,181 $ 203,747
Operating Income Before Impairment 2,928 4,924 4,627 9,903
4.4% 7.1% 2.4% 4.9%
Asset Impairment Charge - - (26,700) -
Operating Income (Loss) After Impairment 2,928 4,924 (22,073) 9,903
Technical Services
Sales $150,925 $139,419 $ 451,675 $ 417,895
Operating Income Before Impairment 9,198 6,584 27,353 24,147
6.1% 4.7% 6.1% 5.8%
Asset Impairment Charge - - (1,500) -
Operating Income After Impairment 9,198 6,584 25,853 24,147
General Corporate Expenses $ (7,155) $ (5,342) $ (19,266) $ (18,167)
Continuing Operations
Sales $358,368 $354,747 $1,074,046 $1,057,445
Operating Income Before Impairment 20,329 23,201 54,850 64,540
5.7% 6.5% 5.1% 6.1%
Asset Impairment Charge - - (28,200) -
Operating Income After Impairment 20,329 23,201 26,650 64,540
</TABLE>
OTHER FINANCIAL INFORMATION
EG&G, Inc. and Subsidiaries
<TABLE>
<CAPTION>
(In thousands) Nine Months Ended
- -------------- -----------------
Sept. 28, 1997 Sept. 29, 1996
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<S> <C> <C>
Purchases of Common Stock:
Number of shares 1,332 531
Cost of shares $ 28,104 $ 12,032
Cash and Cash Equivalents $ 57,155 $ 68,252
Total Debt $153,417 $141,925
</TABLE>
All figures shown are subject to year-end audit.
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