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) January 21, 1998
----------------
EG&G, Inc.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Massachusetts 1-5075 04-2052042
------------- ------ ----------
(State or other (Commission File Number) (IRS Employer
jurisdiction of Identification No.)
incorporation)
45 William Street, Wellesley, Massachusetts 02181
------------------------------------------- -----
(Address of principal executive offices) (Zip Code)
(781) 237-5100
--------------
(Registrant's telephone number, including area code)
Not applicable
--------------
(Former name or former address, if changed since last report)
<PAGE>
Item 5. Other Events
On January 21, 1998, the Company issued a press release reporting on its
financial results for the fourth 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: January 28, 1998
----------------
EXHIBIT INDEX
Exhibit Number Exhibit Description
- -------------- -------------------
(99) Press Release dated January 21, 1998
<PAGE>
FOR IMMEDIATE RELEASE For further information contact:
- --------------------- Deborah S. Lorenz, EG&G, Inc.
21 January 1998 Tel. (781) 431-4306
NYSE Symbol: EGG
Website: www.egginc.com
EG&G ANNOUNCES FOURTH-QUARTER AND YEAR-END 1997 RESULTS
Wellesley, Massachusetts......EG&G, Inc. today announced sales from continuing
operations of $386.8 million and earnings from continuing operations of $0.45
per share for the fourth quarter of 1997, compared with sales and earnings from
continuing operations of $369.8 million and $0.30 per share for the comparable
period in 1996. For the year, EG&G reported sales from continuing operations of
$1.5 billion, a 2% increase from 1996 levels. Before a non-cash asset impairment
charge of $28.2 million, primarily as a result of operational issues in the IC
Sensors division, 1997 earnings from continuing operations were $1.18 per share,
compared with $1.15 in 1996. After the impairment charge, earnings from
continuing operations for 1997 were $0.67 per share.
Commenting on EG&G's performance, Chairman John M. Kucharski stated, "EG&G
finished the year strong. This is especially satisfying after a somewhat
disappointing start to 1997. We made significant progress in 1997, in winning
new commercial and services contracts, in developing two new products in the
X-ray detection and food screening areas, and in completing two new
collaborations -- one with GE Medical Systems and one with Mercedes Benz -- for
new products and services. Our Instruments, Mechanical Components and Technical
Services business segments performed well this year. In 1998, we will continue
to focus on realigning our Optoelectronics segment."
Fourth-quarter and year-end highlights include:
- ----------------------------------------------
Sales from continuing operations increased 5% to $386.8 million, compared
to $369.8 million in the fourth quarter of 1996. The quarter's sales
reflect strength across all business segments.
Fourth-quarter 1997 operating income from continuing operations increased
43% to $32.9 million from $23.1 million reported for the same period last
year. The increase was primarily due to better operating performance across
all segments.
In the Instruments business segment, fourth-quarter sales increased 1% to
$91.8 million, and operating income increased 73% to $19.1 million,
compared to 1996 levels. Contributions to the increase in sales and
operating income included: additional sales of a new product and a strong
reagent business in the Life Science Research (Diagnostics) division;
strong base business in Astrophysics; a $4.7 million gain from the sale of
EG&G Flow Technology; and the absence of a $4.2 million legal settlement in
the fourth quarter of 1996. For the year, Instruments reported sales of
$306.6 million, and operating income of $35.0 million, compared with sales
of $321.7 million and operating income of $36.4 million in 1996. The
decrease in sales was mainly due to the effects of currency translation.
-more-
<PAGE>
EG&G REPORTS FOURTH QUARTER RESULTS
21 January 1998
Page 2 of 5
Fourth-quarter 1997 sales in Mechanical Components increased 7% to $76.3
million, while operating income increased 80% to $10.6 million, compared
with the same period in 1996, primarily due to continued strength in the
aerospace division. For the year, sales increased 6% to $292.7 million, and
operating income increased 26% to $36.9 million, compared with 1996. The
increase in operating income for the year reflects a $4.3 million gain from
the sale of the EG&G Birtcher division.
For the fourth quarter, Optoelectronics sales grew 7% to $70.1 million,
although sales for the year decreased 3% to $261.3 million compared with
1996 levels. Fourth-quarter operating income increased by 109% to $4.9
million, compared with $2.3 million in the same period in 1996, primarily
due to sales of new thermopile products, as well as improved operating
margins. The segment reported 1997 operating income of $9.5 million before
a $26.7 million asset impairment charge taken in the second quarter of 1997
as a result of operational issues in the IC Sensors division.
Technical Services continued to be a significant contributor in the fourth
quarter and for the year. Fourth-quarter sales increased 5% to $148.5
million compared with 1996 levels, largely due to increased sales in the
automotive testing business as well as additional billings under government
contracts. Similarly, this performance helped to increase fourth-quarter
operating income by 7% to $10.7 million, compared to $10.0 million in 1996.
For the year, sales for the Technical Services segment were $600.2 million,
a 7% increase from $559.6 million in 1996. Operating income for the year
increased 11% to $38.1 million, from $34.2 million in 1996.
Recent events included:
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.
October 30: EG&G Astrophysics (EG&G's security screening division) named
one of North America's 10 Best Plants by IndustryWeek Magazine. 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.
December 8: EG&G was awarded a one-year contract (with three option years)
to manage the privatization of the Defense Logistics Agency's distribution
depot at Kelly Air Force Base. The initial year of the contract has an
estimated value of between $18 million and $30 million.
December 22: EG&G announced that it had entered into an agreement to sell
its Sealol Industrial Seals Division to TI Group, plc. for $100 million,
while simultaneously purchasing TI Group's Belfab division for $45 million.
The transaction is expected to close in the second quarter of 1998. In
1997, EG&G Sealol Industrial contributed $88 million in sales.
December 22: EDN Magazine selected EG&G Amorphous Silicon division as a
finalist in its innovator of the year competition for its amorphous silicon
detector technology.
-more-
<PAGE>
EG&G REPORTS FOURTH QUARTER RESULTS
21 January 1998
Page 3 of 5
January 9: EG&G completed the sale of its Rotron division, which
manufactures fans, blowers and motors, to AMETEK, Inc. for approximately
$103 million. In 1997 Rotron contributed $70 million in sales.
January 13: Gregory L. Summe, formerly president of AlliedSignal's
Automotive Product Group, was appointed President and Chief Operating
Officer of EG&G. Summe is expected to begin his role at EG&G at the
beginning of February.
Forward-Looking Information
All statements contained herein that refer to a time after December 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
In the Instruments, Mechanical Components and Optoelectronics business segments,
future performance will be highly dependent on the technological success, market
acceptance and competitive position of new program initiatives and existing
programs, including the amorphous silicon project and the advanced micromachined
sensors technology platform. Improved operational efficiency will be required to
offset increasing price pressure in many of the Company's product offerings.
Other factors which may negatively affect future earnings performance include
lower sales and earnings caused by divestitures, inability to resolve pricing
issues with certain customers and difficulty in attracting and retaining key
personnel in certain areas. The future results of the Optoelectronics segment
are also dependent on management's ability to restore IC Sensors to break-even
in the near term, 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 geographic locations.
In the Technical Services segment, the Company operates in a highly competitive
procurement environment in the automotive testing and government services
businesses. The automotive testing business is dependent on the success of the
new marketing initiatives. The income generated by many of our government
contracts is dependent on performance criteria. In accordance with government
regulations, all of the Company's government contracts are subject to
termination for the convenience of the government. 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. The Company is
participating in the recompetition for the new contract.
For certain business segments, future performance will be highly dependent on
the Company's ability to purchase and integrate acquisitions to replace divested
revenues in accordance with the Company's strategic plan.
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.
-more-
<PAGE>
EG&G REPORTS FOURTH QUARTER RESULTS
21 January 1998
Page 4 of 5
CONSOLIDATED STATEMENT OF OPERATIONS
EG&G, Inc. and Subsidiaries
<TABLE>
<CAPTION>
Fourth Quarter Ended Year Ended
-------------------- ----------
Dec.28, Dec. 29, Dec. 28, Dec. 29,
(In thousands except per share data 1997 1996 1997 1996
- ----------------------------------- ---- ---- ---- ----
<S> <C> <C> <C> <C>
Sales ........................................... $ 386,759 $ 369,807 $1,460,805 $1,427,252
Costs and Expenses:
Cost of sales ................................ 279,338 269,437 1,084,691 1,048,743
Research and development expenses ............ 11,090 11,710 44,907 42,841
Selling, general and administrative
expenses ................................. 63,383 65,570 243,409 248,038
Asset impairment charge ...................... - - 28,200 -
--------- --------- ---------- ----------
Total Costs and Expenses ........................ 353,811 346,717 1,401,207 1,339,622
--------- --------- ----------- -----------
Operating Income From
Continuing Operations ........................ 32,948 23,090 59,598 87,630
Other Income (Expense), Net ..................... (1,597) (2,067) (5,572) (7,276)
--------- --------- ----------- -----------
Income From Continuing
Operations Before Income Taxes ............... 31,351 21,023 54,026 80,354
Provision for Income Taxes ...................... 10,763 6,769 23,381 25,874
--------- --------- ----------- -----------
Income From Continuing Operations ............... 20,588 14,254 30,645 54,480
Income From Discontinued Operations,
Net of Income Taxes .......................... 333 1,844 3,047 5,676
--------- --------- ----------- -----------
Net Income ...................................... $ 20,921 $ 16,098 $ 33,692 $ 60,156
========= ========= ========== ==========
Basic Earnings Per Share:
Continuing Operations ........................... $ .45 $ .30 $ .67 $ 1.15
Discontinued Operations ......................... .01 .04 .07 .12
--------- --------- ---------- ----------
Net Income ...................................... $ .46 $ .34 $ .74 $ 1.27
========= ========= ========== ==========
Diluted Earnings Per Share:
Continuing Operations ........................... $ .45 $ .30 $ .67 $ 1.15
Discontinued Operations ......................... .01 .04 .07 .12
--------- --------- ---------- ----------
Net Income ...................................... $ .46 $ .34 $ .74 $ 1.27
========= ========= ========== ==========
Weighted Average Shares of
Common Stock Outstanding:
Basic ...................................... 45,319 46,824 45,757 47,298
Diluted .................................... 45,448 46,898 45,898 47,467
</TABLE>
<PAGE>
EG&G REPORTS FOURTH QUARTER RESULTS
21 January 1998
Page 5 of 5
SALES AND OPERATING INCOME FROM CONTINUING OPERATIONS
BY INDUSTRY SEGMENT
EG&G, Inc. and Subsidiaries
<TABLE>
<CAPTION>
Fourth Quarter Ended Year Ended
-------------------- ----------
Dec.28, Dec. 29, Dec. 28, Dec. 29,
(In thousands 1997 1996 1997 1996
- ------------- ---- ---- ---- ----
<S> <C> <C> <C> <C>
Instruments
Sales .................................. $ 91,842 $ 90,804 $ 306,580 $ 321,704
Operating Income ....................... 19,092 11,040 34,983 36,400
20.8% 12.2% 11.4% 11.3%
Mechanical Components
Sales .................................. $ 76,275 $ 71,486 $ 292,727 $ 276,389
Operating Income ....................... 10,621 5,906 36,866 29,203
13.9% 8.3% 12.6% 10.6%
Optoelectronics
Sales .................................. $ 70,110 $ 65,783 $ 261,291 $ 269,530
Operating Income Before Impairment ..... 4,904 2,346 9,531 12,249
7.0% 3.6% 3.6% 4.5%
Asset Impairment Charge ................ - - (26,700) -
Operating Income (Loss) After Impairment 4,904 2,346 (17,169) 12,249
Technical Services
Sales .................................. $ 148,532 $ 141,734 $ 600,207 $ 559,629
Operating Income Before Impairment ..... 10,734 10,022 38,087 34,169
7.2% 7.1% 6.3% 6.1%
Asset Impairment Charge ................ - - (1,500) -
Operating Income After Impairment ...... 10,734 10,022 36,587 34,169
General Corporate Expenses ............. $ (12,403) $ (6,224) $ (31,669) $ (24,391)
Continuing Operations
Sales .................................. $ 386,759 $ 369,807 $1,460,805 $1,427,252
Operating Income Before Impairment ..... 32,948 23,090 87,798 87,630
8.5% 6.2% 6.0% 6.1%
Asset Impairment Charge ................ - - (28,200) -
Operating Income After Impairment ...... 32,948 23,090 59,598 87,630
</TABLE>
OTHER FINANCIAL INFORMATION
EG&G, Inc. and Subsidiaries
(In thousands) Year Ended
- -------------- ----------
Dec. 28, Dec. 29,
1997 1996
---- ----
Purchases of Common Stock:
Number of shares .................... 1,332 1,559
Cost of shares ...................... $ 28,104 $ 30,760
Cash and Cash Equivalents............... $ 57,934 $ 47,846
Total Debt ............................. $161,030 $139,603
