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 21, 1998
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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 02481
------------------------------------------- -----
(Address of principal executive offices) (Zip Code)
(781) 237-5100
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(Registrant's telephone number, including area code)
<PAGE>
Item 5. Other Events
On July 21, 1998, the Company issued a press release reporting on its financial
results for the second quarter of 1998 (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, 1998
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EXHIBIT INDEX
Exhibit Number Exhibit Description
- -------------- -------------------
(99) Press Release dated July 21, 1998
<PAGE>
FOR IMMEDIATE RELEASE
- ---------------------
21 July 1998
EG&G REPORTS INCREASED EARNINGS PER SHARE
FOR THE SECOND QUARTER 1998
Wellesley, Massachusetts......EG&G, Inc. today announced second-quarter 1998
income, excluding gains and nonrecurring charges, of $12.9 million, or $0.28
basic earnings per share, compared to earnings from continuing operations,
before a non-cash charge, of $10.1 million, or $0.22 per share, for the
comparable period in 1997, a 27% increase. During the second quarter, EG&G had
nonrecurring charges totaling $33.5 million and a pretax gain of $58.3 million
on the sale of a divested operation. Including the gain and nonrecurring
charges, EG&G reported second-quarter 1998 income from operations of $45.8
million, or $0.69 basic earnings per share, compared to a loss of $10.2 million,
or $0.29 per share, for the second quarter of 1997. On a base operations basis*,
second-quarter 1998 earnings from continuing operations was $21.0 million,
compared to $12.5 million in 1997, a 68% increase. Second-quarter 1998 sales on
a base operations basis were $356.3 million, compared to $324.1 million in the
same period in 1997, a 10% increase.
Chairman and CEO John M. Kucharski stated, "Our second-quarter performance
underscores the continuing progress we have effected across each of our business
segments. We believe that the businesses remain well positioned in their
respective markets, and we expect to deliver consistent earnings growth in
future quarters."
Gregory L. Summe, President and COO added, "We are pleased with our team's
progress in accelerating earnings and revenue growth. The businesses are showing
their ability to increase cost productivity, reengineer our processes, and fix
any operational misfires. The organization is responding well to increased
performance expectations. We expect our progress to further accelerate through
the second half of the year."
<TABLE>
Financial Highlights:
- ---------------------
<CAPTION>
(in millions) 2Q 1998 2Q 1997 6 mos. 1998 6 mos. 1997
------- ------- ----------- -----------
<S> <C> <C> <C> <C>
Sales ..................................... $356.3 $368.7 $712.2 $715.7
Operating income (loss) from continuing
operations including gains and
nonrecurring charges ...................... $45.8 $(10.2) $100.7 $6.3
(in millions) 2Q 1998 2Q 1997 6 mos. 1998 6 mos. 1997
------- ------- ----------- -----------
Base operations*
Sales ..................................... $356.3 $324.1 $712.2 $649.9
Operating income from continuing
operations ................................ $21.0 $12.5 $39.8 $24.7
</TABLE>
-more-
* Base Operations - - Results exclude gains from dispositions, nonrecurring
charges and the results of divested operations from prior periods. See pages 4,
5, and 6 of this release for actual results.
<PAGE>
EG&G REPORTS INCREASED EARNINGS PER SHARE
21 July 1998
Page 2 of 6
Second-Quarter Financial Highlights Presented on a Base Operations Basis:
- -------------------------------------------------------------------------
The Instruments segment sales increased 14% compared with the same period
last year. Base operating income was $7.5 million, an increase of 37%. The
performance improvements reflect the strength in the Life Sciences business
and were due to higher sales and improved product mix. The remainder of the
businesses in the segment continue on track.
The Mechanical Components segment reported an increase in sales and
operating income, compared to 1997 second-quarter levels. The sales
increase of 37% to $44 million was due, in part, to the acquisition of
Belfab in April of this year. Income from operations increased 135% to $5
million, attributable to cost productivity and mix in the continuing
businesses.
Optoelectronics sales grew 5% to $68.9 million primarily in custom
optoelectronic components. Income from operations grew to $6.3 million.
Income benefited from the higher sales level and continued operating
improvements at Heimann Components. IC Sensors improved to break-even
during the second quarter of 1998, compared with a loss in the second
quarter last year.
The Technical Services segment posted a sales increase of 5% to $163.9
million compared with 1997 levels. This performance represents additional
contract work and is particularly strong since this does not include sales
from a communications system contract included in 1997. In the second
quarter, operating income increased 16% to $11.4 million, compared to $9.8
million in 1997.
Corporate expenses increased to $9.2 million from $6.3 million in the same
period last year. This increase was primarily due to management transition
costs and increased incentive costs.
Gains and Nonrecurring Charges:
- -------------------------------
A $58.3 million pretax gain or $0.93 per share was recorded in the second
quarter, from the sale of EG&G's Sealol Industrial Seals division. This
quarter had nonrecurring charges of $33.5 million consisting of: a $23.1
million pretax restructuring charge, reflecting planned actions to
integrate the five strategic business units and consolidate certain
production facilities; a $7.4 million asset impairment charge related to
the Technical Services business; and a contribution to the EG&G Foundation
(a charitable trust) of $3 million, which is classified as a selling,
general and administrative expense. The six-month period contained pretax
gains on sales of divisions of $125.8 million and nonrecurring charges of
$64.9 million.
<TABLE>
<CAPTION>
2Q 1998 EPS 2Q 1997 EPS 6 mos. 1998 EPS 6 mos. 1997 EPS
----------- ----------- --------------- ---------------
<S> <C> <C> <C> <C>
Before gains and nonrecurring charges ....... $ 0.28 $ 0.22 $ 0.53 $ 0.43
Gains and nonrecurring charges (net) ........ 0.41 (0.51) 0.92 (0.51)
------ ------ ------ ------
Including gains and nonrecurring charges .... $ 0.69 $(0.29) $ 1.45 $(0.08)
====== ====== ====== ======
</TABLE>
Recent events included:
- -----------------------
April 1: EG&G completed its purchase of the Belfab Division of John Crane,
Inc. for $45 million. Belfab complements EG&G's existing seal technology
for the semiconductor market and positions EG&G as a major supplier to the
semiconductor manufacturing industry.
April 6: Retired Air Force General Hansford T. (H.T.) Johnson elected
President of its Technical Services business segment and a Vice President
of the Corporation.
May 7: The U.S. Navy awarded the EG&G Services division a $113 million
contract to provide technical, engineering and management support services
for electronics projects managed by the Naval Surface Warfare Center,
Crane, Indiana.
-more-
<PAGE>
EG&G REPORTS INCREASED EARNINGS PER SHARE
21 July 1998
Page 3 of 6
May 26: Robert A. Barrett and Rabbe Klemets elected Vice Presidents of the
Corporation. Barrett is President of EG&G's Engineered Products strategic
business unit. Klemets is President of EG&G's Life Sciences strategic
business unit.
June 10: EG&G Services was awarded a five-year, $39 million contract from
the U.S. Naval Surface Warfare Center to provide technical, engineering and
management services to support development of a Trident Submarine missile
fire control system. Under a contract valued at about $15 million including
options, EG&G Langley will support launch operations at Vandenberg Air
Force Base, California, the west-coast space launch site for the Delta,
Titan and Atlas Programs.
June 15: Richard F. Walsh elected Senior Vice President responsible for
Human Resources worldwide.
Forward-Looking Information
All statements contained herein that refer to a time after June 28,
1998, including the words will, will be, estimated to be, could be, expect,
believe, will continue, expected to, 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 industry
segments, future performance will be highly dependent on the technological
success, market acceptance, competitive position of our businesses, product
performance and ability to reach cost targets of new and continuing program
initiatives. Improved operational efficiency will be required to offset
increasing price pressure in many of the Company's product offerings. Other
factors that may impact future earnings performance include the ability to
replace sales and earnings lost through divestitures, potential issues related
to economic and financial difficulties arising in Asia, unanticipated issues
associated with the Year 2000 dating problem, 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 maintain
IC Sensors at break-even, 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 income generated by many of our government contracts is
dependent on meeting certain 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 have
decided to consolidate and recompete 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.
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 non-U.S. net operating loss
carry-forwards, repatriation costs, resolution of outstanding tax audit issues
and changes in the portfolio of businesses.
EG&G, INC. IS A GLOBAL TECHNOLOGY COMPANY THAT PROVIDES COMPLETE SYSTEMS, AS
WELL AS PRODUCTS TO MEDICAL, AEROSPACE, SEMICONDUCTOR, PHOTOGRAPHIC AND OTHER
INDUSTRIES. IT DELIVERS SKILLED SUPPORT SERVICES TO GOVERNMENT AND INDUSTRIAL
CUSTOMERS. BASED IN WELLESLEY, MASSACHUSETTS, EG&G HAS ANNUAL SALES OF $1.5
BILLION AND MORE THAN 13,000 EMPLOYEES WORLDWIDE.
For further information contact: Deborah S. Lorenz, EG&G, Inc.
Tel. (781) 431-4306
-more-
<PAGE>
<TABLE>
CONSOLIDATED STATEMENT OF OPERATIONS
EG&G, Inc. and Subsidiaries
<CAPTION>
Second Quarter Ended Six Months Ended
-------------------- ----------------
JUN 28, JUN 29, JUN 28, JUN 29
(In thousands except per share data) 1998 1997 1998 1997
- ------------------------------------ ---- ---- ---- ----
<S> <C> <C> <C> <C>
Sales ............................................ $356,282 $368,672 $712,218 $715,678
Cost of Sales .................................... 268,549 278,988 533,309 538,627
Research and Development Expenses ................ 10,941 11,919 21,983 23,073
Selling, General and Administrative Expenses...... 58,812 59,799 120,127 119,457
Restructuring Charges ............................ 23,100 -- 54,500 --
Asset Impairment Charge .......................... 7,400 28,200 7,400 28,200
Gains on Dispositions ............................ (58,344) -- (125,822) --
-------- -------- -------- --------
Operating Income (Loss) From
Continuing Operations ........................ 45,824 (10,234) 100,721 6,321
Other Income (Expense), Net ...................... (878) (2,618) (2,080) (4,676)
-------- -------- -------- --------
Income (Loss) From Continuing
Operations Before Income Taxes ............... 44,946 (12,852) 98,641 1,645
Provision for Income Taxes ....................... 13,332 538 32,544 5,467
-------- -------- -------- --------
Income (Loss) From Continuing Operations ......... 31,614 (13,390) 66,097 (3,822)
Income From Discontinued Operations,
Net of Income Taxes ......................... -- 1,545 -- 2,003
-------- -------- -------- --------
Net Income (Loss) ................................ $ 31,614 $(11,845) $ 66,097 $(1,819)
======== ======== ======== =======
Basic Earnings (Loss) Per Share:
Continuing Operations ............................ $ .69 $(.29) $1.45 $(.08)
Discontinued Operations .......................... -- .03 -- .04
----- ----- ----- -----
Net Income (Loss) ................................ $ .69 $(.26) $1.45 $(.04)
===== ===== ===== =====
Diluted Earnings (Loss) Per Share:
Continuing Operations ............................ $ .68 $(.29) $1.43 $(.08)
Discontinued Operations .......................... -- .03 -- .04
----- ----- ----- -----
Net Income (Loss) ................................ $ .68 $(.26) $1.43 $(.04)
===== ===== ===== =====
Weighted Average Shares of
Common Stock Outstanding:
Basic ..................................... 45,682 45,888 45,472 46,054
Diluted ................................... 46,446 46,007 46,110 46,217
</TABLE>
<TABLE>
OTHER FINANCIAL INFORMATION
EG&G, Inc. and Subsidiaries
<CAPTION>
Six Months Ended
----------------
JUN 28, JUN 29,
(In thousands 1998 1997
- ------------- ---- ----
Purchases of Common Stock:
<S> <C> <C>
Number of shares ............................. 447 832
Cost of shares ............................... $ 11,446 $ 17,440
Cash and Cash Equivalents......................... $177,573 $ 63,548
Total Debt ....................................... $114,877 $184,905
</TABLE>
All figures shown are subject to year-end audit. Page 4
<PAGE>
<TABLE>
SALES AND OPERATING INCOME FROM CONTINUING OPERATIONS
BY INDUSTRY SEGMENT
EG&G, Inc. and Subsidiaries
<CAPTION>
Second Quarter 1997
Second Quarter Ended -------------------
-------------------- Results
JUN 28, JUN 29, of Divested Base
(In thousands) 1998 1997 Operations Operations(a)
- -------------- ---- ---- ---------- ----------
Instruments
<S> <C> <C> <C> <C>
Sales ............................................ $ 79,454 $ 72,350 $ (2,387) $ 69,963
Operating Income Before Nonrecurring Items........ 7,545 5,780 (282) 5,498
9.5% 8.0% 11.8% 7.9%
Restructuring Charges ............................ (5,394) --
1997 Gains, Net of Integration Costs ............. -- --
Operating Income ................................. 2,151 5,780
Mechanical Components
Sales ............................................ $ 43,960 $ 74,298 $(42,175) $ 32,123
Operating Income Before Nonrecurring Items........ 4,959 7,248 (5,139) 2,109
11.3% 9.8% 12.2% 6.6%
Restructuring Charges ............................ (1,370) --
Gains on Dispositions ............................ 58,344 --
Operating Income ................................. 61,933 7,248
Optoelectronics
Sales ............................................ $ 68,939 $ 65,767
Operating Income Before Nonrecurring Items........ 6,275 1,408
9.1% 2.1%
Restructuring Charges ............................ (11,716) --
Asset Impairment Charge .......................... -- (26,700)
Operating Income (Loss) ......................... (5,441) (25,292)
Technical Services
Sales ............................................ $163,929 $156,257
Operating Income Before Nonrecurring Items........ 11,412 9,834
7.0% 6.3%
Restructuring Charges ............................ (3,713) --
Asset Impairment Charge .......................... (7,400) (1,500)
Operating Income ................................. 299 8,334
General Corporate Expenses
Before Nonrecurring Items ........................ $ (9,211) $ (6,304)
Charitable Contribution .......................... (3,000) --
Restructuring Charges ............................ (907) --
General Corporate Expenses ....................... (13,118) (6,304)
Continuing Operations
Sales ............................................ $356,282 $368,672 $(44,562) $324,110
Operating Income Before Nonrecurring Items........ 20,980 17,966 (5,421) 12,545
5.9% 4.9% 12.2% 3.9%
Charitable Contribution .......................... (3,000) --
Restructuring Charges ............................ (23,100) --
Gains on Dispositions ............................ 58,344 --
Asset Impairment Charge .......................... (7,400) (28,200)
1997 Gains, Net of Integration Costs ............. -- --
Operating Income (Loss) .......................... 45,824 (10,234)
</TABLE>
(a) Excludes gains and results of operations divested in 1997 and 1998.
All figures shown are subject to year-end audit. Page 5
<PAGE>
<TABLE>
SALES AND OPERATING INCOME FROM CONTINUING OPERATIONS
BY INDUSTRY SEGMENT
EG&G, Inc. and Subsidiaries
<CAPTION>
Six Months 1997
Six Months Ended ---------------
---------------- Results
JUN 28, JUN 29, of Divested Base
(In thousands) 1998 1997 Operations Operations
- -------------- ---- ---- ---------- ----------
Instruments
<S> <C> <C> <C> <C>
Sales ............................................ $156,336 $144,024 $ (5,285) $138,739
Operating Income Before Nonrecurring Items........ 13,367 10,891 (691) 10,200
8.6% 7.6% 13.1% 7.4%
Restructuring Charges ............................ (12,494) --
1997 Gains, Net of Integration Costs ............. -- 1,024
Operating Income ................................. 873 11,915
Mechanical Components
Sales ............................................ $103,815 $146,032 $(60,486) $ 85,546
Operating Income Before Nonrecurring Items........ 11,429 14,863 (8,148) 6,715
11.0% 10.2% 13.5% 7.8%
Restructuring Charges ............................ (9,870) --
Gains on Dispositions ............................ 125,822 --
Operating Income ................................. 127,381 14,863
Optoelectronics
Sales ............................................ $132,604 $124,872
Operating Income Before Nonrecurring Items........ 8,582 1,699
6.5% 1.4%
Restructuring Charges ............................ (20,316) --
Asset Impairment Charge .......................... -- (26,700)
Operating Income (Loss) ......................... (11,734) (25,001)
Technical Services
Sales ............................................ $319,463 $300,750
Operating Income Before Nonrecurring Items........ 23,576 18,155
7.4% 6.0%
Restructuring Charges ............................ (7,913) --
Asset Impairment Charge .......................... (7,400) (1,500)
Operating Income ................................. 8,263 16,655
General Corporate Expenses
Before Nonrecurring Items ........................ $(17,155) $(12,111)
Charitable Contribution .......................... (3,000) --
Restructuring Charges ............................ (3,907) --
General Corporate Expenses ....................... (24,062) (12,111)
Continuing Operations
Sales ............................................ $712,218 $715,678 $(65,771) $649,907
Operating Income Before Nonrecurring Items........ 39,799 33,497 (8,839) 24,658
5.6% 4.7% 13.4% 3.8%
Charitable Contribution .......................... (3,000) --
Restructuring Charges ............................ (54,500) --
Gains on Dispositions ............................ 125,822 --
Asset Impairment Charge .......................... (7,400) (28,200)
1997 Gains, Net of Integration Costs ............. -- 1,024
Operating Income ................................. 100,721 6,321
</TABLE>
All figures shown are subject to year-end audit. Page 6
