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 21, 1998
----------------
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 02481
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(Address of principal executive offices) (Zip Code)
(781) 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 21, 1998, the Company issued a press release reporting on its
financial results for the third 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: October 22, 1998
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EXHIBIT INDEX
Exhibit Number Exhibit Description
- -------------- -------------------
(99) Press Release dated October 21, 1998
<PAGE>
FOR IMMEDIATE RELEASE
- ---------------------
21 October 1998
EG&G REPORTS INCREASED EARNINGS PER SHARE
FOR THE THIRD QUARTER 1998
Company Continues to Benefit From Operating Improvements, Consolidation
Wellesley, Massachusetts....EG&G, Inc. today announced third-quarter 1998 income
of $14.6 million, or $0.32 per share. A capital gain, partially offset by
one-time costs, contributed an additional $0.02 per share, net. The 28% increase
to $0.32 per share compares to third-quarter 1997 income of $11.8 million, or
$0.25 per share, excluding nonrecurring items ($0.05 per share) and including
earnings contribution from divested operations ($0.11 per share). Third-quarter
1998 sales on a base operations basis increased 9% to $343.5 million, compared
to $314.8 million in the same period in 1997. On a reported basis, third-quarter
1998 income from continuing operations increased 11% to $15.4 million, or $0.34
per share, from $13.9 million, or $0.30 per share, for the comparable period in
1997.
<TABLE>
<CAPTION>
EPS 3Q 1998 3Q 1997
------- -------
<S> <C> <C>
Continuing operations before nonrecurring
items and contract close-out costs ................... $0.32 $0.25
Nonrecurring items and contract close-out
costs, net ........................................... 0.02 0.05
----- -----
As reported .......................................... $0.34 $0.30
===== =====
</TABLE>
Chairman and CEO John M. Kucharski stated, "We continue to see great progress
across all of our business units. We are reconfirming our estimates of achieving
$1.32 earnings per share from continuing operations in 1998 and $1.60 per share
in 1999."
Gregory L. Summe, President and COO added, "We are pleased that our overall
operations continue to perform well in spite of the difficult economic
environment. The improvements in productivity and growth have more than offset
sales pressure due to: Asia, softness in the semiconductor business and effects
of the General Motors strike. We are continuing to strengthen our organization
and are well prepared to sustain our consistent earnings growth through 1999."
Financial Highlights:
<TABLE>
<CAPTION>
(in millions) 3Q 1998 3Q 1997 9 mos. 1998 9 mos. 1997
------------- ------- ------- ----------- -----------
<S> <C> <C> <C> <C>
Base operations*
Sales ................................ $ 343.5 $ 314.8 $1,033.0 $ 942.0
Operating income from continuing
operations ........................... 23.1 13.6 60.8 35.7
</TABLE>
* Base operations - results exclude nonrecurring items, contract close-out costs
and divested operations. See pages 4, 5 and 6 of this release for actual
results.
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<PAGE>
EG&G REPORTS INCREASED EARNINGS PER SHARE
21 October 1998
Page 2 of 6
Third-Quarter Financial Highlights Presented on a Base Operations Basis:
- ------------------------------------------------------------------------
INSTRUMENTS segment sales increased slightly to $71.1 million; operating
income increased 2% to $5.8 million compared with the same period last year
due primarily to higher sales and a favorable product mix in the Life
Sciences business. Offsetting this strong performance, the segment
experienced lower sales of X-ray screening equipment due to the delay and
reduction of certain shipments related to international sales.
MECHANICAL COMPONENTS segment sales increased 43% to $42.0 million;
operating income increased from $0.7 million to $5.3 million compared to
1997 third-quarter levels. The sales increase was due, in part, to the
acquisition of Belfab in April of this year as well as overall strength in
the aerospace business. The increase in operating income was attributable
to increases at most divisions. Partially offsetting these increases was a
continued downturn in the semiconductor industry.
OPTOELECTRONICS segment sales decreased 6% to $62.2 million; operating
income increased 37% to $5.5 million compared with the same period last
year. The decrease in sales was primarily due to lower sales in low-margin
circuit board assemblies and a slowdown in the semiconductor industry.
Improvements at IC Sensors, the absence of contamination issues which
hindered results in 1997 and margin improvement across all divisions
contributed to the increase in operating income.
The TECHNICAL SERVICES segment sales increased 11% to $168.3 million;
operating income increased 44% to $13.7 million compared to 1997 levels.
The sales increase was due primarily to additional contract work as well as
stronger revenue contribution from services provided for the privatization
of the Defense Logistics Agency depot. The strong performance was partly
offset during the quarter by continued pressure in the automotive testing
industry due to the strike at General Motors. The increase in third-quarter
1998 operating income was due primarily to increased sales from new
contracts.
Recent events included:
- -----------------------
AUGUST 24: EG&G, Inc. announced that its joint venture with Johnson
Controls was unsuccessful in its bid to provide support services to NASA
and the U.S. Air Force at Florida's Kennedy Space Center, Cape Canaveral
and Patrick Air Force Base. The joint venture, The Launch Support Company,
consisted of EG&G Florida and Johnson Controls. EG&G is protesting the
decision.
SEPTEMBER 9: EG&G, Inc., announced that its EG&G Services division had
been awarded a U.S. Marine Corps contract that could total approximately
$40 million over five years. EG&G will provide engineering, analytical,
logistics planning, and business support services for the Advanced
Amphibious Assault Vehicle, the premier new U.S. Marine Corps system for
the 21st Century. The work will be performed at EG&G facilities in Manassas
and Woodbridge, VA.
SEPTEMBER 14:EG&G named Stephen P. De Falco as Vice President of Strategic
Planning and Business Development and Gregory D. Perry as Controller.
SEPTEMBER 24: EG&G Services announced that it had been awarded a contract
from the U.S. Navy's Fleet Technical Support Center, Atlantic that could
total approximately $144 million over five years. EG&G will provide
engineering and technical services to support tasks in functional areas
such as: technical assistance/training, assessments, modernization,
industrial/pierside refurbishment, and logistics. The work will be executed
at EG&G facilities in Hampton Roads, Virginia, and has provisions for
similar support services at all major naval bases.
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<PAGE>
EG&G REPORTS INCREASED EARNINGS PER SHARE
21 October 1998
Page 3 of 6
OCTOBER 8: EG&G, Inc. and Daimler-Benz AG opened Germany's newest
state-of-the-art automotive testing facility, the Papenburg Proving Ground
in Emsland, Germany. Papenburg is Europe's largest automotive test track,
and Mercedes-Benz's first dedicated large-scale testing complex. The
facility is jointly operated by an EG&G German subsidiary and Mercedes-Benz
technology (MBtech), a wholly-owned subsidiary of Daimler-Benz.
Forward-Looking Information
- ---------------------------
All statements contained herein that refer to a time after September
27, 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 but not limited to 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 of the Company include the
ability to replace sales and earnings lost through divestitures, the General
Motors strike, the loss of the Kennedy Space Center contract, circuit board
assembly sales reductions, downturn in the semiconductor industry, declining
X-ray screening equipment trends, potential issues related to economic and
financial difficulties arising in Asia and other international markets,
unanticipated issues associated with the Year 2000 dating problem, difficulty in
attracting and retaining key personnel in certain areas and the success of
continued integration efforts related to the Belfab acquisition in the
Mechanical Components segment. 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 the 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.
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
APPROXIMATELY $1.4 BILLION AND MORE THAN 12,000 EMPLOYEES WORLDWIDE.
For further information contact: Deborah S. Lorenz, EG&G, Inc.
Tel. (781) 431-4306
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<PAGE>
CONSOLIDATED STATEMENT OF OPERATIONS
EG&G, Inc. and Subsidiaries
<TABLE>
<CAPTION>
Third Quarter Ended Nine Months Ended
------------------- -----------------
Sept. 27, Sept. 28, Sept. 27, Sept. 28,
(In thousands except per share data) 1998 1997 1998 1997
- ------------------------------------ ---- ---- ---- ----
<S> <C> <C> <C> <C>
SALES .......................................... $ 343,487 $ 358,368 $1,055,705 $1,074,046
Cost of Sales .................................. 260,500 266,726 793,809 805,353
Research and Development Expenses .............. 10,400 10,744 32,383 33,817
Selling, General and
Administrative Expenses..................... 52,392 60,569 172,519 180,026
Restructuring Charges .......................... -- -- 54,500 --
Asset Impairment Charge ........................ -- -- 7,400 28,200
Gains on Dispositions .......................... -- -- (125,822) --
--------- --------- ---------- ----------
OPERATING INCOME FROM
CONTINUING OPERATIONS ....................... 20,195 20,329 120,916 26,650
Other Income (Expense), Net .................... 3,925 701 1,845 (3,975)
--------- --------- ---------- ----------
Income From Continuing
Operations Before Income Taxes ............. 24,120 21,030 122,761 22,675
Provision for Income Taxes ..................... 8,683 7,151 41,227 12,618
--------- --------- ---------- ----------
INCOME FROM CONTINUING OPERATIONS .............. 15,437 13,879 81,534 10,057
Income From Discontinued Operations,
Net of Income Taxes ........................ -- 711 -- 2,714
--------- --------- ---------- ----------
NET INCOME ..................................... $ 15,437 $ 14,590 $ 81,534 $ 12,771
========= ========= ========== ==========
Basic Earnings Per Share:
CONTINUING OPERATIONS .......................... $ .34 $ .30 $1.79 $ .22
Discontinued Operations ........................ -- .02 -- .06
----- ----- ----- -----
NET INCOME ..................................... $ .34 $ .32 $1.79 $ .28
===== ===== ===== =====
Diluted Earnings Per Share:
CONTINUING OPERATIONS .......................... $ .33 $ .30 $1.77 $ .22
Discontinued Operations ........................ -- .02 -- .06
----- ----- ----- -----
NET INCOME ..................................... $ .33 $ .32 $1.77 $ .28
===== ===== ===== =====
Weighted Average Shares of
Common Stock Outstanding:
Basic .................................... 45,711 45,602 45,552 45,903
Diluted .................................. 46,218 45,790 46,089 46,072
</TABLE>
OTHER FINANCIAL INFORMATION
EG&G, Inc. and Subsidiaries
<TABLE>
<CAPTION>
Nine Months Ended
----------------
Sept. 27, Sept. 28,
(In thousands) 1998 1997
- -------------- ---- ----
<S> <C> <C>
Purchases of Common Stock:
Number of shares ........................... 1,785 1,332
Cost of shares ............................. $ 41,217 $ 28,104
Cash and Cash Equivalents....................... $178,649 $ 57,155
Total Debt ..................................... $137,829 $153,417
</TABLE>
All figures shown are subject to year-end audit. Page 4 of 6
<PAGE>
SALES AND OPERATING INCOME FROM CONTINUING OPERATIONS
BY INDUSTRY SEGMENT
EG&G, Inc. and Subsidiaries
<TABLE>
<CAPTION>
Third Quarter Ended Third Quarter Ended Sept. 28, 1997
------------------- ----------------------------------
Sept. 27, Total Divested Base
(In thousands) 1998 Operations Operations Operations(a)
- -------------- ---- ---------- ---------- ----------
<S> <C> <C> <C> <C>
INSTRUMENTS
Sales .............................. $ 71,075 $ 70,714 $ (2,627) $ 68,087
Operating Income Before Nonrecurring 5,849 6,068 (337) 5,731
8.2% 8.6% 12.8% 8.4%
Integration Costs .................. -- (2,092)
Operating Income ................... 5,849 3,976
MECHANICAL COMPONENTS
Sales .............................. $ 41,990 $ 70,420 $ (40,972) $ 29,448
Operating Income Before Nonrecurring 5,281 7,298 (6,635) 663
12.6% 10.4% 16.2% 2.3%
Integration Costs .................. (600) (139)
Gains on Dispositions .............. -- 4,223
Operating Income ................... 4,681 11,382
OPTOELECTRONICS
Sales .............................. $ 62,162 $ 66,309
Operating Income Before Nonrecurring 5,540 4,045
8.9% 6.1%
Integration Costs .................. -- (1,117)
Operating Income ................... 5,540 2,928
TECHNICAL SERVICES
Sales .............................. $ 168,260 $ 150,925
Operating Income Before Nonrecurring 13,671 9,486
8.1% 6.3%
Contract Closeout Costs ............ (2,300) --
Integration Costs .................. -- (288)
Operating Income ................... 11,371 9,198
GENERAL CORPORATE EXPENSES
Before Nonrecurring ................ $ (7,246) $ (6,287)
Integration Costs .................. -- (868)
General Corporate Expenses ......... (7,246) (7,155)
CONTINUING OPERATIONS
Sales .............................. $ 343,487 $ 358,368 $ (43,599) $ 314,769
Operating Income Before Nonrecurring 23,095 20,610 (6,972) 13,638
6.7% 5.8% 16.0% 4.3%
Contract Closeout Costs ............ (2,300) --
Integration Costs .................. (600) (4,504)
Gains on Dispositions .............. -- 4,223
Operating Income ................... 20,195 20,329
</TABLE>
(a) Excludes nonrecurring items and divested operations.
All figures shown are subject to year-end audit.
Page 5 of 6
<PAGE>
SALES AND OPERATING INCOME FROM CONTINUING OPERATIONS
BY INDUSTRY SEGMENT
EG&G, Inc. and Subsidiaries
<TABLE>
<CAPTION>
Nine Months Ended Sept. 27, 1998 Nine Months Ended Sept. 28, 1997
-------------------------------- --------------------------------
Total Divested Base Total Divested Base
(In thousands) Operations Operations Operations(a) Operations Operations Operations(a)
- -------------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
INSTRUMENTS
Sales .............................. $ 227,411 $ 214,738 $ (7,912) $ 206,826
Operating Income Before Nonrecurring 19,216 16,959 (1,029) 15,930
8.4% 7.9% 13.0% 7.7%
Restructuring Charges .............. (12,494) --
Integration Costs .................. -- (2,670)
Gains on Dispositions .............. -- 1,602
Operating Income ................... 6,722 15,891
MECHANICAL COMPONENTS
Sales .............................. $ 145,805 $ (22,666) $ 123,139 $ 216,452 $ (124,163) $ 92,289
Operating Income Before Nonrecurring 16,710 (2,127) 14,583 22,161 (17,389) 4,772
11.5% 9.4% 11.8% 10.2% 14.0% 5.2%
Restructuring Charges .............. (9,870) --
Integration Costs .................. (600) (139)
Gains on Dispositions .............. 125,822 4,223
Operating Income ................... 132,062 26,245
OPTOELECTRONICS
Sales .............................. $ 194,766 $ 191,181
Operating Income Before Nonrecurring 14,122 5,744
7.3% 3.0%
Restructuring Charges .............. (20,316) --
Asset Impairment Charge ............ -- (26,700)
Integration Costs .................. -- (1,117)
Operating Income (Loss) ........... (6,194) (22,073)
TECHNICAL SERVICES
Sales .............................. $ 487,723 $ 451,675
Operating Income Before Nonrecurring 37,247 27,641
7.6% 6.1%
Restructuring Charges .............. (7,913) --
Contract Closeout Costs ............ (2,300) --
Asset Impairment Charge ............ (7,400) (1,500)
Integration Costs .................. -- (288)
Operating Income ................... 19,634 25,853
GENERAL CORPORATE EXPENSES
Before Nonrecurring ................ $ (24,401) $ (18,398)
Charitable Contribution ............ (3,000) --
Restructuring Charges .............. (3,907) --
Integration Costs .................. -- (868)
General Corporate Expenses ......... (31,308) (19,266)
CONTINUING OPERATIONS
Sales .............................. $1,055,705 $ (22,666) $1,033,039 $1,074,046 $ (132,075) $ 941,971
Operating Income Before Nonrecurring 62,894 (2,127) 60,767 54,107 (18,418) 35,689
6.0% 9.4% 5.9% 5.0% 13.9% 3.8%
Charitable Contribution ............ (3,000) --
Restructuring Charges .............. (54,500) --
Contract Closeout Costs ............ (2,300) --
Integration Costs .................. (600) (5,082)
Asset Impairment Charge ............ (7,400) (28,200)
Gains on Dispositions .............. 125,822 5,825
Operating Income ................... 120,916 26,650
</TABLE>
(a) Excludes nonrecurring items, contract closeout costs and divested
operations.
All figures shown are subject to year-end audit.
Page 6 of 6
