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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 26, 1999
EG&G, Inc.
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(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
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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)
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Item 5. Other Events
On January 26, 1999, the Company issued a press release reporting on its
financial results for the fourth 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/ Robert F. Friel
-----------------------------
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
Date: March 4, 1999
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EXHIBIT INDEX
Exhibit Number Exhibit Description
- -------------- -------------------
(99) Press Release dated January 26, 1999
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FOR IMMEDIATE RELEASE EXHIBIT 99
26 January 1999
EG&G REPORTS 10% INCREASE IN INCOME FROM CONTINUING OPERATIONS
BEFORE ACQUISITION CHARGES FOR THE FOURTH QUARTER 1998
Company Finishes 1998 with 18% Growth in Income from
Continuing Operations Before Nonrecurring Items
WELLESLEY, MASSACHUSETTS....EG&G, Inc. today reported that income from
continuing operations before acquisition charges increased 10% for the fourth
quarter of 1998 and 18% before nonrecurring items for the full year, compared
with 1997 levels. This represents the fifth consecutive quarter of double digit
growth.
For the fourth quarter of 1998, EG&G posted income from continuing operations of
$22.8 million, or $0.50 per share on a diluted basis, compared to $20.7 million,
or $0.45 per diluted share for the same period in 1997. The 1998 figures exclude
$2.3 million, or $0.05 per share, related to an in-process research and
development charge from acquisitions. The 1997 fourth-quarter figures include a
$6 million after-tax contribution from divested operations. On a reported basis,
fourth-quarter 1998 income from continuing operations was $20.5 million, or
$0.45 per share on a diluted basis, which included the in-process research and
development charge. This compares to $20.6 million, or $0.45 per share, for the
comparable period in 1997.
Fourth-quarter 1998 sales on a base operations basis* increased 3% to $352.2
million, compared to $343.4 million for the same period in 1997. Reported sales
decreased 9% to $352.2 million, compared to $386.8 million for the same period
in 1997, which included $43.4 million sales of operations that were subsequently
divested.
For the year ended January 3, 1999, EG&G announced income from continuing
operations of $61.5 million, or $1.34 per share on a diluted basis, an increase
of 18% compared to $52.2 million in 1997. The 1998 figures exclude $40.5 million
of nonrecurring income, net, and include an after-tax contribution of $1.8
million from divested operations. Figures for 1997 exclude $21.5 million of
nonrecurring items, and include a contribution of $18.9 million from divested
operations. On a reported basis, 1998 income from continuing operations was $102
million, or $2.22 per share on a diluted basis, which included $0.88 per share
of nonrecurring items. This compares to $30.6 million, or $0.67 per share, for
1997.
On a base operations basis, 1998 sales increased 8% to $1.39 billion, compared
to $1.29 billion in 1997. Reported sales decreased 4% to $1.41 billion, compared
to $1.46 billion in 1997, which included $175 million sales of operations that
were subsequently divested.
* Base operations - results exclude nonrecurring items and divested operations.
See pages 5 and 6 of this release for detailed results.
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PAGE 2 OF 6
Gregory L. Summe, President and Chief Executive Officer stated, "We had a strong
fourth quarter and expanded our operating margin from 8.6% to 10.5%, the highest
margin since EG&G began its transformation in 1994. We did this through driving
productivity, quality, and simplification of our business. We also believe that
we have accelerated revenue growth for the coming year with the acquisitions of
Lumen Technologies, Inc. and Life Science Resources, Ltd. We are well positioned
going into the new year and feel confident in our ability to deliver $1.60
earnings per share, on a diluted basis, for 1999."
Financial Highlights:
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<TABLE>
<CAPTION>
DILUTED EPS 4Q 1998 4Q 1997 YEAR 1998 YEAR 1997
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Continuing operations before
nonrecurring items $ 0.50 $ 0.45 $ 1.34 $ 1.13
Nonrecurring items, net (0.05) -- 0.88 (0.46)
--------- --------- --------- ---------
As reported $ 0.45 $ 0.45 $ 2.22 $ 0.67
========= ========= ========= =========
(in millions) 4Q 1998 4Q 1997 YEAR 1998 YEAR 1997
--------- --------- --------- ---------
BASE OPERATIONS*
Sales $ 352.2 $ 343.4 $ 1,385.2 $ 1,285.4
Operating income from continuing
operations before taxes 36.9 24.9 97.6 61.6
</TABLE>
* Base operations - results exclude nonrecurring items and divested operations.
See pages 5 and 6 of this release for detailed results. Nonrecurring items
include gains on dispositions, restructuring charges, asset impairment charges,
in-process research and development charge, contract close-out costs,
integration costs, charitable contribution and benefit plan deficit.
FOURTH-QUARTER FINANCIAL HIGHLIGHTS PRESENTED ON A BASE OPERATIONS BASIS:
- ------------------------------------------------------------------------
On December 21, 1998, EG&G announced its intention to begin reporting as five
operating segments.
- - LIFE SCIENCES sales increased 20% to $45.2 million; operating income
increased 13% to $5.5 million compared with the fourth quarter of 1997.
The improvement was across both diagnostic and the bioanalytical
research business, driven by new product sales and strengthened
geographic distribution.
- - OPTOELECTRONICS sales increased 5% to $73.8 million; operating income
increased 88% to $6.6 million compared with the same period last year.
The increase in sales was primarily due to strong sales from the custom
optoelectronics business. Breakeven performance at IC Sensors and
margin improvement across most businesses contributed to the increase
in operating income.
- - INSTRUMENTS sales were flat at $70.3 million; operating income
increased 31% to $12.4 million versus the comparable period last year.
Sales growth was limited by shipment timing of several international
security systems orders and softness in automotive services. Operating
profits benefited from increased royalty and licensing fees and a tax
refund offset partially by customer contract provisions.
- - ENGINEERED PRODUCTS sales increased 28% to $44.5 million; operating
income increased 50% to $5.2 million compared to 1997 fourth-quarter
levels. The sales increase was due to the inclusion of sales from
Belfab, an April 1998 acquisition, and overall strength in the
aerospace business. Improved margins across most businesses contributed
to the increase in operating income. Partially offsetting these
increases was continued softness in the semiconductor industry.
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PAGE 3 OF 6
- - TECHNICAL SERVICES sales decreased 9% to $118.4 million due to the
absence of revenue from the Kennedy Space Center contract in the fourth
quarter. Operating income increased 22% to $8.9 million compared to
1997 levels. The increase was due primarily to improved performance in
most of the businesses, coupled with strong contributions from the
privatization sector.
Recent events included:
- ----------------------
- - OCTOBER 8: EG&G, Inc. and Daimler-Benz announced the opening of
Germany's newest state-of-the-art automotive testing facility, the
Papenburg Proving Ground in Emsland, Germany. The facility is jointly
operated by EG&G, Inc. and Daimler-Benz.
- - OCTOBER 15: EG&G, Inc. announced that EG&G Astrophysics would begin
replacing X-ray security systems in key markets served by a major U.S.
airline. During the three-year upgrading program, EG&G will supply 75
Linescan(R) 100 systems, the first site being San Francisco
International Airport.
- - OCTOBER 21: EG&G reported third-quarter 1998 income of $14.6 million
and basic earnings per share of $0.32, a 28% increase over
third-quarter 1997 levels.
- - NOVEMBER 3: EG&G announced that EG&G Engineered Products was awarded a
major contract from Applied Materials, Inc. This contract represented
the single largest award for metal bellows products in EG&G, Inc.
history.
- - DECEMBER 8: EG&G Astrophysics announced that it had been awarded a
contract that will bring airport hold-baggage screening technology to
South Africa. The agreement calls for EG&G Astrophysics to supply the
Airports Company South Africa at Johannesburg International Airport
with Z-Scan(R) explosives detection systems.
- - DECEMBER 16: EG&G announced that it had successfully completed its
tender offer to purchase shares of Lumen Technologies, Inc. for $7.75
per share. The tender offer was made in connection with the acquisition
of Lumen for $250 million in cash and assumed debt.
- - DECEMBER 16: John M. Kucharski, Chairman and CEO of EG&G, Inc.,
announced that Gregory L. Summe would become CEO, effective January 1,
1999. Summe will also succeed Kucharski as Chairman at the Company's
annual meeting in April.
- - DECEMBER 16: EG&G announced that it would adopt Statement of Financial
Accounting Standards (SFAS) No. 131, "Disclosures about Segments of an
Enterprise and Related Information," in the fourth quarter of 1998.
EG&G's financial reporting will be based on five operating segments,
which are the equivalent of the Company's five Strategic Business
Units.
- - DECEMBER 21: EG&G announced that it has agreed to purchase privately
held Life Science Resources Limited, Cambridge, U.K., a leading
developer and supplier of cutting edge biotechnology, biomedical and
clinical research instrumentation.
- - JANUARY 13: EG&G announced that Robert F. Friel will become Senior Vice
President and Chief Financial Officer, effective, February 1, 1999.
Friel replaces John F. Alexander, who contributed to EG&G
accomplishments for the past 16 years.
- - JANUARY 22: EG&G filed a Form S-3 Universal Shelf Registration
Statement with the Securities and Exchange Commission covering up to
$500 million in various equity and debt instruments.
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PAGE 4 OF 6
FORWARD-LOOKING INFORMATION AND FACTORS AFFECTING FUTURE PERFORMANCE
This press release contains "forward-looking statements." For this
purpose, any statements contained in this press release that are not statements
of historical fact may be deemed to be forward-looking statements. Words such as
"believes," "anticipates," "plans," "expects," "will" and similar expressions
are intended to identify forward-looking statements. There are a number of
important factors that could cause the results of EG&G to differ materially from
those indicated by these forward-looking statements, including among others, the
factors set forth in Exhibit 99.1 to our Current Report on Form 8-K filed with
the Securities and Exchange Commission on January 25, 1999, which Exhibit 99.1
is incorporated by reference in this press release.
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 13,000 employees worldwide.
For further information contact: Deborah S. Lorenz, EG&G, Inc.
Tel. (781) 431-4306
-more-
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PAGE 5 OF 6 EG&G, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Fourth Quarter Fiscal Year
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(In thousands except per share data) 1998 1997 1998 1997
---------------------------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
SALES $ 352,191 $ 386,759 $ 1,407,896 $ 1,460,805
Cost of Sales 247,930 279,338 1,041,739 1,084,691
Research and Development Expenses 13,648 11,090 46,031 44,907
Selling, General and Administrative Expenses 53,753 63,383 226,272 243,409
In-Process Research and Development Charge 2,300 -- 2,300 --
Restructuring Charges -- -- 54,500 --
Asset Impairment Charge -- -- 7,400 28,200
Gains on Dispositions -- -- (125,822) --
----------- ----------- ----------- -----------
OPERATING INCOME FROM CONTINUING OPERATIONS 34,560 32,948 155,476 59,598
Other Income (Expense), Net (1,287) (1,597) 558 (5,572)
----------- ----------- ----------- -----------
Income From Continuing Operations Before Income Taxes 33,273 31,351 156,034 54,026
Provision for Income Taxes 12,805 10,763 54,032 23,381
----------- ----------- ----------- -----------
INCOME FROM CONTINUING OPERATIONS 20,468 20,588 102,002 30,645
Income From Discontinued Operations, Net of Income Taxes -- 333 -- 3,047
----------- ----------- ----------- -----------
NET INCOME $ 20,468 $ 20,921 $ 102,002 $ 33,692
=========== =========== =========== ===========
Basic Earnings Per Share:
CONTINUING OPERATIONS $ .46 $ .45 $ 2.25 $ .67
Discontinued Operations -- .01 -- .07
----------- ----------- ----------- -----------
NET INCOME $ .46 $ .46 $ 2.25 $ .74
=========== =========== =========== ===========
Diluted Earnings Per Share:
CONTINUING OPERATIONS $ .45 $ .45 $ 2.22 $ .67
Discontinued Operations -- .01 -- .07
----------- ----------- ----------- -----------
NET INCOME $ .45 $ .46 $ 2.22 $ .74
=========== =========== =========== ===========
Weighted Average Shares of Common Stock Outstanding:
Basic 44,728 45,319 45,322 45,757
Diluted 45,266 45,448 45,884 45,898
</TABLE>
INFORMATION EXCLUDING NONRECURRING ITEMS AND DISCONTINUED OPERATIONS
<TABLE>
<CAPTION>
Fourth Quarter Fiscal Year
(In thousands -------------- -----------
except per share data) 1998 1997 1998 1997
- --------------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net Income $ 22,768 $ 20,690 $ 61,478 $ 52,178
Basic Earnings Per Share .51 .45 1.36 1.13
Diluted Earnings Per Share .50 .45 1.34 1.13
</TABLE>
Note: Nonrecurring items include gains on dispositions, restructuring charges,
asset impairment charges, in-process research and development charge, contract
closeout costs, integration costs, charitable contribution and benefit plan
deficit.
Other Financial Information
<TABLE>
<CAPTION>
Fiscal Year
-----------
(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 $ 95,565 $ 57,934
Total Debt $287,723 $161,030
</TABLE>
<PAGE> 6
EG&G, INC. AND SUBSIDIARIES
PAGE 6 OF 6
SALES AND OPERATING PROFIT BY OPERATING SEGMENT
<TABLE>
<CAPTION>
Fourth Quarter Fiscal Year
-------------- -----------
(In thousands) 1998 1997 1998 1997
------------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
LIFE SCIENCES Sales $ 45,200 $ 37,688 $ 148,124 $ 125,380
OP$ 5,469 4,805 9,046 10,108
OP% 12.1% 12.7% 6.1% 8.1%
----------- ----------- ----------- -----------
OP$ before nonrecurring items 5,469 4,828 13,696 10,308
OP% before nonrecurring items 12.1% 12.8% 9.2% 8.2%
----------- ----------- ----------- -----------
OPTOELECTRONICS Sales 73,792 70,110 268,558 261,291
OP$ 4,335 3,375 (5,454) (23,128)
OP% 5.9% 4.8% -2.0% -8.9%
----------- ----------- ----------- -----------
OP$ before nonrecurring items 6,635 3,526 17,162 5,326
OP% before nonrecurring items 9.0% 5.0% 6.4% 2.0%
----------- ----------- ----------- -----------
INSTRUMENTS Sales 70,314 70,293 247,388 236,839
OP$ 12,440 9,401 6,659 17,966
OP% 17.7% 13.4% 2.7% 7.6%
----------- ----------- ----------- -----------
OP$ before nonrecurring items 12,440 9,480 25,343 20,633
OP% before nonrecurring items 17.7% 13.5% 10.2% 8.7%
----------- ----------- ----------- -----------
ENGINEERED PRODUCTS Sales 44,507 34,744 167,646 127,087
OP$ 5,231 3,445 5,194 8,846
OP% 11.8% 9.9% 3.1% 7.0%
----------- ----------- ----------- -----------
OP$ before nonrecurring items 5,231 3,496 15,664 9,296
OP% before nonrecurring items 11.8% 10.1% 9.3% 7.3%
----------- ----------- ----------- -----------
TECHNICAL SERVICES Sales 118,378 130,376 553,514 533,323
OP$ 8,948 6,841 24,941 22,776
OP% 7.6% 5.2% 4.5% 4.3%
----------- ----------- ----------- -----------
OP$ before nonrecurring items 8,948 7,338 31,714 23,512
OP% before nonrecurring items 7.6% 5.6% 5.7% 4.4%
----------- ----------- ----------- -----------
DIVESTITURES AND OTHER Sales -- 43,548 22,666 176,885
OP$ (1,863) 5,081 115,090 23,030
OP% -- 11.7% 507.8% 13.0%
----------- ----------- ----------- -----------
OP$ before nonrecurring items (1,863) 4,435 (3,825) 19,159
OP% before nonrecurring items -- 10.2% -16.9% 10.8%
----------- ----------- ----------- -----------
TOTAL Sales $ 352,191 $ 386,759 $ 1,407,896 $ 1,460,805
=========== =========== =========== ===========
OP$ 34,560 32,948 155,476 59,598
=========== =========== =========== ===========
OP% 9.8% 8.5% 11.0% 4.1%
----------- ----------- ----------- -----------
OP$ before nonrecurring items 36,860 33,103 99,754 88,234
OP% before nonrecurring items 10.5% 8.6% 7.1% 6.0%
----------- ----------- ----------- -----------
</TABLE>
Note: Nonrecurring items include gains on dispositions, restructuring charges,
asset impairment charges, in-process research and development charge, contract
closeout costs, integration costs, charitable contribution and benefit plan
deficit.
