THE PERKIN-ELMER CORPORATION
INDEX
Page
Part I. Financial Information
Condensed Consolidated Statements of 1
Operations for the Three Months and
Nine Months Ended March 31, 1994 and
April 30, 1993
Condensed Consolidated Statements of 2
Financial Position at March 31, 1994
and June 30, 1993
Condensed Consolidated Statements of 3
Cash Flows for the Nine Months Ended
March 31, 1994 and April 30, 1993
Notes to Unaudited Condensed Consolidated 4
Financial Statements
Management's Discussion and Analysis of 6
Financial Condition and Results of
Operations
Part II. Other Information 9
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THE PERKIN-ELMER CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
unaudited
(Dollar amounts in thousands, except per share amounts)
<TABLE>
Three months ended Nine months ended
<CAPTION>
March 31, April 30, March 31, April 30,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Net revenues $ 263,462 $ 258,558 $ 763,581 $ 779,689
Cost of sales 134,530 135,590 397,414 409,415
Gross margin 128,932 122,968 366,167 370,274
Selling, general and administrative 76,755 76,942 222,205 232,222
Research, development and engineering 25,033 22,208 70,394 64,886
Combination costs 28,500 28,500
Transaction costs 12,500 12,500
Operating income (loss) 27,144 (17,182) 73,568 32,166
Interest expense (1,840) (2,588) (5,303) (10,298)
Interest income 548 1,798 1,490 6,184
Other income (expense), net (672) 1,422 (531) 2,572
Income (loss) before income taxes 25,180 (16,550) 69,224 30,624
Income taxes 4,785 343 13,153 15,460
Income (loss) from continuing operations 20,395 (16,893) 56,071 15,164
Income (loss) from discontinued operations
(net of income taxes) 2,675 (12,465) 4,934
Income (loss) before cumulative effect of
changes in accounting principles 20,395 (14,218) 43,606 20,098
Loss from cumulative effect on prior years of
changes in accounting principles
(net of income taxes) (83,098)
Net income (loss) $ 20,395 $ (14,218)$ 43,606 $ (63,000)
Per share amounts:
Income (loss) from continuing operations $ 0.45 $ (0.38)$ 1.25 $ 0.34
Income (loss) from discontinued operations 0.06 (0.28) 0.11
Income (loss) before cumulative effect of changes
in accounting principles 0.45 (0.32) 0.97 0.45
Loss from cumulative effect on prior years of
changes in accounting principles (1.85)
Net income (loss) $ 0.45 $ (0.32)$ 0.97 $ (1.40)
Dividends per share $ 0.17 $ 0.17 $ 0.51 $ 0.51
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
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THE PERKIN-ELMER CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Dollar amounts in thousands)
At March 31, At June 30,
1994 1993
Assets
(unaudited)
Current Assets
Cash and cash equivalents $ 20,940 $ 28,582
Short-term investments 1,193 1,749
Accounts receivable, net 254,646 218,236
Inventories 207,557 179,082
Prepaid expenses and other current assets 55,163 47,275
Total current assets 539,499 474,924
Property, Plant and Equipment, net 158,186 162,689
Other Assets
Other long-term assets 159,601 152,735
Net assets of discontinued operations 62,361 60,722
Total other assets 221,962 213,457
Total Assets $ 919,647 $ 851,070
Liabilities and Shareholders' Equity
Current Liabilities
Loans payable $ 91,087 $ 73,982
Accounts payable 77,259 66,172
Accrued salaries and wages 39,189 43,350
Accrued taxes on income 42,745 38,056
Other accrued expenses 151,606 152,435
Total current liabilities 401,886 373,995
Long-Term Debt 33,593 7,069
Other Long-Term Liabilities 167,764 163,401
Shareholders' Equity
Capital stock 45,600 45,600
Capital in excess of par value 178,739 178,739
Retained earnings 181,395 163,861
Cumulative translation adjustments 413 (3,931)
Minimum pension liability (31,859) (31,859)
Treasury stock, at cost (57,884) (45,805)
Total shareholders' equity 316,404 306,605
Total Liabilities and Shareholders' Equity $ 919,647 $ 851,070
See accompanying Notes to Condensed Consolidated Financial Statements.
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THE PERKIN-ELMER CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
unaudited
(Dollar amounts in thousands)
<TABLE>
Nine months ended
<CAPTION>
March 31, 1994 April 30, 1993
<S> <C> <C>
Operating Activities
Income from continuing operations $ 56,071 $ 15,164
Adjustments to reconcile income from continuing
operations to net cash provided by operating activities:
Depreciation and amortization 30,774 33,182
Transaction and combination costs 41,000
Other, net (2,723) 453
Changes in operating assets and liabilities:
Increase in accounts receivable (36,606) (12,567)
Increase in inventories (26,338) (20,282)
Increase in prepaid expenses and other assets (12,127) (10,058)
Increase (decrease) in accounts payable and other liabilities 5,020 (34,798)
Net Cash Provided by Operating Activities 14,071 12,094
Investing Activities
Additions to property, plant and equipment
(net of disposals of $1,125 and $1,473, respectively) (23,058) (20,246)
Marketable securities and short-term investments 587 7,807
Investment in Lynx (9,581)
Proceeds from notes receivable and the sale of assets 12,582
Discontinued operations (1,883) 4,298
Legal settlement (15,000)
Other, net (19)
Net Cash Used by Investing Activities (26,772) (17,741)
Financing Activities
Proceeds from long-term borrowings 26,586 34
Principal payments on long-term debt (27,251)
Net change in loans payable 15,988 15,240
Dividends paid (22,431) (18,908)
Purchase of treasury stock (32,073) (4,430)
Stock issued for stock plans, net of cancellations 17,013 15,183
Net Cash Provided (Used) by Financing Activities 5,083 (20,132)
Effect of Exchange Rate Changes on Cash (24) (2,014)
Net change in cash and cash equivalents (7,642) (27,793)
Cash and cash equivalents beginning of period 28,582 43,106
Cash and cash equivalents end of period $ 20,940 $ 15,313
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
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THE PERKIN-ELMER CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - The condensed consolidated financial statements
should be read in conjunction with the financial statements
presented in The Perkin-Elmer Corporation's Transition Report on
Form 10-K for the transition period from August 1, 1992 to June
30, 1993. Significant accounting policies disclosed therein
have not changed. Effective June 30, 1993 the Company changed
its fiscal year end from July 31 to June 30. Therefore, the
financial statements included herein reflect the period from
July 1, 1993 through March 31, 1994 for fiscal 1994 and the
period from August 1, 1992 through April 30, 1993 for fiscal
1993.
NOTE 2 - Inventories are stated at the lower of cost (on a
first-in, first out basis) or market. Inventories are comprised
of the following major components:
(dollar amounts in millions) March 31, 1994 June 30, 1993
Raw materials and supplies $ 27.7 $ 27.9
Work-in-process 20.1 25.4
Finished products 159.8 125.8
$ 207.6 $ 179.1
NOTE 3 - Two major issues have been resolved and are included
in the nine month results. First, the Company paid $15 million
to settle potential claims related to the Hubble Space Telescope
mirror. In 1989, the Company had sold the unit which performed
the work on the telescope to a subsidiary of Hughes Aircraft
Company. This is recorded in discontinued operations in the
nine month results. In the second issue, the Company received a
favorable ruling from the U.S. Tax Court upholding the Company's
pricing method on intercompany sales with respect to its
operations in Puerto Rico.
NOTE 4 - During the first quarter of fiscal 1994 the Company
sold the net assets of its Applied Science Operation to Orbital
Sciences Corporation. The Company received cash proceeds of
$600,000 and 320,000 shares of Orbital Sciences Corporation
common stock which were subsequently disposed of in the second
quarter. During the second quarter of fiscal 1994, the Company
sold its minority equity investment in MRJ, Inc. to MRJ Group,
Inc. for $3.3 million in cash. In addition, two subordinated
notes due from MRJ, Inc. were repaid. The gains from these
sales are reflected in other income and were not significant to
the Company's results of operations.
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NOTE 5 - The Company has entered into a definitive agreement
with Sulzer Inc., a wholly-owned subsidiary of Sulzer Ltd.,
Winterthur, Switzerland for the sale of its Metco Division. The
completion of the transaction is subject to customary closing
conditions, including receipt of relevant government regulatory
approvals. The Company estimates that there will be no
appreciable impact on earnings as a result of the sale.
NOTE 6 - The Company is required to implement Statement of
Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities", no later than fiscal
year 1995. This statement requires investments in equity
securities that have readily determinable fair values and all
investments in debt securities to be classified in three
categories: 1. held-to-maturity securities which are reported
at amortized cost, 2. trading securities which are reported at
fair value with unrealized gains and losses included in earnings
and 3. available for sale securities which are reported at fair
value with unrealized gains and losses excluded from earnings
and reported as a separate component of shareholder's equity.
The Company is currently analyzing the statement to determine
the timing and impact, if any, on its financial statements.
NOTE 7 - The unaudited condensed consolidated financial
statements reflect, in the opinion of the Company's management,
all adjustments which are necessary for a fair statement of the
results for the interim periods. All such adjustments are of a
normal recurring nature. These results are, however, not
necessarily indicative of the results to be expected for the
full year.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following comments should be read in conjunction with
"Management's Discussion and Analysis" appearing on pages 19 -
21 of the Company's 1993 Annual Report to Shareholders.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1994
Consolidated net revenues were $263.5 million in the third
quarter of fiscal 1994 compared with $258.6 million one year
ago. The prior year included $8 million in revenues from the
Company's Applied Science Operation which was sold in the first
quarter of this fiscal year. The effects of foreign currency
translation did not have a significant effect on third quarter
results. The favorable effects of currency in the Far East were
mitigated by the stronger dollar versus the European currencies.
Sales in the Far East increased in most of the analytical
instrument markets as the Company capitalized on competitive
pricing strategies aimed at market share improvement. Revenues
in North America grew only slightly in the third quarter as the
uncertain economic climate in the United States slowed demand
from the Company's pharmaceutical and environmental customers.
In Europe, less demand for traditional analytical instruments,
strong competition and the continued recessionary environment
resulted in sales at a lower level than the prior year.
Gross margin as a percentage of net revenues was 48.9% in the
third quarter of fiscal 1994 as compared with 47.6% in fiscal
1993. Favorable gross margin percentages, primarily resulting
from product mix in Europe and higher volumes in Latin America,
were mitigated by the aforementioned pricing strategies in the
Far East being used to increase market share.
Operating expenses were $101.8 million in the current quarter
compared with $140.2 million a year ago. Last year's third
quarter operating expenses included one-time charges of $41.0
million related to the Applied Biosystems merger. Selling,
general and administrative (SG&A) expenses were $76.8 million in
the current quarter compared with $76.9 million in the prior
year. Expense reductions in Europe were the primary factors
holding SG&A expenses level with the prior year. Research,
development and engineering expenses for the quarter increased
$2.8 million over the prior year. The increase primarily
reflects higher spending in life science programs.
Interest expense was $1.8 million in the current quarter as
compared with $2.6 million one year ago. The decrease resulted
from reduced short-term borrowing levels and lower interest
rates. Interest income was $.5 million compared with $1.8
million a year ago. The decrease in interest income was the
result of lower long-term notes receivable in fiscal 1994 when
compared with the prior year.
Other expense was $.7 million in the current year compared with
other income of $1.4 million in fiscal 1993. Lower joint
venture income and higher miscellaneous non-operating expenses
accounted for the change.
See Results of Operations for the nine months ended March 31,
1994 for discussion of the effective income tax rate.
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RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED MARCH 31, 1994
Consolidated net revenues were $763.6 million in the first nine
months of fiscal 1994 compared with $779.7 million in fiscal
1993, a decrease of $16.1 million. The prior year included
$27.5 million of revenues compared with $5.1 million this year
from the Company's Applied Science Operation, which was sold in
the first quarter of fiscal 1994. The effect of currency
translation decreased fiscal 1994 net revenues by approximately
$24 million when compared to the same period in fiscal year
1993. Operationally, the U.S. and Far Eastern markets improved
during the first nine months of fiscal 1994 as demand for life
science products increased. Higher unit volumes of DNA
sequencers has been the primary contributor to the increased
life science revenues during fiscal 1994. In the Far East the
Company has used selective pricing strategies in analytical
instrument product lines to generate higher unit sales volumes
from year-to-year. Traditional analytical instrument markets
experienced slower demand in the first nine months of fiscal
1994, particularly in Europe, where the soft economy and
competitive pricing pressures have weakened sales from year to
year.
Gross margin as a percentage of net revenues was 48% for the
first nine months of fiscal 1994 compared with 47.5% in fiscal
1993. The improvement resulted from increased higher margin
revenues for life science products, partially offset by reduced
sales volume in Europe, unfavorable effects of currency
translation and selective pricing strategies in the Far East.
SG&A expenses were $222.2 million for the first nine months of
this year compared with $232.2 million in fiscal 1993.
Favorable currency effects of approximately $7 million and cost
reductions in Europe mitigated higher marketing expenses in the
Company's Far Eastern and North American markets. Research,
development and engineering expenses rose $5.5 million
year-to-year from increased investment in life science programs.
Interest expense was $5.3 million during the nine months ended
March 31, 1994 compared with $10.3 million for the first nine
months of fiscal 1993. Reduced short-term borrowing levels and
lower interest rates contributed to the reduced expense.
Interest income was $1.5 million in the current year compared
with $6.2 million in fiscal 1993. Reductions in long-term notes
receivable was the primary reason for the decrease in interest
income.
Other expense for the nine months ended March 31, 1994 was $.5
million compared with other income of $2.6 million in the prior
year. During the first six months of fiscal 1994, the Company
sold the net assets of its Applied Science Operation to Orbital
Sciences Corporation and its interest in MRJ Inc. to MRJ Group
Inc. (See Note 4). The gains on sale from both transactions
were recorded in other income and were not significant to the
results of operations. The reduction in other income was
primarily attributed to lower joint venture income and higher
miscellaneous non-operating expenses in the current year.
The effective income tax rate was approximately 19% for the
first nine months of fiscal 1994 compared with approximately 50%
for the first nine months of the prior year. The prior year's
nine month results included one-time charges of $41.0 million
related to the merger with Applied Biosystems which were not
fully deductible for tax purposes, resulting in a higher tax
rate. During the first quarter of this fiscal year, the Company
received a favorable ruling from the U.S. Tax Court upholding
the Company's pricing method on intercompany sales with respect
to its operations in Puerto Rico. Resolution of this
long-standing dispute with the U.S. government and the
additional tax benefits realized from the inclusion of Applied
Biosystems' results for a full year also reduced the Company's
effective tax rate for fiscal 1994 compared to last year.
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DISCONTINUED OPERATIONS
The Hubble Telescope pretax settlement of $15 million (see Note
3) and the results of the Company's Material Sciences
discontinued operation accounted for an after-tax loss of $12.5
million for the nine months ended March 31, 1994. During the
third quarter, the Company announced that it had entered into a
definitive agreement with Sulzer Inc., a wholly-owned subsidiary
of Sulzer Ltd., Winterthur, Switzerland, for the sale of its
Metco Division. The completion of the transaction is subject to
customary closing conditions, including receipt of relevant
government regulatory approvals. Management believes that there
will be no appreciable impact on earnings from this transaction.
(See Note 5).
FINANCIAL RESOURCES AND LIQUIDITY
The Company's cash and cash equivalents aggregated $20.9 million
at March 31, 1994, compared with $28.6 million at year end. Net
cash provided by operations was $14.1 million for the nine
months ended March 31, 1994 as compared with $12.1 million for
the prior year's nine month period. Loans payable increased
from $74 million at year end to $91.1 million at March 31, 1994
principally to fund combination expenses associated with the
Applied Biosystems merger, settle potential claims related to
the Hubble Space Telescope Mirror and fund the Company's pension
plan. Long-term debt increased from $7.1 million to $33.6
million during fiscal 1994. This increase represents a 3 year
term loan for 2.8 billion Yen ($27.3 million). The proceeds
from the loan were used to pay down short-term loans payable and
to fund working capital requirements of the Company.
Capital expenditures were approximately $24.2 million in the
current year versus $21.7 million a year ago.
RECENTLY ISSUED ACCOUNTING STANDARD
See Note 6 to the Condensed Consolidated Financial Statements.
OUTLOOK
Expectations for the remainder of this fiscal year are being
impacted by the protracted economic downturn in the European
analytical instrument markets and the uncertain climate for
environmental and pharmaceutical customers in the United States.
In the longer term, the Company is encouraged by the
accelerating pace of biotechnology advances which it hopes will
translate into demand for its life science systems. The Company
is also optimistic about the gradual upturn of global analytical
instruments markets, especially in the Far East for industrial
and chemical applications.
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PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
11. Computation of Net Income Per Share.
(b) Reports on Form 8-K.
No reports on Form 8-K have been filed during the
quarter for which this report is filed.
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SIGNATURES
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 thereunto duly
authorized.
THE PERKIN-ELMER CORPORATION
By: /s/ Gaynor N. Kelley
Gaynor N. Kelley
Chairman and
Chief Executive Officer
By: /s/ William F. Emswiler
William F. Emswiler
Vice President, Finance
Dated: May 10, 1994
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EXHIBIT INDEX
Exhibit No. Exhibit Page No.
11 Computation of Net
Income Per Share
THE PERKIN-ELMER CORPORATION
COMPUTATION OF NET INCOME PER SHARE
(Amounts in thousands, except per share amounts)
Nine months ended
March 31, 1994 April 30, 1993
Weighted average number of common shares 43,978 43,712
Common stock equivalents - stock options 955 1,222
Weighted average number of
common shares used in calculating 44,933 44,934
primary net income per share
Additional dilutive stock options
under paragraph #42 APB #15 108 64
Shares used in calculating fully
diluted net income per share 45,041 44,998
Calculation of primary and fully
diluted net income per share:
PRIMARY AND FULLY DILUTED:
Income from continuing operations 56,071 15,164
Income (loss) from discontinued operations (12,465) 4,934
Income before cumulative effect of
changes in accounting principles 43,606 20,098
Loss from cumulative effect on prior years of
changes in accounting principles (83,098)
Net income (loss) used in the calculations of
primary and fully diluted net income per share 43,606 (63,000)
PRIMARY per share amounts:
Income from continuing operations 1.25 0.34
Income (loss) from discontinued operations (0.28) 0.11
Income before cumulative effect of
changes in accounting principles 0.97 0.45
Loss from cumulative effect on prior years of
changes in accounting principles (1.85)
Net income (loss) 0.97 (1.40)
FULLY DILUTED per share amounts:
Income from continuing operations 1.25 0.34
Income (loss) from discontinued operations (0.28) 0.11
Income before cumulative effect of
changes in accounting principles 0.97 0.45
Loss from cumulative effect on prior years of
changes in accounting principles (1.85)
Net income (loss) 0.97 (1.40)
EXHIBIT 11
