SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number: 1-4389
THE PERKIN-ELMER CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
New York 06-0490270
(State or Other (I.R.S. Employer
Jurisdiction of Identification Number)
Incorporation or
Organization)
761 Main Avenue,
Norwalk, Connecticut 06859-0001
(Address of Principal Executive Offices, Including Zip
Code)
(203) 762-1000
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes __x_ No ____
Number of shares outstanding of Common Stock, par value $1 per
share, as of November 1, 1995: 42,268,435.
<PAGE>
THE PERKIN-ELMER CORPORATION
INDEX
Part I. Financial Information Page
Condensed Consolidated Statements of Operations for the
Three Months Ended September 30, 1995 and 1994 1
Condensed Consolidated Statements of Financial Position at
September 30, 1995 and June 30, 1995 2
Condensed Consolidated Statements of Cash Flows for the
Three Months Ended September 30, 1995 and 1994 3
Notes to Unaudited Condensed Consolidated Financial Statements 4
Management's Discussion and Analysis of Financial
Condition and Results of Operations 6
Part II. Other Information 8
<PAGE>
THE PERKIN-ELMER CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
unaudited
(Dollar amounts in thousands except per share amounts)
Three months ended September 30,
1995 1994
Net revenues $ 264,361 $ 247,278
Cost of sales 135,426 129,028
Gross margin 128,935 118,250
Selling, general and administrative 78,719 73,681
Research, development and engineering 25,177 23,288
Operating income 25,039 21,281
Interest expense 1,433 2,388
Interest income 638 620
Other expense, net 1,395 1,064
Income before income taxes 22,849 18,449
Provision for income taxes 5,255 3,505
Net income $ 17,594 $ 14,944
Net income per share $ 0.41 $ 0.35
Dividends per share $ 0.17 $ 0.17
See accompanying Notes to Unaudited Condensed Consolidated
Financial Statements.
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<PAGE>
THE PERKIN-ELMER CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
At September 30, At June 30,
1995 1995
(unaudited)
<S> <C> <C>
Assets
Current assets
Cash and cash equivalents $ 41,431 $ 73,010
Short-term investments 7,000 7,000
Accounts receivable, net 232,072 234,153
Inventories 218,368 212,859
Prepaid expenses and other current assets 74,237 74,606
Total current assets 573,108 601,628
Property, plant and equipment, net 150,847 155,441
Other long-term assets 131,042 135,969
Total assets $ 854,997 $ 893,038
Liabilities and Shareholders' Equity
Current liabilities
Loans payable $ 47,319 $ 54,757
Accounts payable 75,975 85,342
Accrued salaries and wages 30,733 38,862
Accrued taxes on income 39,573 34,676
Other accrued expenses 144,458 160,347
Total current liabilities 338,058 373,984
Long-term debt 29,177 34,124
Other long-term liabilities 177,355 180,230
Shareholders' equity
Capital stock 45,600 45,600
Capital in excess of par value 175,966 176,699
Retained earnings 224,927 215,363
Foreign currency translation adjustments 2,034 9,805
Minimum pension liability adjustment (34,445) (34,445)
Treasury stock, at cost (103,675) (108,322)
Total shareholders' equity 310,407 304,700
Total liabilities and shareholders' equity $ 854,997 $ 893,038
</TABLE>
See accompanying Notes to Unaudited Condensed Consolidated
Financial Statements.
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<PAGE>
THE PERKIN-ELMER CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
Three months ended September 30,
1995 1994
<S>
Operating Activities <C> <C>
Net income $ 17,594 $ 14,944
Adjustments to reconcile net income to net
cash used by operating activities:
Depreciation and amortization 10,535 9,928
Deferred income taxes 2,138 1,733
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable (6,064) 5,587
(Increase) decrease in inventories (9,557) 2,420
Increase in prepaid expenses and other assets (3,189) (2,685)
Decrease in accounts payable and other liabilities (29,241) (46,438)
Net cash used by operating activities (17,784) (14,511)
Investing Activities
Additions to property, plant and equipment
(net of disposals of $440 and $425, respectively) (6,732) (6,003)
Proceeds from sale of discontinued operations 64,847
Net cash provided (used) by investing activities (6,732) 58,844
Financing Activities
Principal payments on long-term debt (591)
Net change in loans payable (1,804) (5,991)
Dividends declared (7,168) (7,220)
Purchases of common stock for treasury (16,027)
Stock issued for stock plans, net of cancellations 2,730 1,309
Net cash used by financing activities (6,242) (28,520)
Effect of exchange rate changes on cash (821) (125)
Net change in cash and cash equivalents (31,579) 15,688
Cash and cash equivalents beginning of period 73,010 25,003
Cash and cash equivalents end of period $ 41,431 $ 40,691
</TABLE>
See accompanying Notes to Unaudited Condensed Consolidated
Financial Statements.
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<PAGE>
THE PERKIN-ELMER CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The interim condensed consolidated financial statements should be
read in conjunction with the financial statements presented in The
Perkin-Elmer Corporation's (the Company's) Annual Report on Form 10-
K for the fiscal year ended June 30, 1995. Significant accounting
policies disclosed therein have not changed.
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 a full year. Certain amounts in the
condensed consolidated financial statements have been reclassified
for comparative purposes.
NOTE 2 - INVENTORIES
Inventories are stated at the lower of cost (on a first-in, first-
out basis) or market. Inventories included the following
components:
(Dollar amounts in millions) September 30, June 30,
1995 1995
Raw materials and supplies $ 32.0 $ 29.2
Work-in-process 18.1 18.9
Finished products 168.3 164.8
Total inventories $ 218.4 $ 212.9
NOTE 3 - DERIVATIVES
The Company manages exposure to fluctuations in foreign exchange
rates by creating offsetting positions through the use of derivative
financial instruments, primarily forward or purchased option foreign
exchange contracts. The Company does not use derivative financial
instruments for trading or speculative purposes, nor is the Company
a party to leveraged derivatives. Foreign exchange contracts are
accounted for as hedges of net investments, firm commitments and
foreign currency transactions. The gains and losses on the
instruments utilized to create the hedge offset the gains and losses
on the underlying exposures. At September 30, 1995, the total
carrying amount of the Company's outstanding foreign currency
contracts held was $173.4 million. The counterparties to these
contracts consist of a limited number of highly rated major
financial institutions and the Company does not expect to record any
losses as a result of counterparty default.
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<PAGE>
NOTE 4 - RESTRUCTURING
The Company recorded a $23.0 million before-tax charge in the fourth
quarter of fiscal 1995 for restructuring actions focused on reducing
the analytical instruments business infrastructure. The charge
included $20.7 million for severance and benefit costs for a
worldwide workforce reduction of 227 employees and $2.3 million for
closure and facility consolidation expenses. As of September 30,
1995, the Company made partial severance and benefit payments
totaling $5.0 million to employees separated under the
restructuring program and payments of $1.3 million were made for
closure and facility consolidation costs, primarily related to the
shutdown of the Company's Puerto Rico manufacturing facility. The
balance at September 30, 1995 of the cost to complete the remaining
restructuring actions was $16.7 million. There have been no
adjustments made to increase or decrease the liabilities originally
accrued for the restructuring plan.
NOTE 5 - SALE OF MATERIAL SCIENCES SEGMENT
On September 30, 1994, the Company concluded the sale of its
Material Sciences segment (Metco) to Sulzer Inc., a wholly-owned
subsidiary of Sulzer, Ltd., Winterthur, Switzerland. The Company
received cash proceeds of $64.8 million as a result of the sale.
NOTE 6 - STATEMENT OF FINANCIAL ACCOUNTING STANDARDS
The Company is required to implement SFAS No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of," no later than fiscal 1997. The Company is analyzing
the statement to determine the impact, if any, on the consolidated
financial statements.
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<PAGE>
THE PERKIN-ELMER CORPORATION
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 23 - 27 of
the Company's 1995 Annual Report to Shareholders.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1995
Net revenues for the first quarter of fiscal 1996 were $264.4
million, an increase of 6.9% over the $247.3 million reported for
the first quarter of fiscal 1995. Net income was $17.6 million, or
$0.41 per share, compared with $14.9 million, or $0.35 per share, in
the first quarter of fiscal 1995.
Foreign currency changes accounted for approximately $7 million of
the $17.1 million net revenue increase over fiscal 1995. This was
primarily due to the U.S. dollar's weakness against the Japanese yen
and certain European currencies. Excluding the effects of currency,
net revenues in all geographic markets, with the exception of the
Far East, increased over the prior year. Europe accounted for
approximately 40% of the increase in net revenues. While traditional
analytical instrument unit volumes were consistent with the prior
year, demand for life science products, especially DNA sequencers
and PCR related instruments and consumables, increased. Overall,
life science revenues increased 17.3% over the first quarter of
fiscal 1995.
Gross margin as a percentage of net revenues was 48.8% in the first
quarter of fiscal 1996 compared with 47.8% in the first quarter of
fiscal 1995. Increased volumes of higher gross margin life science
products and the favorable effects of currency in Europe and the Far
East accounted for the improved gross margin performance.
Selling, general and administrative (SG&A) expenses in the first
quarter of fiscal 1996 increased $5.0 million over the first quarter
of fiscal 1995. The ratio of SG&A expenses to net revenues was
essentially unchanged from the first quarter of fiscal 1995 at
29.8%. Currency changes in Europe and the Far East and, to a lesser
extent, certain one-time expenses, accounted for more than half of
the SG&A growth. Research, development and engineering expenses of
$25.2 million increased 8.1% over the prior year, primarily due to
increased investment in both bioresearch and analytical programs.
The restructuring actions announced during the fourth quarter of
fiscal 1995 did not materially benefit first quarter results and are
expected to have a more significant impact in the second half of the
fiscal year.
As a result of lower short and long-term borrowing levels, interest
expense in the first quarter of fiscal 1996 decreased $1.0 million
compared to the first quarter of fiscal 1995. Interest income of
$0.6 million was consistent with the prior year.
The Company's effective income tax rate for the first quarter of
fiscal 1996 was 23% compared with 19% in the first quarter of fiscal
1995. Fiscal 1995's lower effective tax rate reflected the
utilization of foreign tax credit carryforwards.
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<PAGE>
FINANCIAL RESOURCES AND LIQUIDITY
At September 30, 1995, the Company's total cash position, including
cash equivalents, was $41.4 million, compared with $73.0 million at
June 30, 1995. During the first quarter of fiscal 1996, cash used
by operating activities totaled $17.8 million due primarily to
seasonal payments to fund the Company's U.S. pension and profit
sharing plans, payments related to the restructuring actions
implemented in the fourth quarter of fiscal 1995, increased accounts
receivable and inventory levels, and accounts payable disbursements.
During the first quarter of fiscal 1996, the Company made severance
and benefit payments of $1.4 million to employees separated under
the aforementioned restructuring plan. In addition, payments of
$0.4 million were made for closure and facility consolidation costs,
related primarily to the shutdown of the Company's Puerto Rico
manufacturing facility. At September 30, 1995, the balance of the
cost to complete the restructuring plan was $16.7 million.
Net capital expenditures were $6.7 million in the quarter compared
with $6.0 million in the first quarter of fiscal 1995. Net cash
used for financing activities was $6.2 million in the first quarter
of the fiscal year reflecting the payment of shareholder dividends
and repayment of short-term debt, partially offset by the proceeds
received from employee stock option plan exercises. Cash used by
financing activities of $28.5 million in the first quarter of fiscal
1995 included $16.0 million for the purchase of 0.5 million shares
of common stock for treasury. There were no shares repurchased
during the first quarter of fiscal 1996.
OUTLOOK
The life science business experienced a strong start in the first
quarter and it is anticipated that government funded business in
Japan will be maintained this fiscal year. The previously announced
restructuring program is being implemented on schedule with the
majority of the cost and cashflow benefits anticipated in the second
half of the fiscal year. These benefits should contribute to a
higher operating income margin in fiscal 1996. SG&A expenses are
budgeted for the fiscal year to decline modestly as a percentage of
net revenues but increase in nominal dollars. Research, development
and engineering (R&D) expenditures are expected to increase by
approximately 5% in fiscal 1996. Life sciences will account for
more than the full year's change in R&D spending with analytical
instruments' spending levels currently projected to decline
slightly. Management remains cautious about the recent
strengthening of the dollar against the Japanese yen, which if
maintained, may offset some of the anticipated future sales and
income increase.
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<PAGE>
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security-Holders.
The Company held its Annual Meeting of Shareholders on
October 19, 1995. At such meeting, the shareholders of the
Company reelected each of the Company's directors for a new
term and ratified the selection of Price Waterhouse LLP as
the Company's independent accountants for the fiscal year
ending June 30, 1996, each as described in the Notice of
Annual Meeting and Proxy Statement dated September 13, 1995.
The results of the voting of the shareholders with respect
to such matters is set forth below.
I. Election of Directors.
Total Vote Total Vote
For Each Withheld From
Director Each Director
Joseph F. Abely, Jr. 36,243,068 119,528
Richard H. Ayers 36,246,570 116,026
Jean-Luc Belingard 36,245,361 117,235
Robert H. Hayes 36,244,885 117,711
Gaynor N. Kelley 36,096,834 265,761
Donald R. Melville 36,224,699 137,897
Burnell R. Roberts 36,228,750 133,846
John S. Scott 36,216,424 146,172
Carolyn W. Slayman 36,243,377 119,219
Orin R. Smith 36,244,475 118,121
Richard F. Tucker 36,227,363 135,232
Tony L. White 36,244,645 117,951
II. Ratification of the selection of Price Waterhouse
LLP as the Company's independent accountants for the
fiscal year ending June 30, 1996.
FOR AGAINST ABSTAIN NO VOTE
36,283,731 37,910 40,953 0
Item 5. Other Information.
At a meeting of the Board of Directors of the Company
held immediately following the Annual Meeting of
Shareholders referred to in Item 4, above, the Board of
Directors elected the following persons as officers of the
Company:
-8-
<PAGE>
Tony L. White Chairman, President and Chief Executive Officer
Peter Barrett Vice President
David P. Binkley Vice President
Michael W. Hunkapiller Vice President
Stephen O. Jaeger Vice President and Chief Financial Officer
Joseph E. Malandrakis Vice President
John B. McBennett Corporate Controller
Michael J. McPartland Vice President
William B. Sawch Vice President, General Counsel and Secretary
Rhonda L. Seegal Vice President and Treasurer
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
11. Computation of Net Income Per Share.
27. Financial Data Schedule.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the
quarter for which this report is being filed.
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<PAGE>
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/ Stephen O. Jaeger
Stephen O. Jaeger
Vice President and
Chief Financial Officer
By: /s/ John B. McBennett
John B. McBennett
Corporate Controller (Chief
Accounting Officer)
Dated: November 13, 1995
-10-
<PAGE>
EXHIBIT INDEX
Exhibit No. Exhibit
11 Computation of Net
Income Per Share
27 Financial Data Schedule
THE PERKIN-ELMER CORPORATION
COMPUTATION OF NET INCOME PER SHARE
(unaudited)
(Amounts in thousands except per share amounts)
Three months ended September 30,
1995 1994
Weighted average number of common shares 42,160 42,687
Common stock equivalents - stock options 724 482
Weighted average number of
common shares used in calculating
primary net income per share 42,884 43,169
Additional dilutive stock options 85 121
Shares used in calculating fully
diluted net income per share 42,969 43,290
Calculation of primary and fully
diluted net income per share:
Net income used in the calculations of
primary and fully diluted net income per share $ 17,594 $ 14,944
Primary net income per share $ 0.41 $ 0.35
Fully diluted net income per share $ 0.41 $ 0.35
EXHIBIT 11
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THREE MONTHS
ENDED SEPTEMBER 30,1995 AND THE CONSOLIDATED STATEMENT OF FINANCIAL
POSITION AT SEPTEMBER 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> SEP-30-1995
<CASH> 41,431
<SECURITIES> 0
<RECEIVABLES> 241,001
<ALLOWANCES> (8,929)
<INVENTORY> 218,368
<CURRENT-ASSETS> 573,108
<PP&E> 359,308
<DEPRECIATION> (208,461)
<TOTAL-ASSETS> 854,997
<CURRENT-LIABILITIES> 338,058
<BONDS> 0
<COMMON> 45,600
0
0
<OTHER-SE> 264,807
<TOTAL-LIABILITY-AND-EQUITY> 854,997
<SALES> 264,361
<TOTAL-REVENUES> 264,361
<CGS> 135,426
<TOTAL-COSTS> 135,426
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 269
<INTEREST-EXPENSE> 1,433
<INCOME-PRETAX> 22,849
<INCOME-TAX> (5,255)
<INCOME-CONTINUING> 17,594
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 17,594
<EPS-PRIMARY> 0.41
<EPS-DILUTED> 0.41
</TABLE>
