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 March 31, 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 May 1, 1995: 41,860,693
<PAGE>
THE PERKIN-ELMER CORPORATION
INDEX
Part I. Financial Information Page
Condensed Consolidated Statements of Operations for the 1
Three Months and Nine Months Ended March 31, 1995 and 1994
Condensed Consolidated Statements of Financial Position at 2
March 31, 1995 and June 30, 1994
Condensed Consolidated Statements of Cash Flows for the 3
Nine Months Ended March 31, 1995 and 1994
Notes to Unaudited Condensed Consolidated Financial Statements 4
Management's Discussion and Analysis of Financial Condition 6
and Results of Operations
Part II. Other Information 10
THE PERKIN-ELMER CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
unaudited
(Dollar amounts in thousands, except per share amounts)
Three months ended Nine months ended
March 31, March 31,
1995 1994 1995 1994
Net revenues $ 274,612 $ 263,462 $ 782,861 $ 763,581
Cost of sales 145,866 134,530 412,628 397,414
Gross margin 128,746 128,932 370,233 366,167
Selling, general and administrative 79,429 76,755 231,050 222,205
Research, development and engineering 23,688 25,033 70,168 70,394
Operating income 25,629 27,144 69,015 73,568
Gain on sale of investment, net 20,800 20,800
Interest expense (2,172) (1,840) (6,526) (5,303)
Interest income 761 548 2,148 1,490
Other income (expense), net 262 (672) (608) (531)
Income before income taxes 45,280 25,180 84,829 69,224
Provision for income taxes 8,604 4,785 16,118 13,153
Income from continuing operations 36,676 20,395 68,711 56,071
Loss from discontinued operations
(net of income taxes) (12,465)
Net income $ 36,676 $ 20,395 $ 68,711 $ 43,606
Per share amounts:
Income from continuing operations $ 0.86 $ 0.45 $ 1.61 $ 1.25
Loss from discontinued operations (0.28)
Net income $ 0.86 $ 0.45 $ 1.61 $ 0.97
Dividends per share $ 0.17 $ 0.17 $ 0.51 $ 0.51
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)
At March 31, At June 30,
1995 1994
Assets
(unaudited)
Current Assets
Cash and cash equivalents $ 74,952 $ 25,003
Accounts receivable, net 228,485 231,564
Inventories 207,730 201,436
Prepaid expenses and other current assets 61,755 56,695
Total current assets 572,922 514,698
Property, Plant and Equipment, net 151,831 149,071
Other Assets
Other long-term assets 141,534 164,524
Net assets of discontinued operations 56,207
Total other assets 141,534 220,731
Total Assets $ 866,287 $ 884,500
Liabilities and Shareholders' Equity
Current Liabilities
Loans payable $ 47,187 $ 83,552
Accounts payable 75,495 73,221
Accrued salaries and wages 34,645 41,809
Accrued taxes on income 42,327 38,073
Other accrued expenses 141,902 141,643
Total current liabilities 341,556 378,298
Long-Term Debt 36,450 34,270
Other Long-Term Liabilities 182,982 181,500
Shareholders' Equity
Capital stock 45,600 45,600
Capital in excess of par value 178,739 178,739
Retained earnings 226,383 181,130
Cumulative translation adjustments 8,693 5,521
Net unrealized holding loss on
available-for-sale securities (65)
Minimum pension liability (36,259) (36,259)
Treasury stock, at cost (117,792) (84,299)
Total shareholders' equity 305,299 290,432
Total Liabilities and Shareholders' Equity $ 866,287 $ 884,500
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>
Nine months ended March 31,
<CAPTION>
1995 1994
<S>
Operating Activities <C> <C>
Income from continuing operations $ 68,711 $ 56,071
Adjustments to reconcile income from continuing
operations to net cash provided (used) by operating activities:
Depreciation and amortization 30,395 30,774
Gains from the sale of assets, net (22,129) (3,340)
Other, net (279) 617
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable 13,552 (36,606)
(Increase) decrease in inventories 986 (26,338)
Increase in prepaid expenses and other assets (9,174) (12,127)
Increase (decrease) in accounts payable and other liabilities (18,194) 5,570
Legal settlement (15,550)
Net Cash Provided (Used) by Operating Activities 63,868 (929)
Investing Activities
Additions to property, plant and equipment
(net of disposals of $1,563 and $1,125, respectively) (22,353) (23,058)
Short-term investments 587
Proceeds from the sale of assets, net 110,706 10,699
Net Cash Provided (Used) by Investing Activities 88,353 (11,772)
Financing Activities
Proceeds from long-term borrowings 26,586
Principal payments on long-term debt (1,119)
Net change in loans payable (40,614) 15,988
Dividends declared (21,459) (22,431)
Purchases of common stock for treasury (40,297) (32,073)
Stock issued for stock plans, net of cancellations 4,840 17,013
Net Cash (Used) Provided by Financing Activities (98,649) 5,083
Effect of Exchange Rate Changes on Cash (3,623) (24)
Net Change in Cash and Cash Equivalents 49,949 (7,642)
Cash and Cash Equivalents beginning of period 25,003 28,582
Cash and Cash Equivalents end of period $ 74,952 $ 20,940
</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 - The 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, 1994. Significant accounting
policies disclosed therein have not changed.
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 June 30,
1995 1994
Raw materials and supplies $ 27.6 $ 24.9
Work-in-process 17.3 22.4
Finished products 162.8 154.1
$ 207.7 $ 201.4
NOTE 3 - During the third quarter of fiscal 1995, the Company
sold its equity interest in Silicon Valley Group, Inc.
for net cash proceeds of $49.8 million. The Company
recorded a pre-tax net gain of $20.8 million or $.39 per
share after tax.
NOTE 4 - On March 6, 1995, the Company announced the planned
purchase of Photovac Inc., a privately held Canadian
company. Photovac Inc., founded in 1975, is a leading
developer and manufacturer of field portable
instrumentation used for on site analysis in the
environmental, industrial hygiene, and occupational,
safety and health markets. The cash purchase was
completed on April 12, 1995.
NOTE 5 - On September 30, 1994, the Company concluded the sale of
its Material Sciences segment, consisting of the
Company's Metco division (Metco) headquartered in
Westbury, New York, to Sulzer Inc., a wholly-owned
subsidiary of Sulzer, Ltd., Winterthur, Switzerland.
The Company received net cash proceeds of approximately
$56.2 million as a result of the sale. Metco produces
combustion, electric arc and plasma thermal spray
equipment and supplies. The Company recorded an after-
tax loss on the disposal of Metco of $7.7 million during
the fourth quarter of fiscal 1994, including a provision
of $5.0 million (less applicable taxes of $.8 million)
for operating losses during the phase-out period.
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<PAGE>
NOTE 6 - 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 of
fiscal 1994 for proceeds of approximately $5.0 million.
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 Group, Inc. were repaid
to the Company. The gains from these sales were not
significant to the Company's results of operations.
NOTE 7 - During the second quarter of fiscal 1994, the Company
paid $15.5 million to settle potential claims related
to the Hubble Space Telescope mirror. This amount,
which included legal costs, was recorded in
discontinued operations.
NOTE 8 - The Company adopted Statement of Financial Accounting
Standards (SFAS) No. 115, "Accounting for Certain
Investments in Debt and Equity Securities" in the first
quarter of fiscal 1995. The aggregate fair value of
the Company's securities subject to SFAS No. 115 at
March 31, 1995 is $9.5 million with amortized costs of
$ 9.6 million and a gross unrealized holding loss of
$.1 million, which is reflected in shareholders'
equity. There was no impact to earnings as a result
of the adoption of SFAS No. 115.
NOTE 9 - The Company is required to implement Statement of
Financial Accounting Standards No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of ", no later than fiscal year
1996. This statement requires that long-lived assets
and certain identifiable intangibles to be held and
used by an entity be reviewed for impairment whenever
events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable.
The Company is currently analyzing the statement to
determine the impact, if any, on its financial
statements.
NOTE 10 - The Company has announced plans to take a pre-tax
charge of at least $20 million in the fourth quarter of
fiscal 1995 for actions to improve operating
efficiencies and to reduce future costs and expenses.
Actions to be taken include facility consolidations in
certain overseas locations, staff reductions, and an
early retirement incentive program in the U.S.
NOTE 11 - 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.
Certain amounts in the condensed consolidated financial
statements have been reclassified for comparative
purposes.
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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 21 - 25 of
the Company's 1994 Annual Report to Shareholders.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1995
Consolidated net revenues were $274.6 million in the third quarter
of fiscal 1995 compared with $263.5 million in the third quarter of
fiscal 1994. The prior year's third quarter included $11.4 million
in net revenues from the Physical Electronics Division (PHI), which
was sold as of the end of the third quarter of fiscal 1994.
Excluding the results of PHI, net revenues increased $22.6 million,
or 9%, over the same period last year. Currency translation effects
in Europe and the Far East comprised approximately $15 million of
the third quarter's net revenue increase over the prior year, in
contrast to the previous year, which was not significantly affected
by currency translation. The balance of the increase was primarily
the result of higher life science related product sales. Revenues in
all geographic areas, with the exception of the Far East, increased
over the prior year. The Far East was adversely affected by a
decrease in government funding in Japan compared with the same
period last year.
Gross margin as a percentage of net revenues was 46.9% in the third
quarter of fiscal 1995 compared with 48.9% in the third quarter of
fiscal 1994. Excluding the effects of PHI, gross margin decreased
approximately 2% in the quarter compared with the prior year.
Competitive pricing pressures, particularly in Europe, and the
previously mentioned volume decrease in Japan were the primary
reasons for the unfavorable gross margin performance.
Operating expenses were $103.1 million in the current quarter
compared with $101.8 million in the third quarter of fiscal 1994.
Excluding PHI, the current quarter's expenses were $5.0 million
higher than the prior year's third quarter, with currency
translation accounting for approximately $4.0 million of the
increase. Selling, general and administrative expenses were $79.4
million for the quarter, an increase of $2.7 million over fiscal
1994's third quarter. When measured on a comparable basis,
excluding PHI, SG&A expenses increased $4.7 million. Currency
translation in Europe and the Far East accounted for $3.1 million of
the increase. The balance was attributable to increased worldwide
marketing expenses, primarily in North America and Europe, for the
promotion of recently introduced products. Research, development
and engineering expenses, when measured on a comparable basis,
remained relatively constant with the prior year's third quarter.
Interest expense was $2.2 million in the third quarter of fiscal
1995 compared with $1.8 million one year ago. The increase was
attributable to higher interest rates that were partially offset by
lower short-term borrowing levels in the quarter. Interest income
was $.8 million compared with $.5 million a year ago. The increase
resulted from interest on a note received from the sale of divested
operations.
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<PAGE>
Other income, net was $.3 million in the current quarter compared
with other expense, net of $.7 million in the third quarter of
fiscal 1994. The third quarter of fiscal 1995 included a net gain
on the sale of real estate, partially offset by increased foreign
currency transaction costs and losses.
RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED MARCH 31, 1995
Consolidated net revenues were $782.9 million in the first nine
months of fiscal 1995 compared with $763.6 million in fiscal 1994.
Included in the prior year was $39.1 million of net revenues from
two units, Applied Science Operation (ASO) and PHI. The Company
sold ASO during the first quarter of fiscal 1994 and PHI as of the
end of the third quarter. Excluding the effects of the two units
sold, net revenues increased $58.4 million, or 8%, over the prior
year. The effects of currency translation in Europe and the Far
East, as a result of the weaker U.S. dollar, comprised
approximately $35 million of the increase. Operationally, all
geographic markets, with the exception of the Far East, improved
over the prior year. The Far East was negatively impacted by the
decrease in Japanese governmental funding in the biotechnology and
environmental product areas. While the traditional analytical
instrument products experienced lower demand in fiscal 1995, life
science product revenues have continued to increase.
Gross margin as a percentage of net revenues was 47.3% for the nine
months of fiscal 1995 compared with 48.0% in fiscal 1994. Excluding
the effects of ASO and PHI, gross margin decreased approximately 1%.
Lower volumes of high margin business, competitive pricing pressures
and a less favorable product mix in Europe and the Far East were the
primary factors.
Operating expenses were $301.2 million for the first nine months of
fiscal 1995 compared with $292.6 million in fiscal 1994. When
measured on a comparable basis, excluding the expenses of the two
units sold, operating expenses as a percentage of net revenues
remained constant at 39%. Reductions in administrative expenses
were offset by the unfavorable effects of foreign currency
translation in Europe and the Far East and increased worldwide
marketing expenses. Research and development expenses remained
constant with the prior year.
Interest expense was $6.5 million for the nine months ended March
31, 1995 compared with $5.3 million for fiscal 1994. Higher
borrowing levels in the first quarter of the year and increased
interest rates for the current year contributed to the higher
expense. Interest income was $2.1 million in the current year
compared with $1.5 million in fiscal 1994. The increase was the
result of interest income on notes received from the sale of
divested operations.
Other expense, net for the nine months ended March 31, 1995 was $.6
million compared with $.5 million in the prior year. The current
year includes higher foreign currency transaction costs and losses,
partially offset by a gain on the sale of real estate. In addition,
in fiscal 1994, the Company sold the net assets of ASO and its
interest in MRJ, Inc. (See Note 6). The net gains on sale from both
transactions were included in other income and were not material to
the Company's results of operations.
The effective income tax rate was 19% for the first nine months of
both fiscal years.
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<PAGE>
DISCONTINUED OPERATIONS
On September 30, 1994, the Company concluded the sale of its
Material Sciences segment, consisting of the Company's Metco
division (Metco) headquartered in Westbury, New York, to Sulzer
Inc., a wholly-owned subsidiary of Sulzer, Ltd., Winterthur,
Switzerland. The Company received net cash proceeds of
approximately $56.2 million as a result of the sale. Metco produces
combustion, electric arc and plasma thermal spray equipment and
supplies. The Company recorded an after-tax loss on the disposal of
Metco of $7.7 million during the fourth quarter of fiscal 1994,
including a provision of $5.0 million (less applicable taxes of $.8
million) for operating losses during the phase-out period. Metco's
fiscal 1994 results were included in discontinued operations.
During the second quarter of fiscal 1994, the Company paid $15.5
million to settle potential claims related to the Hubble Space
Telescope mirror. This amount, which included legal costs, was
recorded in discontinued operations.
FINANCIAL RESOURCES AND LIQUIDITY
The Company's cash and cash equivalents aggregated $75.0 million at
March 31, 1995, compared with $25.0 million at the end of fiscal
1994. Net cash provided by operations was $63.9 million for the
first nine months of fiscal 1995 as compared with net cash used by
operating activities of $.9 million for the prior year's nine month
period. The prior year included a $15.5 million payment made to
settle potential claims related to the Hubble Space Telescope
mirror, as well as increased inventory levels and higher accounts
receivables for life science products in the Far East. During
fiscal 1995, cash was used primarily for accounts payable
disbursements, tax payments, funding for the Company's U.S. pension
and profit sharing plans, and payments related to the merger with
Applied Biosystems, Inc. Capital expenditures of approximately $24
million remained constant with the prior year's spending level.
Net proceeds received from the sale of assets and cash provided by
operating activities were used to reduce borrowings, fund capital
expenditures, pay regular dividends to the shareholders and
repurchase shares of the Company's common stock. Approximately 1.4
million shares of common stock, at a cost of $40.3 million, were
repurchased during the first nine months of fiscal 1995. Common
stock purchases were made in support of the Company's various stock
plans and as part of a share repurchase authorization. The Company
has no specific share repurchase targets but expects to make
periodic open market purchases from time to time. The remaining
number of shares available under the purchase authorization is 3.8
million.
During the third quarter of fiscal 1995, the Company sold its equity
interest in Silicon Valley Group, Inc. for net cash proceeds of
$49.8 million. (See Note 3). The cash received was used to repay
loans payable and to fund the fourth quarter purchase of Photovac
Inc.(See Note 4).
The Company has announced plans to take a pre-tax charge of at least
$20 million in the fourth quarter of fiscal 1995 for actions to
improve operating efficiencies and to reduce future costs and
expenses. Actions to be taken include facility consolidations in
certain overseas locations, staff reductions, and an early
retirement incentive program in the U.S. The cash outlays associated
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<PAGE>
with the fourth quarter charge are expected to be substantially
completed in fiscal year 1996. The Company expects to achieve cash
flow and pre-tax savings of an amount approximating the fourth
quarter charge on an annual basis in the future.
RECENTLY ISSUED ACCOUNTING STANDARD
See Note 9 to the Condensed Consolidated Financial Statements.
OUTLOOK
Although the Company is encouraged by the gradual market
improvements in Europe and North America, business conditions in
Japan are not expected to recover in the remainder of the fiscal
year. Margins could be adversely affected by the uncertainty in
Japanese governmental spending and competitive market pressures in
the Far East and Europe. The Company is optimistic about the
various new products for the chemical, environmental, pharmaceutical
and genetic analysis markets that have been introduced this year.
In the long term, the Company has many attractive opportunities in
these areas.
-9-
<PAGE>
PART II - OTHER INFORMATION
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 filed.
-10-
<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/ Gaynor N. Kelley
Gaynor N. Kelley
Chairman, President and
Chief Executive Officer
By: /s/ Stephen O. Jaeger
Stephen O. Jaeger
Vice President, Finance
(Chief Financial Officer)
Dated: May 12, 1995
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<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)
Nine months ended March 31,
1995 1994
Weighted average number of common shares 42,199 43,978
Common stock equivalents - stock options 440 955
Weighted average number of
common shares used in calculating
primary net income per share 42,639 44,933
Additional dilutive stock options
under paragraph #42 APB #15 59 108
Shares used in calculating fully
diluted net income per share 42,698 45,041
Calculation of primary and fully
diluted net income per share:
PRIMARY AND FULLY DILUTED:
Income from continuing operations $ 68,711 $ 56,071
Loss from discontinued operations (12,465)
Net income used in the calculations of
primary and fully diluted net income per share $ 68,711 $ 43,606
PRIMARY per share amounts:
Income from continuing operations $ 1.61 $ 1.25
Loss from discontinued operations (0.28)
Net income $ 1.61 $ 0.97
FULLY DILUTED per share amounts:
Income from continuing operations $ 1.61 $ 1.25
Loss from discontinued operations (0.28)
Net income $ 1.61 $ 0.97
EXHIBIT 11
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE CONSOLIDATED STATEMENT OF OPERATIONS FOR THE NINE MONTHS
ENDED MARCH 31, 1995 AND THE CONSOLIDATED STATEMENT OF FINANCIAL
POSITION AT MARCH 31, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> MAR-31-1995
<CASH> 74,952
<SECURITIES> 7,000
<RECEIVABLES> 235,778
<ALLOWANCES> (7,293)
<INVENTORY> 207,730
<CURRENT-ASSETS> 572,922
<PP&E> 353,294
<DEPRECIATION> (201,463)
<TOTAL-ASSETS> 866,287
<CURRENT-LIABILITIES> 341,556
<BONDS> 0
<COMMON> 45,600
0
0
<OTHER-SE> 259,699
<TOTAL-LIABILITY-AND-EQUITY> 866,287
<SALES> 782,861
<TOTAL-REVENUES> 782,861
<CGS> 412,628
<TOTAL-COSTS> 412,628
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 957
<INTEREST-EXPENSE> 6,526
<INCOME-PRETAX> 84,829
<INCOME-TAX> (16,118)
<INCOME-CONTINUING> 68,711
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 68,711
<EPS-PRIMARY> 1.61
<EPS-DILUTED> 1.61
</TABLE>
