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 December 31, 1994
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 February 6, 1995: 41,855,265.
<PAGE>
THE PERKIN-ELMER CORPORATION
INDEX
Part I. Financial Information Page
Condensed Consolidated Statements of Operations for the 1
Three Months and Six Months Ended December 31, 1994 and 1993
Condensed Consolidated Statements of Financial Position at
December 31, 1994 and June 30, 1994 2
Condensed Consolidated Statements of Cash Flows for the 3
Six Months Ended December 31, 1994 and 1993
Notes to Unaudited Condensed Consolidated Financial Statements 4
Management's Discussion and Analysis of 6
Financial Condition and Results of Operations
Part II. Other Information 9
<PAGE>
THE PERKIN-ELMER CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
unaudited
(Dollar amounts in thousands, except per share amounts)
<TABLE>
Three months ended Six months ended
December 31 December 31,
<CAPTION>
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Net revenues $ 260,971 $ 256,815 $ 508,249 $ 500,119
Cost of sales 137,734 133,159 266,762 262,884
Gross margin 123,237 123,656 241,487 237,235
Selling, general and administrative 77,940 73,280 151,621 145,450
Research, development and engineering 23,192 23,196 46,480 45,361
Operating income 22,105 27,180 43,386 46,424
Interest expense (1,966) (1,865) (4,354) (3,463)
Interest income 767 415 1,387 942
Other income (expense), net 194 1,569 (870) 141
Income before income taxes 21,100 27,299 39,549 44,044
Provision for income taxes 4,009 5,186 7,514 8,368
Income from continuing operations 17,091 22,113 32,035 35,676
Loss from discontinued operations
(net of income taxes) (12,465)
Net income $ 17,091 $ 22,113 $ 32,035 $ 23,211
Per share amounts:
Income from continuing operations $ 0.40 $ 0.50 $ 0.75 $ 0.80
Loss from discontinued operations (0.28)
Net income $ 0.40 $ 0.50 $ 0.75 $ 0.52
Dividends per share $ 0.17 $ 0.17 $ 0.34 $ 0.34
</TABLE>
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 December 31 At June 30,
1994 1994
Assets
(unaudited)
Current Assets
Cash and cash equivalents $ 14,532 $ 25,003
Accounts receivable, net 230,946 231,564
Inventories 198,222 201,436
Prepaid expenses and other current assets 55,698 56,695
Total current assets 499,398 514,698
Property, Plant and Equipment, net 149,630 149,071
Other Assets
Other long-term assets 167,263 164,524
Net assets of discontinued operations 56,207
Total other assets 167,263 220,731
Total Assets $ 816,291 $ 884,500
Liabilities and Shareholders' Equity
Current Liabilities
Loans payable $ 61,660 $ 83,552
Accounts payable 69,775 73,221
Accrued salaries and wages 30,333 41,809
Accrued taxes on income 36,030 38,073
Other accrued expenses 124,646 141,643
Total current liabilities 322,444 378,298
Long-Term Debt 32,973 34,270
Other Long-Term Liabilities 185,675 181,500
Shareholders' Equity
Capital stock 45,600 45,600
Capital in excess of par value 178,739 178,739
Retained earnings 198,014 181,130
Cumulative translation adjustments 4,125 5,521
Net unrealized holding gain on available-
for-sale securities 4,166
Minimum pension liability (36,259) (36,259)
Treasury stock, at cost (119,186) (84,299)
Total shareholders' equity 275,199 290,432
Total Liabilities and Shareholders' Equity $ 816,291 $ 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>
Six months ended December 31,
<CAPTION>
1994 1993
<S> <C> <C>
Operating Activities
Income from continuing operations $ 32,035 $ 35,676
Adjustments to reconcile income from continuing
operations to net cash provided (used) by operating activities:
Depreciation and amortization 20,252 22,254
Other, net 1,485 (2,539)
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable 1,350 (20,672)
(Increase) decrease in inventories 4,556 (16,154)
Increase in prepaid expenses and other assets (4,061) (5,859)
Decrease in accounts payable and other liabilities (40,183) (12,368)
Legal settlement (15,550)
Net Cash Provided (Used) by Operating Activities 15,434 (15,212)
Investing Activities
Additions to property, plant and equipment
(net of disposals of $833 and $1,659, respectively) (15,898) (13,953)
Net cash received from the sale of assets 56,207 11,713
Net Cash Provided (Used) by Investing Activities 40,309 (2,240)
Financing Activities
Proceeds from long-term borrowings 866
Principal payments on long-term debt (922) (866)
Net change in loans and dividends payable (14,974) 30,621
Dividends declared (14,360) (14,933)
Purchase of treasury stock (37,416) (6,361)
Stock issued for stock plans, net of cancellations 1,767 7,471
Net Cash (Used) Provided by Financing Activities (65,905) 16,798
Effect of Exchange Rate Changes on Cash (309) 346
Net Change in Cash and Cash Equivalents (10,471) (308)
Cash and Cash Equivalents beginning of period 25,003 28,582
Cash and Cash Equivalents end of period $ 14,532 $ 28,274
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.
</TABLE>
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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) December 31, 1994 June 30, 1994
Raw materials and supplies $27.0 $24.9
Work-in-process 15.9 22.4
Finished products 155.3 154.1
$198.2 $201.4
NOTE 3 - 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.
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 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 5 - 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.
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<PAGE>
NOTE 6 - 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. 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 shareholders'
equity. Held-to-maturity securities with maturities
between 1 and 5 years have amortized costs and
aggregate fair values of $7.0 million. Those with
maturities between 5 and 10 years have amortized costs
of $17.0 million and aggregate fair values of $18.6
million. The aggregate fair value of available-for-sale
securities is $12.5 million with amortized costs of $8.3
million and a gross unrealized holding gain of $4.2
million, which is recognized in shareholders' equity.
There was no impact to earnings as a result of the
adoption of SFAS No. 115.
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.
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 DECEMBER 31, 1994
Consolidated net revenues were $261.0 million in the second quarter
of fiscal 1995 compared with $256.8 million in the second quarter of
fiscal 1994. The prior year's second quarter included $12.0 million
in net revenues from the Physical Electronics Division (PHI), which
was sold as of the end of the third quarter of fiscal 1994. When
measured on a comparable basis, excluding PHI, net revenues
increased $16.1 million, or 7%, over the same period last year. The
effects of currency translation in Europe and the Far East comprised
approximately $12 million of the increase over the prior year. Life
science related products accounted for the remaining revenue
increase, while traditional analytical product levels were constant
with the prior year. Revenues in all geographic areas increased over
the prior year, with the exception of the Far East, which was
negatively impacted by a decrease in Japanese government sponsored
purchases. Net revenues in Europe for the second quarter of fiscal
1995, excluding the effects of currency, increased 8% over the
second quarter of fiscal 1994 as the European economy showed signs
of strengthening.
Gross margin as a percentage of net revenues was 47.2% in the
current quarter compared with 48.1% in the second quarter of fiscal
1994. Excluding the effects of PHI, gross margin decreased
approximately 1% in the quarter compared with the prior year.
Competitive pricing pressures, less favorable product mix, and lower
volumes in the Far East were partially offset by improved margins in
Europe and Latin America.
Operating expenses were $101.1 million in the current quarter
compared with $96.5 million in the second quarter of fiscal 1994.
When measured on a comparable basis, excluding the results of PHI,
operating expenses as a percentage of net revenues were 39% for the
current fiscal year compared with 38% in fiscal 1994. Excluding PHI,
operating expenses increased $8.2 million. Unfavorable currency
translation in Europe and the Far East accounted for approximately
$3 million of the increase in selling, general and administrative
expenses. The balance was attributable to higher worldwide
marketing expenses for the promotion of new products, partially
offset by a reduction in administrative expenses. Research,
development and engineering expenses were constant with the second
quarter of fiscal 1994. However, when measured on a comparable
basis, excluding PHI, these expenses increased 8% over the prior
year as a result of continuing investment in life science programs.
Interest expense in the second quarter of fiscal 1995 of $2.0
million was constant with the prior year's quarter. Higher interest
rates were offset by lower borrowing levels in the quarter.
Interest income was $.8 million compared with $.4 million a year
ago. The increase was primarily derived from the interest on notes
received from the sale of divested operations.
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<PAGE>
Other income, net, was $.2 million in the current quarter compared
with $1.6 million in the second quarter of fiscal 1994. Increased
foreign currency transaction losses were partially offset by lower
carrying costs for idle real estate in the second quarter of fiscal
1995 when compared with the second quarter of fiscal 1994. Last
year's second quarter also included a one-time gain from the sale of
a minority equity investment in MRJ, Inc. (See Note 4).
RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED DECEMBER 31, 1994
Consolidated net revenues were $508.2 million in the first six
months of fiscal 1995 compared with $500.1 million in fiscal 1994.
The prior year included $27.7 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 ASO and PHI, net
revenues increased 8%, or $35.8 million over the prior year. The
effects of currency translation, approximately $20 million, from the
weaker U.S. dollar compared to European and Far East currencies, and
strong backlogs at the beginning of the fiscal year in both
traditional analytical and life science products were the primary
contributors. With the exception of North America, all geographic
areas showed improvement over the prior year.
Gross margin as a percentage of net revenues was consistent with the
prior year. Excluding the effects of ASO and PHI, gross margin
decreased approximately 1% in the first six months of fiscal 1995
when compared to the prior year. Competitive pricing pressures and
a less favorable product mix, primarily in Europe and the Far East,
were the main causes.
Operating expenses were $198.1 million for the first six months of
this fiscal year compared with $190.8 million in fiscal 1994. As a
percentage of net revenues, operating expenses were 39% for the
current fiscal year compared with 38% in fiscal 1994. On a
comparable basis, excluding the two units sold, operating expenses
as a percentage of net revenues remained constant at 39%. Increased
worldwide marketing expenses were partially offset by reductions in
administrative expenses. The effects of unfavorable currency
translation, primarily in Europe and the Far East, accounted for
approximately $5 million of the increase in SG&A expenses.
Increased investment in life science programs accounted for the
growth in research and development expenses.
Interest expense was $4.4 million in the first six months of fiscal
1995 compared with $3.5 million in the first six months of fiscal
1994. The increase was primarily the result of higher interest rates
for the current year and higher borrowings in the first quarter of
fiscal 1995 compared to the first quarter of fiscal 1994. Interest
income was $1.4 million in the current year compared with $.9
million in fiscal 1994. The increase was primarily the result of
interest on notes received from the sale of divested operations.
Net other expense for the six months ended December 31, 1994 was $.9
million compared with net other income of $.1 million in the prior
year. Higher foreign currency transaction losses were the primary
contributors for the increased expense, partially offset by lower
carrying costs for idle real estate. In addition, the Company sold
the net assets of ASO and its interest in MRJ, Inc. during the first
half of fiscal 1994. (See Note 4). The net gains on sale from both
transactions were recorded in other income and were not significant
to the Company's results of operations.
-7-
<PAGE>
The effective income tax rate was approximately 19% for both fiscal
1995 and 1994.
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.
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. In addition, Metco's fiscal
1994 results were included in discontinued operations.
FINANCIAL RESOURCES AND LIQUIDITY
The Company's cash and cash equivalents aggregated $14.5 million at
December 31, 1994, compared with $25.0 million at the end of fiscal
1994. Net cash provided by operations was $15.4 million for the six
months ended December 31, 1994 as compared with $15.2 million cash
used by operations in the prior year's six month period. The prior
year included $15.5 million paid to settle potential claims related
to the Hubble Space Telescope mirror, as well as higher accounts
receivable and inventory levels. In 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 were approximately $16.7 million in the current
year compared with $15.6 million a year ago.
Net proceeds received from the sale of Metco and cash provided by
operating activities were used to reduce borrowings and fund capital
expenditures. In addition, cash was used to purchase approximately
1.3 million shares of common stock at a cost of $37.4 million.
Purchases of common stock were made to support the Company's various
stock plans and under the Company's share repurchase program. The
Company is authorized to purchase common stock when management deems
such action to be in the best interest of its shareholders and the
Company, subject to certain limitations.
OUTLOOK
Business conditions for the remainder of this fiscal year could be
adversely affected by the uncertainty in Japanese governmental
funding and competitive market pressures in the Far East. Although
European orders and backlog increased in the second quarter of
fiscal 1995, management remains cautious about the European economy
since the Company's industry typically lags behind a general
recovery. The Company, however, is encouraged by the higher orders
in the second quarter, which it hopes will translate into a
continued gradual upturn of its revenues from the global instrument
markets.
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<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.
During the quarter ended December 31, 1994, the
Company filed a Current Report on Form 8-K (as
amended), dated September 30, 1994, to report under
Item 5 thereof the conclusion of the sale of Metco
to affiliates of Sulzer, Ltd.
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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/ Gaynor N. Kelley
Gaynor N. Kelley
Chairman and
Chief Executive Officer
By: /s/ John B. McBennett
John B. McBennett
Corporate Controller
(Chief Accounting Officer)
Dated: February 13, 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)
Six months ended December 31,
1994 1993
Weighted average number of common shares 42,401 43,930
Common stock equivalents - stock options 457 899
Weighted average number of
common shares used in calculating 42,858 44,829
primary net income per share
Additional dilutive stock options
under paragraph #42 APB #15 61 159
Shares used in calculating fully
diluted net income per share 42,919 44,988
Calculation of primary and fully
diluted net income per share:
PRIMARY AND FULLY DILUTED:
Income from continuing operations $ 32,035 $ 35,676
Loss from discontinued operations (12,465)
Net income used in the calculations of
primary and fully diluted net income per share $ 32,035 $ 23,211
PRIMARY per share amounts:
Income from continuing operations $ 0.75 $ 0.80
Loss from discontinued operations (0.28)
Net income $ 0.75 $ 0.52
FULLY DILUTED per share amounts:
Income from continuing operations $ 0.75 $ 0.80
Loss from discontinued operations (0.28)
Net income $ 0.75 $ 0.52
EXHIBIT 11
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE CONSOLIDATED STATEMENT OF OPERATIONS FOR THE SIX MONTHS
ENDED DECEMBER 31, 1994 AND THE CONSOLIDATED STATEMENT OF FINANCIAL
POSITION AT DECEMBER 31, 1994 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> DEC-31-1994
<CASH> 14,532
<SECURITIES> 7,000
<RECEIVABLES> 236,978
<ALLOWANCES> (6,032)
<INVENTORY> 198,222
<CURRENT-ASSETS> 499,398
<PP&E> 339,547
<DEPRECIATION> (189,917)
<TOTAL-ASSETS> 816,291
<CURRENT-LIABILITIES> 322,444
<BONDS> 0
<COMMON> 45,600
0
0
<OTHER-SE> 229,599
<TOTAL-LIABILITY-AND-EQUITY> 816,291
<SALES> 508,249
<TOTAL-REVENUES> 508,249
<CGS> 266,762
<TOTAL-COSTS> 266,762
<OTHER-EXPENSES> 46,480
<LOSS-PROVISION> 717
<INTEREST-EXPENSE> 4,354
<INCOME-PRETAX> 39,549
<INCOME-TAX> (7,514)
<INCOME-CONTINUING> 32,035
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 32,035
<EPS-PRIMARY> 0.75
<EPS-DILUTED> 0.75
</TABLE>
