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, 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 Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
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 January 30, 1996: 43,010,190.
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THE PERKIN-ELMER CORPORATION
INDEX
Part I. Financial Information Page
Condensed Consolidated Statements of Operations for the
Three Months and Six Months Ended December 31, 1995 and 1994 1
Condensed Consolidated Statements of Financial Position at
December 31, 1995 and June 30, 1995 2
Condensed Consolidated Statements of Cash Flows for the
Six Months Ended December 31, 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 9
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THE PERKIN-ELMER CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
unaudited
(Dollar amounts in thousands except per share amounts)
<TABLE>
<CAPTION>
Three months ended Six months ended
December 31, December 31,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Net revenues $ 294,088 $ 260,971 $ 558,449 $ 508,249
Cost of sales 152,902 137,734 288,328 266,762
Gross margin 141,186 123,237 270,121 241,487
Selling, general and administrative 84,728 77,940 163,447 151,621
Research, development and engineering 25,927 23,192 51,104 46,480
Operating income 30,531 22,105 55,570 43,386
Interest expense 1,326 1,966 2,759 4,354
Interest income 919 767 1,557 1,387
Other income (expense), net (571) 194 (1,966) (870)
Income before income taxes 29,553 21,100 52,402 39,549
Provision for income taxes 6,797 4,009 12,052 7,514
Net income $ 22,756 $ 17,091 $ 40,350 $ 32,035
Net income per share $ 0.53 $ 0.40 $ 0.94 $ 0.75
Dividends per share $ 0.17 $ 0.17 $ 0.34 $ 0.34
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.
</TABLE>
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THE PERKIN-ELMER CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Dollar amounts in thousands)
At December 31, At June 30,
1995 1995
Assets (unaudited)
Current assets
Cash and cash equivalents $ 101,000 $ 73,010
Short-term investments 0 7,000
Accounts receivable, net 241,469 234,153
Inventories 214,970 212,859
Prepaid expenses and other current assets 78,189 74,606
Total current assets 635,628 601,628
Property, plant and equipment, net 148,577 155,441
Other long-term assets 137,110 135,969
Total assets $ 921,315 $ 893,038
Liabilities and Shareholders' Equity
Current liabilities
Loans payable $ 53,505 $ 54,757
Accounts payable 91,870 85,342
Accrued salaries and wages 31,745 38,862
Accrued taxes on income 52,258 34,676
Other accrued expenses 144,940 160,347
Total current liabilities 374,318 373,984
Long-term debt 28,219 34,124
Other long-term liabilities 177,571 180,230
Shareholders' equity
Capital stock 45,600 45,600
Capital in excess of par value 176,227 176,699
Retained earnings 238,703 215,363
Foreign currency translation adjustments 3,028 9,805
Net unrealized gain on investment 8,078
Minimum pension liability adjustment (34,445) (34,445)
Treasury stock, at cost (95,984) (108,322)
Total shareholders' equity 341,207 304,700
Total liabilities and shareholders' equity $ 921,315 $ 893,038
See accompanying Notes to Unaudited Condensed
Consolidated Financial Statements.
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THE PERKIN-ELMER CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
Six months ended December 31,
1995 1994
Operating Activities
<S> <C> <C>
Net income $ 40,350 $ 32,035
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 21,054 20,252
Deferred income taxes (1,988) 1,485
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable (17,886) 1,350
(Increase) decrease in inventories (9,557) 4,556
Increase in prepaid expenses and other assets (10,933) (4,061)
Increase (decrease) in accounts payable and other liabilities 6,114 (48,823)
Net cash provided by operating activities 27,154 6,794
Investing Activities
Additions to property, plant and equipment
(net of disposals of $1,484 and $833, respectively) (13,263) (15,898)
Maturity of short-term investment 7,000
Proceeds from the sale of assets, net 4,986
Proceeds from the collection of note receivable 2,028
Proceeds from the sale of discontinued operations 64,847
Net cash provided by investing activities 751 48,949
Financing Activities
Principal payments on long-term debt (922)
Net change in loans payable 6,133 (14,974)
Dividends declared (14,363) (14,360)
Purchases of common stock for treasury (37,416)
Stock issued for stock plans 8,580 1,767
Net cash provided (used) by financing activities 350 (65,905)
Effect of exchange rate changes on cash (265) (309)
Net change in cash and cash equivalents 27,990 (10,471)
Cash and cash equivalents beginning of period 73,010 25,003
Cash and cash equivalents end of period $ 101,000 $ 14,532
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.
</TABLE>
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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) December 31, June 30,
1995 1995
Raw materials and supplies $ 32.9 $ 29.2
Work-in-process 20.9 18.9
Finished products 161.2 164.8
Total inventories $ 215.0 $ 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 December 31, 1995, the total
carrying amount of the Company's outstanding foreign currency
contracts held was $132.5 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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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 December 31,
1995, the Company made partial severance and benefit payments
totaling $7.7 million to employees separated under the
restructuring program and payments of $2.1 million were made for
closure and facility consolidation costs, primarily related to the
shutdown of the Company's Puerto Rico manufacturing facility. The
implementation of the fiscal 1995 restructuring plan is
substantially complete. The balance at December 31, 1995 of $13.2
million represents future severance and deferred payments. There
have been no adjustments made to increase or decrease the
liabilities originally accrued for this 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," and SFAS No. 123, "Accounting for Stock-Based
Compensation" no later than fiscal 1997. The Company is currently
analyzing the statements to determine the impact, if any, on the
consolidated financial statements.
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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 DECEMBER 31, 1995
Net revenues for the second quarter of fiscal 1996 were $294.1
million, an increase of 12.7% over the $261.0 million reported for
the second quarter of fiscal 1995. Net income increased 33.1% to
$22.8 million, or $0.53 per share, compared with $17.1 million, or
$0.40 per share, in the second quarter of fiscal 1995.
Foreign currency translation accounted for approximately $5 million
of the $33.1 million net revenue increase over fiscal 1995,
primarily due to the weaker U.S. dollar against various European
currencies. Excluding the effects of currency, net revenues in all
geographic markets increased over the prior year. The Far East, as
a result of increased private and public funding in Japan, accounted
for approximately 50% of the net revenue increase. Europe accounted
for approximately 25% of the net revenue increase. Analytical
instrument revenues for the second quarter of fiscal 1996 increased
9% over the second quarter of fiscal 1995 primarily as a result of
increased demand for the high-end atomic absorption products and
higher volumes of inductively coupled plasma-mass spectrometers.
The growing demand for DNA sequencers and PCR related instruments
and consumables, as a result of expanding bioresearch applications
and production requirements, led to a 17% increase in life science
revenues.
Gross margin as a percentage of net revenues was 48.0% in the second
quarter of fiscal 1996 compared with 47.2% in the second quarter of
fiscal 1995. Increased volume of higher margin life science
products and the effects of currency gains in Europe more than
offset lower analytical instrument gross margins in North America.
Selling, general and administrative (SG&A) expenses in the second
quarter of fiscal 1996 increased $6.8 million over the second
quarter of fiscal 1995. Approximately $1.2 million of the increase
was the result of currency translation in Europe and the Far East.
The ratio of SG&A expenses to net revenues decreased to 28.8%
compared with 29.9% in the second quarter of fiscal 1995. Research,
development and engineering (R&D) expenses of $25.9 million
increased 11.8% over the prior year, primarily due to continuing
increased investment in bioresearch applications. In total,
operating expenses as a percentage of net revenues decreased 1.2%
from the second quarter of fiscal 1995 as the Company began to
benefit from the restructuring actions announced in the fourth
quarter of fiscal 1995.
As a result of lower short-term borrowing levels, interest expense
in the second quarter of fiscal 1996 decreased $.6 million compared
to the second quarter of fiscal 1995. Net other expense was $.6
million in the second quarter of fiscal 1996 compared to net other
income of $.2 million in the prior year.
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<PAGE>
RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED DECEMBER 31, 1995
Net revenues for the first six months of fiscal 1996 were $558.4
million, nearly 10% higher than the $508.2 million reported in the
first half of fiscal 1995. Foreign currency changes, primarily in
Europe, accounted for approximately $12 million, or 24%, of the
increase. Revenues were higher than the prior year's level in all
geographic markets, especially in the Far East. The Far East market
experienced a year-to-year increase of 16% in fiscal 1996 reflecting
increased public and private funding in Japan. Revenues in the
United States and Europe also experienced growth, increasing 3% and
11%, respectively. Demand for life science products, particularly
DNA sequencers and PCR related instruments and consumables, led to a
17% increase in life science revenues. Analytical instruments
experienced increased revenues of approximately 5% as a result of
higher demand for organic and inorganic products.
Gross margin as a percentage of net revenues was 48.4% for the first
half of fiscal 1996 compared to 47.5% for the first six months of
fiscal 1995. The increase was primarily due to increased volumes of
higher gross margin life science products and, to a lesser extent,
the favorable effects of foreign currency translation in Europe and
the Far East. These increases more than offset lower analytical
instrument gross margins in North America.
SG&A expenses increased $11.8 million in the first half of fiscal
1996 compared to the same period in fiscal 1995. Approximately 28%
of the increase resulted from currency changes. As a percentage of
net revenues, SG&A expenses decreased to 29% in fiscal 1996 from
approximately 30% in fiscal 1995. R&D expenses of $51.1 million
increased approximately 10% over the prior year, primarily due to
increased investment in both bioresearch and analytical programs.
The restructuring actions announced at the end of fiscal 1995, and
implemented during the first six months of fiscal 1996, are
proceeding as planned. While the Company has begun to benefit from
the cost saving actions, with the ratio of total operating expenses
to net revenues decreasing to 38.4% in fiscal 1996 from 39.0% in
fiscal 1995, the restructuring actions are expected to produce
higher operating cost benefits in the second half of the fiscal
year.
Interest expense was $2.8 million in the first six months of fiscal
1996 compared with $4.4 million in the first six months of fiscal
1995. The decrease was primarily the result of lower average short-
term borrowing levels compared to the prior year. Net other expense
in the first six months of fiscal 1996 was $2.0 million compared to
$.9 million in the first half of fiscal 1995.
The Company's effective income tax rate for the first six months of
fiscal 1996 was 23% compared with 19% in the first six months of
fiscal 1995. Fiscal 1995's lower effective tax rate reflected the
greater utilization of foreign tax credit carryforwards.
FINANCIAL RESOURCES AND LIQUIDITY
At December 31, 1995, the Company's total cash position, including
cash equivalents, was $101.0 million, compared with $73.0 million at
June 30, 1995, and $14.5 million at December 31, 1994. Net cash
provided by operations was $27.2 million for the first six months of
fiscal 1996 compared to $6.8 million for the same period in fiscal
1995. Higher net income and operating liabilities more than offset
increased accounts receivable, inventory levels, and other assets
during fiscal 1996.
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Capital spending was $14.7 million in the first half of fiscal 1996
compared with $16.7 million in the first six months of fiscal 1995.
These expenditures were more than offset by the proceeds received
from the collection of long-term notes receivable, the disposal of
fixed assets held for sale and the maturity of a short-term
investment during the second quarter of fiscal 1996. Cash used for
the payment of shareholders' dividends was offset by the proceeds
received from employee stock option plan exercises and increased
short-term borrowings at the end of the second quarter of fiscal
1996. During the first six months of fiscal 1995, cash used by
financing activities included $37.4 million for the purchase of 1.3
million shares of common stock for treasury. There were no shares
repurchased during the first six months of fiscal 1996.
The implementation of the restructuring actions announced at the end
of fiscal 1995 is proceeding as planned. During the first half of
fiscal 1996, the Company made severance and benefit payments of $4.1
million to employees separated under the plan. In addition,
payments of $1.2 million were made for closure and facility
consolidation costs, related primarily to the shutdown of the
Company's Puerto Rico manufacturing facility. The implementation of
the fiscal 1995 restructuring plan is substantially complete. The
balance remaining at December 31, 1995 of $13.2 million represents
future severance and deferred payments.
OUTLOOK
With the implementation of the fiscal 1995 restructuring actions
proceeding as planned, the Company is anticipating increasing cost
and cash flow benefits for the remainder of fiscal 1996. However,
the slow growth trend of revenues and profitability in the
analytical instrument business has confirmed the need for further
actions. The Company has announced plans to take a pre-tax charge of
approximately $65 - $75 million, or approximately $57 - $65 million
after-tax, in the third quarter of fiscal 1996. The actions planned
include a reduction in worldwide manufacturing capacity and the
establishment of an integrated sales, distribution and
administration support infrastructure for European operations. The
operating cost benefit of these actions targeted for fiscal 1997
approximates $25 million. Once completed, cost benefits are
anticipated to exceed $40 million per year, as will operating cash
flow. The complete details, costs, and timing to implement the plan
are expected to be announced upon final approval from the Company's
Board of Directors before the end of the third quarter.
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PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
10. Form of revised Employment Agreement dated as
of November 16, 1995 between Registrant and
certain Named Executive Officers.
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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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: February 12, 1996
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EXHIBIT INDEX
Exhibit No. Exhibit
10 Form of revised Employment
Agreement dated as of
November 16, 1995 between
Registrant and certain
Named Executive Officers.
11 Computation of Net
Income Per Share.
27 Financial Data Schedule.
EXHIBIT 10
Form of revised Employment Agreement dated as of November 16, 1995
between Registrant and certain Named Executive Officers.
As of November 16, 1995, Registrant entered into
individual Employment Agreements in the form attached hereto
with each of Peter Barrett, Michael W. Hunkapiller, Joseph
E. Malandrakis and Michael J. McPartland. These Employment
Agreements supersede individual Employment Agreements
between Registrant and such named executive officers dated
as of September 15, 1994, in the case of Messrs. Barrett and
Hunkapiller, January 21, 1993, in the case of Mr.
Malandrakis, and February 18, 1993, in the case of Mr.
McPartland.
<PAGE>
EMPLOYMENT AGREEMENT
AGREEMENT entered into as of November 16, 1995, between
THE PERKIN-ELMER CORPORATION, a New York corporation having its
principal place of business at Norwalk, Connecticut (the
"Company") and _____________________________ residing at
________________, ____________________ (the "Employee").
WHEREAS, the Employee has rendered and/or will render
valuable services to the Company and it is regarded essential by
the Company that it have the benefit of Employee's services in
future years; and
WHEREAS, the Board of Directors of the Company believes
that it is essential that, in the event of the possibility of a
Change in Control of the Company (as defined herein), the
Employee be able to continue his attention and dedication to his
duties and to assess and advise the Board of Directors of the
Company (the "Board") whether such proposals would be in the best
interest of the Company and its shareholders without distraction
regarding any uncertainty concerning his future with the Company;
and
WHEREAS, the Employee is willing to agree to continue
to serve the Company in the future;
NOW, THEREFORE, it is mutually agreed as follows:
1. Employment. The Company agrees to employ Employee,
and the Employee agrees to serve as an employee of the Company or
one or more of its subsidiaries after a Change of Control during
the Period of Employment (as those terms are defined in Section 2
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hereof) in such executive capacity as Employee served immediately
prior to the Change in Control which caused the commencement of
the Period of Employment. The Employee also agrees to serve
during the Period of Employment, if elected or appointed thereto,
as a Director of the Board of Directors of the Company and as a
member of any committee of the Board of Directors. Notwith-
standing anything to the contrary herein, the Period of
Employment shall not commence and the Employee shall not be
entitled to any rights, benefits, or payments hereunder unless
and until a Change in Control has occurred.
2. Definitions.
(a) Cause. During the Period of Employment, "Cause"
means termination upon (i) the willful and continued failure by
the Employee to perform substantially his duties with the Company
(other than any such failure resulting from the Employee's
incapacity due to physical or mental illness) after a demand for
a substantial performance is delivered to the Employee by the
Chief Executive Officer of the Company ("CEO") which specifically
identifies the manner in which the CEO believes that the Employee
has not substantially performed his duties, or (ii) the willful
engaging by the Employee in illegal conduct which is materially
and demonstrably injurious to the Company. For purposes of this
Section 2(a), no act, or failure to act, on the part of the
Employee shall be considered "willful" unless done, or omitted to
be done, by the Employee in bad faith and without reasonable
belief that the Employee's action or omission was in, or not
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opposed to, the best interests of the Company. Any act, or
failure to act, based upon authority given pursuant to a
resolution duly adopted by the Board or based upon the advice of
counsel for the Company shall be conclusively presumed to be
done, or omitted to be done, by the Employee in good faith and in
the best interests of the Company. Notwithstanding the
foregoing, the Employee shall not be deemed to have been
terminated for Cause unless and until there shall have been
delivered to the Employee a copy of a resolution duly adopted by
the affirmative vote of not less than three quarters of the
entire membership of the Board at a meeting of the Board called
and held for that purpose (after reasonable notice to the
Employee and an opportunity for him, together with counsel, to be
heard before the Board), finding that in the good faith opinion
of the Board the Employee was guilty of the conduct set forth
above in (i) or (ii) of this Section 2(a) and specifying the
particulars thereof in detail.
(b) Cash Compensation. "Cash Compensation" shall mean
the sum of (i) Employee's Base Salary (determined in accordance
with the provisions of Section 4(a) hereof) and (ii) Executive's
incentive compensation (provided for under Section 4(b) hereof),
which shall be an amount equal to the greatest of (x) the average
of the amount of Employee's incentive compensation for the last
three completed fiscal years immediately prior to the Employee's
termination of employment (whether or not such years occurred
during the Period of Employment), (y) the target amount of such
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Employee's incentive compensation for the fiscal year in which
his termination of employment occurs or (z) the Employee's target
amount for the fiscal year in which the Change in Control occurs.
(c) Change in Control. "Change in Control" means the
occurrence of any of the following: an event that would be
required to be reported (assuming such event has not been
"previously reported") in response to Item 1(a) of the Current
Report on Form 8-K, as in effect on the date hereof, pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934;
provided, however, that, without limitation, such a Change in
Control shall be deemed to have occurred at such time as (i) any
"person" within the meaning of Section 14(d) of the Securities
Exchange Act of 1934 becomes the "beneficial owner" as defined in
Rule 13d-3 thereunder, directly or indirectly, of more than 25%
of the Company's Common Stock; (ii) during any two-year period,
individuals who constitute the Board of Directors of the Company
(the "Incumbent Board") as of the beginning of the period cease
for any reason to constitute at least a majority thereof,
provided that any person becoming a director during such period
whose election or nomination for election by the Company's
stockholders was approved by a vote of at least three quarters of
the Incumbent Board (either by a specific vote or by approval of
the proxy statement of the Company in which such person is named
as a nominee for director without objection to such nomination)
shall be, for purposes of this clause (ii), considered as though
such person were a member of the Incumbent Board; or (iii) the
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approval by the Company's stockholders of the sale of all or
substantially all of the stock or assets of the Company.
(d) Disability. "Disability" means the absence of the
Employee from his duties with the Company on a full-time basis
for one hundred eighty (180) consecutive days as a result of
incapacity due to physical or mental illness.
(e) Good Reason. During the Period of Employment,
"Good Reason" means:
(i) an adverse change in the status of the Employee
(other than any such change primarily attributable to the fact
that the Company may no longer be publicly owned) or position(s)
as an officer of the Company as in effect immediately prior to
the Change in Control or the assignment to the Employee of any
duties or responsibilities which, in his reasonable judgment, are
inconsistent with such status or position(s), or any removal of
the Employee from or any failure to reappoint or reelect him to
such position(s) (except in connection with the termination of
the Employee's employment for Cause, Disability, or upon
attaining age 65 or upon taking early retirement under any of the
Company's retirement plans, or as a result of death or by the
Employee other than for Good Reason);
(ii) a reduction by the Company after a Change in
Control in the Employee's Base Salary;
(iii) a material reduction after a Change in Control
in the Employee's total annual compensation; provided, however,
that for these purposes a reduction for any year of over 10% of
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total compensation measured by the preceding year without a
substantially similar reduction to all other executives
participating in incentive compensation plans shall be considered
"material"; and the failure of the Company to adopt or renew a
stock option plan or to grant amounts of restricted stock or
stock options, which are consistent with the Company's prior
practices, to the Employee shall also be considered a material
reduction, unless the Employee participates in substitute
programs that provide substantially equivalent economic value to
the Employee;
(iv) the failure by the Company to continue in effect
any Benefit Plan (as hereinafter defined) in which Employee was
participating at the time of the Change in Control (or Benefit
Plans providing Employee with at least substantially similar
benefits) other than as a result of the normal expiration of any
such Benefit Plan in accordance with its terms as in effect at
the time of the Change in Control, or the taking of any action,
or the failure to act, by the Company which would adversely
affect Employee's continued participation in any such Benefit
Plans on at least as favorable a basis to Employee as is the case
immediately prior to the Change in Control or which would
materially reduce Employee's benefits in the future under any of
such Benefit Plans or deprive Employee of any material benefit
enjoyed by Employee immediately prior to the Change in Control;
(v) the failure by the Company after a Change in
Control to provide and credit Employee with the number of paid
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vacation days to which Employee was then entitled in accordance
with the Company's normal vacation policy as in effect
immediately prior to the Change in Control; or
(vi) the Company's requiring the Employee after a
Change in Control to be based more than fifty miles from the
Employee's principal place of business immediately prior to the
Change in Control except for required travel on the Company's
business to an extent substantially consistent with the business
travel obligations which he undertook on behalf of the Company
prior to the Change in Control.
(f) Period of Employment. (i) "Period of Employment"
means, subject to the provisions of Section 2(f)(ii), the period
of thirty-six (36) months commencing on the date of a Change in
Control (as defined in Section 2(c) hereof) and the period of any
extension or extensions thereof in accordance with the terms of
this Section. The Period of Employment shall be extended
automatically by one week for each week in which the Employee's
employment continues after the date of a Change in Control.
(ii) Notwithstanding the provisions of Section 2(f)(i)
hereof, the Period of Employment shall terminate upon the
occurrence of the earliest of (A) the Employee's attainment of
age 65, or the election by the Employee to retire early from the
Company under any of its retirement plans, (B) the death of the
Employee, (C) the Disability of the Employee or (D) a termination
of Employee's employment by the Company for Cause or by the
Employee without Good Reason.
-7-
<PAGE>
(g) Termination Date. "Termination Date" means the
date on which the Period of Employment terminates.
3. Duties During the Period of Employment. While
employed by the Company during the Period of Employment, the
Employee shall devote his full business time, attention, and best
efforts to the affairs of the Company and its subsidiaries;
provided, however, that the Employee may engage in other
activities, such as activities involving charitable, educational,
religious, and similar types of organizations, speaking
engagements, membership on the board of directors of other
organizations, and similar types of activities to the extent that
such other activities do not prohibit the performance of his
duties under this Agreement, or inhibit or conflict in any
material way with the business of the Company and its
subsidiaries.
4. Current Cash Compensation.
(a) Base Salary. The Company will pay to the Employee
while employed by the Company during the Period of Employment an
annual base salary ("Base Salary") in an amount determined by the
Board of Directors or its Compensation Committee which shall
never be less than the greater of (i) the Employee's Base Salary
prior to the commencement of the Period of Employment or (ii) his
Base Salary during the preceding year of the Period of
Employment; provided, however, that it is agreed between the
parties that the Company shall review annually the Employee's
Base Salary, and in light of such review may, in the discretion
-8-
<PAGE>
of the Board of Directors or its Compensation Committee, increase
such Base Salary taking into account the Employee's responsi-
bilities, inflation in the cost of living, increase in salaries
of executives of other corporations, performance by the Employee,
and other pertinent factors. The Base Salary shall be paid in
substantially equal biweekly installments while Employee is
employed by the Company.
(b) Incentive Compensation. While employed by the
Company during the Period of Employment, the Employee shall
continue to participate in such of the Company's incentive
compensation programs for executives as the Employee participated
in prior to the commencement of the Period of Employment. Any
amount awarded to the Employee under such programs shall be paid
to Employee in accordance with the terms thereof.
5. Employee Benefits.
(a) Vacation and Sick Leave. The Employee shall be
entitled during the Period of Employment to a paid annual
vacation of not less than twenty (20) business days during each
calendar year while employed by the Company and to reasonable
sick leave.
(b) Regular Reimbursed Business Expenses. The Company
shall reimburse the Employee for all expenses and disbursements
reasonably incurred by the Employee in the performance of his
duties during the Period of Employment.
(c) Employment Benefit Plans or Arrangements. While
employed by the Company, Employee shall be entitled to
-9-
<PAGE>
participate in all employee benefit plans, programs, or
arrangements ("Benefit Plans") of the Company, in accordance with
the terms thereof, as in effect from time to time, which provide
benefits to senior executives of the Company. For purposes of
this Agreement, Benefit Plans shall include, without limitation,
any compensation plan such as an incentive, deferred, stock
option or restricted stock plan, or any employee benefit plan
such as a thrift, pension, profit sharing, pre-tax savings,
medical, dental, disability, salary continuation, accident, life
insurance plan, or a relocation plan or policy, or any other
plan, program, or policy of the Company intended to benefit
employees.
6. Termination of Employment.
(a) Termination by the Company for Cause or
Termination by the Employee Other Than for Good Reason. If
during the Period of Employment the Company terminates the
employment of the Employee for Cause or if the Employee
terminates his employment other than for Good Reason the Company
shall pay the Employee (i) the Employee's Base Salary through the
end of the month in which the Termination Date occurs, (ii) any
incentive compensation payable to him pursuant to Section 4(b)
hereof, including a pro rata share for any partial year, (iii)
any accrued vacation pay, and (iv) benefits payable to him
pursuant to the Company's Benefit Plans as provided in Section
5(c) hereof through the end of the month in which the Termination
Date occurs. The amounts and benefits set forth in clauses (i),
-10-
<PAGE>
(ii), (iii) and (iv) of the preceding sentence shall hereinafter
be referred to as "Accrued Benefits."
(b) Termination by the Company Without Cause or by the
Employee for Good Reason. If during the Period of Employment the
Company terminates the Employee's employment with the Company
without Cause or the Employee terminates his employment with the
Company for Good Reason, the Company will pay to Employee all
Accrued Benefits and, in addition, pay or provide to the Employee
the following:
(i) within thirty (30) days after the date
of termination, a lump sum equal to the greater of
(A) the Employee's Cash Compensation for the
remainder of the Period of Employment or (B) two
times the Employee's Cash Compensation;
(ii) for the greater of two years or the
remainder of the Period of Employment immediately
following the Employee's date of termination, the
Employee and Employee's family shall continue to
participate in any Benefit Plans of the Company (as
defined in Section 5(c) hereof) in which Employee
or Employee's family participated at any time
during the one-year period ending on the day
immediately preceding Employee's termination of
employment, provided that (a) such continued
participation is possible under the terms of such
Benefit Plans, and (b) the Employee continues to
-11-
<PAGE>
pay contributions for such participation at the
rates paid for similar participation by active
Company employees in similar positions to that held
by the Employee immediately prior to the date of
termination. If such continued participation is
not possible, the Company shall provide, at its
sole cost and expense, substantially identical
benefits to the Employee plus pay an additional
amount to the Employee equal to the Employee's
liability for federal, state and local income taxes
on any amounts includible in the Employee's income
by virtue of the terms of this Section 6(b)(ii) so
that Employee does not have to personally pay any
federal, state and local income taxes by virtue of
the terms of this Section 6(b)(ii);
(iii) three additional years of service
credit under the Company's Non-Qualified Plans
and, for purposes of such plans, Employee's final
average pay shall be deemed to be his Cash
Compensation for the year in which the date of
termination occurs;
(iv) the Company shall take all reasonable
actions to cause any Company restricted stock
("Restricted Stock") granted to Employee to become
fully vested and any options to purchase Company
stock ("Options") granted to Employee to become
fully exercisable, and in the event the Company
-12-
<PAGE>
cannot effect such vesting or acceleration within
sixty (60) days, the Company shall pay within
thirty (30) days thereafter to Employee (i) with
respect to each Option, an amount equal to the
product of (x) the number of unvested shares
subject to such Option, multiplied by (y) the
excess of the fair market value of a share of
Company common stock on the date of Employee's
termination of employment, over the per share
exercise price of such Option and (ii) with
respect to each unvested share of Restricted Stock
an amount equal to the fair market value of a
share of Company common stock on the date of
Employee's termination of employment.
Except as provided in the following sentence, the amounts payable
to the Employee under this Section 6(b) shall be absolutely owing
and shall not be subject to reduction or mitigation as a result
of employment of the Employee elsewhere after the date of
termination. Notwithstanding any provision herein to the
contrary, the benefits described in clauses (i), (ii) and (iii)
of this Section 6(b) shall only be payable with respect to the
period ending upon the earlier of (i) the end of the period
specified in each such clause or (ii) Employee's attainment of
age 65.
7. Gross-Up. In the event any amounts due to the
Employee under this Agreement after a Change in Control, under
the terms of any Benefit Plan, or otherwise payable by the
-13-
<PAGE>
Company or an affiliate of the Company are subject to excise
taxes under Section 4999 of the Internal Revenue Code of 1986, as
amended ("Excise Taxes"), the Company shall pay to the Employee,
in addition to any other payments due under other provisions of
this Agreement, an amount equal to the amount of such Excise
Taxes plus the amount of any federal, state and local income or
other taxes and Excise Taxes attributable to all amounts,
including income taxes, payable under this Section 7, so that
after payment of all income, Excise and other taxes with respect
to the amounts due to the Employee under this Agreement, the
Employee will retain the same net after tax amount with respect
to such payments as if no Excise Taxes had been imposed.
8. Governing Law. This Agreement is governed by, and
is to be construed and enforced in accordance with, the laws of
the State of Connecticut. If under such laws any portion of this
Agreement is at any time deemed to be in conflict with any
applicable statute, rule, regulation, or ordinance, such portion
shall be deemed to be modified or altered to conform thereto or,
if that is not possible, to be omitted from this Agreement, and
the invalidity of any such portion shall not affect the force,
effect, and validity of the remaining portion hereof.
9. Notices. All notices under this Agreement shall be
in writing and shall be deemed effective when delivered in person
(in the Company's case, to its Secretary) or seventy-two (72)
hours after deposit thereof in the U.S. mail, postage prepaid,
for delivery as registered or certified mail -- addressed, in the
-14-
<PAGE>
case of the Employee, to the Employee at Employee's residential
address, and in the case of the Company, to its corporate
headquarters, attention of the Secretary, or to such other
address as the Employee or the Company may designate in writing
at any time or from time to time to the other party. In lieu of
personal notice or notice by deposit in the U.S. mail, a party
may give notice by telegram, fax or telex.
10. Miscellaneous. This Agreement shall supersede the
prior Employment Agreement dated _____________, 199__, with the
Employee. This Agreement may be amended only by a subsequent
written agreement of the Employee and the Company. This Agreement
shall be binding upon and shall inure to the benefit of the
Employee, the Employee's heirs, executors, administrators,
beneficiaries, and assigns and to the benefit of the Company and
its successors. Notwithstanding anything in this Agreement to
the contrary, nothing herein shall prevent or interfere with the
ability of the Company to terminate the employment of the
Employee prior to a Change in Control nor be construed to entitle
Employee to be continued in employment prior to a Change in
Control and this Agreement shall terminate if Employee or the
Company terminates Employee's employment prior to a Change in
Control. Similarly, nothing herein shall prevent the Employee
from retiring under any of the Company's retirement plans and
receiving the corresponding benefits thereunder consistent with
the treatment of other Company employees.
-15-
<PAGE>
11. Fees and Expenses. The Company shall pay all
reasonable legal fees and related expenses incurred by the
Employee in connection with this Agreement following a Change in
Control of the Company, including without limitation, all such
fees and expenses, if any, incurred in connection with:
(i) contesting or disputing, any termination of the Employee's
employment hereunder; or (ii) the Employee seeking to obtain or
enforce any right or benefit provided by the Agreement.
12. Arbitration. Any dispute or controversy arising
under or in connection with this Agreement shall be settled
exclusively by arbitration in Connecticut by three arbitrators in
accordance with the rules of the American Arbitration Association
then in effect. Judgment may be entered on the arbitrator's
award in any court having jurisdiction; provided, however, that
the Employee shall be entitled to be paid as if his or her
employment continued during the pendency of any dispute or
controversy arising under or in connection with this Agreement.
The Company shall bear all costs and expenses arising in
connection with any arbitration pursuant to this Section 12.
-16-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the year and day first above written.
THE PERKIN-ELMER CORPORATION
By: _________________________
Tony L. White
Chairman, President and
Chief Executive Officer
ATTEST:
By: ____________________________
William B. Sawch
Vice President
General Counsel & Secretary
ACCEPTED AND AGREED:
_____________________________
THE PERKIN-ELMER CORPORATION
COMPUTATION OF NET INCOME PER SHARE
(unaudited)
(Amounts in thousands except per share amounts)
Six months ended December 31,
1995 1994
Weighted average number of common shares 42,243 42,401
Common stock equivalents - stock options 769 457
Weighted average number of
common shares used in calculating
primary net income per share 43,012 42,858
Additional dilutive stock options 117 61
Shares used in calculating fully
diluted net income per share 43,129 42,919
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 $ 40,350 $ 32,035
Primary net income per share $ 0.94 $ 0.75
Fully diluted net income per share $ 0.94 $ 0.75
EXHIBIT 11
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE
SIX MONTHS ENDED DECEMBER 31, 1995 AND THE CONDENSED CONSOLIDATED
STATEMENT OF FINANCIAL POSITION AT DECEMBER 31, 1995 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> DEC-31-1995
<CASH> 101,000
<SECURITIES> 0
<RECEIVABLES> 249,866
<ALLOWANCES> (8,397)
<INVENTORY> 214,970
<CURRENT-ASSETS> 635,628
<PP&E> 360,705
<DEPRECIATION> (212,128)
<TOTAL-ASSETS> 921,315
<CURRENT-LIABILITIES> 374,318
<BONDS> 0
<COMMON> 45,600
0
0
<OTHER-SE> 295,607
<TOTAL-LIABILITY-AND-EQUITY> 921,315
<SALES> 558,449
<TOTAL-REVENUES> 558,449
<CGS> 288,328
<TOTAL-COSTS> 288,328
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 518
<INTEREST-EXPENSE> 2,759
<INCOME-PRETAX> 52,402
<INCOME-TAX> (12,052)
<INCOME-CONTINUING> 40,350
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 40,350
<EPS-PRIMARY> 0.94
<EPS-DILUTED> 0.94
</TABLE>
