SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[ X ] Annual Report Pursuant To Section 13 Or 15(d)
Of The Securities Exchange Act Of 1934 [Fee Required]
For the Fiscal Year Ended June 30, 1996
OR
[ ] Transition Report Pursuant To Section 13 Or 15(d)
Of The Securities Exchange Act Of 1934 [No Fee Required]
For the transition period from to
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 No.)
761 Main Avenue, Norwalk, Connecticut 06859-0001
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 203-762-1000
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of class on which registered
Common Stock (par value New York Stock Exchange
$1.00 per share) Pacific Stock Exchange
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.
X Yes No
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of Registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
As of September 13, 1996, 42,977,736 shares of Registrant's
Common Stock were outstanding, and the aggregate market value of
shares of such Common Stock (based upon the average sales price)
held by non-affiliates was approximately $2,396,008,782.
DOCUMENTS INCORPORATED BY REFERENCE
Annual Report to Shareholders for Fiscal Year ended June 30,
1996 - Parts I, II, and IV.
Proxy Statement for Annual Meeting of Shareholders dated
September 9, 1996 - Part III.
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PART I
Item 1. BUSINESS
(a) General Development of Business.
The Perkin-Elmer Corporation was incorporated in 1939
under the laws of the State of New York. Together with its
consolidated subsidiaries, The Perkin-Elmer Corporation
(hereinafter collectively referred to as "Registrant" or the
"Corporation") develops, manufactures, and sells products in
the industry segments described in sub-item (c) below.
On February 18, 1993, the shareholders of Registrant and
Applied Biosystems, Inc. ("ABI"), a supplier of automated
systems for life science research and related applications,
approved the merger of a subsidiary of Registrant with and
into ABI which resulted in ABI becoming a wholly-owned
subsidiary of Registrant. Effective July 1, 1994, ABI was
merged into Registrant and is now the Applied Biosystems
Division of Registrant.
On April 18, 1994, Registrant entered into an agreement
with Sulzer Inc. to sell its Material Sciences segment
consisting of its Metco Division ("Metco") headquartered in
Westbury, New York. Registrant completed the sale on
September 30, 1994.
The consolidated financial statements and schedules
reflect the merger with ABI as a pooling of interests and
present the Corporation's Material Sciences segment as a
discontinued operation.
On May 18, 1993, Registrant amended its By-laws to change
Registrant's fiscal year end from July 31 to June 30. Prior
to fiscal year 1993, the financial statements of ABI and
Registrant's subsidiaries outside the United States were for
the years ended June 30, while Registrant's domestic
operations were reported on a July 31 fiscal year end.
In order to concentrate on two different strategies for
the Analytical Instruments and Life Sciences businesses,
Registrant reorganized into two separate business segments in
1996.
(b) Financial Information About Industry Segments.
A summary of net sales to unaffiliated customers,
operating income, and identifiable assets attributable to each
of the Registrant's industry segments for the fiscal years
ended June 30, 1996, 1995 and 1994 is incorporated herein by
reference to Note 6 on Pages 42-43 of the Annual Report to
Shareholders for 1996.
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(c) Narrative Description of Business.
The Registrant's operations are organized within two
industry segments: (1) Analytical Instruments; and (2) Life
Sciences. These segments are more fully described below.
ANALYTICAL INSTRUMENTS
Registrant develops, manufactures, markets, sells, and
services analytical instrument systems. This industry segment
includes analytical instrument systems for determining the
composition and molecular structure of chemical substances
(both organic and inorganic) and measuring the concentration
of materials in a sample. These instruments include:
spectrophotometers utilizing a number of analytical
techniques; gas and liquid chromatographs; thermal analyzers;
analytical balances; flame photometers; polarimeters; data-
handling devices that are principally designed for use with
analytical instruments; and data systems for applications in
analytical chemistry.
Registrant's analytical instruments are used by private
industry, educational and research institutions, and
governmental entities for fundamental research, applied
industrial research, quality control, medical research,
hospital clinical testing, pollution analysis, drug
identification, and forensics.
LIFE SCIENCES
In this industry segment, Registrant manufactures and
sells biochemical analytical instrument systems and products,
consisting of instruments and associated consumable products.
Life Sciences products include liquid chromatography/mass
spectrometer systems, and DNA amplification, analysis,
synthesis, and sequence detection systems. Registrant's DNA
sequencing instruments have accounted for an increasing share
of the Life Sciences business. These automated systems and
products are used for amplification, purification, isolation,
analysis, synthesis, and sequencing of nucleic acids,
proteins, and other biological molecules. Registrant's
biochemical analytical instrument systems and products are
used for life science research and related applications.
In a joint venture, Perkin-Elmer Sciex Instruments,
Registrant is engaged in the manufacture and sale of mass
spectrometry instrument systems, which are sold by both the
Analytical Instruments and Life Sciences segments.
MARKETING AND DISTRIBUTION
In the United States, Registrant markets the largest
portion of its products directly through its own sales and
distribution organizations, although certain products are
marketed through independent distributors and sales
representatives. Sales to major markets outside of the United
States are generally made by the Registrant's foreign based
sales and service staff, although some sales are made directly
from the United States to foreign customers. In certain
foreign countries, sales are made through various
representative and distributorship arrangements. Registrant
owns or leases sales and service offices in strategic regional
locations in the United States, and in foreign countries
through its foreign sales subsidiaries and distribution
operations. None of Registrant's products is distributed
through retail outlets.
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RAW MATERIALS
There are no specialized raw materials that are
particularly essential to the operation of Registrant's
business. Registrant's manufacturing operations require a
wide variety of raw materials, electronic and mechanical
components, chemical and biochemical materials, and other
supplies, some of which are occasionally found to be in short
supply. Registrant has multiple commercial sources for most
components and supplies but is dependent on single sources for
a limited number of such items, in which case Registrant
normally secures long-term supply contracts. In certain cases,
discontinuances of certain sources could temporarily interrupt
Registrant's business in the Life Sciences segment.
PATENTS, LICENSES, AND FRANCHISES
Registrant has pursued a policy of seeking patent
protection in the United States and other countries for
developments, improvements, and inventions originating within
its organization which are incorporated in Registrant's
products or which fall within its fields of interest. Certain
licenses under patents have been granted to, and received
from, other entities. Registrant has certain rights from
Hoffmann-La Roche Inc. under patents relating to polymerase
chain reaction technology ("PCR"), which patents expire in
2004. Registrant also has rights under a patent issued to the
California Institute of Technology relating to DNA sequencing,
which patent expires in 2009. In Registrant's opinion,
however, no other single patent or license, or group of
patents or licenses, or any franchise, is material to its
business as a whole or to either industry segment.
From time to time, Registrant has asserted that various
competitors and others are infringing Registrant's patents and
similarly, from time to time, others have asserted that
Registrant was infringing patents owned by them. Generally,
such claims are settled by mutual agreement on a satisfactory
basis and result in the granting of licenses by Registrant or
the granting of licenses to Registrant.
SEASONAL FLUCTUATIONS
Neither of Registrant's industry segments is subject to
pronounced seasonal fluctuations.
BACKLOG
Registrant's recorded backlog was $182.3 million at June
30, 1996 and $167.0 million at June 30, 1995. It is
Registrant's general policy to include in backlog only
purchase orders or production releases which have firm
delivery dates within one year. Recorded backlog may not
result in sales because of cancellation or other factors. It
is anticipated that all orders included in the current backlog
will be delivered before the close of fiscal year 1997.
UNITED STATES GOVERNMENT SALES
No material portion of either of Registrant's industry
segments is subject to renegotiation of profits or termination
of contracts or subcontracts at the election of the United
States Government.
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COMPETITION
The industry segments in which Registrant operates are
highly competitive and are characterized by the application of
advanced technology. There are numerous companies which
specialize in, and a number of larger companies which devote a
significant portion of their resources to, the development,
manufacture, and sale of products which compete with those
manufactured or sold by Registrant. Many of Registrant's
competitors are well-known manufacturers with a high degree of
technical proficiency. In addition, competition is
intensified by the ever-changing nature of the technologies in
the industries in which Registrant is engaged. The markets
for Registrant's products are characterized by specialized
manufacturers that often have strength in narrow segments of
these markets. While the absence of reliable statistics makes
it difficult to determine Registrant's relative market
position in its industry segments, Registrant is confident it
is one of the principal manufacturers in its fields, marketing
a broad line of analytical instruments and life science
systems. In addition to competing in terms of the technology
that Registrant offers, Registrant competes in terms of price,
service, and quality.
RESEARCH, DEVELOPMENT, AND ENGINEERING
Registrant is actively engaged in basic and applied
research, development, and engineering programs designed to
develop new products and to improve existing products. During
fiscal years 1996, 1995, and 1994, Registrant spent $102.3
million, $95.1 million, and $94.2 million, respectively, on
company sponsored research, development, and engineering
activities.
ENVIRONMENTAL MATTERS
Registrant is subject to federal, state, and local laws
and regulations regulating the discharge of materials into the
environment, or otherwise relating to the protection of the
environment, in those jurisdictions where Registrant operates
or maintains facilities. Registrant does not believe that
compliance with all environmental provisions will have a
material effect on its business, and no material capital
expenditures are expected for environmental control.
EMPLOYEES
As of June 30, 1996, Registrant employed 5,697 persons
worldwide. None of Registrant's United States employees is
subject to collective bargaining agreements.
(d) Financial Information About Foreign and Domestic
Operations and Export Sales.
A summary of net revenues to unaffiliated customers,
operating income, and identifiable assets attributable to each
of Registrant's geographic areas and export sales for the
fiscal years 1996, 1995, and 1994 is incorporated herein by
reference to Note 6 on Pages 42-43 of the Annual Report to
Shareholders for the fiscal year ended June 30, 1996.
Registrant's consolidated net revenues to unaffiliated
customers in countries other than the United States for the
fiscal years 1996, 1995, and 1994 were $744.7 million, $669.8
million, and $606.7 million, or 64.0%, 63.0%, and 59.2%,
respectively, of Registrant's consolidated net revenues.
All of the Registrant's manufacturing facilities outside
of the continental United States are located in Germany, the
United Kingdom, Japan, and Canada. The Registrant is in the
process of establishing a manufacturing facility in Singapore.
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There are currently no material foreign exchange controls
or similar limitations restricting the repatriation to the
United States of capital or earnings from operations outside
the United States.
(e) Discontinued Operations.
On September 30, 1994, Registrant sold Metco, comprising
its Material Sciences segment, headquartered in Westbury, New
York to Sulzer Inc., a wholly-owned subsidiary of Sulzer,
Ltd., Winterthur, Switzerland. The consolidated financial
statements and schedules present Registrant's Material
Sciences segment as a discontinued operation.
Item 2. PROPERTIES
Listed below are the principal facilities of Registrant
as of June 30, 1996. Registrant considers all facilities
listed below to be reasonably appropriate for the purpose(s)
for which they are used, including manufacturing, research and
development, and administrative purposes. All properties are
maintained in good working order and, except for those held
for sale or lease, are substantially utilized on the basis of
at least one shift. None of the leased facilities is leased
from an affiliate of Registrant. Facilities are grouped
within the business segment which is the principal user.
Approximate
Owned or Expiration Floor Area
Location Leased Date of Leases In Sq.Ft.
Analytical Instruments
Norwalk, CT Owned 402,000
Wilton, CT Owned 219,000
San Jose, CA Owned 81,000
Beaconsfield, England Owned 70,000
Ueberlingen, Germany Owned 62,000
Ontario, Canada Owned 38,000
Irvine, CA Owned 22,000
Ueberlingen, Germany Leased 2001 201,815
Llantrinsant, Wales Leased 1996 113,000
Meersburg, Germany Leased 1997 24,000
Singapore Leased 1999 15,000
Beaconsfield, England Leased 2005 8,000
Life Sciences
Warrington, England Owned 58,000
Narita, Japan Owned 24,000
Foster City, CA Leased 1999-2005 390,600
Bedford, MA Leased 2000 15,000
Davis, CA Leased 1999 12,000
In addition to the facilities listed above, Registrant
leases space in certain industrial centers for use as regional
sales and service offices, technical demonstration centers,
and warehousing. Registrant also owns undeveloped land in
Redding, Connecticut, Vacaville, California, and Ueberlingen,
Germany.
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In addition to the properties used by Registrant in its
operations, Registrant owns a facility in Garden Grove,
California (approximately 82,000 square feet) which is
currently leased to OCA Applied Optics, Inc. for a term
expiring in 2002, and a facility in Pomona, California
(approximately 135,000 square feet) which is currently leased
to Orbital Sciences Corporation for a term expiring in 2003.
Registrant also owns two facilities in Wilton, Connecticut
(approximately 51,000 square feet and 42,000 square feet), and
a facility in San Jose, California (approximately 67,000
square feet) which are held for sale or lease. One of the
facilities in Wilton is leased on a long-term basis, and the
facility in San Jose and a portion of the remaining facility
in Wilton are leased on a short-term basis.
Item 3. LEGAL PROCEEDINGS
The Corporation has been named as a defendant in various
legal actions arising from the conduct of its normal business
activities. Although the amount of any liability that might
arise with respect to any of these matters cannot be
accurately predicted, the resulting liability, if any, will
not, in the opinion of management of Registrant, have a
material adverse effect on the consolidated financial
statements of Registrant.
Registrant was one of approximately 125 third party
defendants named in a third party complaint dated February 19,
1993 in United States of America v. Davis et al., which is
pending in the United States District Court for the District
of Rhode Island. The third party plaintiffs, who were named
as defendants and potentially responsible parties in the
Government's initial complaint, sought equitable contribution
and indemnification in the event they were found liable for
remediation costs relating to the removal of hazardous
substances from a site located in Smithfield, Rhode Island
(such costs initially were estimated by the Government to be
$27.8 million, but most recent estimates of such costs appear
to be in the $40 million range). All but one of the third
party plaintiffs settled with the Government for a total of
approximately $6 million, and a trial on the question of the
remaining third party plaintiff's liability to the Government
resulted in an April 22, 1995 Memorandum and Order in which
the Court found such plaintiff, United Technologies
Corporation, liable as a "generator" of hazardous wastes
deposited at the site. Thereafter, the Court permitted United
Technologies Corporation to proceed with its claims against
third parties. Approximately one-half of the third party
claims have been settled, and the remaining, including the
claim against Registrant, are scheduled for trial in November
1996. While the Registrant contends that it should have no
liability in this case, because of the uncertainty of all
litigation it cannot definitively state that it will incur
less than $100,000 in monetary liability.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS
No matter was submitted to a vote of security holders,
through the solicitation of proxies or otherwise, during the
fourth quarter of the fiscal year covered by this report.
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PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
(a) Market Information.
The principal United States market where Registrant's
Common Stock is traded is the New York Stock Exchange,
although such stock is also traded on the Pacific Stock
Exchange.
The following information, which appears in Registrant's
Annual Report to Shareholders for the fiscal year ended June
30, 1996, is hereby incorporated by reference in this Form 10-
K: the high and low sales prices of Registrant's Common Stock
for each quarterly period during the fiscal years 1996 and
1995 (Note 13, Page 47 of the Annual Report to Shareholders).
(b) Holders.
On September 13, 1996, the approximate number of holders
of Common Stock of Registrant was 7,490. The approximate
number of record holders is based upon the actual number of
holders registered in the books of Registrant at such date and
does not include holders of shares in "street name" or
persons, partnerships, associations, corporations, or other
entities identified in security position listings maintained
by depository trust companies. The calculation of the number
of shares of Registrant's Common Stock held by non-affiliates
shown on the cover of this Form 10-K was made on the
assumption that there were no affiliates other than executive
officers and directors.
(c) Dividends.
The amount of quarterly dividends paid during the fiscal
years 1996 and 1995 (Note 13, Page 47 of Registrant's Annual
Report to Shareholders) is hereby incorporated by reference in
this Form 10-K.
Item 6. SELECTED FINANCIAL DATA
Registrant hereby incorporates by reference in this Form
10-K Page 26 of Registrant's Annual Report to Shareholders for
the fiscal year ended June 30, 1996.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Registrant hereby incorporates by reference in this Form
10-K Pages 27-32 of Registrant's Annual Report to Shareholders
for the fiscal year ended June 30, 1996.
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Item 8. FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA
The following financial statements and the supplementary
financial information included in Registrant's Annual Report
to Shareholders for the fiscal year ended June 30, 1996 are
incorporated by reference in this Form 10-K: the Consolidated
Financial Statements and the report thereon of Price
Waterhouse LLP dated July 24, 1996, and Pages 33-48 of said
Annual Report, including Note 13, Page 47, which contains
unaudited quarterly financial information.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
Registrant has not changed its public accounting firm
within 24 months prior to June 30, 1996, the date of
Registrant's most recent financial statements.
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PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS
OF THE REGISTRANT
(a) Identification and Background of Directors.
Registrant hereby incorporates by reference in this
Form 10-K Pages 2-4 of Registrant's Proxy Statement dated
September 9, 1996, in connection with its Annual Meeting of
Shareholders to be held on October 17, 1996.
(b) Identification of Executive Officers.
The following is a list of Registrant's executive
officers, their ages, and their positions and offices with
the Registrant, as of September 13, 1996.
<TABLE>
<CAPTION>
Name Age Present Positions and Year First Elected
<S> <C> <C>
Manuel A. Baez................ 54 Senior Vice President (1996)
Peter Barrett................. 43 Vice President (1994)
David P. Binkley............. 43 Vice President (1995)
Michael W. Hunkapiller........ 47 Vice President (1994)
Stephen O.Jaeger.............. 52 Vice President, Chief Financial Officer (1995), and Treasurer (1996)
Joseph E. Malandrakis......... 50 Vice President (1993)
John B. McBennett............. 58 Corporate Controller (1993)
Michael J. McPartland......... 47 Vice President, Human Resources (1993)
Mark C. Rogers................ 53 Senior Vice President (1996)
William B. Sawch.............. 42 Vice President, General Counsel and Secretary (1993)
Tony L. White................. 50 Chairman, President, and Chief Executive Officer (1995)
</TABLE>
Each of the foregoing named officers was either elected
at the last organizational meeting of the Board of Directors
held on October 19, 1995 or was elected by the Board since
that date. The term of each officer will expire on October
17, 1996, the date of the next scheduled organizational
meeting of the Board of Directors, unless renewed for
another year.
(c) Identification of Certain Significant Employees.
Not applicable.
(d) Family Relationships.
To the best of Registrant's knowledge and belief, there
is no family relationship between any of Registrant's
directors, executive officers, or persons nominated or
chosen by Registrant to become a director or an executive
officer.
(e) Business Experience.
With respect to the business experience of Registrant's
directors and persons nominated to become directors,
Registrant hereby incorporates by reference in this Report
on Form 10-K Pages 2-4 of Registrant's Proxy Statement dated
September 9, 1996, in connection with its Annual Meeting of
Shareholders to be held on October 17, 1996. With respect
to the executive officers of Registrant, each such officer
has been employed by Registrant or a subsidiary in one or
more executive or managerial capacities for at least the
past five years, with the exception of
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Drs. Hunkapiller and Rogers, and Messrs. Baez, Jaeger,
McPartland, and White. Mr. Baez was elected Senior Vice
President of Registrant on June 20, 1996. Prior to his
employment by Registrant in June, 1996, Mr. Baez was
employed by Baxter International Inc. for 22 years, most
recently as Executive Vice President, International. Prior
to joining Baxter International, Inc., Mr. Baez was employed
by Ciba-Geigy, Inc. Dr. Hunkapiller was elected Vice
President of Registrant on October 20, 1994. Prior to his
employment by Registrant in February, 1993, Dr. Hunkapiller
was employed by ABI as Executive Vice President. Dr.
Hunkapiller joined ABI in 1983 as a member of the Research
and Development group and was later appointed Vice
President, Research and Development. He also served as Vice
President, Science and Technology, and General Manager, DNA
Business Unit. Mr. Jaeger was elected Vice President of
Registrant on March 16, 1995. Prior to his employment by
Registrant in March, 1995, Mr. Jaeger was employed by
Houghton Mifflin and Company from 1987 to 1995, most
recently as Executive Vice President, Chief Financial
Officer and Treasurer, and served on its board of directors.
Prior to joining Houghton Mifflin, he served as Senior Vice
President and Chief Financial Officer of British Petroleum
North America, Inc. from 1979 to 1987. Mr. McPartland was
elected Vice President of Registrant on February 18, 1993.
Prior to his employment by Registrant in January, 1993,
Mr. McPartland was employed by SmithKline Beecham plc, from
1980 to 1993, most recently as Senior Vice President and
Director, Corporate Personnel. Dr. Rogers was elected
Senior Vice President on June 20, 1996. Prior to his
employment by Registrant in May, 1996, Dr. Rogers was Vice
Chancellor for Health Affairs at Duke University Medical
Center and Chief Executive Officer at Duke Hospital and
Health Network from 1992 to 1996. Prior to joining Duke,
Dr. Rogers held a number of positions at Johns Hopkins
University, including Chairman of the Department of
Anesthesiology and Critical Care Medicine. Mr. White was
elected Chairman, Chief Executive Officer and President of
Registrant on September 12, 1995. Prior to his employment
by Registrant, Mr. White was employed by Baxter
International Inc. in various executive positions, most
recently as Executive Vice President.
(f) Involvement in Certain Legal Proceedings.
To the best of Registrant's knowledge and belief, none
of Registrant's directors, persons nominated to become
directors, or executive officers has been involved in any
proceedings during the past five years that are material to
an evaluation of the ability or integrity of such persons to
be directors or executive officers of Registrant.
(g) Compliance with Section 16(a) of the Securities
Exchange Act of 1934.
Information concerning compliance with Section 16(a) of
the Securities Exchange Act of 1934 is incorporated by
reference to Page 8 of Registrant's Proxy Statement dated
September 9, 1996, in connection with its Annual Meeting of
Shareholders to be held on October 17, 1996.
Item 11. EXECUTIVE COMPENSATION
Registrant hereby incorporates by reference in this
Form 10-K Pages 5-6 and 8-17 of Registrant's Proxy Statement
dated September 9, 1996, in connection with its Annual
Meeting of Shareholders to be held on October 17, 1996.
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Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
(a) Security Ownership of Certain Beneficial Owners.
Registrant hereby incorporates by reference in this
Form 10-K Page 7 of Registrant's Proxy Statement dated
September 9, 1996, in connection with its Annual Meeting of
Shareholders to be held on October 17, 1996.
(b) Security Ownership of Management.
Information concerning the security ownership of
management is hereby incorporated by reference to Pages 2-4
and 7-8 of Registrant's Proxy Statement dated September 9,
1996, in connection with its Annual Meeting of Shareholders
to be held on October 17, 1996.
(c) Changes in Control.
Registrant knows of no arrangements, including any
pledge by any person of securities of Registrant, the
operation of which may at a subsequent date result in a
change in control of Registrant.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information concerning certain related party
transactions is hereby incorporated by reference to Note 9,
Page 45 of the Annual Report to Shareholders, and to Page 17
of Registrant's Proxy Statement dated September 9, 1996, in
connection with its Annual Meeting of Shareholders to be
held on October 17, 1996.
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PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
AND REPORTS ON FORM 8-K
(a) 1. Financial Statements.
The following consolidated financial statements,
together with the report thereon of Price Waterhouse LLP
dated July 24, 1996, appearing on Pages 33 through 48 of
Registrant's Annual Report to Shareholders for the fisical
year ended June 30, 1996, are incorporated by reference in
this Form 10-K. With the exception of the aforementioned
information and that which is specifically incorporated in
Parts I and II, the Annual Report to Shareholders for the
fiscal year ended June 30, 1996, is not to be deemed filed
as part of this report on Form 10-K.
Annual
10-K Report
Page No. Page No.
Consolidated Statements of
Operations - fiscal years
1996, 1995, and 1994 ............... -- 33
Consolidated Statements of
Financial Position - fiscal years
1996 and 1995 ...................... -- 34
Consolidated Statements of
Cash Flows - fiscal years
1996, 1995, and 1994 ............... -- 35
Consolidated Statements of
Shareholders' Equity - fiscal years
1996, 1995, and 1994 ............... -- 36
Notes to Consolidated Financial
Statements.......................... -- 37-47
Report of Management................ 48
Report of Price Waterhouse LLP...... -- 48
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(a) 2. Financial Statement Schedules.
The following additional financial data should be read
in conjunction with the consolidated financial statements in
said Annual Report to Shareholders for the fiscal year ended
June 30, 1996. Schedules not included with this additional
financial data have been omitted because they are not
applicable or the required information is shown in the
consolidated financial statements or notes thereto.
Annual
10-K Page Report
No. Page No.
Report of Independent Accountants
on Financial Statement Schedule..... 18 --
Schedule II - Valuation and
Qualifying Accounts and Reserves... 19 --
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(a) 3. Exhibits.
Exhibit
No.
2(1) Acquisition Agreement dated July 19, 1991, among the
Corporation, Hoffmann-LaRoche Inc., and Roche Probe,
Inc. (Incorporated by reference to Exhibit 1 to
Current Report on Form 8-K of the Corporation dated
July 19, 1991 (Commission file number 1-4389).)
2(2) Acquisition Agreement dated July 19, 1991, between
the Corporation and F. Hoffmann-La Roche Ltd.
(Incorporated by reference to Exhibit 2 to Current
Report on Form 8-K of the Corporation dated July 19,
1991 (Commission file number 1-4389).)
2(3) Agreement and Plan of Merger, by and among
Registrant, Sequence Acquisition Company and Applied
Biosystems, Inc. dated as of October 6, 1992.
(Incorporated by reference to Exhibit 2 to Current
Report on Form 8-K of the Corporation dated October
6, 1992 (Commission file number 1-4389).)
2(4) Agreement dated April 18, 1994 between Sulzer Inc.
and The Perkin-Elmer Corporation, as amended through
August 31, 1994. (Incorporated by reference to
Exhibit 2(4) to Annual Report on Form 10-K of the
Corporation for fiscal year ended June 30, 1994
(Commission file number 1-4389).)
3(i) Restated Certificate of the Corporation as amended
through July 1, 1994. (Incorporated by reference to
Exhibit 3(I) to Annual Report on Form 10-K of the
Corporation for fiscal year ended June 30, 1994
(Commission file number 1-4389).)
3(ii) Amended and Restated By-laws of the Corporation, as
amended through July 15, 1993. (Incorporated by
reference to Exhibit 3(ii) to Annual Report on Form
10-K of the Corporation for fiscal year ended June
30, 1993 (Commission file number 1-4389).)
4(1) Three Year Credit Agreement dated June 1, 1994, among
Morgan Guaranty Trust Company, certain banks named in
such Agreement, and the Corporation, as amended July
20, 1995. (Incorporated by reference to Exhibit 4(1)
to Annual Report on Form 10-K of the Corporation for
fiscal year ended June 30, 1995 (Commission file
number 1-4389).)
4(2) Shareholder Protection Rights Agreement dated April
30, 1989, between The Perkin-Elmer Corporation and
The First National Bank of Boston. (Incorporated by
reference to Exhibit 4 to Current Report on Form 8-K
of the Corporation dated April 20, 1989 (Commission
file number 1-4389).)
10(1) The Perkin-Elmer Corporation 1984 Stock Option Plan
for Key Employees, as amended through May 21, 1987.
(Incorporated by reference to Exhibit 28(c) to Post
Effective Amendment No. 1 to the Corporation's
Registration Statement on Form S-8 (No. 2-95451).)
10(2) The Perkin-Elmer Corporation 1988 Stock Incentive
Plan for Key Employees. (Incorporated by reference
to Exhibit 10(4) to Annual Report on Form 10-K of the
Corporation for the fiscal year ended July 31, 1988
(Commission file number 1-4389).)
10(3) The Perkin-Elmer Corporation 1993 Stock Incentive
Plan for Key Employees. (Incorporated by reference
to Exhibit 99 to the Corporation's Registration
Statement on Form S-8 (No. 33-50847).)
10(4) Contingent Compensation Plan for Key Employees of The
Perkin-Elmer Corporation, as amended through August
1, 1990. (Incorporated by reference to Exhibit 10(5)
to Annual Report on Form 10-K of the Corporation for
the fiscal year ended July 31, 1992 (Commission file
number 1-4389).)
10(5) The Perkin-Elmer Corporation Supplemental Retirement
Plan as amended through August 1, 1991. (Incorporated
by reference to Exhibit 10(6) to Annual Report on
Form 10-K of the Corporation for the fiscal year
ended July 31, 1991 (Commission file number 1-4389).)
10(6) Deferred Compensation Contract dated September 15,
1994, between Registrant and Michael W. Hunkapiller.
(Incorporated by reference to Exhibit 10(7) to Annual
Report on Form 10-K of the Corporation for the fiscal
year ended June 30, 1995 (Commission file number 1-
4389).)
10(7) Deferred Compensation Contract dated February 18,
1993, between Registrant and Michael J. McPartland.
(Incorporated by reference to Exhibit 10(8) to Annual
Report on Form 10-K of the Corporation for the fiscal
year ended June 30, 1995 (Commission file number 1-
4389).)
10(8) Deferred Compensation Contract dated September 15,
1994, between Registrant and Peter Barrett.
(Incorporated by reference to Exhibit 10(9) to Annual
Report on Form 10-K of the Corporation for the fiscal
year ended June 30, 1995 (Commission file number 1-
4389).)
-14
<PAGE>
10(9) Deferred Compensation Contract dated July 29, 1974,
as amended through January 20, 1994 between
Registrant and Gaynor N. Kelley. (Incorporated by
reference to Exhibit 10(8) to Annual Report on Form
10-K of the Corporation for the fiscal year ended
June 30, 1994 (Commission file number 1-4389).)
10(10) Change of Control Agreement dated September 12, 1995,
between Registrant and Tony L. White. (Incorporated
by reference to Exhibit 10(16) to Annual Report on
Form 10-K of the Corporation for the fiscal year
ended June 30, 1995 (Commission file number 1-4389).)
10(11) Employment Agreement dated November 16, 1995, between
Registrant and Michael W. Hunkapiller.
10(12) Employment Agreement dated November 16, 1995, between
Registrant and Stephen O. Jaeger.
10(13) Employment Agreement dated November 16, 1995, between
Registrant and Michael J. McPartland.
10(14) Employment Agreement dated November 16, 1995, between
Registrant and Peter Barrett.
10(15) Employment Agreement dated November 21, 1991, between
Registrant and Gaynor N. Kelley. (Incorporated by
reference to Exhibit 10(1) to Quarterly Report on
Form 10-Q of the Corporation for the fiscal quarter
ended January 31, 1992 (Commission file number 1-
4389).)
10(16) The Excess Benefit Plan of The Perkin-Elmer
Corporation dated August 1, 1984, as amended through
June 30, 1993. (Incorporated by reference to Exhibit
10(17) to Annual Report on Form 10-K of the
Corporation for the fiscal year ended June 30, 1993
(Commission file number 1-4389).)
10(17) 1993 Director Stock Purchase and Deferred
Compensation Plan. (Incorporated by reference to
Exhibit 99 to the Corporation's Registration
Statement on Form S-8 (No. 33-50849).)
10(18) Employment Agreement dated September 12, 1995,
between Registrant and Tony L. White. (Incorporated
by reference to Exhibit 10(21) to Annual Report on
Form 10-K of the Corporation for the fiscal year
ended June 30, 1995 (Commission file number 1-4389).)
10(19) Employment Agreement dated April 11, 1995, between
Registrant and Stephen O. Jaeger.
10(20) Pledge Agreements and Promissory Notes between
Registrant and Stephen O. Jaeger, Michael W.
Hunkapiller and Michael J. McPartland. (Incorporated
by reference to Exhibit 10 to Quarterly Report on
Form 10-Q of the Corporation for the quarter ended
March 31, 1996 (Commission file number 1-4389).)
10(21) Consulting Agreement dated April 1, 1995, between
Registrant and Robert H. Hayes. (Incorporated by
reference to Exhibit 10(17) to Annual Report on Form
10-K of the Corporation for the fiscal year ended
June 30, 1995 (Commission file number 1-4389).)
11 Computation of Net Income (Loss) per Share for the
five years ended June 30, 1996.
13 Annual Report to Shareholders for 1996 (to the extent
incorporated herein by reference).
21 List of Subsidiaries.
23 Consent of Price Waterhouse LLP.
27 Financial Data Schedule.
Note: None of the Exhibits listed in Item 14(a) 3 above,
except Exhibits 11 and 23, are included with this Form 10-K
Annual Report. Registrant will furnish a copy of any such
Exhibit upon written request to the Secretary at the address
on the cover of this Form 10-K Annual Report accompanied by
payment of $3 for each Exhibit requested.
(b) Reports on Form 8-K.
Registrant did not file a report on Form 8-K during the
last quarter of the period covered by this report.
-15-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, Registrant has duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
THE PERKIN-ELMER CORPORATION
By /s/ W. B. Sawch
William B. Sawch
Vice President, General Counsel
and Secretary
Date: September 19, 1996
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the
following persons on behalf of Registrant and in the
capacities and on the dates indicated.
/s/ Tony L. White September 19, 1996
Tony L. White
Chairman of the Board of Directors, President
and Chief Executive Officer
(Principal Executive Officer)
/s/ Stephen O. Jaeger September 19, 1996
Stephen O. Jaeger
Vice President, Chief Financial Officer and Treasurer
(Principal Financial Officer)
/s/ John B. McBennett September 19, 1996
John B. McBennett
Corporate Controller
(Principal Accounting Officer)
/s/ Joseph F. Abely, Jr. September 19, 1996
Joseph F. Abely, Jr.
Director
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<PAGE>
/s/ Richard H. Ayers September 19, 1996
Richard H. Ayers
Director
/s/ Jean-Luc Belingard September 19, 1996
Jean-Luc Belingard
Director
/s/ Robert H. Hayes September 19, 1996
Robert H. Hayes
Director
/s/ Donald R. Melville September 19, 1996
Donald R. Melville
Director
/s/ Burnell R. Roberts September 19, 1996
Burnell R. Roberts
Director
/s/ Georges C. St. Laurent, Jr. September 19, 1996
Georges C. St. Laurent, Jr.
Director
/s/ John S. Scott September 19, 1996
John S. Scott
Director
/s/ Carolyn W. Slayman September 19, 1996
Carolyn W. Slayman
Director
/s/ Orin R. Smith September 19, 1996
Orin R. Smith
Director
/s/ Richard F. Tucker September 19, 1996
Richard F. Tucker
Director
-17-
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULE
To the Board of Directors
of The Perkin-Elmer Corporation
Our audits of the consolidated financial statements
referred to in our report dated July 24, 1996, appearing on
Page 48 of the 1996 Annual Report to Shareholders of The
Perkin-Elmer Corporation (which report and consolidated
financial statements are incorporated by reference in this
Annual Report on Form 10-K) also included an audit of the
Financial Statement Schedule listed in Item 14(a)2 of this
Form 10-K. In our opinion, the Financial Statement Schedule
presents fairly, in all material respects, the information
set forth therein when read in conjunction with the related
consolidated financial statements.
PRICE WATERHOUSE LLP
Stamford, Connecticut
July 24, 1996
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<PAGE>
THE PERKIN-ELMER CORPORATION
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE FISCAL YEARS ENDED JUNE 30, 1996, 1995 AND 1994
(Amounts in thousands)
ALLOWANCE FOR
DOUBTFUL ACCOUNTS
Balance at June 30, 1993..................... $ 8,226
Charged to income in fiscal year 1994........ 2,927
Deductions from reserve in fiscal year 1994.. (3,906)
Balance at June 30, 1994..................... 7,247
Charged to income in fiscal year 1995........ 2,086
Deductions from reserve in fiscal year 1995.. (384)
Balance at June 30, 1995..................... 8,949 (1)
Charged to income in fiscal year 1996........ 1,090
Deductions from reserve in fiscal year 1996.. (3,194)
Balance at June 30, 1996..................... $ 6,845 (1)
(1) Deducted in the Consolidated Statements of Financial
Position from accounts receivable.
SCHEDULE II
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<PAGE>
THE PERKIN-ELMER CORPORATION
COMPUTATION OF NET INCOME (LOSS) PER SHARE
(Dollar amounts in thousands, except per share amounts)
<TABLE>
<CAPTION>
June 30, June 30, June 30, June 30, July 31,
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Weighted average number of common shares 42,720 42,129 43,857 43,780 43,526
Common stock equivalents - stock options 1,027 515 816 1,173 1,169
Weighted average number of common shares
used in calculating primary earnings per share 43,747 42,644 44,673 44,953 44,695
Additional dilutive stock options under
paragraph #42 APB #15 137 120 172 97 280
Shares used in calculating earnings per share - fully
diluted basis 43,884 42,764 44,845 45,050 44,975
Calculation of primary and fully diluted earnings
per share:
PRIMARY AND FULLY DILUTED:
Income from continuing operations $ 13,944 $ 66,877 $ 73,978 $ 24,444 $ 24,296
Income (loss) from discontinued operations (22,851) 1,714 10,941
Income before cumulative effect of
accounting changes 13,944 66,877 51,127 26,158 35,237
Cumulative effect of accounting changes (83,098)
Net income (loss) used in the calculation of
primary and fully diluted earnings per share $ 13,944 $ 66,877 $ 51,127 $ (56,940) $ 35,237
PRIMARY:
Per share amounts:
Income from continuing operations $ .32 $ 1.57 $ 1.66 $ .54 $ .54
Income (loss) from discontinued operations (.52) .04 .25
Income before cumulative effect of
accounting changes .32 1.57 1.14 .58 .79
Loss from cumulative effect of accounting changes (1.85)
Net income (loss) $ .32 $ 1.57 $ 1.14 $ (1.27) $ .79
FULLY DILUTED:
Per share amounts:
Income from continuing operations $ .32 $ 1.56 $ 1.65 $ .54 $ .54
Income (loss) from discontinued operations (.51) .04 .24
Income before cumulative effect of
accounting changes .32 1.56 1.14 .58 .78
Loss from cumulative effect of accounting changes (1.84)
Net income (loss) $ .32 $ 1.56 $ 1.14 $ (1.26) $ .78
</TABLE>
EXHIBIT 11
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<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in
the Registration Statements on Form S-8 (Nos. 2-95451, 33-
25218, 33-44191, 33-50847, 33-50849, and 33-58778) of The
Perkin-Elmer Corporation of our report dated July 24, 1996,
appearing on page 48 of the Annual Report to Shareholders
which is incorporated in this Annual Report on Form 10-K.
We also consent to the incorporation by reference of our
report on the Financial Statement Schedule, which appears on
page 18 of this Form 10-K.
PRICE WATERHOUSE LLP
Stamford, Connecticut
September 19, 1996
EXHIBIT 23
-21-
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 Dr. Michael W. Hunkapiller residing at 1333 Pebble
Drive, San Carlos, California 94070 (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
-1-
<PAGE>
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
-2-
<PAGE>
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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<PAGE>
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
-4-
<PAGE>
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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<PAGE>
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
-6-
<PAGE>
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),
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<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
pay contributions for
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<PAGE>
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 cannot
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<PAGE>
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
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<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
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<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 September 15, 1994 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.
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<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.
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<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: /s/ Tony L. White
Tony L. White
Chairman, President and
Chief Executive Officer
ATTEST:
By: /s/ WB Sawch
William B. Sawch
Vice President
General Counsel & Secretary
ACCEPTED AND AGREED:
/s/ Michael W. Hunkapiller
Dr. Michael W. Hunkapiller
-17-
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 Stephen O. Jaeger residing at 11 Topstone Road,
West Redding, Connecticut 06896 (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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<PAGE>
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
-2-
<PAGE>
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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<PAGE>
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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<PAGE>
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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<PAGE>
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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<PAGE>
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.
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<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
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<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),
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<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
pay contributions for
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<PAGE>
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 cannot
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<PAGE>
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
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<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
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<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 March 16, 1995 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.
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<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.
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<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: /s/ Tony L. White
Tony L. White
Chairman, President and
Chief Executive Officer
ATTEST:
By: /s/ WB Sawch
William B. Sawch
Vice President
General Counsel & Secretary
ACCEPTED AND AGREED:
/s/ Stephen O. Jaeger
Stephen O. Jaeger
-17-
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 Michael J. McPartland residing at 540 Warner Hill
Road, Southport, Connecticut 06940 (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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<PAGE>
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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<PAGE>
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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<PAGE>
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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<PAGE>
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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<PAGE>
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.
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<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
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<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
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<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),
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<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
pay contributions for
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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 cannot
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<PAGE>
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
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<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
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<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 February 18, 1993, 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.
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<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.
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<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: /s/ Tony L. White
Tony L. White
Chairman, President and
Chief Executive Officer
ATTEST:
By: /s/ WB Sawch
William B. Sawch
Vice President
General Counsel & Secretary
ACCEPTED AND AGREED:
/s/ Michael J. McPartland
Michael J. McPartland
-17-
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 Dr. Peter Barrett residing at 84 Lords Highway
East, Weston, Connecticut 06883 (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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<PAGE>
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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<PAGE>
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.
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<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
pay contributions
-11-
<PAGE>
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 cannot
-12-
<PAGE>
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 September 15, 1994, 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: /s/ Tony L. White
Tony L. White
Chairman, President and
Chief Executive Officer
ATTEST:
By: /s/ WB Sawch
William B. Sawch
Vice President
General Counsel & Secretary
ACCEPTED AND AGREED:
/s/ Peter Barrett
Dr. Peter Barrett
-17-
April 11, 1995
Mr. Stephen O. Jaeger
33 Wicks End Lane
Wilton, CT 06897
Dear Steve:
This is to confirm our agreement concerning certain
terms of your employment with The Perkin-Elmer Corporation
(the "Corporation"). As you know, you and the Corporation
are also parties to an Employment Agreement dated March 16,
1995, which concerns other terms of employment (the
"Employment Agreement").
If, prior to March 14, 1997, your employment with the
Corporation is terminated by the Corporation for reasons
other than "cause", or if you resign your employment for
"good reason", the Corporation shall pay to you the
equivalent of two years base salary at the base salary in
effect at the time of termination. This amount will be paid
in 52 equal bi-weekly installments beginning on the next regular
payroll date after the date of termination. All payments will be
net of normal payroll deductions for state and federal
taxes. Upon such termination, you shall receive no other
benefits or compensation except as you may be entitled to
under the Corporation's retirement and profit sharing plans
or as mandated by law (such as `COBRA"). Payments pursuant
to this agreement will be in lieu of any benefit under any
severance pay plan of the Corporation and shall be
contingent upon your signing, and complying with, a release
agreement in the form attached hereto as Exhibit A.
-1-
<PAGE>
In the event of a "Change-in-Control", as defined in
the Employment Agreement, this agreement shall be of no
force or effect, and shall terminate. In any event, this
agreement shall terminate on March 14, 1997, and upon such
termination no further obligations shall be owed hereunder.
"Cause" shall mean (i) gross misconduct or gross
negligence in the performance of your duties; (ii) willful,
intentional, deliberate and continued failure to perform
your duties; (iii) illegal conduct; (iv) willful and
material violation by you of any policy or standard of the
Corporation; (v) any material breach by you of any agreement
between the
Corporation and you.
"Good reason" shall mean (i) any material reduction in
your base annual salary which is materially greater than
reductions suffered by other officers, if any; (ii) removal
from the position of chief financial officer, or assignment
of duties or responsibilities materially inconsistent with
such position, except for "cause".
This agreement does not alter or modify any other
agreement that you have with the Corporation.
If the foregoing represents our understanding, please
so indicate by signing on the line provided below.
THE PERKIN-ELMER CORPORATION
By: /s/ Gaynor N. Kelley
Agreed to:
/s/ Stephen O. Jaeger
Stephen O. Jaeger
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<PAGE>
EXHIBIT A
RELEASE
(a)In consideration of the benefits under the Agreement to
which this Release is an exhibit, Employee releases,
waives, and forever discharges the Company, any related
companies, and the employees, officers, representatives,
agents and directors of any of them from all claims,
demands, actions, suits, covenants, contracts,
agreements, promises and liabilities of any kind
whatsoever, known or unknown which Employee, Employee's
heirs, executors or assigns may have had, now have or
could in the future have including, without limitation,
those based on Employee's employment with the Company, or
the termination of that employment. This includes, for
example, a release of any rights or claims Employee may
have under the Age Discrimination in Employment Act,
which prohibits age discrimination in employment; Title
VII of the Civil Rights Act of 1964, which prohibits
discrimination in employment based on race, color,
national origin, religion or sex; the Equal Pay Act,
which prohibits paying men and women unequal pay for
equal work; or any other federal, state or local laws or
regulations prohibiting employment discrimination. This
also includes a release by Employee of any claims for
wrongful discharge or breach of employment agreement.
This release covers both claims that Employee knows about
and those he or she may not know about.
(b)This release does not include, however, a release of
Employee's right, if any, to benefits under the Company's
standard retirement program or a release of any rights or
claims that Employee may have under the Age
Discrimination in Employment Act which arise after the
date the Employee signs this Release.
(c)Employee further promises never to file or join in a
lawsuit or other proceeding asserting any claims that are
released in Section (a) hereof.
(d)Nothing in this Agreement shall be inferred to be an
admission of any fault by the Company.
Employee
THE PERKIN-ELMER CORPORATION
COMPUTATION OF NET INCOME (LOSS) PER SHARE
(Dollar amounts in thousands, except per share amounts)
<TABLE>
<CAPTION>
June 30, June 30, June 30, June 30, July 31,
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Weighted average number of common shares 42,720 42,129 43,857 43,780 43,526
Common stock equivalents - stock options 1,027 515 816 1,173 1,169
Weighted average number of common shares
used in calculating primary earnings per share 43,747 42,644 44,673 44,953 44,695
Additional dilutive stock options under
paragraph #42 APB #15 137 120 172 97 280
Shares used in calculating earnings per share - fully
diluted basis 43,884 42,764 44,845 45,050 44,975
Calculation of primary and fully diluted earnings
per share:
PRIMARY AND FULLY DILUTED:
Income from continuing operations $ 13,944 $ 66,877 $ 73,978 $ 24,444 $ 24,296
Income (loss) from discontinued operations (22,851) 1,714 10,941
Income before cumulative effect of
accounting changes 13,944 66,877 51,127 26,158 35,237
Cumulative effect of accounting changes (83,098)
Net income (loss) used in the calculation of
primary and fully diluted earnings per share $ 13,944 $ 66,877 $ 51,127 $ (56,940) $ 35,237
PRIMARY:
Per share amounts:
Income from continuing operations $ .32 $ 1.57 $ 1.66 $ .54 $ .54
Income (loss) from discontinued operations (.52) .04 .25
Income before cumulative effect of
accounting changes .32 1.57 1.14 .58 .79
Loss from cumulative effect of accounting changes (1.85)
Net income (loss) $ .32 $ 1.57 $ 1.14 $ (1.27) $ .79
FULLY DILUTED:
Per share amounts:
Income from continuing operations $ .32 $ 1.56 $ 1.65 $ .54 $ .54
Income (loss) from discontinued operations (.51) .04 .24
Income before cumulative effect of
accounting changes .32 1.56 1.14 .58 .78
Loss from cumulative effect of accounting changes (1.84)
Net income (loss) $ .32 $ 1.56 $ 1.14 $ (1.26) $ .78
</TABLE>
EXHIBIT 11
SELECTED FINANCIAL DATA The Perkin-Elmer Corporation
<TABLE>
<CAPTION>
(Dollar amounts in thousands except per share amounts) June 30, June 30, June 30, June 30, July 31,
1996 1995 1994 1993 1992
<S>
Financial Operations <C> <C> <C> <C> <C>
Net revenues $1,162,949 $1,063,506 $1,024,467 $1,011,297 $ 970,054
Income from operations before special items 94,317 68,659 73,978 60,860 46,089
Per share of common stock 2.17 1.61 1.66 1.35 1.03
Special items, net of taxes * (80,373) (1,782) (36,416) (21,793)
Income from continuing operations 13,944 66,877 73,978 24,444 24,296
Per share of common stock .32 1.57 1.66 .54 .54
Discontinued operations (22,851) 1,714 10,941
Accounting changes (83,098)
Net income (loss) 13,944 66,877 51,127 (56,940) 35,237
Per share of common stock .32 1.57 1.14 (1.27) .79
Dividends per share .68 .68 .68 .68 .68
Other Information
Cash and short-term investments $ 96,588 $ 80,010 $ 25,003 $ 30,331 $ 51,618
Working capital 199,560 227,644 136,400 100,929 140,456
Capital expenditures 32,367 28,863 34,512 28,378 30,698
Total assets 941,324 888,842 884,500 851,070 948,953
Long-term debt 890 34,124 34,270 7,069 67,011
Total debt 51,965 88,881 117,822 81,051 165,205
Shareholders' equity 323,442 304,700 290,432 306,605 429,007
</TABLE>
* Results for fiscal years 1996, 1995 and 1992 include before-tax restructuring
charges of $71.6 million, $23.0 million and $22.0 million, respectively, and
before-tax gains on the sale of investments of $11.7 million, $20.8 million,
and $3.3 million, respectively. Other special items affecting comparability
include a $27.1 million charge for acquired research and development in fiscal
1996, a $22.9 million charge for discontinued operations in fiscal 1994, and a
$41.0 million charge in fiscal 1993 for the merger with ABI. The accounting
changes relate to the adoption of accounting standards for postretirement and
postemployment benefits.
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<PAGE>
Management's Discussion and
Analysis
Management's Discussion of
Operations
The following discussion should be
read in conjunction with the
consolidated financial statements
and related notes included on
pages 33 through 47. Historical
results and percentage
relationships are not necessarily
indicative of operating results
for any future periods.
Events Impacting Comparability
Restructuring Charges. The Perkin-
Elmer Corporation (PE or the
Company) initiated restructuring
actions in fiscal 1996 and 1995
primarily targeted to improve the
profitability and cash flow
performance of its analytical
instruments business. The fiscal
1995 plan focused on cost
reduction. The fiscal 1996 plan
was broader, in that asset
redeployment, reduction of
overhead and improved operating
efficiency, primarily in Europe
and North America, were the
principal restructuring goals.
The pre-tax costs required to
implement the plans were $71.6
million and $23.0 million in
fiscal 1996 and 1995,
respectively. The restructuring
charges on an after-tax basis were
$1.44 and $.44 per share,
respectively (see Note 10).
Acquired Research and Development.
In the fourth quarter of fiscal
1996, the Company recorded a $27.1
million, or $.62 per share, charge
for purchased in-process research
and development primarily in
connection with the acquisitions
of Tropix, Inc. and Zoogen, Inc.
(see Note 2).
Sale of Investments. During the
fourth quarter of fiscal 1996, the
Company sold part of its equity
interest in Etec Systems, Inc.
(ETEC) resulting in a before-tax
gain of $11.7 million, or $.21 per
share after-tax. In addition,
during the third quarter of fiscal
1995, the Company sold its 7%
equity interest in Silicon Valley
Group, Inc. (SVG), resulting in a
before-tax gain of $20.8 million,
or $.40 per share after-tax (see
Note 2).
Discontinued Operations. In the
first quarter of fiscal 1995, the
Company concluded the sale of its
Material Sciences segment
consisting of the Company's Metco
division. The Company announced
its plan to divest Metco in July
1993. Consequently, Metco's
operating results are presented in
the accompanying consolidated
financial statements as a
discontinued operation (see Note
2).
Sale of Business Operation. The
Physical Electronics Division
(PHI) was sold as of the end of
the third quarter of fiscal 1994
(see Note 2).
Results of Continuing Operations-
1996 Compared to 1995
Net revenues for fiscal 1996 were
$1,162.9 million, an increase of
9.4% over the $1,063.5 million
reported in fiscal 1995. Although
the effects of foreign currency
translation were not significant
for the full year, the continued
strengthening of the U.S. dollar
adversely affected fourth quarter
revenues by approximately 4%, or
$12 million.
All geographic markets
experienced growth in fiscal 1996.
The U.S. market experienced lower
product and service revenues in
the analytical instruments
business. However, this was more
than offset by increased demand
for life science products. The
European market, benefiting from
higher revenues of both analytical
and life science products,
reported an increase in net
revenues of $39.0 million, or 9%.
Approximately $9 million of the
increase was the result of
currency translation compared to
approximately $35 million in
fiscal 1995. In the Far East, net
revenues increased $26.7 million,
or approximately 14%. Excluding
currency effects, revenues in the
Far East increased approximately
$34 million, or 18%, as the
Company benefited from higher
public and private spending for
both analytical and life science
products in Japan.
Net revenues by business segment
(Dollar amounts in millions) 1996 1995
Analytical Instruments $ 630.6 $ 625.4
Life Sciences 532.3 438.1
$ 1,162.9 $ 1,063.5
Net revenues of the analytical
instruments segment increased $5.2
million, or 1%, over the prior
year. Increased revenues from
inorganic products, primarily
inductively coupled plasma-mass
spectrometers, were offset by
lower demand for organic and
chromatography products. The life
sciences segment continued to
demonstrate strong growth in
fiscal 1996. Increased demand for
DNA sequencing and liquid
chromatography-mass spectrometry
(LC/MS) products primarily
accounted for the 21.5% increase
in net revenues.
Gross margin as a percentage of
net revenues was 48.8% in fiscal
1996 compared with 47.3% in fiscal
1995. The improvement was the
result of increased unit sales of
higher margin life science
products. This was partially
offset by lower margins in the
U.S. analytical instruments
market.
Selling, general and
administrative (SG&A) expenses
were $340.0 million in fiscal 1996
compared to $317.1 million in
fiscal 1995. Worldwide marketing
expenses for the life science
business, reflecting substantially
higher revenue and order growth, a
$5.1 million non-cash
charge for compensation
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<PAGE>
expense under the Company's
restricted stock program
(see Note 8), and incentive
compensation expense primarily
accounted for the increase. As a
percentage of net revenues, SG&A
expenses decreased from 29.8% in
fiscal 1995 to 29.2% in fiscal
1996. Research, development and
engineering (R&D) expenses were
$102.3 million in fiscal 1996
compared to $95.1 million in
fiscal 1995. Increased spending
in the life sciences segment was
the major contributor.
Total operating expenses were
$541.0 million in fiscal 1996
compared to $435.2 million in
fiscal 1995. Fiscal 1996
operating expenses included a
$27.1 million charge for research
and development expense related to
fourth quarter life sciences-
related acquisitions and a $71.6
million charge for restructuring
actions. Fiscal 1995 operating
expenses included a charge for
restructuring actions of $23.0
million. On a comparable basis,
excluding the special charges,
operating expenses as a percentage
of net revenues decreased from
38.8% in fiscal 1995 to 38.0% in
fiscal 1996.
The fiscal 1996 before-tax
restructuring charge of $71.6
million was taken as part of a
plan focused on improving the
profitability and cash flow
performance of the analytical
instruments business. The
worldwide analytical instruments
business was reorganized into
three vertically integrated,
fiscally accountable divisions to
reduce costs, and to improve the
Company's ability to compete more
effectively in each of its
markets. The charge included
$37.8 million for worldwide
workforce reductions of
approximately 390 positions in
manufacturing, sales and support,
and administrative functions. The
charge also included $33.8 million
for the reduction of excess
European manufacturing capacity,
the consolidation of facilities in
Europe, and the write-off of
certain tangible and intangible
assets associated with the
discontinuance of various product
lines.
The Company will transfer the
development and manufacturing of
certain analytical instrument
product lines from its facility in
Germany to other sites, primarily
in the U.S. The facility in
Germany will remain the principal
site for the development of atomic
absorption products. These
changes are scheduled to be
completed by March 1997.
The restructuring actions also
include the establishment of a
distribution center in Holland,
which will provide an integrated
sales, shipment and administration
support infrastructure for the
Company's European operations, and
the integration of certain
operating and business activities.
The European distribution center
will include certain
administrative, financial, and
information systems functions
which are currently being
transacted at individual locations
throughout Europe. These changes
are scheduled to be substantially
completed by June 1997.
These actions, when completed,
should result in improved customer
focus, increased product and
service revenues, and higher
operating income. The benefits of
the program will begin to be
realized in fiscal 1997 with
operating cost reductions of
approximately $25 million. When
the program is fully implemented,
the Company expects to achieve
annual operating cost benefits of
more than $40 million and
increased operating cash flow of a
similar amount.
The fiscal 1995 restructuring
actions resulted in approximately
$20 million of before-tax savings
in fiscal 1996.
Operating income (loss) by
business segment
(Dollar amounts in millions)
Analytical Life
1996 Instruments Sciences
Segment income $ 28.7 $120.6
Restructuring charge (71.6)
Acquired R&D (27.1)
Operating income (loss) $(42.9) $ 93.5
1995
Segment income $ 26.7 $ 81.7
Restructuring charge (19.2)
Operating income $ 7.5 $ 81.7
On a comparable basis, excluding
the restructuring charges,
operating income for the
analytical instruments segment
increased from $26.7 million in
fiscal 1995 to $28.7 million in
fiscal 1996. Increased revenues
in the European and Far East
markets, coupled with the benefits
realized from the prior year's
restructuring actions, accounted
for the 7% growth in segment
income. Operating income in the
U.S. declined in fiscal 1996.
Operating income for the life
sciences segment, excluding the
charge for acquired R&D, increased
$38.9 million, or 48%, as a result
of growth in unit volumes and
increased margins. In particular,
the DNA sequencing and to a lesser
extent, the LC/MS product lines
were the primary contributors.
All geographic markets contributed
to the improved segment income.
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<PAGE>
Interest expense was $5.0
million in fiscal 1996 compared
with $8.2 million in fiscal 1995.
Lower overall borrowing levels in
fiscal 1996 and lower weighted
average interest rates on short-
term debt accounted for the
reduction in interest costs.
Interest income was $4.9 million
in fiscal 1996 compared with $3.5
million in fiscal 1995. The
increase was the result of
maintaining higher cash and short-
term investment balances
throughout the fiscal year.
Net other expense was $2.2
million in fiscal 1996 compared
with $1.5 million in fiscal 1995.
Expenses in fiscal 1995 were
partially offset by a third
quarter gain on the sale of real
estate.
During the fourth quarter of
fiscal 1996, the Company sold part
of its equity interest in ETEC,
resulting in a before-tax gain of
$11.7 million.
The effective income tax rate
for fiscal 1996 was 61% compared
to 19% for fiscal 1995. Fiscal
1996 included the charge for
acquired research and development
which was not deductible for tax
purposes, as well as the
restructuring charge which was not
fully deductible in the current
year. Excluding the special
charges, the effective income tax
rate for fiscal 1996 would have
been 23%. The lower effective
rate for fiscal 1995 was primarily
due to the greater utilization of
domestic tax benefit carryforwards
and temporary differences than in
fiscal 1996. An analysis of the
differences between the federal
statutory income tax rates and the
effective rates is provided in
Note 4.
Results of Continuing Operations -
1995 Compared to 1994
Net revenues were $1,063.5 million
in fiscal 1995 compared with
$1,024.5 million in fiscal 1994.
Fiscal 1994 included $39.2 million
in net revenues from Applied
Science Operation (ASO) and PHI,
two business units which were sold
during fiscal 1994. Excluding the
effects of these two business
units, fiscal 1995 net revenues
increased $78.2 million, or 7.9%,
over the prior year.
Approximately $48 million of the
increase was due to currency
changes, primarily the U.S.
dollar's weakness against the
Japanese yen and certain European
currencies.
Excluding the effects of ASO and
PHI, net revenues in all
geographic markets, with the
exception of the Far East,
increased from fiscal 1994 to
fiscal 1995. U.S. net revenues
increased 2.6% as a result of an
increase in biotechnology product
sales. Europe's net revenues
increased $64.7 million, or 18.1%
(approximately $30 million, or 8%,
excluding the effects of
currency). In the Far East, net
revenues were unchanged for fiscal
1995, following fiscal 1994's
increase of 35.2%. During fiscal
1995, the Far East market was
adversely impacted by decreased
Japanese public and private
funding in the biotechnology and
environmental product areas.
Other worldwide markets
experienced modest improvements
over the prior year due primarily
to bioresearch products.
Net revenues by business segment
(Dollar amounts in millions) 1995 1994
Analytical Instruments $ 625.4 $ 598.6
Discontinued product lines 39.2
Total Analytical Instruments 625.4 637.8
Life Sciences 438.1 386.7
$ 1,063.5 $ 1,024.5
Excluding the revenues of ASO
and PHI in fiscal 1994, the
analytical instruments segment
increased only 4% in fiscal 1995
as a result of lower demand for
traditional analytical products.
The 13% growth in revenues for
life sciences was primarily
attributed to higher demand for
PCR-related instruments and
consumables, and DNA sequencing
systems and consumables.
Excluding the effects of currency,
revenues from life science
products increased $33.4 million
over fiscal 1994.
Gross margin as a percentage of
net revenues was 47.3% in fiscal
1995 compared with 48.1% in fiscal
1994, excluding ASO and PHI.
Improvements in the U.S. market
gross margin were offset by
continued competitive pricing
pressures worldwide and a less
favorable product mix in the Far
East. The change in product mix
reflected lower sales volume of
higher gross margin life science
products.
SG&A expenses were $317.1
million in fiscal 1995, an
increase of 6% over fiscal 1994.
When measured on a comparable
basis, excluding the expenses of
ASO and PHI, SG&A expenses
increased to 29.8% of net revenues
from 29.6% in fiscal 1994. A
decline in administrative expenses
of approximately 2% was offset by
the negative effects of currency
translation in Europe and the Far
East, and increased worldwide
marketing expenses, primarily due
to new product introductions. R&D
expenses were $95.1 million in
fiscal 1995 compared with $94.2
million in fiscal 1994. Excluding
the expenses of ASO and PHI, R&D
expenses increased 6.8%.
Spending, primarily in life
science programs and applications,
as well as the effects of currency
translation in Europe, accounted
for the increase.
Operating income for fiscal
1995, inclusive of the $23.0
million before-tax charge for
restructuring actions, was $67.9
million compared to $96.0 million
in fiscal 1994. The restructuring
plan focused primarily on reducing
the analytical instruments
business infrastructure. The
charge included $20.7 million of
severance and related costs for
workforce reductions and $2.3
million of closure and facility
consolidation expenses. All costs
resulted in cash outlays and the
actions were implemented by the
third quarter of fiscal 1996.
-29-
<PAGE>
The workforce reductions were
accomplished through involuntary
terminations worldwide as well as
a voluntary retirement incentive
plan in the U.S. The reductions
affected all geographic areas of
operation and all disciplines
ranging from production labor to
executive management. This
included product departments,
manufacturing, engineering, sales,
service and support as well as
corporate administrative staff.
The voluntary retirement incentive
plan was accepted by 91 employees
at a cost of $6.8 million. Some
of these positions were replaced,
but at a lower overall cost basis.
All costs associated with hiring
or training of new employees were
excluded from the charge and
recognized in the period incurred.
The closure and facility
consolidation actions included the
shutdown of the Company's Puerto
Rico manufacturing facility,
consolidation of sales offices in
the Far East and consolidation of
administrative departments in the
U.S. The closure of operations in
Puerto Rico included severance
costs for 46 employees, lease
termination payments and other
related costs. The Far East costs
included lease penalties and
restoration of vacated offices.
Benefits from this restructuring
program were offset in part by the
costs of hiring and training of
new employees, moving and
relocation. The restructuring
actions resulted in approximately
$20 million of before-tax savings
in fiscal 1996, and should
approximate $25 million in
succeeding years.
Operating income by business
segment
(Dollar amounts in millions)
Analytical Life
1995 Instruments Sciences
Segment income $26.7 $81.7
Restructuring charge (19.2)
Operating income $ 7.5 $81.7
1994
Segment income $29.9 $77.5
Discontinued product lines 3.0
Operating income $32.9 $77.5
On a comparable basis, excluding
the restructuring charge and the
fiscal 1994 results of PHI and
ASO, operating income for the
analytical instruments segment
decreased from $29.9 million in
fiscal 1994 to $26.7 million in
fiscal 1995. Lower gross margin
performance, resulting from
worldwide competitive pricing
pressures and a less favorable
product mix in the Far East,
combined with increased worldwide
operating expenses, accounted for
the 11% decrease.
Operating income for the life
sciences segment increased 5% in
fiscal 1995. Improved unit sales
and gross margins in the U.S. and
Europe were partially offset by a
decline in public and private
funding in Japan and increased
marketing and R&D spending
worldwide.
Interest expense was $8.2
million in fiscal 1995 compared
with $7.1 million in fiscal 1994.
Higher borrowing levels in the
first quarter and increased short-
term interest rates for the year
contributed to the higher interest
expense in fiscal 1995.
Interest income was $3.5 million
in fiscal 1995 compared with $2.4
million in fiscal 1994. The
increase was the result of
interest income on notes received
from the sale of divested
operations and increased cash and
short-term investment balances.
During the third quarter of
fiscal 1995, the Company sold its
equity interest in SVG, resulting
in a before-tax net gain of $20.8
million, or $.40 per share after-
tax.
The effective income tax rate
was 19% in fiscal 1995 compared
with 17% for fiscal 1994. During
the first quarter of fiscal 1994,
the Company received a favorable
ruling from the U.S. Tax Court
which essentially concurred with
the Company's pricing method on
intercompany sales with respect to
its operations in Puerto Rico.
The resolution of this matter with
the U.S. government contributed to
a lower effective tax rate for
fiscal 1994 when compared to
fiscal 1995.
Discontinued Operations
In the first quarter of fiscal
1995, the Company completed the
sale of Metco to Sulzer Inc., a
wholly-owned subsidiary of Sulzer,
Ltd., Winterthur, Switzerland, for
$64.8 million in cash. Metco's
operating profits had declined
from fiscal 1992 to fiscal 1994,
primarily due to the weakness in
the aircraft turbine engine market
and significant downsizing that
occurred in the airline industry.
In the fourth quarter of fiscal
1994, the Company recorded a $7.7
million after-tax loss on
disposal, including a provision of
$5.0 million (less applicable
income taxes of $.8 million) for
Metco's operating losses during
the phase-out period.
-30-
<PAGE>
Loss from discontinued
operations in fiscal 1994 also
included an after-tax settlement
of $15.2 million, including legal
costs, related to the Hubble Space
Telescope mirror (see Note 2).
Foreign Currency
The results of the Company's
international operations are
subject to foreign currency
fluctuations. The Company enters
into foreign exchange forward and
option contracts to manage its
exposure to currency fluctuations.
Management believes any reasonably
likely change in the level of
underlying major currencies being
hedged will not have a material
adverse effect on the consolidated
financial statements. A
discussion of the Company's
foreign currency hedging
activities is provided in Note 12.
Management's Discussion of
Financial Resources and Liquidity
The following discussion of
financial resources and liquidity
focuses on the Consolidated
Statements of Financial Position
(page 34) and the Consolidated
Statements of Cash Flows (page
35).
Consolidated Statements of
Financial Position
Cash and short-term investments
are primarily cash, cash
equivalents, time deposits and
certificates of deposit with
original maturity dates of three
months to one year (collectively
"cash"). Cash increased $16.6
million in fiscal 1996 to $96.6
million at June 30, 1996.
The accounts receivable balance
at June 30, 1996 totaled $254.5
million compared with $234.2
million at June 30, 1995. During
fiscal 1996, the Company reduced
the amount of receivables sold
through its sale of receivables
program in Japan. The net amount
of receivables sold but
uncollected at June 30, 1996 was
$19.3 million compared with $29.0
million at June 30, 1995 (see Note
1).
Inventories were $207.3 million
at June 30, 1996 compared with
$212.9 million a year ago.
Increased inventory balances were
more than offset by a decrease of
approximately $11 million from
foreign currency translation.
Prepaid expenses and other
current assets increased to $82.4
million at June 30, 1996 from
$70.4 million at the end of fiscal
1995. The increase of $12.0
million was primarily due to
increased current deferred tax
assets.
Other long-term assets increased
from $136.0 million at June 30,
1995 to $152.5 million at June 30,
1996. Other long-term assets
primarily consist of goodwill,
investments in equity securities,
long-term deferred tax assets and
other long-term assets. The
primary reason for the increase in
long-term assets was the $23.2
million increase in fair value of
an equity security investment.
Other accrued expenses increased
$50.4 million to $206.6 million at
the end of fiscal 1996. The
balance at June 30, 1996 included
$57.0 million in liabilities
related to the fiscal 1996
restructuring, partially offset by
the payment of $11.9 million of
costs related to the fiscal 1995
restructuring.
Total short and long-term
borrowings were $52.0 million at
June 30, 1996 compared with $88.9
million at the end of fiscal 1995.
Excluding the effects of currency
translation, total borrowings
decreased $18.1 million. The
Company's debt to total
capitalization ratio fell to 14%
from 23% at June 30, 1995.
The Company believes its cash
and short-term investments, funds
generated from operating
activities and available borrowing
facilities are sufficient to
provide for financing needs in the
foreseeable future. The Company
has unused credit facilities
totaling $297 million. PE has
historically maintained a strong
financial position and
conservative capital structure.
Consolidated Statements of Cash
Flows
The Consolidated Statements of
Cash Flows depict cash flows by
three broad categories: operating
activities, investing activities
and financing activities.
Operating activities are the
principal source of the Company's
cash flows. Investment in
property, plant and equipment
represents ongoing capital
investing activity. Major ongoing
activities reported under
financing activities include
payment of dividends to
shareholders and transactions
involving the Company's various
employee stock plans.
Net cash provided by operating
activities was $111.9 million for
fiscal 1996 compared with $72.0
million for fiscal 1995. The
increase was primarily due to
higher income-related cash flow
which more than offset higher
accounts receivable and inventory
levels.
Net cash used by investing
activities was $45.5 million for
fiscal 1996 compared with $81.3
million of net cash provided by
investing activities in the prior
year. Capital expenditures for
fiscal 1996 were $32.4 million
compared with $28.9 million for
fiscal 1995. In fiscal 1996,
$42.5 million of cash was used for
acquisition outlays, primarily the
purchase of Tropix, Inc., while
$21.6 million was generated from
the sale of non-operating assets.
During fiscal 1995, the Company
generated $119.3 million from the
sale of discontinued operations
and assets while spending $11.0
million for the purchase of
Photovac Inc. A discussion of the
acquisitions and dispositions for
fiscal 1996 and 1995 is provided
in Note 2.
Net cash used by financing
activities was $41.6 million in
fiscal 1996 compared to $101.4
million in fiscal 1995. The $36.4
million increase in cash received
from the exercise of employee
stock options was the primary
reason for the reduction in net
cash required to fund financing
activities. The Company received
$46.7 million in cash proceeds
from stock options compared to
$10.3 million in fiscal 1995.
During both fiscal years, cash was
used to reduce short-term
borrowings, pay dividends and
repurchase shares of the
-31-
<PAGE>
Company's common stock. During fiscal
1996,.8 million shares of common stock,
at a cost of $41.0 million, were
repurchased compared to 1.4
million shares, at a cost of $40.3
million, in fiscal 1995. Common
stock purchases for the treasury
are made in support of the
Company's various stock plans and
as part of a share repurchase
authorization.
As previously mentioned, the
Company recorded before-tax
restructuring charges of $71.6
million and $23.0 million in
fiscal 1996 and 1995,
respectively. To date, the
Company has made cash payments of
$9.6 million for obligations under
the fiscal 1996 restructuring plan
and $16.4 million for obligations
under the fiscal 1995
restructuring plan (see Note 10).
Obligations remaining at June 30,
1996 for the 1996 and 1995
provisions are expected to require
cash outlays of approximately $39
million and $7 million,
respectively. The funding for the
remaining restructuring
liabilities will be from current
cash balances and realized
benefits from both restructuring
activities. The before-tax cash
benefit from these actions was
approximately $20 million in
fiscal 1996 and is targeted to be
approximately $50 million in
fiscal 1997 and approximately $65
million in succeeding years.
Impact of Inflation and Changing
Prices
Inflation and changing prices are
continually monitored. The
Company attempts to minimize the
impact of inflation by improving
productivity and efficiency
through continual review of both
manufacturing capacity and
operating expense levels. When
operating costs and manufacturing
costs increase, the Company
attempts to recover such costs by
increasing, over time, the selling
price of its products and
services. The Company believes
the effects of inflation have been
appropriately managed and
therefore have not had a material
impact on its historic operations
and resulting financial position.
Outlook
Although the impact of currency
translation is likely to have an
adverse effect on life sciences'
fiscal 1997 net revenues, the
underlying demand for life science
products is expected to continue
to grow rapidly. Consequently,
the Company's investment strategy
is to accelerate the search for
new opportunities and applications
in this business. To date, the
Company has been focused in life
sciences largely in genomics and
genetic analysis with the Applied
Biosystems Division. The Company
expects further growth and
expansion of that business and
continued diversification into
plant and animal products as well
as into bioinformatics. The
fiscal 1996 acquisitions of
Tropix, Inc. and Zoogen, Inc. are
direct results of the enhanced
focus on this segment.
Recently the Company has begun
to look at life sciences in a more
generic way and is exploring the
significant potential of the
application of the Company's core
competencies in such technologies
as infrared, fluorescence, and gas
chromatography to medical
monitoring and diagnosis. As a
result, the Company sees growth
opportunities for analytical
instruments. The pursuit of these
new markets will be conducted at
the same time as the fiscal 1996
restructuring plan is implemented.
The profitability and cash flow
goals of the 1996 plan should not
be adversely affected, and may be
enhanced, as the extension of the
analytical instruments core
competencies to new markets is
begun. The penetration of new
markets by analytical instruments
has the potential to add revenue
opportunity to a segment which is
otherwise expected to demonstrate
slow growth.
"Safe Harbor" Statement under
Private Securities Litigation
Reform Act of 1995
Certain statements contained in
this annual report may be forward
looking and are subject to a
variety of risks and
uncertainties. Many factors could
cause actual results to differ
materially from these statements.
These factors include, but are not
limited to, (1) complexity and
uncertainty regarding the
development of new high-technology
products, (2) loss of market share
through competition, (3)
introduction of competing products
or technologies by other
companies, (4) pricing pressures
from competitors and/or customers,
(5) changes in the life sciences
or analytical instrument
industries, (6) changes in the
pharmaceutical, environmental,
research or chemical markets, (7)
variable government funding in key
geographical regions, (8) the
Company's ability to protect
proprietary information and
technology or to obtain necessary
licenses on commercially
reasonable terms, (9) the loss of
key employees, and (10) other
factors which might be described
from time to time in the Company's
filings with the Securities and
Exchange Commission.
A significant portion of the
Company's life science business
operations are located near major
California earthquake faults. The
ultimate impact of earthquakes on
the Company, significant suppliers
and the general infrastructure is
unknown, but operating results
could be materially affected in
the event of a major earthquake.
The Company maintains insurance to
reduce its exposure to losses and
interruptions caused by
earthquakes.
Although the Company believes it
has the product offerings and
resources needed for continuing
success, future revenue and margin
trends cannot be reliably
predicted and may cause the
Company to adjust its operations.
Factors external to the Company
can result in volatility of the
Company's common stock price.
Because of the foregoing factors,
recent trends should not be
considered reliable indicators of
future stock prices or financial
results.
-32-
<PAGE>
CONSOLIDATED STATEMENTS OF OPERATIONS The Perkin-Elmer Corporation
<TABLE>
<CAPTION>
(Dollar amounts in thousands except per share amounts)
For the years ended June 30, 1996 1995 1994
<S> <C> <C> <C>
Net revenues $ 1,162,949 $ 1,063,506 $ 1,024,467
Cost of sales 595,857 560,402 535,178
Gross margin 567,092 503,104 489,289
Selling, general and administrative 339,994 317,120 299,101
Research, development and engineering 102,338 95,088 94,172
Provision for restructured operations 71,600 23,000
Acquired research and development 27,093
Operating income 26,067 67,896 96,016
Gain on sale of investment 11,704 20,800
Interest expense 4,971 8,180 7,145
Interest income 4,894 3,500 2,382
Other expense, net (2,193) (1,452) (2,121)
Income before income taxes 35,501 82,564 89,132
Provision for income taxes 21,557 15,687 15,154
Income from continuing operations 13,944 66,877 73,978
Loss from discontinued operations, net of income taxes (22,851)
Net income $ 13,944 $ 66,877 $ 51,127
Per share amounts:
Income from continuing operations $ .32 $ 1.57 $ 1.66
Loss from discontinued operations (.52)
Net income $ .32 $ 1.57 $ 1.14
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
-33-
<PAGE>
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION The Perkin-Elmer Corporation
<TABLE>
<CAPTION>
(Dollar amounts in thousands)
At June 30,
<S> 1996 1995
Assets <C> <C>
Current assets
Cash and cash equivalents $ 95,361 $ 73,010
Short-term investments 1,227 7,000
Accounts receivable, less allowances for doubtful accounts of $6,845 ($8,949 - 1995) 254,531 234,153
Inventories 207,297 212,859
Prepaid expenses and other current assets 82,360 70,410
Total current assets 640,776 597,432
Property, plant and equipment, net 148,008 155,441
Other long-term assets 152,540 135,969
Total assets $ 941,324 $ 888,842
Liabilities and Shareholders' Equity
Current liabilities
Loans payable $ 51,075 $ 54,757
Accounts payable 86,885 85,342
Accrued salaries and wages 39,607 38,862
Accrued taxes on income 57,097 34,676
Other accrued expenses 206,552 156,151
Total current liabilities 441,216 369,788
Long-term debt 890 34,124
Other long-term liabilities 175,776 180,230
Commitments and contingencies (see Note 11)
Shareholders' equity
Capital stock
Preferred stock $1 par value: 1,000,000 shares authorized; none issued
Common stock $1 par value: 90,000,000 shares authorized; 45,599,755 shares issued 45,600 45,600
Capital in excess of par value 186,058 176,699
Retained earnings 194,613 215,363
Foreign currency translation adjustments 446 9,805
Unrealized gain on investment 23,245
Minimum pension liability adjustment (29,365) (34,445)
Treasury stock, at cost (shares: 1996 - 2,701,186; 1995 - 3,489,649) (97,155) (108,322)
Total shareholders' equity 323,442 304,700
Total liabilities and shareholders' equity $ 941,324 $ 888,842
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
-34-
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS The Perkin-Elmer Corporation
<TABLE>
<CAPTION>
(Dollar amounts in thousands)
For the years ended June 30, 1996 1995 1994
<S> <C> <C> <C>
Operating Activities
Income from continuing operations $ 13,944 $ 66,877 $ 73,978
Adjustments to reconcile income from continuing operations
to net cash provided by operating activities:
Depreciation and amortization 41,240 40,670 42,679
Restricted stock amortization 5,072
Deferred income taxes (12,683) (4,568) 1,750
Gains from the sale of assets (11,704) (22,129)
Provision for restructured operations 71,600 23,000
Acquired research and development 27,093
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable (34,162) 13,675 (21,527)
(Increase) decrease in inventories (4,322) 1,540 (25,360)
Increase in prepaid expenses and other assets (9,794) (11,860) (15,043)
Increase (decrease) in accounts payable and other liabilities 25,638 (35,199) 2,973
Divestitures (6,934)
Legal settlement (15,550)
Net cash provided by operating activities 111,922 72,006 36,966
Investing Activities
Additions to property, plant and equipment
(net of disposals of $2,070, $1,733 and $2,185, respectively) (30,297) (27,130) (32,327)
Short-term investments 5,773 1,778
Proceeds from the sale of assets, net 21,562 54,499 31,850
Acquisitions, net of cash acquired (42,542) (10,898)
Proceeds from the sale of discontinued operations 64,847
Other, net (930)
Net cash (used) provided by investing activities (45,504) 81,318 371
Financing Activities
Net change in loans payable (18,129) (40,850) 5,053
Proceeds from long-term debt 26,992
Principal payments on long-term debt (1,901) (1,886)
Dividends declared (29,095) (28,618) (29,813)
Purchases of common stock for treasury (41,028) (40,297) (59,615)
Stock issued for stock plans 46,656 10,279 17,426
Net cash used by financing activities (41,596) (101,387) (41,843)
Effect of exchange rate changes on cash (2,471) (3,930) 927
Net change in cash and cash equivalents 22,351 48,007 (3,579)
Cash and cash equivalents beginning of year 73,010 25,003 28,582
Cash and cash equivalents end of year $ 95,361 $ 73,010 $ 25,003
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
-35-
<PAGE>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY The Perkin-Elmer Corporation
<TABLE>
<CAPTION> Foreign Minimum
Common Capital In Currency Unrealized Pension
Stock $1.00 Excess Of Retained Translation Gain on Liability Treasury Stock
(Dollar amounts and shares in thousands) Par Value Par Value Earnings Adjustments Investment Adjustment At Cost Shares
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at June 30, 1993 $ 45,600 $ 178,739 $163,861 $ (3,931) $ - $ (31,859)$ (45,805)(1,656)
Net income 51,127
Cash dividends (29,813)
Share repurchases (59,615)(1,841)
Shares issued under stock plans (3,695) 21,121 846
Minimum pension liability adjustment (4,400)
Foreign currency translation adjustments 9,452
Other (350)
Balance at June 30, 1994 $ 45,600 $ 178,739 $181,130 $ 5,521 $ - $ (36,259)$ (84,299)(2,651)
Net income 66,877
Cash dividends (28,618)
Share repurchases (40,297)(1,386)
Shares issued under stock plans (3,929) 14,208 477
Tax benefit related to employee stock options 34
Minimum pension liability adjustment 1,814
Unearned compensation - restricted stock plan (2,074) 8 2,066 70
Foreign currency translation adjustments 4,284
Other (105)
Balance at June 30, 1995 $ 45,600 $ 176,699 $215,363 $ 9,805 $ - $ (34,445)$(108,322)(3,490)
Net income 13,944
Cash dividends (29,095)
Share repurchases (41,028) (800)
Shares issued under stock plans (5,627) 52,283 1,559
Tax benefit related to employee stock options 5,280
Minimum pension liability adjustment 5,080
Restricted stock plan 4,079 993 30
Unrealized gain on investment 23,245
Foreign currency translation adjustments (9,359)
Other 28 (1,081)
Balance at June 30, 1996 $ 45,600 $ 186,058 $194,613 $ 446 $ 23,245 $ (29,365)$ (97,155)(2,701)
</Table)
See accompanying Notes to Consolidated Financial Statements.
-36-
<PAGE>
Notes to Consolidated Financial Statements
Note 1 Accounting Policies and
Practices
Principles of Consolidation. The
consolidated financial statements
include the accounts of all
majority-owned subsidiaries of The
Perkin-Elmer Corporation (PE or
the Company). The preparation of
financial statements in conformity
with generally accepted accounting
principles requires management to
make estimates and assumptions
that affect the reported amounts
of assets and liabilities,
disclosure of contingent assets
and liabilities at the date of the
financial statements, and the
reported amounts of revenues and
expenses during the reporting
periods. Actual results could
differ from those estimates.
Certain amounts in the
consolidated financial statements
and notes have been reclassified
for comparative purposes.
Changes in Accounting Principles.
The Company is required to
implement Statement of Financial
Accounting Standards (SFAS) No.
121, "Accounting for the
Impairment of Long-Lived Assets
and for Long-Lived Assets to Be
Disposed Of," no later than June
30, 1997. The 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 the carrying amount of an
asset may not be recoverable. The
Company has determined that at
June 30, 1996 the application of
SFAS No. 121 will not have a
material impact on the
consolidated financial statements.
In October 1995, the Financial
Accounting Standards Board issued
SFAS No. 123, "Accounting for
Stock-Based Compensation." The
statement requires companies to
measure employee stock
compensation plans based on the
fair value method of accounting or
to continue to apply Accounting
Principles Board (APB) Opinion No.
25, "Accounting for Stock Issued
to Employees" and provide pro
forma footnote disclosures under
the fair value method. The
Company will continue to measure
costs for its employee stock
compensation plans using APB
Opinion No. 25 and will provide
pro forma disclosures, as
required, beginning in fiscal
1997.
Foreign Currency. Assets and
liabilities of foreign operations,
where the functional currency is
the local currency, are translated
into U.S. dollars at the fiscal
year end exchange rates. The
related translation adjustments
are recorded as a separate
component of shareholders' equity.
Foreign currency revenues and
expenses are translated using
average exchange rates prevailing
during the year. Foreign currency
transaction gains and losses, as
well as translation adjustments of
foreign operations where the
functional currency is the dollar,
are included in net income.
Cash, Short-Term Investments and
Marketable Securities. Cash
equivalents consist of highly
liquid debt instruments, time
deposits and certificates of
deposit with original maturities
of three months or less. Time
deposits and certificates of
deposit with original maturities
of three months to one year are
classified as short-term
investments. Short-term
investments, which include
marketable securities, are
recorded at cost which
approximates market value.
Accounts Receivable. The Company
periodically sells accounts
receivable arising from business
conducted in Japan. During the
fiscal years ended 1996, 1995 and
1994, the Company received cash
proceeds of $71.1 million, $101.4
million, and $43.8 million,
respectively, from the sale of
such receivables. The Company
believes it has adequately
provided for any risk of loss
which may occur under these
arrangements.
Investments. The equity method of
accounting for investments in 50%
or less owned joint ventures is
used. Investments where ownership
is less than 20% are carried at
cost.
Inventories. Inventories are
stated at the lower of cost (on a
first-in, first-out basis) or
market. Inventories at June 30,
1996 and 1995 included the
following components:
(Dollar amounts in millions) 1996 1995
Raw materials and supplies $ 31.1 $ 29.2
Work-in-process 19.8 18.9
Finished products 156.4 164.8
Total inventories $ 207.3 $ 212.9
Property, Plant and Equipment and
Depreciation. Property, plant and
equipment are recorded at cost and
consisted of the following at June
30, 1996 and 1995:
(Dollar amounts in millions) 1996 1995
Land $ 22.4 $ 24.1
Buildings and leasehold improvements 133.0 132.9
Machinery and equipment 213.1 205.3
Property, plant and equipment, at cost 368.5 362.3
Accumulated depreciation and
amortization 220.5 206.9
Property, plant and equipment, net $ 148.0 $ 155.4
Provisions for depreciation of
owned property, plant and
equipment are based upon the
expected useful lives of the
assets and computed primarily by
the straight-line method.
Leasehold improvements are
amortized over their estimated
useful lives or the term of the
applicable lease, whichever is
less, using the straight-line
method.
Major renewals and improvements
that significantly add to
productive capacity or extend the
life of an asset are capi-
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talized. Repairs, maintenance and
minor renewals and improvements are
expensed when incurred.
Intangible Assets. The excess of
purchase price over the net asset
value of companies acquired is
amortized on a straight-line
method over periods not exceeding
40 years. Patents and trademarks
are amortized using the straight-
line method over their expected
useful lives.
Revenues. Revenues from service
contracts are recorded as deferred
service contract revenues and
reflected in net revenues over the
term of the contract.
Research, Development and
Engineering. Research,
development and engineering costs
are expensed when incurred.
Income Taxes. The Company expects
to permanently reinvest
substantially all of the
undistributed earnings of its
foreign subsidiaries.
Net Income (Loss) Per Share. Net
income (loss) per share is
computed by dividing net income
(loss) by the weighted average
number of common shares and
dilutive common stock equivalents
outstanding. Common stock
equivalents include stock options.
The difference between weighted
average shares for primary and
fully diluted net income (loss)
per share was not significant for
the years presented.
Supplemental Cash Flow
Information. Cash paid for
interest expense and income taxes
for the fiscal years ended 1996,
1995 and 1994 was as follows:
(Dollar amounts in millions) 1996 1995 1994
Interest $ 5.6 $ 8.0 $ 7.0
Income taxes 15.0 27.3 16.1
Note 2 Acquisitions and
Dispositions
Tropix, Inc. During the fourth
quarter of fiscal 1996, the
Company acquired Tropix, Inc., a
world leader in the development,
manufacture and sale of
chemiluminescent detection
technology for life sciences. The
acquisition cost, net of cash
acquired was $36.0 million and was
accounted for as a purchase. The
purchase price was allocated to
the net assets acquired and to
purchased in-process research and
development (R&D). Purchased in-
process R&D includes the value of
products in the development stage
and not considered to have reached
technological feasibility. In
accordance with applicable
accounting rules, purchased in-
process R&D is required to be
expensed. Accordingly, $22.3
million of the acquisition cost
was expensed in the fourth quarter
of fiscal 1996.
Other Acquisitions. During the
fourth quarter of fiscal 1996, the
Company acquired Zoogen, Inc., a
leading provider of genetic
analysis services, and a minority
equity interest in Paracel, Inc.,
a provider of information
filtering technologies, for $6.5
million in cash. The acquisition
of Zoogen, Inc. was accounted for
as a purchase. In connection with
these acquisitions, $4.8 million
was expensed as purchased in-
process R&D.
Photovac Inc. The Company
acquired Photovac Inc., a leading
developer and manufacturer of
field portable analytical
instrumentation, during the fourth
quarter of fiscal 1995, for $11.0
million in cash. The acquisition
was accounted for as a purchase.
The net assets and results of
operations for the above
acquisitions have been included in
the consolidated financial
statements since the date of each
acquisition. The pro forma effect
on the Company's consolidated
financial statements was not
significant.
Dispositions
Etec Systems, Inc. During the
fourth quarter of fiscal 1996, the
Company sold part of its equity
interest in Etec Systems, Inc. for
net cash proceeds of $16.6
million, resulting in a before-tax
gain of $11.7 million, or $.21 per
share after-tax.
Silicon Valley Group, Inc. 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, resulting in a
before-tax gain of $20.8 million,
or $.40 per share after-tax.
Physical Electronics Division.
During the fourth quarter of
fiscal 1994, the Company completed
the sale of its Physical
Electronics Division (PHI) to the
management of PHI and Chemical
Venture Partners. The unit was
sold for approximately net book
value. The Company received cash
proceeds of $23.0 million and a
10% interest-bearing note with a
face value of $7.2 million in
connection with the sale.
Discontinued Operations
Legal Settlement. The Company
paid $15.5 million to settle
potential claims related to the
Hubble Space Telescope mirror in
the first quarter of fiscal 1994.
This payment, which included legal
costs, resulted in an after-tax
charge of $15.2 million.
Material Sciences Segment. The
Company received $64.8 million in
the first quarter of fiscal 1995
from the sale of its Material
Sciences segment (Metco) to Sulzer
Inc., a wholly-owned subsidiary of
Sulzer, Ltd., Winterthur,
Switzerland. An after-tax loss of
$7.7 million was recorded during
the fourth quarter of fiscal 1994.
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The following table summarizes
discontinued operations reflected
in the fiscal 1994 consolidated
financial statements:
(Dollar amounts in millions)
For the year ended June 30, 1994
Loss on disposal of Metco
including a provision of
$5.0 for operating losses
during the phase-out period,
less applicable income taxes
of $.8 $ (7.7)
Legal settlement, less
applicable income taxes
of $.3 (15.2)
Loss from discontinued
operations $ (22.9)
Note 3 Debt and Lines of Credit
There were no domestic borrowings
outstanding at June 30, 1996 or
1995. Foreign loans payable and
long-term debt at June 30, 1996
and 1995 are summarized below:
(Dollar amounts in millions) 1996 1995
Loans payable:
Notes payable, banks $ 25.4 $ 50.3
Current maturities of
long-term debt 25.7 4.5
Total loans payable $ 51.1 $ 54.8
Long-term debt:
3.255% Yen term loan maturing
in fiscal 1997 $ - $ 33.2
Other .9 .9
Total long-term debt $ .9 $ 34.1
The weighted average interest
rates at June 30, 1996 and 1995
for foreign bank borrowings were
3.7% and 7.2%, respectively.
On June 1, 1994, the Company
entered into a $100 million three-
year revolving credit agreement.
The agreement was amended in
fiscal 1996 to extend the maturity
an additional three years to June
1, 2000. Commitment and facility
fees are based on the leverage and
interest coverage ratios.
Interest rates on amounts borrowed
vary depending on whether
borrowings are undertaken in the
domestic or Eurodollar markets.
There were no borrowings under the
facility at June 30, 1996 or 1995.
The Company's wholly-owned
subsidiary, Perkin-Elmer Japan,
borrowed 2.8 billion Yen at a
fixed interest rate of 3.255% in
fiscal 1994. The final maturity
date is scheduled for February
1997.
At June 30, 1996, the Company
had unused credit facilities for
short-term borrowings from
domestic and foreign banks in
various currencies totaling $297
million.
Under various debt and credit
agreements, the Company is
required to maintain certain
minimum net worth and interest
coverage ratios.
The annual maturity of long-term
debt for fiscal year 1997 is $25.7
million. Maturities for fiscal
years 1998, 1999, 2000, 2001 and
beyond total $.9 million.
Note 4 Income Taxes
Income before income taxes for
fiscal years ended 1996, 1995 and
1994 was as follows:
(Dollar amounts in millions) 1996 1995 1994
United States $16.3 $58.8 $65.0
Foreign 19.2 23.8 24.1
Total $35.5 $82.6 $89.1
The components of the provision
for income taxes for fiscal years
ended 1996, 1995 and 1994
consisted of the following:
(Dollar amounts in millions) 1996 1995 1994
Currently payable:
Federal $ 9.4 $ 2.2 $ (1.3)
Foreign 23.8 17.2 12.6
State and local 1.0 .9 2.1
Total currently payable 34.2 20.3 13.4
Deferred:
Federal (4.4) (7.5)
Foreign (8.2) 2.9 1.8
Total deferred (12.6) (4.6) 1.8
Total provision for
income taxes $ 21.6 $ 15.7 $ 15.2
Significant components of
deferred tax assets and
liabilities at June 30, 1996 and
1995 are summarized below:
Deferred
Tax Assets
(Dollar amounts in millions) 1996 1995
Intangibles $ 10.4 $ 12.4
Inventories 6.7 9.4
Postretirement and postemployment
benefits 35.9 35.6
Other reserves and accruals 76.8 62.6
Tax credit carryforwards 10.4 10.6
Foreign loss carryforwards 10.0 16.4
Subtotal 150.2 147.0
Valuation allowance (105.6) (116.6)
Total deferred tax assets $ 44.6 $ 30.4
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<PAGE>
Deferred Tax
Liabilities
(Dollar amounts in millions) 1996 1995
Inventories $ .7 $ 1.1
Other reserves and accruals 6.0 4.2
Total deferred tax liabilities 6.7 5.3
Total deferred tax assets, net $37.9 $25.1
A reconciliation of the federal
statutory tax provision to the
Company's tax provision for the
fiscal years ended 1996, 1995 and
1994 was as follows:
(Dollar amounts
in millions) 1996 1995 1994
Federal statutory rate 35% 35% 35%
Tax at federal statutory rate $12.4 $28.9 $31.2
State income taxes (net of
federal benefit) .7 .6 1.4
Effect on income from foreign
operations 14.7 13.4 (.2)
Effect on income from
foreign sales corporation (3.2)
Acquired research and
development 9.5
Utilization of tax benefit
carryforwards (10.0) (18.3) (16.5)
U.S. gain from foreign
reorganization 4.6
Domestic temporary
differences for which
benefit is recognized (2.7) (5.4) (7.4)
Other .2 (3.5) 2.1
Total provision for income
taxes $21.6 $15.7 $15.2
At June 30, 1996, the Company
has a U.S. alternative minimum tax
credit of $10.4 million with an
indefinite carryforward period.
The Company has loss carryforwards
of approximately $22 million in
various foreign countries,
primarily in Germany and Japan,
with varying expiration dates.
The Company's federal tax
returns have been examined by the
Internal Revenue Service (IRS) for
the years 1975 through 1989, and
the IRS is currently examining the
years 1990 through 1992. The
years 1988 and 1989 are under
consideration at the IRS appeals
level. In addition, the IRS has
examined the tax returns of
Applied Biosystems, Inc. (ABI)
through 1991, and has proposed
adjustments which also will be
considered at the IRS appeals
level. The IRS is currently
examining ABI's years 1992 and
1993 (prior to its merger with the
Company). It is the Company's
opinion that it has adequately
provided in the financial
statements for any potential IRS
adjustments for these open years.
Note 5 Retirement and Other
Benefits
Pension Plans. The Company
maintains or sponsors pension
plans that cover substantially all
worldwide employees. Pension
benefits earned are generally
based on years of service and
compensation during active
employment. However, the level of
benefits and terms of vesting vary
among the plans. Pension plan
assets are administered by
trustees and are principally
invested in equity and fixed
income securities. The funding of
pension plans is determined in
accordance with statutory funding
requirements.
The total worldwide pension
expense for all employee pension
plans was $15.2 million, $15.0
million and $17.3 million for
fiscal years 1996, 1995, and 1994,
respectively. The actuarial
assumptions used in the
determination of net pension
expense, as well as the components
thereof, are set forth in the
following tables:
Domestic Plans
(Dollar amounts in millions) 1996 1995 1994
Assumptions:
Discount rate 8 1/2% 8 1/2% 8 1/2%
Compensation
increase 4% 4% 4%
Long-term rate of
return 8 1/2-9 1/4% 8 1/2-9 1/4% 8 1/2-10%
Components:
Service cost $ 7.6 $ 7.8 $ 9.1
Interest cost 33.0 30.7 30.6
Actual return on
assets (32.1) (29.9) (19.5)
Net amortization
and deferral (1.4) (.9) (9.8)
Net pension expense $ 7.1 $ 7.7 $ 10.4
Foreign Plans
(Dollar amounts in millions) 1996 1995 1994
Assumptions:
Discount rate 6-8% 6 1/2-8% 6-8 1/2%
Compensation
increase 4-4 1/2% 4 1/4-4 1/2% 4 1/2%
Long-term rate of
return 6 1/2-9 1/2% 6 1/2-10% 6 1/2-10%
Components:
Service cost $3.2 $3.0 $2.9
Interest cost 6.7 6.2 6.0
Actual return on
assets (4.0) (2.6) (1.7)
Net amortization
and deferral 2.2 .7 ( .3)
Net pension
expense $8.1 $7.3 $6.9
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<PAGE>
The funded status of the plans
and amounts recognized in the
Company's Consolidated Statements
of Financial Position at June 30,
1996 and 1995:
Domestic
Plans
(Dollar amounts in millions) 1996 1995
Plan assets at fair value $422.2 $368.4
Projected benefit obligation 435.1 392.1
Plan assets less than
projected benefit obligation (12.9) (23.7)
Unrecognized items:
Net actuarial loss 48.1 55.2
Prior service cost (5.1) (5.3)
Net transition asset (9.0) (11.3)
Minimum pension liability
adjustment (31.5) (37.4)
Accrued pension expense $(10.4) $(22.5)
Actuarial present value
of accumulated benefits $432.5 $390.8
Accumulated benefit obligation
related to vested benefits $424.1 $381.6
A minimum pension liability
adjustment is required when the
actuarial present value of
accumulated benefits exceeds plan
assets and accrued pension
liabilities. The minimum
liability adjustment, less
allowable intangible assets, net
of tax benefit, is reported as a
reduction of shareholders' equity.
Foreign Plans
Assets Exceed Accumulated
Accumulated Benefits
Benefits Exceed Assets
(Dollar amounts in millions) 1996 1995 1996 1995
Plan assets at fair value $27.9 $25.6
Projected benefit obligation 28.0 25.8 $70.2 $72.8
Plan assets less than
projected benefit obligation (.1) (.2) (70.2) (72.8)
Unrecognized items:
Net actuarial (gain) loss 3.9 4.6 (2.3) (2.5)
Prior service cost 1.1 .3
Net transition (asset)
obligation (2.2) (2.7) 5.0 7.8
Prepaid (accrued) pension
expense $ 2.7 $ 2.0 $(67.5)$(67.5)
Actuarial present value
of accumulated benefits $26.0 $23.6 $ 60.1 $ 58.7
Accumulated benefit
obligation related to
vested benefits $ 56.3 $ 53.8
Savings Plan. Effective October
1, 1995, the Company's domestic
profit sharing and savings plan
was reconfigured to form a Company
matched 401(k) savings plan. The
amended plan provides for
automatic Company contributions
for 2% of eligible compensation
and a dollar-for-dollar matching
contribution up to 4% of eligible
compensation. The Company's
contribution to this plan was $7.4
million for fiscal 1996.
Prior to the amendment, the
profit sharing and savings plan
allowed for Company contributions
in an amount equal to 8% of
consolidated income before income
taxes, as defined by the plan,
provided the Company's
contribution did not reduce
earnings below $.3125 per share of
common stock. The profit sharing
payment by the Company was
allocated among its domestic
employees in direct proportion to
their earnings. PE's contribution
to this plan was $7.6 million for
fiscal 1995 and $7.5 million for
fiscal 1994.
Retiree Health Care and Life
Insurance Benefits. PE provides
certain health care and life
insurance benefits to domestic
employees, hired prior to January
1, 1993, who retire from the
Company and satisfy certain
service and age requirements.
Generally, medical coverage pays a
stated percentage of most medical
expenses, reduced for any
deductible and payments made by
Medicare or other group coverage.
The cost of providing these
benefits is shared with retirees.
The plan is unfunded.
The following table sets forth
the accrued postretirement benefit
liability recognized in the
Company's Consolidated Statements
of Financial Position at June 30,
1996 and 1995:
(Dollar amounts in millions) 1996 1995
Actuarial present value of
postretirement benefit obligation:
Retirees $64.4 $68.2
Fully eligible active participants .8 1.4
Other active participants 9.4 10.2
Accumulated postretirement
benefit obligation (APBO) 74.6 79.8
Unrecognized net gain 21.5 16.5
Accrued postretirement benefit liability $96.1 $96.3
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The net postretirement benefit
cost for fiscal 1996 and 1995
included the following components:
(Dollar amounts in millions) 1996 1995
Service cost $ .6 $ .7
Interest cost 6.0 6.8
Amortization of unrecognized gain (1.1) (.1)
Net postretirement benefit cost $ 5.5 $ 7.4
The discount rate used in
determining the APBO was 8.5% in
fiscal 1996 and 1995. The assumed
health care cost trend rate used
for measuring the APBO was divided
into three categories:
1996 1995
Pre-65 participants 11.0% 11.6%
Post-65 participants 8.1% 8.4%
Medicare 8.1% 8.4%
All three rates were assumed to
decline to 5.5% over 9 and 10
years in fiscal 1996 and 1995,
respectively.
If the health care cost trend
rate was increased 1%, the APBO,
as of June 30, 1996, would have
increased 10%. The effect of this
change on the aggregate of service
and interest cost for fiscal 1996
would be an increase of 11%.
Postemployment Benefits. The
Company provides certain
postemployment benefits to
eligible employees. These
benefits generally include
severance, disability, and medical-
related costs paid after
employment but before retirement.
Note 6 Business Segments and
Geographic Area Information
Business Segments. In order to
concentrate on two different
strategies for the analytical
instruments and life sciences
businesses, the Company reorganized
into two separate operating segments
in fiscal 1996. The analytical
instruments segment is comprised of
equipment and systems used for
determining the composition and
molecular structure of chemical
substances (both organic and
inorganic), data handling devices, and
real time, process analysis systems to
monitor process quality and
environmental purity. The life
sciences segment is comprised of
biochemical instrument systems and
associated consumable products for
life science research and related
applications. These automated systems
are used for synthesis, amplification,
purification, isolation, analysis and
sequencing of nucleic acids, proteins,
and other biological molecules. In
addition, through a joint venture, the
Company manufactures and sells mass
spectrometry instrument systems in
both industry segments.
Geographic Areas. Revenues between
geographic areas are primarily
comprised of the sale of instruments
and consumables by the Company's
manufacturing units. The sale amounts
reflect the rules and regulations of
the respective governing tax
authorities. Third-party export net
revenues and operating profits are
reported in the region of destination.
Operating income is determined by
deducting from net revenues the related
costs and operating expenses
attributable to the region. Research,
development and engineering expenses
are reflected in the area where the
activity was performed. Identifiable
assets include all assets directly
identified with those geographic areas.
Corporate assets include cash and short-
term investments, deferred tax assets,
property, plant, and equipment,
minority equity investments, and other
assets which are corporate in nature.
.
Export net revenues for the fiscal
years ended June 30, 1996, 1995 and
1994 were $44.6 million, $45.4 million
and $63.8 million, respectively.
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Business Segments
(Dollar amounts in millions)
Analytical Life
1996 Instruments Sciences Corporate Consolidated
Net revenues $630.6 $532.3 $ - $1,162.9
Segment income (loss) 28.7 120.6 (24.5) 124.8
Restructuring charge (71.6) (71.6)
Acquired research and
development (27.1) (27.1)
Operating income (loss) (42.9) 93.5 (24.5) 26.1
Identifiable assets 401.6 319.3 220.4 941.3
Capital expenditures 13.6 18.2 .6 32.4
Depreciation and
amortization 28.7 12.1 .4 41.2
1995
Net revenues $625.4 $438.1 $ - $1,063.5
Segment income (loss) 26.7 81.7 (17.5) 90.9
Restructuring charge (19.2) (3.8) (23.0)
Operating income (loss) 7.5 81.7 (21.3) 67.9
Identifiable assets 440.8 269.7 178.3 888.8
Capital expenditures 16.3 12.2 .4 28.9
Depreciation and
amortization 29.5 10.7 .5 40.7
1994
Net revenues $637.8 $386.7 $ - $1,024.5
Operating income (loss) 32.9 77.5 (14.4) 96.0
Identifiable assets 447.2 222.3 158.8 828.3
Discontinued assets 56.2
Capital expenditures 18.5 15.6 .4 34.5
Depreciation and
amortization 31.3 10.9 .5 42.7
Geographic Areas
(Dollar amounts in millions)
United Other
1996 States Europe Far East Countries Corporate Consolidated
Total revenues $461.8 $581.2 $346.6 $79.3 $ - $1,468.9
Transfers between
geographic areas (43.6) (119.9) (124.6) (17.9) (306.0)
Revenues to
unaffiliated
customers 418.2 461.3 222.0 61.4 1,162.9
Income (loss) (9.4) 76.7 72.6 9.4 (24.5) 124.8
Restructuring
charge (12.4) (59.2) (71.6)
Acquired research
and development (27.1) (27.1)
Operating
income (loss) (48.9) 17.5 72.6 9.4 (24.5) 26.1
Identifiable
assets 344.1 255.3 98.4 23.1 220.4 941.3
1995
Total revenues $447.7 $542.0 $296.6 $71.3 $ - $1,357.6
Transfers between
geographic areas (54.0) (119.7) (101.3) (19.1) (294.1)
Revenues to
unaffiliated
customers 393.7 422.3 195.3 52.2 1,063.5
Income (loss) (20.5) 68.4 52.2 8.3 (17.5) 90.9
Restructuring
charge (9.4) (8.3) (1.4) (.1) (3.8) (23.0)
Operating
income (loss) (29.9) 60.1 50.8 8.2 (21.3) 67.9
Identifiable
assets 322.0 253.8 102.5 32.2 178.3 888.8
1994
Total revenues $461.3 $476.9 $297.5 $67.9 $ - $1,303.6
Transfers between
geographic areas (43.5) (114.3) (102.2) (19.1) (279.1)
Revenues to
unaffiliated
customers 417.8 362.6 195.3 48.8 1,024.5
Operating income
(loss) (11.0) 49.2 62.5 9.7 (14.4) 96.0
Identifiable
assets 318.9 224.6 102.7 23.3 158.8 828.3
Discontinued
assets 56.2
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Note 7 Shareholders' Equity
Treasury Stock. 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.
For the years ended June 30, 1996,
1995 and 1994, the Company
purchased .8 million, .5 million
and .8 million shares,
respectively, to support various
stock plans. The remaining number
of shares available under the
purchase authorization at June 30,
1996 is 4.2 million.
Shareholders' Protection Rights
Plan. The Company has a
Shareholders' Protection Rights
Plan designed to protect
shareholders against abusive
takeover tactics by declaring a
dividend of one right on each
outstanding share of common stock.
Each right entitles shareholders
to buy one one-hundredth of a
newly issued share of
participating preferred stock
having economic and voting terms
similar to those of one share of
common stock at an exercise price
of $90, subject to adjustment.
The rights will be exercisable
only if a person or a group: (a)
acquires 20% or more of the
Company's shares or (b) commences
a tender offer that will result in
such person or group owning 20% or
more of the Company's shares.
Before that time, the rights trade
with the common stock, but
thereafter they become separately
tradeable.
Upon exercise, after a person or
a group acquires 20% or more of
the Company's shares, each right
(other than rights held by the
acquiring person) will entitle the
shareholder to purchase a number
of shares of preferred stock of
the Company having a market value
of two times the exercise price.
If the Company is acquired in a
merger or other business
combination, each right will
entitle the shareholder to
purchase at the then exercise
price a number of shares of common
stock of the acquiring company
having a market value of two times
such exercise price. If any
person or group acquires between
20% and 50% of PE's shares, the
Company's Board of Directors may,
at its option, exchange one share
of the Company's common stock for
each right. The rights are
redeemable at the Company's option
at one cent per right prior to a
person or group becoming an
acquiring person.
Note 8 Stock Plans
Stock Option Plans. Under the
Company's stock option plans,
officers and other key employees
may be granted options, each of
which allows for the purchase of
common stock at a price of not
less than 100% of fair market
value at the date of grant.
Transactions relating to the
stock option plans of the Company
are summarized below:
Number of
Options
Outstanding at June 30, 1993 4,360,143
Granted at $30.25-$37.75 per share 970,150
Exercised at $10.70-$35.32 per share 763,085
Cancelled 253,458
Outstanding at June 30, 1994 4,313,750
Granted at $28.81-$31.25 per share 543,300
Exercised at $10.70-$35.13 per share 424,017
Cancelled 315,742
Outstanding at June 30, 1995 4,117,291
Granted at $34.56-$54.81 per share 511,650
Exercised at $10.70-$37.75 per share 1,359,054
Cancelled 133,059
Outstanding at June 30, 1996 3,136,828
Options exercisable at June 30, 1996 2,307,692
The options granted during
fiscal 1996 reflected in the above
table do not include those subject
to shareholder approval of the new
1996 Stock Incentive Plan. At
June 30, 1996, 6,835 shares
remained available for option
grant under the 1993 Stock
Incentive Plan.
Employee Stock Purchase Plan. The
Employee Stock Purchase Plan
offers domestic employees the
right to purchase, over a two-year
period, shares of common stock on
an annual offering date. The
purchase price is equal to the
lower of 85% of the average market
price of the common stock on the
offering date or 85% of the
average market price of the common
stock on the last day of the 24-
month purchase period.
Common stock issued under the
Employee Stock Purchase Plan was
.1 million shares in each of
fiscal 1996, 1995 and 1994. At
June 30, 1996, .7 million shares
remained available for issuance.
Director Stock Purchase and
Deferred Compensation Plan. The
Company has a Director Stock
Purchase and Deferred Compensation
Plan which requires non-employee
directors of the Company to apply
at least 50% of their annual
retainer to the purchase of common
stock. The purchase price is the
fair market value on the first
calendar day of the third month of
each fiscal quarter. At June 30,
1996, approximately .1 million
shares were available for
issuance.
-44-
<PAGE>
Restricted Stock. As part of the
Company's 1993 Stock Incentive
Plan, a total of 100,000 shares of
restricted stock may be granted to
key employees. Such stock will
vest when certain continuous
employment restrictions and/or
specified performance goals are
achieved. The value of shares
granted is generally expensed over
the restricted periods, which may
vary depending on the estimated
achievement of performance goals.
Restricted stock granted to key
employees under the plan during
fiscal 1996 and fiscal 1995 was
30,000 and 70,000 shares,
respectively. In fiscal 1994, no
shares were granted. During fiscal
1996, compensation expense of $5.1
million was recognized as the
vesting schedule for these awards
was amended. There were no amounts
charged to expense for fiscal 1995
and 1994.
1996 Stock Incentive Plan. The
Company has granted, subject to
shareholder approval of the new
1996 Stock Incentive Plan, 293,000
employee stock options, 185,000
performance shares, and 12,000
stock awards.
Note 9 Additional Information
Selected Accounts. The following
table provides the major
components of selected accounts
of the Consolidated Statements of
Financial Position:
(Dollar amounts in millions)
At June 30, 1996 1995
Other accrued expenses
Deferred service contract revenues $ 40.1 $ 38.3
Accrued pension liabilities 19.4 21.1
Restructuring provisions 63.6 18.5
Other 83.5 78.3
Total other accrued expenses $206.6 $156.2
Other long-term liabilities
Accrued pension liabilities $ 63.6 $ 72.1
Accrued postretirement benefits 93.8 91.3
Other 18.4 16.8
Total other long-term liabilities $175.8 $180.2
Related Party Transactions. One
of the Company's directors is an
employee of F. Hoffmann-La Roche
Ltd. (Roche), a pharmaceutical
manufacturer and strategic partner
of the Company in the
biotechnology field. During
fiscal 1996, the Company made
payments to Roche and its
affiliates of $59.7 million for
the purchase of reagents and
consumables for resale in the life
sciences segment compared to $33.2
million in fiscal 1995.
Note 10 Provision for Restructured
Operations
Fiscal 1996. As part of
continuing efforts to strengthen
the analytical instruments
business, the Company identified a
series of actions in fiscal 1996
which included asset redeployment,
reduction of overhead, and
improved operating efficiency.
The cost of this plan totaled
$71.6 million ($62.3 million, or
$1.44 per share, after-tax) and
was recorded in the third quarter
of fiscal 1996. The plan's
principal objective was to
reorganize the worldwide
analytical instruments business
into three vertically integrated,
fiscally accountable divisions.
The charge included $37.8 million
for worldwide workforce reductions
of approximately 390 positions in
manufacturing, sales and support,
and administrative functions. The
charge also included $33.8 million
for the reduction of excess
European manufacturing capacity,
the consolidation of facilities in
Europe, and the write-off of
certain tangible and intangible
assets associated with the
discontinuance of various product
lines.
The Company will transfer the
development and manufacturing of
certain analytical instrument
product lines from its facility in
Germany to other sites, primarily
in the U.S. The facility in
Germany will remain the principal
site for the development of atomic
absorption products. These
changes are scheduled to be
completed by March 1997.
The restructuring actions also
include the establishment of a
distribution center in Holland,
which will provide an integrated
sales, shipment and administration
support infrastructure for the
Company's European operations, and
the integration of certain
operating and business activities.
The European distribution center
will include certain
administrative, financial, and
information systems functions
which are currently being
transacted at individual locations
throughout Europe. These changes
are scheduled to be substantially
completed by June 1997.
These actions, when completed,
should result in improved customer
focus, increased product and
service revenues, and higher
operating income. The benefits of
the program will begin to be
realized in fiscal 1997 with
expected reduced operating costs
of approximately $25 million.
When the program is fully
implemented, the Company expects
to achieve annual operating cost
benefits of more than $40 million
and increased operating cash flow
of a similar amount.
As of June 30, 1996, severance
and related payments of $5.6
million were paid to approximately
150 employees separated under this
plan. The Company also incurred
$4.0 million for costs associated
with changes in the European
operations infrastructure and $5.0
million in asset write-offs
related to the discontinuance of
various product lines. The
balance of the cost to complete
the restructuring was $57.0
million at June 30, 1996.
-45-
<PAGE>
Fiscal 1995. During the fourth
quarter of fiscal 1995, the
Company recorded a $23.0 million
before-tax charge for
restructuring actions. The
restructuring plan focused
primarily on reducing costs within
the analytical instruments
business infrastructure. The
charge included $20.7 million of
severance and related costs for
workforce reductions and $2.3
million of closure and facility
consolidation expenses. All costs
resulted in cash outlays and the
actions were implemented by the
third quarter of fiscal 1996.
The workforce reductions were
accomplished through involuntary
terminations worldwide as well as
a voluntary retirement incentive
plan in the U.S. The reductions
affected all geographic areas of
operation and all disciplines
ranging from production labor to
executive management. This
included product departments,
manufacturing, engineering, sales,
service and support as well as
corporate administrative staff.
The voluntary retirement incentive
plan was accepted by 91 employees
at a cost of $6.8 million. Some
of these positions were replaced,
but at a lower overall cost basis.
As of June 30, 1996, the Company
made severance and related
payments of $14.5 million to
approximately 227 employees
separated under the plan.
The closure and facility
consolidation actions included the
shutdown of the Company's Puerto
Rico manufacturing facility,
consolidation of sales offices in
the Far East and consolidation of
administrative departments in the
U.S. The closure of operations in
Puerto Rico included severance
costs for 46 employees, lease
termination payments and other
related costs. The Far East costs
included lease penalties and
restoration of vacated offices.
As of June 30, 1996, payments of
$1.9 million were made for closure
and facility consolidation costs.
Benefits from this restructuring
program were offset in part by the
costs of hiring and training of
new employees, moving and
relocation. The restructuring
actions resulted in approximately
$20 million of before-tax savings
in fiscal 1996, and should
approximate $25 million in
succeeding years.
There have been no adjustments
made to increase or decrease the
liabilities originally accrued for
this restructuring plan. The
balance remaining at June 30, 1996
was $6.6 million, representing
future severance and deferred
payments.
Note 11 Commitments and Contingencies
Future minimum payments at June
30, 1996 under noncancellable
operating leases for real estate
and equipment were as follows:
(Dollar amounts in millions)
1997 $21.0
1998 16.5
1999 13.0
2000 5.7
2001 6.7
2002 and thereafter 17.4
Total $80.3
Rental expense was $31.3 million
in fiscal 1996, $32.5 million in
fiscal 1995 and $32.9 million in
fiscal 1994.
The Company has been named as a
defendant in several legal actions
arising from the conduct of its
normal business activities.
Although the amount of any
liability that might arise with
respect to any of these matters
cannot be accurately predicted,
the resulting liability, if any,
will not in the opinion of
management have a material adverse
effect on the financial statements
of the Company.
Note 12 Financial Instruments
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.
Gains and losses on hedges of net
investments are reported as equity
adjustments from translation on
the balance sheet. The gains and
losses on hedges of firm
commitments are deferred and
included in the basis of the
transaction underlying the
commitment. Gains and losses on
transaction hedges are recognized
in income and offset the foreign
exchange gains and losses on the
related transaction. The costs
associated with entering into
these contracts are amortized over
the life of the contract.
Realized and deferred gains and
losses on hedge contracts were not
material for the years presented.
Concentrations of Credit Risk. The
forward contracts and options used by
the Company in managing its foreign cur-
-46-
<PAGE>
rency positions contain an element of
risk that the counterparties may be
unable to meet the terms of the
agreements. However, the Company
minimizes such risk exposure by
limiting the counterparties to
highly rated major domestic or
international financial
institutions. Management does not
expect to record any losses as a
result of counterparty default.
The Company does not require and
is not required to place
collateral for these financial
instruments.
Fair Value. The following methods
are used in estimating the fair
value of significant financial
instruments held or owed by the
Company. Cash and short-term
investments approximate their
carrying amount due to the short
duration of these instruments.
Fair values of minority equity
investments and notes receivable
are estimated based on quoted
market prices, if available, or
quoted market prices of financial
instruments with similar
characteristics. The fair value
of debt is based on the current
rates offered to the Company for
debt of similar remaining
maturities. Fiscal year end
foreign currency exchange rates
are used to estimate the fair
value of foreign currency
contracts.
The following table presents the
carrying amounts and estimated
fair values of the Company's
financial instruments:
Carrying Fair Carrying Fair
Amount Value Amount Value
(Dollar amounts in millions)
At June 30, 1996 1995
Cash and short-term
investments $96.6 $96.6 $80.0 $80.0
Minority equity
investments 35.6 35.6 5.1 4.7
Notes receivable 7.2 7.2 15.5 15.9
Short-term debt 51.1 51.5 54.8 54.8
Long-term debt .9 .9 34.1 35.1
Foreign currency
contracts 89.9 90.2 70.1 73.8
Those investments in equity
securities, which are categorized
as available-for-sale, are stated
at a fair value of $31.5 million
with a cost basis of $8.3 million.
As a result, an unrealized holding
gain of $23.2 million is reported
as a separate component of
shareholders' equity. The prior
year amount was not material.
Note 13 Quarterly Financial Information (Unaudited)
The following is a summary of quarterly financial results:
</TABLE>
<TABLE>
<CAPTION>
First Quarter Second Quarter Third Quarter Fourth Quarter
(Dollar amounts in millions except per share 1996 1995 1996 1995 1996 1995 1996 1995
amounts)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net revenues $264.4 $247.3 $294.0 $261.0 $299.1 $274.6 $305.4 $280.6
Gross margin 128.9 118.3 141.2 123.2 145.8 128.7 151.2 132.9
Net income (loss) 17.6 14.9 22.8 17.1 (36.0) 36.7 9.5 (1.8)
Net income (loss) per share .41 .35 .53 .40 (.84) .86 .22 (.04)
</TABLE>
Events impacting comparability:
Fiscal 1996. Third quarter results include a restructuring charge of
$71.6 million, or $1.44 per share after-tax (see Note 10). Fourth
quarter results include a $27.1 million charge, or $.62 per share after-
tax, for acquired research and development, and a gain of $11.7 million,
or $.21 per share after-tax, on the partial sale of the Company's equity
interest in Etec Systems, Inc. (see Note 2).
Fiscal 1995. Third quarter results include a $20.8 million gain, or $.40
per share after-tax, on the sale of the Company's equity interest in
Silicon Valley Group, Inc. (see Note 2). Fourth quarter results include
a restructuring charge of $23.0 million, or $.44 per share after-tax (see
Note 10).
Stock Prices 1996 1995
and Dividends
Stock prices High Low High Low
First Quarter $38 $31 1/2 $32 1/4 $26 1/2
Second Quarter $40 1/4 $33 1/8 $33 1/8 $25 1/4
Third Quarter $54 1/2 $37 5/8 $29 7/8 $25 3/4
Fourth Quarter $56 1/4 $46 5/8 $37 1/4 $29
Dividends per share 1996 1995
First Quarter $.17 $.17
Second Quarter $.17 $.17
Third Quarter $.17 $.17
Fourth Quarter $.17 $.17
Total dividends per share $.68 $.68
-47-
<PAGE>
REPORT OF MANAGEMENT
To the Shareholders of The Perkin-Elmer Corporation
Management is responsible for the
accompanying consolidated
financial statements, which have
been prepared in conformity with
generally accepted accounting
principles. In preparing the
financial statements, it is
necessary for management to make
informed judgments and estimates
which it believes are in
accordance with generally accepted
accounting principles appropriate
in the circumstances. Financial
information presented elsewhere in
this annual report is consistent
with that in the financial
statements.
In meeting its responsibility
for preparing reliable financial
statements, the Company maintains
a system of internal accounting
controls designed to provide
reasonable assurance that assets
are safeguarded and transactions
are properly recorded and executed
in accordance with corporate policy and
management authorization. The
Company believes its accounting
controls provide reasonable
assurance that errors or
irregularities which could be
material to the financial
statements are prevented or would
be detected within a timely
period. In designing such control
procedures, management recognizes
judgments are required to assess
and balance the costs and expected
benefits of a system of internal
accounting controls. Adherence to
these policies and procedures is
reviewed through a coordinated
audit effort of the Company's
internal audit staff and
independent accountants.
The Audit Committee of the Board
of Directors is comprised solely
of outside directors and is
responsible for overseeing and
monitoring the quality of the
Company's accounting and auditing
practices. The independent
accountants and internal auditors
have full and free access to the
Audit Committee and meet
periodically with the committee to
discuss accounting, auditing, and
financial reporting matters.
/s/ Stephen O. Jaeger
Stephen O. Jaeger
Vice President, Chief Financial
Officer and Treasurer
/s/ Tony L. White
Tony L. White
Chairman, President and
Chief Executive Officer
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of
Directors of
The Perkin-Elmer Corporation
In our opinion, the accompanying
consolidated statements of
financial position and the related
consolidated statements of
operations, of shareholders'
equity and of cash flows present
fairly, in all material respects,
the financial position of The
Perkin-Elmer Corporation and its
subsidiaries at June 30, 1996 and
1995, and the results of their
operations and their cash flows
for each of the three fiscal years
in the period ended June 30, 1996,
in conformity with generally
accepted accounting principles.
These financial statements are the
responsibility of the Company's
management; our responsibility is
to express an opinion on these
financial statements based on our
audits. We conducted our audits
of these statements in accordance
with generally accepted auditing
standards which require that we
plan and perform the audit to
obtain reasonable assurance about
whether the financial statements
are free of material misstatement.
An audit includes examining, on a
test basis, evidence supporting
the amounts and disclosures in the
financial statements, assessing
the accounting principles used and
significant estimates made by
management, and evaluating the
overall financial statement
presentation. We believe that our
audits provide a reasonable basis
for the opinion expressed above.
/s/ Price Waterhouse
Stamford, Connecticut
July 24, 1996
-48-
EXHIBIT 21
LIST OF SUBSIDIARIES
SUBSIDIARIES OF THE PERKIN-ELMER CORPORATION
State or Jurisdiction
Name of Incorporation or Organization
PKN Overseas Corporation (New York, USA)
Perkin-Elmer (UK) Limited (UK)
Perkin-Elmer (UK) Pension (UK)
Trustees Limited
Perkin-Elmer Limited (UK)
Applied Biosystems Ltd. (UK)
Spartan Ltd. (Channel Isles)
Perkin-Elmer Pty Limited (Australia)
Perkin-Elmer (Canada) Ltd. (Canada)
Perkin-Elmer Sciex * (Canada)
Photovac International, Incorporated (New York,USA)
Photovac Europa AS (Denmark)
Perkin-Elmer Taiwan Corporation (Delaware,USA)
Perkin-Elmer (Thailand) Limited (Thailand)
Perkin-Elmer AG (Switzerland)
Perkin-Elmer Japan Co. Ltd. (Japan)
Perkin-Elmer SA (France)
Perkin-Elmer (Sweden) AB (Sweden)
Perkin-Elmer AB (Sweden)
Perkin-Elmer OY (Finland)
Perkin-Elmer Nederland BV (The Netherlands)
Applied Biosystems, BV (The Netherlands)
Perkin-Elmer Belgium NV (Belgium)
Perkin-Elmer Sro (Czech Republic)
Perkin-Elmer Hungaria Kft (Hungary)
Perkin-Elmer Polska Spolka zoo (Poland)
Perkin-Elmer South Africa Pty. Ltd. (Johannesburg, South
Africa)
Spartan Ltd. (Channel Isles)
Listronagh Company (Ireland)
Perkin-Elmer Instruments Asia Pte. Ltd. (Singapore)
Perkin-Elmer Instruments (Malaysia) SDN. BHD. (Malaysia)
Perkin-Elmer Holding GmbH (Germany)
Bodenseewerk Perkin-Elmer GmbH (Germany)
Perkin-Elmer GmbH (Austria)
Note: Persons directly owned by subsidiaries of The Perkin-
Elmer Corporation are indented and listed below their
immediate parent.
* 50% ownership
<PAGE>
SUBSIDIARIES OF THE PERKIN-ELMER CORPORATION (cont'd)
PKN Overseas Corporation
Perkin-Elmer Italia SpA (Italy)
Perkin-Elmer Hong Kong, Ltd. (Hong Kong)
Perkin-Elmer Analytical and Biochemical
Instruments (Beijing) Co., Ltd. (China)
Perkin-Elmer International, Inc. (Delaware, USA)
Analitica de Centroamerica, S.A. (Costa Rica)
Perkin-Elmer Industria e Comercio Ltda. (Brazil)
Perkin-Elmer Korea Corporation (Delaware, USA)
Perkin-Elmer de Mexico SA (Mexico)
Perkin-Elmer Overseas Ltd. (Cayman Islands)
PECO Insurance Company Limited (Bermuda)
Perkin-Elmer Caribbean Corporation (Delaware,USA)
Perkin-Elmer China, Inc. (Delaware,USA)
Perkin-Elmer FSC, Inc. (U.S.Virgin Islands)
Perkin-Elmer Hispania SA (Spain)
Hitachi Perkin-Elmer, Ltd. + (Japan)
Tropix, Inc. (Delaware,USA)
+49% ownership
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in
the Registration Statements on Form S-8 (Nos. 2-95451, 33-
25218, 33-44191, 33-50847, 33-50849, and 33-58778) of The
Perkin-Elmer Corporation of our report dated July 24, 1996,
appearing on page 48 of the Annual Report to Shareholders
which is incorporated in this Annual Report on Form 10-K.
We also consent to the incorporation by reference of our
report on the Financial Statement Schedule, which appears on
page 18 of this Form 10-K.
PRICE WATERHOUSE LLP
Stamford, Connecticut
September 19, 1996
EXHIBIT 23
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
the Consolidated Statement of Operations for the Twelve Months Ended
June 30, 1996 and the Consolidated Statement of Financial Position at
June 30, 1996 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<CASH> 95,361
<SECURITIES> 0
<RECEIVABLES> 261,371
<ALLOWANCES> (6,845)
<INVENTORY> 207,297
<CURRENT-ASSETS> 640,776
<PP&E> 368,466
<DEPRECIATION> (220,485)
<TOTAL-ASSETS> 941,324
<CURRENT-LIABILITIES> 441,216
<BONDS> 0
<COMMON> 45,600
0
0
<OTHER-SE> 277,842
<TOTAL-LIABILITY-AND-EQUITY> 941,324
<SALES> 1,162,949
<TOTAL-REVENUES> 1,162,949
<CGS> 595,857
<TOTAL-COSTS> 595,857
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,090
<INTEREST-EXPENSE> 4,971
<INCOME-PRETAX> 35,501
<INCOME-TAX> (21,557)
<INCOME-CONTINUING> 13,944
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13,944
<EPS-PRIMARY> .32
<EPS-DILUTED> .32
</TABLE>
