SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number: 1-4389
THE PERKIN-ELMER CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
New York 06-0490270
(State or Other (I.R.S. Employer
Jurisdiction of Identification Number)
Incorporation or
Organization)
761 Main Avenue,
Norwalk, Connecticut 06859-0001
(Address of Principal Executive Offices, Including Zip
Code)
(203) 762-1000
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes x No ____
Number of shares outstanding of Common Stock, par value $1 per
share, as of May 5, 1997: 43,795,014
<PAGE>
THE PERKIN-ELMER CORPORATION
INDEX
Part I. Financial Information Page
Condensed Consolidated Statements of Operations for the
Three Months and Nine Months Ended March 31, 1997 and 1996 1
Condensed Consolidated Statements of Financial Position at
March 31, 1997 and June 30, 1996 2
Condensed Consolidated Statements of Cash Flows for the
Nine Months Ended March 31, 1997 and 1996 3
Notes to Unaudited Condensed Consolidated Financial Statements 4
Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
Part II. Other Information 14
<PAGE>
THE PERKIN-ELMER CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(Dollar amounts in thousands except per share amounts)
<TABLE>
<CAPTION>
Three months ended Nine months ended
March 31, March 31,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Net revenues $ 322,902 $ 299,046 $ 929,429 $ 857,495
Cost of sales 157,129 153,319 465,432 441,647
Gross margin 165,773 145,727 463,997 415,848
Selling, general and administrative 93,557 85,928 270,738 249,375
Research, development and engineering 27,152 25,639 78,573 76,743
Provision for restructured operations 71,600 71,600
Acquired research and development 25,401 25,401
Operating income (loss) 19,663 (37,440) 89,285 18,130
Gain on sale of investment 37,420
Interest expense 601 1,357 1,890 4,116
Interest income 2,030 1,525 4,617 3,082
Other expense, net 48 101 183 2,067
Income (loss) before income taxes 21,044 (37,373) 129,249 15,029
Provision for income taxes 10,683 (1,435) 35,570 10,617
Net income (loss) $ 10,361 $ (35,938) $ 93,679 $ 4,412
Net income (loss) per share $ 0.23 $ (0.84) $ 2.10 $ 0.10
Dividends per share $ 0.17 $ 0.17 $ 0.51 $ 0.51
</TABLE>
See accompanying Notes to Unaudited Condensed Consolidated
Financial Statements.
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<PAGE>
THE PERKIN-ELMER CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Dollar amounts in thousands)
At March 31, At June 30,
1997 1996
Assets (unaudited)
Current assets
Cash and cash equivalents $ 162,838 $ 95,361
Short-term investments 1,275 1,227
Accounts receivable, net 287,936 254,531
Inventories 208,374 207,297
Prepaid expenses and other current assets 85,175 82,360
Total current assets 745,598 640,776
Property, plant and equipment, net 168,608 148,008
Other long-term assets 94,784 152,540
Total assets $ 1,008,990 $ 941,324
Liabilities and Shareholders' Equity
Current liabilities
Loans payable $ 23,181 $ 51,075
Accounts payable 97,424 86,885
Accrued salaries and wages 39,631 39,607
Accrued taxes on income 66,751 57,097
Other accrued expenses 187,291 206,552
Total current liabilities 414,278 441,216
Long-term debt 30,762 890
Other long-term liabilities 176,669 175,776
Stock repurchase commitment 10,358
Shareholders' equity
Capital stock 45,600 45,600
Capital in excess of par value 174,208 186,058
Retained earnings 264,032 194,613
Foreign currency translation adjustments 1,558 446
Net unrealized gain on investment 23,245
Minimum pension liability adjustment (29,365) (29,365)
Treasury stock, at cost (79,110) (97,155)
Total shareholders' equity 376,923 323,442
Total liabilities and shareholders' equity $ 1,008,990 $ 941,324
See accompanying Notes to Unaudited Condensed Consolidated
Financial Statements.
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<PAGE>
THE PERKIN-ELMER CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
Nine months ended March 31,
1997 1996
<S>
Operating Activities <C> <C>
Net income $ 93,679 $ 4,412
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 29,283 30,472
Restricted stock amortization 7,002 4,857
Deferred income taxes (4,385) (2,019)
Gains from the sale of assets (37,420)
Provision for restructured operations 71,600
Acquired research and development 25,401
Changes in operating assets and liabilities:
Increase in accounts receivable (44,918) (25,552)
Increase in inventories (7,649) (15,181)
Increase in prepaid expenses and other assets (2,269) (9,323)
Increase in accounts payable and other liabilities 9,423 2,454
Net cash provided by operating activities 68,147 61,720
Investing Activities
Additions to property, plant and equipment
(net of disposals of $1,257 and $1,306, respectively) (46,784) (22,669)
Acquisition, net of $5,500 related obligation (21,276)
Proceeds from the sale of assets, net 66,881 4,986
Proceeds from the collection of notes receivable 978 2,028
Short-term investments 5,773
Net cash used by investing activities (201) (9,882)
Financing Activities
Proceeds from long-term debt 31,033
Principal payments on long-term debt (22,908)
Net change in loans payable 601 12,343
Dividends declared (22,069) (21,627)
Purchases of common stock for treasury (15,851)
Equity put warrants 1,846
Stock issued for stock plans 22,711 31,214
Net cash (used) provided by financing activities (4,637) 21,930
Effect of exchange rate changes on cash 4,168 (1,446)
Net change in cash and cash equivalents 67,477 72,322
Cash and cash equivalents beginning of period 95,361 73,010
Cash and cash equivalents end of period $ 162,838 $ 145,332
</TABLE>
See accompanying Notes to Unaudited Condensed Consolidated
Financial Statements.
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<PAGE>
THE PERKIN-ELMER CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The interim condensed consolidated financial statements should be
read in conjunction with the financial statements presented in The
Perkin-Elmer Corporation's (the Company's) 1996 Annual Report to
Shareholders. Significant accounting policies disclosed therein
have not changed.
The unaudited condensed consolidated financial statements reflect,
in the opinion of the Company's management, all adjustments which
are necessary for a fair statement of the results for the interim
periods. All such adjustments are of a normal recurring nature.
These results are, however, not necessarily indicative of the
results to be expected for a full year. 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 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 condensed consolidated financial statements have been
reclassified for comparative purposes.
NOTE 2 - INVENTORIES
Inventories are stated at the lower of cost (on a first-in, first-
out basis) or market. Inventories included the following
components:
(Dollar amounts in millions) March 31, June 30,
1997 1996
Raw materials and supplies $ 29.2 $ 31.1
Work-in-process 16.2 19.8
Finished products 163.0 156.4
Total inventories $ 208.4 $ 207.3
NOTE 3 - ACQUISITION
During the third quarter of fiscal 1997, the Company acquired
GenScope, Inc., a company solely engaged in the development of gene
expression technology. To date, GenScope, Inc. has had no revenues.
The acquisition cost of $26.8 million was accounted for as a
purchase. The acquisition represented the purchase of technology in
the development stage which is not presently considered commercially
viable in the health care applications which the Company intends to
pursue. As a result, $25.4 million of the acquisition cost was
allocated to purchased in-process research and development and, in
accordance with applicable accounting rules, was expensed in the
third quarter of fiscal 1997.
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<PAGE>
NOTE 4 - INVESTMENTS
During the second quarter of fiscal 1997, the Company sold its
remaining equity interest in Etec Systems, Inc. (ETEC) for net cash
proceeds of $31.6 million. The Company recorded a before-tax gain
of $26.1 million, or $.42 per share after-tax. During the first
quarter of fiscal 1997, the Company had sold part of its equity
interest in ETEC for net cash proceeds of $14.2 million, resulting
in a before-tax gain of $11.3 million, or $.23 per share after-tax.
The ETEC investment was reported under other long-term assets. The
sale of this investment accounts for a substantial portion of the
decrease in the other long-term assets category.
NOTE 5 - STOCK REPURCHASE COMMITMENT
In the first quarter of fiscal 1997, the Company sold in a private
placement 600,000 put warrants on shares of its common stock. Each
warrant obligates the Company to purchase the shares from the
holder, at a specified price, if the closing price of the common
stock is below the exercise price on the maturity date. The cash
proceeds from the sale of the put warrants were $1.8 million and
have been included in capital in excess of par value. To date,
400,000 of the put warrants have expired (200,000 during the third
quarter and 200,000 during the second quarter of fiscal 1997). The
remaining warrants outstanding at March 31, 1997 have a total
exercise price of $10.4 million and are reflected in the Company's
financial statements as a provisional liability with the offset as a
reduction of capital in excess of par value. The remaining warrants
mature in June of 1997.
NOTE 6 - DERIVATIVES
The Company manages exposure to fluctuations in foreign exchange
rates by creating offsetting positions through the use of derivative
financial instruments, primarily forward or purchased option foreign
exchange contracts. The Company does not use derivative financial
instruments for trading or speculative purposes, nor is the Company
a party to leveraged derivatives. Foreign exchange contracts are
accounted for as hedges of net investments, firm commitments and
foreign currency transactions. The gains and losses on the
instruments utilized to create the hedge offset the gains and losses
on the underlying exposures. At March 31, 1997, the total carrying
amount of the Company's outstanding foreign currency contracts held
was $145.1 million. The counterparties to these contracts consist
of a limited number of highly rated major financial institutions and
the Company does not expect to record any losses as a result of
counterparty default.
NOTE 7 - RESTRUCTURING
Fiscal 1996. As part of continuing efforts to strengthen the
performance of the Analytical Instruments Division, the Company
identified a series of actions in fiscal 1996 which focused on
reducing overhead and improving operating efficiency. The charge
for this plan totaled $71.6 million and was recorded in the third
quarter of fiscal 1996. In connection with the plan, the worldwide
Analytical Instruments business was reorganized into three
vertically integrated, fiscally accountable operating units, a
distribution center in Holland was established to centralize the
European infrastructure for shipping, administration, and related
functions, and a program was implemented to eliminate excess
production capacity in Germany. The plan targeted worldwide
workforce reductions of 390 positions in manufacturing, sales and
support, and administrative functions. As of March 31,
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<PAGE>
1997, severance and related payments were made to 330 employees
separated under the plan. There have been no adjustments to increase
or decrease the liabilities originally provided for this restructuring
plan. The plan is scheduled to be substantially completed by June
1997, although severance and other cash payments will extend through
fiscal 1998.
The following table details the major components of the fiscal 1996
provision for restructured operations:
Facility
Consolidation
and Asset
(Dollar amounts in millions) Personnel Related Total
Write-offs
Provision:
Reduction of excess European
manufacturing capacity $19.7 $23.0 $42.7
Reduction in European distribution and
administrative capacity 11.5 6.0 17.5
Other worldwide workforce reductions
and facility closings 6.6 4.8 11.4
Total Provision for Restructured
Operations $37.8 $33.8 $71.6
Activity:
Reduction of excess European
manufacturing capacity $13.5 $13.8 $27.3
Reduction in European distribution and
administrative capacity 3.8 1.0 4.8
Other worldwide workforce reductions
and facility closings 3.6 1.9 5.5
Total activity through March 31, 1997 $20.9 $16.7 $37.6
Balance at March 31, 1997:
Reduction of excess European
manufacturing capacity $6.2 $9.2 $15.4
Reduction in European distribution and
administrative capacity 7.7 5.0 12.7
Other worldwide workforce reductions
and facility closings 3.0 2.9 5.9
Ending Balance at March 31, 1997 $16.9 $17.1 $34.0
Fiscal 1995. The Company recorded a $23.0 million before-tax charge
in the fourth quarter of fiscal 1995 for restructuring actions
focused on reducing costs within the Analytical Instruments business
infrastructure. The charge included $20.7 million for severance and
related costs for a workforce reduction of 227 employees and $2.3
million for closure and facility consolidation costs primarily
related to the shutdown of the Company's manufacturing facility in
Puerto Rico. All costs resulted in cash outlays and the actions
were implemented by the third quarter of fiscal 1996. The
restructuring reserve balance at March 31, 1997 of $3.1 million
represents future severance and deferred payments. There have been
no adjustments made to increase or decrease the liabilities
originally accrued for this restructuring plan.
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<PAGE>
The following table details the major components of the fiscal 1995
provision for restructured operations:
Activity Balance at
(Dollar amounts in millions) Provision to Date March 31,
1997
Workforce reduction $ 20.7 $ 18.0 $ 2.7
Closure and facility
consolidation 2.3 1.9 .4
Total $ 23.0 $ 19.9 $ 3.1
NOTE 8 - CHANGES IN ACCOUNTING PRINCIPLES
The Company is required to implement Statement of Financial
Accounting Standards (SFAS) No. 128, "Earnings per Share," in the
second quarter of fiscal 1998. This statement replaces the
presentation of primary earnings per share (EPS) with a presentation
of basic EPS and requires dual presentation of basic and diluted EPS
on the face of the income statement. Basic EPS excludes common
stock equivalents and is computed by dividing income available to
shareholders by the weighted average number of common shares
outstanding for the period. Diluted EPS is computed similarly to
fully diluted EPS under the provisions of APB Opinion No. 15,
"Earnings per Share." The following pro forma table illustrates the
application of SFAS No. 128:
Three months ended Nine months ended
March 31, March 31,
1997 1996 1997 1996
As presented under APB
Opinion No. 15:
Primary EPS $ .23 $ (.84) $ 2.10 $ .10
Fully diluted EPS .23 (.82) 2.10 .10
As calculated under SFAS No.
128:
Basic EPS $ .24 $ (.86) $ 2.17 $ .10
Diluted EPS .23 (.84) 2.10 .10
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<PAGE>
THE PERKIN-ELMER CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the
consolidated financial statements and related notes included on
pages 1 - 7 of this report, and "Management's Discussion and Analysis"
appearing on pages 27 - 32 of the Company's 1996 Annual Report to
Shareholders. Historical results and percentage relationships are not
necessarily indicative of operating results for any future periods.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1997
The Company reported net income of $10.4 million, or $.23 per share,
for the third quarter of fiscal 1997 compared with a net loss of
$35.9 million, or $.84 per share, in the third quarter of fiscal
1996. The current quarter included a $25.4 million before-tax
charge for in-process research and development associated with the
acquisition of GenScope, Inc. (see Note 3). The prior year's third
quarter included a before-tax charge of $71.6 million for a
restructuring of the Analytical Instruments business (see Note 7).
On a comparable basis, excluding the special charges, net income for
the third quarter of fiscal 1997 increased 35.7% over the third
quarter of fiscal 1996.
Net revenues were $322.9 million for the third quarter of fiscal
1997, an increase of 8% over the $299.0 million reported for the
third quarter of fiscal 1996. The effects of currency rate
movements decreased net revenues by approximately $16 million, or
5%, in the quarter compared to the prior year, as the U.S. dollar
continued to strengthen against the Japanese Yen and certain
European currencies. Geographically, the Company reported revenue
growth of approximately 25% in the United States and 6% in the Far
East, offsetting a decline of almost 3% in Europe. Excluding
currency effects, revenues in the Far East and Europe would have
increased nearly 20% and 3%, respectively. Regions outside the
United States accounted for 63% of the consolidated third quarter
revenues, compared with 68% in the prior year.
Net revenues for the Applied Biosystems Division increased 19% in
the third quarter of fiscal 1997. The negative effects of a strong
U.S. dollar reduced the division's revenues by approximately $9
million, or 5%. All geographic markets reported increased revenues
over the prior year. Net revenues in Europe and the Far East
increased 6.8% and 13.9%, respectively. The strongest performance
was in North America where revenues increased 30.4% over the prior
year's third quarter. Increased demand for genetic analysis
instruments, liquid chromatography-mass spectrometry (LC/MS)
products, and the polymerase chain reaction (PCR) product line
were the primary contributors. All three product lines experienced
double digit unit growth over the third quarter of fiscal 1996.
Net revenues for the Analytical Instruments Division were $149.9
million, a decrease of 2.4% from the $153.6 million reported in the
prior year's third quarter. Currency rate movements reduced
revenues by approximately $7 million, or 5%. While revenues in
North America increased 11.3%, due in part to the introduction of
new products, this was more than offset by decreased revenues in
other geographic areas. Including currency effects, net revenues in
Europe and the Far East decreased 8.5% and 6.1%, respectively.
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<PAGE>
Gross margin as a percentage of net revenues was 51.3% in the third
quarter of fiscal 1997 compared to 48.7% in the third quarter of
fiscal 1996. Both divisions experienced improved margins over the
prior year. Gross margin as a percentage of net revenues for the
Applied Biosystems Division increased in all geographic areas.
Specifically, better margin performance in the LC/MS and PCR product
lines compared to the third quarter of fiscal 1996, and overall unit
volume increases, accounted for the improved gross margin
percentage. The Analytical Instruments Division's gross margin
percentage improved, substantially as a result of the benefits
realized from the fiscal 1996 divisional restructuring and the
focused sales efforts and product mix in North America and the Far
East.
Selling, general and administrative (SG&A) expenses were $93.6
million in the third quarter of fiscal 1997 compared to $85.9
million in the third quarter of fiscal 1996. The 8.9% increase in
the quarter was primarily due to higher marketing expenses in the
Applied Biosystems Division and costs related to the Company's
restricted stock and incentive compensation programs. These
increases were partially offset by lower expense levels in the
Analytical Instruments Division as a result of the division's
restructuring efforts. As a percentage of net revenues, SG&A
expenses remained constant with the prior year at approximately 29%.
Research, development and engineering (R&D) expenses of $27.2
million increased 5.9% over the prior year. R&D spending in the
Applied Biosystems Division increased 30.3% over the prior year as
the Company continued its planned investments into new bioresearch
applications. R&D expenses for the Analytical Instruments Division
were 6.9% below the prior year's level reflecting the objectives of
the fiscal 1996 restructuring plan.
The implementation of the restructuring actions announced in the
third quarter of fiscal 1996 (see Note 7) is proceeding as planned.
The organizational changes that were focused on business unit
accountability have resulted in reduced operating costs for the
Analytical Instruments Division. The Company achieved approximately
$7 million in before-tax income benefits from the program in the
third quarter of fiscal 1997. When the program is fully implemented,
the Company expects to achieve annual operating cost and cash flow
benefits of more than $40 million.
Total consolidated operating expenses were $146.1 million in the
third quarter of fiscal 1997 compared to $183.2 million in the prior
year's third quarter. As previously mentioned, both years included
special charges: a $25.4 million charge for purchased in-process R&D
in fiscal 1997, and a $71.6 million charge for restructuring actions
in fiscal 1996. Excluding these special charges, operating income
increased 32.3% over the prior year as both divisions reported
improved operating margins. A combination of strong revenue growth
in the Applied Biosystems Division and reduced expense levels in the
Analytical Instruments Division contributed to the improvement.
As a result of lower average debt levels, interest expense in the
third quarter of fiscal 1997 decreased $.8 million compared to the
third quarter of fiscal 1996. Interest income was $.5 million
higher than the prior year as a result of maintaining higher cash
and cash equivalent balances.
The effective income tax rate for the third quarter of fiscal 1997
was 50.8% compared to 3.8% in the third quarter of fiscal 1996.
These rates were impacted by the special charges included in both
years. The current year's third quarter charge for acquired
research and development is not deductible for tax purposes while
the prior year's restructuring charge resulted in a $9.3 million, or
13%, tax benefit
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<PAGE>
in fiscal 1996. Excluding these special charges,
the effective income tax rate was 23% in the third quarter of both
fiscal 1997 and fiscal 1996.
RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED MARCH 31, 1997
The Company reported net income of $93.7 million, or $2.10 per
share, for the nine months ended March 31, 1997 compared with $4.4
million, or $.10 per share, in the first nine months of fiscal 1996.
Net income for both years included special items which affect their
comparability. Special items in fiscal 1997 included a $25.4
million before-tax charge for acquired research and development (see
Note 3) and a $37.4 million before-tax gain from the sale of the
Company's entire equity interest in ETEC (see Note 4). Fiscal 1996
results included a $71.6 million before-tax charge taken for a
restructuring of the Analytical Instruments Division (see Note 7).
On a comparable basis, excluding these special items, year-to-date
net income for fiscal 1997 increased 35% over the prior year.
Fiscal 1997's year-to-date net revenues of $929.4 million increased
8.4% over the $857.5 million reported for the first nine months of
fiscal 1996. Currency rate movements decreased net revenues by
approximately $31 million in fiscal 1997, as the U.S. dollar
strengthened against the Japanese Yen and certain European
currencies. Net revenues in the United States and Europe increased
17.7% and 6.4%, respectively, while revenues in the Far East remained
constant with the prior year's level. Excluding the effects of
currency, revenues in Europe and the Far East would have increased
approximately 9% and 11%, respectively. Increased demand for
genetic analysis and LC/MS products contributed to a 22.6% increase
in revenues for the Applied Biosystems Division, despite a negative
currency impact of approximately $18 million. Revenues for the
Analytical Instruments Division fell 3.2% below the prior year's
level. Excluding currency effects, net revenues in this division
would have remained relatively constant with the prior year.
Gross margin as a percentage of net revenues was 49.9% for the first
nine months of fiscal 1997 compared to 48.5% for the prior year.
Both the Applied Biosystems Division and the Analytical Instruments
Division experienced year-to-year improvements in the gross margin
percentage. Benefits realized from the restructuring of the
Analytical Instruments Division and higher unit volumes in the
Applied Biosystems Division more than offset the negative effects of
a stronger U.S. dollar.
SG&A expenses for the nine months increased $21.4 million in fiscal
1997 compared to the same period in fiscal 1996. An increase in
administrative and marketing expenses for the Applied Biosystems
Division was partially offset by a decline in expenses for the
Analytical Instruments Division. In addition, current year expenses
included a $7.0 million non-cash charge for compensation expense
under the Company's restricted stock program compared with $4.9
million in the prior year. As a percentage of net revenues, SG&A
expenses remained constant with the prior year at 29%.
R&D expenses for the first nine months of fiscal 1997 were $78.6
million compared to $76.7 million in the prior year. R&D spending
in the Applied Biosystems Division increased 27.8% over the prior
year as the Company continued its planned investments into new
bioresearch applications. The Analytical Instruments Division
reported lower R&D spending which reflected the objectives of the
fiscal 1996 restructuring plan.
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<PAGE>
Total Company operating income was $89.3 million for the first nine
months of fiscal 1997 compared with $18.1 million in fiscal 1996.
On a comparable basis, excluding the special charge of $25.4 million
in fiscal 1997 for acquired research and development, and the $71.6
million restructuring charge in fiscal 1996, operating income
increased by $25.0 million, or 27.8%.
The implementation of the restructuring actions announced in the
third quarter of fiscal 1996 is proceeding as planned. The Company
has achieved approximately $17 million in before-tax income benefits
from the program in fiscal 1997.
Year-to-date interest expense was $1.9 million for fiscal 1997
compared with $4.1 million in fiscal 1996. The decrease was
primarily the result of lower average borrowing levels compared to
the prior year. As a result of maintaining higher cash and cash
equivalents balances, interest income increased $1.5 million over
the prior year.
The Company's effective income tax rate was 27.5% for the first nine
months of fiscal 1997 compared to 70.6% for the same period in
fiscal 1996. Excluding the different tax impacts of the previously
mentioned special items, the effective income tax rates for both
years was 23%.
FINANCIAL RESOURCES AND LIQUIDITY
At March 31, 1997, the Company's total cash position, including cash
equivalents, was $162.8 million compared with $95.4 million at June
30, 1996, and $145.3 million at March 31, 1996. Net cash provided
by operating activities was $68.1 million for the first nine months
of fiscal 1997 compared to $61.7 million for the same period in
fiscal 1996. The increase was primarily due to higher net income
(excluding the special charges in both years), which more than
offset higher accounts receivable balances.
Net cash used by investing activities was $.2 million for the first
nine months of fiscal 1997 compared to $9.9 million for the first
nine months of fiscal 1996. In the current year, the Company
generated $66.9 million in net cash proceeds from the sale of its
equity interest in ETEC (see Note 4) and certain non-operating
assets. These proceeds almost entirely offset the $21.3 million
used for the purchase of GenScope, Inc. and a $24.1
million increase in net capital spending. Substantially all of the
increase in capital expenditures is related to the improvement of
the Company's information technology infrastructure and the
acquisition of a corporate airplane.
In addition to the $10.1 million spent in fiscal 1997 on the
Company's strategic program to improve its information technology
infrastructure, a capital commitment of approximately $30 million is
expected to be paid in fiscal 1998 when the improvements are
delivered, implemented, and accepted. The Company expects this
obligation to be funded by operating cash flow and/or the issuance
of commercial paper.
Net cash used by financing activities was $4.6 million in fiscal
1997 compared to $21.9 million of cash provided by financing
activities in fiscal 1996. While the Company generated $1.8 million
from the sale of equity put warrants (see Note 5), and $22.7 million
in proceeds from employee stock option plan exercises, this was more
than offset by the $22.1 million used for the payment of
shareholders' dividends combined with the $15.9 million used for the
purchase of 300,000 shares of common stock for treasury. There were
no shares repurchased during the first nine months of fiscal
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<PAGE>
1996. The change in long-term debt reflects the Company's refinancing
of its Yen denominated loan during the third quarter of fiscal 1997.
The Company replaced its 2.8 billion Yen loan which matured in
February with a 3.8 billion Yen long-term loan for a period of five
years. The effective interest rate for the new loan is 2.1% compared
to 3.3% on the previous loan.
OUTLOOK
As the underlying demand for life sciences products continues to
grow, the outlook for the remainder of the fiscal year is positive.
New product introductions have been well received and unit volume
growth is expected to continue in the Applied Biosystems Division.
However, adverse currency effects on net revenues could continue if
the relationship of the U.S. dollar to certain currencies is
maintained at current levels, or if the U.S. dollar continues to
strengthen.
In addition, the Company has announced further actions to improve
the efficiency of its manufacturing facilities. These actions will
continue the transition of the Analytical Instruments Division from
a highly vertical manufacturing operation to one that relies more
heavily on outsourcing functions that are not considered core
competencies. This reorganization will form a major part of the second
phase of a profit improvement program, begun by the Company in fiscal
1996, which has already produced cost savings in its analytical
instruments business. The full scope of this phase of the profit
improvement program is expected to be finalized and announced before
the end of fiscal 1997. The outsourcing of specific manufacturing
functions will be implemented during fiscal 1998. Current
expectations are that the total charge against earnings for fiscal
1997 will be less than the $71.6 million before-tax charge taken in
fiscal 1996. A portion of the cost savings targeted by these actions
will come from the elimination of approximately 285 manufacturing
jobs in the U.S. and Europe. The remainder of the cost savings will
come from increased productivity achieved through outsourcing and
higher utilization of the Company's Singapore facility.
"SAFE HARBOR" STATEMENT UNDER PRIVATE SECURITIES LITIGATION REFORM
ACT OF 1995
Certain statements contained in this 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, (10) fluctuations in foreign currency exchange rates, and
(11) 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
-12-
<PAGE>
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.
-13-
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
11. Computation of Net Income Per Share.
27. Financial Data Schedule.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the
quarter for which this report is being filed.
-14-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to
be signed on its behalf by the undersigned thereunto duly
authorized.
THE PERKIN-ELMER CORPORATION
By:/s/ Stephen O. Jaeger
Stephen O. Jaeger
Vice President, Chief
Financial
Officer and Treasurer
By:/s/ Ugo D. DeBlasi
Ugo D. DeBlasi
Corporate Controller (Chief
Accounting Officer)
Dated: May 14, 1997
-15-
<PAGE>
EXHIBIT INDEX
Exhibit No. Exhibit
11 Computation of Net
Income Per Share
27 Financial Data
Schedule
EXHIBIT 11
THE PERKIN-ELMER CORPORATION
COMPUTATION OF NET INCOME (LOSS) PER SHARE
(unaudited)
(Amounts in thousands except per share amounts)
<TABLE>
<CAPTION>
Three months ended Nine months ended
March 31, March 31,
1997 1996 1997 1996
<S>
Weighted average number <C> <C> <C> <C>
of common shares 43,531 42,490 43,225 42,490
Common stock equivalents 1,319 936 1,319 936
Weighted average number of
common shares used in calculating
primary net income (loss) per share 44,850 43,426 44,544 43,426
Additional dilutive stock options 101 172 101 172
Shares used in calculating fully
diluted net income (loss) per share 44,951 43,598 44,645 43,598
Calculation of primary and fully
diluted net income (loss) per share:
Net income (loss) used in the
calculation of primary and fully
diluted net income (loss) per share $ 10,361 $ (35,938) $ 93,679 $ 4,412
Primary net income (loss) per share $ 0.23 $ (0.84) $ 2.10 $ 0.10
Fully diluted net income (loss) per share $ 0.23 $ (0.82) $ 2.10 $ 0.10
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE
NINE MONTHS ENDED MARCH 31, 1997 AND THE CONDENSED CONSOLIDATED
STATEMENT OF FINANCIAL POSITION AT MARCH 31, 1997 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> MAR-31-1997
<CASH> 162,838
<SECURITIES> 0
<RECEIVABLES> 293,461
<ALLOWANCES> (5,525)
<INVENTORY> 208,374
<CURRENT-ASSETS> 745,598
<PP&E> 403,439
<DEPRECIATION> (234,831)
<TOTAL-ASSETS> 1,008,990
<CURRENT-LIABILITIES> 414,278
<BONDS> 0
<COMMON> 45,600
0
0
<OTHER-SE> 331,323
<TOTAL-LIABILITY-AND-EQUITY> 1,008,990
<SALES> 929,429
<TOTAL-REVENUES> 929,429
<CGS> 465,432
<TOTAL-COSTS> 465,432
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 267
<INTEREST-EXPENSE> 1,890
<INCOME-PRETAX> 129,249
<INCOME-TAX> (35,570)
<INCOME-CONTINUING> 93,679
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 93,679
<EPS-PRIMARY> 2.10
<EPS-DILUTED> 2.10
</TABLE>
