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
For the Fiscal Year Ended June 30, 1997
OR
[ ] Transition Report Pursuant To Section 13 Or 15(d)
Of The Securities Exchange Act Of 1934
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 $1.00 per share) New York Stock Exchange
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 8, 1997, 43,847,333 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 $3,450,237,015.
DOCUMENTS INCORPORATED BY REFERENCE
Annual Report to Shareholders for Fiscal Year ended June 30, 1997
- Parts I, II, and IV.
Proxy Statement for Annual Meeting of Shareholders dated September 8,
1997 - Part III.
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.
On August 25, 1997, Registrant and PerSeptive Biosystems,
Inc. ("PerSeptive") announced that they had signed a
definitive merger agreement in which Registrant would acquire
PerSeptive for $13.00 per share, paid in Registrant's stock.
Based on then current market prices, this transaction will
involve the exchange of approximately $360 million in newly
issued Registrant stock for outstanding PerSeptive securities.
The transaction is subject to antitrust regulatory clearance,
approval by holders of a majority of the outstanding shares of
PerSeptive common stock, and certain other conditions. No
vote of Registrant's shareholders is required. Both companies
expect the merger to be completed by the end of calendar 1997.
Page 1
(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, 1997, 1996 and 1995 is incorporated herein by
reference to Note 6 on Pages 52-53 of the Annual Report to
Shareholders for the fiscal year ended June 30, 1997.
(c) Narrative Description of Business.
Registrant develops, manufactures and markets, on a
worldwide basis, life science and analytical instrument
systems used in such markets as pharmaceutical, biotechnology,
environmental testing, food, agriculture, and chemical
manufacturing.
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's Analytical Instruments segment, consisting
of Registrant's Analytical Instruments Division, develops,
manufactures, markets, sells, and services analytical
instrument systems.
Analytical chemistry is the science of experimentally
determining the elemental and chemical and physical
characteristics that make up a particular sample. Analytical
instruments are the tools used to perform analytical
chemistry. These systems detect, identify and measure changes
in properties of solids, liquids and gases. For example,
certain types of analytical instruments are targeted toward
determining chemical composition, others are used to study
molecular structure and still others measure physical
characteristics. Analytical instruments are also used for
testing and analysis applications, both inside and outside of
laboratories. The use of analytical instruments is widespread
in the life science, pharmaceutical, food, bio-medical,
chemicals, petrochemicals, material science, and environmental
industries, as well as in academic research.
Registrant's Analytical Instrument products tend to vary
significantly in terms of their technologies, test
methodologies, applications, performance and cost. Moreover,
there is rarely any overlap of instruments across categories
of inorganic elements/organic compound/attribute level. That
is, an instrument can be applied for use either in analyzing
elements, compounds or attributes, but typically not more than
one of these applications.
Registrant's Analytical Instrument products can be
broadly classified into four categories:
1. Chromatography. Chromatography instruments are designed
to analyze complex mixtures by first separating them into
their components, and then measuring them quantitatively.
Registrant offers two types of chromatography products:
liquid (LC); and gas (GC).
2. Inorganic Analysis. These instruments are intended for
analysis of inorganic elements such as lead, mercury,
arsenic or gold in a wide variety of samples from oils
and water to geological materials. Registrant offers
three types of inorganic analysis products: atomic
absorption spectrometers; inductively coupled plasma
optical emission spectrometers; and inductively coupled
plasma/mass spectrometers.
Page 2
3. Organic Analysis. These instruments are designed to
provide qualitative and quantitative information for
molecular and organic compounds, in the broadest range of
samples. Registrant's organic analysis products include:
infrared and near infrared spectrometers; thermal
analyzers; ultraviolet, visible and near infrared
spectrometers; fluorescence spectrometers; analytical
balances; and polarimeters.
4. Laboratory Information Management Systems. These systems
provide data handling and data management for analytical
laboratories.
Registrant also provides services including: repair and
maintenance, validation, consulting, installation and other
product support services.
The principal markets for Registrant's Analytical
Instrument products and services include: agricultural
analysis, automotive industries, petrochemical industries,
clinical and biological analysis industries, environmental
testing and monitoring, materials research, food quality
management, pharmaceutical, and semiconductors.
LIFE SCIENCES
Registrant's Life Sciences segment, consisting of
Registrant's Applied Biosystems Division, develops,
manufactures, markets, sells and services a wide range of
biochemical analytical instrument systems and products,
consisting of instruments, associated reagents and consumable
products.
The analytical problems of biotechnology differ from
those of classical chemical analysis because the molecules
involved are larger than those with which analytical chemists
are usually concerned. In addition, problems differ because
the detailed structure, and in particular the exact order of
the specific nucleotide building blocks in these molecules, is
the most important piece of information.
All cells are composed of four basic biomolecules:
nucleic acids which include deoxyribonucleic acid and
ribonucleic acid , proteins, carbohydrates and lipids.
Although all of these macromolecules are critical for a cell
to function normally, historically key advances in
therapeutics have come from an understanding of proteins or
DNA. Increasingly, and principally driven by the
"biotechnology revolution," researchers are developing an
understanding of and focusing on DNA's role in the growth pattern
of disease. An increased knowledge of how DNA ultimately
determines the functions of living organisms has generated a
worldwide effort to identify and sequence genes of many
organisms, including the estimated 100,000 genes comprising
the human genome. This effort is being led by the Human
Genome Project and related academic, government and industry
research projects.
The Life Science products and services are used in both
research and commercial applications in analyzing,
synthesizing, sequencing and amplifying proteins and genetic
material.
Registrant's Life Science products can be broadly
classified into five categories:
1. Genetic Analysis. Genetic analysis primarily uses
electrophoresis techniques for separating molecules
based on their differentialmobility in an electric field.
Registrant's genetic analysis products are further
differentiatedbetween DNA sequencers and DNA fragment
analysis systems.
Page 3
DNA sequencers are used to determine the exact order of
nucleotide base pairs that make up DNA. This is done
through the fluorescent tagging of bases, each with a
different colored tag. The tagged fragments are then run
through a gel electrophoresis grid and detected by a
scanner at the bottom of the gel. Registrant's DNA
sequencing products include a sequencer expandable to 96
lanes, a single-lane capillary sequencer, and sequencing
reagents. These automated systems and products are used
for amplification, purification, isolation, analysis,
synthesis, and sequencing of nucleic acids, proteins, and
other biological molecules.
DNA fragment analyzers are used to determine the size,
quantity or pattern of DNA fragments generated by Polymerase
Chain Reaction ("PCR") amplification or other means. Typically
this is done by using fluorescently tagged PCR primers to generate
labeled PCR products. Those products are then analyzed
electrophoretically. Fragment analysis applications
include gene mapping and forensic typing, using
microsatellite markers, single-strand conformation
polymorphism (SSCP) analysis to screen for unknown
mutations within genes, and oligonucleotide ligation
assay (OLA) analysis to detect known mutations within
characterized genes.
2. PCR Products. PCR allows for the amplification of
genetic material that otherwise is and of insufficient
quantity to be detected, by producing enough copies of
the material of interest to conduct numerous studies.
PCR products include 24, 48 and 96 sample amplification
systems, a combination PCR preparation and DNA
sequencing system, a combination PCR and PCR detection
system, and various reagents.
3. DNA Synthesizers. DNA synthesizers build synthetic DNA.
Synthetic DNA is used for DNA sequencing primers and is
also used in drug discovery applications. Registrant currently
markets 5 models of synthesizers. Registrant also provides
custom synthesis, in which oligonucleotides are
made-to-order and shipped to customers.
4. Protein Synthesis and Analysis. Protein sequencers
provide information about the amino acids that make up a
given protein by enzymatically digesting the protein and
analyzing the components. Peptide synthesizers build
peptides from amino acids through successive reactions
which involve the addition of the next amino acid,
removal of the groups in order to prevent unwanted side
reactions, activation to ready the growing chain for the
next amino acid addition, and, finally, repeating the
cycle until the desired peptide is produced. The
synthetically-produced peptides are used in understanding
antibody reactions and as potential drugs or drug
analogues.
5. Liquid Chromatography/Mass Spectrometry "LC/MS". LC/MS
combines the separation of complex mixtures with the
quantitation and/or identification of the compounds in
the mixture.
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.
Registrant also provides services including: repair and
maintenance, consulting, installation and other product
support services.
Page 4
The principal markets for Registrant's Life Sciences
products and services include human disease research, genetic
analysis, pharmaceutical drug discovery, clinical and
biological analysis, and forensics.
MARKETING AND DISTRIBUTION
The marketing and distribution systems for Registrant's
Analytical Instruments and Life Sciences businesses are
essentially the same. 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.
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 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. In most
cases, 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.
Page 5
BACKLOG
Registrant's recorded backlog was $173.2 million at June
30, 1997 and $182.3 million at June 30, 1996. 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 1998.
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.
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,
application requirements, 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 1997, 1996, and 1995, Registrant spent $105.7
million, $102.3 million, and $95.1 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, 1997, Registrant employed 5,685 persons
worldwide. None of Registrant's United States employees is
subject to collective bargaining agreements.
Page 6
(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 1997, 1996, and 1995 is incorporated herein by
reference to Note 6 on Pages 52 and 54 of the Annual Report to
Shareholders for the fiscal year ended June 30, 1997.
Registrant's consolidated net revenues to unaffiliated
customers in countries other than the United States for the
fiscal years 1997, 1996, and 1995 were $792.4 million, $744.7
million, and $669.8 million, or 62.1%, 64.0%, and 63.0%,
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, Canada, and Singapore.
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, 1997. 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.
Page 7
Approximate
Owned or Expiration Floor Area
Location Leased Date of Lease In Sq. Ft.
Analytical Instruments
Norwalk, CT Owned 402,000
Wilton, CT Owned 219,000
San Jose, CA Owned 72,000
Beaconsfield, England Owned 70,000
Ueberlingen, Germany Owned 62,000
Ontario, Canada Owned 38,000
Irvine, CA Owned 22,000
Toronto, Canada Owned 14,700
Ueberlingen, Germany Leased 2001 180,000
Llantrisant, Wales Leased * 113,000
Singapore Leased 1999 30,000
Meersburg, Germany Leased 1998 24,000
Beaconsfield, England Leased 2005 8,000
Life Sciences
Warrington, England Owned 58,000
Narita, Japan Owned 24,000
San Jose, CA Owned 9,000
Foster City, CA** Leased 1997-2005 436,000
Bedford, MA Leased 2000 15,000
Davis, CA Leased 1999 13,000
Salt Lake City, UT Leased 1999 8,000
* Leased on a month to month basis as the facility is being closed.
** Comprising 3 principal facilities totaling 324,000
square feet, and additional facilities totaling 112,000 square
feet.
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.
In addition to the properties used by Registrant in its
operations, Registrant owned as of June 30, 1997 a facility in
Garden Grove, California (approximately 82,000 square feet),
leased to OCA Applied Optics, Inc., which was sold in July
1997. Registrant also owns two facilities in Wilton,
Connecticut (approximately 51,000 square feet and 42,000
square feet), which are held for sale or lease. One of the
facilities in Wilton is leased on a long-term basis, and a
portion of the other facility in Wilton is 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
Page 8
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 claims, including
the claim against Registrant, are likely to be scheduled for
trial in early 1998. In addition, the Government has
threatened to sue non-settling third party defendants for the
unreimbursed waste removal costs should United Technologies
Corporation prevail in its suit. Registrant, while vigorously
contesting the case, has explored the possibility of an out-
of-court settlement, but to date such efforts have proven
unsuccessful. Because of the uncertainty of all litigation,
Registrant 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.
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, 1997, 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 1997 and
1996 (Note 13, Page 61 of the Annual Report to Shareholders
for the fiscal year ended June 30, 1997).
Page 9
(b) Holders.
On September 8, 1997, the approximate number of holders
of Common Stock of Registrant was 6,889. The approximate
number of 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 1997 and 1996 (Note 13, Page 61 of Registrant's Annual
Report to Shareholders for the fiscal year ended June 30,
1997) is hereby incorporated by reference in this Form 10-K.
(d) Sale of Unregistered Securities
Registrant has sold no securities in the last 3 years
which were not registered under the Securities Act of 1933.
Item 6. SELECTED FINANCIAL DATA
Registrant hereby incorporates by reference in this Form
10-K, Page 34 of Registrant's Annual Report to Shareholders for
the fiscal year ended June 30, 1997.
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 35-41 of Registrant's Annual Report to
Shareholders for the fiscal year ended June 30, 1997.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK
Registrant hereby incorporates by reference in this Form
10-K, Note 12 on Pages 59-60 of Registrant's Annual Report to
Shareholders for the fiscal year ended June 30, 1997.
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, 1997 are
incorporated by reference in this Form 10-K: the Consolidated
Financial Statements and the report thereon of Price
Waterhouse LLP dated July 23, 1997, and Pages 42-62 of said
Annual Report, including Note 13, Page 61, which contains
unaudited quarterly financial information.
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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, 1997, the date of
Registrant's most recent financial statements. There have
been no unresolved disagreements on any matter of accounting
principles or practices, financial statement disclosure, or
auditing scope or procedure.
Page 11
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 1-3 of Registrant's Proxy Statement dated September 8,
1997, in connection with its Annual Meeting of Shareholders to be
held on October 16, 1997.
(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 8, 1997.
<TABLE>
<CAPTION>
Name Age Present Positions and Year First Elected
<S> <C> <C>
Manuel A. Baez...........55 Senior Vice President and President, Analytical Instruments Division (1996)
Peter Barrett............44 Vice President (1994)
Ugo D. DeBlasi...........35 Corporate Controller (1997)
Michael W. Hunkapiller...48 Vice President (1994)
Stephen O. Jaeger........53 Vice President, Chief Financial Officer (1995), and Treasurer (1996)
Joseph E. Malandrakis....52 Vice President (1993)
Mark C. Rogers...........54 Senior Vice President, Corporate Development, and Chief Technology Officer (1996)
William B. Sawch.........42 Vice President, General Counsel and Secretary (1993)
Tony L. White............51 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 17, 1996 or was elected by the Board since that date.
The term of each officer will expire on October 16, 1997, the
date of the next scheduled organizational meeting of the Board of
Directors, unless renewed for another year. Mr. Jaeger has
announced his resignation as Vice President, Chief Financial
Officer and Treasurer on or about September 30, 1997. Mr. Dennis
L. Winger has been appointed Senior Vice President, Chief
Financial Officer and Treasurer effective upon Mr. Jaeger's
resignation.
(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 1-3 of Registrant's Proxy Statement
dated September 8, 1997, in connection with its Annual
Page 12
Meeting of Shareholders to beheld on October 16, 1997. 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 Mr. Baez, Dr. Hunkapiller,
Mr. Jaeger, Dr. Rogers, Mr. White and Mr. Winger.
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 in
various capacities at British Petroleum North America, Inc. from
1979 to 1987, with his last position being Senior Vice President
and Chief Financial Officer.
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, President and Chief
Executive Officer of Registrant in September, 1995. Prior to his
joining Registrant, he was Executive Vice President and a member
of the Office of the Chief Executive of Baxter International Inc.
He also served as Group Vice President of Baxter International
Inc. from 1986 to 1992. Mr. White is also a director of
C.R. Bard, Inc. and Ingersoll-Rand Company.
Mr. Winger has accepted the position of Senior Vice
President, Chief Financial Officer, and Treasurer effective
September 30, 1997. Prior to his employment by Registrant, Mr.
Winger was employed by Chiron Corporation where he was Senior
Vice President, Finance and Administration, and Chief Financial
Officer since 1989.
(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.
Page 13
(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 7 of Registrant's Proxy Statement dated September 8, 1997,
in connection with its Annual Meeting of Shareholders to be held
on October 16, 1997.
Item 11. EXECUTIVE COMPENSATION
Registrant hereby incorporates by reference in this Form 10-K
Pages 8-11 and 13-18 of Registrant's Proxy Statement dated
September 8, 1997, in connection with its Annual Meeting of
Shareholders to be held on October 16, 1997.
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 6 of Registrant's Proxy Statement dated September 8, 1997,
in connection with its Annual Meeting of Shareholders to be held
on October 16, 1997.
(b) Security Ownership of Management.
Information concerning the security ownership of management
is hereby incorporated by reference to Pages 2-3 and 7 of
Registrant's Proxy Statement dated September 8, 1997, in
connection with its Annual Meeting of Shareholders to be held on
October 16, 1997.
(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, Pages 56-57 of the
Annual Report to Shareholders for the fiscal year ended June 30,
1997, and to Page 6 of Registrant's Proxy Statement dated
September 8, 1997, in connection with its Annual Meeting of
Shareholders to be held on October 16, 1997.
Page 14
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 23,
1997, appearing on Pages 42 through 62 of Registrant's Annual
Report to Shareholders for the fiscal year ended June 30, 1997,
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, 1997 is not to be
deemed filed as part of this report on Form 10-K.
10-K Annual Report
Page No. Page No.
Consolidated Statements of
Operations - fiscal years
1997, 1996, and 1995..................... -- 42
Consolidated Statements of
Financial Position - fiscal years
1997 and 1996............................ -- 43
Consolidated Statements of
Cash Flows - fiscal years
1997, 1996, and 1995..................... -- 44
Consolidated Statements of
Shareholders' Equity - fiscal years
1997, 1996, and 1995..................... -- 45
Notes to Consolidated Financial
Statements............................... -- 46-61
Report of Management....................... -- 62
Report of Price Waterhouse LLP............. -- 62
(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,
1997. 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 No. Report Page No.
Report of Independent Accountants
on Financial Statement Schedule........... 20 --
Schedule II - Valuation and
Qualifying Accounts and Reserves.......... 21 --
Page 15
(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).)
2(5) Agreement and Plan of Merger, dated as of August 23, 1997, among
the registrant, Seven Acquisition Corp. and PerSeptive
Biosystems, Inc. (Incorporated by reference to Exhibit 2 to Current
Report on Form 8-K of the Corporation dated August 23, 1997 (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) Amendment dated as of March 31, 1996 to the Three Year Credit Agreement
dated as of June 1, 1994, among Morgan Guaranty Trust Company, certain
banks named in such Agreement, and the Corporation, as amended July 20,
1995.
4(3) 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) The Perkin-Elmer Corporation 1996 Stock Incentive Plan. (Incorporated
by reference to Exhibit 99 to the Corporation's Registration Statement
on Form S-8 (No. 333-15189).)
10(5) 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(6) 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).)
Page 16
10(7) 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(8) Agreement dated May 7, 1996, between Registrant and Mark C. Rogers.
10(9) Agreement dated April 11, 1995, between Registrant and Stephen O.
Jaeger. (Incorporated by reference to Exhibit 10(19) to Annual Report
on Form 10-K of the Corporation for the fiscal year ended June 30, 1996
(Commission file number 1-4389).)
10(10) Agreement dated June 3, 1996, between Registrant and Manuel A. Baez.
10(11) 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(12) 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(13) Employment Agreement dated November 16, 1995, between Registrant and
Michael W. Hunkapiller. (Incorporated by reference to Exhibit 10(11) to
Annual Report on Form 10-K of the Corporation for fiscal year ended
June 30, 1996 (Commission file number 1-4389).)
10(14) Employment Agreement dated June 20, 1996, between Registrant and Manuel
A. Baez.
10(15) Employment Agreement dated June 20, 1996, between Registrant and Mark
C. Rogers.
10(16) Employment Agreement dated November 16, 1995, between Registrant and
Stephen O. Jaeger. (Incorporated by reference to Exhibit 10(12) to
Annual Report on Form 10-K of the Corporation for the fiscal year ended
June 30, 1996 (Commission file number 1-4389).)
10(17) 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(18) 1993 Director Stock Purchase and Deferred Compensation Plan as amended
June 19, 1997.
10(19) 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(20) The Division Long-Term Incentive Plan of The Perkin-Elmer Corporation
dated July 1, 1996.
10(21) The Performance Unit Bonus Plan of The Perkin-Elmer Corporation.
10(22) The Estate Enhancement Plan of The Perkin-Elmer Corporation.
10(23) The Deferred Compensation Plan of The Perkin-Elmer Corporation dated
October 1, 1996.
11 Computation of Net Income (Loss) per Share for the five years ended
June 30, 1997.
13 Annual Report to Shareholders for 1997 (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 $3.00 U.S.
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.
Page 17
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 12, 1997
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 12, 1997
Tony L. White
Chairman of the Board of Directors, President
and Chief Executive Officer
(Principal Executive Officer)
/s/ Stephen O. Jaeger September 12, 1997
Stephen O. Jaeger
Vice President, Chief Financial Officer and Treasurer
(Principal Financial Officer)
/s/ Ugo D. DeBlasi September 12, 1997
Ugo D. DeBlasi
Corporate Controller
(Principal Accounting Officer)
/s/ Joseph F. Abely, Jr. September 10, 1997
Joseph F. Abely, Jr.
Director
Page 18
/s/ Richard H. Ayers September 9, 1997
Richard H. Ayers
Director
/s/ Jean-Luc Belingard September 8, 1997
Jean-Luc Belingard
Director
/s/ Robert H. Hayes September 10, 1997
Robert H. Hayes
Director
/s/ Donald R. Melville September 8, 1997
Donald R. Melville
Director
/s/ Burnell R. Roberts September 5, 1997
Burnell R. Roberts
Director
/s/ Georges C. St. Laurent, Jr. September 10, 1997
Georges C. St. Laurent, Jr.
Director
/s/ Carolyn W. Slayman September 5, 1997
Carolyn W. Slayman
Director
/s/ Orin R. Smith September 9, 1997
Orin R. Smith
Director
/s/ Richard F. Tucker September 10, 1997
Richard F. Tucker
Director
Page 19
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 23, 1997, appearing on Page 62 of the
1997 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 23, 1997
Page 20
THE PERKIN-ELMER CORPORATION
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE FISCAL YEARS ENDED JUNE 30, 1997, 1996 AND 1995
(Amounts in thousands)
ALLOWANCE FOR
DOUBTFUL ACCOUNTS
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
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)
Charged to income in fiscal year 1997.................. 1,049
Deductions from reserve in fiscal year 1997............ (2,450)
Balance at June 30, 1997............................... $5,444 (1)
(1) Deducted in the Consolidated Statements of Financial Position
from accounts receivable.
SCHEDULE II
Page 21
THE PERKIN-ELMER CORPORATION
COMPUTATION OF NET INCOME (LOSS) PER SHARE
(Dollar amounts in thousands, except per share amounts)
<TABLE>
<CAPTION>
At June 30, 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
Weighted average number of common shares 43,383 42,720 42,129 43,857 43,780
Common stock equivalents - stock options 1,296 1,027 515 816 1,173
Weighted average number of common shares
used in calculating primary earnings per share 44,679 43,747 42,644 44,673 44,953
Additional dilutive stock options under
paragraph #42 APB #15 116 137 120 172 97
Shares used in calculating earnings per share - fully
diluted basis 44,795 43,884 42,764 44,845 45,050
Calculation of primary and fully diluted earnings
per share:
PRIMARY AND FULLY DILUTED:
Income from continuing operations $ 115,155 $ 13,944 $ 66,877 $ 73,978 $ 24,444
(Loss) Income from discontinued operations - - - (22,851) 1,714
Income before cumulative effect of
accounting changes 115,155 13,944 66,877 51,127 26,158
Cumulative effect of accounting changes - - - - (83,098)
Net income (loss) used in the calculation of
primary and fully diluted earnings per share $ 115,155 $ 13,944 $ 66,877 $ 51,127 $ (56,940)
PRIMARY:
Per share amounts:
Income from continuing operations $ 2.58 $ .32 $ 1.57 $ 1.66 $ .54
(Loss) Income from discontinued operations - - - (.52) .04
Income before cumulative effect of
accounting changes 2.58 .32 1.57 1.14 .58
Loss from cumulative effect of accounting changes - - - - (1.85)
Net income (loss) $ 2.58 $ .32 $ 1.57 $ 1.14 $ (1.27)
FULLY DILUTED:
Per share amounts:
Income from continuing operations $ 2.57 $ .32 $ 1.56 $ 1.65 $ .54
(Loss) Income from discontinued operations - - - (.51) .04
Income before cumulative effect of
accounting changes 2.57 .32 1.56 1.14 .58
Loss from cumulative effect of accounting changes - - - - (1.84)
Net income (loss) $ 2.57 $ .32 $ 1.56 $ 1.14 $ (1.26)
</TABLE>
EXHIBIT 11
Page 22
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, 33-58778, and 333-15189) of The
Perkin-Elmer Corporation of our report dated July 23, 1997,
appearing on page 62 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 20 of this
Form 10-K.
PRICE WATERHOUSE LLP
Stamford, Connecticut
September 10, 1997
EXHIBIT 23
Page 23
[CONFORMED COPY]
AMENDMENT NO. 2 TO CREDIT AGREEMENT
AMENDMENT dated as of March 31, 1996 (this "Amendment") to
the Three-Year Credit Agreement dated as of June 1, 1994, as
heretofore amended (the "Agreement") among THE PERKIN-ELMER
CORPORATION (the "Borrower"), the BANKS party thereto (the "Banks")
and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Agent (the
"Agent").
W I T N E S S E T H :
WHEREAS, the undersigned parties desire to amend the
definition of "Consolidated EBIT" in Section 1.01 of the Agreement to
eliminate the effect of any separately identified non-recurring non-
cash gains or losses;
NOW, THEREFORE, the undersigned parties agree as follows:
SECTION 1. Definitions; References. Unless otherwise
specifically defined herein, each term used herein which is defined in
the Agreement has the meaning assigned to such term in the Agreement.
Each reference to "hereof", "hereunder", "herein" and "hereby" and
each other similar reference and each reference to "this Agreement"
and each other similar reference contained in the Agreement shall
from and after the date hereof refer to the Agreement as
amended hereby.
SECTION 2. Definition of Consolidated EBIT. The
definition of "Consolidated EBIT" in Section 1.01 of the Agreement is
amended to read as follows:
"Consolidated EBIT" means, for any period, the sum
(without duplication) of (i) net operating income for such period
plus (ii) interest income for such period plus (iii) to the
extent deducted in determining such net operating income, any
non-recurring non-cash losses separately identified on the
Borrower's consolidated statement of operations minus (iv) to the
extent included in determining such net operating income, any
non-recurring non-cash gains separately identified on the
Borrower's consolidated statement of operations, all
determined on a consolidated basis for the Borrower and its
Consolidated Subsidiaries.
SECTION 3. Governing Law. This Amendment shall be
governed by and construed in accordance with the laws of the State of
New York.
SECTION 4. Counterparts; Effectiveness. This Amendment may
be signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto
were upon the same instrument. This Amendment shall become effective
as of the date hereof when the Agent shall have received duly executed
counterparts hereof signed by the Borrower and all
Page 1
the Banks (or, in the case of any such party as to which an
executed counterpart shall not have been received, the Agent
shall have received facsimile or other written confirmation from
such party of execution of a counterpart hereof by such party).
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed as of the date first above written.
THE PERKIN-ELMER CORPORATION
By /s/ Steven 0. Jaeger
Title: Vice President, Chief
Financial Officer
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By /s/ Penelope J.B. Cox
Title: Vice President
CITIBANK, N.A.
By /s/ James Walsh
Title: Attorney-in-fact
CREDIT SUISSE
By /s/ Lynn Allegaert
Title: Member of Senior Management
By /s/ Robert B. Potter
Title: Member of Senior Management
BANQUE NATIONAL DE PARIS
By /s/ Richard L. Sted
Title: Senior Vice President
By /s/ Sophie Revillard Kaufman
Title: Vice President
Page 2
CHEMICAL BANK
By /s/ Ann B. Kerns
Title: Vice President
THE INDUSTRIAL BANK OF JAPAN, LIMITED
By /s/ John V. Veltri
Title: Senior Vice President
WACHOVIA BANK OF GEORGIA, N.A.
By /s/ M. Euqene Wood, III
Title: Vice President
Page 3
EMPLOYMENT AGREEMENT
AGREEMENT entered into as of May 7, 1996, between THE
PERKIN-ELMER CORPORATION (the "Company"), a New York
corporation, and DR. MARK C. ROGERS ("Executive"), presently
residing at 33 West Putnam Avenue, 3H, Greenwich, CT 06830.
WHEREAS, the Company desires to employ Executive on the
terms and conditions set forth herein; and
WHEREAS, the Executive desires to render services to the
Company on the terms and conditions set forth herein;
NOW, THEREFORE, the parties hereto agree as follows:
1. Scope.
(a) The Company agrees to employ Executive, and Executive
agrees to serve as Senior Vice President of the
Corporation and Chief Technology Officer. In such
capacities, Executive shall report to the Chairman,
President and Chief Executive Officer of the Company,
and will have corporate-wide responsibilities for
strategic planning, mergers and acquisitions, business
development, technology review and oversight, as well
as integrating new business initiatives into the
Company.
(b) Executive shall devote his full business time,
attention and best efforts to the affairs of the
Company and its subsidiaries during the Term;
Page 1
provided, however, that nothing in this Agreement
shall preclude Executive from engaging, so long as, in
the reasonable determination of the Board, such
activities do not interfere with his duties and
responsibilities hereunder, in religious, charitable
and community affairs, from managing any passive
investment made by him in publicly traded equity
securities or other property (provided that no such
investment may exceed 1% of the equity of any entity,
without the prior approval of the Board) or from
serving, subject to the prior approval of the Board,
as a member of boards of directors or as a trustee of
any other corporation, association or entity. The
Executive is encouraged to maintain significant
outside contacts to include lectures, advisory boards,
and consultantships in order to promote the visibility
of the Company in health care as long as such
activities do not interfere with the Executive's
performance of his Company responsibilities.
2. Term of Employment.
(a) Executive's term of employment (the "Term") under this
Agreement shall commence (the "Commencement Date") as
of the date hereof, and terminate (the "Termination
Date") on the termination of Executive's employment.
Any termination of employment by Executive (other than
Page 2
for death, Permanent Disability or Good Reason) may
only be made upon 90 days prior written notice to the
Company and any termination of employment by Executive
for Good Reason may only be made upon 30 days prior
written notice to the Company.
(b) For purposes of this Agreement, "Good Reason" shall
mean the occurrence of any of the following, other
than with the consent of Executive:
i) Any failure to continue Executive as Senior Vice
President of the Corporation and Chief Technology
Officer or any material reduction by the Company
of Executive's duties or responsibilities (except
in connection with the termination of Executive's
employment for Cause, as a result of Permanent
Disability, as a result of Executive's death or
by Executive other than for Good Reason);
ii) a reduction by the Company in Executive's Base
Salary or Target Bonus (as herein defined), other
than a reduction which is part of a general
salary reduction program affecting senior
executives of the Company.
iii) any material breach by the Company of the
provisions of this Agreement; and
iv) the Company's requiring the Executive to be based
more than fifty miles from Norwalk, Connecticut
Page 3
except for required travel on the Company's
business to an extent substantially consistent
with the business travel obligations of Executive
hereunder.
(c) For purposes of this Agreement, "Cause" shall mean (i)
willful malfeasance or willful misconduct by Executive
in connection with his employment, (ii) continuing
refusal by Executive to perform his duties hereunder
or any lawful direction of the Board of Directors of
the Company (other than due to Executive's physical or
mental incapacity), after a demand for a substantial
performance is delivered to the Executive by the Board
which identifies the manner in which the Executive has
not performed his duties, (iii) any material breach of
this Agreement by Executive, (iv) the willful engaging
by the Executive in conduct which is materially
injurious to the Company or (v) the indictment of
Executive for (A) any felony or (B) a misdemeanor
involving moral turpitude. Termination of Executive
for Cause shall be made by delivery to Executive of a
copy of a resolution duly adopted by the affirmative
vote of not less than a majority of the Directors at a
meeting of the Board of Directors of the Company
called and held for the purpose (after 30 days prior
written notice to Executive and reasonable opportunity
Page 4
for Executive to be heard before the Board prior to
such vote), finding that in the reasonable judgment of
such Board, Executive was guilty of the conduct set
forth in any of clauses (i) through (iv) above and
specifying the particulars thereof; provided, however,
that with respect to clause (v) herein the Board shall
determine in good faith that Executive's indictment is
reasonably likely to have a material adverse effect on
Executive's ability to perform his duties hereunder as
the Senior Vice President of the Company.
(d) For purposes of this Agreement, "Permanent Disability"
means the absence of the Executive from his duties
with the Company on a full-time basis for one hundred
and eighty (180) consecutive days as a result of
incapacity due to physical or mental illness, such
that executive would be entitled to long term
disability benefits under the long term disability
plan of the Company in effect at such time.
3. Compensation.
(a) The Company will pay to Executive a base salary ("Base
Salary") at the rate of $375,000 per annum for the
period commencing on the beginning of Executive's term
of employment hereunder and ending on the Termination
Date. Base Salary shall be payable in accordance with
the ordinary payroll practices of the Company. Any
Page 5
increase in Base Salary shall be in the discretion of
the Board and, as so increased, shall constitute "Base
Salary" hereunder. It is understood that the Company
shall review Executive's Base Salary annually, and in
light of such review may, in the discretion of the
Board of Directors or its Compensation Committee,
increase such Base Salary taking into account the
Executive's responsibilities, compensation of other
executives of the Company and its subsidiaries,
increase in salaries of executives of other
corporations, performance by the Executive, and other
pertinent factors.
(b) During the Term, Executive shall be eligible to
receive an annual bonus (a "Bonus") in respect of each
Fiscal Year of the Company ("Fiscal Year") under, and
subject to the terms of, the Company Contingent
Compensation Plan (the "Bonus Plan") to the extent not
inconsistent with the terms hereof. Executive's
target bonus (the "Target Bonus") under the Bonus Plan
will be equal to 60 percent of Executive's Base Salary
and will be payable in accordance with the provisions
of the Bonus Plan; provided, however, that with
respect to Fiscal Year 1996, Executive shall receive a
Bonus of not less than $37,500.
Page 6
4. Stock Arrangements.
(a) Upon Executive's commencement of employment with the
Company, Executive shall be granted 15,000 shares of
restricted stock of the Company ("Restricted Stock")
in accordance with terms consistent with the Company's
1993 Stock Incentive Plan for Key Employees. (Company
has previously granted all available shares under such
plan. Accordingly, the grant to the Executive is
conditioned upon approval of the Company's
shareholders of a new plan or additional authorization
of shares under the Stock Plan. Until such approval,
the grant of Restricted Stock will be treated as a
"performance unit grant" which is consistent with the
terms of Restricted Stock but may not be voted by the
Executive.) The Restricted Stock will vest based on
the average per share market price for 90 consecutive
days of Company common stock as follows:
Average Per Share Market Price for 90 Days Vested Percentage
$59 33%
$66 33%
$73 33%
(b) As of May 7, 1996, Executive's commencement of
employment with the Company, the Company shall grant
Page 7
Executive an option (an "Option") to purchase at fair
market value on the date of grant 50,000 shares of
common stock of the Company under the Stock Plan. The
Option shall vest with respect to 50% of the shares
subject thereto on each of the first and second
anniversaries of the date of grant and shall expire
ten years following the date of grant. In addition to
the foregoing Option grant, the Company, subject to
the approval of the Board, anticipates making annual
Option grants to Executive of 25,000 shares per year,
when normally granted by the Company, beginning in
calendar year 1997.
(c) Unless otherwise specified in this Section 4, the
terms of all Restricted Stock and Options granted to
Executive hereunder, including, without limitation,
terms relating to vesting and forfeiture, shall be
governed by the Stock Plan.
(d) It is understood that Company policy anticipates that
Executive will maintain a level of stock ownership in
the Company equal to two times Executive's Base
Salary. Grants of Restricted Stock under the terms of
this Agreement and shares of Company stock acquired
upon exercise of an Option shall be credited towards
Executive's stock ownership. Executive is expected to
Page 8
achieve the foregoing level of stock ownership no
later than five years after the date hereof.
(e) For purposes only of vesting of Restricted Stock and
Options granted hereunder, in the event of Executive's
termination of employment his termination date will be
the May 7 following the date on which Executive's
employment is terminated.
5. Employee Benefits.
(a) During the Term, Executive shall be entitled to
participate in all employee benefit plans, programs or
arrangements ("Benefit Plans") of the Company, in
accordance with the terms thereof, as presently in
effect or as they may be modified by the Company from
time to time, which the Company makes available to
senior executives of the Company.
(b) During the Term, the Executive shall be entitled to a
paid annual vacation of not less than twenty (20)
business days during each calendar year and to
reasonable sick leave.
(c) During the Term, Executive shall receive an automobile
allowance of $15,000 per year and the Company shall
also reimburse Executive for the reasonable costs of
financial planning and tax preparation in accordance
with Company policy as in effect from time to time.
In addition, Executive shall be entitled, during the
Page 9
Term, to any other perquisites and fringe benefits not
specifically mentioned herein that are made available
to senior executives of the Company, subject to the
terms of this Agreement and commensurate with his
position with the Company.
(d) In addition to receiving credit under the Company's
qualified defined benefit plan ("Pension Plan") and
the Company's non-qualified Supplemental Retirement
Plan and Contingent Compensation Plan for Key
Executives (collectively, the "Non-Qualified Plans")
for Executive's service with the Company under the
terms of this Agreement, the Company shall pay
Executive a special supplemental pension benefit equal
to the amount which he would receive under the Pension
Plan and the Non-Qualified Plans if Executive were
credited with thirteen (13) years of service under the
Pension Plan and the Non-Qualified Plans.
(e) Company shall reimburse Executive for all reasonable
costs incurred by Executive in connection with his
relocation to Connecticut. At such time as the
Executive relocates to Connecticut, Executive shall
also receive $150,000 in order to assist in such
relocation. If Executive decides to delay selling his
residence in North Carolina, he may choose to make use
of Company's Home Sale Program (which is commensurate
Page 10
with that provided other executives of Company at
Executive's level) at any time during the first three
years of employment.
6. Severance; Benefits.
(a) In the event the Executive's employment is terminated
by the Company for reasons other than "Cause" (and not
due to death or Permanent Disability), or is
terminated by the Executive due to a Good Reason, and
the provisions of the Executive's Employment Agreement
of even date (entitling Executive to benefits
thereunder in the event of a "Change-in-Control" as
defined in such agreement (hereinafter referred to as
the "Change-in-Control Agreement")) are not applicable
to such termination, then the Executive shall be
entitled to, in addition to accrued retirement
benefits, an annual severance payment at the rate of
$150,000 per annum which shall be payable to the
Executive until age 65. In the event that the
Executive becomes eligible for said severance benefit,
the Executive shall have the option to receive such
benefit in an accelerated form or a lump sum based on
the net present value of such severance benefit at the
time of the Executive's eligibility therefor, and
using a discount rate of 4% to calculate such amount.
The severance benefit under this section 6 shall be in
Page 11
lieu of severance under any other severance pay plan
of the Company.
(b) In the event the Executive's employment terminates,
other than for Cause, the Executive's Company provided
medical insurance coverage and life insurance coverage
shall continue upon the same terms as in effect
immediately prior to the Termination Date for a period
of up to two (2) years following the Termination Date,
and the Executive shall be deemed to be on a leave of
absence for such purposes; provided, however, that in
the event the Executive obtains employment during such
two (2) year period and his employer provides medical
and life insurance coverage comparable to that
provided hereunder, then such leave of absence shall
end and insurance coverage hereunder shall terminate.
7. Separability; Legal Fees. If any provision of this
Agreement shall be declared to be invalid or
unenforceable, in whole or in part, such invalidity or
unenforceability shall not affect the remaining provisions
hereof, which shall remain in full force and effect. Each
party shall bear the costs of any legal fees and other
fees and expenses which may be incurred in respect of
enforcing its respective rights under this Agreement;
provided, however, that the Company shall pay the costs of
any reasonable legal fees incurred by Executive in good
Page 12
faith in enforcing his rights or entitlements under this
Agreement if Executive prevails in such enforcement
action.
8. Assignment. This Agreement shall be binding upon and
inure to the benefit of the heirs and representatives of
Executive and the assigns and successors of the Company,
but neither this Agreement nor any rights or obligations
hereunder shall be assignable or otherwise subject to
hypothecation by Executive (except by will or by operation
of the laws of intestate succession) or by the Company,
except that the Company may assign this Agreement to any
successor (whether by merger, purchase or otherwise) to
all or substantially all of the stock, assets or
businesses of the Company, if such successor expressly
agrees to assume the obligations of the Company hereunder.
9. No Obligation to Mitigate Damages. Except as specifically
provided in this Agreement, Executive shall not be
required to mitigate damages or the amount of any payment
provided for under this Agreement by seeking other
employment or otherwise, nor will any payments under this
Agreement be subject to offset in respect of any amounts
which Executive earns or becomes entitled to from any
other employer or other person after termination of his
employment with the Company.
Page 13
10. Amendment. This Agreement may only be amended by written
agreement of the parties hereto.
11. Survivorship. The respective rights and obligations of
the parties hereunder shall survive any termination of
this Agreement to the extent necessary to the intended
preservation of such rights and obligations. The
provisions of this Section 11 are in addition to the
survivorship provisions of any other section of this
Agreement.
12. Governing Law. This Agreement shall be construed,
interpreted and governed in accordance with the laws of
the State of New York, without reference to rules relating
to conflicts of law.
13. Effect on Prior Agreements. This Agreement and the
Change-in-Control Agreement contain the entire
understanding between the parties hereto and supersede in
all respects any prior or other agreement or understanding
between the Company and Executive.
14. Withholding. The Company shall be entitled to withhold
from payment any amount of withholding required by law.
15. Supersession. Notwithstanding any other provision of this
Agreement, in the event of a Change in Control of the
Company, as defined under the Change in Control Agreement,
the provisions of this Agreement shall be superseded by
the provisions of the Change in Control Agreement.
Page 14
16. Counterparts. This Agreement may be executed in two or
more counterparts, each of which will be deemed an
original.
THE PERKIN-ELMER CORPORATION
By: /s/ Tony L. White
Tony L. White
Chairman, President and
Chief Executive Officer
By: /s/ Mark C. Rogers
Dr. Mark C. Rogers
Page 15
June 3, 1996
Mr. Manuel Baez
3502 Derby Lane
Ft. Lauderdale, FL 33331
Dear Manny:
Subject to the formal election by the Board of Directors, I am pleased to
offer you the position of Senior Vice President of the Corporation and
President, Analytical Instruments Division, reporting to Tony L. White,
Chairman, President and Chief Executive Officer.
Reporting to you in this position will be:
Dr. David Binkley, Vice President and General Mgr. Organic Div.
Peter Macintyre, Vice President and General Mgr., Chromatography Div.
Joseph Malandrakis, Vice President and General Mgr., Inorganic Div.
Dr. Nino Portolan, Vice President and Managing Director, Europe
Dr. Luigi Strassorier, Vice President and Managing Director, Far East
Luis Carmona, General Manager, Latin America
The annual salary for this position is $375,000. Your salary will be
reviewed by the Management Resources Committee of the Board in September
of each year along with the other officers of the Corporation. You will
also participate in Perkin-Elmer's Contingent Compensation Plan, which is
our annual bonus plan. In this program, you will have a targeted annual
bonus opportunity of 60% of your base salary. The plan provides a range
of bonus payouts from 0 - 90% of salary based upon accomplishment of our
annual financial targets. For FY 96 you will be guaranteed a minimum
payment of $37,500. This payment will be made following the Board
meeting in August.
Mr. Manuel Baez
June 3, 1996
Page 2
On your first day of employment, the Management Resources Committee will
formally review our recommendation of a Restricted Stock Award of 15,000
shares of Perkin-Elmer stock. This grant will vest according to the
following schedule:
Average Market Price for 90 Days % Vested
$59 33%
$66 33%
$73 33%
Additionally as each increment is earned, the Board has agreed to accept
a recommendation to "reload" your Restricted Stock Plan with an amount to
be earned against new performance measures. You will immediately begin
receiving dividends from this award, which under current dividend policy
equals $10,200.
Since we have exhausted our current pool of restricted stock, your grant
will be made by the Board conditional upon shareholder approval at our
Annual Meeting in October. Until shareholder approval, the grant will be
treated as a performance unit grant which mirrors our restricted stock in
all aspects except that you will not be entitled to vote these shares.
The Board has established ownership guidelines for all officers of the
Corporation and this restricted stock grant, is "credited" towards these
ownership guidelines. The Management Resources Committee set an
ownership target of two times annual salary for your position. This
program, initiated last year, allows five years for you to achieve this
target.
Upon your employment, the Management Resources Committee will also
formally review the recommendation to provide you a stock option grant of
50,000 shares of Perkin-Elmer stock. The option will be valued at the
average market price of the stock on the day of your election. This
stock option will vest 50% per year over two years and, subject to the
other terms of our stock plan, will expire ten years following the date
of the grant.
In April of each year, the Management Resources Committee considers
recommendations for stock option grants. Beginning in April 1997, you
will be recommended for an annual stock option grant, which based upon
our current grant practice, would be approximately 25,000 shares.
Mr. Manuel Baez
June 3, 1996
Page 3
As we have discussed, we are designing a divisionalized "Phantom Stock
Option Plan" to provide you with an opportunity to more closely tie the
long-term incentives of your team to the "value creation" which they
accomplish for the Analytical Instruments business. Likewise, Tony wants
a portion of your long-term incentives tied to the Analytical Instrument
business. When this "Phantom Stock Option" grant is determined, it will
not be additive but rather will be integrated with Perkin-Elmer stock
options to achieve an equivalent value to your annual Perkin-Elmer stock
option as described above.
Your Option Grants and Restricted Stock Awards will be subject to terms
of Perkin-Elmer's Employee Stock Incentive Plan, a copy of which will be
provided to you.
In our discussions, you raised the issue of your retirement benefit. We
propose that when you join PE you will be credited with 13 years of past-
service credit for purposes of calculating your benefit. For purposes of
vesting, we have a five year vesting requirement in our qualified plans
that must remain in place. However, you will vest immediately in our
non-qualified plan. If for any reason you resigned before you were
vested in the qualified plan, your total benefit would be derived from
the non-qualified plan.
You will receive a Change of Control Agreement, which applies to all
Executive Officers of the Corporation. This Agreement provides for three
year salary and bonus continuation in the event of a change of control of
the Corporation and the resulting loss of your position.
In addition to the foregoing, you will receive an annual car allowance of
$15,000, financial planning and tax preparation assistance, and four
weeks annual vacation. The usual range of benefits is also included as
described in the accompanying summary.
Obviously, we do not want you to experience any financial burden
associated with your move to Connecticut, and the Corporation will bear
all reasonable expenses regarding this move. As well as our normal
relocation benefits, you will receive a payment of $150,000 at the time
you join the Company in order to assist in your move from Florida.
Mr. Manuel Baez
June 3, 1996
Page 4
Manny, we hope you will accept this offer and join our team at Perkin-
Elmer. Speaking personally, I believe you will find Perkin-Elmer to be a
company that will provide the career opportunity, professional challenges
and personal rewards which you seek.
Please give me a call if you have any questions or concerns regarding any
of the above issues. You can reach me at any time at either my office at
203-761-5451 or my home at 203-259-6012.
Sincerely,
/jk
Agreed: ____________________________
Manuel Baez
EMPLOYMENT AGREEMENT
AGREEMENT entered into as of June 20, 1996 between THE
PERKIN-ELMER CORPORATION, a New York corporation having its
principal place of business at Norwalk, Connecticut (the
"Company") and Manuel A. Baez, residing at 3502 Derby Lane,
Ft. Lauderdale, FL 33331 (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
Page 1
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
Page 2
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
Page 3
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
Page 4
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
Page 5
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
Page 6
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.
Page 7
(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
Page 8
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
Page 9
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),
Page 10
(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
Page 11
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
Page 12
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
Page 13
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
Page 14
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 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.
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
Page 15
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.
Page 16
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/ W. B. Sawch
William B. Sawch
Vice President
General Counsel & Secretary
ACCEPTED AND AGREED:
/s/ Manuel A. Baez
Page 17
EMPLOYMENT AGREEMENT
AGREEMENT entered into as of June 20, 1996 between THE
PERKIN-ELMER CORPORATION, a New York corporation having its
principal place of business at Norwalk, Connecticut (the
"Company") and Dr. Mark C. Rogers, residing at 33 West Putnam
Avenue, 3G, Greenwich, CT 06830 (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
Page 1
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
Page 2
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
Page 3
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
Page 4
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
Page 5
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
Page 6
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.
Page 7
(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
Page 8
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
Page 9
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),
Page 10
(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
Page 11
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
Page 12
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
Page 13
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
Page 14
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 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.
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
Page 15
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.
Page 16
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/ W. B. Sawch
William B. Sawch
Vice President
General Counsel & Secretary
ACCEPTED AND AGREED:
/s/ Mark C. Rogers
Page 17
THE PERKIN-ELMER CORPORATION
1993 DIRECTOR STOCK PURCHASE AND DEFERRED
COMPENSATION PLAN
(as amended June 19, 1997)
1. OBJECTIVE OF THE PLAN.
The Perkin-Elmer Corporation 1993 Director Stock
Purchase and Deferred Compensation Plan (the "Plan") is
established effective October 21, 1993 for the benefit of
directors of The Perkin-Elmer Corporation (the
"Corporation") who are not employees of the Corporation or
any of its subsidiaries. The Corporation has adopted the
Plan in recognition that its long-term success and
achievements are enhanced and the interests of its
shareholders are best served when its outside directors have
a direct and personal stake in the performance of the
Corporation's stock.
2. DEFINITIONS.
As used herein, the following terms have the meanings
hereinafter set forth unless the context clearly indicates
to the contrary:
2.1 "Account" shall mean the deferred Fees
account established for a Participant pursuant to
Subparagraph 5.3.
2.2 "Board of Directors" shall mean the board of
directors of the Corporation.
2.3 "Common Stock" shall mean shares of the
common stock, par value $1.00 per share, of the
Corporation.
2.4 "Common Stock Unit" shall mean the
bookkeeping entry representing the equivalent of one
share of Common Stock.
2.5 "Corporate Secretary" shall mean the person
holding the position of Secretary of the Corporation.
2.6 "Effective Date" shall mean October 21, 1993.
2.7 "Fees" shall mean all retainer, meeting and
committee fees payable to a non-employee director for
service on the Board of Directors for any calendar year
from and after the Effective Date, before any reduction
pursuant to this Plan.
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2.8 "Fees Payment Date" shall mean the first
calendar day of the third month of each fiscal quarter
or, if such date is not a business day for the
Corporation, the next succeeding business day.
2.9 "Participant" shall mean any member of the
Board of Directors who is not also a regular, salaried
employee of the Corporation or any of its subsidiaries.
2.10 "Stock Price" shall mean the simple average
of the high and low sales prices of a share of Common
Stock as reported in the report of composite
transactions (or other independent published source
designated by the Board of Directors) on the Fees
Payment Date (or if there shall be no trading on such
date, then on the first previous date on which sales
were made on a national securities exchange).
Notwithstanding the foregoing, if Common Stock is
purchased in the market for purposes of the Plan on a
Fees Payment Date, "Stock Price" shall mean the actual
average cost per share of the aggregate purchases of
Common Stock for the Plan on such date.
3. PARTICIPATION.
All members of the Board of Directors who are not also
regular salaried employees of the Corporation or any of its
subsidiaries shall participate in the Plan.
4. PAYMENT OF FEES.
4.1 Automatic Payment of Fees in Common Stock. Fifty
percent (50%) of the Fees of each Participant payable on and
after the Effective Date, shall be applied to the purchase
of Common Stock or, if deferred pursuant to Subparagraph
5.1, credited as Common Stock Units, at the Stock Price on
the Fees Payment Date. To the extent not deferred pursuant
to Subparagraph 5.1, whole shares of Common Stock purchased
in respect of such Fees shall be issued to the Participant
as soon as practicable thereafter. Cash shall be paid to a
Participant in lieu of a fractional share of Common Stock.
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4.2 Election to Receive Fees in Common Stock. A
Participant may elect, by filing the appropriate election
form with the Corporate Secretary before the Fees Payment
Date to which the election applies, to have up to that
portion of his or her Fees payable on and after such Fees
Payment Date which are not automatically paid in Common
Stock pursuant to Section 4.1 or which are not deferred
pursuant to Subparagraph 5.1, applied to the purchase of
Common Stock at the Stock Price on the Fees Payment Date.
Whole shares of Common Stock purchased in respect of such
Fees shall be issued to the Participant as soon as
practicable thereafter. Cash shall be paid to a Participant
in lieu of a fractional share of Common Stock.
A Participant may amend or terminate an election under
this Subparagraph 4.2 by written notice to the Corporate
Secretary. Such amendment or termination shall be effective
as of the next Fees Payment Date followingthe date of
delivery of such notice to the Corporate Secretary.
5. DEFERRAL OF FEES.
5.1 Deferral Election. A Participant may elect to
defer receipt of his or her Fees, including all or any
portion of his or her Fees which are subject to Subparagraph
4.1 hereof, by filing the appropriate deferral form with the
Corporate Secretary on or before December 15th of the
calendar year prior to the calendar year in which such
deferral is to be effective or, in the case of any person
elected to the Board of Directors after the Effective Date,
within thirty (30) days after such person first becomes
eligible to participate in the Plan.
Any Participant who has made an effective election to
defer the receipt of Fees which election was in effect on
October 21, 1993 may continue to defer receipt of such Fees
pursuant to such election, provided, however, that such
election and any such deferral which occurs on or after the
Effective Date shall be governed by the terms of this Plan.
Notwithstanding the foregoing, no deferral shall be
permitted to the extent prohibited by applicable law.
5.2 Period of Deferral. Subject to Subparagraph 5.9,
a Participant may elect to defer receipt of Fees until (a) a
specified date in the future, (b) cessation of the
Participant's service as a member of the Board of Directors
or (c) the end of the calendar year in which cessation of
the Participant's service as a member of the Board of
Directors occurs.
5.3 Deferred Fees Account. There shall be established
an Account in the Participant's name on the books of the
Corporation for each Participant electing to defer Fees
pursuant to this Paragraph 5.
5.4 Investment of Deferrals. Except as provided in
the next sentence, deferrals shall be credited to a
Participant's Account in Common Stock Units. With respect
to that portion of his or her deferrals under the Plan which
are not subject to Subparagraph 4.1, the Participant may
elect under the procedures set forth in Subparagraph 4.2
that such deferrals be credited to his or her Account in
dollar or Common Stock Units.
5.5 Amounts Credited to Accounts.
(a) Investment in Common Stock Units. To the
extent the deferral of a Participant's Fees is deemed
invested in Common Stock Units, such amounts shall
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be credited to his or her Account in the following manner:
on the Fees Payment Date to which the deferral election
applies, the amount deferred shall be converted into a
number of Common Stock Units by dividing the amount of
Fees payable by the Stock Price as of such date. The
quotient, which shall be expressed in whole or
fractional Common Stock Units to the nearest one/one
hundredth (1/100th), shall be credited to the
Participant's Account as of such date.
Whenever cash dividends are paid with respect to
shares of Common Stock, each Participant's Account
shall be credited on the payment date of such dividend
with additional Common Stock Units (including
fractional units to the nearest one/one hundredth
(1/100th)) equal in value to the amount of the cash
dividend paid on a single share of Common Stock
multiplied by the number of Common Stock Units
(including fractional units) credited to a
Participant's Account as of the date of record for
dividend purposes. For purposes of crediting
dividends, the value of a Common Stock Unit shall be
the Stock Price as of the payment date of the dividend.
The number of Common Stock Units credited to each
Participant's Account shall be appropriately adjusted
and modified upon the occurrence of any stock split,
stock dividend or stock consolidation affecting the
Common Stock. In the event of a merger, consolidation
or an acquisition involving more than 50% of the issued
and outstanding shares of Common Stock, the Board of
Directors shall have the authority to amend the Plan to
provide for the conversion of Common Stock Units
credited to Participants' Accounts into units equal to
shares of stock of the resulting or acquiring company
(or a related company), as appropriate, if such stock
is publicly traded or, if not, into cash of equal value
on the date of merger, consolidation or acquisition.
If pursuant to the preceding sentence cash is credited
to Participants' Accounts, income shall be credited
thereon from the date such cash is received to the date
of distribution at the rate determined pursuant to
Subparagraph 5.5(b). If units representing publicly
traded stock of the resulting or acquired company (or a
related company) are credited to Participants'
Accounts, dividends shall be credited thereto in the
same manner as dividends are credited on Common Stock
Units credited to such Accounts.
(b) Deferrals in Cash. To the extent not deemed
invested in Common Stock Units pursuant to Subparagraph
5.5(a), the Account of a Participant will be credited
with the dollar amount of the Participant's deferrals
as of the Fees Payment Date. Subject to Subparagraph
5.9, interest shall be credited thereon from the date
such cash is received to the date of distribution
quarterly, at the end of each calendar quarter, at a
rate per annum (computed on the basis of a 360 day year
and a 91 day quarter) equal to the prime rate announced
publicly by Citibank, N.A. at the end of such calendar
quarter.
5.6 Distribution of Deferral Account. Subject to
Subparagraph 5.9, distributions of a Participant's Account
under the Plan shall be made as follows:
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(a) if a Participant has elected to defer his or
her Fees to a specified date in the future, payment
shall be as of such date and shall be made or shall
commence, as the case may be, within thirty (30) days
after the date specified;
(b) if a Participant has elected to defer his or
her Fees until cessation of his or her service as a
member of the Board of Directors, payment shall be as
of the date of such cessation of service and shall be
made or shall commence, as the case may be, within
thirty (30) days after the cessation of the
Participant's service as a director; and
(c) if a Participant has elected to defer his or
her Fees until the end of the calendar year in which
the cessation of his or her service as a member of the
Board of Directors occurs, payment shall be made or
commence, as the case may be, on or before December
31st of such year.
5.7 Payment Upon Death. Notwithstanding any elections
pursuant to Subparagraphs 5.2 and/or 5.8 hereof, but subject
to Subparagraph 5.9 hereof, in the event of the death of the
Participant prior to the distribution of his or her Account
hereunder, the balance credited to such Participant's
Account as of the date of his or her death shall be paid, as
soon as reasonably possible thereafter, in a single
distribution to the Participant's beneficiary or
beneficiaries designated on such Participant's deferral
election form. If no such election or designation has been
made, such amounts shall be payable to the Participant's
estate.
5.8 Form of Payment. Subject to Subparagraph 5.9, a
participant may elect to have his or her Account under the
Plan paid in a single distribution or equal annual
installments, not to exceed 10 annual installments. To the
extent a Participant's Account is deemed invested in Common
Stock Units, such Common Stock Units shall be converted to
Common Stock on the distribution date as provided in the
next paragraph. To the extent deemed invested in units of
any other stock, such units shall similarly be converted and
distributed in the form of stock. To the extent invested in
a medium other than Common Stock Units or other units, each
such distribution hereunder shall be in the medium credited
to the Participant's Account.
To the extent a Participant's Account is deemed
invested in Common Stock Units, a single distribution shall
consist of the number of whole shares of Common Stock equal
to the number of Common Stock Units credited to the
Participant's Account on the date as of which the
distribution occurs. Cash shall be paid to a Participant in
lieu of a fractional share, determined by reference to the
Stock Price on the date as of which the distribution occurs.
In the event a Participant has elected to receive
annual installment payments, each such payment shall be
determined as follows:
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(i) To the extent his or her Account is deemed to
be invested in Common Stock Units, each such payment
shall consist of the number of whole shares of Common
Stock equal to the number of Common Stock Units
(including fractional units) credited to the
Participant's Account on the date as of which the
distribution occurs, divided by the number of annual
installments remaining as of such distribution date.
Cash shall be paid to Participants in lieu of
fractional shares, determined by reference to the Stock
Price on the date as of which the distribution occurs.
(ii) To the extent his or her Account has been
credited in cash, each such payment shall be calculated
by dividing the value on the date the distribution
occurs of that portion of the Participant's Account
which is in cash by the number of annual installments
remaining as of such distribution date.
Each Participant or beneficiary agrees that prior to
any distribution under the Plan, he or she will make such
representations and execute such documents as are deemed by
the Board of Directors to be necessary to comply with
applicable laws.
5.9 Split-Dollar Arrangements. Notwithstanding
anything to the contrary contained herein, in the event that
the Company has paid any premiums under any life insurance
policies purchased in accordance with the terms of any
split-dollar insurance agreement between a Participant and
the Company, the Company shall have no obligation hereunder
to make any distribution to such Participant of that portion
of the balance of such Participant's Account credited in
cash pursuant to Subparagraph 5.6 or 5.7 equal to the amount
of such premiums, or to credit any interest on such portion
of such Account pursuant to Subparagraph 5.5(b), unless and
until such time as the Company shall be reimbursed in full
for the amount of such premium payments. At such time as
the Company shall have been reimbursed in full for the
amount of such premium payments, the balance of such
Participant's Account so credited in cash shall be
distributed as follows: (i) if such Participant is on the
date of such reimbursement in full a Participant in the
Plan, then in accordance with his or her election pursuant
to Subparagraphs 5.2 and 5.8, and (ii) if such Participant
is not a Participant in the Plan on the date of such
reimbursement, then in a single distribution as soon as
reasonably possible after such date.
6. ADMINISTRATION OF THE PLAN.
The Board of Directors shall administer the Plan. The
Board of Directors shall have plenary authority in its
discretion to interpret the Plan; to prescribe, amend and
rescind rules and regulations relating to it; to determine
the terms of Fees deferral agreements executed and delivered
under the Plan, including such terms and provisions as shall
be requisite in the judgment of the Board of Directors to
conform to any change in any law or regulation applicable
thereto; and to make all other determinations deemed
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necessary or advisable for the administration of the Plan.
The Board of Directors' determination on the foregoing
matters shall be conclusive.
7. TERMINATION AND AMENDMENT OF THE PLAN.
The Board of Directors may at any time terminate the
Plan or make such modification or amendment of the Plan as
it shall deem advisable; provided, however, that no
amendment may be made, without the approval by the holders
of Common Stock, which would (i) materially increase the
benefits accruing to Participants under the Plan, (ii)
increase the maximum number of shares reserved for issuance
under the Plan, or (iii) amend the requirements as to the
class of persons eligible to participate in the Plan and,
provided further, that no modification or amendment of the
Plan shall reduce any amount already credited to a
Participant's Account as of the effective date of such
modification or amendment. This Plan may be amended without
shareholder approval in order to ensure that this Plan, in
form and operation, complies with regulations issued under
Section 16 of the Securities Exchange Act of 1934. In no
event may Paragraphs 3, 4 and 5 of the Plan be amended more
than once every six months other than to comport with
changes in the Internal Revenue Code of 1986, as amended, or
the Employee Retirement Income Security Act of 1974, as
amended.
8. STOCK RESERVED FOR THE PLAN.
One hundred thousand (100,000) shares of authorized but
unissued Common Stock are reserved for issuance and may be
issued pursuant to the terms of the Plan.
In lieu of such unissued shares, the Corporation may,
in its discretion, transfer to Participants under the terms
of the Plan treasury shares, reacquired shares or shares
bought in the market for the purposes of the Plan, provided
that (subject to the provisions of the next paragraph) the
total number of shares which may be granted or sold pursuant
to Awards granted under the Plan shall not exceed 100,000.
In the event of any changes in the outstanding Common
Stock by reason of stock dividends, split-ups, spin-offs,
recapitalizations, mergers, consolidations, combinations or
exchanges of shares and the like, the aggregate number and
class of shares available under the Plan shall be
appropriately adjusted.
9. NO INTEREST IN ASSETS.
No Participant or any other person shall have any interest in any
specific asset of the Corporation by reason of any amount
credited to him or her hereunder, nor any right to receive any
distribution under the Plan except as and to the extent
expressly provided in the Plan. There shall be no funding
of any benefits which may become payable hereunder. No trust shall
be created by the execution or adoption of this Plan or be
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required to be created inconnection herewith. Any amounts
which become payablehereunder shall be paid from the general
assets of theCorporation. Nothing in the Plan shall be deemed
to give any member of the Board of Directors any right to
participate in the Plan, except in accordance with the
provisions of the Plan.
10. RESTRICTION AGAINST ASSIGNMENT.
The Corporation shall pay all amounts payable hereunder
only to the person or persons designated by the Plan as
Participant or beneficiary, as appropriate, and not to any
other person or corporation. No part of a Participant's
Account shall be liable for the debts, contracts or
engagements of any Participant, his or her beneficiaries or
successors in interest, nor shall it be subject to execution
by levy, attachment or garnishment or by any other legal or
equitable proceeding, nor shall any such person have any
right to alienate, anticipate, commute, pledge, encumber or
assign any benefits or payments hereunder in any manner
whatsoever.
11. GOVERNMENT REGULATIONS.
The Plan, and the deferral of Fees and purchase of
Common Stock thereunder, and the obligation of the
Corporation to issue, sell and deliver shares, as
applicable, under the Plan, shall be subject to all
applicable laws, rules and regulations.
12. GOVERNING LAW.
This Plan shall be construed, regulated and
administered under the internal laws of the State of
Connecticut.
13. SHAREHOLDER APPROVAL.
This Plan shall be without force and effect unless
approved by the Corporation's shareholders.
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THE PERKIN-ELMER CORPORATION
DIVISION LONG-TERM INCENTIVE PLAN
1. Purpose of the Plan.
The purpose of the Plan is to motivate and retain key
division employees in order to further the long-term growth
of The Perkin-Elmer Corporation (the "Company"), a New York
corporation, by offering long-term incentives in the form of
"Value Units," the value of which is related to the growth
in financial performance measures of the Company's operating
divisions.
2. Administration of the Plan.
(a) The Plan shall be administrated by the Management
Resources Committee of the Board of Directors of the Company
(the "Committee") in accordance with the terms of the Plan.
(b) Subject to the express provisions of the Plan, the
Committee shall have exclusive power to interpret the Plan;
to establish and review rules and regulations relating to
the Plan; to select the employees to be granted Value Units
(the "Participants"); to determine the number of Value Units
to be granted to each Participant; to determine the terms
and conditions applicable to the grant of Value Units and
the time or times when Value Units will be awarded; and to
make all other determinations with respect to the operation
of the Plan and the grant and terms of Value Units.
Decisions and determinations by the Committee shall be final
and binding upon all persons having an interest in the Plan.
3. Eligibility.
Individual Participants in the Plan shall be selected
from regular full-time employees of the Company's operating
divisions, including, without limitation, the Applied
Biosystems Division and the Analytical Instruments Division
(each a "Division").
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4. Awards of Value Units.
(a) Awards of Value Units under the Plan may be made
by the Committee at any time during the term of the Plan
and, when made in accordance with the terms of the Plan,
shall be credited to an Account to be maintained by the
Company for each Participant. The Account of a Participant
shall be the sole and exclusive record of Value Units
granted to him or her under the Plan for all purposes. The
award of Value Units under the Plan shall not entitle the
recipient to any voting rights, any rights to receive
dividends or distributions, or any other rights of a
shareholder of the Company or any other entity.
(b) An award of Value Units under the Plan shall be
evidenced by a written instrument signed on behalf of the
Company and delivered to the Participant and shall indicate
the number of Value Units awarded and state that any
payments with respect to such Value Units shall remain
subject to all of the terms and conditions of the Plan.
Under no circumstances shall any award of Value Units under
the Plan be effective or binding on the Company unless and
until such written instrument evidencing such award has been
so signed on behalf of the Company and delivered to the
Participant.
(c) Notwithstanding anything to the contrary
contained herein, the maximum number of Value Units that may
be granted with respect to any Division in any Performance
Cycle (as hereinafter defined) shall be 500,000.
5. Vesting and Termination of Value Units.
(a) A Participant's right to obtain payment of the
Unit Amount (as hereinafter defined) of the Value Units
awarded to him or her under the Plan with respect to a
Performance Cycle shall, except as provided in Section 7, 8,
or 9 below, vest as to fifty percent (50%) of such Value
Units on the last day of such Performance Cycle and as to
the remaining fifty percent (50%) of such Value Units on the
first anniversary of the such date.
(b) Except as otherwise provided in the Plan, all
Value Units and all rights of a Participant to receive payment
of the Unit Amount of Value Units shall terminate on the
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earlier of (i) termination of the Participant's
employment, or (ii) such other date as may be specified in
any award agreement entered into between the Participant and
the Company.
6. Valuation of Value Units and Award Pool.
(a) The Committee shall establish one or more
performance cycles, each representing three consecutive
fiscal years over which the Unit Amount of a Value Unit
shall be accrued (each a "Performance Cycle").
(b) For each of the three fiscal years in a
Performance Cycle, the Company shall, as soon as practicable
following receipt of the Company's audited financial
statements for such year, establish a reserve on the books
of the Company for each Division (the "Award Pool") equal
to the sum of:
(i) Ten percent (10%) of the increase in such
Division's EBIT (as hereinafter defined) over the
highest prior fiscal year's EBIT for such Division;
plus
(ii) Five percent (5%) of the increase in such
Division's Operating Cash Flow (as hereinafter defined)
over the highest prior fiscal year's Operating Cash
Flow for such Division.
(c) Notwithstanding the provisions of Section 6(b)
above, for the Performance Cycle beginning on July 1, 1996,
any funding of the Award Pool for a Division shall be based
upon the increase of such Division's EBIT and Operating Cash
Flow over the highest prior fiscal year's EBIT and Operating
Cash Flow for such Division. For fiscal year 1997 only, the
percentage of the increase of a Division's EBIT contributed
to the Award Pool shall be fifteen percent (15%) and the
percentage of the increase in a Division's Operating Cash
Flow contributed to the Award Pool shall be ten percent
(10%).
(d) At the end of each Performance Cycle, the
Committee shall increase or decrease the aggregate amount of
the Award Pool established for each Division based on the
application of a multiplier to such Award Pool. The
multiplier for each Division shall be established by the
Committee at the beginning of the Performance Cycle based upon
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three-year point-to-point compound annual growth rate
in each Division's EBIT and Operating Cash Flow.
(e) The value of each Value Unit awarded with respect
to a Division for a Performance Cycle (the "Unit Amount")
shall be equal to the aggregate amount of such Division's
Award Pool for such Performance Cycle divided by 500,000.
(f) For the purpose of the Plan:
(i) "EBIT" means the earnings of the applicable
Division before interest income (or expense) and income
taxes, including all directly managed Division
operations and a portion of the cost of shared service
activities provided to the Division, and
(ii) "Operating Cash Flow" means the amount of
cash generated or consumed by the applicable Division,
including EBIT, plus those expenses included in EBIT
which did not require a current year outlay of cash
(e.g., depreciation or amortization of assets),
increased/reduced by current year additions to fixed
assets, net changes in assets and liabilities directly
managed or in support of the Division, and a share of
the Company's income tax liability.
The Committee shall make a determination of Division EBIT
and Operating Cash Flow for each Performance Cycle based on
the Company's audited financial statements. The Committee
may revise such definitions at any time and from time to
time in such manner as it determines, in its sole
discretion, to be necessary or appropriate.
(g) The value of each Value Unit awarded under this
Plan shall be determined in good faith by the Committee at
least once annually as soon as practicable following the
receipt of the Company's audited financial statements for
the immediately preceding fiscal year. The Committee's
determination of such value shall be final and binding on
all persons having an interest in the Plan.
7. Payment Terms During Normal Employment.
(a) Payment of the aggregate Unit Amount of vested Value Units
shall, in the discretion of the Committee, be made to Participants
in cash, common stock of the Company (the "Common Stock"),
or a combination thereof within 90 days after the date
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of vesting. Notwithstanding theforegoing, if payment is to
be made in shares of Common Stock, or a combination of such
shares and cash, any such issuance of shares of Common Stock
may be made subject to the condition that the Participant accept
such restrictionson voting rights and transferability of the shares
as the Committee, in its sole discretion, shall determine.
(b) Notwithstanding the provisions of Section 7(a)
above, to the extent otherwise permissible under the terms
of any deferred compensation plan then offered by the
Company, Participants may elect at least six months prior to
the end of a Performance Cycle to defer payment of all or a
portion of the dollar value of the aggregate Unit Amount of
vested Value Units payable with respect to such Performance
Cycle under the terms of such plan.
8. Payment Terms Following Termination of Employment.
(a) In the event that a Participant's employment is
terminated for reasons other than death, total and permanent
disability, or retirement, all non-vested Value Units
awarded to such Participant shall terminate automatically,
and the Participant shall have no right to receive or to
cause the Company to make any payment for or in respect of
such Value Units; provided, however, that in the event that
a Participant's employment is so terminated after the end of
a Performance Cycle but prior to the payment of the Unit
Amount of any vested Value Units awarded to such Participant
with respect to such Performance Cycle, such Participant
shall be entitled to receive payment with respect to fifty
percent of such Value Units within 90 days after the end of
the Performance Cycle, and such Participant shall thereafter
have no right to receive or to cause the Company to make any
payment for or in respect of such Value Units or any
remaining Value Units.
(b) In the event that a Participant's employment is
terminated for reasons of death, total and permanent
disability, or retirement, such Participant shall be
entitled to receive payment in respect of all Value Units
that were held by such Participant immediately prior to the
date of such Participant's death, total and permanent
disability, or retirement. Such payment shall be made in a
single lump sum payment within 90 days after the end of the
Performance Cycle without regard to the vesting provisions
of Section 7 hereof.
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9. Payment Terms Following a Change in Control.
Notwithstanding any other provision of the Plan, all
Value Units awarded with respect to a Division shall
immediately vest in full in the event (a) of the sale or
other disposition by the Company of all or substantially all
of the assets of such Division, other than a sale or other
disposition to an affiliate (as defined under Rule 144 of
the Securities Act of 1933, as the same may be amended from
time to time) of the Company, (b) that a tender offer or
exchange offer (other than an offer by the Company) for the
Common Stock is made by any "person" within the meaning of
Section 14(d) of the Securities Exchange Act of 1934, as the
same may be amended from time to time (the "Act"), and not
withdrawn within ten (10) days after the commencement
thereof; provided, however, that the Committee may by action
taken prior to the end of such ten (10) day period extend
such ten (10) day period for up to a period of ninety (90)
days after the commencement of such tender offer or exchange
offer; and, provided further, that the Committee may by
further action taken prior to the end of such extended
period declare all Value Units vested in full, or (c) of a
Control Event with respect to the Company. For purposes of
the Plan, a "Control Event" means 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 effective
date of the Plan, pursuant to Section 13 or 15(d) of the
Act; provided, however, that, without limitation, such a
Control Event shall be deemed to have occurred at such time
as (i) any "person" within the meaning of Section 14(d) of
the Act becomes the "beneficial owner" as defined in Rule
13d-3 thereunder, directly or indirectly, of more than 25%
of the 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 shareholders 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
Page 6
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 approval by the Company's shareholders of the
sale of all or substantially all of the stock or assets of the
Company (each of the events specified in clauses (a), (b),
or (c) above being herein referred to as a "Change in
Control").
The Unit Amount of each Value Unit vested in accordance
with this Section 9 shall be paid to Participants as soon as
practicable following the date of the Change in Control
based upon the applicable Award Pool as of the date of the
Change in Control as if such date were the last day of the
Performance Cycle and the multiplier to be applied pursuant
to Section 6(d) hereof shall be based on the point-to-point
compound annual growth rate in the applicable Division's
EBIT and Operating Cash Flow through the most recently
completed fiscal year. The Committee may adopt such
procedures as may be necessary to effectuate the
acceleration of the vesting of the Value Units as described
above.
10. Miscellaneous.
(a) The Company shall have the right to deduct from
all payments under the Plan any taxes required by law to be
withheld with respect to such payments.
(b) The Plan is intended and at all times shall be an
unfunded and unsecured deferred compensation plan that is
limited to key management employees of the Company. Any
payments made under the Plan shall be paid from the general
funds of the Company, and no provision shall at any time be
made with respect to segregating assets of the Company for
such payment hereunder. No Participant or other person
shall have any interest in any particular assets of the
Company by reason of a right to receive any payment or
benefit under the Plan, and any such Participant or other
person shall have only the rights of a general unsecured
creditor of the Company with respect to any rights under the
Plan.
(c) Notwithstanding anything to the contrary contained
in the Plan or otherwise, the Company shall not be obligated to pay
the Unit Amount of any Value Unit to the extent that the aggregate
amount payable would cause the Company to violate any law or
Page 7
violate or breach any term of any loan,
credit, or any other material agreement of the Company or to
which it or any of its assets are bound or subject. If any
payments are precluded from being made by reason of the
first sentence of this Section 10(c), such payments
otherwise due shall be made on a pro rata basis as and to
the extent such applicable laws or agreements shall permit.
11. Payments at Discretion of Committee.
The Committee may, in its discretion, vest all or a
portion of a Participant's Value Units and permit the
payment of the aggregate Unit Amount of such Value Units to
Participants under circumstances other than those set forth
in Sections 7, 8, or 9 above.
12. Non-Transferability/Certain Limitations.
(a) A Participant's rights and interests under the
Plan may not be assigned, pledged, hypothecated, or
otherwise transferred, either voluntarily or by operation of
law, and shall not be subject to execution, attachment or
similar process. In the case of a Participant's death,
payment of the aggregate Unit Amount of vested Value Units
of such Participant due under the Plan shall be made to his
or her designated beneficiary, or in the absence of such
designation, in accordance with the laws of descent and
distribution.
(b) No employee or other person shall have any claim
or right to be granted an award under the Plan. Neither the
Plan nor any action taken hereunder shall be construed as
giving any employee any right to be retained in the employ
of the Company or any division thereof.
13. Amendment and Termination.
The Committee may at any time terminate the Plan, or
amend any terms hereof with respect to awards not
theretofore granted, provided that no such action shall
adversely affect in any material manner any right or
obligation with respect to any award theretofore granted
without the consent of the recipient thereof.
14. Effective Date and Termination of the Plan.
The Plan shall be effective as of July 1, 1996, and
shall remain in effect until terminated by the Committee.
Page 8
THE PERKIN-ELMER CORPORATION
PERFORMANCE UNIT BONUS PLAN
1. Purpose of the Plan.
The purpose of The Perkin-Elmer Corporation Performance
Unit Bonus Plan (the "Plan") is to increase shareholder
value and to advance the interests of The Perkin-Elmer
Corporation and its subsidiaries (collectively, the
"Corporation") by providing financial incentives designed to
attract, retain, and motivate key employees of the
Corporation.
2. Definitions.
As used herein, the following terms have the meanings
hereinafter set forth unless the context clearly indicates
to the contrary:
2.1 "Cause" means (a) willful malfeasance or willful
misconduct by the employee in connection with his or her
employment, (b) continuing refusal by the employee to
perform his or her duties at the Corporation or any lawful
direction by either the Board of Directors or the Chief
Executive Officer of the Corporation (other than due to the
employee's physical or mental incapacity), after a demand
for substantial performance is delivered to the employee
which identifies the manner in which the employee has not
performed his or her duties, (c) the willful engaging by the
employee in conduct which is materially injurious to the
Corporation, or (d) the indictment of the employee for any
felony or misdemeanor involving moral turpitude.
2.2 "Committee" means the Management Resources
Committee of the Board of Directors of the Corporation, or
any successor thereto or committee designated thereby.
2.3 "Common Stock" means the common stock, par value
$1.00 per share, of the Corporation.
2.4 "Good Reason" means the occurrence of any of the
following, other than with the employee's consent: (a) a
reduction of 10% or more by the Corporation in the
employee's base salary without a substantially similar
reduction to all other executives of comparable level to the
employee, (b) any material breach by the Corporation of its
contractual obligations to the employee, and (c) the
Corporation's requiring the employee to be based more than
50 miles from his or her then principal place of employment
with the Corporation without the employee's consent, except
for required travel on the Corporation's business to an
extent substantially consistent with the business travel
obligations of the employee.
Page 1
2.5 "Participant" means a employee to whom an award of
Performance Units has been granted under the Plan.
2.6 "Stock Incentive Plan" means The Perkin-Elmer
Corporation 1996 Stock Incentive Plan, as the same may be
amended from time to time.
2.7 "Stock Price Targets" means the stock price
targets applicable to a series of Performance Units
established by the Committee at the time of such award. For
purposes hereof, a stock price target shall be deemed
attained at such time as the fair market value (as defined
in the Stock Incentive Plan) of a share of Common Stock
averages such stock price target over a period of 90
consecutive calendar days.
2.8 "Unit Value" means the value of a Performance Unit
as determined pursuant to Section 4.
2.9 "Vesting Period" means the vesting period
applicable to a series of Performance Units established by
the Committee at the time of such award.
3. Administration of the Plan.
The Committee shall have plenary authority in its
discretion, but subject to the express provisions of the
Plan, to administer the Plan. The Committee shall also have
plenary authority in its discretion to interpret the Plan,
to prescribe, amend, and rescind rules and regulations
relating to it, and to make any and all other determinations
and take any and all actions deemed necessary or advisable
for the administration of the Plan. The Committee's
determination on the foregoing matters shall be conclusive
and binding.
4. Awards of Performance Units.
At the time of grant of stock options under the Stock
Incentive Plan, the Committee may grant to any employee to
whom options have been so granted such number of Performance
Units up to the number of stock options so granted.
Performance Units may be granted in one or more series, each
series containing such terms and conditions consistent with
the Plan as the Committee shall determine. The term of each
Performance Unit shall be the term of the related stock
option, subject to earlier termination as hereinafter
provided, and the Unit Value of each Performance Unit shall
be the purchase price of the related option. Each
Performance Unit granted hereunder shall be evidenced by an
agreement containing such terms and conditions consistent
with the Plan as the Committee shall determine.
Page 2
5. Conditions to Payment of Performance Units.
A Participant's right to receive payment of the Unit
Value of Performance Units awarded to him or her shall,
except as provided below, be subject to the attainment of
the Stock Price Targets and satisfaction of the Vesting
Period applicable to such Performance Units. Performance
Units shall not be affected by any change of duties or
position so long as the holder thereof continues to be an
employee of the Corporation.
6. Payment of Performance Units.
6.1 Terms of Payment. Payment of the aggregate Unit
Value of Performance Units shall be made to Participants as
soon as practicable following the satisfaction of the
applicable Stock Price Targets and Vesting Period and shall,
in the discretion of the Committee, be made in cash, Common
Stock, or a combination thereof. Notwithstanding the
foregoing, if payment is to be made in shares of Common
Stock, or a combination of such shares and cash, any such
issuance of shares of Common Stock may be made subject to
all applicable laws and regulations and to the approval of
all governmental authorities required in connection with the
authorization, issuance, sale, or transfer of shares of
Common Stock.
6.2 Deferrals. Notwithstanding the provisions of
Section 6.1 above, to the extent otherwise permissible under
the terms of any deferred compensation plan then offered by
the Corporation, and subject to the terms thereof, a
Participant may elect to defer payment of the dollar value
of the Unit Value payable with respect to any Performance
Units.
7. Payment Upon Termination of Employment.
7.1 Termination of Employment Prior to Attainment of
Stock Price Targets. In the event that the employment of a
Participant shall terminate for any reason prior to any
Stock Price Targets having been attained, all Performance
Units granted to such Participant shall immediately
terminate without the payment of any consideration therefor.
7.2 Termination of Employment Following Attainment of
Stock Price Targets. In the event that the employment of a
Participant shall terminate following the attainment of one
or more applicable Stock Price Targets but prior to
satisfaction of the applicable Vesting Period, the
Performance Units corresponding to such Stock Price Targets
shall be payable as follows:
7.2.1 Termination by Participant Other than for
Good Reason or by the Corporation For Cause. In the
event of termination of employment by Participant due
to Participant's choice, such choice not being
supported by Good Reason, or due to the Corporation's
terminating said employment for Cause, then
Page 3
all Performance Units granted to such Participant shall
immediately terminate without the payment of any
consideration therefor.
7.2.2 Termination by Participant for Good Reason
or by the Corporation Other than For Cause. In the
event of termination of employment by Participant for
Good Reason or by the Corporation other than for Cause,
then the Performance Units as to which the Stock Price
Targets have been attained as of the date of such
termination shall be paid to the Participant at such
time as payment of the Unit Value of the Performance
Units would otherwise be made pursuant to Section 6.1
hereof.
7.2.3 Termination Upon Retirement, Death, or
Disability. In the event of termination of employment
due to retirement from the Corporation in accordance
with the terms of any qualified pension plan provided
by the Corporation, or if a Participant shall die while
employed by the Corporation or become totally and
permanently disabled, then the Performance Units as to
which the Stock Price Targets have been attained as of
the date of such termination shall be paid to the
Participant at such time as payment of the Unit Value
of the Performance Units would otherwise be made
pursuant to Section 6.1 hereof.
8. Rights as a Shareholder.
A Participant shall not be entitled to any rights or
privileges of a shareholder of the Corporation, except that
such Participant shall be entitled to receive dividend
equivalents if, as and when paid on shares of Common Stock;
provided, however, that, except as otherwise provided by the
Committee, Participants shall not be entitled to receive
dividend equivalents on more than one series of Performance
Units at any one time. For purposes of the payment of such
dividend equivalent, each Performance Unit shall be deemed
equivalent to one share of Common Stock (subject to
adjustment as provided below).
9. Acceleration Upon a Change of Control.
Notwithstanding any other provision of the Plan or any
Performance Unit granted hereunder, all Stock Price Targets
shall be deemed attained and all Vesting Periods satisfied
(i) in the event that a tender offer or exchange offer
(other than an offer by the Corporation) for the Common
Stock is made by any "person" within the meaning of Section
14(d) of the Act and not withdrawn within ten (10) days
after the commencement thereof; provided, however, that the
Committee may by action taken prior to the end of such ten
(10) day period extend such ten (10) day period for up to a
period of ninety (90) days after the commencement of such tender
offer or exchange offer; and, provided further, that the Committee
may by further action taken prior to the end of such extended
Page 4
period declare all Stock Price Targets to have been
attained and all Vesting Periods to have been satisfied,
or (ii) in the event of a Change in Control (as
hereinafter defined).
For purposes of this Section 9, a "Change in Control"
means 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 effective date of the Plan, pursuant to
Section 13 or 15(d) of the Act; provided, however, that,
without limitation, such a Change in Control shall be deemed
to have occurred at such time as (a) any "person" within the
meaning of Section 14(d) of the Act becomes the "beneficial
owner" as defined in Rule 13d-3 thereunder, directly or
indirectly, of more than 25% of the Common Stock, (b) during
any two-year period, individuals who constitute the Board of
Directors (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 Corporation's shareholders 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 Corporation in which such person is named
as a nominee for director without objection to such
nomination) shall be, for purposes of this clause (b),
considered as though such person were a member of the
Incumbent Board, or (c) the approval by the Corporation's
shareholders of the sale of all or substantially all of the
stock or assets of the Corporation. The Committee may adopt
such procedures as to notice and exercise as may be
necessary to effectuate the acceleration of the payment of
the Unit Value of Performance Units as described above.
10. Performance Units Not Transferable.
Performance Units may not be sold, assigned,
bequeathed, transferred, pledged, hypothecated, or otherwise
disposed of in any way by the recipient thereof. Any
attempt to sell, pledge, assign, or transfer such rights
shall be void and unenforceable against the Corporation or
any affiliate.
11. Time of Granting Performance Units.
Nothing contained in the Plan or in any resolution
adopted by the Board of Directors or the holders of Common
Stock shall constitute the grant of any Performance Units
hereunder. A Performance Unit shall be deemed to have been
granted on the date on which the name of the recipient and
the terms of the Performance Unit are set forth in an
Agreement and delivered to the recipient, unless otherwise
provided in the Agreement.
Page 5
12. No Right to Continued Employment.
Nothing contained in the Plan shall confer upon any
employee the right to continue in the employ of the
Corporation or any subsidiary or interfere with the right of
the Corporation or such subsidiary to terminate such
employee's employment at any time.
13. Adjustment Upon Changes in Capitalization.
Notwithstanding any other provision of the Plan, in the
event of changes in the outstanding Common Stock by reason
of stock dividends, stock splits, recapitalizations,
combinations or exchanges of shares, corporate separations
or divisions (including, but not limited to, split-ups,
split-offs, or spin-offs), reorganizations (including, but
not limited to, mergers or consolidations), liquidations, or
other similar events, the aggregate number of Performance
Units granted under the Plan and the dividend equivalent
payments payable thereon shall be adjusted in such manner as
the Committee in its discretion deems appropriate.
14. Termination and Amendment of the Plan; Amendment
of Awards.
The Board of Directors may terminate the Plan at any
time or make such modification or amendment to the Plan as
it shall deem advisable. The Committee may amend the terms
of any award of Performance Shares granted hereunder,
including, without limitation, to permit the payment of the
Unit Value of any Performance Units to Participants under
circumstances other than those set forth in Section 7 above;
provided, however, that no such amendment shall adversely
affect in any material manner any right of any Participant
without his or her consent.
15. Miscellaneous.
15.1 Withholding for Taxes. The Corporation shall
have the right to deduct from all payments under the Plan,
or withhold from any distribution of shares of Common Stock
under the Plan, any taxes required by law to be withheld
with respect to such payments.
15.2 Unfunded Status. The Plan is intended and at all
times shall be an unfunded and unsecured deferred
compensation plan that is limited to key management and
other highly-compensated employees of the Corporation. Any
payments made under the Plan shall be paid from the general
funds of the Corporation, and no provision shall at any time
be made with respect to segregating assets of the
Corporation for such payment hereunder. No Participant or
other person shall have any interest in any particular
assets of the Corporation by reason of a right to receive
any payment or benefit under the Plan,
Page 6
and any such Participant or other person shall have only the
rights of a general unsecured creditor of the Corporation with
respect to any rights under the Plan.
15.3 Compliance with Laws. Notwithstanding anything
to the contrary contained in the Plan or otherwise, the
Corporation shall not be obligated to pay the Unit Amount of
any Performance Unit to the extent that the aggregate amount
payable would cause the Company to violate any law or
violate or breach any term of any loan, credit, or any other
material agreement of the Corporation or to which it or any
of its assets are bound or subject. If any payments are
precluded from being made by reason of the first sentence of
this Section 15.3, such payments otherwise due shall be made
on a pro rata basis as and to the extent such applicable
laws or agreements shall permit.
15.4 Governing Law. The Plan shall be construed,
regulated, and administered under the internal laws of the
State of Connecticut.
Page 7
PERFORMANCE UNITS GRANTED JUNE 26, 1997
Series A Performance Units
Stock Price Targets:
$80.00 with respect to 33.33% of Performance Units
$87.00 with respect to 33.33% of Performance Units
$94.00 with respect to 33.34% of Performance Units
Vesting Period:
Three years after date of grant
Series B Performance Units
Stock Price Targets:
$101.00 with respect to 33.33% of Performance Units
$108.00 with respect to 33.33% of Performance Units
$115.00 with respect to 33.34% of Performance Units
Vesting Period:
Earlier of (a) six years after the date of grant or (b)
three years after the date all Stock Price Targets
applicable to the Series A Performance Units have been
attained.
Page 8
The Perkin-Elmer Corporation
Estate Enhancement Plan
Agreement
This Agreement is hereby entered into between The Perkin-
Elmer Corporation (the "Corporation") and ________________
(the "Assignees"), as the Assignees of
_____________________ (the "Participant"), to be effective
_______________, pursuant to Participant's election for
coverage under The Perkin-Elmer Corporation Estate
Enhancement Plan (the "Plan"). Assignees and Corporation
hereby certify, acknowledge and agree as follows:
1. Corporation and Assignees shall cause to be issued by
the Insurer a Survivorship Policy (the "Policy")
insuring the lives of Participant and his spouse
pursuant to the provisions of the Plan.
2. The Policy shall be owned by Corporation as provided in
the Plan.
3. The Policy shall be a Stag Last Survivor Flexible
Premium Variable Life Insurance Policy issued by
Hartford Life Insurance Company with an "Option B" death
benefit and an initial face amount of $___________.
4. The Policy's effective date shall be _____________.
5. Subject to the terms of the Plan, Corporation agrees to
pay premiums as directed by Assignees.
6. Assignees have read and understand the provisions of the
Plan, and agree that all terms and conditions specified
in the Plan are hereby incorporated by reference as
though fully set forth herein and form a part of this
Agreement.
Page 1
THE PERKIN-ELMER CORPORATION
By:
____________________ ______________________________
Name of Assignee Signature of Assignee
______________________________
Date
Address of Assignee: ______________________________
______________________________
______________________________ ______________________________
Consent and Acknowledgment of Participant:
The undersigned Participant has elected to participate in
the Plan and has read and understands the terms of the Plan
and this Agreement, consents to the terms of this Agreement
and agrees to be bound by and subject to the terms of this
Agreement to the same extent as if Participant had been a
party to this Agreement.
______________________________ ______________________________
Date Signature
Page 2
The Perkin-Elmer Corporation
Estate Enhancement Plan
Death Benefit Agreement
THIS AGREEMENT is hereby entered into as of the
_______ day of _______________, by and between THE PERKIN-
ELMER CORPORATION (the "Corporation") , and
_______________, (the "Director").
W I T N E S S E T H T H A T:
WHEREAS, the Director is a member of the Corporation's
Board of Directors; and
WHEREAS, the Director wishes to provide a death
benefit for certain beneficiaries in the event of his/her
death; and
WHEREAS, the Corporation is willing to provide such
death benefit in recognition of the Director's service as a
member of the Corporation's Board of Directors; and
WHEREAS, the Director and the Corporation wish to
provide the terms and conditions upon which the Corporation
will provide such death benefit.
NOW, THEREFORE, the parties agree as follows:
Section 1. Terms. The following terms shall have
the meaning specified in this Section.
1.1 "Excess Equity Value" means the amount, if
any, by which the Corporation's share of the death benefit
received under the Insurance Policy exceeds the cumulative
premiums paid by the Corporation with respect to the
Insurance Policy.
1.2 "Insurance Policy" means the policy of life
insurance insuring the Director and Director's spouse,
which is described in Exhibit A attached hereto.
1.3 "Director's Beneficiary" shall mean the
beneficiary selected to receive the death benefit in
accordance with Section 3 hereof.
Page 1
Section 2. Death Benefit Obligation and Payment.
Upon the second to die of the Director and the Director's
spouse, the Corporation shall pay a death benefit (the
"Death Benefit") to the Director's Beneficiary within
thirty (30) days of the receipt by the Corporation of the
proceeds of the Insurance Policy, equal to the Excess
Equity Value.
Section 3. Election of Beneficiary. The Director
shall select a beneficiary or beneficiaries to receive the
Death Benefit by completing Exhibit B hereto. [Once such
beneficiary has been designated, such designation is
irrevocable.]
Section 4. Unsecured General Creditor.
Notwithstanding anything herein to the contrary, the
Corporation's obligation to pay the Death Benefit shall be
that of an unfunded and unsecured promise of the
Corporation to pay money in the future and the Corporation
shall not be under any obligation to apply the proceeds of
the Insurance Policy in satisfaction of the obligation
under Section 2 above. Neither the Director nor the
Director's designated beneficiary or beneficiaries shall
have any rights in the Insurance Policy or any other
property or assets of the Corporation.
Section 5. Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of
the State of Connecticut.
Section 6. Binding Effect. This Agreement shall
be binding upon and inure to the benefit of the Corporation
and the Director, and their respective legal
representatives, executors, administrators, heirs,
beneficiaries, and permitted successors, assigns, and
transferees.
Section 7. Amendment. This Agreement may not be
amended, altered or modified except by a written instrument
signed by the parties hereto, or their respective
successors or assigns, and may not be otherwise terminated
excepted as provided herein.
Section 8. Counterparts. This Agreement may be
executed simultaneously in two or more counterparts, each
of which shall be deemed an original and all of which, when
taken together, constitute one and the same document. The
signature of any party to any counterpart shall be deemed a
signature to, and may be appended to, any other
counterpart.
Page 2
IN WITNESS WHEREOF, the parties have signed this
Agreement effective as of the date first written above.
By: _____________________________________
Its: _____________________________________
______________________________________________
[Director]
Page 3
EXHIBIT A
DESCRIPTION OF INSURANCE POLICY
Insurer Policy Number Face Amount Date of Issue
Page 1
EXHIBIT B
THE PERKIN-ELMER CORPORATION
DEATH BENEFIT AGREEMENT
BENEFICIARY DESIGNATION FORM
All payments required to be made under Section 2 of the
DEATH BENEFIT AGREEMENT between The Perkin-Elmer
Corporation and ________________ shall be made to the
following person(s):
Name of designated beneficiary: ____________________________
Address of designated beneficiary: ____________________________
____________________________
If the above-designated beneficiary does not survive me,
the payments will be made to the following successor
beneficiary:
Name of designated beneficiary: ____________________________
Address of designated beneficiary: ____________________________
____________________________
____________________________
Signature of Director
____________________________
Date
Designation Form was received by the Secretary of the
Company on _________________________.
____________________________
Secretary
Page 2
The Perkin-Elmer Corporation
Deferred Compensation Plan
Master Plan Document
Effective October 1, 1996
TABLE OF CONTENTS
Page
Purpose..............................................................1
ARTICLE 1............................................................1
ARTICLE 2............................................................6
2.1 Selection by Committee...........................................6
2.2 Enrollment Requirements..........................................6
2.3 Eligibility; Commencement of Participation.......................7
2.4 Termination of Participation and/or Deferrals....................7
ARTICLE 3............................................................7
3.1 Minimum Deferral.................................................7
3.2 Maximum Deferral.................................................8
3.3 Election to Defer; Effect of Election Form.......................8
3.4 Withholding of Deferral Amounts..................................9
3.5 Interest Crediting Prior to Distribution.........................9
3.6 Interest Crediting for Installment Distributions.................9
3.7 FICA and Other Taxes.............................................9
3.8 Vesting.........................................................10
ARTICLE 4...........................................................10
4.1 Short-Term Payout...............................................10
4.2 Other Benefits Take Precedence Over Short-Term Payout...........11
4.3 Withdrawal Payout/Suspensions for Unforeseeable Financial
Emergencies.....................................................11
4.4 Withdrawal Election.............................................11
ARTICLE 5...........................................................11
5.1 Retirement Benefit..............................................11
5.2 Payment of Retirement Benefit...................................11
5.3 Death Prior to Completion of Retirement Benefit.................12
ARTICLE 6...........................................................12
6.1 Pre-Retirement Survivor Benefit.................................12
6.2 Payment of Pre-Retirement Survivor Benefit......................12
ARTICLE 7...........................................................13
7.1 Termination Benefit.............................................13
7.2 Payment of Termination Benefit..................................13
i
ARTICLE 8...........................................................13
8.1 Beneficiary.....................................................13
8.2 Beneficiary Designation; Change; Spousal Consent................13
8.3 Acknowledgment..................................................14
8.4 No Beneficiary Designation......................................14
8.5 Doubt as to Beneficiary.........................................14
8.6 Discharge of Obligations........................................14
ARTICLE 9...........................................................14
9.1 Paid Leave of Absence...........................................14
9.2 Unpaid Leave of Absence.........................................14
ARTICLE 10..........................................................15
10.1 Termination....................................................15
10.2 Amendment......................................................15
10.3 Plan Agreement.................................................16
10.4 Effect of Payment..............................................16
ARTICLE 11..........................................................16
11.1 Committee Duties...............................................16
11.2 Agents.........................................................16
11.3 Binding Effect of Decisions....................................16
11.4 Indemnity of Committee.........................................17
11.5 Employer Information...........................................17
ARTICLE 12..........................................................17
12.1 Coordination with Other Benefits...............................17
ARTICLE 13..........................................................17
13.1 Presentation of Claim..........................................17
13.2 Notification of Decision.......................................17
13.3 Review of a Denied Claim.......................................18
13.4 Decision on Review.............................................18
13.5 Legal Action...................................................19
ii
ARTICLE 14..........................................................19
14.1 Establishment of the Trust.....................................19
14.2 Interrelationship of the Plan and the Trust....................19
14.3 Distributions From the Trust...................................19
ARTICLE 15..........................................................20
15.1 Status of Plan.................................................20
15.2 Unsecured General Creditor.....................................20
15.3 Employer's Liability...........................................20
15.4 Nonassignability...............................................20
15.5 Not a Contract of Employment...................................20
15.6 Furnishing Information.........................................21
15.7 Terms..........................................................21
15.8 Captions.......................................................21
15.9 Governing Law..................................................21
15.10 Notice........................................................21
15.11 Successors....................................................22
15.12 Spouse's Interest.............................................22
15.13 Validity......................................................22
15.14 Incompetent...................................................22
15.15 Court Order...................................................22
15.16 Distribution in the Event of Taxation.........................22
15.17 Trust.........................................................23
15.18 Insurance.....................................................23
15.19 Legal Fees To Enforce Rights After Change in Control..........23
iii
THE PERKIN-ELMER CORPORATION
DEFERRED COMPENSATION PLAN
Effective October 1, 1996
Purpose
The purpose of this Plan is to provide specified
benefits to a select group of management or highly compensated
Employees who contribute materially to the continued growth,
development and future business success of The Perkin-Elmer
Corporation, a New York corporation, and its subsidiaries, if any,
that sponsor this Plan. This Plan shall be unfunded for tax
purposes and for purposes of Title I of ERISA.
ARTICLE 1
Definitions
For purposes of this Plan, unless otherwise clearly
apparent from the context, the following phrases or terms shall
have the following indicated meanings:
1.1 "Account Balance" shall mean the Deferral Account balance.
The Account Balance shall be a bookkeeping entry only and
shall be utilized solely as a device for the measurement
and determination of the amounts to be paid to a
Participant, or his or her designated Beneficiary,
pursuant to this Plan.
1.2 "Annual Bonus" shall mean any compensation, in addition to
Base Annual Salary, paid annually to a Participant as an
Employee under any Employer's annual bonus and incentive
plans.
1.3 "Annual Deferral Amount" shall mean that portion of a
Participant's Base Annual Salary and Annual Bonus that a
Participant elects to have, and is deferred, in accordance
with Article 3, for any one Plan Year. In the event of a
Participant's Retirement, death or a Termination of
Employment prior to the end of a Plan Year, such year's
Annual Deferral Amount shall be the actual amount withheld
prior to such event.
1.4 "Base Annual Salary" shall mean (i) for the first Plan
Year of the Plan itself, the annual rate of salary paid
to a Participant for employment services rendered, after
reduction for compensation voluntarily deferred or
contributed by the Participant
Page 1
pursuant to all other qualified or non-qualified plans
under Code Sections 125, 401(k), 402(e)(3), 402(h) or
403(b) pursuant to plans established by any Employer;
and (ii) for each succeeding Plan Year, the annual rate
of salary paid to a Participant for employment services
rendered, without reduction for compensation voluntarily
deferred or contributed by the Participant pursuant to
all other qualified or non-qualified plans under Code
Section 125, 401(k), 402(e)(3), 402(h) or 403(b)
pursuant to plans established by any Employer.
1.5 "Beneficiary" shall mean one or more persons, trusts,
estates or other entities, designated in accordance with
Article 8, that are entitled to receive benefits under
this Plan upon the death of a Participant.
1.6 "Beneficiary Designation Form" shall mean the form
established from time to time by the Committee that a
Participant completes, signs and returns to the
Committee to designate one or more Beneficiaries.
1.7 "Board" shall mean the board of directors of the
Company.
1.8 "Change in Control" shall mean 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 effective 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 (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 approval by the Company's stockholders of the
sale of all or substantially all of the stock or assets
of the Company.
1.9 "Claimant" shall have the meaning set forth in
Section 13.1
Page 2
1.10 "Code" shall mean the Internal Revenue Code of 1986, as
it may be amended from time to time.
1.11 "Committee" shall mean the committee described in
Article 11.
1.12 "Company" shall mean The Perkin-Elmer Corporation, a New
York corporation, and any successor to all or
substantially all of the Company's assets or business.
1.13 "Crediting Rate" shall mean, for each Plan Year, an
interest rate, stated as an annual rate, determined and
announced by the Committee before the Plan Year for
which it is to be used that is equal to the applicable
"Moody's Rate." The Moody's Rate for a Plan Year shall
be an interest rate, stated as an annual rate, that (i)
is published in Moody's Bond Record under the heading of
"Moody's Corporate Bond Yield Averages-Av. Corp," and
(ii) is equal to the average corporate bond yield
calculated for the month of September that immediately
precedes the Plan Year for which the rate is to be used.
1.14 "Deduction Limitation" shall mean the following
described limitation on a benefit that may otherwise be
distributable pursuant to the provisions of this Plan.
Except as otherwise provided, this limitation shall be
applied to all distributions that are "subject to the
Deduction Limitation" under this Plan. If an Employer
determines in good faith prior to a Change in Control
that there is a reasonable likelihood that any
compensation paid to a Participant for a taxable year of
the Employer would not be deductible by the Employer
solely by reason of the limitation under Code Section
162(m), then to the extent deemed necessary by the
Employer to ensure that the entire amount of any
distribution to the Participant pursuant to this Plan
prior to the Change in Control is deductible, the
Employer may defer all or any portion of a distribution
under this Plan. Any amounts deferred pursuant to this
limitation shall continue to be credited with interest
in accordance with Section 3.5 below, even if such
amount is an installment payment. The amounts so
deferred and interest thereon shall be distributed to
the Participant or his or her Beneficiary (in the event
of the Participant's death) at the earliest possible
date, as determined by the Employer in good faith, on
which the deductibility of compensation paid or payable
to the Participant for the taxable year of the Employer
during which the distribution is made will not be
limited by Section 162(m), or if earlier, the effective
date of a Change in Control. Notwithstanding anything
to the contrary in this Plan, the Deduction Limitation
shall not apply to any distributions made after a Change
in Control.
Page 3
1.15 "Deferral Account" shall mean an account to which shall be
credited, (i) the sum of all of a Participant's Annual
Deferral Amounts, plus (ii) interest credited in
accordance with all the applicable interest crediting
provisions of this Plan that relate to the Participant's
Deferral Account, less (iii) all distributions made to the
Participant or his or her Beneficiary pursuant to this
Plan that relate to the Participant's Deferral Account.
This account shall be a bookkeeping entry only and shall
be utilized solely as a device for the measurement and
determination of the amounts to be paid to the
Participant, or his or her designated Beneficiary,
pursuant to this Plan.
1.16 "Election Form" shall mean the form established from time
to time by the Committee that a Participant completes,
signs and returns to the Committee to make an election
under the Plan.
1.17 "Employee" shall mean a person who is an employee of any
Employer.
1.18 "Employer(s)" shall mean the Company and/or any of its
subsidiaries (now in existence or hereafter formed or
acquired) that have been selected by the Board to
participate in the Plan and have adopted the Plan as a
sponsor.
1.19 "ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as it may be amended from time to time.
1.20 "401(k) Plan" shall mean that certain Employee Savings
Plan effective August 1, 1967 adopted by the Company.
1.21 "Participant" shall mean any Employee (i) who is selected
to participate in the Plan, (ii) who elects to participate
in the Plan, (iii) who signs a Plan Agreement, an Election
Form and a Beneficiary Designation Form, (iv) whose signed
Plan Agreement, Election Form and Beneficiary Designation
Form are accepted by the Committee, (v) who commences
participation in the Plan, and (vi) whose Plan Agreement
has not terminated. A spouse or former spouse of a
Participant shall not be treated as a Participant in the
Plan or have an Account Balance under the Plan, even if he
or she has an interest in the Participant's benefits under
the Plan as a result of applicable law or property
settlements resulting from legal separation or divorce.
1.22 "Plan" shall mean the Company's Deferred Compensation
Plan, which shall be evidenced by this instrument and by
each Plan Agreement, as they may be amended from time to
time.
Page 4
1.23 "Plan Agreement" shall mean a written agreement, as may be
amended from time to time, which is entered into by and
between an Employer and a Participant. Each Plan Agree-
ment executed by a Participant and the Participant's
Employer shall provide for the entire benefit to which
such Participant is entitled to under the Plan, and the
Plan Agreement bearing the latest date of acceptance by
the Committee shall govern such entitlement. The terms of
any Plan Agreement may be different for any Participant,
and any Plan Agreement may provide additional benefits not
set forth in the Plan or limit the benefits otherwise
provided under the Plan; provided, however, that any such
additional benefits or benefit limitations must be agreed
to by both the Employer and the Participant.
1.24 "Plan Year" shall, for the first Plan Year, begin on
October 1, 1996, and end on December 31, 1996. For each
Plan Year thereafter, the Plan Year shall begin on January
1 of each year and continue through December 31.
1.25 "Pre-Retirement Survivor Benefit" shall mean the benefit
set forth in Article 6.
1.26 "Retirement", "Retires" or "Retired" shall mean, with
respect to an Employee, severance from employment from all
Employers for any reason, other than an authorized leave
of absence or death, on or after the earlier of the
attainment of (a) age sixty-five (65) or (b) age fifty-
five (55) with five (5) Years of Service.
1.27 "Retirement Benefit" shall mean the benefit set forth in
Article 5.
1.28 "Short-Term Payout" shall mean the payout set forth in
Section 4.1.
1.29 "Termination Benefit" shall mean the benefit set forth in
Article 7.
1.30 "Termination of Employment" shall mean the severing of
employment with all Employers, voluntarily or
involuntarily, for any reason other than Retirement, death
or an authorized leave of absence.
Page 5
1.31 "Trust" shall mean the trust established pursuant to that
certain Master Trust Agreement between the Company and the
trustee named therein, as amended from time to time.
1.32 "Unforeseeable Financial Emergency" shall mean an
unanticipated emergency that is caused by an event beyond
the control of the Participant that would result in severe
financial hardship to the Participant resulting from (i) a
sudden and unexpected illness or accident of the
Participant or a dependent of the Participant, (ii) a loss
of the Participant's property due to casualty, or
(iii) such other extraordinary and unforeseeable
circumstances arising as a result of events beyond the
control of the Participant, all as determined in the sole
discretion of the Committee.
1.33 "Years of Plan Participation" shall mean the total number
of full Plan Years a Participant has been a Participant in
the Plan prior to his or her Termination of Employment
(determined without regard to whether deferral elections
have been made by the Participant for any Plan Year). Any
partial year shall not be counted. Notwithstanding the
previous sentence, a Participant's first Plan Year of
participation shall be treated as a full Plan Year for
purposes of this definition, even if it is only a partial
Plan Year of participation.
1.34 "Years of Service" shall mean the total number of full
years in which a Participant has been employed by one or
more Employers. For purposes of this definition, a year
of employment shall be a 365 day period (or 366 day period
in the case of a leap year) that, for the first year of
employment, commences on the Employee's date of hiring and
that, for any subsequent year, commences on an anniversary
of that hiring date. Any partial year of employment shall
not be counted.
ARTICLE 2
Selection, Enrollment, Eligibility
2.1 Selection by Committee. Participation in the Plan shall
be limited to a select group of management or highly
compensated Employees of the Employers, as determined by
the Committee, in its sole discretion. From that group,
the Committee shall select, in its sole discretion,
Employees to participate in the Plan.
2.2 Enrollment Requirements. As a condition to participation,
each selected Employee shall complete, execute and return
to the Committee a Plan Agreement, an Election Form and a
Beneficiary Designation Form, all prior to 30 days after
he or she is selected to participate in the Plan. In
addition, the Committee shall establish from time to time
such other enrollment requirements as it determines, in
its sole discretion, are necessary.
Page 6
2.3 Eligibility; Commencement of Participation. Provided an
Employee selected to participate in the Plan has met all
enrollment requirements set forth in this Plan and required
by the Committee, including returning all required documents
to the Committee within the specified time period, that
Employee shall commence participation in the Plan on the
first day of the month following the month in which the
Employee completes all enrollment requirements. If an
Employee fails to meet all such requirements within the
required 30 day period, that Employee shall not be eligible
to participate in the Plan until the first day of the Plan
Year following the delivery to and acceptance by the
Committee of the required documents.
2.4 Termination of Participation and/or Deferrals. If the
Committee determines in good faith that a Participant no
longer qualifies as a member of a select group of management
or highly compensated employees, as membership in such group
is determined in accordance with Sections 201(2), 301(a)(3)
and 401(a)(1) of ERISA, the Committee shall have the right,
in its sole discretion, to (i) terminate any deferral
election the Participant has made for the Plan Year in which
the Participant's membership status changes, (ii) prevent
the Participant from making future deferral elections and/or
(iii) immediately distribute the Participant's then Account
Balance as a Termination Benefit and terminate the
Participant's participation in the Plan. In addition, if
the Committee determines in good faith that the aggregate
amount of a Participant's deferral election for a particular
Plan Year will or may cause any qualified plan maintained by
the Company (or any affiliated entity) to fail to meet the
applicable non-discrimination tests under Code Sections
401(a)(4), 410(b), 401(k) or 401(m) or any successor
provisions or similar non-discrimination provisions of the
Code, the Committee may reduce or terminate the
Participant's deferral election for that Plan Year to the
extent necessary to meet the relevant non-discrimination
tests. All determinations under this Section 2.4 shall be
in the sole discretion of the Committee and shall be final
and binding on the Participant.
ARTICLE 3
Deferral Commitments/Interest Crediting/Taxes
3.1 Minimum Deferral
(a) Minimum. For each Plan Year, a Participant may
elect to defer, as his or her Annual Deferral
Amount, one or more of the following forms of
compensation in the following minimum amounts for
each deferral elected:
Minimum
Deferral Amount
Base Annual Salary $2,000
Annual Bonus $5,000
Page 7
If an election is made for less than stated minimum
amounts, or if no election is made, the amount deferred
shall be zero.
(b) Short Plan Year. If a Participant first becomes
a Participant after the first day of a Plan Year,
or in the case of the first Plan Year of the Plan
itself, the minimum Base Annual Salary deferral
shall be an amount equal to the minimum set forth
above, multiplied by a fraction, the numerator of
which is the number of complete months remaining
in the Plan Year and the denominator of which
is 12.
3.2 Maximum Deferral. For each Plan Year, a Participant may
elect to defer, as his or her Annual Deferral Amount, Base
Annual Salary and/or Annual Bonus up to the following
maximum percentages for each deferral elected:
Minimum
Deferral Amount
Base Annual Salary 50%
Annual Bonus 100%
Notwithstanding the foregoing: (i) for the first Plan
Year of the Plan itself, a Participant may elect to defer
up to 100% of his or her Base Annual Salary earned after
September 30, 1996; and (ii) if a Participant first
becomes a Participant after the first day of a Plan Year,
or in the case of the first Plan Year of the Plan itself,
the maximum Annual Deferral Amount shall be limited to
the amount of compensation not yet earned by the
Participant as of the later of September 30, 1996 or the
date the Participant submits a Plan Agreement and
Election Form to the Committee for acceptance.
3.3 Election to Defer; Effect of Election Form.
(a) First Plan Year. In connection with a
Participant's commencement of participation in
the Plan, the Participant shall make an
irrevocable deferral election for the Plan Year
in which the Participant commences participation
in the Plan, along with such other elections as
the Committee deems necessary or desirable under
the Plan. For these elections to be valid, the
Election Form must be completed and signed by
the Participant, timely delivered to the
Committee (in accordance with Section 2.3 above)
and accepted by the Committee.
(b) Subsequent Plan Years. For each succeeding Plan
Year, an irrevocable deferral election for that
Plan Year, and such other elections as the
Committee deems necessary or desirable under the
Plan, shall be made by timely delivering to the
Committee, in accordance with its rules and
procedures before the end of the Plan
Year preceding the Plan Year
Page 8
for which the election is made, a new Election Form.
If no Election Form is timely delivered for a Plan Year,
no Annual Deferral Amount shall be withheld for
that Plan Year.
3.4 Withholding of Deferral Amounts. For each Plan Year, the
Base Annual Salary portion of the Annual Deferral Amount
shall be withheld from each regularly scheduled Base
Annual Salary payroll in equal amounts, as adjusted from
time to time for increases and decreases in Base Annual
Salary. The Annual Bonus portion of the Annual Deferral
Amount shall be withheld at the time the Annual Bonus is
or otherwise would be paid to the Participant.
3.5 Interest Crediting Prior to Distribution. Prior to any
distribution of benefits under Articles 4, 5, 6 or 7,
interest shall be credited and compounded annually on a
Participant's Deferral Account as though the Annual
Deferral Amount for that Plan Year was withheld at the
beginning of the Plan Year. However, if a Participant's
commencement of participation in the Plan is other than
the first day of the Plan Year, then interest crediting
for the Annual Deferral Amount shall commence as of the
date that the Participant commences participation in the
Plan. The rate of interest for crediting shall be the
Crediting Rate, except as otherwise provided in this Plan,
which rate shall be treated as the nominal rate for
crediting interest. In the event of Retirement, death or
Termination of Employment prior to the end of a Plan Year,
the basis for that year's interest crediting will be a
fraction of the full year's interest, based on the number
of full months that the Participant was employed with the
Employer during the Plan Year prior to the occurrence of
such event. If a distribution is made under this Plan,
for purposes of crediting interest up to the time of the
distribution, the Participant's Account Balance shall be
reduced as of the first day of the month in which the
distribution is made.
3.6 Interest Crediting for Installment Distributions. If a
Participant's benefits under this Plan are to be paid in
substantially equal monthly installments, such payments
shall be determined by amortizing the Participant's
specified benefit over the number of months elected, using
the interest rate specified below and treating the first
installment payment as all principal and each subsequent
installment payment, first as interest accrued for the
applicable installment period on the unpaid Account
Balance and second as a reduction in the Account Balance.
The interest rate to be used to calculate installment
payment amounts shall be a fixed interest rate that is
equal to the Crediting Rate for the Plan Year in which
installment payments commence. This rate shall be treated
as the nominal rate for making such calculations.
3.7 FICA and Other Taxes.
(a) Annual Deferral Amounts. For each Plan Year in
which an Annual Deferral Amount is being
withheld from a Participant, the Participant's
Page 9
Employer(s) shall withhold from that portion of
the Participant's Base Annual Salary and/or
Bonus that is not being deferred, in a manner
determined by the Employer(s), the Participant's
share of FICA and other employment taxes. If
necessary, the Committee may reduce the Annual
Deferral Amount in order to comply with this
Section 3.7.
(b) Distributions. The Participant's Employer(s),
or the trustee of the Trust, shall withhold from
any payments made to a Participant under this
Plan all federal, state and local income,
employment and other taxes required to be
withheld by the Employer(s), or the trustee of
the Trust, in connection with such payments, in
amounts and in a manner to be determined in the
sole discretion of the Employer(s) and the
trustee of the Trust.
3.8 Vesting. A Participant shall be 100% vested in his or her
Deferral Account at all times.
ARTICLE 4
Short-Term Payout; Unforeseeable Financial Emergencies; Withdrawal Election
4.1 Short-Term Payout. In connection with each election to
defer an Annual Deferral Amount, a Participant may
irrevocably elect to receive a future "Short-Term Payout"
from the Plan with respect to that Annual Deferral Amount.
Subject to the Deduction Limitation, the Short-Term Payout
shall be a lump sum payment in an amount that is equal to
the Annual Deferral Amount plus interest credited on that
amount in the manner provided in Section 3.5 above.
Subject to the Deduction Limitation and the other terms
and conditions of this Plan, each Short-Term Payout
elected shall be paid within 60 days of the first day of
any Plan Year designated by the Participant that is at
least 3 years after the first day of the Plan Year in
which the Annual Deferral Amount is actually deferred.
Page 10
4.2 Other Benefits Take Precedence Over Short-Term Payout.
Should an event occur that triggers a benefit under
Article 5, 6 or 7, any Annual Deferral Amount, plus
interest thereon, that is subject to a Short-Term Payout
election under Section 4.1 shall not be paid in accordance
with Section 4.1, but shall be paid in accordance with the
other applicable Article.
4.3 Withdrawal Payout/Suspensions for Unforeseeable Financial
Emergencies. If the Participant experiences an
Unforeseeable Financial Emergency, the Participant may
petition the Committee to (i) suspend any deferrals
required to be made by a Participant and/or (ii) receive a
partial or full payout from the Plan. The payout shall
not exceed the lesser of the Participant's Account
Balance, calculated as if such Participant were receiving
a Termination Benefit, or the amount reasonably needed to
satisfy the Unforeseeable Financial Emergency. If,
subject to the sole discretion of the Committee, the
petition for a suspension and/or payout is approved,
suspension shall take effect upon the date of approval and
any payout shall be made within 60 days of the date of
approval. The payment of any amount under this Section
4.2 shall not be subject to the Deduction Limitation.
4.4 Withdrawal Election. A Participant may elect, at any time,
to withdraw all of his or her Account Balance, calculated as
if there had occurred a Termination of Employment as of the
day of the election, less a withdrawal penalty equal to 10%
of such amount (the net amount shall be referred to as the
"Withdrawal Amount"). This election can be made at any time
before or after Retirement or Termination of Employment, and
whether or not the Participant is in the process of being
paid pursuant to an installment payment schedule. No
partial withdrawals of the Withdrawal Amount shall be
allowed. The Participant shall make this election by giving
the Committee advance written notice of the election in a
form determined from time to time by the Committee. The
Participant shall be paid the Withdrawal Amount within
60 days of his or her election. Once the Withdrawal Amount
is paid, the Participant's participation in the Plan shall
terminate and the Participant shall not be eligible to
participate in the Plan in the future. The payment of this
Withdrawal Amount shall not be subject to the Deduction
Limitation.
ARTICLE 5
Retirement Benefit
5.1 Retirement Benefit. Subject to the Deduction Limitation, a
Participant who Retires shall receive, as a Retirement
Benefit, his or her Account Balance.
5.2 Payment of Retirement Benefit. A Participant, in connection
with his or her commencement of participation in the Plan,
shall elect on an Election Form to receive the Retirement
Benefit in a lump sum or in substantially equal monthly
payments (the latter determined in accordance with Section
3.6 above) over a period of 60, 120 or 180 months.
Page 11
The Participant may annually change his or her election to an
allowable alternative payout period by submitting a new
Election Form to the Committee, provided that any such
Election Form is submitted at least 3 years prior to the
Participant's Retirement and is accepted by the Committee in
its sole discretion. The Election Form most recently
accepted by the Committee shall govern the payout of the
Retirement Benefit. If a Participant does not make any
election with respect to the payment of the Retirement
Benefit, then such benefit shall be payable in a lump sum.
The lump sum payment shall be made, or installment payments
shall commence, no later than 60 days after the date the
Participant Retires. Any payment made shall be subject to
the Deduction Limitation.
5.3 Death Prior to Completion of Retirement Benefit. If a
Participant dies after Retirement but before the Retirement
Benefit is paid in full, the Participant's unpaid Retirement
Benefit payments shall continue and shall be paid to the
Participant's Beneficiary (a) over the remaining number of
months and in the same amounts as that benefit would have
been paid to the Participant had the Participant survived,
or (b) in a lump sum, if requested by the Beneficiary and
allowed in the sole discretion of the Committee, that is
equal to the Participant's unpaid remaining Account Balance.
ARTICLE 6
Pre-Retirement Survivor Benefit
6.1 Pre-Retirement Survivor Benefit. Subject to the Deduction
Limitation, the Participant's Beneficiary shall receive a
Pre-Retirement Survivor Benefit equal to the Participant's
Account Balance, if the Participant dies before he or she
Retires or experiences a Termination of Employment.
6.2 Payment of Pre-Retirement Survivor Benefit. A
Participant, in connection with his or her commencement of
participation in the Plan, shall elect on an Election Form
whether the Pre-Retirement Survivor Benefit shall be
received by his or her Beneficiary in a lump sum or in
substantially equal monthly payments (the latter
determined in accordance with Section 3.6 above) over a
period of 60, 120 or 180 months. The Participant may
annually change this election to an allowable alternative
payout period by submitting a new Election Form to the
Committee, which form shall be accepted by the Committee
in its sole discretion. The Election Form most recently
accepted by the Committee prior to the Participant's death
shall govern the payout of the Participant's Pre-
Retirement Survivor Benefit. If a Participant does not
make an election with respect to the payment of the Pre-
Retirement Survivor Benefit, then such benefit shall be
paid in a lump sum. Despite the foregoing, payment of the
Pre-Retirement Survivor Benefit may be made in a lump sum,
if requested by the Beneficiary and allowed in the sole
discretion of the Committee, that is equal to the
Participant's unpaid remaining Account Balance. The lump
sum payment shall be made, or installment payments shall
commence, no later than 60 days after the date the
Committee is provided with proof
Page 12
that is satisfactory to the Committee of the Participant's
death. Any payment made shall be subject to the
Deduction Limitation.
ARTICLE 7
Termination Benefit
7.1 Termination Benefit. Subject to the Deduction Limitation,
a Participant who experiences a Termination of Employment
prior to his or her Retirement or death shall receive, as
a Termination Benefit, his or her Account Balance.
7.2 Payment of Termination Benefit. If the Participant's
Account Balance at the time of his or her Termination of
Employment is less than $25,000, payment of his or her
Termination Benefit shall be paid in a lump sum. If his
or her Account Balance at such time is equal to or greater
than that amount, the Committee, in its sole discretion,
may cause the Termination Benefit to be paid in a lump sum
or in substantially equal monthly installment payments
over a period of time that does not exceed five years in
duration (the latter determined in accordance with Section
3.6 above). The lump sum payment shall be made, or
installment payments shall commence, no later than 60 days
after the date of the Participant's Termination of
Employment. Any payment made shall be subject to the
Deduction Limitation.
ARTICLE 8
Beneficiary Designation
8.1 Beneficiary. Each Participant shall have the right, at any
time, to designate his or her Beneficiary(ies) (both primary
as well as contingent) to receive any benefits payable under
the Plan to a beneficiary upon the death of a Participant.
The Beneficiary designated under this Plan may be the same
as or different from the Beneficiary designation under any
other plan of an Employer in which the Participant
participates.
8.2 Beneficiary Designation; Change; Spousal Consent. A
Participant shall designate his or her Beneficiary by
completing and signing the Beneficiary Designation Form, and
returning it to the Committee or its designated agent. A
Participant shall have the right to change a Beneficiary by
completing, signing and otherwise complying with the terms
of the Beneficiary Designation Form and the Committee's
rules and procedures, as in effect from time to time. If a
married Participant names someone other than his or her
spouse as a Beneficiary, a spousal consent, in the form
designated by the Committee, must be signed by that
Participant's spouse and returned to the Committee. Upon
the acceptance by the Committee of a new Beneficiary
Designation Form, all Beneficiary designations previously
filed shall be canceled. The Committee shall be entitled to
rely on the last Beneficiary Designation Form filed by the
Participant and accepted by the Committee prior to his or
her death.
Page 13
8.3 Acknowledgment. No designation or change in designation of
a Beneficiary shall be effective until received, accepted
and acknowledged in writing by the Committee or its
designated agent.
8.4 No Beneficiary Designation. If a Participant fails to
designate a Beneficiary as provided in Sections 8.1, 8.2 and
8.3 above or, if all designated Beneficiaries predecease the
Participant or die prior to complete distribution of the
Participant's benefits, then the Participant's designated
Beneficiary shall be deemed to be his or her surviving
spouse. If the Participant has no surviving spouse, the
benefits remaining under the Plan to be paid to a
Beneficiary shall be payable to the executor or personal
representative of the Participant's estate.
8.5 Doubt as to Beneficiary. If the Committee has any doubt as
to the proper Beneficiary to receive payments pursuant to
this Plan, the Committee shall have the right, exercisable
in its discretion, to cause the Participant's Employer to
withhold such payments until this matter is resolved to the
Committee's satisfaction.
8.6 Discharge of Obligations. The payment of benefits under the
Plan to a Beneficiary shall fully and completely discharge
all Employers and the Committee from all further obligations
under this Plan with respect to the Participant, and that
Participant's Plan Agreement shall terminate upon such full
payment of benefits.
ARTICLE 9
Leave of Absence
9.1 Paid Leave of Absence. If a Participant is authorized by
the Participant's Employer for any reason to take a paid
leave of absence from the employment of the Employer, the
Participant shall continue to be considered employed by
the Employer and the Annual Deferral Amount shall continue
to be withheld during such paid leave of absence in
accordance with Section 3.3.
9.2 Unpaid Leave of Absence. If a Participant is authorized
by the Participant's Employer for any reason to take an
unpaid leave of absence from the employment of the
Employer, the Participant shall continue to be considered
employed by the Employer, but shall be excused from making
deferrals until the earlier of the date the leave of
absence expires or the Participant returns to a paid
employment status. Upon such expiration or return,
deferrals shall resume for the remaining portion of the
Plan Year in which the expiration or return occurs, based
on the deferral election, if any, made for that Plan Year.
If no election was made for that Plan Year, no deferral
shall be withheld.
Page 14
ARTICLE 10
Termination, Amendment or Modification
10.1 Termination. Although the Employers anticipate that they
will continue the Plan for an indefinite period of time,
there is no guarantee that any Employer will continue the
Plan or will not terminate the Plan at any time in the
future. Accordingly, each Employer reserves the right to
discontinue its sponsorship of the Plan and/or to
terminate the Plan, at any time, with respect to its
participating Employees by the actions of its board of
directors. Upon the termination of the Plan with respect
to any Employer, the Plan Agreements of the affected
Participants who are employed by that Employer, shall
terminate and their Account Balances, determined as if
they had experienced a Termination of Employment on the
date of Plan termination, shall be paid to the
Participants as follows. Prior to a Change in Control, an
Employer shall have the right, in its sole discretion, and
notwithstanding any elections made by the Participant, to
pay such benefits in a lump sum or in monthly installments
for up to 15 years, with interest credited during the
installment period as provided in Section 3.6. After a
Change in Control, the Employer shall be required to pay
such benefits in a lump sum. The termination of the Plan
shall not adversely affect any Participant or Beneficiary
who has become entitled to the payment of any benefits
under the Plan as of the date of termination; provided
however, that the Employer shall have the right to
accelerate installment payments by paying the present
value equivalent of such payments, using the Crediting
Rate for the Plan Year in which the termination occurs as
the discount rate, in a lump sum or pursuant to an
accelerated payment schedule (provided that, the present
value of all payments that will have been received by a
Participant at any given point in time under the different
payment schedule shall equal or exceed the present value
of all payments that would have been received at that
point in time under the original payment schedule).
10.2 Amendment. The Company may, at any time, amend or modify
the Plan in whole or in part with respect to any or all
Employers by the actions of the Company's board of
directors; provided, however, that no amendment or
modification shall modify the obligation of the Company to
pay benefits under the Plan in a lump sum upon termination
of the Plan following a Change in Control, and no
amendment or modification shall be effective to decrease
or restrict the value of a Participant's Account Balance
in existence at the time the amendment or modification is
made, calculated as if the Participant had experienced a
Termination of Employment as of the effective date of the
amendment or modification, or, if the amendment or
modification occurs after the date upon which the
Participant was eligible to Retire, the Participant had
Retired as of the effective date of the amendment or
modification. The amendment or modification of the Plan
shall not affect any Participant or Beneficiary who has
become entitled to the payment of benefits under the Plan
as of the date of the amendment or modification; provided, however,
that the Employer shall have the right to accelerate installment
payments by paying the present value equivalent of such
Page 15
payments, using the Crediting Rate for the Plan Year of the
amendment or modification as the discount rate, in a lump sum
or pursuant to a different payment schedule (provided that, the
present value of all payments that will have been received by a
Participant at any given point in time under the different
payment schedule shall equal or exceed the present value
of all payments that would have been received at that
point in time under the original payment schedule).
10.3 Plan Agreement. Despite the provisions of Sections 10.1
and 10.2 above, if a Participant's Plan Agreement contains
benefits or limitations that are not in this Plan
document, the Employer may only amend or terminate such
provisions in accordance with any limitations or
requirements imposed with respect to the amendment or
termination of such benefits, or in any case, with the
consent of the Participant.
10.4 Effect of Payment. The full payment of the applicable
benefit under Section 4.4 or Articles 5, 6 or 7 of the
Plan shall completely discharge all obligations to a
Participant and his or her designated Beneficiaries under
this Plan and the Participant's Plan Agreement shall
terminate.
ARTICLE 11
Administration
11.1 Committee Duties. This Plan shall be administered by a
Committee which shall consist of the Board, or such
committee as the Board shall appoint. Members of the
Committee may be Participants under this Plan. The
Committee shall also have the discretion and authority to
(i) make, amend, interpret, and enforce all appropriate
rules and regulations for the administration of this Plan
and (ii) decide or resolve any and all questions including
interpretations of this Plan, as may arise in connection
with the Plan. Any individual serving on the Committee
who is a Participant shall not vote or act on any matter
relating solely to himself or herself. When making a
determination or calculation, the Committee shall be
entitled to rely on information furnished by a Participant
or the Company.
11.2 Agents. In the administration of this Plan, the Committee
may, from time to time, employ agents and delegate to them
such administrative duties as it sees fit (including
acting through a duly appointed representative) and may
from time to time consult with counsel who may be counsel
to any Employer.
11.3 Binding Effect of Decisions. The decision or action of
the Committee with respect to any question arising out of
or in connection with the administration, interpretation
and application of the Plan and the rules and regulations
promulgated hereunder shall be final and conclusive and
binding upon all persons having any interest in the Plan.
Page 16
11.4 Indemnity of Committee. All Employers shall indemnify and
hold harmless the members of the Committee, and any
Employee to whom duties of the Committee may be delegated,
against any and all claims, losses, damages, expenses or
liabilities arising from any action or failure to act with
respect to this Plan, except in the case of willful
misconduct by the Committee or any of its members or any
such Employee.
11.5 Employer Information. To enable the Committee to perform
its functions, each Employer shall supply full and timely
information to the Committee on all matters relating to
the compensation of its Participants, the date and circum-
stances of the Retirement, death or Termination of
Employment of its Participants, and such other pertinent
information as the Committee may reasonably require.
ARTICLE 12
Other Benefits and Agreements
12.1 Coordination with Other Benefits. The benefits provided
for a Participant and Participant's Beneficiary under the
Plan are in addition to any other benefits available to
such Participant under any other plan or program for
employees of the Participant's Employer. The Plan shall
supplement and shall not supersede, modify or amend any
other such plan or program except as may otherwise be
expressly provided.
ARTICLE 13
Claims Procedures
13.1 Presentation of Claim. Any Participant or Beneficiary of
a deceased Participant (such Participant or Beneficiary
being referred to below as a "Claimant") may deliver to
the Committee a written claim for a determination with
respect to the amounts distributable to such Claimant from
the Plan. If such a claim relates to the contents of a
notice received by the Claimant, the claim must be made
within 60 days after such notice was received by the
Claimant. The claim must state with particularity the
determination desired by the Claimant. All other claims
must be made within 180 days of the date on which the
event that caused the claim to arise occurred. The claim
must state with particularity the determination desired by
the Claimant.
13.2 Notification of Decision. The Committee shall consider a
Claimant's claim within a reasonable time, and shall
notify the Claimant in writing:
(a) that the Claimant's requested determination has
been made, and that the claim has been allowed
in full; or
(b) that the Committee has reached a conclusion
contrary, in whole or in part, to the Claimant's
requested determination, and such notice must
set forth in a manner calculated to be
understood by the Claimant:
Page 17
(i) the specific reason(s) for the denial
of the claim, or any part of it;
(ii) specific reference(s) to
pertinent provisions of the Plan upon
which such denial was based;
(iii) a description of any additional
material or information necessary for
the Claimant to perfect the claim, and
an explanation of why such material or
information is necessary; and
(iv) an explanation of the claim
review procedure set forth in
Section 13.3 below.
13.3 Review of a Denied Claim. Within 60 days after receiving
a notice from the Committee that a claim has been denied,
in whole or in part, a Claimant (or the Claimant's duly
authorized representative) may file with the Committee a
written request for a review of the denial of the claim.
Thereafter, but not later than 30 days after the review
procedure began, the Claimant (or the Claimant's duly
authorized representative):
(a) may review pertinent documents;
(b) may submit written comments or other documents;
and/or
(c) may request a hearing, which the Committee, in
its sole discretion, may grant.
13.4 Decision on Review. The Committee shall render its deci-
sion on review promptly, and not later than 60 days after
the filing of a written request for review of the denial,
unless a hearing is held or other special circumstances
require additional time, in which case the Committee's
decision must be rendered within 120 days after such date.
Such decision must be written in a manner calculated to be
understood by the Claimant, and it must contain:
(a) specific reasons for the decision;
(b) specific reference(s) to the pertinent Plan
provisions upon which the decision was based;
and
(c) such other matters as the Committee deems
relevant.
Page 18
13.5 Legal Action. A Claimant's compliance with the foregoing
provisions of this Article 13 is a mandatory prerequisite
to a Claimant's right to commence any legal action with
respect to any claim for benefits under this Plan.
ARTICLE 14
Trust
14.1 Establishment of the Trust. The Company shall establish
the Trust, and the Employers may transfer over to the
Trust such assets as the Employers determine, in their
sole discretion, are necessary to provide, on a present
value basis, for their respective future liabilities
created with respect to the Annual Deferral Amounts and
interest credited for those amounts for that year.
14.2 Interrelationship of the Plan and the Trust. The
provisions of the Plan and the Plan Agreement shall govern
the rights of a Participant to receive distributions
pursuant to the Plan. The provisions of the Trust shall
govern the rights of the Employers, Participants and the
creditors of the Employers to the assets transferred to
the Trust. Each Employer shall at all times remain liable
to carry out its obligations under the Plan.
14.3 Distributions From the Trust. Each Employer's
obligations under the Plan may be satisfied with Trust
assets distributed pursuant to the terms of the Trust, and
any such distribution shall reduce the Employer's
obligations under this Agreement.
Page 19
ARTICLE 15
Miscellaneous
15.1 Status of Plan. The Plan is intended to be a plan that
is not qualified within the meaning of Code Section
401(a) and that "is unfunded and is maintained by an
employer primarily for the purpose of providing deferred
compensation for a select group of management and highly
compensated employees" within the meaning of ERISA
Sections 201(2), 301(a)(3) and 401(a)(1). The Plan
shall be administered and interpreted to the extent
possible in a manner consistent with that intent.
15.2 Unsecured General Creditor. Participants and their
Beneficiaries, heirs, successors and assigns shall have
no legal or equitable rights, interests or claims in any
property or assets of an Employer. For purposes of the
payment of benefits under this Plan, any and all of an
Employer's assets shall be, and remain, the general,
unpledged unrestricted assets of the Employer. An
Employer's obligation under the Plan shall be merely
that of an unfunded and unsecured promise to pay money
in the future.
15.3 Employer's Liability. An Employer's liability for the
payment of benefits shall be defined only by the Plan
and the Plan Agreement, as entered into between the
Employer and a Participant. An Employer shall have no
obligation to a Participant under the Plan except as
expressly provided in the Plan and his or her Plan
Agreement.
15.4 Nonassignability. Neither a Participant nor any other
person shall have any right to commute, sell, assign,
transfer, pledge, anticipate, mortgage or otherwise
encumber, transfer, hypothecate, alienate or convey in
advance of actual receipt, the amounts, if any, payable
hereunder, or any part thereof, which are, and all
rights to which are expressly declared to be,
unassignable and non-transferable. No part of the
amounts payable shall, prior to actual payment, be
subject to seizure, attachment, garnishment or
sequestration for the payment of any debts, judgments,
alimony or separate maintenance owed by a Participant or
any other person, be transferable by operation of law in
the event of a Participant's or any other person's
bankruptcy or insolvency or be transferable to a spouse
as a result of a property settlement or otherwise.
15.5 Not a Contract of Employment. The terms and conditions
of this Plan shall not be deemed to constitute a
contract of employment between any Employer and the
Participant. Such employment is hereby acknowledged to
be an "at will" employment relationship that can be
terminated at any time for any reason, or no reason,
with or without cause, and with or without notice,
except as otherwise provided in a written employment agreement.
Nothing in this Plan shall be deemed to give a Participant
the right to be retained in the service of any Employer as an
Page 20
Employee or to interfere with the right of any
Employer to discipline or discharge the Participant
at any time.
15.6 Furnishing Information. A Participant or his or her
Beneficiary will cooperate with the Committee by
furnishing any and all information requested by the
Committee and take such other actions as may be
requested in order to facilitate the administration of
the Plan and the payments of benefits hereunder,
including but not limited to taking such physical
examinations as the Committee may deem necessary.
15.7 Terms. Whenever any words are used herein in the
masculine, they shall be construed as though they were
in the feminine in all cases where they would so apply;
and whenever any words are used herein in the singular
or in the plural, they shall be construed as though they
were used in the plural or the singular, as the case may
be, in all cases where they would so apply.
15.8 Captions. The captions of the articles, sections and
paragraphs of this Plan are for convenience only and
shall not control or affect the meaning or construction
of any of its provisions.
15.9 Governing Law. Subject to ERISA, the provisions of this
Plan shall be construed and interpreted according to the
internal laws of the State of Connecticut without regard
to its conflicts of laws principles.
15.10 Notice. Any notice or filing required or permitted to
be given to the Committee under this Plan shall be
sufficient if in writing and hand-delivered, or sent by
registered or certified mail, to the address below:
The Perkin-Elmer Corporation
761 Main Avenue
Norwalk, CT. 06859-0001
Attn: Vice President - Human Resources
Such notice shall be deemed given as of the date of
delivery or, if delivery is made by mail, as of the date
shown on the postmark on the receipt for registration or
certification.
Any notice or filing required or permitted to be given to
a Participant under this Plan shall be sufficient if in
writing and hand-delivered, or sent by mail, to the last
known address of the Participant.
Page 21
15.11 Successors. The provisions of this Plan shall bind and
inure to the benefit of the Participant's Employer and its
successors and assigns and the Participant and the
Participant's designated Beneficiaries.
15.12 Spouse's Interest. The interest in the benefits hereunder
of a spouse of a Participant who has predeceased the
Participant shall automatically pass to the Participant
and shall not be transferable by such spouse in any
manner, including but not limited to such spouse's will,
nor shall such interest pass under the laws of intestate
succession.
15.13 Validity. In case any provision of this Plan shall be
illegal or invalid for any reason, said illegality or
invalidity shall not affect the remaining parts hereof,
but this Plan shall be construed and enforced as if such
illegal or invalid provision had never been inserted
herein.
15.14 Incompetent. If the Committee determines in its
discretion that a benefit under this Plan is to be paid to
a minor, a person declared incompetent or to a person
incapable of handling the disposition of that person's
property, the Committee may direct payment of such benefit
to the guardian, legal representative or person having the
care and custody of such minor, incompetent or incapable
person. The Committee may require proof of minority,
incompetence, incapacity or guardianship, as it may deem
appropriate prior to distribution of the benefit. Any
payment of a benefit shall be a payment for the account of
the Participant and the Participant's Beneficiary, as the
case may be, and shall be a complete discharge of any
liability under the Plan for such payment amount.
15.15 Court Order. The Committee is authorized to make any
payments directed by court order in any action in which
the Plan or the Committee has been named as a party. In
addition, if a court determines that a spouse or former
spouse of a Participant has an interest in the
Participant's benefits under the Plan in connection with a
property settlement or otherwise, the Committee, in its
sole discretion, shall have the right, notwithstanding any
election made by a Participant, to immediately distribute
the spouse's or former spouse's interest to that spouse or
former spouse.
15.16 Distribution in the Event of Taxation. If, for any
reason, all or any portion of a Participant's benefit
under this Plan becomes taxable to the Participant prior
to receipt, a Participant may petition the Committee
before a Change in Control, or the trustee of the Trust
after a Change in Control, for a distribution of that
portion of his or her benefit that has become taxable.
Upon the grant of such a petition, which grant shall not
be unreasonably withheld, a Participant's Employer shall
distribute to the Participant immediately available funds
in an amount equal to the taxable portion of his or her
benefit (which amount shall not exceed a Participant's
unpaid Account Balance under the Plan). If the petition
is granted, the tax liability distribution shall be made
Page 22
within 90 days of the date when the Participant's
petition is granted. Such a distribution shall affect
and reduce the benefits to be paid under this Plan.
15.17 Trust. If the Trust terminates in accordance with its
terms for tax reasons and benefits are distributed from
the Trust to a Participant in accordance therewith, the
Participant's benefits under this Plan shall be reduced to
the extent of such distributions.
15.18 Insurance. The Employers, on their own behalf or on
behalf of the trustee of the Trust, may, in their sole
discretion, apply for and procure insurance on the life of
a Participant, in such amounts and in such forms as the
Employer may choose. The Employers or the trustee of the
Trust, as the case may be, shall be the sole owner and
beneficiary of any such insurance. The Participant shall
have no interest whatsoever in any such policy or
policies, and at the request of the Employers shall submit
to medical examinations and supply such information and
execute such documents as may be required by the insurance
company or companies to whom the Employers have applied
for insurance.
15.19 Legal Fees To Enforce Rights After Change in Control. The
Company and each Employer is aware that upon the
occurrence of a Change in Control, the Board or the board
of directors of the Participant's Employer (which might
then be composed of new members) or a shareholder of the
Company or the Participant's Employer, or of any successor
corporation might then cause or attempt to cause the
Company or the Participant's Employer or such successor to
refuse to comply with its obligations under the Plan and
might cause or attempt to cause the Company or the
Participant's Employer to institute, or may institute,
litigation seeking to deny Participants the benefits
intended under the Plan. In these circumstances, the
purpose of the Plan could be frustrated. Accordingly, if,
following a Change in Control, it should appear to any
Participant that the Company, the Participant's Employer
or any successor corporation has failed to comply with any
of its obligations under the Plan or any agreement
thereunder or, if the Company, such Employer or any other
person takes any action to declare the Plan void or
unenforceable or institutes any litigation or other legal
action designed to deny, diminish or to recover from any
Participant the benefits intended to be provided, then the
Company and the Participant's Employer irrevocably
authorize such Participant to retain counsel of his or her
choice at the expense of the Company and the Employer (who
shall be jointly and severally liable) to represent such
Participant in connection with the initiation or defense
of any litigation or other legal action, whether by or
against the Company, the Participant's Employer or any
director,
Page 23
officer, shareholder or other person affiliated with the
Company, the Participant's Employer or any successor
thereto in any jurisdiction.
IN WITNESS WHEREOF, the Company has signed this Plan document as
of October 1, 1996.
The Perkin-Elmer Corporation,
a New York corporation
By: /s/ Michael J. McPartland
Title: Vice President - Human Resources
Page 24
THE PERKIN-ELMER CORPORATION
COMPUTATION OF NET INCOME (LOSS) PER SHARE
(Dollar amounts in thousands, except per share amounts)
<TABLE>
<CAPTION>
At June 30, 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
Weighted average number of common shares 43,383 42,720 42,129 43,857 43,780
Common stock equivalents - stock options 1,296 1,027 515 816 1,173
Weighted average number of common shares
used in calculating primary earnings per share 44,679 43,747 42,644 44,673 44,953
Additional dilutive stock options under
paragraph #42 APB #15 116 137 120 172 97
Shares used in calculating earnings per share - fully
diluted basis 44,795 43,884 42,764 44,845 45,050
Calculation of primary and fully diluted earnings
per share:
PRIMARY AND FULLY DILUTED:
Income from continuing operations $ 115,155 $ 13,944 $ 66,877 $ 73,978 $ 24,444
Income (loss) from discontinued operations - - - (22,851) 1,714
Income before cumulative effect of
accounting changes 115,155 13,944 66,877 51,127 26,158
Cumulative effect of accounting changes - - - - (83,098)
Net income (loss) used in the calculation of
primary and fully diluted earnings per share $ 115,155 $ 13,944 $ 66,877 $ 51,127 $ (56,940)
PRIMARY:
Per share amounts:
Income from continuing operations $ 2.58 $ .32 $ 1.57 $ 1.66 $ .54
Income (loss) from discontinued operations - - - (.52) .04
Income before cumulative effect of
accounting changes 2.58 .32 1.57 1.14 .58
Loss from cumulative effect of accounting changes - - - - (1.85)
Net income (loss) $ 2.58 $ .32 $ 1.57 $ 1.14 $ (1.27)
FULLY DILUTED:
Per share amounts:
Income from continuing operations $ 2.57 $ .32 $ 1.56 $ 1.65 $ .54
Income (loss) from discontinued operations - - - (.51) .04
Income before cumulative effect of
accounting changes 2.57 .32 1.56 1.14 .58
Loss from cumulative effect of accounting changes - - - - (1.84)
Net income (loss) $ 2.57 $ .32 $ 1.56 $ 1.14 $ (1.26)
</TABLE>
EXHIBIT 11
SELECTED FINANCIAL DATA The Perkin-Elmer Corporation
<TABLE>
<CAPTION>
(Dollar amounts in thousands except per share amounts)
For the years ended June 30, 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
Financial Operations
Net revenues $1,276,766 $1,162,949 $1,063,506 $1,024,467 $1,011,297
Income from operations before special items 128,789 94,317 68,659 73,978 60,860
Per share of common stock 2.88 2.17 1.61 1.66 1.35
Special items, net of taxes (13,634) (80,373) (1,782) (36,416)
Income from continuing operations 115,155 13,944 66,877 73,978 24,444
Per share of common stock 2.58 .32 1.57 1.66 .54
Discontinued operations (22,851) 1,714
Accounting changes (83,098)
Net income (loss) 115,155 13,944 66,877 51,127 (56,940)
Per share of common stock 2.58 .32 1.57 1.14 (1.27)
Dividends per share .68 .68 .68 .68 .68
Other Information
Cash and short-term investments $ 195,971 $ 96,588 $ 80,010 $ 25,003 $ 30,331
Working capital 338,991 199,560 227,644 136,400 100,929
Capital expenditures 62,167 32,367 28,863 34,512 28,378
Total assets 1,104,798 941,324 888,842 884,500 851,070
Long-term debt 33,599 890 34,124 34,270 7,069
Total debt 51,653 51,965 88,881 117,822 81,051
Shareholders' equity 436,872 323,442 304,700 290,432 306,605
</TABLE>
Results for fiscal years 1997, 1996, and 1995 included net before-tax
restructuring charges of $13.0 million, $71.6 million, and $23.0 million,
respectively, and before-tax gains on the sale of investments of $37.4
million, $11.7 million, and $20.8 million, respectively. Other special items
affecting comparability included acquired research and development
charges of $26.8 million and $27.1 million in fiscal 1997 and 1996,
respectively; a $7.5 million before-tax charge in fiscal 1997 for the
impairment of assets; 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 related to the adoption of accounting
standards for postretirement and postemployment benefits.
Page 34
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 42 through 61.
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 (the Company) implemented
restructuring actions in fiscal 1997,
1996, and 1995 primarily targeted to
improve the profitability and cash flow
performance of the Analytical Instruments
Division. The fiscal 1995 plan focused
solely on cost reduction. The fiscal
1996 plan was a broader program to reduce
administrative and manufacturing overhead
and improve operating efficiency,
primarily in Europe and the United
States. The fiscal 1997 plan focuses on
the transition from highly vertical
manufacturing operations to more reliance
on outsourcing functions not considered
core competencies. The before-tax
charges associated with the
implementation of these actions were
$24.2 million, $71.6 million, and $23.0
million in fiscal 1997, 1996, and 1995,
respectively. On an after-tax basis, the
charges were $.34, $1.44, and $.44 per
share, respectively. Fiscal 1997 also
reflected an $11.2 million before-tax, or
$.15 per share after-tax, reduction of
charges associated with the fiscal 1996
plan. A complete discussion of the
Company's restructuring actions is
provided in Note 10.
Acquired Research and Development.
During fiscal 1997 and 1996, the Company
recorded charges for purchased in-process
research and development in connection
with certain acquisitions for the Applied
Biosystems Division. The charges
recorded in fiscal 1997 and 1996 were
$26.8 million and $27.1 million,
respectively (see Note 2).
Impairment of Assets. During the fourth
quarter of fiscal 1997, the Company
recorded a $7.5 million cost of sales
charge to write-down $5.6 million of
goodwill associated with the fiscal 1995
acquisition of Photovac Inc. and $1.9
million of other assets associated
primarily with the Analytical Instruments
Division (see Note 1).
Sale of Investments. Fiscal 1997, 1996,
and 1995 included before-tax gains of
$37.4 million, $11.7 million, and $20.8
million, respectively, for the sale of
non-strategic equity investments. The
after-tax gains were $.65, $.21, and $.40
per share, respectively (see Note 2).
Results of Operations - 1997 Compared With 1996
The Company reported net income of $115.2
million, or $2.58 per share, for fiscal
1997 compared with $13.9 million, or $.32
per share, for fiscal 1996. Excluding the
special items previously described, net
income and earnings per share increased
36.5%, and 32.7%, respectively.
Net revenues for fiscal 1997 were
$1,276.8 million, an increase of 9.8%
over the $1,162.9 million reported in
fiscal 1996. The effects of currency
rate movements decreased net revenues by
approximately $45 million, or 4%, as the
U.S. dollar strengthened against the
Japanese Yen and certain European
currencies.
All geographic markets experienced
revenue growth in fiscal 1997. Net
revenues in the United States increased
15.8% over the prior year, benefiting
from growth in both the Applied
Biosystems and Analytical Instruments
Divisions. Net revenues in Europe and
the Far East increased 7.7% and 5.3%,
respectively, as higher revenues from the
Applied Biosystems Division were
partially offset by decreases in the
Analytical Instruments Division's
revenues. In Europe, a 25.6% increase in
revenues from the Applied Biosystems
Division was partially offset by a 2.3%
decline in the Analytical Instruments
Division's revenues. In the Far East, a
12% increase in the Applied Biosystems
Division's revenues was partially offset
by a 2.3% decrease in the Analytical
Instruments Division's revenues.
Excluding currency effects, total
revenues in Europe and the Far East would
have increased approximately 12% and 16%,
respectively.
Net Revenues by Business Segment
(Dollar amounts in millions)
1997 1996
Applied Biosystems $ 652.7 $ 532.3
Analytical Instruments 624.1 630.6
$ 1,276.8 $ 1,162.9
Including currency effects, which
reduced reported revenues by
approximately $25 million, or 5%, net
revenues of the Applied Biosystems
Division increased 22.6% over fiscal
1996. Net revenues in the United States,
Europe, and the Far East increased 26.4%,
25.6%, and 12%, respectively. Increased
demand for genetic analysis, liquid
chromatography-mass spectrometry (LC/MS),
and the polymerase chain reaction (PCR)
product lines were the primary
contributors.
The Analytical Instruments Division
experienced a 1% decline in net revenues
compared with the prior year. Currency
rate movements reduced revenues by
approximately $20 million, or
Page 35
3%. While revenues in the United States
increased 2.5%, this was offset by a decrease
of 2.3% in both Europe and the Far East.
Excluding the effects of currency,
revenues in Europe and the Far East would
have increased approximately 2% and 4%,
respectively.
Gross margin, excluding the $7.5
million charge for impaired assets, was
50.3% in fiscal 1997 compared with 48.8%
in fiscal 1996. Both divisions
experienced improved gross margin in
fiscal 1997. The Applied Biosystems
Division's improvement was the result of
the overall unit volume increase and
product mix. The benefits realized from
the fiscal 1996 restructuring plan,
combined with a more favorable product
mix, contributed to improved gross margin
for the Analytical Instruments Division.
Selling, general and administrative
(SG&A) expenses were $375.9 million in
fiscal 1997 compared with $340.0 million
in fiscal 1996. As a percentage of net
revenues, SG&A expenses increased from
29.2% in fiscal 1996 to 29.4% in fiscal
1997. Lower expense levels resulting
from cost control and the actions of the
restructuring program in the Analytical
Instruments Division were more than
offset by increased expenses of 26.8% in
the Applied Biosystems Division and costs
for the Company's restricted stock and
performance based compensation programs,
including a long-term division plan
which became effective in fiscal 1997.
The total expense for the restricted
stock, performance based programs, and
long-term division plan was $26.3 million
and $11.8 million in fiscal 1997 and
1996, respectively.
Research, development and engineering
(R&D) expenses were $105.7 million in
fiscal 1997 compared with $102.3 million
in fiscal 1996. R&D spending in the
Applied Biosystems Division increased 28%
over the prior year as the Company
continued its product development efforts
for the bioresearch markets. In fiscal
1997, the Analytical Instruments Division
recorded a 20.9% decrease in R&D
expenditures, which reflected the
objectives of restructuring actions and
product line reviews.
Total operating expenses were $521.3
million in fiscal 1997 compared with
$541.0 million in fiscal 1996. Fiscal
1997 operating expenses included a $26.8
million charge for acquired research and
development related to acquisitions in
the Applied Biosystems Division compared
with $27.1 million recorded in fiscal
1996. Fiscal 1997 expenses also included
a net restructuring charge of $13.0
million compared with $71.6 million in
fiscal 1996. On a comparable basis,
excluding the special items, operating
expenses as a percentage of net revenues
decreased to 37.7% in fiscal 1997 from
38.0% in fiscal 1996.
During the fourth quarter of fiscal
1997, the Company announced a follow-on
phase to the Analytical Instruments
Division's profit improvement program.
The restructuring cost for this action
was $24.2 million, or $.34 per share
after-tax, and included $19.4 million for
costs focused on further improving the
operating efficiency of manufacturing
facilities in the United States, Germany,
and the United Kingdom. These actions
are designed to transition the Analytical
Instruments Division from a highly
vertical manufacturing operation to one
that relies more on outsourcing functions
not considered core competencies. The
restructuring charge also included $4.8
million to finalize the consolidation of
sales and administrative support,
primarily in Europe where seventeen
facilities will be closed.
The workforce reductions under this
plan total approximately 285 employees in
production labor and 25 employees in
sales and administrative support. The
charge included $11.9 million for
severance related costs. The $12.3
million provided for facility
consolidation and asset related write-
offs included $1.2 million for lease
termination payments and $11.1 million
for the write-off of machinery,
equipment, and tooling associated with
those functions to be outsourced. These
changes are scheduled to be substantially
completed by June 1998. The Company
expects to achieve before-tax savings
from these actions of approximately $8
million in fiscal 1998 and $16 million in
succeeding fiscal years.
In the fourth quarter of fiscal 1997,
the Company finalized the actions
associated with the restructuring plan
announced in fiscal 1996. The Company
achieved operating cost savings of
approximately $25 million in fiscal 1997
and expects to achieve cost savings in
excess of $40 million for fiscal 1998.
The costs to implement the program were
$11.2 million less than the $71.6 million
charge recorded in fiscal 1996. As a
result, during the fourth quarter of
fiscal 1997, the Company recorded an
$11.2 million reduction of charges
required to implement the fiscal 1996
plan.
Operating income for fiscal 1997 was
$113.2 million compared with $26.1
million in fiscal 1996. On a comparable
basis, excluding special items, operating
income increased 28.6% in fiscal 1997.
Operating Income (Loss) by Business Segment
(Dollar amounts in millions)
Applied Analytical
1997 Biosystems Instruments
Segment income $135.6 $ 56.1
Restructuring charge (13.0)
Acquired R&D (26.8)
Impairment of assets (.7) (6.8)
Operating income $108.1 $ 36.3
1996
Segment income $120.6 $ 28.7
Restructuring charge (71.6)
Acquired R&D (27.1)
Operating income (loss) $ 93.5 $(42.9)
Page 36
Operating income for the Applied
Biosystems Division, excluding the
charges for acquired R&D and impairment
of assets, increased $15.0 million, or
12.4%, as a result of volume and
increased margin. All geographic markets
contributed to the improved segment
income. The United States increased
40.1%, Europe 35.7%, and the Far East
12.8% compared with the prior year. A
29.2% increase in operating income from
high margin sequencing and mapping
systems was the primary contributor.
Excluding currency effects, segment
income would have increased by approximately
23%. As a percentage of net revenues,
segment income, before special items,
decreased to 20.8% in fiscal 1997 from
22.7% in fiscal 1996.
Operating income for the Analytical
Instruments Division, excluding the
charges for restructuring and impairment
of assets, increased to $56.1 million in
fiscal 1997 from $28.7 million in fiscal
1996. As a percentage of net revenues,
segment income increased to 9.0% in
fiscal 1997 from 4.6% in fiscal 1996.
The cost savings realized from the
restructuring actions and cost control
were the primary reasons for the
improvement. Lower operating income in
Europe of 2.9%, resulting primarily from
the effects of a stronger U.S. dollar,
was more than offset by improvements in
other geographic areas, primarily the
United States.
In fiscal 1997, the Company completed
the sale of its entire equity interest in
Etec Systems, Inc. As a result, before-
tax gains of $37.4 million, or $.65 per
share after-tax, and $11.7 million, or
$.21 per share after-tax, were recorded
in fiscal 1997 and 1996, respectively.
Interest expense was $2.3 million in
fiscal 1997 compared with $5.0 million in
fiscal 1996. Lower average borrowing
levels in fiscal 1997 and lower weighted
average interest rates on short-term debt
accounted for the reduction in interest
costs. As a result of maintaining higher
cash and cash equivalent balances,
interest income increased by $2.7 million
to $7.6 million in fiscal 1997.
Net other income was $1.5 million in
fiscal 1997 compared with net other
expense of $2.2 million in fiscal 1996.
The fiscal 1997 amount consisted
primarily of a fourth quarter gain on the
sale of real estate.
The effective income tax rate for
fiscal 1997 was 27% compared with 61% for
fiscal 1996. These rates were impacted
by the special items occurring in both
fiscal years. The charges for acquired
research and development were not
deductible for tax purposes.
Additionally, the fiscal 1996 charge for
restructuring and the fiscal 1997 charge
for impairment of assets were only
partially deductible. Excluding the special
items, the effective income tax rate would
have been 23% for both fiscal 1997 and
1996. An analysis of the differences between
the federal statutory income tax rate and
the effective rates is provided in Note 4.
During the fourth quarter of fiscal
1997, the Company reduced its deferred
tax valuation allowance, resulting in the
recognition of a $50.0 million deferred
tax benefit. Based on continued
improvement in the Company's outlook for
sustained profitability, management
believes it is more likely than not it
will generate taxable income sufficient
to realize the Company's $66.2 million
net deferred tax asset. The valuation
allowance adjustment incorporates
management's assessment of the
significant cumulative progress made by
the Company over the past years to
increase taxable income in certain
geographic areas. Such reassessment is
reinforced by the positive effect of the
recent restructuring charges. The
benefit resulting from the valuation
allowance release was substantially
offset by a fourth quarter accrual for
tax costs related to gains on foreign
reorganizations.
Results of Operations - 1996 Compared With 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
revenue growth in fiscal 1996. Revenues
for the United States market increased
6.2% over fiscal 1995. While revenues
for the Analytical Instruments Division
decreased 10.4%, this was more than
offset by a 24.5% increase for the
Applied Biosystems Division. In Europe,
revenues from the Applied Biosystems and
Analytical Instruments divisions
increased 18.2% and 4.8%, respectively.
In total, net revenues for Europe
increased $39.0 million, or 9.2%, over
fiscal 1995. Approximately $9 million of
the increase was the result of currency
translation compared with approximately
$35 million in fiscal 1995. In the Far
East, increased revenues for the Applied
Biosystems and Analytical Instruments
divisions of 22.7% and 5.0%,
respectively, led to a total increase of
$26.7 million, or 13.7%, over the prior
year. 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 life science
and analytical products in Japan.
Net Revenues by Business Segment
(Dollar amounts in millions) 1996 1995
Applied Biosystems $ 532.3 $ 438.1
Analytical Instruments 630.6 625.4
$1,162.9 $1,063.5
The Applied Biosystems Division
demonstrated strong revenue growth in
fiscal 1996. Increased demand for DNA
sequencing and LC/MS products
primarily accounted for the
Page 37
21.5% increase in net revenues.
Net revenues of the Analytical
Instruments Division increased $5.2
million, or 1%, over fiscal 1995.
Increased revenues from inorganic
products, primarily inductively coupled
plasma-mass spectrometers, were offset by
lower demand for organic and
chromatography products.
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 and higher margin for the
Applied Biosystems Division. This was
partially offset by lower margin in the
Analytical Instruments Division.
SG&A expenses were $340.0 million in
fiscal 1996 compared with $317.1 million
in fiscal 1995. The primary contributors
were increased worldwide expenses for the
Applied Biosystems Division of 14.5%,
reflecting substantially higher revenue
and order growth, a $5.1 million non-cash
charge for compensation expense under the
Company's restricted stock program (see
Note 8), and increased incentive
compensation expense. As a percentage of
net revenues, SG&A expenses decreased
from 29.8% in fiscal 1995 to 29.2% in
fiscal 1996.
R&D expenses were $102.3 million in
fiscal 1996 compared with $95.1 million
in fiscal 1995. A 17% increase in
spending for the Applied Biosystems
Division was the major contributor.
Total operating expenses were $541.0
million in fiscal 1996 compared with
$435.2 million in fiscal 1995. Fiscal
1996 operating expenses included a $27.1
million charge for acquired research and
development related to fourth quarter
acquisitions for the Applied Biosystems
Division, 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
the first phase of a plan focused on
improving the profitability and cash flow
performance of the Analytical Instruments
Division. In connection with the plan,
the division 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 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 facility
consolidation costs and asset related
write-offs associated with the
discontinuation of various product lines.
During fiscal 1997, the Company
finalized the actions associated with
this restructuring plan. The costs
associated with the reduction of excess
European manufacturing capacity were
$11.2 million less than the $42.7 million
originally provided in fiscal 1996. The
$11.2 million reduction consisted of $4.7
million for personnel costs and $6.5
million for facility consolidation costs
and asset related write-offs (see Note
10).
In fiscal 1996, the Company transferred
the development and manufacturing of
certain analytical instrument product
lines from its facility in Germany to
other sites, primarily in the United
States. The facility in Germany remains
the principal site for the development of
atomic absorption products.
In fiscal 1996, a distribution center
in Holland was established to provide an
integrated sales, shipment, and
administration support infrastructure for
the Company's European operations, and to
integrate certain operating and business
activities. The European distribution
center includes certain administrative,
financial, and information systems
functions previously transacted at
individual locations throughout Europe.
The Company's fiscal 1995 restructuring
charge of $23.0 million was taken for
actions focused on reducing costs in the
Analytical Instruments Division
infrastructure. These actions included
the workforce reduction of 227 employees,
shutdown of the Company's manufacturing
facility in Puerto Rico, consolidation of
sales offices in the Far East, and
consolidation of administrative
departments in the United States.
Operating Income (Loss) by Business Segment
(Dollar amounts in millions)
Applied Analytical
1996 Biosystems Instruments
Segment income $120.6 $ 28.7
Restructuring charge (71.6)
Acquired R&D (27.1)
Operating income (loss) $ 93.5 $ (42.9)
1995
Segment income $ 81.7 $ 26.7
Restructuring charge (19.2)
Operating income $ 81.7 $ 7.5
Fiscal 1996 operating income for the
Applied Biosystems Division, excluding
the charge for acquired R&D, increased
$38.9 million, or 47.6%, as a result of
growth in unit volumes and increased
margin. 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, with the United States, Europe
and the Far East increasing 23.3%, 12.1%,
and 32.3%, respectively.
Page 38
On a comparable basis, excluding the
restructuring charges, operating income
for the Analytical Instruments Division
increased from $26.7 million in fiscal
1995 to $28.7 million in fiscal 1996.
The increased revenues in the European
and Far East markets, coupled with the
benefits realized from the fiscal 1995
restructuring actions, accounted for the
7.5% growth in segment income.
During the fourth quarter of fiscal
1996, the Company sold part of its equity
interest in Etec Systems, Inc., resulting
in a before-tax gain of $11.7 million.
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.
The effective income tax rate for
fiscal 1996 was 61% compared with 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 year of the charge.
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.
Foreign Currency and Interest Rate Risk Management
The Company's international operations
are subject to foreign currency
fluctuations. As a result, the reported
and anticipated cash flows associated
with the sale of products in foreign
locations may be adversely affected by
changes in foreign currency exchange
rates. The Company uses foreign exchange
forward and option contracts to manage
its exposure to currency fluctuations.
At June 30, 1997, outstanding hedge
contracts covered approximately 50% of
the estimated foreign currency exposures
related to cross-currency cash flows to
be realized in fiscal 1998. The
outstanding hedges were a combination of
forward and option contracts maturing in
fiscal 1998.
In fiscal 1997, the Company executed an
interest rate swap in conjunction with
the refinancing of its Yen loan. Under
the terms of the contract, the Company
pays a fixed rate of interest at 2.1%,
and receives a floating LIBOR interest
rate. At June 30, 1997, the notional
amount of indebtedness covered by the
interest rate swap was Yen 3.8 billion
($33.6 million). The maturity date of
the swap coincides with the maturity of
the Yen loan in fiscal 2002. The Company
had no interest rate swaps outstanding at
June 30, 1996. Further discussion of the
Company's foreign currency and interest
rate management 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 43) and the Consolidated
Statements of Cash Flows (page 44).
The Company's financial position
remained strong with cash and cash
equivalents totaling $194.7 million at
June 30, 1997, compared with $95.4
million at June 30, 1996. The working
capital position increased from $199.6
million at the end of fiscal 1996 to
$339.0 million at the end of fiscal 1997.
Debt to total capitalization decreased
from 14% in fiscal 1996 to 11% in fiscal
1997.
Significant Changes in the Consolidated
Statements of Financial Position
Prepaid expenses and other current assets
increased 24.2% to $102.3 million at June
30, 1997 from $82.4 million at June 30,
1996. The increase was primarily due to
a $9.1 million increase in current
deferred tax assets resulting from the
Company's reduction of the deferred tax
valuation allowance, and the
reclassification of a $9.7 million note
receivable (including accrued interest)
from long-term to current. During fiscal
1997, the Company reduced the deferred
tax valuation allowance, based upon
management's assessment of the
significant cumulative progress made by
the Company over the past years to
increase taxable income in certain
geographic areas. The remaining
valuation allowance relates to domestic
deferred tax assets that are long-term in
nature and foreign tax loss carryforward
benefits with limited carryforward
periods. An analysis of the significant
components of deferred tax assets and
liabilities is provided in Note 4.
Other long-term assets decreased to
$137.6 million at June 30, 1997 from
$152.5 million at June 30, 1996. The
sale of the Company's equity interest in
Etec Systems, Inc. and other non-
operating assets, and the
reclassification of a note receivable,
was partially offset by an $18.2 million
increase in long-term deferred tax assets
and a $31.6 million increase in prepaid
pension expense. The change in long-term
deferred tax assets resulted primarily
from the reduction of the deferred tax
valuation allowance.
The changes in loans payable and long-
term debt reflect the Company's
refinancing of its Yen denominated loan
during the third quarter of fiscal 1997.
The Company replaced its Yen 2.8 billion
($25.7 million at June 30, 1996) loan,
which matured in February 1997, with a
Yen 3.8 billion ($33.6 million at June
30, 1997) variable rate long-term loan
which matures in March 2002.
Page 39
Through an interest rate swap agreement, the
effective interest rate for the new loan
is 2.1% compared with 3.3% for the
previous loan (see Note 12).
Statement of Cash Flows
Operating activities generated $131.9
million of cash in fiscal 1997 compared
with $111.9 million in fiscal 1996 and
$72.0 million in fiscal 1995. The
increase in fiscal 1997 was primarily due
to substantially higher income related
cash flow, lower inventory levels, and
increased liabilities, which more than
offset the increase in accounts
receivable, which was primarily due to
the fourth quarter's 13.8% revenue
increase.
Net cash used by investing activities
was $16.2 million in fiscal 1997 compared
with $45.5 million in fiscal 1996.
During fiscal 1997, the Company generated
$70.4 million in net cash proceeds from
the sale of its equity interest in Etec
Systems, Inc. and certain other non-
operating assets. These proceeds
partially offset the $27.7 million used
for acquisitions, primarily GenScope,
Inc. (see Note 2), and $62.2 million for
capital expenditures. In fiscal 1996,
$42.5 million of cash was used for
acquisition outlays, primarily the
purchase of Tropix, Inc. (see Note 2),
and $32.4 million for capital
expenditures. This was partially offset
by $21.6 million of cash proceeds
generated from the sale of non-operating
assets.
Fiscal 1997 capital expenditures were
$34.5 million for the Applied Biosystems
Division, $14.1 million for the
Analytical Instruments Division, and
$13.6 million for corporate. The
Company's expenditures included $11.5
million as part of a strategic program to
improve its information technology
infrastructure, and $12.1 million for the
acquisition of a corporate airplane.
Capital expenditures for fiscal 1996
totaled $32.4 million, with $18.2 million
for the Applied Biosystems Division and
$13.6 million for the Analytical
Instruments Division.
Net cash used by financing activities
was $18.3 million for fiscal 1997
compared with $41.6 million used during
fiscal 1996. During fiscal 1997, the
Company generated $1.8 million from the
sale of equity put warrants (see Note 7),
and $31.5 million in proceeds from
employee stock plan option exercises,
compared with $46.7 million from employee
stock exercises in fiscal 1996. This was
more than offset by cash used for the
payment of shareholder dividends and for
the purchase of common stock for
treasury. During fiscal 1997, .4 million
shares were repurchased at a cost of
$25.1 million compared with .8 million
shares at a cost of $41.0 million in
fiscal 1996. Common stock purchases for
treasury were made in support of the
Company's various stock plans.
As previously mentioned, the Company
recorded before-tax restructuring charges
of $24.2 million, $71.6 million, and
$23.0 million in fiscal 1997, 1996, and
1995, respectively. Fiscal 1997 also
reflected an $11.2 million before-tax
reduction of charges associated with the
fiscal 1996 plan. During fiscal 1997,
the Company made cash payments of $29.6
million for obligations under these
restructuring plans. Liabilities
remaining at June 30, 1997 were $19.5
million and $13.8 million for the fiscal
1997 and 1996 plans, respectively (see
Note 10). The funding for the remaining
restructuring liabilities will be from
current cash balances, including realized
benefits from the restructuring
activities. The before-tax cash benefits
from these actions was approximately $50
million and $20 million in fiscal 1997
and 1996, respectively. Additional
savings are targeted to be approximately
$73 million in fiscal 1998 and $81
million in succeeding fiscal years.
In addition to the $11.5 million
spending in fiscal 1997 for the Company's
information technology infrastructure, a
capital commitment of approximately $40
million is expected to be paid in fiscal
1998 when the improvements are delivered,
implemented, and accepted. The Company
currently intends to fund this obligation
from operating cash flow.
The Company believes its cash and
short-term investments, funds generated
from operating activities, and available
borrowing facilities are sufficient to
provide for its future financing needs.
At June 30, 1997, the Company had unused
credit facilities totaling $319 million.
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
As the underlying demand for life science
products continues to grow, the Applied
Biosystems Division is expected to
continue its revenue growth and maintain
profitability. The Company intends to
continue to grow this business through
increased internal development efforts,
and in part through acquisitions, equity,
and other collaborations to expand its
technology base. The fiscal 1997
acquisitions and investments are
indicators of the Company's continued
focus on this segment. The Company is
optimistic the fiscal 1997 and 1996
restructuring actions will continue to
increase the profitability and cash flow
of the Analytical Instruments Division.
However, the division's revenues did not
meet its budget target in fiscal
1997, and the Company continues
Page 40
to examine its product portfolio to determine
an appropriate growth strategy for that
business. Future profitability for both
divisions could be adversely affected if
the relationship of the U.S. dollar to
certain currencies is maintained or
strengthens.
Forward Looking Statements
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
science 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
that might be described from time to time
in the Company's filings with the
Securities and Exchange Commission.
A significant portion of the Applied
Biosystems Division's 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.
Page 41
CONSOLIDATED STATEMENTS OF OPERATIONS The Perkin-Elmer Corporation
<TABLE>
<CAPTION>
(Dollar amounts in thousands except per share amounts)
For the years ended June 30, 1997 1996 1995
<S> <C> <C> <C>
Net revenues $ 1,276,766 $ 1,162,949 $ 1,063,506
Cost of sales 642,264 595,857 560,402
Gross margin 634,502 567,092 503,104
Selling, general and administrative 375,880 339,994 317,120
Research, development and engineering 105,660 102,338 95,088
Provision for restructured operations 13,000 71,600 23,000
Acquired research and development 26,801 27,093
Operating income 113,161 26,067 67,896
Gain on sale of investment 37,420 11,704 20,800
Interest expense 2,325 4,971 8,180
Interest income 7,574 4,894 3,500
Other income (expense), net 1,548 (2,193) (1,452)
Income before income taxes 157,378 35,501 82,564
Provision for income taxes 42,223 21,557 15,687
Net income $ 115,155 $ 13,944 $ 66,877
Net income per share $ 2.58 $ .32 $ 1.57
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
Page 42
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION The Perkin-Elmer Corporation
<TABLE>
<CAPTION>
(Dollar amounts in thousands)
At June 30, 1997 1996
<S> <C> <C>
Assets
Current assets
Cash and cash equivalents $ 194,745 $ 95,361
Short-term investments 1,226 1,227
Accounts receivable, less allowances for doubtful accounts of $5,444 ($6,845 - 1996) 307,230 254,531
Inventories 188,720 207,297
Prepaid expenses and other current assets 102,263 82,360
Total current assets 794,184 640,776
Property, plant and equipment, net 173,037 148,008
Other long-term assets 137,577 152,540
Total assets $ 1,104,798 $ 941,324
Liabilities and Shareholders' Equity
Current liabilities
Loans payable $ 18,054 $ 51,075
Accounts payable 115,374 86,885
Accrued salaries and wages 46,470 39,607
Accrued taxes on income 97,307 57,097
Other accrued expenses 177,988 206,552
Total current liabilities 455,193 441,216
Long-term debt 33,599 890
Other long-term liabilities 179,134 175,776
Total liabilities 667,926 617,882
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 198,570 186,058
Retained earnings 278,760 194,613
Foreign currency translation adjustments (267) 446
Unrealized gain on investment 23,245
Minimum pension liability adjustment (705) (29,365)
Treasury stock, at cost (shares: 1997 - 1,795,563; 1996 - 2,701,186) (85,086) (97,155)
Total shareholders' equity 436,872 323,442
Total liabilities and shareholders' equity $ 1,104,798 $ 941,324
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
Page 43
CONSOLIDATED STATEMENTS OF CASH FLOWS The Perkin-Elmer Corporation
<TABLE>
<CAPTION>
(Dollar amounts in thousands)
For the years ended June 30, 1997 1996 1995
<S> <C> <C> <C>
Operating Activities
Net income $ 115,155 $ 13,944 $ 66,877
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 36,017 41,240 40,670
Restricted stock amortization 11,678 5,072
Deferred income taxes (37,799) (12,683) (4,568)
Gains from the sale of assets (39,155) (11,704) (22,129)
Provision for restructured operations 13,000 71,600 23,000
Acquired research and development 26,801 27,093
Impairment of assets 7,500
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable (62,128) (34,162) 13,675
(Increase) decrease in inventories 7,678 (4,322) 1,540
Increase in prepaid expenses and other assets (2,438) (9,794) (11,860)
Increase (decrease) in accounts payable and other liabilities 55,546 25,638 (35,199)
Net cash provided by operating activities 131,855 111,922 72,006
Investing Activities
Additions to property, plant and equipment
(net of disposals of $2,226, $2,070 and $1,733, respectively) (59,941) (30,297) (27,130)
Acquisitions, net (27,676) (42,542) (10,898)
Proceeds from the sale of assets, net 70,447 21,562 54,499
Proceeds from the collection of note receivable 978
Proceeds from short-term investments 5,773
Proceeds from the sale of discontinued operations 64,847
Net cash (used) provided by investing activities (16,192) (45,504) 81,318
Financing Activities
Net change in loans payable (5,234) (18,129) (40,850)
Proceeds from long-term debt 31,033
Principal payments on long-term debt (22,908) (1,901)
Dividends (29,459) (29,095) (28,618)
Purchases of common stock for treasury (25,126) (41,028) (40,297)
Proceeds from issuance of equity put warrants 1,846
Proceeds from stock issued for stock plans 31,511 46,656 10,279
Net cash used by financing activities (18,337) (41,596) (101,387)
Effect of exchange rate changes on cash 2,058 (2,471) (3,930)
Net change in cash and cash equivalents 99,384 22,351 48,007
Cash and cash equivalents beginning of year 95,361 73,010 25,003
Cash and cash equivalents end of year $ 194,745 $ 95,361 $ 73,010
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
Page 44
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, 1994 $ 45,600 $ 178,739 $ 181,130 $ 5,521 $ - $ (36,259) $ (84,299)(2,651)
Net income 66,877
Cash dividends declared (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
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 declared (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)
Net income 115,155
Cash dividends declared (29,536)
Share repurchases (25,126) (428)
Shares issued under stock plans (1,459) 32,970 1,146
Tax benefit related to employee stock options 4,568
Minimum pension liability adjustment 28,660
Restricted stock plan 6,098 5,580 187
Sale of equity investment (23,245)
Sale of equity put warrants 1,846
Foreign currency translation adjustments (713)
Other (13) (1,355)
Balance at June 30, 1997 $ 45,600 $ 198,570 $ 278,760 $ (267) $ - $ (705) $ (85,086)(1,796)
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
Page 45
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
adopted 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," in fiscal 1997. The statement
requires that long-lived assets and certain
identifiable intangibles, including goodwill, 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. During the fourth
quarter of fiscal 1997, the Company recorded a $7.5
million cost of sales charge to write-down $5.6
million of goodwill associated with the fiscal
1995 acquisition of Photovac Inc. and $1.9 million
of other assets primarily associated with the
Analytical Instruments Division. The impairment
loss was determined based upon estimated future
cash flows and fair values.
SFAS No. 123, "Accounting for Stock-Based
Compensation," 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. In fiscal 1997, the Company
adopted the disclosure provisions of SFAS No. 123
and will continue to measure costs for its employee
stock compensation plans using APB Opinion No. 25.
Pro forma disclosure is provided in Note 8.
The Company is required to implement SFAS No.
128, "Earnings per Share," in the second quarter of
fiscal 1998. This statement replaces the
presentation of 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 table
illustrates the pro forma disclosure of EPS data in
accordance with SFAS No. 128:
1997 1996 1995
As Presented Under APB
Opinion No. 15
Primary EPS $2.58 $.32 $1.57
Fully diluted EPS $2.57 $.32 $1.56
As Calculated Under
SFAS No. 128
Basic EPS $2.65 $.33 $1.59
Diluted EPS $2.58 $.32 $1.57
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 monthly 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 U.S. dollar, are
included in net income.
Derivative Financial Instruments. The Company uses
derivative financial instruments to offset exposure
to market risks arising from changes in foreign
currency exchange rates and interest rates.
Derivative financial instruments currently utilized
by the Company include foreign currency forward
contracts, foreign currency options, and an
interest rate swap (see Note 12 for further
discussion).
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 generally approximates market value.
Accounts Receivable. The Company periodically
sells accounts receivable arising from business
conducted in Japan. During fiscal 1997,
1996, and 1995, the Company received cash
Page 46
proceeds of $66.5 million, $71.1 million, and
$101.4 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 is
used for investments in 50% or less owned joint
ventures. Investments where ownership is less than
20% are carried at cost. Investments accounted for
under the cost or equity methods were not material
for the years presented.
Inventories. Inventories are stated at the lower
of cost (on a first-in, first-out basis) or market.
Inventories at June 30, 1997 and 1996 included the
following components:
(Dollar amounts in millions) 1997 1996
Raw materials and supplies $ 23.7 $ 31.1
Work-in-process 15.7 19.8
Finished products 149.3 156.4
Total inventories $ 188.7 $ 207.3
Property, Plant and Equipment and Depreciation.
Property, plant and equipment are recorded at cost
and consisted of the following at June 30, 1997 and
1996:
(Dollar amounts in millions) 1997 1996
Land $ 21.8 $ 22.4
Buildings and leasehold improvements 138.1 133.0
Machinery and equipment 246.7 213.1
Property, plant and equipment, at cost 406.6 368.5
Accumulated depreciation and
amortization 233.6 220.5
Property, plant and equipment, net $ 173.0 $ 148.0
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 capitalized. 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 forty years. Patents and trademarks
are amortized using the straight-line method over
their expected useful lives. The Company
periodically reviews the recoverability of
intangible and other long-lived assets based upon
anticipated cash flows generated from such
underlying assets.
Revenues. Revenues are recorded at the time of
shipment of products or performance of services.
Revenues from service contracts are recorded as
deferred service contract revenues and reflected in
net revenues over the term of the contract,
primarily one year.
Research, Development and Engineering. Research,
development and engineering costs are expensed when
incurred.
Income Taxes. The Company accounts for certain
income and expense items differently for financial
reporting and income tax purposes. Deferred tax
assets and liabilities are determined based on
differences between the financial reporting and the
tax basis of assets and liabilities, and are
measured by applying enacted tax rates applicable
to taxable years in which the differences are
expected to reverse.
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 1997, 1996, and 1995 was as follows:
(Dollar amounts in millions) 1997 1996 1995
Interest $ 2.7 $ 5.6 $ 8.0
Income taxes $ 31.3 $ 15.0 $ 27.3
Note 2 Acquisitions and Dispositions
GenScope, Inc. During the third quarter of fiscal
1997, the Company acquired GenScope, Inc., a
company solely engaged in the development of gene
expression technology. The acquisition cost of
$26.8 million was accounted for as a purchase. The
Page 47
acquisition represented the purchase of technology
in the development stage that 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 (R&D) and, in accordance with
applicable accounting rules, was expensed in the
third quarter of fiscal 1997. The Company recorded
a $5.5 million contingent liability, payable if
certain performance criteria are achieved, in
connection with the acquisition.
Other Acquisitions. The Company acquired a
minority equity interest in Hyseq, Inc., during the
fourth quarter of fiscal 1997, for an initial cash
investment of $5.0 million. Hyseq, Inc. is engaged
in the development of gene-based therapeutic
product candidates and diagnostic products and
tests.
The Company acquired Linkage Genetics, Inc., a
provider of genetic services in the agriculture
industry, during the fourth quarter of fiscal 1997.
The cash acquisition cost of $1.4 million was
accounted for as a purchase. The entire
acquisition cost was expensed as purchased in-
process R&D.
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.
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. A portion of the purchase price was
allocated to the net assets acquired and $22.3
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.
Based upon a review of estimated future cash
flows, the Company recorded a $5.6 million charge
to write-down goodwill associated with this
acquisition in fiscal 1997.
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. In fiscal 1997, the Company
completed the sale of its entire equity interest in
Etec Systems, Inc. Before-tax gains of $37.4
million, or $.65 per share after-tax, and $11.7
million, or $.21 per share after-tax, were
recognized in fiscal 1997 and 1996, respectively.
Net cash proceeds received from the sales were
$45.8 million and $16.6 million, respectively.
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.
Discontinued Operations
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. During
fiscal 1994, Metco was reported as a discontinued
operation.
Note 3 Debt and Lines of Credit
There were no domestic borrowings outstanding at
June 30, 1997 or 1996. Foreign loans payable and
long-term debt at June 30, 1997 and 1996 are
summarized below:
(Dollar amounts in millions) 1997 1996
Loans Payable
Notes payable, banks $18.1 $25.4
Current maturity of Yen loan 25.7
Total loans payable $18.1 $51.1
Long-term Debt
Yen loan $33.6 $ -
Other .9
Total long-term debt $33.6 $ .9
The weighted average interest rates at June 30,
1997 and 1996 for notes payable to foreign banks
were 2.4% and 3.7%, respectively.
During the third quarter of fiscal 1997, the
Company replaced its Yen 2.8 billion ($25.7 million
at June 30, 1996) loan, which matured in February
1997, with a Yen 3.8 billion ($33.6 million at June
30, 1997) variable rate long-term loan which
matures in March 2002. Through an interest rate
swap agreement (see Note 12), the effective
interest rate for the new loan is 2.1% compared
with 3.3% for the previous loan.
Page 48
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 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, 1997 or 1996.
At June 30, 1997, the Company had unused credit
facilities for short-term borrowings from domestic
and foreign banks in various currencies totaling
$319 million.
Under various debt and credit agreements, the
Company is required to maintain certain minimum net
worth and interest coverage ratios.
There are no maturities of long-term debt
scheduled for fiscal 1998, 1999, 2000, or 2001.
The Yen 3.8 billion loan matures in fiscal 2002.
Note 4 Income Taxes
Income before income taxes for fiscal 1997, 1996,
and 1995 is summarized below:
(Dollar amounts in millions) 1997 1996 1995
United States $ 98.6 $ 16.3 $ 58.8
Foreign 58.8 19.2 23.8
Total $ 157.4 $ 35.5 $ 82.6
The components of the provision for income taxes
for fiscal 1997, 1996 and 1995 consisted of
the following:
(Dollar amounts in millions) 1997 1996 1995
Currently Payable
Federal $ 55.9 $ 9.4 $ 2.2
Foreign 23.8 23.8 17.2
State and local .3 1.0 .9
Total currently payable 80.0 34.2 20.3
Deferred
Federal (41.0) (4.4) (7.5)
Foreign 3.2 (8.2) 2.9
Total deferred (37.8) (12.6) (4.6)
Total provision for
income taxes $ 42.2 $ 21.6 $ 15.7
Significant components of deferred tax assets
and liabilities at June 30, 1997 and 1996 are
summarized below:
(Dollar amounts in millions) 1997 1996
Deferred Tax Assets
Intangibles $ 6.4 $ 10.4
Inventories 6.1 6.7
Postretirement and
postemployment benefits 35.7 35.9
Other reserves and accruals 48.2 76.8
Tax credit carryforwards 4.9 10.4
Foreign loss carryforwards 12.3 10.0
Subtotal 113.6 150.2
Valuation allowance (41.7) (105.6)
Total deferred tax assets 71.9 44.6
Deferred Tax Liabilities
Inventories .6 .7
Other reserves and accruals 5.1 6.0
Total deferred tax liabilities 5.7 6.7
Total deferred tax assets, net $ 66.2 $ 37.9
A reconciliation of the federal statutory tax to
the Company's tax provision for fiscal 1997, 1996,
and 1995 is set forth in the following table:
(Dollar amounts in millions) 1997 1996 1995
Federal statutory rate 35% 35% 35%
Tax at federal statutory rate $ 55.1 $ 12.4 $ 28.9
State income taxes
(net of federal benefit) .2 .7 .6
Effect on income from
foreign operations 40.4 14.7 13.4
Effect on income from
foreign sales corporation (4.8) (3.2)
Acquired research and
development 9.4 9.5
Domestic temporary
differences for which
benefit is recognized (60.6) (12.7) (23.7)
Other 2.5 .2 (3.5)
Total provision for
income taxes $ 42.2 $ 21.6 $ 15.7
Page 49
At June 30, 1997, the Company had a U.S.
alternative minimum tax credit carryforward of $4.8
million with an indefinite carryforward period.
The Company has loss carryforwards of approximately
$29 million in various foreign countries, primarily
in Germany and Japan, with varying expiration
dates.
During the fourth quarter of fiscal 1997, the
Company reduced its deferred tax valuation
allowance, resulting in the recognition of a $50.0
million deferred tax benefit. Based on continued
improvement in the Company's outlook for sustained
profitability, management believes it is more
likely than not it will generate taxable income
sufficient to realize the Company's $66.2 million
net deferred tax asset. The valuation allowance
adjustment incorporates management's assessment of
the significant cumulative progress made by the
Company over the past years to increase taxable
income in certain geographic areas. Such
reassessment is reinforced by the positive effect
of the recent restructuring charges. The benefit
resulting from the valuation allowance release was
substantially offset by a fourth quarter accrual
for tax costs related to gains on foreign
reorganizations.
U.S. income taxes have not been provided on
approximately $124 million of net unremitted
earnings from foreign subsidiaries since the
Company intends to permanently reinvest
substantially all of such earnings in the
operations of the subsidiaries. In those instances
where the Company expects to remit earnings, the
effect on the results of operations, after
considering available tax credits and amounts
previously accrued, was not significant.
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.
It is anticipated that an agreement with the IRS to
settle all years through 1987 will be finalized
during fiscal 1998, including the years litigated
before the U.S. Tax Court. The years 1988 and 1989
are under consideration at the IRS appeals level.
It is expected the field work for the IRS
examination of the years 1990 to 1992 and the
written report of findings will be completed in
fiscal 1998. The tax returns for Applied
Biosystems Inc. (ABI), acquired by the Company in
1993, are also being examined by the IRS. ABI
years 1989 to 1991 are under consideration at the
IRS appeals level, while 1992 and 1993 are
currently under examination by the IRS. It is
management's opinion that it has adequately
provided in the financial statements for any IRS
adjustments for these 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 $15.1 million, $15.2
million, and $15.0 million for fiscal 1997,
1996, and 1995, 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) 1997 1996 1995
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 1/2-9 1/4%
Components
Service cost $ 8.0 $ 7.6 $ 7.8
Interest cost 37.0 33.0 30.7
Actual return on assets (35.6) (32.1) (29.9)
Net amortization
and deferral (1.0) (1.4) (.9)
Net pension expense $ 8.4 $ 7.1 $ 7.7
Foreign Plans
(Dollar amounts in millions) 1997 1996 1995
Assumptions
Discount rate 6-8% 6-8% 6 1/2-8%
Compensation increase 3 1/2-4 1/2% 4-4 1/2% 4 1/4-4 1/2%
Long-term rate of return 6 1/2-9 1/2% 6 1/2-9 1/2% 6 1/2-10%
Components
Service cost $ 2.7 $ 3.2 $ 3.0
Interest cost 6.3 6.7 6.2
Actual return on assets (3.5) (4.0) (2.6)
Net amortization
and deferral 1.2 2.2 .7
Net pension expense $ 6.7 $ 8.1 $ 7.3
Page 50
The following table sets forth the funded status
of the plans and amounts recognized in the
Company's Consolidated Statements of Financial
Position at June 30, 1997 and 1996:
Domestic Plans
Assets Exceed Accumulated
Accumulated Benefits
Benefits Exceed Assets
(Dollar amounts in millions) 1997 1997 1996
Plan assets at fair value $ 474.2 $ - $ 422.2
Projected benefit obligation 475.0 10.7 435.1
Plan assets less than
projected benefit
obligation (.8) (10.7) (12.9)
Unrecognized items:
Net actuarial loss 43.3 1.7 48.1
Prior service cost (5.5) 3.0 (5.1)
Net transition (asset)
obligation (7.2) .5 (9.0)
Minimum pension
liability adjustment (3.8) (31.5)
Prepaid (accrued)
pension expense $ 29.8 $ (9.3) $ (10.4)
Actuarial present value
of accumulated
benefits $ 470.2 $ 9.3 $ 432.5
Accumulated benefit
obligation related
to vested benefits $ 461.7 $ 8.0 $ 424.1
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. At June 30 1997, pension
plan assets exceeded the present value of
accumulated benefits for most plans. Accordingly,
the additional minimum liability was reduced to $.7
million at June 30, 1997 from $29.4 million at June
30, 1996.
Foreign Plans
Assets Exceed Accumulated
Accumulated Benefits
Benefits Exceed Assets
(Dollar amounts in millions) 1997 1996 1997 1996
Plan assets at fair value $ 32.0 $ 27.9 $ - $ -
Projected benefit obligation 30.3 28.0 64.9 70.2
Plan assets greater (less)
than projected benefit
obligation 1.7 (.1) (64.9) (70.2)
Unrecognized items:
Net actuarial (gain) loss 3.2 3.9 (2.5) (2.3)
Prior service cost 1.5 1.1
Net transition (asset)
obligation (1.9) (2.2) 4.0 5.0
Prepaid (accrued)
pension expense $ 4.5 $ 2.7 $(63.4) $(67.5)
Actuarial present value
of accumulated
benefits $ 28.0 $ 26.0 $ 56.1 $ 60.1
Accumulated benefit
obligation related
to vested benefits $ 27.8 $ 25.7 $ 52.5 $ 56.3
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 of 2% of eligible
compensation and a dollar-for-dollar matching
contribution of up to 4% of eligible compensation.
The Company's contributions to this plan were $9.6
million and $7.4 million for fiscal 1997 and 1996,
respectively.
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. The Company's contribution to this
plan was $7.6 million for fiscal 1995.
Retiree Health Care and Life Insurance Benefits.
The Company provides certain health care and life
insurance benefits to domestic employees, hired
prior to January 1, 1993, who
Page 51
retire 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, 1997 and 1996:
(Dollar amounts in millions) 1997 1996
Actuarial Present Value
of Postretirement Benefit
Obligation
Retirees $ 60.6 $ 64.4
Fully eligible active participants 1.0 .8
Other active participants 9.7 9.4
Accumulated postretirement
benefit obligation (APBO) 71.3 74.6
Unrecognized net gain 24.4 21.5
Accrued postretirement benefit liability $ 95.7 $ 96.1
The net postretirement benefit cost for fiscal
1997 and 1996 included the following components:
(Dollar amounts in millions) 1997 1996
Service cost $ .6 $ .6
Interest cost 5.8 6.0
Amortization of unrecognized gain (1.3) (1.1)
Net postretirement benefit cost $ 5.1 $ 5.5
The discount rate used in determining the APBO
was 8.5% in fiscal 1997 and 1996. The assumed
health care cost trend rate used for measuring the
APBO was divided into three categories:
1997 1996
Pre-65 participants 10.3% 11.0%
Post-65 participants 7.7% 8.1%
Medicare 7.7% 8.1%
All three rates were assumed to decline to 5.5%
over eight and nine years in fiscal 1997 and 1996,
respectively.
If the health care cost trend rate was increased
1%, the APBO, as of June 30, 1997, would have
increased 10%. The effect of this change on the
aggregate of service and interest cost for fiscal
1997 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. The Company reorganized into two
separate segments in fiscal 1996. This change
incorporated the Company's decentralized management
philosophy and recognized the differing business and
strategic objectives of both divisions. The Applied
Biosystems Division 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.
The Analytical Instruments Division 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.
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 products by the
Company's manufacturing units. The revenues reflect the
rules and regulations of the respective governing tax
authorities. 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 that are corporate in
nature.
Export net revenues for fiscal 1997, 1996, and 1995
were $43.7 million, $44.6 million and $45.4 million,
respectively.
Page 52
Business Segments
<TABLE>
<CAPTION>
Applied Analytical
(Dollar amounts in millions) Biosystems Instruments Corporate Consolidated
<S> <C> <C> <C> <C>
1997
Net revenues $ 652.7 $ 624.1 $ - $ 1,276.8
Segment income (loss) $ 135.6 $ 56.1 $ (31.2) $ 160.5
Restructuring charge (13.0) (13.0)
Acquired research and development (26.8) (26.8)
Impairment of assets (.7) (6.8) (7.5)
Operating income (loss) $ 108.1 $ 36.3 $ (31.2) $ 113.2
Identifiable assets $ 391.3 $ 384.5 $ 329.0 $ 1,104.8
Capital expenditures $ 34.5 $ 14.1 $ 13.6 $ 62.2
Depreciation and amortization $ 15.7 $ 18.6 $ 1.7 $ 36.0
1996
Net revenues $ 532.3 $ 630.6 $ - $ 1,162.9
Segment income (loss) $ 120.6 $ 28.7 $ (24.5) $ 124.8
Restructuring charge (71.6) (71.6)
Acquired research and development (27.1) (27.1)
Operating income (loss) $ 93.5 $ (42.9) $ (24.5) $ 26.1
Identifiable assets $ 319.3 $ 401.6 $ 220.4 $ 941.3
Capital expenditures $ 18.2 $ 13.6 $ .6 $ 32.4
Depreciation and amortization $ 12.1 $ 28.7 $ .4 $ 41.2
1995
Net revenues $ 438.1 $ 625.4 $ - $ 1,063.5
Segment income (loss) $ 81.7 $ 26.7 $ (17.5) $ 90.9
Restructuring charge (19.2) (3.8) (23.0)
Operating income (loss) $ 81.7 $ 7.5 $ (21.3) $ 67.9
Identifiable assets $ 269.7 $ 440.8 $ 178.3 $ 888.8
Capital expenditures $ 12.2 $ 16.3 $ .4 $ 28.9
Depreciation and amortization $ 10.7 $ 29.5 $ .5 $ 40.7
</TABLE>
Page 53
Geographic Areas
<TABLE>
<CAPTION>
United Other
(Dollar amounts in millions) States Europe Far East Countries Corporate Consolidated
<S> <C> <C> <C> <C> <C> <C>
1997
Total revenues $ 524.8 $ 632.3 $ 381.1 $ 83.5 $ - $ 1,621.7
Transfers between geographic areas (40.4) (135.5) (147.3) (21.7) (344.9)
Revenues to unaffiliated customers $ 484.4 $ 496.8 $ 233.8 $ 61.8 $ $ 1,276.8
Income (loss) $ 4.0 $ 105.5 $ 73.8 $ 8.4 $ (31.2) $ 160.5
Restructuring charge (5.2) (5.9) (.9) (1.0) (13.0)
Acquired research and development (26.8) (26.8)
Impairment of assets (1.9) (5.6) (7.5)
Operating income (loss) $ (29.9) $ 99.6 $ 72.9 $ 1.8 $ (31.2) $ 113.2
Identifiable assets $ 356.7 $ 270.0 $ 120.4 $ 28.7 $ 329.0 $ 1,104.8
1996
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 $ 336.6 $ 255.3 $ 98.4 $ 30.6 $ 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
Page 54
Note 7 Shareholders' Equity
Treasury Stock. Common stock purchases were made in
support of the Company's various stock plans. The
Company has no specific share repurchase targets but
may make periodic open market purchases from time to
time. During fiscal 1997, 1996, and 1995, the
Company purchased .4 million, .8 million, and .5
million shares, respectively, to support various
stock plans. The remaining number of shares
available under a purchase authorization at June 30,
1997 is 4.2 million.
Equity Put Warrants. During 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 obligated the Company to purchase the
shares from the holder, at specified prices, if the
closing price of the common stock was 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. During fiscal 1997, all 600,000
warrants expired unexercised.
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. Under the vesting requirements, 50% of the
options are exercisable after one year and 100%
after two years. Options expire ten years from the
date of grant.
Transactions relating to the stock option plans
of the Company are summarized below:
Weighted
Average
Number of Exercise
(Option prices per share) Options Price
Outstanding at June 30, 1994 4,313,750 $ 28.36
Granted at $28.81-$31.25 543,300 $ 30.97
Exercised at $10.70-$35.13 424,017 $ 22.72
Cancelled 315,742 $ 31.99
Outstanding at June 30, 1995 4,117,291 $ 29.00
Granted at $34.56-$54.81 511,650 $ 49.45
Exercised at $10.70-$37.75 1,359,054 $ 29.53
Cancelled 133,059 $ 33.50
Outstanding at June 30, 1996 3,136,828 $ 32.61
Granted at $51.31-$80.44 1,278,650 $ 65.54
Exercised at $10.70-$54.81 1,117,109 $ 29.61
Cancelled 67,006 $ 45.17
Outstanding at June 30, 1997 3,231,363 $ 46.48
Options exercisable at June 30, 1997 1,873,438 $ 33.78
Fiscal 1997 options grants do not include
160,000 options that were granted subject to
shareholder approval. At June 30, 1997, 57,200
shares remained available for option grant.
The following table summarizes options outstanding
and exercisable at June 30, 1997:
Weighted Average
Con-
tractual
Number of Life Exercise
(Option prices per share Options Remaining Price
Options Outstanding
At $10.70-$25.00 258,373 2.9 $ 19.76
At $25.45-$54.81 2,004,690 6.7 $ 38.95
At $54.94-$80.44 968,300 9.6 $ 69.19
Options Exercisable
At $10.70-$25.00 258,373 2.9 $ 19.76
At $25.45-$54.81 1,615,065 5.9 $ 36.03
Page 55
Employee Stock Purchase Plan. The Employee Stock
Purchase Plan offers domestic employees the right
to purchase, over a certain 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 purchase
period.
Common stock issued under the Employee Stock
Purchase Plan was .1 million shares in each of
fiscal 1997, 1996, and 1995. At June 30, 1997, .6
million shares remained available for issuance.
Director Stock Purchase and Deferred Compensation
Plan. The Company has a Director Stock Purchase
and Deferred Compensation Plan that 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 business day of the third
month of each fiscal quarter. At June 30, 1997,
approximately .1 million shares were available for
issuance.
Restricted Stock. As part of the Company's Stock
Incentive Plan, key employees may be granted shares
of restricted stock that will vest when certain
continuous employment restrictions and/or specified
performance goals are achieved. The fair 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 during
fiscal 1997, 1996, and 1995 was 42,000 shares,
185,000 shares (155,000 of which were subject to
shareholder approval in fiscal 1997), and 70,000
shares, respectively. Compensation expense
recognized for these awards was $11.7 million and
$5.1 million in fiscal 1997 and 1996, respectively.
No amount was required to be charged to expense for
fiscal 1995.
Accounting for Stock-Based Compensation. The
Company applies APB Opinion No. 25, "Accounting for
Stock Issued to Employees," in accounting for its
stock-based compensation plans (see Note 1).
Accordingly, no compensation expense has been
recognized for its stock option and employee stock
purchase plans.
Pro forma net income and earnings per share
information, as required by SFAS No. 123,
"Accounting for Stock-Based Compensation," has been
determined for employee stock plans under the
statement's fair value method. The fair value of
the options was estimated at grant date using a
Black-Scholes option pricing model with the
following weighted average assumptions for fiscal
1997 and 1996, respectively: dividend yields of
1.06% and 1.43%; volatility factors of the expected
market price of the Company's common stock of 22%;
an expected option life of five years; and the five
year U.S. treasury interest rate on the grant dates
as the risk-free interest rate. For purposes of
pro forma disclosure, the estimated fair value of
the options is amortized to expense over the
options' vesting period. The Company's pro forma
information is presented below:
(Dollar amounts in millions, except per share amounts)
For the years ended June 30, 1997 1996
Net income - as reported $ 115.2 $ 13.9
Net income - pro forma $ 107.6 $ 12.5
Earnings per share - as reported $ 2.58 $ .32
Earnings per share - pro forma $ 2.41 $ .28
The fair value method of accounting has not been
applied to options granted prior to July 1, 1995.
Therefore, this disclosure is not likely to be
representative of the effects on reported net
earnings for future years since options vest over
several years and additional awards generally are
made each year.
The weighted average fair value of options
granted was $19.78 and $14.09 per share for fiscal
1997 and 1996, respectively.
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, 1997 1996
Prepaid Expenses & Other Current Assets
Current deferred tax assets $ 40.6 $ 31.5
Other 61.7 50.9
Total prepaid expenses and
other current assets $ 102.3 $ 82.4
Other Accrued Expenses
Deferred service contract revenues $ 45.1 $ 40.1
Accrued pension liabilities 17.9 19.4
Restructuring provisions 33.3 63.6
Other 81.7 83.5
Total other accrued expenses $ 178.0 $ 206.6
Other Long-term Liabilities
Accrued pension liabilities $ 62.3 $ 63.6
Accrued postretirement benefits 91.2 93.8
Other 25.6 18.4
Total other long-term liabilities $ 179.1 $ 175.8
Page 56
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. The Company made payments to
Roche and its affiliates, for the purchase of
reagents and consumables, of $68.2 million in
fiscal 1997 and $59.7 million in fiscal 1996.
Note 10 Provision for Restructured Operations
The Company initiated restructuring actions in
fiscal 1997, 1996, and 1995 primarily targeted to
improve the profitability and cash flow performance
of the Analytical Instruments Division. The fiscal
1995 plan focused solely on cost reduction. The
fiscal 1996 plan was a broader program to reduce
administrative and manufacturing overhead and
improve operating efficiency, primarily in Europe
and the United States. The fiscal 1997 plan
focuses on the transition from highly vertical
manufacturing operations to more reliance on
outsourcing functions not considered core
competencies. The before-tax charges associated
with the implementation of these restructuring
plans were $24.2 million, $71.6 million, and $23.0
million in fiscal 1997, 1996, and 1995,
respectively. In addition, fiscal 1997 reflected
an $11.2 million before-tax reduction of charges
required to implement the fiscal 1996 plan.
Fiscal 1997. During the fourth quarter of fiscal
1997, the Company announced a follow-on phase to
the Analytical Instrument Division's profit improvement
program. The restructuring cost for this action was $24.2
million before-tax and included $19.4 million for
costs focused on further improving the operating
efficiency of manufacturing facilities in the
United States, Germany, and the United Kingdom.
These actions are designed to help transition the
Analytical Instruments Division from a highly
vertical manufacturing operation to one that relies
more on outsourcing functions not considered core
competencies. The restructuring charge also
included $4.8 million to finalize the consolidation
of sales and administrative support, primarily in
Europe where seventeen facilities will be closed.
The workforce reductions under this plan total
approximately 285 employees in production labor and
25 employees in sales and administrative support.
The charge included $11.9 million for severance
related costs. The $12.3 million provided for
facility consolidation and asset related write-offs
included $1.2 million for lease termination
payments and $11.1 million for the write-off of
machinery, equipment, and tooling associated with
those functions to be outsourced. These changes
are scheduled to be substantially completed by June
1998. The Company expects to achieve before-tax
savings from these actions of approximately $8
million in fiscal 1998 and $16 million in
succeeding fiscal years.
The following table details the major components
of the fiscal 1997 restructuring provision:
Facility
Consolidation
and Asset
Related
(Dollar amounts in millions) Personnel Write-offs Total
Provision
Changes in manufacturing
operations $ 9.6 $ 9.8 $ 19.4
Consolidation of sales and
administrative support 2.3 2.5 4.8
Total provision $ 11.9 $ 12.3 $ 24.2
Fiscal 1997 Activity
Changes in manufacturing
operations $ .1 $ 4.6 $ 4.7
Consolidation of sales and
administrative support
Total fiscal 1997 activity $ .1 $ 4.6 $ 4.7
Balance at June 30, 1997
Changes in manufacturing
operations $ 9.5 $ 5.2 $ 14.7
Consolidation of sales and
administrative support 2.3 2.5 4.8
Balance
at June 30, 1997 $ 11.8 $ 7.7 $ 19.5
Fiscal 1996. The fiscal 1996 before-tax
restructuring charge of $71.6 million was the first
phase of a plan focused on improving the
profitability and cash flow performance of the
Analytical Instruments Division. In connection
with the plan, the division 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 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 facility consolidation and asset
related write-offs associated with the
discontinuation of various product lines.
In fiscal 1996, the Company transferred the
development and manufacturing of certain analytical
instrument product lines from its facility in
Germany to other sites, primarily in the United States.
The facility in Germany remains the principal site for
the development of atomic absorption products.
In fiscal 1996, a distribution center in
Holland as established to provide an integrated
sales, shipment and administration
Page 57
support infrastructure for the Company's European
operations, and to integrate certain operating and
business activities. The European distribution center
includes certain administrative, financial, and
information systems functions that were previously
transacted at individual locations throughout Europe.
In the fourth quarter of fiscal 1997, the
Company finalized the actions associated with the
restructuring plan announced in fiscal 1996. The
costs to implement the program were $11.2 million
below the $71.6 million charge recorded in fiscal
1996. As a result, during the fourth quarter of
fiscal 1997, the Company recorded an $11.2 million
reduction of charges required to implement the
fiscal 1996 plan.
The following table details the major components
of the fiscal 1996 restructuring provision:
Facility
Consolidation
and Asset
Related
(Dollar amounts in millions) Personnel Write-offs Total
Provision
Reduction of excess
European manufacturing
capacity $ 19.7 $ 23.0 $ 42.7
Reduction of 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 $ 37.8 $ 33.8 $ 71.6
Fiscal 1996 Activity
Reduction of excess
European manufacturing
capacity $ 2.1 $ 6.7 $ 8.8
Reduction of European
distribution and
administrative capacity 1.6 .7 2.3
Other worldwide workforce
reductions and facility
closings 1.9 1.6 3.5
Total fiscal 1996 activity $ 5.6 $ 9.0 $ 14.6
Fiscal 1997 Activity
Reduction of excess
European manufacturing
capacity $ 10.9 $ 6.6 $ 17.5
Adjustment to decrease
liabilities originally
accrued for excess
European manufacturing
capacity 4.7 6.5 11.2
Reduction of European
distribution and
administrative capacity 6.2 4.4 10.6
Other worldwide workforce
reductions and facility
closings 1.9 2.0 3.9
Total fiscal 1997 activity $ 23.7 $ 19.5 $ 43.2
Balance at June 30, 1997
Reduction of excess
European manufacturing
capacity $ 2.0 $ 3.2 $ 5.2
Reduction of European
distribution and
administrative capacity 3.7 .9 4.6
Other worldwide workforce
reductions and facility
closings 2.8 1.2 4.0
Balance
at June 30, 1997 $ 8.5 $ 5.3 $ 13.8
As of June 30, 1997 approximately 335 employees
were separated under the plan. During fiscal 1997,
the Company achieved operating cost savings of
approximately $25 million related to these actions,
and expects to achieve cost savings in excess of
$40 million for fiscal 1998.
Fiscal 1995. The Company recorded a $23.0 million
before-tax charge in the fourth quarter of fiscal
1996 for restructuring actions focused on reducing
costs within the Analytical Instruments Division
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.
Page 58
The workforce reductions were accomplished
through involuntary terminations worldwide as well
as a voluntary retirement incentive plan in the
United States. 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.
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 United States.
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.
There were no adjustments made to increase or
decrease the liabilities originally accrued for
this restructuring plan. Through June 30, 1997,
all costs associated with the plan were
incurred, and the balance remaining was not
material.
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 $25
million and $20 million of before-tax savings in
fiscal 1997 and 1996, respectively.
Note 11 Commitments and Contingencies
Future minimum payments at June 30, 1997 under non-
cancelable operating leases for real estate and
equipment were as follows:
(Dollar amounts in millions)
1998 $ 18.2
1999 15.1
2000 13.1
2001 9.9
2002 9.5
2003 and thereafter 61.9
Total $ 127.7
Rental expense was $29.7 million in fiscal 1997,
$31.3 million in fiscal 1996, and $32.5 million in
fiscal 1995.
The Company has entered into a fifteen year non-
cancelable lease for a facility in Foster City,
California, effective July 1, 2000. Total lease
payments over the fifteen year period will be
approximately $42 million.
The Company has implemented a program to improve
its information technology infrastructure. A capital
commitment of approximately $40 million is expected to
be paid in fiscal 1998 when the improvements are
delivered, implemented and accepted. The Company
currently intends to fund this obligation from
operating cash flow.
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 utilizes foreign exchange
forward and option contracts and an interest rate
swap agreement to manage foreign currency and
interest rate exposures. The principal objective
of these contracts is to minimize the risks and/or
costs associated with global financial and
operating activities. The Company does not use
derivative financial instruments for trading or
other speculative purposes, nor is the Company a
party to leveraged derivatives.
Foreign Currency Risk Management. Foreign exchange
forward and option contracts are used primarily to
hedge reported and anticipated cash flows resulting
from the sale of products in foreign locations.
Option contracts outstanding at June 30, 1997 were
purchased at a cost of $1.5 million. Under these
contracts the Company has the right, but not the
obligation, to purchase or sell foreign currencies
at fixed rates at various maturity dates. These
contracts are utilized primarily when the amount
and/or timing of the foreign currency exposures are
not certain. At June 30, 1997 and 1996, the
Company had forward and option contracts
outstanding for the sale and purchase of foreign
currencies at fixed rates as summarized in the
table below:
(Dollar amounts in millions) Sold Purchased Sold Purchased
At June 30, 1997 1997 1996 1996
Japanese Yen $ 83.5 $ - $ 7.9 $ -
French Francs 18.1 14.4
Australian Dollars 13.7 1.4
German Marks 13.4 2.3 22.1 11.8
Italian Lira 5.6 1.2 9.8
British Pounds 8.3 3.8 3.7
Other 15.3 14.8 .2
Total $ 149.6 $ 11.8 $ 74.2 $ 15.7
Page 59
Foreign exchange contracts are accounted for as
hedges of net investments, firm commitments, and
foreign currency transactions. Unrealized gains
and losses on hedges of net investments are
reported as equity adjustments from translation on
the statement of financial position. With respect
to firm commitments, unrealized gains and losses
are deferred and included in the basis of the
transaction underlying the commitment. Gains and
losses on foreign currency transactions are
recognized in income and offset the foreign
exchange gains and losses on the related
transactions. The costs associated with entering
into these contracts are amortized over the life of
the contracts. Unrealized gains and losses on
outstanding hedge contracts were not material for
the years presented.
Interest Rate Risk Management. In fiscal 1997, the
Company entered into an interest rate swap in
conjunction with a five year Japanese Yen debt
obligation (see Note 3). The interest rate swap
agreement involves the payment of a fixed rate of
interest and the receipt of a floating rate of
interest without the exchange of the underlying
notional loan principal amount. Under this
contract, the Company will make fixed interest
payments of 2.1% while receiving interest at a
LIBOR floating rate. No other cash payments will
be made unless the contract is terminated prior to
maturity, in which case the amount to be paid or
received in settlement is established by agreement
at the time of termination. The agreed upon amount
usually represents the net present value at the
then existing interest rates of the remaining
obligations to exchange payments under the terms of
the contract.
Based on the level of interest rates prevailing
at June 30, 1997, the fair value of the Company's
floating rate debt approximated its carrying value.
There would be a receipt of $.2 million to
terminate the related interest rate swap contract
which would equal the unrealized gain. Unrealized
gains or losses on debt or interest rate swap
contracts are not recognized for financial
reporting purposes unless the debt is retired or
the contracts are terminated prior to maturity. A
change in interest rates would have no impact on
the Company's reported interest expense and related
cash payments since the floating rate debt and
fixed rate swap contract have the same maturity and
are based on the same interest rate index.
Concentrations of Credit Risk. The forward
contracts, options, and swaps used by the Company
in managing its foreign currency and interest rate
exposures 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 a diverse group of highly rated major domestic
and international financial institutions with which
the Company has other financial relationships. The
Company is exposed to potential losses in the event
of non-performance by these counterparties;
however, the Company 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 fair value of foreign currency
forward and option contracts, as well as interest
rate swaps, is estimated based on quoted market
prices of comparable contracts and reflects the
amounts the Company would receive or pay to
terminate the contracts at the reporting date. The
following table presents notional amounts and fair
values of the Company's derivatives:
Notional Fair Notional Fair
(Dollar amounts in millions) Amount Value Amount Value
At June 30, 1997 1997 1996 1996
Forward contracts $ 114.0 $ (3.7) $ 89.9 $ .3
Purchased options $ 47.4 $ .7
Interest rate swap $ 33.6 $ .2
The following methods are used in estimating the
fair value of other significant financial
instruments held or owed by the Company. Cash and
short-term investments approximate their carrying
amount due to the 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. The
following table presents the carrying amounts and
fair values of the Company's other financial
instruments:
Carrying Fair Carrying Fair
(Dollar amounts in millions) Amount Value Amount Value
At June 30, 1997 1997 1996 1996
Cash and short-term
investments $196.0 $196.0 $ 96.6 $ 96.6
Minority equity
investments $ 9.0 $ 9.0 $ 35.6 $ 35.6
Note receivable $ 7.2 $ 7.2 $ 7.2 $ 7.2
Short-term debt $ 18.1 $ 18.1 $ 51.1 $ 51.5
Long-term debt $ 33.6 $ 33.4 $ .9 $ .9
At June 30, 1996, the Company's investment in
Etec Systems, Inc. was 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 was reported for fiscal 1996 as a separate
component of shareholders' equity. The equity
interest was sold during fiscal 1997 (see Note 2).
Page 60
Note 13 Quarterly Financial Information (Unaudited)
The following is a summary of quarterly financial results:
</TABLE>
<TABLE>
<CAPTION>
(Dollar amounts in millions First Quarter Second Quarter Third Quarter Fourth Quarter
except per share amounts) 1997 1996 1997 1996 1997 1996 1997 1996
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net revenues $ 275.7 $ 264.4 $ 330.8 $ 294.0 $ 322.9 $ 299.1 $ 347.4 $ 305.4
Gross margin $ 134.7 $ 128.9 $ 163.5 $ 141.2 $ 165.8 $ 145.8 $ 170.5 $ 151.2
Net income (loss) $ 32.4 $ 17.6 $ 50.9 $ 22.8 $ 10.4 $ (36.0)$ 21.5 $ 9.5
Net income (loss) per share $ .73 $ .41 $ 1.15 $ .53 $ .23 $ (.84)$ .48 $ .22
</TABLE>
Events Impacting Comparability:
Fiscal 1997. First and second quarter results included gains of
$11.3 million and $26.1 million, or $.23 and $.42 per share after-
tax, respectively, from the sale of the Company's remaining equity
interest in Etec Systems, Inc. (see Note 2). Third quarter results
included a $25.4 million charge, or $.57 per share after-tax, for
acquired research and development (see Note 2). Fourth quarter
results included a net restructuring charge of $13.0 million, or
$.19 per share after-tax (see Note 10), a $1.4 million charge, or
$.03 per share after-tax, for acquired research and development
(see Note 2), and a $7.5 million charge, or $.15 per share after-
tax, for asset impairment (see Note 1). In addition, the Company
recognized deferred royalty income, other miscellaneous income, and
recorded certain compensation related expenses. The net effect of
these items increased fourth quarter net income by approximately
$5.0 million, or $.11 per share.
Fiscal 1996. Third quarter results included a restructuring
charge of $71.6 million, or $1.44 per share after-tax (see Note
10). Fourth quarter results included 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).
Stock Prices
High Low High Low
1997 1997 1996 1996
First Quarter $ 58 1/8 $ 44 1/4 $ 38 $ 31 1/2
Second Quarter $ 61 7/8 $ 52 1/2 $ 40 1/4 $ 33 1/8
Third Quarter $ 77 1/8 $ 57 7/8 $ 54 1/2 $ 37 5/8
Fourth Quarter $ 81 1/8 $ 60 3/8 $ 56 1/4 $ 46 5/8
Dividends per share
1997 1996
First Quarter $ .17 $ .17
Second Quarter .17 .17
Third Quarter .17 .17
Fourth Quarter .17 .17
Total dividends per share $ .68 $ .68
Page 61
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, 1997 and 1996, and the
results of their operations and their cash flows
for each of the three fiscal years in the period
ended June 30, 1997, 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 23, 1997
Page 62
SUBSIDIARIES OF THE PERKIN-ELMER CORPORATION
Name State or Jurisdiction
of Incorporation or Organization
PKN Overseas Corporation (New York, USA)
Perkin-Elmer (UK) Limited (UK)
Perkin-Elmer (UK) Pension Trustees Limited (UK)
Perkin-Elmer Limited (UK)
Spartan Ltd. (Channel Isles)
Listronagh Company (Ireland)
Applied Biosystems Ltd. (UK)
Perkin-Elmer Pty Limited (Australia)
Perkin-Elmer (Canada) Ltd. (Canada)
Perkin-Elmer Sciex * (Canada)
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 Holding BV (The Netherlands)
Perkin-Elmer Europe 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 Genscope GmbH (Switzerland)
Joint Stock Company Perkin-Elmer AO (Russia)
Perkin-Elmer South Africa Pty. Ltd. (South Africa)
Perkin-Elmer Instruments Asia Pte. Ltd. (Singapore)
Perkin-Elmer Instruments (Malaysia) SDN. BHD. (Malaysia)
Perkin-Elmer Instruments (Philippines) Corporat(Philippines)
Note: Persons directly owned by subsidiaries of The Perkin-Elmer Corporation
are indented and listed below their immediate parent.
* 50% ownership
SUBSIDIARIES OF THE PERKIN-ELMER CORPORATION (cont'd)
PKN Overseas Corporation
Perkin-Elmer Holding GmbH (Germany)
Bodenseewerk Perkin-Elmer GmbH (Germany)
Perkin-Elmer GmbH (Austria)
Perkin-Elmer Italia SpA (Italy)
Perkin-Elmer Hong Kong, Ltd. (Hong Kong)`
Perkin-Elmer Analytical and Biochemical
Instruments (Beijing) Co., Ltd. (China)
Analitica de Centroamerica, S.A. (Costa Rica)
Perkin-Elmer Industria e Comercio Ltda. (Brazil)
Perkin-Elmer International, Inc. (Delaware, USA)
Perkin-Elmer (Argentina) S.R.L. (Argentina)
Perkin-Elmer Korea Corporation (Delaware, USA)
Perkin-Elmer de Mexico SA (Mexico)
Perkin-Elmer Overseas Ltd. (Cayman Islands)
Perkin-Elmer Colombia Limitada (Colombia)
PECO Insurance Company Limited (Bermuda)
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)
GenScope, Inc. (Delaware, USA)
PE AgGen, Inc. (Utah, USA)
Applied Biosystems GmbH (Germany)
+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, 33-58778, and 333-15189) of The
Perkin-Elmer Corporation of our report dated July 23, 1997,
appearing on page 62 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 20 of this
Form 10-K.
PRICE WATERHOUSE LLP
Stamford, Connecticut
September 10, 1997
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, 1997 and the Consolidated Statement of Financial Position at
June 30, 1997 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-30-1997
<PERIOD-END> JUN-30-1997
<CASH> 194,745
<SECURITIES> 0
<RECEIVABLES> 312,674
<ALLOWANCES> (5,444)
<INVENTORY> 188,720
<CURRENT-ASSETS> 794,184
<PP&E> 406,632
<DEPRECIATION> (233,595)
<TOTAL-ASSETS> 1,104,798
<CURRENT-LIABILITIES> 455,193
<BONDS> 0
<COMMON> 45,600
<PREFERRED-MANDATORY> 0
<PREFERRED> 0
<OTHER-SE> 391,272
<TOTAL-LIABILITY-AND-EQUITY> 1,104,798
<SALES> 1,276,766
<TOTAL-REVENUES> 1,276,766
<CGS> 642,264
<TOTAL-COSTS> 642,264
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,049
<INTEREST-EXPENSE> 2,325
<INCOME-PRETAX> 157,378
<INCOME-TAX> (42,223)
<INCOME-CONTINUING> 115,155
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 115,155
<EPS-PRIMARY> 2.58
<EPS-DILUTED> 2.57
</TABLE>