SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number: 1-4389
THE PERKIN-ELMER CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
New York 06-0490270
(State or Other (I.R.S. Employer
Jurisdiction of Identification Number)
Incorporation or
Organization)
761 Main Avenue,
Norwalk, Connecticut 06859-0001
(Address of Principal Executive Offices, Including Zip Code)
(203) 762-1000
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes __x_ No ____
Number of shares outstanding of Common Stock, par value $1 per
share, as of May 1, 1996: 43,620,864.
THE PERKIN-ELMER CORPORATION
INDEX
Part I. Financial Information Page
Condensed Consolidated Statements of
Operations for the
Three Months and Nine Months Ended March 1
31, 1996 and 1995
Condensed Consolidated Statements of
Financial Position at
March 31, 1996 and June 30, 1995 2
Condensed Consolidated Statements of Cash
Flows for the
Nine Months Ended March 31, 1996 and 1995 3
Notes to Unaudited Condensed Consolidated 4
Financial Statements
Management's Discussion and Analysis of
Financial Condition and Results of 7
Operations
Part II. Other Information 12
THE PERKIN-ELMER CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
unaudited
(Dollar amounts in thousands except per share amounts)
<TABLE>
<CAPTION>
Three months ended Nine months ended
March 31, March 31,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Net revenues $ 299,046 $ 274,612 $ 857,495 $ 782,861
Cost of sales 153,319 145,866 441,647 412,628
Gross margin 145,727 128,746 415,848 370,233
Selling, general and administrative 85,928 79,429 249,375 231,050
Research, development and engineering 25,639 23,688 76,743 70,168
Provision for restructured operations 71,600 71,600
Operating income (loss) (37,440) 25,629 18,130 69,015
Gain on sale of investment 20,800 20,800
Interest expense 1,357 2,172 4,116 6,526
Interest income 1,525 761 3,082 2,148
Other income (expense), net (101) 262 (2,067) (608)
Income (loss) before income taxes (37,373) 45,280 15,029 84,829
Provision for income taxes (1,435) 8,604 10,617 16,118
Net income (loss) $ (35,938)$ 36,676 $ 4,412 $ 68,711
Net income (loss) per share $ (0.84)$ 0.86 $ 0.10 $ 1.61
Dividends per share $ 0.17 $ 0.17 $ 0.51 $ 0.51
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.
</TABLE>
-1-
THE PERKIN-ELMER CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Dollar amounts in thousands)
At March 31, At June 30,
1996 1995
Assets (unaudited)
Current assets
Cash and cash equivalents $ 145,332 $ 73,010
Short-term investments 1,227 7,000
Accounts receivable, net 245,741 234,153
Inventories 219,196 212,859
Prepaid expenses and other current assets 74,364 74,606
Total current assets 685,860 601,628
Property, plant and equipment, net 149,179 155,441
Other long-term assets 136,580 135,969
Total assets $ 971,619 $ 893,038
Liabilities and Shareholders' Equity
Current liabilities
Loans payable $ 82,584 $ 54,757
Accounts payable 75,620 85,342
Accrued salaries and wages 35,622 38,862
Accrued taxes on income 48,637 34,676
Other accrued expenses 221,848 160,347
Total current liabilities 464,311 373,984
Long-term debt 944 34,124
Other long-term liabilities 177,398 180,230
Shareholders' equity
Capital stock 45,600 45,600
Capital in excess of par value 178,561 176,699
Retained earnings 191,104 215,363
Foreign currency translation adjustments 1,892 9,805
Net unrealized gain on investment 13,292
Minimum pension liability adjustment (34,445) (34,445)
Treasury stock, at cost (67,038) (108,322)
Total shareholders' equity 328,966 304,700
Total liabilities and shareholders' equity $ 971,619 $ 893,038
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.
-2-
THE PERKIN-ELMER CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
Nine months ended March 31,
1996 1995
Operating Activities
<S> <C> <C>
Net income $ 4,412 $ 68,711
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 30,472 30,395
Restricted stock amortization 4,857
Deferred income taxes (2,019) (279)
Gains from the sale of assets (22,129)
Provision for restructured operations 71,600
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable (25,552) 13,552
(Increase) decrease in inventories (15,181) 986
Increase in prepaid expenses and other assets (9,323) (9,174)
Increase (decrease) in accounts payable and other liabilities 2,454 (26,834)
Net cash provided by operating activities 61,720 55,228
Investing Activities
Additions to property, plant and equipment
(net of disposals of $1,306 and $1,563, respectively) (22,669) (22,353)
Short-term investments 5,773
Proceeds from sale of assets, net 4,986 54,499
Proceeds from collection of note receivable 2,028
Proceeds from sale of discontinued operations 64,847
Net cash provided (used) by investing activities (9,882) 96,993
Financing Activities
Principal payments on long-term debt (1,119)
Net change in loans payable 12,343 (40,614)
Dividends declared (21,627) (21,459)
Purchases of common stock for treasury (40,297)
Stock issued for stock plans 31,214 4,840
Net cash provided (used) by financing activities 21,930 (98,649)
Effect of exchange rate changes on cash (1,446) (3,623)
Net change in cash and cash equivalents 72,322 49,949
Cash and cash equivalents beginning of period 73,010 25,003
Cash and cash equivalents end of period $ 145,332 $ 74,952
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.
</TABLE>
-3-
THE PERKIN-ELMER CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The interim condensed consolidated financial statements should be
read in conjunction with the financial statements presented in The
Perkin-Elmer Corporation's (the Company's) 1995 Annual Report to
Shareholders. Significant accounting policies disclosed therein
have not changed.
The unaudited condensed consolidated financial statements reflect,
in the opinion of the Company's management, all adjustments which
are necessary for a fair statement of the results for the interim
periods. All such adjustments are of a normal recurring nature.
These results are, however, not necessarily indicative of the
results to be expected for a full year. Certain amounts in the
condensed consolidated financial statements have been reclassified
for comparative purposes.
NOTE 2 - INVENTORIES
Inventories are stated at the lower of cost (on a first-in, first-
out basis) or market. Inventories included the following
components:
(Dollar amounts in millions) March 31, June 30,
1996 1995
Raw materials and supplies $ 33.0 $ 29.2
Work-in-process 20.9 18.9
Finished products 165.3 164.8
Total inventories $ 219.2 $ 212.9
NOTE 3 - INVESTMENTS
Investments in equity securities, which are categorized as available-
for-sale, are stated at a fair value of $26.5 million with a cost
basis of $13.2 million. As a result, an unrealized holding gain of
$13.3 million is reported as a separate component of shareholders'
equity. The prior year amount was not material.
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. The Company recorded a pre-tax gain of $20.8 million
or $.39 per share after-tax.
NOTE 4 - DERIVATIVES
The Company manages exposure to fluctuations in foreign exchange
rates by creating offsetting positions through the use of derivative
financial instruments, primarily forward or purchased option foreign
exchange contracts. The Company does not use derivative financial
instruments for trading or speculative purposes, nor is the Company
a party to leveraged derivatives. Foreign exchange contracts are
accounted for as hedges of net investments, firm commitments and
foreign currency
-4-
transactions. The gains and losses on the
instruments utilized to create the hedge offset the gains and losses
on the underlying exposures. At March 31, 1996, the total carrying
amount of the Company's outstanding foreign currency contracts held
was $87.2 million. The counterparties to these contracts consist of
a limited number of highly rated major financial institutions and
the Company does not expect to record any losses as a result of
counterparty default.
NOTE 5 - RESTRUCTURINGS
As part of continuing efforts to strengthen the analytical
instruments business, the Company initiated further actions designed
to reduce costs and improve operating margins. During the third
quarter of fiscal 1996, the Company recorded a before-tax
restructuring charge of $71.6 million to reorganize the worldwide
analytical instruments business into three vertically integrated,
fiscally accountable divisions, to reduce costs, and to improve the
Company's ability to compete more effectively in each of its
markets. The charge included $37.8 million for worldwide workforce
reductions of approximately 390 positions in manufacturing, sales
and support, and administrative functions. The charge also included
$33.8 million for the reduction of excess European manufacturing
capacity, the consolidation of facilities in Europe, and the write-
off of certain tangible and intangible assets associated with the
discontinuance of various product lines. The Company will transfer
the development and manufacturing of certain analytical instrument
product lines from its facility in Germany to other sites, primarily
in the U.S. The facility in Germany will remain the principal site
for the development and manufacturing of atomic absorption products.
These changes are scheduled to be completed by March 1997. The
restructuring actions also include the establishment of a
distribution center in Holland, which will provide an integrated
sales, shipment and administration support infrastructure for the
Company's European operations, and the integration of certain
operating and business activities. The European distribution center
will include certain administrative, financial and information
systems functions which are currently being transacted at individual
locations throughout Europe. These changes are scheduled to be
implemented by June 1997. As of March 31, 1996, the Company made
payments of $2.1 million for severance related costs. The reserve
balance at March 31, 1996 was $64.7 million.
The Company recorded a $23.0 million before-tax charge in the fourth
quarter of fiscal 1995 for restructuring actions focused on reducing
the analytical instruments business infrastructure. The charge
included $20.7 million for severance and benefit costs for worldwide
workforce reductions of 227 employees and $2.3 million for
facility closure and consolidation expenses. As of March 31, 1996,
the Company made partial severance and benefit payments totaling
$10.8 million to employees separated under this restructuring
program and payments of $1.9 million were made for facility closure
and consolidation costs, primarily related to the shutdown of the
Company's Puerto Rico manufacturing facility. The implementation of
the fiscal 1995 restructuring plan was completed in the third
quarter of fiscal 1996. The balance at March 31, 1996 of $10.3
million represents future severance and deferred payments. There
have been no adjustments made to increase or decrease the
liabilities originally accrued for this restructuring plan.
NOTE 6 - SALE OF MATERIAL SCIENCES SEGMENT
On September 30, 1994, the Company concluded the sale of its
Material Sciences segment (Metco) to Sulzer Inc., a wholly-owned
subsidiary of Sulzer, Ltd., Winterthur, Switzerland. The Company
received cash proceeds of $64.8 million as a result of the sale.
-5-
NOTE 7 - STATEMENT OF FINANCIAL ACCOUNTING STANDARDS
The Company is required to implement SFAS No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of," and SFAS No. 123, "Accounting for Stock-Based
Compensation," no later than fiscal 1997. The Company is currently
analyzing the statements to determine the impact, if any, on the
consolidated financial statements.
-6-
THE PERKIN-ELMER CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following comments should be read in conjunction with
"Management's Discussion and Analysis" appearing on pages 23 - 27 of
the Company's 1995 Annual Report to Shareholders.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1996
The Company reported a net loss of $35.9 million, or $.84 per share,
for the third quarter of fiscal 1996 compared with net income of
$36.7 million, or $.86 per share, for the third quarter of fiscal
1995. The net loss for the current quarter included an after-tax
restructuring charge of $62.3 million, or $1.44 per share. Fiscal
1995's third quarter included an after-tax gain of $16.8 million
from the sale of the Company's equity interest in Silicon Valley
Group, Inc. On a comparable basis, excluding the restructuring
charge in fiscal 1996 and the equity interest gain in fiscal 1995,
net income in the third quarter increased 33% over the third quarter
of fiscal 1995.
Net revenues for the third quarter of fiscal 1996 were $299.0
million, an increase of 8.9% over the $274.6 million reported for
the third quarter of fiscal 1995. Net revenues decreased
approximately $3 million in the third quarter of fiscal 1996 as a
result of the effects of foreign currency translation as the U.S.
dollar strengthened against the Yen. The European and Far East
markets were the primary contributors of the net revenue increase
over the prior year. The European market represented approximately
27% of the net revenue increase, while the Far East market,
benefiting from increased government spending in Japan, contributed
approximately 55% of the quarterly revenue increase. Net revenues
from the analytical instruments business were approximately 2% below
the prior year's third quarter. The decrease was centered in the
U.S. where both product and service revenues were below last year's
third quarter. Increased demand for DNA analysis and liquid
chromatography/mass spectrometry (LC/MS) products contributed to an
increase of approximately 24% in the Company's life science net
revenues compared to the prior year's third quarter.
Gross margin as a percentage of net revenues was 48.7% in the third
quarter of fiscal 1996, compared with 46.9% in the third quarter of
fiscal 1995. Improvements from year-to-year came from both the
analytical and life science businesses, although the Company
continues to experience competitive pricing pressures in its U.S.
analytical market.
Selling, general and administrative (SG&A) expenses in the third
quarter of fiscal 1996 increased $6.5 million over the third quarter
of fiscal 1995, including $4.2 million for the Company's restricted
stock program. The structure of this program provided for the
lifting of restrictions at common stock price levels ranging from
$40 to $52. Research, development and engineering (R&D) expenses of
$25.6 million increased approximately 8% over the prior year,
primarily due to higher investment in bioresearch applications.
Operating expenses of $183.2 million for the third quarter of fiscal
1996 included a $71.6 million before-tax charge for restructuring
actions. Excluding the restructuring charge, operating expenses as
a percentage of net revenues were slightly lower than the prior
year's third quarter. The improved gross margin and operating
expense performance resulted in operating income being approximately
33% higher than the third quarter of fiscal 1995.
-7-
The third quarter fiscal 1996 before-tax restructuring charge of
$71.6 million was taken as part of a plan focused on reducing costs
and improving operating margins in the analytical instruments
business. The worldwide analytical instruments business will be
reorganized into three vertically integrated, fiscally accountable
divisions to reduce costs, and to improve the Company's ability to
compete more effectively in each of its markets. The charge
included $37.8 million for worldwide workforce reductions of
approximately 390 positions in manufacturing, sales and support, and
administrative functions. The charge also included $33.8 million
for the reduction of excess European manufacturing capacity, the
consolidation of facilities in Europe, and the write-off of certain
tangible and intangible assets associated with the discontinuance of
various product lines. The Company will transfer the development
and manufacturing of certain analytical instrument product lines
from its facility in Germany to other sites, primarily in the U.S.
The facility in Germany will remain the principal site for the
development and manufacturing of atomic absorption products. These
changes are scheduled to be completed by March 1997. The
restructuring actions also include the establishment of a
distribution center in Holland, which will provide an integrated
sales, shipment and administration support infrastructure for the
Company's European operations, and the integration of certain
operating and business activities. The European distribution center
will include certain administrative, financial, and information
systems functions which are currently being transacted at individual
locations throughout Europe. These changes are scheduled to be
implemented by June 1997. These actions, when completed, should
result in improved customer focus, increased product and service
revenues, and higher operating income. The benefits of the program
will begin to be realized in fiscal 1997 with reduced operating
costs of approximately $25 million. When the program is
implemented, the Company expects to achieve annual operating cost
benefits of more than $40 million and increased operating cash flow
of a similar amount.
Interest expense in the third quarter of fiscal 1996 was $1.4
million compared with $2.2 million in the third quarter of fiscal
1995. The decrease was the result of lower average borrowing
levels. Interest income was $1.5 million in the third quarter of
fiscal 1996 compared to $.8 million in the prior year. The increase
was primarily the result of higher cash and cash equivalents
balances during the quarter.
Fiscal 1996's third quarter effective tax rate was 23% prior to a
$9.3 million, or 13%, tax benefit on the $71.6 million charge for
restructuring actions. The effective income tax rate for the third
quarter of fiscal 1995 was 19%.
RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED MARCH 31, 1996
The Company reported net income of $4.4 million, or $.10 per share,
for the first nine months of fiscal 1996 compared with $68.7
million, or $1.61 per share, for the same period in fiscal 1995.
Fiscal 1996 net income included an after-tax restructuring charge of
$62.3 million, or $1.44 per share. Fiscal 1995 included an after-
tax gain of $16.8 million from the sale of the Company's equity
interest in Silicon Valley Group, Inc. On a comparable basis,
excluding the restructuring charge in fiscal 1996 and the equity
interest gain in fiscal 1995, year-to-date net income for fiscal
1996 increased 29% over the net income reported in the prior year.
Fiscal 1996's year-to-date net revenues of $857.5 million were
approximately 10% higher than the $782.9 million reported for the
first nine months of fiscal 1995. Foreign currency translation
changes in Europe, offset partially by Latin America, accounted for
approximately $9 million of the increase.
-8-
All geographic markets
experienced growth in fiscal 1996, particularly the Far East, where
revenues were approximately 19% higher than the previous year. This
increase was primarily the result of higher public and private
spending in Japan. The life science business experienced an
increase in net revenues of approximately 25% as a result of
increased demand for DNA and LC/MS products. The analytical
instruments business net revenues increased approximately 4% over
the prior year as a result of higher demand for inorganic products.
Gross margin as a percentage of net revenues was 48.5% for the first
nine months of fiscal 1996 compared to 47.3% for the prior year.
The increase was primarily due to increased sales volume of higher
gross margin life science products.
SG&A expenses for the first nine months of fiscal 1996 increased
$18.3 million, or approximately 8%, over the first nine months of
fiscal 1995. Approximately $2.6 million of the increase resulted
from foreign currency changes in Europe. SG&A expenses included
$4.9 million of expenses for the previously mentioned restricted
stock program. As a percentage of net revenues, SG&A expenses
decreased from 29.5% in fiscal 1995 to 29.1% in fiscal 1996. R&D
expenses of $76.7 million increased $6.6 million over the prior
year, reflecting continued increased investment in the life science
business and, to a lesser extent, the analytical instruments
business. Total year-to-date operating expenses of $397.7 million
included the $71.6 million before-tax charge for restructuring
actions. On a comparable basis, excluding the provision for
restructured operations, total operating expenses as a percentage of
net revenues decreased from 38.5% in fiscal 1995 to 38.0% in fiscal
1996.
As a result of lower average borrowing levels in fiscal 1996,
interest expense was $2.4 million lower than the amount reported in
the first nine months of fiscal 1995. Interest income increased $.9
million over the prior year as a result of maintaining higher cash
and cash equivalents balances and rising interest rates. Year-to-
date net other expense for fiscal 1996 was $2.1 million compared
with $.6 million in the prior year. Other expenses in fiscal 1995
were partially offset by a third quarter gain on the sale of real
estate.
The Company's effective tax rate for the first nine months of fiscal
1996 was 23% prior to a $9.3 million, or 13%, tax benefit on the
$71.6 million charge for restructuring actions. The effective
income tax rate for fiscal 1995 was 19%.
FINANCIAL RESOURCES AND LIQUIDITY
At March 31, 1996, the Company's total cash and short-term
investment position was $146.6 million, compared with $80.0 million
at June 30, 1995 and $75.0 million at March 31, 1995. Net cash
provided by operating activities was $61.7 million for the first
nine months of fiscal 1996 compared to $55.2 million for the same
period in fiscal 1995. The increase was primarily due to higher net
income (excluding the current quarter's restructuring charge) and
increased operating liabilities which more than offset higher
accounts receivable and inventory levels.
Net cash used by investing activities was $9.9 million for the first
nine months of fiscal 1996 compared with $97.0 million net cash
provided by investing activities in fiscal 1995. Fiscal 1995
included $64.8 million in cash proceeds from the sale of the
material sciences unit, a discontinued operation, and proceeds of
$54.5 million from the sale of assets. Of this amount, $49.8
million was the net proceeds resulting from the Company's sale of
its equity interest in Silicon Valley Group, Inc. which was sold
-9-
during the third quarter of fiscal 1995. Fiscal 1996 included $5.0
million cash received from the sale of assets. Capital expenditures
for the first nine months of fiscal 1996 remained constant with the
prior year's spending level of approximately $24 million.
Fiscal 1996 year-to-date net cash provided by financing activities
was $21.9 million. Proceeds received from employee stock plan
exercises more than offset cash used for the payment of shareholder
dividends. As a result of the increased stock price, proceeds
received from employee stock plan exercises was $26.4 million higher
than the prior year. Loans payable included $26.4 million
reclassified from long-term debt for a loan which will mature in the
third quarter of fiscal 1997. Cash used by financing activities was
$98.6 million for the first nine months of fiscal 1995, primarily as
a result of repayments of short-term debt and purchases of common
stock for treasury. Approximately 1.4 million shares of common
stock, at a cost of $40.3 million, were repurchased during the first
nine months of fiscal 1995.
The implementation of the restructuring actions announced at the end
of fiscal 1995 has resulted in cash outlays of $8.2 million during
the first nine months of fiscal 1996. The Company made severance
and benefit payments of $7.2 million to employees separated under
the plan and payments of $1.0 million were made for closure and
facility consolidation costs, related primarily to the shutdown of
the Company's Puerto Rico manufacturing facility. The
implementation of the fiscal 1995 restructuring plan was completed
in the third quarter of fiscal 1996. The balance remaining at March
31, 1996 of $10.3 million represents future severance and deferred
payments.
As of March 31, 1996, the balance remaining for the restructuring
actions announced during the third quarter of fiscal 1996 was $64.7
million. To date, the Company has made payments of $2.1 million for
worldwide severance related costs.
OUTLOOK
Demand for life science products has grown steadily, driven by
increased emphasis on growing market segments, and the Company
continues to invest in and search for new opportunities and
applications in this business. This investment strategy is designed
to further position the Company as the technology and market leader
in the fast-growing life sciences marketplace.
On April 19, 1996, the Company announced the planned acquisition of
Tropix, Inc., a world leader in the development, manufacture, and
sale of chemiluminescent detection technology for life sciences.
The Company envisions this acquisition will provide new
opportunities in the life science and pharmaceutical research
markets. The cash acquisition is subject to the approval of Tropix,
Inc. shareholders and customary closing conditions.
The Company believes the restructuring plan recognized in the third
quarter of fiscal 1996 and other actions will lead to improved
profitability and cash flow from the analytical instruments
business. The reorganization of the analytical instruments business
into three vertically integrated and fiscally accountable divisions
is designed to create a more responsive and profitable organization
resulting in better customer focus, increased product and service
revenues, and higher operating income. The benefits of the program
will begin to be realized in fiscal 1997 with reduced operating
costs of approximately $25 million. When the program is
implemented, the Company expects to achieve annual operating cost
benefits of more than $40 million and increased operating cash flow
of a similar amount. The full benefits are expected to be realized
in fiscal 1998.
-10-
"SAFE HARBOR" STATEMENT UNDER PRIVATE SECURITIES LITIGATION REFORM
ACT OF 1995
Certain statements contained in this report may be forward looking
and are subject to a variety of risks and uncertainties. Many
factors could cause actual results to differ materially from these
statements. These factors include, but are not limited to, (1)
complexity and uncertainty regarding the development of new high
technology products, (2) loss of market share through competition,
(3) introduction of competing products or technologies by other
companies, (4) pricing pressures from competitors and/or customers,
(5) changes in the life sciences or analytical instrument
industries, (6) changes in the pharmaceutical, environmental,
research or chemical markets, (7) variable government funding in key
geographical regions, (8) the Company's ability to protect
proprietary information and technology or to obtain necessary
licenses on commercially reasonable terms, (9) the loss of key
employees, and (10) other factors which might be described from time
to time in the Company's filings with the Securities and Exchange
Commission.
A significant portion of the Company's life science business
operations are located near major California earthquake faults. The
ultimate impact of earthquakes on the Company, significant suppliers
and the general infrastructure is unknown, but operating results
could be materially affected in the event of a major earthquake.
The Company maintains insurance to reduce its exposure to losses and
interruptions caused by earthquakes.
Although the Company believes it has the product offerings and
resources needed for continuing success, future revenue and margin
trends cannot be reliably predicted and may cause the Company to
adjust its operations. Factors external to the Company can result
in volatility of the Company's common stock price. Because of the
foregoing factors, recent trends should not be considered reliable
indicators of future stock prices or financial results.
-11-
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
10. Form of Pledge Agreement and Promissory Note
dated as of March 8, 1996 between Registrant
and certain Named Executive Officers.
11. Computation of Net Income Per Share.
27. Financial Data Schedule.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the
quarter for which this report is being filed.
-12-
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to
be signed on its behalf by the undersigned thereunto duly
authorized.
THE PERKIN-ELMER CORPORATION
By: /s/ Stephen O. Jaeger
Stephen O. Jaeger
Vice President and
Chief Financial Officer
By: /s/ John B. McBennett
John B. McBennett
Corporate Controller (Chief
Accounting Officer)
Dated: May 13, 1996
-13-
EXHIBIT INDEX
Exhibit No. Exhibit
10 Form of Pledge Agreement
and Promissory Note dated
as of March 8, 1996
between Registrant and
certain Named Executive
Officers.
11 Computation of Net
Income Per Share.
27 Financial Data Schedule.
EXHIBIT 10
Form of Pledge Agreement and Promissory Note dated as of
March 8, 1996 between Registrant and certain Named Executive
Officers.
Each of Michael W. Hunkapiller and Michael J. McPartland,
Named Executive Officers of the Registrant, entered into a
Pledge Agreement and Promissory Note dated as of March 8,
1996 in the form attached hereto. These Agreements are
identical as to each such Named Executive Officer, except
for principal amount, number of shares pledged, and home
address. The principal amount and number of shares pledged
by each such Named Executive Officer are: $83,976.70 and
1,812 shares, respectively, in the case of Mr. Hunkapiller;
and $80,511.75 and 1,738 shares, respectively, in the case
of Mr. McPartland.
PLEDGE AGREEMENT
PLEDGE AGREEMENT made as of March 8, 1996 by [
], having an address at [ ] (the "Pledgor"), in
favor of The Perkin-Elmer Corporation, a New York
corporation having its principal office at 761 Main Avenue,
Norwalk, Connecticut (the "Pledgee").
WHEREAS, the Pledgor is the sole owner of [ ]
shares (the "Pledged Stock") of Common Stock, par value
$1.00 per share, of the Pledgee, which shares are registered
in the Pledgor's name on the stock transfer records of the
Pledgee; and
WHEREAS, the Pledgee has advanced to the Pledgor funds
in the amount of $[ ], and the obligation of the
Pledgor to repay the Pledgee such amount, including interest
thereon (together with all of the Pledgor's obligations to
the Pledgee under this Agreement, the "Obligations"), is
evidenced by the Pledgor's promissory note dated the date
hereof in the form of Exhibit A hereto; and
WHEREAS, the Pledgor has agreed to secure the
Obligations by pledging the Pledged Stock to the Pledgee.
IT IS THEREFORE AGREED:
1. In consideration of the foregoing and to secure
payment and performance of the Obligations, the Pledgor
hereby assigns and pledges to the Pledgee, and grants to the
Pledgee a security interest in, all of the Pledgor's right,
title, and interest in and to (i) the Pledged Stock, (ii)
all dividends and other distributions on or with respect to
the Pledged Stock (whether or not in cash), (iii) all rights
of the Pledgor with respect to the Pledged Stock, and (iv)
all proceeds of the sale or other disposition of the Pledged
Stock (collectively, the "Collateral"). The Pledgor has
delivered to the Pledgee the Certificate for the Pledged
Stock, to hold the same until all of the Obligations shall
be paid in full. Concurrently herewith, the Pledgor shall
deliver to the Pledgee a fully executed stock power in blank
in respect of the Pledged Stock.
2. So long as the Pledgor is not in default in the
payment or performance of any of the Obligations, any cash
dividends or cash distributions on the Pledged Stock shall
be paid to the Pledgor, and the Pledgor shall have the right
to vote the Pledged Stock. In the event of any such default
and whether or not the Pledgee at such time enforces its
rights to dispose of the Pledged Stock pursuant to paragraph
5 hereof, any such cash dividends or cash distributions
shall be paid to the Pledgee, and the Pledgee at its option
may apply any such cash dividends or cash distributions to
the Obligations and, in addition, the Pledgee
-1-
may, to the extent permitted by applicable law, exercise
all voting rights with respect to the Pledged Stock.
3. The Pledgor represents and warrants that it is the
sole beneficial and record owner of all of the Pledged
Stock, free and clear of all liens, encumbrances, charges,
claims, and beneficial interests in favor of any party. The
Pledgor agrees that it shall not enter into any agreement to
sell, transfer, encumber, or otherwise dispose of any of the
Pledged Stock without the prior written consent of the
Pledgee.
4. In case, upon the bankruptcy or liquidation of the
assets (in whole or in part) of the Pledgor, any sum shall
be paid upon or with respect to any of the Pledged Stock,
such sum shall be paid over to the Pledgee, to be held by
the Pledgee as collateral security for the Obligations. In
case any dividend shall be declared on any of the Pledged
Stock in stock, obligations, scrip, or other property, or
any shares of stock or fractions thereof shall be issued
pursuant to any stock split or similar event involving any
of the Pledged Stock, or any property shall be distributed
upon or with respect to the Pledged Stock pursuant to the
recapitalization or reclassification of the capital stock of
the Pledgee or any merger, consolidation or other
reorganization involving the Pledgee, the shares,
obligations, scrip, or other property so issued and/or
distributed shall forthwith be delivered to the Pledgee
(accompanied by proper instruments of assignment and/or
stock powers duly executed by the Pledgor in accordance with
the Pledgee's instruction) to be held by the Pledgee as
collateral security for the Obligations.
5. In the event of any default by the Pledgor in the
payment or performance of any of the Obligations, the
Pledgee may, upon five (5) business days' prior written
notice to the Pledgor (by overnight express or certified
mail to his above-mentioned address), declare all of the
Obligations to be immediately due and payable and, without
liability for any diminution in price or value, sell any or
all of the Pledged Stock at a public or private sale
pursuant to the Uniform Commercial Code as adopted in any
applicable jurisdiction and any other applicable law. At
any such sale, the Pledgee may, unless prohibited by
applicable law, purchase any of the Pledged Stock. The
proceeds of any such sale shall be applied by the Pledgee
first to any expenses relating to such sale and the
enforcement of this Pledge Agreement, including reasonable
attorneys' fees and expenses, and thereafter to the full
repayment of the Obligations. Any surplus from such
proceeds shall be remitted by the Pledgee to the Pledgor,
and the Pledgor shall remain liable to the extent of any
deficiency between the amount of the proceeds of any such
sale and the amount of the Obligations and all such
expenses.
6. The Pledgor agrees that, at any time and from time
to time and at the expense of the Pledgor, the Pledgor will
promptly execute and deliver any and all further instruments
and documents and take any and all further action that may
be necessary or desirable or that the Pledgee may reasonably
request in order to perfect and protect any security
interest granted or purported to be granted hereby or to
enable the Pledgee to protect and enforce its rights and
remedies hereunder with respect to the Pledged Stock.
-2-
7. The Pledgor hereby appoints the Pledgee as the
Pledgor's proxy and attorney-in-fact (which appointment is
irrevocable and coupled with an interest), with full power
of substitution, and with full authority in the place and
stead of the Pledgor and in the name of the Pledgor or
otherwise, from time to time upon the occurrence of a
default hereunder or in the payment or performance of any of
the Obligations, in the Pledgee's discretion, to take any
action and to execute any document or instrument which the
Pledgee may deem necessary or advisable to accomplish the
purposes of this Pledge Agreement, including, without
limitation, to exercise all voting rights with respect to
the Pledged Stock, to receive, endorse, and collect all
instruments made payable to the Pledgor representing any
dividend or other distribution or issuance in respect of the
Pledged Stock or any part thereof and to give full discharge
for the same.
8. No failure or delay on the part of the Pledgee in
exercising any right or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of
any such right or remedy preclude any other or further
exercise thereof or the exercise of any other right or
remedy hereunder. No amendment or waiver of any provision
of this Pledge Agreement, nor consent to any departure by
the Pledgor therefrom, shall in any event be effective
unless the same is in writing and executed by the parties
hereto. The rights, powers, and remedies provided herein in
favor of the Pledgee shall not be deemed exclusive, but
shall be cumulative, and shall be in addition to all other
rights and remedies in favor of the Pledgee existing at law
or in equity, including, without limitation, all of the
rights and remedies available to a secured party under the
provisions of the Uniform Commercial Code as adopted in any
appropriate jurisdiction.
9. This Pledge Agreement shall terminate upon the date
upon which all Obligations shall have been paid in full, and
the Pledgee shall duly assign, transfer, and deliver
(without recourse and without any representation or
warranty) such of the Collateral as shall at the time be in
the possession of the Pledgee, together with any moneys at
the time held by the Pledgee hereunder.
10. Wherever possible, each provision of this Pledge
Agreement shall be interpreted in such a manner as to be
effective and valid under applicable law, but if any
provision hereof shall be prohibited by or invalid under
such law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions
hereof.
11. The Pledgor hereby agrees to pay all costs and
expenses (including reasonable attorneys' fees and expenses)
of the Pledgee in enforcing its rights under this Pledge
Agreement and otherwise with respect to the collection and
enforcement of the Obligations.
12. This Pledge Agreement shall be governed by, and
construed in accordance with, the laws of the State of New
York.
-3-
IN WITNESS WHEREOF, the Pledgor and the Pledgee have
executed and delivered this Pledge Agreement as of the date
first written above.
The Pledgor:
The Pledgee:
THE PERKIN-ELMER CORPORATION
By
-4-
EXHIBIT A
PROMISSORY NOTE
$[ ] March [ ], 1996
FOR VALUE RECEIVED, the undersigned, [ ], having
an address at [ ] (the "Maker"), hereby
promises to pay to the order of The Perkin-Elmer Corporation, a
New York corporation having its principal office at 761 Main
Avenue, Norwalk, Connecticut ("Perkin-Elmer"), in lawful money of
the United States, the principal sum of [ ] ($[
]), together with interest thereon or on the amount thereof
outstanding from time to time at the federal short-term rate
required by Section 7872 of the Internal Revenue Code and the
regulations thereunder, compounded semiannually. The holder of
this Note shall periodically provide the Maker with a statement
of accrued interest which shall be presumed correct. The
principal and accrued interest on this Note shall be due and
payable on March [ ], 1999 at the offices of Perkin-Elmer, or at
such other office as the holder shall advise the Maker in
writing.
This Note may be prepaid in whole or in part by the Maker at
any time; provided, however, that any such prepayments shall be
accompanied by payment of all accrued interest hereunder on the
amount prepaid to the date of such prepayment.
This Note is secured by that certain Pledge Agreement (the
"Pledge Agreement") dated as of the date hereof made by the Maker
in favor of Perkin-Elmer, with respect to the Pledged Stock (as
defined therein), and is subject to all of the terms and
provisions thereof, which are incorporated herein by reference.
Upon the occurrence of (i) a default under or breach of the
Pledge Agreement, (ii) a default in the payment of principal or
interest on this Note when due hereunder, (iii) the termination
of Maker's employment by Perkin-Elmer for any reason, including,
without limitation, involuntary discharge, voluntary termination,
death, or disability, or (iv) the insolvency of, assignment for
the benefit or creditors by, or the commencement of any
proceedings under any bankruptcy or insolvency law by or against,
the Maker, the unpaid principal balance of this Note, together
with all accrued and unpaid interest thereon, shall forthwith
become due and payable by the Maker without any further notice or
act by the holder.
The Maker agrees that Perkin-Elmer, so long as it is the
holder of this Note, may reduce by way of setoff all money
payable to the Maker, other than annual base salary, which is due
from Perkin-Elmer until this Note, including interest, is repaid
in full.
The Maker waives demand, presentment for payment, notice of
dishonor, protest and notice of protest; waives any and all lack
of diligence or delays in the collection or enforcement hereof;
and consents that the time of payment may be extended or this
note may be renewed without notice, and without releasing the
undersigned.
-1-
In the event that any action be instituted on this Note, or
any action or proceeding (including any foreclosure proceeding)
is taken with respect to a default hereunder, the prevailing
party in any such action or proceeding shall be paid by the other
party all expenses in connection therewith, including reasonable
attorneys' fees and expenses.
No course of dealing between the Maker and the holder of this
Note and no delay on the part of the holder of this Note in
exercising any rights shall operate as a waiver of any rights of
such holder; nor shall any such delay, unless agreed to in
writing by the Maker and the holder of this Note, constitute a
forbearance. No covenant or other provision of this Note, nor
any default hereunder, may be waived otherwise than by a written
instrument signed by the party so waiving such covenant or other
provision or default; provided, however, that no such waiver
shall extend to or impair any obligation not expressly waived, or
impair any right consequent thereon. Any waiver may be given
subject to satisfaction of conditions stated therein.
The Maker hereby waives all rights of set-off and
counterclaim with respect to this Note including rights of set-
off and counterclaim with respect to this Note which may arise
from claims heretofore unknown to the Maker.
This Note shall be governed by, and construed in accordance
with, the laws of the State of New York.
IN WITNESS WHEREOF, this Note has been duly executed by the
Maker as of the date first written above.
[ ]
WITNESS:
-2-
PROMISSORY NOTE
$[ ] March 8, 1996
FOR VALUE RECEIVED, the undersigned, [ ], having
an address at [ ] (the "Maker"), hereby
promises to pay to the order of The Perkin-Elmer Corporation, a
New York corporation having its principal office at 761 Main
Avenue, Norwalk, Connecticut ("Perkin-Elmer"), in lawful money of
the United States, the principal sum of [ ] ($[
]), together with interest thereon or on the amount thereof
outstanding from time to time at the federal short-term rate
required by Section 7872 of the Internal Revenue Code and the
regulations thereunder, compounded semiannually. The holder of
this Note shall periodically provide the Maker with a statement
of accrued interest which shall be presumed correct. The
principal and accrued interest on this Note shall be due and
payable on March 8, 1999 at the offices of Perkin-Elmer, or at
such other office as the holder shall advise the Maker in
writing.
This Note may be prepaid in whole or in part by the Maker at
any time; provided, however, that any such prepayments shall be
accompanied by payment of all accrued interest hereunder on the
amount prepaid to the date of such prepayment.
This Note is secured by that certain Pledge Agreement (the
"Pledge Agreement") dated as of the date hereof made by the Maker
in favor of Perkin-Elmer, with respect to the Pledged Stock (as
defined therein), and is subject to all of the terms and
provisions thereof, which are incorporated herein by reference.
Upon the occurrence of (i) a default under or breach of the
Pledge Agreement, (ii) a default in the payment of principal or
interest on this Note when due hereunder, (iii) the termination
of Maker's employment by Perkin-Elmer for any reason, including,
without limitation, involuntary discharge, voluntary termination,
death, or disability, or (iv) the insolvency of, assignment for
the benefit or creditors by, or the commencement of any
proceedings under any bankruptcy or insolvency law by or against,
the Maker, the unpaid principal balance of this Note, together
with all accrued and unpaid interest thereon, shall forthwith
become due and payable by the Maker without any further notice or
act by the holder.
The Maker agrees that Perkin-Elmer, so long as it is the
holder of this Note, may reduce by way of setoff all money
payable to the Maker, other than annual base salary, which is due
from Perkin-Elmer until this Note, including interest, is repaid
in full.
The Maker waives demand, presentment for payment, notice of
dishonor, protest and notice of protest; waives any and all lack
of diligence or delays in the collection or enforcement hereof;
and consents that the time of payment may be extended or this
note may be renewed without notice, and without releasing the
undersigned.
-1-
In the event that any action be instituted on this Note, or
any action or proceeding (including any foreclosure proceeding)
is taken with respect to a default hereunder, the prevailing
party in any such action or proceeding shall be paid by the other
party all expenses in connection therewith, including reasonable
attorneys' fees and expenses.
No course of dealing between the Maker and the holder of this
Note and no delay on the part of the holder of this Note in
exercising any rights shall operate as a waiver of any rights of
such holder; nor shall any such delay, unless agreed to in
writing by the Maker and the holder of this Note, constitute a
forbearance. No covenant or other provision of this Note, nor
any default hereunder, may be waived otherwise than by a written
instrument signed by the party so waiving such covenant or other
provision or default; provided, however, that no such waiver
shall extend to or impair any obligation not expressly waived, or
impair any right consequent thereon. Any waiver may be given
subject to satisfaction of conditions stated therein.
The Maker hereby waives all rights of set-off and
counterclaim with respect to this Note including rights of set-
off and counterclaim with respect to this Note which may arise
from claims heretofore unknown to the Maker.
This Note shall be governed by, and construed in accordance
with, the laws of the State of New York.
IN WITNESS WHEREOF, this Note has been duly executed by the
Maker as of the date first written above.
[ ]
WITNESS:
-2-
THE PERKIN-ELMER CORPORATION
COMPUTATION OF NET INCOME PER SHARE
(unaudited)
(Amounts in thousands except per share amounts)
Nine months ended March 31,
1996 1995
Weighted average number of common shares 42,490 42,199
Common stock equivalents - stock options 936 440
Weighted average number of
common shares used in calculating
primary net income per share 43,426 42,639
Additional dilutive stock options 172 59
Shares used in calculating fully
diluted net income per share 43,598 42,698
Calculation of primary and fully
diluted net income per share:
Net income used in the calculations of
primary and fully diluted net income per share $ 4,412 $ 68,711
Primary net income per share $ 0.10 $ 1.61
Fully diluted net income per share $ 0.10 $ 1.61
EXHIBIT 11
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE
NINE MONTHS ENDED MARCH 31, 1996 AND THE CONDENSED CONSOLIDATED
STATEMENT OF FINANCIAL POSITION AT MARCH 31, 1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> MAR-31-1996
<CASH> 145,332
<SECURITIES> 0
<RECEIVABLES> 254,413
<ALLOWANCES> (8,672)
<INVENTORY> 219,196
<CURRENT-ASSETS> 685,860
<PP&E> 366,155
<DEPRECIATION> (216,976)
<TOTAL-ASSETS> 971,619
<CURRENT-LIABILITIES> 464,311
<BONDS> 0
<COMMON> 45,600
<PREFERRED-MANDATORY> 0
<PREFERRED> 0
<OTHER-SE> 283,366
<TOTAL-LIABILITY-AND-EQUITY> 971,619
<SALES> 857,495
<TOTAL-REVENUES> 857,495
<CGS> 441,647
<TOTAL-COSTS> 441,647
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,081
<INTEREST-EXPENSE> 4,116
<INCOME-PRETAX> 15,029
<INCOME-TAX> (10,617)
<INCOME-CONTINUING> 4,412
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,412
<EPS-PRIMARY> 0.10
<EPS-DILUTED> 0.10
</TABLE>