-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, T5AX97fH0d+GG4tc1ZPb+XuB0OXy0RLthFjEYA6JLBuV26Gp9yaZYLP4rb1VAgJw 4FzWdDC3xUzJeohpkMSh4A== 0000077551-97-000004.txt : 19970515 0000077551-97-000004.hdr.sgml : 19970515 ACCESSION NUMBER: 0000077551-97-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970514 SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PERKIN ELMER CORP CENTRAL INDEX KEY: 0000077551 STANDARD INDUSTRIAL CLASSIFICATION: LABORATORY ANALYTICAL INSTRUMENTS [3826] IRS NUMBER: 060490270 STATE OF INCORPORATION: NY FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-04389 FILM NUMBER: 97605482 BUSINESS ADDRESS: STREET 1: 761 MAIN AVE CITY: NORWALK STATE: CT ZIP: 06859-0001 BUSINESS PHONE: 2037621000 MAIL ADDRESS: STREET 1: 761 MAIN AVENUE CITY: NORWALK STATE: CT ZIP: 06859-0001 10-Q 1 10-Q FILING FOR PERIOD ENDED MARCH 31, 1997 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ____________ FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number: 1-4389 THE PERKIN-ELMER CORPORATION (Exact Name of Registrant as Specified in Its Charter) New York 06-0490270 (State or Other (I.R.S. Employer Jurisdiction of Identification Number) Incorporation or Organization) 761 Main Avenue, Norwalk, Connecticut 06859-0001 (Address of Principal Executive Offices, Including Zip Code) (203) 762-1000 (Registrant's Telephone Number, Including Area Code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ____ Number of shares outstanding of Common Stock, par value $1 per share, as of May 5, 1997: 43,795,014 THE PERKIN-ELMER CORPORATION INDEX Part I. Financial Information Page Condensed Consolidated Statements of Operations for the Three Months and Nine Months Ended March 31, 1997 and 1996 1 Condensed Consolidated Statements of Financial Position at March 31, 1997 and June 30, 1996 2 Condensed Consolidated Statements of Cash Flows for the Nine Months Ended March 31, 1997 and 1996 3 Notes to Unaudited Condensed Consolidated Financial Statements 4 Management's Discussion and Analysis of Financial Condition and Results of Operations 8 Part II. Other Information 14 THE PERKIN-ELMER CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (Dollar amounts in thousands except per share amounts)
Three months ended Nine months ended March 31, March 31, 1997 1996 1997 1996 Net revenues $ 322,902 $ 299,046 $ 929,429 $ 857,495 Cost of sales 157,129 153,319 465,432 441,647 Gross margin 165,773 145,727 463,997 415,848 Selling, general and administrative 93,557 85,928 270,738 249,375 Research, development and engineering 27,152 25,639 78,573 76,743 Provision for restructured operations 71,600 71,600 Acquired research and development 25,401 25,401 Operating income (loss) 19,663 (37,440) 89,285 18,130 Gain on sale of investment 37,420 Interest expense 601 1,357 1,890 4,116 Interest income 2,030 1,525 4,617 3,082 Other expense, net 48 101 183 2,067 Income (loss) before income taxes 21,044 (37,373) 129,249 15,029 Provision for income taxes 10,683 (1,435) 35,570 10,617 Net income (loss) $ 10,361 $ (35,938) $ 93,679 $ 4,412 Net income (loss) per share $ 0.23 $ (0.84) $ 2.10 $ 0.10 Dividends per share $ 0.17 $ 0.17 $ 0.51 $ 0.51
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements. -1- THE PERKIN-ELMER CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Dollar amounts in thousands) At March 31, At June 30, 1997 1996 Assets (unaudited) Current assets Cash and cash equivalents $ 162,838 $ 95,361 Short-term investments 1,275 1,227 Accounts receivable, net 287,936 254,531 Inventories 208,374 207,297 Prepaid expenses and other current assets 85,175 82,360 Total current assets 745,598 640,776 Property, plant and equipment, net 168,608 148,008 Other long-term assets 94,784 152,540 Total assets $ 1,008,990 $ 941,324 Liabilities and Shareholders' Equity Current liabilities Loans payable $ 23,181 $ 51,075 Accounts payable 97,424 86,885 Accrued salaries and wages 39,631 39,607 Accrued taxes on income 66,751 57,097 Other accrued expenses 187,291 206,552 Total current liabilities 414,278 441,216 Long-term debt 30,762 890 Other long-term liabilities 176,669 175,776 Stock repurchase commitment 10,358 Shareholders' equity Capital stock 45,600 45,600 Capital in excess of par value 174,208 186,058 Retained earnings 264,032 194,613 Foreign currency translation adjustments 1,558 446 Net unrealized gain on investment 23,245 Minimum pension liability adjustment (29,365) (29,365) Treasury stock, at cost (79,110) (97,155) Total shareholders' equity 376,923 323,442 Total liabilities and shareholders' equity $ 1,008,990 $ 941,324 See accompanying Notes to Unaudited Condensed Consolidated Financial Statements. -2- THE PERKIN-ELMER CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (Dollar amounts in thousands)
Nine months ended March 31, 1997 1996 Operating Activities Net income $ 93,679 $ 4,412 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 29,283 30,472 Restricted stock amortization 7,002 4,857 Deferred income taxes (4,385) (2,019) Gains from the sale of assets (37,420) Provision for restructured operations 71,600 Acquired research and development 25,401 Changes in operating assets and liabilities: Increase in accounts receivable (44,918) (25,552) Increase in inventories (7,649) (15,181) Increase in prepaid expenses and other assets (2,269) (9,323) Increase in accounts payable and other liabilities 9,423 2,454 Net cash provided by operating activities 68,147 61,720 Investing Activities Additions to property, plant and equipment (net of disposals of $1,257 and $1,306, respectively) (46,784) (22,669) Acquisition, net of $5,500 related obligation (21,276) Proceeds from the sale of assets, net 66,881 4,986 Proceeds from the collection of notes receivable 978 2,028 Short-term investments 5,773 Net cash used by investing activities (201) (9,882) Financing Activities Proceeds from long-term debt 31,033 Principal payments on long-term debt (22,908) Net change in loans payable 601 12,343 Dividends declared (22,069) (21,627) Purchases of common stock for treasury (15,851) Equity put warrants 1,846 Stock issued for stock plans 22,711 31,214 Net cash (used) provided by financing activities (4,637) 21,930 Effect of exchange rate changes on cash 4,168 (1,446) Net change in cash and cash equivalents 67,477 72,322 Cash and cash equivalents beginning of period 95,361 73,010 Cash and cash equivalents end of period $ 162,838 $ 145,332
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements. -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) 1996 Annual Report to Shareholders. Significant accounting policies disclosed therein have not changed. The unaudited condensed consolidated financial statements reflect, in the opinion of the Company's management, all adjustments which are necessary for a fair statement of the results for the interim periods. All such adjustments are of a normal recurring nature. These results are, however, not necessarily indicative of the results to be expected for a full year. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Certain amounts in the condensed consolidated financial statements have been reclassified for comparative purposes. NOTE 2 - INVENTORIES Inventories are stated at the lower of cost (on a first-in, first- out basis) or market. Inventories included the following components: (Dollar amounts in millions) March 31, June 30, 1997 1996 Raw materials and supplies $ 29.2 $ 31.1 Work-in-process 16.2 19.8 Finished products 163.0 156.4 Total inventories $ 208.4 $ 207.3 NOTE 3 - ACQUISITION During the third quarter of fiscal 1997, the Company acquired GenScope, Inc., a company solely engaged in the development of gene expression technology. To date, GenScope, Inc. has had no revenues. The acquisition cost of $26.8 million was accounted for as a purchase. The acquisition represented the purchase of technology in the development stage which is not presently considered commercially viable in the health care applications which the Company intends to pursue. As a result, $25.4 million of the acquisition cost was allocated to purchased in-process research and development and, in accordance with applicable accounting rules, was expensed in the third quarter of fiscal 1997. -4- NOTE 4 - INVESTMENTS During the second quarter of fiscal 1997, the Company sold its remaining equity interest in Etec Systems, Inc. (ETEC) for net cash proceeds of $31.6 million. The Company recorded a before-tax gain of $26.1 million, or $.42 per share after-tax. During the first quarter of fiscal 1997, the Company had sold part of its equity interest in ETEC for net cash proceeds of $14.2 million, resulting in a before-tax gain of $11.3 million, or $.23 per share after-tax. The ETEC investment was reported under other long-term assets. The sale of this investment accounts for a substantial portion of the decrease in the other long-term assets category. NOTE 5 - STOCK REPURCHASE COMMITMENT In the first quarter of fiscal 1997, the Company sold in a private placement 600,000 put warrants on shares of its common stock. Each warrant obligates the Company to purchase the shares from the holder, at a specified price, if the closing price of the common stock is below the exercise price on the maturity date. The cash proceeds from the sale of the put warrants were $1.8 million and have been included in capital in excess of par value. To date, 400,000 of the put warrants have expired (200,000 during the third quarter and 200,000 during the second quarter of fiscal 1997). The remaining warrants outstanding at March 31, 1997 have a total exercise price of $10.4 million and are reflected in the Company's financial statements as a provisional liability with the offset as a reduction of capital in excess of par value. The remaining warrants mature in June of 1997. NOTE 6 - DERIVATIVES The Company manages exposure to fluctuations in foreign exchange rates by creating offsetting positions through the use of derivative financial instruments, primarily forward or purchased option foreign exchange contracts. The Company does not use derivative financial instruments for trading or speculative purposes, nor is the Company a party to leveraged derivatives. Foreign exchange contracts are accounted for as hedges of net investments, firm commitments and foreign currency transactions. The gains and losses on the instruments utilized to create the hedge offset the gains and losses on the underlying exposures. At March 31, 1997, the total carrying amount of the Company's outstanding foreign currency contracts held was $145.1 million. The counterparties to these contracts consist of a limited number of highly rated major financial institutions and the Company does not expect to record any losses as a result of counterparty default. NOTE 7 - RESTRUCTURING Fiscal 1996. As part of continuing efforts to strengthen the performance of the Analytical Instruments Division, the Company identified a series of actions in fiscal 1996 which focused on reducing overhead and improving operating efficiency. The charge for this plan totaled $71.6 million and was recorded in the third quarter of fiscal 1996. In connection with the plan, the worldwide Analytical Instruments business was reorganized into three vertically integrated, fiscally accountable operating units, a distribution center in Holland was established to centralize the European infrastructure for shipping, administration, and related functions, and a program was implemented to eliminate excess production capacity in Germany. The plan targeted worldwide workforce reductions of 390 positions in manufacturing, sales and support, and administrative functions. As of March 31, -5- 1997, severance and related payments were made to 330 employees separated under the plan. There have been no adjustments to increase or decrease the liabilities originally provided for this restructuring plan. The plan is scheduled to be substantially completed by June 1997, although severance and other cash payments will extend through fiscal 1998. The following table details the major components of the fiscal 1996 provision for restructured operations: Facility Consolidation and Asset (Dollar amounts in millions) Personnel Related Total Write-offs Provision: Reduction of excess European manufacturing capacity $19.7 $23.0 $42.7 Reduction in European distribution and administrative capacity 11.5 6.0 17.5 Other worldwide workforce reductions and facility closings 6.6 4.8 11.4 Total Provision for Restructured Operations $37.8 $33.8 $71.6 Activity: Reduction of excess European manufacturing capacity $13.5 $13.8 $27.3 Reduction in European distribution and administrative capacity 3.8 1.0 4.8 Other worldwide workforce reductions and facility closings 3.6 1.9 5.5 Total activity through March 31, 1997 $20.9 $16.7 $37.6 Balance at March 31, 1997: Reduction of excess European manufacturing capacity $6.2 $9.2 $15.4 Reduction in European distribution and administrative capacity 7.7 5.0 12.7 Other worldwide workforce reductions and facility closings 3.0 2.9 5.9 Ending Balance at March 31, 1997 $16.9 $17.1 $34.0 Fiscal 1995. The Company recorded a $23.0 million before-tax charge in the fourth quarter of fiscal 1995 for restructuring actions focused on reducing costs within the Analytical Instruments business infrastructure. The charge included $20.7 million for severance and related costs for a workforce reduction of 227 employees and $2.3 million for closure and facility consolidation costs primarily related to the shutdown of the Company's manufacturing facility in Puerto Rico. All costs resulted in cash outlays and the actions were implemented by the third quarter of fiscal 1996. The restructuring reserve balance at March 31, 1997 of $3.1 million represents future severance and deferred payments. There have been no adjustments made to increase or decrease the liabilities originally accrued for this restructuring plan. -6- The following table details the major components of the fiscal 1995 provision for restructured operations: Activity Balance at (Dollar amounts in millions) Provision to Date March 31, 1997 Workforce reduction $ 20.7 $ 18.0 $ 2.7 Closure and facility consolidation 2.3 1.9 .4 Total $ 23.0 $ 19.9 $ 3.1 NOTE 8 - CHANGES IN ACCOUNTING PRINCIPLES The Company is required to implement Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings per Share," in the second quarter of fiscal 1998. This statement replaces the presentation of primary earnings per share (EPS) with a presentation of basic EPS and requires dual presentation of basic and diluted EPS on the face of the income statement. Basic EPS excludes common stock equivalents and is computed by dividing income available to shareholders by the weighted average number of common shares outstanding for the period. Diluted EPS is computed similarly to fully diluted EPS under the provisions of APB Opinion No. 15, "Earnings per Share." The following pro forma table illustrates the application of SFAS No. 128: Three months ended Nine months ended March 31, March 31, 1997 1996 1997 1996 As presented under APB Opinion No. 15: Primary EPS $ .23 $ (.84) $ 2.10 $ .10 Fully diluted EPS .23 (.82) 2.10 .10 As calculated under SFAS No. 128: Basic EPS $ .24 $ (.86) $ 2.17 $ .10 Diluted EPS .23 (.84) 2.10 .10 -7- THE PERKIN-ELMER CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with the consolidated financial statements and related notes included on pages 1 - 7 of this report, and "Management's Discussion and Analysis" appearing on pages 27 - 32 of the Company's 1996 Annual Report to Shareholders. Historical results and percentage relationships are not necessarily indicative of operating results for any future periods. RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1997 The Company reported net income of $10.4 million, or $.23 per share, for the third quarter of fiscal 1997 compared with a net loss of $35.9 million, or $.84 per share, in the third quarter of fiscal 1996. The current quarter included a $25.4 million before-tax charge for in-process research and development associated with the acquisition of GenScope, Inc. (see Note 3). The prior year's third quarter included a before-tax charge of $71.6 million for a restructuring of the Analytical Instruments business (see Note 7). On a comparable basis, excluding the special charges, net income for the third quarter of fiscal 1997 increased 35.7% over the third quarter of fiscal 1996. Net revenues were $322.9 million for the third quarter of fiscal 1997, an increase of 8% over the $299.0 million reported for the third quarter of fiscal 1996. The effects of currency rate movements decreased net revenues by approximately $16 million, or 5%, in the quarter compared to the prior year, as the U.S. dollar continued to strengthen against the Japanese Yen and certain European currencies. Geographically, the Company reported revenue growth of approximately 25% in the United States and 6% in the Far East, offsetting a decline of almost 3% in Europe. Excluding currency effects, revenues in the Far East and Europe would have increased nearly 20% and 3%, respectively. Regions outside the United States accounted for 63% of the consolidated third quarter revenues, compared with 68% in the prior year. Net revenues for the Applied Biosystems Division increased 19% in the third quarter of fiscal 1997. The negative effects of a strong U.S. dollar reduced the division's revenues by approximately $9 million, or 5%. All geographic markets reported increased revenues over the prior year. Net revenues in Europe and the Far East increased 6.8% and 13.9%, respectively. The strongest performance was in North America where revenues increased 30.4% over the prior year's third quarter. Increased demand for genetic analysis instruments, liquid chromatography-mass spectrometry (LC/MS) products, and the polymerase chain reaction (PCR) product line were the primary contributors. All three product lines experienced double digit unit growth over the third quarter of fiscal 1996. Net revenues for the Analytical Instruments Division were $149.9 million, a decrease of 2.4% from the $153.6 million reported in the prior year's third quarter. Currency rate movements reduced revenues by approximately $7 million, or 5%. While revenues in North America increased 11.3%, due in part to the introduction of new products, this was more than offset by decreased revenues in other geographic areas. Including currency effects, net revenues in Europe and the Far East decreased 8.5% and 6.1%, respectively. -8- Gross margin as a percentage of net revenues was 51.3% in the third quarter of fiscal 1997 compared to 48.7% in the third quarter of fiscal 1996. Both divisions experienced improved margins over the prior year. Gross margin as a percentage of net revenues for the Applied Biosystems Division increased in all geographic areas. Specifically, better margin performance in the LC/MS and PCR product lines compared to the third quarter of fiscal 1996, and overall unit volume increases, accounted for the improved gross margin percentage. The Analytical Instruments Division's gross margin percentage improved, substantially as a result of the benefits realized from the fiscal 1996 divisional restructuring and the focused sales efforts and product mix in North America and the Far East. Selling, general and administrative (SG&A) expenses were $93.6 million in the third quarter of fiscal 1997 compared to $85.9 million in the third quarter of fiscal 1996. The 8.9% increase in the quarter was primarily due to higher marketing expenses in the Applied Biosystems Division and costs related to the Company's restricted stock and incentive compensation programs. These increases were partially offset by lower expense levels in the Analytical Instruments Division as a result of the division's restructuring efforts. As a percentage of net revenues, SG&A expenses remained constant with the prior year at approximately 29%. Research, development and engineering (R&D) expenses of $27.2 million increased 5.9% over the prior year. R&D spending in the Applied Biosystems Division increased 30.3% over the prior year as the Company continued its planned investments into new bioresearch applications. R&D expenses for the Analytical Instruments Division were 6.9% below the prior year's level reflecting the objectives of the fiscal 1996 restructuring plan. The implementation of the restructuring actions announced in the third quarter of fiscal 1996 (see Note 7) is proceeding as planned. The organizational changes that were focused on business unit accountability have resulted in reduced operating costs for the Analytical Instruments Division. The Company achieved approximately $7 million in before-tax income benefits from the program in the third quarter of fiscal 1997. When the program is fully implemented, the Company expects to achieve annual operating cost and cash flow benefits of more than $40 million. Total consolidated operating expenses were $146.1 million in the third quarter of fiscal 1997 compared to $183.2 million in the prior year's third quarter. As previously mentioned, both years included special charges: a $25.4 million charge for purchased in-process R&D in fiscal 1997, and a $71.6 million charge for restructuring actions in fiscal 1996. Excluding these special charges, operating income increased 32.3% over the prior year as both divisions reported improved operating margins. A combination of strong revenue growth in the Applied Biosystems Division and reduced expense levels in the Analytical Instruments Division contributed to the improvement. As a result of lower average debt levels, interest expense in the third quarter of fiscal 1997 decreased $.8 million compared to the third quarter of fiscal 1996. Interest income was $.5 million higher than the prior year as a result of maintaining higher cash and cash equivalent balances. The effective income tax rate for the third quarter of fiscal 1997 was 50.8% compared to 3.8% in the third quarter of fiscal 1996. These rates were impacted by the special charges included in both years. The current year's third quarter charge for acquired research and development is not deductible for tax purposes while the prior year's restructuring charge resulted in a $9.3 million, or 13%, tax benefit -9- in fiscal 1996. Excluding these special charges, the effective income tax rate was 23% in the third quarter of both fiscal 1997 and fiscal 1996. RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED MARCH 31, 1997 The Company reported net income of $93.7 million, or $2.10 per share, for the nine months ended March 31, 1997 compared with $4.4 million, or $.10 per share, in the first nine months of fiscal 1996. Net income for both years included special items which affect their comparability. Special items in fiscal 1997 included a $25.4 million before-tax charge for acquired research and development (see Note 3) and a $37.4 million before-tax gain from the sale of the Company's entire equity interest in ETEC (see Note 4). Fiscal 1996 results included a $71.6 million before-tax charge taken for a restructuring of the Analytical Instruments Division (see Note 7). On a comparable basis, excluding these special items, year-to-date net income for fiscal 1997 increased 35% over the prior year. Fiscal 1997's year-to-date net revenues of $929.4 million increased 8.4% over the $857.5 million reported for the first nine months of fiscal 1996. Currency rate movements decreased net revenues by approximately $31 million in fiscal 1997, as the U.S. dollar strengthened against the Japanese Yen and certain European currencies. Net revenues in the United States and Europe increased 17.7% and 6.4%, respectively, while revenues in the Far East remained constant with the prior year's level. Excluding the effects of currency, revenues in Europe and the Far East would have increased approximately 9% and 11%, respectively. Increased demand for genetic analysis and LC/MS products contributed to a 22.6% increase in revenues for the Applied Biosystems Division, despite a negative currency impact of approximately $18 million. Revenues for the Analytical Instruments Division fell 3.2% below the prior year's level. Excluding currency effects, net revenues in this division would have remained relatively constant with the prior year. Gross margin as a percentage of net revenues was 49.9% for the first nine months of fiscal 1997 compared to 48.5% for the prior year. Both the Applied Biosystems Division and the Analytical Instruments Division experienced year-to-year improvements in the gross margin percentage. Benefits realized from the restructuring of the Analytical Instruments Division and higher unit volumes in the Applied Biosystems Division more than offset the negative effects of a stronger U.S. dollar. SG&A expenses for the nine months increased $21.4 million in fiscal 1997 compared to the same period in fiscal 1996. An increase in administrative and marketing expenses for the Applied Biosystems Division was partially offset by a decline in expenses for the Analytical Instruments Division. In addition, current year expenses included a $7.0 million non-cash charge for compensation expense under the Company's restricted stock program compared with $4.9 million in the prior year. As a percentage of net revenues, SG&A expenses remained constant with the prior year at 29%. R&D expenses for the first nine months of fiscal 1997 were $78.6 million compared to $76.7 million in the prior year. R&D spending in the Applied Biosystems Division increased 27.8% over the prior year as the Company continued its planned investments into new bioresearch applications. The Analytical Instruments Division reported lower R&D spending which reflected the objectives of the fiscal 1996 restructuring plan. -10- Total Company operating income was $89.3 million for the first nine months of fiscal 1997 compared with $18.1 million in fiscal 1996. On a comparable basis, excluding the special charge of $25.4 million in fiscal 1997 for acquired research and development, and the $71.6 million restructuring charge in fiscal 1996, operating income increased by $25.0 million, or 27.8%. The implementation of the restructuring actions announced in the third quarter of fiscal 1996 is proceeding as planned. The Company has achieved approximately $17 million in before-tax income benefits from the program in fiscal 1997. Year-to-date interest expense was $1.9 million for fiscal 1997 compared with $4.1 million in fiscal 1996. The decrease was primarily the result of lower average borrowing levels compared to the prior year. As a result of maintaining higher cash and cash equivalents balances, interest income increased $1.5 million over the prior year. The Company's effective income tax rate was 27.5% for the first nine months of fiscal 1997 compared to 70.6% for the same period in fiscal 1996. Excluding the different tax impacts of the previously mentioned special items, the effective income tax rates for both years was 23%. FINANCIAL RESOURCES AND LIQUIDITY At March 31, 1997, the Company's total cash position, including cash equivalents, was $162.8 million compared with $95.4 million at June 30, 1996, and $145.3 million at March 31, 1996. Net cash provided by operating activities was $68.1 million for the first nine months of fiscal 1997 compared to $61.7 million for the same period in fiscal 1996. The increase was primarily due to higher net income (excluding the special charges in both years), which more than offset higher accounts receivable balances. Net cash used by investing activities was $.2 million for the first nine months of fiscal 1997 compared to $9.9 million for the first nine months of fiscal 1996. In the current year, the Company generated $66.9 million in net cash proceeds from the sale of its equity interest in ETEC (see Note 4) and certain non-operating assets. These proceeds almost entirely offset the $21.3 million used for the purchase of GenScope, Inc. and a $24.1 million increase in net capital spending. Substantially all of the increase in capital expenditures is related to the improvement of the Company's information technology infrastructure and the acquisition of a corporate airplane. In addition to the $10.1 million spent in fiscal 1997 on the Company's strategic program to improve its information technology infrastructure, a capital commitment of approximately $30 million is expected to be paid in fiscal 1998 when the improvements are delivered, implemented, and accepted. The Company expects this obligation to be funded by operating cash flow and/or the issuance of commercial paper. Net cash used by financing activities was $4.6 million in fiscal 1997 compared to $21.9 million of cash provided by financing activities in fiscal 1996. While the Company generated $1.8 million from the sale of equity put warrants (see Note 5), and $22.7 million in proceeds from employee stock option plan exercises, this was more than offset by the $22.1 million used for the payment of shareholders' dividends combined with the $15.9 million used for the purchase of 300,000 shares of common stock for treasury. There were no shares repurchased during the first nine months of fiscal -11- 1996. The change in long-term debt reflects the Company's refinancing of its Yen denominated loan during the third quarter of fiscal 1997. The Company replaced its 2.8 billion Yen loan which matured in February with a 3.8 billion Yen long-term loan for a period of five years. The effective interest rate for the new loan is 2.1% compared to 3.3% on the previous loan. OUTLOOK As the underlying demand for life sciences products continues to grow, the outlook for the remainder of the fiscal year is positive. New product introductions have been well received and unit volume growth is expected to continue in the Applied Biosystems Division. However, adverse currency effects on net revenues could continue if the relationship of the U.S. dollar to certain currencies is maintained at current levels, or if the U.S. dollar continues to strengthen. In addition, the Company has announced further actions to improve the efficiency of its manufacturing facilities. These actions will continue the transition of the Analytical Instruments Division from a highly vertical manufacturing operation to one that relies more heavily on outsourcing functions that are not considered core competencies. This reorganization will form a major part of the second phase of a profit improvement program, begun by the Company in fiscal 1996, which has already produced cost savings in its analytical instruments business. The full scope of this phase of the profit improvement program is expected to be finalized and announced before the end of fiscal 1997. The outsourcing of specific manufacturing functions will be implemented during fiscal 1998. Current expectations are that the total charge against earnings for fiscal 1997 will be less than the $71.6 million before-tax charge taken in fiscal 1996. A portion of the cost savings targeted by these actions will come from the elimination of approximately 285 manufacturing jobs in the U.S. and Europe. The remainder of the cost savings will come from increased productivity achieved through outsourcing and higher utilization of the Company's Singapore facility. "SAFE HARBOR" STATEMENT UNDER PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 Certain statements contained in this report may be forward looking and are subject to a variety of risks and uncertainties. Many factors could cause actual results to differ materially from these statements. These factors include, but are not limited to, (1) complexity and uncertainty regarding the development of new high technology products, (2) loss of market share through competition, (3) introduction of competing products or technologies by other companies, (4) pricing pressures from competitors and/or customers, (5) changes in the life sciences or analytical instrument industries, (6) changes in the pharmaceutical, environmental, research or chemical markets, (7) variable government funding in key geographical regions, (8) the Company's ability to protect proprietary information and technology or to obtain necessary licenses on commercially reasonable terms, (9) the loss of key employees, (10) fluctuations in foreign currency exchange rates, and (11) other factors which might be described from time to time in the Company's filings with the Securities and Exchange Commission. A significant portion of the Company's life science business operations are located near major California earthquake faults. The ultimate impact of earthquakes on the Company, significant suppliers and the general infrastructure is unknown, but operating results could be materially affected -12- in the event of a major earthquake. The Company maintains insurance to reduce its exposure to losses and interruptions caused by earthquakes. Although the Company believes it has the product offerings and resources needed for continuing success, future revenue and margin trends cannot be reliably predicted and may cause the Company to adjust its operations. Factors external to the Company can result in volatility of the Company's common stock price. Because of the foregoing factors, recent trends should not be considered reliable indicators of future stock prices or financial results. -13- PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits. 11. Computation of Net Income Per Share. 27. Financial Data Schedule. (b) Reports on Form 8-K. No reports on Form 8-K were filed during the quarter for which this report is being filed. -14- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. THE PERKIN-ELMER CORPORATION By:/s/ Stephen O. Jaeger Stephen O. Jaeger Vice President, Chief Financial Officer and Treasurer By:/s/ Ugo D. DeBlasi Ugo D. DeBlasi Corporate Controller (Chief Accounting Officer) Dated: May 14, 1997 -15- EXHIBIT INDEX Exhibit No. Exhibit 11 Computation of Net Income Per Share 27 Financial Data Schedule EX-11 2 EARNING PER SHARE EXHIBIT 11 THE PERKIN-ELMER CORPORATION COMPUTATION OF NET INCOME (LOSS) PER SHARE (unaudited) (Amounts in thousands except per share amounts)
Three months ended Nine months ended March 31, March 31, 1997 1996 1997 1996 Weighted average number of common shares 43,531 42,490 43,225 42,490 Common stock equivalents 1,319 936 1,319 936 Weighted average number of common shares used in calculating primary net income (loss) per share 44,850 43,426 44,544 43,426 Additional dilutive stock options 101 172 101 172 Shares used in calculating fully diluted net income (loss) per share 44,951 43,598 44,645 43,598 Calculation of primary and fully diluted net income (loss) per share: Net income (loss) used in the calculation of primary and fully diluted net income (loss) per share $ 10,361 $ (35,938) $ 93,679 $ 4,412 Primary net income (loss) per share $ 0.23 $ (0.84) $ 2.10 $ 0.10 Fully diluted net income (loss) per share $ 0.23 $ (0.82) $ 2.10 $ 0.10
EX-27 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED MARCH 31, 1997 AND THE CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AT MARCH 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 9-MOS JUN-30-1997 MAR-31-1997 162,838 0 293,461 (5,525) 208,374 745,598 403,439 (234,831) 1,008,990 414,278 0 45,600 0 0 331,323 1,008,990 929,429 929,429 465,432 465,432 0 267 1,890 129,249 (35,570) 93,679 0 0 0 93,679 2.10 2.10
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