-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, A3odtOI9VqXOtymJ5fdg7fu80Zjw3BK/cBPyAkxp5iNT1MXrywMB1CPEVFRL0OmW PU17/41HOiXL/78IuK10ZA== 0000891618-95-000064.txt : 19950515 0000891618-95-000064.hdr.sgml : 19950515 ACCESSION NUMBER: 0000891618-95-000064 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19941231 FILED AS OF DATE: 19950214 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: RAYCHEM CORP CENTRAL INDEX KEY: 0000082206 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC LIGHTING & WIRING EQUIPMENT [3640] IRS NUMBER: 941369731 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-08341 FILM NUMBER: 95510309 BUSINESS ADDRESS: STREET 1: 300 CONSTITUTION DR STREET 2: MS#120/8502 CITY: MENLO PARK STATE: CA ZIP: 94025-1164 BUSINESS PHONE: 4153613333 MAIL ADDRESS: STREET 1: 300 CONSTITUTION DRIVE STREET 2: #MS 120/8502 CITY: MENLO PARK STATE: CA ZIP: 94025-1164 FORMER COMPANY: FORMER CONFORMED NAME: RAYTHERM CORP DATE OF NAME CHANGE: 19720526 10-Q 1 FORM 10-Q FOR RAYCHEM COPORATION 1 UNITED STATES 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 DECEMBER 31, 1994 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 COMMISSION FILE NUMBER 2-15299 RAYCHEM CORPORATION (Exact name of registrant as specified in its charter) Delaware 94-1369731 (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 300 Constitution Drive, Menlo Park, CA 94025-1164 (Address of principal executive offices) (Zip code)
(415) 361-4180 (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 --- --- As of February 2, 1995, the registrant had outstanding 43,665,513 shares of Common Stock, $1.00 par value. 2 RAYCHEM CORPORATION INDEX TO FORM 10-Q
Page Number ----------- PART I. FINANCIAL INFORMATION Item 1: Financial Information Consolidated Condensed Statements of Operations - Three and Six Months Ended December 31, 1994 and 1993 1 Consolidated Condensed Balance Sheets - December 31, 1994, and June 30, 1994 2 Consolidated Condensed Statements of Cash Flows - Six Months Ended December 31, 1994 and 1993 3 Notes to Consolidated Condensed Financial Statements 4-9 Item 2: Management's Discussion and Analysis 10-18 of Financial Condition and Results of Operations PART II. OTHER INFORMATION Item 1: Legal Proceedings 19 Item 4: Submission of Matters to a Vote of Security Holders 19-20 Item 6: Exhibits and Reports on Form 8-K 20 SIGNATURES 21
3 RAYCHEM CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (In thousands except share data) (Unaudited)
Three Months Ended Six Months Ended December 31, December 31, --------------------------- ----------------------------- 1994* 1993 1994* 1993 ------------ ------------ ------------ ------------- Revenues $ 382,494 $ 353,835 $ 750,639 $ 709,267 Cost of goods sold 184,648 187,984 367,507 371,714 Research and development expense 28,748 35,306 55,977 68,920 Selling, distribution, and administrative expense 121,267 119,858 236,460 234,080 Provision for restructuring and divestitures - - 23,900 - Loss on formation of Ericsson Raynet joint venture and other Raynet items (423) - 31,300 - Equity in net losses of affiliated companies 12,640 118 37,316 677 Interest expense, net 2,973 3,345 7,567 6,048 Other expense, net 1,507 2,493 5,116 4,780 ------------ ------------ ------------ ------------- Income (loss) before income taxes, extraordinary item, and change in accounting principle 31,134 4,731 (14,504) 23,048 Provision for income taxes 11,135 3,075 13,825 14,981 ------------ ------------ ------------ ------------- Income (loss) before extraordinary item and change in accounting principle 19,999 1,656 (28,329) 8,067 Extraordinary item - (loss) adjustment related to early retirement of debt, net of $0 income taxes 756 - (6,318) - Cumulative effect of change in accounting principle, net of $0 income taxes - - (1,477) - ------------ ------------ ------------ ------------- Net income (loss) $ 20,755 $ 1,656 $ (36,124) $ 8,067 ============ ============ ============ ============= Average number of common shares and equivalents outstanding 44,225,536 43,171,602 43,394,465 43,065,406 ============ ============ ============ ============= Earnings (loss) per common share: Income (loss) before extraordinary item and change in accounting principle $ 0.45 $ 0.04 $ (0.65) $ 0.19 Extraordinary item 0.02 - (0.15) - Change in accounting principle - - (0.03) - ------------ ------------ ------------ ------------- Net income (loss) $ 0.47 $ 0.04 $ (0.83) $ 0.19 ============ ============ ============ ============= Dividends per common share $ 0.08 $ 0.08 $ 0.16 $ 0.16 ============ ============ ============ =============
*Raynet Corporation and subsidiaries' results are presented on the equity basis of accounting in fiscal 1995 versus consolidated in fiscal 1994. See accompanying notes to consolidated condensed financial statements. 1 4 RAYCHEM CORPORATION CONSOLIDATED CONDENSED BALANCE SHEETS (in thousands except share data)
(Unaudited) December 31, 1994* June 30, 1994 ------------------ ------------- ASSETS Current assets: Cash and cash equivalents $ 114,587 $ 78,090 Accounts receivable, net 274,344 312,624 Inventories: Raw materials 80,463 99,129 Work in process 49,645 55,406 Finished goods 89,661 93,254 ----------- ----------- Total inventories 219,769 247,789 Prepaid taxes 41,534 40,014 Other current assets 79,343 57,425 ----------- ----------- Total current assets 729,577 735,942 Property, plant, and equipment 1,072,035 1,110,695 Less accumulated depreciation and amortization 573,108 576,216 ----------- ----------- Net property, plant, and equipment 498,927 534,479 Other assets 120,713 128,594 ----------- ----------- Total assets $ 1,349,217 $ 1,399,015 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable to banks $ 25,555 $ 26,986 Accounts payable 54,241 83,136 Other accrued liabilities 167,364 184,573 Income taxes 21,097 25,515 Current maturities of long-term debt 1,649 3,881 ----------- ----------- Total current liabilities 269,906 324,091 Long-term debt 258,869 244,681 Deferred income taxes 28,536 27,433 Other long-term liabilities 81,453 65,625 Minority interest 4,331 4,261 Stockholders' equity: Preferred Stock, $1.00 par value Authorized: 15,000,000 shares; Issued: none - - Common Stock, $1.00 par value Authorized: 72,150,000 shares Issued: 43,633,858 and 43,005,786 shares, respectively 43,634 43,006 Additional contributed capital 372,659 354,660 Retained earnings 276,826 319,905 Currency translation 15,693 16,077 Treasury Stock, at cost (56,700 shares) (2,013) - Notes receivable from sale of stock (677) (724) ----------- ----------- Total stockholders' equity 706,122 732,924 ----------- ----------- Total liabilities and stockholders' equity $ 1,349,217 $ 1,399,015 =========== ===========
* Raynet Corporation and subsidiaries' results are presented on the equity basis of accounting in fiscal 1995 versus consolidated in fiscal 1994. See accompanying notes to consolidated condensed financial statements. 2 5 RAYCHEM CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
SIX MONTHS ENDED DECEMBER 31 (IN THOUSANDS) 1994* 1993 -------- -------- Cash flows from operating activities: Net (loss) income $(36,124) $ 8,067 Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: Provision for restructuring and divestitures, net of payments 20,196 (3,696) Loss on formation of Ericsson Raynet joint venture 14,950 - Extraordinary loss from early retirement of debt (1,043) - Change in accounting principle 1,477 - Depreciation and amortization 32,994 38,975 Deferred income tax benefit (680) 3 Changes in certain assets and liabilities, net of effects from restructuring and divestitures, joint venture formation, extraordinary item, and change in accounting principle: Accounts receivable (867) (26,665) Inventories (2,532) (23,309) Accounts payable and accrued liabilities (28,356) (10,779) Income taxes (2,173) (1,612) Other assets and liabilities 19,814 4,838 -------- -------- Net cash provided by (used in) operating activities 17,656 (14,178) -------- -------- Cash flows from investing activities: Investment in property, plant, and equipment (49,166) (51,288) Disposition of property, plant, and equipment 5,102 7,735 Proceeds from sale of specified Raynet assets 40,000 - Purchase of investment (1,000) - -------- -------- Net cash used in investing activities (5,064) (43,553) -------- -------- Cash flows from financing activities: Net proceeds from (payment of) short-term debt 3,085 (16,419) Proceeds from long-term debt 225,378 15,880 Payments of long-term debt (212,043) (839) Common Stock issued under employee benefit plans 18,396 17,639 Common stock repurchased (2,013) - Proceeds from repayments of stockholder notes receivable 278 160 Cash dividends (6,955) (6,767) -------- -------- Net cash provided by financing activities 26,126 9,654 -------- -------- Effect of exchange rate changes on cash and cash equivalents (2,221) (2,180) -------- -------- Increase (decrease) in cash and cash equivalents 36,497 (50,257) Cash and cash equivalents at beginning of period 78,090 133,946 -------- -------- Cash and cash equivalents at end of period $114,587 $ 83,689 ======== ======== SUPPLEMENTAL DISCLOSURES Cash paid for: Interest (net of amounts capitalized) $ 16,588 $ 7,211 Income taxes (net of refunds) 10,687 12,682
* Raynet Corporation and subsidiaries' results are presented on the equity basis of accounting in fiscal 1995 versus consolidated in fiscal 1994. See accompanying notes to consolidated condensed financial statements. 3 6 RAYCHEM CORPORATION NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED) STATEMENT OF ACCOUNTING PRESENTATION In the opinion of management, the accompanying unaudited consolidated condensed financial statements include all adjustments, including normal recurring accruals, necessary to present fairly the results of operations for the three and six months ended December 31, 1994 and 1993, the financial position as of December 31, 1994 and the cash flows for the six months ended December 31, 1994 and 1993. The June 30, 1994 balance sheet included is derived from the consolidated financial statements included in the company's Annual Report on Form 10-K for the year ended June 30, 1994. Certain prior-period amounts have been reclassified to conform with the fiscal 1995 financial statement presentation. Results for the three- and six-months ended December 31, 1994, include the results of Raynet Corporation and subsidiaries through November 16, 1994, and the results of Ericsson Raynet from November 17, 1994, through December 31, 1994, on the equity basis of accounting. BUSINESS SEGMENTS Revenues and operating income (loss) by business segment are as follows:
In thousands ------------------------------------------------------------------------ Three Months Ended Six Months Ended December 31, December 31, --------------------------------- -------------------------------- 1994* 1993 1994* 1993 ------------- ------------ ------------- ------------- Revenues Electronics $144,891 $127,476 $284,990 $254,080 Industrial 130,558 108,611 252,420 221,349 Telecommunications 107,045 109,201 213,229 224,535 Raynet - 8,547 - 9,303 -------- -------- -------- -------- Total revenues $382,494 $353,835 $750,639 $709,267 ======== ======== ======== ======== Operating income (loss) before provision for restructuring and loss on formation of JV and other Raynet items Electronics $ 24,566 $ 21,026 $ 47,068 $ 46,624 Industrial 28,112 16,246 51,541 37,911 Telecommunications 16,442 23,047 33,709 50,141 Raynet - (28,964) - (57,553) Corporate (21,289) (20,668) (41,623) (42,570) -------- -------- -------- -------- Total operating income $ 47,831 $ 10,687 $ 90,695 $ 34,553 ======== ======== ======== ========
4 7 Operating income (loss) including provision for restructuring and loss on formation of JV and other Raynet items Electronics $ 24,566 $ 21,026 $ 47,068 $ 46,624 Industrial 28,112 16,246 51,541 37,911 Telecommunications 16,442 23,047 9,809 50,141 Raynet 423 (28,964) (31,300) (57,553) Corporate (21,289) (20,668) (41,623) (42,570) -------- -------- -------- -------- Total operating income $ 48,254 $ 10,687 $ 35,495 $ 34,553 ======== ======== ======== ========
*Raynet Corporation and subsidiaries' results are presented on the equity basis of accounting in fiscal 1995 versus consolidated in fiscal 1994. CHANGE IN ACCOUNTING PRINCIPLE The company adopted Statement of Financial Accounting Standards No. 112, "Employers' Accounting for Postemployment Benefits" (FAS 112), effective July 1, 1994. This statement changes the method of accounting for certain postemployment benefits from a cash basis to an accrual basis. Adoption of FAS 112 resulted in a one-time adjustment of $1.5 million for the six months ended December 31, 1994, to reflect the cumulative amount that would have been accrued had the statement been in effect in prior years. EXTRAORDINARY ITEM - LOSS FROM EARLY RETIREMENT OF DEBT On September 30, 1994, the company gave irrevocable notice to the holders of its 9.55% privately placed senior notes of its intention to prepay this debt on November 1, 1994. Accordingly, the company recorded in the first quarter of 1995 an extraordinary loss of $7.1 million for the early retirement of debt. The extraordinary loss was comprised of an estimated $8.1 million prepayment penalty and deferred debt issuance costs of $0.5 million, net of a $1.5 million deferred gain resulting from the termination of a related interest rate swap agreement. The prepayment penalty was estimated based on interest rates at the time of notice. When paid, the prepayment penalty was $0.8 million less, which adjustment was recorded in the second quarter of 1995. NEW ACCOUNTING STANDARD In October 1994, the Financial Accounting Standards Board issued Statement No. 119, "Disclosure About Derivative Financial Instruments and Fair Value of Financial Instruments," which the company has adopted this quarter. Currently, the company has not entered into any interest rate risk management transactions. The company does not engage in foreign currency speculative transactions. The company has written policies that place all foreign currency forward and option transactions under the direction of corporate treasury and that restrict all derivative transactions to those intended for hedging purposes. The company operates in more than 40 countries worldwide, with in excess of sixty percent of its revenues occurring outside the United States. The company attempts to limit its exposure to changing foreign currency exchange rates through both operational and financial market actions. The company manufactures its products in a number of locations around the world, and hence has a cost base that is well diversified over a number of European and Asian currencies as well as the U.S. dollar. This diverse base of local currency costs serves to counterbalance the income effect 5 8 of potential changes in the value of the company's local currency denominated revenues. Also, the company denominates its third-party export sales in the currency of the selling Raychem entity, whenever possible. Short-term exposures to changing foreign currency exchange rates are managed by financial market transactions, principally through the purchase of forward exchange contracts (with maturities usually less than three months) to hedge the non-functional currency denominated receivables and payables of the company's operating units. The related gains and losses are included in "other expense, net," as they arise. For the three- and six-month periods ended December 31, 1994, gains and losses from forward exchange contracts used to hedge receivables and payables totaled $0.4 million and $4.1 million, respectively. During these periods the company incurred total foreign exchange transaction losses of $1.6 million and $3.6 million, respectively. The total amount of exposure hedged as at December 31, 1994, was $155 million, reflecting hedging for trade and intercompany receivables, payables, and loans in non-functional currencies. The company has unhedged non-functional currency translation and transaction exposures in countries whose currencies do not have a liquid, cost-effective forward market available for hedging. Exposures, at December 31, 1994, included $13.1 million in intercompany payables in non-functional currencies and $5.5 million of net monetary assets in foreign countries with the U.S. dollar as functional currency. The company periodically enters into forward exchange contracts to hedge a portion of its foreign equity. The gains and losses on these contracts are included in "stockholders' equity." RESTRUCTURING AND DIVESTITURES On October 11, 1994, the company announced a major restructuring of its telecommunications business segment. As a result, the company recorded a pretax charge of $24 million for restructuring and divestitures in the first quarter of 1995. The segment's restructuring charge included $13 million for severance costs related to a net workforce reduction of 340 employees, resulting from the closure of telecommunications' manufacturing operations in Germany and the restructuring of its North American activities. The remaining charge of $11 million related to plant consolidations and the shutdown of unprofitable product lines. RAYNET On November 16, 1994, the company and L M Ericsson (Ericsson), a Swedish telecommunications company, formed a joint venture for the development, manufacture, and marketing of fiber-optic communications systems for telephone access networks worldwide. The joint venture, called "Ericsson Raynet," has taken over and is continuing the operations of the company's Raynet subsidiary, and is headquartered in Menlo Park, California. Ericsson Raynet has been organized as a partnership under Delaware law; the company's Raynet subsidiary holds the company's interest in the joint venture. Ericsson representatives constitute a majority of the Board of Managers of the joint venture. In forming the joint venture, Raychem sold certain specified assets of its Raynet subsidiary to Ericsson in exchange for $40 million. Ericsson contributed the purchased assets to the joint venture, and Raynet contributed substantially all of its remaining assets and liabilities to the joint venture. Funding of the joint venture will initially be provided by the partners, generally 51% by Ericsson and 49% by Raynet. 6 9 During the first five to eight years of operation, subject to various conditions, substantially all of the profits of the joint venture up to $156 million will be allocated to Raynet; thereafter, profits of the joint venture will be shared 51/49 by Ericsson and Raynet, respectively. Ericsson's share of the joint venture's losses will be capped at $25 million for the fiscal year ending June 30, 1995. During the fiscal year ending June 30, 1996, up to $19.6 million of losses will be allocated to Ericsson and Raynet in a 51/49 ratio; additional losses, if any, of up to $10 million will be allocated 100% to Raynet; and additional losses, if any, will again be allocated to Ericsson and Raynet in a 51/49 ratio. BellSouth Enterprises Inc. (BSE) had financed a portion of the software development work at Raynet and held a royalty interest in the software related revenues of Raynet. With the creation of the joint venture, this royalty payment was reconfigured. Raychem paid BSE $10 million in 1994, and is required to make two additional payments of $10 million each over the next two calendar years. Raychem has agreed to make other royalty payments to BSE contingent upon the revenues and earnings performance of the joint venture. At such time as the joint venture achieves profitability, these royalty payments could approximate 36% of Raychem's distributions from the joint venture. Ericsson has a right to purchase Raynet's interest in the joint venture at a fixed price for a limited period beginning November 16, 1996; and Ericsson and Raynet have call and put rights, respectively, on Raynet's interest in the joint venture exercisable at fair market value at any time after July 1, 1999. If any of these options are exercised, Raychem has agreed to pay BSE a portion of the purchase price received. Reflected in the accompanying Statement of Operations for the six months ended December 31, 1994, is a pre-tax charge of $28 million which is the company's loss resulting from these transactions. For purposes of recording its loss, the company has discounted its obligations to BSE to their present value using a 7.97% discount rate. INVESTMENTS The financial position and results of operations of Ericsson Raynet, the only significant equity investment of the company, is summarized below:
(Unaudited) (Unaudited) Three Months Ended Six Months Ended December 31, December 31, ---------------------- ---------------------- 1994(a) 1993(c) 1994(a) 1993(c) --------- --------- -------- -------- Revenues $ 6,959 $ 8,547 $ 29,515 $ 9,303 ======== ======== ======== ======== Gross profit (loss) $ (5,990) $ (7,786) $ (8,959) $(16,442) Research and development expense 8,922 11,188 20,646 21,708 Selling, distribution and administrative expense 9,687 9,990 19,626 19,403 Interest and other expense 865 1,002 909 1,820 -------- -------- -------- -------- Pretax loss $(25,464) $(29,966) $(50,140) $(59,373) ======== ======== ======== ======== Raychem's equity in loss $(13,532)(b) $(29,966) $(38,208)(b) $(59,373) ======== ======== ======== ========
7 10
(Unaudited) December 31, June 30, 1994(d) 1994(c) ------------ ------------ Current assets $51,882 $70,120 Non-current assets 36,938 39,424 Current liabilities $46,351 $55,532 Non-current liabilities 312 0
(a) Results for the three and six months ended December 31, 1994, include the results of Raynet Corporation and subsidiaries through November 16, 1994, and the results of Ericsson Raynet from November 17, through December 31, 1994, on the equity basis of accounting as reflected in Raychem's financial statements. (b) The joint venture agreement specifies varying profit and loss allocations to its partners as more fully described in the "Raynet" footnote above. (c) Results for the three and six months ended December 31, 1993, and the balances as of June 30, 1994, are those of Raynet Corporation and subsidiaries as previously reported. (d) Balances as of December 31, 1994, are those of Ericsson Raynet, reflected as an equity investment in Raychem's financial statements. DEBT STRUCTURE On September 29, 1994, the company entered into syndicated loan agreements providing for a five-year partially amortizing term loan of $225 million, and a renewable 364-day revolving credit facility of $200 million. Interest on the term loan and revolving credit facility are at variable rates. The term loan requires quarterly principal payments of $15 million beginning December 31, 1996, increasing to $17.5 million from December 31, 1997, and to $20 million from December 31, 1998, with a final payment of $35 million due September 29, 1999. Proceeds from the term loan were drawn on November 1, 1994, and used to retire the 9.55% privately placed senior notes and for general corporate purposes, while the revolving credit facility replaced existing committed credit facilities. The new agreement includes covenants which, among other things, specify a minimum net worth requirement, a maximum leverage limit, a minimum fixed charge coverage ratio, a dividend restriction, and limits on further advances to fund Raynet operations. REPURCHASE OF COMMON STOCK In December 1994, the Board of Directors authorized the repurchase, at management's discretion, of up to 1.5 million shares of the company's stock during any one fiscal year. Shares repurchased under this authorization will be used to offset the dilution caused by the company's employee stock plans. The company has repurchased 100,000 shares, of which 56,700 shares settled and were held as treasury stock at December 31, 1994. CONTINGENCIES The company has been named, among others, as a potentially responsible party (PRP) in administrative proceedings alleging that it may be liable for the costs of correcting environmental conditions at certain hazardous waste sites. At all of the sites, the company is alleged to be a de minimis generator of hazardous wastes, and the company believes that it has limited or no liability for cleanup costs at these sites. The company has also been notified by a state environmental agency that it may be required to investigate the need for remedial work at one of its 8 11 manufacturing sites. The company currently is conducting such investigations on a voluntary basis. Additionally, the company and its subsidiaries have been named as defendants in lawsuits arising from various commercial matters, including product liability and private cost recovery for environmental cleanup expenses. The principal product liability litigation involves a variety of claims arising from the company's heat-tracing and freeze-protection products. The single environmental cost recovery lawsuit in which Raychem has been named as a defendant, along with sixteen other corporate and governmental codefendants, involves the disposal of waste materials at the West Contra Costa County Landfill in Richmond, California. Legal proceedings tend to be unpredictable and costly. Based on currently available information, however, management believes that the resolution of pending claims, regulatory inquiries, and legal proceedings will not have a material adverse effect on the company's operating results or financial position. SUBSEQUENT EVENTS On January 2, 1995, the company entered into a revolving credit agreement with its Ericsson Raynet joint venture. The company committed to make available to the joint venture a maximum of $50 million, due in full on December 20, 1995, or earlier if the revolving credit arrangement is terminated at the company's discretion. The credit agreement stipulates that borrowings under the agreement will be interest-free, and imposes no covenants or restrictions on the joint venture's operations. Ericsson has also entered into a similar agreement with the joint venture. On January 17, 1995, the company's Board of Directors declared a quarterly cash dividend of $0.08 per share of Common Stock, payable on March 8, 1995, to stockholders of record as of February 8, 1995. 9 12 RAYCHEM CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS OVERVIEW The company reported second quarter 1995 net income of $21 million, or $0.47 per share, versus net income of $2 million, or $0.04 per share, in the second quarter of 1994. Revenues increased to $382 million in the second quarter of 1995 from $354 million in the comparable prior-year period, which included $9 million in revenues from Raynet. This represents a 5% increase over the year-ago quarter on a constant currency basis (which assumes that foreign currency exchange rates had remained constant from the prior period). For the six months ended December 31, 1994, net loss was $36 million, or $0.83 per share, compared to net income of $8 million, or $0.19 per share, for the same period in the prior year. Revenues for the six-month period ended December 31, 1994, increased 3% over the prior-year period on a constant currency basis to $751 million. Results for the three- and six-months ended December 31, 1994, include the results of Raynet Corporation and subsidiaries through November 16, 1994, and the results of Ericsson Raynet from November 17, 1994, through December 31, 1994, (the "Raynet" results) on the equity basis of accounting. Excluding the effect of Raynet, Raychem's "ongoing" pretax income increased to $44 million in the three months ended December 31, 1994, from $35 million in the year-ago quarter which was adversely affected by currency movements in Europe. Raynet's pretax loss for the quarter was $13 million, which was primarily attributable to losses incurred through November 16, 1994, compared with a $30 million loss in the previous year's second quarter when Raynet was a wholly owned Raychem subsidiary. Pretax income for the six months ended December 31, 1994, included a $24 million provision for restructuring of the telecommunications business segment and a Raynet pretax loss of $70 million, which included a $28 million loss on formation of the Ericsson Raynet joint venture, equity in loss of $38 million and $3 million of other Raynet items. Raychem's results are summarized as follows:
PRETAX INCOME (LOSS) BEFORE EXTRAORDINARY ITEM AND CHANGE Three Months Ended Six Months Ended IN ACCOUNTING PRINCIPLE December 31, December 31, (in millions) 1994 1993 1994 1993 ---- ---- ---- ---- Core business: "Ongoing" pretax income $ 44 $ 35 $ 79 $ 82 Provision for restructuring and divestitures - - (24) - ---- ---- ---- ---- Core business pretax income 44 35 55 82 Raynet pretax loss (13) (30) (70) (59) ---- ---- ---- ---- Consolidated $ 31 $ 5 $(15) $ 23 ==== ==== ==== ====
10 13 The results for the six months ended December 31, 1994, include an extraordinary loss of $6.3 million (recorded as $7.1 million in the first quarter and adjusted by $0.8 million in the second quarter), or $0.15 per share, for the early retirement of debt following payment by the company of its 9.55% privately placed senior notes. In addition, the company adopted in the first quarter, effective July 1, 1994, Statement of Financial Accounting Standards No. 112, "Employers' Accounting for Postemployment Benefits" (FAS 112). The cumulative effect of this accounting change (a charge of $1.5 million, or $0.03 per share) has been reflected in the 1995 first half results. The following discussion of the results of operations is presented based on the company's business segments--electronics, industrial, and telecommunications-- (which along with the corporate groups are referred to collectively as the "core business") and on Raynet. The condensed consolidating financial statements included on pages 16 through 18 supplement the discussion. CORE BUSINESS OPERATIONS Core business revenues for the second quarter of 1995 increased to $382 million from $345 million in the prior-year period. Revenue growth was 7% on a constant currency basis. Revenues for the six months ended December 31, 1994, were $751 million compared to $700 million in the comparable prior-year period, a constant currency increase of 4%. Revenues in the electronics business segment were $145 million in the second quarter of 1995 compared to $127 million in the prior-year period, a 10% constant currency increase over the prior-year quarter. The PolySwitch and Thermofit divisions contributed significantly to the revenue growth. The PolySwitch division decreased its prices substantially compared to the prior year while sales increased in all geographic regions. The Thermofit division experienced particularly strong growth in Europe and in the worldwide automotive market. In addition, Elo TouchSystems experienced strong U.S. growth. Incoming orders during the quarter were slightly less than shipments for the segment. Operating income grew to $25 million from $21 million a year ago reflecting increased sales volume. Revenues for the six months ended December 31, 1994, were $285 million compared to $254 million in the comparable prior-year period. Operating income for the six months ended December 31, 1994 and 1993, was $47 million, unchanged due to increased operating expenses in growth divisions. Revenues in the industrial business segment for the three months ended December 31, 1994, were $131 million, up from $109 million, a 16% constant currency increase over the prior-year period. The strong growth was due to the Electrical Products (EPD) and Chemelex divisions. Chemelex sales were especially strong in North America, while EPD experienced strong growth in North America and Europe. Incoming orders in the second quarter were approximately equal to shipments for the industrial business segment. Operating income increased to $28 million from $16 million a year ago reflecting higher sales volumes and an increase in gross profit percentage over the prior year which was adversely affected by exchange rate movements. Revenues for the six months ended December 31, 1994, were $252 million versus $221 million in the comparable prior-year period. Operating income was $52 million, $14 million higher than the comparable prior-year period reflecting the strong revenues in EPD and Chemelex divisions and improved gross profit percentage, partially offset by weakness in the Ultratec division due to a lack of pipeline construction projects worldwide and continued softness in its European base business. 11 14 Revenues in the telecommunications business segment decreased to $107 million from $109 million in the second quarter of the prior year, a 5% decrease in constant currency terms from the prior-year quarter. Sales were down in Asia, but flat in Europe, despite a sales decline in Germany. The segment's North American sales improved versus the year-ago quarter, and sales were little changed in Latin America. Orders received in the second quarter of 1995 were $9 million less than sales in the quarter. Operating income was $16 million versus $23 million in the year-ago quarter due to adverse product and geographic mix and higher operating expenses. Revenues for the six months ended December 31, 1994, were $213 million compared to $225 million in the comparable prior-year period. Excluding the previously described restructuring charge, operating income declined $16 million to $34 million for the six months ended December 31, 1994, due to lower sales and higher operating expenses. Fiscal 1995 revenues for the telecommunications business segment will likely be lower than the prior year resulting from a general market shift away from the copper telephony network and an expected decline in Asia and Latin America sales. While the company is introducing new products into other market segments of the outside plant network, sales of these new products, which carry lower margins, are not yet sufficient to offset the decline in sales of copper closures. This adverse geographic and product mix is expected to offset restructuring savings so that telecommunications' fiscal 1995 profitability will likely be lower than the prior year. Provision for Restructuring and Divestitures On October 11, 1994, the company announced a major restructuring of its telecommunications business segment. As a result, the core business incurred a pretax charge of $24 million for restructuring and divestitures in the first quarter of 1995. The segment's restructuring charge included $13 million for severance costs related to a net workforce reduction of 340 employees, resulting from the closure of telecommunications' manufacturing operations in Germany and the restructuring of its North American activities. The remaining charge of $11 million related to plant consolidations and the shutdown of unprofitable product lines. The restructuring is expected to be substantially complete by June 30, 1995, and will result in approximately $24 million of annualized savings, of which $9 million of savings is expected in fiscal 1995. Substantially all of the savings are cash related. The following table sets forth the company's restructuring charge for the six month period ended December 31, 1994. All charges, excluding asset writedowns, are cash in nature and are expected to be incurred in fiscal year 1995 and funded through operating cash flow.
Provision for Restructuring and Divestitures ----------------------------------------------- Employee Asset Severance Writedowns Leases Other Total --------- ---------- ------ ----- ----- (in millions) 1995 Provision: Telecommunications: Employee severance $13 $- $- $- $13 Assets to be sold - 5 - 1 6 Discontinued product inventory - 3 - - 3 Vacated buildings - - 1 - 1 Other - - - 1 1 --- -- -- -- --- Total 1995 Provision $13 $8 $1 $2 $24 === == == == ===
12 15 The company has implemented a number of programs over the past three years to restructure the core business. Reserves which were established in prior fiscal years have largely been used, and the remaining balances, if any, are immaterial. The following table sets forth the company's 1995 telecommunications restructuring reserve as of December 31, 1994:
Restructuring Reserves ---------------------- Employee Asset Severance Writedowns Leases Other Total --------- ---------- ------ ----- ----- (in millions) Reserve Balances, July 1, 1994: $ - $ - $- $- $ - 1995 provision 13 8 1 2 24 Cash payments (1) - - - (1) Non-cash items - (8) - - (8) --- --- -- -- --- Reserve Balance, December 31, 1994: $12 $ - $1 $2 $15 === === == == ===
As of December 31, 1994, 205 employees have separated from the company following the telecommunications announcement in the first quarter, although severance will not be paid until the end of the notice period. Extraordinary Item - Loss From Early Retirement of Debt On September 30, 1994, the company gave irrevocable notice to the holders of its 9.55% privately placed senior notes of its intention to prepay this debt on November 1, 1994. Accordingly, the company recorded in the first quarter of 1995 an extraordinary loss of $7.1 million for the early retirement of debt. The extraordinary loss is comprised of an estimated $8.1 million prepayment penalty and deferred debt issuance costs of $0.5 million, net of a $1.5 million deferred gain resulting from the termination of a related interest rate swap agreement. The prepayment penalty was estimated based on interest rates at the time of notice. When paid, the prepayment penalty was $0.8 million less, which adjustment was recorded in the second quarter of 1995. Change in Accounting Principle The company adopted FAS 112 effective July 1, 1994. This statement changes the method of accounting for certain postemployment benefits from a cash basis to an accrual basis. Adoption of FAS 112 resulted in a one-time adjustment of $1.5 million for the six months ended December 31, 1994, to reflect the cumulative amount that would have been accrued had the statement been in effect in prior years. New Accounting Standard In October 1994, the Financial Accounting Standards Board issued Statement No. 119, "Disclosure About Derivative Financial Instruments and Fair Value of Financial Instruments," which the company adopted in the second quarter. For the disclosures, see "New Accounting Standard" in the notes to the consolidated condensed financial statements. RAYNET OPERATIONS The pretax loss attributable to Raynet was $13 million for the second quarter of 1995, principally due to losses incurred through November 16, 1994. The joint venture agreement provides that Ericsson's share of the joint venture's losses will be capped at 13 16 $25 million for the fiscal year ending June 30, 1995. Accordingly, $12 million of equity losses in the second quarter were absorbed by Ericsson. Raynet was consolidated in the previous year's second quarter when it was a wholly owned Raychem subsidiary and reported revenues of $9 million and a pretax loss of $30 million. Raynet's second quarter 1994 results also included a $2 million severance provision reflecting a restructuring and work force reduction of approximately 80 people throughout the organization. Pretax loss of $70 million for the six months ended December 31, 1994, includes a $28 million loss on formation of the Ericsson Raynet joint venture, equity in loss of $38 million, and $3 million of other Raynet items. Revenues in the comparable prior-year period were $9 million and pretax loss was $59 million. For selected financial data on Ericsson Raynet, see "Investments" in the notes to the consolidated condensed financial statements. Loss on Formation of Ericsson Raynet Joint Venture In the first quarter of 1995, the company recorded a pre-tax charge of $28 million which was the company's estimate of the loss which would result from transactions relating to the formation of the Ericsson Raynet joint venture. This amount was previously presented as a core business item, but has been reclassified to conform to the current presentation. For details on the loss, see "Raynet" in the notes to the consolidated condensed financial statements. OUTLOOK As described earlier, fiscal 1995 revenues for the telecommunications business segment will likely be lower than the prior year resulting from a general market shift away from the copper telephony network and an expected decline in Asia and Latin America sales. While the company is introducing new products into other market segments of the outside plant network, sales of these new products, which carry lower margins, are not yet sufficient to offset the decline in sales of copper closures. This adverse geographic and product mix is expected to offset restructuring savings so that telecommunications' fiscal 1995 profitability will likely be lower than the prior year. In addition, Ultratec revenues and profitability are expected to be lower in 1995 as compared to the prior year. Overall, the company believes that there will be moderate sales growth in the core business, in constant currency terms, for the remainder of fiscal 1995. LIQUIDITY AND CAPITAL RESOURCES CONSOLIDATED Debt exceeded cash by $171 million at December 31, 1994, compared to $197 million at June 30, 1994. Debt net of cash decreased $26 million in the first six months of 1995, compared to an increase in debt net of cash of $45 million in the first six months of 1994. The decrease in debt net of cash results from cash proceeds from the Ericsson Raynet joint venture transaction and improved cash flow from operations. In addition, in accordance with the joint venture agreement, the parties completed their initial funding of the joint venture which resulted in Raychem receiving $17 million of amounts previously advanced to fund Raynet's operations. On September 29, 1994, the company entered into syndicated loan agreements providing for a five-year partially amortizing term loan of $225 million, and a renewable 364-day revolving credit facility of $200 million. Interest on the term loan and revolving credit facility are at variable rates. The term loan requires quarterly principal payments of $15 million beginning December 31, 1996, increasing to $17.5 million from December 31, 1997, and to $20 million from December 31, 1998, with a final payment of $35 million due September 29, 1999. Proceeds from the term loan were drawn on November 1, 1994, and used to retire the 9.55% privately placed senior notes and for general corporate 14 17 purposes, while the revolving credit facility replaced existing committed credit facilities. The new agreement includes covenants which, among other things, specify a minimum net worth requirement, a maximum leverage limit, a minimum fixed charge coverage ratio, a dividend restriction, and limits on further advances to fund Raynet operations. At December 31, 1994, the company had $115 million in cash and cash equivalents, $240 million in committed credit facilities (of which $3 million was utilized) and approximately $174 million in various uncommitted credit facilities (of which $37 million was utilized). On January 2, 1995, the company entered into a revolving credit agreement with its Ericsson Raynet joint venture. The company committed to make available to the joint venture a maximum of $50 million, due in full on December 20, 1995, or earlier if the revolving credit arrangement is terminated at the company's discretion. The credit agreement stipulates that borrowings under the arrangement will be interest-free, and imposes no covenants or restrictions on the joint venture's operations. Ericsson has also entered into a similar agreement with the joint venture. The combination of cash and cash equivalents, available lines of credit, and future cash flows from operations are expected to be sufficient to satisfy substantially all of the company's needs for working capital, normal capital expenditures, Ericsson Raynet funding requirements, scheduled debt repayments, and anticipated dividends. CORE BUSINESS Inventory, as measured by the number of days of inventory on hand, improved to 109 days for the second quarter compared to 114 days for the year-ago period. Receivables, as measured by the number of billing days outstanding, increased to 64 days at December 31, 1994, compared to 61 days at December 31, 1993. Capital expenditures of $49 million in the first half of 1995 increased slightly from $46 million in the prior-year period. In the first quarter of 1994, the company received $4 million from the sale of a building in the United States. 15 18 RAYCHEM CORPORATION Condensed Consolidating Statements of Operations (in thousands)
THREE MONTHS ENDED DECEMBER 31 (UNAUDITED) ----------------------------------------------------------------- CORE BUSINESS RAYNET CONSOLIDATED ------------------- --------------------- ------------------- 1994* 1993 1994* 1993 1994* 1993 -------- -------- -------- ---------- -------- -------- Revenues $382,494 $345,288 $ - $ 8,547 $382,494 $353,835 Cost of goods sold 184,648 171,651 - 16,333 184,648 187,984 Research and development expense 28,748 24,118 - 11,188 28,748 35,306 Selling, distribution, and administrative expense 121,267 109,868 - 9,990 121,267 119,858 Loss on formation of Ericsson Raynet joint venture and other Raynet items - - (423) - (423) - Equity in net (earnings) losses of affiliated companies (892) 118 13,532 - 12,640 118 Interest expense, net 2,973 2,597 - 748 2,973 3,345 Other expense, net 1,507 2,239 - 254 1,507 2,493 -------- -------- -------- ---------- -------- -------- Income (loss) before income taxes and extraordinary item 44,243 34,697 (13,109) (29,966) 31,134 4,731 Provision for income taxes 11,135 3,073 - 2 11,135 3,075 -------- -------- -------- ---------- -------- -------- Income (loss) before extraordinary item 33,108 31,624 (13,109) (29,968) 19,999 1,656 Extraordinary item - adjustment related to early retirement of debt, net of $0 income taxes 756 - - - 756 - -------- -------- -------- ---------- -------- -------- Net income (loss) $ 33,864 $ 31,624 $(13,109) $(29,968) $ 20,755 $ 1,656 ======== ======== ======== ======== ======== ========
SIX MONTHS ENDED DECEMBER 31 (UNAUDITED) ---------------------------------------------------------------- CORE BUSINESS RAYNET CONSOLIDATED ------------------- -------------------- ------------------- 1994* 1993 1994* 1993 1994* 1993 -------- -------- -------- --------- -------- -------- Revenues $750,639 $699,964 $ - $ 9,303 $750,639 $709,267 Cost of goods sold 367,507 345,969 - 25,745 367,507 371,714 Research and development expense 55,977 47,212 - 21,708 55,977 68,920 Selling, distribution, and administrative expense 236,460 214,677 - 19,403 236,460 234,080 Provision for restructuring and divestitures 23,900 - - - 23,900 - Loss on formation of Ericsson Raynet joint venture and other Raynet items - - 31,300 - 31,300 - Equity in net (earnings) losses of affiliated companies (892) 677 38,208 - 37,316 677 Interest expense, net 7,567 4,558 - 1,490 7,567 6,048 Other expense, net 5,116 4,450 - 330 5,116 4,780 -------- -------- -------- --------- -------- -------- (Loss) income before income taxes, extraordinary item, and change in accounting principle 55,004 82,421 (69,508) (59,373) (14,504) 23,048 Provision for income taxes 13,825 14,948 - 33 13,825 14,981 -------- -------- -------- --------- -------- -------- (Loss) income before extraordinary item and change in accounting principle 41,179 67,473 (69,508) (59,406) (28,329) 8,067 Extraordinary item - loss from early retirement of debt, net of $0 income taxes (6,318) - - - (6,318) - Cumulative effect of change in accounting principle, net of $0 income taxes (1,477) - - - (1,477) - -------- -------- -------- --------- -------- -------- Net (loss) income $ 33,384 $ 67,473 $(69,508) $ (59,406) $(36,124) $ 8,067 ======== ======== ======== ========= ======== ========
* Raynet Corporation and subsidiaries' results are presented on the equity basis of accounting in fiscal 1995 versus consolidated in fiscal 1994. 16 19 RAYCHEM CORPORATION Condensed Consolidating Balance Sheets (in thousands)
CORE BUSINESS RAYNET CONSOLIDATED -------------------------- ------------------------- -------------------------- (Unaudited) (Unaudited) (Unaudited) 12/31/94* 06/30/94 12/31/94* 06/30/94 12/31/94* 06/30/94** ----------- ----------- ----------- -------- ----------- ---------- ASSETS Current assets: Cash and cash equivalents $ 114,587 $ 75,384 $ - $ 2,706 $ 114,587 $ 78,090 Accounts receivable, net 274,344 275,904 - 36,720 274,344 312,624 Inventories 219,769 220,116 - 27,673 219,769 247,789 Other current assets 120,877 94,418 - 3,021 120,877 97,439 ---------- ---------- ----------- -------- ---------- ---------- Total current assets 729,577 665,822 - 70,120 729,577 735,942 ---------- ---------- ----------- -------- ---------- ---------- Net property, plant, and equipment 498,927 507,474 - 27,005 498,927 534,479 Other assets, including investment in Raynet 120,713 170,187 - 12,419 120,713 128,594 ---------- ---------- ----------- -------- ---------- ---------- Total assets $1,349,217 $1,343,483 $ - $109,544 $1,349,217 $1,399,015 ========== ========== =========== ======== ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable to banks $ 25,555 $ 24,183 $ - $ 2,803 $ 25,555 $ 26,986 Intercompany accounts payable (receivable) - (12,532) - 12,532 - - Accounts payable 54,241 61,939 - 21,197 54,241 83,136 Other current liabilities 190,110 194,969 - 19,000 190,110 213,969 ---------- ---------- ----------- -------- ---------- ---------- Total current liabilities 269,906 268,559 - 55,532 269,906 324,091 ---------- ---------- ----------- -------- ---------- ---------- Long-term debt 258,869 244,681 - - 258,869 244,681 Other long-term liabilities 109,989 93,058 - - 109,989 93,058 Minority interest 4,331 4,261 - - 4,331 4,261 Stockholders' equity 706,122 732,924 - 54,012 706,122 732,924 ---------- ---------- ----------- -------- ---------- ---------- Total liabilities and stockholders' equity $1,349,217 $1,343,483 $ - $109,544 $1,349,217 $1,399,015 ========== ========== =========== ======== ========== ==========
* Raynet Corporation and subsidiaries' results are presented on the equity basis of accounting in fiscal 1995 versus consolidated in fiscal 1994. ** Consolidated balances reflect eliminations of intercompany transactions. 17 20 RAYCHEM CORPORATION Condensed Consolidating Statements of Cash Flows (in thousands)
SIX MONTHS ENDED DECEMBER 31, (UNAUDITED) ----------------------------------------------------------------- CORE BUSINESS RAYNET CONSOLIDATED ------------------- -------------------- ------------------- 1994* 1993 1994* 1993 1994* 1993 -------- -------- ------- -------- -------- -------- Net cash provided by (used in) operating activities $ 17,656 $ 55,139 $ - $(69,317) $ 17,656 $(14,178) -------- -------- ------- -------- -------- -------- Cash flows from investing activities: Investment in property, plant, and equipment (49,166) (45,895) - (5,393) (49,166) (51,288) Disposition of property, plant, and equipment 5,102 7,735 - - 5,102 7,735 Proceeds from sale of specified Raynet Assets 40,000 - - - 40,000 - Purchase of investment (1,000) - - - (1,000) - -------- -------- ------- -------- -------- -------- Net cash used in investing activities (5,064) (38,160) - (5,393) (5,064) (43,553) -------- -------- ------- -------- -------- -------- Cash flows from financing activities: Proceeds from (payment of) debt 16,420 (1,378) - - 16,420 (1,378) Proceeds from (payment of) intercompany loans - (48,962) - 48,962 - - Common Stock issued under employee benefit plans 18,396 17,639 - - 18,396 17,639 Common Stock repurchased (2,013) - - - (2,013) - Proceeds from repayments of stockholder notes receivable 278 160 - - 278 160 Cash dividends (6,955) (6,767) - - (6,955) (6,767) -------- -------- ------- -------- -------- -------- Net cash provided by (used in) financing activities 26,126 (39,308) - 48,962 26,126 9,654 -------- -------- ------- -------- -------- -------- Effect of exchange rate changes on cash and cash equivalents (2,221) (2,131) - (49) (2,221) (2,180) -------- -------- ------- -------- -------- -------- Increase (decrease) in cash and cash equivalents $ 36,497 $(24,460) $ - $(25,797) $ 36,497 $(50,257) ======== ======== ======= ======== ======== ========
* Raynet Corporation and subsidiaries' results are presented on the equity basis of accounting in fiscal 1995 versus consolidated in fiscal 1994. 18 21 RAYCHEM CORPORATION PART II - OTHER INFORMATION ITEM 1: LEGAL PROCEEDINGS On January 13, 1995, the company's motion to dismiss the related lawsuits against the company by Creole Engineering Co. and Unit Process Company was granted in its entirety. Information about this lawsuit was disclosed in the company's annual report on Form 10-K for the year ended June 30, 1994. On January 5, 1995, the company and its insurers agreed to settle the property damage claims in the lawsuit initiated by Culinary Foods against the company for $8.5 million, of which the company will be required to pay a $1 million insurance deductible. Subsequently, the personal injury claims in the Culinary Foods action were settled for $1.05 million, which is to be funded entirely from insurance proceeds. These settlements are subject to court approval and entry of consent judgment. Information about this lawsuit was disclosed in the company's annual report on Form 10-K for the year ended June 30, 1994. ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS (a) On November 9, 1994, the company held its Annual Meeting of the Stockholders. (b) The following Directors were elected:
Votes Name Votes For Withheld ---- ---------- -------- Paul M. Cook 35,386,045 191,007 Richard Dulude 35,393,937 183,115 James F. Gibbons 35,399,396 177,656 John P. McTague 35,386,651 190,401 Dean O. Morton 35,398,787 178,265 Robert J. Saldich 35,398,303 178,748 Isaac Stein 35,383,461 193,590 Cyril J. Yansouni 35,383,807 193,245
(c) The following other matters were voted upon: 1. Approval of amendments to the company's Amended and Restated 1984 Employee Stock Purchase Plan and Amended and Restated 1985 Supplemental Employee Stock Purchase Plan to increase by 700,000 shares the aggregate number of shares issuable under the two plans. Affirmative Votes: 31,112,081 Negative Votes: 3,792,335 Abstentions: 672,636
2. Approval of an amendment to the company's 1990 Incentive Plan to limit the number of shares with respect to which options may be granted to no more than 200,000 shares to any one participant in any one-year period. Affirmative Votes: 33,002,866 Negative Votes: 1,899,307 Abstentions: 674,878
19 22 3. Approval of an amendment to the 1990 Incentive Plan to extend up to five years the period during which awards granted on or after August 12, 1994, may be exercised following retirement from the company. Affirmative Votes: 24,523,189 Negative Votes: 10,371,323 Abstentions: 682,539
4. Ratification of the appointment by the company's Board of Directors of Price Waterhouse LLP to audit the accounts of the company and its subsidiaries for the 1995 fiscal year. Affirmative Votes: 35,444,158 Negative Votes: 48,956 Abstentions: 83,937
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K (a) Index to Exhibits
EXHIBIT NO. DESCRIPTION ----------- ------------ 27 Financial Data Schedule
(b) Reports on Form 8-K The company filed a Current Report on Form 8-K dated November 16, 1994, the date on which the company and L M Ericsson, a Swedish telecommunications company, formed a joint venture for the development, manufacture, and marketing of fiber-optic communications systems for telephone access networks worldwide. The joint venture, called "Ericsson Raynet," has taken over and is continuing the operations of the company's Raynet subsidiary. Pro forma financial information to give effect to the formation of the Ericsson Raynet joint venture was filed as an amendment to the Form 8-K on January 6, 1995. 20 23 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. RAYCHEM CORPORATION (Registrant) Date: February 13, 1995 /s/ RAYMOND J. SIMS ------------------------- ------------------------------- Raymond J. Sims Senior Vice President and Chief Financial Officer (Principal Financial Officer) /s/ DEIDRA D. BARSOTTI ------------------------------- Deidra D. Barsotti Vice President and Corporate Controller (Principal Accounting Officer) 21 EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE PERIOD ENDED DECEMBER 31, 1994, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 0 6-MOS JUN-30-1995 JUL-01-1994 DEC-31-1994 1 114,587 0 286,298 11,954 219,769 729,577 1,072,035 573,108 1,349,217 269,906 258,869 43,634 0 0 662,488 1,349,217 748,912 750,639 366,648 367,507 55,977 2,339 7,567 (14,504) 13,825 (28,329) 0 (6,318) (1,477) (36,124) ($0.83) 0
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