-----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, R/bHZfIBTQuJoX7PVma71ABXASyTkEYa9hbilz7P0o9IBQTfJdoP55avOH1Ew6/b HkwgGWmFYJLOL+rWKFa16Q== 0000031791-96-000012.txt : 19961115 0000031791-96-000012.hdr.sgml : 19961115 ACCESSION NUMBER: 0000031791-96-000012 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960929 FILED AS OF DATE: 19961113 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: EG&G INC CENTRAL INDEX KEY: 0000031791 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-ENGINEERING SERVICES [8711] IRS NUMBER: 042052042 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-05075 FILM NUMBER: 96660517 BUSINESS ADDRESS: STREET 1: 45 WILLIAM ST CITY: WELLESLEY STATE: MA ZIP: 02181-4078 BUSINESS PHONE: 6172375100 MAIL ADDRESS: STREET 1: 45 WILLIAM ST CITY: WELLESLEY STATE: MA ZIP: 02181 FORMER COMPANY: FORMER CONFORMED NAME: EDGERTON GERMESHAUSEN & GRIER INC DATE OF NAME CHANGE: 19670626 10-Q 1 3Q96 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended September 29, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 1-5075 EG&G, Inc. ---------- (Exact name of registrant as specified in its charter) Massachusetts 04-2052042 ------------- ---------- (State or other jurisdiction of (I.R.S. employer identification no.) incorporation or organization) 45 William Street, Wellesley, Massachusetts 02181 ------------------------------------------------- (Address of principal executive offices)(Zip Code) (617) 237-5100 -------------- (Registrant's telephone number, including area code) NONE ---- (Former name, former address and former fiscal year, if changed since last report) 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 each of the issuer's classes of common stock, as of the latest practicable date: Class Outstanding at October 27, 1996 ----- ------------------------------- Common Stock, $1 par value 47,337,000 (Excluding treasury shares) 1 PART I. FINANCIAL INFORMATION Item 1. Financial Statements -------------------- EG&G, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF OPERATIONS For the Three and Nine Months Ended September 29, 1996 and October 1, 1995 (Unaudited) ---------
(In Thousands Except Per Share Data) ---------------------------------- Three Months Ended Nine Months Ended -------------------------- ------------------------ SEP 29, OCT 1, SEP 29, OCT 1, 1996 1995 1996 1995 ----------- ----------- ---------- ---------- Sales: Products ................................... $215,328 $186,197 $ 639,550 $ 589,877 Services ................................... 139,419 175,405 417,895 452,206 ----------- ----------- ---------- ---------- Total Sales .................................. 354,747 361,602 1,057,445 1,042,083 ----------- ----------- ---------- ---------- Costs and Expenses: Cost of sales: Products ................................. 136,471 116,975 406,108 381,567 Services ................................. 126,374 156,973 373,198 397,051 ----------- ----------- ---------- ---------- Total cost of sales ........................ 262,845 273,948 779,306 778,618 Research and development expenses .......... 8,756 10,238 31,131 30,599 Selling, general and administrative expenses 59,945 58,330 182,468 177,672 ----------- ----------- ---------- ---------- Total Costs and Expenses ..................... 331,546 342,516 992,905 986,889 ----------- ----------- ---------- ---------- Operating Income From Continuing Operations .. 23,201 19,086 64,540 55,194 Other Income (Expense), Net (Note 2) ......... (2,255) 1,218 (5,209) 851 ----------- ----------- ---------- ---------- Income From Continuing Operations Before Income Taxes ........................ 20,946 20,304 59,331 56,045 Provision for Income Taxes ................... 6,745 6,635 19,105 20,681 ----------- ----------- ---------- ---------- Income From Continuing Operations ............ 14,201 13,669 40,226 35,364 Income From Discontinued Operations, Net of Income Taxes (Note 3) ...................... 1,436 2,309 3,832 10,679 ----------- ----------- ---------- ---------- Net Income ................................... $ 15,637 $ 15,978 $ 44,058 $ 46,043 =========== =========== ========== ========== Earnings Per Share: Continuing Operations ......... $ .30 $ .27 $ .85 $ .67 Discontinued Operations ....... .03 .05 .08 .20 ----- ----- ----- ----- Net Income .................... $ .33 $ .32 $ .93 $ .87 ===== ===== ===== ===== Cash Dividends Per Common Share ....... $ .14 $ .14 $ .42 $ .42 ===== ===== ===== ===== Weighted Average Shares of Common Stock Outstanding ......................... 47,316 50,138 47,457 52,666 The accompanying unaudited notes are an integral part of these consolidated financial statements.
2 EG&G, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET As of September 29, 1996 and December 31, 1995 (Dollars in Thousands Except Per Share Data) ------------------------------------------
SEP 29, DEC 31, 1996 1995 -------- -------- (Unaudited) --------- Current assets: Cash and cash equivalents ............................ $ 68,252 $ 76,204 Accounts receivable (Note 4) ......................... 218,447 211,903 Inventories (Note 5) ................................. 123,213 114,199 Other (Note 7) ....................................... 66,825 66,380 -------- -------- Total Current Assets ................................... 476,737 468,686 -------- -------- Property, Plant and Equipment: At cost (Note 6) ..................................... 466,183 417,566 Accumulated depreciation and amortization ............ (284,473) (270,026) -------- -------- Net Property, Plant and Equipment ...................... 181,710 147,540 -------- -------- Investments (Note 7) ................................... 12,712 16,072 Intangible Assets (Note 8) ............................. 114,054 123,421 Other Assets ........................................... 51,836 48,196 -------- -------- Total Assets ........................................... $837,049 $803,915 ======== ======== Current Liabilities: Short-term debt ...................................... $ 26,990 $ 5,275 Accounts payable ..................................... 73,632 72,759 Accrued expenses (Note 9) ............................ 167,358 168,671 Net liabilities of discontinued operations (Note 3) .. 5,386 3,746 -------- -------- Total Current Liabilities .............................. 273,366 250,451 -------- -------- Long-Term Debt ......................................... 114,935 115,222 Long-Term Liabilities .................................. 70,960 71,296 Contingencies Stockholders' Equity: Preferred stock - $1 par value, authorized 1,000,000 shares; none outstanding ................. -- -- Common stock - $1 par value, authorized 100,000,000 shares; issued 60,102,000 shares ....... 60,102 60,102 Retained earnings .................................... 522,148 498,181 Cumulative translation adjustments ................... 22,870 28,679 Net unrealized gain on marketable investments (Note 7) 426 244 Cost of shares held in treasury; 12,765,000 shares at September 29, 1996 and 12,492,000 shares at December 31, 1995 ............. (227,758) (220,260) -------- -------- Total Stockholders' Equity ............................. 377,788 366,946 -------- -------- Total Liabilities and Stockholders' Equity ............. $837,049 $803,915 ======== ======== The accompanying unaudited notes are an integral part of these consolidated financial statements.
3 EG&G, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS For the Nine Months Ended September 29, 1996 and October 1, 1995 (Unaudited) ---------
(In Thousands) ------------ Nine Months Ended -------------------- SEP 29, OCT 1, 1996 1995 -------- -------- Cash Flows Provided by Operating Activities: Net income ........................................ $ 44,058 $ 46,043 Deduct net income from discontinued operations .... (3,832) (10,679) -------- -------- Income from continuing operations ................. 40,226 35,364 Adjustments to reconcile income from continuing operations to net cash provided by continuing operations: Depreciation and amortization ................. 29,794 28,097 Changes in assets and liabilities: Decrease (increase) in accounts receivable (7,571) 20,066 Decrease (increase) in inventories ....... (10,110) 15,154 Increase in accounts payable ............. 1,295 8,721 Change in prepaid and deferred taxes ..... (1,472) (444) Decrease in accrued expenses ............. (359) (2,874) Change in prepaid expenses and other ..... (5,895) (9,633) -------- -------- Net Cash Provided by Continuing Operations ............. 45,908 94,451 Net Cash Provided by Discontinued Operations ........... 5,472 25,726 -------- -------- Net Cash Provided by Operating Activities .............. 51,380 120,177 -------- -------- Cash Flows Used in Investing Activities: Capital expenditures .............................. (62,787) (42,331) Proceeds from sales of investment securities ...... 8,784 6,010 Other ............................................. 2,221 1,404 -------- -------- Net Cash Used in Investing Activities .................. (51,782) (34,917) -------- -------- Cash Flows Used in Financing Activities: Increase in commercial paper ...................... 21,940 61,276 Other debt payments ............................... (630) (4,247) Proceeds from issuance of common stock ............ 4,395 1,015 Purchases of common stock ......................... (12,032) (123,691) Cash dividends .................................... (19,952) (22,550) Other ............................................. 95 (550) -------- -------- Net Cash Used in Financing Activities .................. (6,184) (88,747) -------- -------- Effect of Exchange Rate Changes on Cash and Cash Equivalents ................................. (1,366) 1,351 -------- -------- Net Decrease in Cash and Cash Equivalents .............. (7,952) (2,136) Cash and cash equivalents at beginning of period ....... 76,204 66,424 -------- -------- Cash and cash equivalents at end of period ............. $ 68,252 $ 64,288 ======== ======== The accompanying unaudited notes are an integral part of these consolidated financial statements.
4 EG&G, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) --------- (1) Basis of Presentation - -------------------------- The consolidated financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. It is suggested that these consolidated financial statements be read in conjunction with the financial statements and the notes thereto included in the Company's latest annual report on Form 10-K. The balance sheet amounts as of December 31, 1995 in this report were extracted from the Company's audited 1995 financial statements included in the latest annual report on Form 10-K. In the opinion of management, the unaudited consolidated financial statements included herein contain all adjustments, consisting only of normal recurring accruals, necessary to present fairly the financial position as of September 29, 1996 and the results of operations for the three and nine months ended September 29, 1996 and October 1, 1995 and the cash flows for the nine months then ended. The results of operations are not necessarily to be considered indicative of the results for the entire year. Effective January 1, 1996, the company adopted the provisions of statement of financial accounting standards (sfas) no. 123, "Accounting for stock-based compensation." Sfas no. 123 Requires companies to account for the grant of stock options and other stock-based compensation at fair value or to continue to account for them at intrinsic value in accordance with accounting principles board (apb) opinion no. 25 With disclosure of the effects of the fair value accounting on compensation expense, net income and earnings per share on a proforma basis. The company has elected to continue to apply APB Opinion No. 25. (2) Other Income (Expense), Net - -------------------------------- Other income (expense), net, consisted of the following: (In Thousands) ------------ Three Months Ended Nine Months Ended ------------------ ------------------ SEP 29, OCT 1, SEP 29, OCT 1, 1996 1995 1996 1995 ------- ------- ------- ------- Interest income ......... $ 1,148 $ 1,167 $ 2,923 $ 3,302 Interest expense ........ (3,335) (1,677) (9,751) (5,237) Gains on investments, net 392 108 1,309 853 Other ................... (460) 1,620 310 1,933 ------- ------- ------- ------- $(2,255) $ 1,218 $(5,209) $ 851 ======= ======= ======= ======= 5 EG&G, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Unaudited) --------- (3) Discontinued Operations - --------------------------- The former Department of Energy (DOE) Support segment, which has provided services under management and operations contracts, is presented as discontinued operations in accordance with APB Opinion No. 30. Summary operating results of the discontinued operations were as follows: (In Thousands) ------------ Three Months Ended Nine Months Ended ------------------- ------------------- SEP 29, OCT 1, SEP 29, OCT 1, 1996 1995 1996 1995 -------- -------- -------- -------- Sales .................... $ 38,236 $ 82,968 $ 99,315 $606,259 Costs and expenses ....... 36,026 79,416 93,419 589,830 -------- -------- -------- -------- Income from discontinued operations before income taxes ........... 2,210 3,552 5,896 16,429 Provision for income taxes 774 1,243 2,064 5,750 -------- -------- -------- -------- Income from discontinued operations, net of income taxes ........... $ 1,436 $ 2,309 $ 3,832 $ 10,679 ======== ======== ======== ======== Sales and income from discontinued operations decreased in 1996, reflecting the expiration of the Rocky Flats and Nevada Test Site contracts in 1995. Net assets (liabilities) of discontinued operations consisted of the following: (In Thousands) ------------------ SEP 29, DEC 31, 1996 1995 ------- ------- Accounts receivable, primarily unbilled $ 2,494 $ 7,575 Operating current liabilities ...... (7,880) (11,439) Other .............. -- 118 ------- ------- $(5,386) $(3,746) ======== ======= (4) Accounts Receivable - ------------------------ Accounts receivable as of September 29, 1996 and December 31, 1995 included unbilled receivables of $46 million and $44 million, respectively, which were due primarily from U.S. Government agencies. Accounts receivable were net of reserves for doubtful accounts of $4.8 million and $4.4 million as of September 29, 1996 and December 31, 1995, respectively. (5) Inventories - ---------------- Inventories consisted of the following: (In Thousands) ------------ SEP 29, DEC 31, 1996 1995 -------- -------- Finished goods $ 30,174 $ 28,540 Work in process 30,753 28,613 Raw materials . 62,286 57,046 -------- -------- $123,213 $114,199 ======== ======== 6 EG&G, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Unaudited) --------- (6) Property, Plant and Equipment, at Cost - ------------------------------------------ Property, plant and equipment consisted of the following: (In Thousands) ------------ SEP 29, DEC 31, 1996 1995 -------- -------- Land ............................... $ 11,746 $ 12,003 Buildings and leasehold improvements 116,285 108,254 Machinery and equipment ............ 338,152 297,309 -------- -------- $466,183 $417,566 ======== ======== (7) Investments - ---------------- Investments consisted of the following: (In Thousands) -------------- SEP 29, DEC 31, 1996 1995 -------- -------- Marketable investments .... $ 8,809 $ 9,547 Other investments ......... 955 1,396 Joint venture investments . 3,623 7,349 -------- -------- 13,387 18,292 Less investments classified as other current assets . (675) (2,220) -------- -------- $ 12,712 $ 16,072 ======== ======== At September 29, 1996, marketable investments, all classified as available for sale, had an aggregate market value of $8.8 million and gross unrealized holding gains of $0.7 million. Gross unrealized holding gains, net of deferred taxes, of $0.4 million were reported as a separate component of stockholders' equity at September 29, 1996. $0.2 million of marketable investments and $0.5 million of other investments were classified as other current assets at September 29, 1996. (8) Intangible Assets - ---------------------- The decrease in intangible assets resulted primarily from current year amortization and the effect of translating goodwill denominated in non-U.S. currencies at current exchange rates. (9) Accrued Expenses - --------------------- Accrued expenses consisted of the following: (In Thousands) ------------ SEP 29, DEC 31, 1996 1995 -------- -------- Payroll and incentives ............... $ 24,228 $ 28,660 Employee benefits .................... 47,260 40,178 Federal, non-U.S. & state income taxes 32,423 33,153 Other ................................ 63,447 66,680 -------- -------- $167,358 $168,671 ======== ======== 7 Item 2. Management's Discussion and Analysis of Results ----------------------------------------------- of Operations and Financial Condition ------------------------------------- EG&G, INC. AND SUBSIDIARIES Results of Operations --------------------- The following industry segment information is presented as an aid to a better understanding of the Company's operating results:
(In Thousands) ------------ Three Months Ended Nine Months Ended -------------------------------- ------------------------------------ SEP 29, OCT 1, Increase SEP 29, OCT 1, Increase 1996 1995 (Decrease) 1996 1995 (Decrease) -------- -------- -------- ---------- ---------- -------- Instruments Sales ............ $ 78,543 $ 70,088 $ 8,455 $ 230,900 $ 211,263 $ 19,637 Operating Income . 9,095 5,000 4,095 25,360 11,095 14,265 Mechanical Components Sales ............ $ 67,122 $ 61,585 $ 5,537 $ 204,903 $ 184,892 $ 20,011 Operating Income . 7,940 5,961 1,979 23,297 19,098 4,199 Optoelectronics Sales ............ $ 69,663 $ 68,345 $ 1,318 $ 203,747 $ 193,722 $ 10,025 Operating Income . 4,924 5,850 (926) 9,903 14,484 (4,581) Technical Services Sales ............ $139,419 $161,584 $(22,165) $ 417,895 $ 452,206 $(34,311) Operating Income . 6,584 9,037 (2,453) 24,147 31,573 (7,426) General Corporate Expenses ......... $ (5,342) $ (6,762) $ 1,420 $ (18,167) $ (21,056) $ 2,889 Continuing Operations Sales ............ $354,747 $361,602 $ (6,855) $1,057,445 $1,042,083 $ 15,362 Operating Income . 23,201 19,086 4,115 64,540 55,194 9,346
The discussion that follows is a summary analysis of the major changes in operating results by industry segment that occurred for the three and nine months ended September 29, 1996 compared to the three and nine months ended October 1, 1995. Overview - -------- Sales from continuing operations decreased 2% for the third quarter of 1996 compared to 1995; the three products segments' sales were up 8%, and Technical Services' sales were down 14%. Sales for the first nine months of 1996 increased 1% over 1995; the three products segments' sales were up 8%, and Technical Services' sales were down 8%. Operating income from continuing operations increased 22% for the third quarter of 1996 compared to 1995, and 17% for the first nine months of 1996 compared to the same period last year. The improvements reflected the impact of higher sales in the Instruments and Mechanical Components segments and lower costs resulting from the Company's restructuring plan. Partially offsetting these increases in operating income 8 EG&G, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued) were decreases in Optoelectronics, caused by continuing significant operational problems resulting in a loss in the micromachined sensors business, and decreases in Technical Services, caused by lower automotive operations sales. Cost savings under the restructuring plan totaled $7 million for the quarter and $19 million for the first nine months of 1996. This represents a $2.8 million increase for the quarter and an $8.8 million increase for the nine months over the savings achieved for the comparable periods in 1995. Instruments - ----------- Third Quarter - -------------- The $8.5 million sales increase resulted mainly from strong demand for explosives detection systems from airports and government agencies and for diagnostic products. These increases were partially offset by lower sales due to the effect of changes in foreign exchange rates. The $4.1 million increase in operating income resulted primarily from improved margins on higher sales and lower costs from the restructuring plan. Nine Months - ----------- The $19.6 million sales increase resulted mainly from higher demand for explosives detection systems and diagnostic products. These increases were partially offset by a $4.4 million decrease due to the divestiture of two product lines in 1995 and lower sales due to the effect of changes in foreign exchange rates. Operating income increased $14.3 million primarily from improved margins on higher sales, as well as lower costs resulting from the restructuring plan, income from the expiration of a grant liability in the second quarter of 1996 and the favorable impact on export shipment margins caused by the weakening of the Finnish markka. Mechanical Components - --------------------- Third Quarter - ------------- The continued recovery of the aerospace market and higher demand for electromechanical products resulted in a $5.5 million sales increase. The $2 million increase in operating income resulted mainly from the margin on higher sales. Nine Months - ----------- Higher demand for aerospace, electromechanical and industrial process sealing products resulted in a $20 million sales increase. The $4.2 million increase in operating income resulted from the margin on higher sales and lower costs from the restructuring plan, partially offset by projected excess contract costs incurred mainly in the second quarter of 1996. 9 EG&G, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued) Optoelectronics - --------------- Third Quarter - ------------- Sales increased 2% compared to 1995. Operating income decreased $0.9 million primarily due to continuing significant operational problems resulting in a loss in the micromachined sensor business and, to a lesser extent, lower sales in the power supplies business. Corrective actions are being taken, and management expects the micromachined sensor business to return to profitability in 1997. Partially offsetting these decreases were the margin on sales increases experienced by some operations and lower costs from the restructuring plan. Nine Months - ----------- Sales increased $10 million due to higher demand for micromachined sensors for the medical market, accelerometers for the automotive market and detectors, and sales of new imaging products. These increases were partially offset by decreases caused by lower power supplies sales and the divestiture of a product line in 1995. Operating income decreased $4.6 million as a result of the operational problems, inventory reserve provisions and fixed asset adjustments in the micromachined sensor business and, to a lesser extent, lower sales and projected excess contract costs in the power supplies business. Partially offsetting these decreases were the margin on higher sales of detectors and imaging products and lower costs resulting from the restructuring plan. Technical Services - ------------------ Third Quarter - ------------- The $22.2 million sales reduction was mainly the result of a communication systems development contract billing in 1995; the follow-on order is expected to be shipped in 1997. Also contributing to the reduction was a decrease in automotive operations, primarily due to continuing lower demand for stationary testing services caused by customers' budget constraints and mature testing specifications, and completion of a lubricant testing contract at the end of the first quarter of 1996. Automotive operations income was down due to lower sales and was the primary contributor to the $2.5 million decrease in the segment. The environmental technology initiative continued to incur losses and is not performing to management's expectations. Nine Months - ----------- The $34.3 million sales decrease was mainly the result of the 1995 systems development billing, lower automotive operations sales and the completion of a contract in 1995. The $7.4 million operating income reduction was the result of the sales reductions, primarily in automotive operations, partially offset by an estimated provision for a legal judgment recorded in 1995. 10 EG&G, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued) General Corporate Expenses - -------------------------- The decreases for the quarter and nine months were due primarily to lower costs as a result of the restructuring plan. Other - ----- The net increases in other expense, $3.5 million for the third quarter and $6.1 million for nine months, were due to higher interest expense reflecting the issuance of $115 million of ten-year notes in October 1995. Lower gains on the disposition of operating assets also contributed to the third-quarter increase. The effective tax rate of 32.2% for the first nine months of 1996 was lower than the 36.9% rate in 1995 primarily due to lower anticipated repatriation costs and changes in the geographical distribution of income. The effective tax rate for the third quarter of 1996 was 32.2%, approximately the same as 1995. The 1995 third-quarter rate reflected a reduction in the annual rate from the rate used for the first six months of 1995. Discontinued Operations - ----------------------- Decreased income from discontinued operations, net of income taxes, for the quarter and nine months, reflected the expiration of the Rocky Flats and Nevada Test Site contracts in 1995. The Mound contract, the Company's remaining management and operations contract with the DOE, has been extended to March 31, 1997 under existing terms and conditions and could be extended for up to an additional six months. Sales and income from the Mound contract are dependent upon the work scope and fee pools that are negotiated annually. Financial Condition ------------------- The Company's cash and cash equivalents decreased $8 million in the first nine months of 1996 while short-term debt increased $21.9 million, mainly due to the higher level of capital expenditures. Net cash provided by continuing operations was $45.9 million in 1996 compared to $94.5 million in 1995. The change in net cash resulted primarily from increases in accounts receivable and inventories in 1996 compared to decreases in 1995. The accounts receivable increase was mainly caused by higher sales in the products segments and timing of payments under government contracts. Inventory levels were increased primarily for anticipated sales. Although further progress was not achieved in the first nine months of 1996, the Company's program to reduce receivables and inventories remains a management priority. 11 EG&G, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued) Discontinued operations generated cash of $5.5 million in the first nine months of 1996 compared to $25.7 million in 1995, reflecting the expiration of the Rocky Flats and Nevada Test Site contracts during 1995. Capital expenditures were $62.8 million in the first nine months of 1996, an increase of $20.5 million over the same period in 1995. In 1996, capital expenditures are expected to exceed the 1995 level by approximately 50%. These increases support new product development initiatives primarily in the Optoelectronics segment. During the first six months of 1996, the Company purchased 531,000 shares of its common stock through periodic purchases on the open market at a cost of $12 million. There were no purchases during the third quarter, and the Company resumed making purchases during the fourth quarter. As of September 29, 1996, the Company had authorization to purchase 5.1 million additional shares. The pace of future purchases will depend on operational cash flows and cash utilization alternatives. In March 1996, the Company renegotiated its credit facilities with the signing of two revolving credit agreements totaling $200 million. These agreements consist of a $100 million, 364-day facility and a $100 million, five-year facility, which expires in March 2001. These agreements serve primarily as backup facilities for the Company's commercial paper borrowing program. 12 Exhibits -------- EG&G, INC. AND SUBSIDIARIES Exhibit 27 - Financial data schedule 13 PART II. OTHER INFORMATION EG&G, INC. AND SUBSIDIARIES Item 6. Exhibits and Reports on Form 8-K -------------------------------- (a) Exhibits incorporated by reference from Part I herein Exhibit 27 - Financial data schedule (submitted in electronic format only) (b) Reports on Form 8-K There were no reports on Form 8-K filed for the three months ended September 29, 1996. 14 EG&G, INC. AND SUBSIDIARIES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. EG&G, Inc. By /s/ John F. Alexander, II ------------------------- Senior Vice President and Chief Financial Officer (Principal Financial Officer) Date November 8, 1996 ---------------- 15 EX-27 2 FDS --
5 0000031791 EG&G, Inc. 1000 US$ 9-MOS DEC-29-1996 JAN-01-1996 SEP-29-1996 1 68,252 0 218,447 4,800 123,213 476,737 466,183 284,473 837,049 273,366 114,935 0 0 60,102 317,686 837,049 1,057,445 1,057,445 406,108 779,306 213,599 0 9,751 59,331 19,105 40,226 3,832 0 0 44,058 .93 .93
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