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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended January 2, 1994 Commission file number 1-5075
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from _________ to _________
EG&G, Inc.
----------------------------------------------------
(Exact name of registrant as specified in its charter)
Massachusetts 04-2052042
------------------------------ ---------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
45 William Street, Wellesley, Massachusetts 02181
------------------------------------------- --------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (617) 237-5100
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which Registered
------------------- -----------------------------------------
Common Stock, $1 Par Value New York Stock Exchange, Inc.
-------------------------- -----------------------------
Preferred Share Purchase Rights New York Stock Exchange, Inc.
------------------------------- -----------------------------
Securities registered pursuant to Section 12(g) of the Act: NONE
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 [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [ ]
The aggregate market value of the common stock, $1 par value, held by
non-affiliates of the registrant on February 25, 1994, was
$1,004,884,329.
As of February 25, 1994, there were outstanding, exclusive of treasury
shares, 55,823,147 shares of common stock, $1 par value.
DOCUMENTS INCORPORATED BY REFERENCE
PORTIONS OF EG&G, INC.'S
1994 PROXY STATEMENT . . . . . . . . . . PART III (Items 10, 11 and 12)
PART I
ITEM 1. BUSINESS
----------------
General Business Description
----------------------------
EG&G, Inc. was incorporated under the laws of the Commonwealth of
Massachusetts in 1947. EG&G, Inc. and its subsidiaries (hereafter
referred to as "EG&G", the "Company", or the "Registrant") is a
diversified company with annual sales of $2.7 billion.
The Company provides systems engineering and test site operating
and management services to government agencies and laboratories. It
also designs and manufactures a variety of analytical and clinical
instruments and mechanical and optoelectronic components for
governmental and commercial customers.
The Company's operations are classified into five industry
segments: Technical Services, Department of Energy ("DOE") Support,
Instruments, Mechanical Components and Optoelectronics.
Recent Developments
-------------------
In June 1993, the Company acquired the Wallac Group, a unit of
Procordia AB, for approximately U.S. $46 million. Wallac, headquartered
in Finland, has 500 employees located in Scandinavia, Russia, the United
Kingdom and North America. It develops, manufactures and markets
analytical and immunodiagnostic systems, instruments and reagents for
clinical diagnostics, life-science research and environmental
monitoring.
Also in June 1993, the Company signed a 27 month joint research
and development agreement with the Institute of Microelectronics
National University of Singapore to develop a commercially viable
micromachined accelerometer, an electronic sensor that triggers the
deployment of vehicle airbags, for automotive and industrial use.
In October 1993, the Company was notified that it had been
selected to continue as Base Operations Contractor at the Kennedy Space
Center. The cost-plus-award/incentive fee contract is for four years with
two renewal option periods of three years each at the election of the
government. The proposed contract cost is approximately $1.7 billion
over the life of the contract including renewals.
In October 1993, the Board of Directors authorized the purchase of
up to a total of 5.5 million shares of the Company's common stock by the
Company which will be accomplished through periodic purchases on the
open market.
In February 1994, the Company formed EG&G Environmental, Inc. to
provide environmental services and systems management.
Industry Segments
-----------------
In January 1994, the Company reorganized its operating
organization and redefined its reporting segments.
A Mechanical Components segment was formed that includes all
operations previously a part of the former Aerospace segment and all
mechanical seal and blower operations previously a part of the former
Components segment. An Optoelectronics segment was also formed
comprising all Optoelectronics divisions from the former Components
segment, the Electronic Components Division and Power Systems both from
the former Defense segment. The composition of the Instruments and DOE
Support segments remains essentially unchanged. The Technical Services
segment has been enlarged to include the service organizations of the
former Defense segment.
As a result of these changes, the Company's external reporting
segments now correspond to its internal operating organization.
Technical Services
The Company provides a wide range of technical services including
engineering, scientific, and technical support to a number of
governmental organizations. It also provides analysis and testing
services to the automotive industry.
The Company has been the Base Operations Contractor for NASA's
Kennedy Space Center in Florida since 1983. The Company manages the
Center's facilities, tests astronaut rescue procedures and escape
systems, provides security, fire protection and medical services,
handles propellant commodities and manages the shuttle landing
facility. The current contract was awarded in October 1993 for a term
of four years with two renewal options of three years each at the
election of the government.
The Company also supplies maintenance and support services to
NASA's Langley Research Center in Virginia for the development of
aircraft and spacecraft systems.
The Company runs the U.S. Customs Service Support Seized Property
Program, involving the management and disposal of all types of personal
and real property. It also provides perimeter and transit-system safety
and security systems for U.S. government agencies.
The Company provides technical support services to the Army's Yuma
Proving Grounds including testing of vehicles, artillery, aircraft
armaments and airborne missile systems as well as providing optical and
radar systems support. The Company operates and maintains the U.S. Air
Force Radar Target Scatter facility, an electromagnetic laboratory for
static radar cross-section measurements. The Company also furnishes
technical services for the operation and calibration of high-power
lasers and operational field-testing and evaluation of weapons systems.
Work for the U.S. Department of Defense ("DoD") includes planning
and analysis, training, engineering and other support services to the
Navy in connection with next-generation combat systems for surface
vessels and submarines; supporting major Navy submarine and surface ship
programs with emphasis on improving the operational performance of
electronic systems, developing new surveillance radars and sonar-based
anti-submarine warfare systems; and developing systems used to evaluate
the electronic warfare effectiveness of command, control, and
communication systems in an electromagnetic environment.
The Company is the management and operations contractor for the
chemical weapons demilitarization program at the Army's Tooele Depot in
Utah. The Company's responsibilities include the construction and
operation of a facility for the disposal of lethal chemical agents and
munitions.
Under a contract with the Army, the Company furnishes specialized
operational and maintenance services for the Chemical Decontamination
Training Facility at Fort McClellan, Alabama.
The Company conducts research on benign technologies for the
extraction, conversion, and utilization of coal, oil, and gas for the
DOE's Morgantown Energy Technology Center in West Virginia. The current
contract covers work to be performed through September 1994.
The Company is managing the closedown of operations at the DOE's
Superconducting Super Collider Laboratory project near Dallas, Texas.
The Company develops and conducts mobile and stationary vehicle
durability testing and comprehensive vehicle component testing for the
automotive industry. It also tests fuels and lubricants for petroleum
and chemical-additive industries to determine how these materials
perform against industry and government standards.
Department of Energy Support
The Company provides site and environmental management, design,
engineering and fabrication of equipment and other engineering and
research services for the DOE.
The work, which is performed under five prime contracts with the
DOE, includes engineering services in support of nuclear weapons
testing, radiation sensing, the operation of precision switching devices
and precision machining, research on reactor safety and nuclear waste
management.
Uncertainty continues to exist in the DOE Support segment due to
changes in government budget and national priorities. The Department of
Energy's rules concerning contractor liability and performance
evaluation currently apply to all five contracts. These new performance
evaluation criteria create greater variability in the incentive awards
earned. The contractor liability rules provide for increased contractor
accountability for costs associated with events determined to have been
avoidable. This liability is generally limited to the fee earned in the
grading period in which the avoidable event occurs. In addition, the
Department of Energy has announced its intention to proceed with a
contract reform initiative.
Under the Rocky Flats contract, the Company is the management and
operations contractor for the Rocky Flats facility near Golden,
Colorado. The Company provides the management, operation, and
maintenance of government facilities capable of producing nuclear
weapons components. The Company also provides all support services at
the site. In addition, the Company manages DOE programs related to
environmental restoration, waste management, and technology development.
The current contract expires at the end of December 1995.
Under the Idaho National Engineering Laboratory ("INEL") contract,
the Company is the management and operations contractor for certain
government-owned facilities at INEL. The Company is responsible for
equipment and systems development in the fields of reactor physics,
reactor safety technology, heat transfer, materials and nuclear waste
management; and safety research on magnetic fusion, energy conservation,
and geothermal and other non-nuclear energy sources. It conducts
research, development, and testing for reactor safety programs and
provides support for the entire site. The current contract expires in
October 1994. The Company has submitted a proposal in partnership with
BNFL, Inc., a subsidiary of British Nuclear Fuels, plc, and Fluor
Daniels Environmental Services, Inc., a subsidiary of Fluor Daniel,
Inc., for increased work scope at the facility. A decision on the
awarding of the contract is expected in mid-1994.
Under the Energy Measurements contract, the Company provides
scientific and engineering services for the DOE's underground nuclear
weapons test program at the Nevada Test Site. Much of this work is done
in cooperation with the Sandia, Los Alamos, and Lawrence Livermore
national research laboratories. The primary work requires the
measurement of energy from underground nuclear detonations. Besides
this mission, the Company works on many of DOE's non-weapons programs.
It conducts aerial radiation and environmental surveys nationwide and
maintains a staff of experts to provide assistance in the event of a
nuclear emergency anywhere in the world. The current contract expires
at the end of December 1995.
Under the Reynolds Electrical and Engineering Co. contract, the
Company provides specialized support and maintenance services also
relating to the DOE's underground nuclear weapons test program at the
Nevada Test Site. This work includes construction services at the
Tonopah Test Range and surface testing and drilling at the Yucca
Mountain Project. The current contract expires at the end of
December, 1995.
The United States has implemented a moratorium on nuclear weapons
testing scheduled to last through September 1995 and the
Administration has proposed a permanent ban on nuclear weapons testing.
The DOE is maintaining a capability to resume weapons testing if a
decision to do so should be made. However, during the moratorium, all
test-related activities have been stopped or reduced significantly.
Other activities at the Nevada Test Site, such as environmental
monitoring and remediation, have increased, but have not offset the
reduction in the testing programs.
Under the Mound Applied Technologies contract, the Company is the
management and operations contractor for the Mound facility in
Miamisburg, Ohio. The Mound facility is in the midst of a transition
from defense programs to environmental restoration and economic
development activities. The Company's responsibilities include
research, development, and production of high-technology mechanical
explosives and electrical components for nuclear weapons. The current
contract expires at the end of September 1996.
Instruments
The Company offers instruments and systems for applications in
medical and clinical diagnostics; biochemical, medical and life science
research; environmental monitoring; industrial and pharmaceutical
process measurement; gas and oil field applications; airport and
industrial security; and marine and oceanographic studies.
Many of the Company's instruments are based on the Company's
expertise in nuclear measurements, including detection, characterization
and measurement of radiation. For example, the Company offers alpha,
beta and gamma counting systems that are used in clinical laboratories,
research laboratories, and for environmental analysis. A complete line
of radiation protection measuring systems equipped with built-in large-
area proportional detectors are sold to laboratories, nuclear and
environmental monitoring facilities.
For research and environmental applications, the Company offers
radiation detectors and associated electronic processing equipment
ranging from discrete modular instruments to complete systems. Many of
these instruments are based on the Company's hyperpure germanium crystal
and silicon-based detector technologies. Examples of such products are
germanium detectors, charged particle detectors, multichannel analyzers,
and electronic instrumentation modules. These products are used by
university, industrial, and government laboratories to study various
nuclear phenomena.
Employing its radioisotopic measurement technology, the Company
offers industrial on-line level and density measuring instruments for
process control of liquids, slurries, or solids in containers, tanks,
and pipes.
Instruments based on the Company's expertise in detecting and
characterizing electromagnetic radiation, including infrared, visible,
and ultraviolet light, and microwave, x-rays, and gamma rays, include
optical analyzers and Raman spectrometers that are used extensively in
materials research and development. Extensions of these product lines
are used to characterize the performance of fiber optics and for the
non-destructive analysis of materials and surfaces. The Company offers
clinical laboratory instruments based on the luminescence of biological
chemicals and immunoassay products that use the Company's proprietary
time-resolved fluorescence technology. The Company also offers x-ray
security inspection systems and walk-through metal detectors for
industry, airline, and commercial use, and microwave-based moisture
detection systems used in process control and in-line analysis of bulk
materials. The Company has recently developed food inspection systems
which combine imaging technology developed for its optical analyzers
with the x-ray technology employed by the Company in its security
systems business.
The Company's high-performance electrochemistry instruments, the
majority of which are computer controlled, are used by research
laboratories, universities and industrial and pharmaceutical companies
to detect, analyze, and characterize corrosion, trace materials and
neurological biochemicals.
The Company offers small high-precision turbine flow meters and
primary standard flow calibrators that are used in aerospace, industrial
and pharmaceutical applications.
For marine and oceanographic applications, the Company offers
side-scan sonar equipment, marine seismic instruments, and acoustic
equipment for recovery of ocean-floor moorings and instruments, and it
provides instruments for use in the oil and gas industry including high-
temperature, high-pressure test chambers that predict performance of
cement slurries during drilling and completion of oil and gas wells,
viscometers for analyzing drilling muds, pressure calibration standards,
and chromatographs and gravitometers for the analysis of natural gas.
Mechanical Components
The Company offers high reliability advanced seals and bellows
products, fans and blowers, precision components for aerospace
applications and heat management devices.
The Company produces bellows used in mechanical sealing components
and systems for the containment and control of fluids. These products
are used by the oil, petrochemical, chemical, food processing, pulp and
paper, waste water treatment and refrigeration industries.
The Company's mechanical face-type bellows seals, engineered
sealing products, and bellows devices are utilized in jet aircraft,
surface ships, submarines, torpedoes, weapons, medical equipment,
computer equipment and power generation equipment.
The Company manufactures solenoid and pressure operated valves for
aerospace and other applications primarily to control turbines, rocket
engines and aircraft and space systems.
The Company manufactures high-reliability cooling fans and blowers
for electronics and electrical equipment and transportation systems, and
blowers and blower systems that produce both vacuum and pressure using
regeneration and multistage technology for industrial applications.
The Company's BiocubeTM Aerobic Biofilter treats volatile organic
compounds and odorous emissions with naturally occurring microbes.
The Company manufactures aircraft engine exhaust and pneumatic
ducting assemblies and rocket engine components that utilize bulge
forming, drop hammer forming and fusion welding technologies.
The Company's metal printed circuit board retainers and extractors
are used in electronic enclosures for military, commercial aircraft,
telecommunications and computer applications.
Optoelectronics
The Company offers a broad variety of components that emit and
detect light in the spectrum from ultraviolet through visible to the far
infrared. These components are used in many applications ranging from
simple light sensors used in automotive and commercial electronics to
sophisticated space-qualified detectors that are used for communications
and remote sensing of the earth and planetary exploration.
Examples of commercial and consumer applications of the Company's
optical sensors include medical instruments, smoke detectors, cameras,
bar-code scanners and automatic headlight dimmers. The Company's high
performance image sensors have applications in aerospace, astronomy,
spectroscopy and medical and industrial imaging.
The Company also offers a wide variety of flashlamps for use in
photocopy and reprographic equipment, phototypesetting systems, beacons
and in laser systems and accessories. TV camera tubes, the main
component in x-ray diagnostic equipment, are supplied to manufacturers
of medical imaging instruments. Pyroelectric infrared and thermopile
sensors are used in security systems, temperature monitoring and, in
combination with photo resistors, for automatic light switches.
The Company offers hermetically-sealed ceramic-to-metal switching
devices used for pulsed radar and gas and liquid lasers. Spark gaps are
offered for use in lithotripters which alleviate kidney stones non-
invasively and in high-performance lasers such as those used in laser
range finders. Similar and related products are used by the military
for missile and rocket firing and control. The Company also offers
rubidium atomic frequency standards for both military and commercial
navigation and communication systems and high-reliability and high-
frequency power supplies that provide precise power conditioning in
electronic equipment used by the military and in commercial aircraft and
air traffic control systems.
Marketing
---------
The services and products of the Company are marketed through its
own specialized sales forces as well as independent foreign and domestic
manufacturers' representatives and distributors. In certain foreign
countries, the Company has entered into joint venture and license
agreements with local firms to manufacture and market its products.
Raw Materials and Supplies
--------------------------
Raw materials and supplies are generally readily available in
adequate quantities from domestic and foreign sources.
Patents and Trademarks
----------------------
While the Company's patents, trademarks, and licenses are
cumulatively important to its business, the Company does not believe
that the loss of any one or group of related patents, trademarks, or
licenses would have a materially adverse effect on the overall business
of the Company or on any of its business segments.
Backlog
-------
The approximate dollar value of all unfilled orders by industry
segment as of January 2, 1994, and January 3, l993, is set forth in
the table below.
(In Thousands) January 2, 1994 January 3, 1993
--------------- ---------------
Technical Services $ 243,081 $ 219,092
DOE Support 1,154,505 1,294,456
Instruments 47,452 45,276
Mechanical Components 92,691 114,454
Optoelectronics 83,459 95,897
---------- ----------
Total $1,621,188 $1,769,175
========== ==========
At January 2, 1994, 85% of the total backlog represented orders
received from U.S. Government agencies, primarily DOE. The DOE Support
backlog represents the annual funding for these contracts that has
actually been appropriated. The order backlog for each segment relates
differently to future sales based on different business characteristics,
primarily order and delivery lead times and customer demand requirements.
The Company estimates that approximately 96% of its current backlog will
be billed during l994.
Government Contracts
--------------------
The Company's five major contracts are awarded on a
cost-plus-award-fee basis. Sales under these contracts were $1,379
million in 1993. The expiration dates for these contracts are, as
follows, one in 1994, three in 1995 and one in 1996; funds are
appropriated, work scopes are determined and fee pools are negotiated
annually. The INEL contract expires in October 1994 and the Company
holds the majority interest in a joint venture that has submitted a
proposal for increased work scope at the facility. The Department of
Energy's rules concerning contractor liability and performance
evaluation currently apply to all five contracts. These new performance
evaluation criteria create greater variability in the incentive awards
earned. The contractor liability rules provide for increased contractor
accountability for costs associated with events determined to have been
avoidable. This liability is generally limited to the fee earned in the
grading period in which the avoidable event occurs. In addition, the
Department of Energy has announced its intention to proceed with a
contract reform initiative. Uncertainty continues to exist in the
Company's DOE Support segment due to changes in government budget and
national priorities. Sales to U.S. Government agencies, which were
predominantly to the DOE, DoD and NASA, were $1,939 million, $2,035 million
and $1,987 million in 1993, 1992 and 1991, respectively.
The Company's Kennedy Space Center contract with NASA generated
sales of $201 million in 1993. In October 1993, the Company was
selected by NASA to continue as the base operations contractor at the
Kennedy Space Center. The new award-fee contract has a potential term
of ten years, including options, contains reductions in contract value
and could result in reductions in annual fee.
In accordance with government regulations, all of the Company's
government contracts are subject to termination for the convenience of
the government.
Competition
-----------
Because of the wide range of its products and services, the
Company faces many different types of competition and competitors.
Competitors range from large foreign and domestic organizations that
produce a comprehensive array of goods and services, to small concerns
producing a few goods or services for specialized market segments.
The Technical Services segment provides technical services to
several agencies of the federal government, including DoD Departments
and NASA. This business is typically won through competition with a
number of large and small government contractors, many of whom are as
large or larger than the Company and who, therefore, have resources and
capabilities that are comparable to or greater than those of the
Company. The primary bases for competition in these markets are
technical and management capabilities, current and past performance,
and price. Competition is typically subject to mandated procurement and
competitive bidding requirements. Competition for automotive testing
services is primarily from a few specialized testing companies and from
customer-owned testing facilities. Automotive testing competition is
primarily based on quality, service, and price.
In the DOE Support segment, the Company is subject to federally
mandated procurement procedures, usually bidding competitively against a
variety of large and small government contractors. Whereas in the past
the Company was occasionally granted a sole-source opportunity for this
work, the Company anticipates that future business will be obtained
through competitive bidding subject to DOE procurement procedures. Some
of the competitors in this segment are larger than the Company and
therefore may have resources and capabilities that are comparable to or
greater than those of the Company.
In the Instruments segment, the Company primarily competes with
small specialized instrument companies that serve narrow segments of
markets in oceanographic equipment; x-ray security systems; nuclear,
industrial, diagnostic, clinical and oil and gas related instrumentation.
The Company competes in these markets on the basis of product performance,
product reliability, service and price. Consolidation of competitors
through acquisitions and mergers and the Company's increasing activity
in selected diagnostics and industrial markets will increase the
proportion of large competitors in this segment.
In the Mechanical Components segment, the Company is a leading
supplier of selected precision aircraft exhaust components, specialized
fans and heat transfer devices, and mechanical seals for industrial
applications. Competition in these areas is typically from small
specialized manufacturing companies.
The Company is among the leading suppliers of specialty
flashtubes, silicon photodetectors, avalanche photodiodes, cadmium
sulfide and cadmium selenide detectors, photodiode arrays and switched
power supplies, all of which are part of the Company's Optoelectronics
segment. Typically, competition is from small specialized manufacturing
companies.
Within both the Mechanical Components and Optoelectronics
segments, competition for governmental purchases is subject to mandated
procurement procedures and competitive bidding practices. In both of
these segments, the Company competes on the basis of product
performance, quality, service and price. In much of the Optoelectronics
segment and in the specialized fan and aircraft and marine mechanical
seal markets included in the Mechanical Components segment, advancing
technology and research and development are important competitive
factors.
Research and Development
------------------------
During 1993, 1992 and 1991, Company-sponsored research and
development expenditures were approximately $34.7 million, $32.1 million
and $24.7 million, respectively. Customer-sponsored research and
development, primarily for Department of Energy programs, accounted for
additional expenditures of approximately $137 million in 1993, $133
million in 1992 and $127 million in 1991.
Environmental Compliance
------------------------
The Company is conducting a number of environmental investigations and
remedial actions at current and former Company locations and, along with other
companies, has been named a potentially responsible party for certain waste
disposal sites. The Company accrues for environmental issues in the accounting
period in which the Company's responsibility is established and the cost can
be reasonably estimated. There have been no environmental matters to date
which had or are expected to have a material effect on the Company's financial
position or results of operations.
The Company's compliance with the laws, rules and regulations relating
to the protection of the environment has not had, and is not expected to have,
a material adverse effect on its capital expenditures, earnings or competitive
position.
Employees
---------
As of March 17, l994, the Company employed approximately 32,000 persons.
Certain of the Company's subsidiaries are parties to contracts with labor
unions. The Company considers its relations with employees to be
satisfactory.
Financial Information About Industry Segments
---------------------------------------------
Sales and Income From Operations by Industry Segment
For the Five Years Ended January 2, 1994
(In thousands) 1993 1992 1991 1990 1989
---------- ---------- ---------- ---------- ----------
Sales:
Technical Services $ 636,041 $ 608,864 $ 586,537 $ 522,724 $ 486,633
DOE Support 1,378,532 1,468,741 1,430,016 1,318,329 592,807
Instruments 237,223 226,900 230,196 208,263 165,169
Mechanical Components 244,878 274,199 295,519 295,052 271,707
Optoelectronics 201,274 210,118 146,274 129,920 133,842
---------- ---------- ---------- ---------- ----------
Total $2,697,948 $2,788,822 $2,688,542 $2,474,288 $1,650,158
========== ========== ========== ========== ==========
Income from Operations:
Technical Services $ 65,498 $ 54,173 $ 53,296 $ 45,246 $ 44,655
DOE Support 38,383 59,112 44,403 42,403 27,190
Instruments 10,119 15,764 21,125 5,917 11,915
Mechanical Components 23,554 20,934 27,239 26,120 28,699
Optoelectronics 10,866 3,070 6,588 11,517 8,767
General Corporate
Expenses (27,573) (29,895) (27,456) (23,491) (22,833)
---------- ---------- ---------- ---------- ----------
Total $ 120,847 $ 123,158 $ 125,195 $ 107,712 $ 98,393
========== ========== ========== ========== ==========
The Company's operations are classified into five industry segments:
Technical Services, DOE Support, Instruments, Mechanical Components and
Optoelectronics. The Company has changed the way its products and services
are grouped into industry segments to better reflect the markets served
and the Company's strategies for the future. Data for prior periods have
been restated accordingly.
Additional information relating to the Company's operations in the
various industry segments follows:
Depreciation and Capital
(In thousands) Amortization Expense Expenditures
------------------------- -------------------------
1993 1992 1991 1993 1992 1991
------- ------- ------- ------- ------- -------
Technical Services $ 8,422 $ 7,991 $ 7,653 $ 6,315 $ 5,650 $ 4,974
DOE Support - - - - - -
Instruments 9,213 8,131 8,425 6,555 4,768 6,276
Mechanical Components 6,870 7,755 8,643 5,598 5,290 9,606
Optoelectronics 12,417 11,595 8,189 8,469 6,305 4,708
Corporate 920 820 816 923 433 1,053
------- ------- ------- ------- ------- -------
$37,842 $36,292 $33,726 $27,860 $22,446 $26,617
======= ======= ======= ======= ======= =======
(In thousands) Identifiable Assets
--------------------------
1993 1992 1991
-------- -------- --------
Technical Services $127,917 $133,351 $131,931
DOE Support 11,959 22,189 17,171
Instruments 256,117 217,792 215,029
Mechanical Components 97,317 112,272 133,404
Optoelectronics 142,630 142,543 90,577
Corporate 132,868 121,593 109,785
-------- -------- --------
$768,808 $749,740 $697,897
======== ======== ========
DOE Support's identifiable assets mainly represent accounts receivable
for fees from the U.S. Department of Energy. DOE Support's assets do not
include U.S. Government funds and facilities that are devoted to the contracts
and for which the Company is custodian. Corporate assets consist primarily of
cash and cash equivalents, prepaid taxes and investments.
Financial Information About Geographic Areas
--------------------------------------------
Information relating to geographic areas follows:
(In thousands) Sales Income From Operations
-------------------------------- --------------------------
1993 1992 1991 1993 1992 1991
---------- ---------- ---------- -------- -------- --------
U.S. $2,427,663 $2,532,494 $2,484,972 $129,858 $142,272 $137,346
Non-U.S. 270,285 256,328 203,570 18,562 10,781 15,305
Corporate - - - (27,573) (29,895) (27,456)
---------- ---------- ---------- -------- -------- --------
$2,697,948 $2,788,822 $2,688,542 $120,847 $123,158 $125,195
========== ========== ========== ======== ======== ========
(In thousands) Identifiable Assets
----------------------------
1993 1992 1991
-------- -------- --------
U.S. $317,303 $355,722 $364,990
Non-U.S. 318,637 272,425 223,122
Corporate 132,868 121,593 109,785
-------- -------- --------
$768,808 $749,740 $697,897
======== ======== ========
Over 60% of the identifiable assets of the non-U.S. operations are
located in European Community countries. Transfers between geographic
areas were not material.
ITEM 2. PROPERTIES
--------------------
The Company occupies approximately 5,789,700 square feet of building
area, of which approximately 1,768,400 square feet is owned and the balance
leased. The Company's headquarters occupies 53,350 square feet of leased
space in Wellesley, Massachusetts. The Company's other operations are
conducted in manufacturing and assembly plants, research laboratories,
administrative offices and other facilities located in 27 states,
Washington, D.C., Puerto Rico, the Virgin Islands and 24 foreign
countries.
Non-U.S. facilities account for approximately 1,278,600 square feet of
owned and leased property, or approximately 22% percent of the Company's total
occupied space.
The Company's leases on property are both short-term and long-term. In
management's opinion, the Company's properties are well-maintained and are
adequate for its present requirements. Future space requirements are
anticipated and appropriate facility plans will be implemented to meet those
requirements.
At certain government facilities, the Company occupies government
furnished space. In addition, a substantial part of the equipment and
machinery used by the Company in the performance of its government contracts
has been furnished by the government. Substantially all of the machinery and
equipment used by the Company in its other activities is owned by the Company
and the balance is leased or furnished by contractors or customers.
The following table indicates the approximate square footage of real
property owned and leased attributable to each of the Company's industry
segments.
Property Property
Owned Leased Total
(Sq. Feet) (Sq. Feet) (Sq. Feet)
---------- ---------- ----------
Technical Services 163,400 1,003,600 1,167,000
DOE Support 0 1,527,600 1,527,600
Instruments 633,600 397,200 1,030,800
Mechanical Components 574,300 551,100 1,125,400
Optoelectronics 397,100 476,600 873,700
Corporate Offices 0 65,200 65,200
--------- --------- ---------
Totals 1,768,400 4,021,300 5,789,700
========= ========= =========
ITEM 3. LEGAL PROCEEDINGS
--------------------------
The Company is subject to various investigations, claims, and legal
proceedings covering a wide range of matters that arise in the ordinary course
of its business activities. Each of these matters is subject to various
uncertainties, and it is possible that some of these matters may be resolved
unfavorably to the Company. The Company has established accruals for matters
that are probable and reasonably estimable. Management believes that any
liability that may ultimately result from the resolution of these matters in
excess of amounts provided will not have a material adverse effect on the
financial position or results of operations of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
------------------------------------------------------------
Not applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
------------------------------------------------------------------------------
Quarterly Common Stock Market Price Range
-----------------------------------------
1992 Quarters 1993 Quarters
------------------------------ ------------------------------
Price First Second Third Fourth First Second Third Fourth
----- ------ ------ ------ ------ ------ ------ ------ ------
High $26.75 $26.31 $24.75 $21.88 $24.00 $24.50 $20.25 $18.38
Low 24.06 21.25 21.13 18.00 19.38 18.88 15.75 16.75
Dividends
---------
1992 Quarters 1993 Quarters
------------------------------ -----------------------------
First Second Third Fourth First Second Third Fourth
------ ------ ------ ------ ------ ------ ------ ------
Cash Dividends
Per Common
Share $ .115 $ .125 $ .125 $ .125 $ .13 $ .13 $ .13 $ .13
The Company's common stock is listed and traded on the New York Stock
Exchange. The number of holders of record of the Company's Common Stock as of
February 25, 1994, was approximately 15,712.
In October l993 the Board of Directors of the Company voted an increase
in the Company's quarterly cash dividend from thirteen cents to fourteen cents
per share. The quarterly cash dividend was paid on February 10, l994, to
stockholders of record at the close of business on January 21, l994.
ITEM 6. SELECTED FINANCIAL DATA
--------------------------------
SELECTED FINANCIAL INFORMATION For the Five Years Ended January 2, 1994
(In thousands where applicable) 1993 1992 1991 1990 1989
---------- ---------- ---------- ---------- ----------
Operations:
Sales $2,697,948 $2,788,822 $2,688,542 $2,474,288 $1,650,158
Income From Operations 120,847 123,158 125,195 107,712 98,393
Income Before Cumulative
Effect of Accounting
Changes 79,571 87,779 81,242 73,966 69,850
Net Income 59,071* 87,779 81,242 73,966 69,850
Earnings Per Share Before
Cumulative Effect of
Accounting Changes 1.41 1.56 1.45 1.30 1.20
Earnings Per Share 1.05* 1.56 1.45 1.30 1.20
Return On Equity Before
Cumulative Effect of
Accounting Changes 16.4% 19.6% 20.6% 20.6% 20.5%
Return On Equity 12.4%* 19.6% 20.6% 20.6% 20.5%
Weighted Average Shares
Outstanding 56,504 56,385 55,901 56,989 58,262
Financial Position:
Working Capital $ 227,935 $ 247,518 $ 214,495 $ 149,674 $ 151,187
Current Ratio 1.96:1 2.05:1 1.89:1 1.58:1 1.59:1
Total Assets 768,808 749,740 697,897 675,224 643,403
Total Debt 45,039 42,223 59,635 95,551 113,390
Stockholders' Equity 477,534 473,636 420,711 369,631 348,987
- Per Share 8.51 8.34 7.45 6.58 6.02
Total Debt/Total Capital 9% 8% 12% 21% 25%
Shares Outstanding 56,131 56,812 56,495 56,175 57,993
Other Data:
Cash Flows From
Operating Activities $ 112,137 $ 127,807 $ 104,429 $ 129,208 $ 52,414
Capital Expenditures 27,860 22,446 26,617 19,848 23,258
Depreciation and
Amortization 37,842 36,292 33,726 29,944 25,536
Cash Dividends Per
Common Share .52 .49 .42 .38 .34
*Includes one-time after-tax charges of $20.5 million, or $.36 per share, due to the
Company's adoption of SFAS Nos. 106 and 109.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
------------------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
Results of Operations
---------------------
The discussion that follows is a summary analysis of the major changes
by industry segment.
1993 Compared to 1992
Sales
Sales for 1993 were $2,698 million, $91 million below 1992 sales of $2,789
million.
Technical Services: The $27 million increase resulted from an increase of
$24 million in automotive testing services caused primarily by the
introduction of new industry testing protocols, partially offset by a $10
million reduction in contract billings at the Kennedy Space Center.
DOE Support: The majority of the $90 million decrease resulted from a lower
program scope at Rocky Flats and the impact of the moratorium on nuclear
testing on Energy Measurements. The shift in sales and related cost of sales
from products to services presented in the Consolidated Statement of Income
reflects the change, compared to 1992, from production to environmental
restoration services at some facilities.
Instruments: The $10 million increase resulted from the $43 million sales
of Wallac acquired in June 1993, partially offset by reduced scientific,
industrial and security instruments sales due to sluggish market conditions,
lower foreign exchange rates and large orders shipped in 1992.
Mechanical Components: The $29 million decrease was attributable to a $21
million reduction in aerospace sales due primarily to continued softness in
this market and, to a lesser extent, the divestiture of two operations.
Optoelectronics: The $9 million decrease was due mainly to the completion of
several programs in 1992, partially offset by the sales of Heimann
Optoelectronics acquired early in the second quarter of 1992.
Income From Operations
Income from operations was $120.8 million in 1993, a 2% decrease from 1992.
Technical Services: The $11.3 million increase was due primarily to higher
sales and improved margins in the automotive testing services business. In
October 1993, the Company was selected by NASA to continue as the base
operations contractor at the Kennedy Space Center. The new contract has a
potential term of 10 years, including options, contains reductions in
contract value and could result in reductions in annual fee of
approximately $5 million.
DOE Support: Uncertainty continues to exist in the DOE Support segment due
to changes in government budgets and national priorities. The $20.7 million
decrease was primarily attributable to Rocky Flats which experienced lower
grades and a reduction of available fee pool. In addition, 1992 results
included a favorable profit adjustment due to higher than anticipated
performance grades at year-end 1991. Lower grades on the Idaho contract also
contributed, to a lesser extent, to the decrease. The Idaho contract expires
in October 1994, and the Company is participating as the majority interest in
a joint venture that has submitted a proposal for increased work scope at the
facility. The Department of Energy's rules concerning contractor liability
and performance evaluation became effective for the remaining two contracts,
REECo and Mound, in October 1993. These rules, coupled with the Department
of Energy's announced intention to proceed with a contract reform initiative,
create greater variability in the incentive awards earned and provide for
increased contractor accountability.
Instruments: The $5.6 million decrease resulted from lower sales of
scientific, industrial and security instruments partially offset by the
income generated by the Wallac acquisition. Management has initiated a
review to assess certain operating elements of this segment. The
Instruments segment remains an integral part of the Company's long-term
growth strategy.
Mechanical Components: Improved profitability resulting from cost reduction
programs in the industrial sealing and electromechanical businesses more than
offset the impact of lower aerospace sales, generating a $2.6 million
increase.
Optoelectronics: The $7.8 million increase was due to improved profitability
as a result of cost reductions at Heimann Optoelectronics. The 1992 results
included a charge of $6.3 million for the write-down of the net assets of two
businesses to their estimated disposal value.
General Corporate Expenses: The $2.3 million decrease was due to the absence
of corporate management incentives in 1993.
The net change in other income (expense) was an increase in income of
$3.1 million. This was primarily due to gains on investments. The 1993
effective tax rate of 34.7% is higher than the 27.5% in 1992 primarily because
the 1992 rate reflected a favorable adjustment of prior estimated tax
liabilities and the tax benefit resulting from the sale of an investment in a
hydroelectric power plant.
During the first quarter of 1993, the Company adopted Statement of
Financial Accounting Standards (SFAS) No. 106 on accounting for postretirement
benefits other than pensions for its U.S. retiree health benefits and SFAS No.
109 on accounting for income taxes. The adoption of SFAS No. 106 resulted in
an after-tax charge of $13.2 million ($.23 per share) while the charge for
SFAS No. 109 was $7.3 million ($.13 per share). See Notes 13 and 16 for
additional disclosures.
The Company reduced its discount rate for employee benefit plans in 1993
as a result of the decrease in long-term interest rates. The effects of the
lower discount rates were partially offset by corresponding reductions in
assumptions for compensation increases and health care cost trend rates. The
net results of these changes will not materially affect the Company's results
of operations.
1992 Compared to 1991
Sales
1992 sales of $2,789 million were $100 million higher than the $2,689 million
achieved in 1991.
Technical Services: The increase of $22 million was generated by higher sales
levels under various government contracts.
DOE Support: Sales increased $39 million due to higher program scopes at most
of the operations.
Instruments: Sales decreased $3 million from lower security and industrial
instruments sales that were partially offset by higher scientific instruments
sales.
Mechanical Components: The $21 million decrease resulted from $14 million
lower sales in the aerospace business due primarily to general softness in the
market and, to a lesser extent, from a 1991 divestiture.
Optoelectronics: The sales of Heimann Optoelectronics acquired early in the
second quarter of 1992 were the main contributor to the $64 million increase.
Income From Operations
Income from operations was $123.2 million in 1992, a decrease of $2 million
from the 1991 level.
Technical Services: The $0.9 million increase was generated by the margin on
increased government sales offset by lower margins in the automotive testing
business caused by slightly lower sales and costs associated with follow-on
test programs.
DOE Support: All operations contributed to the $14.7 million increase, the
majority of which was due to higher award fee pools, with the largest increase
at the Rocky Flats facility.
Instruments: The $5.4 million decrease was due to lower sales and changes in
sales mix for security and industrial instruments as well as lower security
instruments margins caused by competitive pricing pressures; these decreases
were partially offset by improved margins and higher volume on scientific
instruments.
Mechanical Components: Income decreased $6.3 million, resulting from cost
inefficiencies and product mix in the industrial sealing and electromechanical
businesses and the profit impact of lower sales. These decreases were
partially offset by lower costs in Europe in 1992 and general productivity
improvements in the aerospace business. The 1991 results included charges for
environmental cleanup costs.
Optoelectronics: Income decreased $3.5 million. The 1992 results included a
$6.3 million charge to write-down two businesses' net assets, including
goodwill, to their estimated disposal value. This write-down was included in
general and administrative expense. Higher costs and manufacturing
inefficiencies at an operation also contributed to the decrease. Partially
offsetting the decreases were improved margins at some operations. The 1991
results included program cost write-offs.
General Corporate Expenses: The $2.4 million increase was due to increased
training and business development expenses as well as normal cost increases in
1992, partially offset by reduced management incentives.
The net change in other income (expense) was a decrease in expense of
$2.8 million due primarily to lower interest expense. The decrease in the
effective tax rate from 32.5% in 1991 to 27.5% in 1992 reflected a tax benefit
resulting from the sale of an investment in a hydroelectric power plant and a
higher favorable adjustment of prior estimated tax liabilities in 1992.
Financial Condition
-------------------
The Company's cash and cash equivalents increased $2.4 million to $72.2
million at the end of 1993 while total debt increased $2.8 million to $45
million. During the second quarter of 1993, the Company acquired Wallac for
net cash of $33.8 million and a one-year note for $5.4 million. Cash flows
from operating activities totaled $112.1 million in 1993, $127.8 million in
1992 and $104.4 million in 1991 and were principally used for capital
expenditures, acquisitions, debt retirement and dividends. In addition, the
Company increased its purchases of common stock by one million shares in 1993.
At the end of 1993, the Company had $34.9 million of commercial paper
outstanding, an increase of $3 million over last year's balance. Commercial
paper, which is the Company's principal source of borrowing, continues to be
rated "A-1" by Standard & Poor's. Moody's recently changed its rating to
"Prime-2" from "Prime-1." The Company's commercial paper borrowing cost is not
expected to increase significantly as a result of the rating change. Credit
agreements, which are in the process of being restructured, total $300 million
and serve as backup facilities.
The Company invested $27.9 million in physical plant and equipment in
1993 and expects to increase this level of investment to approximately $50
million in 1994 to support new product development initiatives in the
Instruments and Optoelectronics segments. In October 1993, the Board of
Directors authorized the purchase of up to a total of 5.5 million shares of
the Company's common stock through periodic purchases on the open market.
During 1993, the Company purchased 1.1 million shares under this new program.
The Company, which is considering financing these activities with a
combination of short-term and long-term debt and cash flows from operations,
believes it can take these actions and retain the flexibility to maintain both
its product development and growth strategies.
Dividends
---------
In October 1993, the Board of Directors voted to increase the Company's
quarterly cash dividend by 8% to 14 cents per share, beginning with the
dividend payable in February 1994 and resulting in an annual rate of 56 cents
per share for 1994. EG&G has paid cash dividends, without interruption, for 29
years and has increased dividends each year since 1974. The Company continues
to retain what management believes to be sufficient earnings to support the
funding requirements of its planned growth.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
----------------------------------------------------
CONSOLIDATED BALANCE SHEET - As of January 2, 1994 and January 3, 1993
(Dollars in thousands except per share data) 1993 1992
-------- --------
Current Assets:
Cash and cash equivalents $ 72,185 $ 69,752
Accounts receivable (Note 3) 237,609 261,859
Inventories (Note 4) 121,581 114,196
Other (Note 16) 33,657 36,988
-------- --------
Total Current Assets 465,032 482,795
-------- --------
Property, Plant and Equipment:
At cost (Note 5) 327,416 301,931
Less - Accumulated depreciation and amortization 221,320 205,767
-------- --------
Net Property, Plant and Equipment 106,096 96,164
-------- --------
Investments (Note 6) 25,920 26,660
-------- --------
Intangible and Other Assets (Notes 7 and 16) 171,760 144,121
-------- --------
Total Assets $768,808 $749,740
======== ========
Current Liabilities:
Short-term debt (Note 8) $ 43,589 $ 40,267
Accounts payable 60,794 69,727
Accrued expenses (Note 9) 132,714 125,283
-------- --------
Total Current Liabilities 237,097 235,277
-------- --------
Long-Term Liabilities (Notes 8 and 13) 54,177 40,827
-------- --------
Contingencies (Note 10) - -
Stockholders' Equity (Note 11):
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
Capital in excess of par value - -
Retained earnings 496,063 473,262
Cumulative translation adjustments (Note 1) (8,287) (1,323)
-------- --------
547,878 532,041
CONSOLIDATED BALANCE SHEET - As of January 2, 1994 and January 3, 1993 - Continued
(Dollars in thousands except per share data) 1993 1992
-------- --------
Stockholders' Equity (Note 11) - Continued:
Less - Cost of shares held in treasury;
3,970,000 shares in 1993 and
3,289,000 shares in 1992 70,344 58,405
-------- --------
Total Stockholders' Equity 477,534 473,636
-------- --------
Total Liabilities and Stockholders' Equity $768,808 $749,740
======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
CONSOLIDATED STATEMENT OF INCOME - For the Three Years Ended January 2, 1994
(Dollars in thousands except per share data) 1993 1992 1991
---------- ---------- ----------
Sales (Note 1):
Products $1,584,644 $2,042,454 $1,974,260
Services 1,113,304 746,368 714,282
---------- ---------- ----------
Total Sales 2,697,948 2,788,822 2,688,542
---------- ---------- ----------
Costs and Expenses (Notes 4, 12, 13 and 14):
Cost of sales:
Products 1,343,473 1,777,704 1,723,414
Services 999,031 645,915 616,831
---------- ---------- ----------
Total cost of sales 2,342,504 2,423,619 2,340,245
Selling, general and administrative
expenses 234,597 242,045 223,102
---------- ---------- ----------
Total Costs and Expenses 2,577,101 2,665,664 2,563,347
---------- ---------- ----------
Income From Operations 120,847 123,158 125,195
Other income (expense), net (Note 15) 1,008 (2,083) (4,837)
---------- ---------- ----------
Income Before Income Taxes 121,855 121,075 120,358
Provision for Federal and
non-U.S. income taxes (Note 16) 42,284 33,296 39,116
---------- ---------- ----------
Income Before Cumulative Effect
of Accounting Changes 79,571 87,779 81,242
Cumulative Effect of Accounting Changes:
Income taxes (Note 16) (7,300) - -
Postretirement benefits other
than pensions (Note 13) (13,200) - -
---------- ---------- ----------
Net Income $ 59,071 $ 87,779 $ 81,242
========== ========== ==========
Earnings Per Share (Note 17):
Income Before Cumulative Effect
of Accounting Changes $ 1.41 $ 1.56 $ 1.45
Cumulative Effect of Accounting Changes:
Income taxes (.13) - -
Postretirement benefits
other than pensions (.23) - -
---------- ---------- ----------
Net Income $ 1.05 $ 1.56 $ 1.45
========== ========== ==========
The accompanying notes are an integral part of these consolidated financial
statements.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY - For the Three Years Ended January 2, 1994
Capital Cost of Total
in Excess Cumulative Shares Stock-
Common of Par Retained Translation Held in holders
(Dollars in thousands) Stock Value Earnings Adjustments Treasury Equity
-------- --------- -------- ----------- -------- --------
Balance, December 30, 1990 $30,051 $ 5,010 $393,909 $10,097 $(69,436) $369,631
Net income - - 81,242 - - 81,242
Cash dividends ($.42 per share) - - (23,453) - - (23,453)
Exercise of employee stock options
and related income tax benefits - (931) - - 5,371 4,440
Translation adjustments - - - (4,147) - (4,147)
Issuance of common stock
for employee benefit plans - - (7,459) - 24,687 17,228
Purchase of common stock
for treasury - - - - (24,230) (24,230)
------- ------- -------- ------- -------- --------
Balance, December 29, 1991 30,051 4,079 444,239 5,950 (63,608) 420,711
Net income - - 87,779 - - 87,779
Cash dividends ($.49 per share) - - (27,575) - - (27,575)
Exercise of employee stock options
and related income tax benefits - (422) (43) - 8,901 8,436
Translation adjustments - - - (7,273) - (7,273)
Issuance of common stock
for employee benefit plans - - (4,744) - 24,907 20,163
Purchase of common stock
for treasury - - - - (28,605) (28,605)
Effect of 2-for-1 stock
split (Note 11) 30,051 (3,657) (26,394) - - -
------- ------- -------- ------- -------- -------
Balance, January 3, 1993 60,102 - 473,262 (1,323) (58,405) 473,636
Net income - - 59,071 - - 59,071
Cash dividends ($.52 per share) - - (29,358) - - (29,358)
Exercise of employee stock options
and related income tax benefits - - (298) - 7,356 7,058
Translation adjustments - - - (6,964) - (6,964)
Issuance of common stock
for employee benefit plans - - (6,614) - 25,724 19,110
Purchase of common stock
for treasury - - - - (45,019) (45,019)
------- ------- -------- ------- --------- --------
Balance, January 2, 1994 $60,102 $ - $496,063 $(8,287) $(70,344) $477,534
======= ======= ======== ======= ======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
CONSOLIDATED STATEMENT OF CASH FLOWS - For the Three Years Ended January 2, 1994
(Dollars in thousands) 1993 1992 1991
-------- -------- --------
Cash Flows From Operating Activities:
Net income $ 59,071 $ 87,779 $ 81,242
Adjustments to reconcile net income to
net cash provided by operating activities:
Cumulative effect of accounting changes 20,500 - -
Depreciation and amortization 37,842 36,292 33,726
Losses (gains) on dispositions and investments, net (3,176) (169) 530
Changes in assets and liabilities, net of
effects from companies purchased and divested:
Decrease (increase) in accounts receivable 30,167 (689) (15,398)
Decrease (increase) in inventories (1,971) 11,179 (2,069)
Increase (decrease) in accounts payable
and accrued expenses (16,798) 2,732 14,073
Change in prepaid and deferred taxes (3,514) (11,070) (4,492)
Other (9,984) 1,753 (3,183)
------- -------- --------
Net Cash Provided by Operating Activities 112,137 127,807 104,429
------- -------- --------
Cash Flows From Investing Activities:
Capital expenditures (27,860) (22,446) (26,617)
Proceeds from dispositions of businesses and
sales of property, plant and equipment 9,503 2,593 4,531
Cost of acquisitions, net of cash and cash
equivalents acquired (32,186) (58,070) (23,624)
Funds held in escrow - - 21,112
Purchases of investment securities (2,503) (1,111) (3,431)
Proceeds from sales of investment securities 7,813 5,275 14,473
-------- -------- --------
Net Cash Used in Investing Activities (45,233) (73,759) (13,556)
-------- -------- --------
Cash Flows From Financing Activities:
Changes in commercial paper 2,977 (10,428) (35,319)
Other changes in debt (17,752) (7,396) (214)
Proceeds from issuing common stock 26,168 28,599 21,668
Purchases of common stock (45,019) (28,605) (24,230)
Cash dividends (29,358) (27,575) (23,453)
-------- -------- --------
Net Cash Used in Financing Activities (62,984) (45,405) (61,548)
-------- -------- --------
Effect of exchange rate changes on cash and cash equivalents (1,487) (1,916) (458)
-------- -------- --------
Net Increase in Cash and Cash Equivalents 2,433 6,727 28,867
Cash and cash equivalents at beginning of year 69,752 63,025 34,158
-------- -------- --------
Cash and cash equivalents at end of year $ 72,185 $ 69,752 $ 63,025
======== ======== ========
CONSOLIDATED STATEMENT OF CASH FLOWS - For the Three Years Ended January 2, 1994 - Continued
(Dollars in thousands) 1993 1992 1991
-------- -------- --------
Supplemental Disclosures of Cash Flow Information:
Cash paid during the year for:
Interest $ 6,819 $ 7,486 $ 9,445
Income taxes 36,642 44,985 45,452
The accompanying notes are an integral part of these consolidated financial
statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
Principles of Consolidation: The consolidated financial statements
include the accounts of EG&G, Inc. and its subsidiaries (the Company).
All material intercompany balances and transactions have been eliminated
in consolidation.
Sales: Cost-reimbursement sales are recorded as costs are incurred and
include applicable income in the proportion that costs incurred bear to
total estimated costs. Sales and income on fixed-price contracts are
recorded at the completion of the contract, at the end of a contract
phase for service contracts and at the time of shipment for products. If
a loss is anticipated on any contract, provision for the entire loss is
made immediately.
The Company performs technical, scientific, production and support
activities under contracts with the U.S. Department of Energy. The
Consolidated Statement of Income does not include billings and
associated costs for nonvalue-added support activities. However, the
fees derived from these support activities were included in sales in the
amounts of $13.8 million, $16.2 million and $12.3 million in 1993, 1992
and 1991, respectively. The shift in sales from products to services
presented in the Consolidated Statement of Income in 1993 reflects the
change, compared to 1992, from production to environmental restoration
services at some of the DOE Support facilities.
Inventories: Inventories, which include material, labor and
manufacturing overhead, are valued at the lower of cost or market. The
majority of inventories is accounted for using the first-in, first-out
method. All other inventories are accounted for using the last-in,
first-out method.
Property, Plant and Equipment: The Company depreciates plant and
equipment over their estimated useful lives using accelerated methods
for both financial statement and income tax purposes. For financial
statement purposes, the estimated useful lives generally fall within the
following ranges: buildings and special-purpose structures - 10 to 25
years; leasehold improvements - estimated useful life or remaining term
of lease, whichever is shorter; machinery and equipment - 3 to 7 years;
special-purpose equipment - expensed or over the life of the initial
related contract. Nonrecurring tooling costs are capitalized while
recurring costs are expensed.
Pension Plans: The Company's funding policy provides that payments to
the U.S. pension trusts shall at least be equal to the minimum funding
requirements of the Employee Retirement Income Security Act of 1974.
Non-U.S. plans are generally not funded.
Foreign Exchange: The balance sheet accounts of non-U.S. operations,
exclusive of stockholders' equity, are translated at year-end exchange
rates, and income statement accounts are translated at weighted average
rates in effect during the year; any translation adjustments are made
directly to a component of stockholders' equity. The after-tax aggregate
net transaction gains (losses) were not material for the years
presented.
Intangible Assets: Intangible assets result from acquisitions accounted
for using the purchase method of accounting and include the excess of
cost over the fair market value of the net assets of the acquired
businesses. These amounts are being amortized over periods of up to 40
years. Subsequent to the acquisition, the Company continually evaluates
whether later events and circumstances have occurred that indicate the
remaining estimated useful life of goodwill may warrant revision or that
the remaining balance of goodwill may not be recoverable. When factors
indicate that goodwill should be evaluated for possible impairment, the
Company uses an estimate of the related business segment's future cash
flow over the remaining life of the goodwill in measuring whether the
goodwill is recoverable.
Cash Flows: For purposes of the Consolidated Statement of Cash Flows,
the Company considers all highly liquid instruments with a purchased
maturity of three months or less to be cash equivalents. The carrying
amount of cash and cash equivalents approximates fair value due to the
short maturities.
Financial Instruments: Disclosures about fair value of financial
instruments, including the methods and assumptions used to estimate the
fair values, are included in Notes 6 and 8.
2. Acquisitions
In June 1993, the Company acquired The Wallac Group (Wallac), a
unit of Procordia AB, for a total purchase price of approximately $46
million, including related expenses, consisting of $41 million cash and
a one-year note for $5 million. This acquisition was accounted for
using the purchase method. The excess of the cost over the fair market
value of the net assets acquired is estimated to be $24 million, which
is being amortized over 20 years using a straight-line method. Wallac's
results of operations were included in the consolidated results of the
Company from the date of acquisition.
Early in the second quarter of 1992, the Company completed the
acquisition of the Heimann Optoelectronics Division of Siemens AG for
cash of approximately $60 million, including related expenses. This
acquisition was accounted for using the purchase method. The excess of
the cost over the fair market value of the net assets acquired was $23
million, which is being amortized over 20 years using a straight-line
method. Heimann's results of operations were included in the
consolidated results of the Company from the date of acquisition.
The effect of the purchased acquisitions was not material to the
results of operations. The products of the acquired companies are
described elsewhere in this report.
3. Accounts Receivable
Accounts receivable as of January 2, 1994 and January 3, 1993
included unbilled receivables of $67.8 million and $91.1 million,
respectively, which were due primarily from U.S. Government agencies.
Accounts receivable were net of reserves for doubtful accounts of $6.1
million and $5.6 million, respectively.
4. Inventories
Inventories as of January 2, 1994 and January 3, 1993 consisted of
the following:
(In thousands) 1993 1992
-------- --------
Finished goods $ 30,864 $ 29,801
Work in process 30,393 29,902
Raw materials 60,324 54,493
-------- --------
$121,581 $114,196
======== ========
The portion of inventories accounted for using the last-in,
first-out (LIFO) method of determining inventory costs in 1993 and 1992
approximated 24% and 27%, respectively, of total inventories. The excess
of current cost of inventories over the LIFO value was approximately $10
million at January 2, 1994 and $11 million at January 3, 1993.
5. Property, Plant and Equipment, at Cost
Property, plant and equipment as of January 2, 1994 and January 3,
1993 consisted of the following:
(In thousands) 1993 1992
-------- --------
Land $ 14,327 $ 15,043
Buildings and leasehold improvements 91,280 78,828
Machinery and equipment 221,809 208,060
-------- --------
$327,416 $301,931
======== ========
6. Investments
Investments as of January 2, 1994 and January 3, 1993 consisted of
the following:
(In thousands) 1993 1992
------- -------
Marketable investments $ 6,838 $ 3,895
Other investments 13,426 18,338
Joint venture investments 5,656 4,427
------- -------
$25,920 $26,660
======= =======
Marketable investments consisted of common stocks and trust
assets, which were invested in money market funds, fixed income
securities and common stocks to meet the supplemental executive
retirement plan obligation. These investments had an aggregate market
value of $13.1 million and $9.7 million at January 2, 1994 and January
3, 1993, respectively. At January 2, 1994, gross unrealized gains on
marketable investments were $6.3 million. The market values were based
on quoted market prices.
Other investments consisted of nonmarketable investments in
private companies and venture capital partnerships, which are carried at
the lower of cost or net realizable value. The estimated aggregate fair
value of other investments approximated the carrying amount at
January 2, 1994 and January 3, 1993. The fair values of other
investments were estimated based primarily on the most recent rounds of
financing and securities transactions and, to a lesser extent, on other
pertinent information, including financial condition and operating
results.
Joint venture investments are accounted for using the equity
method.
The Company will adopt SFAS No. 115 on accounting for certain
investments in debt and equity securities in 1994. This new standard
requires that available-for-sale investments in equity securities that
have readily determinable fair values be measured at fair value in the
balance sheet. Unrealized holding gains and losses for these
investments shall be excluded from earnings and reported as a net amount
in a separate component of stockholders' equity until realized. The
Company does not expect at this time that the statement, when adopted,
will have a material impact on its financial position.
7. Intangible and Other Assets
Intangible and other assets as of January 2, 1994 and January 3,
1993 consisted of the following:
(In thousands) 1993 1992
-------- --------
Intangible assets $139,205 $126,540
Other assets 32,555 17,581
-------- --------
$171,760 $144,121
======== ========
Intangible assets were shown net of accumulated amortization of
$25.5 million and $22.2 million at January 2, 1994 and January 3, 1993,
respectively. The increase in intangible assets was due primarily to the
acquisition of Wallac in 1993, partially offset by current year
amortization and the effect of translating goodwill denominated in non-
U.S. currencies at current exchange rates. The majority of the increase
in other assets was due to increases in long-term prepaid pension of
$7.9 million and income taxes of $4.3 million.
8. Debt
Short-term debt at January 2, 1994 and January 3, 1993 consisted
primarily of commercial paper in the amounts of $34.9 million and $32
million, respectively, which had maturities of less than 90 days.
Commercial paper borrowings averaged $42.7 million during 1993 at an
average interest rate of 3.2% compared to average borrowings of $41.8
million during 1992 at an average interest rate of 4.1%. Current
maturities of long-term debt are also included in this account.
The Company has a $150 million multicurrency credit agreement with
a domestic banking group. It consists of a $100 million three-year
revolving credit agreement followed by a three-year term loan, and a $50
million two-year revolving credit agreement followed by a three-year
term loan. In addition, the Company has multicurrency credit agreements
with an international banking group totaling $150 million, consisting of
a $120 million one-year revolving credit agreement and a $30 million
two-year revolving credit agreement. These lines of credit serve as
backup facilities for the commercial paper borrowing. The Company,
which is in the process of restructuring its credit agreements, is in
compliance with all covenants.
During 1993, the Company terminated its interest rate and currency
exchange agreement, entered into in 1989, that effectively established a
73.5 million D-mark principal obligation in exchange for $40 million.
Long-term liabilities associated with the swap agreement at January 3,
1993 were $5.3 million, which approximated fair value.
At January 2, 1994 and January 3, 1993, long-term debt amounts of
$1.5 million and $2 million, respectively, were included in long-term
liabilities. The carrying amount of the Company's long-term debt
approximated fair value.
9. Accrued Expenses
Accrued expenses as of January 2, 1994 and January 3, 1993
consisted of the following:
(In thousands) 1993 1992
-------- --------
Payroll $ 13,375 $ 12,170
Employee benefits 46,121 50,377
Federal, non-U.S. and state income taxes 26,119 14,927
Other 47,099 47,809
-------- --------
$132,714 $125,283
======== ========
10. Contingencies
The Company is subject to various investigations, claims and legal
proceedings covering a wide range of matters that arise in the ordinary
course of its business activities. Each of these matters is subject to
various uncertainties, and it is possible that some of these matters may
be resolved unfavorably to the Company. The Company has established
accruals for matters that are probable and reasonably estimable.
Management believes that any liability that may ultimately result from
the resolution of these matters in excess of amounts provided will not
have a material adverse effect on the financial position or results of
operations of the Company.
In addition, the Company is conducting a number of environmental
investigations and remedial actions at current and former Company
locations and, along with other companies, has been named a potentially
responsible party for certain waste disposal sites. The Company accrues
for environmental issues in the accounting period in which the Company's
responsibility is established and the cost can be reasonably estimated.
There have been no environmental problems to date which had or are
expected to have a material effect on the Company's financial position
or results of operations.
11. Stockholders' Equity
At January 2, 1994, 4.5 million shares of the Company's common
stock were reserved for employee benefit plans.
The Company has nonqualified and incentive stock option plans for
officers and key employees. Under these plans, options may be granted at
prices not less than 100% of the fair market value on the date of grant.
All options are exercisable at the date of grant and expire 10 years
from the date of grant. The Stock Option Committee of the Board of
Directors, at its sole discretion, may also include stock appreciation
rights in any option granted. There are no stock appreciation rights
outstanding under these plans.
A summary of certain stock option information is as follows:
(In thousands) 1993 1992 1991
-------------- --------------- --------------
Number Number Number
of Option of Option of Option
Shares Price Shares Price Shares Price
------ ------- ------ ------- ------ -------
Outstanding, beginning
of year 2,902 $55,126 2,754 $49,984 2,370 $38,315
Granted 726 15,916 678 13,643 706 16,140
Exercised (355) (6,217) (510) (8,131) (318) (4,446)
Lapsed (13) (279) (20) (370) (4) (25)
----- ------- ----- ------- ----- -------
Outstanding and exercisable,
end of year 3,260 $64,546 2,902 $55,126 2,754 $49,984
===== ======= ===== ======= ===== =======
Shares available for grant,
end of year 1,144 1,021 48
===== ===== =====
The Company's Employees Stock Purchase Plan was terminated as of
October 31, 1993. During 1993 and 1992, the Company issued 1.2 million
shares and 1.1 million shares, respectively, under this plan.
On January 22, 1992, the Board of Directors declared a 2-for-1
stock split, paid May 8, 1992, in the form of a dividend of one
additional share of the Company's common stock for each share owned by
stockholders of record at the close of business on April 17, 1992. Par
value remained at $1 per share. The stock split resulted in the issuance
of 30,051,000 additional shares of common stock from authorized but
unissued shares. The issuance of authorized but unissued shares resulted
in the transfer of $3,657,000 from capital in excess of par value and
$26,394,000 from retained earnings to common stock, representing the par
value of the shares issued.
The Company declared a dividend distribution of one right on each
share of common stock outstanding on and after February 9, 1987. Each
right, when exercisable, entitles a stockholder to buy one two-hundredth
of a share of a new series of preferred stock at a price of $50. The
rights become exercisable when a person or group acquires 20% or more or
tenders for 30% or more of the Company's common stock. This preferred
stock is nonredeemable and will have one vote per share. The rights are
nonvoting, expire in 1997 and may be redeemed prior to becoming
exercisable. The Company has reserved 500,000 preferred shares,
designated as Series B Junior Participating Preferred Stock, for
issuance upon exercise of such rights. In the event that the Company is
acquired in a merger or other business combination, each outstanding
right would entitle a holder to purchase that number of shares of common
stock of the surviving company which, at the time of such transaction,
would have a market value of two times the exercise price paid.
12. Research and Development
During 1993, 1992 and 1991, Company-sponsored research and
development expenditures were approximately $34.7 million, $32.1 million
and $24.7 million, respectively. Customer-sponsored research and
development, primarily for Department of Energy programs, accounted for
additional expenditures of approximately $137 million in 1993, $133
million in 1992 and $127 million in 1991.
13. Employee Benefit Plans
The Company has a savings plan for the benefit of qualified U.S.
employees. Under this plan, the Company contributes an amount equal to
the lesser of 50% of the amount of the employee's voluntary contribution
or 3% of the employee's annual compensation. In 1994, the Company
contribution will be increased to the lesser of 55% of the employee's
voluntary contribution or 3.3% of the employee's annual compensation.
The Company has defined benefit pension plans covering
substantially all U.S. employees and non-U.S. pension plans for non-U.S.
employees. The plans provide benefits that are based on an employee's
years of service and compensation near retirement. Assets of the U.S.
plan are composed primarily of corporate equity and debt securities.
Net periodic pension cost included the following components:
(In thousands) 1993 1992 1991
-------- -------- --------
Service cost - benefits earned
during the period $ 8,398 $ 8,164 $ 6,608
Interest cost on projected
benefit obligations 14,030 12,824 11,184
Actual return on plan assets (18,316) (11,005) (14,686)
Net amortization and deferral 3,852 (1,914) 2,783
-------- -------- --------
$ 7,964 $ 8,069 $ 5,889
======== ======== ========
The increase in 1992 pension costs resulted from the inclusion of
new participants and the pension expense of Heimann Optoelectronics,
acquired in 1992.
The following table sets forth the funded status of the principal
U.S. plan and the principal non-U.S. plans and the amounts recognized in
the Company's Consolidated Balance Sheet at January 2, 1994 and
January 3, 1993:
(In thousands) 1993 1992
------------------ ------------------
Non-U.S. U.S. Non-U.S. U.S.
-------- -------- -------- --------
Actuarial present value of
benefit obligations:
Vested benefit obligations $18,143 $141,325 $13,323 $109,944
======= ======== ======= ========
Accumulated benefit
obligations $20,176 $148,295 $16,094 $115,402
======= ======== ======= ========
Projected benefit obligations
for service provided to date $25,673 $173,379 $21,244 $142,778
Plan assets at fair value - 164,593 - 139,774
------- -------- ------- --------
Plan assets less than
projected benefit obligations 25,673 8,786 21,244 3,004
Unrecognized net transition asset - 6,010 - 6,762
Unrecognized prior service costs (1,459) 1,041 - (394)
Unrecognized net gain (loss) (635) (25,213) 925 (10,854)
------- -------- ------- --------
Accrued pension liability (asset) $23,579 $ (9,376) $22,169 $ (1,482)
======= ======== ======= ========
Assumptions of the principal plan were:
Discount rate 7.00% 7.40% 7.50% 8.50%
Rate of compensation increase 4.50% 5.00% 5.00% 5.82%
Long-term rate of return on assets - 9.75% - 10.00%
The non-U.S. accrued pension liability included $22.7 million and
$21.9 million classified as long-term liabilities as of January 2, 1994
and January 3, 1993, respectively. The U.S. pension asset was
classified as other assets.
The Company also sponsors a supplemental executive retirement plan
to provide senior management with benefits in excess of normal pension
benefits. At January 2, 1994 and January 3, 1993, the projected benefit
obligations were $10.2 million and $7.1 million, respectively. Assets of
$4.7 million and $3.3 million, segregated in a trust, were available to
meet this obligation as of January 2, 1994 and January 3, 1993. Pension
expense for this plan was approximately $1 million in 1993, $0.9 million
in 1992 and $0.7 million in 1991.
Effective January 4, 1993, the Company adopted SFAS No. 106 on
accounting for postretirement benefits other than pensions for its U.S.
retiree health benefits. This statement requires the expected cost of
postretirement benefits to be charged to expense during the years in
which employees render service. This is a change from the prior policy
of recognizing these costs as paid. As part of adopting the new
standard, the Company recorded a one-time, non-cash charge against
earnings of $20 million before taxes, or $13.2 million after income
taxes ($.23 per share). This cumulative adjustment represents the
discounted present value of expected future retiree health benefits
attributed to employees' service rendered prior to January 4, 1993.
The Company provides health care benefits for eligible retired
U.S. employees under a comprehensive major medical plan or under health
maintenance organizations where available. The majority of the
Company's U.S. employees become eligible for retiree health benefits if
they retire directly from the Company and have at least 10 years of
service. Generally, the major medical plan pays stated percentages of
covered expenses after a deductible is met, and takes into consideration
payments by other group coverages and by Medicare. The Plan requires
retiree contributions under most circumstances and has provisions for
cost sharing changes. For employees retiring after 1991, the Company
has capped its medical premium contribution based on employees' years of
service. The Company funds the amount allowable under a 401(h)
provision in the Company's defined benefit pension plan. Assets of the
plan are composed primarily of corporate equity and debt securities.
Postretirement medical benefit expense computed under SFAS No. 106
amounted to $2 million in 1993. Amounts included in expense for 1992
and 1991 under the previous cash method of accounting were $0.8 million
and $0.7 million, respectively. If the 1993 expense had been determined
under the cash method of accounting, the amount recognized would have
been $1 million.
Net periodic postretirement medical benefit cost for 1993 included
the following components:
(In thousands) 1993
------
Service cost - benefits earned during the period $ 360
Interest cost on accumulated benefit obligation 1,686
Actual return on plan assets (3)
Net amortization and deferral 3
------
$2,046
======
The following table sets forth the plan's funded status and the
amount recognized in the Company's Consolidated Balance Sheet at January 2,
1994:
(In thousands) 1993
-------
Accumulated benefit obligation:
Current retirees $15,638
Active employees eligible to retire 3,134
Other active employees 3,217
-------
21,989
Plan assets at fair value 2,003
-------
Plan assets less than accumulated benefit obligation 19,986
Unrecognized net loss (993)
-------
Accrued postretirement medical liability $18,993
=======
Assumptions of the plan are:
Discount rate 7.4%
Health care cost trend:
First year 15.0%
Ultimate 6.0%
Years to reach ultimate 10 years
Long-term rate of return on assets 9.75%
The accumulated postretirement medical benefit obligation included
$18 million classified as long-term liabilities as of January 2, 1994.
If the health care cost trend rate was increased 1%, the accumulated
postretirement benefit obligation would have increased by approximately
$1.6 million. The effect of this increase on the annual cost for 1993
would be approximately $0.1 million.
The Company also has an incentive compensation plan for certain
officers and key employees. Awards under this plan are approved annually by
the Board of Directors and are limited by certain predetermined criteria.
The total expense under all benefit plans referred to above amounted
to approximately $18.8 million in 1993, $21 million in 1992 and $23.2
million in 1991. In addition, the Company maintains various other employee
benefit plans, including health and life insurance plans.
The above information does not include amounts related to benefit
plans applicable to employees associated with contracts with the Department
of Energy and NASA because the Company is not responsible for the current
or future funded status of the plans.
The Company will adopt SFAS No. 112 on accounting for postemployment
benefits in 1994. This new standard requires that benefits paid for former
or inactive employees after employment but prior to retirement must be
accrued if certain criteria are met. The Company does not expect at this
time that the statement, when adopted, will have a material impact on its
financial position or results of operations.
14. Leases
The Company leases certain property and equipment under operating
leases. Rental expense charged to earnings for 1993, 1992 and 1991
amounted to $18.7 million, $20.6 million and $19.6 million, respectively.
Minimum rental commitments under noncancelable operating leases through
1998 do not exceed $16.7 million annually and aggregate $4.4 million after
1998. The above information does not include amounts related to leases
covered by contracts with the Department of Energy and NASA because the
costs are reimbursable under the contracts.
15. Other Income (Expense), Net
Other income (expense), net, consisted of the following:
(In thousands) 1993 1992 1991
------- ------- -------
Interest and dividend income $ 4,043 $ 3,380 $ 2,789
Gains (losses) on investments, net 2,975 (338) (622)
Interest expense (6,264) (7,241) (8,833)
Other 254 2,116 1,829
------- ------- -------
$ 1,008 $(2,083) $(4,837)
======= ======= =======
Gains (losses) on investments for 1991 included net gains of
$5.9 million resulting from sales of investment securities and a loss
of $6.5 million due to a reduction in the carrying value of certain
nonmarketable investments to their expected realizable values.
16. Income Taxes
Effective January 4, 1993, the Company adopted SFAS No. 109 on
accounting for income taxes. This standard determines deferred income
taxes based on the estimated future tax effects of differences between
the financial statement and tax basis of assets and liabilities, given
the provisions of enacted tax laws. Prior to the implementation of this
statement, the Company accounted for income taxes under Accounting
Principles Board Opinion No. 11. As part of adopting the new standard,
the Company recorded a one-time, non-cash charge against earnings of
$7.3 million ($.13 per share).
The components of income before income taxes for financial
reporting purposes were as follows:
(In thousands) U.S. Non-U.S. Total
-------- -------- --------
1993 $103,812 $18,043 $121,855
======== ======= ========
1992 $110,779 $10,296 $121,075
======== ======= ========
1991 $105,596 $14,762 $120,358
======== ======= ========
The components of the provision for income taxes were as follows:
(In thousands) 1993 1992 1991
------------------------ ------------------------ ------------------------
Non- Non- Non-
Federal U.S. Total Federal U.S. Total Federal U.S. Total
------- ------ ------- ------- ------ ------- ------- ------ -------
Current $34,936 $6,398 $41,334 $34,147 $4,491 $38,638 $37,972 $5,577 $43,549
Deferred
(Prepaid) 1,447 (497) 950 (3,761) (1,581) (5,342) (2,268) (2,165) (4,433)
------- ------ ------- ------- ------ ------- ------- ------ -------
$36,383 $5,901 $42,284 $30,386 $2,910 $33,296 $35,704 $3,412 $39,116
======= ====== ======= ======= ====== ======= ======= ====== =======
The provision for deferred (prepaid) taxes resulted primarily from
temporary differences in the recognition of income and expenses for tax
purposes and for financial statement purposes. The sources and tax
effects related to the following:
(In thousands) 1993 1992 1991
------- ------- -------
Expenses not currently deductible $ 1,303 $(4,693) $(2,220)
Deferred award fee (2,363) 604 1,770
Other 2,010 (1,253) (3,983)
------- ------- -------
$ 950 $(5,342) $(4,433)
======= ======= =======
The major differences between the Company's effective tax rate and
the Federal statutory rate were as follows:
1993 1992 1991
----- ----- -----
Federal statutory rate 35.0% 34.0% 34.0%
Non-U.S. rate differential, net (0.6) (0.7) (0.8)
Adjustment of prior estimated
tax liabilities - (4.5) (1.7)
Sale of an investment - (1.7) -
Other, net 0.3 0.4 1.0
---- ---- ----
Effective tax rate 34.7% 27.5% 32.5%
==== ==== ====
The effect of SFAS No. 109 on the consolidated effective tax rate
was minimal in 1993. If SFAS No. 109 had been in effect for 1992 and
1991, the consolidated effective tax rates would not have changed.
The tax effects of temporary differences and carry forwards which
gave rise to prepaid (deferred) income taxes as of January 2, 1994 were
as follows:
(In thousands) 1993
-------
Nondeductible reserves $ 3,748
Untaxed reserves (3,948)
Depreciation 7,913
Inventory reserves 5,588
State income taxes 4,430
Vacation pay 5,107
Award and holdback fees (5,619)
Non-U.S. net operating loss carryforwards 9,939
Valuation allowance (9,939)
Postretirement health benefits 7,000
Pension contribution (2,327)
All other, net 10,342
-------
Total Prepaid Taxes $32,234
=======
In the above table, prepaid (deferred) income tax items were shown
as assets or (liabilities) with no netting except for "other," which
included prepaid tax assets of $19.7 million and deferred tax
liabilities of $9.4 million.
At January 2, 1994, the Company had non-U.S. net operating loss
carryforwards of approximately $22.3 million for income tax purposes
which either expire in years 1994 through 2000 or carryforward
indefinitely. The $9.9 million valuation allowance required under SFAS
No. 109 represents the tax effect of non-U.S. net operating loss
carryforwards that are not anticipated to be utilized.
Current prepaid income taxes of $18.7 million and $23.2 million at
January 2, 1994 and January 3, 1993, respectively, were included in
other current assets. Long-term prepaid income taxes of $13.6 million
and $9.2 million were included in other long-term assets at January 2,
1994 and January 3, 1993, respectively.
In general, it is the practice and intention of the Company to
reinvest the earnings of its non-U.S. subsidiaries in those operations.
Repatriation of retained earnings is done only when it is advantageous.
Applicable Federal taxes are provided only on amounts planned to be
remitted. Accumulated net earnings of non-U.S. subsidiaries for which no
Federal taxes have been provided for 1993, 1992 and 1991 were
$66.6 million, $59.1 million and $53 million, respectively, exclusive of
those amounts that if remitted would result in little or no additional
tax due to the availability of non-U.S. tax credits. Federal taxes on
these earnings would have aggregated for 1993, 1992 and 1991,
respectively, $19.5 million, $17.1 million and $16 million.
The Internal Revenue Service is currently examining the Company's
Federal income tax returns for the years 1988 through 1990. The Company
believes that the results of this examination will not have a material
effect on its financial position or results of operations.
17. Earnings Per Share
Earnings per share of common stock were computed by dividing net
income by the weighted average number of common shares outstanding. The
number of shares issuable on the exercise of stock options had no
material effect on earnings per share. The weighted average number of
shares used in the earnings per share computations were 56,504,000 for
1993, 56,385,000 for 1992 and 55,901,000 for 1991.
18. Industry Segment and Geographic Area Information
The Company's operations are classified into five industry
segments: Technical Services, DOE Support, Instruments, Mechanical
Components and Optoelectronics. The Company has changed the way its
products and services are grouped into industry segments to better
reflect the markets served and the Company's strategies for the future.
Data for prior periods have been restated accordingly. The products and
services of the segments are described elsewhere in the Annual Report.
Sales and income from operations by industry segment are shown in the
Segment Sales and Income section of this report; such information with
respect to 1993, 1992 and 1991 is considered an integral part of this
note.
Sales to U.S. Government agencies, which were predominantly to the
Department of Energy, the Department of Defense and NASA, were $1,939
million, $2,035 million and $1,987 million in 1993, 1992 and 1991,
respectively. The Company currently has five major award-fee contracts
with the Department of Energy, for which funds are appropriated, work
scopes are determined and award-fee pools are negotiated annually. The
expiration dates for these contracts are as follows: one in 1994, three
in 1995 and one in 1996. The Idaho contract expires in October 1994, and
the Company is participating as the majority interest in a joint venture
that has submitted a proposal for increased work scope at the facility.
The Department of Energy's rules concerning contractor liability and
performance evaluation currently apply to all five contracts. These new
performance evaluation criteria create greater variability in the
incentive awards earned. The contractor liability rules provide for
increased contractor accountability for costs associated with events
determined to have been avoidable. This liability is limited to the fee
earned in the grading period in which the avoidable event occurs. In
addition, the Department of Energy has announced its intention to
proceed with a contract reform initiative. In October 1993, the Company
was selected by NASA to continue as the base operations contractor at
the Kennedy Space Center. The new contract has a potential term of 10
years, including options, contains reductions in contract value and
could result in reductions in annual fee.
Additional information relating to the Company's operations in the
various industry segments follows:
Depreciation and Capital
(In thousands) Amortization Expense Expenditures
------------------------- -------------------------
1993 1992 1991 1993 1992 1991
------- ------- ------- ------- ------- -------
Technical Services $ 8,422 $ 7,991 $ 7,653 $ 6,315 $ 5,650 $ 4,974
DOE Support - - - - - -
Instruments 9,213 8,131 8,425 6,555 4,768 6,276
Mechanical Components 6,870 7,755 8,643 5,598 5,290 9,606
Optoelectronics 12,417 11,595 8,189 8,469 6,305 4,708
Corporate 920 820 816 923 433 1,053
------- ------- ------- ------- ------- -------
$37,842 $36,292 $33,726 $27,860 $22,446 $26,617
======= ======= ======= ======= ======= =======
Identifiable
(In thousands) Assets
--------------------------
1993 1992 1991
-------- -------- --------
Technical Services $127,917 $133,351 $131,931
DOE Support 11,959 22,189 17,171
Instruments 256,117 217,792 215,029
Mechanical Components 97,317 112,272 133,404
Optoelectronics 142,630 142,543 90,577
Corporate 132,868 121,593 109,785
-------- -------- --------
$768,808 $749,740 $697,897
======== ======== ========
DOE Support's identifiable assets mainly represent accounts receivable
for fees from the U.S. Department of Energy. DOE Support's assets do not
include U.S. Government funds and facilities that are devoted to the contracts
and for which the Company is custodian. Corporate assets consist primarily of
cash and cash equivalents, prepaid taxes and investments.
Information relating to geographic areas follows:
(In thousands) Sales Income From Operations
-------------------------------- ----------------------------
1993 1992 1991 1993 1992 1991
---------- ---------- ---------- -------- -------- --------
U.S. $2,427,663 $2,532,494 $2,484,972 $129,858 $142,272 $137,346
Non-U.S. 270,285 256,328 203,570 18,562 10,781 15,305
Corporate - - - (27,573) (29,895) (27,456)
---------- ---------- ---------- -------- -------- --------
$2,697,948 $2,788,822 $2,688,542 $120,847 $123,158 $125,195
========== ========== ========== ======== ======== ========
(In thousands) Identifiable Assets
------------------------------
1993 1992 1991
-------- -------- --------
U.S. $317,303 $355,722 $364,990
Non-U.S. 318,637 272,425 223,122
Corporate 132,868 121,593 109,785
-------- -------- --------
$768,808 $749,740 $697,897
======== ======== ========
Over 60% of the identifiable assets of the non-U.S. operations are
located in European Community countries. Transfers between geographic areas
were not material.
19. Quarterly Financial Information (Unaudited)
Selected quarterly financial information follows:
(In thousands except per share data)
Quarters
--------------------------------------
First Second Third Fourth Year
-------- -------- -------- -------- ----------
1993
----
Sales $648,926 $662,053 $746,248 $640,721 $2,697,948
Income From Operations 29,382 31,353 25,119 34,993 120,847
Income Before Cumulative Effect
of Accounting Changes 19,107 21,068 15,213 24,183 79,571
Net Income (1,393)* 21,068 15,213 24,183 59,071*
Earnings Per Share Before Cumulative
Effect of Accounting Changes .34 .37 .27 .43 1.41
Earnings Per Share (.02)* .37 .27 .43 1.05*
Cash Dividends Per Common Share .13 .13 .13 .13 .52
1992
----
Sales 654,828 695,752 749,026 689,216 2,788,822
Income From Operations 27,234 33,481 32,194 30,249 123,158
Net Income 18,058 21,770 22,096 25,855 87,779
Earnings Per Share .32 .39 .39 .46 1.56
Cash Dividends Per Common Share .115 .125 .125 .125 .49
*Includes one-time after-tax charges of $20.5 million, or $.36 per share, due to the Company's
adoption of SFAS Nos. 106 and 109.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders of EG&G, Inc.:
We have audited the accompanying consolidated balance sheets of EG&G,
Inc. (a Massachusetts corporation) and subsidiaries as of January 2, 1994,
and January 3, 1993, and the related consolidated statements of income,
stockholders' equity and cash flows for the years ended January 2, 1994,
January 3, 1993, and December 29, 1991. These financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of EG&G,
Inc. and subsidiaries as of January 2, 1994, and January 3, 1993, and the
results of their operations and their cash flows for the years ended
January 2, 1994, January 3, 1993, and December 29, 1991, in conformity
with generally accepted accounting principles.
As explained in Notes 13 and 16 to the consolidated financial statements,
effective January 4, 1993, the Company changed its method of accounting
for postretirement benefits other than pensions and for income taxes.
Boston, Massachusetts /s/Arthur Andersen & Co.
January 24, 1994 ------------------------
Arthur Andersen & Co.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
---------------------------------------------------------
ACCOUNTING AND FINANCIAL DISCLOSURE
-----------------------------------
None.
PART III
ITEM l0. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
------------------------------------------------------------
a) DIRECTORS
The information required by this Item with respect to Directors is
contained on Pages 3 through 9 of the Company's l994 Proxy Statement under
the captions "Election of Directors" and "Information Relative to the
Board of Directors and Certain of its Committees" and is herein
incorporated by reference.
b) EXECUTIVE OFFICERS
Listed below are the executive officers as of March 17, 1994. No
family relationship exists between any of the officers.
Name Position Age
---- -------- ---
John M. Kucharski Chairman of the Board, 58
President and Chief
Executive Officer
Fred B. Parks Senior Vice President 46
Louis P. Valente Senior Vice President 63
James O. Zane Senior Vice President 60
Murray Gross Vice President, General 57
Counsel and Clerk
John F. Alexander, II Corporate Controller and 37
Acting Chief Financial
Officer
Peter A. Broadbent Treasurer 55
Angelo D. Castellana Vice President 52
James R. Dubay Vice President 57
Dale L. Fraser Vice President 58
Listing of Executive Officers - Continued
Name Position Age
---- -------- ---
Elmar Illek Vice President 44
Deborah S. Lorenz Vice President 44
Richard F. Murphy Vice President 57
Donald H. Peters Vice President 53
Luciano S. Rossi Vice President 48
Edward H. Snow Vice President 57
Charles M. Williams Vice President 57
Louis J. Williams Vice President 54
Peter H. Zavattaro Vice President 56
Mr. Kucharski joined the Company in 1972. He was elected a Vice
President in 1979, a Senior Vice President in 1982 and Executive Vice
President in 1985. In 1986 he was elected President and Chief Operating
Officer and in 1987 Chief Executive Officer.
Dr. Parks joined the Company in 1976. He was elected a Vice
President in 1988 and a Senior Vice President in 1991.
Mr. Valente joined the Company in 1968. He was elected Treasurer in
1979, a Vice President in 1983, and a Senior Vice President in 1991 and is
Director of Acquisitions, Dispositions and Investments. Mr. Valente did not
reflect in his reported holdings on Section 16(a) Form 4, 408 shares of
Common Stock held by his wife and with respect to which Mr. Valente
disclaims beneficial ownership. A Form 4 was filed correcting the
inadvertent omission in Mr. Valente's reported holdings.
Mr. Zane joined the Company in 1976. He was elected a Vice President
in 1986 and a Senior Vice President in 1991 and is Group Executive of the
DOE Support segment.
Mr. Gross joined the Company in 1971. He was elected Assistant General
Counsel and Assistant Clerk in 1978 and Vice President and General Counsel in
1990.
Mr. Alexander joined the Company in 1982. He was elected Corporate
Controller in 1991 and was appointed Acting Chief Financial Officer effective
January 1994.
Mr. Broadbent joined the Company in 1967. He was elected Treasurer
in 1984.
Mr. Castellana joined the Company in 1965. He was elected a Vice
President in 1991 and is Chief Operating Officer of the Instruments
segment.
Mr. Dubay joined the Company in 1971. He was elected a Vice President
in 1988 and is General Manager of EG&G Florida.
Mr. Fraser joined the Company in 1961. He was elected a Vice
President in 1990 and is General Manager of Reynolds Electrical and
Engineering Company.
Mr. Illek joined the Company in 1976. He was elected a Vice
President in 1992 and is Group Executive of the Instruments segment.
Ms. Lorenz joined the Company in 1990. She was elected a Vice
President in 1992. From 1980 to 1990 Ms. Lorenz was Assistant Director
of Investor Relations at British Petroleum, plc.
Mr. Murphy joined the Company in 1960. He was elected a Vice
President of the Company in 1987 and is Corporate Director of Human
Resources.
Dr. Peters joined the Company in 1968. He was elected a Vice
President in 1987 and is Director of Planning.
Mr. Rossi joined the Company in 1967. He was elected a Vice
President in 1988 and is Group Executive of the Mechanical Components
segment.
Dr. Snow joined the Company in 1977. He was elected a Vice
President in 1992 and is Group Executive of the Optoelectronics segment.
Mr. C. M. Williams joined the Company in 1973. He was elected a Vice
President in 1984 and is Group Executive of the Technical Services segment.
Mr. L. J. Williams joined the Company in 1973. He was elected a Vice
President in 1988 and is Director of Strategic Tax Projects.
Mr. Zavattaro joined the Company in 1959. He was elected a Vice
President in 1985 and is General Manager of Energy Measurements.
ITEM ll. EXECUTIVE COMPENSATION
--------------------------------
The information required to be disclosed by this Item is contained in
Pages 12 - 21 of the Company's 1994 Proxy Statement from under the caption
"Board Compensation Committee Report on Executive Compensation" up to and
including "Aggregated Option Exercises in the Last Fiscal Year and Fiscal
Year-End Value Table" and Notes thereto, and is herein incorporated by
reference.
ITEM l2. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
------------------------------------------------------------------------
The information required by this Item is contained on Pages 9-12 of
the Company's l994 Proxy Statement under the captions "Security Ownership
of Certain Beneficial Owners" and "Security Ownership of Management" and
is herein incorporated by reference.
ITEM l3. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
--------------------------------------------------------
Not applicable.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
--------------------------------------------------------------------------
(a) DOCUMENTS FILED AS PART OF THIS REPORT:
1. FINANCIAL STATEMENTS
Included in Part II, Item 8:
Consolidated Balance Sheet as of January 2, 1994 and January 3, 1993
Consolidated Statement of Income for the Three Years Ended
January 2, 1994
Consolidated Statement of Stockholder's Equity for the Three Years
Ended January 2, 1994
Consolidated Statement of Cash Flows for the Three Years Ended
January 2, 1994
Notes to Consolidated Financial Statements
Report of Independent Public Accountants
2. FINANCIAL STATEMENT SCHEDULES
Report of independent public accountants on financial statement
schedules
Schedule VIII - Valuation and Qualifying Accounts
Schedule IX - Short-Term Borrowings
Financial statement schedules, other than those above, are omitted
because of the absence of conditions under which they are required or
because the required information is given in the financial statements or
notes thereto.
Separate financial statements of the Registrant are omitted since
it is primarily an operating company, and since all subsidiaries
included in the consolidated financial statements being filed, in the
aggregate, do not have minority equity interests and/or indebtedness
to any person other than the Registrant or its consolidated
subsidiaries in amounts which together exceed five percent of total
consolidated assets.
3. EXHIBITS
(i) The Company's Restated Articles of Organization, as amended to
date, including all Certificates of Vote of Directors Establishing a
Series of a Class of Stock were filed with the Commission on
July 16, 1992, as an Exhibit to Form-8 Amendment No. 1 to EG&G's Annual
Report on Form 10-K for the fiscal year ended December 29, 1991, and are
herein incorporated by reference.
(ii) The Company's By-Laws as amended by the Board of Directors on
April 23, 1991, and on January 22, 1992, were filed with the Commission as
Exhibit 14 (a)(3).(ii) to EG&G's Annual Report on Form 10-K for the
fiscal year ended December 29, 1991, and are herein incorporated by
reference.
(iii) The form of certificate used to evidence ownership of EG&G Common
Stock, $1 par value, was filed as Exhibit 4(a) to EG&G's Registration
Statement on Form S-3, File No. 2-69642, and is herein incorporated by
reference.
* (iv) The EG&G, Inc. 1978 Non-Qualified Stock Option Plan as amended by
the Board of Directors on January 26, 1988, was filed with the Commission
as Exhibit 14(a)3.(v) to EG&G's Annual Report on Form 10-K for the fiscal
year ending January 3, 1988, and is herein incorporated by reference.
* (v) The EG&G, Inc. 1982 Incentive Stock Option Plan as amended by the
Board of Directors on January 24, 1990, was filed with the Commission as
Exhibit B on pages 37-42 of EG&G's 1990 Proxy Statement, and is
herein incorporated by reference.
* (vi) The EG&G, Inc. 1992 STOCK OPTION PLAN was filed as Exhibit 4(v) to
EG&G's Registration Statement on Form S-8, File No. 33-49898, and is
herein incorporated by reference.
* (vii) Employment Contracts:
(1) Employment contract between John M. Kucharski and EG&G dated
November 1, 1993.
(2) Employment contract between Murray Gross and EG&G dated
November 1, 1993.
(3) Employment contract between John F. Alexander, II and EG&G
dated November 1, 1993.
(4) Employment contract between Peter A. Broadbent and EG&G dated
November 1, 1993.
(5) Employment contract between Angelo Castellana and EG&G dated
November 1, 1993.
(6) Employment contract between James R. Dubay and EG&G dated
November 1, 1993.
(7) Employment contract between Dale L. Fraser and EG&G dated
November 1, 1993.
(8) Employment contract between Deborah S. Lorenz and EG&G dated
November 1, 1993.
(9) Employment contract between Richard F. Murphy and EG&G dated
November 1, 1993.
(10) Employment contract between Fred B. Parks and EG&G dated
November 1, 1993.
(11) Employment contract between Donald H. Peters and EG&G dated
November 1, 1993.
(12) Employment contract between Luciano S. Rossi and EG&G dated
November 1, 1993.
(13) Employment contract between Edward H. Snow and EG&G dated
November 1, 1993.
(14) Employment contract between Louis P. Valente and EG&G dated
November 1, 1993.
(15) Employment contract between Charles M. Williams and EG&G dated
November 1, 1993.
(16) Employment contract between Louis J. Williams and EG&G dated
November 1, 1993.
(17) Employment contract between James O. Zane and EG&G dated
November 1, 1993.
(18) Employment contract between Peter H. Zavattaro and EG&G dated
November 1, 1993.
Except for the name of the officer in the employment contracts
identified by numbers 3 through and including 18, the form of said
employment contracts is identical in all respects. The employment
contracts identified by numbers 1 and 2 are identical to each other
and are virtually identical to the contracts identified by numbers 3
through 18 except that they provide for a longer contract term. The
employment contract between Richard F. Murphy and EG&G is
representative of the employment contracts of the executive officers,
and is attached hereto as Exhibit 14(a)(vii).
* (viii) Remunerative Plans:
(1) EG&G, Inc. Supplemental Executive Retirement Plan. Information
with respect to this item is found following the Notes to Table II on
Pages 17-18 of EG&G's 1994 Proxy Statement, and such information
is herein incorporated by reference.
(2) EG&G, Inc. Management Incentive Plan. Information with
respect to this item is found on Page 13 of EG&G's 1994 Proxy Statement
under the caption "Annual Incentive Plan", and such information is
herein incorporated by reference.
(ix) Power of Attorney (appears on signature page)
(x) Subsidiaries of the Registrant
* This exhibit is a management contract or compensatory plan or arrangement
required to be filed as an Exhibit pursuant to Item 14(c) of Form 10-K.
(b) REPORTS ON FORM 8-K
There have been no reports on Form 8-K filed during the last quarter
of the the fiscal year ended January 2, 1994.
(c) PROXY STATEMENT
EG&G's 1994 Proxy Statement, in definitive form, was filed
electronically on March 17, 1994, with the Securities and Exchange Commission
in Washington, D.C. pursuant to the Commission's Rule 14(a)-6.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
ON SCHEDULES
To EG&G, Inc.:
We have audited in accordance with generally accepted auditing
standards, the consolidated financial statements of EG&G, Inc. included
in this Form 10-K and have issued our report thereon dated
January 24, 1994. Our audit was made for the purpose of forming an
opinion on the basic financial statements taken as a whole. Schedules
VIII and IX are the responsibility of the Company's management and are
presented for purposes of complying with the Securities an Exchange
Commission's rules and are not part of the basic financial statements.
These schedules have been subjected to the auditing procedures applied in
the audit of the basic financial statements and, in fairly state in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
/s/Arthur Andersen & Co.
Boston, Massachusetts ------------------------
January 24, 1994 Arthur Andersen & Co.
SCHEDULE VIII
-------------
EG&G, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE THREE YEARS ENDED JANUARY 2, 1994
(In thousands)
Balance at Additions Accounts Balance
Beginning Charged Charged at End
Description of Year to Income Off Other of Year
----------- ---------- --------- -------- -------- -------
Reserve for
-----------
Doubtful Accounts
-----------------
Year Ended
December 29, 1991 $6,453 $1,448 $(2,111) $(265) $5,525
Year Ended
January 3, 1993 $5,525 $ 254 $ (920) $ 762(A) $5,621
Year Ended
January 2, 1994 $5,621 $ 737 $ (755) $ 523(B) $6,126
(A) Includes reserves of $1,378 related to a company acquired in 1992.
(B) Includes reserves of $705 related to a company acquired in 1993.
SCHEDULE IX
-----------
EG&G, INC. AND SUBSIDIARIES
SHORT-TERM BORROWINGS
FOR THE THREE YEARS ENDED JANUARY 2, 1994
(In thousands)
Balance at
End of Period
Category of ----------------- Maximum Amt. Average Amt. Weighted
Aggregate Weighted Outstanding Outstanding Avg. Int.
Short-Term Average During During Rate During
Borrowing Amount Int. Rate The Period The Period The Period
----------- ------ --------- ------------ ------------ -----------
Year Ended
December 29, 1991:
Commercial Paper $42,392 4.9% $92,550 $69,222 6.3%
Other Bank Loans $14,029 10.9% $14,029 $12,577 11.0%
Year Ended
January 3, 1993:
Commercial Paper $31,964 3.8% $77,000 $41,777 4.1%
Other Bank Loans $ 7,929 10.4% $14,579 $10,903 10.7%
Year Ended
January 2, 1994
Commercial Paper $34,941 3.4% $81,000 $42,731 3.2%
Other Bank Loans $ 7,540 8.2% $11,324 $ 8,501 8.0%
The average amount outstanding during the period was based upon daily
balances for commercial paper and upon quarter-end balances for other
bank loans.
The weighted average interest rate during the period was calculated based
upon daily rates for commercial paper and upon quarter-end rates for other
bank loans.
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference of our reports dated January 24, 1994,
included in this Form 10-K, into Registration Statements previously
filed by EG&G, Inc. on, respectively, Form S-8, File No. 2-61241;
S-8, File No. 2-98168; Form S-8, 33-17466; Form S-8, File No. 33-36082;
Form S-8, File No. 33-35379; Form S-8, File No. 33-35374; Form S-8,
File No. 33-43582; Form S-8, File No. 33-49898; and Form S-8, File
No. 33-57606.
Boston, Massachusetts /s/Arthur Andersen & Co.
March 31, 1994 ------------------------
ARTHUR ANDERSEN & CO.
POWER OF ATTORNEY
We, the undersigned officers and directors of EG&G, Inc., hereby
severally constitute John M. Kucharski, and Murray Gross, and each of
them singly, our true and lawful attorneys with full power to them,
and each of them singly, to sign for us and in our names, in the
capacities indicated below, this Annual Report on Form 10-K and any and
all amendments to said Annual Report on Form 10-K, and generally to do
all such things in our name and behalf in our capacities as officers
and directors to enable EG&G, Inc. to comply with the provisions of
the Securities Exchange Act of 1934, and all requirements of the
Securities and Exchange Commission, hereby rectifying and confirming
signed by our said attorneys, and any and all amendments thereto.
Witness our hands on the date set forth below.
SIGNATURES
Pursuant to the requirements of section 13 or 15(d) 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.
March 30, 1994 By:/s/John M. Kucharski
--------------------
John M. Kucharski
Chairman of the Board, President
and Chief Executive Officer
(Principal Executive Officer)
March 30, 1994 By:/s/John F. Alexander, II
------------------------
John F. Alexander, II
Corporate Controller and Acting
Chief Financial Officer
(Principal Accounting Officer and
Principal Financial Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the date indicated:
By: /s/John M. Kucharski
--------------------
John M. Kucharski, Director
Date: March 30, 1994
By: /s/Gail Deegan
--------------
Gail Deegan, Director
Date: March 30, 1994
By:
-----------------------
Dean W. Freed, Director
Date: ________________________
By:
-----------------------
Robert F. Goldhammer, Director
Date: ________________________
By:
----------------------
John B. Gray, Director
Date: ________________________
By: /s/Kent F. Hansen
-----------------
Kent F. Hansen, Director
Date: March 31, 1994
By: /s/Greta Marshall
-----------------
Greta Marshall, Director
Date: March 30, 1994
By: /s/Samuel Rubinovitz
--------------------
Samuel Rubinovitz, Director
Date: March 30, 1994
By: /s/William F. Pounds
--------------------
William F. Pounds, Director
Date: March 30, 1994
By: /s/John Larkin Thompson
-----------------------
John Larkin Thompson, Director
Date: March 30, 1994
By: /s/G. Robert Tod
----------------
G. Robert Tod, Director
Date: March 30, 1994
By: /s/Joseph F. Turley
-------------------
Joseph F. Turley, Director
Date: March 30, 1994
EXHIBIT INDEX
Exhibit
Item 601,
Regulation S-K
- --------------
Exhibit 14(a)3.(vii) Employment Contract:
Employment contract between Richard F. Murphy and EG&G, Inc. dated
November 1, 1993.
Exhibit 21 Subsidiaries of the Registrant