SECURITIES AND EXCHANGE COMMISSION
                        WASHINGTON, D.C.   20549


                                FORM 10-Q

      (Mark One)
      [X]         QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
                  OF THE SECURITIES EXCHANGE ACT OF 1934

                  For the Quarterly Period Ended April 3, 1994

                                   OR

      [ ]         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                  OF THE SECURITIES EXCHANGE ACT OF 1934

                                                  
                      Commission File Number 1-5075

                               EG&G, Inc.
         (Exact name of registrant as specified in its charter)

        Massachusetts                     04-2052042
(State or other jurisdiction of     (I.R.S. employer identification no.)
 incorporation or organization)

             45 William Street, Wellesley, Massachusetts  02181
             (Address of principal executive offices)(Zip Code)

                               (617) 237-5100
            (Registrant's telephone number, including area code)

                                    NONE
           (Former name, former address and former fiscal year, 
                       if changed since last report)



Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.


                                          Yes     X         No        




Number of shares outstanding of each  of the issuer's classes of  common
stock, as of the latest practicable date:

          Class                           Outstanding at May 1, 1994


Common Stock, $1 par value                        55,121,000

                                          (Excluding treasury shares)


                           PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements
         --------------------
 
                             EG&G, INC. AND SUBSIDIARIES

                          CONSOLIDATED STATEMENT OF INCOME

             For the Three Months Ended April 3, 1994 and April 4, 1993

                                     (Unaudited)
(In Thousands Except Per Share Data) ---------------------------------- Three Months Ended ----------------------- April 3, April 4, 1994 1993 --------- --------- Sales: Products $381,313 $377,911 Services 295,173 271,015 -------- -------- Total Sales 676,486 648,926 -------- -------- Costs and Expenses: Cost of sales: Products 324,249 321,209 Services 271,425 241,224 -------- -------- Total cost of sales 595,674 562,433 Selling, general and administrative expenses 58,878 57,111 -------- -------- Total Costs and Expenses 654,552 619,544 -------- -------- Income From Operations 21,934 29,382 Other income (expense), net (Note 2) (21) (650) -------- -------- Income Before Income Taxes 21,913 28,732 Provision for Federal and non-U.S. income taxes 7,560 9,625 -------- -------- Income Before Cumulative Effect of Accounting Changes 14,353 19,107 Cumulative Effect of Accounting Changes: Income taxes (Note 3) - (7,300) Postretirement benefits other than pensions (Note 4) - (13,200) -------- -------- Net Income (Loss) $ 14,353 $ (1,393) ======== ========
EG&G, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF INCOME (Continued) For the Three Months Ended April 3, 1994 and April 4, 1993 Earnings Per Share: Income Before Cumulative Effect of Accounting Changes $.26 $ .34 Cumulative Effect of Accounting Changes: Income taxes - (.13) Postretirement benefits other than pensions - (.23) ---- ----- Net Income (Loss) $.26 $(.02) ==== ===== Cash Dividends Per Common Share $.14 $ .13 ==== ===== Weighted Average Shares of Common Stock Outstanding 55,721 56,722 The accompanying unaudited notes are an integral part of these consolidated financial statements.
EG&G, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET As of April 3, 1994 and January 2, 1994 (Dollars in Thousands) --------------------
April 3, January 2, 1994 1994 --------- ---------- (Unaudited) Current assets: Cash and cash equivalents $ 47,306 $ 72,185 Accounts receivable (including unbilled receivables of $62,100 as of April 3, 1994 and $67,800 as of January 2, 1994), less reserves 236,073 237,609 Inventories (Note 5) 130,279 121,581 Other 41,461 33,657 -------- -------- Total Current Assets 455,119 465,032 -------- -------- Property, Plant and Equipment: At cost (Note 6) 334,023 327,416 Less - Accumulated depreciation and amortization 227,724 221,320 -------- -------- Net Property, Plant and Equipment 106,299 106,096 -------- -------- Investments (Note 7) 30,138 25,920 -------- -------- Intangible and Other Assets (Note 8) 180,751 171,760 -------- -------- Total Assets $772,307 $768,808 ======== ========
EG&G, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (Continued) As of April 3, 1994 and January 2, 1994 (Dollars in Thousands) -------------------- Current Liabilities: Short-term debt $ 53,458 $ 43,589 Accounts payable 59,361 60,794 Accrued expenses (Note 9) 131,699 132,714 -------- -------- Total Current Liabilities 244,518 237,097 -------- -------- Long-Term Liabilities 55,839 54,177 Contingencies - - Stockholders' Equity: Preferred stock - $1 par value, authorized 1,000,000 shares; none outstanding - - Common stock - $1 par value, authorized 100,000,000 shares; issued 60,102,000 shares 60,102 60,102 Capital in excess of par value - - Retained earnings 502,655 496,063 Cumulative translation adjustments (5,809) (8,287) Unrealized gain on marketable investments (Note 7) 3,654 - -------- -------- 560,602 547,878 Less - Cost of shares held in treasury; 4,981,000 shares at April 3, 1994 and 3,970,000 shares at January 2, 1994 88,652 70,344 -------- -------- Total Stockholders' Equity 471,950 477,534 -------- -------- Total Liabilities and Stockholders' Equity $772,307 $768,808 ======== ========
The accompanying unaudited notes are an integral part of these consolidated financial statements. EG&G, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS For the Three Months Ended April 3, 1994 and April 4, 1993 (Unaudited)
(In Thousands) ------------ Three Months Ended ----------------------- April 3, April 4, 1994 1993 -------- -------- Cash Flows From Operating Activities: Net income (loss) $ 14,353 $ (1,393) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Cumulative effect of accounting changes - 20,500 Depreciation and amortization 8,815 9,290 Changes in assets and liabilities: Decrease in accounts receivable 2,046 14,954 Increase in inventories (8,275) (3,092) Decrease in accounts payable and accrued expenses (2,898) (597) Other (17,545) (15,563) -------- -------- Net Cash Provided by (Used in) Operating Activities (3,504) 24,099 -------- -------- Cash Flows From Investing Activities: Capital expenditures (6,977) (5,972) Other 1,927 (611) -------- -------- Net Cash Used in Investing Activities (5,050) (6,583) -------- -------- Cash Flows From Financing Activities: Changes in commercial paper 7,960 (2,988) Other changes in debt 1,616 (1,506) Proceeds from issuing common stock 925 3,028 Purchases of common stock (19,139) (8,688) Cash dividends (7,855) (7,388) -------- -------- Net Cash Used in Financing Activities (16,493) (17,542) -------- -------- Effect of exchange rate changes on cash and cash equivalents 168 (75) -------- -------- Net Decrease in Cash and Cash Equivalents (24,879) (101) Cash and cash equivalents at beginning of period 72,185 69,752 -------- -------- Cash and cash equivalents at end of period $ 47,306 $ 69,651 ======== ========
The accompanying unaudited notes are an integral part of these consolidated financial statements. EG&G, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (1) Principles of Consolidation - - -------------------------------- The consolidated financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. The Company believes, however, that the disclosures are adequate to make the information presented not misleading. It is suggested that these consolidated financial statements be read in conjunction with the financial statements and the notes thereto included in the Company's latest annual report on Form 10-K. The balance sheet amounts as of January 2, 1994 in this report were extracted from the Company's audited 1993 financial statements included in the latest annual report on Form 10-K. In the opinion of management, the unaudited consolidated financial statements included herein contain all adjustments, consisting only of normal recurring accruals, necessary to present fairly the financial position as of April 3, 1994 and the results of operations for the three months ended April 3, 1994 and April 4, 1993 and the cash flows for the three months then ended. The results of operations are not necessarily to be considered indicative of the results for the entire year. Effective January 3, 1994, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 112 on accounting for postemployment benefits. 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. Adoption of the statement did not have a material impact on the Company's financial position or results of operations. (2) Other Income (Expense), Net - - -------------------------------- Other income (expense), net consisted of the following:
(In Thousands) ------------ Three Months Ended ------------------- April 3, April 4, 1994 1993 -------- -------- Interest and dividend income $ 839 $ 854 Interest expense (965) (1,501) Other 105 (3) ----- ------- $ (21) $ (650) ===== =======
EG&G, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Unaudited) (3) Accounting for Income Taxes - - -------------------------------- Effective January 4, 1993, the Company adopted SFAS No. 109 on accounting for income taxes. 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) in the first quarter of 1993. (4) Postretirement Benefits Other Than Pensions - - ------------------------------------------------ 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. 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), in the first quarter of 1993. (5) Inventories - - ---------------- Inventories consisted of the following:
(In Thousands) ------------ April 3, January 2, 1994 1994 -------- ---------- Finished goods $ 32,737 $ 30,864 Work in process 33,840 30,393 Raw materials 63,702 60,324 -------- -------- $130,279 $121,581 ======== ========
(6) Property, Plant and Equipment, at Cost - - ------------------------------------------- Property, plant and equipment consisted of the following:
(In Thousands) ------------ April 3, January 2, 1994 1994 -------- ---------- Land $ 14,367 $ 14,327 Buildings and leasehold improvements 90,813 91,280 Machinery and equipment 228,843 221,809 -------- -------- $334,023 $327,416 ======== ========
EG&G, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Unaudited) (7) Investments - - ---------------- Investments consisted of the following:
(In Thousands) ------------ April 3, January 2, 1994 1994 -------- ---------- Marketable investments $12,411 $ 6,838 Other investments 12,766 13,426 Joint venture investments 4,961 5,656 ------- ------- $30,138 $25,920 ======= =======
Effective January 3, 1994, the Company adopted SFAS No. 115 on accounting for certain investments in debt and equity securities. 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 and that unrealized holding gains and losses for these investments be reported in a separate component of stockholders' equity until realized. At April 3, 1994, marketable investments classified as available-for-sale had an aggregate market value of $12.4 million and gross unrealized holding gains of $5.6 million. At April 3, 1994, $3.7 million was reported as a separate component of stockholders' equity, representing the unrealized holding gains, net of deferred federal income taxes. (8) Intangible and Other Assets - - -------------------------------- Intangible and other assets consisted of the following:
(In Thousands) ------------ April 3, January 2, 1994 1994 -------- ---------- Intangible assets $138,987 $139,205 Other assets 41,764 32,555 -------- -------- $180,751 $171,760 ======== ========
The majority of the increase in other assets was due to an increase in prepaid pension expense. EG&G, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Unaudited) (9) Accrued Expenses - - --------------------- Accrued expenses consisted of the following:
(In Thousands) ------------ April 3, January 2, 1994 1994 -------- ---------- Payroll $ 11,398 $ 13,375 Employee benefits 43,077 46,121 Federal, non-U.S. and state income taxes 29,690 26,119 Other 47,534 47,099 -------- -------- $131,699 $132,714 ======== ========
Item 2. Management's Discussion and Analysis of Financial Condition and --------------------------------------------------------------- Results of Operations --------------------- EG&G, INC. AND SUBSIDIARIES Results of Operations --------------------- The following industry segment information is presented as an aid to a better understanding of the operating results:
(In Thousands) ------------ Three Months Ended ------------------------------ April 3, April 4, Increase 1994 1993 (Decrease) --------- --------- -------- Sales: Technical Services $156,421 $158,091 $(1,670) DOE Support 350,739 329,362 21,377 Instruments 62,855 47,222 15,633 Mechanical Components 56,039 63,641 (7,602) Optoelectronics 50,432 50,610 (178) -------- -------- ------- Total $676,486 $648,926 $27,560 ======== ======== ======= Income From Operations: Technical Services $ 11,841 $ 15,951 $(4,110) DOE Support 10,061 14,251 (4,190) Instruments 487 945 (458) Mechanical Components 3,352 4,493 (1,141) Optoelectronics 3,408 776 2,632 General Corporate Expenses (7,215) (7,034) (181) -------- -------- ------- Total $ 21,934 $ 29,382 $(7,448) ======== ======== =======
The discussion that follows is a summary analysis of the major changes in operating results by industry segment that occurred for the three months ended April 3, 1994 compared to the three months ended April 4, 1993. Sales for 1994 were $676 million, $28 million above the 1993 level. Higher program scopes at Idaho and Mound resulted in a $21 million Department of Energy (DOE) Support increase. The $16 million Instruments increase resulted primarily from the sales of Wallac, acquired in June 1993. In Mechanical Components, the $8 million decrease resulted primarily from the divestiture of an operation in the fourth quarter of 1993 and from lower sales in the electromechanical and industrial sealing businesses. Income from operations was $21.9 million in 1994, compared to $29.4 million in 1993. The $4.1 million decrease in Technical Services reflected the reduction in available fee under the new base operations contract at the Kennedy Space Center. In addition, profits in the automotive testing business were adversely impacted by the faster than anticipated return to normal sales levels following increases in 1993 caused primarily by the introduction of new industry testing protocols. EG&G, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued) In DOE Support, the $4.2 million decrease was primarily attributable to estimated lower performance grades at Rocky Flats and Idaho. In Instruments, the income generated by the Wallac acquisition was offset by the effects of pricing pressures in security instruments. Certain operating elements within this segment did not contribute to income as a result of continuing unfavorable market conditions. In Mechanical Components, the $1.1 million decrease resulted from lower sales and inventory adjustments. The $2.6 million Optoelectronics increase resulted primarily from improved margins in the German and Far East operations due to increased sales and cost reductions. The net change in other income (expense) was a $0.6 million reduction in expense due primarily to lower interest expense. Liquidity and Capital Resources ------------------------------- The Company's cash and cash equivalents decreased $24.9 million during the first quarter of 1994 while total debt increased $9.7 million. Net cash used in operating activities, which totaled $3.5 million, included a $13.7 million increase in prepaid pension. The Company invested $7 million in physical plant and equipment during the first quarter of 1994 and expects to increase this level of investment in subsequent quarters. In the fourth quarter of 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. The Company has purchased 2.2 million shares under this program to date, including 1.1 million shares purchased in the first quarter of 1994. Effective March 21, 1994, the Company concluded the restructuring of its credit facilities with the signing of two revolving credit agreements totaling $250 million. These agreements consist of a $175 million 364-day facility and a $75 million three-year facility and serve as backup facilities for the commercial paper borrowing. PART II. OTHER INFORMATION EG&G, INC. AND SUBSIDIARIES Item 4. Results of Votes of Security Holders ------------------------------------ (a) The Company's annual meeting of stockholders was held on April 26, 1994. (b) Proxies for the meeting were solicited pursuant to Regulation 14A, and there were no solicitations in opposition to management's nominees for Directors. All such nominees were elected, and the number of Directors was fixed at eleven. (c) The stockholders voted 4,250,768 shares for and 39,899,963 shares against, with 2,829,013 shares abstaining and 3,144,439 shares not voting, on a stockholder proposal to request the Board of Directors to commission a subcommittee to develop criteria for the acceptance and execution of military contracts. Item 6. Exhibits and Reports on Form 8-K -------------------------------- (b) Reports on Form 8-K - There were no reports on Form 8-K filed for the three months ended April 3, 1994. EG&G, INC. AND SUBSIDIARIES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. EG&G, Inc. By /s/ John F. Alexander, II -------------------------------- Corporate Controller and Acting Chief Financial Officer (Principal Accounting Officer and Principal Financial Officer) Date May 13, 1994 ------------