Exhibit 99.1
PerkinElmer Announces Q2 2007 Results
-- Revenue Growth of 16%; Health Sciences Revenue up 18%
-- EPS from Continuing Operations of $.28; Adjusted EPS of $.30,
up 15%
-- Cash Flow from Operations of $70M, up 31%
WALTHAM, Mass.--(BUSINESS WIRE)--July 26, 2007--PerkinElmer, Inc.
(NYSE: PKI), a global leader in Health Sciences and Photonics markets,
today reported GAAP earnings per share from continuing operations of
$.28 on revenue of $437.3 million for the second quarter ended July 1,
2007. On a non-GAAP basis, which includes the adjustments noted in the
attached reconciliation, the Company announced adjusted earnings per
share for the second quarter 2007 of $.30, which was on the upper end
of the Company's forecasted range of $.28 to $.30.
Second quarter 2007 revenue of $437.3 million increased 16% versus
the second quarter of 2006. Revenue growth was 17% in Life and
Analytical Sciences and 13% in Optoelectronics compared to the same
period last year. From an end market perspective, second quarter 2007
revenue from Health Sciences, which represented 85% of total revenues
for the quarter, increased 18% over the same period of 2006. This
increase was driven primarily by strong growth in genetic screening,
medical imaging, environmental and service. Foreign exchange and
acquisitions contributed 7% to second quarter 2007 revenue growth.
"We were very pleased to deliver strong revenue, earnings and cash
flow growth for the second quarter. We are continuing to see the
benefits of our increased investments in R&D, marketing, and capital
equipment. Our recent acquisitions are also performing well," said
Gregory L. Summe, Chairman and CEO of PerkinElmer, Inc. "We expect to
carry this momentum into the second half of 2007 on the strength of
our new products and market development initiatives."
GAAP operating profit during the second quarter of 2007 was $48.1
million. On a non-GAAP basis, which includes the adjustments noted in
the attached reconciliation, second quarter 2007 adjusted operating
profit was $50.8 million, or 11.6% as a percentage of GAAP revenue for
the quarter.
The Company generated cash flow from operations of $69.7 million
in the second quarter of 2007, while increasing capital expenditures
by 32% over the same period of 2006. In addition, the Company
repurchased 3.5 million shares of its common stock for a cost of
approximately $87 million in the second quarter of 2007. This leaves
4.0 million shares remaining on the Company's stock repurchase
authorization.
Financial Overview by Reporting Segment
Life and Analytical Sciences reported revenue of $326.3 million
for the second quarter of 2007, up 17% from revenue of $278.5 million
in the second quarter of 2006, driven primarily by growth in the
Company's genetic screening, service and environmental businesses, as
well as a positive impact from acquisitions and new product
introductions.
The segment's GAAP operating profit for the second quarter of 2007
was $44.6 million. On a non-GAAP basis, which includes the adjustments
noted in the attached reconciliation, the segment's adjusted operating
profit for the second quarter of 2007 was $40.7 million, or 12.5% as a
percentage of GAAP revenue.
Optoelectronics reported revenue of $111.0 million for the second
quarter of 2007, up 13% from revenue of $98.5 million in the second
quarter of 2006, driven primarily by revenue growth in medical imaging
and specialty lighting.
The segment's GAAP operating profit was $13.0 million for the
second quarter of 2007. On a non-GAAP basis, which includes the
adjustments noted in the attached reconciliation, the segment's
adjusted operating profit for the second quarter of 2007 was $18.5
million, or 16.7% as a percentage of GAAP revenue.
Financial Guidance
For the third quarter of 2007, the Company projects revenue to
increase by low double digits, GAAP earnings per share of between $.24
and $.26, and on a non-GAAP basis, which includes the adjustments
noted in the attached reconciliation, adjusted earnings per share of
between $.31 and $.33.
The Company will discuss its second quarter results in a
conference call on July 26, 2007, at 5:30 p.m. Eastern Time (ET). To
listen to the call live, please tune into the webcast at the
"Investors" section of our Web site, www.perkinelmer.com. A playback
of this conference call will be available beginning at 7:30 p.m. ET,
Thursday, July 26, 2007. The playback phone number is (617) 801-6888
and the code number is 44903829.
Use of Non-GAAP Financial Measures
In addition to financial measures prepared in accordance with
generally accepted accounting principles (GAAP), this earnings
announcement also contains non-GAAP financial measures. The reasons
that we use these measures, a reconciliation of these measures to the
most directly comparable GAAP measures, and other information relating
to these measures are included below following our GAAP financial
statements.
Factors Affecting Future Performance
This press release contains "forward-looking" statements within
the meaning of the Private Securities Litigation Reform Act of 1995,
including, but not limited to, statements relating to estimates and
projections of future earnings per share, cash flow and revenue growth
and other financial results, developments relating to our customers
and end-markets, and plans concerning business development
opportunities. Words such as "believes," "intends," "anticipates,"
"plans," "expects," "projects," "forecasts," "will" and similar
expressions, and references to guidance, are intended to identify
forward-looking statements. Such statements are based on management's
current assumptions and expectations and no assurances can be given
that our assumptions or expectations will prove to be correct. A
number of important risk factors could cause actual results to differ
materially from the results described, implied or projected in any
forward-looking statements. These factors include, without limitation:
(1) our failure to introduce new products in a timely manner; (2) our
ability to execute acquisitions and license technologies, or to
successfully integrate acquired businesses and licensed technologies
into our existing business or to make them profitable; (3) our failure
to protect adequately our intellectual property; (4) the loss of any
of our licenses or licensed rights; (5) our ability to compete
effectively; (6) fluctuation in our quarterly operating results and
our ability to adjust our operations to address unexpected changes;
(7) our ability to produce an adequate quantity of products to meet
our customers' demands; (8) our failure to maintain compliance with
applicable government regulations; (9) regulatory changes; (10)
economic, political and other risks associated with foreign
operations; (11) our ability to retain key personnel; (12)
restrictions in our credit agreement; (13) our ability to realize the
full value of our intangible assets; and (14) other factors which we
describe under the caption "Risk Factors" in our most recent annual
report on Form 10-K and in our most recent quarterly report on Form
10-Q and in our other filings with the Securities and Exchange
Commission. We disclaim any intention or obligation to update any
forward-looking statements as a result of developments occurring after
the date of this press release.
PerkinElmer, Inc. is a global technology leader driving growth and
innovation in Health Sciences and Photonics markets to improve the
quality of life. The Company reported revenues of $1.55 billion in
2006, has 8,500 employees serving customers in more than 125
countries, and is a component of the S&P 500 Index. Additional
information is available through www.perkinelmer.com or
1-877-PKI-NYSE.
PerkinElmer, Inc. and Subsidiaries
INCOME STATEMENTS
Three Months Ended Six Months Ended
------------------- -------------------
(In thousands, except per July 1, July 2, July 1, July 2,
share data) 2007 2006 2007 2006
- ----------------------------- ---------------------------------------
Sales $437,290 $377,001 $840,190 $732,455
Cost of Sales 262,642 225,412 505,475 439,179
Amortization of Acquired
Inventory Revaluation 670 - 2,047 -
Research and Development
Expenses 27,316 25,036 55,157 47,878
In-Process Research and
Development Charges - - 1,502 -
Selling, General and
Administrative Expenses 109,357 92,655 211,122 182,508
Gains on Settlement of
Insurance Claim (15,346) - (15,346) -
Gains on Dispositions, Net - (1,505) - (1,505)
Restructuring and Lease
Charges (Reversals), Net 4,547 (290) 8,985 (290)
--------- --------- --------- ---------
Operating Income From
Continuing Operations 48,104 35,693 71,248 64,685
Interest Income (1,093) (2,363) (2,304) (5,735)
Interest Expense 3,509 2,232 5,764 4,537
Gains on Dispositions of
Investments, Net (135) (667) (536) (933)
Other Expense, Net 1,149 2,612 3,272 3,772
--------- --------- --------- ---------
Income From Continuing
Operations Before Income
Taxes 44,674 33,879 65,052 63,044
Provision for Income Taxes 11,371 7,559 16,930 14,704
--------- --------- --------- ---------
Net Income From Continuing
Operations 33,303 26,320 48,122 48,340
Loss From Discontinued
Operations, Net of Income
Taxes - (582) - (1,025)
Gain (Loss) on Disposition
of Discontinued Operations,
Net of Income Taxes 384 (1,253) 257 787
--------- --------- --------- ---------
Net Income $ 33,687 $ 24,485 $ 48,379 $ 48,102
========= ========= ========= =========
Diluted Earnings (Loss) Per
Share:
Continuing Operations $ 0.28 $ 0.21 $ 0.39 $ 0.38
Loss From Discontinued
Operations, Net of Income
Taxes - - - (0.01)
Gain (Loss) on Disposition
of Discontinued Operations,
Net of Income Taxes - (0.01) - 0.01
--------- --------- --------- ---------
Net Income $ 0.28 $ 0.19 $ 0.40 $ 0.37
========= ========= ========= =========
Weighted Average Diluted
Shares of Common Stock
Outstanding 120,689 127,401 121,976 128,558
ABOVE PREPARED IN ACCORDANCE WITH GAAP
- ----------------------------- ---------------------
Additional Supplemental
Information:
(per share, continuing
operations)
GAAP Diluted EPS from
Continuing Operations $ 0.28 $ 0.21
Amortization of Intangible
Assets, Net of Income Taxes 0.06 0.04
Stock Options, Net of Income
Taxes 0.01 0.01
Amortization of Acquired
Inventory Revaluation, Net
of Income Taxes 0.01 -
Gain on Settlement of
Insurance Claim, Net of
Income Taxes (0.08) -
Restructuring and Lease
Charges (Reversals), Net of
Income Taxes 0.02 -
--------- ---------
Adjusted EPS $ 0.30 $ 0.26
========= =========
PerkinElmer, Inc. and Subsidiaries
SALES AND OPERATING PROFIT (LOSS)
Three Months Ended Six Months Ended
------------------- ------------------
(In thousands) July 1, July 2, July 1, July 2,
2007 2006 2007 2006
- ---------------- ------------------ -------------------
Life and
Analytical
Sciences Sales $326,284 $278,462 $625,822 $540,391
OP$ Reported 44,617 25,305 59,469 49,095
OP% Reported 13.7% 9.1% 9.5% 9.1%
Amortization
Expense 10,000 7,129 19,783 13,892
Stock Option
Expense 718 748 1,466 1,357
Revaluation
of Acquired
Inventory 670 - 2,047 -
In-Process
Research &
Development
Charges - - 1,502 -
Gain on
Settlement
of Insurance
Claim (15,346) - (15,346) -
Restructuring
and Lease
Charges - 1,109 4,438 1,109
OP$ Adjusted 40,659 34,291 73,359 65,453
OP% Adjusted 12.5% 12.3% 11.7% 12.1%
Optoelectronics Sales 111,006 98,539 214,368 192,064
OP$ Reported 12,993 17,365 29,262 30,112
OP% Reported 11.7% 17.6% 13.7% 15.7%
Amortization
Expense 663 637 1,316 1,259
Stock Option
Expense 341 412 751 687
Restructuring
and Lease
Charges
(Reversals) 4,547 (1,399) 4,547 (1,399)
OP$ Adjusted 18,544 17,015 35,876 30,659
OP% Adjusted 16.7% 17.3% 16.7% 16.0%
Corporate OP$ Reported (9,506) (6,977) (17,483) (14,522)
Stock Option
Expense 1,078 933 2,110 1,699
OP$ Adjusted (8,428) (6,044) (15,373) (12,823)
Continuing
Operations Sales $437,290 $377,001 $840,190 $732,455
OP$ Reported 48,104 35,693 71,248 64,685
OP% Reported 11.0% 9.5% 8.5% 8.8%
Amortization
Expense 10,663 7,766 21,099 15,151
Stock Option
Expense 2,137 2,093 4,327 3,743
Revaluation
of Acquired
Inventory 670 - 2,047 -
In-Process
Research &
Development
Charges - - 1,502 -
Gain on
Settlement
of Insurance
Claim (15,346) - (15,346) -
Restructuring
and Lease
Charges
(Reversals) 4,547 (290) 8,985 (290)
-------- -------- -------- --------
OP$ Adjusted $ 50,775 $ 45,262 $ 93,862 $ 83,289
======== ======== ======== ========
OP% Adjusted 11.6% 12.0% 11.2% 11.4%
SALES AND REPORTED OPERATING PROFIT PREPARED IN ACCORDANCE WITH GAAP
PerkinElmer, Inc. And Subsidiaries
CONSOLIDATED BALANCE SHEETS
July 1, December July 2,
2007 31, 2006 2006
----------- -----------------------
(In thousands)
Current assets:
Cash and cash equivalents $ 150,040 $ 191,059 $ 323,755
Accounts receivable, net 271,470 268,459 233,449
Inventories, net 204,059 183,260 173,658
Other current assets 86,139 101,511 76,707
Current assets of discontinued
operations 485 477 854
----------- ----------- -----------
Total current assets 712,193 744,766 808,423
Property, plant and equipment:
At cost 544,064 525,134 507,642
Accumulated depreciation (353,326) (342,938) (327,931)
----------- ----------- -----------
Net property, plant and equipment 190,738 182,196 179,711
Marketable securities and
investments 4,485 7,508 9,674
Intangible assets, net 414,737 404,021 383,406
Goodwill 1,158,836 1,117,724 1,066,542
Other assets 49,971 52,502 86,351
Long-term assets of discontinued
operations 1,509 1,605 1,455
----------- ----------- -----------
Total assets $2,532,469 $2,510,322 $2,535,562
=========== =========== ===========
Current liabilities:
Short-term debt $ 898 $ 1,153 $ 1,090
Accounts payable 151,930 152,836 130,014
Accrued restructuring and
integration costs 4,687 2,731 9,797
Accrued expenses 292,241 318,987 276,135
Current liabilities of
discontinued operations - 826 998
----------- ----------- -----------
Total current liabilities 449,756 476,533 418,034
Long-term debt 234,504 151,781 199,187
Long-term liabilities 351,903 304,278 317,364
--------- --------- ---------
Total liabilities 1,036,163 932,592 934,585
Commitments and contingencies
Total stockholders' equity 1,496,306 1,577,730 1,600,977
----------- ----------- -----------
Total liabilities and
stockholders' equity $2,532,469 $2,510,322 $2,535,562
=========== =========== ===========
PREPARED IN ACCORDANCE WITH GAAP
PerkinElmer, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended Six Months Ended
------------------- ---------------------
July 1, July 2, July 1, July 2,
2007 2006 2007 2006
--------- --------- ---------- ----------
(In thousands)
Operating activities:
Net income $ 33,687 $ 24,485 $ 48,379 $ 48,102
Add: loss from
discontinued operations,
net of income taxes - 582 - 1,025
Add: (gain) loss on
disposition of
discontinued operations,
net of income taxes (384) 1,253 (257) (787)
--------- --------- ---------- ----------
Net income from
continuing operations 33,303 26,320 48,122 48,340
--------- --------- ---------- ----------
Adjustments to reconcile
net income from continuing
operations to net cash
provided by continuing
operations:
Stock-based
compensation 4,618 4,475 7,506 7,316
Restructuring and lease
charges (reversals),
net 4,547 285 8,985 (1,812)
Amortization of
deferred debt issuance
costs 74 73 148 143
Depreciation and
amortization 19,076 16,928 38,161 33,406
In-process research and
development charges - - 1,502 -
Amortization of
acquired inventory
revaluation 670 - 2,047 -
Gains on settlement of
insurance claim (15,346) - (15,346) -
Gains on dispositions,
net (135) (3,571) (536) (3,837)
Changes in operating assets
and liabilities:
Accounts receivable,
net (3,003) 9,618 9,457 27,842
Inventories 2,445 854 (6,456) (6,519)
Accounts payable 4,210 (9,049) (5,945) (21,260)
Taxes paid on
divestitures (235) (4,601) (235) (59,151)
Accrued expenses and
other 19,135 12,200 (669) (8,049)
--------- --------- ---------- ----------
Net cash provided by
continuing operations 69,359 53,532 86,741 16,419
--------- --------- ---------- ----------
Net cash provided by (used
in) discontinued
operations 377 (291) 246 (871)
--------- --------- ---------- ----------
Net cash provided by
operating activities 69,736 53,241 86,987 15,548
--------- --------- ---------- ----------
Investing activities:
Capital expenditures (16,124) (12,210) (27,517) (21,448)
Proceeds from
dispositions of
property, plant and
equipment, net 10,787 7,085 10,787 7,085
Proceeds from surrender
of life insurance
policies 1,327 2,327 1,327 2,327
Payments for business
development activity (177) (796) (1,094) (796)
Proceeds from (payments
for) disposition of
businesses and
investments, net 135 (876) 580 20,325
Payments for acquisitions
and investments, net of
cash and cash
equivalents acquired (2,930) (29,616) (42,925) (38,312)
--------- --------- ---------- ----------
Net cash used in continuing
operations (6,982) (34,086) (58,842) (30,819)
--------- --------- ---------- ----------
Net cash provided by
discontinued operations 800 - 800 -
--------- --------- ---------- ----------
Net cash used in investing
activities (6,182) (34,086) (58,042) (30,819)
--------- --------- ---------- ----------
Financing Activities:
Payments on debt (49,694) (16,831) (49,694) (56,565)
Proceeds from borrowings 104,012 - 129,462 -
Payments for debt
issuance costs - - - (741)
Decrease in other credit
facilities (810) (499) (824) (603)
Tax benefit from
(provision for) exercise
of common stock options 732 (154) 1,435 3,631
Proceeds from issuance of
common stock options 6,611 2,316 12,781 17,145
Purchases of common stock (87,077) - (147,105) (116,393)
Dividends paid (8,494) (8,858) (17,123) (17,974)
--------- --------- ---------- ----------
Net cash used in financing
activities (34,720) (24,026) (71,068) (171,500)
--------- --------- ---------- ----------
Effect of exchange rate
changes on cash and cash
equivalents 1,644 6,785 1,104 8,262
--------- --------- ---------- ----------
Net increase (decrease) in
cash and cash equivalents 30,478 1,914 (41,019) (178,509)
Cash and cash equivalents
at beginning of period 119,562 321,841 191,059 502,264
--------- --------- ---------- ----------
Cash and cash equivalents
at end of period $150,040 $323,755 $ 150,040 $ 323,755
========= ========= ========== ==========
PREPARED IN ACCORDANCE WITH GAAP
PerkinElmer, Inc. and Subsidiaries
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
PKI
--------------------------------
Q207 Q206
------------ -------
Adjusted Gross Margin:
GAAP Gross Margin 174.0 39.8% 151.6 40.2%
Intangibles Amortization 8.6 2.0% 7.2 1.9%
Stock Option Expense 0.3 0.1% 0.3 0.1%
Revaluation of Acquired Inventory 0.7 0.2% - 0.0%
------------ ----- ------- -----
Adjusted Gross Margin: $183.5 42.0% $159.1 42.2%
============ ===== ======= =====
Adjusted SG&A:
GAAP SG&A 109.4 25.0% 92.7 24.6%
Intangibles Amortization (1.7) -0.4% (0.3) -0.1%
Stock Option Expense (1.7) -0.4% (1.6) -0.4%
------------ ----- ------- -----
Adjusted SG&A: $106.0 24.2% $ 90.8 24.1%
============ ===== ======= =====
Adjusted R&D:
GAAP R&D 27.3 6.2% 25.0 6.6%
Intangibles Amortization (0.4) -0.1% (0.3) -0.1%
Stock Option Expense (0.1) 0.0% (0.2) -0.1%
------------ ----- ------- -----
Adjusted R&D: $ 26.8 6.1% $ 24.5 6.5%
============ ===== ======= =====
Adjusted Operating Profit:
GAAP Operating Profit 48.1 11.0% 35.7 9.5%
Intangibles Amortization 10.7 2.4% 7.8 2.1%
Stock Option Expense 2.1 0.5% 2.1 0.6%
Revaluation of Acquired Inventory 0.7 0.2% - 0.0%
Gains on Settlement of Insurance
Claim (15.3) -3.5% -
Restructuring and Lease Charges 4.5 1.0% (0.3) -0.1%
------------ ----- ------- -----
Adjusted Operating Profit $ 50.8 11.6% $ 45.3 12.0%
============ ===== ======= =====
PKI
--------------------------------
Q207 Q206
------------ -------
Adjusted EPS:
GAAP EPS $ 0.28 $ 0.19
Discontinued Operations 0.00 0.01
------------ ----- ------- -----
GAAP EPS from Continuing Operations 0.28 0.21
Intangibles Amortization 0.06 0.04
Stock Option Expense 0.01 0.01
Revaluation of Acquired Inventory 0.01 -
Gains on Settlement of Insurance
Claim (0.08) -
Restructuring and Lease Charges 0.02 (0.00)
------------ ----- ------- -----
Adjusted EPS $ 0.30 $ 0.26
============ ===== ======= =====
PKI
--------------------------------
Q307 Q306
------------ -------
Adjusted EPS: Projected
GAAP EPS $0.24 - 0.26 $ 0.24
Discontinued Operations - (0.01)
------------ ----- ------- -----
GAAP EPS from Continuing Operations $0.24 - 0.26 0.23
Intangibles Amortization 0.06 0.05
Stock Option Expense 0.01 0.02
------------ ----- ------- -----
Adjusted EPS $0.31 - 0.33 $ 0.30
================== ======= =====
LAS
--------------------------------
Q207 Q206
------------ -------
Adjusted Operating Profit:
GAAP Operating Profit 44.6 13.7% 25.3 9.1%
Intangibles Amortization 10.0 3.1% 7.1 2.6%
Stock Option Expense 0.7 0.2% 0.7 0.3%
Revaluation of Acquired Inventory 0.7 0.2% - 0.0%
Gains on Settlement of Insurance
Claim (15.3) -4.7% - 0.0%
Restructuring and Lease Charges - 0.0% 1.1 0.4%
------------ ----- ------- -----
Adjusted Operating Profit $ 40.7 12.5% $ 34.3 12.3%
============ ===== ======= =====
OPTO
--------------------------------
Q207 Q206
------------ -------
Adjusted Operating Profit:
GAAP Operating Profit 13.0 11.7% 17.4 17.6%
Intangibles Amortization 0.7 0.6% 0.6 0.6%
Stock Option Expense 0.3 0.3% 0.4 0.4%
Restructuring and Lease Charges 4.5 4.1% (1.4) -1.4%
------------ ----- ------- -----
Adjusted Operating Profit $ 18.5 16.7% $ 17.0 17.3%
============ ===== ======= =====
Adjusted Gross Margin and Adjusted Gross Margin Percentage
We use the term "adjusted gross margin" to refer to GAAP gross
margin, excluding amortization of intangible assets, inventory fair
value adjustments related to business acquisitions, and stock option
expense. We use the related term "adjusted gross margin percentage" to
refer to adjusted gross margin as a percentage of GAAP revenue. We
believe that these non-GAAP measures, when taken together with our
GAAP financial measures, allow us and our investors to better measure
the performance of our investments in technology, to evaluate the
long-term profitability trends and to assess our ability to invest in
the business. We exclude amortization of intangible assets from these
measures because intangibles amortization charges do not represent
what our management and what we believe our investors consider to be
costs of producing our products and could distort the additional value
generated over the cost of producing those products. Inventory fair
value adjustments related to business acquisitions charges also do not
represent what our management and what we believe our investors
consider to be costs used in producing our products. In addition, we
exclude stock option expense from these measures because stock-based
compensation plans and the critical assumptions used to calculate the
expense vary dramatically between us and our peers, which we believe
makes comparisons of long-term operating performance trends difficult
for management and investors, and could result in overstating or
understating to our investors the costs used in producing our
products.
Adjusted Selling, General and Administrative (SG&A) Expense and
Adjusted SG&A Percentage
We use the term "adjusted SG&A expense" to refer to GAAP SG&A
expense, excluding amortization of intangible assets and stock option
expense. We use the related term "adjusted SG&A percentage" to refer
to adjusted SG&A expense as a percentage of GAAP revenue. We believe
that these non-GAAP measures, when taken together with our GAAP
financial measures, allow us and our investors to better measure the
cost of the internal operating structure, our ability to leverage that
structure and the level of investment required to grow our business.
We exclude amortization of intangible assets from these measures
because intangibles amortization charges do not represent what our
management and what we believe our investors consider to be costs that
support our internal operating structure and could distort the
efficiencies of that structure. We also exclude stock option expense
from these measures because stock-based compensation plans and the
critical assumptions used to calculate the expense vary dramatically
between us and our peers, which we believe makes comparisons of
long-term operating performance trends difficult for management and
investors, and could result in overstating or understating to our
investors the costs to support our internal operating structure.
Adjusted Research and Development (R&D) Expense and Adjusted R&D
Percentage
We use the term "adjusted R&D expense" to refer to GAAP R&D
expense, excluding amortization of intangible assets and stock option
expense. We use the related term "adjusted R&D percentage" to refer to
adjusted R&D expense as a percentage of GAAP revenue. We believe that
these non-GAAP measures, when taken together with our GAAP financial
measures, allow us and our investors to better understand and evaluate
our internal technology investments. We exclude amortization of
intangible assets from these measures because intangibles amortization
charges do not represent what our management and what we believe our
investors consider to be internal investments in R&D activities and
could distort our R&D investment level. In addition, we exclude stock
option expense from these measures because stock-based compensation
plans and the critical assumptions used to calculate the expense vary
dramatically between us and our peers, which we believe makes
comparisons of long-term operating performance trends difficult for
management and investors, and could result in overstating or
understating to our investors the amount of our internal investments
in R&D activities.
Adjusted Operating Profit and Adjusted Operating Profit Percentage
We use the term "adjusted operating profit" to refer to GAAP
operating profit, excluding amortization of intangible assets,
inventory fair value adjustments related to business acquisitions,
gains on the settlement of insurance claim, restructuring and lease
charges and stock option expense. Adjusted operating profit is
calculated by subtracting adjusted R&D expense and adjusted SG&A
expense from adjusted gross margin. We use the related term "adjusted
operating profit percentage" to refer to adjusted operating profit as
a percentage of GAAP revenue. We believe that these non-GAAP measures,
when taken together with our GAAP financial measures, allow us and our
investors to analyze the costs of the different components of
producing and selling our products, to better measure the performance
of our internal investments in technology and to evaluate the
long-term profitability trends of our core operations. Adjusted
operating profit also provides for easier comparisons of our
performance and profitability with prior and future periods and
relative comparisons to our peers. We believe our investors do not
consider the items that we exclude from adjusted operating profit to
be costs of producing our products, investments in technology and
production, and costs to support our internal operating structure, and
so we present this non-GAAP measure to avoid overstating or
understating to our investors the performance of our operations. In
addition, we exclude gains on the settlement of insurance claim and
restructuring and lease charges because they tends to occur due to an
acquisition, divestiture, repositioning of the business or other
unusual event that could distort the performance measures of our
internal investments and costs to support our internal operating
structure.
Adjusted Earnings per Share
We use the term "adjusted earnings per share" to refer to GAAP
earnings per share, excluding discontinued operations, amortization of
intangible assets, inventory fair value adjustments related to
business acquisitions, gains on settlement of insurance claim,
restructuring and lease charges and stock option expense. Adjusted
earnings per share is calculated by subtracting adjusted R&D expense,
adjusted SG&A expense, other income / expense and provision for taxes
from adjusted gross margin. We believe that this non-GAAP measure,
when taken together with our GAAP financial measures, allows us and
our investors to analyze the costs of producing and selling our
products and the performance of our internal investments in technology
and our internal operating structure, to evaluate the long-term
profitability trends of our core operations and to calculate the
underlying value of the core business on a dilutive share basis, which
is a key measure of the value of the company used by our management
and we believe used by investors as well. Adjusted earnings per share
also facilitates the overall analysis of the value of the company and
the core measure of the success of our operating business model as
compared to prior and future periods and relative comparisons to our
peers. We exclude discontinued operations, amortization of intangible
assets, inventory fair value adjustments related to business
acquisitions, gains on the settlement of insurance claim,
restructuring and lease charges and stock option expense as these
items do not represent what our management and what we believe our
investors consider to be costs of producing our products, investments
in technology and production, and costs to support our internal
operating structure, which could result in overstating or understating
to our investors the performance of our operations.
****
The non-GAAP financial measures described above are not meant to
be considered superior to, or a substitute for, our financial
statements prepared in accordance with GAAP. There are material
limitations associated with non-GAAP financial measures because they
exclude charges that have an effect on our reported results and,
therefore, should not be relied upon as the sole financial measures to
evaluate our financial results. Management compensates and believes
that investors should compensate for these limitations by viewing the
non-GAAP financial measures in conjunction with the GAAP financial
measures. In addition, the non-GAAP financial measures included in
this earnings announcement may be different from, and therefore may
not be comparable to, similar measures used by other companies.
Each of the non-GAAP financial measures listed above are also used
by our management to evaluate our operating performance, communicate
our financial results to our Board of Directors, benchmark our results
against our historical performance and the performance of our peers,
evaluate investment opportunities including acquisitions and
discontinued operations, and determine the bonus payments for senior
management and employees.
CONTACT: Investor Relations:
Steven Delahunt
PerkinElmer, Inc.
(781) 663-5677
or
Media Contact:
Kevin Lorenc
PerkinElmer, Inc.
(781) 663-5701