- GAAP revenue of $527 million;
Constant currency adjusted revenue growth 5%; Organic revenue
growth 3%
- GAAP earnings per share from
continuing operations of $0.36; Adjusted earnings per share of
$0.50 representing 19% constant currency adjusted EPS
growth
- Expanded constant currency adjusted
operating profit margins by 130 basis points
PerkinElmer, Inc. (NYSE: PKI), a global leader focused on
improving the health and safety of people and the environment,
today reported financial results for the first quarter ended March
29, 2015.
The Company reported GAAP earnings per share from continuing
operations of $0.36, as compared to $0.31 in the first quarter of
2014. GAAP revenue in the first quarter of 2015 was $526.9 million,
as compared to $530.6 million in the first quarter of 2014. GAAP
operating income from continuing operations for the first quarter
of 2015 was $57.4 million, as compared to $51.8 million in the
first quarter of 2014.
Adjusted earnings per share was $0.50, as compared to $0.47 in
the first quarter of 2014. Adjusted revenue for the quarter was
$527.2 million, as compared to $532.1 million in the first quarter
of 2014. Adjusted operating income for the first quarter of 2015
was $82.8 million, as compared to $79.4 million for the same period
a year ago. Adjusted operating profit margin was 15.7% as a
percentage of adjusted revenue, as compared to 14.9% for the same
period a year ago. Adjustments for the Company's non-GAAP financial
measures have been noted in the attached reconciliations. Certain
of these non-GAAP financial measures are presented on a ‘constant
currency’ basis, so that financial results can be viewed without
the fluctuations in foreign currency exchange rates, allowing for a
period-to-period comparison of underlying business performance.
“I am pleased with our start to the year as we delivered a
strong financial performance despite the headwinds from the
stronger dollar,” said Robert Friel, chairman and chief executive
officer of PerkinElmer. “We continue to be encouraged by the
success we are seeing from our growth and productivity investments
giving us confidence in our ability to deliver solid results for
the balance of the year.”
Cash Flow
For the first quarter of 2015, GAAP operating cash flow from
continuing operations, after taking into account approximately
$24.0 million of voluntary pension funding, was $37.6 million, as
compared to $68.1 million in the comparable period of 2014.
Financial Overview by Reporting Segment for the First Quarter
of 2015
Human Health
- Revenue of $326.1 million, as compared
to $330.0 million for the first quarter of 2014.
- Adjusted revenue of $326.3 million.
Organic revenue increased 4%.
- Operating income of $55.9 million, as
compared to operating income of $44.0 million for the same period a
year ago.
- Adjusted operating income of $71.7
million. Adjusted operating profit margin was 22.0% as a percentage
of adjusted revenue, as compared to 19.3% in the first quarter of
2014.
Environmental Health
- Revenue of $200.8 million, as compared
to $200.6 million for the first quarter of 2014. Organic revenue
increased 2%.
- Operating income of $11.3 million, as
compared to operating income of $21.6 million for the same period a
year ago.
- Adjusted operating income of $20.7
million. Adjusted operating profit margin was 10.3% as a percentage
of revenue, as compared to 13.0% in the first quarter of 2014.
Financial Guidance – Full Year 2015
For the full year 2015, the Company now forecasts GAAP earnings
per share from continuing operations in the range of $2.06 to $2.12
and updates on a non-GAAP basis, which is expected to include the
adjustments noted in the attached reconciliation, adjusted earnings
per share of $2.54 to $2.60 which now represents 12-15% constant
currency adjusted earnings per share growth as compared to the
Company's prior guidance of 11-13%. The guidance now assumes that
the stronger U.S. dollar will negatively impact adjusted earnings
per share for 2015 by a total of $0.23 as compared to the Company’s
original guidance of $0.15.
Conference Call Information
The Company will discuss its first quarter results and its
outlook for business trends in a conference call on April 30, 2015
at 5:00 p.m. Eastern Time (ET). To access the call, please dial
(617) 399-5124 prior to the scheduled conference call time and
provide the access code 76415442.
A live audio webcast of the call will be available on the
Investor section of the Company’s Web site, www.perkinelmer.com.
Please go to the site at least 15 minutes prior to the call in
order to register, download, and install any necessary software. An
archived version of the webcast will be posted on the Company’s Web
site for a two week period beginning approximately two hours after
the call.
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 and divestitures. 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) markets into which we sell our products declining
or not growing as anticipated; (2) fluctuations in the global
economic and political environments; (3) our failure to introduce
new products in a timely manner; (4) 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, or successfully divest
businesses; (5) our failure to adequately protect our intellectual
property; (6) the loss of any of our licenses or licensed rights;
(7) our ability to compete effectively; (8) fluctuation in our
quarterly operating results and our ability to adjust our
operations to address unexpected changes; (9) significant
disruption in third-party package delivery and import/export
services or significant increases in prices for those services;
(10) disruptions in the supply of raw materials and supplies; (11)
the manufacture and sale of products exposing us to product
liability claims; (12) our failure to maintain compliance with
applicable government regulations; (13) regulatory changes; (14)
our failure to comply with healthcare industry regulations; (15)
economic, political and other risks associated with foreign
operations; (16) our ability to retain key personnel; (17)
significant disruption in our information technology systems; (18)
our ability to obtain future financing; (19) restrictions in our
credit agreements; (20) our ability to realize the full value of
our intangible assets; (21) significant fluctuations in our stock
price; (22) reduction or elimination of dividends on our common
stock; and (23) other factors which we describe under the caption
"Risk Factors" in our most recent annual report on Form 10-K 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.
About PerkinElmer
PerkinElmer, Inc. is a global leader focused on improving the
health and safety of people and the environment. The Company
reported revenue of approximately $2.2 billion in 2014, has about
7,700 employees serving customers in more than 150 countries, and
is a component of the S&P 500 Index. Additional information is
available through 1-877-PKI-NYSE, or at www.perkinelmer.com.
PerkinElmer, Inc. and
Subsidiaries CONSOLIDATED INCOME STATEMENTS
Three Months
Ended
(In thousands, except per share data)
March 29,
2015
March 30,
2014
Revenue $ 526,901 $ 530,610 Cost of
revenue 291,527 294,897 Selling, general and administrative
expenses 145,873 152,437 Research and development expenses 32,120
29,379 Restructuring and contract termination charges, net
- 2,135
Operating income from continuing operations 57,381 51,762
Interest income (209 ) (94 ) Interest expense 9,388 9,219
Other expense, net
242
2,164 Income from continuing operations,
before income taxes 47,960 40,473 Provision for income taxes
7,649 5,522
Income from continuing operations 40,311 34,951
Loss from discontinued operations, before income taxes (37 )
(1,030 ) Loss on disposition of discontinued operations, before
income taxes (13 ) (72 ) Benefit from income taxes on discontinued
operations and dispositions
(73 )
(375 ) Gain (loss) from
discontinued operations and dispositions 23 (727 )
Net income $ 40,334
$ 34,224 Diluted
earnings per share: Income from continuing operations $ 0.36 $
0.31 Gain (loss) from discontinued operations and
dispositions
0.00
(0.01 ) Net income
$
0.36 $ 0.30
Weighted average diluted shares of common stock
outstanding 113,439 113,777 ABOVE PREPARED IN
ACCORDANCE WITH GAAP
Additional Supplemental Information
(1): (per share, continuing operations) GAAP
EPS from continuing operations $ 0.36 $ 0.31 Amortization of
intangible assets, net of income taxes 0.11 0.12 Purchase
accounting adjustments, net of income taxes 0.03 0.01 Significant
litigation matter, net of income taxes - 0.02 Restructuring and
contract termination charges, net of income taxes
- 0.01 Adjusted
EPS $ 0.50
$ 0.47 (1)
amounts may not sum due to rounding
PerkinElmer, Inc. and Subsidiaries REVENUE AND
OPERATING INCOME (LOSS)
Three Months
Ended
(In thousands, except percentages)
March 29,
2015
March 30,
2014
Human Health Reported revenue $ 326,053 $
330,033 Purchase accounting adjustments 269 1,452
Adjusted Revenue 326,322 331,485 Reported
operating income from continued operations 55,882 43,982 OP% 17.1 %
13.3 % Amortization of intangible assets 15,473 18,020 Purchase
accounting adjustments 300 1,538 Acquisition-related costs 72 29
Restructuring and contract termination charges, net - 490
Adjusted operating income 71,727 64,059
Adjusted OP% 22.0 % 19.3 %
Environmental Health
Reported revenue 200,848 200,577 Reported operating income
from continued operations 11,346 21,607 OP% 5.6 % 10.8 %
Amortization of intangible assets 4,365 2,675 Purchase accounting
adjustments 4,850 - Acquisition-related costs 123 82 Restructuring
and contract termination charges, net - 1,645
Adjusted operating income 20,684 26,009 Adjusted OP%
10.3 % 13.0 %
Corporate Reported operating loss
(9,847 ) (13,827 ) Significant litigation matter - 3,227 Mark to
market on postretirement benefits 234 (54 ) Adjusted
operating loss (9,613 ) (10,654 )
Continuing
Operations Reported revenue $ 526,901 $ 530,610 Purchase
accounting adjustments 269 1,452 Adjusted Revenue
527,170 532,062 Reported operating income from
continued operations 57,381 51,762 OP% 10.9 % 9.8 % Amortization of
intangible assets 19,838 20,695 Purchase accounting adjustments
5,150 1,538 Acquisition-related costs 195 111 Significant
litigation matter - 3,227 Mark to market on postretirement benefits
234 (54 ) Restructuring and contract termination charges, net -
2,135 Adjusted operating income $ 82,798 $
79,414 Adjusted OP% 15.7 % 14.9 % REPORTED REVENUE
AND REPORTED OPERATING INCOME (LOSS) PREPARED IN ACCORDANCE WITH
GAAP
PerkinElmer, Inc. and
Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months
Ended
March
29,
2015
March
30,
2014
(In thousands) Operating activities: Net
income $ 40,334 $ 34,224 Less: (gain) loss from discontinued
operations and dispositions, net of income taxes (23 )
727 Income from continuing operations 40,311
34,951
Adjustments to reconcile income from
continuing operations to net cash provided by continuing
operations:
Stock-based compensation 3,987 4,516 Restructuring and contract
termination charges, net - 2,135 Amortization of deferred debt
issuance costs, interest rate hedges and accretion of discounts 312
304 Depreciation and amortization 28,334 29,328 Amortization of
acquired inventory revaluation 4,850 -
Changes in operating assets and
liabilities which provided (used) cash, excluding effects from
companies purchased and divested:
Accounts receivable, net 37,582 26,732 Inventories (22,498 )
(17,719 ) Accounts payable (12,335 ) 959 Accrued expenses and other
(42,895 ) (13,093 )
Net cash provided by operating
activities of continuing operations 37,648
68,113 Net cash provided by (used in)
operating activities of discontinued operations 15
(402 )
Net cash provided by operating activities
37,663 67,711
Investing activities: Capital expenditures (4,479 ) (6,020 )
Changes in restricted cash balances 59 - Activity related to
acquisitions and investments, net of cash and cash equivalents
acquired (4,619 ) -
Net cash used in
investing activities (9,039 )
(6,020 )
Financing activities:
Payments on revolving credit facility (98,000 ) (95,000 ) Proceeds
from revolving credit facility 61,000 90,000 Payments of debt
financing costs - (1,724 )
Settlement of hedges
15,563 - Net payments on other credit facilities (263 ) (252 )
Proceeds from issuance of common stock under stock plans 8,840
7,231 Purchases of common stock (3,954 ) (3,916 ) Dividends paid
(7,876 ) (7,887 )
Net cash used in financing
activities (24,690 ) (11,548
) Effect of exchange rate changes on cash and cash
equivalents (9,831 ) 728
Net
(decrease) increase in cash and cash equivalents (5,897
) 50,871 Cash and cash equivalents at beginning of
period 174,821 173,242
Cash and cash
equivalents at end of period $ 168,924
$ 224,113 PREPARED IN ACCORDANCE WITH
GAAP
PerkinElmer, Inc. and
Subsidiaries CONSOLIDATED BALANCE SHEETS (In
thousands)
March 29,
2015
December 28,
2014
Current assets: Cash and cash equivalents $ 168,924 $
174,821 Accounts receivable, net 415,378 470,563 Inventories
291,120 285,457 Other current assets 147,113
137,710 Total current assets 1,022,535
1,068,551 Property, plant and equipment: At cost
485,101 492,814 Accumulated depreciation (316,602 )
(316,620 ) Property, plant and equipment, net 168,499 176,194
Marketable securities and investments 1,598 1,568 Intangible
assets, net 470,012 490,265 Goodwill 2,253,208 2,284,077 Other
assets, net 112,419 113,420 Total
assets $ 4,028,271 $ 4,134,075 Current
liabilities: Current portion of long-term debt $ 1,083 $ 1,075
Accounts payable 157,471 173,953 Short-term accrued restructuring
and contract termination charges 13,312 17,124 Accrued expenses and
other current liabilities 376,585 403,021 Current liabilities of
discontinued operations 2,130 2,137
Total current liabilities 550,581 597,310
Long-term debt 1,014,666 1,051,892 Long-term accrued
restructuring and contract termination charges 5,855 6,706
Long-term liabilities 397,284 436,065
Total liabilities 1,968,386 2,091,973
Total stockholders' equity 2,059,885
2,042,102 Total liabilities and stockholders' equity $
4,028,271 $ 4,134,075 PREPARED IN ACCORDANCE
WITH GAAP
PerkinElmer, Inc. and Subsidiaries RECONCILIATION
OF GAAP TO NON-GAAP FINANCIAL MEASURES (1)
(In
millions, except per share data and percentages) PKI
Three Months Ended
March 29,
2015
March 30,
2014
Adjusted revenue: Revenue $ 526.9 $ 530.6 Purchase
accounting adjustments 0.3
1.5 Adjusted
revenue $ 527.2 $ 532.1
Adjusted gross margin:
Gross margin $ 235.4 44.7 % $ 235.7 44.4 % Amortization of
intangible assets 10.7 2.0 % 12.7 2.4 % Purchase accounting
adjustments 5.1 1.0 % 1.5 0.3 % Mark to market on postretirement
benefits 0.2 0.0 %
(0.1 ) 0.0 % Adjusted gross margin $ 251.5
47.7 % $ 249.8
47.0 %
Adjusted SG&A: SG&A $ 145.9 27.7 % $
152.4 28.7 % Amortization of intangible assets (9.0 ) -1.7 % (7.8 )
-1.5 % Purchase accounting adjustments (0.0 ) 0.0 % (0.1 ) 0.0 %
Acquisition-related costs (0.2 ) 0.0 % (0.1 ) 0.0 % Significant
litigation matter - 0.0 %
(3.2 ) -0.6 % Adjusted SG&A $ 136.7
25.9 % $ 141.2
26.5 %
Adjusted R&D: R&D $ 32.1 6.1 % $ 29.4
5.5 % Amortization of intangible assets (0.1 )
0.0 % (0.2 ) 0.0 % Adjusted
R&D $ 32.0 6.1 % $ 29.2
5.5 %
Adjusted operating income:
Operating income $ 57.4 10.9 % $ 51.8 9.8 % Amortization of
intangible assets 19.8 3.8 % 20.7 3.9 % Purchase accounting
adjustments 5.2 1.0 % 1.5 0.3 % Acquisition-related costs 0.2 0.0 %
0.1 0.0 % Significant litigation matter - 0.0 % 3.2 0.6 % Mark to
market on postretirement benefits 0.2 0.0 % (0.1 ) 0.0 %
Restructuring and contract termination charges, net -
0.0 % 2.1
0.4 % Adjusted operating income $ 82.8 15.7 %
$ 79.4 14.9 %
PKI
Three Months Ended
March 29,
2015
March 30,
2014
Adjusted EPS: GAAP EPS $ 0.36 $ 0.30 Discontinued
operations, net of income taxes 0.00
(0.01 ) GAAP EPS
from continuing operations 0.36 0.31 Amortization of intangible
assets, net of income taxes 0.11 0.12 Purchase accounting
adjustments, net of income taxes 0.03 0.01 Significant litigation
matter, net of income taxes - 0.02 Acquisition-related costs, net
of income taxes 0.00 0.00 Mark to market on postretirement
benefits, net of income taxes 0.00 (0.00 ) Restructuring and
contract termination charges, net of income taxes -
0.01
Adjusted EPS $ 0.50
$ 0.47
PKI
Three Months Ended
March 29,
2015
March 30,
2014
Constant currency adjusted EPS: GAAP EPS $ 0.36 $
0.30 Discontinued operations, net of income taxes 0.00
(0.01 )
GAAP EPS from continuing operations 0.36 0.31
Amortization of intangible assets, net of income taxes 0.11 0.12
Purchase accounting adjustments, net of income taxes 0.03 0.01
Significant litigation matter, net of income taxes - 0.02
Acquisition-related costs, net of income taxes 0.00 0.00 Mark to
market on postretirement benefits, net of income taxes 0.00 (0.00 )
Restructuring and contract termination charges, net of income taxes
- 0.01 Effect of currency changes from prior year period
0.06 -
Constant currency adjusted EPS $ 0.56
$ 0.47
PKI Twelve Months Ended
January 3,
2016
Adjusted EPS: Projected GAAP EPS from continuing
operations $2.06 - $2.12 Amortization of intangible assets, net of
income taxes 0.43 Purchase accounting adjustments, net of income
taxes 0.05 Acquisition-related costs, net of income taxes 0.00 Mark
to market on postretirement benefits, net of income taxes
0.00
Adjusted EPS $2.54
- $2.60
(1) amounts may not
sum due to rounding
PerkinElmer, Inc. and Subsidiaries
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(1)
(In millions, except per share data and
percentages) PKI Twelve Months Ended
January 3,
2016
Constant currency adjusted EPS:
Projected GAAP EPS from continuing operations $2.06 - $2.12
Amortization of intangible assets, net of income taxes 0.43
Purchase accounting adjustments, net of income taxes 0.05
Acquisition-related costs, net of income taxes 0.00 Mark to market
on postretirement benefits, net of income taxes 0.00 Effect of
currency changes from prior year period
0.23 Constant
currency adjusted EPS
$2.77 - $2.83
Human
Health Three Months Ended
March 29,
2015
March 30,
2014
Adjusted revenue: Revenue $ 326.1 $ 330.0 Purchase
accounting adjustments 0.3
1.5 Adjusted revenue $
326.3 $ 331.5
Adjusted operating income: Operating
income $ 55.9 17.1 % $ 44.0 13.3 % Amortization of intangible
assets 15.5 4.7 % 18.0 5.5 % Purchase accounting adjustments 0.3
0.1 % 1.5 0.5 % Acquisition-related costs 0.1 0.0 % 0.0 0.0 %
Restructuring and contract termination charges, net -
0.0 % 0.5 0.1 %
Adjusted operating income $ 71.7 22.0 %
$ 64.1 19.3 %
Environmental
Health Three Months Ended
March 29,
2015
March 30,
2014
Revenue: Revenue $ 200.8 $ 200.6
Adjusted
operating income: Operating income $ 11.3 5.6 % $ 21.6 10.8 %
Amortization of intangible assets 4.4 2.2 % 2.7 1.3 % Purchase
accounting adjustments 4.9 2.4 % - 0.0 % Acquisition-related costs
0.1 0.1 % 0.1 0.0 % Restructuring and contract termination charges,
net - 0.0 % 1.6
0.8 % Adjusted operating income $ 20.7
10.3 % $ 26.0 13.0 %
PKI Three Months Ended
March 29,
2015
March 30,
2014
Constant currency adjusted revenue: Revenue $ 526.9 $
530.6 Purchase accounting adjustments 0.3 1.5 Effect of currency
changes from prior year period 33.3
- Constant
currency adjusted revenue $ 560.5
$ 532.1
Constant
currency adjusted operating income: Operating income $ 57.4
10.9 % $ 51.8 9.8 % Amortization of intangible assets 19.8 3.8 %
20.7 3.9 % Purchase accounting adjustments 5.2 1.0 % 1.5 0.3 %
Acquisition-related costs 0.2 0.0 % 0.1 0.0 % Significant
litigation matter - 0.0 % 3.2 0.6 % Mark to market on
postretirement benefits 0.2 0.0 % (0.1 ) 0.0 % Restructuring and
contract termination charges, net - 0.0 % 2.1 0.4 % Effect of
currency changes from prior year period 8.1
1.5 % - 0.0 % Constant
currency adjusted operating income $ 90.9 16.2 %
$ 79.4 14.9 %
(1)
amounts may not sum due to rounding
PerkinElmer, Inc. and Subsidiaries RECONCILIATION OF GAAP
TO NON-GAAP FINANCIAL MEASURES PKI
Three Months Ended
March 29,
2015
Organic revenue growth: Reported revenue growth -1% Less:
effect of foreign exchange rates -6% Less: effect of acquisitions
including purchase accounting adjustments 3% Organic revenue growth
3%
Human Health Three Months Ended
March 29,
2015
Organic revenue growth: Reported revenue growth -1% Less:
effect of foreign exchange rates -5% Less: effect of acquisitions
including purchase accounting adjustments 1% Organic revenue growth
4%
Environmental Health Three Months
Ended
March 29,
2015
Organic revenue growth: Reported revenue growth 0% Less:
effect of foreign exchange rates -8% Less: effect of acquisitions
including purchase accounting adjustments 6% Organic revenue growth
2%
(1) amounts may not sum due to rounding
Adjusted Revenue and Adjusted Revenue
Growth
We use the term “adjusted revenue” to refer to GAAP revenue,
including estimated revenue from contracts acquired in various
acquisitions that will not be fully recognized due to business
combination accounting rules. We use the related term “adjusted
revenue growth” to refer to the measure of comparing current period
adjusted revenue with the corresponding period of the prior year.
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 long-term performance trends and to assess our ability to
invest in our business. Adjusted revenue growth also provides for
easier comparisons of our performance with prior and future periods
and relative comparisons to our peers. Our GAAP revenue for the
periods subsequent to our acquisitions does not reflect the full
amount of revenue on such contracts that would have otherwise been
recorded by the acquired businesses. The non-GAAP adjustment is
intended to reflect the full amount of such revenue. We believe our
investors will use this adjustment as a measure of the ongoing
performance of the acquired businesses because customers have
historically entered into such contracts for renewed and/or
developmental support, although there can be no assurance that
customers will do so in the future.
Constant Currency Adjusted Revenue and
Constant Currency Adjusted Revenue Growth
We use the term “constant currency adjusted revenue” to refer to
GAAP revenue, excluding the impact from foreign currency exchange
rates on the current period, and including estimated revenue from
contracts acquired in various acquisitions that will not be fully
recognized due to business combination accounting rules. We use the
related term “constant currency adjusted revenue growth” to refer
to the measure of comparing current period constant currency
adjusted revenue with the corresponding period of the prior year.
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 long-term performance trends and to assess our ability to
invest in our business. We exclude the impact of foreign currency
exchanges rates from these measures by using the prior period’s
foreign currency exchange rates for the current period because
foreign currency exchange rates are subject to volatility and can
obscure underlying trends. We include estimated revenue from
contracts acquired with various acquisitions that will not be fully
recognized due to business combination rules because we believe our
investors will use this adjustment as a measure of the ongoing
performance of the acquired businesses, as a result of customers
having historically entered into such contracts for renewed and/or
developmental support, although there can be no assurance that
customers will do so in the future.
Organic Revenue and Organic Revenue
Growth
We use the term “organic revenue” to refer to GAAP revenue,
excluding the effect of foreign currency translation and
acquisitions, and including estimated revenue from contracts
acquired in various acquisitions that will not be fully recognized
due to business combination accounting rules. We use the related
term “organic revenue growth” to refer to the measure of comparing
current period organic revenue with the corresponding period of the
prior year. 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 long-term performance trends and to assess
our ability to invest in our business. Organic revenue growth also
provides for easier comparisons of our performance with prior and
future periods and relative comparisons to our peers. We exclude
the effect of foreign currency translation from these measures
because foreign currency translation is subject to volatility and
can obscure underlying trends. We exclude the effect of
acquisitions because acquisition activity can vary dramatically
between reporting periods and between us and our peers, which we
believe makes comparisons of long-term performance trends difficult
for management and investors, and could result in overstating or
understating to our investors the performance of our operations. We
include estimated revenue from contracts acquired with various
acquisitions that will not be fully recognized due to business
combination rules because we believe our investors will use this
adjustment as a measure of the ongoing performance of the acquired
businesses, as a result of customers having historically entered
into such contracts for renewed and/or developmental support,
although there can be no assurance that customers will do so in the
future.
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, other costs
related to business acquisitions, and including estimated revenue
from contracts acquired in various acquisitions that will not be
fully recognized due to business combination accounting rules. We
also exclude adjustments for mark-to-market accounting on
post-retirement benefits, therefore only our projected costs have
been used to calculate our non-GAAP measure. We use the related
term “adjusted gross margin percentage” to refer to adjusted gross
margin as a percentage of adjusted 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 our business. We exclude amortization of intangible assets and
adjustments for mark-to-market accounting on post-retirement
benefits from these measures because these charges do not represent
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. In addition, inventory fair value
adjustments related to business acquisitions and other costs
related to business acquisitions are excluded because they only
occur due to an acquisition and the potential subsequent
repositioning of the business that could distort the performance
measures of costs used in producing our products. We include
estimated revenue from contracts acquired with various acquisitions
that will not be fully recognized due to business combination rules
because we believe our investors will use this adjustment as a
measure of the ongoing performance of the acquired businesses, as a
result of customers having historically entered into such contracts
for renewed and/or developmental support, although there can be no
assurance that customers will do so in the future.
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,
changes to the fair values assigned to contingent consideration,
other costs related to business acquisitions, and a significant
litigation matter. We use the related term “adjusted SG&A
percentage” to refer to adjusted SG&A expense as a percentage
of adjusted 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 and a significant litigation matter because
these charges do not represent what we believe our investors
consider to be costs that support our internal operating structure
and could distort the efficiencies of that structure. We exclude
changes to the fair values assigned to contingent consideration and
other costs related to business acquisitions because they only
occur due to an acquisition and the potential subsequent
repositioning of the business that could distort the performance
measures of 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. We
use the related term “adjusted R&D percentage” to refer to
adjusted R&D expense as a percentage of adjusted 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 these charges do not represent what we believe our
investors consider to be internal investments in R&D activities
and could distort our R&D investment level.
Adjusted Operating Income, Adjusted
Operating Profit Percentage, Adjusted Operating Profit Margin and
Adjusted Operating Margin
We use the term “adjusted operating income,” to refer to GAAP
operating income, excluding amortization of intangible assets,
inventory fair value adjustments related to business acquisitions,
changes to the fair values assigned to contingent consideration,
other costs related to business acquisitions, a significant
litigation matter, and restructuring and contract termination
charges, and including estimated revenue from contracts acquired in
various acquisitions that will not be fully recognized due to
business combination accounting rules. We also exclude adjustments
for mark-to-market accounting on post-retirement benefits,
therefore only our projected costs have been used to calculate our
non-GAAP measure. Adjusted operating income is calculated by
subtracting adjusted R&D expense and adjusted SG&A expense
from adjusted gross margin. We use the related terms “adjusted
operating profit percentage,” “adjusted operating profit margin,”
or “adjusted operating margin” to refer to adjusted operating
income as a percentage of adjusted 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 income 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 income to be costs of producing our
products, investments in technology and production or 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. We exclude
restructuring and contract termination charges because they tend 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. We include estimated revenue from
contracts acquired with various acquisitions that will not be fully
recognized due to business combination rules because we believe our
investors will use this adjustment as a measure of the ongoing
performance of the acquired businesses, as a result of customers
having historically entered into such contracts for renewed and/or
developmental support, although there can be no assurance that
customers will do so in the future.
Constant Currency Adjusted Operating
Income, Constant Currency Adjusted Operating Profit Percentage,
Constant Currency Adjusted Operating Profit Margin and Constant
Currency Adjusted Operating Margin
We use the term “constant currency adjusted operating income,”
to refer to GAAP operating income, excluding the impact from
foreign currency exchange rates on the current period, amortization
of intangible assets, inventory fair value adjustments related to
business acquisitions, changes to the fair values assigned to
contingent consideration, other costs related to business
acquisitions, a significant litigation matter, and restructuring
and contract termination charges, and including estimated revenue
from contracts acquired in various acquisitions that will not be
fully recognized due to business combination accounting rules. We
also exclude adjustments for mark-to-market accounting on
post-retirement benefits, therefore only our projected costs have
been used to calculate our non-GAAP measure. We use the related
terms “constant currency adjusted operating profit percentage,”
“constant currency adjusted operating profit margin,” or “constant
currency adjusted operating margin” to refer to constant currency
adjusted operating income as a percentage of constant currency
adjusted 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.
We believe our investors do not consider the items that we exclude
from constant currency adjusted operating income to be costs of
producing our products, investments in technology and production or
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. We exclude the
impact of foreign currency exchanges rates from these measures by
using the prior period’s foreign currency exchange rates for the
current period because foreign currency exchange rates are subject
to volatility and can obscure underlying trends. We exclude
restructuring and contract termination charges because they tend 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. We include estimated revenue from
contracts acquired with various acquisitions that will not be fully
recognized due to business combination rules because we believe our
investors will use this adjustment as a measure of the ongoing
performance of the acquired businesses, as a result of customers
having historically entered into such contracts for renewed and/or
developmental support, although there can be no assurance that
customers will do so in the future.
Adjusted Earnings Per Share and
Adjusted EPS
We use the term “adjusted earnings per share,” or “adjusted
EPS,” to refer to GAAP earnings per share, excluding discontinued
operations, amortization of intangible assets, inventory fair value
adjustments related to business acquisitions, changes to the fair
values assigned to contingent consideration, other costs related to
business acquisitions, a significant litigation matter,
restructuring and contract termination charges, and including
estimated revenue from contracts acquired in various acquisitions
that will not be fully recognized due to business combination
accounting rules. We also exclude adjustments for mark-to-market
accounting on post-retirement benefits, therefore only our
projected costs have been used to calculate our non-GAAP measure.
Adjusted earnings per share is calculated by subtracting the items
above included in adjusted gross margin, adjusted R&D expense,
adjusted SG&A expense, restructuring and contract termination
charges, and the provision for taxes related to these items from
GAAP earnings per share. 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,
changes to the fair values assigned to contingent consideration,
other costs related to business acquisitions, adjustments for
mark-to-market accounting on post-retirement benefits, a
significant litigation matter, and restructuring and contract
termination charges, as these items do not represent 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. We include estimated revenue from contracts acquired
with various acquisitions that will not be fully recognized due to
business combination rules because we believe our investors will
use this adjustment as a measure of the ongoing performance of the
acquired businesses, as a result of customers having historically
entered into such contracts for renewed and/or developmental
support, although there can be no assurance that customers will do
so in the future.
The first quarter tax effect on adjusted EPS for (i)
discontinued operations was a benefit of $0.00 in both 2015 and
2014, (ii) amortization of intangible assets was an expense of
$0.06 in both 2015 and 2014, (iii) inventory fair value adjustments
related to business acquisitions was an expense of $0.01 in 2015,
(iv) significant litigation matter was an expense of $0.01 in 2014,
and (v) restructuring and contract termination charges was an
expense of $0.01 in 2014. The first quarter tax effect on adjusted
EPS for each of the remaining items (changes to the fair values
assigned to contingent consideration, other costs related to
business acquisitions, adjustments for mark-to-market accounting on
post-retirement benefits, and the estimated revenue from contracts
acquired with various acquisitions that will not be fully
recognized due to business combination accounting rules) was $0.00
in both 2015 and 2014.
Constant Currency Adjusted Earnings Per
Share, Constant Currency Adjusted EPS and Constant Currency
Adjusted EPS Growth
We use the term “constant currency adjusted earnings per share,”
or “constant currency adjusted EPS,” to refer to GAAP earnings per
share, excluding the impact from foreign currency exchange rates on
the current period, discontinued operations, amortization of
intangible assets, inventory fair value adjustments related to
business acquisitions, changes to the fair values assigned to
contingent consideration, other costs related to business
acquisitions, a significant litigation matter, restructuring and
contract termination charges, and including estimated revenue from
contracts acquired in various acquisitions that will not be fully
recognized due to business combination accounting rules. We also
exclude adjustments for mark-to-market accounting on
post-retirement benefits, therefore only our projected costs have
been used to calculate our non-GAAP measure. We use the related
term "constant currency adjusted EPS growth" to refer to the
measure of comparing current period constant currency adjusted EPS
with the corresponding period of the prior year. 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. Constant currency 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 the impact of foreign currency exchanges
rates from these measures by using the prior period’s foreign
currency exchange rates for the current period because foreign
currency exchange rates are subject to volatility and can obscure
underlying trends. We exclude discontinued operations, amortization
of intangible assets, inventory fair value adjustments related to
business acquisitions, changes to the fair values assigned to
contingent consideration, other costs related to business
acquisitions, adjustments for mark-to-market accounting on
post-retirement benefits, a significant litigation matter, and
restructuring and contract termination charges, as these items do
not represent 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. We include estimated revenue from
contracts acquired with various acquisitions that will not be fully
recognized due to business combination rules because we believe our
investors will use this adjustment as a measure of the ongoing
performance of the acquired businesses, as a result of customers
having historically entered into such contracts for renewed and/or
developmental support, although there can be no assurance that
customers will do so in the future.
The first quarter tax effect on constant currency adjusted EPS
for (i) discontinued operations was a benefit of $0.00 in both 2015
and 2014, (ii) amortization of intangible assets was an expense of
$0.06 in both 2015 and 2014, (iii) inventory fair value adjustments
related to business acquisitions was an expense of $0.01 in 2015,
(iv) significant litigation matter was an expense of $0.01 in 2014,
(v) restructuring and contract termination charges was an expense
of $0.01 in 2014,and (vi) the impact from foreign currency exchange
rates on the current period by using the prior period’s foreign
currency exchange rates for the current period was an expense of
$0.02 in 2015. The first quarter tax effect on adjusted EPS for
each of the remaining items (changes to the fair values assigned to
contingent consideration, other costs related to business
acquisitions, adjustments for mark-to-market accounting on
post-retirement benefits, and the estimated revenue from contracts
acquired with various acquisitions that will not be fully
recognized due to business combination accounting rules) was $0.00
in both 2015 and 2014.
###
The tax effect for discontinued operations is calculated based
on the authoritative guidance in the Financial Accounting Standards
Board’s Accounting Standards Codification 740, Income Taxes. The
tax effect for amortization of intangible assets, inventory fair
value adjustments related to business acquisitions, changes to the
fair values assigned to contingent consideration, other costs
related to business acquisitions, a significant litigation matter,
adjustments for mark-to-market accounting on post-retirement
benefits, restructuring and contract termination charges, and the
estimated revenue from contracts acquired with various acquisitions
is calculated based on operational results and applicable
jurisdictional law, which contemplates tax rates currently in
effect to determine our tax provision. The tax effect for the
impact from foreign currency exchange rates on the current period
is calculated based on the average rate currently in effect to
determine our tax provision.
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.
PerkinElmer, Inc.Investor Relations:Tommy J. Thomas, CPA,
781-663-5889tommy.thomas@perkinelmer.comorMedia Contact:Fara
Goldberg, 781-663-5699fara.goldberg@perkinelmer.com
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