- GAAP revenue of $564 million;
Constant currency adjusted revenue growth 8%; Organic revenue
growth 4%
- GAAP earnings per share from
continuing operations of $0.43; Adjusted earnings per share of
$0.60 representing 12% constant currency adjusted EPS
growth
- Updates Full Year 2015
Guidance
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 second quarter ended June
28, 2015.
The Company reported GAAP earnings per share from continuing
operations of $0.43, compared to $0.46 in the second quarter of
2014. Revenue in the second quarter of 2015 was $563.9 million,
compared to $556.2 million in the second quarter of 2014. GAAP
operating income from continuing operations for the second quarter
of 2015 was $68.1 million, compared to $69.6 million in the second
quarter of 2014. GAAP operating profit margin from continuing
operations was 12.1% in the second quarter of 2015, compared to
12.5% in the second quarter of 2014.
Adjusted earnings per share was $0.60, compared to $0.59 in the
second quarter of 2014. Adjusted revenue increased 1% and organic
revenue increased 4%, compared to the second quarter of 2014.
Adjusted revenue was $564.1 million, compared to $556.6 million in
the second quarter of 2014. Adjusted operating income for the
second quarter of 2015 was $95.8 million, compared to $93.3 million
for the same period a year ago. Adjusted operating profit margin
was 17.0% as a percentage of adjusted revenue, as compared to 16.8%
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 accomplishments in the quarter and am
particularly encouraged by the broad based strength of our
financial performance through the first half of the year,” said
Robert Friel, chairman and chief executive officer of PerkinElmer.
“While we remain mindful of the economic uncertainties in various
parts of the world, our continued focus on execution and new
product innovation gives us the confidence in our ability to
deliver on our commitments in the second half.”
Cash Flow
For the six months ended June 28, 2015, GAAP operating cash flow
from continuing operations, after taking into account approximately
$22.0 million of voluntary pension funding, was $101.2 million as
compared to $122.6 million for the same period a year ago.
Financial Overview by Reporting Segment for the Second
Quarter 2015
Human Health
- Revenue of $341.5 million, as compared
to $342.5 million for the second quarter of 2014.
- Operating income of $60.5 million, as
compared to $57.9 million for the same period a year ago.
- Adjusted revenue of $341.7 million, as
compared to $343.0 million for the second quarter of 2014. Organic
revenue increased 5%.
- Adjusted operating income of $78.0
million, as compared to $76.3 million for the same period a year
ago.
- Adjusted operating profit margin was
22.8% as a percentage of adjusted revenue, an increase of
approximately 60 basis points as compared to the second quarter of
2014.
Environmental Health
- Revenue of $222.4 million, as compared
to $213.6 million for the second quarter of 2014. Revenue increased
4% and organic revenue increased 3%.
- Operating income of $19.4 million, as
compared to $25.6 million for the same period a year ago.
- Adjusted operating income of $28.9
million, as compared to $27.4 million for the same period a year
ago.
- Adjusted operating profit margin was
13.0% as a percentage of revenue, an increase of approximately 20
basis points as compared to the second quarter of 2014.
Financial Guidance – Full Year 2015 - Updated
For the full year 2015, the Company now forecasts GAAP earnings
per share from continuing operations in the range of $2.00 to $2.05
and on a non-GAAP basis, which is expected to include the
adjustments noted in the attached reconciliation, adjusted earnings
per share in the range of $2.55 to $2.60 representing 13-15%
constant currency adjusted earnings per share growth.
Conference Call Information
The Company will discuss its second quarter results and its
outlook for business trends in a conference call on July 30, 2015
at 5:00 p.m. Eastern Time (ET). To access the call, please dial
(617) 399-5127 prior to the scheduled conference call time and
provide the access code 13142415.
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, plans concerning
business development opportunities and divestitures and effects of
foreign currency exchange rates. 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 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.
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 CONDENSED CONSOLIDATED INCOME STATEMENTS
Three Months Ended
Six Months Ended (In thousands, except per
share data) June 28, 2015 June 29,
2014 June 28, 2015 June 29,
2014 Revenue $ 563,906 $ 556,170 $
1,090,807 $ 1,086,780 Cost of revenue 311,394 308,186
602,921 603,083 Selling, general and administrative expenses
146,742 147,253 292,615 299,690 Research and development expenses
32,683 30,352 64,803 59,731 Restructuring and contract termination
charges, net
4,956
742 4,956
2,877 Operating income from
continuing operations 68,131 69,637 125,512 121,399
Interest income (132 ) (151 ) (341 ) (245 ) Interest expense 9,302
9,079 18,690 18,298 Other expense, net
1,673
36 1,915
2,200 Income from
continuing operations, before income taxes 57,288 60,673 105,248
101,146 Provision for income taxes
8,292
8,670 15,941
14,192 Income from
continuing operations 48,996 52,003 89,307 86,954 Gain
(loss) from discontinued operations, before income taxes 35 (2,084
) (2 ) (3,114 ) Loss on disposition of discontinued operations,
before income taxes (10 ) (302 ) (23 ) (374 ) Provision for
(benefit from) income taxes on discontinued operations and
dispositions
47 (873
) (26 )
(1,248 ) (Loss) gain from
discontinued operations and dispositions (22 ) (1,513 ) 1
(2,240 )
Net income $
48,974 $ 50,490
$ 89,308 $
84,714 Diluted earnings per
share: Income from continuing operations $ 0.43 $ 0.46 $ 0.79 $
0.76 (Loss) gain from discontinued operations and
dispositions
(0.00 )
(0.01 ) 0.00
(0.02 ) Net income
$ 0.43 $
0.44 $ 0.79
$ 0.74 Weighted
average diluted shares of common stock outstanding 113,833 113,971
113,636 113,874 ABOVE PREPARED IN ACCORDANCE WITH
GAAP
Additional Supplemental Information
(1): (per share, continuing operations) GAAP
EPS from continuing operations $ 0.43 $ 0.46 $ 0.79 $ 0.76
Amortization of intangible assets, net of income taxes 0.12 0.12
0.23 0.24 Purchase accounting adjustments, net of income taxes 0.01
(0.01 ) 0.05 (0.00 ) Significant litigation matter, net of income
taxes - 0.02 - 0.04 Mark to market on postretirement benefits, net
of income taxes 0.01 - 0.01 (0.00 ) Restructuring and contract
termination charges, net of income taxes
0.03
0.00 0.03
0.02 Adjusted EPS
$ 0.60
$ 0.59
$ 1.10
$ 1.05 (1)
amounts may not sum due to rounding PerkinElmer, Inc.
and Subsidiaries REVENUE AND OPERATING INCOME (LOSS)
Three Months
Ended Six Months Ended (In
thousands, except percentages) June 28,
2015 June 29, 2014 June 28,
2015 June 29, 2014
Human Health Reported revenue $ 341,488 $ 342,543 $ 667,541
$ 672,576 Purchase accounting adjustments 195 426 464
1,878 Adjusted Revenue 341,683 342,969
668,005 674,454 Reported operating income from
continued operations 60,531 57,908 116,413 101,890 OP% 17.7 % 16.9
% 17.4 % 15.1 % Amortization of intangible assets 15,270 18,288
30,743 36,308 Purchase accounting adjustments 225 (337 ) 525 1,201
Acquisition-related costs 137 40 209 69 Restructuring and contract
termination charges, net 1,820 365 1,820 855
Adjusted operating income 77,983 76,264
149,710 140,323 Adjusted OP% 22.8 % 22.2 % 22.4 %
20.8 %
Environmental Health Reported revenue 222,418
213,627 423,266 414,204 Reported operating income from
continued operations 19,422 25,578 30,768 47,185 OP% 8.7 % 12.0 %
7.3 % 11.4 % Amortization of intangible assets 4,583 2,288 8,948
4,963 Purchase accounting adjustments 1,617 (830 ) 6,467 (830 )
Acquisition-related costs 93 30 216 112 Restructuring and contract
termination charges, net 3,136 377 3,136 2,022
Adjusted operating income 28,851 27,443 49,535
53,452 Adjusted OP% 13.0 % 12.8 % 11.7 % 12.9 %
Corporate Reported operating (loss) income (11,822 )
(13,849 ) (21,669 ) (27,676 ) Significant litigation matter - 3,418
- 6,645 Mark to market on postretirement benefits 832 -
1,066 (54 ) Adjusted operating loss (10,990 ) (10,431
) (20,603 ) (21,085 )
Continuing Operations
Reported revenue $ 563,906 $ 556,170 $ 1,090,807 $ 1,086,780
Purchase accounting adjustments 195 426 464
1,878 Adjusted Revenue 564,101 556,596
1,091,271 1,088,658 Reported operating income
from continued operations 68,131 69,637 125,512 121,399 OP% 12.1 %
12.5 % 11.5 % 11.2 % Amortization of intangible assets 19,853
20,576 39,691 41,271 Purchase accounting adjustments 1,842 (1,167 )
6,992 371 Acquisition-related costs 230 70 425 181 Significant
litigation matter - 3,418 - 6,645 Mark to market on postretirement
benefits 832 - 1,066 (54 ) Restructuring and contract termination
charges, net 4,956 742 4,956 2,877
Adjusted operating income $ 95,844 $ 93,276 $ 178,642
$ 172,690 Adjusted OP% 17.0 % 16.8 % 16.4 % 15.9 %
REPORTED REVENUE AND REPORTED OPERATING INCOME (LOSS)
PREPARED IN ACCORDANCE WITH GAAP
PerkinElmer, Inc. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands) June 28, 2015
December 28, 2014 Current assets: Cash
and cash equivalents $ 192,170 $ 174,821 Accounts receivable, net
425,698 470,563 Inventories, net 304,754 285,457 Other current
assets 147,706 137,710 Total current
assets 1,070,328 1,068,551
Property, plant and equipment: At cost 492,497 492,814 Accumulated
depreciation (326,180 ) (316,620 ) Property, plant
and equipment, net 166,317 176,194 Marketable securities and
investments 1,633 1,568 Intangible assets, net 454,251 490,265
Goodwill 2,275,898 2,284,077 Other assets, net 114,329
113,420 Total assets $ 4,082,756 $
4,134,075 Current liabilities: Current portion of
long-term debt $ 1,974 $ 1,075 Accounts payable 170,677 173,953
Short-term accrued restructuring and contract termination charges
15,402 17,124 Accrued expenses and other current liabilities
384,182 403,021 Current liabilities of discontinued operations
2,109 2,137 Total current liabilities
574,344 597,310 Long-term debt
986,452 1,051,892 Long-term liabilities 401,056
442,771 Total liabilities 1,961,852
2,091,973 Total stockholders' equity
2,120,904 2,042,102 Total liabilities and
stockholders' equity $ 4,082,756 $ 4,134,075
PREPARED IN ACCORDANCE WITH GAAP
PerkinElmer, Inc. and Subsidiaries CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS Three Months
Ended Six Months Ended
June
28,2015
June
29,2014
June
28,2015
June
29,2014
(In thousands) Operating activities: Net
income $ 48,974 $ 50,490 $ 89,308 $ 84,714 Less: loss (gain) from
discontinued operations and dispositions, net of income taxes
22 1,513 (1 ) 2,240
Income from continuing operations 48,996
52,003 89,307 86,954
Adjustments to reconcile income from
continuing operationsto net cash provided by continuing
operations:
Stock-based compensation 4,206 4,803 8,193 9,319 Restructuring and
contract termination charges, net 4,956 742 4,956 2,877
Amortization of deferred debt issuance costs and accretion of
discount 365 358 677 662 Depreciation and amortization 28,259
28,579 56,593 57,907 Amortization of acquired inventory revaluation
1,617 - 6,467 -
Changes in operating assets and
liabilities which (used) provided cash, excludingeffects from
companies purchased and divested:
Accounts receivable, net (6,739 ) (3,298 ) 30,843 23,434
Inventories, net (10,829 ) 1,982 (33,327 ) (15,737 ) Accounts
payable 10,794 (12,826 ) (1,541 ) (11,867 ) Accrued expenses and
other (18,112 ) (17,886 ) (61,007 )
(30,979 )
Net cash provided by operating activities of
continuing operations 63,513
54,457 101,161
122,570 Net cash used in operating activities of
discontinued operations (42 ) (62 ) (27 )
(464 )
Net cash provided by operating activities
63,471 54,395
101,134 122,106
Investing activities: Capital expenditures (5,620 ) (8,427 )
(10,099 ) (14,447 ) Changes in restricted cash balances - - 59 -
Proceeds from surrender of life insurance policies - 425 - 425
Activity related to acquisitions and investments, net of cash and
cash equivalents acquired (14,116 ) (350 )
(18,735 ) (350 )
Net cash used in investing activities of
continuing operations (19,736 )
(8,352 ) (28,775 )
(14,372 ) Net cash used in investing activities of
discontinued operations - (213 ) -
(213 )
Net cash used in investing activities
(19,736 ) (8,565 )
(28,775 ) (14,585 )
Financing Activities: Payments on revolving credit facility
(151,000 ) (137,000 ) (249,000 ) (232,000 ) Proceeds from revolving
credit facility 123,000 103,000 184,000 193,000 Payments of debt
issuance costs - (121 ) - (1,845 ) Settlement of hedges 7,905 -
23,468 - Net proceeds from (payments on) other credit facilities
607 (255 ) 344 (507 ) Proceeds from issuance of common stock under
stock plans 3,829 12,223 12,669 19,454 Purchases of common stock
(141 ) (35,060 ) (4,095 ) (38,976 ) Dividends paid (7,923 )
(7,922 ) (15,799 ) (15,809 )
Net cash used
in financing activities (23,723 )
(65,135 ) (48,413 )
(76,683 ) Effect of exchange rate changes on
cash and cash equivalents 3,234 450
(6,597 ) 1,178
Net increase
(decrease) in cash and cash equivalents 23,246
(18,855 ) 17,349 32,016 Cash and cash
equivalents at beginning of period 168,924
224,113 174,821 173,242
Cash
and cash equivalents at end of period $ 192,170
$ 205,258 $ 192,170
$ 205,258 PREPARED IN ACCORDANCE
WITH GAAP
PerkinElmer, Inc. and
Subsidiaries RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL
MEASURES (1)
PKI
(In millions, except per share data and percentages)
Three Months Ended
June 28,
2015
June 29,
2014
Adjusted revenue: Revenue $ 563.9 $ 556.2 Purchase
accounting adjustments 0.2
0.4
Adjusted revenue $ 564.1
$ 556.6
Adjusted gross margin: Gross margin $ 252.5 44.8 % $
248.0 44.6 % Amortization of intangible assets 10.8 1.9 % 12.3 2.2
% Purchase accounting adjustments 1.8
0.3 % 0.4
0.1 % Adjusted gross margin $ 265.1
47.0 % $ 260.7
46.8 %
Adjusted SG&A: SG&A $ 146.7
26.0 % $ 147.3 26.5 % Amortization of intangible assets (8.9 ) -1.6
% (8.1 ) -1.5 % Purchase accounting adjustments (0.0 ) 0.0 % 1.6
0.3 % Acquisition-related costs (0.2 ) 0.0 % (0.1 ) 0.0 %
Significant litigation matter - 0.0 % (3.4 ) -0.6 % Mark to market
on postretirement benefits (0.8 ) -0.1
% - 0.0 %
Adjusted SG&A $ 136.7 24.2 %
$ 137.2 24.7 %
Adjusted R&D: R&D $ 32.7 5.8 % $ 30.4 5.5 %
Amortization of intangible assets (0.1 )
0.0 % (0.1 )
0.0 % Adjusted R&D $ 32.6
5.8 % $ 30.2 5.4 %
Adjusted operating income: Operating income $ 68.1
12.1 % $ 69.6 12.5 % Amortization of intangible assets 19.9 3.5 %
20.6 3.7 % Purchase accounting adjustments 1.8 0.3 % (1.2 ) -0.2 %
Acquisition-related costs 0.2 0.0 % 0.1 0.0 % Significant
litigation matter - 0.0 % 3.4 0.6 % Mark to market on
postretirement benefits 0.8 0.1 % - 0.0 % Restructuring and
contract termination charges, net 5.0
0.9 % 0.7
0.1 % Adjusted operating income $ 95.8
17.0 % $ 93.3
16.8 %
PKI
Three Months Ended
June 28,
2015
June 29,
2014
Adjusted EPS: GAAP EPS $ 0.43 $ 0.44 Discontinued
operations, net of income taxes (0.00 )
(0.01 )
GAAP EPS from continuing operations 0.43 0.46 Amortization
of intangible assets, net of income taxes 0.12 0.12 Purchase
accounting adjustments, net of income taxes 0.01 (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 0.01 -
Restructuring and contract termination charges, net of income taxes
0.03
0.00 Adjusted EPS $ 0.60
$ 0.59
PKI
Three Months Ended
June 28,
2015
June 29,
2014
Constant currency adjusted EPS:
GAAP EPS $ 0.43 $ 0.44 Discontinued operations, net of income taxes
(0.00 )
(0.01 ) GAAP EPS from continuing
operations 0.43 0.46 Amortization of intangible assets, net of
income taxes 0.12 0.12 Purchase accounting adjustments, net of
income taxes 0.01 (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 0.01 - Restructuring and contract termination charges, net of
income taxes 0.03 0.00 Effect of currency changes from prior year
period 0.06
-
Constant currency adjusted EPS
$ 0.66 $
0.59
Human Health
Three Months Ended
June 28,
2015
June 29,
2014
Adjusted revenue: Revenue $ 341.5 $ 342.5 Purchase
accounting adjustments 0.2
0.4
Adjusted revenue $ 341.7
$ 343.0
Adjusted operating income: Operating income $ 60.5
17.7 % $ 57.9 16.9 % Amortization of intangible assets 15.3 4.5 %
18.3 5.3 % Purchase accounting adjustments 0.2 0.1 % (0.3 ) -0.1 %
Acquisition-related costs 0.1 0.0 % 0.0 0.0 % Restructuring and
contract termination charges, net 1.8
0.5 % 0.4
0.1 % Adjusted operating income $ 78.0
22.8 % $ 76.3
22.2 %
Environmental Health
Three Months Ended
June 28,
2015
June 29,
2014
Revenue: Revenue $ 222.4 $ 213.6
Adjusted
operating income: Operating income $ 19.4 8.7 % $ 25.6 12.0 %
Amortization of intangible assets 4.6 2.1 % 2.3 1.1 % Purchase
accounting adjustments 1.6 0.7 % (0.8 ) -0.4 % Acquisition-related
costs 0.1 0.0 % 0.0 0.0 % Restructuring and contract termination
charges, net 3.1 1.4 % 0.4 0.2 %
Adjusted operating income $ 28.9 13.0 % $ 27.4 12.8 %
(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
Six Months Ended
June 28,
2015
June 29,
2014
Adjusted revenue: Revenue $ 1,090.8 $ 1,086.8
Purchase accounting adjustments 0.5
1.9
Adjusted revenue $ 1,091.3
$ 1,088.7
Adjusted gross margin: Gross margin $
487.9 44.7 % $ 483.7 44.5 % Amortization of intangible assets 21.5
2.0 % 25.0 2.3 % Purchase accounting adjustments 7.0 0.6 % 1.9 0.2
% Mark to market on postretirement benefits 0.2
0.0 % (0.1 )
0.0 % Adjusted gross margin $ 516.6
47.3 % $ 510.6
46.9 %
Adjusted SG&A:
SG&A $ 292.6 26.8 % $ 299.7 27.6 % Amortization of intangible
assets (17.9 ) -1.6 % (16.0 ) -1.5 % Purchase accounting
adjustments (0.0 ) 0.0 % 1.5 0.1 % Acquisition-related costs (0.4 )
0.0 % (0.2 ) 0.0 % Significant litigation matter - 0.0 % (6.6 )
-0.6 % Mark to market on postretirement benefits (0.8 )
-0.1 % -
0.0 % Adjusted SG&A $ 273.4
25.1 % $ 278.4
25.6 %
Adjusted R&D: R&D $ 64.8
5.9 % $ 59.7 5.5 % Amortization of intangible assets (0.2 )
0.0 % (0.3 )
0.0 % Adjusted R&D $ 64.6
5.9 % $ 59.4
5.5 %
Adjusted operating income:
Operating income $ 125.5 11.5 % $ 121.4 11.2 % Amortization of
intangible assets 39.7 3.6 % 41.3 3.8 % Purchase accounting
adjustments 7.0 0.6 % 0.4 0.0 % Acquisition-related costs 0.4 0.0 %
0.2 0.0 % Significant litigation matter - 0.0 % 6.6 0.6 % Mark to
market on postretirement benefits 1.1 0.1 % (0.1 ) 0.0 %
Restructuring and contract termination charges, net 5.0
0.5 % 2.9
0.3 % Adjusted operating income $ 178.6
16.4 % $ 172.7
15.9 %
PKI
Six Months Ended
June 28,
2015
June 29,
2014
Adjusted EPS: GAAP EPS $ 0.79 $ 0.74 Discontinued
operations, net of income taxes 0.00
(0.02 )
GAAP EPS from continuing operations 0.79 0.76
Amortization of intangible assets, net of income taxes 0.23 0.24
Purchase accounting adjustments, net of income taxes 0.05 (0.00 )
Significant litigation matter, net of income taxes - 0.04
Acquisition-related costs, net of income taxes 0.00 0.00 Mark to
market on postretirement benefits, net of income taxes 0.01 (0.00 )
Restructuring and contract termination charges, net of income taxes
0.03
0.02 Adjusted EPS $ 1.10
$ 1.05
PKI
Twelve Months Ended
January 3,
2016
Adjusted EPS:
Projected
GAAP EPS from continuing operations $ 2.00 - $2.05 Amortization of
intangible assets, net of income taxes 0.46 Purchase accounting
adjustments, net of income taxes 0.05 Mark to market on
postretirement benefits, net of income taxes 0.01 Restructuring and
contract termination charges, net of income taxes
0.03 Adjusted EPS
$ 2.55 -
$2.60
PKI
Twelve Months Ended January 3,
2016 Constant Currency Adjusted EPS:
Projected GAAP EPS from continuing operations $ 2.00 - $2.05
Amortization of intangible assets, net of income taxes 0.46
Purchase accounting adjustments, net of income taxes 0.05 Mark to
market on postretirement benefits, net of income taxes 0.01
Restructuring and contract termination charges, net of income taxes
0.03 Effect of currency changes from prior year period
0.23
Constant currency adjusted EPS
$
2.78 - $2.83
Human Health
Six Months Ended
June 28,
2015
June 29,
2014
Adjusted revenue: Revenue $ 667.5 $ 672.6 Purchase
accounting adjustments 0.5
1.9
Adjusted revenue $ 668.0
$ 674.5
Adjusted operating income: Operating income $ 116.4
17.4 % $ 101.9 15.1 % Amortization of intangible assets 30.7 4.6 %
36.3 5.4 % Purchase accounting adjustments 0.5 0.1 % 1.2 0.2 %
Acquisition-related costs 0.2 0.0 % 0.1 0.0 % Restructuring and
contract termination charges, net 1.8
0.3 % 0.9
0.1 % Adjusted operating income $ 149.7
22.4 % $ 140.3
20.8 %
Environmental Health
Six Months Ended
June 28,
2015
June 29,
2014
Revenue: Revenue $ 423.3 $ 414.2
Adjusted
operating income: Operating income $ 30.8 7.3 % $ 47.2 11.4 %
Amortization of intangible assets 8.9 2.1 % 5.0 1.2 % Purchase
accounting adjustments 6.5 1.5 % (0.8 ) -0.2 % Acquisition-related
costs 0.2 0.1 % 0.1 0.0 % Restructuring and contract termination
charges, net 3.1 0.7 %
2.0 0.5 % Adjusted
operating income $ 49.5 11.7 %
$ 53.5 12.9 %
(1) amounts may not sum due to rounding
PerkinElmer, Inc. and Subsidiaries RECONCILIATION
OF GAAP TO NON-GAAP FINANCIAL MEASURES
PKI
Three Months Ended
June 28,
2015
Organic revenue growth: Reported revenue growth 1% Less:
effect of foreign exchange rates -7% Less: effect of acquisitions
including purchase accounting adjustments 4% Organic revenue
growth 4%
PKI
Three Months Ended
June 28,
2015
Constant currency adjusted revenue
growth:
Reported revenue growth 1% Less: effect of foreign exchange rates
-7%
Less: effect of purchase accounting
adjustments
0%
Constant currency adjusted revenue
growth
8%
Human Health
Three Months Ended
June 28,
2015
Organic revenue growth: Reported revenue growth 0% Less:
effect of foreign exchange rates -6% Less: effect of acquisitions
including purchase accounting adjustments 0% Organic revenue
growth 5%
Environmental Health
Three Months Ended
June 28,
2015
Organic revenue growth: Reported revenue growth 4% Less:
effect of foreign exchange rates -8% Less: effect of acquisitions
including purchase accounting adjustments 9% Organic revenue
growth 3%
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.
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 second quarter tax effect on adjusted EPS for (i)
discontinued operations was a provision of $0.00 in 2015 and a
benefit of $0.01 in 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 $0.00 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 2015 and $0.00 in 2014. The
second 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 full year tax effect on adjusted EPS for (i) discontinued
operations was a benefit of $0.00 in 2015 and a benefit of $0.01 in
2014, (ii) amortization of intangible assets was an expense of
$0.12 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 $0.02 in 2014,
(v) restructuring and contract termination charges was an expense
of $0.01 in both 2014 and 2015, and (vi) the estimated revenue from
contracts acquired with various acquisitions that will not be fully
recognized due to business combination accounting rules was an
expense of $0.00 in 2015 and $0.01 in 2014. The full year 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, and adjustments for
mark-to-market accounting on post-retirement benefits) was $0.00 in
both 2015 and 2014.
Constant Currency Adjusted Earnings Per
Share and Constant Currency Adjusted EPS
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 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 second quarter tax effect on adjusted EPS for (i)
discontinued operations was a provision of $0.00 in 2015 and a
benefit of $0.01 in 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 $0.00 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 2015 and $0.00 in 2014 and (vi)
the impact from foreign currency exchange rates on the current
period by using the prior period’s exchange rates for the current
period’s expense was an expense of $0.02 in 2015. The second
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 full year tax effect on adjusted EPS for (i) discontinued
operations was a benefit of $0.00 in 2015 and a benefit of $0.01 in
2014, (ii) amortization of intangible assets was an expense of
$0.12 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 $0.02 in 2014,
(v) restructuring and contract termination charges was an expense
of $0.01 in both 2014 and 2015, (vi) the estimated revenue from
contracts acquired with various acquisitions that will not be fully
recognized due to business combination accounting rules was an
expense of $0.00 in 2015 and $0.01 in 2014 and (vii) the impact
from foreign currency exchange rates on the current period by using
the prior period’s exchange rates for the current period’s expense
was an expense of $0.05 in 2015. The full year 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, and adjustments for mark-to-market
accounting on post-retirement benefits) 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.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20150730006674/en/
Investor Relations:PerkinElmer, Inc.Tommy J. Thomas, CPA,
781-663-5889tommy.thomas@perkinelmer.comorMedia
Contact:PerkinElmer, Inc.Fara Goldberg,
781-663-5699fara.goldberg@perkinelmer.com
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