UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549
______________

FORM 8-K
______________

CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934


Date of Report (Date of earliest event reported): April 25, 2019
______________

PerkinElmer, Inc.
(Exact Name of Registrant as Specified in its Charter)
______________

Massachusetts

001-05075

04-2052042

(State or Other Jurisdiction

of Incorporation or Organization)

(Commission

File Number)

(IRS Employer

Identification No.)

940 Winter Street, Waltham, Massachusetts

02451

(Address of Principal Executive Offices)

(Zip Code)

Registrant’s telephone number, including area code: (781) 663-6900

Not applicable.
(Former Name or Former Address, if Changed Since Last Report)
______________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company   

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

 

Item 2.02.  Results of Operations and Financial Condition

On April 25, 2019, PerkinElmer, Inc. announced its financial results for the first quarter ended March 31, 2019. The full text of the press release issued in connection with the announcement is furnished as Exhibit 99.1 to this Current Report on Form 8-K.  

The information in this Form 8-K (including Exhibit 99.1) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing.

Item 9.01.  Financial Statements and Exhibits

(d)

 

Exhibits

 

Exhibit No.

Description

99.1*

Press Release entitled “PerkinElmer Announces Financial Results for the First Quarter of 2019”, issued by PerkinElmer, Inc. on April 25, 2019.

 

* This exhibit relating to Item 2.02 shall be deemed to be furnished, and not filed.


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

PERKINELMER, INC.

Date:

April 25, 2019

By: /s/ James M. Mock

James M. Mock

Senior Vice President and Chief Financial Officer

Exhibit 99.1

PerkinElmer Announces Financial Results for the First Quarter of 2019

WALTHAM, Mass.--(BUSINESS WIRE)--April 25, 2019--PerkinElmer, Inc. (NYSE: PKI), a global leader committed to innovating for a healthier world, today reported financial results for the first quarter ended March 31, 2019.

The Company reported GAAP earnings per share from continuing operations of $0.32, as compared to GAAP earnings per share from continuing operations of $0.23 in the first quarter of 2018. GAAP revenue for the quarter was $648.7 million, as compared to $644.0 million in the first quarter of 2018. GAAP operating income from continuing operations for the quarter was $53.3 million, as compared to $39.9 million in the first quarter of 2018. GAAP operating profit margin was 8.2% as a percentage of revenue, as compared to 6.2% in the first quarter of 2018.

Adjusted earnings per share from continuing operations for the quarter was $0.69, as compared to $0.63 in the first quarter of 2018. Adjusted revenue for the quarter was $648.9 million, as compared to $644.2 million in the first quarter of 2018. Adjusted operating income from continuing operations for the quarter was $105.2 million, as compared to $95.9 million for the same period a year ago. Adjusted operating profit margin was 16.2% as a percentage of adjusted revenues, as compared to 14.9% in the first quarter of 2018.

Adjustments for the Company's non-GAAP financial measures have been noted in the attached reconciliations.

“We are pleased with our first quarter results of 5% organic growth and a corresponding 10% increase in adjusted EPS, driven by strong margin expansion. Generally speaking the markets are performing in-line with our expectations heading into the year,” said Robert Friel, chairman and chief executive officer of PerkinElmer. “I’m also very pleased to welcome the Cisbio Bioassays team into PerkinElmer. Their technical capabilities and product portfolio fit seamlessly and expand our leading drug discovery franchise.”


Financial Overview by Reporting Segment for the First Quarter of 2019

Discovery & Analytical Solutions

Diagnostics

Full Year 2019 Guidance

For the full year 2019, the Company now forecasts GAAP earnings per share from continuing operations in a range of $2.85 to $2.90 and, on a non-GAAP basis, which is expected to include the adjustments noted in the attached reconciliation, adjusted earnings per share of $4.02 to $4.07.


Acquisition

Today, PerkinElmer is excited to announce the acquisition of Cisbio Bioassays, a leading custom assay service provider. The addition of Cisbio bolsters PerkinElmer’s position in life sciences and diagnostics markets.

Founded in 1974, and headquartered in Codolet, France, Cisbio develops, manufactures and markets high quality kits and reagents for the life sciences and diagnostics markets. Cisbio’s proprietary approach and intellectual property allow the company to offer simpler and more sensitive quantification immunoassays compared to conventional assays on the market. The addition will expand PerkinElmer’s current offerings for life sciences researchers, which include a wide range of validated drug discovery screening reagents and kits for high throughput and profiling assays, as well as research-use only in vitro diagnostic kits. Specifically, Cisbio’s market-leading HTRF® screening technology can be integrated into PerkinElmer’s customers’ upstream workflows such as target identification and characterization, along with downstream applications such as lead optimization and validation. Cisbio also significantly expands PerkinElmer’s cell-based assay R&D capabilities, and from a commercial standpoint, PerkinElmer expects to be able to leverage Cisbio’s customer base in key growth regions including the Americas, Europe and China to expand its market reach for reagents.

Conference Call Information

The Company will discuss its first quarter 2019 results and its outlook for business trends in a conference call on April 25, 2019 at 5:00 p.m. Eastern Time. To access the call, please dial (720) 405-2250 prior to the scheduled conference call time and provide the access code 5586084.

A live audio webcast of the call will be available on the Investors 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, acquisitions 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, or cybercrime; (18) our ability to obtain future financing; (19) restrictions in our credit agreements; (20) the United Kingdom’s intention to withdraw from the European Union; (21) our ability to realize the full value of our intangible assets; (22) significant fluctuations in our stock price; (23) reduction or elimination of dividends on our common stock; and (24) 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 innovating for a healthier world. The Company reported revenue of approximately $2.8 billion in 2018, has about 12,500 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

(In thousands, except per share data)

March 31, 2019

April 1, 2018

 
 
Revenue $ 648,737

$

643,972
 
Cost of revenue 340,931 351,750
Selling, general and administrative expenses 198,857 199,725
Research and development expenses 47,980 45,984
Restructuring and contract termination charges, net   7,639     6,578  
 
Operating income from continuing operations 53,330 39,935
 
Interest income (283 ) (265 )
Interest expense 15,850 17,650
Loss on disposition of businesses and assets, net 2,133 -
Other income, net   (1,135 )   (5,955 )
 
Income from continuing operations, before income taxes 36,765 28,505
 
Provision for income taxes   1,312     2,470  
 
Income from continuing operations 35,453 26,035
 
Income from discontinued operations, before income taxes - -
Provision for income taxes on discontinued operations and dispositions   41     11  
 
Loss from discontinued operations and dispositions   (41 )   (11 )
 
Net income $ 35,412   $ 26,024  
 
 
Diluted earnings per share:
Income from continuing operations $ 0.32 $ 0.23
 
Loss from discontinued operations and dispositions   (0.00 )   (0.00 )
 
Net income $ 0.32   $ 0.23  
 
 
Weighted average shares of common stock outstanding 111,293 111,330
 
ABOVE PREPARED IN ACCORDANCE WITH GAAP
 
Additional Supplemental Information (1):
(per share, continuing operations)
 
GAAP EPS from continuing operations $ 0.32 $ 0.23
Amortization of intangible assets 0.35 0.30
Purchase accounting adjustments 0.03 0.09
Significant litigation matter 0.00 0.04
Acquisition and divestiture-related costs 0.02 0.02
Disposition of businesses and assets, net 0.02 -
Restructuring and contract termination charges, net 0.07 0.06
Tax on above items (0.12 ) (0.12 )
Impact of tax act   -     0.01  
Adjusted EPS $ 0.69   $ 0.63  
 

(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 31, 2019

April 1, 2018

 
DAS Reported revenue $ 388,833 $ 396,525
 
Reported operating income from continuing operations 36,927 36,197
OP% 9.5 % 9.1 %
Amortization of intangible assets 10,269 11,711
Purchase accounting adjustments 37 15
Acquisition and divestiture-related costs 543 38
Significant litigation matter 376 4,185
Restructuring and contract termination charges, net   6,180     5,676  
Adjusted operating income   54,332     57,822  
Adjusted OP% 14.0 % 14.6 %
 
Diagnostics Reported revenue 259,904 247,447
Purchase accounting adjustments   192     187  
Adjusted revenue   260,096     247,634  
 
Reported operating income from continuing operations 31,486 18,394
OP% 12.1 % 7.4 %
Amortization of intangible assets 28,458 21,189
Purchase accounting adjustments 3,571 9,528
Acquisition and divestiture-related costs 1,007 2,535
Significant litigation matter - 150
Restructuring and contract termination charges, net   1,459     902  
Adjusted operating income   65,981     52,698  
Adjusted OP% 25.4 % 21.3 %
 
Corporate Reported operating loss (15,083 ) (14,656 )
 
Continuing Operations Reported revenue $ 648,737 $ 643,972
Purchase accounting adjustments   192     187  
Adjusted revenue   648,929     644,159  
 
Reported operating income from continuing operations 53,330 39,935
OP% 8.2 % 6.2 %
Amortization of intangible assets 38,727 32,900
Purchase accounting adjustments 3,608 9,543
Acquisition and divestiture-related costs 1,550 2,573
Significant litigation matter 376 4,335
Restructuring and contract termination charges, net   7,639     6,578  
Adjusted operating income $ 105,230   $ 95,864  
Adjusted OP% 16.2 % 14.9 %
 
REPORTED REVENUE AND REPORTED OPERATING INCOME (LOSS) PREPARED IN ACCORDANCE WITH GAAP
 

 
PerkinElmer, Inc. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
       
(In thousands)

March 31, 2019

December 30, 2018

 
Current assets:
Cash and cash equivalents $ 134,252 $ 163,111
Accounts receivable, net 623,927 632,669
Inventories, net 376,507 338,347
Other current assets   112,960     100,507  
Total current assets   1,247,646     1,234,634  
 
Property, plant and equipment:
At cost 648,517 680,183
Accumulated depreciation   (355,375 )   (361,593 )
Property, plant and equipment, net 293,142 318,590
 
Operating lease right-of-use assets 191,251 -
Intangible assets, net 1,167,576 1,199,667
Goodwill 2,939,082 2,952,608
Other assets, net   247,800     270,023  
Total assets $ 6,086,497   $ 5,975,522  
 
Current liabilities:
Current portion of long-term debt $ 13,334 $ 14,856
Accounts payable 219,341 220,949
Short-term accrued restructuring and contract termination charges 9,238 4,834
Accrued expenses and other current liabilities 498,221 528,827
Current liabilities of discontinued operations   2,134     2,165  
Total current liabilities   742,268     771,631  
 
Long-term debt 1,848,935 1,876,624
Long-term liabilities 689,074 742,312
Operating lease liabilities   167,748     -  
Total liabilities   3,448,025     3,390,567  
 
Total stockholders' equity   2,638,472     2,584,955  
Total liabilities and stockholders' equity $ 6,086,497   $ 5,975,522  
 
PREPARED IN ACCORDANCE WITH GAAP
 

 
PerkinElmer, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
       

Three Months Ended

March 31, 2019

April 1, 2018

(In thousands)
 
Operating activities:
Net income $ 35,412 $ 26,024
Loss from discontinued operations and dispositions, net of income taxes   41     11  
Income from continuing operations   35,453     26,035  
Adjustments to reconcile income from continuing operations
to net cash provided by continuing operations:
Stock-based compensation 6,097 5,332
Restructuring and contract termination charges, net 7,639 6,578
Depreciation and amortization 50,469 44,453
Change in fair value of contingent consideration 3,102 117
Amortization of deferred debt financing costs and accretion of discounts 861 615
Loss on disposition of businesses and assets, net 2,133 -
Amortization of acquired inventory revaluation 283 9,208
Changes in assets and liabilities which provided (used) cash, excluding
effects from companies acquired:
Accounts receivable, net 7,864 (10,280 )
Inventories (38,441 ) (25,028 )
Accounts payable (1,451 ) (10,026 )
Accrued expenses and other   (79,325 )   (61,562 )
Net cash used in operating activities of continuing operations (5,316 ) (14,558 )
Net cash used in operating activities of discontinued operations   -     -  
Net cash used in operating activities   (5,316 )   (14,558 )
 
Investing activities:
Capital expenditures (19,875 ) (22,652 )
Purchases of investments (519 ) -
Purchases of licenses (5,000 ) -
Proceeds from surrender of life insurance policies - 72
Proceeds from disposition of businesses and assets 550 -
Payment of acquisitions, net of cash and cash equivalents acquired   (4,384 )   (1,087 )
Net cash used in investing activities of continuing operations (29,228 ) (23,667 )
Net cash provided by investing activities of discontinued operations   -     -  
Net cash used in investing activities   (29,228 )   (23,667 )
 
Financing Activities:
Payments on borrowings (152,000 ) (147,000 )
Proceeds from borrowings 179,000 204,000
Payments of debt issuance costs (88 ) -
Settlement of cash flow hedges (1,675 ) (36,169 )
Net payments on other credit facilities (3,476 ) (3,008 )
Payments for acquisition-related contingent consideration (12,100 ) -
Proceeds from issuance of common stock under stock plans 8,610 7,468
Purchases of common stock (5,293 ) (4,555 )
Dividends paid   (7,743 )   (7,727 )
Net cash provided by financing activities of continuing operations 5,235 13,009
Net cash used in financing activities of discontinued operations   -     -  
Net cash provided by financing activities 5,235 13,009
 
Effect of exchange rate changes on cash, cash equivalents, and restricted cash   450     3,850  
 
Net decrease in cash, cash equivalents, and restricted cash (28,859 ) (21,366 )
Cash, cash equivalents, and restricted cash at beginning of period   166,315     202,371  
Cash, cash equivalents, and restricted cash at end of period $ 137,456   $ 181,005  
 
Supplemental disclosure of cash flow information:
Reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total shown in the consolidated statements of cash flows:
Cash and cash equivalents 134,252 $ 180,800
Restricted cash included in other current assets   3,204     205  
Total cash, cash equivalents and restricted cash $ 137,456   $ 181,005  
 
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 31, 2019

   

April 1, 2018

       
Adjusted revenue:
Revenue $ 648.7 $ 644.0
Purchase accounting adjustments   0.2               0.2        
Adjusted revenue $ 648.9             $ 644.2        
 
Adjusted gross margin:
Gross margin $ 307.8 47.4 % $ 292.2 45.4 %
Amortization of intangible assets 14.8 2.3 % 11.7 1.8 %
Purchase accounting adjustments   0.5       0.1 %       9.4       1.5 %
Adjusted gross margin $ 323.1       49.8 %     $ 313.3       48.6 %
 
Adjusted SG&A:
SG&A $ 198.9 30.7 % $ 199.7 31.0 %
Amortization of intangible assets (23.9 ) -3.7 % (21.1 ) -3.3 %
Purchase accounting adjustments (3.1 ) -0.5 % (0.1 ) 0.0 %
Acquisition and divestiture-related expenses (1.6 ) -0.2 % (2.6 ) -0.4 %
Significant litigation matter   (0.4 )     -0.1 %       (4.3 )     -0.7 %
Adjusted SG&A $ 169.9       26.2 %     $ 171.6       26.6 %
 
Adjusted R&D:
R&D $ 48.0 7.4 % $ 46.0 7.1 %
Amortization of intangible assets   -       0.0 %       (0.1 )     0.0 %
Adjusted R&D $ 48.0       7.4 %     $ 45.9       7.1 %
 
Adjusted operating income:
Operating income $ 53.3 8.2 % $ 39.9 6.2 %
Amortization of intangible assets 38.7 6.0 % 32.9 5.1 %
Purchase accounting adjustments 3.6 0.6 % 9.5 1.5 %
Acquisition and divestiture-related expenses 1.6 0.2 % 2.6 0.4 %
Significant litigation matter 0.4 0.1 % 4.3 0.7 %
Restructuring and contract termination charges, net   7.6       1.2 %       6.6       1.0 %
Adjusted operating income $ 105.2       16.2 %     $ 95.9       14.9 %
 
PKI
Three Months Ended

March 31, 2019

April 1, 2018

 
Adjusted EPS:
GAAP EPS $ 0.32 $ 0.23
Discontinued operations, net of income taxes   (0.00 )             (0.00 )      
GAAP EPS from continuing operations 0.32 0.23
Amortization of intangible assets 0.35 0.30
Purchase accounting adjustments 0.03 0.09
Significant litigation matter 0.00 0.04
Acquisition and divestiture-related expenses 0.02 0.02
Loss on disposition of businesses and assets, net 0.02 -
Restructuring and contract termination charges, net 0.07 0.06
Tax on above items (0.12 ) (0.12 )
Impact of tax act   -               0.01        
Adjusted EPS $ 0.69             $ 0.63        
 
PKI
Twelve Months Ended

December 29, 2019

Adjusted EPS: Projected

GAAP EPS from continuing operations

 

$2.85 - $2.90

Amortization of intangible assets 1.39
Purchase accounting adjustments 0.06
Significant litigation matter 0.00
Acquisition and divestiture-related costs 0.02
Disposition of businesses and assets, net 0.02
Restructuring and contract termination charges, net 0.07
Tax on above items               (0.39 )      

Adjusted EPS

           

 

$4.02 - $4.07

       
 
DAS
Three Months Ended

March 31, 2019

April 1, 2018

 
Revenue $ 388.8 $ 396.5
 
Adjusted operating income:
Operating income $ 36.9 9.5 % $ 36.2 9.1 %
Amortization of intangible assets 10.3 2.6 % 11.7 3.0 %
Purchase accounting adjustments 0.0 0.0 % 0.0 0.0 %
Acquisition and divestiture-related expenses 0.5 0.1 % 0.0 0.0 %
Significant litigation matter 0.4 0.1 % 4.2 1.1 %
Restructuring and contract termination charges, net   6.2       1.6 %       5.7       1.4 %
Adjusted operating income $ 54.3       14.0 %     $ 57.8       14.6 %
 
Diagnostics
Three Months Ended

March 31, 2019

April 1, 2018

 
Adjusted revenue:
Revenue $ 259.9 $ 247.4
Purchase accounting adjustments   0.2               0.2        
Adjusted revenue $ 260.1             $ 247.6        
 
Adjusted operating income:
Operating income $ 31.5 12.1 % $ 18.4 7.4 %
Amortization of intangible assets 28.5 10.9 % 21.2 8.6 %
Purchase accounting adjustments 3.6 1.4 % 9.5 3.9 %
Acquisition and divestiture-related expenses 1.0 0.4 % 2.5 1.0 %
Significant litigation matter - 0.0 % 0.2 0.1 %
Restructuring and contract termination charges, net   1.5       0.6 %       0.9       0.4 %
Adjusted operating income $ 66.0       25.4 %     $ 52.7       21.3 %
 
(1) amounts may not sum due to rounding
 

 
PerkinElmer, Inc. and Subsidiaries
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (1)
       
 

 

PKI

Three Months Ended

March 31, 2019

Organic revenue growth:
Reported revenue growth 1%
Less: effect of foreign exchange rates -4%

Less: effect of acquisitions including purchase accounting adjustments and impact of divested businesses

0%
Organic revenue growth 5%
 
 

 

DAS

Three Months Ended

March 31, 2019

Organic revenue growth:
Reported revenue growth -2%
Less: effect of foreign exchange rates -3%
Less: effect of acquisitions including purchase accounting adjustments and impact of divested businesses 0%
Organic revenue growth 2%
 
 

 

Diagnostics

Three Months Ended

March 31, 2019

Organic revenue growth:
Reported revenue growth 5%
Less: effect of foreign exchange rates -4%
Less: effect of acquisitions including purchase accounting adjustments and impact of divested businesses 1%
Organic revenue growth 9%
 
(1) amounts may not sum due to rounding

Explanation of Non-GAAP Financial Measures

We report our financial results in accordance with GAAP. However, management believes that, in order to more fully understand our short-term and long-term financial and operational trends, investors may wish to consider the impact of certain non-cash, non-recurring or other items, which result from facts and circumstances that vary in frequency and impact on continuing operations. Accordingly, we present non-GAAP financial measures as a supplement to the financial measures we present in accordance with GAAP. These non-GAAP financial measures provide management with additional means to understand and evaluate the operating results and trends in our ongoing business by adjusting for certain non-cash expenses and other items that management believes might otherwise make comparisons of our ongoing business with prior periods more difficult, obscure trends in ongoing operations, or reduce management's ability to make useful forecasts. Management believes these non-GAAP financial measures provide additional means of evaluating period-over-period operating performance. In addition, management understands that some investors and financial analysts find this information helpful in analyzing our financial and operational performance and comparing this performance to our peers and competitors.

We use the term “adjusted revenue” to refer to GAAP revenue, including purchase accounting adjustments for revenue from contracts acquired in acquisitions that will not be fully recognized due to 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 use the term “organic revenue” to refer to GAAP revenue, excluding the effect of foreign currency changes and including acquisitions growth from the comparable prior period, and including purchase accounting adjustments for revenue from contracts acquired in acquisitions that will not be fully recognized due to accounting rules. We also exclude the impact of sales from divested businesses by deducting the effects of divested business revenue from the current and prior periods. 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 use the term “adjusted gross margin” to refer to GAAP gross margin, excluding amortization of intangible assets and inventory fair value adjustments related to business acquisitions, and including purchase accounting adjustments for revenue from contracts acquired in acquisitions that will not be fully recognized due to business combination accounting rules. We use the related term “adjusted gross margin percentage” to refer to adjusted gross margin as a percentage of adjusted revenue.


We use the term “adjusted SG&A expense” to refer to GAAP SG&A expense, excluding amortization of intangible assets, purchase accounting adjustments, acquisition and divestiture-related expenses, significant litigation matters and significant environmental charges. We use the related term “adjusted SG&A percentage” to refer to adjusted SG&A expense as a percentage of adjusted revenue.

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 use the term “adjusted operating income,” to refer to GAAP operating income, including revenue from contracts acquired in acquisitions that will not be fully recognized due to accounting rules, and excluding amortization of intangible assets, other purchase accounting adjustments, acquisition and divestiture-related expenses, significant litigation matters, significant environmental charges, and restructuring and contract termination charges. 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 use the term “adjusted earnings per share,” or “adjusted EPS,” to refer to GAAP earnings per share, including revenue from contracts acquired in acquisitions that will not be fully recognized due to accounting rules, and excluding discontinued operations, amortization of intangible assets, other purchase accounting adjustments, acquisition and divestiture-related expenses, significant litigation matters, significant environmental charges, disposition of businesses and assets, net, and restructuring and contract termination charges. 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 also adjust for any tax impact related to the above items, and exclude the impact of significant tax events.


Management includes or excludes the effect of each of the items identified below in the applicable non-GAAP financial measure referenced above for the reasons set forth below with respect to that item:


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 and divestitures, significant litigation matters, significant environmental charges, adjustments for mark-to-market accounting on post-retirement benefits, disposition of businesses and assets, net, restructuring and contract termination charges, and the 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 by which 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 is also used by our management to evaluate our operating performance, communicate our financial results to our Board of Directors, benchmark our results against our historical performance and the performance of our peers, evaluate investment opportunities including acquisitions and discontinued operations, and determine the bonus payments for senior management and employees.

CONTACT:
Investor Relations:
PerkinElmer, Inc.
Bryan Kipp (781) 663-5583
bryan.kipp@perkinelmer.com

Media Contact:
PerkinElmer, Inc.
Fara Goldberg (781) 663-5699
fara.goldberg@perkinelmer.com