PerkinElmer, Inc.
Feb 2, 2017
PDF

PerkinElmer Announces Financial Results for Fourth Quarter and Full Year 2016

WALTHAM, Mass.--(BUSINESS WIRE)-- PerkinElmer, Inc. (NYSE: PKI), a global leader focused on innovating for a healthier world, today reported financial results for the fourth quarter and full year ended January 1, 2017.

The Company announced the divestiture of its Medical Imaging business in the fourth quarter of 2016. With the announcement, the Company has moved the operating results of that business into discontinued operations thereby impacting comparability to previously issued financial guidance.

Fourth Quarter 2016

The Company reported GAAP earnings per share from continuing operations of $0.57 versus $0.56 in the comparable prior period of 2015. Revenue was $566.8 million versus $569.9 million in the comparable prior period of 2015 resulting in a decline of 1%. GAAP operating income from continuing operations was $80.4 million versus $77.2 million in the comparable prior period of 2015.

Adjusted earnings per share from continuing operations of $0.83, as compared to $0.81 in the comparable prior period in 2015. Adjusted revenue was $567.0 million versus $570.1 million in the comparable prior period of 2015 resulting in organic revenue growth of 1%. Adjusted operating income was $120.6 million versus $118.1 million in the comparable prior period of 2015.

Full Year 2016

The Company reported GAAP earnings per share from continuing operations of $1.96, compared to $1.67 in 2015 representing 17% earnings per share growth. GAAP revenue was $2.12 billion versus $2.10 billion in the comparable prior period representing 1% growth. GAAP operating income from continuing operations was $283.1 million as compared to $250.9 million in 2015, representing 13% operating income growth.

Adjusted earnings per share from continuing operations of $2.60, compared to $2.33 in 2015 representing 12% adjusted earnings per share growth. Adjusted revenue was $2.12 billion, as compared to $2.11 billion in 2015 resulting in organic revenue growth of 2%. Adjusted operating income was $393.6 million, compared to $363.2 million in 2015 representing 8% adjusted operating income growth.

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

"As we exit 2016, I am pleased with our performance in delivering strong margin expansion and cash flow growth while making significant progress against our strategic priorities," said Robert Friel, chairman and chief executive officer of PerkinElmer. "We have undertaken substantial steps to strengthen our organization, accelerate our operational capabilities and increase our focus on innovation, that better position us to improve revenue growth and increase profitability."

Cash Flow

For the full year, operating cash flow from continuing operations was $323.8 million as compared to $263.8 million in 2015.

Historical Financial Data

The Company's Annual Report on Form 10-K for the fiscal year ended January 1, 2017 will be the Company's first periodic report to reflect the Company's new segment structure and the exclusion of the Company's Medical Imaging business from continuing operations. Financial information relating to prior years will be retrospectively adjusted to reflect these changes.

The Company has made available on the Investor Relations section of its website (ir.perkinelmer.com) unaudited historical financial data that retrospectively reflect the Company's new segment structure and the exclusion of the Company's Medical Imaging business from continuing operations as well as schedules reconciling the Company's 2016 financial results and guidance.

Financial Overview by Reporting Segment for the Fourth Quarter and Full Year 2016

Discovery & Analytical Solutions

Diagnostics

Financial Guidance - Full Year 2017

For the full year 2017, the Company forecasts GAAP earnings per share from continuing operations in the range of $2.06 to $2.16 and on a non-GAAP basis, which is expected to include the adjustments noted in the attached reconciliation, adjusted earnings per share of $2.75 to $2.85.

Conference Call Information

The Company will discuss its fourth quarter and full year 2016 results and its outlook for business trends in a conference call on February 2, 2017 at 5:00 p.m. Eastern Time. To access the call, please dial (541) 797-2422 prior to the scheduled conference call time and provide the access code 40914697.

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) the approval of the Brexit Referendum in the United Kingdom; (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 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 innovating for a healthier world. The Company reported revenue of approximately $2.1 billion in 2016, has about 9,000 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 Twelve Months Ended
(In thousands, except per share data) January 1, 2017 January 3, 2016 January 1, 2017 January 3, 2016
 
 
Revenue $ 566,770 $ 569,903 $ 2,115,517 $ 2,104,823
 
Cost of revenue 290,607 302,172 1,102,164 1,140,592
Selling, general and administrative expenses 162,795 155,324 600,885 587,219
Research and development expenses 32,926 26,432 124,278 112,539
Restructuring and contract termination charges, net   -     8,752     5,124     13,547  
 
Operating income from continuing operations 80,442 77,223 283,066 250,926
 
Interest income (341 ) (185 ) (702 ) (673 )
Interest expense 10,750 9,433 41,528 37,997
Gain on disposition of businesses and assets, net - - (5,562 ) -
Other expense, net   847     663     3,734     4,795  
 
Income from continuing operations, before income taxes 69,186 67,312 244,068 208,807
 
Provision for income taxes   6,897     3,920     28,362     20,022  
 
Income from continuing operations 62,289 63,392 215,706 188,785
 
Income from discontinued operations, before income taxes 3,665 7,492 22,229 35,205
(Loss) gain on disposition of discontinued operations, before income taxes - (2 ) 619 (28 )
Provision for income taxes on discontinued operations and dispositions   1,105     2,628     4,255     11,537  
 
Income from discontinued operations and dispositions   2,560     4,862     18,593     23,640  
 
Net income $ 64,849   $ 68,254   $ 234,299   $ 212,425  
 
 
Diluted earnings per share:
Income from continuing operations $ 0.57 $ 0.56 $ 1.96 $ 1.67
 
Income from discontinued operations and dispositions   0.02     0.04     0.17     0.21  
 
Net income $ 0.59   $ 0.61   $ 2.12   $ 1.87  
 
 
Weighted average diluted shares of common stock outstanding 110,137 112,263 110,313 113,315
 
 
ABOVE PREPARED IN ACCORDANCE WITH GAAP
 
                 
Additional Supplemental Information (1):
(per share, continuing operations)
 
GAAP EPS from continuing operations $ 0.57 $ 0.56 $ 1.96 $ 1.67
Amortization of intangible assets 0.16 0.17 0.65 0.68
Purchase accounting adjustments 0.06 0.00 0.16 0.07

Significant litigation matter

- 0.01 - 0.01
Acquisition and divesiture-related expenses 0.01 0.00 0.01 0.01
Disposition of businesses - - (0.05 ) -
Mark to market on postretirement benefits 0.14 0.10 0.14 0.11
Restructuring and contract termination charges - 0.08 0.05 0.12
Tax on above items   (0.10 )   (0.12 )   (0.31 )   (0.33 )
Adjusted EPS $ 0.83   $ 0.81   $ 2.60   $ 2.33  
 

(1) amounts may not sum due to rounding

                 
 

 
PerkinElmer, Inc. and Subsidiaries
REVENUE AND OPERATING INCOME (LOSS)
         
 
 
Three Months Ended Twelve Months Ended
(In thousands, except percentages) January 1, 2017 January 3, 2016 January 1, 2017 January 3, 2016
 
 
DAS Reported revenue $ 409,944 $ 418,182 $ 1,512,984 $ 1,528,419
Purchase accounting adjustments   -     -     -     27  
Adjusted Revenue   409,944     418,182     1,512,984     1,528,446  
 
Reported operating income from continued operations 71,994 64,382 207,487 173,668
OP% 17.6 % 15.4 % 13.7 % 11.4 %
Amortization of intangible assets 13,018 14,064 53,342 54,612
Purchase accounting adjustments 16 11 457 7,352
Acquisition and divestiture-related expenses 160 65 513 346
Significant litigation matter - 812 - 812
Restructuring and contract termination charges, net   -     7,265     4,740     11,416  
Adjusted operating income   85,188     86,599     266,539     248,206  
Adjusted OP% 20.8 % 20.7 % 17.6 % 16.2 %
 
Diagnostics Reported revenue 156,826 151,721 602,533 576,404
Purchase accounting adjustments   184     169     711     770  
Adjusted Revenue   157,010     151,890     603,244     577,174  
 
Reported operating income from continued operations 34,033 36,977 138,909 135,572
OP% 21.7 % 24.4 % 23.1 % 23.5 %
Amortization of intangible assets 4,572 5,460 18,120 22,007
Purchase accounting adjustments 6,703 188 16,955 842
Acquisition and divestiture-related expenses 441 127 725 306
Restructuring and contract termination charges, net   -     1,487     384     2,131  
Adjusted operating income   45,749     44,239     175,093     160,858  
Adjusted OP% 29.1 % 29.1 % 29.0 % 27.9 %
 
Corporate Reported operating loss (25,585 ) (24,136 ) (63,330 ) (58,314 )
Mark to market on postretirement benefits   15,290     11,381     15,287     12,447  
Adjusted operating loss   (10,295 )   (12,755 )   (48,043 )   (45,867 )
 
 
Continuing Operations Reported revenue $ 566,770 $ 569,903 $ 2,115,517 $ 2,104,823
Purchase accounting adjustments   184     169     711     797  
Adjusted Revenue   566,954     570,072     2,116,228     2,105,620  
 
Reported operating income from continued operations 80,442 77,223 283,066 250,926
OP% 14.2 % 13.6 % 13.4 % 11.9 %
Amortization of intangible assets 17,590 19,524 71,462 76,619
Purchase accounting adjustments 6,719 199 17,412 8,194
Acquisition and divestiture-related expenses 601 192 1,238 652
Significant litigation matter - 812 - 812
Mark to market on postretirement benefits 15,290 11,381 15,287 12,447
Restructuring and contract termination charges, net   -     8,752     5,124     13,547  
Adjusted operating income $ 120,642   $ 118,083   $ 393,589   $ 363,197  
Adjusted OP% 21.3 % 20.7 % 18.6 % 17.2 %
 
 
REPORTED REVENUE AND REPORTED OPERATING INCOME (LOSS) PREPARED IN ACCORDANCE WITH GAAP
 

 
PerkinElmer, Inc. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
   
 
 
(In thousands) January 1, 2017 January 3, 2016
 
Current assets:
Cash and cash equivalents $ 359,265 $ 237,932
Accounts receivable, net 425,588 415,064
Inventories 246,847 259,486
Other current assets 99,246 64,347
Current assets of discontinued operations   58,985     56,332  
Total current assets   1,189,931     1,033,161  
 
Property, plant and equipment:
At cost 427,903 401,740
Accumulated depreciation   (282,409 )   (264,176 )
Property, plant and equipment, net 145,494 137,564
Marketable securities and investments 1,678 1,586
Intangible assets, net 420,224 485,637
Goodwill 2,247,966 2,236,863
Other assets, net 203,001 196,455
Long-term assets of discontinued operations   68,389     75,029  
Total assets $ 4,276,683   $ 4,166,295  
 
Current liabilities:
Current portion of long-term debt $ 1,172 $ 1,123
Accounts payable 168,033 140,980
Short-term accrued restructuring and contract termination charges 7,479 17,042
Accrued expenses and other current liabilities 399,700 382,334
Current liabilities of discontinued operations   26,971     20,006  
Total current liabilities   603,355     561,485  
 
Long-term debt 1,045,254 1,011,762
Long-term liabilities 459,544 465,490
Long-term liabilities of discontinued operations   14,960     17,117  
Total liabilities   2,123,113     2,055,854  
 
Total stockholders' equity   2,153,570     2,110,441  
Total liabilities and stockholders' equity $ 4,276,683   $ 4,166,295  
 
 
PREPARED IN ACCORDANCE WITH GAAP
 

 
PerkinElmer, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
       
 
Three Months Ended Twelve Months Ended
January 1, 2017   January 3, 2016   January 1, 2017   January 3, 2016
(In thousands)
 
Operating activities:
Net income $ 64,849 $ 68,254 $ 234,299 $ 212,425
Income from discontinued operations and dispositions, net of income taxes   (2,560 )   (4,862 )     (18,593 )   (23,640 )
Income from continuing operations   62,289     63,392       215,706     188,785  
Adjustments to reconcile income from continuing operations
to net cash provided by continuing operations:
Stock-based compensation 3,709 5,128 17,158 17,278
Restructuring and contract termination charges, net - 8,753 5,124 13,548
Depreciation and amortization 25,465 26,644 99,972 105,364
Pension and other postretirement expenses 14,511 9,381 14,511 9,381
Change in fair value of contingent consideration 6,505 - 16,183 -
Amortization of deferred debt financing costs and accretion of discounts 630 384 2,137 1,496
Gain on disposition of businesses and assets, net - - (5,562 ) -
Amortization of acquired inventory revaluation - - 396 7,275
Deferred taxes (6,526 ) (6,571 ) (6,526 ) (6,571 )
Contingencies and non-cash tax matters (291 ) (5,342 ) (291 ) (5,342 )
Excess tax benefit from exercise of common stock options - (2,435 ) - (2,435 )

Changes in assets and liabilities which provided (used) cash, excluding effects from companies purchased and divested:

Accounts receivable, net (24,040 ) (32,263 ) (18,960 ) 4,061
Inventories 20,775 18,479 6,752 (27,931 )
Accounts payable 24,852 6,350 30,716 (10,897 )
Accrued expenses and other   14,707     24,923       (53,540 )   (30,178 )
Net cash provided by operating activities of continuing operations 142,586 116,823 323,776 263,834
Net cash provided by operating activities of discontinued operations   6,136     8,416       26,839     23,264  
Net cash provided by operating activities   148,722     125,239       350,615     287,098  
 
Investing activities:
Capital expenditures (7,291 ) (11,577 ) (31,702 ) (28,218 )
Proceeds from surrender of life insurance policies - - 44 757
Changes in restricted cash balances (14,959 ) - (16,959 ) 59
Proceeds from disposition of businesses - - 21,000 -
Activity related to acquisitions and investments, net of cash and cash equivalents acquired   -     (53,305 )     (71,924 )   (72,040 )
Net cash used in investing activities of continuing operations (22,250 ) (64,882 ) (99,541 ) (99,442 )
Net cash used in investing activities of discontinued operations   (402 )   (241 )     (1,302 )   (1,414 )
Net cash used in investing activities   (22,652 )   (65,123 )     (100,843 )   (100,856 )
 
Financing Activities:
Payments on revolving credit facility (98,000 ) (114,000 ) (902,507 ) (485,000 )
Proceeds from revolving credit facility 45,000 104,000 420,507 451,000
Proceeds from sale of senior debt - - 546,190 -
Payments of debt issuance costs - - (7,868 ) -
Settlement of cash flow hedges (3,574 ) (504 ) (1,900 ) 18,706
Net payments on other credit facilities (261 ) (272 ) (1,096 ) (1,072 )
Payments for acquisition-related contingent consideration (42 ) (77 ) (155 ) (103 )
Excess tax benefit from exercise of common stock options - 2,435 - 2,435
Proceeds from issuance of common stock under stock plans 2,337 1,824 14,418 14,905
Purchases of common stock (161 ) (281 ) (151,801 ) (76,439 )
Dividends paid   (7,667 )   (7,834 )     (30,799 )   (31,571 )
Net cash used in financing activities   (62,368 )   (14,709 )     (115,011 )   (107,139 )
 
Effect of exchange rate changes on cash and cash equivalents   (16,100 )   (2,541 )     (13,428 )   (15,992 )
 
Net increase in cash and cash equivalents 47,602 42,866 121,333 63,111
Cash and cash equivalents at beginning of period   311,663     195,066       237,932     174,821  
Cash and cash equivalents at end of period $ 359,265   $ 237,932     $ 359,265   $ 237,932  
 
 
 
PREPARED IN ACCORDANCE WITH GAAP
 

PerkinElmer, Inc. and Subsidiaries
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
               
(In millions, except per share data and percentages)

PKI

Three Months Ended

January 1, 2017

   

January 3, 2016

 
 
Adjusted revenue:
Revenue $ 566.8 $ 569.9
Purchase accounting adjustments   0.2           0.2      
Adjusted revenue $ 567.0         $ 570.1      
 
Adjusted gross margin:
Gross margin $ 276.2 48.7 % $ 267.7 47.0 %
Amortization of intangible assets 7.0 1.2 % 11.0 1.9 %
Purchase accounting adjustments 0.2 0.0 % 0.2 0.0 %
Mark to market on postretirement benefits   0.4     0.1 %     1.0     0.2 %
Adjusted gross margin $ 283.8     50.0 %   $ 279.9     49.1 %
 
Adjusted SG&A:
SG&A $ 162.8 28.7 % $ 155.3 27.3 %
Amortization of intangible assets (10.6 ) -1.9 % (8.4 ) -1.5 %
Purchase accounting adjustments (6.5 ) -1.2 % (0.0 ) 0.0 %
Acquisition and divestiture related expenses (0.6 ) -0.1 % (0.2 ) 0.0 %
Significant litigation matter - 0.0 % (0.8 ) -0.1 %
Mark to market on postretirement benefits   (14.9 )   -2.6 %     (10.2 )   -1.8 %
Adjusted SG&A $ 130.2     23.0 %   $ 135.6     23.8 %
 
Adjusted R&D:
R&D $ 32.9 5.8 % $ 26.4 4.6 %
Amortization of intangible assets   (0.0 )   0.0 %     (0.1 )   0.0 %
Adjusted R&D $ 32.9     5.8 %   $ 26.2     4.6 %
 
Adjusted operating income:
Operating income $ 80.4 14.2 % $ 77.2 13.6 %
Amortization of intangible assets 17.6 3.1 % 19.5 3.4 %
Purchase accounting adjustments 6.7 1.2 % 0.2 0.0 %
Acquisition and divestiture-related expenses 0.6 0.1 % 0.2 0.0 %
Significant litigation matter - 0.0 % 0.8 0.1 %
Mark to market on postretirement benefits 15.3 2.7 % 11.4 2.0 %
Restructuring and contract termination charges, net   -     0.0 %     8.8     1.5 %
Adjusted operating income $ 120.6     21.3 %   $ 118.1     20.7 %
             
PKI
Three Months Ended

January 1, 2017

January 3, 2016

 
Adjusted EPS:
GAAP EPS $ 0.59 $ 0.61
Discontinued operations, net of income taxes   0.02           0.04      
GAAP EPS from continuing operations 0.57 0.56
Amortization of intangible assets 0.16 0.17
Purchase accounting adjustments 0.06 0.00
Significant litigation matter - 0.01
Acquisition and divestiture-related expenses 0.01 0.00
Mark to market on postretirement benefits 0.14 0.10
Restructuring and contract termination charges - 0.08
Tax on above items   (0.10 )         (0.12 )    
Adjusted EPS $ 0.83         $ 0.81      
             
DAS
Three Months Ended

January 1, 2017

January 3, 2016

 
Revenue:
Revenue $ 409.9 $ 418.2
 
Adjusted operating income:
Operating income $ 72.0 17.6 % $ 64.4 15.4 %
Amortization of intangible assets 13.0 3.2 % 14.1 3.4 %
Purchase accounting adjustments 0.0 0.0 % 0.0 0.0 %
Acquisition and divestiture-related expenses 0.2 0.0 % 0.1 0.0 %
Significant litigation matter - 0.0 % 0.8 0.2 %
Restructuring and contract termination charges, net   -     0.0 %     7.3     1.7 %
Adjusted operating income $ 85.2     20.8 %   $ 86.6     20.7 %
             
Diagnostics
Three Months Ended

January 1, 2017

January 3, 2016

 
Adjusted revenue:
Revenue $ 156.8 $ 151.7
Purchase accounting adjustments   0.2           0.2      
Adjusted revenue $ 157.0         $ 151.9      
 
Adjusted operating income:
Operating income $ 34.0 21.7 % $ 37.0 24.4 %
Amortization of intangible assets 4.6 2.9 % 5.5 3.6 %
Purchase accounting adjustments 6.7 4.3 % 0.2 0.1 %
Acquisition and divestiture-related expenses 0.4 0.3 % 0.1 0.1 %
Restructuring and contract termination charges, net   -     0.0 %     1.5     1.0 %
Adjusted operating income $ 45.7     29.1 %   $ 44.2     29.1 %
 

(1) amounts may not sum due to rounding

 
PerkinElmer, Inc. and Subsidiaries
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
               
(In millions, except per share data and percentages) PKI
Twelve Months Ended

January 1, 2017

   

January 3, 2016

 
Adjusted revenue:
Revenue $ 2,115.5 $ 2,104.8
Purchase accounting adjustments   0.7           0.8      
Adjusted revenue $ 2,116.2         $ 2,105.6      
 
Adjusted gross margin:
Gross margin $ 1,013.4 47.9 % $ 964.2 45.8 %
Amortization of intangible assets 30.3 1.4 % 42.4 2.0 %
Purchase accounting adjustments 1.2 0.1 % 8.1 0.4 %
Mark to market on postretirement benefits   0.4     0.0 %     1.2     0.1 %
Adjusted gross margin $ 1,045.2     49.4 %   $ 1,016.0     48.3 %
 
Adjusted SG&A:
SG&A $ 600.9 28.4 % $ 587.2 27.9 %
Amortization of intangible assets (40.7 ) -1.9 % (33.8 ) -1.6 %
Purchase accounting adjustments (16.2 ) -0.8 % (0.1 ) 0.0 %
Acquisition and divestiture-related expenses (1.2 ) -0.1 % (0.7 ) 0.0 %
Significant litigation matter - 0.0 % (0.8 ) 0.0 %
Mark to market on postretirement benefits   (14.9 )   -0.7 %     (11.1 )   -0.5 %
Adjusted SG&A $ 527.8     24.9 %   $ 540.8     25.7 %
 
Adjusted R&D:
R&D $ 124.3 5.9 % $ 112.5 5.3 %
Amortization of intangible assets (0.5 ) 0.0 % (0.5 ) 0.0 %
Mark to market on postretirement benefits   0.0     0.0 %     (0.1 )   0.0 %
Adjusted R&D $ 123.8     5.8 %   $ 111.9     5.3 %
 
Adjusted operating income:
Operating income $ 283.1 13.4 % $ 250.9 11.9 %
Amortization of intangible assets 71.5 3.4 % 76.6 3.6 %
Purchase accounting adjustments 17.4 0.8 % 8.2 0.4 %
Acquisition and divestiture-related expenses 1.2 0.1 % 0.7 0.0 %
Significant litigation matter - 0.0 % 0.8 0.0 %
Mark to market on postretirement benefits 15.3 0.7 % 12.4 0.6 %
Restructuring and contract termination charges, net   5.1     0.2 %     13.5     0.6 %
Adjusted operating income $ 393.6     18.6 %   $ 363.2     17.2 %
             
PKI
Twelve Months Ended

January 1, 2017

January 3, 2016

 
Adjusted EPS:
GAAP EPS $ 2.12 $ 1.87
Discontinued operations   0.17           0.21      
GAAP EPS from continuing operations 1.96 1.67
Amortization of intangible assets 0.65 0.68
Purchase accounting adjustments 0.16 0.07
Significant litigation matter - 0.01
Acquisition and divestiture-related expenses 0.01 0.01
Gain on disposition of businesses and assets, net (0.05 ) -
Mark to market on postretirement benefits 0.14 0.11
Restructuring and contract termination charges 0.05 0.12
Tax on above items   (0.31 )         (0.33 )    
Adjusted EPS $ 2.60         $ 2.33      
             
PKI

Twelve Months Ended
December 31, 2017

Adjusted EPS:

Projected

GAAP EPS from continuing operations $2.06 - $2.16
Amortization of intangible assets 0.63
Purchase accounting adjustments 0.11
Acquisition and divestiture-related expenses 0.17
Tax on above items         (0.22

)

 

 

Adjusted EPS         $2.75 - $2.85      
             
DAS
Twelve Months Ended

January 1, 2017

January 3, 2016

 
Adjusted revenue:
Revenue $ 1,513.0 $ 1,528.4
Purchase accounting adjustments   -           0.0      
Adjusted revenue $ 1,513.0         $ 1,528.4      
 
Adjusted operating income:
Operating income $ 207.5 13.7 % $ 173.7 11.4 %
Amortization of intangible assets 53.3 3.5 % 54.6 3.6 %
Purchase accounting adjustments 0.5 0.0 % 7.4 0.5 %
Acquisition and divestiture-related expenses 0.5 0.0 % 0.3 0.0 %
Significant litigation matter - 0.0 % 0.8 0.1 %
Restructuring and contract termination charges, net   4.7     0.3 %     11.4     0.7 %
Adjusted operating income $ 266.5     17.6 %   $ 248.2     16.2 %
             
Diagnostics
Twelve Months Ended

January 1, 2017

January 3, 2016

 
Adjusted revenue:
Revenue $ 602.5 $ 576.4
Purchase accounting adjustments   0.7           0.8      
Adjusted revenue $ 603.2         $ 577.2      
 
Adjusted operating income:
Operating income $ 138.9 23.1 % $ 135.6 23.5 %
Amortization of intangible assets 18.1 3.0 % 22.0 3.8 %
Purchase accounting adjustments 17.0 2.8 % 0.8 0.1 %
Acquisition and divestiture-related expenses 0.7 0.1 % 0.3 0.1 %
Restructuring and contract termination charges, net   0.4     0.1 %     2.1     0.4 %
Adjusted operating income $ 175.1     29.0 %   $ 160.9     27.9 %
 
 

(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
January 1, 2017

Organic revenue growth:
Reported revenue growth -1%
Less: effect of foreign exchange rates -1%
Less: effect of acquisitions including purchase accounting adjustments and impact of divested businesses 0%
Organic revenue growth 1%
 
 
DAS

Three Months Ended
January 1, 2017

Organic revenue growth:
Reported revenue growth -2%
Less: effect of foreign exchange rates -1%
Less: effect of acquisitions including purchase accounting adjustments and impact of divested businesses 1%
Organic revenue growth -1%
 
 
Diagnostics

Three Months Ended
January 1, 2017

Organic revenue growth:
Reported revenue growth 3%
Less: effect of foreign exchange rates -1%
Less: effect of acquisitions including purchase accounting adjustments and impact of divested businesses -3%
Organic revenue growth 7%
 

(1) amounts may not sum due to rounding

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

Twelve Months Ended
January 1, 2017

Organic revenue growth:
Reported revenue growth 1%
Less: effect of foreign exchange rates -1%
Less: effect of acquisitions including purchase accounting adjustments and impact of divested businesses 0%
Organic revenue growth 2%
 
 
DAS

Twelve Months Ended
January 1, 2017

Organic revenue growth:
Reported revenue growth -1%
Less: effect of foreign exchange rates -1%
Less: effect of acquisitions including purchase accounting adjustments and impact of divested businesses 0%
Organic revenue growth 0%
 
 
Diagnostics

Twelve Months Ended
January 1, 2017

Organic revenue growth:
Reported revenue growth 5%
Less: effect of foreign exchange rates -1%
Less: effect of acquisitions including purchase accounting adjustments and impact of divested businesses -2%
Organic revenue growth 8%
 

(1) amounts may not sum due to rounding

Explanation of Non-GAAP Financial Measures

We report our financial results in accordance with U. S. generally accepted accounting principles ("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 acquisitions, 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, 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 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 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 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 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 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 "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, gain on 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.

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, gain on disposition of businesses and assets, 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.

PerkinElmer, Inc.
Investor Relations:
Tommy J. Thomas, CPA 781-663-5889
tommy.thomas@perkinelmer.com
or
Media Contact:
Fara Goldberg, 781-663-5699
fara.goldberg@perkinelmer.com

Source: PerkinElmer, Inc.

News Provided by Acquire Media