PerkinElmer, Inc.
Jan 29, 2015
PDF

PerkinElmer Announces Financial Results for the Fourth Quarter of 2014

WALTHAM, Mass.--(BUSINESS WIRE)-- 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 fourth quarter ended December 28, 2014.

The Company reported GAAP earnings per share from continuing operations of $0.28, compared to $0.65 in the fourth quarter of 2013. Revenue in the fourth quarter of 2014 was $608.4 million, as compared to $591.9 million in the fourth quarter of 2013. GAAP operating income from continuing operations for the fourth quarter of 2014 was $30.6 million, as compared to operating income of $92.9 million in the fourth quarter of 2013.

Adjusted earnings per share was $0.85, compared to $0.74 in the fourth quarter of 2013. Adjusted revenue for the quarter grew 3% to $608.6 million, compared to $592.6 million in the fourth quarter of 2013. Adjusted operating income for the fourth quarter of 2014 was $130.6 million, compared to $115.5 million for the same period a year ago. Adjusted operating profit margin was 21.5% as a percentage of adjusted revenue, compared to 19.5% for the same period a year ago. Adjustments for the Company's non-GAAP financial measures have been noted in the attached reconciliations.

"I am very pleased with our strong finish to a year in which we exceeded our financial commitments and made significant progress against our strategic priorities," said Robert Friel, chairman and chief executive officer of PerkinElmer. "By leveraging the success of our recent growth and productivity investments, we believe we are well positioned to deliver profitable revenue growth in 2015 while continuing to address the critical health and environmental needs of our customers throughout the world."

Cash Flow

For the fourth quarter of 2014, operating cash flow from continuing operations was $96.6 million as compared to $69.0 million in the comparable period of 2013. Full year 2014 operating cash flow from continuing operations was $282.3 as compared to $157.2 million in 2013.

Financial Overview by Reporting Segment for the Fourth Quarter of 2014

Human Health

Environmental Health

Financial Guidance - Full Year 2015

For the full year 2015, the Company forecasts GAAP earnings per share from continuing operations in the range of $2.04 to $2.10 and on a non-GAAP basis, which is expected to include the adjustments noted in the attached reconciliation, adjusted earnings per share of $2.58 to $2.64. The guidance assumes that the stronger US dollar will negatively impact earnings per share for 2015 by approximately $0.15.

Conference Call Information

The Company will discuss its fourth quarter results and its outlook for business trends in a conference call on January 29, 2015 at 5:00 p.m. Eastern Time (ET). To access the call, please dial (617) 614-3472 prior to the scheduled conference call time and provide the access code 36880834.

A live audio webcast of the call will be available on the Investor section of the Company's Web site, www.perkinelmer.com. Please go to the site at least 15 minutes prior to the call in order to register, download, and install any necessary software. An archived version of the webcast will be posted on the Company's Web site for a two week period beginning approximately two hours after the call.

Use of Non-GAAP Financial Measures

In addition to financial measures prepared in accordance with generally accepted accounting principles (GAAP), this earnings announcement also contains non-GAAP financial measures. The reasons that we use these measures, a reconciliation of these measures to the most directly comparable GAAP measures, and other information relating to these measures are included below following our GAAP financial statements.

Factors Affecting Future Performance

This press release contains "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements relating to estimates and projections of future earnings per share, cash flow and revenue growth and other financial results, developments relating to our customers and end-markets, and plans concerning business development opportunities and divestitures. Words such as "believes," "intends," "anticipates," "plans," "expects," "projects," "forecasts," "will" and similar expressions, and references to guidance, are intended to identify forward-looking statements. Such statements are based on management's current assumptions and expectations and no assurances can be given that our assumptions or expectations will prove to be correct. A number of important risk factors could cause actual results to differ materially from the results described, implied or projected in any forward-looking statements. These factors include, without limitation: (1) markets into which we sell our products declining or not growing as anticipated; (2) fluctuations in the global economic and political environments; (3) our failure to introduce new products in a timely manner; (4) our ability to execute acquisitions and license technologies, or to successfully integrate acquired businesses and licensed technologies into our existing business or to make them profitable, or successfully divest businesses; (5) our failure to adequately protect our intellectual property; (6) the loss of any of our licenses or licensed rights; (7) our ability to compete effectively; (8) fluctuation in our quarterly operating results and our ability to adjust our operations to address unexpected changes; (9) significant disruption in third-party package delivery and import/export services or significant increases in prices for those services; (10) disruptions in the supply of raw materials and supplies; (11) the manufacture and sale of products exposing us to product liability claims; (12) our failure to maintain compliance with applicable government regulations; (13) regulatory changes; (14) our failure to comply with healthcare industry regulations; (15) economic, political and other risks associated with foreign operations; (16) our ability to retain key personnel; (17) significant disruption in our information technology systems; (18) our ability to obtain future financing; (19) restrictions in our credit agreements; (20) our ability to realize the full value of our intangible assets; (21) significant fluctuations in our stock price; (22) reduction or elimination of dividends on our common stock; and (23) other factors which we describe under the caption "Risk Factors" in our most recent 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
CONSOLIDATED INCOME STATEMENTS
       
 

Three Months Ended

Twelve Months Ended

(In thousands, except per share data)

December 28,
2014

December 29,
2013

December 28,
2014

December 29,
2013

 
 
Revenue $ 608,390 $ 591,870 $ 2,237,219 $ 2,157,586
 
Cost of revenue 330,788 315,100 1,232,611 1,181,444
Selling, general and administrative expenses 216,648 140,883 659,335 581,898
Research and development expenses 30,966 32,588 121,141 132,400

Asset impairment

- 158 - 158
Restructuring and contract termination charges, net   (579 )   10,211     13,390     33,892  
 
Operating income from continuing operations 30,567 92,930 210,742 227,794
 
Interest income (292 ) (362 ) (667 ) (650 )
Interest expense 9,063 14,614 36,270 49,924
Other expense, net   1,149     12,613     5,536     14,836  
 
Income from continuing operations, before income taxes 20,647 66,065 169,603 163,684
 
(Benefit from) provision for income taxes   (10,667 )   (7,390 )   8,437     (10,583 )
 
Income from continuing operations 31,314 73,455 161,166 174,267
 
Loss from discontinued operations, before income taxes (754 ) (8,249 ) (4,959 ) (10,352 )
Gain (loss) on disposition of discontinued operations, before income taxes 121 (2,267 ) (260 ) (1,810 )
Benefit from income taxes on discontinued operations and dispositions   (106 )   (3,934 )   (1,831 )   (5,107 )
 
Loss from discontinued operations and dispositions (527 ) (6,582 ) (3,388 ) (7,055 )
 
Net income $ 30,787   $ 66,873   $ 157,778   $ 167,212  
 
 
Diluted earnings per share:
Income from continuing operations $ 0.28 $ 0.65 $ 1.42 $ 1.54
 
Loss from discontinued operations and dispositions   (0.00 )   (0.06 )   (0.03 )   (0.06 )
 
Net income $ 0.27   $ 0.59   $ 1.39   $ 1.47  
 
 
Weighted average diluted shares of common stock outstanding 113,448 113,463 113,739 113,503
 
 
ABOVE PREPARED IN ACCORDANCE WITH GAAP
 
                 
Additional Supplemental Information (1):
(per share, continuing operations)
 
GAAP EPS from continuing operations $ 0.28 $ 0.65 $ 1.42 $ 1.54
Amortization of intangible assets, net of income taxes 0.11 0.12 0.47 0.51
Debt extinguishment costs, net of income taxes - 0.08 - 0.08
Purchase accounting adjustments, net of income taxes 0.01 0.02 0.01 0.05
Significant litigation matter, net of income taxes (0.00 ) - 0.03 -
Acquisition-related costs, net of income taxes 0.03 0.00 0.03 0.00
Significant environmental charges, net of income taxes (0.01 ) 0.02 (0.01 ) 0.02
Mark to market on postretirement benefits, net of income taxes 0.43 (0.13 ) 0.43 (0.13 )
Restructuring and contract termination charges, net of income taxes 0.01 0.05 0.09 0.19
Significant tax credits   -     (0.08 )   -     (0.16 )
Adjusted EPS $ 0.85   $ 0.74   $ 2.47   $ 2.10  
 
(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)

December 28,
2014

December 29,
2013

December 28,
2014

December 29,
2013

 
 
Human Health Reported revenue $ 336,183 $ 334,690 $ 1,243,402 $ 1,201,110
Purchase accounting adjustments 227   739   2,916   7,312  

Adjusted revenue

336,410   335,429   1,246,318   1,208,422  
 
Reported operating income from continued operations

78,428

55,352

220,165

156,452
OP%

23.3

% 16.5 % 17.7 % 13.0 %
Amortization of intangible assets 18,117 19,556 72,555 79,125
Asset impairment - 158 - 158
Purchase accounting adjustments (929 ) 2,873 1,108 8,919
Acquisition-related costs 7 - 94 (21 )
Restructuring and contract termination charges, net 84   7,308   6,876   22,136  
Adjusted operating income

95,707

  85,247  

300,798

  266,769  
Adjusted OP%

28.4

% 25.4 %

24.1

% 22.1 %
 
Environmental Health Reported revenue 272,207 257,180 993,817 956,476
Purchase accounting adjustments -   -   -   9  

Adjusted revenue

272,207   257,180   993,817   956,485  
 
Reported operating income from continued operations

35,162

35,130

109,129

97,052
OP%

12.9

% 13.7 %

11.0

% 10.1 %
Amortization of intangible assets 3,405 2,670 10,817 10,137
Purchase accounting adjustments 2,425 50 1,595 59
Acquisition-related costs 2,836 16 2,965 141
Restructuring and contract termination charges, net (663 ) 2,903   6,514   11,756  
Adjusted operating income

43,165

  40,769  

131,020

  119,145  
Adjusted OP%

15.9

% 15.9 %

13.2

% 12.5 %
 
Corporate Reported operating (loss) income

(83,023

) 2,448

(118,552

) (25,710 )
Significant litigation matter - - 6,645 -
Significant environmental charges (1,191 ) 4,625 (1,191 ) 4,625
Mark to market on postretirement benefits 75,973   (17,570 ) 75,919   (17,617 )
Adjusted operating loss

(8,241

) (10,497 )

(37,179

) (38,702 )
 
 
Continuing Operations Reported revenue $ 608,390 $ 591,870 $ 2,237,219 $ 2,157,586
Purchase accounting adjustments 227   739   2,916   7,321  

Adjusted revenue

608,617   592,609   2,240,135   2,164,907  
 
Reported operating income from continued operations 30,567 92,930 210,742 227,794
OP% 5.0 % 15.7 % 9.4 % 10.6 %
Amortization of intangible assets 21,522 22,226 83,372 89,262
Asset impairment - 158 - 158
Purchase accounting adjustments 1,496 2,923 2,703 8,978
Acquisition-related costs 2,843 16 3,059 120
Significant litigation matter - - 6,645 -
Significant environmental charges (1,191 ) 4,625 (1,191 ) 4,625
Mark to market on postretirement benefits 75,973 (17,570 ) 75,919 (17,617 )
Restructuring and contract termination charges, net (579 ) 10,211   13,390   33,892  
Adjusted operating income $ 130,631   $ 115,519   $ 394,639   $ 347,212  
Adjusted OP% 21.5 % 19.5 % 17.6 % 16.0 %
 
 
REPORTED REVENUE AND REPORTED OPERATING INCOME (LOSS) PREPARED IN ACCORDANCE WITH GAAP
 

 
PerkinElmer, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
         
 

Three Months Ended

Twelve Months Ended

December 28,
2014

December 29,
2013

December 28,
2014

December 29,
2013

(In thousands)
 
Operating activities:
Net income $ 30,787 $ 66,873 $ 157,778 $ 167,212
Less: loss from discontinued operations and dispositions, net of income taxes   527     6,582     3,388     7,055  
Income from continuing operations   31,314     73,455     161,166     174,267  

Adjustments to reconcile income from continuing operations to net cash provided by continuing operations:

Stock-based compensation 2,695 2,630 14,464 14,053
Restructuring and contract termination charges, net (579 ) 10,211 13,390 33,892
Amortization of deferred debt issuance costs, interest rate hedges and accretion of discounts 363 3,904 1,434 6,502
Depreciation and amortization 29,903 31,638 116,736 126,879
Losses (gains) on disposition 108 - 108 (1,566 )
Amortization of acquired inventory revaluation 2,425 - 2,425 203
Pension and other postretirement expenses 77,669 (18,176 ) 77,669 (18,176 )
Asset impairment - 158 - 158

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

Accounts receivable, net (43,830 ) (41,639 ) (16,989 ) (14,071 )
Inventories, net 3,894 17,849 (24,642 ) (14,171 )
Accounts payable 12,112 4,431 8,103 (1,083 )
Accrued expenses and other   (19,463 )   (15,481 )   (71,596 )   (149,639 )
Net cash provided by operating activities of continuing operations   96,611     68,980     282,268     157,248  
Net cash (used in) provided by operating activities of discontinued operations   (47 )   2,723     (671 )   1,343  
Net cash provided by operating activities   96,564     71,703     281,597     158,591  
 
Investing activities:
Capital expenditures (6,858 ) (7,427 ) (29,072 ) (38,981 )
Proceeds from dispositions of property, plant and equipment, net 2,531 - 2,531 52,202
Proceeds from surrender of life insurance policies - - 490 783
Activity related to acquisitions and investments, net of cash and cash equivalents acquired   (269,598 )   (8,650 )   (271,477 )   (15,699 )
Net cash (used in) provided by investing activities of continuing operations   (273,925 )   (16,077 )   (297,528 )   (1,695 )
Net cash provided by investing activities of discontinued operations   1,844     -     1,631     484  
Net cash used in investing activities   (272,081 )   (16,077 )   (295,897 )   (1,211 )
 
Financing Activities:
Payments on revolving credit facility (51,000 ) (109,000 ) (356,000 ) (538,000 )
Prepayment of long-term debt - (150,000 ) - (150,000 )
Proceeds from revolving credit facility 248,000 258,000 475,000 677,000
Premium on prepayment of debt - (11,119 ) - (11,119 )
Payments of debt financing costs - - (1,845 ) -
Settlement of cash flow hedges - - - 1,363
Net (payments on) proceeds from other credit facilities (11,450 ) (249 ) (12,675 ) 5,281
Payments for acquisition-related contingent consideration - - (855 ) -
Proceeds from issuance of common stock under stock plans 3,508 5,021 24,455 20,313
Purchases of common stock (26,525 ) (212 ) (65,529 ) (127,398 )
Dividends paid   (7,907 )   (7,867 )   (31,620 )   (31,600 )
Net cash provided by (used in) financing activities   154,626     (15,426 )   30,931     (154,160 )
 
Effect of exchange rate changes on cash and cash equivalents   (7,971 )   739     (15,052 )   (1,422 )
 
Net (decrease) increase in cash and cash equivalents (28,862 ) 40,939 1,579 1,798
Cash and cash equivalents at beginning of period   203,683     132,303     173,242     171,444  
Cash and cash equivalents at end of period $ 174,821   $ 173,242   $ 174,821   $ 173,242  
 
 
 
PREPARED IN ACCORDANCE WITH GAAP
 

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

December 28,
2014

December 29,
2013

 
Current assets:
Cash and cash equivalents $ 174,821 $ 173,242
Accounts receivable, net 470,563

 

466,749
Inventories, net 285,457 260,858
Other current assets 137,152 140,342
Current assets of discontinued operations   -     3,647  
Total current assets   1,067,993     1,044,838  
 
Property, plant and equipment:
At cost 492,814 498,111
Accumulated depreciation   (316,620 )   (314,923 )
Property, plant and equipment, net 176,194 183,188
Marketable securities and investments 1,568 1,319
Intangible assets, net 490,265 460,430
Goodwill 2,284,077 2,143,120
Other assets, net 114,429 111,633
Long-term assets of discontinued operations   -     2,184  
Total assets $ 4,134,526   $ 3,946,712  
 
Current liabilities:
Current portion of long-term debt $ 1,075 $ 2,624
Accounts payable 173,953 166,881
Short-term accrued restructuring and contract termination charges 17,124 26,374
Accrued expenses and other current liabilities 405,073 403,678
Current liabilities of discontinued operations   2,137     3,239  
Total current liabilities   599,362     602,796  
 
Long-term debt 1,051,892 932,104
Long-term accrued restructuring and contract termination charges 6,706 9,161
Long-term liabilities   434,464     408,164  
Total liabilities   2,092,424     1,952,225  
 
Total stockholders' equity   2,042,102     1,994,487  
Total liabilities and stockholders' equity $ 4,134,526   $ 3,946,712  
 
 
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

December 28, 2014

   

December 29, 2013

 
 
Adjusted revenue:
Revenue $ 608.4 $ 591.9
Purchase accounting adjustments   0.2           0.7      
Adjusted revenue $ 608.6         $ 592.6      
 
Adjusted gross margin:
Gross margin $ 277.6 45.6 % $ 276.8 46.8 %
Amortization of intangible assets 12.3 2.0 % 13.0 2.2 %
Purchase accounting adjustments 2.7 0.4 % 0.8 0.1 %
Mark to market on postretirement benefits   8.5     1.4 %     0.8     0.1 %
Adjusted gross margin $ 301.0     49.5 %   $ 291.4     49.2 %
 
Adjusted SG&A:
SG&A $ 216.6 35.6 % $ 140.9 23.8 %
Amortization of intangible assets (9.1 ) -1.5 % (9.1 ) -1.5 %
Purchase accounting adjustments 1.2 0.2 % (2.1 ) -0.4 %
Acquisition-related costs (2.8 ) -0.5 % (0.0 ) 0.0 %
Significant environmental charges 1.2 0.2 % (4.6 ) -0.8 %
Mark to market on postretirement benefits   (67.1 )   -11.0 %     18.1     3.1 %
Adjusted SG&A $ 140.0     23.0 %   $ 143.1     24.1 %
 
Adjusted R&D:
R&D $ 31.0 5.1 % $ 32.6 5.5 %
Amortization of intangible assets (0.1 ) 0.0 % (0.1 ) 0.0 %
Purchase accounting adjustments - 0.0 % (0.0 ) 0.0 %
Mark to market on post-retirement benefits   (0.4 )   -0.1 %     0.3     0.0 %
Adjusted R&D $ 30.4     5.0 %   $ 32.8     5.5 %
 
Adjusted operating income:
Operating income $ 30.6 5.0 % $ 92.9 15.7 %
Amortization of intangible assets 21.5 3.5 % 22.2 3.8 %
Asset impairments - 0.0 % 0.2 0.0 %
Purchase accounting adjustments 1.5 0.2 % 2.9 0.5 %
Acquisition-related costs 2.8 0.5 % 0.0 0.0 %
Significant environmental charges (1.2 ) -0.2 % 4.6 0.8 %
Mark to market on postretirement benefits 76.0 12.5 % (17.6 ) -3.0 %
Restructuring and contract termination charges, net   (0.6 )   -0.1 %     10.2     1.7 %
Adjusted operating income $ 130.6     21.5 %   $ 115.5     19.5 %
             
PKI
Three Months Ended

December 28, 2014

December 29, 2013

 
Adjusted EPS:
GAAP EPS $ 0.27 $ 0.59
Discontinued operations, net of income taxes   (0.00 )         (0.06 )    
GAAP EPS from continuing operations 0.28 0.65
Amortization of intangible assets, net of income taxes 0.11 0.12
Asset impairments, net of income taxes - 0.00
Debt extinguishment costs, net of income taxes - 0.08
Purchase accounting adjustments, net of income taxes 0.01 0.02
Significant litigation matter, net of income taxes (0.00 ) -
Acquisition-related costs, net of income taxes 0.03 0.00
Significant environmental charges, net of income taxes (0.01 ) 0.02
Mark to market on postretirement benefits, net of income taxes 0.43 (0.13 )
Significant tax credits - (0.08 )
Restructuring and contract termination charges, net of income taxes   0.01           0.05      
Adjusted EPS $ 0.85         $ 0.74      
             
Human Health
Three Months Ended

December 28, 2014

December 29, 2013

 
Adjusted revenue:
Revenue $ 336.2 $ 334.7
Purchase accounting adjustments   0.2           0.7      
Adjusted revenue $ 336.4         $ 335.4      
 
Adjusted operating income:
Operating income $

78.4

23.3

% $

55.4

16.5 %
Amortization of intangible assets 18.1 5.4 % 19.6 5.8 %
Asset impairments - 0.0 % 0.2 0.0 %
Purchase accounting adjustments (0.9 ) -0.3 % 2.9 0.9 %
Acquisition-related costs 0.0 0.0 % - 0.0 %
Restructuring and contract termination charges, net   0.1     0.0 %     7.3     2.2 %
Adjusted operating income $

95.7

   

28.4

%   $ 85.2     25.4 %
             
Environmental Health
Three Months Ended

December 28, 2014

December 29, 2013

 
Revenue:
Revenue $ 272.2 $ 257.2
Purchase accounting adjustments   -           -      
Adjusted revenue $ 272.2         $ 257.2      
 
Adjusted operating income:
Operating income $

35.2

12.9

% $ 35.1 13.7 %
Amortization of intangible assets 3.4 1.3 % 2.7 1.0 %
Purchase accounting adjustments 2.4 0.9 % 0.1 0.0 %
Acquisition-related costs 2.8 1.0 % 0.0 0.0 %
Restructuring and contract termination charges, net   (0.7 )   -0.2 %     2.9     1.1 %
Adjusted operating income $

43.2

   

15.9

%   $ 40.8     15.9 %
 
 
(1) amounts may not sum due to rounding
 

PerkinElmer, Inc. and Subsidiaries
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (1)
               
(In millions, except per share data and percentages) PKI
Twelve Months Ended

December 28, 2014

   

December 29, 2013

 
 
Adjusted revenue:
Revenue $ 2,237.2 $ 2,157.6
Purchase accounting adjustments   2.9           7.3      
Adjusted revenue $ 2,240.1         $ 2,164.9      
 
Adjusted gross margin:
Gross margin $ 1,004.6 44.9 % $ 976.1 45.2 %
Amortization of intangible assets 49.7 2.2 % 52.0 2.4 %
Purchase accounting adjustments 5.4 0.2 % 7.8 0.4 %
Mark to market on postretirement benefits   8.4     0.4 %     0.8     0.0 %
Adjusted gross margin $ 1,068.1     47.7 %   $ 1,036.7     47.9 %
 
Adjusted SG&A:
SG&A $ 659.3 29.5 % $ 581.9 27.0 %
Amortization of intangible assets (33.1 ) -1.5 % (36.9 ) -1.7 %
Purchase accounting adjustments 2.7 0.1 % (1.0 ) 0.0 %
Acquisition-related costs (3.1 ) -0.1 % (0.1 ) 0.0 %
Significant litigation matter (6.6 ) -0.3 % - 0.0 %
Significant environmental charges 1.2 0.1 % (4.6 ) -0.2 %
Mark to market on postretirement benefits   (67.1 )   -3.0 %     18.1     0.8 %
Adjusted SG&A $ 553.4     24.7 %   $ 557.3     25.7 %
 
Adjusted R&D:
R&D $ 121.1 5.4 % $ 132.4 6.1 %
Amortization of intangible assets (0.6 ) 0.0 % (0.3 ) 0.0 %
Purchase accounting adjustments - 0.0 % (0.2 ) 0.0 %
Mark to market on postretirement benefits   (0.4 )   0.0 %     0.3     0.0 %
Adjusted R&D $ 120.1     5.4 %   $ 132.2     6.1 %
 
Adjusted operating income:
Operating income $ 210.7 9.4 % $ 227.8 10.6 %
Amortization of intangible assets 83.4 3.7 % 89.3 4.1 %
Asset impairments - 0.0 % 0.2 0.0 %
Purchase accounting adjustments 2.7 0.1 % 9.0 0.4 %
Acquisition-related costs 3.1 0.1 % 0.1 0.0 %
Significant litigation matter 6.6 0.3 % - 0.0 %
Significant environmental charges (1.2 ) -0.1 % 4.6 0.2 %
Mark to market on postretirement benefits 75.9 3.4 % (17.6 ) -0.8 %
Restructuring and contract termination charges, net   13.4     0.6 %     33.9     1.6 %
Adjusted operating income $ 394.6     17.6 %   $ 347.2     16.0 %
             
PKI
Twelve Months Ended

December 28, 2014

December 29, 2013

 
Adjusted EPS:
GAAP EPS $ 1.39 $ 1.47
Discontinued operations, net of income taxes   (0.03 )         (0.06 )    
GAAP EPS from continuing operations 1.42 1.54
Amortization of intangible assets, net of income taxes 0.47 0.51
Asset impairments, net of income taxes - 0.00
Debt extinguishment costs, net of income taxes - 0.08
Purchase accounting adjustments, net of income taxes 0.01 0.05
Significant litigation matter, net of income taxes 0.03 -
Acquisition-related costs, net of income taxes 0.03 0.00
Significant environmental charges, net of income taxes (0.01 ) 0.02
Mark to market on postretirement benefits, net of income taxes 0.43 (0.13 )
Restructuring and contract termination charges, net of income taxes 0.09 0.19
Significant tax credits   -           (0.16 )    
Adjusted EPS $ 2.47         $ 2.10      
             
PKI
Twelve Months Ended

January 3, 2016

Adjusted EPS: Projected
GAAP EPS from continuing operations $

2.04 - $2.10

Amortization of intangible assets, net of income taxes 0.49
Purchase accounting adjustments, net of income taxes 0.05
Mark to market on postretirement benefits, net of income taxes           0.00      
Adjusted EPS         $

2.58 - $2.64

     
             
Human Health
Twelve Months Ended

December 28, 2014

December 29, 2013

 
Adjusted revenue:
Revenue $ 1,243.4 $ 1,201.1
Purchase accounting adjustments   2.9           7.3      
Adjusted revenue $ 1,246.3         $ 1,208.4      
 
Adjusted operating income:
Operating income $

220.2

17.7

% $ 156.5 13.0 %
Amortization of intangible assets 72.6 5.8 % 79.1 6.6 %
Asset impairments - 0.0 % 0.2 0.0 %
Purchase accounting adjustments 1.1 0.1 % 8.9 0.7 %
Acquisition-related costs 0.1 0.0 % (0.0 ) 0.0 %
Restructuring and contract termination charges, net   6.9     0.6 %     22.1     1.8 %
Adjusted operating income $

300.8

   

24.1

%   $ 266.8     22.1 %
             
Environmental Health
Twelve Months Ended

December 28, 2014

December 29, 2013

 
Revenue:
Revenue $ 993.8 $ 956.5
Purchase accounting adjustments   -           0.0      
Adjusted revenue $ 993.8         $ 956.5      
 
Adjusted operating income:
Operating income $

109.1

11.0

% $ 97.1 10.1 %
Amortization of intangible assets 10.8 1.1 % 10.1 1.1 %
Purchase accounting adjustments 1.6 0.2 % 0.1 0.0 %
Acquisition-related costs 3.0 0.3 % 0.1 0.0 %
Restructuring and contract termination charges, net   6.5     0.7 %     11.8     1.2 %
Adjusted operating income $

131.0

   

13.2

%   $ 119.1     12.5 %
 
 
(1) amounts may not sum due to rounding
 

 

PerkinElmer, Inc. and Subsidiaries

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
 
 
PKI
Three Months Ended

December 28, 2014

Organic revenue growth:
Reported revenue growth 3%
Less: effect of foreign exchange rates -3%
Less: effect of acquisitions including purchase accounting adjustments 1%
Organic revenue growth 5%
 
 
Human Health
Three Months Ended

December 28, 2014

Organic revenue growth:
Reported revenue growth 0%
Less: effect of foreign exchange rates -3%
Less: effect of acquisitions including purchase accounting adjustments 0%
Organic revenue growth 3%
 
 
Environmental Health
Three Months Ended

December 28, 2014

Organic revenue growth:
Reported revenue growth 6%
Less: effect of foreign exchange rates -4%
Less: effect of acquisitions including purchase accounting adjustments 3%
Organic revenue growth 7%
 

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.

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. 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.

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. 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.

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, a significant litigation matter, and significant environmental matters. 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 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, a significant litigation matter, significant environmental matters, 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 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 and other costs related to business acquisitions. 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 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 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 internal investments in R&D activities and could distort our R&D investment level. We exclude 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 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, significant environmental matters, asset impairments, 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 asset impairments and 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. 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.

Adjusted Earnings Per Share

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, significant environmental matters, asset impairments, restructuring and contract termination charges, significant debt extinguishment charges, and significant tax credits, 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, the provision for taxes related to these items, and significant tax credits 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, significant environmental matters, asset impairments, restructuring and contract termination charges, significant debt extinguishment charges, and significant tax credits, 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. 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.

The fourth quarter tax effect on adjusted EPS for (i) discontinued operations was a benefit of $0.00 in 2014 and a benefit of $0.03 in 2013, (ii) amortization of intangible assets was an expense of $0.08 in 2014 and an expense of $0.07 in 2013, (iii) inventory fair value adjustments related to business acquisitions was an expense of $0.01 in 2014, (iv) significant environmental charges was a benefit of $0.00 in 2014 and an expense of $0.02 in 2013, (v) restructuring and contract termination charges was a benefit of $0.01 in 2014 and an expense of $0.04 in 2013, (vi) significant debt extinguishment charges was an expense of $0.05 in 2013, (vii) significant tax credits was a benefit of $0.08 in 2013, and (viii) adjustments for mark-to-market accounting on post-retirement benefits was an expense of $0.24 in 2014 and a benefit of $0.03 in 2013. The fourth 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, asset impairments, 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 2014 and 2013.

The full year tax effect on adjusted EPS through the fourth quarter for (i) discontinued operations was a benefit of $0.02 in 2014 and a benefit of $0.04 in 2013, (ii) amortization of intangible assets was an expense of $0.27 in 2014 and an expense of $0.28 in 2013, (iii) inventory fair value adjustments related to business acquisitions was an expense of $0.01 in 2014 and an expense of $0.00 in 2013, (iv) a significant litigation matter was an expense of $0.02 in 2014, (v) significant environmental charges was a benefit of $0.00 in 2014 and an expense of $0.02 in 2013, (vi) restructuring and contract termination charges was an expense of $0.02 in 2014 and an expense of $0.10 in 2013, (vii) significant debt extinguishment charges was an expense of $0.05 in 2013, (viii) significant tax credits was a benefit of $0.16 in 2013, (ix) 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 $0.01 in 2014 and an expense of $0.02 in 2013, and (x) adjustments for mark-to-market accounting on post-retirement benefits was an expense of $0.24 in 2014 and a benefit of $0.03 in 2013. The full year tax effect on adjusted EPS through the fourth quarter for each of the remaining items (changes to the fair values assigned to contingent consideration, other costs related to business acquisitions, and asset impairments) was $0.00 in both 2014 and 2013.

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, significant environmental matters, adjustments for mark-to-market accounting on post-retirement benefits, asset impairments, restructuring and contract termination charges, significant debt extinguishment charges, significant tax credits, 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 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.

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

Source: PerkinElmer, Inc.

News Provided by Acquire Media