PerkinElmer, Inc.
Feb 4, 2016
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PerkinElmer Announces Financial Results for Fourth Quarter and Full Year 2015

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 and full year ended January 3, 2016.

Fourth Quarter 2015

The Company reported GAAP earnings per share from continuing operations of $0.61 versus $0.28 in the comparable prior period of 2014. Revenue was $608.1 million versus $608.4 million in the comparable prior period of 2014. GAAP operating income from continuing operations was $84.7 million versus $30.6 million in the comparable prior period of 2014.

Adjusted earnings per share of $0.86, representing constant currency adjusted earnings per share growth of 11%, as compared to $0.85 in the comparable prior period in 2014. Adjusted earnings per share was negatively impacted by $0.08 of foreign currency headwinds versus the comparable prior period representing an incremental $0.02 per share versus prior guidance. Adjusted revenue was $608.3 million versus $608.6 million in the comparable prior period of 2014 negatively impacted by foreign currency headwinds of $32 million, $5 million more than expected in our prior guidance. Adjusted operating income was $126.0 million negatively impacted by approximately $11 million of foreign currency headwinds versus $130.6 million in the comparable prior period of 2014.

Full Year 2015

The Company reported GAAP earnings per share from continuing operations of $1.88, compared to $1.42 in 2014. GAAP operating income from continuing operations was $286.1 million as compared to $210.7 million in 2014.

Adjusted earnings per share of $2.55, representing 13% constant currency adjusted earnings per share growth, as compared to $2.47 in 2014. Negative foreign exchange rates impacted full year adjusted earnings per share by approximately $0.25 as compared to 2014. Adjusted revenue was $2.26 billion, representing 7% constant currency adjusted revenue growth as compared to $2.24 billion in 2014, negatively impacted by approximately $142 million of foreign currency headwinds. Adjusted operating income was $400.4 million, as compared to $394.6 million in 2014.

Adjustments for the Company's non-GAAP financial measures have been noted in the attached reconciliations. Certain of these non-GAAP financial measures are presented on a ‘constant currency' basis, so that financial results can be viewed without the effects of fluctuations in foreign currency exchange rates, allowing for a period-to-period comparison of underlying business performance.

"I am very pleased with our financial results for the year, as we delivered strong performance for our shareholders while supporting our customers with award winning innovations and differentiated solutions for their unique needs," said Robert Friel, chairman and chief executive officer of PerkinElmer. "We are well positioned heading into 2016 and will look to build on our core strengths while offering world class products and services for our customers."

Cash Flow

For the fourth quarter of 2015, operating cash flow from continuing operations was $125.7 million, a strong 30% increase as compared to $96.6 million in the comparable prior period of 2014. For the full year, operating cash flow from continuing operations was $287.6 million which includes $20.0 million in voluntary pension payments as compared to $282.3 million in 2014.

Financial Overview by Reporting Segment for the Fourth Quarter and Full Year of 2015

Human Health

Environmental Health

Financial Guidance - Full Year 2016

For the full year 2016, the Company forecasts GAAP earnings per share from continuing operations in the range of $2.21 to $2.31 and on a non-GAAP basis, which is expected to include the adjustments noted in the attached reconciliation, adjusted earnings per share of $2.65 to $2.75.

Conference Call Information

The Company will discuss its fourth quarter and full year 2015 results and its outlook for business trends in a conference call on February 4, 2016 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 12028033.

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 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 $2.3 billion in 2015, has about 8,000 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 3, 2016

December 28,
2014

January 3, 2016

December 28,
2014

 
 
Revenue $ 608,116 $ 608,390 $ 2,262,359 $ 2,237,219
 
Cost of revenue 326,105 330,788 1,237,859 1,232,611
Selling, general and administrative expenses 158,505 216,648 598,848 659,335
Research and development expenses 30,030 30,966 125,928 121,141
Restructuring and contract termination charges, net   8,752     (579 )   13,590     13,390  
 
Operating income from continuing operations 84,724 30,567 286,134 210,742
 
Interest income (185 ) (292 ) (673 ) (667 )
Interest expense 9,433 9,063 37,997 36,270
Other expense, net   663     1,149     4,795     5,536  
 
Income from continuing operations, before income taxes 74,813 20,647 244,015 169,603
 
Provision for (benefit from) income taxes   6,329     (10,667 )   31,327     8,437  
 
Income from continuing operations 68,484 31,314 212,688 161,166
 
Loss from discontinued operations, before income taxes (9 ) (754 ) (3 ) (4,959 )
(Loss) gain on disposition of discontinued operations, before income taxes (2 ) 121 (28 ) (260 )
Provision for (benefit from) income taxes on discontinued operations and dispositions   219     (106 )   232     (1,831 )
 
Loss from discontinued operations and dispositions   (230 )   (527 )   (263 )   (3,388 )
 
Net income $ 68,254   $ 30,787   $ 212,425   $ 157,778  
 
 
Diluted earnings per share:
Income from continuing operations $ 0.61 $ 0.28 $ 1.88 $ 1.42
 
Loss from discontinued operations and dispositions   (0.00 )   (0.00 )   (0.00 )   (0.03 )
 
Net income $ 0.61   $ 0.27   $ 1.87   $ 1.39  
 
 
Weighted average diluted shares of common stock outstanding 112,563 113,448 113,315 113,739
 
 
ABOVE PREPARED IN ACCORDANCE WITH GAAP
 
                               
Additional Supplemental Information (1):
(per share, continuing operations)
 
GAAP EPS from continuing operations $ 0.61 $ 0.28 $ 1.88 $ 1.42
Amortization of intangible assets, net of income taxes 0.12 0.11 0.46 0.47
Purchase accounting adjustments, net of income taxes 0.00 0.01 0.05 0.01
Significant litigation matters, net of income taxes 0.00 (0.00 ) 0.00 0.03
Acquisition-related costs, net of income taxes 0.00 0.03 0.00 0.03
Significant environmental charges, net of income taxes - (0.01 ) - (0.01 )
Mark to market on postretirement benefits, net of income taxes 0.07 0.43 0.07 0.43
Restructuring and contract termination charges, net of income taxes   0.05     0.01     0.08     0.09  
Adjusted EPS $ 0.86   $ 0.85   $ 2.55   $ 2.47  
 
(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 3, 2016

December
28, 2014

January 3, 2016

December 28,
2014

 
 
Human Health Reported revenue $ 365,467 $ 374,698 $ 1,376,644 $ 1,384,223
Purchase accounting adjustments 169   227   797   2,916  
Adjusted revenue 365,636   374,925   1,377,441   1,387,139  
 
Reported operating income from continued operations 72,183 83,710 251,743 233,689
OP% 19.8 % 22.3 % 18.3 % 16.9 %
Amortization of intangible assets 15,827 18,508 61,868 73,218
Purchase accounting adjustments 199 (929 ) 919 1,108
Acquisition-related costs 120 7 403 94
Significant litigation matters 812 - 812 -
Restructuring and contract termination charges, net 2,156   84   4,160   7,224  
Adjusted operating income 91,297   101,380   319,905   315,333  
Adjusted OP% 25.0 % 27.0 % 23.2 % 22.7 %
 

Environmental Health

Reported revenue

242,649

233,692

885,715

852,996

 
Reported operating income from continued operations 35,938 29,880 89,544 95,605
OP% 14.8 % 12.8 % 10.1 % 11.2 %
Amortization of intangible assets 4,190 3,014 16,689 10,154
Purchase accounting adjustments - 2,425 7,275 1,595
Acquisition-related costs 72 2,836 307 2,965
Restructuring and contract termination charges, net 6,596   (663 ) 9,430   6,166  
Adjusted operating income 46,796   37,492   123,245   116,485  
Adjusted OP% 19.3 % 16.0 % 13.9 % 13.7 %
 
Corporate Reported operating loss (23,397 ) (83,023 ) (55,153 ) (118,552 )
Significant litigation matters - - - 6,645
Significant environmental charges - (1,191 ) - (1,191 )
Mark to market on postretirement benefits 11,342   75,973   12,408   75,919  
Adjusted operating loss (12,055 ) (8,241 ) (42,745 ) (37,179 )
 
 
Continuing Operations Reported revenue $ 608,116 $ 608,390 $ 2,262,359 $ 2,237,219
Purchase accounting adjustments 169   227   797   2,916  
Adjusted revenue 608,285   608,617   2,263,156   2,240,135  
 
Reported operating income from continued operations 84,724 30,567 286,134 210,742
OP% 13.9 % 5.0 % 12.6 % 9.4 %
Amortization of intangible assets 20,017 21,522 78,557 83,372
Purchase accounting adjustments 199 1,496 8,194 2,703
Acquisition-related costs 192 2,843 710 3,059
Significant litigation matters 812 - 812 6,645
Significant environmental charges - (1,191 ) - (1,191 )
Mark to market on postretirement benefits 11,342 75,973 12,408 75,919
Restructuring and contract termination charges, net 8,752   (579 ) 13,590   13,390  
Adjusted operating income $ 126,038   $ 130,631   $ 400,405   $ 394,639  
Adjusted OP% 20.7 % 21.5 % 17.7 % 17.6 %
 
REPORTED REVENUE AND REPORTED OPERATING INCOME (LOSS) PREPARED IN ACCORDANCE WITH GAAP
 

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

January 3, 2016

December 28, 2014

 
Current assets:
Cash and cash equivalents $ 237,932 $ 174,821
Accounts receivable, net 439,015 470,563
Inventories 288,028 285,457
Other current assets   68,186     137,710  
Total current assets   1,033,161     1,068,551  
 
Property, plant and equipment:
At cost 494,956 492,814
Accumulated depreciation   (327,927 )   (316,620 )
Property, plant and equipment, net 167,029 176,194
Marketable securities and investments 1,586 1,568
Intangible assets, net 490,811 490,265
Goodwill 2,279,189 2,284,077
Other assets, net   167,397     106,921  
Total assets $ 4,139,173   $ 4,127,576  
 
Current liabilities:
Current portion of long-term debt $ 1,123 $ 1,075
Accounts payable 152,726 173,953
Short-term accrued restructuring and contract termination charges 17,090 17,124
Accrued expenses and other current liabilities 388,446 403,021
Current liabilities of discontinued operations   2,100     2,137  
Total current liabilities   561,485     597,310  
 
Long-term debt 1,011,762 1,045,393
Long-term liabilities   455,485     442,771  
Total liabilities   2,028,732     2,085,474  
 
Total stockholders' equity   2,110,441     2,042,102  
Total liabilities and stockholders' equity $ 4,139,173   $ 4,127,576  
 
PREPARED IN ACCORDANCE WITH GAAP
 

PerkinElmer, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
                 
 

Three Months Ended

Twelve Months Ended

January 3, 2016

December 28,
2014

January 3, 2016

December 28,
2014

(In thousands)
 
Operating activities:
Net income $ 68,254 $ 30,787 $ 212,425 $ 157,778
Loss from discontinued operations and dispositions, net of income taxes   230     527     263     3,388  
Income from continuing operations   68,484     31,314     212,688     161,166  
Adjustments to reconcile income from continuing operations
to net cash provided by continuing operations:
Stock-based compensation 5,236 2,695 17,719 14,464
Restructuring and contract termination charges, net 8,752 (579 ) 13,590 13,390
Amortization of deferred debt issuance costs and accretion of discounts 384 363 1,496 1,434
Depreciation and amortization 28,250 29,903 112,007 116,736
Losses on disposition - 108 - 108
Amortization of acquired inventory revaluation - 2,425 7,275 2,425
Pension and other postretirement expenses 9,420 77,669 9,420 77,669
Excess tax benefit from exercise of common stock options (2,435 ) - (2,435 ) -
Changes in operating assets and liabilities which provided (used) cash, excluding
effects from companies purchased and divested:
Accounts receivable, net (29,601 ) (43,830 ) 6,760 (16,989 )
Inventories 22,124 3,894 (28,700 ) (24,642 )
Accounts payable 3,834 12,112 (16,082 ) 8,103
Accrued expenses and other   11,204     (19,463 )   (46,157 )   (71,596 )
Net cash provided by operating activities of continuing operations 125,652 96,611 287,581 282,268
Net cash used in operating activities of discontinued operations   (413 )   (47 )   (483 )   (671 )
Net cash provided by operating activities   125,239     96,564     287,098     281,597  
 
Investing activities:
Capital expenditures (11,818 ) (6,858 ) (29,632 ) (29,072 )
Proceeds from dispositions of property, plant and equipment, net - 2,531 - 2,531
Proceeds from surrender of life insurance policies - - 757 490
Changes in restricted cash balances - - 59 -
Activity related to acquisitions and investments, net of cash and cash equivalents acquired   (53,305 )   (269,598 )   (72,040 )   (271,477 )
Net cash used in investing activities of continuing operations (65,123 ) (273,925 ) (100,856 ) (297,528 )
Net cash provided by investing activities of discontinued operations   -     1,844     -     1,631  
Net cash used in investing activities   (65,123 )   (272,081 )   (100,856 )   (295,897 )
 
Financing Activities:
Payments on revolving credit facility (114,000 ) (51,000 ) (485,000 ) (356,000 )
Proceeds from revolving credit facility 104,000 248,000 451,000 475,000
Payments of debt issuance costs - - - (1,845 )
Settlement of hedges (504 ) - 18,706 -
Net payments on other credit facilities (272 ) (11,450 ) (1,072 ) (12,675 )
Payments for acquisition-related contingent consideration (77 ) - (103 ) (855 )
Excess tax benefit from exercise of common stock options 2,435 - 2,435 -
Proceeds from issuance of common stock under stock plans 1,824 3,508 14,905 24,455
Purchases of common stock (281 ) (26,525 ) (76,439 ) (65,529 )
Dividends paid   (7,834 )   (7,907 )   (31,571 )   (31,620 )
Net cash (used in) provided by financing activities   (14,709 )   154,626     (107,139 )   30,931  
 
Effect of exchange rate changes on cash and cash equivalents   (2,541 )   (7,971 )   (15,992 )   (15,052 )
 
Net increase (decrease) in cash and cash equivalents 42,866 (28,862 ) 63,111 1,579
Cash and cash equivalents at beginning of period   195,066     203,683     174,821     173,242  
Cash and cash equivalents at end of period $ 237,932   $ 174,821   $ 237,932   $ 174,821  
 
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
January 3, 2016 December 28, 2014
 
Adjusted revenue:
Revenue $ 608.1 $ 608.4
Purchase accounting adjustments   0.2       0.2    
Adjusted revenue $ 608.3     $ 608.6    
 
Adjusted gross margin:
Gross margin $ 282.0 46.4 % $ 277.6 45.6 %
Amortization of intangible assets 11.2 1.8 % 12.3 2.0 %
Purchase accounting adjustments 0.2 0.0 % 2.7 0.4 %
Mark to market on postretirement benefits   1.0   0.2 %   8.5   1.4 %
Adjusted gross margin $ 294.4   48.4 % $ 301.0   49.5 %
 
Adjusted SG&A:
SG&A $ 158.5 26.1 % $ 216.6 35.6 %
Amortization of intangible assets (8.7 ) -1.4 % (9.1 ) -1.5 %
Purchase accounting adjustments (0.0 ) 0.0 % 1.2 0.2 %
Acquisition-related costs (0.2 ) 0.0 % (2.8 ) -0.5 %
Significant litigation matters (0.8 ) -0.1 % - 0.0 %
Significant environmental charges - 0.0 % 1.2 0.2 %
Mark to market on postretirement benefits   (10.2 ) -1.7 %   (67.1 ) -11.0 %
Adjusted SG&A $ 138.6   22.8 % $ 140.0   23.0 %
 
Adjusted R&D:
R&D $ 30.0 4.9 % $ 31.0 5.1 %
Amortization of intangible assets (0.1 ) 0.0 % (0.1 ) 0.0 %
Mark to market on post-retirement benefits   (0.1 ) 0.0 %   (0.4 ) -0.1 %
Adjusted R&D $ 29.8   4.9 % $ 30.4   5.0 %
 
Adjusted operating income:
Operating income $ 84.7 13.9 % $ 30.6 5.0 %
Amortization of intangible assets 20.0 3.3 % 21.5 3.5 %
Purchase accounting adjustments 0.2 0.0 % 1.5 0.2 %
Acquisition-related costs 0.2 0.0 % 2.8 0.5 %
Significant litigation matters 0.8 0.1 % - 0.0 %
Significant environmental charges - 0.0 % (1.2 ) -0.2 %
Mark to market on postretirement benefits 11.3 1.9 % 76.0 12.5 %
Restructuring and contract termination charges, net   8.8   1.4 %   (0.6 ) -0.1 %
Adjusted operating income $ 126.0   20.7 % $ 130.6   21.5 %
       
PKI
Three Months Ended
January 3, 2016 December 28, 2014
 
Adjusted EPS:
GAAP EPS $ 0.61 $ 0.27
Discontinued operations, net of income taxes   (0.00 )     (0.00 )  
GAAP EPS from continuing operations 0.61 0.28
Amortization of intangible assets, net of income taxes 0.12 0.11
Purchase accounting adjustments, net of income taxes 0.00 0.01
Significant litigation matters, net of income taxes 0.00 (0.00 )
Acquisition-related costs, net of income taxes 0.00 0.03
Significant environmental charges, net of income taxes - (0.01 )
Mark to market on postretirement benefits, net of income taxes 0.07 0.43
Restructuring and contract termination charges, net of income taxes   0.05       0.01    
Adjusted EPS $ 0.86     $ 0.85    
       
PKI
Three Months Ended
January 3, 2016 December 28, 2014

Impact of tax expense related to non-GAAP adjustments on adjusted EPS:

Amortization of intangible assets (0.05 ) (0.08 )
Purchase accounting adjustments (0.00 ) 0.00
Significant litigation matters (0.00 ) (0.00 )
Acquisition-related costs (0.00 ) (0.01 )
Significant environmental charges - 0.00
Mark to market on postretirement benefits (0.03 ) (0.24 )
Restructuring and contract termination charges   (0.03 )     0.01    

Impact of tax (expense) benefit related to non-GAAP adjustments on adjusted EPS

$ (0.12 )

 

$ (0.31 )

 

       
PKI
Three Months Ended
January 3, 2016 December 28, 2014
 
Constant currency adjusted EPS:
GAAP EPS $ 0.61 $ 0.27
Discontinued operations, net of income taxes   (0.00 )     (0.00 )  
GAAP EPS from continuing operations 0.61 0.28
Amortization of intangible assets, net of income taxes 0.12 0.11
Purchase accounting adjustments, net of income taxes 0.00 0.01
Significant litigation matters, net of income taxes 0.00 (0.00 )
Acquisition-related costs, net of income taxes 0.00 0.03
Significant environmental charges, net of income taxes - (0.01 )
Mark to market on postretirement benefits, net of income taxes 0.07 0.43
Restructuring and contract termination charges, net of income taxes 0.05 0.01
Effect of currency changes from prior year period   0.08       -    
Constant currency adjusted EPS $ 0.94     $ 0.85    
       
PKI
Three Months Ended
January 3, 2016 December 28, 2014

Tax Expense related to non-GAAP adjustments on constant currency adjusted EPS:

Amortization of intangible assets (0.05 ) (0.08 )
Purchase accounting adjustments (0.00 ) 0.00
Significant litigation matters (0.00 ) (0.00 )
Acquisition-related costs (0.00 ) (0.01 )
Significant environmental charges - 0.00
Mark to market on postretirement benefits (0.03 ) (0.24 )
Restructuring and contract termination charges (0.03 ) 0.01
Effect of currency changes from prior year period   (0.02 )     -    

Impact of tax (expense) benefit related to non-GAAP adjustments on constant currency adjusted EPS

$ (0.14 )   $ (0.31 )  
       
Human Health
Three Months Ended
January 3, 2016 December 28, 2014
 
Adjusted revenue:
Revenue $ 365.5 $ 374.7
Purchase accounting adjustments   0.2       0.2    
Adjusted revenue $ 365.6     $ 374.9    
 
Adjusted operating income:
Operating income $ 72.2 19.8 % $ 83.7 22.3 %
Amortization of intangible assets 15.8 4.3 % 18.5 4.9 %
Purchase accounting adjustments 0.2 0.1 % (0.9 ) -0.2 %
Acquisition-related costs 0.1 0.0 % 0.0 0.0 %
Significant litigation matters 0.8 0.2 % - 0.0 %
Restructuring and contract termination charges, net   2.2   0.6 %   0.1   0.0 %
Adjusted operating income $ 91.3   25.0 % $ 101.4   27.0 %
       
Environmental Health
Three Months Ended
January 3, 2016 December 28, 2014
 
Revenue:
Revenue $ 242.6 $ 233.7
 
Adjusted operating income:
Operating income $ 35.9 14.8 % $ 29.9 12.8 %
Amortization of intangible assets 4.2 1.7 % 3.0 1.3 %
Purchase accounting adjustments - 0.0 % 2.4 1.0 %
Acquisition-related costs 0.1 0.0 % 2.8 1.2 %
Restructuring and contract termination charges, net   6.6   2.7 %   (0.7 ) -0.3 %
Adjusted operating income $ 46.8   19.3 % $ 37.5   16.0 %
 
(1) amounts may not sum due to rounding
 

PerkinElmer, Inc. and Subsidiaries
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (1)
             
(In millions, except per share data and percentages) PKI
Twelve Months Ended
January 3, 2016 December 28, 2014
 
Adjusted revenue:
Revenue $ 2,262.4 $ 2,237.2
Purchase accounting adjustments   0.8       2.9    
Adjusted revenue $ 2,263.2     $ 2,240.1    
 
Adjusted gross margin:
Gross margin $ 1,024.5 45.3 % $ 1,004.6 44.9 %
Amortization of intangible assets 43.5 1.9 % 49.7 2.2 %
Purchase accounting adjustments 8.1 0.4 % 5.4 0.2 %
Mark to market on postretirement benefits   1.2   0.1 %   8.4   0.4 %
Adjusted gross margin $ 1,077.3   47.6 % $ 1,068.1   47.7 %
 
Adjusted SG&A:
SG&A $ 598.8 26.5 % $ 659.3 29.5 %
Amortization of intangible assets (34.6 ) -1.5 % (33.1 ) -1.5 %
Purchase accounting adjustments (0.1 ) 0.0 % 2.7 0.1 %
Acquisition-related costs (0.7 ) 0.0 % (3.1 ) -0.1 %
Significant litigation matters (0.8 ) 0.0 % (6.6 ) -0.3 %
Significant environmental charges - 0.0 % 1.2 0.1 %
Mark to market on postretirement benefits   (11.1 ) -0.5 %   (67.1 ) -3.0 %
Adjusted SG&A $ 551.6   24.4 % $ 553.4   24.7 %
 
Adjusted R&D:
R&D $ 125.9 5.6 % $ 121.1 5.4 %
Amortization of intangible assets (0.5 ) 0.0 % (0.6 ) 0.0 %
Mark to market on postretirement benefits   (0.1 ) 0.0 %   (0.4 ) 0.0 %
Adjusted R&D $ 125.3   5.5 % $ 120.1   5.4 %
 
Adjusted operating income:
Operating income $ 286.1 12.6 % $ 210.7 9.4 %
Amortization of intangible assets 78.6 3.5 % 83.4 3.7 %
Purchase accounting adjustments 8.2 0.4 % 2.7 0.1 %
Acquisition-related costs 0.7 0.0 % 3.1 0.1 %
Significant litigation matters 0.8 0.0 % 6.6 0.3 %
Significant environmental charges - 0.0 % (1.2 ) -0.1 %
Mark to market on postretirement benefits 12.4 0.5 % 75.9 3.4 %
Restructuring and contract termination charges, net   13.6   0.6 %   13.4   0.6 %
Adjusted operating income $ 400.4   17.7 % $ 394.6   17.6 %
         
PKI
Twelve Months Ended
January 3, 2016 December 28, 2014
 
Adjusted EPS:
GAAP EPS $ 1.87 $ 1.39
Discontinued operations, net of income taxes   (0.00 )     (0.03 )  
GAAP EPS from continuing operations 1.88 1.42
Amortization of intangible assets, net of income taxes 0.46 0.47
Purchase accounting adjustments, net of income taxes 0.05 0.01
Significant litigation matters, net of income taxes 0.00 0.03
Acquisition-related costs, net of income taxes 0.00 0.03
Significant environmental charges, net of income taxes - (0.01 )
Mark to market on postretirement benefits, net of income taxes 0.07 0.43
Restructuring and contract termination charges, net of income taxes   0.08       0.09    
Adjusted EPS $ 2.55     $ 2.47    
         
PKI
Twelve Months Ended
January 3, 2016 December 28, 2014

Impact of tax Expense related to non-GAAP adjustments on adjusted EPS:

Amortization of intangible assets (0.23 ) (0.27 )
Purchase accounting adjustments (0.00 ) -
Significant litigation matters (0.00 ) (0.02 )
Acquisition-related costs (0.02 ) (0.01 )
Significant environmental charges - 0.00
Mark to market on postretirement benefits (0.04 ) (0.24 )
Restructuring and contract termination charges   (0.04 )     (0.02 )  

Impact of tax (expense) benefit related to non-GAAP adjustments on adjusted EPS

$ (0.33 )   $ (0.56 )  
         
PKI
Twelve Months Ended
January 3, 2016 December 28, 2014
 
Constant currency adjusted EPS:
GAAP EPS $ 1.87 $ 1.39
Discontinued operations, net of income taxes   (0.00 )     (0.03 )  
GAAP EPS from continuing operations 1.88 1.42
Amortization of intangible assets, net of income taxes 0.46 0.47
Purchase accounting adjustments, net of income taxes 0.05 0.01
Significant litigation matters, net of income taxes 0.00 0.03
Acquisition-related costs, net of income taxes 0.00 0.03
Significant environmental charges, net of income taxes - (0.01 )
Mark to market on postretirement benefits, net of income taxes 0.07 0.43
Restructuring and contract termination charges, net of income taxes 0.08 0.09
Effect of currency changes from prior year period   0.25    

-

   
Constant currency adjusted EPS $ 2.80     $ 2.47    
         
PKI
Twelve Months Ended
January 3, 2016 December 28, 2014

Tax Expense related to non-GAAP adjustments on constant currency adjusted EPS:

Amortization of intangible assets (0.23 ) (0.27 )
Purchase accounting adjustments (0.00 )

-

Significant litigation matters (0.00 ) (0.02 )
Acquisition-related costs (0.02 ) (0.01 )
Significant environmental charges - 0.00
Mark to market on postretirement benefits (0.04 ) (0.24 )
Restructuring and contract termination charges (0.04 ) (0.02 )
Effect of currency changes from prior year period   (0.06 )  

-

   

Impact of tax (expense) benefit related to non-GAAP adjustments on constant currency adjusted EPS

$ (0.33 )   $ (0.56 )  
               

PKI

Twelve Months Ended

January 1, 2017

Projected

Adjusted EPS:

EPS from continuing operations

 

$

2.21 - 2.31

Amortization of intangible assets, net of income taxes

 

0.43

Purchase accounting adjustments, net of income taxes

 

 

     

0.01

   

Adjusted EPS

 

 

   

$

2.65 - 2.75

   
         
Human Health
Twelve Months Ended
January 3, 2016 December 28, 2014
 
Adjusted revenue:
Revenue $ 1,376.6 $ 1,384.2
Purchase accounting adjustments   0.8       2.9    
Adjusted revenue $ 1,377.4     $ 1,387.1    
 
Adjusted operating income:
Operating income $ 251.7 18.3 % $ 233.7 16.9 %
Amortization of intangible assets 61.9 4.5 % 73.2 5.3 %
Purchase accounting adjustments 0.9 0.1 % 1.1 0.1 %
Acquisition-related costs 0.4 0.0 % 0.1 0.0 %
Restructuring and contract termination charges, net   4.2   0.3 %   7.2   0.5 %
Adjusted operating income $ 319.9   23.2 % $ 315.3   22.7 %
         
Environmental Health
Twelve Months Ended
January 3, 2016 December 28, 2014
 
Revenue:
Revenue $ 885.7 $ 853.0
 
Adjusted operating income:
Operating income $ 89.5 10.1 % $ 95.6 11.2 %
Amortization of intangible assets 16.7 1.9 % 10.2 1.2 %
Purchase accounting adjustments 7.3 0.8 % 1.6 0.2 %
Acquisition-related costs 0.3 0.0 % 3.0 0.3 %
Restructuring and contract termination charges, net   9.4   1.1 %   6.2   0.7 %
Adjusted operating income $ 123.2   13.9 % $ 116.5   13.7 %
 
(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 3, 2016

Organic revenue growth:
Reported revenue growth 0 %
Less: effect of foreign exchange rates -5 %
Less: effect of acquisitions including purchase accounting adjustments   2 %
Organic revenue growth   3 %
 
   
Human Health
Three Months Ended

January 3, 2016

Organic revenue growth:
Reported revenue growth -2 %
Less: effect of foreign exchange rates -4 %
Less: effect of acquisitions including purchase accounting adjustments   0 %
Organic revenue growth   2 %
 
   
Environmental Health
Three Months Ended

January 3, 2016

Organic revenue growth:
Reported revenue growth 4 %
Less: effect of foreign exchange rates -7 %
Less: effect of acquisitions including purchase accounting adjustments   5 %
Organic revenue growth   5 %
 
   
PKI
Three Months Ended

January 3, 2016

Constant currency revenue growth:
Reported revenue growth 0 %
Less: effect of foreign exchange rates   -5 %
Constant currency revenue growth   5 %
 
(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 3, 2016

Organic revenue growth:
Reported revenue growth 1%
Less: effect of foreign exchange rates -6%
Less: effect of acquisitions including purchase accounting adjustments   3%
Organic revenue growth   4%
 
   
Human Health
Twelve Months Ended

January 3, 2016

Organic revenue growth:
Reported revenue growth -1%
Less: effect of foreign exchange rates -5%
Less: effect of acquisitions including purchase accounting adjustments   0%
Organic revenue growth   4%
 
   
Environmental Health
Twelve Months Ended

January 3, 2016

Organic revenue growth:
Reported revenue growth 4%
Less: effect of foreign exchange rates -8%
Less: effect of acquisitions including purchase accounting adjustments   8%
Organic revenue growth   4%
 
   
PKI
Twelve Months Ended

January 3, 2016

Constant currency growth:
Reported revenue growth 1%
Less: effect of foreign exchange rates   -6%
Constant currency revenue growth   7%
 
(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 properly understand our short-term and long-term financial and operational trends, investors may wish to consider the impact of certain non-cash or non-recurring 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 "constant currency adjusted revenue" to refer to GAAP revenue recalculated using the currency exchange rates for the corresponding period in the prior year, and 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 "constant currency adjusted revenue growth" to refer to the measure of comparing current period constant currency adjusted revenue with the corresponding period of the prior year.

We use the term "organic revenue" to refer to GAAP revenue, excluding the effect of foreign currency translation 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 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-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-related costs, 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-related costs, 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 also adjust for any tax impact related to the above items.

We use the term "constant currency adjusted earnings per share," or "constant currency adjusted EPS," to refer to GAAP earnings per share recalculated using the currency exchange rates for the corresponding period in the prior year, 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-related costs, 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 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, significant litigation matters, significant environmental charges, adjustments for mark-to-market accounting on post-retirement benefits, 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 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.

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