UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

 

FORM 8-K
 
 
 
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported): May 5, 2020

 

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


 
 
Massachusetts
001-05075
04-2052042
(State or Other Jurisdiction
of Incorporation or Organization)
(Commission
File Number)
(IRS Employer
Identification No.)
 
940 Winter Street, Waltham, Massachusetts
02451
(Address of Principal Executive Offices)
(Zip Code)
 
Registrant’s telephone number, including area code: (781) 663-6900
 
Not applicable
(Former Name or Former Address, if Changed Since Last Report)

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

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

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

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

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

Securities registered pursuant to Section 12(b) of the Act:

Title of each class
  Trading Symbol(s)
  Name of exchange on which registered
Common stock, $1 par value per share
  PKI
  The New York Stock Exchange
1.875% Notes due 2026   PKI 21A
  The New York Stock Exchange
0.600% Notes due 2021   PKI 21B
  The New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
 
Emerging growth company  
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐




Item 2.02.  Results of Operations and Financial Condition

On May 5, 2020 PerkinElmer, Inc. announced its financial results for the first quarter ended April 5, 2020. The full text of the press release issued in connection with the announcement is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

The information in this Form 8-K (including Exhibit 99.1) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing.
 
Item 9.01.  Financial Statements and Exhibits

(d)            Exhibits

 
EXHIBIT INDEX
   
Exhibit No.
Description
 
 
 
 
101.INS
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
 
 
101.SCH
Inline XBRL Taxonomy Extension Schema Document
 
 
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document
 
 
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document
 
 
101.LAB
Inline XBRL Taxonomy Extension Labels Linkbase Document
 
 
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document
 
 
104
Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101)

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


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

 
 
PERKINELMER, INC.
Date:  May 5, 2020 By: /s/ James M. Mock
  James M. Mock
  Senior Vice President and Chief Financial Officer

Exhibit 99.1

PerkinElmer Announces Financial Results for the First Quarter of 2020

  • Revenue of $652.4 million; 1% reported growth; (1)% organic growth
  • GAAP EPS from continuing operations of $0.30; Adjusted EPS of $0.67
  • Withdrawing previously disseminated FY20 guidance due to COVID-related uncertainties

WALTHAM, Mass.--(BUSINESS WIRE)--May 5, 2020--PerkinElmer, Inc. (NYSE: PKI), a global leader committed to innovating for a healthier world, today reported financial results for the first quarter ended April 5, 2020.

The Company reported GAAP earnings per share from continuing operations of $0.30, as compared to GAAP earnings per share from continuing operations of $0.32 in the first quarter of 2019. GAAP revenue for the quarter was $652.4 million, as compared to $648.7 million in the first quarter of 2019. GAAP operating income from continuing operations for the quarter was $44.7 million, as compared to $53.3 million for the same period a year ago. GAAP operating profit margin was 6.8% as a percentage of revenue, as compared to 8.2% in the first quarter of 2019.

Adjusted earnings per share from continuing operations for the quarter was $0.67, as compared to $0.69 in the first quarter of 2019. Adjusted revenue for the quarter was $652.6 million, as compared to $648.9 million in the first quarter of 2019. Adjusted operating income from continuing operations for the quarter was $99.6 million, as compared to $105.2 million for the same period a year ago. Adjusted operating profit margin was 15.3% as a percentage of adjusted revenue, as compared to 16.2% in the first quarter of 2019.

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

“The world has dramatically changed since our last earnings call. Over the past few months, I witnessed our 13,000 employees go above and beyond to partner with colleagues, customers, governments, and industry experts, to do everything we could to make an impact and fulfill our mission of innovating for a healthier world,” said Prahlad Singh, president and chief executive officer of PerkinElmer. “The team stepped up to deliver a very good quarter despite the macroeconomic uncertainty. The first quarter performance speaks to the diversity of our business both from a portfolio and geographic standpoint, and it highlights the resiliency and strength of our company.”


Financial Overview by Reporting Segment for the First Quarter

Discovery & Analytical Solutions

  • First quarter 2020 revenue was $398.4 million, as compared to $388.8 million for the first quarter of 2019. Reported revenue increased 2% and organic revenue decreased 1% as compared to the first quarter of 2019.
  • First quarter 2020 operating income from continuing operations was $28.5 million, as compared to $36.9 million for the comparable prior period.
  • First quarter 2020 adjusted operating income was $54.4 million, as compared to $54.3 million for the first quarter of 2019.

Diagnostics

  • First quarter 2020 revenue was $254.0 million, as compared to $259.9 million for the first quarter of 2019. Reported revenue decreased 2% and organic revenue decreased 1% as compared to the first quarter of 2019.
  • First quarter 2020 operating income from continuing operations was $29.6 million, as compared to $31.5 million for the comparable prior period.
  • First quarter 2020 adjusted operating income was $58.6 million, as compared to $66.0 million for the first quarter of 2019.

Withdrawing Full-Year 2020 Guidance & Issuing Second Quarter 2020 Guidance

Due to the COVID-19 pandemic and ongoing uncertainties related to the timing and scope of a potential customer activity rebound, PerkinElmer is withdrawing its full-year 2020 financial guidance, which was previously provided on January 27, 2020.

For the second quarter of 2020, the Company forecasts GAAP revenue in the range of $610-720 million, GAAP earnings per share from continuing operations of at least $0.33 and, on a non-GAAP basis, which is expected to include the adjustments noted in the attached reconciliation, adjusted earnings per share of at least $0.65.

Conference Call Information

The Company will discuss its first quarter 2020 results and its outlook for business trends in a conference call on May 5, 2020 at 5:00 p.m. Eastern Time. To access the call, please dial (720) 405-2250 prior to the scheduled conference call time and provide the access code 6979343.

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

Use of Non-GAAP Financial Measures

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


Factors Affecting Future Performance

This press release contains "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements relating to estimates and projections of future earnings per share, cash flow and revenue growth and other financial results, developments relating to our customers and end-markets, and plans concerning business development opportunities, acquisitions and divestitures. Words such as "believes," "intends," "anticipates," "plans," "expects," "projects," "forecasts," "will" and similar expressions, and references to guidance, are intended to identify forward-looking statements. Such statements are based on management's current assumptions and expectations and no assurances can be given that our assumptions or expectations will prove to be correct. A number of important risk factors could cause actual results to differ materially from the results described, implied or projected in any forward-looking statements. These factors include, without limitation: (1) markets into which we sell our products declining or not growing as anticipated; (2) fluctuations in the global economic and political environments; (3) our failure to introduce new products in a timely manner; (4) our ability to execute acquisitions and license technologies, or to successfully integrate acquired businesses and licensed technologies into our existing business or to make them profitable, or successfully divest businesses; (5) our failure to adequately protect our intellectual property; (6) the loss of any of our licenses or licensed rights; (7) our ability to compete effectively; (8) fluctuation in our quarterly operating results and our ability to adjust our operations to address unexpected changes; (9) significant disruption in third-party package delivery and import/export services or significant increases in prices for those services; (10) disruptions in the supply of raw materials and supplies; (11) the manufacture and sale of products exposing us to product liability claims; (12) our failure to maintain compliance with applicable government regulations; (13) regulatory changes; (14) our failure to comply with healthcare industry regulations; (15) outbreaks of communicable diseases such as COVID-19; (16) economic, political and other risks associated with foreign operations; (17) our ability to retain key personnel; (18) significant disruption in our information technology systems, or cybercrime; (19) our ability to obtain future financing; (20) restrictions in our credit agreements; (21) discontinuation or replacement of LIBOR; (22) the United Kingdom’s withdrawal from the European Union; (23) our ability to realize the full value of our intangible assets; (24) significant fluctuations in our stock price; (25) reduction or elimination of dividends on our common stock; and (26) other factors which we describe under the caption "Risk Factors" in our most recent annual report on Form 10-K and in our other filings with the Securities and Exchange Commission. We disclaim any intention or obligation to update any forward-looking statements as a result of developments occurring after the date of this press release.

About PerkinElmer

PerkinElmer, Inc. is a global leader focused on innovating for a healthier world. The Company reported revenue of approximately $2.9 billion in 2019, has about 13,000 employees serving customers in more than 190 countries, and is a component of the S&P 500 Index. Additional information is available through 1-877-PKI-NYSE, or at www.perkinelmer.com.


PerkinElmer, Inc. and Subsidiaries
CONDENSED CONSOLIDATED INCOME STATEMENTS






 






 


Three Months Ended



(In thousands, except per share data)
April 5, 2020
March 31, 2019







 






 
Revenue

$ 652,396


$ 648,737









 
Cost of revenue

344,373


340,931



Selling, general and administrative expenses

208,569


198,857



Research and development expenses

48,914


47,980



Restructuring and other, net

5,858


7,639









 
Operating income from continuing operations

44,682


53,330









 
Interest income

(265)


(283)



Interest expense

13,665


15,850



Loss on disposition of businesses and assets, net

-


2,133



Other (income) expense, net

(3,407)


(1,135)









 
Income from continuing operations, before income taxes

34,689


36,765









 
Provision for income taxes

974


1,312









 
Income from continuing operations

33,715


35,453









 
Loss on disposition of discontinued operations, before income taxes

-


-



Provision for income taxes on discontinued operations and dispositions

50


41









 
Loss from discontinued operations and dispositions

(50)


(41)









 
Net income

$ 33,665


$ 35,412









 






 
Diluted earnings per share:





Income from continuing operations

$ 0.30


$ 0.32









 
Loss from discontinued operations and dispositions

(0.00)


(0.00)









 
Net income

$ 0.30


$ 0.32









 






 
Weighted average diluted shares of common stock outstanding

111,643


111,293









 






 
ABOVE PREPARED IN ACCORDANCE WITH GAAP






 






 
Additional supplemental information (1):





(per share, continuing operations)











 
GAAP EPS from continuing operations

$ 0.30


$ 0.32



Amortization of intangible assets

0.42


0.35



Purchase accounting adjustments

(0.10)


0.03



Acquisition and divestiture-related costs

0.11


0.02



Significant litigation matters

0.00


0.00



Disposition of businesses and assets, net

-


0.02



Restructuring and other, net

0.05


0.07



Tax on above items

(0.12)


(0.12)



Adjusted EPS

$ 0.67


$ 0.69









 
(1) amounts may not sum due to rounding











 

PerkinElmer, Inc. and Subsidiaries
REVENUE AND OPERATING INCOME (LOSS)

 





 





 




Three Months Ended
(In thousands, except percentages)

April 5, 2020
March 31, 2019







 







 
DAS
Reported revenue

$

398,395

$

388,833









 


Reported operating income from continued operations

28,513


36,927




OP%

7.2%


9.5%




Amortization of intangible assets

20,710


10,269




Purchase accounting adjustments

(11,470)


37




Acquisition and divestiture-related costs

12,319


543




Significant litigation matters

398


376




Restructuring and other, net

3,909


6,180




Adjusted operating income

54,379


54,332




Adjusted OP%

13.6%


14.0%









 
Diagnostics
Reported revenue

254,001


259,904




Purchase accounting adjustments

196


192




Adjusted revenue

254,197


260,096









 


Reported operating income from continued operations

29,591


31,486




OP%

11.6%


12.1%




Amortization of intangible assets

26,540


28,458




Purchase accounting adjustments

429


3,571




Acquisition and divestiture-related costs

42


1,007




Significant litigation matters

45


-




Restructuring and other, net

1,949


1,459




Adjusted operating income

58,596


65,981




Adjusted OP%

23.1%


25.4%









 
Corporate
Reported operating loss

(13,422)


(15,083)









 
Continuing Operations Reported revenue

$

652,396

$

648,737




Purchase accounting adjustments

196


192




Adjusted revenue

652,592


648,929









 


Reported operating income from continued operations

44,682


53,330




OP%

6.8%


8.2%




Amortization of intangible assets

47,250


38,727




Purchase accounting adjustments

(11,041)


3,608




Acquisition and divestiture-related costs

12,361


1,550




Significant litigation matters

443


376




Restructuring and other, net

5,858


7,639




Adjusted operating income

$

99,553

$

105,230




Adjusted OP%

15.3%


16.2%









 







 
REPORTED REVENUE AND REPORTED OPERATING INCOME (LOSS) PREPARED IN ACCORDANCE WITH GAAP

PerkinElmer, Inc. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS

 

 



 
(In thousands) April 5, 2020
December 29, 2019



 
Current assets:


Cash and cash equivalents

$ 195,146


$ 191,877

Accounts receivable, net

626,150


725,184

Inventories

393,164


356,937

Other current assets

127,366


100,381

Total current assets

1,341,826


1,374,379




 
Property, plant and equipment:


At cost

703,266


701,580

Accumulated depreciation

(389,409)


(383,357)

Property, plant and equipment, net

313,857


318,223




 
Operating lease right-of-use assets

196,319


167,276

Intangible assets, net

1,200,288


1,283,286

Goodwill

3,051,694


3,111,227

Other assets, net

280,412


284,173

Total assets

$ 6,384,396


$ 6,538,564




 
Current liabilities:


Current portion of long-term debt

$ 9,654


$ 9,974

Accounts payable

233,227


235,855

Short-term accrued restructuring and other costs

11,298


11,559

Accrued expenses and other current liabilities

473,853


503,332

Current liabilities of discontinued operations

2,112


2,112

Total current liabilities

730,144


762,832




 
Long-term debt

2,010,525


2,064,041

Long-term liabilities

704,154


751,468

Operating lease liabilities

179,827


146,399

Total liabilities

3,624,650


3,724,740




 
Total stockholders' equity

2,759,746


2,813,824

Total liabilities and stockholders' equity

$ 6,384,396


$ 6,538,564




 



 
PREPARED IN ACCORDANCE WITH GAAP

PerkinElmer, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS

 




 

Three Months Ended

April 5, 2020
March 31, 2019

(In thousands)




 
Operating activities:



Net income

$ 33,665


$ 35,412


Loss from discontinued operations and dispositions, net of income taxes

50


41


Income from continuing operations

33,715


35,453


Adjustments to reconcile income from continuing operations



to net cash provided by (used in) continuing operations:



Stock-based compensation

3,050


6,097


Restructuring and other, net

5,858


7,639


Depreciation and amortization

60,758


50,469


Change in fair value of contingent consideration

(12,325)


3,102


Amortization of deferred debt financing costs and accretion of discounts

707


861


Loss on disposition of businesses and assets, net

-


2,133


Amortization of acquired inventory revaluation

1,088


283


Changes in assets and liabilities which provided (used) cash, excluding



effects from companies acquired:



Accounts receivable, net

80,600


7,864


Inventories

(54,758)


(38,441)


Accounts payable

3,164


(1,451)


Accrued expenses and other

(61,807)


(79,325)


Net cash provided by (used in) operating activities of continuing operations

60,050


(5,316)


Net cash used in operating activities of discontinued operations

-


-


Net cash provided by (used in) operating activities

60,050


(5,316)






 
Investing activities:



Capital expenditures

(20,488)


(19,875)


Purchases of investments

(1,638)


(519)


Purchases of licenses

-


(5,000)


Proceeds from surrender of life insurance policies

52


-


Proceeds from disposition of businesses and assets

60


550


Payment of acquisitions, net of cash and cash equivalents acquired

-


(4,384)


Net cash used in investing activities of continuing operations

(22,014)


(29,228)


Net cash provided by investing activities of discontinued operations

-


-


Net cash used in investing activities

(22,014)


(29,228)






 
Financing Activities:



Payments on borrowings

(141,000)


(152,000)


Proceeds from borrowings

125,000


179,000


Payments of debt financing costs

-


(88)


Settlement of cash flow hedges

8,708


(1,675)


Net payments on other credit facilities

(4,283)


(3,476)


Payments for acquisition-related contingent consideration

-


(12,100)


Proceeds from issuance of common stock under stock plans

1,106


8,610


Purchases of common stock

(6,342)


(5,293)


Dividends paid

(7,781)


(7,743)


Net cash (used in) provided by financing activities of continuing operations

(24,592)


5,235


Net cash used in financing activities of discontinued operations

-


-


Net cash (used in) provided by financing activities

(24,592)


5,235






 
Effect of exchange rate changes on cash, cash equivalents, and restricted cash

(10,169)


450






 
Net increase (decrease) in cash, cash equivalents, and restricted cash

3,275


(28,859)


Cash, cash equivalents, and restricted cash at beginning of period

191,894


166,315


Cash, cash equivalents, and restricted cash at end of period

$ 195,169


$ 137,456






 




 
Supplemental disclosure of cash flow information:



Reconciliation of cash, cash equivalents and restricted cash reported within the consolidated
balance sheets that sum to the total shown in the consolidated statements of cash flows:




Cash and cash equivalents

$ 195,146


$ 134,252


Restricted cash included in other current assets

23


3,204


Total cash, cash equivalents and restricted cash

$ 195,169


$ 137,456






 
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





April 5, 2020
March 31, 2019







 
Adjusted revenue:





Revenue

$

652.4

 


$

648.7

 



Purchase accounting adjustments

 

0.2

 


 

0.2

 



Adjusted revenue

$

652.6

 


$

648.9

 









 
Adjusted gross margin:





Gross margin

$

308.0

 

47.2

%

$

307.8

 

47.4

%


Amortization of intangible assets

 

16.1

 

2.5

%

 

14.8

 

2.3

%


Purchase accounting adjustments

 

1.3

 

0.2

%

 

0.5

 

0.1

%


Adjusted gross margin

$

325.4

 

49.9

%

$

323.1

 

49.8

%






 
Adjusted SG&A:





SG&A

$

208.6

 

32.0

%

$

198.9

 

30.7

%


Amortization of intangible assets

 

(31.2

)

-4.8

%

 

(23.9

)

-3.7

%


Purchase accounting adjustments

 

12.3

 

1.9

%

 

(3.1

)

-0.5

%


Acquisition and divestiture-related expenses

 

(12.4

)

-1.9

%

 

(1.6

)

-0.2

%


Significant litigation matters

 

(0.4

)

-0.1

%

 

(0.4

)

-0.1

%


Adjusted SG&A

$

176.9

 

27.1

%

$

169.9

 

26.2

%








 
Adjusted R&D:





R&D

$

48.9

 

7.5

%

$

48.0

 

7.4

%


Adjusted R&D

$

48.9

 

7.5

%

$

48.0

 

7.4

%








 
Adjusted operating income:





Operating income

$

44.7

 

6.8

%

$

53.3

 

8.2

%


Amortization of intangible assets

 

47.3

 

7.2

%

 

38.7

 

6.0

%


Purchase accounting adjustments

 

(11.0

)

-1.7

%

 

3.6

 

0.6

%


Acquisition and divestiture-related expenses

 

12.4

 

1.9

%

 

1.6

 

0.2

%


Significant litigation matters

 

0.4

 

0.1

%

 

0.4

 

0.1

%


Restructuring and other, net

 

5.9

 

0.9

%

 

7.6

 

1.2

%


Adjusted operating income

$

99.6

 

15.3

%

$

105.2

 

16.2

%








 


PKI


Three Months Ended





April 5, 2020
March 31, 2019







 
Adjusted EPS:





GAAP EPS

$

0.30

 


$

0.32

 



Discontinued operations, net of income taxes

 

(0.00

)


 

(0.00

)



GAAP EPS from continuing operations

 

0.30

 


 

0.32

 



Amortization of intangible assets

 

0.42

 


 

0.35

 



Purchase accounting adjustments

 

(0.10

)


 

0.03

 



Acquisition and divestiture-related expenses

 

0.11

 


 

0.02

 



Significant litigation matters

 

0.00

 


 

0.00

 



Disposition of businesses and assets, net

 

-

 


 

0.02

 



Restructuring and other, net

 

0.05

 


 

0.07

 



Tax on above items

 

(0.12

)


 

(0.12

)



Adjusted EPS

$

0.67

 


$

0.69

 









 


PKI




Three Months Ended





July 5, 2020

Adjusted EPS:


Projected

GAAP EPS from continuing operations


at least $0.33

Amortization of intangible assets


 

0.41

 



Purchase accounting adjustments


 

0.01

 



Acquisition and divestiture-related expenses


 

0.00

 



Restructuring and other, net


 

0.00

 



Tax on above items


 

(0.10

)



Adjusted EPS


at least $0.65







 


DAS


Three Months Ended





April 5, 2020
March 31, 2019







 
Revenue

$

398.4

 


$

388.8

 









 
Adjusted operating income:





Operating income

$

28.5

 

7.2

%

$

36.9

 

9.5

%


Amortization of intangible assets

 

20.7

 

5.2

%

 

10.3

 

2.6

%


Purchase accounting adjustments

 

(11.5

)

-2.9

%

 

0.0

 

0.0

%


Acquisition and divestiture-related expenses

 

12.3

 

3.1

%

 

0.5

 

0.1

%


Significant litigation matters

 

0.4

 

0.1

%

 

0.4

 

0.1

%


Restructuring and other, net

 

3.9

 

1.0

%

 

6.2

 

1.6

%


Adjusted operating income

$

54.4

 

13.6

%

$

54.3

 

14.0

%








 


Diagnostics


Three Months Ended





April 5, 2020
March 31, 2019







 
Adjusted revenue:





Revenue

$

254.0

 


$

259.9

 



Purchase accounting adjustments

 

0.2

 


 

0.2

 



Adjusted revenue

$

254.2

 


$

260.1

 









 
Adjusted operating income:





Operating income

$

29.6

 

11.6

%

$

31.5

 

12.1

%


Amortization of intangible assets

 

26.5

 

10.4

%

 

28.5

 

10.9

%


Purchase accounting adjustments

 

0.4

 

0.2

%

 

3.6

 

1.4

%


Acquisition and divestiture-related expenses

 

0.0

 

0.0

%

 

1.0

 

0.4

%


Significant litigation matters

 

0.0

 

0.0

%

 

-

 

0.0

%


Restructuring and other, net

 

1.9

 

0.8

%

 

1.5

 

0.6

%


Adjusted operating income

$

58.6

 

23.1

%

$

66.0

 

25.4

%








 






 
(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




April 5, 2020

Organic revenue growth:




Reported revenue growth

1%



Less: effect of foreign exchange rates

-2%



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

3%



Organic revenue growth

-1%








 





 


DAS



Three Months Ended




April 5, 2020

Organic revenue growth:




Reported revenue growth

2%



Less: effect of foreign exchange rates

-2%



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

5%



Organic revenue growth

-1%








 





 


Diagnostics



Three Months Ended




April 5, 2020

Organic revenue growth:




Reported revenue growth

-2%



Less: effect of foreign exchange rates

-2%



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

0%



Organic revenue growth

-1%








 





 
(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




July 5, 2020

Organic revenue growth:

Projected

Reported revenue growth

(16%) - 0%



Less: effect of foreign exchange rates

-2%



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

1%



Organic revenue growth

(15%) - 0%






 





 
(1) amounts may not sum due to rounding





Explanation of Non-GAAP Financial Measures

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

We use the term “adjusted revenue” to refer to GAAP revenue, including purchase accounting adjustments for revenue from contracts acquired in acquisitions that will not be fully recognized due to accounting rules. We use the related term “adjusted revenue growth” to refer to the measure of comparing current period adjusted revenue with the corresponding period of the prior year.


We use the term “organic revenue” to refer to GAAP revenue, excluding the effect of foreign currency changes and including acquisitions growth from the comparable prior period, and including purchase accounting adjustments for revenue from contracts acquired in acquisitions that will not be fully recognized due to accounting rules. We also exclude the impact of sales from divested businesses by deducting the effects of divested business revenue from the current and prior periods. We use the related term “organic revenue growth” to refer to the measure of comparing current period organic revenue with the corresponding period of the prior year.

We use the term “adjusted gross margin” to refer to GAAP gross margin, excluding amortization of intangible assets and inventory fair value adjustments related to business acquisitions, and including purchase accounting adjustments for revenue from contracts acquired in acquisitions that will not be fully recognized due to business combination accounting rules. We use the related term “adjusted gross margin percentage” to refer to adjusted gross margin as a percentage of adjusted revenue.

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

We use the term “adjusted R&D expense” to refer to GAAP R&D expense, excluding amortization of intangible assets and purchase accounting adjustments. 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 net interest and other expense” to refer to GAAP net interest and other expense, excluding adjustments for mark-to-market accounting on post-retirement benefits, changes in the value of financial securities and debt extinguishment costs.

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, acceleration of executive compensation, significant litigation matters, significant environmental charges, and restructuring and other charges. We use the related terms “adjusted operating profit percentage,” “adjusted operating profit margin,” or “adjusted operating margin” to refer to adjusted operating income as a percentage of adjusted revenue.

We use the term “adjusted earnings per share,” or “adjusted EPS,” to refer to GAAP earnings per share, including revenue from contracts acquired in acquisitions that will not be fully recognized due to accounting rules, and excluding discontinued operations, amortization of intangible assets, debt extinguishment costs, other purchase accounting adjustments, acquisition and divestiture-related expenses, acceleration of executive compensation, significant litigation matters, significant environmental charges, changes in the value of financial securities, disposition of businesses and assets, net, and restructuring and other charges. We also exclude adjustments for mark-to-market accounting on post-retirement benefits, therefore only our projected costs have been used to calculate this non-GAAP measure. We also adjust for any tax impact related to the above items and exclude the impact of significant tax events.


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

  • Amortization of intangible assets— purchased intangible assets are amortized over their estimated useful lives and generally cannot be changed or influenced by management after the acquisition. Accordingly, this item is not considered by management in making operating decisions. Management does not believe such charges accurately reflect the performance of our ongoing operations for the period in which such charges are incurred.
  • Debt extinguishment costs—we incur costs and income related to the extinguishment of debt; including make-whole payments to debt holders, accelerated amortization of debt fees and discounts, and expense or income from hedges to lock in make whole payments. We exclude the impact of these items from our non-GAAP measures because we believe they do not reflect the performance of our ongoing operations.
  • Revenue from contracts acquired in acquisitions that will not be fully recognized due to accounting rules—accounting rules require us to account for the fair value of revenue from contracts assumed in connection with our acquisitions. As a result, our GAAP results reflect the fair value of those revenues, which is not the same as the revenue that otherwise would have been recorded by the acquired entity. We include such revenue in our non-GAAP measures because we believe the fair value of such revenue does not accurately reflect the performance of our ongoing operations for the period in which such revenue is recorded.
  • Other purchase accounting adjustments—accounting rules require us to adjust various balance sheet accounts, including inventory and deferred rent balances to fair value at the time of the acquisition. As a result, the expenses for these items in our GAAP results are not the same as what would have been recorded by the acquired entity. Accounting rules also require us to estimate the fair value of contingent consideration at the time of the acquisition, and any subsequent changes to the estimate or payment of the contingent consideration and purchase accounting adjustments are charged to expense or income. We exclude the impact of any changes to contingent consideration from our non-GAAP measures because we believe these expenses or benefits do not accurately reflect the performance of our ongoing operations for the period in which such expenses or benefits are recorded.
  • Acquisition and divestiture-related expenses—we incur legal, due diligence, stay bonuses, incentive awards, interest expense, foreign exchange gains and losses, significant acquisition integration expenses and other costs related to acquisitions and divestitures. We exclude these expenses from our non-GAAP measures because we believe they do not reflect the performance of our ongoing operations.
  • Acceleration of executive compensationthe announced retirement of a senior executive resulted in an acceleration of compensation expense. We exclude these expenses from our non-GAAP measures because we believe they do not reflect the performance of our ongoing operations.
  • Restructuring and other charges—restructuring and other charges consist of employee severance, other exit costs as well as the cost of terminating certain lease agreements or contracts as well as costs associated with relocating facilities. Management does not believe such costs accurately reflect the performance of our ongoing operations for the period in which such costs are reported.
  • Adjustments for mark-to-market accounting on post-retirement benefits—we exclude adjustments for mark-to-market accounting on post-retirement benefits, and therefore only our projected costs are used to calculate our non-GAAP measures. We exclude these adjustments because they 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.
  • Significant litigation matters—we incur expenses related to significant litigation matters. Management does not believe such charges accurately reflect the performance of our ongoing operations for the periods in which such charges were incurred.
  • Significant environmental charges—we incur expenses related to significant environmental charges. Management does not believe such charges accurately reflect the performance of our ongoing operations for the periods in which such charges were incurred.
  • Disposition of businesses and assets, net—we exclude the impact of gains or losses from the disposition of businesses and assets from our adjusted earnings per share. Management does not believe such gains or losses accurately reflect the performance of our ongoing operations for the period in which such gains or losses are reported.
  • Impact of foreign currency changes on the current period—we exclude the impact of foreign currency from these measures by using the prior period’s foreign currency exchange rates for the current period because foreign currency exchange rates are subject to volatility and can obscure underlying trends.
  • Impact of significant tax events – we exclude the impact of significant tax events, such as the Tax Cuts and Jobs Act of 2017. Management does not believe the impact of significant tax events accurately reflects the performance of our ongoing operations for the periods in which the impact of such events were recorded.
  • Changes in value of financial securities—we exclude the impact of changes in the value of financial securities. Management does not believe such gains or losses accurately reflect the performance of our ongoing operations for the period in which such gains or losses are reported.

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, debt extinguishment costs, other costs related to business acquisitions and divestitures, acceleration of executive compensation, significant litigation matters, significant environmental charges, changes in the fair value of financial securities, adjustments for mark-to-market accounting on post-retirement benefits, disposition of businesses and assets, net, restructuring and other 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.

Contacts

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

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