SEC Filing | PerkinElmer, Inc.

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_______________________________________

FORM 10-Q

_______________________________________

(Mark One)


☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended July 5, 2020


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission File Number 001-5075

_______________________________________

PerkinElmer, Inc.

(Exact name of Registrant as specified in its Charter)

_______________________________________

Massachusetts

04-2052042

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)

940 Winter Street,

Waltham,

Massachusetts

02451

(Address of principal executive offices)

(Zip Code)

(781) 663-6900

(Registrant’s telephone number, including area code)

______________________________________

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


Title of each class	Trading Symbol (s)	Name of each 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
0.60% Notes due 2021	PKI 21B	The New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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Large accelerated filer

☑

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark whether 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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of August 6, 2020, there were outstanding 111,814,516 shares of common stock, $1 par value per share.

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TABLE OF CONTENTS


		Page
PART I. FINANCIAL INFORMATION

Item 1.	Unaudited Financial Statements	4
	Condensed Consolidated Statements of Operations	4
	Condensed Consolidated Statements of Comprehensive Income	5
	Condensed Consolidated Balance Sheets	6
	Condensed Consolidated Statements of Stockholders' Equity	7
	Condensed Consolidated Statements of Cash Flows	9
	Notes to Condensed Consolidated Financial Statements	10

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	36
	Overview	36
	Critical Accounting Policies and Estimates	37
	Consolidated Results of Continuing Operations	37
	Reporting Segment Results of Continuing Operations	42
	Liquidity and Capital Resources	43
	Dividends	48
	Contractual Obligations	48
	Effects of Recently Adopted and Issued Accounting Pronouncements	48

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	48

Item 4.	Controls and Procedures	50

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	51

Item 1A.	Risk Factors	51

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	59

Item 6.	Exhibits	60

Signatures			61

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PART I. FINANCIAL INFORMATION

Item 1.Unaudited Financial Statements

PERKINELMER, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	Three Months Ended						Six Months Ended
	July 5, 2020		June 30, 2019		July 5, 2020		June 30, 2019
	(In thousands, except per share data)
Product revenue	$	601,506	$	502,114	$	1,027,035	$	940,836
Service revenue	210,212		220,403		437,079		430,418
Total revenue	811,718		722,517		1,464,114		1,371,254
Cost of product revenue	240,494		238,455		446,684		444,731
Cost of service revenue	123,880		136,269		262,063		270,924
Total cost of revenue	364,374		374,724		708,747		715,655
Selling, general and administrative expenses	221,026		201,553		429,595		400,410
Research and development expenses	49,521		48,344		98,435		96,324
Restructuring and other costs, net	1,158		6,161		7,016		13,800
Operating income from continuing operations	175,639		91,735		220,321		145,065
Interest and other expense, net	10,812		19,908		20,805		36,473
Income from continuing operations before income taxes	164,827		71,827		199,516		108,592
Provision for income taxes	27,614		2,686		28,588		3,998
Income from continuing operations	137,213		69,141		170,928		104,594

Loss on disposition of discontinued operations before income taxes	—		—		—		—
Provision for income taxes on discontinued operations and dispositions	51		54		101		95
Loss from discontinued operations and dispositions	(51)		(54)		(101)		(95)
Net income	$	137,162	$	69,087	$	170,827	$	104,499
Basic earnings per share:
Income from continuing operations	$	1.23	$	0.62	$	1.54	$	0.94
Loss from discontinued operations and dispositions	(0.00)		(0.00)		(0.00)		(0.00)
Net income	$	1.23	$	0.62	$	1.54	$	0.94
Diluted earnings per share:
Income from continuing operations	$	1.23	$	0.62	$	1.53	$	0.94
Loss from discontinued operations and dispositions	(0.00)		(0.00)		(0.00)		(0.00)
Net income	$	1.23	$	0.62	$	1.53	$	0.94
Weighted average shares of common stock outstanding:
Basic	111,329		110,845		111,225		110,694
Diluted	111,869		111,528		111,756		111,411
Cash dividends declared per common share	$	0.07	$	0.07	$	0.14	$	0.14

The accompanying notes are an integral part of these condensed consolidated financial statements.

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PERKINELMER, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


	Three Months Ended						Six Months Ended
	July 5, 2020		June 30, 2019		July 5, 2020		June 30, 2019
	(In thousands)
Net income	$	137,162	$	69,087	$	170,827	$	104,499
Other comprehensive income (loss):
Foreign currency translation adjustments	61,568		(7,320)		(17,025)		(4,254)


Unrealized gain (loss) on securities, net of tax	87		103		(1)		(17)
Other comprehensive income (loss)	61,655		(7,217)		(17,026)		(4,271)
Comprehensive income	$	198,817	$	61,870	$	153,801	$	100,228

The accompanying notes are an integral part of these condensed consolidated financial statements.

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PERKINELMER, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


	July 5, 2020		December 29, 2019
	(In thousands, except share and per share data)
Current assets:
Cash and cash equivalents	$	218,536	$	191,877
Accounts receivable, net	708,799		725,184

Inventories	477,707		356,937
Other current assets	126,371		100,381

Total current assets	1,531,413		1,374,379
Property, plant and equipment:
At cost	729,596		701,580
Accumulated depreciation	(406,807)		(383,357)
Property, plant and equipment, net	322,789		318,223
Operating lease right-of-use assets	195,222		167,276
Intangible assets, net	1,188,464		1,283,286
Goodwill	3,107,373		3,111,227
Other assets, net	291,555		284,173

Total assets	$	6,636,816	$	6,538,564
Current liabilities:
Current portion of long-term debt	$	346,342	$	9,974
Accounts payable	255,137		235,855
Short-term accrued restructuring and other costs	9,613		11,559
Accrued expenses and other current liabilities	550,067		503,332
Current liabilities of discontinued operations	2,097		2,112
Total current liabilities	1,163,256		762,832
Long-term debt	1,624,996		2,064,041
Long-term liabilities	703,208		751,468
Operating lease liabilities	177,893		146,399

Total liabilities	3,669,353		3,724,740
Commitments and contingencies (see Note 18)
Stockholders’ equity:
Preferred stock—$1 par value per share, authorized 1,000,000 shares; none issued or outstanding	—		—
Common stock—$1 par value per share, authorized 300,000,000 shares; issued and outstanding 111,501,000 shares and 111,140,000 shares at July 5, 2020 and December 29, 2019, respectively	111,501		111,140
Capital in excess of par value	106,744		90,357
Retained earnings	2,965,890		2,811,973
Accumulated other comprehensive loss	(216,672)		(199,646)
Total stockholders’ equity	2,967,463		2,813,824
Total liabilities and stockholders’ equity	$	6,636,816	$	6,538,564

The accompanying notes are an integral part of these condensed consolidated financial statements.

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PERKINELMER, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)


	For the Six-Month Period Ended July 5, 2020
	Common Stock Amount		Capital in Excess of Par Value		Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity
	(In thousands)
Balance, December 29, 2019	$	111,140	$	90,357	$	2,811,973	$	(199,646)	$	2,813,824
Impact of adopting ASU 2016-13 (see Note 1)	—		—		(1,328)		—		(1,328)
Net income	—		—		33,665		—		33,665
Other comprehensive loss	—		—		—		(78,681)		(78,681)
Dividends	—		—		(7,779)		—		(7,779)
Exercise of employee stock options and related income tax benefits	21		1,085		—		—		1,106
Issuance of common stock for employee stock purchase plans	14		1,242		—		—		1,256
Purchases of common stock	(66)		(6,276)		—		—		(6,342)
Issuance of common stock for long-term incentive program	197		2,831		—		—		3,028
Stock compensation	—		997		—		—		997
Balance, April 5, 2020	$	111,306	$	90,236	$	2,836,531	$	(278,327)	$	2,759,746
Net income	—		—		137,162		—		137,162
Other comprehensive income	—		—		—		61,655		61,655
Dividends	—		—		(7,803)		—		(7,803)
Exercise of employee stock options and related income tax benefits	175		8,792		—		—		8,967
Issuance of common stock for employee stock purchase plans	14		1,291		—		—		1,305
Purchases of common stock	(4)		(323)		—		—		(327)
Issuance of common stock for long-term incentive program	2		5,123		—		—		5,125
Stock compensation	8		1,625		—		—		1,633
Balance, July 5, 2020	$	111,501	$	106,744	$	2,965,890	$	(216,672)	$	2,967,463

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	For the Six-Month Period Ended June 30, 2019
	Common Stock Amount		Capital in Excess of Par Value		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Equity
	(In thousands)
Balance, December 30, 2018	$	110,597	$	48,772	$	2,602,067	$	(176,481)	$	2,584,955
Impact of adopting ASU 2016-02	—		—		13,289		—		13,289
Net income	—		—		35,412		—		35,412
Other comprehensive income	—		—		—		2,946		2,946
Dividends	—		—		(7,742)		—		(7,742)
Exercise of employee stock options and related income tax benefits	186		8,424		—		—		8,610
Issuance of common stock for employee stock purchase plans	19		1,367		—		—		1,386
Purchases of common stock	(57)		(5,236)		—		—		(5,293)
Issuance of common stock for long-term incentive program	146		3,392		—		—		3,538
Stock compensation	—		1,371		—		—		1,371
Balance, March 31, 2019	$	110,891	$	58,090	$	2,643,026	$	(173,535)	$	2,638,472
Net income	—		—		69,087		—		69,087
Other comprehensive loss	—		—		—		(7,217)		(7,217)
Dividends	—		—		(7,746)		—		(7,746)
Exercise of employee stock options and related income tax benefits	167		7,777		—		—		7,944
Issuance of common stock for employee stock purchase plans	15		1,387		—		—		1,402
Purchases of common stock	(7)		(757)		—		—		(764)
Issuance of common stock for long-term incentive program	5		4,384		—		—		4,389
Stock compensation	—		1,300		—		—		1,300
Balance, June 30, 2019	$	111,071	$	72,181	$	2,704,367	$	(180,752)	$	2,706,867

The accompanying notes are an integral part of these consolidated financial statements.

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PERKINELMER, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Six Months Ended
	July 5, 2020		June 30, 2019
	(In thousands)
Operating activities:
Net income	$	170,827	$	104,499
Loss from discontinued operations and dispositions, net of income taxes	101		95
Income from continuing operations	170,928		104,594
Adjustments to reconcile income from continuing operations to net cash provided by (used in) continuing operations:
Stock-based compensation	12,654		12,801
Restructuring and other costs, net	7,016		13,800
Depreciation and amortization	120,047		103,793
Loss on disposition of businesses and assets, net	485		2,469

Change in fair value of contingent consideration	(11,446)		3,161

Amortization of deferred debt financing costs and accretion of discounts	1,642		1,790
Amortization of acquired inventory revaluation	1,485		5,565
Changes in assets and liabilities which provided (used) cash, excluding effects from companies acquired:
Accounts receivable, net	4,312		(9,604)

Inventories	(126,707)		(50,450)
Accounts payable	20,907		(39,951)

Accrued expenses and other	(2,677)		(106,425)
Net cash provided by operating activities of continuing operations	198,646		41,543
Net cash used in operating activities of discontinued operations	—		—
Net cash provided by operating activities	198,646		41,543
Investing activities:
Capital expenditures	(37,138)		(36,461)
Purchases of investments	(7,393)		(868)
Purchases of licenses	—		(5,000)
Proceeds from disposition of businesses and assets	1,815		550
Proceeds from surrender of life insurance policies	131		—
Activity related to acquisitions, net of cash and cash equivalents acquired	(2,990)		(244,738)
Net cash used in investing activities of continuing operations	(45,575)		(286,517)
Net cash provided by investing activities of discontinued operations	—		—
Net cash used in investing activities	(45,575)		(286,517)
Financing activities:
Payments on borrowings	(290,000)		(578,000)
Proceeds from borrowings	188,000		849,550

Payments of debt financing costs	—		(181)
Settlement of cash flow hedges	5,037		(1,659)
Net payments on other credit facilities	(6,036)		(9,806)
Payments for acquisition-related contingent consideration	(5,200)		(23,700)
Proceeds from issuance of common stock under stock plans	10,074		16,554
Purchases of common stock	(6,669)		(6,057)
Dividends paid	(15,572)		(15,507)
Net cash (used in) provided by financing activities of continuing operations	(120,366)		231,194
Net cash provided by financing activities of discontinued operations	—		—
Net cash (used in) provided by financing activities	(