-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Lb66fBxkUt+fgSagp1RJrWryQoGwdCpUJMUhwPeOMznT6KIxE2x5NzhHs2RLO2nb 6hzM/fI/Ir6+c76LNlxauw== 0000950135-02-005361.txt : 20021129 0000950135-02-005361.hdr.sgml : 20021128 20021129172550 ACCESSION NUMBER: 0000950135-02-005361 CONFORMED SUBMISSION TYPE: SC TO-I PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 20021129 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: PERKINELMER INC CENTRAL INDEX KEY: 0000031791 STANDARD INDUSTRIAL CLASSIFICATION: LABORATORY ANALYTICAL INSTRUMENTS [3826] IRS NUMBER: 042052042 STATE OF INCORPORATION: MA FISCAL YEAR END: 0103 FILING VALUES: FORM TYPE: SC TO-I SEC ACT: 1934 Act SEC FILE NUMBER: 005-18230 FILM NUMBER: 02845153 BUSINESS ADDRESS: STREET 1: 45 WILLIAM ST CITY: WELLESLEY STATE: MA ZIP: 02481 BUSINESS PHONE: 7812375100 MAIL ADDRESS: STREET 1: 45 WILLIAM ST CITY: WELLESLEY STATE: MA ZIP: 02481 FORMER COMPANY: FORMER CONFORMED NAME: EDGERTON GERMESHAUSEN & GRIER INC DATE OF NAME CHANGE: 19670626 FORMER COMPANY: FORMER CONFORMED NAME: EG&G INC DATE OF NAME CHANGE: 19920703 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: PERKINELMER INC CENTRAL INDEX KEY: 0000031791 STANDARD INDUSTRIAL CLASSIFICATION: LABORATORY ANALYTICAL INSTRUMENTS [3826] IRS NUMBER: 042052042 STATE OF INCORPORATION: MA FISCAL YEAR END: 0103 FILING VALUES: FORM TYPE: SC TO-I BUSINESS ADDRESS: STREET 1: 45 WILLIAM ST CITY: WELLESLEY STATE: MA ZIP: 02481 BUSINESS PHONE: 7812375100 MAIL ADDRESS: STREET 1: 45 WILLIAM ST CITY: WELLESLEY STATE: MA ZIP: 02481 FORMER COMPANY: FORMER CONFORMED NAME: EDGERTON GERMESHAUSEN & GRIER INC DATE OF NAME CHANGE: 19670626 FORMER COMPANY: FORMER CONFORMED NAME: EG&G INC DATE OF NAME CHANGE: 19920703 SC TO-I 1 b44808tosctovi.txt PERKINELMER, INC. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------- SCHEDULE TO (RULE 13e-4) TENDER OFFER STATEMENT UNDER SECTION 14(d)(1) OR 13(e)(1) OF THE SECURITIES EXCHANGE ACT OF 1934 ------------------- PERKINELMER, INC. (Name of Subject Company (Issuer) and Filing Person (Offeror)) ------------------- ZERO COUPON CONVERTIBLE DEBENTURES DUE AUGUST 7, 2020 (Title of Class of Securities) ------------------- 714046 AA 7 (CUSIP Number of Class of Securities) ------------------- Terrance L. Carlson, Esq. Senior Vice President and General Counsel PerkinElmer, Inc. 45 William Street Wellesley, MA 02481 (781) 237-5100 (Name, address and telephone number of person authorized to receive notices and communications on behalf of filing person) Copy to: David E. Redlick, Esq. Hale and Dorr LLP 60 State Street Boston, Massachusetts 02109 Telephone: (617) 526-6000 Telecopy: (617) 526-5000 ------------------- CALCULATION OF FILING FEE TRANSACTION VALUATION (1) AMOUNT OF FILING FEE (2) $392,142,311 $36,078 - ---------- (1) Determined pursuant to Rule 0-11(b)(1) of the Securities Exchange Act of 1934. Based upon the maximum amount of cash that might be paid for the Zero Coupon Convertible Debentures due August 7, 2020. (2) The amount of the filing fee, calculated in accordance with Section 13(e)(3) of the Securities Exchange Act of 1934, as amended, equals $92.00 per $1,000,000 of the value of securities proposed to be purchased. [ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. Amount Previously Paid: Not applicable. Filing party: Not applicable. Form or Registration No.: Not applicable. Date filed: Not applicable.
[ ] Check the box if the filing relates solely to preliminary communications made before the commencement of a tender offer. Check the appropriate boxes below to designate any transactions to which the statement relates: [ ] third-party tender offer subject to Rule 14d-1. [X] issuer tender offer subject to Rule 13e-4. [ ] going-private transaction subject to Rule 13e-3. [ ] amendment to Schedule 13D under Rule 13d-2. Check the following box if the filing is a final amendment reporting the results of the tender offer: [ ] TENDER OFFER This Issuer Tender Offer Statement on Schedule TO (the "Statement") is being filed with the United States Securities and Exchange Commission (the "Commission") by PerkinElmer, Inc., a Massachusetts corporation ("PerkinElmer"), in connection with PerkinElmer's offer to purchase for cash, on the terms and subject to the conditions set forth in the attached Offer to Purchase, dated November 29, 2002 (the "Offer to Purchase"), and Letter of Transmittal (the "Letter of Transmittal"), any and all of PerkinElmer's outstanding zero coupon convertible debentures due August 7, 2020 (the "Debentures"). Copies of the Offer to Purchase and the Letter of Transmittal are filed as exhibits (a)(1)(i) and (a)(1)(ii), respectively, hereto. Pursuant to General Instruction F to Schedule TO, information contained in the Offer to Purchase is hereby incorporated by reference in the answers to items of this Statement. ITEM 1. SUMMARY TERM SHEET. The information set forth in the section of the Offer to Purchase captioned "Summary Term Sheet" is incorporated herein by reference. ITEM 2. SUBJECT COMPANY INFORMATION. (a) The name of the issuer is PerkinElmer, Inc., a Massachusetts corporation, and the address and telephone number of its principal executive offices are 45 William Street, Wellesley, Massachusetts 02481, (781) 237-5100. (b) The securities that are subject to this offer are the zero coupon convertible debentures due August 7, 2020 of PerkinElmer. As of November 26, 2002, there was approximately $722.3 million aggregate principal amount at maturity of Debentures outstanding. As of November 26, 2002, the accreted value of the outstanding Debentures was approximately $390.9 million. (c) The Debentures are not listed on any national securities exchange or authorized to be quoted in any inter-dealer quotation system of any national securities association. There is no established trading market for the Debentures. PerkinElmer believes that trading in the Debentures has been limited and sporadic. ITEM 3. IDENTITY AND BACKGROUND OF FILING PERSON. (a) The information set forth under Item 2(a) above is incorporated herein by reference. PerkinElmer is both the filing person and the subject company. As required by General Instruction C to Schedule TO promulgated by the Commission, the following persons are directors and/or executive officers and/or controlling persons of PerkinElmer: Gregory L. Summe Chairman of the Board, Chief Executive Officer and President Robert A. Barrett Senior Vice President, President -- Fluid Sciences Peter B. Coggins Senior Vice President, President -- Life and Analytical Sciences John P. Murphy Senior Vice President, President -- Optoelectronics Robert F. Friel Senior Vice President and Chief Financial Officer Terrance L. Carlson Senior Vice President, Business Development, General Counsel and Clerk Richard F. Walsh Senior Vice President Jeffrey D. Capello Vice President -- Finance and Chief Accounting Officer Tamara J. Erickson Director Nicholas A. Lopardo Director Alexis P. Michas Director Michael C. Ruettgers Director Dr. Vicki L. Sato Director Gabriel Schmergel Director Kenton J. Sicchitano Director G. Robert Tod Director
The address of each director and/or executive officer and/or controlling person listed above is c/o PerkinElmer, Inc., 45 William Street, Wellesley, MA 02481, and each such person's telephone number is (781) 237-5100. ITEM 4. TERMS OF THE TRANSACTION. (a)(1)(i) - (a)(1)(iii), (v) - (viii), (x), (xii) The information set forth in the sections of the Offer to Purchase captioned "Summary Term Sheet," "The Refinancing Transactions," "Purpose of the Offer," "Source and Amount of Funds," "Terms of the Offer -- General," "Terms of the Offer -- Procedure for Tendering Debentures," "Terms of the Offer -- Withdrawal of Tendered Debentures," "Terms of the Offer -- Conditions to the Offer," "Terms of the Offer -- Extension, Waiver, Amendment and Termination," "Description of the Debentures," "Certain Significant Considerations" and "United States Federal Income Tax Consequences" is incorporated herein by reference. (a)(1)(iv), (ix), (xi) Not applicable. (a)(2) Not applicable. (b) None of the subject securities is to be purchased from any officer, director, or affiliate of PerkinElmer. ITEM 5. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS. (e) The Debentures are governed by the First Supplemental Indenture, dated as of August 7, 2000, to the Indenture, dated as of August 7, 2000, between PerkinElmer, Inc. and Bank One Trust Company, N.A., as successor Trustee. From time to time subsequent to their issuance, PerkinElmer has repurchased Debentures. The information set forth in the Offer to Purchase in the section captioned "Description of the Debentures" is incorporated herein by reference. ITEM 6. PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS. (a) The information set forth in the Offer to Purchase in the sections captioned "Purpose of the Offer" and "The Refinancing Transactions" is incorporated herein by reference. (b) The information set forth in the Offer to Purchase in the sections captioned "Purpose of the Offer" and "The Refinancing Transactions" is incorporated herein by reference. (c)(1) None. (c)(2) None. (c)(3) The information set forth in the Offer to Purchase in the sections captioned "The Refinancing Transactions," "Purpose of the Offer," "Capitalization," "Terms of the Offer -- Conditions to the Offer," "Description of the Debentures" and "Certain Significant Considerations" is incorporated herein by reference. (c)(4) None. (c)(5) None. (c)(6) None. (c)(7) None. (c)(8) None. (c)(9) The information set forth in the Offer to Purchase in the section captioned "The Refinancing Transactions" is incorporated herein by reference. (c)(10) The information set forth in the Offer to Purchase in the sections captioned "The Refinancing Transactions" and "Certain Significant Considerations" is incorporated herein by reference. ITEM 7. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. (a) The information set forth in the Offer to Purchase in the sections captioned "The Refinancing Transactions," "Source and Amount of Funds" and "Capitalization" is incorporated herein by reference. (b) The information set forth in the Offer to Purchase in the sections captioned "The Refinancing Transactions," "Source and Amount of Funds," and "Terms of the Offer -- Conditions to the Offer" is incorporated herein by reference. (d) The information set forth in the Offer to Purchase in the sections captioned "The Refinancing Transactions," "Source and Amount of Funds," "Capitalization" and "Terms of the Offer -- Conditions to the Offer" is incorporated herein by reference. ITEM 8. INTEREST IN SECURITIES OF THE SUBJECT COMPANY. (a) None. (b) During the past sixty days, PerkinElmer repurchased an aggregate of $24.7 million in principal amount at maturity of debentures outstanding. ITEM 9. PERSONS/ASSETS, RETAINED, EMPLOYED, COMPENSATED OR USED. (a) The information set forth in the Offer to Purchase in the sections captioned "Depositary and Information Agent; Fees and Expenses" and "Miscellaneous" is incorporated herein by reference. ITEM 10. FINANCIAL STATEMENTS. (a) The information set forth in the Offer to Purchase in the section captioned "Certain Financial Information" is incorporated herein by reference. (b) The information set forth in the Offer to Purchase in the sections captioned "Capitalization" and "Certain Financial Information" is incorporated herein by reference. ITEM 11. ADDITIONAL INFORMATION. Agreements, Regulatory Requirements and Legal Proceedings. (a) (1) None. (a) (2) None. (a) (3) None. (a) (4) None. (a) (5) None. Other Material Information. (b) The information set forth in the Offer to Purchase and the Letter of Transmittal dated as of November 29, 2002, copies of which are attached hereto as Exhibits (a)(1)(i) and (a)(1)(ii), respectively, is incorporated herein by reference. ITEM 12. EXHIBITS.
Exhibit Number Description (a)(1)(i) Offer to Purchase, dated November 29, 2002.* (a)(1)(ii) Letter of Transmittal, dated November 29, 2002.* (a)(1)(iii) Letter to Clients, dated November 29, 2002.* (a)(1)(iv) Letter to Broker-Dealers, dated November 29, 2002.* (a)(1)(v) Instructions to Form W-9.* (a)(2) Press Release Regarding Offer, dated November 29, 2002.* (d)(1) Indenture, dated August 7, 2000, between PerkinElmer, Inc. (formerly EG&G, Inc.) and Bank One Trust Company, N.A., as successor Trustee (previously filed as Exhibit 4.1 to the EG&G, Inc. Registration Statement on Form S-3 (Registration No. 333-71069), and incorporated herein by reference). (d)(2) First Supplemental Indenture, dated as of August 7, 2000, between PerkinElmer and Bank One Trust Company, N.A., relating to the Zero Coupon Convertible Debentures due August 7, 2000 (previously filed as Exhibit 4.1 to PerkinElmer's Current Report on Form 8-K, File No. 1-5075, and incorporated herein by reference).
- ---------- * Filed herewith ITEM 13. INFORMATION REQUIRED BY SCHEDULE 13E-3. (a) Not applicable. SIGNATURE After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this Schedule TO is true, complete and correct. PERKINELMER, INC. By: /s/ Terrance L. Carlson ------------------------------- Terrance L. Carlson, Esq. Senior Vice President, Business Development, General Counsel and Clerk Date: November 29, 2002 EXHIBIT INDEX
Exhibit Number Description ------ ----------- (a)(1)(i) Offer to Purchase, dated November 29, 2002.* (a)(1)(ii) Letter of Transmittal, dated November 29, 2002.* (a)(1)(iii) Letter to Clients, dated November 29, 2002.* (a)(1)(iv) Letter to Broker-Dealers, dated November 29, 2002.* (a)(1)(v) Instructions to Form W-9.* (a)(2) Press Release Regarding Offer, dated November 29, 2002.* (d)(1) Indenture, dated August 7, 2000, between PerkinElmer, Inc. (formerly EG&G, Inc.) and Bank One Trust Company, N.A., as successor Trustee (previously filed as Exhibit 4.1 to the EG&G, Inc. Registration Statement on Form S-3 (Registration No. 333-71069), and incorporated herein by reference). (d)(2) First Supplemental Indenture, dated as of August 7, 2000, between PerkinElmer and Bank One Trust Company, N.A., relating to the Zero Coupon Convertible Debentures due August 7, 2000 (previously filed as Exhibit 4.1 to PerkinElmer's Current Report on Form 8-K, File No. 1-5075, and incorporated herein by reference).
- ---------- * Filed herewith EX-99.(A)(1)(I) 3 b44808toexv99wxayx1yxiy.txt OFFER TO PURCHASE EXHIBIT (a)(1)(i) OFFER TO PURCHASE PERKINELMER, INC. OFFER TO PURCHASE FOR CASH ANY AND ALL OF THE OUTSTANDING ZERO COUPON CONVERTIBLE DEBENTURES DUE AUGUST 7, 2020 OF PERKINELMER, INC. (CUSIP NO. 714046 AA 7) THE OFFER AND YOUR WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, DECEMBER 27, 2002, UNLESS THE OFFER IS EXTENDED. THE OFFER MAY BE EXTENDED UNTIL THE FINANCING CONDITION IS SATISFIED. PerkinElmer, Inc. is offering to purchase for cash any and all of its outstanding Zero Coupon Convertible Debentures due August 7, 2020, at a repurchase price for each $1,000 principal amount at maturity of debentures equal to their accreted value to, but excluding, December 30, 2002. If the expiration date of the offer is December 27, 2002, the repurchase price for each $1,000 principal amount at maturity of debentures would be $542.88, representing the original issue price of $499.60 plus accrued original issue discount of $43.28. The offer is subject to a number of conditions, including that we have received funding under the proposed new senior credit facilities described in this offer to purchase and at least $225.0 million in gross cash proceeds from our proposed issuance and sale of the new senior subordinated notes described in this offer to purchase. IF WE DO NOT COMPLETE THE REFINANCING TRANSACTIONS IN A MANNER THAT SATISFIES THIS FINANCING CONDITION, WE DO NOT INTEND TO COMPLETE THE OFFER. COMPLETION OF THE OFFER IS NOT A CONDITION TO THE COMPLETION OF THE REFINANCING TRANSACTIONS. As of November 26, 2002, there was approximately $722.3 million aggregate principal amount at maturity of debentures outstanding, with an aggregate accreted value as of that date of approximately $390.9 million. As of November 26, 2002, the debentures were convertible into shares of our common stock at a conversion rate of 11.757 shares per debenture. Our common stock is listed on the New York Stock Exchange under the symbol "PKI." On November 27, 2002, the closing price of our common stock, as reported on the New York Stock Exchange, was $8.66 per share. NONE OF PERKINELMER, THE DEALER MANAGER, THE DEPOSITARY, THE INFORMATION AGENT, OR THE TRUSTEE MAKES ANY RECOMMENDATION AS TO WHETHER OR NOT HOLDERS OF DEBENTURES SHOULD TENDER THEIR DEBENTURES PURSUANT TO THE OFFER. The Dealer Manager for the Offer is: MERRILL LYNCH & CO. November 29, 2002 TABLE OF CONTENTS
PAGE ---- SUMMARY TERM SHEET.......................................... 1 PERKINELMER, INC............................................ 6 THE REFINANCING TRANSACTIONS................................ 6 PURPOSE OF THE OFFER........................................ 9 SOURCE AND AMOUNT OF FUNDS.................................. 9 CAPITALIZATION.............................................. 10 TERMS OF THE OFFER.......................................... 12 DESCRIPTION OF THE DEBENTURES............................... 17 CERTAIN SIGNIFICANT CONSIDERATIONS.......................... 20 UNITED STATES FEDERAL INCOME TAX CONSEQUENCES............... 23 CERTAIN FINANCIAL INFORMATION............................... 26 DEALER MANAGER, DEPOSITARY AND INFORMATION AGENT; FEES AND EXPENSES.................................................. 26 FORWARD-LOOKING STATEMENTS.................................. 27 INCORPORATION OF DOCUMENTS BY REFERENCE..................... 28 WHERE YOU CAN FIND MORE INFORMATION......................... 28 MISCELLANEOUS............................................... 29 INDEX TO FINANCIAL STATEMENTS............................... F-1
--------------------- THE OFFER IS NOT BEING MADE TO, NOR WILL THE SURRENDER OF DEBENTURES FOR PURCHASE BE ACCEPTED FROM OR ON BEHALF OF, HOLDERS OF DEBENTURES IN ANY JURISDICTION IN WHICH THE MAKING OR ACCEPTANCE OF THE OFFER WOULD NOT BE IN COMPLIANCE WITH THE LAWS OF SUCH JURISDICTION. --------------------- IMPORTANT NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN AS CONTAINED IN THIS OFFER TO PURCHASE OR IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY PERKINELMER, THE DEALER MANAGER, THE DEPOSITARY, THE INFORMATION AGENT OR THE TRUSTEE. THIS OFFER TO PURCHASE AND RELATED DOCUMENTS DO NOT CONSTITUTE AN OFFER TO BUY OR SOLICITATION OF AN OFFER TO SELL DEBENTURES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. IN THOSE JURISDICTIONS WHERE THE SECURITIES, "BLUE SKY" OR OTHER LAWS REQUIRE THE OFFER TO BE MADE BY A LICENSED BROKER OR DEALER, THE OFFER WILL BE DEEMED TO BE MADE ON BEHALF OF PERKINELMER BY ONE OR MORE REGISTERED BROKERS OR DEALERS LICENSED UNDER THE LAWS OF SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS OFFER TO PURCHASE AND RELATED DOCUMENTS NOR ANY PURCHASE OF DEBENTURES WILL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED IN THIS OFFER TO PURCHASE OR THEREIN IS CURRENT AS OF ANY TIME AFTER THE DATE OF SUCH INFORMATION. We and our affiliates, including our executive officers and directors, will be prohibited by Rule 13e-4 under the Securities Exchange Act of 1934, as amended, from repurchasing any of the debentures outside of the Offer until at least the tenth business day after the expiration or termination of the Offer. Following that time, we expressly reserve the absolute right, in our sole discretion from time to time in the future, to purchase any of the debentures, whether or not any debentures are purchased pursuant to the Offer, through open market purchases, privately negotiated transactions, tender offers, exchange offers or otherwise, upon such terms and at such prices as we may determine, which may be more or less than the price to be paid pursuant to the Offer and could be for cash or other consideration. We can not assure you as to which, if any, of these alternatives, or combinations thereof, we will pursue. The CUSIP number referenced in this Offer to Purchase has been assigned by Standard & Poor's Corporation and is included solely for the convenience of holders of the debentures. None of PerkinElmer, the Dealer Manager, the Depositary, the Information Agent or the Trustee is responsible for the selection or use of the above CUSIP number, and no representation is made as to its correctness on the debentures or as indicated in this Offer to Purchase, the Letter of Transmittal or any other document. i SUMMARY TERM SHEET The following are answers to some of the questions that you, as a holder of the debentures, may have. We urge you to read the remainder of this offer to purchase and the other documents that are incorporated in this document by reference carefully because the information in this summary term sheet is not complete. Additional important information is contained in the remainder of this document and the incorporated documents. INFORMATION ABOUT THE OFFER WHO IS OFFERING TO PURCHASE THE DEBENTURES? - - PerkinElmer, Inc., a Massachusetts corporation, is offering to purchase the debentures. WHAT CLASS OF SECURITIES IS SOUGHT IN THE OFFER? - - We are offering to acquire any and all of our outstanding Zero Coupon Convertible Debentures due August 7, 2020, which we refer to as the "debentures." We issued the debentures under the First Supplemental Indenture, dated as of August 7, 2000, to the Indenture, dated as of August 7, 2000, between us and Bank One Trust Company, N.A., successor to The First National Bank of Chicago, as Trustee. We refer to that document as the "indenture." WHY IS PERKINELMER MAKING THE OFFER? - - The offer is a component of a series of related transactions that we are conducting in order to refinance most of our outstanding indebtedness. We will deliver the debentures that we repurchase in the offer to the Trustee for cancellation and those debentures will cease to be outstanding. HOW MUCH IS PERKINELMER OFFERING TO PAY FOR THE DEBENTURES? - - We are offering to pay in cash for each $1,000 principal amount of debentures due at maturity an amount equal to their accreted value to, but excluding, December 30, 2002. If the expiration date of the offer is December 27, 2002, the repurchase price for each $1,000 principal amount at maturity of debentures would be $542.88, representing the original issue price of $499.60 plus accrued original issue discount of $43.28. WHAT ARE THE SIGNIFICANT CONDITIONS TO THE OFFER? - - It is a condition to the completion of the offer that we have received funding under our proposed new senior credit facilities and at least $225.0 million in gross cash proceeds from our proposed issuance and sale of new senior subordinated notes. We refer to this as the "financing condition." It is also a condition to the completion of the offer that we have repaid our obligations under our Fremont, California operating lease. We have agreed to a commitment letter for new senior credit facilities that consist of a term loan in an amount of up to $345.0 million and a $100.0 million revolving credit facility. It is a condition to the funding of the new senior credit facilities that we have received at least $225.0 million in gross cash proceeds from our proposed issuance and sale of the new senior subordinated notes. We cannot assure you that the financing condition will be satisfied. If it is not satisfied, we do not intend to complete the offer. We may waive, in our discretion, the financing condition. You should read the section titled "The Refinancing Transactions" for more information about our proposed new senior credit facilities and senior subordinated notes. HOW MANY DEBENTURES WILL PERKINELMER PURCHASE? - - We will purchase for cash, upon the terms and subject to the conditions of the offer, any and all of the debentures that are validly tendered and not properly withdrawn. 1 DOES PERKINELMER HAVE THE FINANCIAL RESOURCES TO REPURCHASE THE DEBENTURES? - - As discussed in our answer to the question "What are the significant conditions to the offer?", it is a condition to the completion of the offer that we have received funding under our proposed new senior credit facilities and at least $225.0 million in gross cash proceeds from our proposed issuance and sale of new senior subordinated notes. We intend to use a portion of these funds to pay for the debentures purchased in the offer, as well as related costs and expenses of the offer. We do not have any alternative financing arrangements or alternative financing plans in the event that the financing condition is not satisfied. WHAT IS THE MARKET VALUE OF THE DEBENTURES? - - There is no established reporting or trading system for the debentures. We believe that trading in the debentures has been limited and sporadic. WHAT IS THE PROCESS FOR TENDERING DEBENTURES? - - There are three ways to tender debentures, depending upon the manner in which your debentures are held: - If your debentures are registered in your name, (a) complete and sign the letter of transmittal or a facsimile copy in accordance with the instructions to the letter of transmittal, (b) mail or deliver it and any other required documents to the Depositary, and (c) either deliver the certificates for the tendered debentures to the Depositary or transfer your debentures pursuant to the book-entry transfer procedures described in this offer to purchase; - If your debentures are registered in the name of a broker, dealer, commercial bank, trust company or other nominee, meaning your debentures are owned in "street name," then you must instruct your broker, dealer, commercial bank, trust company or other nominee to tender your debentures; or - If your debentures are held of record by The Depository Trust Company, or DTC, you may tender them through DTC's Automated Tender Offer Program. You should read the section titled "Terms of the Offer -- Procedure for Tendering Debentures" for more information on how to tender your debentures. WHEN DOES THE OFFER EXPIRE? - - The expiration date of the Offer is 12:00 midnight, New York City time, on Friday, December 27, 2002, unless we extend the offer in our sole discretion. CAN THE OFFER BE EXTENDED, AND UNDER WHAT CIRCUMSTANCES? - - We may extend the offer until the conditions to the completion of the offer are satisfied, including the financing condition described in our answer to the question "What are the significant conditions to the offer?" We expressly reserve the right, in our sole discretion, to terminate the offer if any of the conditions described in the section titled "Terms of the Offer -- Conditions to the Offer" have not been satisfied or waived by us on or before the expiration date of the offer or for any other reason, or for no reason at all. HOW WILL HOLDERS OF DEBENTURES BE NOTIFIED IF THE OFFER IS EXTENDED? - - If we extend the offer, we will notify you as promptly as practicable by a public announcement, which will be issued no later than 9:00 a.m., New York City time, on the first business day after the previously scheduled expiration date of the offer. Without limiting the manner in which we may choose to make any public announcement, we have no obligation to publish, advertise or otherwise communicate any public announcement other than by issuing a press release to the Dow Jones News Service. You should 2 read the section titled "Terms of the Offer -- Extension, Waiver, Amendment and Termination" for more information. - - In addition, if we materially change the terms of the offer or the information concerning the offer, or if we waive a material condition of the offer, we will disseminate additional tender offer materials and extend the offer to the extent required by Rule 13e-4(d)(2) and Rule 13e-4(e)(3) under the Securities Exchange Act of 1934, which we refer to as the "Exchange Act." WHEN WILL HOLDERS RECEIVE PAYMENT FOR TENDERED DEBENTURES? - - You will receive payment for your debentures promptly after the date on which we accept all debentures properly tendered and not validly withdrawn. Assuming the offer is not extended, we expect the payment date for the debentures to be December 30, 2002. CAN HOLDERS WITHDRAW TENDERED DEBENTURES? - - You may withdraw your tendered debentures at any time on or before 12:00 midnight, New York City time, on December 27, 2002 or, if the offer is extended, the time and date when the extended offer expires. You may also withdraw your debentures if we have not accepted them for payment by January 29, 2003. HOW DO HOLDERS WITHDRAW PREVIOUSLY TENDERED DEBENTURES? - - To withdraw debentures, you must deliver a written notice of withdrawal, or a facsimile of one, with the required information to the Depositary before your right to withdraw has expired. You may not rescind a withdrawal of tendered debentures. However, you may retender your debentures by following the proper tender procedures. You should read the section titled "Terms of the Offer -- Withdrawal of Tendered Debentures" for more information on how to withdraw previously tendered debentures. WHAT HAPPENS TO DEBENTURES THAT ARE NOT TENDERED? - - Any debentures that remain outstanding after the completion of the offer will continue to be our obligations. Holders of those outstanding debentures will continue to have all the rights associated with those debentures. You should read the sections titled "Purpose of the Offer" and "Description of the Debentures" for more information on the terms of the debentures. CAN HOLDERS STILL CONVERT DEBENTURES INTO SHARES OF PERKINELMER COMMON STOCK? - - Yes. However, if you tender your debentures in the offer, you may convert your debentures only if you properly withdraw your debentures before your right to withdraw has expired. The debentures are convertible into shares of our common stock at the conversion rate of 11.757 shares of our common stock for each $1,000 principal amount at maturity of debentures. As of November 26, 2002, this conversion rate is equivalent to a conversion price of $46.03 per share of common stock based on the accreted value of the debentures at that date. Our common stock is listed on the New York Stock Exchange under the symbol "PKI." On November 27, 2002, the closing price of our common stock, as reported on the New York Stock Exchange, was $8.66 per share. You should read the question titled "What is the conversion rate of the debentures?" for more information on the conversion of debentures. WHAT ARE THE TAX CONSEQUENCES TO HOLDERS IF THEY TENDER THEIR DEBENTURES? - - The receipt of cash in exchange for your debentures in the offer will be a taxable transaction to you for United States federal income tax purposes. Except with respect to any accrued market discount, as described below, that you did not previously include in your taxable income, which will be taxable as ordinary income, you will generally recognize a capital gain or loss on the sale equal to the difference between: - the amount of cash you receive for your debentures; and 3 - your adjusted tax basis in the debentures. The capital gain or loss will be considered long-term if you held your debentures for longer than one year and short-term if you held your debentures for one year or less. Any accrued market discount, which is generally the difference between your cost of the debenture and its revised issue price, that you have not previously included in your taxable income, will be taxable to you as ordinary income. You should read the section titled "United States Federal Income Tax Consequences" for more information on the tax consequences of the offer. - - You should consult with your tax advisor with respect to the application of the United States federal income tax laws to your particular situation as well as any tax consequences arising under the laws of any state, local or foreign taxing jurisdiction or under any applicable tax treaty. DO HOLDERS HAVE TO PAY A BROKERAGE COMMISSION FOR TENDERING DEBENTURES? - - No brokerage commissions are payable by holders to PerkinElmer, Merrill Lynch & Co., the Dealer Manager, Bank One Trust Company, N.A., the Depositary, or D. F. King & Co., Inc., the Information Agent, or Bank One Trust Company, the Trustee, in connection with the tender of your debentures in the offer. WHERE CAN HOLDERS GET MORE INFORMATION REGARDING THE OFFER? - - If you have any questions or requests for assistance or for additional copies of this offer to purchase or the letter of transmittal, please contact Merrill Lynch & Co., the Dealer Manager for the offer, at (888) ML4-TNDR or D.F. King & Co., Inc., the Information Agent for the offer, at (800) 659-6590. The addresses for Merrill Lynch & Co. and D.F. King & Co., Inc. may be found on the back cover of this offer to purchase. You may also contact PerkinElmer by writing to us at the following address: PerkinElmer, Inc., Attention: Diane Basile, Vice President, Investor Relations and Corporate Communications, 45 William Street, Wellesley, MA 02481 or by calling: (781) 237-5100. Beneficial owners may also contact their broker, dealer, commercial bank, trust company or other nominee through which they hold their debentures with questions and requests for assistance. IS PERKINELMER MAKING ANY RECOMMENDATION ABOUT THE OFFER? - - Neither we nor the Dealer Manager, the Depositary, the Information Agent or the Trustee makes any recommendation as to whether or not you should tender your debentures pursuant to the offer. Holders should determine whether or not to tender their debentures pursuant to the offer based upon, among other things, their own assessment of the current market value of the debentures, liquidity needs and investment objectives. INFORMATION ABOUT THE DEBENTURES WHAT IS THE AMOUNT OF CURRENTLY OUTSTANDING DEBENTURES? - - As of November 26, 2002, there was approximately $722.3 million aggregate principal amount at maturity of debentures outstanding, with an aggregate accreted value as of that date of approximately $390.9 million. WHAT IS THE CONVERSION RATE OF THE DEBENTURES? - - The debentures are convertible into shares of our common stock at a conversion rate of 11.757 shares for each $1,000 principal amount at maturity of debentures. As of November 26, 2002, this conversion rate is equivalent to a conversion price of $46.03 per share, based on the accreted value of the debentures at that date. On November 27, 2002, the closing price of our common stock, as reported on the New York Stock Exchange, was $8.66 per share. You may convert your debentures at any time before the close of business on August 6, 2020, unless we have previously redeemed or repurchased the 4 debentures. You may convert your debentures called for redemption up to and including the business day immediately preceding the day fixed for redemption. You will not receive any cash payment for the accrued original issue discount through the conversion date. DO HOLDERS HAVE ANY RIGHTS TO REQUIRE PERKINELMER TO REPURCHASE THE DEBENTURES? - - You may require us to repurchase some or all of your debentures on August 7, 2003 or on August 7, 2010, or at any time upon certain changes of control, at a repurchase price equal to the initial issue price plus the accrued original issue discount to the redemption date. The repurchase for each $1,000 principal amount at maturity of debentures would be $554.41 as of August 7, 2003 and $706.82 as of August 7, 2010. We have the right to pay the repurchase price with our common stock based on the then current market price, subject to satisfying conditions contained in the indenture, including that the shares of common stock must be issued either pursuant to an effective registration statement or an exemption from the registration requirements of applicable securities laws. WHAT ARE THE REDEMPTION PROVISIONS OF THE DEBENTURES? - - We may redeem some or all of the debentures at any time on or after August 7, 2003, at a redemption price equal to the initial issue price of $499.60 for each $1,000 principal amount at maturity of debentures, plus the accrued original issue discount at a rate of 3.5% per annum compounded semi-annually to the redemption date. At August 7, 2003, the redemption price for each $1,000 principal amount at maturity of debentures would be $554.41. On August 7, 2003, we intend to exercise the right to redeem any debentures that remain outstanding. You should read the section titled "Description of the Debentures" for more information on the redemption provisions of the debentures. --------------------- In this Offer to Purchase, "PerkinElmer, Inc.," "PerkinElmer," "we," "us" and "our" refer to PerkinElmer, Inc. and its consolidated subsidiaries, unless the context requires otherwise. We were incorporated in 1947 under the laws of the Commonwealth of Massachusetts. Our principal executive offices are located at 45 William Street, Wellesley, Massachusetts 02481. Our telephone number is (781) 237-5100. 5 PERKINELMER, INC. We are a leading provider of scientific instruments, consumables and services to the pharmaceutical, biomedical, environmental testing and general industrial markets. We design, manufacture, market and service products and systems within three business units: - Life and Analytical Sciences. We are a leading provider of drug discovery, genetic screening and chemical analysis tools and instrumentation. - Optoelectronics. We provide a broad range of digital imaging, sensor and specialty lighting components used in the biomedical, consumer products and other specialty end markets. - Fluid Sciences. We provide critical fluid control and containment solutions for highly demanding environments such as turbine engines and semiconductor fabrication facilities. THE REFINANCING TRANSACTIONS REFINANCING TRANSACTIONS The Offer is a component of a series of related transactions we are conducting in order to refinance: - our existing unsecured revolving credit facility, which is scheduled to expire in March 2003; - our existing unsecured revolving credit facility, which is scheduled to expire in March 2006; - our outstanding unsecured 6.80% notes due October 15, 2005; - our existing Fremont, California operating lease, which is scheduled to mature in February 2003; and - the debentures. In addition to the Offer, we plan to enter into the following transactions in order to accomplish the refinancing of the indebtedness described above. New Senior Credit Facilities We have agreed to a commitment letter, dated October 26, 2002, with Merrill Lynch Capital Corporation, for new senior credit facilities that consist of a six-year term loan in an amount of up to $345.0 million and a $100.0 million five-year revolving credit facility. The $100.0 million revolving credit facility will not be used to fund the refinancing transactions, but rather will be available for our working capital needs. The principal amount of the term loan will be reduced on a dollar-for-dollar basis to the extent that any 6.80% notes are not repurchased in our 6.80% notes tender offer, which we discuss below. We expect to borrow under the term loan in a single drawing on the closing date of the proposed issuance and sale of the new senior subordinated notes described below. The term loan will be repayable in nominal quarterly installments until the date that is five years after the closing date, and thereafter in four equal quarterly installments until the date that is six years after the closing date. The revolving credit facility will be available to us on a revolving basis during the period commencing on the closing date of the credit agreement and ending on the date that is five years after the closing date. We do not expect to draw down on the revolving credit facility on the closing date. We expect to enter into a credit agreement for the new senior credit facilities at or prior to the completion of the Offer. The closing of the new senior credit facilities is subject to several customary conditions, including the accuracy of representations and warranties and the absence of a material adverse change in our financial condition or results of operations. In addition, the closing of the new senior credit facilities is subject to the condition that we receive at least $225.0 million in gross cash proceeds from our proposed sale of new senior subordinated notes described below. This discussion of various terms of the 6 new senior credit facilities is based on our expectations as of the date of this Offer to Purchase. These terms are still being negotiated and could change materially prior to the expiration date of the Offer. We anticipate that loans under the proposed new senior credit facilities will be secured by a perfected first priority security interest in: - a substantial portion of our domestic assets; - a substantial portion of the domestic assets of our direct and indirect domestic subsidiaries; and - all of the capital stock of our direct and indirect subsidiaries, limited to 65% of such capital stock in the case of foreign subsidiaries that are controlled foreign corporations. For a discussion of circumstances under which some of this security may also be applicable to our 6.80% notes you should read "-- 6.80% Notes Tender Offer" below. In addition, loans under the new senior credit facilities will be guaranteed on a senior basis by our direct and indirect domestic subsidiaries. Loans under the new senior credit facilities will bear interest at a rate per year equal to either: - the base rate plus the applicable margin; or - the eurodollar rate plus the applicable margin. Interest payments based upon the base rate will be payable quarterly. Interest payments based upon the eurodollar rate will be payable on the last day of each relevant interest period and, in the case of any interest period longer than three months, on each successive date three months after the first day of such interest period. The base rate will be a rate calculated on a daily basis as the higher of: - the corporate base rate of interest announced from time to time by Bank of America, N.A.; and - the federal funds effective rate from time to time plus 0.5% per annum. The eurodollar rate will be the rate for eurodollar deposits for one, two, three or six months, at our option, appearing on page 3750 of the Telerate British Bankers Assn. Interest Settlement Page. The applicable margin for the term loans will be 2.5%, in the case of term loans bearing interest at the base rate, and 3.5%, in the case of loans bearing interest at the eurodollar rate. The applicable margin for borrowings under the revolving credit facility will initially be 2.0%, in the case of revolving loans bearing interest at the base rate, and 3.0%, in the case of revolving loans bearing interest at the eurodollar rate. The applicable margin for revolving loans will be subject to reduction after two full fiscal quarters have been completed after the closing date by amounts to be agreed upon based on our total leverage ratio and provided that no event of default has occurred and is continuing. Upon any default in the payment of any amount of principal due under the loans, all outstanding loans will bear interest at 2.0% above the otherwise applicable rate. Overdue interest, fees and other amounts will bear interest at 2.0% above the rate applicable to the base rate loans under the term loan or the revolving credit facility, as the case may be. The new senior credit facilities will contain covenants customary for loans of this type, including negative covenants, our requirement to maintain specified financial ratios and the requirement to use proceeds from specified transactions to prepay outstanding borrowings. The new senior credit facilities will contain customary events of default, including nonpayment of principal when due, nonpayment of interest, material inaccuracy of representations and warranties, change of control and cross defaults. New Senior Subordinated Notes We intend to issue and sell $225.0 million aggregate principal amount of new senior subordinated notes in a private placement transaction pursuant to Rule 144A and Regulation S of the Securities Act of 1933, as amended. The new senior subordinated notes will be our unsecured senior subordinated 7 obligations, junior in right of payment to all of our existing senior indebtedness, including indebtedness under our new senior credit facilities, any debentures that remain outstanding after the Offer or any 6.80% notes that remain outstanding after our 6.80% notes tender offer, and all of our future borrowings, except any future indebtedness that expressly provides that it ranks equally with, or is subordinated in right of payment to, the new senior subordinated notes. The new senior subordinated notes will contain covenants customary for notes of this type and will be guaranteed on a senior subordinated basis by our direct and indirect domestic restricted subsidiaries. These guarantees will be unsecured and subordinated to any senior indebtedness of the guarantor. The interest rate on these notes will be determined at the time of pricing of the offering. 6.80% Notes Tender Offer On November 22, 2002, we commenced an offer to purchase all of our outstanding 6.80% notes. As of November 22, 2002, $115.0 million in aggregate principal amount of our 6.80% notes was outstanding. The tender offer is scheduled to expire on December 23, 2002. Any 6.80% notes that remain outstanding after the 6.80% notes tender offer will rank senior to the proposed new senior subordinated notes and equally with any debentures that remain outstanding following the Offer. Completion of the 6.80% notes tender offer is subject to a number of conditions, including the receipt of the requisite number of the consents described below, the availability of financing and the satisfaction of our obligations under our Fremont, California operating lease. On November 22, 2002, we also commenced a solicitation of consents from the holders of the 6.80% notes to amend the 6.80% notes indenture to eliminate substantially all of the restrictive covenants, including the restrictive covenant that would require the 6.80% notes to be secured, equally and ratably, by the security for certain of our secured debt. If we do not receive the consents of more than a majority of the aggregate principal amount of the outstanding 6.80% notes in our consent solicitation to amend the 6.80% notes indenture, we will not complete the 6.80% notes tender offer and we may be required to secure the 6.80% notes equally and ratably with the borrowings under the proposed new senior credit facilities for so long as those borrowings are secured. CERTAIN CONDITIONS TO THE REFINANCING TRANSACTIONS It is a condition to the completion of the Offer that we receive funding under the proposed new senior credit facilities and at least $225.0 million in gross cash proceeds from the proposed issuance and sale of the new senior subordinated notes. It is also a condition to the completion of the Offer that we have repaid our obligations under our Fremont, California operating lease. Successful completion of the Offer is not a condition to the completion of the 6.80% notes tender offer or the other refinancing transactions. Successful completion of all or a portion of the 6.80% notes tender offer is not a condition to the completion of the Offer or the other refinancing transactions. 8 PURPOSE OF THE OFFER The Offer is a component of a series of related transactions that we are conducting in order to refinance most of our outstanding indebtedness. We will deliver the debentures that we purchase in the Offer to the Trustee for cancellation, and those debentures will cease to be outstanding. Any debentures that remain outstanding after the Offer will continue to be our obligations. Holders of those outstanding debentures will continue to have all the rights associated with those debentures. We are not seeking approval from holders of the debentures for any amendments to the debentures or to the indenture under which they were issued. SOURCE AND AMOUNT OF FUNDS We intend to use a portion of the borrowings under our proposed new senior credit facilities and proceeds from the proposed issuance and sale of the new senior subordinated notes to pay for the debentures purchased in the Offer and related costs and expenses of the Offer, as well as to complete the other refinancing transactions. We estimate that we will require approximately $392.2 million to pay for the debentures purchased in the Offer and the related costs and expenses of the Offer. This assumes that all debentures are validly tendered and accepted for purchase in the Offer and the Offer expires on December 27, 2002. It is a condition to the completion of the Offer that we receive funding under our proposed new senior credit facilities and at least $225.0 million in gross cash proceeds from our proposed issuance and sale of new senior subordinated notes. We cannot assure you that this financing condition will be satisfied. If it is not satisfied, we do not intend to complete the Offer. We do not have any alternative financing arrangements or alternative financing plans in the event that the financing condition is not satisfied. You should read the section titled "The Refinancing Transactions" for more information about our sources of funds for the Offer and the financing condition. 9 CAPITALIZATION The following table sets forth our consolidated cash and cash equivalents and capitalization as of September 29, 2002. This information is presented on an actual basis and on an as adjusted basis to reflect the following transactions as if they had occurred on September 29, 2002: - the repayment and termination of our two existing unsecured revolving credit facilities; - the satisfaction of our existing Fremont, California operating lease; - the sale of our new senior subordinated notes; - the funding of the term loan under our new senior credit facilities; and - our payment of fees, expenses and other costs associated with the above transactions. The following table also sets forth the information on an as adjusted basis to reflect the following transactions, in addition to the transactions described above, as if they had occurred on September 29, 2002: - the completion of our 6.80% notes tender offer, assuming all of those notes are tendered and accepted for payment; and - the completion of the Offer, assuming all of the debentures are tendered and accepted for payment. You should read the capitalization table below in conjunction with our unaudited condensed consolidated financial statements and the related notes to those financial statements that are included elsewhere in this Offer to Purchase.
AS OF SEPTEMBER 29, 2002 ----------------------------------------------------------- AS ADJUSTED (ASSUMING NO AS ADJUSTED REPURCHASES OF 6.80% (ASSUMING REPURCHASE NOTES OR ZERO OF ALL 6.80% NOTES COUPON CONVERTIBLE AND ZERO COUPON ACTUAL DEBENTURES) CONVERTIBLE DEBENTURES) ---------- -------------------- ----------------------- (IN THOUSANDS, EXCEPT SHARE DATA) (UNAUDITED) Cash and cash equivalents(1)(2)............. $ 97,549 $ 466,155(3) $ 26,211 ========== ========== ========== Total debt: 364-day revolving credit facility......... -- -- -- Five-year revolving credit facility....... 73,000 -- -- New senior credit facility -- term loan(1)(2)............................. 230,000 345,000 New senior credit facility -- revolving credit(4).............................. -- -- 6.80% notes(2)............................ 115,000 115,000 -- Zero coupon convertible debentures(1)..... 403,751 403,751 -- New senior subordinated notes(1).......... 225,000 225,000 Other debt(5)............................. 259 259 259 ---------- ---------- ---------- Total debt............................. 592,010 974,010 570,259 Stockholders' equity: Preferred stock -- $1 par value, authorized 1,000,000 shares; none issued or outstanding.................. -- -- -- Common Stock -- $1 par value, authorized 300,000,000 shares; issued 145,101,000 shares at September 29, 2002........... 145,101 145,101 145,101 Capital in excess of par value............ 644,188 644,188 644,188 Retained earnings(6)...................... 666,255 665,676 663,135 Accumulated other comprehensive loss...... (45,023) (45,023) (45,023) Cost of shares held in treasury -- 19,798,000 shares at September 29, 2002..................... (197,584) (197,584) (197,584) ---------- ---------- ---------- Total stockholders' equity............. 1,212,937 1,212,358 1,209,817 ---------- ---------- ---------- Total capitalization........................ $1,804,947 $2,186,368 $1,780,075 ========== ========== ==========
footnotes on the following page 10 - --------------- (1) The completion of all or any portion of the Offer is not a condition to the closing of the new senior subordinated notes offering or any of the other refinancing transactions. The lenders participating in our new senior credit facilities will require that we place in escrow, upon completion of the new senior subordinated notes offering, all of the net proceeds of the new senior subordinated notes offering and a portion of our borrowings under the term loan of our new senior credit facilities to pay the purchase price for debentures purchased in the Offer and to otherwise purchase or satisfy our repurchase obligations with respect to any untendered debentures. In addition, we may from time to time after the tenth business day after the expiration date of the Offer purchase any debentures not tendered in the Offer. We may acquire these debentures through open market purchases, privately negotiated transactions, tender offers, exchange offers or otherwise, upon such terms and at such prices as we may determine, which may be more or less than the price to be paid pursuant to the Offer and could be for cash or other consideration. (2) The completion of all or any portion of the 6.80% notes tender offer is not a condition to the closing of the new senior subordinated notes offering or any of the other refinancing transactions. The amount of the term loan under the new senior credit facilities will be reduced on a dollar-for-dollar basis to the extent any 6.80% notes are not repurchased in the 6.80% notes tender offer. In addition, we may from time to time after the expiration date of the 6.80% notes tender offer purchase any 6.80% notes not tendered in the tender offer. We may acquire these notes through open market purchase, privately negotiated transactions, tender offers, exchange offers or otherwise, upon such terms and at such prices as we may determine, which may be more or less than the price to be paid pursuant to the 6.80% notes tender offer and could be for cash or other consideration. (3) Includes restricted cash to be held in escrow to otherwise purchase or satisfy our repurchase obligations with respect to the untendered debentures. See note (1) above. (4) We expect to be able to borrow up to $100.0 million under the revolving credit facilities. The revolving credit facilities will be available to us on a revolving basis during the period commencing on the closing date of the proposed new senior credit facilities and ending on the date that is five years after the closing date. We do not expect to draw down on the revolving credit facilities on the closing date. (5) Represents borrowings on our draft facilities linked to depository accounts for certain of our subsidiaries. (6) The refinancing of our existing revolving credit facilities will result in our expensing of previously capitalized deferred financing costs related to these facilities. The repurchase of both the 6.80% notes and the debentures will also result in a charge to our earnings equal to the unamortized deferred financing costs related to the 6.80% notes and the debentures. Both of these charges will be reflected in other expense on our consolidated income statement. We have not reflected any gain or loss that may result from the repurchase of the 6.80% notes or the debentures. Any such gain or loss would also affect retained earnings and our consolidated income statement. 11 TERMS OF THE OFFER GENERAL Upon the terms and subject to the conditions set forth in this Offer to Purchase and in the related Letter of Transmittal (which, together with this Offer to Purchase and any amendments or supplements hereto or thereto, collectively constitute the "Offer"), including, if the Offer is extended or amended, the terms and conditions of the extension or amendment, we are offering to purchase for cash any and all of the outstanding debentures at a repurchase price for each $1,000 principal amount at maturity of debentures equal to their accreted value to, but excluding, December 30, 2002, or, if the expiration date of the Offer is after December 27, 2002, to, and including, such later expiration date. If the expiration date of the Offer is December 27, 2002, the repurchase price for each $1,000 principal amount at maturity of debentures would be $542.88, representing the original issue price of $499.60 plus accrued original issue discount of $43.28 to, but including, December 30, 2002. You will not be required to pay a commission to the Depositary, the Information Agent, or the Trustee in connection with the tender of your debentures in the Offer. If any condition to the Offer is not satisfied or waived by us on or before the expiration date of the Offer or for any other reason or for no reason at all, we expressly reserve the right, but will not be obligated, subject to applicable law: - to terminate the Offer and not accept for payment and purchase the tendered debentures and promptly return all tendered debentures to tendering holders; - to waive all the unsatisfied conditions and accept for payment and purchase all debentures that are validly tendered on or before the expiration date of the Offer and not validly withdrawn; - to extend the expiration date of the Offer at any time; or - to amend the Offer. Our right to delay acceptance for payment of debentures tendered pursuant to the Offer or the payment for debentures accepted for purchase is subject to Rule 14e-1(c) under the Exchange Act, which requires that we pay the consideration offered or return the debentures deposited by or on behalf of the holders of debentures promptly after the termination or withdrawal of the Offer. The Offer will expire at 12:00 midnight, New York City time, on Friday, December 27, 2002, unless we extend it in our sole discretion. You should read the sections titled "-- Conditions to the Offer" and "-- Extension, Waiver, Amendment and Termination" below. For purposes of the Offer, we will be deemed to have accepted for payment (and thereby purchased) debentures validly tendered and not properly withdrawn if, as and when we give written notice to the Depositary of our acceptance for payment of such debentures. We will deposit the aggregate purchase price for the debentures purchased in the Offer with the Depositary, which will act as agent for the tendering holders for the purpose of transmitting payments to the tendering holders. Debentures purchased pursuant to the Offer will be paid for in immediately available funds promptly after the date on which we accept all debentures properly tendered and not withdrawn. We reserve the right to transfer or assign, from time to time, in whole or in part, to one or more of our affiliates the right to purchase any or all of the debentures validly tendered pursuant to the Offer. If this transfer or assignment occurs, the assignee-affiliate will purchase the debentures validly tendered. However, the transfer or assignment will not relieve us of our obligations under the Offer and will not prejudice holders' rights to receive the purchase price in exchange for the debentures validly tendered and accepted for payment. NONE OF PERKINELMER, THE DEALER MANAGER, THE DEPOSITARY, THE INFORMATION AGENT, OR THE TRUSTEE MAKES ANY RECOMMENDATION AS TO WHETHER OR NOT HOLDERS OF DEBENTURES SHOULD TENDER THEIR DEBENTURES PURSUANT TO THE OFFER. 12 There are three ways to tender your debentures, depending on the manner in which your debentures are held: - If your debentures are registered in your name, (a) complete and sign the Letter of Transmittal or a facsimile copy in accordance with the instructions to the Letter of Transmittal, (b) mail or deliver it and any other required documents to the Depositary, and (c) either deliver the certificates for the tendered debentures to the Depositary or transfer your debentures pursuant to the book-entry transfer procedures described in this Offer to Purchase; - If your debentures are registered in the name of a broker, dealer, commercial bank, trust company or other nominee, meaning your debentures are owned in "street name," then you must instruct your broker, dealer, commercial bank, trust company or other nominee to tender your debentures; or - If your debentures are held of record by DTC, you may tender them through DTC's Automated Tender Offer Program. A HOLDER WITH DEBENTURES REGISTERED IN THE NAME OF A BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY OR OTHER NOMINEE MUST CONTACT AND INSTRUCT THAT BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY OR OTHER NOMINEE IF SUCH HOLDER DESIRES TO TENDER THOSE DEBENTURES. TO BE VALID, TENDERS MUST BE RECEIVED BY THE DEPOSITARY ON OR BEFORE THE EXPIRATION DATE OF THE OFFER. HOLDERS OF DEBENTURES SHOULD BE AWARE THAT NO GUARANTEED DELIVERY PROCESS IS AVAILABLE TO TENDER DEBENTURES. PROCEDURE FOR TENDERING DEBENTURES Valid Tender. For a holder to validly tender debentures pursuant to the Offer, a properly completed and duly executed Letter of Transmittal or facsimile thereof, with any required signature guarantee, or in the case of a book-entry transfer, an Agent's Message in lieu of the Letter of Transmittal, and any other required documents, must be received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase on or before the expiration date of the Offer. In addition, on or before the expiration date of the Offer, either: - certificates for tendered debentures must be received by the Depositary at such address; or - such debentures must be transferred pursuant to the procedures for book-entry transfer, and a confirmation of such tender must be received by the Depositary, including an Agent's Message if the tendering holder has not delivered a Letter of Transmittal. The term "Agent's Message" means a message, transmitted by DTC to and received by the Depositary and forming a part of a book-entry confirmation, which states that DTC has received an express acknowledgment from the tendering participant, which acknowledgment states that such participant has received and agrees to be bound by the Letter of Transmittal and that we may enforce such Letter of Transmittal against such participant. Only holders of debentures are authorized to tender their debentures. In all cases, notwithstanding any other provision in this Offer to Purchase, the payment for the debentures tendered and accepted for payment will be made only after timely receipt by the Depositary of certificates representing tendered debentures or book-entry confirmation, the Letter of Transmittal, or a facsimile thereof, properly completed and duly executed and any required signature guarantees or, in the case of a book-entry transfer, an Agent's Message and other documents required by the Letter of Transmittal. If the debentures are held of record in the name of a person other than the signer of the Letter of Transmittal, or if certificates for unpurchased debentures are to be issued to a person other than the registered holder, the debentures must be endorsed or accompanied by appropriate instruments of transfer entitling the signer to tender the debentures on behalf of the registered holder, in any case signed exactly 13 as the name of the registered holder appears on the debentures, with the signatures on the certificates or instruments of transfer guaranteed as described below. Need for Signature Guarantee. Signatures on a Letter of Transmittal must be guaranteed by a recognized participant (each, a "Medallion Signature Guarantor") in the Securities Transfer Agents Medallion Program, the New York Stock Exchange Medallion Signature Program or the Stock Exchanges Medallion Program, unless the tendered debentures are tendered: - by the registered holder of such debentures, or by a participant in DTC whose name appears on a debenture position listing as the owner of such debentures, and that holder has not completed either of the boxes entitled "A. Special Issuance/Delivery Instructions" or "B. Special Payment Instructions" on the Letter of Transmittal; or - for the account of a firm that is a member of a registered national securities exchange or the National Association of Securities Dealers, Inc. or is a commercial bank or trust company having an office in the United States (each, an "Eligible Institution"). Book-Entry Delivery of the Debentures. Within two business days after the date of this Offer to Purchase, the Depositary will establish an account with respect to the debentures at DTC for purposes of the Offer. Any financial institution that is a participant in the DTC system may make book-entry delivery of debentures by causing DTC to transfer such debentures into the Depositary's account in accordance with DTC's procedure for such transfer. Although delivery of debentures may be effected through book-entry at DTC, the Letter of Transmittal or facsimile thereof, with any required signature guarantees, or an Agent's Message in lieu of the Letter of Transmittal, and any other required documents, must be transmitted to and received by the Depositary on or before the expiration date of the Offer at one of its addresses set forth on the back cover of this Offer to Purchase. DELIVERY OF DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY. General. The tender of debentures pursuant to the Offer by one of the procedures set forth above will constitute: - the tendering holder's acceptance of the terms and conditions of the Offer; and - a representation and warranty by the tendering holder that: - such holder has the full power and authority to tender, sell, assign and transfer the tendered debentures; and - when the same are accepted for payment by us, we will acquire good and unencumbered title to such debentures, free and clear of all liens, restrictions, charges and encumbrances and not subject to adverse claims or rights. The acceptance for payment by us of debentures will constitute a binding agreement between us and the tendering holder upon the terms and subject to the conditions of the Offer. THE METHOD OF DELIVERY OF THE LETTER OF TRANSMITTAL, CERTIFICATES FOR DEBENTURES AND ALL OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE TENDERING HOLDER. IF A HOLDER CHOOSES TO DELIVER BY MAIL, THE RECOMMENDED METHOD IS BY REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY. Form and Validity. All questions as to the form of all documents and the validity, eligibility, including time of receipt, acceptance for payment and withdrawal of tendered debentures will be determined by us, in our sole discretion, and our determination will be final and binding. We reserve the absolute right to reject any and all tenders of debentures that we determine are not in proper form or the acceptance for payment of or payment for which may, in the opinion of our counsel, be unlawful. We also reserve the absolute right in our sole discretion to waive any of the conditions of the Offer or any defect or irregularity in the tender of debentures of any particular holder, whether or not similar defects or irregularities are waived in the case of other holders. Our interpretation of the terms and conditions of the Offer, including the instructions in the Letter of Transmittal, will be final and binding. None of us, the 14 Dealer Manager, the Depositary, the Information Agent or the Trustee or any other person will be under any duty to give notification of any defects or irregularities in tenders or any notices of withdrawal or will incur liability for failure to give any such notification. WITHDRAWAL OF TENDERED DEBENTURES When Debentures may be Withdrawn. You may withdraw your tendered debentures at any time on or before the expiration date of the Offer. You may also withdraw your debentures if we have not accepted them for payment by January 29, 2003. Withdrawal of tendered debentures may not be rescinded. Any debentures properly withdrawn will be deemed not validly tendered for purposes of the Offer unless such debentures are properly retendered. Holders who have withdrawn their tendered debentures may retender debentures at any time on or before the expiration date of the Offer by following one of the procedures described in "-- Procedure for Tendering Debentures." In the event of a termination of the Offer, the debentures tendered pursuant to the Offer will be promptly returned to the tendering holder. Procedure for Withdrawing Debentures. For a withdrawal of debentures to be effective, a written or facsimile transmission notice of withdrawal must be timely received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase. The withdrawal notice must: - specify the name of the person who tendered the debentures to be withdrawn; - contain a description of the debentures to be withdrawn; - specify the certificate numbers shown on the particular certificates evidencing such debentures and the aggregate principal amount at maturity represented by such debentures; and - be signed by the holder of such debentures in the same manner as the original signature on the Letter of Transmittal, including any required signature guarantees. Alternatively, the withdrawal notice must be accompanied by evidence satisfactory to us, in our sole discretion, that the person withdrawing the tender has succeeded to the beneficial ownership of the debentures. In addition, any such notice of withdrawal must specify, in the case of debentures tendered by delivery of certificates for such debentures, the name of the registered holder, if different from that of the tendering holder or, in the case of debentures tendered by book-entry transfer, the name and number of the account at DTC to be credited with the withdrawn debentures. The signature on the notice of withdrawal must be guaranteed by an Eligible Institution unless such debentures have been tendered for the account of an Eligible Institution. If certificates for the debentures to be withdrawn have been delivered or otherwise identified to the Depositary, a signed notice of withdrawal will be effective immediately upon receipt by the Depositary of a written or facsimile transmission notice of withdrawal even if physical release is not yet effected. Any debentures properly withdrawn will be deemed to be not validly tendered for purposes of the Offer. Withdrawals of debentures can only be accomplished in accordance with the foregoing procedures. Form and Validity. All questions as to the form and validity, including time of receipt, of notices of withdrawal of tenders will be determined by us, in our sole discretion, which determination will be final and binding. None of us, the Dealer Manager, the Depositary, the Information Agent or the Trustee or any other person will be under any duty to give notification of any defects or irregularities in any notices of withdrawal or be subject to any liability for failure to give any such notification. CONDITIONS TO THE OFFER The completion of the Offer is conditioned upon: - the satisfaction of the financing condition on terms satisfactory to us to pay the purchase price and all related costs and expenses of the Offer; and 15 - the absence of: - in our sole judgment, any actual or threatened legal impediment, including a default under an agreement, indenture or other instrument or obligation to which we are a party or by which we are bound, to the purchase of debentures pursuant to the Offer; - any change or development, including a prospective change or development, in the general economic, financial, currency exchange or market conditions in the United States or abroad that, in our sole judgment, has or may have a material adverse effect on the market price of the debentures or upon trading in the debentures or upon the value of the debentures to us; - the institution, threat or pendency of any action or proceeding before any court, governmental, regulatory or administrative agency or authority or instrumentality, or by any person, in connection with the Offer that challenges the making of the Offer; or - the occurrence or likely occurrence of any event affecting the business, operations, properties, financial or other condition, assets, liabilities or prospects by us or our affiliates that, in our sole judgment, would or might prohibit, prevent, restrict or delay completion of the Offer. IMPORTANT: The above conditions are for our sole benefit and may be asserted by us regardless of the circumstances, including any action or inaction by us, giving rise to such condition or may be waived by us in whole or in part at any time and from time to time in our sole discretion. The failure by us at any time to exercise any of the foregoing rights will not be deemed a waiver of any other right, and each right will be deemed an ongoing right which may be asserted at any time and from time to time. EXTENSION, WAIVER, AMENDMENT AND TERMINATION We expressly reserve the right, at any time or from time to time, regardless of whether or not any of the events set forth in "-- Conditions to the Offer" have occurred or have been determined by us to have occurred, subject to applicable law: - to extend the expiration date of the Offer and thereby delay acceptance for payment of, and the payment for, any debentures, by giving written notice of such extension to the Depositary; - to amend the Offer in any respect, by giving written notice of such amendment to the Depositary; - to waive in whole or in part any condition to the Offer and accept for payment and purchase all debentures validly tendered and not validly withdrawn before the expiration date of the Offer; or - to terminate or withdraw the Offer on or before its expiration date. We may extend the Offer until the satisfaction of the conditions to the completion of the Offer, including the financing condition. We expressly reserve the right, in our sole discretion, to terminate the Offer if any of the conditions set forth under "-- Conditions to the Offer" have not been satisfied or waived by us on or before the expiration date of the Offer or for any other reason or for no reason at all. If we materially change the terms of the Offer or the information concerning the Offer, or if we waive a material condition of the Offer, we will disseminate additional tender offer materials and extend the Offer to the extent required by Rule 13e-4(d)(2) and Rule 13e-4(e)(3) under the Exchange Act. We will notify you as promptly as practicable of any other extension, waiver, amendment or termination by public announcement, with the announcement in the case of an extension to be issued no later than 9:00 a.m., New York City time, on the first business day after the previously scheduled Offer expiration date. Without limiting the manner in which we may choose to make any public announcement, we will have no obligation to publish, advertise or otherwise communicate any such public announcement other than by issuing a release to the Dow Jones News Service. If we terminate the Offer, we will give immediate notice of the termination to the Depositary, and all debentures previously tendered will be returned promptly to the tendering holders thereof. If the Offer is withdrawn or otherwise not completed, the purchase price will not be paid or become payable to holders of debentures who have validly tendered their debentures in the Offer. 16 DESCRIPTION OF THE DEBENTURES Any debentures that remain outstanding after the completion of the Offer will continue to be our obligations. Holders of those outstanding debentures will continue to have all the rights associated with those debentures. The following is a brief description of some of the important terms of the debentures. GENERAL In August 2000, we issued and sold approximately $920.7 million aggregate principal amount at maturity of debentures for gross cash proceeds of approximately $460.0 million, representing an original issue price of $499.60 for each $1,000 principal amount at maturity of debentures. The debentures are due on August 7, 2020, and were priced with a yield to maturity of 3.5%. As of November 26, 2002, after giving effect to repurchases of debentures by us since their issuance, there was approximately $722.3 million aggregate principal amount at maturity of debentures outstanding, with an aggregate accreted value as of that date of approximately $390.9 million. RANKING The debentures are our senior unsecured obligations. Any debentures that remain outstanding after the Offer will rank equally with borrowings under our proposed new senior credit facilities and any 6.80% notes that remain outstanding after completion of our 6.80% notes tender offer. Any such outstanding debentures will rank senior to our proposed new senior subordinated notes. However, outstanding debentures will remain unsecured and will not be guaranteed by any of our subsidiaries. You should read the section titled "The Refinancing Transactions" for a description of our proposed new senior credit facilities and senior subordinated notes. You should read the section titled "Certain Significant Transactions" for a description of the risks you may face in holding the debentures after completion of the refinancing transactions. INTEREST We will not pay cash interest on the debentures prior to maturity, unless we elect to do so following a tax event, as defined in the indenture under which the debentures were issued. REPURCHASE AT OPTION OF HOLDERS You may require us to repurchase some or all of your debentures on August 7, 2003 or on August 7, 2010, or at any time upon certain changes of control, at a repurchase price equal to the initial issue price plus the accrued original issue discount to the redemption date. The repurchase price for each $1,000 principal amount at maturity of debentures would be $554.41 as of August 7, 2003 and $706.82 as of August 7, 2010. We have the right to pay the repurchase price with our common stock based on the then current market price, subject to satisfying conditions contained in the indenture governing the debentures, including that the shares of common stock must be issued either pursuant to an effective registration statement or an exemption from the registration requirements of applicable securities laws. OPTIONAL REDEMPTION BY US At any time on or after August 7, 2003, we may redeem the debentures, in whole or in part, at our option, for a price equal to $499.60 per debenture plus accrued original issue discount at a rate of 3.5% per annum compounded semi-annually to the date of redemption, on the basis of a 360-day year consisting of twelve 30-day months. On August 7, 2003, we intend to exercise the right to redeem any debentures that remain outstanding. 17 The table below shows redemption prices of the debentures at August 7, 2003, at each following August 7 prior to maturity and at maturity on August 7, 2020. The prices reflect the accrued original issue discount calculated through each date. The redemption price of a debenture redeemed between these dates would include an additional amount reflecting the additional original issue discount accrued since the immediately preceding date in the table to the actual redemption date. The indenture under which the debentures were issued requires us to give to holders of debentures notice of redemption not more than 60 and not less than 30 days before the redemption date.
(1) (2) (3) DEBENTURE ISSUE ACCRUED ORIGINAL REDEMPTION PRICE REDEMPTION DATE PRICE ISSUE DISCOUNT AT 3.5% (1) + (2) - --------------- --------------- ---------------------- ---------------- August 7, 2003...................... $499.60 $ 54.81 $ 554.41 August 7, 2004...................... $499.60 $ 74.38 $ 573.98 August 7, 2005...................... $499.60 $ 94.65 $ 594.25 August 7, 2006...................... $499.60 $115.63 $ 615.23 August 7, 2007...................... $499.60 $137.35 $ 636.95 August 7, 2008...................... $499.60 $159.84 $ 659.44 August 7, 2009...................... $499.60 $183.12 $ 682.72 August 7, 2010...................... $499.60 $207.22 $ 706.82 August 7, 2011...................... $499.60 $232.18 $ 731.78 August 7, 2012...................... $499.60 $258.01 $ 757.61 August 7, 2013...................... $499.60 $284.76 $ 784.36 August 7, 2014...................... $499.60 $312.46 $ 812.06 August 7, 2015...................... $499.60 $341.13 $ 840.73 August 7, 2016...................... $499.60 $370.81 $ 870.41 August 7, 2017...................... $499.60 $401.54 $ 901.14 August 7, 2018...................... $499.60 $433.36 $ 932.96 August 7, 2019...................... $499.60 $466.30 $ 965.90 At stated maturity.................. $499.60 $500.40 $1,000.00
ESCROW OF PROCEEDS The lenders participating in our proposed new senior credit facilities will require that we place in escrow, upon completion of our proposed new senior subordinated notes offering, all of the net proceeds of that offering and a portion of our borrowings under the term loan of our new senior credit facilities to pay the purchase price for debentures purchased in the Offer and to otherwise purchase or satisfy our repurchase obligations with respect to any untendered debentures. CONVERSION RIGHTS The debentures are convertible into shares of our common stock at a conversion rate of 11.757 shares for each $1,000 principal amount at maturity of debentures. As of November 26, 2002, this conversion rate is equivalent to a conversion price of $46.03 per share of common stock, based on the accreted value of the debentures at that date. The conversion rate is subject to adjustment in certain events. On November 27, 2002, the closing price of our common stock, as reported on the New York Stock Exchange, was $8.66 per share. You may convert your debentures at any time before the close of business on August 6, 2020, unless we have previously redeemed or repurchased the debentures. You may convert your debentures called for redemption up to and including the business day immediately preceding the day fixed for redemption. You will not receive any cash payment for the accrued original issue discount through the conversion date. 18 TRADING MARKET FOR THE DEBENTURES There is no established reporting or trading system for the debentures. We believe that trading in the debentures has been limited and sporadic. The table below sets forth the range of intraday high and low prices of our common stock as reported on the New York Stock Exchange for the periods indicated beginning with the year ended December 31, 2000.
HIGH LOW ------- ------ 2000 Quarter ended March 31, 2000................................ $ 80.56 $38.56 Quarter ended June 30, 2000................................. $ 69.08 $49.82 Quarter ended September 30, 2000............................ $108.02 $61.49 Quarter ended December 31, 2000............................. $120.22 $84.47 2001 Quarter ended March 31, 2001................................ $100.67 $43.86 A two-for-one stock split was effected on June 1, 2001 Quarter ended June 30, 2001................................. $ 75.66 $26.01 Quarter ended September 30, 2001............................ $ 34.48 $24.32 Quarter ended December 31, 2001............................. $ 36.25 $25.28 2002 Quarter ended March 31, 2002................................ $ 36.30 $15.71 Quarter ended June 30, 2002................................. $ 18.60 $10.46 Quarter ended September 30, 2002............................ $ 11.26 $ 4.29 Quarter ended December 31, 2002 (through November 27, 2002)..................................................... $ 8.95 $ 4.33
19 CERTAIN SIGNIFICANT CONSIDERATIONS In deciding whether to participate in the Offer, you should consider the following factors, in addition to the other information presented in this Offer to Purchase and the documents that we incorporate by reference into this Offer to Purchase, including the important factors described in "Forward-Looking Information and Factors Affecting Future Performance" that are included from time to time in our filings with the Securities and Exchange Commission. These are not the only risks we face. Any of such risks as well as other risks and uncertainties that we do not know about now or that we do not think are important, could seriously harm our business and financial results and cause the value of the debentures to decline, which in turn could cause you to lose all or part of your investment. DEBENTURES THAT REMAIN OUTSTANDING AFTER THE OFFER WILL NOT BE SECURED BY ANY OF OUR ASSETS. The debentures are not now, and any debentures that remain outstanding after the Offer will not be, secured by any of our or our subsidiaries' assets. However, we anticipate that loans under our proposed new senior credit facilities will be secured by a perfected first priority security interest in: - a substantial portion of our domestic assets; - a substantial portion of the domestic assets of our direct and indirect domestic subsidiaries; and - all of the capital stock of our direct and indirect subsidiaries, limited to 65% of such capital stock in the case of foreign subsidiaries that are controlled foreign corporations. In addition, a significant portion of our accounts receivable has been sold pursuant to our accounts receivable securitization facility, and will not be available to satisfy our obligations to other creditors, including holders of the debentures. If we do not receive the requisite consents in our 6.80% notes consent solicitation to approve the elimination of substantially all of the restrictive covenants in the 6.80% notes indenture, we will not complete the 6.80% notes tender offer and we may be required to secure the 6.80% notes by any collateral we grant to secure any other debt we may incur in the future, including the proposed new senior credit facilities. Future indebtedness that we incur may be secured by our assets. If we become insolvent or are liquidated, or if payment of any secured indebtedness is accelerated, the holders of the secured indebtedness will be entitled to exercise the remedies available to secured lenders under applicable law, including the ability to foreclose on and sell the collateral for the indebtedness in order to satisfy the indebtedness. In that case, we may not have sufficient assets to repay the debentures. OUR CORPORATE STRUCTURE RESULTS IN SUBSTANTIAL STRUCTURAL SUBORDINATION AND MAY AFFECT OUR ABILITY TO MAKE PAYMENTS ON THE DEBENTURES. The debentures are obligations exclusively of PerkinElmer, Inc., and not any of its subsidiaries. However, substantially all of our operations are conducted through our subsidiaries. As a result, our cash flow and our ability to service our debt, including the debentures, depend upon the earnings of our subsidiaries. In addition, we depend on the distribution of earnings, loans and other payments by our subsidiaries to us. Our subsidiaries are separate and distinct legal entities. Our subsidiaries have no obligation to pay any amounts due on the debentures or to provide us with funds for our payment obligations, whether by dividends, distributions, loans or other payments. In addition, any payment of dividends, distributions, loans or advances by our subsidiaries to us could be subject to statutory or contractual restrictions. Payments to us by our subsidiaries will also be contingent upon our subsidiaries' earnings and business considerations. Any debentures that remain outstanding after the Offer will be effectively subordinated to claims of creditors, other than us, of our subsidiaries, including lessors, trade creditors, taxing authorities, creditors holding guarantees and tort claimants. In the event of a liquidation, reorganization or similar proceeding relating to a subsidiary, these persons generally will have priority as to the assets of that subsidiary over our claims and equity interest and, thereby indirectly, holders of our indebtedness, including the debentures. In addition, even if we were a creditor of any of our subsidiaries, our right as a creditor would be subordinate to any security interest in the assets of the subsidiary and any debt of the subsidiary senior to that held by us. We anticipate that some or all of our subsidiaries will guarantee our proposed new 20 senior credit facilities and proposed new senior subordinated notes. Holders of that indebtedness will rank ahead of holders of debentures in any claim relating to the assets of our guarantor subsidiaries. ANY MARKET THAT EXISTS FOR UNTENDERED DEBENTURES WILL BE VERY LIMITED. To the extent that debentures are tendered and accepted in the Offer, the trading activity in the debentures that remain outstanding after the Offer will become more limited than the current limited and sporadic trading activity in the debentures. A debt security with a smaller outstanding aggregate principal amount available for trading (a smaller "float") may command a lower price than would a comparable debt security with a greater float. Therefore, the market price for debentures not tendered or not purchased may be affected adversely to the extent the amount of debentures tendered and purchased pursuant to the Offer reduces the float of the debentures. The reduced float may make the trading price more volatile. There can be no assurance that any trading market will exist for the debentures following the Offer. The extent of the market for the debentures following the completion of the Offer will depend upon the number of holders that remain at such time, the interest on the part of securities firms in establishing a market in the debentures and upon other factors. WE HAVE NOW, AND WILL HAVE AFTER COMPLETION OF THE REFINANCING TRANSACTIONS, SUBSTANTIAL EXISTING DEBT AND MAY INCUR ADDITIONAL DEBT IN THE FUTURE. We have a substantial amount of outstanding indebtedness. Assuming completion of the Offer and the other refinancing transactions described under the caption "The Refinancing Transactions," including the repurchase of all of our 6.80% notes and all of the debentures, as of September 29, 2002, we would have had approximately $570.3 million in outstanding indebtedness, excluding obligations under our accounts receivable securitization facility. Also, upon the closing of our proposed new senior credit facilities, we will have $100.0 million in borrowing capacity available to us under the revolving credit facility associated with the new senior credit facilities. To the extent that all or some portion of the debentures remain outstanding following the Offer, there will be no offsetting reduction in the amount of indebtedness that we will incur upon completion of the refinancing transactions. Any such debentures remaining outstanding will, therefore, represent additional indebtedness to the indebtedness incurred in the refinancing transactions. The lenders participating in our new senior credit facilities will require that we place in escrow, upon completion of our proposed new senior subordinated notes offering, all of the net proceeds from that offering and a portion of our borrowings under the term loan of our new senior secured credit facilities to pay the purchase price for those debentures purchased in the Offer and to otherwise purchase or satisfy our repurchase obligations with respect to any untendered debentures. Our substantial level of indebtedness increases the possibility that we may be unable to generate sufficient cash to pay the principal or interest in respect of our indebtedness. We may also obtain additional long-term debt and working capital lines of credit to meet future financing needs, which would have the effect of increasing our total leverage. Our substantial leverage could have significant negative consequences, including: - increasing our vulnerability to adverse economic and industry conditions; - limiting our ability to obtain additional financing; - limiting our ability to acquire new products and technologies through acquisitions or licensing; - requiring the dedication of a substantial portion of our cash flow from operations to service our indebtedness, thereby reducing the amount of our cash flow available for other purposes, including capital expenditures; - limiting our flexibility in planning for, or reacting to, changes in our business and the industries in which we compete; and - placing us at a possible competitive disadvantage with less leveraged competitors and competitors that may have better access to capital resources. 21 A significant portion of our indebtedness outstanding after the refinancing transactions will bear interest at floating rates. As a result, our interest payment obligations on such indebtedness will increase if interest rates increase. Our ability to satisfy our obligations and to reduce our total debt depends on our future operating performance and on economic, financial, competitive and other factors beyond our control. Our business may not generate sufficient cash flow to meet these obligations or to successfully execute our business strategy. If we are unable to service our debt and fund our business, we may be forced to reduce or delay capital expenditures, seek additional financing or equity capital, restructure or refinance our debt or sell assets. We cannot assure you that we would be able to obtain additional financing or refinance existing debt or sell assets on terms acceptable to us or at all. RESTRICTIONS IN THE PROPOSED NEW SENIOR SUBORDINATED NOTES INDENTURE AND OUR NEW SENIOR CREDIT FACILITIES MAY LIMIT OUR ACTIVITIES. The indenture relating to the proposed new senior subordinated notes and the proposed new senior credit facilities will contain, and future debt instruments to which we may become subject may contain, restrictive covenants that limit our ability to engage in activities that could otherwise benefit us, including restrictions on our ability and the ability of our subsidiaries to: - incur additional indebtedness; - pay dividends on, redeem or repurchase our capital stock; - make investments; - create certain liens; - sell assets; - in the case of our restricted subsidiaries, incur obligations that restrict their ability to make dividend or other payments to us; - in the case of our restricted subsidiaries, guarantee or secure indebtedness; - enter into transactions with affiliates; - create unrestricted subsidiaries; and - consolidate, merge or transfer all or substantially all of our assets and the assets of our subsidiaries on a consolidated basis. These limitations on our operational flexibility may limit our ability to meet obligations related to our proposed indebtedness. We will also be subject to restrictive covenants contained in the indenture for our 6.80% notes, to the extent any 6.80% notes remain outstanding following the 6.80% notes tender offer and assuming we do not receive in our consent solicitation the consents required to eliminate those restrictive covenants. We will also be required to meet specified financial ratios under the terms of our proposed new senior credit facilities. Our ability to comply with these financial restrictions and covenants will depend on our future performance, which will be subject to prevailing economic conditions and other factors, including factors that are beyond our control such as foreign exchange rates, interest rates, changes in technology and changes in the level of competition. Our failure to comply with any of these restrictions or covenants when they apply may result in an event of default under the applicable debt instrument, which could permit acceleration of the debt under that instrument and require us to prepay that debt before its scheduled due date. Also, an acceleration of the debt under one of our debt instruments could trigger an event of default under our other debt instruments, including the debentures, and a default under the debentures could trigger an event of default under our other debt instruments, including our proposed new senior credit facilities and new senior subordinated notes. In an event of default, we may not have sufficient funds available to make the required payments under our indebtedness. If we are unable to repay amounts owed under our proposed new senior credit facilities, those lenders may be entitled to foreclose on and sell the collateral that secures our borrowings under that agreement. Our inability to repay amounts owed under our new senior credit facilities may also cause a default under some of our other obligations, including our accounts receivable securitization facility. 22 UNITED STATES FEDERAL INCOME TAX CONSEQUENCES The following is a general summary of certain of the anticipated United States federal income tax consequences resulting from the sale of the debentures pursuant to the Offer. This summary is intended for general information only and is based on the United States Internal Revenue Code, the Treasury regulations promulgated thereunder, administrative pronouncements of the Internal Revenue Service and judicial decisions, all as in effect on the date hereof, and all of which are subject to change, possibly with retroactive effect, and to different interpretations. We have not sought any ruling from the Internal Revenue Service or an opinion of counsel with respect to the statements made and the conclusions set forth in this summary and there can be no assurance that the Internal Revenue Service or a court will agree with such statements and conclusions. This summary assumes that the debentures are held as "capital assets" (generally property held for investment) under the Internal Revenue Code. This summary does not discuss all aspects of United States federal income taxation that may be relevant to particular beneficial owners of the debentures in light of their particular investment or other circumstances or to certain types of beneficial owners of the debentures subject to special tax rules, such as: - banks or other financial institutions; - broker-dealers; - traders in securities; - insurance companies; - certain U.S. expatriates; - tax-exempt organizations; and - persons who hold the debentures as part of a straddle or hedging or a conversion transaction. This summary also does not discuss any United States state or local income or foreign income or other tax consequences that may be applicable to beneficial owners of the debentures. For purposes of this summary, it should be noted that the debentures were issued with a significant amount of "original issue discount" for United States federal income tax purposes. For purposes of this summary, the term "United States Holder" means a beneficial owner of a debenture that, for United States federal income tax purposes, is - an individual who is a citizen or resident of the United States; - a corporation or other entity taxable as a corporation that is created or organized in or under the laws of the United States or any political subdivision thereof (including the District of Columbia); - an estate the income of which is subject to United States federal income tax regardless of its source; or - a trust, in general, if a court within the United States is able to exercise primary supervision over the administration of the trust, and one or more United States persons (within the meaning of the Internal Revenue Code) have the authority to control all substantial decisions of the trust. The term "Non-United States Holder" means a beneficial owner of a debenture that is not a United States Holder. If a partnership holds a debenture, the tax treatment of a partner generally will depend upon the status of the partner and the activities of the partnership. A partner of a partnership that holds a debenture should consult its own tax advisor. EACH BENEFICIAL OWNER OF THE DEBENTURES IS URGED TO CONSULT ITS OWN TAX ADVISOR REGARDING THE SPECIFIC UNITED STATES FEDERAL, STATE, LOCAL AND FOREIGN INCOME OR OTHER TAX CONSEQUENCES OF THE SALE OF THE DEBENTURES. 23 CONSEQUENCES TO UNITED STATES HOLDERS TENDERING DEBENTURES PURSUANT TO THE OFFER A sale of the debentures by a United States Holder pursuant to the Offer will be a taxable transaction to such United States Holder for United States federal income tax purposes. A United States Holder will recognize gain or loss for United States federal income tax purposes equal to the difference (if any) between (i) the amount of the purchase price received upon tendering its debentures and (ii) such Holder's adjusted tax basis in such debentures. In general, a United States Holder's adjusted tax basis in the debentures equals the cost of such debentures to such United States Holder, increased by the amount of original issue discount previously included in the United States Holder's gross income with respect to such debentures and the amount of any market discount (as defined herein) with respect to such debentures previously included in such United States Holder's gross income. Gain or loss will be computed separately for each block of debentures tendered by a United States Holder. Any such gain or loss will be capital gain or loss (except with respect to amounts received that are attributable to accrued market discount not previously included in gross income, as discussed below) and generally will be long-term capital gain or loss if the United States Holder held the debentures for more than one year. Subject to a de minimis exception, a United States Holder that acquired a debenture at a market discount (generally, at a cost less than its revised issue price at the time of the acquisition) and did not elect (or was not deemed to have elected) to include such market discount in income currently as it accrued (with a corresponding increase in the tax basis for such debenture equal to the amount of such accrued income) generally will be required to treat any gain recognized on a sale of such debenture pursuant to the Offer as ordinary income (generally, interest income), rather than capital gain, to the extent of the market discount that has accrued (on a straight line basis or, at the election (or deemed election) of the United States Holder, on a constant yield basis) while such debenture was held by such United States Holder. For this purpose, a debenture's revised issue price generally means the sum of its issue price and the amount of original issue discount that was previously includible in the gross income of all holders of the debenture for periods before the acquisition of the debenture by the current United States Holder. CONSEQUENCES TO NON-UNITED STATES HOLDERS TENDERING DEBENTURES PURSUANT TO OFFER Subject to the discussion below regarding the application of the United States withholding tax, gain realized by a Non-United States Holder on the sale of a debenture pursuant to the Offer will not be subject to United States federal income tax unless (i) such gain is effectively connected with the conduct by such Holder of a trade or business in the United States (and, if an income tax treaty applies, the gain is generally attributable to a United States permanent establishment maintained by such Non-United States Holder) or (ii) in the case of gain realized by a Non-United States Holder who is an individual, such Holder is present in the United States for 183 days or more in the taxable year of the sale (as determined under the Internal Revenue Code) and certain other conditions are met. Under current United States federal income tax laws, United States federal withholding tax will not apply to payments to a Non-United States Holder of principal and original issue discount (including amounts attributable to market discount) on the debentures, provided that in the case of original issue discount and market discount: - the Non-United States Holder does not, directly or indirectly, actually or constructively, own ten percent or more of the total combined voting power of all classes of the stock of PerkinElmer entitled to vote within the meaning of section 871(h)(3) of the Internal Revenue Code and the Treasury regulations thereunder; - the Non-United States Holder is not (i) a controlled foreign corporation for United States federal income tax purposes that is related, directly or indirectly, to PerkinElmer through sufficient stock ownership (as provided in the Internal Revenue Code), or (ii) a bank receiving interest described in section 881(c)(3)(A) of the Internal Revenue Code; 24 - such original issue discount or market discount is not effectively connected with the Non-United States Holder's conduct of a United States trade or business; and - the Non-United States Holder provides a signed written statement, under penalties of perjury, that can reliably be related to such holder, certifying that the Non-United States Holder is not a United States person within the meaning of the Internal Revenue Code and providing its name and address to: (A) PerkinElmer or any paying agent of PerkinElmer; or (B) a securities clearing organization, bank or other financial institution that holds customers' securities in the ordinary course of its trade or business and holds the Non-United States Holder's debentures on such holder's behalf and that certifies to PerkinElmer or any paying agent of PerkinElmer under penalties of perjury that it, or the bank or financial institution between it and the Non-United States Holder, has received from such holder a signed, written statement and provides PerkinElmer or any paying agent of PerkinElmer with a copy of this statement. Treasury regulations provide alternative methods for satisfying the certification requirement described in this section. In addition, under these Treasury regulations: - if the Non-United States Holder is a foreign partnership, the certification requirement will generally apply to partners in such partnership, and the partnership will be required to provide certain specified information; - if the Non-United States Holder is a foreign trust, the certification requirement will generally apply to such trust or its beneficial owners depending on whether the trust is a "foreign complex trust," "foreign simple trust," or "foreign grantor trust" as defined in the Treasury regulations; and - look-through rules will apply for tiered partnerships, foreign simple trusts and foreign grantor trusts. If the Non-United States Holder is a foreign partnership or a foreign trust, such holder should consult its own tax advisor regarding its status under these Treasury regulations and the certification requirements applicable to it. If the Non-United States Holder cannot satisfy the requirements described above, payments of original issue discount and market discount will be subject to the 30% United States federal withholding tax, unless the Non-United States Holder provides us with a properly executed (1) Internal Revenue Service Form W-8BEN claiming an exemption from or reduction in withholding under the benefit of an applicable tax treaty or (2) Internal Revenue Service Form W-8ECI stating that original issue discount and market discount with respect to the debenture is not subject to withholding tax because it is effectively connected with the Non-United States Holder's conduct of a trade or business in the U.S. Alternative documentation may be applicable in certain circumstances. If a Non-United States Holder is engaged in a trade or business in the United States and gain recognized on the sale of the debentures pursuant to the Offer is effectively connected with the conduct of such trade or business (and, if an income tax treaty applies, is generally attributable to a United States permanent establishment maintained by such Non-United States Holder), such Non-United States Holder may be subject to United States federal income tax on the gain in a manner similar to that applicable to United States Holders, as described above. In addition, a Non-United States Holder that is a foreign corporation may be subject to a branch profits tax equal to 30% of its earnings and profits for the taxable year that are effectively connected to a United States trade or business, as adjusted for certain items, unless a lower rate applies under a United States income tax treaty with such Holder's country of residence. For this purpose, original issue discount, market discount, gain or income on the debentures must be included in the earnings and profits subject to the branch profits tax if these amounts are effectively connected with the conduct of the Non-United States Holder's United States trade or business. 25 BACKUP WITHHOLDING A United States Holder whose debentures are tendered and accepted for payment and who receives the purchase price may be subject to backup withholding at the rate of 30% with respect to such payments, unless such Holder (i) is a corporation or other exempt recipient and, when required, establishes its exemption from backup withholding or (ii) provides its correct taxpayer identification number ("TIN"), certifies that it is not currently subject to backup withholding and otherwise complies with applicable requirements of the backup withholding rules. Completion of the Substitute Form W-9 provided in the Letter of Transmittal should be used for this purpose. You should read the section titled "Important Tax Information" in the Letter of Transmittal. Backup withholding at a rate of 30% also may apply to Non-United States Holders that fail to certify their foreign exempt status on an IRS Form W-8BEN or other applicable IRS Form W-8 (which are available from the Depositary) submitted along with the Letter of Transmittal. United States Holders and Non-United States Holders should consult their own tax advisors regarding the application of the backup withholding rules in their particular circumstances and the availability of and procedure for obtaining an exemption from the backup withholding under the current Treasury regulations. Backup withholding is not an additional tax. Rather, the amount of any backup withholding from a payment to a United States Holder or a Non-United States Holder will be allowed as a credit against such Holder's United States federal income tax liability and may entitle such Holder to a refund provided that the required information is furnished to the Internal Revenue Service. CERTAIN FINANCIAL INFORMATION Our audited consolidated financial statements as of the end of and for each of the fiscal years in the two years ended December 30, 2001 are included in this Offer to Purchase, beginning at page F-1. The following is our consolidated ratio of earnings to fixed charges for each of the periods indicated:
FISCAL YEAR ENDED NINE MONTHS ENDED, --------------------------- ----------------------------- DECEMBER 31, DECEMBER 30, SEPTEMBER 30, SEPTEMBER 29, 2000 2001 2001 2002 ------------ ------------ ------------- ------------- Ratio of earnings to fixed charges......... 4.1x 3.1x 4.9x 0.7x
We have computed the ratio of earnings to fixed charges by dividing our pre-tax income from continuing operations before income or loss of equity method investees and fixed charges by fixed charges. Fixed charges means the sum of (a) interest expense, (b) amortized premiums, discounts and capitalized expenses related to indebtedness and (c) an estimate of the interest within rental expense. For the nine months ended September 29, 2002, the difference between such earnings and fixed charges was $7.6 million. DEALER MANAGER, DEPOSITARY AND INFORMATION AGENT; FEES AND EXPENSES GENERAL We have retained Merrill Lynch & Co. to act as Dealer Manager in connection with the Offer. We have agreed to pay the Dealer Manager a fee for its services as Dealer Manager equal to 0.25% of the aggregate accreted value of debentures purchased in the Offer. The Dealer Manager will also be reimbursed by us for its reasonable expenses and indemnified by us against certain liabilities and expenses in connection with the Offer, including certain liabilities under U.S. federal securities laws. We have retained Bank One Trust Company, N.A. as the Depositary in connection with the Offer. We have agreed to pay the Depositary approximately $10,000 for its services as Depositary in the Offer. The Depositary will also be reimbursed by us for its reasonable expenses and indemnified by us against 26 certain liabilities and expenses in connection with the Offer, including certain liabilities under U.S. federal securities laws. We have retained D.F. King & Co., Inc. as the Information Agent in connection with the Offer. We have agreed to pay the Information Agent approximately $20,000 for its services as Information Agent in the Offer. The Information Agent will also be reimbursed by us for its reasonable expenses and indemnified by us against certain liabilities and expenses in connection with the Offer, including certain liabilities under U.S. federal securities laws. The Depositary and the Information Agent may contact holders of debentures by mail, telephone, telex, telecopy, telegraph and personal interview regarding the Offer and may request brokers, dealers, commercial banks, trust companies and other nominees to forward this Offer to Purchase and related materials to beneficial owners of debentures. Directors, officers and regular employees of PerkinElmer, who will not be specifically compensated for such services, and the Information Agent may contact holders of the debentures by mail, telephone, telex, telecopy, telegraph and personal interview regarding the Offer and may request brokers, dealers and other nominees to forward this Offer to Purchase and related materials to beneficial owners of debentures. Tendering holders of debentures who tender their debentures directly to the Depositary will not be obligated to pay brokers' fees or commissions or, except as set forth in the Letter of Transmittal, transfer taxes on the purchase of debentures by us pursuant to the Offer. We will pay all fees and expenses of the Depositary and the Information Agent in connection with the Offer. Brokers, dealers, commercial banks and trust companies will be reimbursed by us for customary mailing and handling expenses incurred by them in forwarding material to their customers. We will not pay any fees or commissions to any broker, dealer or other person (other than the Depositary and the Information Agent) in connection with the Offer. None of the Depositary or the Information Agent assumes any responsibility for the accuracy or completeness of the information concerning us contained in the Offer or for any failure by us to disclose events that may have occurred and may affect the significance or accuracy of such information. OTHER RELATIONSHIPS Merrill Lynch & Co. and its affiliates have engaged in, and may in the future engage in, investment banking, commercial banking, financial advisory services and other commercial dealings in the ordinary course of business with us. They have received customary fees and commissions for these transactions. We have engaged Merrill Lynch & Co. as dealer manager and solicitation agent in connection with our 6.80% notes tender offer and we expect that affiliates of Merrill Lynch & Co. will act in various capacities in connection with our other refinancing transactions, including as a lender, sole advisor, sole lead arranger, sole bookrunner and syndication agent under our proposed new senior credit facilities. FORWARD-LOOKING STATEMENTS This Offer to Purchase and the documents that we incorporate by reference into this Offer to Purchase contain forward-looking statements that are based on current expectations, estimates, forecasts and projections about our company, the industries in which we operate and other matters, as well as management's beliefs and assumptions and other statements regarding matters that are not historical facts. These statements include, in particular, statements about our plans, strategies, prospects, charges and cost savings under the headings "Summary Term Sheet," "The Refinancing Transactions" and "Certain Significant Considerations." For example, when we use words such as "projects," "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," "should," "would," "could" or "may," variations of such words or other words that convey uncertainty of future events or outcome, we are making forward-looking statements. Our forward-looking statements are subject to risks and uncertainties. You should note that many important factors, some of which are discussed elsewhere in this Offer to Purchase or in the 27 documents we incorporate by reference into this Offer to Purchase, could affect us in the future and could cause results to differ materially from those expressed in our forward-looking statements. For a discussion of some of these factors, please read carefully the information in the section of this Offer to Purchase titled "Certain Significant Considerations." We do not undertake any obligation to update forward-looking statements made by us. INCORPORATION OF DOCUMENTS BY REFERENCE We are incorporating by reference certain documents we file with the SEC, which means that we can disclose important information to you by referring you to those documents. The information in the documents incorporated by reference is considered to be part of this Offer to Purchase. We incorporate by reference the following documents, which have been filed by us (File No. 001-05075) with the SEC: - our Annual Report on Form 10-K for the fiscal year ended December 30, 2001; - our Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31, June 30, and September 29, 2002; and - our Current Reports on Form 8-K dated June 18, June 20, August 13, September 19 and October 29, 2002. The documents incorporated by reference herein, other than exhibits to such documents that are not specifically incorporated by reference herein, are available without charge to any person to whom this Offer to Purchase has been delivered upon written or oral request to Diane Basile, Vice President, Investor Relations and Corporate Communications, 45 William Street, Wellesley, Massachusetts 02481; (781) 237-5100. These documents are also available from the SEC's public reference room and Internet site referred to below in the section titled "Where You Can Find More Information." The audited financial statements for the two years ended December 30, 2001 included in this Offer to Purchase supersede the corresponding financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 30, 2001. The unaudited financial statements, the financial data derived therefrom and the related discussion therein included in our Quarterly Reports on Form 10-Q for the quarters ended March 31 and June 30, 2002 are presented on a different basis from the presentation of financial information in this Offer to Purchase and our Quarterly Report on Form 10-Q for the quarter ended September 29, 2002. Our Quarterly Reports on Form 10-Q for the quarters ended March 31 and June 30, 2002 present financial information reflecting our Fluid Sciences business unit as a discontinued operation. In addition, our Quarterly Report on Form 10-Q for the quarter ended March 31, 2002 presents financial information reflecting our Telecommunications Component and Entertainment Lighting businesses as within our consolidated results. Our Quarterly Report on Form 10-Q for the quarter ended September 29, 2002 and this Offer to Purchase present financial information reflecting our Fluid Sciences business unit as within our consolidated results and financial information reflecting our Telecommunications Component and Entertainment Lighting businesses as discontinued operations. WHERE YOU CAN FIND MORE INFORMATION We file annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy any reports, statements or other information on file at the SEC's public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. You can request copies of those documents upon payment of a duplicating fee to the SEC. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference room. You can review our SEC filings by accessing the SEC's Internet site at http://www.sec.gov. In addition, these materials may be read at the offices of the New York Stock Exchange, 20 Broad Street, New York, New York 10005. 28 MISCELLANEOUS Pursuant to Rule 13e-4 under the Exchange Act, we have filed with the SEC a tender offer statement on Schedule TO that contains additional information with respect to the Offer. The Schedule TO, including the exhibits and any amendments to the Schedule TO, may be examined, and copies may be obtained, at the same places and in the same manner as described in the sections titled "Incorporation of Documents by Reference" and "Where You Can Find More Information." We are not aware of any jurisdiction where the making of the Offer is not in compliance with the laws of such jurisdiction. If we become aware of any jurisdiction where the making of the Offer would not be in compliance with such laws, we will make a good faith effort to comply with any such laws or seek to have such laws declared inapplicable to the Offer. If, after such good faith effort, we cannot comply with any such applicable laws, the Offer will not be made to, nor will tenders be accepted from or on behalf of, the holders of debentures residing in such jurisdiction. PERKINELMER, INC. November 29, 2002 29 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AUDITED CONSOLIDATED FINANCIAL STATEMENTS: Independent Auditors' Report................................ F-2 Consolidated Income Statements for the Two Years Ended December 30, 2001......................................... F-3 Consolidated Balance Sheets at December 30, 2001 and December 31, 2000......................................... F-4 Consolidated Statements of Stockholders' Equity for the Two Years Ended December 30, 2001............................. F-5 Consolidated Statements of Cash Flows for the Two Years Ended December 30, 2001................................... F-6 Notes to Consolidated Financial Statements.................. F-8 UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS: Condensed Consolidated Income Statements for the Nine Months Ended September 29, 2002 and September 30, 2001........... F-36 Condensed Consolidated Balance Sheet at September 29, 2002...................................................... F-37 Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 29, 2002 and September 30, 2001.... F-38 Notes to Condensed Consolidated Financial Statements........ F-39
F-1 INDEPENDENT AUDITORS' REPORT To the Board of Directors and Stockholders of PerkinElmer, Inc. Wellesley, Massachusetts We have audited the accompanying consolidated balance sheets of PerkinElmer, Inc. and subsidiaries (the "Company") as of December 30, 2001 and December 31, 2000, and the related consolidated statements of income, stockholders' equity, and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of PerkinElmer, Inc. and subsidiaries as of December 30, 2001 and December 31, 2000, and the results of their operations and their cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. /s/ Deloitte & Touche LLP Boston, Massachusetts November 26, 2002 F-2 CONSOLIDATED INCOME STATEMENTS FOR THE TWO YEARS ENDED DECEMBER 30, 2001
2001 2000 ----------- ----------- (IN THOUSANDS, EXCEPT PER SHARE DATA) Sales: Products.................................................. $1,327,473 $1,348,797 Services.................................................. 197,866 189,185 ---------- ---------- Total sales................................................. 1,525,339 1,537,982 ---------- ---------- Cost of sales: Products.................................................. 739,234 782,489 Services.................................................. 110,186 109,884 ---------- ---------- Total cost of sales......................................... 849,420 892,373 Selling, general and administrative expenses................ 420,786 396,792 Research and development expenses........................... 80,074 76,098 In-process research and development charges................. 71,533 24,300 Restructuring charges, net.................................. 7,000 6,300 Gains on dispositions, net.................................. (33,189) (37,739) ---------- ---------- Operating income from continuing operations................. 129,715 179,858 Other expense, net.......................................... 29,165 33,113 ---------- ---------- Income from continuing operations before income taxes....... 100,550 146,745 Provision for income taxes.................................. 59,052 56,375 ---------- ---------- Income from continuing operations........................... 41,498 90,370 Loss from discontinued operations, net of income taxes...... (9,360) (4,303) Gain on disposition of discontinued operations, net of income taxes.............................................. 2,367 4,453 ---------- ---------- Net income............................................. $ 34,505 $ 90,520 ========== ========== Basic earnings (loss) per share Continuing operations..................................... $ 0.40 $ 0.92 Discontinued operations................................... (0.07) 0.00 ---------- ---------- Net income............................................. $ 0.33 $ 0.92 ========== ========== Diluted earnings (loss) per share Continued operations...................................... $ 0.39 $ 0.88 Discontinued operations................................... (0.07) 0.00 ---------- ---------- Net income............................................. $ 0.32 $ 0.89 ========== ==========
The accompanying notes are an integral part of these consolidated financial statements. F-3 CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 30, 2001 AND DECEMBER 31, 2000
2001 2000 ------------ ------------ (IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA) Current assets: Cash and cash equivalents................................. $ 138,250 $ 125,551 Accounts receivable....................................... 319,063 318,139 Inventories............................................... 244,841 196,825 Other current assets...................................... 150,686 171,076 Current assets of discontinued operations................. 90,518 81,950 ---------- ---------- Total current assets................................... 943,358 893,541 ---------- ---------- Property, plant and equipment: At cost................................................... 530,327 533,721 Accumulated depreciation.................................. (247,703) (271,279) ---------- ---------- Net property, plant and equipment........................... 282,624 262,442 Investments................................................. 18,197 26,226 Intangible assets........................................... 1,530,053 877,846 Other assets................................................ 102,055 103,088 Long-term assets of discontinued operations................. 93,651 97,617 ---------- ---------- Total assets........................................... $2,969,938 $2,260,760 ========== ========== Current liabilities: Short-term debt........................................... $ 125,984 $ 185,411 Accounts payable.......................................... 128,952 114,078 Accrued restructuring costs............................... 51,735 53,344 Accrued expenses.......................................... 427,550 329,671 Current liabilities of discontinued operations............ 20,814 35,578 ---------- ---------- Total current liabilities.............................. 755,035 718,082 Long-term debt.............................................. 598,125 583,337 Long-term liabilities....................................... 253,164 230,941 Long-term liabilities of discontinued operations............ 57 11 Commitments and contingencies Stockholders' equity: Preferred stock -- $1 par value, authorized 1,000,000 shares; none issued or outstanding..................... -- -- Common stock -- $1 par value, authorized 300,000,000 shares; issued 145,101,000 and 122,908,000 in 2001 and 2000, respectively..................................... 145,101 122,908 Capital in excess of par value............................ 641,164 37,060 Retained earnings......................................... 842,004 835,917 Accumulated other comprehensive loss...................... (60,940) (39,042) Cost of shares held in treasury -- 20,913,000 shares in 2001 and 23,360,000 shares in 2000..................... (203,772) (228,454) ---------- ---------- Total stockholders' equity............................. 1,363,557 728,389 ---------- ---------- Total liabilities and stockholders' equity............. $2,969,938 $2,260,760 ========== ==========
The accompanying notes are an integral part of these consolidated financial statements. F-4 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY FOR THE TWO YEARS ENDED DECEMBER 30, 2001
ACCUMULATED CAPITAL IN OTHER COST OF TOTAL COMPREHENSIVE COMMON EXCESS OF RETAINED COMPREHENSIVE SHARES HELD STOCKHOLDERS' INCOME STOCK PAR EARNINGS INCOME (LOSS) IN TREASURY EQUITY ------------- -------- ---------- -------- ------------- ----------- ------------- (DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA) BALANCE, JANUARY 3, 2000......... $120,204 $ -- $701,907 $(14,040) $(257,295) $ 550,776 Comprehensive income Net income..................... $ 90,520 -- -- 90,520 -- -- 90,520 Other comprehensive income (loss), net of tax Foreign currency translation adjustments.................. (25,484) -- -- -- (25,484) -- (25,484) Unrealized gains on securities arising during the period................. 481 Reclassification adjustment................. 1 -------- Net unrealized gains......... 482 -- -- -- 482 -- 482 -------- Other comprehensive loss....... (25,002) -------- Comprehensive income............. $ 65,518 ======== Cash dividends ($.28 per share)......................... -- -- (27,533) -- -- (27,533) Exercise of employee stock options and related income tax benefits....................... -- 17,230 16,000 -- 34,939 68,169 Issuance of common stock for employee benefit plans......... -- 5,228 (155) -- 4,389 9,462 Purchase of common stock for treasury....................... -- (102) -- -- (10,487) (10,589) Mergers, acquisitions and other.......................... 2,704 14,704 55,178 -- -- 72,586 -------- -------- -------- -------- --------- ---------- BALANCE, DECEMBER 31, 2000....... 122,908 37,060 835,917 (39,042) (228,454) 728,389 -------- -------- -------- -------- --------- ---------- Comprehensive income Net income..................... $ 34,505 -- -- 34,505 -- -- 34,505 Other comprehensive income (loss), net of tax Foreign currency translation adjustments.................. (20,976) -- -- -- (20,976) -- (20,976) Unrealized gains on derivative instruments..... 1,407 -- -- -- 1,407 -- 1,407 Unrealized losses on securities arising during the period................. (2,438) Reclassification adjustment................. 109 -------- Net unrealized losses........ (2,329) -- -- -- (2,329) -- (2,329) -------- Other comprehensive loss....... (21,898) -------- Comprehensive income............. $ 12,607 ======== Cash dividends ($.28 per share)......................... -- -- (28,294) -- -- (28,294) Exercise of employee stock options and related income tax benefits....................... -- 20,723 -- -- 20,047 40,770 Issuance of common stock for employee benefit plans......... -- 7,042 (124) -- 4,671 11,589 Purchase of common stock for treasury....................... -- -- -- -- (1,784) (1,784) Acquisition of AAS............... -- 3,252 -- -- 1,748 5,000 Acquisition of Packard........... 22,193 573,087 -- -- -- 595,280 -------- -------- -------- -------- --------- ---------- BALANCE, DECEMBER 30, 2001....... $145,101 $641,164 $842,004 $(60,940) $(203,772) $1,363,557 ======== ======== ======== ======== ========= ==========
The accompanying notes are an integral part of these consolidated financial statements. F-5 CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE TWO YEARS ENDED DECEMBER 30, 2001
2001 2000 --------- --------- (IN THOUSANDS) Operating activities: Net income................................................ $ 34,505 $ 90,520 Add net loss from discontinued operations................. 9,360 4,303 Deduct net gain on disposition of discontinued operations............................................. (2,367) (4,453) --------- --------- Income from continuing operations......................... 41,498 90,370 Adjustments to reconcile income from continuing operations to net cash provided by continuing operations: In-process research and development charges............ 71,533 24,300 Non-cash portion of restructuring charges.............. 5,624 2,900 Depreciation and amortization.......................... 88,472 74,253 Stock-based compensation............................... 3,529 4,143 Deferred taxes......................................... 5,628 14,318 Amortization of deferred debt issuance cost and accretion of discounts................................ 20,753 8,567 Gains on dispositions and sales of investments, net.... (40,738) (38,248) Changes in assets and liabilities which provided (used) cash, excluding effects from companies purchased and divested: Accounts receivable.................................. 18,219 439 Inventories.......................................... (35,518) (12,033) Accounts payable..................................... 487 9,796 Tax benefit from exercise of common stock options.... 15,043 30,843 Accrued restructuring costs.......................... (35,452) (31,174) Accrued expenses and other........................... (13,810) (21,544) --------- --------- Net cash provided by continuing operations operating activities................................................ 145,268 156,930 Net cash used by discontinued operations operating activities................................................ (21,969) (11,382) --------- --------- Net cash provided by operating activities................... 123,299 145,548 --------- --------- Investing activities: Capital expenditures...................................... (94,382) (59,294) Proceeds from dispositions of businesses, net............. 73,505 39,148 Proceeds from dispositions of property, plant and equipment.............................................. 61,243 42,276 Cost of acquisitions and investments, net of cash and cash equivalents acquired................................... 34,149 (411,040) Proceeds from sale (use from purchase) of investments, net.................................................... 2,951 (20,457) Other..................................................... (758) 1,919 --------- --------- Net cash provided by (used in) continuing operations investing activities...................................... 76,708 (407,448) Net cash (used in) provided by discontinued operations investing activities...................................... (10,947) 6,018 --------- --------- Net cash provided by (used in) investing activities......... 65,761 (401,430) Financing activities: Proceeds from issuance of convertible debt................ -- 448,000 (Decrease) increase in commercial paper borrowings........ (177,000) 37,000 Other debt decreases...................................... (3,235) (233,991) Proceeds from issuance of common stock.................... 39,475 46,902
F-6 CONSOLIDATED STATEMENTS OF CASH FLOWS -- (CONTINUED)
2001 2000 --------- --------- (IN THOUSANDS) Purchases of common stock for treasury.................... (1,784) (10,589) Cash dividends............................................ (28,294) (27,533) --------- --------- Net cash (used in) provided by continuing operations financing activities...................................... (170,838) 259,789 --------- --------- Effect of exchange rate changes on cash and cash equivalents............................................... (5,523) (5,006) --------- --------- Net increase (decrease) in cash and cash equivalents........ 12,699 (1,099) Cash and cash equivalents at beginning of year.............. 125,551 126,650 --------- --------- Cash and cash equivalents at end of year.................... $ 138,250 $ 125,551 ========= ========= Supplemental disclosures of cash flow information for continuing and discontinued operations (see also Note 2): Cash paid during the year for Interest............................................... $ 17,971 $ 45,236 Income taxes........................................... 18,211 21,819 Noncash investing and financing activities: Stock issued to Packard shareholders................... 595,280 -- Packard debt assumed................................... 118,432 -- NEN debt assumed....................................... -- 48,262 Fair value of warrants issued in NEN acquisition....... -- 6,940
The accompanying notes are an integral part of these consolidated financial statements. F-7 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1: NATURE OF OPERATIONS AND ACCOUNTING POLICIES Nature of Operations: PerkinElmer, Inc. is a global high technology company which designs, manufactures, markets and supports products, systems and service offerings within four major business segments: Life Sciences, Analytical Instruments, Optoelectronics and Fluid Sciences. In July 2001, PerkinElmer, Inc. approved a plan to sell its Security and Detection Systems business, which is presented as discontinued operations in accordance with Accounting Principles Board (APB) Opinion No. 30, Reporting the Results of Operations -- Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions ("APB No. 30") (see Note 6). In June 2002, the Company approved separate plans to dispose of its Telecom Components and Entertainment Lighting businesses. The Company has accounted for these businesses as discontinued operations in accordance with Statement of Financial Accounting Standards ("SFAS") No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, ("SFAS No. 144"); which the Company adopted as of the beginning of fiscal 2002. The consolidated financial statements include the accounts of PerkinElmer, Inc. and its subsidiaries (the Company). All material intercompany balances and transactions have been eliminated in consolidation. Accounting Policies and Estimates: The preparation of consolidated financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, the Company evaluates its estimates, including those related to bad debts, inventories, investments, intangible assets, income taxes, restructuring activities, pensions and other post-retirement benefits, and contingencies and litigation. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Sales: The majority of the Company's product sales are recorded at the time of shipment, when title and risk of ownership passes to the buyer and when persuasive evidence of an arrangement exists, the seller's price to the buyer is fixed or determinable and collectibility is reasonably assured. A provision is made at the time the related revenue is recognized for the cost of any installation obligations and the estimated cost of product warranties. When other significant obligations remain after products are delivered, including certain customer acceptance provisions, revenue is recognized only after such obligations are fulfilled. If a loss is anticipated on any contract, a provision for the entire loss is made immediately. Revenue related to the sale of maintenance contracts is deferred and amortized on a straight-line basis over the service period. Shipping and handling costs are reflected in both revenue and cost of goods sold to the extent they are billed to customers. In all other instances they are reflected as a component of cost of goods sold. Inventories: Inventories, which include material, labor and manufacturing overhead, are valued at the lower of cost or market. Substantially all inventories are accounted for using the first-in, first-out (FIFO) method of determining inventory costs. Inventory quantities on-hand are regularly reviewed, and where necessary, provisions for excess and obsolete inventory are recorded based primarily on either the Company's estimated forecast of product demand and production requirements for the next twelve months or historical trailing twelve month usage. A significant increase in the demand for the Company's products could result in a short-term increase in the cost of inventory purchases while a significant decrease in demand could result in an increase in the amount of excess inventory quantities on hand requiring additional inventory write-downs. F-8 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Allowance for Doubtful Accounts: The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. If the financial condition of the Company's customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowance may be required. Property, Plant and Equipment: For financial statement purposes, the Company depreciates plant and equipment using the straight-line method over their estimated useful lives, which generally fall within the following ranges: buildings -- 10 to 25 years; leasehold improvements -- estimated useful life or remaining term of lease, whichever is shorter; machinery and equipment -- 3 to 7 years. Certain tooling costs are capitalized and amortized over a 3 year life, while diminimus costs are expensed. For income tax purposes, the Company depreciates plant and equipment over their estimated useful lives using accelerated methods. Pension Plans: The Company's funding policy provides that payments to the U.S. pension trusts shall at least be equal to the minimum funding requirements of the Employee Retirement Income Security Act of 1974. Non-U.S. plans are accrued for, but generally not fully funded, and benefits are paid from operating funds. Translation of Foreign Currencies: For foreign operations with functional currencies other than the U.S. dollar, asset and liability accounts are translated at current exchange rates; income and expenses are translated using weighted average exchange rates. Resulting translation adjustments, as well as gains and losses from certain intercompany transactions, are reported in a separate component of stockholders' equity. Translation adjustments for operations in highly inflationary economies and exchange gains and losses on transactions are included in earnings. Intangible Assets: In accordance with Statement of Financial Accounting Standards (SFAS) No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, and APB Opinion No. 17, Intangible Assets, the Company reviews long-lived assets and all intangible assets, including goodwill, for impairment whenever events or changes in circumstances indicate the carrying amount of such assets may not be recoverable. Recoverability of these assets is determined by comparing the forecasted undiscounted net cash flows of the operation to which the assets relate, to the carrying amount including associated intangible assets of such operation. If the operation is determined to be unable to recover the carrying amount of its assets, then intangible assets are written down first, followed by the other long-lived assets of the operation, to fair value. Fair value is determined based on discounted cash flows or appraised values, depending upon the nature of the assets. The Company adopted SFAS No. 144 in 2002. This standard is the successor to SFAS No. 121. The adoption has no impact on the Company. Stock-Based Compensation: As allowed by SFAS No. 123, Accounting for Stock-Based Compensation, the Company has elected to account for stock-based compensation at intrinsic value with disclosure of the effects of fair value accounting on net income and earnings per share on a pro forma basis. Investments and Marketable Securities: Investments where the Company does not have the ability to exercise significant influence, generally where ownership is less than 20%, are accounted for either in accordance with SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities or under the cost method. For public companies that have readily determinable fair values, the Company classifies its equity investments as either available-for-sale or trading. Should securities be classified as available for sale, the Company records these investments at their fair values with unrealized gains and losses included in "accumulated other comprehensive income loss." If investments are classified as trading, any unrealized gain or loss is recorded directly to the income statement. Under the cost method of accounting, investments in private companies are carried at cost and are adjusted only for other-than-temporary declines in fair value, distributions of earnings and additional investments. F-9 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Investments in business entities in which the Company does not have control, but has the ability to exercise significant influence over operating and financial policies, generally 20-50 percent ownership, are accounted for by the equity method. If the Company has disproportionate capital at risk and the equity method investee is recognizing losses, the Company records its proportionate loss based on its proportionate capital at risk. Fair Value of Financial Instruments: The Company's financial instruments consist of accounts receivable, accounts payable, certain derivative instruments used to manage foreign currency and interest rate risks, and long-term debt. The fair value of the derivative instruments is discussed in Note 19, and the fair value of the long-term debt is discussed in Note 13. The current carrying amounts of other financial instruments are considered reasonable estimates of their fair market value, due to the short maturity of these instruments, or as a result of the competitive market interest rates, which have been negotiated. Cash Flows: For purposes of the Consolidated Statements of Cash Flows, the Company considers all highly liquid instruments with a purchased maturity of three months or less to be cash equivalents. The carrying amount of cash and cash equivalents approximates fair value due to the short maturities. Environmental Matters: The Company accrues for costs associated with the remediation of environmental pollution when it is probable that a liability has been incurred and the Company's proportionate share of the amount can be reasonably estimated. The recorded liabilities have not been discounted. Comprehensive Income: The Company follows the provisions of SFAS No. 130, Reporting Comprehensive Income. Comprehensive income is reflected in the consolidated statements of stockholders' equity. Derivative Instruments and Hedging: The Financial Accounting Standards Board ("FASB") issued SFAS No. 137, Accounting for Derivative Instruments and Hedging Activities -- Deferral of the Effective Date of SFAS No. 133, in June 1999. SFAS No. 133 was adopted by the Company on January 3, 2001. The statement requires companies to record derivatives on the balance sheet as assets or liabilities, measured at fair value. Gains or losses resulting from changes in the values of those derivatives would be accounted for depending on the use of the derivative instrument and whether it qualifies for hedge accounting. The effect of the adoption of SFAS No. 133 as of January 1, 2001 was not material. Stock Splits: Per share amounts and share data have been retroactively restated to give effect to the two-for-one stock split on June 1, 2001, effected in the form of a 100% stock dividend for holders of record as of May 15, 2001. Reclassifications: Certain financial statement amounts from prior years have been reclassified for purposes of consistent presentation. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS In June 2001, the Financial Accounting Standards Board ("FASB") issued SFAS No. 141 and SFAS No. 142. SFAS No. 141 requires all business combinations initiated after July 1, 2001 to be accounted for using the purchase method. Under SFAS No. 142, goodwill and intangible assets with indefinite lives are no longer amortized but are reviewed at least annually for potential impairment by comparing the carrying value to the fair value of the reporting unit to which they are assigned. The provisions of SFAS No. 142 are effective for the Company's current fiscal year. Accordingly, the Company has ceased goodwill amortization as of the beginning of fiscal 2002. SFAS No. 142 requires that goodwill be tested for impairment at the reporting unit level upon initial adoption and at least annually thereafter, utilizing a two-step methodology. The initial step requires the Company to determine the fair value of each reporting unit and compare it to the carrying value, including goodwill of such unit. If the fair value exceeds the carrying value, no impairment loss would be recognized. However, if the carrying value of the reporting unit exceeds the corresponding fair value, the goodwill of this unit may be impaired. The F-10 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) amount, if any, of the impairment would then be evaluated in the third step of the impairment testing which places the value of the goodwill balance to that which would be accounted for under purchase accounting. In connection with adopting this standard, the Company, assisted by independent valuation consultants, completed the transitional testing of goodwill using a measurement date of January 1, 2002. The results of this testing indicate that the carrying values of the lighting reporting unit within the Optoelectronics business unit exceeds the estimated fair value of this unit as determined utilizing various valuation techniques including discounted cash flow and comparative market analysis. Accordingly, an impairment charge has been recognized as a change in accounting principle as of the beginning of 2002. The impairment charge was $117.8 million on a before and after-tax basis. In April 2002, the FASB issued SFAS No. 145, which rescinds SFAS No. 4, Reporting Gains and Losses from Extinguishment of Debt an amendment of APB No. 30, which required all gains and losses from the extinguishment of debt to be aggregated and, if material, classified as an extraordinary item, net of related income tax effect. As a result, the criteria set forth by APB Opinion No. 30 will now be used to classify those gains and losses. The Company has elected to early adopt the provisions of SFAS No. 145 as of July 2, 2002. As a result, the $6.7 million net gain resulting from the early extinguishment of a portion of the Company's zero coupon convertible debentures discussed in Note 6 was recognized within other expense, net during the third quarter of 2002. Additionally, the $5.5 million extraordinary loss resulting from the early extinguishment of the Packard Notes during the first quarter of 2002 was classified as other expense, net. In July 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities ("SFAS No. 146") which nullifies EITF Issue No. 94-3, SFAS No. 146 requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred, whereas EITF No. 94-3 had recognized the liability at the commitment date to an exit plan. The Company is required to adopt the provisions of SFAS No. 146 effective for exit or disposal activities initiated after December 31, 2002. NOTE 2: ACQUISITIONS AND DIVESTITURES On November 13, 2001, the Company completed the acquisition of 100% of Packard BioScience Company (Packard) for a purchase price of approximately $733 million consisting of approximately 22 million of the Company's common shares and the assumption of $118 million in debt which was subsequently redeemed in March 2002 (see Note 13). Packard is a global developer, manufacturer and marketer of instruments and related consumables and services for use in drug discovery and other life sciences research and generated sales of approximately $165 million for its fiscal year ended December 31, 2000. The Company undertook this acquisition to extend our capabilities in automated liquid handling and sample preparation and strengthened our position as a global provider of comprehensive drug discovery solutions. Packard's operations, assumed as of the date of acquisition, are reported within the results from operations of the Life Sciences segment. The acquisition was accounted for as a purchase in accordance with SFAS No. 141, and the Company has accordingly allocated the purchase price of Packard based upon the fair values of the net assets acquired and liabilities assumed. The allocation of the purchase price has not yet been finalized as the Company is awaiting the resolution of certain contingencies. Portions of the net assets acquired and liabilities assumed were valued by independent appraisers utilizing customary valuation procedures and techniques. These intangible assets included $69.0 million in acquired in-process research and development for projects that had not yet reached technological feasibility as of the acquisition date and for which no future alternative use existed. These costs were expensed on the date of the acquisition. Other acquired intangible assets valued at $237.3 million included the fair value of trade names, trademarks, patents and developed technology. Of this amount, $76.5 million has been ascribed to F-11 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) trade names and trademarks for which an indefinite life has been assigned. The Packard acquisition also resulted in a preliminary allocation to goodwill of $410.6 million. Indefinite lived intangibles and goodwill are not being amortized in accordance with SFAS No. 142, effective for all business combinations completed subsequent to July 1, 2001. In connection with this acquisition, the Company agreed to issue 0.311 shares of PerkinElmer common stock for each outstanding share of Packard common stock. The Company also agreed to assume all outstanding options to purchase Packard common stock, which became exercisable for shares of PerkinElmer common stock following the merger after giving effect to the same exchange ratio provided for in the merger agreement to the Packard common shareholders. The purchase price for Packard has been allocated to the estimated fair value of assets acquired and liabilities assumed based upon the Company's current estimates of respective fair values. Some allocations are based on studies and independent valuations, as discussed above. The components of the estimated purchase price and preliminary allocation are as follows (in thousands): Preliminary allocation of purchase price: Stock issued to Packard shareholders........................ $ 595,280 Debt assumed................................................ 118,432 Acquisition costs........................................... 20,261 --------- Total consideration and acquisition costs.............. $ 733,973 ========= Preliminary allocation of purchase price: Current assets.............................................. 157,677 Property, plant and equipment............................... 23,186 Other assets................................................ 40,601 Identifiable intangible assets.............................. 237,320 In-process research and development......................... 69,040 Goodwill.................................................... 410,583 Liabilities assumed......................................... (204,434) --------- $ 733,973 =========
As part of the Packard acquisition and included in liabilities assumed is approximately $33.0 million in integration charges. The integration accrual was recorded pursuant to a formal plan and includes initiatives to integrate the operations of Packard and the Company and are principally comprised of amounts related to employee separation costs and the termination of leases and other contractual obligations.
TERMINATION OF DISPOSAL OF LEASES AND EMPLOYEE CERTAIN PRODUCT OTHER SEPARATION LINES AND CONTRACTUAL COSTS ASSETS OBLIGATIONS TOTAL ---------- --------------- -------------- ----- Packard Plan........................... $20.0 $3.0 $10.0 $33.0
On July 31, 2000, the Company completed its acquisition of 100% of NEN Life Sciences, Inc. (NEN), a provider of state-of-the-art drug discovery products, services, reagents and technologies to the life sciences industry for an aggregate purchase price of approximately $418 million. The acquisition was undertaken to expand the Company's drug discovery products, services, reagents and technologies provided to the life sciences industry. In connection with the acquisition, the Company paid approximately $350 million in cash and issued warrants to purchase approximately 600,000 shares of the Company's F-12 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) common stock at $40.00 per share in exchange for all of the outstanding shares, options and warrants of NEN. In addition, the Company repaid approximately $50 million of outstanding indebtedness of NEN. The Company financed the acquisition and repayment of the outstanding indebtedness with $410 million of commercial paper borrowings with a weighted-average interest rate of 7%. These short-term borrowings were repaid in August 2000 with proceeds from the issuance of long-term convertible debentures (see Note 13). NEN's operations, included in the consolidated results of the Company from the date of acquisition, are reported in the Life Sciences segment. The acquisition was accounted for as a purchase under APB Opinion No. 16, Business Combinations, and the results of operations of NEN are included in the Company's financial statements from the date of acquisition. The components of NEN's purchase price and allocation were as follows:
(IN THOUSANDS) Consideration and acquisition costs: Cash paid to NEN.......................................... $348,918 Debt assumed.............................................. 48,262 Acquisition costs......................................... 13,647 Fair value of warrants issued............................. 6,940 -------- Total.................................................. $417,767 ======== Allocation of purchase price: Current assets............................................ $ 34,327 Property, plant and equipment............................. 59,755 Other assets.............................................. 739 Acquired intangibles...................................... 75,900 In-process research and development....................... 24,300 Goodwill.................................................. 270,790 Liabilities............................................... (48,044) -------- Total.................................................. $417,767 ========
As part of the July 2000 acquisition of NEN, the Company recorded a $4.0 million integration charge for actions targeted at reduced employment costs, consolidation of certain facilities and the termination of certain leases and other contractual obligations. During the second quarter of 2000, the Company finalized its integration plan in connection with its acquisition of the Analytical Instruments Division of PE Corp. Based on continued aggressive actions by the Company to improve the cost structure of the acquired business, and increased costs related primarily to employment integration, the Company increased its original estimate of integration costs and related goodwill recorded at the acquisition date by $24.0 million in connection with purchase accounting. The following table summarizes integration reserve activity during fiscal 2001 and 2000 related to the 1999 acquisition of Analytical Instruments and NEN acquisitions as discussed above: Total integration charges................................... $ 42.1 Amounts paid during 2000.................................... (9.8) ------ Accrued integration costs at December 31, 2000.............. 32.3 Amounts paid during 2001.................................... (23.1) ------ Accrued integration costs at December 30, 2001.............. $ 9.2 ======
F-13 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Unaudited pro forma operating results for the Company, assuming the acquisition of NEN and Packard occurred on January 3, 2000 are as follows:
2001 2000 ----------- ----------- (IN THOUSANDS EXCEPT PER SHARE DATA) Sales from continuing operations............................ $1,691,332 $1,786,287 Income from continuing operations........................... 101,278 84,123 Net income.................................................. $ 94,285 $ 84,279 Basic earnings per share.................................... 0.77 0.70 Diluted earning per share................................... 0.74 0.67
The pro forma amounts in the previous table exclude the in-process research and development charges of $69.0 million and $24.3 million for the Packard and NEN acquisitions, respectively. The unaudited pro forma financial information is provided for informational purposes only and is not necessarily indicative of the Company's operating results that would have occurred had the acquisitions been consummated on the dates for which the consummation of the acquisitions are being given effect, nor is it necessarily indicative of the Company's future operating results. The pro forma amounts do not reflect any operating efficiencies and cost savings that the Company believes are achievable. During the fourth quarter of 2001, the Company sold its IRAS business for cash of $55.5 million, resulting in a pretax gain of approximately $32.3 million. Additionally, the Company has deferred a gain of approximately $3 million in connection with certain contingencies related to the sale. Also during the fourth quarter of 2001, the Company sold its Voltarc business for cash of $9.5 million and a note for approximately $8.0 million, resulting in a pretax loss of approximately $6.3 million. The combined net income of the disposed businesses were $5.4 million in 2000 and $1.4 million in 2001 through the date of disposal. During the fourth quarter of 2000, the Company sold its Berthold business at a net pre-tax gain of $10 million. The Company deferred gain recognition of approximately $11.9 million of sales proceeds from this divestiture in connection with certain contingencies related to the sale, $2.0 million of which was recognized during 2001 as a result of the resolution of certain events and contingencies. Revenues for 2000 for the divested business was $30 million. Also during 2000, the Company recorded a pre-tax gain of $16.7 million from the sale of a building, and recognized $2.4 million in net losses related to certain other asset dispositions. During the first quarter of 2000, the Company sold its micromachined sensors and specialty semiconductor businesses for cash of $24.3 million, resulting in a pre-tax gain of $6.7 million. Combined financial results of the divested businesses for 2000 were not material to the consolidated results of the Company. All of the gains described above are reported on the "Gains on Dispositions, net" line in the consolidated income statements. NOTE 3: RESTRUCTURING CHARGES During the fourth quarter of 2001, the Company expanded its continuing effort to restructure certain businesses to further improve performance. The plan resulted in additional pre-tax restructuring charges of $9.2 million. The principal actions in these restructuring plans primarily relate to employee separation costs associated with the consolidation of certain European general and managerial functions within both the F-14 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Life Sciences and Analytical Instruments segments, as well as costs associated with the closure of certain facilities and disposal of related assets.
TERMINATION OF DISPOSAL OF LEASES AND EMPLOYEE CERTAIN PRODUCT OTHER SEPARATION LINES AND CONTRACTUAL COSTS ASSETS OBLIGATIONS TOTAL ---------- --------------- -------------- ----- 2001 Plan: Life Sciences........................ $ 3.2 $0.1 $0.6 $ 3.9 Analytical Instruments............... 3.8 -- 1.5 5.3 ----- ---- ---- ----- Total restructuring charges............ 7.0 0.1 2.1 9.2 Amounts paid during 2001............... (1.6) -- -- (1.6) ----- ---- ---- ----- Accrued restructuring costs at December 30, 2001............................. $ 5.4 $0.1 $2.1 $ 7.6 ===== ==== ==== =====
During the fourth quarter of 2000, the Company recorded of a pre-tax restructuring charge of $15.1 million for actions to be completed in 2001 (the "2000 plan"). These charges related to the Company's Life Sciences and Optoelectronics segments. The principal actions in the restructuring plans included close-down or consolidation of a number of offices and facilities, the closure of certain manufacturing facilities, and the disposal of underutilized assets. The restructuring charges included: Life Sciences' actions associated with rationalization of its distribution network and overall facility consolidation and Optoelectronics' actions associated with its Lighting and Imaging businesses related to employee separation costs and the closures of certain manufacturing facilities. During 2001, the Company provided for an additional $0.8 million under the 2000 plan as a result of additional needs related to lease terminations. Also during 2001, due to the substantial completion of the actions of the 2000 plan, the Company reevaluated its 2000 restructuring plans. As a result of this review, costs associated with the previous Life Sciences plan related to the rationalization of its network and facility consolidation were no longer required. As a result, the Company recognized a restructuring credit of $0.5 million during 2001. The following table summarizes activity related to the 2000 plan:
TERMINATION OF DISPOSAL OF LEASES AND EMPLOYEE CERTAIN PRODUCT OTHER SEPARATION LINES AND CONTRACTUAL COSTS ASSETS OBLIGATIONS TOTAL ---------- --------------- -------------- ------ Total restructuring charges........... $10.1 $ 2.9 $ 2.1 $ 15.1 Amounts incurred during 2000.......... -- -- -- -- ----- ----- ----- ------ Accrued restructuring costs at December 31, 2000................... 10.1 2.9 2.1 15.1 Additional amounts provided during 2001................................ -- -- 0.8 0.8 Amounts paid during 2001.............. (9.6) (2.9) (2.9) (15.4) Amounts reversed during 2001.......... (0.5) -- -- (0.5) ----- ----- ----- ------ Accrued restructuring costs at December 30, 2001................... $ -- $ -- $ -- $ -- ===== ===== ===== ======
Also during 2000, as a result of the substantial completion of previously announced restructuring plans, the Company recognized restructuring credits of $6.3 million relating to 1999 and 1998 restructuring plans. Additionally, during 1999, the Company recognized a $23.5 million restructuring charge in connection with the closure and consolidation of certain facilities, underutilized assets and product lines. As of F-15 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) December 30, 2001 and December 31, 2000, $2.0 million and $5.9 million, respectively, remained accrued for under this plan. Spending against this plan totaled $1.4 million and reversals totaled $2.5 million during the year ended December 30, 2001. During the year ended December 31, 2000, there were net reversals of $2.5 million and amounts paid totaled $12.4 million. Cash outlays during 2001 and 2000 were approximately $35.5 million and $31.2 million, respectively, for the above discussed plans. NOTE 4: OTHER EXPENSE Other expense, net consisted of the following:
2001 2000 -------- -------- (IN THOUSANDS) Interest income............................................. $ (3,730) $ (3,874) Interest expense............................................ 37,730 37,418 Gains on sale of investments, net........................... (4,274) (1,294) Other....................................................... (561) 863 -------- -------- $ 29,165 $ 33,113 ======== ========
NOTE 5: INCOME TAXES The components of income from continuing operations before income taxes for financial reporting purposes were as follows:
2001 2000 -------- -------- (IN THOUSANDS) U.S. ....................................................... $(18,641) $ 38,315 Non-U.S. ................................................... 119,191 108,430 -------- -------- $100,550 $146,745 ======== ========
The components of the provision for income taxes for continuing operations were as follows:
DEFERRED EXPENSE CURRENT (BENEFIT) TOTAL ------- ----------------- ------- (IN THOUSANDS) 2001 Federal......................................... $20,971 $ 1,995 $22,966 State........................................... 1,732 2,516 4,248 Non-U.S. ....................................... 30,721 1,117 31,838 ------- ------- ------- $53,424 $ 5,628 $59,052 ======= ======= ======= 2000 Federal......................................... $14,121 $12,571 $26,692 State........................................... 3,405 2,968 6,373 Non-U.S. ....................................... 24,627 (1,317) 23,310 ------- ------- ------- $42,153 $14,222 $56,375 ======= ======= =======
F-16 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The total provision for income taxes included in the consolidated financial statements was as follows:
2001 2000 ------- ------- (IN THOUSANDS) Continuing operations....................................... $59,052 $56,375 Discontinued operations..................................... (2,427) 4,894 ------- ------- $56,625 $61,269 ======= =======
The major differences between the Company's effective tax rate for continuing operations and the federal statutory rate were as follows:
2001 2000 ---- ----- Federal statutory rate...................................... 35.0% 35.0% Non-U.S. rate differential, net............................. (9.8) (12.6) State income taxes, net..................................... 2.7 2.9 Nondeductible goodwill amortization......................... 7.2 8.1 Nondeductible in-process research and development........... 24.9 7.8 Change in valuation allowance............................... (0.5) (1.7) Other, net including tax settlement......................... (0.8) (1.1) ---- ----- Effective tax rate.......................................... 58.7% 38.4% ==== =====
The tax effects of temporary differences and carryovers that gave rise to deferred income tax assets and liabilities as of December 30, 2001 and December 31, 2000 were as follows:
2001 2000 --------- -------- (IN THOUSANDS) Deferred tax assets: Inventory reserves........................................ $ 9,591 $ 2,789 Other reserves............................................ 12,217 21,761 Deferred income........................................... 1,152 6,179 Vacation pay.............................................. 4,303 5,478 Tax attributes carryover.................................. 52,691 22,698 Post-retirement health benefits........................... 4,699 4,981 Restructuring reserve..................................... 16,784 16,005 In-process research and development....................... 9,916 10,726 All other, net............................................ 47,744 46,850 --------- -------- Total deferred tax assets................................... 159,097 137,467 Deferred tax liabilities: Pension contribution...................................... (12,195) (13,850) Amortization.............................................. (97,256) (6,470) Depreciation.............................................. (29,631) (39,209) All other, net............................................ (5,152) (17,979) --------- -------- Total deferred tax liabilities.............................. (144,234) (77,508) Valuation allowance......................................... (42,561) (22,698) --------- -------- Net deferred tax assets and (liabilities)................... $ (27,698) $ 37,261 ========= ========
F-17 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) At December 30, 2001, the Company had net operating loss carryovers totalling approximately $110.0 million and foreign tax credits of approximately $14.0 million subject to various carryforward periods. Based on the judgement of the Company, the valuation allowance takes into consideration limitations imposed upon the use of the tax attribute carryovers and reduces the value of such items to the likely net realizeable amount. Current deferred tax assets of $83 million and $62 million were included in other current assets at December 30, 2001 and December 31, 2000, respectively. Long-term deferred tax liabilities of $111 million and $24 million were included in long-term liabilities at December 30, 2001 and December 31, 2000, respectively. In general, it is the practice and intention of the Company to reinvest the earnings of its non-U.S. subsidiaries in those operations. With the exception of APB No. 23 reserves that have specifically been identified as relating to earnings expected to be repatriated, all earnings of foreign subsidiaries are treated as permanently reinvested. During the third quarter of 2001, the Company settled a U.S. Tax Court case and reached an audit settlement with the Internal Revenue Service. As a result, the Company received $2.5 million as a reduction to its 2001 full year tax expense. NOTE 6: DISCONTINUED OPERATIONS In June 2002, the Company completed the sale of its Security and Detection Systems business for cash consideration of approximately $100 million and a net working capital adjustment, the amount of which has yet to be finalized. A net pre-tax gain of $18.0 million was recorded pursuant to this transaction in the second quarter of 2002 as a gain on the disposition of a discontinued operation. The Company has accounted for its Security and Detection Systems business as a discontinued operation in accordance with APB No. 30, and accordingly, the results of operations and related cash flows of this business through the disposal date have been segregated from continuing operations and reported as a separate line on the Company's Consolidated Income Statements. The assets and liabilities of the Security and Detection Systems business are reflected within the assets and liabilities from discontinued operations in the accompanying Consolidated Balance Sheets for the periods prior to its sale and the resulting gain from the sale is presented as a component of net income within dispositions of discontinued operations, net of income tax on the Company's Consolidated Income Statements. During June 2002, the Company approved separate plans to shutdown its Telecommunications Components and sell its Entertainment Lighting businesses as part of its continued efforts to focus on higher growth opportunities. The results of these businesses were previously reported as part of the Optoelectronics segment. The Company has accounted for these businesses as discontinued operations in accordance with SFAS No. 144, and accordingly, has presented the results of operations and related cash flows of these businesses as discontinued operations for all periods presented. The assets and liabilities of these disposal groups have been presented separately and are reflected within the assets and liabilities from discontinued operations in the accompanying Consolidated Balance Sheets. F-18 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Summary operating results of the discontinued operations of the Security and Detection Systems, Telecommunications Components and Entertainment Lighting businesses (through December 30, 2001) were as follows:
2001 2000 -------- -------- (IN THOUSANDS) Sales....................................................... $ 76,424 $157,285 Costs and expenses.......................................... 83,620 150,547 -------- -------- Operating (loss) income from discontinued operations........ (7,196) 6,738 Other expense............................................... 6,124 8,994 -------- -------- Loss from discontinued operations before income taxes....... (13,320) (2,256) (Benefit)/provision for income taxes........................ (3,960) 2,047 -------- -------- Loss from discontinued operations, net of income taxes...... $ (9,360) $ (4,303) ======== ========
NOTE 7: EARNINGS PER SHARE Basic earnings per share was computed by dividing net income by the weighted-average number of common shares outstanding during the year. Diluted earnings per share was computed by dividing net income by the weighted-average number of common shares outstanding plus all potentially dilutive common shares outstanding, primarily shares issuable upon the exercise of stock options using the treasury stock method. The following table reconciles the number of shares utilized in the earnings per share calculations:
2001 2000 ------- ------- (IN THOUSANDS) Number of common shares -- basic............................ 103,687 98,212 Effect of dilutive securities Stock options............................................. 2,700 4,022 Restricted shares and other............................... 872 44 ------- ------- Number of common shares -- diluted.......................... 107,259 102,278 ======= =======
Options to purchase 8 million and 0.1 million shares of common stock were not included in the computation of diluted earnings per share for 2001 and 2000, respectively, because the options' exercise prices were greater than the average market price of the common shares and thus their effect would have been antidilutive. Additionally, the Company's zero coupon senior convertible debentures (see Note 13) are convertible into 10.8 million shares of the Company's common stock at December 30, 2001 at approximately $44.00 per share. Conversion of the debentures was not assumed in the computation of diluted earnings per share for 2001 and 2000 because the effect of assumed conversion would have been antidilutive. NOTE 8: ACCOUNTS RECEIVABLE Accounts receivable were net of reserves for doubtful accounts of $13.0 million and $13.3 million as of December 30, 2001 and December 31, 2000 respectively. During 2001, the Company established a wholly owned consolidated subsidiary to fund, on a revolving basis, certain of the Company's accounts receivable balances and simultaneously sell an undivided interest in this pool of receivables to a financial institution. As collections reduce the balance of sold accounts receivable, new receivables are sold. The Company's consolidated subsidiary retains the risk of credit loss on the receivables and accordingly, the full amount of the allowance for doubtful accounts has been provided for on the Company's balance sheet. Under the terms of this arrangement, the Company retains F-19 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) collection and administrative responsibilities for the balances. The facility is renewable by mutual agreement of the parties on an annual basis and has an effective interest rate of approximately LIBOR plus 30 basis points. Amounts funded under this facility during 2001 approximated $37 million. This amount has reduced the outstanding receivable balance. The facility includes conditions that require the Company to maintain a corporate credit rating of BB or above as defined by Standard & Poor's Rating Services, and Ba2 or above as defined by Moody's Investors Service. At November 22, 2002 the Company had a senior unsecured credit rating of BBB- from Standard & Poor's Rating Services, which is currently under review, and of Ba2 with a stable outlook from Moody's Investors Service. NOTE 9: INVENTORIES Inventories as of December 30, 2001 and December 31, 2000 consisted of the following:
2001 2000 -------- -------- (IN THOUSANDS) Raw materials............................................... $ 76,085 $ 71,140 Work in progress............................................ 60,872 48,378 Finished goods.............................................. 107,884 77,307 -------- -------- $244,841 $196,825 ======== ========
NOTE 10: PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment, at cost, as of December 30, 2001 and December 31, 2000 consisted of the following:
2001 2000 -------- -------- (IN THOUSANDS) Land........................................................ $ 25,542 $ 26,058 Building and leasehold improvements......................... 140,100 143,046 Machinery and equipment..................................... 364,685 364,617 -------- -------- $530,327 $533,721 ======== ========
NOTE 11: INVESTMENTS Investments as of December 30, 2001 and December 31, 2000 consisted of the following:
2001 2000 ------- ------- (IN THOUSANDS) Marketable securities....................................... $15,716 $21,936 Joint venture and other investments......................... 2,481 4,290 ------- ------- $18,197 $26,226 ======= =======
Marketable securities include equity and fixed-income securities held to meet obligations associated with the supplemental executive retirement plan. As of December 30, 2001, the fixed-income securities held within marketable securities had maturities of between 3 and 30 years. The net unrealized holding gain (loss) on marketable securities, net of deferred income taxes, reported as a component of accumulated other comprehensive income (loss) in stockholders' equity, was a $1.4 million loss and a $0.9 million gain at December 30, 2001 and December 31, 2000, respectively. F-20 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Marketable securities classified as available for sale as of December 30, 2001 and December 31, 2000 consisted of the following:
GROSS UNREALIZED HOLDING MARKET --------------------------- VALUE COST GAINS (LOSSES) ------- ------- ------ -------- 2001 Common stocks................................. $ 8,865 $10,864 $ 32 $(2,031) Fixed-income securities....................... 6,098 6,066 32 -- Other......................................... 753 766 -- (13) ------- ------- ------ ------- $15,716 $17,696 $ 64 $(2,044) ======= ======= ====== ======= 2000 Common stocks................................. $17,356 $16,021 $1,689 $ (354) Fixed-income securities....................... 4,143 4,074 69 -- Other......................................... 437 492 -- (55) ------- ------- ------ ------- $21,936 $20,587 $1,758 $ (409) ======= ======= ====== =======
NOTE 12: INTANGIBLE ASSETS Intangible assets consist mainly of goodwill from acquisitions accounted for using the purchase method of accounting, representing the excess of cost over the fair market value of the net assets of the acquired businesses. Goodwill, net of accumulated amortization, was $1,034 million and $620 million at December 30, 2001 and December 31, 2000, respectively. Other identifiable intangible assets from acquisitions include patents, trademarks, trade names and developed technology and are being amortized over periods of 10-40 years. Other identifiable intangible assets, net of accumulated amortization, were $496 million and $258 million at December 30, 2001 and December 31, 2000, respectively. Intangible assets as of December 30, 2001 and December 31, 2000 were as follows:
2001 2000 ---------- -------- (IN THOUSANDS) Goodwill.................................................... $1,109,041 $672,878 Other identifiable intangible assets........................ 532,127 297,431 ---------- -------- 1,641,168 970,309 Less: accumulated amortization.............................. (111,115) (92,463) ---------- -------- $1,530,053 $877,846 ========== ========
As previously discussed, the issuance of SFAS No. 142 resulted in the discontinuance of amortization goodwill and indefinite lived intangible effective December 31, 2001. Instead, these items will be tested on an annual basis for potential impairment by comparing the carrying value to the fair value of the reporting unit to which they are assigned. The impact of the adoption of SFAS No. 142 was an impairment charge totaling $117.8 million, which was recorded in January 2002. NOTE 13: DEBT Short-term debt at December 30, 2001 was $126.0 million, principally consisting of the notes assumed as part of the Packard transaction, which are discussed below. There were no commercial paper borrowings outstanding at December 30, 2001. Short-term debt at December 31, 2000 was $185.4 million and was comprised primarily of commercial paper borrowings. The weighted average interest rate on the commercial paper borrowings was 4.4% and 6.7%, during 2001 and 2000, respectively. Weighted average maturities were 20 days or less during 2001 and 60 days or less during 2000. F-21 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The Company maintains two unsecured credit facilities. Both facilities were amended in September 2002. Prior to their amendment, the facilities consisted of a $270 million 364-day revolving credit facility (the "364-day facility") which will expire in March 2003, and a $100 million 5-year revolving credit facility (the "5-year facility") which will expire in March 2006. Borrowings outstanding under the 364-day facility at maturity may be converted, at the Company's option, into a one-year term note due in March 2004, subject to the Company's compliance with the facility's financial covenants. During September 2002, the Company significantly amended both facilities as follows: - the borrowing capacity under the 364-day facility was reduced from $270 million to $200 million; - provisions were added that would further reduce the borrowing capacity under the 364-day facility in amounts equal to: (A) 100% of any amounts used by the Company to repurchase zero coupon convertible debentures; and (B) 50% of the net proceeds received by the Company from future asset sales and capital market transactions, up to a maximum reduction of $100 million (which maximum will be increased, on a dollar-for-dollar basis, for every dollar of zero coupon convertible debentures repurchased by the Company) pursuant to this provision; - the spread over LIBOR on borrowings under the facilities increased by 37.5 basis points; - the definition of EBITDA was clarified to exclude certain non-operating items; and - a new consolidated indebtedness leverage ratio was added. At December 30, 2001 and December 31, 2000, long-term debt was $598.1 million and $583.3 million, respectively. Included in these amounts are $115 million of unsecured ten-year notes issued in October 1995, which carry an interest rate of 6.8% and mature in 2005. During the fourth quarter of 2001, this fixed rate was swapped to a floating rate, resulting in an all-in cost of funds of 4.46% during 2001, an annualized reduction of 2.34% from the fixed rate. This interest rate swap instrument resets semi-annually in arrears based upon six month USD LIBOR. The fair value of this instrument as of December 30, 2001 was $(2.3) million, which is offset by a corresponding gain on the underlying bond. Other long term debt includes zero coupon senior convertible debentures described below which had a $483 million accreted value at 2001 and a $468 million accreted value at 2000. The carrying amount of the unsecured ten-year notes and senior subordinated ten-year notes approximated the estimated fair value at December 30, 2001, based on a quoted market price. The estimated fair value of the convertible debentures approximated $512 million at December 30, 2001, also based on a quoted market price. In August 2000, the Company sold zero coupon senior convertible debentures with an aggregate purchase price of $460 million. The Company used the offering's net proceeds of approximately $448 million to repay a portion of its commercial paper borrowings, which had been increased temporarily to finance the NEN acquisition. Deferred issuance costs of $12 million were recorded as a noncurrent asset and are being amortized over three years. The debentures, which were offered by a prospectus supplement pursuant to the Company's effective shelf registration statement, are due August 2020, and were priced with a yield to maturity of 3.5%. At maturity, the Company is required to repay $921 million, comprised of $460 million of original purchase price plus accrued original issue discount. The Company may redeem some or all of the debentures at any time on or after August 7, 2003 at a redemption price equal to the issue price plus the accrued original issue discount through the redemption date. Holders of the debentures may require the Company to repurchase some or all of the debentures in August 2003 and August 2010, or at any time when there is a change in control of the Company, as is customary and ordinary for debentures of this nature, at a repurchase price equal to the initial price to the public plus the accrued original issue discount through the date of the repurchase. The debentures are convertible into F-22 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 10.8 million shares of the Company's common stock at December 30, 2001 at approximately $44.00 per share. During the September 2002, the Company repurchased a portion of its zero coupon convertible debentures due 2020 with a carrying amount of approximately $91.8 million for approximately $84.4 million. These transactions resulted in a gain of approximately $6.7 million net of a pro rata portion of deferred issuance costs. In November 2001, the Company completed its acquisition of Packard BioScience Company and assumed $118 million of senior subordinated ten-year notes issued in March 1997 at an interest rate of 9.375%. The Company redeemed the notes on March 1, 2002 at a rate of 104.688% in accordance with the indenture dated as of March 4, 1997. As a result, the Company recognized a pre-tax loss on the retirement of this debt totaling $5.5 million. On November 22, 2002, the Company launched a tender offer to retire the $115 million outstanding principal on the ten-year notes. NOTE 14: ACCRUED EXPENSES Accrued expenses as of December 30, 2001 and December 31, 2000 consisted of the following:
2001 2000 -------- -------- (IN THOUSANDS) Payroll and incentives...................................... $ 34,580 $ 45,940 Employee benefits........................................... 43,513 46,952 Federal, non-U.S. and state income taxes.................... 83,067 42,480 Other accrued operating expenses............................ 266,390 194,299 -------- -------- $427,550 $329,671 ======== ========
NOTE 15: EMPLOYEE BENEFIT PLANS Except where noted otherwise, the following employee benefit plan disclosures include amounts and information, on a combined basis, for both the continuing and discontinued operations of the Company. Savings Plan: The Company has a savings plan for the benefit of qualified U.S. employees. Under this plan, for all business units except those within Life Sciences, the Company contributes an amount equal to the lesser of 55% of the amount of the employee's voluntary contribution or 3.3% of the employee's annual compensation. For Life Sciences, the Company contributes an amount equal to the lesser of 100% of the employee's voluntary contribution or 5.0% of the employee's annual compensation. Savings plan expense charged to continuing operations was $5.8 million in 2001 and $4.2 million in 2000. Pension Plans: The Company has defined benefit pension plans covering substantially all U.S. employees except those employed by Life Sciences and non-U.S. pension plans for non-U.S. employees. The U.S. defined benefit pension plans were closed to new hires effective January 31, 2001. The plans provide benefits that are based on an employee's years of service and compensation near retirement. Assets of the U.S. plan are comprised primarily of equity and debt securities. F-23 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Net periodic pension cost included the following components:
2001 2000 -------- -------- (IN THOUSANDS) Service cost................................................ $ 6,860 $ 7,830 Interest cost............................................... 19,011 19,315 Expected return on plan assets.............................. (23,235) (20,588) Net amortization and deferral............................... (460) (486) -------- -------- $ 2,176 $ 6,071 ======== ========
The following table sets forth the changes in the funded status of the principal U.S. pension plan and the principal non-U.S. pension plans and the amounts recognized in the Company's consolidated balance sheets as of December 30, 2001 and December 31, 2000.
2001 2000 ------------------- ------------------- NON-U.S. U.S. NON-U.S. U.S. -------- -------- -------- -------- (IN THOUSANDS) Actuarial present value of benefit obligations: Accumulated benefit obligations............ $111,610 $157,573 $112,940 $162,809 ======== ======== ======== ======== Projected benefit obligations at beginning of year.................................. $123,386 $174,351 $141,552 $171,106 Service cost............................... 2,020 4,840 3,206 4,624 Interest cost.............................. 7,054 11,957 7,119 12,196 Benefits paid and plan expenses............ (5,535) (13,077) (5,607) (9,677) Participants' contributions................ 540 -- 194 -- Actuarial loss (gain)...................... 4,616 (9,974) (12,831) (3,898) Plan Amendments............................ -- (861) -- -- Effect of exchange rate changes............ (6,778) -- (10,210) -- Dispositions............................... -- -- (17,584) -- Curtailment gain -- discontinued operations............................... (2,672) -- -- -- Acquisitions............................... 2,229 -- 17,547 -- -------- -------- -------- -------- Projected benefit obligations at end of year..................................... 124,860 167,236 123,386 174,351 -------- -------- -------- -------- Fair value of plan assets at beginning of year..................................... 48,737 230,347 35,560 254,535 Actual return on plan assets............... (5,228) (8,685) 4,067 (14,038) Benefits paid and plan expenses............ (5,535) (13,077) (5,607) (9,677) Employer contribution...................... 5,133 -- 4,437 -- Participant contribution................... 540 -- 194 -- Effect of exchange rate changes............ (1,700) -- (2,841) -- Transfer out -- discontinued operations.... -- -- 12,927 (473) -------- -------- -------- -------- Fair value of plan assets at end of year... 41,947 208,585 48,737 230,347 -------- -------- -------- -------- Plan assets less (greater) than projected benefit obligations...................... 82,913 (41,349) 74,649 (55,996) Unrecognized net transition asset (obligation)............................. (277) -- (322) 512 Unrecognized net prior service costs....... (379) 623 (410) (52) -------- -------- -------- -------- Unrecognized net gain (loss)............... 1,184 1,428 7,441 19,469 -------- -------- -------- -------- Accrued pension liability (asset).......... $ 83,441 $(39,298) $ 81,358 $(36,067) ======== ======== ======== ========
F-24 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
2001 2000 ------------------- ------------------- NON-U.S. U.S. NON-U.S. U.S. -------- -------- -------- -------- (IN THOUSANDS) Actuarial assumptions as of the year-end measurement date: Discount rate.............................. 5.7% 7.5% 6.0% 7.5% Rate of compensation increase.............. 3.4% 4.5% 3.4% 4.5% Expected rate of return on assets.......... 7.9% 9.0% 7.9% 9.0%
Non-U.S. accrued pension liabilities classified as long-term liabilities totaled $80 million and $86 million as of December 30, 2001 and December 31, 2000, respectively. The U.S. pension asset was classified as other noncurrent assets. The Company also sponsors a supplemental executive retirement plan to provide senior management with benefits in excess of normal pension benefits. Effective July 31, 2000, this plan was closed to new entrants. At December 30, 2001 and December 31, 2000, the projected benefit obligations were $16.5 million and $16.4 million, respectively. Assets with a fair value of $8.0 million and $9.2 million segregated in a trust, were available to meet this obligation as of December 30, 2001 and December 31, 2000, respectively. Pension expense for this plan was approximately $1.1 million in 2001 and $2.0 million in 2000. Postretirement Medical Plans: The Company provides health care benefits for eligible retired U.S. employees under a comprehensive major medical plan or under health maintenance organizations where available. The majority of the Company's U.S. employees become eligible for retiree health benefits if they retire directly from the Company and have at least ten years of service. Generally, the major medical plan pays stated percentages of covered expenses after a deductible is met and takes into consideration payments by other group coverages and by Medicare. The plan requires retiree contributions under most circumstances and has provisions for cost-sharing charges. Effective January 1, 2000, this plan was closed to new hires. For employees retiring after 1991, the Company has capped its medical premium contribution based on employees' years of service. The Company funds the amount allowable under a 401(h) provision in the Company's defined benefit pension plan. Assets of the plan are comprised primarily of equity and debt securities. Net periodic post-retirement medical benefit cost (credit) included the following components:
2001 2000 ------- ------- (IN THOUSANDS) Service cost................................................ $ 207 $ 232 Interest cost............................................... 646 992 Expected return on plan assets.............................. (1,062) (1,219) Net amortization and deferral............................... (674) (1,516) ------- ------- $ (883) $(1,511) ======= =======
F-25 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The following table sets forth the changes in the postretirement medical plan's funded status and the amounts recognized in the Company's consolidated balance sheets at December 30, 2001 and December 31, 2000.
2001 2000 ------- ------- (IN THOUSANDS) Actuarial present value of benefit obligations Retirees.................................................... $10,651 $10,379 Active employees eligible to retire......................... 400 371 Other active employees...................................... 2,804 2,117 ------- ------- Accumulated benefit obligations at beginning of year........ 13,855 12,867 ------- ------- Service cost................................................ 207 232 Interest cost............................................... 646 992 Benefits paid............................................... (905) (1,196) Actuarial loss.............................................. 1,315 430 Plan adjustments............................................ (6,109) 530 Curtailment gain -- discontinued operations................. (115) -- ------- ------- Change in accumulated benefit obligations during the year... (4,961) 988 ------- ------- Retirees.................................................... 5,720 10,651 Active employees eligible to retire......................... 422 400 Other active employees...................................... 2,752 2,804 ------- ------- Accumulated benefit obligations at end of year.............. 8,894 13,855 Fair value of plan assets at beginning of year.............. 12,254 14,474 Actual return on plan assets................................ (422) (590) Benefits paid and plan expenses............................. (1,377) (1,630) ------- ------- Fair value of plan assets at end of year.................... 10,455 12,254 Fair value of plan assets (greater) less than accumulated benefit obligations....................................... (1,561) 1,601 Unrecognized prior service costs............................ 4,705 (489) Unrecognized net gain....................................... 2,347 4,614 ------- ------- Accrued post-retirement medical liability................... $ 5,491 $ 5,726 ======= ======= Actuarial assumptions as of the year-end measurement date Discount rate............................................. 7.5% 7.5% Expected rate of return on assets......................... 9.0% 9.0% Healthcare cost trend rate: First year.................................................. * 8.0% Ultimate.................................................... * 5.5% Time to reach ultimate...................................... * 3 years
- --------------- * In 2001, the Company moved entirely to a defined dollar plan. Accordingly, such assumptions are no longer applicable. The accrued postretirement medical liability included $4.5 million and $4.7 million classified as long-term liabilities as of December 30, 2001 and December 31, 2000, respectively. F-26 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Deferred Compensation Plans: During 1998, the Company implemented certain nonqualified deferred compensation programs that provide benefits payable to officers and certain key employees or their designated beneficiaries at specified future dates, upon retirement or death. Benefit payments under these plans are funded by a combination of contributions from participants and the Company. In 2000, this plan was extended to cover members of the Board of Directors. NOTE 16: COMMITMENTS AND CONTINGENCIES The Company is subject to various claims, legal proceedings and investigations covering a wide range of matters that arise in the ordinary course of its business activities. Each of these matters is subject to various uncertainties, and it is possible that some of these matters may be resolved unfavorably to the Company. The Company has established accruals for matters that are probable and reasonably estimable. Management believes that any liability that may ultimately result from the resolution of these matters in excess of amounts provided will not have a material adverse effect on the financial position, results of operations, cash flows of the Company. The Company and certain officers have been named as defendants in a class action lawsuit in which the plaintiffs have alleged various statements made by the Company and management were misleading with respect to the Company's prospects and future operating results. The Company believes it has meritorious defenses to the lawsuits and intends to contest the actions vigorously. The Company is currently unable, however, to reasonably estimate the amount of the loss, if any, that may result from resolution of these matters. In addition, the Company is conducting a number of environmental investigations and remedial actions at current and former Company locations and, along with other companies, has been named a potentially responsible party (PRP) for certain waste disposal sites. The Company accrues for environmental issues in the accounting period that the Company's responsibility is established and when the cost can be reasonably estimated. The Company has accrued $12.1 and $8.8 million as of December 30, 2001 and December 31, 2000, respectively, representing management's estimate of the total cost of ultimate disposition of known environmental matters. Such amount is not discounted and does not reflect the recovery of any amounts through insurance or indemnification arrangements. These cost estimates are subject to a number of variables, including the stage of the environmental investigations, the magnitude of the possible contamination, the nature of the potential remedies, possible joint and several liability, the timeframe over which remediation may occur and the possible effects of changing laws and regulations. For sites where the Company has been named a PRP, management does not currently anticipate any additional liability to result from the inability of other significant named parties to contribute. The Company expects that such accrued amounts could be paid out over a period of up to five years. As assessments and remediation activities progress at each individual site, these liabilities are reviewed and adjusted to reflect additional information as it becomes available. There have been no environmental problems to date that have had or are expected to have a material effect on the Company's financial position or results of operations. While it is reasonably possible that a material loss exceeding the amounts recorded may have been incurred, the preliminary stages of the investigations make it impossible for the Company to reasonably estimate the range of potential exposure. NOTE 17: STOCKHOLDERS' EQUITY Stock-Based Compensation: Under the 2001 Incentive Plan, 8.8 million additional shares of the Company's common stock were made available for option grants, restricted stock awards, performance units and other stock-based awards. Under the 1999 Incentive Plan, 7.0 million additional shares of the Company's common stock were made available for similar stock-based awards. At December 30, 2001, 3.6 million shares of the Company's common stock were reserved for employee benefit plans. F-27 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The Company has nonqualified and incentive stock option plans for officers and key employees. Under these plans, options may be granted at prices not less than 100% of the fair market value on the date of grant. Options expire 7-10 years from the date of grant, and options granted become exercisable, in ratable installments, over periods of 3-5 years from the date of grant. The Compensation Committee of the Board of Directors, at its sole discretion, may also include stock appreciation rights in any option granted. There are no stock appreciation rights outstanding under these plans. The following table summarizes stock option activity for the two years ended December 30, 2001:
2001 2000 ------------------------- ------------------------- NUMBER OF WEIGHTED- NUMBER OF WEIGHTED- SHARES AVERAGE PRICE SHARES AVERAGE PRICE --------- ------------- --------- ------------- (SHARES IN THOUSANDS) Outstanding at beginning of year....... 9,650 $19.52 9,144 $11.77 Granted................................ 9,315 30.31 5,564 25.39 Exercised.............................. (2,073) 12.41 (3,724) 10.12 Lapsed................................. (907) 28.85 (1,334) 15.51 ------ ------ ------ ------ Outstanding at end of year............. 15,985 $26.25 9,650 $19.52 ====== ====== ====== ====== Exercisable at end of year............. 5,567 $17.43 2,490 $12.71
The following table summarizes information about stock options outstanding at December 30, 2001:
OPTIONS OUTSTANDING OPTIONS EXERCISABLE ---------------------------------- ---------------------------------- ACTUAL RANGE OF NUMBER WEIGHTED-AVERAGE WEIGHTED- NUMBER WEIGHTED- EXERCISE PRICES OUTSTANDING AT REMAINING AVERAGE EXERCISABLE AT AVERAGE 150% INCREMENT DECEMBER 30, 2001 CONTRACTUAL LIFE EXERCISE PRICE DECEMBER 30, 2001 EXERCISE PRICE - --------------- ----------------- ----------------- -------------- ----------------- -------------- $ 1.56 -- 1.57....... 3,860 2.0 $ 1.56 3,860 $ 1.56 $ 3.11 -- 4.23....... 92,384 3.0 $ 4.08 92,384 $ 4.08 $ 4.67 -- 5.28....... 30,249 3.9 $ 4.68 30,249 $ 4.68 $ 7.04 -- 10.16...... 795,594 4.7 $ 8.64 711,934 $ 8.52 $10.77 -- 16.00...... 2,955,190 6.0 $13.85 2,187,126 $13.77 $16.59 -- 24.15...... 3,081,083 6.6 $19.81 1,921,203 $19.79 $25.05 -- 37.17...... 6,806,840 6.3 $30.42 407,574 $29.36 $37.98 -- 56.59...... 2,168,844 6.5 $46.19 179,649 $46.75 $57.22 -- 67.92...... 51,248 7.7 $58.32 32,584 $58.32 ---------- --- ------ --------- ------ $1.56 -- 67.92...... 15,985,292 6.2 $26.25 5,566,563 $17.43
During 2001, approximately 6,071,000 and 1,190,000 options were granted pursuant to the 2001 Incentive Plan and the 1999 Incentive Plan, respectively, at exercise prices ranging from $23.84 per share to $50.28 per share. The remaining options granted during 2001 were done so principally under plans associated with Packard. At December 30, 2001, there were 3,491,000 common shares available for grant under active equity plans. F-28 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The weighted-average fair values of options granted during 2001 and 2000 were $14.40 and $9.91, respectively. The values were estimated on the date of grant using the Black-Scholes option-pricing model. The following weighted-average assumptions were used in the model:
2001 2000 ---- ---- Risk-free interest rate..................................... 4.5% 6.5% Expected dividend yield..................................... 1.0% 2.0% Expected lives.............................................. 4.0 years 3.7 years Expected stock volatility................................... 50% 46%
In April 1999, the Company's stockholders approved the 1998 Employee Stock Purchase Plan, whereby participating employees currently have the right to purchase common stock at a price equal to 85% of the lower of the closing price on the first day or the last day of the six-month offering period. The number of shares which an employee may purchase, subject to certain aggregate limits, is determined by the employee's voluntary contribution, which may not exceed 10% of base compensation. During 2001, the Company issued 449,082 shares under this plan at a weighted-average price of $23.40 per share. During 2000, the Company issued 420,534 shares under this plan at a weighted-average price of $21.82 per share. There remains available for sale to employees an aggregate of 3.4 million shares of the Company's stock out of 5 million shares authorized by the stockholders. The following table discloses pro forma net income and diluted earnings per share had compensation cost for the Company's stock-based compensation plans been determined based on the fair value approach:
2001 2000 --------- --------- (IN THOUSANDS EXCEPT PER SHARE DATA) Net income: As reported............................................... $34,505 $90,520 Pro forma................................................. 8,216 77,635 Diluted earnings per share As reported............................................... $ 0.32 $ 0.89 Pro forma................................................. $ 0.08 $ 0.76
Pro forma compensation cost may not be representative of that to be expected in future years since the estimated fair value of stock options is amortized to expense over the vesting period, and additional options may be granted in future years. Employee Stock Purchase Plan: The Company has an Employee Stock Purchase Plan, whereby participating employees have the right to purchase common stock at a price equal to 85% of the lower of the closing price on the first day or the last day of the six-month offering period. The number of shares which an employee may purchase, subject to certain aggregate limits, is determined by the employee's voluntary contribution which may not exceed 10% of base compensation. Other: The Company has granted restricted stock awards to certain executive employees and directors which contain vesting provisions tied to certain Company performance metrics. The shares available under these awards are a component of the Company's 1999 Incentive Plan. The compensation associated with the fair value of these awards is charged to expense over the period that the performance targets are expected to be achieved. During 2001 and 2000, $3.5 million and $4.2 million, respectively, was charged to expense related to the restricted shares awarded under this program. The total number of common shares outstanding and subject to forfeiture under the restricted stock program totaled 400,000 at December 30, 2001 and 390,000 at December 31, 2000. F-29 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Shareholder Rights Plan: Under a Shareholder Rights Plan, preferred stock purchase rights were distributed on February 8, 1995 as a dividend at the rate of one right for each share of common stock outstanding. Each right, when exercisable, entitles a stockholder to purchase one one-thousandth of a share of a new series of junior participating preferred stock at a price of $30. The rights become exercisable only if a person or group acquires 20% or more or announces a tender or exchange offer for 30% or more of the Company's common stock. This preferred stock is nonredeemable and will have 1,000 votes per share. The rights are nonvoting, expire in 2005 and may be redeemed prior to becoming exercisable. The Company has reserved 70,000 shares of preferred stock, designated as Series C Junior Participating Preferred Stock, for issuance upon exercise of such rights. If a person (an Acquiring Person) acquires or obtains the right to acquire 20% or more of the Company's outstanding common stock (other than pursuant to certain approved offers), each right (other than rights held by the Acquiring Person) will entitle the holder to purchase shares of common stock of the Company at one-half of the current market price at the date of occurrence of the event. In addition, in the event that the Company is involved in a merger or other business combination in which it is not the surviving corporation or in connection with which the Company's common stock is changed or converted, or it sells or transfers 50% or more of its assets or earning power to another person, each right that has not previously been exercised will entitle its holder to purchase shares of common stock of such other person at one-half of the current market price of such common stock at the date of the occurrence of the event. Comprehensive Income: The components of accumulated other comprehensive income (loss) were as follows:
FOREIGN ACCUMULATED CURRENCY UNREALIZED GAINS UNREALIZED GAINS OTHER TRANSLATION ON DERIVATIVE (LOSSES) ON COMPREHENSIVE ADJUSTMENTS INSTRUMENTS SECURITIES INCOME (LOSS) ----------- ---------------- ---------------- ------------- (IN THOUSANDS) Balance, January 3, 2000...... $(14,461) $ -- $ 421 $(14,040) Current year change........... (25,484) -- 482 (25,002) -------- ------ ------- -------- Balance, December 31, 2000.... (39,945) -- 903 (39,042) Current year change........... $(20,976) $1,407 $(2,329) $(21,898) -------- ------ ------- -------- Balance, December 30, 2001.... $(60,921) $1,407 $(1,426) $(60,940) ======== ====== ======= ========
F-30 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The tax effects related to each component of other comprehensive income (loss) were as follows:
TAX BEFORE-TAX (PROVISION) AFTER-TAX AMOUNT BENEFIT AMOUNT -------------- ----------- --------- (IN THOUSANDS) 2001 Foreign currency translation adjustments......... $(20,976) $ -- $(20,976) Unrealized gains on derivative instruments....... 1,407 -- 1,407 Unrealized gains (losses) on securities: Losses arising during the period............... (3,709) 1,271 (2,438) Reclassification adjustment for realized losses included in net income...................... 167 (58) 109 -------- ------ -------- Net unrealized losses on securities.............. (3,542) 1,213 (2,329) -------- ------ -------- Other comprehensive income (loss)................ $(23,111) $1,213 $(21,898) ======== ====== ======== 2000 Foreign currency translation adjustments......... $(25,484) $ -- $(25,484) Unrealized gains on securities: Gains arising during the period................ 673 (192) 481 Reclassification adjustment for realized losses included in net income...................... 1 -- 1 -------- ------ -------- Net unrealized gains............................. 674 (192) 482 -------- ------ -------- Other comprehensive income (loss)................ $(24,810) $ (192) (25,002) ======== ====== ========
NOTE 18: FINANCIAL INSTRUMENTS Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of temporary cash investments and accounts receivable. The Company believes it had no significant concentrations of credit risk as of December 30, 2001. In the ordinary course of business, the Company enters into foreign exchange contracts for periods consistent with its committed exposures to mitigate the effect of foreign currency movements on transactions denominated in foreign currencies. Transactions covered by hedge contracts include intercompany and third-party receivables and payables. The contracts are primarily in European and Asian currencies, generally have maturities that do not exceed 12 months, have no cash requirements until maturity and are recorded at fair value on the consolidated balance sheet. Credit risk and market risk are minimal as the foreign exchange instruments are contracted with major banking institutions. Gains and losses on the Company's foreign currency contracts are recognized immediately in earnings for hedges designated as fair value and, for hedges designated as cash flow, the related unrealized gains or losses are deferred as a component of other comprehensive income in the accompanying consolidated balance sheet. These deferred gains and losses are recognized in income in the period in which the underlying anticipated transaction occurs. Effectiveness of these cash flow hedges is measured utilizing the cumulative dollar offset method and is reviewed quarterly. For the year ended December 30, 2001, net losses from hedges reclassified from other comprehensive income to revenue and expense totaled $36,000. The notional amount of the outstanding foreign currency contracts was approximately $280 million as of December 30, 2001 and $190 million at December 31, 2000. At December 30, 2001, the approximate fair value for foreign currency derivative instruments designated as fair value hedges was $560,000. The approximate fair value for foreign currency derivative instruments designated as cash flow hedges was $380,000 and is recorded in other current assets with the offset to other comprehensive income. This gain will be recognized in earnings over the next 12 months. At January 1, 2001, the fair value of all derivative F-31 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) instruments was not significant. Accordingly, when the Company adopted the provisions of SFAS No. 133, there was no cumulative effect adjustment recorded. NOTE 19: LEASES The Company leases certain property and equipment under operating leases. Rental expense charged to continuing operations for 2001 and 2000 amounted to $20.5 million and $17.6 million, respectively. Minimum rental commitments under noncancelable operating leases are as follows: $22.2 million in 2002, $19.2 million in 2003, $16.8 million in 2004, $13.4 million in 2005, $14.1 million in 2006 and $132.7 million after 2006. Included in the lease commitments is a six-year operating lease agreement signed in 2000 for a facility in the Optoelectronics segment. At the end of the lease term, the Company, at its option, may: (i) renew the lease; (ii) purchase the property at a price equal to the lessor's original cost (approximately $30 million); or (iii) allow the lease to expire and cause the property to be sold. The Company's ability to cause the property to be sold depends upon its compliance with certain terms of the lease. In September 2002, the lease was amended. The effect of the amendment was to accelerate the termination date of the lease to the earlier of the sale of the Fluid Sciences business or February 28, 2003. As a result, at termination the Company either must purchase the building or secure alternative financing. NOTE 20: INDUSTRY SEGMENT AND GEOGRAPHIC AREA INFORMATION The Company's businesses are reported as three reportable segments which reflect the Company's management and structure under three strategic business units ("SBUs"). The accounting policies of the reportable segments are the same as those described in Note 1. The Company evaluates the performance of its operating segments based on operating profit. Intersegment sales and transfers are not significant. The operating segments and their principal products and services are: Life Sciences: Provider of drug discovery, genetic screening and chemical analysis tools and instrumentation used in daily applications for scientific research and clinical applications. Analytical Instruments: Analytical tools employing technologies such as molecular and atomic spectroscopy, high-pressure liquid chromatography, gas chromatography and thermal analysis. Optoelectronics: A broad spectrum of digital imaging, sensor and specialty lighting components to customers in a wide variety of industries, including the biomedical and consumer products markets. Fluid Sciences: Products and services providing critical sealing and fluid containment products and services for the aerospace, semiconductor and power generation markets, as well as engine lubricant testing services. F-32 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Sales and operating profit by segment for the three years ended December 30, 2001 are shown in the table below:
2001 2000 ---------- ---------- (IN THOUSANDS) LIFE SCIENCES Sales....................................................... $ 346,110 $ 221,401 Operating (loss)............................................ (46,366) (3,636) ANALYTICAL INSTRUMENTS Sales....................................................... 568,373 617,699 Operating profit............................................ 77,755 56,076 OPTOELECTRONICS Sales....................................................... 380,227 447,129 Operating profit............................................ 51,268 96,126 FLUID SCIENCES Sales....................................................... 230,629 251,753 Operating profit............................................ 57,272 45,071 OTHER Sales....................................................... -- -- Operating (loss)............................................ (10,214) (13,779) CONTINUING OPERATIONS Sales....................................................... $1,525,339 $1,537,982 Operating profit............................................ $ 129,715 $ 179,858
The Company's Detection and Security Systems business (formerly included in the Analytical Instruments segment) Telecommunications Components business and Entertainment Lighting business (both formerly included in the Optoelectronics segment) are presented as discontinued operations and, therefore, are not included in the preceding table. Additional information relating to the Company's operating segments is as follows:
DEPRECIATION AND AMORTIZATION EXPENSE CAPITAL EXPENDITURES --------------------- --------------------- 2001 2000 2001 2000 --------- --------- --------- --------- (IN THOUSANDS) Life Sciences.................................. $34,887 $17,719 $17,691 $16,239 Analytical Instruments......................... 17,952 21,172 32,295 3,881 Optoelectronics................................ 23,182 23,839 27,892 27,323 Fluid Sciences................................. 11,036 10,664 9,242 10,895 Other.......................................... 1,415 859 7,262 956 ------- ------- ------- ------- Continuing operations.......................... $88,472 $74,253 $94,382 $59,294 ======= ======= ======= =======
F-33 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
TOTAL ASSETS ----------------------- 2001 2000 ---------- ---------- (IN THOUSANDS) Life Sciences............................................... $1,051,667 $ 600,168 Analytical Instruments...................................... 591,752 726,109 Optoelectronics............................................. 471,193 462,616 Fluid Sciences.............................................. 121,040 123,096 Other....................................................... 550,117 169,204 Net current and long-term assets of discontinued operations................................................ 184,169 179,567 ---------- ---------- $2,969,938 $2,260,760 ========== ==========
The following geographic area information for continuing operations includes sales based on location of external customer and net property, plant and equipment based on physical location:
2001 2000 ---------- ---------- (IN THOUSANDS) U.S. ....................................................... $ 731,053 $ 697,992 United Kingdom.............................................. 94,265 97,130 Germany..................................................... 93,117 99,342 Japan....................................................... 85,800 77,062 France...................................................... 51,814 51,788 Italy....................................................... 52,475 55,047 Other non-U.S. ............................................. 416,815 459,621 ---------- ---------- $1,525,339 $1,537,982 ========== ==========
NET PROPERTY, PLANT AND EQUIPMENT ----------------------- 2001 2000 ---------- ---------- (IN THOUSANDS) U.S. ....................................................... $160,523 $139,232 Canada...................................................... 35,203 19,051 Singapore................................................... 15,600 12,002 United Kingdom.............................................. 14,746 12,836 Philippines................................................. 7,960 8,646 China....................................................... 6,397 5,014 Other non-U.S. ............................................. 42,195 65,661 -------- -------- $282,624 $262,442 ======== ========
F-34 UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 29, 2002 AND SEPTEMBER 30, 2001 F-35 PERKINELMER, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED INCOME STATEMENTS (UNAUDITED)
NINE MONTHS ENDED ------------------------------- SEPTEMBER 29, SEPTEMBER 30, 2002 2001 -------------- -------------- (IN THOUSANDS EXCEPT PER SHARE DATA) SALES....................................................... $1,095,400 $1,119,358 Cost of sales............................................... 663,017 622,553 Research and development expenses........................... 64,915 61,086 Selling, general and administrative expenses................ 344,253 293,329 Loss (gains) on dispositions and restructuring charges, net....................................................... 4,008 (13,348) ---------- ---------- OPERATING INCOME FROM CONTINUING OPERATIONS................. 19,207 155,738 Other expense, net.......................................... 26,782 23,362 ---------- ---------- Income (loss) from continuing operations before income taxes..................................................... (7,575) 132,376 Provision (benefit) for income taxes........................ (2,742) 43,231 ---------- ---------- INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE EFFECT OF ACCOUNTING CHANGE......................................... (4,833) 89,145 Discontinued operations: Loss from discontinued operations, net of income tax........ (15,711) (5,020) Loss on disposition of discontinued operations, net of income tax................................................ (10,966) -- ---------- ---------- Net income (loss) before effect of accounting change........ (31,510) 84,125 Effect of accounting change, net of income tax.............. (117,800) -- ---------- ---------- NET INCOME (LOSS)........................................... $ (149,310) $ 84,125 ========== ========== BASIC EARNINGS (LOSS) PER SHARE: Income (loss) from continuing operations before effect of accounting change....................................... $ (0.04) $ 0.89 Discontinued operations: Loss from discontinued operations, net of income tax...... $ (0.13) $ (0.05) Loss on disposition of discontinued operation, net of income tax.............................................. (0.09) -- ---------- ---------- Net (loss) income before effect of accounting change...... (0.25) 0.84 Effect of accounting change, net of income tax............ (0.94) -- ---------- ---------- Net income (loss)......................................... $ (1.19) $ 0.84 ========== ========== DILUTED EARNINGS (LOSS) PER SHARE: Income (loss) from continuing operations before effect of accounting change....................................... $ (0.04) $ 0.86 Discontinued operations: Loss from discontinued operations, net of income tax...... $ (0.13) $ (0.05) Loss on disposition of discontinued operations, net of income tax.............................................. (0.09) -- ---------- ---------- Net income (loss) before effect of accounting change...... (0.25) $ 0.81 Effect of accounting change, net of income tax............ (0.94) -- ---------- ---------- Net income (loss)......................................... $ (1.19) $ 0.81 ========== ========== Weighted average shares of common stock outstanding: Basic..................................................... 125,335 100,636 Diluted................................................... 125,335 104,179 Cash dividends per common share............................. $ 0.21 $ 0.21
The accompanying unaudited notes are an integral part of these condensed consolidated financial statements. F-36 PERKINELMER, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
SEPTEMBER 29, DECEMBER 30, 2002 2001 ------------- ------------ (IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA) Current assets: Cash and cash equivalents................................. $ 97,549 $ 138,250 Accounts receivable....................................... 294,651 319,063 Inventories............................................... 221,536 244,841 Other current assets...................................... 168,457 150,686 Current assets of discontinued operations................. 10,212 90,518 ---------- ---------- Total current assets................................... 792,405 943,358 ---------- ---------- Property, plant and equipment: At cost................................................... 556,280 530,327 Accumulated depreciation.................................. (280,006) (247,703) ---------- ---------- Net property, plant and equipment........................... 276,274 282,624 Investments................................................. 14,293 18,197 Intangible assets........................................... 1,446,689 1,530,053 Other assets................................................ 62,497 102,055 Long-term assets of discontinued operations................. 7,157 93,651 ---------- ---------- Total assets........................................... $2,599,315 $2,969,938 ========== ========== Current liabilities: Short-term debt........................................... $ 153,218 $ 125,984 Accounts payable.......................................... 138,260 128,952 Accrued restructuring costs............................... 31,970 51,735 Accrued expenses.......................................... 345,697 427,550 Current liabilities of discontinued operations............ 3,684 20,814 ---------- ---------- Total current liabilities.............................. 672,829 755,035 Long-term debt.............................................. 438,792 598,125 Long-term liabilities....................................... 272,599 253,164 Long-term liabilities of discontinued operations............ 2,158 57 Commitments and contingencies Stockholders' equity: Preferred stock -- $1 par value, authorized 1,000,000 shares; none issued or outstanding..................... -- -- Common stock -- $1 par value, authorized 300,000,000 shares; issued 145,101,000 shares at September 29, 2002 and December 30, 2001.................................. 145,101 145,101 Capital in excess of par value............................ 644,188 641,164 Retained earnings......................................... 666,255 842,004 Accumulated other comprehensive loss...................... (45,023) (60,940) Cost of shares held in treasury -- 19,798,000 shares at September 29, 2002 and 20,913,000 shares at December 30, 2001............................................... (197,584) (203,772) ---------- ---------- Total stockholders' equity............................. 1,212,937 1,363,557 ---------- ---------- Total liabilities and stockholders' equity............. $2,599,315 $2,969,938 ========== ==========
The accompanying unaudited notes are an integral part of these condensed consolidated financial statements. F-37 PERKINELMER, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
NINE MONTHS ENDED ----------------------------- SEPTEMBER 29, SEPTEMBER 30, 2002 2001 ------------- ------------- (IN THOUSANDS) OPERATING ACTIVITIES: Net (loss) income........................................... $(149,310) $ 84,125 Less effect of accounting change............................ 117,800 -- Less net loss from discontinued operations.................. 26,677 5,020 --------- -------- (Loss) income from continuing operations.................... (4,833) 89,145 Adjustments to reconcile (loss) income from continuing operations to net cash provided by (used in) continuing operations: Amortization of debt discount and issuance costs............ 15,694 15,473 Depreciation and amortization............................... 55,849 61,917 Gains on dispositions and sales of investments, net......... (5,335) (17,339) Net gain on purchase of debt................................ 1,470 -- Changes in operating assets and liabilities which provided (used) cash, excluding effects from companies purchased and divested: Accounts receivable....................................... 38,822 3,311 Inventories............................................... 30,326 (41,763) Accounts payable.......................................... 10,560 (1,813) Accrued restructuring costs............................... (28,856) (27,238) Accrued expenses and other................................ (55,743) (6,035) --------- -------- NET CASH PROVIDED BY OPERATING ACTIVITIES FROM CONTINUING OPERATIONS................................................ 57,954 75,658 NET CASH USED IN OPERATING ACTIVITIES FROM DISCONTINUED OPERATIONS................................................ (6,495) (10,542) --------- -------- NET CASH PROVIDED BY OPERATING ACTIVITIES................... 51,459 65,116 INVESTING ACTIVITIES: Capital expenditures...................................... (31,751) (72,796) Proceeds from dispositions of businesses, net............. 97,494 -- Proceeds from disposition of property, plant and equipment, net......................................... 28,342 6,800 Cost of acquisitions, net of cash acquired................ (39,208) (16,412) Proceeds from sale of investments, net.................... 3,242 3,637 --------- -------- NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES FROM CONTINUING OPERATIONS..................................... 58,119 (78,771) NET CASH USED IN INVESTING ACTIVITIES FROM DISCONTINUED OPERATIONS................................................ (5,200) (17,077) --------- -------- NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES......... 52,919 (95,848) FINANCING ACTIVITIES: Increase in commercial paper borrowings................... -- 43,000 Increase (decrease) in other debt......................... 65,202 (6,467) Prepayment of short-term debt............................. (123,683) -- Prepayment of zero coupon convertible debt................ (84,440) -- Proceeds from exercise of stock options and employee stock purchase plans......................................... 14,062 21,657 Purchases of common stock................................. (1,636) (2,171) Cash dividends............................................ (26,436) (21,176) --------- -------- NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES FROM CONTINUING OPERATIONS..................................... (156,931) 34,843 Effect of exchange rate changes on cash and cash equivalents............................................... 11,852 (1,263) --------- -------- NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS........ (40,701) 2,848 Cash and cash equivalents at beginning of period............ 138,250 125,551 --------- -------- Cash and cash equivalents at end of period.................. $ 97,549 $128,399 ========= ========
The accompanying unaudited notes are an integral part of these condensed consolidated financial statements. F-38 PERKINELMER, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (1) BASIS OF PRESENTATION The consolidated financial statements included herein have been prepared by PerkinElmer, Inc. (the "Company"), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC"). Certain information in footnote disclosures normally included in financial statements has been condensed or omitted in accordance with the rules and regulations of the SEC. These statements should be read in conjunction with the Company's Annual Report for the fiscal year ended December 30, 2001, filed on Form 10-K with the SEC (the "2001 Form 10-K"). The balance sheet amounts at December 30, 2001 in this report were extracted from the Company's audited 2001 financial statements included in the 2001 Form 10-K. Certain prior period amounts have been reclassified to conform to the current-year financial statement presentation. The assets and liabilities from businesses the Company has approved to dispose but not yet disposed, have been identified and reflected within the assets and liabilities from discontinued operations. The information reflects all adjustments that, in the opinion of management, are necessary to present fairly the Company's results of operations, financial position and cash flows for the periods indicated. All such adjustments are of a normal recurring nature with the exception of those entries resulting from discontinued operations, gains and losses on dispositions and the effect of an accounting change. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The results of operations for the nine months ended September 29, 2002 are not necessarily indicative of the results for the entire fiscal year. In June 2002, the Company approved separate plans to dispose of its Telecom Components and Entertainment Lighting businesses. The Company has accounted for these businesses as discontinued operations in accordance with Statement of Financial Accounting Standards ("SFAS") No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, ("SFAS No. 144"); which the Company adopted as of the beginning of fiscal 2002. The Company's Security and Detection Systems business, disposed of during June 2002, was approved for disposal during 2001 in accordance with Accounting Principles Board ("APB") Opinion No. 30, Reporting the Results of Operations -- Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions ("APB No. 30"). During October 2001, the Board of Directors approved a plan to sell the Fluid Sciences business unit, at which time the business was reflected as a discontinued operation in the Company's consolidated financial statements in accordance with APB No. 30. The sale of the business has not been completed due to external market conditions. As APB No. 30 affords a one-year window for the completion of a disposition, the Company has reflected the Fluid Sciences business unit within its consolidated results from continuing operations. All periods presented have been adjusted to reflect this change. The consolidated financial statements included herein reflect the Company's adoption of SFAS No. 141, Business Combinations ("SFAS No. 141") and SFAS No. 142, Goodwill and Other Intangible Assets ("SFAS No. 142") as of the beginning of the 2002 fiscal year. SFAS No. 141 requires all business combinations initiated after September 29, 2001 to be accounted for using the purchase method. Under SFAS No. 142, goodwill and intangible assets with indefinite lives are no longer amortized but are reviewed annually at a minimum for potential impairment. The impact of this adoption is further discussed in Note 12. The consolidated financial statements included herein reflect the Company's early adoption of SFAS No. 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections ("SFAS No. 145") as of July 2, 2002. Accordingly, the gains and losses resulting F-39 PERKINELMER, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) from the Company's extinguishments of debt during the first and third quarters of 2002 have been reflected in other expense, net within the Company's consolidated income statements, as discussed in Note 6. On October 29, 2002, the Company announced its intention to consolidate its Life Sciences and Analytical Instruments operations into a new integrated business -- Life and Analytical Sciences. The Company expects that, as a result of the integration, certain restructuring actions may be necessary. (2) ACQUISITIONS On November 13, 2001, the Company completed the acquisition of Packard BioScience Company (Packard) for an aggregate purchase price of approximately $733 million in the form of approximately 22 million of the Company's common shares and the assumption of $118 million in debt which was redeemed in March 2002 resulting in a pretax loss of $5.5 million (Note 6). Packard is a global developer, manufacturer and marketer of instruments and related consumables and services for use in drug discovery and other life sciences research and generated sales of approximately $165 million for its fiscal year ended December 31, 2000. Packard's operations, assumed as of the date of acquisition, are reported within the results from operations of the Life Sciences segment as of November 13, 2001 and, as a result, were not reflected in the results from operations for the three and nine months ended September 30, 2001. The acquisition was accounted for as a purchase in accordance with SFAS No. 141 and the Company has accordingly allocated the purchase price of Packard based upon the fair value of the net assets acquired and liabilities assumed. The Company expects the allocation of the purchase price to be finalized during the fourth quarter of 2002. Unaudited pro forma operating results for the Company from continuing operations for the nine months ended September 30, 2001, assuming the Packard acquisition was completed as of January 1, 2001, would be as follows: sales of $1,269.9 million; net income from continuing operations of $83.3 million; basic and diluted earnings of $0.68 and $0.66 per share, respectively. The unaudited pro forma financial information is provided for informational purposes only. It is not necessarily indicative of the Company's operating results that would have occurred had the acquisition been consummated on the date for which the consummation of the acquisition is being given effect, nor is it necessarily indicative of the Company's future operating results. The unaudited pro forma financial information does not give effect to acquisitions other than Packard, does not adjust for businesses divested and does not adjust for foreign exchange. (3) RESTRUCTURING CHARGES Consistent with the strategic direction of the Company and concurrent with the reevaluation of existing restructuring plans at the time, the Company recorded a pre-tax restructuring charge of $9.2 million during the first quarter of 2002 (the "2002 plan"). The principal actions within the 2002 plan related to a workforce reduction and overhead reductions resulting from continued reorganization activities within the Life Sciences, Optoelectronics and Analytical Instruments businesses, including the closure of certain manufacturing facilities. F-40 PERKINELMER, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The following table summarizes the restructuring activity for the 2002 plan during the nine months ended September 29, 2002:
NINE MONTHS ENDED SEPTEMBER 29, 2002 ------------- (IN MILLIONS) Accrued restructuring costs at beginning of period.......... $ -- Additions................................................... 9.2 Payments.................................................... (8.0) ----- Accrued restructuring costs at September 29, 2002........... $ 1.2 =====
The Company recorded a pre-tax restructuring charge of $9.2 million during the fourth quarter of 2001 as a result of the continued efforts to restructure certain businesses to further improve performance (the "2001 plan"). The principal actions in the restructuring plans related to employee separation costs associated with the consolidation of certain European general and managerial functions within both Life Sciences and Analytical Instruments segments, as well as costs associated with the closure of certain facilities and the disposal of related assets. Details of this plan are discussed more fully in the Company's 2001 Form 10-K. The following table summarizes the restructuring activity for the 2001 plan during the nine months ended September 29, 2002:
NINE MONTHS ENDED SEPTEMBER 29, 2002 ------------- (IN MILLIONS) Accrued restructuring costs at beginning of period.......... $ 7.6 Payments.................................................... (4.0) ----- Accrued restructuring costs at September 29, 2002........... $ 3.6 =====
As part of the Packard acquisition, the Company recorded approximately $33 million in integration charges as detailed in the Company's 2001 Form 10-K (the "Packard plan"). The integration plans include initiatives to integrate the operations of Packard and the Company and are principally comprised of amounts related to employee separation costs and the termination of leases and other obligations. The following table summarizes the restructuring activity for the Packard plan during the nine months ended September 29, 2002:
NINE MONTHS ENDED SEPTEMBER 29, 2002 ------------- (IN MILLIONS) Accrued restructuring costs at beginning of period.......... $33.0 Payments.................................................... (6.7) ----- Accrued restructuring costs at September 29, 2002........... $26.3 =====
As part of the Analytical Instruments acquisition, the Company recorded approximately $52 million in charges. This plan primarily included actions to integrate the operations of the acquired business and improve their cost structure through consolidation or shutdown of certain facilities, workforce and overhead F-41 PERKINELMER, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) reductions and the termination of certain leases and other obligations. The remaining balance of these accrued charges were expended during the three months ended March 31, 2002.
NINE MONTHS ENDED SEPTEMBER 29, 2002 ------------- (IN MILLIONS) Accrued restructuring costs at beginning of period.......... $ 9.2 Payments.................................................... (9.2) ----- Accrued restructuring costs at September 29, 2002........... $ -- =====
Additionally, during 1999, the Company recognized a $23.5 million restructuring charge in connection with the closure and consolidation of certain facilities, underutilized assets and product lines. As of September 29, 2002, $0.9 million remained accrued for under this plan. Spending against this plan totaled $1.0 million during the nine months ended September 29, 2002. Cash outlays, both foreign and domestic, during the nine months ended September 29, 2002 were approximately $28.9 million for all of these plans. There were no significant revisions to these accruals during the three and nine months ended September 29, 2002. The majority of the actions remaining at September 29, 2002 are expected to occur in fiscal 2002. (4) GAINS ON DISPOSITIONS During the nine months ended September 29, 2002 the Company recognized gains from dispositions totaling $5.2 million resulting from $4.4 million in net gains from facility sales and $0.8 million in gains previously deferred from the fourth quarter 2001 sale of the Instruments for Research and Applied Science business reflecting the resolution of certain contingencies for which amounts had previously been deferred. During the nine months ended September 30, 2001, the Company recognized $10.3 million in gains from dispositions, of which $4.5 million resulted from the Company's disposition of its Space Valves business within the Fluid Sciences business, $2.0 million resulting from the disposition of the Berthold business and $3.8 million resulted from deferred gains from previously divested businesses. (5) INVENTORIES Inventories consisted of the following:
SEPTEMBER 29, DECEMBER 30, 2002 2001 ------------- ------------ (IN THOUSANDS) Raw materials............................................... $ 84,555 $ 76,085 Work in progress............................................ 45,143 60,872 Finished goods.............................................. 91,838 107,884 -------- -------- $221,536 $244,841 ======== ========
(6) LONG-TERM DEBT During September 2002, the Company repurchased a portion of its zero coupon convertible debentures due 2020 with a carrying amount of approximately $91.8 million for approximately $84.4 million. These transactions resulted in a gain of approximately $6.7 million net of a pro rata portion of deferred issuance costs, which has been reflected in other expense, in accordance with the Company's early adoption of SFAS No. 145 as of July 2, 2002. F-42 PERKINELMER, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) On March 1, 2002, the Company elected to redeem $118 million of senior subordinated ten-year notes issued in March 1997 at an interest rate of 9.375%, which were assumed as part of the Packard acquisition ("the Packard Notes"). The Packard Notes were redeemed at a redemption price of 104.688% of the principal amount plus accrued interest. As a result, the Company recognized a pre-tax loss on the early retirement of debt of $5.5 million, which reflects the call premium paid on the redemption. The redemption was funded through borrowings under the Company's commercial paper program. The loss, which was classified as an extraordinary item on the Company's Consolidated Income Statements prior to the Company's adoption of SFAS No. 145, is now shown as a component of other expense, net. The Company maintains two unsecured credit facilities. Both facilities were amended in September 2002. Prior to their amendment, the facilities consisted of a $270 million 364-day revolving credit facility (the "364-day facility") which will expire in March 2003, and a $100 million 5-year revolving credit facility (the "5-year facility") which will expire in March 2006. Borrowings outstanding under the 364-day facility at maturity may be converted, at the Company's option, into a one-year term note due in March 2004, subject to the Company's compliance with the facility's financial covenants at maturity. During September 2002, the Company significantly amended both facilities as follows: - the borrowing capacity under the 364-day facility was reduced from $270 million to $200 million; - provisions were added that would further reduce the borrowing capacity under the 364-day facility in amounts equal to: (A) 100% of any amounts used by the Company to repurchase zero coupon convertible debentures; and (B) 50% of the net proceeds received by the Company from future asset sales and capital market transactions, up to a maximum reduction of $100 million (which maximum will be increased, on a dollar-for-dollar basis, for every dollar of zero coupon convertible debentures repurchased by the Company) pursuant to this provision; - the spread over LIBOR on borrowings under the facilities increased by 37.5 basis points; - the definition of EBITDA was clarified to exclude certain non-operating items; and - a new consolidated indebtedness leverage ratio was added. As of September 29, 2002, there were no borrowings outstanding under the 364-day facility. Accordingly, as of September 29, 2002, borrowing availability under the 364-day facility was approximately $115.6 million due to the Company's repurchases of zero coupon convertible debentures described above. As of September 29, 2002, the Company had $73 million in borrowings outstanding under the 5-year facility and $27 million of borrowing availability. Because of the long-term nature of the 5-year facility, these borrowings have been classified in long-term debt at the end of the period. As of September 29, 2002, there were outstanding zero coupon convertible debentures with an accreted value of $404 million. Holders of the debentures may require the Company to repurchase some or all of the debentures in August 2003 and August 2010, or at any time upon certain changes of control in the Company, at a repurchase price equal to the initial price to the public plus the accrued original issue discount through the date of the repurchase. The Company has the right to repay some or all of the debentures with its common stock based on the then current market price, subject to satisfying conditions within the trust indenture, including that the shares of common stock must be issued either pursuant to an effective registration statement or an exemption therefrom under applicable securities laws. As of September 29, 2002, the obligation of the Company to repurchase the debentures would have been considered short-term in nature. However, as of September 29, 2002, the Company had the ability to use existing borrowing availability under the 364-day facility and the 5-year facility to refinance a portion of F-43 PERKINELMER, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) the aggregate repurchase price on a long-term basis as well as the ability to issue shares to satisfy a portion of this potential repurchase obligation. Accordingly, $250.5 million of the $404.0 million obligation has been classified as long-term in nature. The remainder was included in short-term debt. (7) SYNTHETIC LEASE AND ACCOUNTS RECEIVABLE SECURITIZATION As described in the 2001 10-K, the Company is a party to both a synthetic lease and an accounts receivable securitization facility. The synthetic lease was amended in September 2002. Prior to its amendment, the synthetic lease had allowed the Company to lease a $30.0 million facility in the Optoelectronics segment over a six-year term. The amendment increased the monthly amount payable under the lease and shortened the term of the lease from December 2006 to the earlier of the sale of the Company's Fluid Sciences business or February 28, 2003. As a result, at termination the Company either must purchase the building for approximately $30.0 million or secure alternative financing. The accounts receivable securitization facility provides for up to $51.0 million in accounts receivable funding. Amounts funded under this facility at September 29, 2002 and December 30, 2001 were $38.0 million and $37.0 million, respectively. The facility includes conditions that require the Company to maintain a debt rating of BB or above as defined by Standard & Poor's Rating Services, and Ba2 or above as defined by Moody's Investors Service. At November 22, 2002, the Company had a senior unsecured credit rating of BBB- from Standard & Poor's Rating Services, which is currently under review, and of Ba2 with a stable outlook from Moody's Investors Service. (8) EARNINGS PER SHARE Basic earnings per share was computed by dividing net income by the weighted-average number of common shares outstanding during the period. Diluted earnings per share was computed by dividing net income by the weighted-average number of common shares outstanding plus all potentially dilutive common shares outstanding, primarily shares issuable upon the exercise of stock options using the treasury stock method. For the nine months ended September 29, 2002, potentially dilutive securities were excluded from the calculation of weighted-average shares outstanding because of their anti-dilutive effect due to the net loss during the period. The following table reconciles the number of shares utilized in the earnings per share calculations:
NINE MONTHS ENDED ----------------------------- SEPTEMBER 29, SEPTEMBER 30, 2002 2001 ------------- ------------- (IN THOUSANDS) Number of common shares -- basic........................... 125,335 100,636 Effect of dilutive securities Stock options............................................ -- 2,415 Restricted stock and other............................... -- 1,128 ------- ------- Number of common shares -- diluted......................... 125,335 104,179
F-44 PERKINELMER, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (9) COMPREHENSIVE (LOSS) INCOME Comprehensive (loss) income consisted of the following:
NINE MONTHS ENDED ----------------------------- SEPTEMBER 29, SEPTEMBER 30, 2002 2001 ------------- ------------- (IN THOUSANDS) Net income (loss)......................................... $(149,310) $84,125 Other comprehensive (loss) income: Gross foreign currency translation adjustments.......... 17,617 (6,526) Unrealized losses on derivatives, net of tax............ (1,244) (87) Unrealized losses on securities, net of tax............. (456) (2,509) --------- ------- 15,917 (9,122) Comprehensive (loss) income............................... $(133,393) $75,003 ========= =======
The components of accumulated other comprehensive loss were as follows:
SEPTEMBER 29, DECEMBER 30, 2002 2001 ------------- ------------ (IN THOUSANDS) Foreign currency translation adjustments.................... $(43,304) $(60,921) Unrealized gains on derivative instruments.................. 163 1,407 Unrealized losses on securities............................. (1,882) (1,426) -------- -------- Accumulated other comprehensive loss........................ $(45,023) $(60,940) ======== ========
(10) INDUSTRY SEGMENT INFORMATION The Company's continuing operations are classified into four reportable segments, which reflect the Company's management and structure: Life Sciences, Optoelectronics, Analytical Instruments and Fluid Sciences. The accounting policies of the reportable segments are the same as those described in Note 1 of the 2001 Form 10-K. The Company evaluates the performance of its reportable segments based on operating profit. Intersegment sales and transfers are not significant. Unaudited sales and operating profit information by segment for the nine months ended September 29, 2002 and September 30, 2001 is as follows:
NINE MONTHS ENDED ----------------------------- SEPTEMBER 29, SEPTEMBER 30, 2002 2001 ------------- ------------- (IN THOUSANDS) Life Sciences Sales................................................... $ 363,523 $ 221,637 Operating profit........................................ 11,324 22,064 Optoelectronics Sales................................................... 236,472 295,105 Operating profit (loss)................................. (11,654) 50,925
F-45 PERKINELMER, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NINE MONTHS ENDED ----------------------------- SEPTEMBER 29, SEPTEMBER 30, 2002 2001 ------------- ------------- (IN THOUSANDS) Analytical Instruments Sales................................................... 354,551 421,262 Operating profit........................................ 18,940 42,905 Fluid Sciences Sales................................................... 140,854 181,354 Operating profit........................................ 12,715 48,223 Other Operating loss.......................................... (12,118) (8,379) Continuing Operations Sales................................................... $1,095,400 $1,119,358 ========== ========== Operating profit........................................ $ 19,207 $ 155,738 ========== ==========
The Company's Telecom Components and Entertainment Lighting businesses (formerly included in the Optoelectronics segment) and Security and Detection Systems business (formerly included in the Analytical Instruments segment) are presented as discontinued operations and, therefore, are not included in the preceding table (Note 11). The basis under which certain Company-wide costs are allocated to the business units was re-measured for all periods presented due to the Company reinstating the Fluid Sciences business as a continuing operation in accordance with APB No. 30. All prior periods appearing in this report have been adjusted for this change. (11) DISCONTINUED OPERATIONS During June 2002, the Company completed the sale of its Security and Detection Systems business for cash consideration of approximately $100 million and a net working capital adjustment, the amount of which has yet to be finalized. A net pre-tax gain of $18.0 million was recorded pursuant to this transaction in the second quarter of 2002 as a gain on the disposition of a discontinued operation. The Company has accounted for its Security and Detection Systems business as a discontinued operation in accordance with APB No. 30, and accordingly, the results of operations and related cash flows of this business through the disposal date have been segregated from continuing operations and reported as a separate line on the Company's Consolidated Income Statements. The assets and liabilities of the Security and Detection Systems business are reflected within the assets and liabilities from discontinued operations in the accompanying Consolidated Balance Sheets for the periods prior to its sale and the resulting gain from the sale is presented as a component of Net Income within dispositions of discontinued operations, net of income tax on the Company's Consolidated Income Statements. During June 2002, the Company approved separate plans to shutdown its Telecom Components and sell its Entertainment Lighting businesses as part of its continued efforts to focus on higher growth opportunities. The results of these businesses were previously reported as part of the Optoelectronics segment. The Company has accounted for these businesses as discontinued operations in accordance with SFAS No. 144, and accordingly, has presented the results of operations and related cash flows of these businesses as discontinued operations for all periods presented. The assets and liabilities of these disposal groups have been presented separately and are reflected within the assets and liabilities from discontinued operations in the accompanying Consolidated Balance Sheets. F-46 PERKINELMER, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The Company ceased operations of its Telecom Components business as of June 30, 2002. A pre-tax loss of $17.5 million was recorded as a disposition of discontinued operations in the second quarter of 2002 as a result of $0.5 million in severance charges and $17.0 million for the net write-off of fixed assets, inventory and other assets, including the write-down of an equity investment held by the Telecom Components business. As a result of the write-off, the carrying value of the net assets of the Telecom Components business was reduced to an amount management believes is recoverable. A pre-tax loss of $2.1 million was recorded as a disposition of discontinued operations in the three months ended June 30, 2002 to bring the carrying value of the net assets of the Entertainment Lighting business down to an amount management believes is recoverable. During October 2001, the Board of Directors approved a plan to sell the Fluid Sciences business unit, at which time the business was reflected as a discontinued operation in the Company's consolidated financial statements in accordance with APB No. 30. The sale of the business has not been completed due to external market conditions. As APB No. 30 affords a one-year window for the completion of a disposition, the Company has reflected the Fluid Sciences business unit within its consolidated results from continuing operations. All periods presented have been adjusted to reflect this change. Summary operating results of the discontinued operations discussed above which are reported as a separate line on the Company's Consolidated Income Statements were as follows:
NINE MONTHS ENDED ----------------------------- SEPTEMBER 29, SEPTEMBER 30, 2002 2001 ------------- ------------- (IN THOUSANDS) Sales...................................................... $117,544 $71,912 Costs and expenses......................................... 131,584 75,147 -------- ------- Operating loss from discontinued operations................ (14,040) (3,235) Other expense, net......................................... (6,638) (3,820) -------- ------- Operating loss from discontinued operations before income taxes.................................................... (20,678) (7,055) Benefit for income taxes................................... (4,967) (2,035) -------- ------- Loss from discontinued operations, net of taxes............ $(15,711) $(5,020) ======== =======
(12) GOODWILL AND INTANGIBLE ASSETS In June 2001, the Financial Accounting Standards Board ("FASB") issued SFAS No. 141 and SFAS No. 142. SFAS No. 141 requires all business combinations initiated after July 1, 2001 to be accounted for using the purchase method. Under SFAS No. 142, goodwill and intangible assets with indefinite lives are no longer amortized but are reviewed annually at a minimum for potential impairment by comparing the carrying value to the fair value of the reporting unit to which they are assigned. The provisions of SFAS No. 142 are effective for the Company's current fiscal year. Accordingly, the Company has ceased goodwill amortization as of the beginning of fiscal 2002. SFAS No. 142 requires that goodwill be tested for impairment at the reporting unit level upon initial adoption and at least annually thereafter, utilizing a two-step methodology. The initial step requires the Company to determine the fair value of each reporting unit and compare it to the carrying value, including goodwill of such unit. If the fair value exceeds the carrying value, no impairment loss would be recognized. However, if the carrying value of the reporting unit exceeds the corresponding fair value, the goodwill of this unit may be impaired. The amount, if any, of the impairment would then be evaluated in the third step of the impairment testing which places the value of the goodwill balance to that which would be accounted for under purchase accounting. F-47 PERKINELMER, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) In connection with adopting this standard, the Company, assisted by independent valuation consultants, has completed the transitional testing of goodwill using a measurement date of January 1, 2002. The results of this testing indicate that the carrying values of the lighting reporting unit within the Optoelectronics business unit exceeds the estimated fair value of this unit as determined utilizing various valuation techniques including discounted cash flow and comparative market analysis. Accordingly, an impairment charge has been recognized as a change in accounting principle as of the beginning of 2002. The impairment charge was $117.8 million on a before and after-tax basis. The adjustment to previously reported net income (loss) and earnings (loss) per share below illustrates the impact of goodwill amortization on reported results. The impact on net income (loss), and basic and diluted net earnings (loss) per share for the three and nine months ended September 29, 2002 and September 30, 2001 is as follows:
NINE MONTHS ENDED ------------------------------- SEPTEMBER 29, SEPTEMBER 30, 2002 2001 -------------- -------------- (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Reported income (loss) from continuing operations before effect of accounting change.............................. $(4,833) $ 89,145 Goodwill amortization, net of tax.......................... -- 21,696 ------- -------- Adjusted income (loss) from continuing operations before effect of accounting change.............................. $(4,833) $110,841 ======= ======== BASIC EARNINGS (LOSS) PER SHARE: Reported income (loss) before effect of accounting change................................................... $ (0.04) $ 0.89 Goodwill amortization, net of tax.......................... -- 0.22 ------- -------- Adjusted income (loss) from continuing operations before effect of accounting change.............................. $ (0.04) $ 1.10 ======= ======== DILUTED EARNINGS (LOSS) PER SHARE: Reported income (loss) from continuing operations before effect of accounting change.............................. $ (0.04) $ 0.86 Goodwill amortization, net of tax.......................... -- 0.21 ------- -------- Adjusted income (loss) from continuing operations before effect of accounting change.............................. $ (0.04) $ 1.06 ======= ========
F-48 PERKINELMER, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Intangible asset balances at September 29, 2002 by business segment were as follows:
ANALYTICAL LIFE SCIENCES OPTOELECTRONICS INSTRUMENTS FLUID SCIENCES CONSOLIDATED ------------- --------------- ----------- -------------- ------------ (IN THOUSANDS) Patents........................ $ 291,147 $12,682 $ 2,800 $ 4,000 $ 310,629 Less: Accumulated depreciation.............. (22,191) (4,935) (467) (3,600) (31,193) ---------- ------- -------- ------- ---------- Net patents.................. 268,956 7,747 2,333 400 279,436 Trademarks..................... 12,088 -- 76,000 -- 88,088 Less: Accumulated depreciation.............. (506) -- (4,908) -- (5,414) ---------- ------- -------- ------- ---------- Net patents.................. 11,582 -- 71,092 -- 82,674 Licenses....................... 47,099 1,385 -- -- 48,484 Less: Accumulated depreciation.............. (4,202) (1,281) -- -- (5,483) ---------- ------- -------- ------- ---------- Net licenses................. 42,897 104 -- -- 43,001 Core technology................ -- -- 85,000 -- 85,000 Less: Accumulated depreciation.............. -- -- (14,167) -- (14,167) ---------- ------- -------- ------- ---------- Net core technology.......... -- -- 70,833 -- 70,833 ---------- ------- -------- ------- ---------- Net amortizable intangible assets....................... 323,435 7,851 144,258 400 475,944 Net goodwill................. 707,015 36,057 191,343 36,330 970,745 ---------- ------- -------- ------- ---------- Totals......................... $1,030,450 $43,908 $335,601 $36,730 $1,446,689 ========== ======= ======== ======= ==========
(13) RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS In April 2002, the FASB issued SFAS No. 145, which rescinds SFAS No. 4, Reporting Gains and Losses from Extinguishment of Debt an amendment of APB No. 30, which required all gains and losses from the extinguishment of debt to be aggregated and, if material, classified as an extraordinary item, net of related income tax effect. As a result, the criteria set forth by APB Opinion No. 30 will now be used to classify those gains and losses. The Company has elected to early adopt the provisions of SFAS No. 145 as of July 2, 2002. As a result, the $6.7 million net gain resulting from the early extinguishment of a portion of the Company's zero coupon convertible debentures discussed in Note 6 was recognized within other expense, net during the third quarter of 2002. Additionally, the $5.5 million extraordinary loss resulting from the early extinguishment of the Packard Notes during the first quarter of 2002 was reclassified to other expense, for the nine months ended September 29, 2002. In July 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities ("SFAS No. 146") which nullifies EITF Issue No. 94-3. SFAS No. 146 requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred, whereas EITF No. 94-3 had recognized the liability at the commitment date to an exit plan. The Company is required to adopt the provisions of SFAS No. 146 effective for exit or disposal activities initiated after December 31, 2002. (14) CONTINGENCIES The Company is subject to various claims, legal proceedings and investigations covering a wide range of matters that arise in the ordinary course of its business activities. Each of these matters is subject to various uncertainties, and it is possible that some of these matters may be resolved unfavorably to the Company. The Company has established accruals for matters that are probable and reasonably estimable. Management believes that any liability that may ultimately result from the resolution of these matters in excess of amounts provided will not have a material adverse affect on the financial position or results of operations of the Company. F-49 PERKINELMER, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The Company and certain officers have been named as defendants in a class action lawsuit in which the plaintiffs have alleged various statements made by the Company and management were misleading with respect to the Company's prospects and future operating results. The Company believes it has meritorious defenses to the lawsuits and intends to contest the actions vigorously. The Company is currently unable, however, to reasonably estimate the amount of the loss, if any, that may result from resolution of these matters. In addition, the Company is conducting a number of environmental investigations and remedial actions at current and former Company locations and, along with other companies, has been named a potentially responsible party (PRP) for certain waste disposal sites. The Company accrues for environmental issues in the accounting period that the Company's responsibility is established and when the cost can be reasonably estimated. The Company has accrued $11.6 million as of September 29, 2002, representing management's estimate of the total cost of ultimate disposition of known environmental matters. Such amount is not discounted and does not reflect the potential recovery of any amounts through insurance or indemnification arrangements. These cost estimates are subject to a number of variables, including the stage of the environmental investigations, the magnitude of the possible contamination, the nature of the potential remedies, possible joint and several liability, the timeframe over which remediation may occur and the possible effects of changing laws and regulations. The Company expects that such accrued amounts could be paid out over a period of up to five years. As assessments and remediation activities progress at each individual site, these liabilities are reviewed and adjusted to reflect additional information as it becomes available. There have been no environmental problems to date that have had or are expected to have a material effect on the Company's financial position or results of operations. F-50 The Depositary for the Offer is: BANK ONE TRUST COMPANY, N.A. BY MAIL: BY HAND: BY OVERNIGHT COURIER: Bank One Trust Company, N.A. Bank One Trust Company, N.A. Bank One Trust Company, N.A. 1111 Polaris Parkway 1111 Polaris Parkway 1111 Polaris Parkway Suite N1-OH1-0184 Suite N1-OH1-0184 Suite N1-OH1-0184 Columbus, Ohio 43240 Columbus, Ohio 43240 Columbus, Ohio 43240 Attention: Exchange Department Attention: Exchange Department Attention: Exchange Department
BY FACSIMILE TRANSMISSION: (614) 248-9987 Attention: Exchange Department FOR INFORMATION OR CONFIRMATION BY TELEPHONE: 1(800)346-5153 Any questions or requests for assistance or for additional copies of this Offer to Purchase or the Letter of Transmittal may be directed to the Dealer Manager or the Information Agent at their respective telephone numbers set forth below. A holder may also contact such holder's broker, dealer, commercial bank, trust company or other nominee for assistance concerning the Offer. The Information Agent is: D.F. KING & CO., INC. 77 Water Street New York, NY 10005-4495 Banks and Brokers Call Collect: (212) 269-5550 All Others Call Toll-Free: (800) 659-6590 The Dealer Manager for the Offer is: MERRILL LYNCH & CO. 4 World Financial Center -- North Tower 250 Vesey Street New York, New York 10080 Call Toll-Free: (888) ML4-TNDR or (212) 449-6025 Attention: Equity Capital Markets EX-99.(A)(1)(II) 4 b44808toexv99wxayx1yxiiy.txt LETTER OF TRANSMITTAL EXHIBIT (a)(1)(ii) PERKINELMER, INC. LETTER OF TRANSMITTAL TO TENDER WITH RESPECT TO THE ZERO COUPON CONVERTIBLE DEBENTURES DUE AUGUST 7, 2020 OF PERKINELMER, INC. (CUSIP NO. 714046 AA 7) PURSUANT TO THE OFFER TO PURCHASE DATED NOVEMBER 29, 2002 THE OFFER AND YOUR WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, DECEMBER 27, 2002, UNLESS THE OFFER IS EXTENDED. THE OFFER MAY BE EXTENDED UNTIL THE FINANCING CONDITION IS SATISFIED. The Depositary for the Offer is: BANK ONE TRUST COMPANY, N.A. BY MAIL: BY HAND: BY OVERNIGHT COURIER: Bank One Trust Company, N.A. Bank One Trust Company, N.A. Bank One Trust Company, N.A. 1111 Polaris Parkway 1111 Polaris Parkway 1111 Polaris Parkway Suite N1-OH1-0184 Suite N1-OH1-0184 Suite N1-OH1-0184 Columbus, Ohio 43240 Columbus, Ohio 43240 Columbus, Ohio 43240 Attention: Exchange Department Attention: Exchange Department Attention: Exchange Department
BY FACSIMILE TRANSMISSION: (614) 248-9987 Attention: Exchange Department FOR INFORMATION OR CONFIRMATION BY TELEPHONE: 1(800) 346-5153 Delivery of this Letter of Transmittal to an address other than as set forth above, or transmission of instructions via a facsimile number other than as listed above, will not constitute a valid delivery. Capitalized terms used in this Letter of Transmittal and not defined herein will have the meaning ascribed to them in the Offer to Purchase (the "Offer to Purchase"). This Letter of Transmittal is to be used by the holders of the Zero Coupon Convertible Debentures due August 7, 2020, which are referred to as the "debentures," of PerkinElmer, Inc., a Massachusetts corporation ("PerkinElmer"), if: - certificates for tendered debentures are to be physically delivered to the Depositary; or - tender of debentures is to be made by book-entry transfer to the Depositary's account at The Depository Trust Company ("DTC") pursuant to the procedures for book-entry transfer set forth under the caption "Terms of the Offer -- Procedure for Tendering Debentures -- Book-Entry Delivery of the Debentures" in the Offer to Purchase, and, in each case, instructions are not being transmitted through the DTC's Automated Tender Offer Program ("ATOP"). Holders of debentures who are tendering by book-entry transfer to the Depositary's account at DTC can execute the tender through ATOP. DTC participants that are accepting the Offer may transmit their acceptance to DTC, which will verify the acceptance and execute a book-entry delivery to the Depositary's account at DTC. DTC will then transmit an Agent's Message to the Depositary for its acceptance. Delivery of the Agent's Message by DTC will satisfy the terms of the Offer as to execution and delivery of a Letter of Transmittal by the participant identified in the Agent's Message. DELIVERY OF DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY. HOLDERS OF DEBENTURES SHOULD BE AWARE THAT NO GUARANTEED DELIVERY PROCESS IS AVAILABLE TO TENDER DEBENTURES. Only holders of debentures are authorized to tender their debentures. The undersigned should complete, execute and deliver this Letter of Transmittal to indicate the action the undersigned desires to take with respect to the Offer. 2 TENDER OF DEBENTURES - -------------------------------------------------------------------------------- [ ] CHECK HERE IF CERTIFICATES REPRESENTING TENDERED DEBENTURES ARE ENCLOSED. [ ] CHECK HERE IF TENDERED DEBENTURES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE DEPOSITARY WITH DTC AND COMPLETE THE FOLLOWING: Name of Tendering Institution: - -------------------------------------------------------------------------------- Account Number: - -------------------------------------------------------------------------------- Transaction Code Number: - -------------------------------------------------------------------------------- List below the debentures to which this Letter of Transmittal relates. If the space provided is inadequate, list the certificate numbers and principal amounts at maturity on a separately executed schedule and affix the schedule to this Letter of Transmittal. Tenders of debentures will be accepted only in principal amounts at maturity equal to $1,000 or integral multiples. - --------------------------------------------------------------------------------------------------------------------------- DESCRIPTION OF DEBENTURES - --------------------------------------------------------------------------------------------------------------------------- AGGREGATE PRINCIPAL NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) OR AMOUNT PRINCIPAL AMOUNT NAME OF DTC PARTICIPANT AND PARTICIPANT'S DTC ACCOUNT NUMBER CERTIFICATE AT MATURITY AT MATURITY IN WHICH DEBENTURES ARE HELD (PLEASE FILL IN BLANK) NUMBER(S)* REPRESENTED TENDERED** - --------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------- --------------------------------------------------------- --------------------------------------------------------- --------------------------------------------------------- --------------------------------------------------------- --------------------------------------------------------- --------------------------------------------------------- --------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------- Total Principal Amount of Debentures - --------------------------------------------------------------------------------------------------------------------------- * Need not be completed by holders tendering by book-entry transfer. ** Unless otherwise specified, it will be assumed that the entire aggregate principal amount at maturity represented by the debentures described above is being tendered. See Instruction 4. Only holders may validly tender their debentures pursuant to the Offer. - ---------------------------------------------------------------------------------------------------------------------------
The names and addresses of the holders should be printed, if not already printed above, exactly as they appear on the certificates representing the tendered debentures. The debentures and the principal amount at maturity of debentures that the undersigned wishes to tender should be indicated in the appropriate boxes. 3 NOTE: SIGNATURES MUST BE PROVIDED BELOW. PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY. Ladies and Gentlemen: The undersigned hereby tenders to PerkinElmer, Inc. ("PerkinElmer"), upon the terms and subject to the conditions set forth in the Offer to Purchase, dated November 29, 2002 (the "Offer to Purchase"), receipt of which is acknowledged, and in accordance with this Letter of Transmittal (which together with the Offer to Purchase, constitutes the "Offer"), the principal amount at maturity of debentures indicated in the table above entitled "Description of Debentures" under the column heading "Principal Amount at Maturity Tendered." If nothing is indicated in that column, then the entire aggregate principal amount at maturity represented by the debentures described in the table is tendered. Subject to, and effective upon, the acceptance for payment of the debentures tendered in accordance with the Offer, the undersigned hereby sells, assigns and transfers to, or upon the order of, PerkinElmer, all right, title and interest in and to all of the tendered debentures. The undersigned hereby irrevocably constitutes and appoints the Depositary the true and lawful agent and attorney-in-fact of the undersigned, with full knowledge that the Depositary also acts as the agent of PerkinElmer), with respect to tendered debentures, and with full powers of substitution and revocation: - to present such debentures and all evidences of transfer and authenticity to, or transfer ownership of, such debentures on the account books maintained by the Depository Trust Company ("DTC") to, or upon the order of, PerkinElmer; and - to receive all benefits and otherwise exercise all rights of beneficial ownership of such debentures, all in accordance with the terms and conditions of the Offer as described in the Offer to Purchase. The above granted power of attorney is deemed to be an irrevocable power of attorney coupled with an interest. If the undersigned is not the registered holder of the debentures listed in the box above labeled "Description of Debentures" under the column heading "Principal Amount at Maturity Tendered" or the holder's legal representative or attorney-in-fact, then in order to validly tender, the undersigned must obtain and deliver with this Letter of Transmittal debentures that are endorsed or accompanied by appropriate instruments of transfer entitling the undersigned to tender the debentures on behalf of such registered holder, in any case signed exactly as the name of the registered holder appears on the debentures, with the signatures on the certificates or instruments of transfer guaranteed as described below. The undersigned understands that tenders of debentures pursuant to any of the procedures described in the Offer to Purchase and in the Letter of Transmittal instructions will constitute the undersigned's acceptance of the terms and conditions of the Offer. PerkinElmer's acceptance of such debentures for payment will constitute a binding agreement between the undersigned and PerkinElmer upon the terms and subject to the conditions of the Offer. For purposes of the Offer, the undersigned understands that PerkinElmer will be deemed to have accepted for payment (and thereby purchased) tendered debentures, or defectively tendered debentures with respect to which PerkinElmer has, or has caused to be, waived such defect, if, as and when PerkinElmer gives written notice to the Depositary of our acceptance for payment of such debentures. The undersigned hereby represents and warrants that the undersigned has full power and authority to tender, sell, assign and transfer the debentures tendered hereby, and that when such tendered debentures are accepted for payment by PerkinElmer, PerkinElmer will acquire good and unencumbered title to the debentures, free and clear of all liens, restrictions, charges and encumbrances and not subject to adverse claims or rights. The undersigned will, upon request, execute and deliver any additional documents deemed by the Depositary or by PerkinElmer to be necessary or desirable to complete the sale, assignment and transfer of the debentures tendered hereby. The undersigned understands that PerkinElmer reserves the right to transfer or assign, from time to time, in whole or in part, to one or more of its affiliates the right to purchase all or any of the debentures validly tendered pursuant to the Offer. If such assignment occurs, the assignee-affiliate will purchase the debentures validly tendered. 4 However, any such transfer or assignment will not relieve PerkinElmer of its obligations under the Offer and will not prejudice the undersigned's rights to receive the purchase price in exchange for the debentures validly tendered and accepted for payment on the acceptance date. All authority herein conferred or agreed to be conferred by this Letter of Transmittal will not be affected by, and will survive, the death or incapacity of the undersigned, and any obligation of the undersigned hereunder will be binding upon the heirs, executors, administrators, trustees in bankruptcy, person and legal representatives, successors and assigns of the undersigned. The undersigned understands that the delivery and surrender of any debentures is not effective, and the risk of loss of the debentures does not pass to the Depositary, until receipt by the Depositary of this Letter of Transmittal, or a facsimile hereof, properly completed and duly executed, together with all accompanying evidences of authority and any other required documents in form satisfactory to PerkinElmer. All questions as to the form of all documents and the validity, including time of receipt, acceptance for payment and withdrawal of tendered debentures will be determined by PerkinElmer, in its sole discretion, which determination will be final and binding. Unless otherwise indicated herein in the box below labeled "A. Special Issuance/Delivery Instructions," the undersigned hereby request(s) that any debentures representing principal amounts at maturity not tendered or not accepted for purchase be issued in the name(s) of, and delivered to, the undersigned, and in the case of debentures tendered by book-entry transfer, by credit to the account of DTC. Unless otherwise indicated herein in the box below labeled "B. Special Payment Instructions," the undersigned hereby request(s) that any checks for payments to be made in connection with the Offer be issued to the order of, and delivered to, the undersigned. 5 If the "A. Special Issuance/Delivery Instructions" box is completed, the undersigned hereby request(s) that any debentures representing principal amounts at maturity not tendered or not accepted for purchase be issued in the name(s) of, and be delivered to, the person(s) at the address(es) therein indicated. The undersigned recognizes that PerkinElmer has no obligation pursuant to the "A. Special Issuance/Delivery Instructions" box to transfer any debentures from the names of the registered holder(s) thereof if it does not accept for purchase any of such tendered debentures. In the event that the "B. Special Payment Instructions" box is completed, the undersigned hereby request(s) that checks for payments to be made in connection with the Offer be issued in the name(s) of, and be delivered to, the person(s) at the address(es) therein indicated. A. SPECIAL ISSUANCE/ DELIVERY INSTRUCTIONS (SEE INSTRUCTIONS 1, 5, 6 AND 7) To be completed ONLY if debentures in a principal amount at maturity not tendered or not accepted for purchase are to be issued in the name of someone other than the person(s) whose signature(s) appear(s) within this Letter of Transmittal or sent to an address different from that shown in the box entitled "Description of Debentures" within this Letter of Transmittal. Name: -------------------------------------------------------------------------- (PLEASE PRINT) Address: ----------------------------------------------------------------------- - ----------------------------------------------------------------------- - ----------------------------------------------------------------------- (ZIP CODE) - -------------------------------------------------------------------------------- (TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER) (SEE SUBSTITUTE FORM W-9 HEREIN) B. SPECIAL PAYMENT INSTRUCTIONS (SEE INSTRUCTIONS 1, 5, 6 AND 7) To be completed ONLY if checks are to be issued in the name of someone other than the person(s) whose signature(s) appear(s) within this Letter of Transmittal or sent to an address different from that shown in the box entitled "Description of Debentures" within this Letter of Transmittal. Name: -------------------------------------------------------------------------- (PLEASE PRINT) Address: ----------------------------------------------------------------------- - ------------------------------------------------------------------------ - ------------------------------------------------------------------------ (ZIP CODE) - -------------------------------------------------------------------------------- (TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER) (SEE SUBSTITUTE FORM W-9 HEREIN) 6 PLEASE SIGN HERE (To be completed by all tendering holders regardless of whether debentures are being physically delivered herewith) By completing, executing and delivering this Letter of Transmittal, the undersigned hereby tenders the principal amount at maturity of the debentures listed in the box above labeled "Description of Debentures" under the column heading "Principal Amount at Maturity Tendered" (or, if nothing is indicated therein, with respect to the entire aggregate principal amount at maturity represented by the debentures described in such box). This Letter of Transmittal must be signed by the holder(s) exactly as name(s) appear(s) on certificate(s) representing debentures, or if tendered by a participant in DTC, exactly as such participant's name appears on a debenture position listing as the owner of debentures. If signature is by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, please set forth full title and see Instruction 5. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SIGNATURE(S) OF REGISTERED HOLDER(S) OR AUTHORIZED SIGNATORY (See guarantee requirement below) Dated -------------------------------------------------------------------------- Name(s) ------------------------------------------------------------------------ ------------------------------------------------------------------------ (PLEASE PRINT) Capacity ----------------------------------------------------------------------- Address ------------------------------------------------------------------------- ------------------------------------------------------------------------- (INCLUDING ZIP CODE) Area Code and Telephone Number ------------------------------------------------ Tax Identification or Social Security No. ------------------------------ (COMPLETE ACCOMPANYING SUBSTITUTE FORM W-9) ------------------------ MEDALLION SIGNATURE GUARANTEE (IF REQUIRED -- SEE INSTRUCTIONS 1 AND 5) Authorized Signature ------------------------------------------------------------ Name of Firm --------------------------------------------------------------------------- 7 INSTRUCTIONS FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER 1. Signature Guarantees. Signatures on this Letter of Transmittal must be guaranteed by a Medallion Signature Guarantor, unless the debentures hereby are tendered by the registered holder of such debentures, or by a participant in DTC whose name appears on a debenture position listing as the owner of such debentures, and that holder has not completed either of the boxes entitled "A. Special Issuance/Delivery Instructions" or "B. Special Payment Instructions" on this Letter of Transmittal or for the account of an Eligible Institution. If the debentures are registered in the name of a person other than the signer of this Letter of Transmittal, or if certificates for unpurchased debentures are to be issued to a person other than the registered holder, the signatures on this Letter of Transmittal accompanying the tendered debentures must be guaranteed by a Medallion Signature Guarantor as described above. See Instruction 5. 2. Delivery of Letter of Transmittal and Debentures. This Letter of Transmittal is to be completed by holders if: - certificates for tendered debentures are to be physically delivered to the Depositary; or - tender of debentures is to be made by book-entry transfer to the Depositary's account at DTC pursuant to the procedures for book-entry transfer set forth under the caption "Terms of the Offer -- Procedure for Tendering Debentures -- Book-Entry Delivery of the Debentures" in the Offer to Purchase, and instructions are not being transmitted through ATOP. All physically delivered debentures, or a confirmation of a book-entry transfer into the Depositary's account at DTC of all debentures delivered electronically, as well as a properly completed and duly executed Letter of Transmittal (or a facsimile thereof) and any other documents required by this Letter of Transmittal, must be received by the Depositary at its address set forth herein on or before the expiration date (in order to receive the purchase price). DELIVERY OF DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY. DELIVERY WILL BE DEEMED MADE ONLY WHEN DOCUMENTS ARE ACTUALLY RECEIVED BY THE DEPOSITARY. The method of delivery of this Letter of Transmittal, certificates for debentures and all other required documents, including delivery through DTC and any acceptance or Agent's Message delivered through ATOP, is at the election and risk of the tendering holder. If a holder chooses to deliver by mail, the recommended method is by registered mail with return receipt requested, properly insured. In all cases, sufficient time should be allowed to ensure timely delivery to the Depositary. HOLDERS OF DEBENTURES SHOULD BE AWARE THAT NO GUARANTEED DELIVERY PROCESS IS AVAILABLE TO TENDER DEBENTURES. No alternative, conditional or contingent tenders will be accepted. All tendering holders, by execution of this Letter of Transmittal, or a facsimile hereof, waive any right to receive any notice of the acceptance of their debentures for payment. 3. Inadequate Space. If the space provided in this Letter of Transmittal is inadequate, the certificate numbers and/or the principal amount represented by debentures should be listed on a separate signed schedule attached to this Letter of Transmittal. 4. Partial Tenders. (Not applicable to holders who tender by book-entry transfer.) Tenders of debentures will be accepted only in integral multiples of $1,000 principal amount at maturity. If holders wish to tender with respect to less than the entire principal amount at maturity evidenced by any debentures submitted, holders must fill in the principal amount at maturity that is to be tendered in the columns entitled "Principal Amount at Maturity Tendered." In the case of a partial tender of debentures, as soon as practicable after the expiration date, new certificates for the remainder of the debentures that were evidenced by such holder's old certificates will be sent to such holder, unless otherwise provided in the appropriate box of this Letter of Transmittal. The entire principal amount at maturity that is represented by the debentures delivered to the Depositary will be deemed to have been tendered, unless otherwise indicated. 5. Signature on Letter of Transmittal, Instruments of Transfer and Endorsements. If this Letter of Transmittal is signed by the registered holders of the debentures tendered hereby, the signatures must correspond with the 8 name(s) as written on the face of the certificate(s) without alteration, enlargement or any change whatsoever. If this Letter of Transmittal is signed by a participant in DTC whose name is shown as the owner of the debentures tendered hereby, the signature must correspond with the name shown on the debenture position listing as the owner of the debentures. If any of the debentures tendered hereby are registered in the name of two or more holders, all such holders must sign this Letter of Transmittal. If any of the debentures tendered hereby are registered in different names on several certificates, it will be necessary to complete, sign and submit as many separate Letters of Transmittal as there are different registrations of certificates. If this Letter of Transmittal or any debenture or instrument of transfer is signed by a trustee, executor, administrator, guardian, attorney-in-fact, agent, officer of a corporation or other person acting in a fiduciary or representative capacity, such person should so indicate when signing, and proper evidence satisfactory to PerkinElmer of such person's authority to so act must be submitted. When this Letter of Transmittal is signed by the registered holders of the debentures listed and transmitted hereby, no endorsements of debentures or separate instruments of transfer are required unless payment is to be made, or debentures not tendered or purchased are to be issued, to a person other than the registered holders, in which case signatures on such debentures or instruments of transfer must be guaranteed by a Medallion Signature Guarantor. If this Letter of Transmittal is signed other than by the registered holders of the debentures listed, the debentures must be endorsed or accompanied by appropriate instruments of transfer entitling the undersigned to tender the debentures on behalf of such registered holders, in any case signed exactly as the name or names of the registered holders appear on the debentures, with the signatures on the certificates or instruments of transfer guaranteed by a Medallion Signature Guarantor, unless the signature is that of an Eligible Institution. 6. Special Issuance and Delivery Instructions. If a check and/or certificates for debentures representing principal amounts at maturity not tendered or not accepted for payment are to be issued in the name of a person other than the signer of this Letter of Transmittal, or if a check is to be sent and/or such debentures are to be returned to someone other than the signer of this Letter of Transmittal or to an address other than that shown above, the appropriate "A. Special Issuance/Delivery Instructions" or "B. Special Payment Instructions" box on this Letter of Transmittal should be completed. All debentures tendered by book-entry transfer and not accepted for payment will be returned by crediting the account at DTC designated above as the account for which such debentures were delivered. 7. Transfer Taxes. Except as set forth in this Instruction 7, PerkinElmer will pay or cause to be paid any transfer taxes with respect to the transfer and sale of debentures to PerkinElmer, or to PerkinElmer's order, pursuant to the Offer. If payment is to be made to, or if debentures not tendered or purchased are to be registered in the name of, any persons other than the registered owners, or if tendered debentures are registered in the name of any persons other than the persons signing this Letter of Transmittal, the amount of any transfer taxes (whether imposed on the registered holder or such other person) payable on account of the transfer to such other person will be deducted from the payment unless satisfactory evidence of the payment of such taxes or exemption therefrom is submitted. 8. Waiver of Conditions. The conditions of the Offer are for the sole benefit of PerkinElmer. The conditions may be asserted by PerkinElmer regardless of the circumstances, including any action or inaction by PerkinElmer, giving rise to such condition or may be waived by PerkinElmer in whole or in part at any time and from time to time in its sole discretion. The failure of PerkinElmer at any time to exercise any of its rights will not be deemed a waiver of any other right and each right will be deemed an ongoing right which may be asserted at any time and from time to time. 9. Substitute Form W-9. Unless an exemption from backup withholding and information reporting requirements is otherwise established with the Depositary, each tendering holder (or other payee) must provide the Depositary with a correct taxpayer identification number ("TIN"), generally the holder's social security or federal employer identification number, and with certain other information, on Substitute Form W-9, which is provided under "Important Tax Information" below, and certify, under penalty of perjury, that such TIN is correct, such holder (or other payee) is not subject to backup withholding and such holder (or other payee) is a United States person. Failure to provide the information on the Substitute Form W-9 may subject the tendering holder (or other payee) to a $50 9 penalty imposed by the Internal Revenue Service and a federal income tax backup withholding (currently 30%) on any payment. The box in Part 3 of the Substitute Form W-9 may be checked if the tendering holder (or other payee) has not been issued a TIN and has applied for a TIN or intends to apply for a TIN in the near future. If the box in Part 3 is checked and the Depositary is not provided with a TIN by the time of payment, the Depositary will withhold a certain percentage (currently 30%) on all such payments, if any, until a TIN is provided to the Depositary. See the enclosed "Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9" for additional instructions. 10. Requests for Assistance or Additional Copies. Any questions or requests for assistance or additional copies of the Offer to Purchase or this Letter of Transmittal may be directed to the Dealer Manager or the Information Agent at their respective telephone numbers set forth below. A holder may also contact such holder's broker, dealer, commercial bank or trust company or nominee for assistance concerning the Offer. IMPORTANT: This Letter of Transmittal, or a facsimile hereof, together with debentures and all other required documents, must be received by the Depositary on or before the expiration date in order for holders to receive the purchase price. 10 IMPORTANT TAX INFORMATION Under United States federal income tax law, a holder whose tendered debentures are accepted for payment is generally required to provide the Depositary with such holder's current TIN on Substitute Form W-9 below. A TIN is either an individual holder's social security number or a holder's employer identification number. If the Depositary is not provided with the correct TIN, the holder or other payee may be subject to a $50 penalty imposed by the Internal Revenue Service. In addition, any payment made to such holder or other payee with respect to debentures purchased pursuant to the Offer may be subject to withholding tax (currently set at 30% of the payment). More serious penalties may be imposed for providing false information, which, if willfully done, may result in fines and/or imprisonment. Backup withholding is not an additional tax. Rather, the United States federal income tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained provided that the required information is furnished to the Internal Revenue Service. Certain holders (including, among others, corporations and certain foreign individuals) are not subject to these backup withholding and reporting requirements. Non-United States holders must establish their status as exempt recipients from backup withholding and can do so by submitting to the Depositary a properly completed IRS Form W-8BEN or other applicable IRS Form W-8 (which are available from the Depositary), signed, under penalties of perjury, attesting to such holder's exempt foreign status. PURPOSE OF SUBSTITUTE FORM W-9 To prevent backup withholding on any payment made to a holder or other payee with respect to debentures purchased pursuant to the Offer, the holder is required to notify the Depositary of the holder's current TIN (or the TIN of any other payee) by completing the form below, certifying that: (A) the TIN provided on Substitute Form W-9 is correct (or that such holder is awaiting a TIN); (B)(1) the holder is exempt from backup withholding, (2) the holder has not been notified by the Internal Revenue Service that such holder is subject to backup withholding as a result of failure to report all interest or dividends, or (3) the Internal Revenue Service has notified the holder that such holder is no longer subject to backup withholding; and (C) the holder is a United States person (including a United States resident alien). WHAT NUMBER TO GIVE THE DEPOSITARY The holder is required to give the Depositary the TIN of the record owner of the debentures. If the debentures are registered in more than one name or are not registered in the name of the actual owner, consult the enclosed "Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9" for additional guidance on which number to report. 11
- ------------------------------------------------------------------------------------------------------------------- PAYER'S NAME: PERKINELMER - ------------------------------------------------------------------------------------------------------------------- SUBSTITUTE PART 1 -- PLEASE PROVIDE YOUR TIN IN THE BOX SOCIAL SECURITY NUMBER(S) OR FORM W-9 AT RIGHT. IF YOU DO NOT HAVE A TIN, PLEASE EMPLOYER IDENTIFICATION NUMBER(S) DEPARTMENT OF THE TREASURY SEE "OBTAINING A NUMBER" IN THE ENCLOSED INTERNAL REVENUE SERVICE "GUIDELINES FOR CERTIFICATION OF TAXPAYER --------------------------------------- PAYER'S REQUEST FOR IDENTIFICATION NUMBER ON SUBSTITUTE FORM TAXPAYER IDENTIFICATION W-9". IF AWAITING TIN, WRITE "APPLIED FOR" NUMBER ("TIN") PLEASE CERTIFY BY SIGNING AND DATING BELOW. NOTE: IF THE ACCOUNT IS IN MORE THAN ONE NAME, PLEASE REFERENCE THE ENCLOSED "GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9" TO DETERMINE WHICH NUMBER TO GIVE THE PAYER. --------------------------------------------------------------------------------------
PART 2 -- CERTIFICATION -- PART 3 -- Under Penalties of Perjury, I certify that: If you are a payee exempt (1) The number shown on this form is my correct taxpayer from backup withholding, see identification number (or I am waiting for a number the enclosed "Guidelines for to be issued to me), Certification of Taxpayer Identification Number on (2) I am not subject to backup withholding because: (a) Substitute Form W-9" and I am exempt from backup withholding, or (b) I have follow the instructions not been notified by the Internal Revenue Service under the section captioned ("IRS") that I am subject to backup withholding as a "Payees Exempt from Backup result of a failure to report all interest or Withholding." dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding, and (3) I am a United States person (including United States resident alien). -------------------------------------------------------------------------------------- CERTIFICATION INSTRUCTIONS -- You must cross out item (2) above if you have been notified by the IRS that you are currently subject to backup withholding because of underreporting interest or dividends on your tax return. Generally, for payments other than interest and dividends, you are not required to sign the Certification, but you must provide your correct TIN. SIGNATURE ------------------------------------- DATE ------------------------ - -------------------------------------------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN A $50 PENALTY IMPOSED BY THE INTERNAL REVENUE SERVICE AND BACKUP WITHHOLDING OF 30% OF ANY CASH PAYMENTS MADE TO YOU PURSUANT TO THE OFFER AND THE SOLICITATION. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS. 12 NOTE: YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU ARE APPLYING FOR A TAXPAYER IDENTIFICATION NUMBER. CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and either (1) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security Administration office or (2) I intend to mail or deliver an application in the near future. I understand that if I do not provide a taxpayer identification number by the time of payment, 30% of all reportable cash payments made to me thereafter will be withheld until I provide a taxpayer identification number. Signature:----------------------- Date:--------------- 13 The Depositary for the Offer is: BANK ONE TRUST COMPANY, N.A. BY MAIL: BY HAND: BY OVERNIGHT COURIER: Bank One Trust Company, N.A. Bank One Trust Company, N.A. Bank One Trust Company, N.A. 1111 Polaris Parkway 1111 Polaris Parkway 1111 Polaris Parkway Suite N1-OH1-0184 Suite N1-OH1-0184 Suite N1-OH1-0184 Columbus, Ohio 43240 Columbus, Ohio 43240 Columbus, Ohio 43240 Attention: Exchange Department Attention: Exchange Department Attention: Exchange Department
BY FACSIMILE TRANSMISSION: (614) 248-9987 Attention: Exchange Department FOR INFORMATION OR CONFIRMATION BY TELEPHONE: 1(800) 346-5153 Any questions or requests for assistance or for additional copies of the Offer to Purchase or this Letter of Transmittal may be directed to the Dealer Manager or the Information Agent at their respective telephone numbers set forth below. A holder may also contact such holder's broker, dealer, commercial bank, trust company or other nominee for assistance concerning the Offer. The Information Agent: D.F. KING & CO., INC. 77 Water Street New York, New York 10005 Banks and Brokers Call Collect: (212) 269-5550 All Others Call Toll-Free: (800) 659-6590 The Dealer Manager: MERRILL LYNCH & CO. 4 World Financial Center -- North Tower 250 Vesey Street New York, New York 10080 Call Toll-Free: (888) ML4-TNDR or (212) 449-6025 Attention: Equity Capital Markets EX-99.(A)(1)(III) 5 b44808toexv99wxayx1yxiiiy.txt LETTER TO CLIENTS EXHIBIT (a)(1)(ii) PERKINELMER, INC. OFFER TO PURCHASE FOR CASH ANY AND ALL OF THE OUTSTANDING ZERO COUPON CONVERTIBLE DEBENTURES DUE AUGUST 7, 2020 OF PERKINELMER, INC. (CUSIP NO. 714046 AA 7) THE OFFER AND YOUR WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, DECEMBER 27, 2002, UNLESS THE OFFER IS EXTENDED. THE OFFER MAY BE EXTENDED UNTIL THE FINANCING CONDITION IS SATISFIED. November 29, 2002 To Our Clients: Enclosed for your consideration is an Offer to Purchase (the "Offer to Purchase") and a form of Letter of Transmittal (the "Letter of Transmittal" and, together with the Offer to Purchase, the "Offer"), relating to the offer by PerkinElmer, Inc., a Massachusetts corporation ("PerkinElmer"), to purchase for cash any and all of its outstanding zero coupon convertible debentures due August 7, 2020 at a repurchase price for each $1,000 principal amount at maturity of debentures equal to their accreted value to, but excluding, December 30, 2002, or, if the expiration date of the Offer is after December 27, 2002, to, and including, such later expiration date. If the expiration date of the Offer is December 27, 2002, the repurchase price for each $1,000 principal amount at maturity of debentures would be $542.88, representing the original issue price of $499.60 plus accrued original issue discount of $43.28. Capitalized terms used in this letter and not defined in this letter have the meanings ascribed to them in the Offer to Purchase. The material relating to the Offer is being forwarded to you as the beneficial owner of debentures carried by us for your account or benefit but not registered in your name. A tender of any debentures may only be made by us as the registered holder of the debentures and pursuant to your instructions. Therefore, PerkinElmer urges beneficial owners of debentures registered in the name of a broker, dealer, commercial bank, trust company or other nominee to contact and instruct that broker, dealer, commercial bank, trust company or other nominee if such holder desires to tender those debentures pursuant to the Offer. Accordingly, we request instructions as to whether you wish us to tender any or all of the debentures held by us for your account. We urge you to read carefully the Offer to Purchase, the Letter of Transmittal and the other materials provided with this letter before instructing us to tender your debentures. Your instructions to us should be forwarded as promptly as possible in order to permit us to tender debentures on your behalf in accordance with the provisions of the Offer to Purchase. The Offer and withdrawal rights will expire at 12:00 midnight on Friday, December 27, 2002, the expiration date, unless extended by PerkinElmer in its sole discretion. To receive the purchase price, valid tenders must be received by the Depositary on or before the expiration date. Your attention is directed to the following: 1. The Offer is for any and all debentures that are outstanding. 2. If you desire to tender any debentures pursuant to the Offer and to receive the purchase price, we must receive your instructions in ample time to permit us to effect a tender of debentures on your behalf on or before the expiration date. 3. The offer to purchase is being made upon the terms and subject to the conditions set forth in the Offer to Purchase and in the related Letter of Transmittal. These conditions include that PerkinElmer complete the refinancing transactions described in the Offer to Purchase. 4. Any transfer taxes incident to the transfer of debentures from the tendering holder to PerkinElmer will be paid by PerkinElmer, except as provided in the Offer to Purchase and the instructions to the Letter of Transmittal. If you wish to have us tender any or all of your debentures held by us for your account or benefit pursuant to the Offer to Purchase, please so instruct us by completing, executing and returning to us the instruction form that appears below. THE ACCOMPANYING LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR INFORMATIONAL PURPOSES ONLY AND MAY NOT BE USED BY YOU TO TENDER DEBENTURES HELD BY US AND REGISTERED IN OUR NAME FOR YOUR ACCOUNT. 2 INSTRUCTIONS The undersigned acknowledge(s) receipt of your letter and the enclosed material referred to therein relating to the Offer by PerkinElmer with respect to the debentures. THIS WILL INSTRUCT YOU TO TENDER THE PRINCIPAL AMOUNT AT MATURITY OF DEBENTURES INDICATED BELOW HELD BY YOU FOR THE ACCOUNT OR BENEFIT OF THE UNDERSIGNED, PURSUANT TO THE TERMS OF AND CONDITIONS SET FORTH IN THE OFFER TO PURCHASE DATED NOVEMBER 29, 2002, AND THE LETTER OF TRANSMITTAL.
- --------------------------------------------------------------------------------- CERTIFICATE NO. PRINCIPAL AMOUNT AT MATURITY TENDERED* - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------
* If no amount is indicated, the undersigned will be deemed to have instructed you to tender (and to deliver Consents in respect of) the entire principal amount at maturity of debentures held by the undersigned. PLEASE SIGN HERE Name(s) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (PLEASE PRINT) Address - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Area Code and Telephone No. - -------------------------------------------------------------------------------- Employer Identification or Social Security No. - --------------------------------------------------------------------- My Account Number With You - -------------------------------------------------------------------------------- Date - ------------------------------ 3 EX-99.(A)(1)(IV) 6 b44808toexv99wxayx1yxivy.txt LETTER TO BROKERS-DEALERS EXHIBIT (a)(1)(iv) PERKINELMER, INC. OFFER TO PURCHASE FOR CASH ANY AND ALL OF THE OUTSTANDING ZERO COUPON CONVERTIBLE DEBENTURES DUE AUGUST 7, 2020 OF PERKINELMER, INC. (CUSIP NO. 714046 AA 7) THE OFFER AND YOUR WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, DECEMBER 27, 2002, UNLESS THE OFFER IS EXTENDED. THE OFFER MAY BE EXTENDED UNTIL THE FINANCING CONDITION IS SATISFIED. November 29, 2002 To Brokers, Dealers, Commercial Banks, Trust Companies and other Nominees: Enclosed for your consideration is an Offer to Purchase (the "Offer to Purchase") and a form of Letter of Transmittal (the "Letter of Transmittal" and, together with the Offer to Purchase, the "Offer"), relating to the offer by PerkinElmer, Inc., a Massachusetts corporation ("PerkinElmer"), to purchase for cash any and all of its outstanding zero coupon convertible debentures due August 7, 2020 at a repurchase price for each $1,000 principal amount at maturity of debentures equal to their accreted value to, but excluding, December 30, 2002, or, if the expiration date of the Offer is after December 27, 2002, to, and including, such later expiration date. If the expiration date of the Offer is December 27, 2002, the repurchase price for each $1,000 principal amount at maturity of debentures would be $542.88, representing the original issue price of $499.60 plus accrued original issue discount of $43.28. Capitalized terms used in this letter and not defined in this letter will have the meanings ascribed to them in the Offer to Purchase. We have been engaged by PerkinElmer to act as the Dealer Manager in connection with the Offer. The offer to purchase is being made upon the terms and subject to the conditions set forth in the Offer to Purchase and in the related Letter of Transmittal. These conditions include that PerkinElmer complete the refinancing transactions described in the Offer to Purchase. For your information and for forwarding to your clients for whom you hold debentures registered in your name or in the name of your nominee, we are enclosing the following documents: 1. The Offer to Purchase, dated November 29, 2002; 2. A Letter of Transmittal for the debentures for your use and for the information of your clients, which includes the Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 providing information relating to backup United States federal income tax withholding; and 3. A letter which may be sent to your clients for whose accounts you hold debentures registered in your name or in the name of your nominee, with space provided for obtaining such clients' instructions with regard to the Offer. Participants of The Depository Trust Company ("DTC") will be able to execute tenders through the DTC Automated Tender Offer Program. HOLDERS OF DEBENTURES SHOULD BE AWARE THAT NO GUARANTEED DELIVERY PROCESS IS AVAILABLE TO TENDER DEBENTURES. WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE TO OBTAIN THEIR INSTRUCTIONS. Any inquiries you may have with respect to the Offer should be addressed to Merrill Lynch & Co., the Dealer Manager for the Offer, or D.F. King & Co., Inc., the Information Agent for the Offer, at their respective addresses and telephone numbers as set forth on the back cover page of the enclosed Offer to Purchase. Additional copies of the enclosed materials may be obtained from the Dealer Manager or the Information Agent. Very truly yours, MERRILL LYNCH & CO. NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS WILL CONSTITUTE YOU AS THE AGENT OF PERKINELMER, THE DEALER MANAGER, THE DEPOSITARY, THE INFORMATION AGENT, OR THE TRUSTEE, OR AUTHORIZE YOU TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN AS CONTAINED HEREIN, IN THE OFFER TO PURCHASE OR IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY PERKINELMER, THE DEALER MANAGER, THE DEPOSITARY, THE INFORMATION AGENT, OR THE TRUSTEE. THE OFFER TO PURCHASE AND RELATED DOCUMENTS DO NOT CONSTITUTE AN OFFER TO BUY OR SOLICITATION OF AN OFFER TO SELL DEBENTURES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. 2 EX-99.(A)(1)(V) 7 b44808toexv99wxayx1yxvy.txt INSTRUCTIONS TO FORM W-9 EXHIBIT (a)(1)(v) GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE PAYER. -- Social security numbers have nine digits separated by two hyphens, i.e. 000-00-0000. Employer identification numbers have nine digits separated by only one hyphen, i.e., 00-0000000. The table below will help determine the number to give the payer.
- --------------------------------------------------- GIVE THE SOCIAL SECURITY FOR THIS TYPE OF ACCOUNT NUMBER OF -- - --------------------------------------------------- 1. An individual's account The individual 2. Two or more individuals The actual owner of (joint account) the account or, if combined funds, the first individual on the account(1) 3. Husband and wife (joint The actual owner of account) the account, or if joint funds, either person(1) 4. Custodian account of a The minor(2) minor (Uniform Gift to Minors Act) 5. Adult and minor (joint The adult or, if account) the minor is the only contributor, the minor(1) 6. Account in the name of The ward, minor, or guardian or committee incompetent for a designated ward, person(3) minor, or incompetent person 7. a. A revocable savings The grantor trust account (in which trustee(1) grantor is also trustee) b. Any "trust" account The actual owner that is not a legal or valid trust under State law - ---------------------------------------------------
- --------------------------------------------------- GIVE THE SOCIAL SECURITY FOR THIS TYPE OF ACCOUNT NUMBER OF -- - --------------------------------------------------- 8. Sole proprietorship The owner(4) account 9. A valid trust, estate, The legal entity or pension trust (do not furnish the identifying number of the personal representative or trustee unless the legal entity itself is not designated in the account title)(5) 10. Corporate account The corporation 11. Religious, charitable or The organization educational organization account 12. Partnership account held The partnership in the name of the business 13. Association, club, or The organization other tax-exempt organization 14. A broker or registered The broker or nominee nominee 15. Account with the The public entity Department of Agriculture in the name of a public entity (such as a state or local government, school district, or prison) that receives agricultural program payments - ---------------------------------------------------
(1) List first and circle the name of the person whose number you furnish. If only one person on a joint account has a social security number, that person's number must be furnished. (2) Circle the minor's name and furnish the minor's social security number. (3) Circle the ward, minor or incompetent person's name and furnish such person's social security number. (4) Show the individual name of the owner. The business or DBA name may be added under "Business name." The owner's social security number or employer identification number may be used. (5) List first and circle the name of the legal trust, estate or pension trust. Do not furnish the name of the personal representative or trustee unless the legal entity itself is not designated in the account title. Note: If no name is circled when there is more than one name, the number will be considered to be that of the first name listed. OBTAINING A NUMBER If you don't have a taxpayer identification number or you do not know your number, obtain Form SS-5, Application for a Social Security Number Card (for resident individuals), Form SS-4, Application for Employer Identification Number (for business and all other entities), or Form W-7 for International Taxpayer Identification Number (for alien individuals required to file U.S. tax returns), at an office of the Social Security Administration or the Internal Revenue Service. To complete Substitute Form W-9 if you do not have a taxpayer identification number, write "Applied For" in the space for the taxpayer identification number in Part I, sign and date the Form, and give it to the requester. Generally, you will then have 60 days to obtain a taxpayer identification number and furnish it to the requester. If the requester does not receive your taxpayer identification number within 60 days, backup withholding, if applicable, will begin and will continue until you furnish your taxpayer identification number to the requester. PAYEES EXEMPT FROM BACKUP WITHHOLDING Unless otherwise noted herein, all references below to section numbers or to regulations are references to the Internal Revenue Code and the regulations promulgated thereunder. Payees generally exempted from backup withholding include the following: - A corporation. - A financial institution. - An organization exempt from tax under section 501(a), or an individual retirement plan, or a custodial account under section 403(b)(7) if the account satisfies the requirements of section 401(f)(2). - The United States or any agency or instrumentality thereof. - A State, the District of Columbia, a possession of the United States, or any political subdivision or instrumentality thereof. - A foreign government or a political subdivision, agency or instrumentality thereof. - An international organization or any agency or instrumentality thereof. - A dealer in securities or commodities registered in the United States or a possession of the United States. - A middleman known in the investment community as a nominee or custodian. - A futures commission merchant registered with the Commodity Futures Trading Commission. - A real estate investment trust. - A common trust fund operated by a bank under section 584(a). - An exempt charitable remainder trust, or a non-exempt trust described in section 4947(a)(1). - An entity registered at all times during the tax year under the Investment Company Act of 1940. - A foreign central bank of issue. - A nonresident alien subject to withholding under section 1441. Exempt payees described above should still file a Substitute Form W-9 to avoid possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER. FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO THE PAYER. PRIVACY ACT NOTICES -- Section 6109 requires most recipients of dividends, interest or other payments to give taxpayer identification numbers to payers who must report the payments to the IRS. The IRS uses the numbers for identification purposes and to help verify the accuracy of your tax return. Payers must be given the number whether or not recipients are required to file tax returns. Payers must generally withhold a percentage (currently at 30%) of taxable interest, dividends and certain other payments to a payee who does not furnish a taxpayer identification number to a payer. Certain penalties may also apply. FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE SERVICE EX-99.(A)(2) 8 b44808toexv99wxayx2y.txt PRESS RELEASE, DATED NOVEMBER 29, 2002 Exhibit (a)(2) FOR IMMEDIATE RELEASE 29 NOVEMBER 2002 PERKINELMER COMMENCES TENDER OFFER FOR ITS ZERO COUPON CONVERTIBLE DEBENTURES DUE AUGUST 7, 2020 BOSTON - PerkinElmer, Inc. (NYSE: PKI) today announced a cash tender offer for its outstanding Zero Coupon Convertible Debentures due August 7, 2020. The tender offer is being made in connection with PerkinElmer's recently announced plans to refinance its existing debt. PerkinElmer is offering to purchase the debentures at a repurchase price equal to their accreted value to, but excluding, the date the debentures are paid for pursuant to the offer. Assuming the payment date is December 30, 2002, the repurchase price for each $1,000 principal amount of debentures at maturity would be $542.88, representing the original issue price of $499.60 plus accrued original issue discount of $43.28. PerkinElmer's obligation to complete the tender offer is subject to a number of conditions, including PerkinElmer's receipt of funding under its recently announced refinancing plan. Completion of the tender offer is not a condition to completion of the refinancing transactions. The offer and withdrawal rights are scheduled to expire at 12:00 midnight, New York City time, on Friday, December 27, 2002, unless extended. This press release is neither an offer to purchase nor a solicitation of an offer to sell securities and no recommendation is made as to whether or not holders of debentures should tender their debentures pursuant to the offer. The offer is made only by the Offer to Purchase, dated November 29, 2002. Important Additional Information Will Be Available: The terms and conditions of the tender offer appear in PerkinElmer's Offer to Purchase, dated November 29, 2002, and the related Letter of Transmittal. Copies of these and other related documents will be filed with the SEC later today as exhibits to Schedule TO and will be delivered to holders of the zero coupon convertible debentures. These documents contain important information about PerkinElmer, the zero coupon convertible debentures, PerkinElmer's offer to purchase the debentures and related matters. Investors and security holders are urged to read the Schedule TO, Offer to Purchase and Letter of Transmittal carefully when they become available. Investors and security holders can obtain free copies of the Schedule TO, Offer to Purchase and Letter of Transmittal and other documents filed with the SEC by PerkinElmer through the web site maintained by the SEC at www.sec.gov. Investors and security holders can obtain free copies of these documents directly from PerkinElmer by contacting PerkinElmer Investor Relations at (781) 431-4306. In addition, PerkinElmer has retained Merrill Lynch to act as Dealer Manager in connection with the offer. Questions about the offer may be directed to Merrill Lynch (telephone: (888) ML4-TNDR (toll-free), or (212) 449-6025) or to D.F. King & Co., Inc., the information agent for the offer, at (212) 269-5550 (collect telephone for banks and brokers) or (800) 659-6590 (for all others). FACTORS AFFECTING FUTURE PERFORMANCE Any statements contained in this press release that relate to prospective events or developments are deemed to be forward-looking statements. Words such as "believes," "anticipates," "plans," "expects," "will" and similar expressions are intended to identify forward-looking statements. There are a number of important factors that could cause actual results or events to differ materially from those indicated by these forward-looking statements, including the possibility that our proposed new financing with Merrill Lynch is not consummated, including without limitation as a result of an inability to satisfy the conditions to Merrill Lynch's obligations set forth in the commitment agreement for such proposed new financing, risks related to our debt levels, a downturn in our customers' markets, our failure to introduce new products in a timely manner, risks related to our international operations, our inability to integrate acquired businesses into our existing business, competition and other factors which we describe under the caption "Forward-Looking Information and Factors Affecting Future Performance" in our most recently filed quarterly report on Form 10-Q. 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. # # # PerkinElmer, Inc. is a global technology leader focused in the following businesses - Life and Analytical Sciences, Optoelectronics, and Fluid Sciences. Combining operational excellence and technology expertise with an intimate understanding of its customers' needs, PerkinElmer creates innovative solutions - - backed by unparalleled service and support - for customers in health sciences, semiconductor, aerospace, and other markets whose applications demand absolute precision and speed. The company markets in more than 125 countries, and is a component of the S&P 500 Index. Additional information is available through www.perkinelmer.com or 1-877-PKI-NYSE. For further information: Investor Contact: Media Contact: Diane Basile Jim Monahan PerkinElmer, Inc. PerkinElmer, Inc. (781) 431-4306 (781) 431-4111 -----END PRIVACY-ENHANCED MESSAGE-----