EX-99.1 2 a5196227ex99_1.txt EXHIBIT 99.1 PRESS RELEASE Exhibit 99.1 PerkinElmer Announces Q2 2006 Results BOSTON--(BUSINESS WIRE)--July 27, 2006--PerkinElmer, Inc. (NYSE: PKI): -- EPS from Continuing Ops of $.21; Cash EPS of $.26, up 30% -- Completes Screening, Diagnostics and Service Acquisitions -- Accelerating Investment in Growth Platforms PerkinElmer, Inc. (NYSE: PKI), a global leader in Health Sciences and Photonics markets, today reported GAAP earnings per share from continuing operations of $.21 on revenue of $377.0 million for the second quarter ended July 2, 2006. The second quarter 2006 results include intangibles amortization of $7.8 million, or approximately $.04 per share, and stock option expense of $2.1 million, or $.01 per share. The Company announced earnings per share from continuing operations excluding intangibles amortization, stock option expense and a restructuring reversal of $.26, which represents an increase of 30% over the second quarter of 2005 and met the Thomson First Call(TM) consensus earnings per share estimate. Second quarter 2006 revenue of $377.0 million increased 2% over the second quarter of 2005. Revenue growth was 3% in Life and Analytical Sciences and 1% in Optoelectronics compared to the same period last year. Second quarter 2006 revenue from Health Sciences end markets, representing 83% of total revenues for the quarter, increased 3% over the same period of 2005, while second quarter revenue from Photonics end markets increased 1% over the same period. Recently, the Company completed three acquisitions in the priority growth areas of screening, diagnostics and service. Within screening and diagnostics, the Company acquired the business and associated intellectual property of NTD Laboratories and Spectral Genomics. NTD Laboratories is a leading provider of first-trimester prenatal risk assessment, while Spectral Genomics is a leader in molecular karyotyping technology used to research chromosomal abnormalities. NTD Laboratories and Spectral Genomics provide additional technology and a broader platform to drive the Company's high growth screening and diagnostics strategies. Within service, the Company acquired Clinical & Analytical Services Solutions(C&A), an asset management firm that the Company expects will allow it to drive laboratory efficiency and cost savings for customers through asset management and expert maintenance. "We were pleased to deliver excellent cash EPS growth during the quarter, with strong performance in our key growth platforms of genetic screening, imaging and service," said Gregory L. Summe, chairman and CEO of the Company. "We remain focused on driving growth in these platforms as evidenced by our strategic acquisitions of NTD Laboratories, Spectral Genomics and C&A as well as our increased investment in R&D. We are committed to further increasing our investment in these attractive growth areas," added Summe. GAAP operating profit during the second quarter of 2006 was $35.7 million, while GAAP operating margin for the same period was 9.5%. Second quarter 2006 operating profit excluding intangibles amortization of $7.8 million, stock option expense of $2.1 million and a restructuring reversal of $.3 million was $45.3 million, or 12.0% as a percentage of revenue for the quarter, representing an increase of 30 basis points compared to the same period of last year. The Company generated operating cash flows of $53.2 million in the second quarter of 2006. Free cash flow for the second quarter of 2006, defined as operating cash flow of $53.2 million less capital expenditures of $12.2 million, was $41.0 million. This number includes a tax payment of $4.6 million related to the gain on the divestiture of Fluid Sciences. Free cash flow, net of divestiture taxes, was $45.6 million. Financial Overview by Reporting Segment Life and Analytical Sciences reported revenue of $278.5 million for the second quarter of 2006, up 3% from revenue of $270.8 million in the second quarter of 2005, driven primarily by revenue growth in the Company's genetic screening and service businesses. Revenue growth during the second quarter of 2006 excluding the effects of foreign exchange and acquisitions was 2%. The segment's GAAP operating profit for the second quarter of 2006 was $25.3 million versus $15.7 million for the same period of 2005. As a percentage of sales, GAAP operating profit for the second quarter of 2006 was up 330 basis points. Operating profit excluding intangibles amortization, stock option expense and restructuring charges for the second quarter of 2006 was $34.3 million, or 12.3% as a percentage of revenue. Optoelectronics reported revenue of $98.5 million for the second quarter of 2006, up 1% from revenue of $97.2 million in the second quarter of 2005, driven primarily by revenue growth in imaging partially offset by a decline in specialty lighting and sensors revenue. There was no material revenue impact from foreign exchange. The segment's GAAP operating profit was $17.4 million for the second quarter of 2006, versus $12.9 million for the comparable period of 2005. As a percentage of sales, GAAP operating profit for the second quarter of 2006 was 17.6%, an increase of 440 basis points. The segment's operating profit excluding intangibles amortization, stock option expense and a restructuring reversal for the second quarter of 2006 was $17.0 million, or 17.3% as a percentage of revenue. Financial Guidance For the third quarter of 2006, the Company projects GAAP earnings per share from continuing operations of between $.22 and $.24. Excluding the impact of intangibles amortization and stock option expense, the Company projects earnings per share from continuing operations of between $.27 and $.29 for the third quarter of 2006, an increase of approximately 13% to 21% over the third quarter 2005. For the full year 2006, the Company projects GAAP earnings per share from continuing operations of between $.95 and $1.00, and earnings per share excluding intangibles amortization and stock option expense, of between $1.15 and $1.20 per share. This reflects approximately $.05 per share change in full year cash EPS guidance due to dilution from acquisitions and increased growth investments in the second half of 2006. The Company will discuss its second quarter results in a conference call on July 27, 2006, at 5:00 p.m. Eastern Time (ET). To listen to the call live, please tune into the webcast at the "Investor Corner" section of our website, www.perkinelmer.com. A playback of this conference call will be available beginning 7:00 p.m. ET, Thursday, July 27, 2006. The playback phone number is 617-801-6888 and the code number is 63608327. Use of Non-GAAP Financial Measures In addition to financial measures prepared in accordance with generally accepted accounting principles (GAAP), this press release also contains non-GAAP financial measures of revenue, revenue growth, operating profit, operating margin and earnings per share, in each case excluding, where appropriate, the impact of foreign exchange, the effects of acquisitions, intangibles amortization, restructuring reversals, restructuring charges, stock option expense and tax benefits. -- When we refer in this press release to "revenue growth," other than on a GAAP basis, we are excluding the effects of foreign exchange and acquisitions on GAAP revenue. -- When we refer in this press release to "operating profit," other than on a GAAP basis, we are excluding the amortization of intangibles, stock option expense and restructuring charges or reversals from GAAP operating margin. -- When we refer in this press release to "operating margin," other than on a GAAP basis, we are excluding the amortization of intangibles, stock option expense and restructuring charges or reversals from GAAP operating margin. -- When we refer to "earnings per share from continuing operations," other than on a GAAP basis, we are excluding the amortization of intangibles, stock option expense, a restructuring reversal and, for 2005 adjustments, tax benefit from GAAP earnings per share from continued operations. We exclude the impact of foreign exchange, the effects of acquisitions, intangibles amortization, restructuring reversals, restructuring charges, stock option expense and tax benefit in calculating these non-GAAP measures because such items are outside of our ongoing core business operations. We believe that the inclusion of these non-GAAP financial measures in this press release helps investors to gain a meaningful understanding of our core operating results and future prospects, and can also help investors who wish to make comparisons between us and other companies on both a GAAP and a non-GAAP basis, particularly with respect to stock option expenses. Our management uses both GAAP financial measures and non-GAAP financial measures to measure and forecast our core operating performance and to compare that performance to prior periods and to the performance of our competitors. Both GAAP and non-GAAP measures are also used by management in their financial and operating decision-making. This press release also contains non-GAAP financial measures of free cash flow and free cash flow, net of divestiture taxes. -- We define free cash flow as our net cash provided by operating activities minus our capital expenditures. -- We define free cash flow, net of divestiture taxes, as free cash flow minus tax payments related to the gain on divestitures. We use free cash flow, and ratios based on this measure, to conduct and evaluate our business and, specifically, to determine incentive compensation, to allocate resources to debt repayment and for cash investing and financing activities. We use free cash flow, net of divestiture taxes, to compare our period-over-period results and our results to those of competitors, without the impact of a non-recurring tax payment. Therefore, we believe that these measures may be similarly useful and informative to investors. The non-GAAP financial measures included in this press release are not meant to be considered superior to or a substitute for results of operations prepared in accordance with GAAP. In addition, the non-GAAP financial measures included in this press release may be different from, and therefore may not be comparable to, similar measures used by other companies. Although certain non-GAAP financial measures used in this release exclude the accounting treatment of stock option expense, these non-GAAP measures should not be relied upon independently, as they ignore the contribution to our operating results that is generated by the incentive and compensation effects of the underlying stock option programs. Reconciliations of the non-GAAP financial measures used in this press release to the most directly comparable GAAP financial measures are set forth in the text of, and the accompanying exhibits to, this press release. Factors Affecting Future Performance This press release contains "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements relating to estimates and projections of future earnings per share and revenue growth and other financial results, developments relating to our customers and end-markets, and plans concerning business development opportunities. Words such as "believes," "intends," "anticipates," "plans," "expects," "projects," "forecasts," "will" and similar expressions, and references to guidance, are intended to identify forward-looking statements. Such statements are based on management's current assumptions and expectations and no assurances can be given that our assumptions or expectations will prove to be correct. A number of important risk factors could cause actual results to differ materially from the results described, implied or projected in any forward-looking statements. These factors include, without limitation: (1) our failure to introduce new products in a timely manner; (2) our ability to execute acquisitions and license technologies, or to successfully integrate acquired businesses and licensed technologies into our existing business or to make them profitable; (3) our failure to protect adequately our intellectual property; (4) the loss of any of our licenses or licensed rights; (5) our ability to compete effectively; (6) fluctuation in our quarterly operating results and our ability to adjust our operations to address unexpected changes; (7) our ability to produce an adequate quantity of products to meet our customers' demands; (8) our failure to maintain compliance with applicable government regulations; (9) regulatory changes; (10) economic, political and other risks associated with foreign operations; (11) our ability to retain key personnel; (12) restrictions in our credit agreement; (13) our ability to realize the full value of our intangible assets; and (14) other factors which we describe under the caption "Risk Factors" in our most recent annual report on Form 10-K and in our most recent quarterly report on Form 10-Q and in our other filings with the Securities and Exchange Commission. We disclaim any intention or obligation to update any forward-looking statements as a result of developments occurring after the date of this press release. Other Information Health Sciences end markets include genetic screening, environmental, service, biopharma, and medical imaging. Photonics markets include sensors and specialty lighting. PerkinElmer, Inc. is a global technology leader driving growth and innovation in Health Sciences and Photonics markets to improve the quality of life. The Company reported revenues of $1.5 billion in 2005, has 8,000 employees serving customers 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. PerkinElmer, Inc. and Subsidiaries CONSOLIDATED INCOME STATEMENTS Three Months Ended Six Months Ended -------------------- ------------------- (In thousands, except per July 2, July 3, July 2, July 3, share data) 2006 2005 2006 2005 ----------------------------- --------------------------------------- Sales $377,001 $368,017 $732,455 $726,191 Cost of Sales 225,412 216,894 439,179 426,779 Research and Development Expenses 25,036 22,082 47,878 44,673 In-Process Research and Development Charge - - - 194 Selling, General and Administrative Expenses 92,655 92,711 182,508 189,537 (Gains) Losses on Dispositions (1,505) 397 (1,505) 397 Restructuring and Integration (Reversals) Charges, Net (290) 14,245 (290) 14,245 --------- --------- --------- --------- Operating Income From Continuing Operations 35,693 21,688 64,685 50,366 Extinguishment of Debt - 6,210 - 6,210 Interest Income (2,363) (620) (5,735) (1,289) Interest Expense 2,232 7,500 4,537 15,576 Gains on Dispositions of Investments, Net (667) (5,444) (933) (5,444) Other Expense (Income), Net 2,612 (201) 3,772 451 --------- --------- --------- --------- Income From Continuing Operations Before Income Taxes 33,879 14,243 63,044 34,862 Provision for (Benefit From) Income Taxes 7,559 (16,319) 14,704 (11,302) --------- --------- --------- --------- Net Income From Continuing Operations 26,320 30,562 48,340 46,164 (Loss) Income From Discontinued Operations, Net of Income Taxes (582) 3,138 (1,025) 7,288 (Loss) Gain on Disposition of Discontinued Operations, Net of Income Taxes (1,253) (4,802) 787 (4,725) --------- --------- --------- --------- Net Income $24,485 $28,898 $48,102 $48,727 ========= ========= ========= ========= Diluted Earnings (Loss) Per Share: Continuing Operations $0.21 $0.23 $0.38 $0.35 (Loss) Income From Discontinued Operations, Net of Income Taxes - 0.02 (0.01) 0.06 (Loss) Gain on Disposition of Discontinued Operations, Net of Income Taxes (0.01) (0.04) 0.01 (0.04) --------- --------- --------- --------- Net Income $0.19 $0.22 $0.37 $0.37 ========= ========= ========= ========= Weighted Average Diluted Shares of Common Stock Outstanding 127,401 130,718 128,558 130,887 ABOVE PREPARED IN ACCORDANCE WITH GAAP --------------------------------------------------- Additional Supplemental Information: (per share, continuing operations) GAAP Diluted EPS from Continuing Operations $0.21 $0.23 Amortization of Intangible Assets, Net of Income Taxes 0.04 0.04 Stock Options, Net of Tax 0.01 - Restructuring and Integration (Reversals) Charges, Net of Income Taxes 0.00 0.08 Tax Expense (Benefit) - (0.15) --------- --------- Continuing Operations EPS excluding above items $0.26 $0.20 ========= ========= PerkinElmer, Inc. and Subsidiaries SALES AND OPERATING PROFIT (LOSS) Three Months Ended Six Months Ended ------------------ ------------------ (In thousands) July 2, July 3, July 2, July 3, 2006 2005 2006 2005 ---------------- ------------------- ------------------ Life and Sales $278,462 $270,778 $540,391 $535,551 Analytical OP$ reported 25,305 15,667 49,095 37,625 Sciences OP% reported 9.1% 5.8% 9.1% 7.0% Amortization expense 7,129 6,539 13,892 13,114 Stock option expense 748 - 1,357 - Restructuring charges 1,109 11,035 1,109 11,035 OP$ adjusted 34,291 33,241 65,453 61,774 OP% adjusted 12.3% 12.3% 12.1% 11.5% Opto- electronics Sales 98,539 97,239 192,064 190,640 OP$ reported 17,365 12,872 30,112 26,374 OP% reported 17.6% 13.2% 15.7% 13.8% Amortization expense(a) 637 630 1,259 1,349 Stock option expense 412 - 687 - Restructuring charges (1,399) 3,210 (1,399) 3,210 OP$ adjusted 17,015 16,712 30,659 30,933 OP% adjusted 17.3% 17.2% 16.0% 16.2% Other OP$ reported (6,977) (6,851) (14,522) (13,633) Stock option expense 933 - 1,699 - OP$ adjusted (6,044) (6,851) (12,823) (13,633) Continuing Sales $377,001 $368,017 $732,455 $726,191 Operations OP$ reported 35,693 21,688 64,685 50,366 OP% reported 9.5% 5.9% 8.8% 6.9% Amortization expense(a) 7,766 7,169 15,151 14,463 Stock option expense 2,093 - 3,743 - Restructuring charges (290) 14,245 (290) 14,245 -------- -------- -------- -------- OP$ adjusted $ 45,262 $ 43,102 $ 83,289 $ 79,074 ======== ======== ======== ======== OP% adjusted 12.0% 11.7% 11.4% 10.9% (a) Includes In-Process Research and Development Charge in the amount of $194 in Q1 2005. SALES AND REPORTED OPERATING PROFIT PREPARED IN ACCORDANCE WITH GAAP PerkinElmer, Inc. and Subsidiaries CONSOLIDATED BALANCE SHEETS July 2, January 1, July 3, 2006 2006 2005 ----------- ----------- ----------- (In thousands) Current assets: Cash and cash equivalents $323,755 $502,264 $158,733 Accounts receivable, net 233,449 250,844 239,294 Inventories 173,658 163,150 166,383 Other current assets 76,707 71,189 72,037 Current assets of discontinued operations 854 11,442 59,596 ----------- ----------- ----------- Total current assets 808,423 998,889 696,043 Property, plant and equipment: At cost 507,642 484,453 489,208 Accumulated depreciation (327,931) (307,084) (303,320) ----------- ----------- ----------- Net property, plant and equipment 179,711 177,369 185,888 Marketable securities and investments 9,674 9,222 9,220 Intangible assets, net 379,038 375,419 385,983 Goodwill 1,068,858 1,026,201 1,027,855 Other assets 86,351 90,156 99,356 Long-term assets of discontinued operations 1,455 16,205 88,081 ----------- ----------- ----------- Total assets $2,533,510 $2,693,461 $2,492,426 =========== =========== =========== Current liabilities: Short-term debt $1,090 $1,131 $5,887 Accounts payable 130,014 146,971 124,365 Accrued restructuring and integration costs 9,797 11,242 14,538 Accrued expenses 275,499 324,954 268,480 Current liabilities of discontinued operations 998 10,241 57,168 ----------- ----------- ----------- Total current liabilities 417,398 494,539 470,438 Long-term debt 199,187 243,282 268,334 Long-term liabilities 315,948 303,687 283,934 Long-term liabilities of discontinued operations - 1,440 12,019 ----------- ----------- ----------- Total liabilities 932,533 1,042,948 1,034,725 Commitments and contingencies Total stockholders' equity 1,600,977 1,650,513 1,457,701 ----------- ----------- ----------- Total liabilities and stockholders' equity $2,533,510 $2,693,461 $2,492,426 =========== =========== =========== PREPARED IN ACCORDANCE WITH GAAP PerkinElmer, Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS Three Months Ended Six Months Ended ------------------- ------------------- July 2, July 3, July 2, July 3, 2006 2005 2006 2005 -------------------- ------------------- (In thousands) Operating Activities: Net income $24,485 $28,898 $48,102 $48,727 Loss (income) from discontinued operations, net of income taxes 582 (3,138) 1,025 (7,288) Loss (gain) on disposition of discontinued operations, net of income taxes 1,253 4,802 (787) 4,725 --------- --------- --------- --------- Net income from continuing operations 26,320 30,562 48,340 46,164 --------- --------- --------- --------- Adjustments to reconcile net income from continuing operations to net cash provided by continuing operations: Stock-based compensation 4,475 4,087 7,316 5,008 Amortization of debt discount and issuance costs 73 2,903 143 3,721 Depreciation and amortization 16,928 16,968 33,406 34,280 In-process research and development - - - 194 Gains on dispositions and sales of investments, net (3,571) (5,047) (3,837) (5,047) Changes in operating assets and liabilities: Accounts receivable 9,618 6,402 27,842 4,171 Inventories 854 3,969 (6,519) (2,333) Accounts payable (9,049) 2,263 (21,260) (166) Accrued restructuring and integration costs 285 12,551 (1,812) 11,493 Taxes paid on divestitures (4,601) - (59,151) - Accrued expenses and other 12,200 8,832 (8,049) (6,556) --------- --------- --------- --------- Net Cash Provided by Continuing Operations 53,532 83,490 16,419 90,929 --------- --------- --------- --------- Net Cash (Used in) Provided by Discontinued Operations (291) 3,325 (871) 9,381 --------- --------- --------- --------- Net Cash Provided by Operating Activities 53,241 86,815 15,548 100,310 --------- --------- --------- --------- Investing Activities: Capital expenditures (12,210) (5,940) (21,448) (9,604) Proceeds from disposition of property, plant and equipment, net 7,085 5,936 7,085 6,258 Proceeds from settlement of life insurance policies 2,327 - 2,327 - (Cash used) proceeds from disposition or settlement of business, net (1,672) 6,306 19,529 6,556 Cash used related to acquisitions, net of cash acquired (29,616) - (38,312) (13,138) --------- --------- --------- --------- Net Cash (Used in) Provided by Continuing Operations (34,086) 6,302 (30,819) (9,928) --------- --------- --------- --------- Net Cash Used in Discontinued Operations - (1,079) - (1,945) --------- --------- --------- --------- Net Cash (Used in) Provided by Investing Activities (34,086) 5,223 (30,819) (11,873) --------- --------- --------- --------- Financing Activities: Principal payments on debt (16,831) (34,125) (56,565) (34,125) Prepayment of term loan debt - (69,825) - (70,000) Payment of debt issuance and tender costs - - (741) - Tax benefit from exercise of common stock options - - 3,785 - Decrease in other credit facilities (653) (707) (757) (950) Proceeds from issuance of common stock for employee benefit plans 2,316 1,333 17,145 3,976 Purchase of stock - - (116,393) - Cash dividends (8,858) (9,073) (17,974) (18,110) --------- --------- --------- --------- Net Cash Used in Financing Activities (24,026) (112,397) (171,500) (119,209) --------- --------- --------- --------- Effect of Exchange Rate Changes on Cash and Cash Equivalents 6,785 (5,121) 8,262 (8,008) --------- --------- --------- --------- Net Increase (Decrease) in Cash and Cash Equivalents 1,914 (25,480) (178,509) (38,780) Cash and Cash Equivalents at Beginning of Period 321,841 184,213 502,264 197,513 --------- --------- --------- --------- Cash and Cash Equivalents at End of Period $323,755 $158,733 $323,755 $158,733 ========= ========= ========= ========= PREPARED IN ACCORDANCE WITH GAAP PerkinElmer, Inc. and Subsidiaries Reconciliation of GAAP to non-GAAP financial measures. PKI LAS Opto Adjusted Operating Q206 Q205 Q206 Q205 Q206 Q205 Profit: GAAP Operating Profit $35.7 $21.7 $25.3 $15.7 $17.4 $12.9 Intangibles Amortization 7.8 7.2 7.1 6.5 0.6 0.6 Stock Option Expense 2.1 - 0.7 - 0.4 - Restructuring (Reversal)Expense (0.3) 14.2 1.1 11.0 (1.4) 3.2 ------------ ------------ -------------------- Adjusted Operating Profit: $45.3 $43.1 $34.3 $33.2 $17.0 $16.7 ============ ============ ==================== PKI LAS Opto Adjusted OP Margin: Q206 Q205 Q206 Q205 Q206 Q205 GAAP Operating Margin 9.5% 5.9% 9.1% 5.8% 17.6% 13.2% Intangibles Amortization 2.1% 1.9% 2.6% 2.4% 0.6% 0.6% Stock Option Expense 0.6% 0.0% 0.3% 0.0% 0.4% 0.0% Restructuring (Reversal) Expense -0.1% 3.9% 0.4% 4.1% -1.4% 3.3% ------------ ------------ -------------------- Adjusted Operating Margin 12.0% 11.7% 12.3% 12.3% 17.3% 17.2% ============ ============ ==================== PKI PKI Cash EPS: Q206 Q205 FY2006 FY2005 GAAP EPS $0.19 $0.22 $0.95 - $1.00 $2.04 Discontinued Operations 0.01 0.01 - (1.54) ------------ -------------------- GAAP EPS from Continuing Operations 0.21 0.23 0.95 - 1.00 0.51 Intangibles Amortization 0.04 0.04 0.16 0.14 Stock Option Expense 0.01 - 0.04 - Restructuring (Reversal)Expense - 0.08 - 0.12 Tax Expense (Benefit) - (0.15) - (0.08) Extinguishment of Debt - - - 0.26 ------------ -------------------- Cash EPS $0.26 $0.20 $1.15 - $1.20 $0.95 ============ ==================== Free Cash Flow Q206 GAAP Net Cash from Operations $53.2 Capital Expenditures (12.2) ------ Free Cash Flow 41.0 Divestiture Taxes 4.6 ------ Free Cash Flow net of Divestiture Taxes $45.6 ====== Q2 2006 Adjusted Revenue LAS Opto PKI Growth: Reported Revenue Growth 3% 1% 2% Foreign Exchange -1% 0% 0% Acquisitions 0% 0% 0% --------------- Adjusted Revenue Growth 2% 1% 2% =============== CONTACT: PerkinElmer, Inc. Investor Relations: Steven Delahunt, 781-431-4258 or Media: Kevin Lorenc, 781-431-4231