EX-99.1 2 a5456016ex99_1.txt EXHIBIT 99.1 Exhibit 99.1 PerkinElmer Announces Q2 2007 Results -- Revenue Growth of 16%; Health Sciences Revenue up 18% -- EPS from Continuing Operations of $.28; Adjusted EPS of $.30, up 15% -- Cash Flow from Operations of $70M, up 31% WALTHAM, Mass.--(BUSINESS WIRE)--July 26, 2007--PerkinElmer, Inc. (NYSE: PKI), a global leader in Health Sciences and Photonics markets, today reported GAAP earnings per share from continuing operations of $.28 on revenue of $437.3 million for the second quarter ended July 1, 2007. On a non-GAAP basis, which includes the adjustments noted in the attached reconciliation, the Company announced adjusted earnings per share for the second quarter 2007 of $.30, which was on the upper end of the Company's forecasted range of $.28 to $.30. Second quarter 2007 revenue of $437.3 million increased 16% versus the second quarter of 2006. Revenue growth was 17% in Life and Analytical Sciences and 13% in Optoelectronics compared to the same period last year. From an end market perspective, second quarter 2007 revenue from Health Sciences, which represented 85% of total revenues for the quarter, increased 18% over the same period of 2006. This increase was driven primarily by strong growth in genetic screening, medical imaging, environmental and service. Foreign exchange and acquisitions contributed 7% to second quarter 2007 revenue growth. "We were very pleased to deliver strong revenue, earnings and cash flow growth for the second quarter. We are continuing to see the benefits of our increased investments in R&D, marketing, and capital equipment. Our recent acquisitions are also performing well," said Gregory L. Summe, Chairman and CEO of PerkinElmer, Inc. "We expect to carry this momentum into the second half of 2007 on the strength of our new products and market development initiatives." GAAP operating profit during the second quarter of 2007 was $48.1 million. On a non-GAAP basis, which includes the adjustments noted in the attached reconciliation, second quarter 2007 adjusted operating profit was $50.8 million, or 11.6% as a percentage of GAAP revenue for the quarter. The Company generated cash flow from operations of $69.7 million in the second quarter of 2007, while increasing capital expenditures by 32% over the same period of 2006. In addition, the Company repurchased 3.5 million shares of its common stock for a cost of approximately $87 million in the second quarter of 2007. This leaves 4.0 million shares remaining on the Company's stock repurchase authorization. Financial Overview by Reporting Segment Life and Analytical Sciences reported revenue of $326.3 million for the second quarter of 2007, up 17% from revenue of $278.5 million in the second quarter of 2006, driven primarily by growth in the Company's genetic screening, service and environmental businesses, as well as a positive impact from acquisitions and new product introductions. The segment's GAAP operating profit for the second quarter of 2007 was $44.6 million. On a non-GAAP basis, which includes the adjustments noted in the attached reconciliation, the segment's adjusted operating profit for the second quarter of 2007 was $40.7 million, or 12.5% as a percentage of GAAP revenue. Optoelectronics reported revenue of $111.0 million for the second quarter of 2007, up 13% from revenue of $98.5 million in the second quarter of 2006, driven primarily by revenue growth in medical imaging and specialty lighting. The segment's GAAP operating profit was $13.0 million for the second quarter of 2007. On a non-GAAP basis, which includes the adjustments noted in the attached reconciliation, the segment's adjusted operating profit for the second quarter of 2007 was $18.5 million, or 16.7% as a percentage of GAAP revenue. Financial Guidance For the third quarter of 2007, the Company projects revenue to increase by low double digits, GAAP earnings per share of between $.24 and $.26, and on a non-GAAP basis, which includes the adjustments noted in the attached reconciliation, adjusted earnings per share of between $.31 and $.33. The Company will discuss its second quarter results in a conference call on July 26, 2007, at 5:30 p.m. Eastern Time (ET). To listen to the call live, please tune into the webcast at the "Investors" section of our Web site, www.perkinelmer.com. A playback of this conference call will be available beginning at 7:30 p.m. ET, Thursday, July 26, 2007. The playback phone number is (617) 801-6888 and the code number is 44903829. Use of Non-GAAP Financial Measures In addition to financial measures prepared in accordance with generally accepted accounting principles (GAAP), this earnings announcement also contains non-GAAP financial measures. The reasons that we use these measures, a reconciliation of these measures to the most directly comparable GAAP measures, and other information relating to these measures are included below following our GAAP financial statements. Factors Affecting Future Performance This press release contains "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements relating to estimates and projections of future earnings per share, cash flow and revenue growth and other financial results, developments relating to our customers and end-markets, and plans concerning business development opportunities. 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. 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 $1.55 billion in 2006, has 8,500 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 INCOME STATEMENTS Three Months Ended Six Months Ended ------------------- ------------------- (In thousands, except per July 1, July 2, July 1, July 2, share data) 2007 2006 2007 2006 ----------------------------- --------------------------------------- Sales $437,290 $377,001 $840,190 $732,455 Cost of Sales 262,642 225,412 505,475 439,179 Amortization of Acquired Inventory Revaluation 670 - 2,047 - Research and Development Expenses 27,316 25,036 55,157 47,878 In-Process Research and Development Charges - - 1,502 - Selling, General and Administrative Expenses 109,357 92,655 211,122 182,508 Gains on Settlement of Insurance Claim (15,346) - (15,346) - Gains on Dispositions, Net - (1,505) - (1,505) Restructuring and Lease Charges (Reversals), Net 4,547 (290) 8,985 (290) --------- --------- --------- --------- Operating Income From Continuing Operations 48,104 35,693 71,248 64,685 Interest Income (1,093) (2,363) (2,304) (5,735) Interest Expense 3,509 2,232 5,764 4,537 Gains on Dispositions of Investments, Net (135) (667) (536) (933) Other Expense, Net 1,149 2,612 3,272 3,772 --------- --------- --------- --------- Income From Continuing Operations Before Income Taxes 44,674 33,879 65,052 63,044 Provision for Income Taxes 11,371 7,559 16,930 14,704 --------- --------- --------- --------- Net Income From Continuing Operations 33,303 26,320 48,122 48,340 Loss From Discontinued Operations, Net of Income Taxes - (582) - (1,025) Gain (Loss) on Disposition of Discontinued Operations, Net of Income Taxes 384 (1,253) 257 787 --------- --------- --------- --------- Net Income $ 33,687 $ 24,485 $ 48,379 $ 48,102 ========= ========= ========= ========= Diluted Earnings (Loss) Per Share: Continuing Operations $ 0.28 $ 0.21 $ 0.39 $ 0.38 Loss From Discontinued Operations, Net of Income Taxes - - - (0.01) Gain (Loss) on Disposition of Discontinued Operations, Net of Income Taxes - (0.01) - 0.01 --------- --------- --------- --------- Net Income $ 0.28 $ 0.19 $ 0.40 $ 0.37 ========= ========= ========= ========= Weighted Average Diluted Shares of Common Stock Outstanding 120,689 127,401 121,976 128,558 ABOVE PREPARED IN ACCORDANCE WITH GAAP ----------------------------- --------------------- Additional Supplemental Information: (per share, continuing operations) GAAP Diluted EPS from Continuing Operations $ 0.28 $ 0.21 Amortization of Intangible Assets, Net of Income Taxes 0.06 0.04 Stock Options, Net of Income Taxes 0.01 0.01 Amortization of Acquired Inventory Revaluation, Net of Income Taxes 0.01 - Gain on Settlement of Insurance Claim, Net of Income Taxes (0.08) - Restructuring and Lease Charges (Reversals), Net of Income Taxes 0.02 - --------- --------- Adjusted EPS $ 0.30 $ 0.26 ========= ========= PerkinElmer, Inc. and Subsidiaries SALES AND OPERATING PROFIT (LOSS) Three Months Ended Six Months Ended ------------------- ------------------ (In thousands) July 1, July 2, July 1, July 2, 2007 2006 2007 2006 ---------------- ------------------ ------------------- Life and Analytical Sciences Sales $326,284 $278,462 $625,822 $540,391 OP$ Reported 44,617 25,305 59,469 49,095 OP% Reported 13.7% 9.1% 9.5% 9.1% Amortization Expense 10,000 7,129 19,783 13,892 Stock Option Expense 718 748 1,466 1,357 Revaluation of Acquired Inventory 670 - 2,047 - In-Process Research & Development Charges - - 1,502 - Gain on Settlement of Insurance Claim (15,346) - (15,346) - Restructuring and Lease Charges - 1,109 4,438 1,109 OP$ Adjusted 40,659 34,291 73,359 65,453 OP% Adjusted 12.5% 12.3% 11.7% 12.1% Optoelectronics Sales 111,006 98,539 214,368 192,064 OP$ Reported 12,993 17,365 29,262 30,112 OP% Reported 11.7% 17.6% 13.7% 15.7% Amortization Expense 663 637 1,316 1,259 Stock Option Expense 341 412 751 687 Restructuring and Lease Charges (Reversals) 4,547 (1,399) 4,547 (1,399) OP$ Adjusted 18,544 17,015 35,876 30,659 OP% Adjusted 16.7% 17.3% 16.7% 16.0% Corporate OP$ Reported (9,506) (6,977) (17,483) (14,522) Stock Option Expense 1,078 933 2,110 1,699 OP$ Adjusted (8,428) (6,044) (15,373) (12,823) Continuing Operations Sales $437,290 $377,001 $840,190 $732,455 OP$ Reported 48,104 35,693 71,248 64,685 OP% Reported 11.0% 9.5% 8.5% 8.8% Amortization Expense 10,663 7,766 21,099 15,151 Stock Option Expense 2,137 2,093 4,327 3,743 Revaluation of Acquired Inventory 670 - 2,047 - In-Process Research & Development Charges - - 1,502 - Gain on Settlement of Insurance Claim (15,346) - (15,346) - Restructuring and Lease Charges (Reversals) 4,547 (290) 8,985 (290) -------- -------- -------- -------- OP$ Adjusted $ 50,775 $ 45,262 $ 93,862 $ 83,289 ======== ======== ======== ======== OP% Adjusted 11.6% 12.0% 11.2% 11.4% SALES AND REPORTED OPERATING PROFIT PREPARED IN ACCORDANCE WITH GAAP PerkinElmer, Inc. And Subsidiaries CONSOLIDATED BALANCE SHEETS July 1, December July 2, 2007 31, 2006 2006 ----------- ----------------------- (In thousands) Current assets: Cash and cash equivalents $ 150,040 $ 191,059 $ 323,755 Accounts receivable, net 271,470 268,459 233,449 Inventories, net 204,059 183,260 173,658 Other current assets 86,139 101,511 76,707 Current assets of discontinued operations 485 477 854 ----------- ----------- ----------- Total current assets 712,193 744,766 808,423 Property, plant and equipment: At cost 544,064 525,134 507,642 Accumulated depreciation (353,326) (342,938) (327,931) ----------- ----------- ----------- Net property, plant and equipment 190,738 182,196 179,711 Marketable securities and investments 4,485 7,508 9,674 Intangible assets, net 414,737 404,021 383,406 Goodwill 1,158,836 1,117,724 1,066,542 Other assets 49,971 52,502 86,351 Long-term assets of discontinued operations 1,509 1,605 1,455 ----------- ----------- ----------- Total assets $2,532,469 $2,510,322 $2,535,562 =========== =========== =========== Current liabilities: Short-term debt $ 898 $ 1,153 $ 1,090 Accounts payable 151,930 152,836 130,014 Accrued restructuring and integration costs 4,687 2,731 9,797 Accrued expenses 292,241 318,987 276,135 Current liabilities of discontinued operations - 826 998 ----------- ----------- ----------- Total current liabilities 449,756 476,533 418,034 Long-term debt 234,504 151,781 199,187 Long-term liabilities 351,903 304,278 317,364 --------- --------- --------- Total liabilities 1,036,163 932,592 934,585 Commitments and contingencies Total stockholders' equity 1,496,306 1,577,730 1,600,977 ----------- ----------- ----------- Total liabilities and stockholders' equity $2,532,469 $2,510,322 $2,535,562 =========== =========== =========== PREPARED IN ACCORDANCE WITH GAAP PerkinElmer, Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS Three Months Ended Six Months Ended ------------------- --------------------- July 1, July 2, July 1, July 2, 2007 2006 2007 2006 --------- --------- ---------- ---------- (In thousands) Operating activities: Net income $ 33,687 $ 24,485 $ 48,379 $ 48,102 Add: loss from discontinued operations, net of income taxes - 582 - 1,025 Add: (gain) loss on disposition of discontinued operations, net of income taxes (384) 1,253 (257) (787) --------- --------- ---------- ---------- Net income from continuing operations 33,303 26,320 48,122 48,340 --------- --------- ---------- ---------- Adjustments to reconcile net income from continuing operations to net cash provided by continuing operations: Stock-based compensation 4,618 4,475 7,506 7,316 Restructuring and lease charges (reversals), net 4,547 285 8,985 (1,812) Amortization of deferred debt issuance costs 74 73 148 143 Depreciation and amortization 19,076 16,928 38,161 33,406 In-process research and development charges - - 1,502 - Amortization of acquired inventory revaluation 670 - 2,047 - Gains on settlement of insurance claim (15,346) - (15,346) - Gains on dispositions, net (135) (3,571) (536) (3,837) Changes in operating assets and liabilities: Accounts receivable, net (3,003) 9,618 9,457 27,842 Inventories 2,445 854 (6,456) (6,519) Accounts payable 4,210 (9,049) (5,945) (21,260) Taxes paid on divestitures (235) (4,601) (235) (59,151) Accrued expenses and other 19,135 12,200 (669) (8,049) --------- --------- ---------- ---------- Net cash provided by continuing operations 69,359 53,532 86,741 16,419 --------- --------- ---------- ---------- Net cash provided by (used in) discontinued operations 377 (291) 246 (871) --------- --------- ---------- ---------- Net cash provided by operating activities 69,736 53,241 86,987 15,548 --------- --------- ---------- ---------- Investing activities: Capital expenditures (16,124) (12,210) (27,517) (21,448) Proceeds from dispositions of property, plant and equipment, net 10,787 7,085 10,787 7,085 Proceeds from surrender of life insurance policies 1,327 2,327 1,327 2,327 Payments for business development activity (177) (796) (1,094) (796) Proceeds from (payments for) disposition of businesses and investments, net 135 (876) 580 20,325 Payments for acquisitions and investments, net of cash and cash equivalents acquired (2,930) (29,616) (42,925) (38,312) --------- --------- ---------- ---------- Net cash used in continuing operations (6,982) (34,086) (58,842) (30,819) --------- --------- ---------- ---------- Net cash provided by discontinued operations 800 - 800 - --------- --------- ---------- ---------- Net cash used in investing activities (6,182) (34,086) (58,042) (30,819) --------- --------- ---------- ---------- Financing Activities: Payments on debt (49,694) (16,831) (49,694) (56,565) Proceeds from borrowings 104,012 - 129,462 - Payments for debt issuance costs - - - (741) Decrease in other credit facilities (810) (499) (824) (603) Tax benefit from (provision for) exercise of common stock options 732 (154) 1,435 3,631 Proceeds from issuance of common stock options 6,611 2,316 12,781 17,145 Purchases of common stock (87,077) - (147,105) (116,393) Dividends paid (8,494) (8,858) (17,123) (17,974) --------- --------- ---------- ---------- Net cash used in financing activities (34,720) (24,026) (71,068) (171,500) --------- --------- ---------- ---------- Effect of exchange rate changes on cash and cash equivalents 1,644 6,785 1,104 8,262 --------- --------- ---------- ---------- Net increase (decrease) in cash and cash equivalents 30,478 1,914 (41,019) (178,509) Cash and cash equivalents at beginning of period 119,562 321,841 191,059 502,264 --------- --------- ---------- ---------- Cash and cash equivalents at end of period $150,040 $323,755 $ 150,040 $ 323,755 ========= ========= ========== ========== PREPARED IN ACCORDANCE WITH GAAP PerkinElmer, Inc. and Subsidiaries RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES PKI -------------------------------- Q207 Q206 ------------ ------- Adjusted Gross Margin: GAAP Gross Margin 174.0 39.8% 151.6 40.2% Intangibles Amortization 8.6 2.0% 7.2 1.9% Stock Option Expense 0.3 0.1% 0.3 0.1% Revaluation of Acquired Inventory 0.7 0.2% - 0.0% ------------ ----- ------- ----- Adjusted Gross Margin: $183.5 42.0% $159.1 42.2% ============ ===== ======= ===== Adjusted SG&A: GAAP SG&A 109.4 25.0% 92.7 24.6% Intangibles Amortization (1.7) -0.4% (0.3) -0.1% Stock Option Expense (1.7) -0.4% (1.6) -0.4% ------------ ----- ------- ----- Adjusted SG&A: $106.0 24.2% $ 90.8 24.1% ============ ===== ======= ===== Adjusted R&D: GAAP R&D 27.3 6.2% 25.0 6.6% Intangibles Amortization (0.4) -0.1% (0.3) -0.1% Stock Option Expense (0.1) 0.0% (0.2) -0.1% ------------ ----- ------- ----- Adjusted R&D: $ 26.8 6.1% $ 24.5 6.5% ============ ===== ======= ===== Adjusted Operating Profit: GAAP Operating Profit 48.1 11.0% 35.7 9.5% Intangibles Amortization 10.7 2.4% 7.8 2.1% Stock Option Expense 2.1 0.5% 2.1 0.6% Revaluation of Acquired Inventory 0.7 0.2% - 0.0% Gains on Settlement of Insurance Claim (15.3) -3.5% - Restructuring and Lease Charges 4.5 1.0% (0.3) -0.1% ------------ ----- ------- ----- Adjusted Operating Profit $ 50.8 11.6% $ 45.3 12.0% ============ ===== ======= ===== PKI -------------------------------- Q207 Q206 ------------ ------- Adjusted EPS: GAAP EPS $ 0.28 $ 0.19 Discontinued Operations 0.00 0.01 ------------ ----- ------- ----- GAAP EPS from Continuing Operations 0.28 0.21 Intangibles Amortization 0.06 0.04 Stock Option Expense 0.01 0.01 Revaluation of Acquired Inventory 0.01 - Gains on Settlement of Insurance Claim (0.08) - Restructuring and Lease Charges 0.02 (0.00) ------------ ----- ------- ----- Adjusted EPS $ 0.30 $ 0.26 ============ ===== ======= ===== PKI -------------------------------- Q307 Q306 ------------ ------- Adjusted EPS: Projected GAAP EPS $0.24 - 0.26 $ 0.24 Discontinued Operations - (0.01) ------------ ----- ------- ----- GAAP EPS from Continuing Operations $0.24 - 0.26 0.23 Intangibles Amortization 0.06 0.05 Stock Option Expense 0.01 0.02 ------------ ----- ------- ----- Adjusted EPS $0.31 - 0.33 $ 0.30 ================== ======= ===== LAS -------------------------------- Q207 Q206 ------------ ------- Adjusted Operating Profit: GAAP Operating Profit 44.6 13.7% 25.3 9.1% Intangibles Amortization 10.0 3.1% 7.1 2.6% Stock Option Expense 0.7 0.2% 0.7 0.3% Revaluation of Acquired Inventory 0.7 0.2% - 0.0% Gains on Settlement of Insurance Claim (15.3) -4.7% - 0.0% Restructuring and Lease Charges - 0.0% 1.1 0.4% ------------ ----- ------- ----- Adjusted Operating Profit $ 40.7 12.5% $ 34.3 12.3% ============ ===== ======= ===== OPTO -------------------------------- Q207 Q206 ------------ ------- Adjusted Operating Profit: GAAP Operating Profit 13.0 11.7% 17.4 17.6% Intangibles Amortization 0.7 0.6% 0.6 0.6% Stock Option Expense 0.3 0.3% 0.4 0.4% Restructuring and Lease Charges 4.5 4.1% (1.4) -1.4% ------------ ----- ------- ----- Adjusted Operating Profit $ 18.5 16.7% $ 17.0 17.3% ============ ===== ======= ===== Adjusted Gross Margin and Adjusted Gross Margin Percentage We use the term "adjusted gross margin" to refer to GAAP gross margin, excluding amortization of intangible assets, inventory fair value adjustments related to business acquisitions, and stock option expense. We use the related term "adjusted gross margin percentage" to refer to adjusted gross margin as a percentage of GAAP revenue. We believe that these non-GAAP measures, when taken together with our GAAP financial measures, allow us and our investors to better measure the performance of our investments in technology, to evaluate the long-term profitability trends and to assess our ability to invest in the business. We exclude amortization of intangible assets from these measures because intangibles amortization charges do not represent what our management and what we believe our investors consider to be costs of producing our products and could distort the additional value generated over the cost of producing those products. Inventory fair value adjustments related to business acquisitions charges also do not represent what our management and what we believe our investors consider to be costs used in producing our products. In addition, we exclude stock option expense from these measures because stock-based compensation plans and the critical assumptions used to calculate the expense vary dramatically between us and our peers, which we believe makes comparisons of long-term operating performance trends difficult for management and investors, and could result in overstating or understating to our investors the costs used in producing our products. Adjusted Selling, General and Administrative (SG&A) Expense and Adjusted SG&A Percentage We use the term "adjusted SG&A expense" to refer to GAAP SG&A expense, excluding amortization of intangible assets and stock option expense. We use the related term "adjusted SG&A percentage" to refer to adjusted SG&A expense as a percentage of GAAP revenue. We believe that these non-GAAP measures, when taken together with our GAAP financial measures, allow us and our investors to better measure the cost of the internal operating structure, our ability to leverage that structure and the level of investment required to grow our business. We exclude amortization of intangible assets from these measures because intangibles amortization charges do not represent what our management and what we believe our investors consider to be costs that support our internal operating structure and could distort the efficiencies of that structure. We also exclude stock option expense from these measures because stock-based compensation plans and the critical assumptions used to calculate the expense vary dramatically between us and our peers, which we believe makes comparisons of long-term operating performance trends difficult for management and investors, and could result in overstating or understating to our investors the costs to support our internal operating structure. Adjusted Research and Development (R&D) Expense and Adjusted R&D Percentage We use the term "adjusted R&D expense" to refer to GAAP R&D expense, excluding amortization of intangible assets and stock option expense. We use the related term "adjusted R&D percentage" to refer to adjusted R&D expense as a percentage of GAAP revenue. We believe that these non-GAAP measures, when taken together with our GAAP financial measures, allow us and our investors to better understand and evaluate our internal technology investments. We exclude amortization of intangible assets from these measures because intangibles amortization charges do not represent what our management and what we believe our investors consider to be internal investments in R&D activities and could distort our R&D investment level. In addition, we exclude stock option expense from these measures because stock-based compensation plans and the critical assumptions used to calculate the expense vary dramatically between us and our peers, which we believe makes comparisons of long-term operating performance trends difficult for management and investors, and could result in overstating or understating to our investors the amount of our internal investments in R&D activities. Adjusted Operating Profit and Adjusted Operating Profit Percentage We use the term "adjusted operating profit" to refer to GAAP operating profit, excluding amortization of intangible assets, inventory fair value adjustments related to business acquisitions, gains on the settlement of insurance claim, restructuring and lease charges and stock option expense. Adjusted operating profit is calculated by subtracting adjusted R&D expense and adjusted SG&A expense from adjusted gross margin. We use the related term "adjusted operating profit percentage" to refer to adjusted operating profit as a percentage of GAAP revenue. We believe that these non-GAAP measures, when taken together with our GAAP financial measures, allow us and our investors to analyze the costs of the different components of producing and selling our products, to better measure the performance of our internal investments in technology and to evaluate the long-term profitability trends of our core operations. Adjusted operating profit also provides for easier comparisons of our performance and profitability with prior and future periods and relative comparisons to our peers. We believe our investors do not consider the items that we exclude from adjusted operating profit to be costs of producing our products, investments in technology and production, and costs to support our internal operating structure, and so we present this non-GAAP measure to avoid overstating or understating to our investors the performance of our operations. In addition, we exclude gains on the settlement of insurance claim and restructuring and lease charges because they tends to occur due to an acquisition, divestiture, repositioning of the business or other unusual event that could distort the performance measures of our internal investments and costs to support our internal operating structure. Adjusted Earnings per Share We use the term "adjusted earnings per share" to refer to GAAP earnings per share, excluding discontinued operations, amortization of intangible assets, inventory fair value adjustments related to business acquisitions, gains on settlement of insurance claim, restructuring and lease charges and stock option expense. Adjusted earnings per share is calculated by subtracting adjusted R&D expense, adjusted SG&A expense, other income / expense and provision for taxes from adjusted gross margin. We believe that this non-GAAP measure, when taken together with our GAAP financial measures, allows us and our investors to analyze the costs of producing and selling our products and the performance of our internal investments in technology and our internal operating structure, to evaluate the long-term profitability trends of our core operations and to calculate the underlying value of the core business on a dilutive share basis, which is a key measure of the value of the company used by our management and we believe used by investors as well. Adjusted earnings per share also facilitates the overall analysis of the value of the company and the core measure of the success of our operating business model as compared to prior and future periods and relative comparisons to our peers. We exclude discontinued operations, amortization of intangible assets, inventory fair value adjustments related to business acquisitions, gains on the settlement of insurance claim, restructuring and lease charges and stock option expense as these items do not represent what our management and what we believe our investors consider to be costs of producing our products, investments in technology and production, and costs to support our internal operating structure, which could result in overstating or understating to our investors the performance of our operations. **** The non-GAAP financial measures described above are not meant to be considered superior to, or a substitute for, our financial statements prepared in accordance with GAAP. There are material limitations associated with non-GAAP financial measures because they exclude charges that have an effect on our reported results and, therefore, should not be relied upon as the sole financial measures to evaluate our financial results. Management compensates and believes that investors should compensate for these limitations by viewing the non-GAAP financial measures in conjunction with the GAAP financial measures. In addition, the non-GAAP financial measures included in this earnings announcement may be different from, and therefore may not be comparable to, similar measures used by other companies. Each of the non-GAAP financial measures listed above are also used by our management to evaluate our operating performance, communicate our financial results to our Board of Directors, benchmark our results against our historical performance and the performance of our peers, evaluate investment opportunities including acquisitions and discontinued operations, and determine the bonus payments for senior management and employees. CONTACT: Investor Relations: Steven Delahunt PerkinElmer, Inc. (781) 663-5677 or Media Contact: Kevin Lorenc PerkinElmer, Inc. (781) 663-5701