PerkinElmer reports fourth-quarter results

 David Lammers
  26th-Jan-2007
 1527
BOSTON---PerkinElmer, Inc. (NYSE: PKI), a global leader in Health Sciences and Photonics markets, today reported GAAP earnings per share from continuing operations of $.33 on revenue of $427.0 million for the fourth quarter ended December 31, 2006. On a non-GAAP basis, which includes the adjustments noted in the income statement reconciliation, the Company announced earnings per share for the fourth quarter 2006 of $.39, which met the First Call consensus estimate and was in line with the Companys forecasted range of $.38 to $.40.
Fourth quarter 2006 revenue of $427.0 million increased 10% over the fourth quarter of 2005. Revenue growth was 12% in Life and Analytical Sciences and 5% in Optoelectronics compared to the same period last year. From an end market perspective, fourth quarter 2006 revenue from Health Sciences, which represented 85% of total revenues for the quarter, increased 12% over the same period of 2005. This increase was driven primarily by strong growth in the genetic screening, medical imaging, environmental and service businesses, as well as a positive impact from acquisitions and new product introductions. Foreign exchange and acquisitions contributed 3% and 2%, respectively, to fourth quarter 2006 revenue. Full year 2006 revenue of $1.55 billion increased 5% over 2005 driven primarily by sales growth in medical imaging, genetic screening and service.
Our strong Q4 results reflect the increased growth momentum we are generating through R&D and capital investments in our key growth platforms. We also announced eight acquisitions during the year that will help fuel our long-term growth, said Gregory L. Summe, Chairman and CEO of the Company. We expect to carry this momentum into 2007, bringing an increased number of new products to market while continuing to deliver strong financial results.
GAAP operating profit during the fourth quarter of 2006 was $52.2 million. On a non-GAAP basis, which includes the adjustments noted in the attached reconciliation, fourth quarter 2006 operating profit was $64.0 million, or 15.0% as a percentage of revenue for the quarter.
The Company generated cash flow from operations of $84.9 million in the fourth quarter of 2006. For the full year 2006, cash flow from operations was $127.3 million. This number includes tax payments of $60.3 million related to the gain on the divestiture of Fluid Sciences. Cash flow from operations, net of divestiture taxes, was $187.6 million.
Financial Overview by Reporting Segment:
Life and Analytical Sciences reported revenue of $320.6 million for the fourth quarter of 2006, up 12% from revenue of $286.5 million in the fourth quarter of 2005, driven primarily by growth in the Companys genetic screening, environmental and service businesses, as well as a positive impact from acquisitions and new product introductions.
The segments GAAP operating profit for the fourth quarter of 2006 was $40.9 million. On a non-GAAP basis, which includes the adjustments noted in the attached reconciliation, operating profit for the fourth quarter of 2006 was $51.3 million, or 16.0% as a percentage of revenue.
Optoelectronics reported revenue of $106.3 million for the fourth quarter of 2006, up 5% from revenue of $101.2 million in the fourth quarter of 2005, driven primarily by revenue growth in imaging.
The segments GAAP operating profit was $19.8 million for the fourth quarter of 2006. On a non-GAAP basis, which includes the adjustments noted in the attached reconciliation, operating profit for the fourth quarter of 2006 was $20.4 million or 19.2% as a percentage of Optoelectronics revenue.
Financial Guidance
The Company projects revenue to increase in the high single to low double digits for the full year 2007 and non-GAAP earnings per share to grow in the low double digits to mid-teens. Looking ahead to the first quarter of 2007, earnings per share, excluding intangibles amortization and stock option expense, is projected to be $.23-$.25.
The Company will discuss its fourth quarter results in a conference call on January 25, 2007 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, January 25, 2007. The playback phone number is (617) 801-6888 and the code number is 67623101.
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 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, stock option expense, impairment charges, restructuring reversals and tax benefits.
· When we refer in this earnings announcement to operating profit, other than on a GAAP basis, we are excluding the amortization of intangibles, stock option expense, impairment charges and restructuring charges or reversals from GAAP operating margin.
· When we refer in this earnings announcement to operating margin, other than on a GAAP basis, we are excluding the amortization of intangibles, stock option expense, impairment charges and restructuring charges or reversals from GAAP operating margin.
· When we refer to non-GAAP earnings per share or specify that earnings per share is on a non-GAAP basis, we are excluding the amortization of intangibles, stock option expense, impairment charges, tax expenses or benefits, debt extinguishment charges and restructuring charges or reversals from GAAP earnings per share from continued operations.
· When we refer to cash flow from operations, net of divestiture taxes, we are excluding tax benefits relating to divestitures from GAAP cash flow from operations.
We exclude the impact of foreign exchange, the effects of acquisitions, intangibles amortization, stock option expense, impairment charges and restructuring charges or reversals 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 earnings announcement 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.
The non-GAAP financial measures included in this earnings announcement 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 earnings announcement 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 earnings announcement to the most directly comparable GAAP financial measures are set forth in the text of, and the accompanying exhibits to, this earnings announcement.
Factors Affecting Future Performance
This earnings announcement 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 managements 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 earnings announcement.
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 $1.55 billion in 2006, 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
INCOME STATEMENTS
Three Months Ended
Year Ended
(In thousands, except per share data)
31-Dec-06
1-Jan-06
31-Dec-06
1-Jan-06
Sales
$
426,986
$
387,658
$
1,546,358
$
1,473,831
Cost of Sales
248,132
222,816
918,287
859,295
Research and Development Expenses
27,079
21,022
99,719
87,371
In-Process Research and Development Charge
-
-
-
194
Selling, General and Administrative Expenses
99,677
88,020
376,849
365,457
Gains on Dispositions, Net
-
(1,438)
(1,505)
(1,502)
Impairment of Assets
3,246
-
3,246
-
Restructuring and Integration (Reversals) Charges, Net
(3,350)
7,820
(3,640)
22,065
Operating Income From Continuing Operations
52,202
49,418
153,402
140,951
Extinguishment of Debt
-
48,676
-
54,886
Interest Income
(1,736)
(1,543)
(9,390)
(3,321)
Interest Expense
2,468
4,829
9,157
27,291
Gains on Dispositions of Investments, Net
(383)
-
(2,296)
(5,844)
Other Expense, Net
899
777
5,195
1,279
Income (Loss) From Continuing Operations Before Income Taxes
50,954
(3,321)
150,736
66,660
Provision for Income Taxes
9,885
2,780
32,412
128
Net Income (Loss) From Continuing Operations
41,069
(6,101)
118,324
66,532
(Loss) Income From Discontinued Operations, Net of Income Taxes
(149)
2,750
(1,174)
15,214
Gain on Disposition of Discontinued Operations, Net of Income Taxes
808
190,899
2,433
186,362
Net Income
$
41,728
$
187,548
$
119,583
$
268,108
Diluted Earnings (Loss) Per Share:
Continuing Operations
$
0.33
$
(0.05)
$
0.94
$
0.51
(Loss) Income From Discontinued Operations, Net of Income Taxes
-
0.02
(0.01)
0.12
Gain on Disposition of Discontinued Operations, Net of Income Taxes
0.01
1.47
0.02
1.42
Net Income
$
0.34
$
1.45
$
0.95
$
2.04
Weighted Average Diluted Shares of Common Stock Outstanding
123,760
129,663
126,512
131,140
ABOVE PREPARED IN ACCORDANCE WITH GAAP
Additional Supplemental Information:
(per share, continuing operations)
GAAP Diluted EPS from Continuing Operations
$
0.33
$
(0.05)
Amortization of Intangible Assets, Net of Income Taxes
0.05
0.03
Stock Options, Net of Income Taxes
0.01
-
Impairment of Assets, Net of Income Taxes
0.02
-
Restructuring (Reversals) Charges, Net of Income Taxes
(0.02)
0.04
Tax Expense
-
0.07
Extinguishment of Debt, Net of Income Taxes
-
0.26
Continuing Operations EPS excluding Amortization of Intangible Assets
$
0.39
$
0.36

PerkinElmer, Inc. and Subsidiaries
SALES AND OPERATING PROFIT (LOSS)
Three Months Ended
Year Ended
(In thousands)
December 31, 2006
January 1, 2006
December 31, 2006
January 1, 2006
Life and Analytical Sciences
Sales
$
320,644
$
286,470
$
1,144,562
$
1,081,104
OP$ reported
40,943
45,886
115,372
110,228
OP% reported
12.8%
16.0%
10.1%
10.2%
Amortization expense
8,986
6,576
31,288
26,219
Stock option expense
906
-
3,231
-
Impairment of assets
3,246
-
3,246
-
Restructuring (reversals) charges
(2,820)
1,866
(1,711)
12,901
OP$ adjusted
51,261
54,328
151,426
149,348
OP% adjusted
16.0%
19.0%
13.2%
13.8%
Opto-
electronics
Sales
106,342
101,188
401,796
392,727
OP$ reported
19,812
11,249
70,021
58,405
OP% reported
18.6%
11.1%
17.4%
14.9%
Amortization expense*
644
633
2,544
2,600
Stock option expense
470
-
1,573
-
Impairment of assets
-
-
-
-
Restructuring (reversals) charges
(530)
5,954
(1,929)
9,164
OP$ adjusted
20,396
17,836
72,209
70,169
OP% adjusted
19.2%
17.6%
18.0%
17.9%
Other
OP$ reported
(8,553)
(7,717)
(31,991)
(27,682)
Stock option expense
867
-
4,267
-
OP$ adjusted
(7,686)
(7,717)
(27,724)
(27,682)
Continuing Operations
Sales
$
426,986
$
387,658
$
1,546,358
$
1,473,831
OP$ reported
52,202
49,418
153,402
140,951
OP% reported
12.2%
12.7%
9.9%
9.6%
Amortization expense*
9,630
7,209
33,832
28,819
Stock option expense
2,243
-
9,071
-
Impairment of assets
3,246
-
3,246
-
Restructuring (reversals) charges
(3,350)
7,820
(3,640)
22,065
OP$ adjusted
$
63,971
$
64,447
$
195,911
$
191,835
OP% adjusted
15.0%
16.6%
12.7%
13.0%
* 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
December 31, 2006
October 1, 2006
January 1, 2006
(In thousands)
Current assets:
Cash and cash equivalents
$ 191,059
$ 207,074
$ 502,264
Accounts receivable, net
267,703
253,189
250,844
Inventories
183,260
182,124
163,150
Other current assets
100,857
72,745
71,189
Current assets of discontinued operations
477
1,090
11,442
Total current assets
743,356
716,222
998,889
Property, plant and equipment:
At cost
524,134
517,611
484,453
Accumulated depreciation
(342,938)
(336,026)
(307,084)
Net property, plant and equipment
181,196
181,585
177,369
Marketable securities and investments
7,508
7,531
9,222
Intangible assets, net
404,021
410,417
375,419
Goodwill
1,117,724
1,103,352
1,026,201
Other assets
53,156
80,028
90,156
Long-term assets of discontinued operations
1,605
1,654
16,205
Total assets
$ 2,508,566
$ 2,500,789
$ 2,693,461
Current liabilities:
Short-term debt
$ 1,153
$ 1,142
$ 1,131
Accounts payable
152,080
142,644
146,971
Accrued restructuring and integration costs
2,731
8,607
11,242
Accrued expenses
310,726
278,969
324,954
Current liabilities of discontinued operations
826
909
10,241
Total current liabilities
467,516
432,271
494,539
Long-term debt
151,781
201,133
243,282
Long-term liabilities
311,539
310,738
303,687
Long-term liabilities of discontinued operations
-
-
1,440
Total liabilities
930,836
944,142
1,042,948
Commitments and contingencies
Total stockholders' equity
1,577,730
1,556,647
1,650,513
Total liabilities and stockholders' equity
$ 2,508,566
$ 2,500,789
$ 2,693,461
PREPARED IN ACCORDANCE WITH GAAP

PerkinElmer, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended
Year Ended
December 31, 2006
January 1, 2006
December 31, 2006
January 1, 2006
(In thousands)
Operating activities:
Net income
$ 41,728
$ 187,548
$ 119,583
$ 268,108
Add: Loss (income) from discontinued operations, net of income taxes
149
(2,750)
1,174
(15,214)
Add: Gain on disposition of discontinued operations, net of income taxes
(808)
(190,899)
(2,433)
(186,362)
Net income (loss) from continuing operations
41,069
(6,101)
118,324
66,532
Adjustments to reconcile net income (loss) from continuing operations to net cash provided by continuing operations:
Stock-based compensation
5,515
4,198
16,144
9,825
Restructuring and integration (reversals) charges, net
(3,350)
7,820
(3,640)
22,065
Amortization of debt discount and issuance costs
74
48,879
292
57,385
Depreciation and amortization
18,247
15,881
69,184
66,998
Resolution of prior year tax contingencies
-
-
55
(27,772)
Gains on dispositions, net
(383)
(1,438)
(3,801)
(7,346)
Asset impairment
3,246
-
3,246
-
Changes in operating assets and liabilities:
Accounts receivable
(8,901)
(7,776)
4,071
(10,434)
Inventories
2,196
1,863
(11,067)
(323)
Accounts payable
7,550
20,432
(2,427)
23,242
Taxes paid on divestitures
(301)
-
(60,297)
-
Tax benefit from exercise of common stock options
-
5,343
-
5,343
Accrued expenses and other
18,688
(6,032)
(3,220)
(12,579)
Net cash provided by continuing operations
83,650
83,069
126,864
192,936
Net cash provided by discontinued operations
1,282
1,506
419
15,157
Net cash provided by operating activities
84,932
84,575
127,283
208,093
Investing activities:
Capital expenditures
(13,474)
(11,794)
(44,473)
(27,993)
Proceeds from advance and settlement of insurance claim
3,100
2,942
5,309
2,942
Proceeds from disposition of property, plant and equipment, net
-
-
4,876
9,393
Proceeds from settlement of life insurance policies
72
-
3,826
-
Proceeds from disposition of investments, net
383
359,622
23,627
366,578
Cash used related to acquisitions, net of cash acquired
(35,395)
(2,683)
(132,971)
(17,571)
Net cash (used in) provided by continuing operations
(45,314)
348,087
(139,806)
333,349
Net cash (used in) provided by discontinued operations
-
(513)
467
(10,060)
Net cash (used in) provided by investing activities
(45,314)
347,574
(139,339)
323,289
Financing Activities:
Payments on debt
(53,513)
(274,656)
(110,078)
(374,656)
Premium on prepayment of debt
-
(32,196)
-
(36,321)
Settlement of interest rate swaps
-
(8,480)
-
(8,480)
Proceeds from borrowings
-
244,253
-
244,253
Payment of debt issuance costs
-
(1,133)
(741)
(1,133)
Tax benefit from exercise of common stock options
(1,795)
-
2,203
-
Increases in other credit facilities
(21)
899
(834)
24
Proceeds from issuance of common stock options
4,135
10,118
21,520
19,388
Purchases of common stock
-
(24,397)
(190,121)
(24,397)
Cash dividends
(8,605)
(9,086)
(35,455)
(36,296)
Net cash used in continuing operations
(59,799)
(94,678)
(313,506)
(217,618)
Net cash used in discontinued operations
-
(78)
-
(233)
Net cash used in financing activities
(59,799)
(94,756)
(313,506)
(217,851)
Effect of exchange rate changes on cash and cash equivalents
4,166
(1,186)
14,357
(8,780)
Net (decrease) increase in cash and cash equivalents
(16,015)
336,207
(311,205)
304,751
Cash and cash equivalents at beginning of period
207,074
166,057
502,264
197,513
Cash and cash equivalents at end of period
$ 191,059
$ 502,264
$ 191,059
$ 502,264
PREPARED IN ACCORDANCE WITH GAAP

PerkinElmer, Inc. and Subsidiaries
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
PKI
LAS
Opto
Adjusted Operating Profit:
Q406
Q405
Q406
Q405
Q406
Q405
GAAP Operating Profit
$ 52.2
$ 49.4
$ 40.9
$ 45.9
$ 19.8
$ 11.2
Intangibles Amortization
9.6
7.2
9.0
6.6
0.6
0.6
Stock Option Expense
2.2
-
0.9
-
0.5
-
Impairment of Assets
3.2
-
3.2
-
-
-
Restructuring (Reversals) Charges
(3.4)
7.8
(2.8)
1.9
(0.5)
6.0
Adjusted Operating Profit
$ 64.0
$ 64.4
$ 51.3
$ 54.3
$ 20.4
$ 17.8
PKI
LAS
Opto
Adjusted OP Margin:
Q406
Q405
Q406
Q405
Q406
Q405
GAAP Operating Profit
12.2%
12.7%
12.8%
16.0%
18.6%
11.1%
Intangibles Amortization
2.3%
1.9%
2.8%
2.3%
0.6%
0.6%
Stock Option Expense
0.5%
0.0%
0.3%
0.0%
0.4%
0.0%
Impairment of Assets
0.8%
0.0%
1.0%
0.0%
0.0%
0.0%
Restructuring (Reversals) Charges
-0.8%
2.0%
-0.9%
0.7%
-0.5%
5.9%
Adjusted Operating Profit
15.0%
16.6%
16.0%
19.0%
19.2%
17.6%
PKI
PKI
Cash EPS:
Q406
Q405
Q107
Q106
GAAP EPS
$ 0.34
$ 1.45
$0.17 - $0.19
$ 0.18
Discontinued Operations
(0.01)
(1.49)
-
(0.01)
GAAP EPS from Continuing Operations
0.33
(0.05)
$0.17 - $0.19
0.17
Intangibles Amortization
0.05
0.03
0.05
0.04
Stock Option Expense
0.01
-
0.01
0.01
Impairment of Assets
0.02
-
-
-
Restructuring (Reversals) Charges
(0.02)
0.04
-
-
Tax Expense
-
0.07
-
-
Extinguishment of Debt
-
0.26
-
-
Cash EPS
$ 0.39
$ 0.36
$0.23 - $0.25
$ 0.22
PKI
LAS
Opto
Adjusted Operating Profit:
FY06
FY05
FY06
FY05
FY06
FY05
GAAP Operating Profit
$ 153.4
$ 141.0
$ 115.4
$ 110.2
$ 70.0
$ 58.4
Intangibles Amortization
33.8
28.8
31.3
26.2
2.5
2.6
Stock Option Expense
9.1
-
3.2
-
1.6
-
Impairment of Assets
3.2
-
3.2
-
-
-
Restructuring (Reversals) Charges
(3.6)
22.1
(1.7)
12.9
(1.9)
9.2
Adjusted Operating Profit
$ 195.9
$ 191.8
$ 151.4
$ 149.3
$ 72.2
$ 70.2
PKI
LAS
Opto
Adjusted OP Margin:
FY06
FY05
FY06
FY05
FY06
FY05
GAAP Operating Profit
9.9%
9.6%
10.1%
10.2%
17.4%
14.9%
Intangibles Amortization
2.2%
2.0%
2.7%
2.4%
0.6%
0.7%
Stock Option Expense
0.6%
0.0%
0.3%
0.0%
0.4%
0.0%
Impairment of Assets
0.2%
0.0%
0.3%
0.0%
0.0%
0.0%
Restructuring (Reversals) Charges
-0.2%
1.5%
-0.1%
1.2%
-0.5%
2.3%
Adjusted Operating Profit
12.7%
13.0%
13.2%
13.8%
18.0%
17.9%

Domain: Electronics
Category: Semiconductors
Contact Person Address: PerkinElmer
Posted By: David Lammers and Contact David Lammers
Maxims of Tech: Rules of Engagement for a Fast Changing Environment

Recent Press Releases

VilleTravail.fr Now Helps People Fin...

Job search is a challenge and everyone who has ever been involved in the process has the firsthand knowledge of how tiresome and time-taking the procedure it. Finding a nice job th

24 November, 2017

Your Guide To Acquiring A Used Car F...

Today, a lot more people are considering wisely especially in terms of getting the points that they want. Due to the fact you can find many fantastic choices available, the last as

24 November, 2017

Ustay North Coast Offers the Right P...

FOR IMMEDIATE RELEASEFollowing the success of their accommodation on the KZN South Coast website, Ustay North Coast decided to expand their service to the North Coast as well. Simi

24 November, 2017