PERKINELMER INC - 10-Q Quarterly Report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

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

For the quarterly period ended March 28, 2004

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

Commission file number 001-5075

PerkinElmer, Inc.

(Exact name of registrant as specified in its charter)


Massachusetts		04-2052042
(State or other jurisdiction of incorporation or organization)		(I.R.S. employer identification no.)

45 William Street, Wellesley, Massachusetts		02481
(Address of principal executive offices)		(Zip Code)

(781) 237-5100

(Registrant’s telephone number, including area code)

NONE

(Former name, former address and former fiscal year, if changed since last report)

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

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). x Yes ¨ No

Number of shares outstanding of each of the issuer’s classes of common stock:

Class

Outstanding at May 3, 2004

Common Stock, $1 par value per share

127,709,000

(Excluding treasury shares)

TABLE OF CONTENTS


		Page
	PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	3
	Consolidated Income Statements	3
	Consolidated Balance Sheets	4
	Consolidated Statements of Cash Flows	5
	Notes to Consolidated Financial Statements	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
	Overview	22
	Consolidated Results of Continuing Operations	23
	Reporting Segment Results of Operations	28
	Liquidity and Capital Resources	29
	Off Balance Sheet Arrangements	31
	Application of Critical Accounting Policies and Estimates	32
	Forward-Looking Information and Factors Affecting Future Performance	32

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	38

Item 4.	Controls and Procedures	39

	PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	40

Item 4.	Submission of Matters to a Vote of Security Holders	40

Item 6.	Exhibits and Reports on Form 8-K	41

Signature		42

Exhibit Index		42

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

PERKINELMER, INC. AND SUBSIDIARIES

CONSOLIDATED INCOME STATEMENTS


	Three Months Ended
	March 28, 2004			March 30, 2003
	(Unaudited)
	(In thousands except per share data)
Sales	$	393,451		$	358,449
Cost of sales		241,513			219,280
Research and development expenses		20,628			20,852
Selling, general and administrative expenses		95,870			92,879
Restructuring (reversals) and impairment charges, net		1,160			(445	)
Gains on dispositions		(363	)		(580	)
Amortization of intangible assets		7,106			7,195

Operating income from continuing operations		27,537			19,268
Interest and other expense, net		9,541			14,347

Income from continuing operations before income taxes		17,996			4,921
Provision for income taxes		5,219			1,599

Income from continuing operations		12,777			3,322
Loss from discontinued operations, net of income taxes		—			(980	)
Gain on dispositions of discontinued operations, net of income taxes		494			20

Net income	$	13,271		$	2,362

Basic and diluted earnings (loss) per share:
Continuing operations	$	0.10		$	0.03
(Loss) from discontinued operations, net of income taxes		—			(0.01	)

Net income	$	0.10		$	0.02

Weighted average shares of common stock outstanding:
Basic		126,685			125,649
Diluted		128,933			126,375
Cash dividends per common share	$	0.07		$	0.07

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

PERKINELMER, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS


	March 28, 2004			December 28, 2003
	(Unaudited)
	(In thousands except share and per share data)
Current assets:
Cash and cash equivalents	$	165,471		$	191,499
Accounts receivable, net		282,695			288,556
Inventories		197,997			190,946
Other current assets		98,357			95,297

Total current assets		744,520			766,298

Property, plant and equipment:
At cost		622,764			623,164
Accumulated depreciation		(366,899	)		(355,008	)

Net property, plant and equipment		255,865			268,156
Marketable securities and investments		10,590			10,874
Intangible assets		418,024			424,811
Goodwill		1,032,073			1,034,911
Other assets		100,099			102,669

Total assets	$	2,561,171		$	2,607,719

Current liabilities:
Short-term debt	$	4,979		$	5,167
Accounts payable		143,057			154,661
Accrued restructuring costs and integration costs		6,016			8,055
Accrued expenses		291,407			284,132

Total current liabilities		445,459			452,015

Long-term debt		499,369			544,307
Long-term liabilities		261,667			262,347

Commitments and contingencies

Stockholders’ equity:
Preferred stock — $1 par value per share, authorized 1,000,000 shares; none issued or outstanding		—			—
Common stock — $1 par value per share, authorized 300,000,000 shares; issued 145,101,000; and outstanding 127,682,000 and 126,909,000 at March 28, 2004 and December 28, 2003, respectively		145,101			145,101
Capital in excess of par value		684,059			681,550
Unearned compensation		(6,928	)		(3,494	)
Retained earnings		676,983			672,616
Accumulated other comprehensive income		27,972			30,908
Cost of shares held in treasury — 17,419,000, shares at March 28, 2004 and 18,192,000 shares at December 28, 2003, respectively		(172,511	)		(177,631	)

Total stockholders’ equity		1,354,676			1,349,050

Total liabilities and stockholders’ equity	$	2,561,171		$	2,607,719

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

PERKINELMER, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS


	Three Months Ended
	March 28, 2004			March 30, 2003
	(Unaudited)
	(In thousands)
Operating activities:
Net income	$	13,271		$	2,362
Add net loss from discontinued operations		—			980
Deduct net gain on disposition of discontinued operations		(494	)		(20	)

Net income from continuing operations		12,777			3,322
Adjustments to reconcile net income from continuing operations to net cash provided by continuing operations:
Stock-based compensation		806			700
Amortization of debt discount and issuance costs		2,211			2,866
Depreciation and amortization		19,483			18,801
Gains on dispositions and sales of investments, net		(363	)		(580	)
Loss on impairment of assets		1,160			—
Changes in operating assets and liabilities which provided (used) cash, excluding effects from companies purchased and divested:
Accounts receivable		5,334			37,342
Inventories		(7,030	)		1,406
Accounts payable		(11,967	)		(14,710	)
Accrued restructuring costs		(2,039	)		(4,557	)
Accrued expenses and other		5,427			(21,685	)

Net cash provided by operating activities from continuing operations		25,799			22,905
Net cash provided by operating activities from discontinued operations		757			1,164

Net cash provided by operating activities		26,556			24,069
Investing activities:
Cash withdrawn from escrow to repay debt		—			32,509
Capital expenditures		(3,297	)		(3,461	)
Proceeds from dispositions of property, plant and equipment, net		2,056			—
Settlement of disposition of businesses, net		—			(575	)
Proceeds of acquisitions, net of cash acquired		—			2,126

Net cash (used in) provided by investing activities		(1,241	)		30,599
Financing activities:
Payment of debt issuance costs		—			(1,356	)
Prepayment of zero coupon convertible notes		—			(32,509	)
Prepayment of term loan debt		(45,000	)		(15,000	)
(Decrease) increase in other credit facilities		(464	)		211
Proceeds from issuance of common stock		3,658			—
Dividends paid		(8,904	)		(8,833	)

Net cash used in financing activities		(50,710	)		(57,487	)

Effect of exchange rate changes on cash and cash equivalents		(633	)		1,981

Net decrease in cash and cash equivalents		(26,028	)		(838	)
Cash and cash equivalents at beginning of period		191,499			130,615

Cash and cash equivalents at end of period	$	165,471		$	129,777

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

PERKINELMER, INC. AND SUBSIDIARIES

NOTES TO 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 on Form 10-K for the fiscal year ended December 28, 2003, filed with the SEC (the “2003 Form 10-K”). The balance sheet amounts at December 28, 2003 in this report were derived from the Company’s audited 2003 financial statements included in the 2003 Form 10-K. Certain prior period amounts have been reclassified to conform to the current-year financial statement presentation. 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. 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 three months ended March 28, 2004 and March 30, 2003 are not necessarily indicative of the results for the entire fiscal year.

(2) Restructuring (Reversals) and Impairment Charges, Net

The Company has undertaken four separate restructuring actions over the past three years related to the impact of acquisitions, divestitures and the integration of its business units. Restructuring actions in 2001 and 2002 were recorded in accordance with EITF 94-3, Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring). Restructuring actions taken in 2003 were recorded in accordance with SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities. The principal actions associated with these plans related to workforce reductions and overhead reductions resulting from reorganization activities, including the closure of certain manufacturing and selling facilities. Details of these plans are discussed more fully in the Company’s 2003 Form 10-K.

In the quarter ended March 30, 2003, the Company recorded a pre-tax restructuring reversal of $0.4 million relating to its Q4 2001 Plan, described below, due to higher than expected attrition rates in several countries prior to ultimate termination and accordingly lower severance costs.

A description of each of the four restructuring plans and the activity recorded for the three-month period ended March 28, 2004 is as follows:

Q2 2003 Plan:

During 2003, the Company incurred a $2.0 million restructuring charge in the Life and Analytical Sciences business and a $0.3 million restructuring charge in the Optoelectronics business. The purpose of the restructuring was to further improve performance and take advantage of synergies between the Company’s former Life Sciences and Analytical Instruments businesses. The principal actions in this restructuring plan included lower headcount due to the continued integration of the Life and Analytical Sciences business in a European manufacturing facility and a customer ca

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