PerkinElmer Announces Q4 2004 Results

    Business Editors/Technology Editors

    BOSTON--(BUSINESS WIRE)--Jan. 26, 2005--PerkinElmer, Inc. (NYSE: PKI)

    -- Revenue Up 11%
    -- EPS up 32%
    -- Operating Cash Flow of $71M

    PerkinElmer, Inc. (NYSE: PKI), a global leader in health sciences and industrial technology markets, today announced GAAP earnings per share of $.29 from continuing operations on revenue of $478.6 million for the fourth quarter ended January 2, 2005. The fourth quarter 2004 results include intangibles amortization of $7.2 million, or approximately $.04 per share. The Company reported earnings per share from continuing operations excluding intangibles amortization of $.33, which exceeded the Thomson First Call(TM) consensus earnings per share estimate of $.31 for the fourth quarter of 2004 and also the Company's forecasted range. The Company reported full year 2004 GAAP earnings per share from continuing operations of $.76, an increase of 69% over 2003. Excluding intangibles amortization, the Company reported 2004 earnings per share from continuing operations of $.91 compared to $.60 in 2003.
    Fourth quarter 2004 revenue of $478.6 million increased 11% over the fourth quarter of 2003. Revenue growth excluding the impact of foreign exchange was 8% over the fourth quarter of the prior year. Fourth quarter 2004 revenue in Health Sciences increased 8.5% over the same period of 2003 driven by double digit growth in genetic screening, medical imaging, environmental and service. Industrial Technologies revenue in the fourth quarter of 2004 increased 17.3% over the fourth quarter of 2003 due to strength in nearly all applications, including the Company's aerospace, safety and security, and semiconductor businesses. Full year 2004 revenue of $1.69 billion increased 10% over 2003, with Health Sciences revenue growth of 7.1% and Industrial Technologies revenues up 17.7%.
    "We delivered a strong quarter to complete an excellent year in 2004, with significant revenue and earnings growth and very good cash flow," said Gregory L. Summe, Chairman and CEO of the Company. "During 2004, a number of businesses achieved double-digit growth, and we enter 2005 with good momentum," added Summe.
    GAAP operating profit during the fourth quarter of 2004 was $64.2 million, up 16% over the fourth quarter of 2003, and operating margin of 13.4% increased 60 basis points over the fourth quarter of 2003. Fourth quarter 2004 operating profit excluding intangibles amortization was $71.4 million, and operating margin excluding intangibles amortization was 14.9%. For the full year 2004, GAAP operating profit was $177.1 million, or 10.5% of revenue, an increase of 120 basis points over 2003. Operating profit excluding intangibles amortization for 2004 was $205.6 million, or 12.2% of revenue for the period, representing an increase of 110 basis points over 2003.
    The Company generated operating cash flow of $71.0 million in the fourth quarter of 2004 and $200.8 million for the full year of 2004. Free cash flow, defined as operating cash flow of $71.0 million less capital expenditures of $6.4 million, was $64.6 million for the fourth quarter of 2004. Free cash flow for fiscal 2004 was $181.8 million, or approximately $1.40 per share, and was comprised of operating cash flow of $200.8 million less capital expenditures of $19.0 million. During the fourth quarter and full year of 2004, the Company reduced debt by $100 million and $175 million, respectively. Cash and cash equivalents were $197.5 million at the end of the fourth quarter of 2004.

    Financial overview by reporting segment:

    Life and Analytical Sciences reported revenue of $311.9 million for the fourth quarter of 2004, up 7% from revenue of $290.4 million in the fourth quarter of 2003. The increase in revenue was driven by double digit revenue growth in the Company's genetic screening, service and environmental businesses.
    The segment's GAAP operating profit for the fourth quarter of 2004 was $46.6 million versus $41.1 million for the same period of 2003. As a percentage of sales, operating profit for the fourth quarters of 2004 and 2003 was 14.9% and 14.2%, respectively. The operating profit for the fourth quarters of 2004 and 2003 included intangibles amortization of $6.6 million. Operating profit excluding intangibles amortization for the fourth quarter of 2004 was $53.2 million, or 17.1% as a percentage of revenue, increasing 70 basis points over the same period of 2003.

    Optoelectronics reported revenue of $101.5 million for the fourth quarter of 2004, an increase of 12% from revenue of $90.3 million for the fourth quarter of 2003, with the increase in revenue driven by continued strength in the Company's medical imaging and sensors businesses.
    The segment's GAAP operating profit was $15.6 million for the fourth quarter of 2004, versus $12.9 million for the comparable period of 2003. As a percentage of sales, operating profit for the fourth quarter of 2004 was 15.4%, up 110 basis points over the fourth quarter of 2003.

    Fluid Sciences reported revenue of $65.2 million for the fourth quarter of 2004, up 27% from revenue of $51.1 million in the fourth quarter of 2003. This increase in revenue was driven by strong growth in the segment's aerospace and semiconductor businesses.
    The segment's GAAP operating profit for the fourth quarter of 2004 was $10.4 million, versus $6.8 million for the same period last year. As a percentage of sales, operating profit for the fourth quarters of 2004 and 2003 was 15.9% and 13.3%, respectively.
    "In 2004, we made significant operational improvements and strengthened our organization and market positions," added Summe. "For 2005, we anticipate significantly higher R&D investments to accelerate innovation. Combined with our significant cash flow, this provides fuel for our growth investments in key health sciences and industrial technology opportunities," continued Summe.
    For the first quarter of 2005, the Company projects GAAP earnings per share from continuing operations of between $.13 and $.14. Excluding the impact of intangibles amortization, the Company projects earnings per share from continuing operations of between $.17 and $.18 for the first quarter of 2005. For the full year 2005, the Company reaffirmed its guidance for GAAP earnings per share of between $.90 and $.95, and excluding intangibles amortization, the Company is forecasting a range of $1.05 and $1.10 earnings per share.
    The Company will discuss its fourth quarter results in a conference call on January 27, 2005 at 10:00 a.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 1:00 p.m. ET, Thursday, January 27, 2005. The playback phone number is 719-457-0820 and the code number is 8554643.

    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 earnings per share, operating profit and operating margin, in each case excluding amortization of acquisition-related intangible assets. This press release also contains a non-GAAP financial measure of organic revenue growth, representing the rate of revenue growth excluding the effects of fluctuations in foreign exchange rates. We exclude the amortization of acquisition-related intangibles and the effects of foreign exchange rates in calculating these non-GAAP measures because such amortization is outside of our normal operations and such foreign exchange effects are out of our control. We believe that the inclusion of these non-GAAP financial measures in this press release also helps investors to gain a meaningful understanding of our core operating results and future prospects, consistent with how management measures and forecasts the Company's performance, especially when comparing such results to previous periods or forecasts. PerkinElmer's management uses these non-GAAP measures, in addition to GAAP financial measures, as the basis for measuring the Company's core operating performance and comparing such performance to that of prior periods and to the performance of our competitors. These measures are also used by management in their financial and operating decision-making.
    This press release also contains a non-GAAP financial measure of free cash flow. We define free cash flow as our net cash provided by operating activities minus our capital expenditures. 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. Therefore, we believe that this measure 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. 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. Any statements contained in this press release that relate to prospective events or developments, including, without limitation, all projections of future financial results and plans concerning business development opportunities, are deemed to be forward-looking statements. Words such as "believes," "anticipates," "plans," "expects," "projects," "forecasts," "will" and similar expressions are intended to identify forward-looking statements. There are a number of important risk factors that could cause actual results or events to differ materially from those indicated by these forward-looking statements, including, without limitation, economic and geopolitical forces that may limit any continued or expected economic or end market strengthening or recoveries, risks related to our failure to introduce new products in a timely manner, the impact of our debt on our cash flow and investment opportunities, our ability to comply with financial covenants contained in our credit agreements and debt instruments, cyclical downturns continuing to affect several of the industries into which we sell our products, our ability to adjust our operations to address unexpected changes, our ability to execute acquisitions and license technologies and successfully integrate acquired businesses and licensed technologies into our existing business, the loss of any of our licenses that may require us to stop selling products or lose competitive advantage, competition, regulatory compliance, regulatory changes, our failure to obtain and enforce intellectual property protection, our defense of third party claims of patent infringement and our ability to realize the full value of our intangible assets, as well as other factors which we describe under the caption "Forward-Looking Information and Factors Affecting Future Performance" in our most recent annual report on Form 10-K and in our most recent quarterly report on Form 10-Q, each on file 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 and biotech imaging. Industrial Technology end markets include military/aerospace, semiconductor, consumer electronics, safety and security, and other.

    PerkinElmer, Inc. is a global technology leader focused in the following businesses - Life and Analytical Sciences, Optoelectronics and Fluid Sciences. Combining operational excellence and technology expertise with an intimate understanding of our customers' needs, PerkinElmer provides products and services in health sciences and other advanced technology markets that require innovation, precision and reliability. The Company serves 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) 2-Jan-05 28-Dec-03 2-Jan-05 28-Dec-03 ------------------------ --------- --------- ----------- -----------

Sales $478,606 $431,873 $1,687,231 $1,532,050

Cost of Sales 277,386 246,398 1,006,678 900,758 Research and Development Expenses 23,625 19,899 87,050 81,366 Selling, General and Administrative Expenses 105,147 104,255 387,543 385,975 Restructuring Reversals, Net - (545) - (3,539) Losses (Gains) on Dispositions, Net 1,071 (617) 409 (2,674) Amortization of Intangible Assets 7,163 7,083 28,481 28,323 -------- -------- ---------- ----------

Operating Income From Continuing Operations 64,214 55,400 177,070 141,841

Extinguishment of Debt 2,266 951 4,143 1,953 Interest Income (936) (298) (2,394) (2,488) Interest Expense 9,492 11,823 37,952 52,586 Loss on Investments 300 1,141 300 2,391 Other Expense, Net 1,306 990 322 1,954 -------- -------- ---------- ----------

Income From Continuing Operations Before Income Taxes 51,786 40,793 136,747 85,445

Provision for Income Taxes 13,855 13,106 38,495 27,512 -------- -------- ---------- ----------

Net Income From Continuing Operations 37,931 27,687 98,252 57,933

Income (Loss) From Discontinued Operations, Net of Income Tax 20 (844) (1,714) (4,526) (Loss) Gain on Disposition of Discontinued Operations, Net of Income Tax (28) 1,087 (495) (448) -------- -------- ---------- ----------

Net Income $ 37,923 $ 27,930 $ 96,043 $ 52,959 ======== ======== ========== ==========

Diluted Earnings (Loss) Per Share: Continuing Operations $ 0.29 $ 0.22 $ 0.76 $ 0.45

Income (Loss) From Discontinued Operations, Net of Income Tax - (0.01) (0.01) (0.04) (Loss) Gain on Disposition of Discontinued Operations, Net of Income Tax - 0.01 - - -------- -------- ---------- ----------

Net Income $ 0.29 $ 0.22 $ 0.74 $ 0.41 ======== ======== ========== ==========

Weighted Average Diluted Shares of Common Stock Outstanding 130,037 128,261 129,429 127,741

ABOVE PREPARED IN ACCORDANCE WITH GAAP

--------------------------------------------------------------------- Additional Supplemental Information and Reconciliation of GAAP to Non-GAAP Measures (per share, continuing operations)

GAAP Diluted EPS from Continuing Operations $ 0.29 $ 0.22 $ 0.76 $ 0.45 Amortization of Intangible Assets, Net of Income Tax 0.04 0.04 0.15 0.14 -------- -------- ---------- ---------- EPS excluding Amortization of Intangible Assets $ 0.33 $ 0.25 $ 0.91 $ 0.60 ======== ======== ========== ==========

Thomson First Call(TM) EPS $ 0.31 $ 0.89 ======== ==========

PerkinElmer, Inc. and Subsidiaries Sales and Operating Profit (Loss)

Three Months Ended Year Ended ------------------ ---------------------- (In Jan. 2, Dec. 28, Jan. 2, Dec. 28, thousands) 2005 2003 2005 2003 ------------- ------------------ ----------------------

Life and Analytical Sciences Sales $311,947 $290,395 $1,062,767 $1,003,711 OP$ reported 46,577 41,134 103,609 94,745 OP% reported 14.9% 14.2% 9.7% 9.4% Amortization expense 6,636 6,557 26,374 26,017 OP$ excl. amortization 53,213 47,691 129,983 120,762 OP% excl. amortization 17.1% 16.4% 12.2% 12.0%

Opto- electronics Sales 101,473 90,343 380,637 348,669 OP$ reported 15,589 12,892 57,403 46,778 OP% reported 15.4% 14.3% 15.1% 13.4% Amortization expense 307 306 1,227 1,226 OP$ excl. amortization 15,896 13,198 58,630 48,004 OP% excl. amortization 15.7% 14.6% 15.4% 13.8%

Fluid Sciences Sales 65,186 51,135 243,827 179,670 OP$ reported 10,353 6,796 38,221 17,922 OP% reported 15.9% 13.3% 15.7% 10.0% Amortization expense 220 220 880 1,080 OP$ excl. amortization 10,573 7,016 39,101 19,002 OP% excl. amortization 16.2% 13.7% 16.0% 10.6%

Other OP$ reported (8,305) (5,422) (22,163) (17,604)

Continuing Operations Sales $478,606 $431,873 $1,687,231 $1,532,050 ======== ======== ========== ========== OP$ reported $ 64,214 $ 55,400 $ 177,070 $ 141,841 ======== ======== ========== ========== OP% reported 13.4% 12.8% 10.5% 9.3% Amortization expense $ 7,163 $ 7,083 $ 28,481 $ 28,323 ======== ======== ========== ========== OP$ excl. amortization$ 71,377 $ 62,483 $ 205,551 $ 170,164 ======== ======== ========== ========== OP% excl. amortization 14.9% 14.5% 12.2% 11.1%

SALES AND REPORTED OPERATING PROFIT PREPARED IN ACCORDANCE WITH GAAP

PERKINELMER, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

Jan. 2, Sept. 26, Dec. 28, 2005 2004 2003 ----------- ----------- ----------- (In thousands)

Current assets: Cash and cash equivalents $ 197,513 $ 220,041 $ 191,499 Accounts receivable 287,299 272,460 288,027 Inventories 193,556 189,082 188,602 Other current assets 63,919 94,236 95,204 Current assets of discontinued operations 143 1,323 2,968 ---------- ---------- ---------- Total current assets 742,430 777,142 766,300

Property, plant and equipment: At cost 631,693 621,458 618,651 Accumulated depreciation (395,777) (382,277) (352,290) ---------- ---------- ---------- Net property, plant and equipment 235,916 239,181 266,361 Marketable securities and investments 10,479 10,230 10,874 Intangible assets 397,445 403,970 424,703 Goodwill, net 1,073,869 1,030,241 1,034,911 Other assets 110,016 98,037 102,658 Long-term assets of discontinued operations 152 513 1,920 ---------- ---------- ---------- Total assets $2,570,307 $2,559,314 $2,607,727 ========== ========== ==========

Current liabilities: Short-term debt $ 9,714 $ 4,995 $ 5,167 Accounts payable 146,630 131,227 154,260 Accrued restructuring and integration costs 3,045 3,824 8,055 Accrued expenses 286,460 301,017 283,695 Current liabilities of discontinued operations 118 858 846 ---------- ---------- ---------- Total current liabilities 445,967 441,921 452,023

Long-term debt 364,874 469,493 544,307 Long-term liabilities 299,381 257,611 262,347 ---------- ---------- ---------- Total liabilities 1,110,222 1,169,025 1,258,677

Commitments and contingencies

Total stockholders' equity 1,460,085 1,390,289 1,349,050 ---------- ---------- ---------- Total liabilities and stockholders' equity $2,570,307 $2,559,314 $2,607,727 ========== ========== ==========

PREPARED IN ACCORDANCE WITH GAAP

PerkinElmer, Inc. and Subsidiaries Consolidated Statements of Cash Flows

Three Months Ended Year Ended -------------------- --------------------- Jan. 2, Dec. 28, Jan. 2, Dec. 28, 2005 2003 2005 2003 ------------------------------------------ (In thousands)

Operating Activities: Net income $ 37,923 $ 27,930 $ 96,043 $ 52,959 Add (gain) loss from discontinued operations, net of income taxes (20) 844 1,714 4,526 Add net loss (gain) on disposition of discontinued operations 28 (1,087) 495 448 --------- -------- --------- --------- Net income from continuing operations 37,931 27,687 98,252 57,933 --------- -------- --------- --------- Adjustments to reconcile net income from continuing operations to net cash provided by continuing operations: Restructuring reversals, net of expense - (545) - (3,539) Stock based compensation 4,471 2,939 9,290 8,880 Amortization of debt discount and issuance costs 3,229 1,386 8,099 9,631 Depreciation and amortization 19,880 21,976 76,241 79,494 Losses (gains) on dispositions 1,071 524 409 (283) Changes in operating assets and liabilities: Accounts receivable (83) (13,293) 14,596 43,359 Inventories 2,624 13,783 1,853 28,163 Accounts payable 11,493 9,522 (11,575) 725 Accrued restructuring and integration costs (779) (5,383) (5,010) (21,675) Accrued expenses and other (9,614) 16,550 7,335 (38,975) --------- -------- --------- --------- Net Cash Provided by Continuing Operations 70,223 75,146 199,490 163,713 --------- -------- --------- --------- Net Cash Provided by Discontinued Operations 790 2,757 1,267 3,762 --------- -------- --------- --------- Net Cash Provided by Operating Activities 71,013 77,903 200,757 167,475 --------- -------- --------- ---------

Investing Activities: Cash withdrawn from escrow to repay debt - - - 187,477 Capital expenditures (6,396) (5,394) (18,961) (16,588) Proceeds from disposition or settlement of PP&E, net - 2,068 3,442 5,363 Settlement of the disposition of business, net 425 (113) 425 (959) Proceeds related to acquisitions, net of cash acquired - - 2,765 534 --------- -------- --------- --------- Net Cash (Used in) Provided by Continuing Operations (5,971) (3,439) (12,329) 175,827 --------- -------- --------- --------- Net Cash Provided by Discontinued Operations - - 646 1,400 --------- -------- --------- --------- Net Cash (Used in) Provided by Investing Activities (5,971) (3,439) (11,683) 177,227 --------- -------- --------- ---------

Financing Activities: Payment of debt issuance costs - (2,660) - (4,385) Prepayment of zero coupon convertible notes - - - (189,901) Prepayment of term loan debt (100,000) (20,000) (175,000) (70,000) Increase (decrease) in other credit facilities 82 (536) (198) (2,273) Proceeds from issuance of common stock for employee benefit plans 8,949 1,262 15,041 3,617 Cash dividends (8,967) (8,878) (35,781) (35,409) --------- -------- --------- --------- Net Cash Used in Financing Activities (99,936) (30,812) (195,938) (298,351) --------- -------- --------- ---------

Effect of Exchange Rate Changes on Cash and Cash Equivalents 12,366 6,531 12,878 14,533 --------- -------- --------- ---------

Net (Decrease) Increase in Cash and Cash Equivalents (22,528) 50,183 6,014 60,884 Cash and Cash Equivalents at Beginning of Period 220,041 141,316 191,499 130,615 --------- -------- --------- --------- Cash and Cash Equivalents at End of Period $ 197,513 $191,499 $ 197,513 $ 191,499 ========= ======== ========= =========

PREPARED IN ACCORDANCE WITH GAAP

--30--JO/bo*

CONTACT: PerkinElmer, Inc. Dan Sutherby, 781-431-4306

KEYWORD: MASSACHUSETTS INDUSTRY KEYWORD: CHEMICALS/PLASTICS MEDICAL BANKING TELECOMMUNICATIONS EARNINGS CONFERENCE CALLS SOURCE: PerkinElmer, Inc.

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