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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported) July 31, 2000
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PerkinElmer, Inc.
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(Exact name of registrant as specified in its charter)
Massachusetts 1-5075 04-2052042
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(State or other (Commission File Number) (IRS Employer
jurisdiction of Identification No.)
incorporation)
45 William Street, Wellesley, Massachusetts 02481
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(Address of principal executive offices) (Zip Code)
(781) 237-5100
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(Registrant's telephone number, including area code)
Not applicable
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(Former name or former address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On July 31, 2000 (the "Effective Date"), PerkinElmer, Inc. (the "Company")
completed its acquisition of NEN Life Sciences, Inc. ("NEN"), a provider of
state-of-the-art drug discovery products, services, reagents and technologies to
the life science industry. The Company purchased NEN, a Delaware corporation,
from an investor group led by Genstar Capital LLC for an aggregate purchase
price of approximately $400 million, including the assumption of approximately
$50 million of indebtedness, pursuant to an Agreement and Plan of Merger dated
June 12, 2000, as amended (as so amended, the "Merger Agreement"), by and among
the Company, Nancy Acquisition Corporation, a Delaware corporation and a wholly
owned subsidiary of the Company ("Sub"), and NEN.
Pursuant to the Merger Agreement, Sub merged with and into NEN on the Effective
Date, whereupon NEN became a wholly owned subsidiary of the Company (the
"Merger"). In connection with the Merger, the Company paid approximately $350
million in cash and issued warrants to purchase approximately 300,000 shares of
the Company's common stock in exchange for all of the outstanding shares of NEN
capital stock and all outstanding options and warrants to purchase NEN capital
stock. In addition, the Company repaid approximately $50 million of outstanding
indebtedness of NEN at the Effective Date. The Company financed the acquisition
and repayment of the outstanding indebtedness with $400 million of commercial
paper borrowings with a weighted-average interest rate of 7.1%. The Company
intends to refinance these borrowings on a long-term basis in the near future.
A total of $22.5 million of the cash consideration has been placed in escrow in
accordance with the terms of two escrow agreements for the purpose of satisfying
certain indemnification obligations of the NEN stockholders, option holders and
warrant holders.
The purchase price was based upon the Company's determination of the fair value
of NEN, and the Company intends to treat the Merger as a purchase for accounting
purposes. The terms of the Merger Agreement and the Merger, including the
acquisition consideration, were determined on the basis of arm's-length
negotiations between the Company and NEN. The board of directors of the Company
and the board of directors and the stockholders of NEN approved the Merger
Agreement and the Merger. Prior to the execution of the Merger Agreement, none
of the Company, its affiliates, officers or directors or any associate of any
such officer or director, had any material relationship with NEN or any of the
stockholders of NEN.
The Company currently intends to continue NEN's business substantially in the
manner conducted by NEN immediately prior to the Merger. However, the Company
will review NEN's assets, corporate structure, capitalization, operations,
properties, policies, management and personnel. After completion of this review,
the Company may develop alternative plans or proposals, including mergers,
transfers of a material amount of assets or other transactions or changes
relating to NEN.
The foregoing description of the Merger Agreement does not purport to be
complete and is qualified by reference to the full text of the Merger Agreement,
which is filed as Exhibit 2.1 to this Current Report on Form 8-K and is
incorporated herein by reference, and Amendment No. 1 to the Merger Agreement,
which is filed as Exhibit 2.2 to this Current Report on Form 8-K and is
incorporated herein by reference.
ITEM 5. OTHER EVENTS
On July 20, 2000, the Company issued a press release reporting on its financial
results for the second quarter of 2000. The Company's press release dated July
20, 2000, which is filed as Exhibit 99.1 to this Current Report on Form 8-K, is
also incorporated herein by reference.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of Businesses Acquired
The financial statements required to be filed for NEN Life Sciences, Inc.
are filed as Exhibits 99.2 and 99.3 to this Current Report on Form 8-K.
(b) Unaudited Pro Forma Financial Information
On July 31, 2000, the Company completed its acquisition of NEN, a provider
of state-of-the-art drug discovery products, services, reagents and
technologies to the life science industry.
On May 28, 1999, the Company acquired the Analytical Instruments Division
("AI") of PE Corp., a leading producer of high quality analytical testing
instruments.
The Company accounted for the AI acquisition as a purchase. The unaudited
pro forma consolidated financial information gives effect to the
acquisition of NEN as a purchase.
The following unaudited pro forma consolidated income statements give
effect to the acquisitions of NEN and AI and should be read in conjunction
with the historical financial statements and related notes thereto for the
Company, NEN and AI. The financial statements required to be filed with the
Securities and Exchange Commission for the AI acquisition were included as
exhibits in a separate Current Report on Form 8-K/A, filed by the Company
on August 11, 1999. The unaudited pro forma consolidated income statements
for the fiscal year ended January 2, 2000 and the three-month period ended
April 2, 2000 give effect to the acquisitions as if they were completed as
of January 4, 1999, and combine the Company, NEN and AI's historical income
statements for each respective period as necessary. The unaudited pro forma
consolidated results for the fiscal year ended January 2, 2000 and the
three-month period ended April 2, 2000 exclude acquisition-related charges
of $19 million and $23 million for purchased in-process research and
development related to NEN and AI, respectively.
The unaudited pro forma consolidated income statement for the fiscal year
ended January 2, 2000 includes columns representing the Company's
historical results for the fiscal twelve months then ended, NEN's
historical results for the fiscal twelve months ended December 31, 1999 and
AI's historical results for the five-month period ended May 28, 1999 (the
date of acquisition). The Company's historical financial statements include
the results of AI subsequent to May 28, 1999.
The unaudited pro forma consolidated income statement for the three months
ended April 2, 2000 includes columns representing the Company's historical
results for the three months then ended and NEN's historical results for
the period from January 1, 2000 through March 31, 2000.
The unaudited pro forma consolidated balance sheet as of April 2, 2000
includes the historical balance sheet of the Company as of April 2, 2000
and NEN as of March 31, 2000 and gives effect to the acquisition of NEN as
if it occurred on April 2, 2000.
The unaudited pro forma consolidated financial information is provided for
informational purposes only and is not necessarily indicative of the
Company's operating results that would have occurred had the acquisitions
been consummated on the dates, or at the beginning of the periods, for
which the consummation of the acquisitions is being given effect, nor is it
necessarily indicative of the Company's future operating results. The
unaudited pro forma adjustments do not
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reflect any operating efficiencies and cost savings that the Company
believes are achievable.
The unaudited pro forma consolidated financial information has been
prepared using the purchase method of accounting, whereby the total cost of
the acquisitions has been allocated to the tangible and intangible assets
acquired and liabilities assumed based on their respective fair values at
the effective dates of the acquisitions. For the NEN acquisition, such
allocations will be based on studies and independent valuations, which are
currently being conducted. Accordingly, the allocations reflected in the
unaudited pro forma consolidated financial information are preliminary and
subject to revision.
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PERKINELMER, INC.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
APRIL 2, 2000
(Dollars in thousands)
<TABLE>
<CAPTION>
PERKINELMER NEN
HISTORICAL HISTORICAL PRO FORMA PRO FORMA
4/2/00 3/31/00 ADJUSTMENTS PERKINELMER
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents $ 112,003 $ 790 $ 0 $112,793
Accounts receivable 337,144 19,438 0 356,582
Inventories 220,522 11,240 2,500 (A) 234,262
Other current assets 146,845 4,399 0 151,244
---------- -------- -------- ----------
Total current assets 816,514 35,867 2,500 854,881
Property, plant and equipment, net 225,658 34,489 3,000 (C) 263,147
Intangible assets 615,392 27,150 342,884 (B) 985,426
Other assets 95,056 7,285 0 102,341
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Total assets $1,752,620 $104,791 $348,384 $2,205,795
========== ======== ======== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Short-term debt and current portion of long-term $ 340,186 $4,910 $400,000 (D) $745,096
Accounts payable 124,423 9,095 0 133,518
Accrued restructuring costs 43,076 0 10,000 (H) 53,076
Accrued expenses 276,436 15,411 12,879 (H) 304,726
---------- -------- -------- ----------
Total current liabilities 784,121 29,416 422,879 1,236,416
Long-term debt 114,850 49,300 (49,300)(D) 114,850
Other long-term liabilities 202,286 6,115 6,825 (H) 215,226
Preferred stock 0 0 0 0
Common stock 61,744 161 (161)(F) 61,744
Additional paid-in capital 70,385 16,833 (9,893)(F) 77,325
Retained earnings 782,426 3,008 (22,008)(F) 763,426
Accumulated other comprehensive income (loss) (24,763) 38 (38)(F) (24,763)
Cost of shares held in treasury (238,429) (80) 80 (F) (238,429)
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Total stockholders' equity 651,363 19,960 (32,020) 639,303
---------- -------- -------- ----------
Total liabilities and stockholders' equity $1,752,620 $104,791 $348,384 $2,205,795
========== ======== ======== ==========
</TABLE>
The accompanying notes are an integral part of this pro forma
consolidated financial information.
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PERKINELMER, INC.
UNAUDITED PRO FORMA CONSOLIDATED INCOME STATEMENT
FOR THE FISCAL YEAR ENDED JANUARY 2, 2000
(Dollars in thousands)
<TABLE>
<CAPTION>
PERKINELMER AI NEN
HISTORICAL HISTORICAL HISTORICAL
FISCAL YEAR FIVE MONTHS FISCAL YEAR PRO FORMA PRO FORMA
ENDED 1/2/00 ENDED 5/28/99 ENDED 12/31/99 ADJUSTMENTS PERKINELMER
------------ -------------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Sales $1,363,129 $214,834 $103,854 $0 $1,681,817
Cost of Sales 863,317 136,125 44,808 2,973 (A)(C) 1,047,223
---------- -------- -------- ------- ----------
Gross Margin 499,812 78,709 59,046 (2,973) 634,594
Research and development expenses 71,248 18,914 9,422 0 99,584
Selling, general and administrative expenses 327,142 85,287 36,476 26,354 (B)(C) 475,259
Restructuring charges 11,520 0 0 0 11,520
In-process R&D charge 23,000 0 0 (23,000)(G) 0
Asset impairment charge 18,000 0 0 0 18,000
Gains on dispositions (17,750) 0 0 0 (17,750)
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Operating income (loss) from continuing
operations 66,652 (25,492) 13,148 (6,327) 47,981
Other income (expense) (21,782) (125) 14,649 (43,030)(D)(E) (50,288)
---------- -------- -------- ------- ----------
Income (loss) from continuing operations before
taxes 44,870 (25,617) 27,797 (49,357) (2,307)
Provision (benefit) for income taxes 16,499 (7,173) 10,828 (11,789)(I) 8,365
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Income (loss) from continuing operations 28,371 (18,444) 16,969 (37,568) (10,672)
---------- -------- -------- ------- ----------
Basic earnings (loss) per share from continuing
operations $0.62 ($0.23)
Diluted earnings (loss) per share from continuing
operations $0.61 ($0.23)
Weighted average shares of common stock
outstanding:
Basic 45,522 45,522
Diluted 46,569 46,569
</TABLE>
The accompanying notes are an integral part of this pro forma
consolidated financial information.
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PERKINELMER, INC.
UNAUDITED PRO FORMA CONSOLIDATED INCOME STATEMENT
FOR THE THREE MONTHS ENDED APRIL 2, 2000
(Dollars in thousands)
<TABLE>
<CAPTION>
PERKINELMER NEN
HISTORICAL HISTORICAL
THREE MONTHS THREE MONTHS PRO FORMA PRO FORMA
ENDED 4/2/00 ENDED 3/31/00 ADJUSTMENTS PERKINELMER
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<S> <C> <C> <C> <C>
Sales $402,286 $28,987 $ 0 $431,273
Cost of Sales 246,715 12,917 59 (C) 259,691
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Gross Margin 155,571 16,070 (59) 171,582
Research and development expenses 21,300 2,267 0 23,567
Selling, general and administrative expenses 95,679 9,834 5,930 (B)(C) 111,443
Restructuring charges 2,400 0 0 2,400
In-process R&D charges 8,100 1,010 (1,010)(G) 8,100
Asset impairment charge 0 0 0 0
Gains on dispositions (7,796) 0 0 (7,796)
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Operating income (loss) from continuing operations 35,888 2,959 (4,979) 33,868
Other income (expense) (8,575) (11,502) 3,944 (D)(E) (16,133)
-------- ------- ------- --------
Income (loss) from continuing operations before income taxes 27,313 (8,543) (1,035) 17,735
Provision (benefit) for income taxes 11,070 (3,049) 1,346 (I) 9,367
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Income (loss) from continuing operations 16,243 (5,494) (2,381) 8,368
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Basic earnings per share from continuing operations $0.34 $0.17
Diluted earnings per share from continuing operations $0.32 $0.17
Weighted average shares of common stock outstanding:
Basic 48,463 48,463
Diluted 50,411 50,411
</TABLE>
The accompanying notes are an integral part of this pro forma
consolidated financial information.
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PERKINELMER, INC.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
(Dollars in thousands)
Note 1 Purchase Price Allocation -- The purchase price allocation related to
the AI acquisition is included in the Company's Annual Report on Form 10-K for
the year ended January 2, 2000 and its separate report filed on Form 8-K/A,
filed August 11, 1999, related to the AI acquisition. The purchase price for NEN
has been allocated to the estimated fair value of assets acquired and
liabilities assumed. The preliminary purchase price allocation is based on the
Company's current estimates of respective fair values. Some allocations will be
based on studies and independent valuations that are currently being conducted.
Accordingly, the allocations reflected in the unaudited pro forma consolidated
financial information are preliminary and subject to revision. The components of
the purchase price and preliminary allocation are as follows:
Cash paid to NEN $349,059
Debt assumed 50,000
Acquisition costs 12,879
Fair value of warrants issued 6,940
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Total consideration & acquisition costs $418,878
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Preliminary allocation of purchase price:
Current assets $ 38,367
Property, plant & equipment 37,489
Other assets 7,285
Identifiable intangible assets 22,000
In-process research and development 19,000
Goodwill 348,034
Liabilities (53,297)
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Total $418,878
========
Current liabilities include approximately $10,000 of accrued restructuring
charges related to NEN expected to be incurred in connection with the
acquisition. The restructuring plans include initiatives to integrate the
operations of the Company and NEN, and reduce overhead. The primary components
of these plans relate to employment costs, consolidation of certain facilities,
and the termination of certain leases and other contractual obligations.
Management is in the process of developing its restructuring plans related to
NEN, and accordingly, the amounts recorded are based on management's current
estimate of those costs. The Company will finalize these plans during 2000, and
the majority of the restructuring actions are expected to occur by mid-2001.
Approximately $19,000 was allocated to in-process research and development
for projects that had not reached technological feasibility as of the
acquisition date and for which no alternative use existed. The estimated fair
value will be based on a risk-adjusted cash flow and determined by an
independent third party appraiser. The in-process research and development has
not been included in the pro forma combined income statements due to its
nonrecurring nature.
(A) Adjustment includes the amortization of the write-up to fair value of NEN's
work-in-process and finished goods inventory as of its acquisition date. This
amount will be charged to cost of sales as the related inventory is sold.
Approximately $2,500 related to NEN has been included in cost of sales in the
pro forma consolidated income statement for the fiscal year ended January 2,
2000. The Company's historical consolidated income statement for the fiscal year
ended January 2, 2000 includes $9,897 of inventory write-up amortization related
to AI.
(B) Includes additional amortization related to goodwill and acquired
intangible assets amortization as follows:
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<TABLE>
<CAPTION>
12/99 3/00
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<S> <C> <C>
Goodwill $ 25,775 $ 5,989
Acquired intangibles 3,970 275
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Total amortization 29,745 6,264
Pre-acquisition historical amortization 3,594 358
-------- -------
Pro forma adjustment $ 26,151 $ 5,906
-------- -------
</TABLE>
Goodwill represents the excess of consideration paid over the fair value of net
assets acquired and totaled approximately $348,000 and $205,000 for NEN and AI,
respectively. The NEN and AI goodwill amounts are being amortized over 15 years
and 40 years, respectively. The $342,884 pro forma adjustment reflects the
incremental goodwill and acquired intangibles from the NEN acquisition over the
historical amounts included in NEN's balance sheet at March 31, 2000.
Acquired intangibles include the fair value assigned or to be assigned to
trademarks, trade names, patents and developed technology by an independent
third party appraiser. These intangible assets are being amortized over periods
of 10-40 years.
(C) Includes the write-up to fair value of NEN and AI's property, plant &
equipment as of the acquisition dates and the resulting additional depreciation
expense. The pro forma consolidated income statements include additional
depreciation expense related to these write-ups of $473 and $59 for cost of
sales and $203 and $25 for selling, general and administrative expenses for the
fiscal year ended January 2, 2000 and three months ended April 2, 2000,
respectively.
(D) Reflects incremental interest expense related to financing the acquisitions.
The Company financed the NEN acquisition and repayment of the outstanding
indebtedness with $400,000 of commercial paper borrowings with a weighted-
average interest rate of 7.1%. The Company intends to refinance these
borrowings on a long-term basis in the near future.
The AI acquisition was financed through a combination of $75,000 of available
cash, $100,000 of commercial paper borrowings with a weighted-average interest
rate of 5.2%, $100,000 of money market loans with a weighted-average interest of
5.2% and one-year secured promissory notes of $150,000 issued by the Company to
PE Corp (the seller) that bear interest at 5.0%.
A 1/8 of one percent change in the base rate would change incremental annual
interest expense by approximately $750.
(E) Reflects adjustments to eliminate an unrealized gain (loss) related to a
warrant of $10,079 and ($9,762) from NEN's historical statements of operations
for fiscal 1999 and the three-month period ended March 31, 2000, respectively.
The unrealized gain/loss is a result of NEN's early adoption of Statement of
Financial Accounting Standards (SFAS) No. 133, Accounting for Derivative
Instruments and Hedging Activities. The Company has not yet adopted the
provisions of SFAS No. 133 and therefore, these amounts have been eliminated
through pro forma adjustments. The Company has not yet determined the effect
that adoption of SFAS No. 133 will have but believes that it will not have a
material effect on its results of operations or financial position due to its
relatively limited use of derivatives.
(F) Reflects adjustments to eliminate the historical equity accounts of NEN and
record as additional paid-in capital the fair value of the warrants issued in
connection with the acquisition. Additionally, the in-process research and
development charge of $19,000 is reflected as a reduction of retained earnings.
(G) Reflects adjustments to eliminate in-process research and development
charges related to the Company's acquisition of AI ($23,000) and NEN's
acquisition of Receptor Biology ($1,000) from the historical financial
statements of the Company and NEN.
(H) Includes adjustments to accrue transaction costs and restructuring charges
and to record deferred taxes resulting from purchase accounting.
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(I) Income tax adjustments have been calculated using estimated statutory income
tax rates for the jurisdictions in which the Companies operate. The primary
difference between the provision calculated at statutory rates and the amount
reflected in the pro forma adjustments column for the periods presented is
attributable to nondeductible goodwill resulting from the NEN acquisition. The
pro forma consolidated provision for income taxes may not represent amounts that
would have resulted had the Company, NEN and AI filed consolidated income tax
returns during the periods presented.
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(c) Exhibits
Exhibit 2.1 - Agreement and Plan of Merger dated as of June 12, 2000 by
and among PerkinElmer, Inc., Nancy Acquisition Corporation and NEN Life
Sciences, Inc. (In accordance with SEC rules, certain exhibits to the
Agreement, which are listed under "Exhibits", are omitted. Such
exhibits will be furnished supplementally to the SEC upon request.)
Exhibit 2.2 - Amendment No. 1 to Agreement and Plan of Merger dated as
of June 30, 2000 by and among PerkinElmer, Inc., Nancy Acquisition
Corporation and NEN Life Sciences, Inc.
Exhibit 23.1 - Consent of Ernst & Young LLP, Independent Auditors
Exhibit 23.2 - Consent of PricewaterhouseCoopers LLP, Independent
Accountants
Exhibit 99.1 - Press Release of the Company dated July 20, 2000
Exhibit 99.2 - NEN Life Sciences, Inc. Consolidated Financial
Statements as of December 31, 1999 and 1998 and March 31, 2000
(unaudited) and for the period from July 1, 1997 through December 31,
1997, the years ended December 31, 1998 and 1999 and for the three
months ended March 31, 1999 and 2000 (unaudited)
Exhibit 99.3 - NEN(R) Life Science Products, a division of E.I du Pont
de Nemours and Company, Combined Financial Statements for the Six
Months Ended June 30, 1997
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PerkinElmer, Inc.
Date: August 1, 2000 By: /s/ Robert F. Friel
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Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
