<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 APRIL 2, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 1-5075
PERKINELMER, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
MASSACHUSETTS 04-2052042
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
45 WILLIAM STREET, WELLESLEY, MASSACHUSETTS 02481
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>
(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
Number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date:
<TABLE>
<CAPTION>
CLASS OUTSTANDING AT MAY 11, 2000
----- ---------------------------
<S> <C>
Common Stock, $1 par value 49,135,834
(Excluding treasury shares)
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PERKINELMER, INC. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------
APRIL 2, APRIL 4,
2000 1999
-------- --------
<S> <C> <C>
(IN THOUSANDS EXCEPT PER SHARE DATA)
SALES....................................................... $402,286 $243,217
Cost of Sales............................................... 246,715 160,701
Research and Development Expenses........................... 21,300 13,397
In-Process Research and Development Charge (Note 3)......... 8,100 --
Selling, General and Administrative Expenses................ 95,679 52,091
Restructuring Charge (Note 4)............................... 2,400 --
Gains on Dispositions (Note 5).............................. (7,796) --
-------- --------
OPERATING INCOME FROM CONTINUING OPERATIONS................. 35,888 17,028
Other Expense, Net (Note 6)................................. (8,575) (4,632)
-------- --------
Income From Continuing Operations Before Income Taxes....... 27,313 12,396
Provision for Income Taxes.................................. 11,070 4,354
-------- --------
INCOME FROM CONTINUING OPERATIONS........................... 16,243 8,042
Income From Discontinued Operations, Net of Income Taxes
(Note 7).................................................. -- 6,045
-------- --------
NET INCOME.................................................. $ 16,243 $ 14,087
======== ========
BASIC EARNINGS PER SHARE:
Continuing Operations..................................... $.34..... $ .18
Discontinued Operations................................... -- .13
-------- --------
Net Income................................................ $.34..... $ .31
======== ========
DILUTED EARNINGS PER SHARE:
Continuing Operations..................................... $.32..... $ .18
Discontinued Operations................................... -- .13
-------- --------
Net Income................................................ $.32..... $ .31
======== ========
Cash Dividends Per Common Share............................. $.14..... $ .14
Weighted Average Shares of Common Stock Outstanding:
Basic..................................................... 48,463 44,910
Diluted................................................... 50,411 45,704
</TABLE>
The accompanying unaudited notes are an integral part of these consolidated
financial statements.
1
<PAGE> 3
PERKINELMER, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
APRIL 2, JANUARY 2,
2000 2000
----------- ----------
(UNAUDITED)
<S> <C> <C>
(IN THOUSANDS EXCEPT SHARE DATA)
Current Assets:
Cash and Cash Equivalents................................. $ 112,003 $ 126,650
Accounts Receivable (Note 8).............................. 337,144 346,160
Inventories (Note 9)...................................... 220,522 201,724
Other Current Assets...................................... 146,845 140,560
---------- ----------
TOTAL CURRENT ASSETS........................................ 816,514 815,094
---------- ----------
Property, Plant and Equipment:
At Cost (Note 10)......................................... 487,051 496,347
Accumulated Depreciation and Amortization................. (261,393) (268,313)
---------- ----------
Net Property, Plant and Equipment........................... 225,658 228,034
---------- ----------
Intangible Assets (Note 11)................................. 615,392 592,438
Other Assets................................................ 95,056 79,074
---------- ----------
TOTAL ASSETS................................................ $1,752,620 $1,714,640
========== ==========
Current Liabilities:
Short-Term Debt (Note 12)................................. $ 340,186 $ 382,162
Accounts Payable.......................................... 124,423 119,737
Accrued Restructuring Costs (Note 4)...................... 43,076 41,759
Accrued Expenses (Note 13)................................ 276,436 308,840
---------- ----------
TOTAL CURRENT LIABILITIES................................... 784,121 852,498
---------- ----------
Long-Term Debt.............................................. 114,850 114,855
Long-Term Liabilities....................................... 202,286 196,511
CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred Stock -- $1 par value, authorized 1,000,000
shares; none issued or outstanding..................... -- --
Common Stock -- $1 par value, authorized 100,000,000
shares; issued 61,744,000 shares at April 2, 2000 and
60,102,000 shares at January 2, 2000................... 61,744 60,102
Capital in Excess of Par Value............................ 70,385 --
Retained Earnings......................................... 782,426 762,009
Accumulated Other Comprehensive Loss (Note 14)............ (24,763) (14,040)
Cost of Shares Held in Treasury; 12,710,000 shares at
April 2, 2000 and 13,736,000 shares at January 2,
2000................................................... (238,429) (257,295)
---------- ----------
Total Stockholders' Equity.................................. 651,363 550,776
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY.................. $1,752,620 $1,714,640
========== ==========
</TABLE>
The accompanying unaudited notes are an integral part of these consolidated
financial statements.
2
<PAGE> 4
PERKINELMER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-------------------
APRIL 2, APRIL 4,
2000 1999
-------- --------
<S> <C> <C>
(IN THOUSANDS)
OPERATING ACTIVITIES:
Net income................................................ $ 16,243 $ 14,087
Deduct net income from discontinued operations............ -- (6,045)
-------- --------
Income from continuing operations......................... 16,243 8,042
Adjustments to reconcile income from continuing operations
to net cash provided by (used in) continuing
operations:
In-process research and development charge............. 8,100 --
Depreciation and amortization.......................... 18,956 15,401
Gains on dispositions and sales of investments, net.... (8,454) (53)
Changes in assets and liabilities which provided (used)
cash, excluding effects from companies purchased and
divested:
Accounts receivable.................................... 8,519 3,819
Inventories............................................ (16,792) 2,600
Accounts payable and accrued expenses.................. (11,883) (24,446)
Accrued restructuring costs............................ 1,397 (3,613)
Prepaid expenses and other............................. (3,752) (4,606)
-------- --------
Net Cash Provided by (Used in) Continuing Operations........ 12,334 (2,856)
Net Cash Provided by Discontinued Operations................ -- 13,072
-------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES................... 12,334 10,216
-------- --------
INVESTING ACTIVITIES:
Capital expenditures...................................... (14,744) (8,256)
Proceeds from dispositions of businesses and sales of
property, plant and equipment, net..................... 23,297 2,831
Cost of acquisitions, net of cash acquired................ 13,656 (3,843)
Purchases of investments.................................. (15,007) (1,382)
Other..................................................... 47 1,131
-------- --------
Net Cash Provided by (Used in) Continuing Operations........ 7,249 (9,519)
Net Cash Used in Discontinued Operations.................... (1,340) (238)
-------- --------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES......... 5,909 (9,757)
-------- --------
FINANCING ACTIVITIES:
Increase in commercial paper borrowings................... 40,000 25,000
Decrease in other debt.................................... (81,721) (11,258)
Proceeds from issuance of common stock.................... 19,014 4,334
Purchases of common stock................................. (358) --
Cash dividends............................................ (6,747) (6,279)
-------- --------
Net Cash Provided by (Used in) Continuing Operations........ (29,812) 11,797
Net Cash Provided by Discontinued Operations................ -- --
-------- --------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES......... (29,812) 11,797
-------- --------
Effect of Exchange Rate Changes on Cash and Cash
Equivalents............................................... (3,078) (1,536)
-------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS........ (14,647) 10,720
Cash and cash equivalents at beginning of period............ 126,650 95,565
-------- --------
Cash and cash equivalents at end of period.................. $112,003 $106,285
======== ========
Supplemental Disclosures of Noncash Investing and Financing
Activities:
Common stock and options issued in connection with the
acquisition of Vivid Technologies, Inc. ............... $ 65,937 $ --
</TABLE>
The accompanying unaudited notes are an integral part of these consolidated
financial statements.
3
<PAGE> 5
PERKINELMER, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) NATURE OF OPERATIONS
PerkinElmer, Inc. is a high-technology company operating in four
businesses -- Life Sciences, Optoelectronics, Instruments and Fluid Sciences.
The Company has operations in over 100 countries and is a component of the S&P
500 Index.
The operating segments and their principal products and services are:
Life Sciences: Helps solve the complex analytical problems
encountered in bio-screening and population screening laboratories by
providing chemical reagents, sample handling and measuring instruments, and
computer software. Within the field of bio-screening, Life Sciences focuses
on customers engaged in drug discovery and has established a strong
presence in high throughput screening technologies. In population
screening, the subject of the screen is a human patient; customers include
public health authorities in the United States as well as in many European
countries.
Optoelectronics: A broad spectrum of optoelectronic products,
including high-volume and high-performance specialty lighting sources,
detectors, telecom products which include optical fiber communication
components, emitters, receivers and mux arrays, imaging devices and large
area amorphous silicon detectors.
Instruments: Develops, manufactures and markets sophisticated
analytical instruments and imaging detection systems for research
laboratories, academia, medical institutions, government agencies and a
wide range of industrial applications designed to provide industry-specific
solutions. Analytical Instruments provide world class analytical solutions
employing technologies such as molecular and atomic spectroscopies, high
pressure liquid chromatography, gas chromatography, and thermal and
elemental analysis. Detection Systems provide a broad range of products,
including walk through weapons detection systems, advanced explosive
detection systems, and large cargo inspection systems.
Fluid Sciences: Static and dynamic seals, sealing systems, solenoid
valves, bellows devices, advanced pneumatic components, systems and
assemblies and sheet metal-formed products for original equipment
manufacturers and end users.
(2) BASIS OF PRESENTATION
The consolidated financial statements included herein have been prepared by
the Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information in footnote disclosures
normally included in financial statements has been condensed or omitted in
accordance with the rules and regulations of the Securities and Exchange
Commission. These statements should be read in conjunction with the Company's
Annual Report for the year ended January 2, 2000, filed on Form 10-K with the
Securities and Exchange Commission (the "1999 Form 10-K"). The balance sheet
amounts at January 2, 2000 in this report were extracted from the Company's
audited 1999 financial statements included in the 1999 Form 10-K. Certain prior
period amounts have been reclassified to conform to the current-year financial
statement presentation. The information set forth in these statements may be
subject to normal year-end adjustments. 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 April 2,
2000 are not necessarily indicative of the results for the entire year.
4
<PAGE> 6
PERKINELMER, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(3) ACQUISITIONS
On January 14, 2000, the Company completed its acquisition of Vivid
Technologies, Inc. (Vivid) for an aggregate purchase price of approximately $67
million. The transaction was a stock merger whereby the shareholders of Vivid
received one share of the Company's common stock for each 6.2 shares of Vivid
common stock; approximately 1.6 million shares were issued in connection with
the acquisition. Vivid, which is a leading supplier of automated explosive
detection systems utilized in airports and high-security facilities worldwide,
generated sales of $21 million for the fiscal year ended September 30, 1999.
Vivid's operations, included in the consolidated results of the Company from the
date of acquisition, are reported in the Company's Instruments segment. The
transaction was accounted for as a purchase in accordance with Accounting
Principles Board (APB) Opinion No. 16, Business Combinations. In accordance with
APB Opinion No. 16, the Company allocated the purchase price of Vivid based on
the fair values of the net assets acquired and liabilities assumed. The
allocation of the purchase price has not yet been finalized, however, the
Company does not expect any material changes. Portions of the purchase price,
including intangible assets, were valued by independent appraisers utilizing
customary valuation procedures and techniques. These intangible assets included
approximately $8.1 million for acquired in-process research and development
(R&D) for projects that did not have future alternative uses. This allocation
represents the estimated fair value based on risk-adjusted cash flows related to
the in-process R&D projects. At the date of the acquisition of Vivid, the
development of these projects had not yet reached technological feasibility, and
the R&D in process had no alternative future uses. Accordingly, these costs were
expensed in the first quarter of 2000. Other acquired intangibles totaling $6.4
million included the fair value of developed technology. This intangible asset
is being amortized over its estimated useful life of 10 years. Goodwill
resulting from the acquisition of Vivid is being amortized over 25 years.
Approximately $0.3 million has been recorded as accrued restructuring charges in
connection with the acquisition of Vivid.
The components of the purchase price and preliminary allocation were as
follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
- --------------
<S> <C>
Consideration and acquisition costs:
Value of common stock issued................................ $ 64,724
Value of options issued..................................... 1,213
Acquisition costs........................................... 1,044
--------
$ 66,981
========
Preliminary allocation of purchase price:
Current assets.............................................. $ 38,166
Acquired intangibles........................................ 6,400
In-process R&D.............................................. 8,100
Goodwill.................................................... 27,190
Liabilities assumed and other............................... (12,875)
--------
$ 66,981
========
</TABLE>
5
<PAGE> 7
PERKINELMER, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
On May 28, 1999, the Company completed its acquisition of the Analytical
Instruments Division (AI) of PE Corp. The specific details of the AI acquisition
are discussed in the 1999 Form 10-K. Unaudited pro forma operating results for
the Company for the three months ended April 4, 1999, assuming the acquisition
of AI occurred on December 29, 1997, are as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
- --------------
<S> <C>
Sales....................................................... $388,872
Income from continuing operations........................... 8,577
Net income.................................................. 14,622
Basic earnings per share.................................... .33
Diluted earnings per share.................................. .32
</TABLE>
The pro forma amounts in the table above exclude the acquired in-process
R&D charge for AI of $23 million. Pro forma amounts for the Vivid acquisition
are not included as their effect is not material to the Company's consolidated
financial statements.
(4) RESTRUCTURING CHARGES
The Company developed restructuring plans during 1998 to integrate and
consolidate its businesses and recorded restructuring charges in the first and
second quarters of 1998. During the first quarter of 1998, management developed
a plan to restructure certain businesses that resulted in a pre-tax
restructuring charge of $30.5 million. During the second quarter of 1998, the
Company expanded its continuing effort to restructure certain businesses to
further improve performance. The plan resulted in additional pre-tax
restructuring charges of $19.5 million. The specific details of the actions and
charges by operating segment are discussed more fully in the 1999 Form 10-K.
During the third quarter of 1999, due to the substantial completion of the
actions of the 1998 restructuring plans, the Company reevaluated its 1998
restructuring plans. As a result of this review, costs associated with the
previously planned shutdown of two businesses were no longer required due to
actions taken to improve performance. Therefore, the Company recognized a
restructuring credit of $12 million during the third quarter of 1999, which
primarily affected the Fluid Sciences and Optoelectronics segments.
The Company's acquisitions in 1998 and 1999 and the Company's 1999
divestiture of its Technical Services segment (exiting government services) were
strategic milestones in the Company's transition to a commercial high-technology
company. Consistent with the strategic direction of the Company and concurrent
with the reevaluation of existing restructuring plans during the third quarter
of 1999, the Company developed additional plans during the third quarter of 1999
to restructure certain businesses to continue to improve the Company's
performance. These plans resulted in a pre-tax restructuring charge of $23.5
million recorded in the third quarter of 1999. The specific details of the
actions and charges by operating segment are discussed more fully in the 1999
Form 10-K. Due to increases in employee separation costs in certain of the
Company's non-U.S. operations, during the first quarter of 2000 the Company
increased the restructuring liability estimate by $2.4 million.
6
<PAGE> 8
PERKINELMER, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following table summarizes restructuring activity from continuing
operations related to the 1998 and 1999 plans:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
APRIL 2, 2000
------------------
<S> <C>
(In millions)
Accrued restructuring costs at beginning of period.......... $27.2
Provisions.................................................. 2.4
Charges/writeoffs........................................... --
-----
Accrued restructuring costs at end of period................ $29.6
</TABLE>
Approximately $28 million was recorded as accrued restructuring costs in
connection with the May 1999 AI acquisition, and approximately $5 million was
recorded as accrued restructuring costs in connection with the December 1998
Lumen acquisition. The specific details of the actions are discussed in the 1999
Form 10-K.
The following table summarizes restructuring activity from continuing
operations related to the Vivid, AI and Lumen acquisitions:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
(IN MILLIONS) APRIL 2, 2000
- ------------- -------------------
<S> <C>
Accrued restructuring costs at beginning of period.......... $14.1
Provisions.................................................. $ .3
Charges/writeoffs........................................... (1.0)
-----
Accrued restructuring costs at end of period................ $13.4
=====
</TABLE>
Cash outlays during the three months ended April 2, 2000 and April 4, 1999
were $1 million and $3.6 million, respectively, for all of these plans. The
Company expects to incur at least $30 million of cash outlays in connection with
these plans throughout fiscal 2000. Most of the actions remaining at April 2,
2000 are expected to occur in fiscal 2000.
(5) GAINS ON DISPOSITIONS
During the first quarter of 2000, the Company sold its micromachined
sensors and specialty semiconductor businesses for cash of $24.3 million,
resulting in a pre-tax gain of $6.7 million. Combined financial results of the
divested businesses for the first quarters of 2000 and 1999 were not material to
the consolidated results of the Company. During the first quarter of 2000,
primarily in connection with the 1999 disposition of the Company's Structural
Kinematics business, the Company recognized $1.1 million of pre-tax gains from
the previously deferred sales proceeds as a result of the favorable resolution
of certain events and contingencies.
(6) OTHER EXPENSE
Other income (expense), net, consisted of the following:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------
APRIL 2, APRIL 4,
(IN THOUSANDS) 2000 1999
- -------------- -------- --------
<S> <C> <C>
Interest income............................................. $ 775 $ 596
Interest expense............................................ (8,532) (5,549)
Other....................................................... (818) 321
------- -------
$(8,575) $(4,632)
======= =======
</TABLE>
7
<PAGE> 9
PERKINELMER, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(7) DISCONTINUED OPERATIONS
On August 20, 1999, the Company sold the assets of its Technical Services
segment. Additional details are disclosed in the Company's 1999 Form 10-K. The
Company accounted for the sale of its Technical Services segment as a
discontinued operation in accordance with APB Opinion No. 30, Reporting the
Results of Operations, and, accordingly, the results of operations of the
Technical Services segment have been segregated from continuing operations and
reported as a separate line item on the Company's Consolidated Income
Statements. As a result of a post-closing selling price adjustment that was
settled in April, 2000, the Company is in the process of finalizing the gain on
disposition of discontinued operations, which will be adjusted in the second
quarter of 2000.
Summary operating results of the discontinued operations were as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------
(IN THOUSANDS) APRIL 4, 1999
- -------------- ------------------
<S> <C>
Sales...................................................... $114,270
Costs and expenses......................................... 105,480
--------
Operating income from discontinued operations.............. 8,790
Other income............................................... 656
--------
Income from discontinued operations before income taxes.... 9,446
Provision for income taxes................................. 3,401
--------
Income from discontinued operations, net of income taxes... $ 6,045
========
</TABLE>
(8) ACCOUNTS RECEIVABLE
Accounts receivable were net of reserves for doubtful accounts of $13.3
million and $12.9 million as of April 2, 2000 and January 2, 2000, respectively.
(9) INVENTORIES
Inventories consisted of the following:
<TABLE>
<CAPTION>
APRIL 2, JANUARY 2,
(IN THOUSANDS) 2000 2000
- -------------- -------- ----------
<S> <C> <C>
Finished goods......................................... $109,471 $ 87,177
Work in process........................................ 32,048 26,342
Raw materials.......................................... 79,003 88,205
-------- --------
$220,522 $201,724
======== ========
</TABLE>
(10) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment, at cost, consisted of the following:
<TABLE>
<CAPTION>
APRIL 2, JANUARY 2,
(IN THOUSANDS) 2000 2000
- -------------- -------- ----------
<S> <C> <C>
Land................................................... $ 28,350 $ 28,724
Buildings and leasehold improvements................... 125,387 127,908
Machinery and equipment................................ 333,314 339,715
-------- --------
$487,051 $496,347
======== ========
</TABLE>
8
<PAGE> 10
PERKINELMER, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(11) INTANGIBLE ASSETS
Intangible assets consist mainly of goodwill from acquisitions accounted
for using the purchase method of accounting, representing the excess of cost
over the fair market value of the net assets of the acquired businesses.
Goodwill is being amortized over periods of 10 to 40 years. Goodwill, net of
accumulated amortization, was $436 million and $417 million at April 2, 2000 and
January 2, 2000, respectively. Other identifiable intangible assets from
acquisitions include patents, trademarks, trade names and developed technology
and are being amortized over periods of 10 to 40 years. Other identifiable
intangible assets, net of accumulated amortization, were $179 million and $175
million at April 2, 2000 and January 2, 2000, respectively. Intangible assets
consisted of the following:
<TABLE>
<CAPTION>
APRIL 2, JANUARY 2,
(IN THOUSANDS) 2000 2000
- -------------- -------- ----------
<S> <C> <C>
Goodwill............................................... $492,030 $477,072
Other identifiable intangible assets................... 212,139 182,550
-------- --------
704,169 659,622
Accumulated amortization............................... (88,777) (67,184)
-------- --------
$615,392 $592,438
======== ========
</TABLE>
(12) SHORT-TERM DEBT
Short-term debt at April 2, 2000 was $340 million and included secured
promissory notes of $150 million issued to PE Corp. and commercial paper
borrowings of $180 million.
(13) ACCRUED EXPENSES
Accrued expenses consisted of the following:
<TABLE>
<CAPTION>
APRIL 2, JANUARY 2,
(IN THOUSANDS) 2000 2000
- -------------- -------- ----------
<S> <C> <C>
Payroll and incentives................................. $ 17,741 $ 32,720
Employee benefits...................................... 46,630 49,293
Federal, non-U.S. and state income taxes............... 26,870 45,324
Other accrued operating expenses....................... 185,195 181,503
-------- --------
$276,436 $308,840
======== ========
</TABLE>
9
<PAGE> 11
PERKINELMER, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(14) COMPREHENSIVE INCOME
Comprehensive income presented in accordance with SFAS No. 130, Reporting
Comprehensive Income, consisted of the following:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------
APRIL 2, APRIL 4,
(IN THOUSANDS) 2000 1999
- -------------- -------- --------
<S> <C> <C>
Net income............................................. $ 16,243 $ 14,087
Other comprehensive income (loss), net of tax:
Gross foreign currency translation adjustments......... (10,793) (11,641)
Unrealized gains (losses) on securities................ 70 (10)
-------- --------
(10,723) (11,651)
-------- --------
Comprehensive income................................... $ 5,520 $ 2,436
======== ========
</TABLE>
The components of accumulated other comprehensive loss were as follows:
<TABLE>
<CAPTION>
APRIL 2, JANUARY 2,
(IN THOUSANDS) 2000 2000
- -------------- -------- ----------
<S> <C> <C>
Foreign currency translation adjustments............... $(25,254) $(14,461)
Unrealized gains on securities......................... 491 421
-------- --------
Accumulated other comprehensive loss................... $(24,763) $(14,040)
======== ========
</TABLE>
(15) INDUSTRY SEGMENT INFORMATION
The Company's businesses are reported as four reportable segments which
reflect the Company's management and structure under four strategic business
units (SBUs). The segments' principal products and services are described in
Note 1 of this Form 10-Q. The accounting policies of the reportable segments are
the same as those described in Note 1 of the 1999 Form 10-K. The Company
evaluates the performance of its operating segments based on operating profit.
Intersegment sales and transfers are not significant. Unaudited sales and
operating profit information by segment for the first three months of 2000 and
1999 are shown in Item 2 of this Quarterly Report on Form 10-Q and are
considered an integral part of this note.
(16) NEW ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards (SFAS) No. 137, Accounting for Derivative Instruments and
Hedging Activities -- Deferral of the Effective Date of SFAS No. 133, in June
1999. SFAS No. 133 is now effective for all fiscal quarters of all fiscal years
beginning after June 15, 2000; earlier adoption is allowed. The statement
requires companies to record derivatives on the balance sheet as assets or
liabilities, measured at fair value. Gains or losses resulting from changes in
the values of those derivatives would be accounted for depending on the use of
the derivative and whether it qualifies for hedge accounting. The Company has
not yet determined the effect that adoption of SFAS No. 133 will have. However,
the Company currently expects that, due to its relatively limited use of
derivative instruments, the adoption of SFAS No. 133 will not have a material
effect on the Company's results of operations or financial position.
The Securities and Exchange Commission released Staff Accounting Bulletin
(SAB) No. 101, Revenue Recognition in Financial Statements, on December 3, 1999.
This SAB provides additional guidance on the accounting for revenue recognition,
including both broad conceptual discussions as well as certain industry-
specific guidance. The new guidance that is most likely to have a potential
impact on the Company concerns customer acceptance and installation terms. The
Company is in the process of accumulating the information
10
<PAGE> 12
PERKINELMER, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
necessary to quantify the potential impact of this new guidance. The guidance is
effective for the second quarter of fiscal 2000 and is required to be adopted
effective January 3, 2000 by recording the effect of any prior year revenue
transactions affected as a "cumulative effect of a change in accounting
principle" as of January 3, 2000. First quarter 2000 financial statements would
be restated to conform to the new guidance as necessary.
11
<PAGE> 13
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
ACQUISITIONS AND DIVESTITURES
The Company acquired PE Corp.'s Analytical Instruments Division (AI) on May
28, 1999 for an aggregate purchase price of approximately $425 million plus
acquisition costs. The specific details of the AI acquisition are discussed more
fully in the 1999 Form 10-K. AI is a leading producer of high-quality analytical
testing instruments and consumables, and generated 1998 fiscal year sales of
$569 million.
On August 20, 1999, the Company sold its Technical Services segment. The
Company accounted for the sale of its Technical Services segment as a
discontinued operation in accordance with APB Opinion No. 30 and, accordingly,
the results of operations of the Technical Services segment have been segregated
from continuing operations and reported as a separate line item on the Company's
Consolidated Income Statements.
On January 14, 2000, the Company completed its acquisition of Vivid
Technologies, Inc. (Vivid) for an aggregate purchase price of approximately $67
million. The transaction was a stock merger whereby the shareholders of Vivid
received one share of the Company's common stock for each 6.2 shares of Vivid
common stock; approximately 1.6 million shares were issued in connection with
the acquisition. Vivid, which is a leading supplier of automated explosive
detection systems utilized in airports and high-security facilities worldwide,
generated sales of $21 million for the fiscal year ended September 30, 1999.
Vivid's operations, included in the consolidated results of the Company from the
date of acquisition, are reported in the Company's Instruments segment. The
transaction was accounted for as a purchase in accordance with Accounting
Principles Board (APB) Opinion No. 16, Business Combinations. In accordance with
APB Opinion No. 16, the Company allocated the purchase price of Vivid based on
the fair values of the net assets acquired and liabilities assumed. The
allocation of the purchase price has not yet been finalized, however, the
Company does not expect any material changes. Portions of the purchase price,
including intangible assets, were valued by independent appraisers utilizing
customary valuation procedures and techniques. These intangible assets included
approximately $8.1 million for acquired in-process research and development
(R&D) for projects that did not have future alternative uses. This allocation
represents the estimated fair value based on risk-adjusted cash flows related to
the in-process R&D projects. At the date of the acquisition of Vivid, the
development of these projects had not yet reached technological feasibility, and
the R&D in process had no alternative future uses. Accordingly, these costs were
expensed in the first quarter of 2000. Other acquired intangibles totaling $6.4
million included the fair value of developed technology. This intangible asset
is being amortized over its estimated useful life of 10 years. Goodwill
resulting from the acquisition of Vivid is being amortized over 25 years.
Approximately $0.3 million has been recorded as accrued restructuring charges in
connection with the acquisition of Vivid.
During the first quarter of 2000, the Company divested its micromachined
sensors and specialty semiconductor businesses for cash of $24.3 million,
resulting in a pre-tax gain of approximately $6.7 million. Combined financial
results of the divested businesses for the first quarters of 2000 and 1999 were
not material to the consolidated results of the Company.
12
<PAGE> 14
Sales and operating profit by segment are shown in the table below. The
following unaudited segment information is presented as an aid to better
understand the Company's operating results:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
----------------------------------
APRIL 2, APRIL 4, INCREASE
(IN THOUSANDS) 2000 1999 (DECREASE)
- -------------- -------- -------- ----------
<S> <C> <C> <C>
LIFE SCIENCES
Sales............................................ $ 39,626 $ 35,057 $ 4,569
Operating Profit................................. 4,275 3,627 648
Operating Profit Before Nonrecurring Items....... 4,275 3,627 648
OPTOELECTRONICS
Sales............................................ $114,465 $110,598 $ 3,867
Operating Profit................................. 20,157 8,654 11,503
Operating Profit Before Nonrecurring Items....... 13,417 8,654 4,763
INSTRUMENTS
Sales............................................ $186,545 $ 43,557 $142,988
Operating Profit................................. 5,827 4,523 1,304
Operating Profit Before Nonrecurring Items....... 14,491 4,523 9,968
FLUID SCIENCES
Sales............................................ $ 61,650 $ 54,005 $ 7,645
Operating Profit................................. 8,487 4,012 4,475
Operating Profit Before Nonrecurring Items....... 10,058 4,012 6,046
OTHER
Sales............................................ $ -- $ -- $ --
Operating Profit (Loss).......................... (2,858) (3,788) 930
Operating Profit Before Nonrecurring Items....... (3,085) (3,788) 703
CONTINUING OPERATIONS
Sales............................................ $402,286 $243,217 $159,069
Operating Profit................................. 35,888 17,028 18,860
Operating Profit Before Nonrecurring Items....... 39,156 17,028 22,128
</TABLE>
The reported results for the three months ended April 2, 2000 include
certain nonrecurring items which are discussed in detail in the Discussion of
Consolidated Results of Operations and Segment Results of Operations sections to
follow herein.
DISCUSSION OF CONSOLIDATED RESULTS OF OPERATIONS
Sales from continuing operations for the first quarter of 2000 increased
65% to $402.3 million versus $243.2 million for the same period of 1999. Organic
growth during the first quarter of 2000 was 11%. The Company defines organic
growth as growth in historical businesses plus growth in acquired businesses
assuming they were owned in prior periods, adjusted for the effects of exited
businesses and foreign exchange. Revenues from acquisitions, net of
divestitures, during the first quarter of 2000 were approximately $133 million.
The organic revenue growth was driven primarily by strength in the Company's
Life Sciences, Optoelectronics and Fluid Sciences segments. Revenues by segment
are discussed in further detail below in the Segment Results of Operations
section.
On a reported basis, operating income increased 110% to $35.9 million
during the first quarter of 2000 compared to $17 million in the same period of
1999. The 2000 first quarter operating income included certain purchase
accounting items from the Vivid acquisition, as well as certain nonrecurring
items: a $.6 million charge for the revaluation of acquired inventory;
in-process R&D charge of $8.1 million; restructuring charges of $2.4 million;
$6.7 million of gains from divestitures; and $1.1 million of deferred gain
recognition from prior periods' divestitures. Discussion of operating income by
segment during the first quarter of 2000 versus 1999 is presented in the Segment
Results of Operations section below. Research and development expenses were
13
<PAGE> 15
$21.3 million during the first quarter of 2000, an increase of $7.9 million over
the comparable 1999 period and were approximately 5% of total sales for both
periods. The first quarter increase during 2000 versus 1999 was due primarily to
the inclusion of the acquired AI business and increased investments in new
product development, particularly Life Sciences. This was partially offset by
lower R&D spending during the first quarter of 2000 associated with the
Optoelectronics' Amorphous Silicon business, as the Company transitioned
successfully from an R&D stage to full-scale production.
SEGMENT RESULTS OF OPERATIONS
The Company's continuing businesses are reported as four operating
segments, which reflect the Company's management methodology and structure under
continuing Strategic Business Units (SBUs). The Company evaluates performance
based on operating profit of the respective segments. The discussion that
follows is a summary analysis of the primary changes in operating results by
segment for the first quarter of 2000 versus the same period of 1999.
Life Sciences
Sales for the first quarter of 2000 were $39.6 million compared to $35.1
million for the first quarter of 1999, which represents a $4.5 million, or 13%,
increase. Organic revenue growth was 17%. The increase was due to higher sales
volumes from the Company's drug discovery and genetic disease screening
businesses. Strong demand and higher reagent sales were the primary drivers of
the increase in the first quarter of 2000 versus 1999.
Operating income for the first quarter of 2000 increased 18% to $4.3
million versus the same period last year. The increase was due primarily to
higher sales discussed above.
Optoelectronics
Sales for the first quarter of 2000 were $114.5 million compared to $110.6
million for the first quarter of 1999, which represents a $3.9 million increase.
The Company sold its micromachined sensors and specialty semiconductor
businesses during the first quarter of 2000. Organic revenue growth was 21% for
the first quarter of 2000 versus the same period of 1999. Strong revenue growth
across all businesses contributed to the increase and partially offset the
absence of revenues from divested businesses.
Operating income in the first quarter of 2000 was $20.1 million. Excluding
gains in 2000 of $6.7 million, operating income increased $4.8 million, or 55%,
to $13.4 million during the first quarter of 2000 versus the same period of
1999. The 1999 operating income included a $2.9 million charge for the
revaluation of acquired inventory related to the Lumen acquisition. Adjusting
for this nonrecurring item, the increase of $1.9 million in 2000 versus 1999 was
due primarily to higher volume, the exiting of less profitable businesses and
strong productivity and quality improvements during the quarter.
Instruments
Sales of $186.5 million for the first quarter of 2000 increased by $143
million, or 328%, compared to the first quarter of 1999. This increase is
primarily attributable to revenues from the AI and Vivid acquisitions.
First quarter 2000 operating income was $5.8 million and increased by $1.3
million, or 29% versus the comparable period of 1999. The 2000 operating income
included a charge of $8.1 million for in-process R&D and a $.6 million charge
for the revaluation of acquired inventory, both attributable to the Vivid
acquisition. Excluding these nonrecurring charges, operating income increased
approximately 220% to $14.5 million for the first quarter of 2000 versus the
same period of 1999. Higher revenues discussed above, cost reductions and
production efficiencies were the primary contributors to the operating margin
improvement.
Fluid Sciences
Sales for the first quarter of 2000 were $61.7 million, up 14% versus the
same 1999 period. Strong semiconductor demand and growth in power generation
revenues offset softness in the aerospace market.
14
<PAGE> 16
Operating profit of $8.5 million for the first quarter of 2000 more than
doubled versus 1999. The 2000 operating profit included restructuring charges of
$2.4 million and a gain on the sale of a business a $.8 million. Excluding these
nonrecurring items, operating income for the first quarter of 2000 increased by
$6 million, or 151% versus the same period of 1999. Strong revenue growth,
productivity gains and exiting unprofitable businesses in 1999 contributed to
this operating margin expansion.
RESTRUCTURING CHARGES
The Company developed restructuring plans during 1998 to integrate and
consolidate its businesses and recorded restructuring charges in the first and
second quarters of 1998. During the first quarter of 1998, management developed
a plan to restructure certain businesses. That resulted in a pre-tax
restructuring charge of $30.5 million. During the second quarter of 1998, the
Company expanded its continuing effort to restructure certain businesses to
further improve performance. The plan resulted in additional pre-tax
restructuring charges of $19.5 million. The specific details of the actions and
charges by operating segment are discussed more fully in the 1999 Form 10-K.
During the third quarter of 1999, due to the substantial completion of the
actions of the 1998 restructuring plans, the Company reevaluated its 1998
restructuring plans. As a result of this review, costs associated with the
previously planned shutdown of two businesses were no longer required due to
actions taken to improve performance. Therefore, the Company recognized a
restructuring credit of $12 million during the third quarter of 1999, which
primarily affected the Fluid Sciences and Optoelectronics segments.
The Company's acquisitions in 1998 and 1999 and the Company's 1999
divestiture of its Technical Services segment (exiting government services) were
strategic milestones in the Company's transition to a commercial high-technology
company. Consistent with the strategic direction of the Company and concurrent
with the reevaluation of existing restructuring plans during the third quarter
of 1999, the Company developed additional plans during the third quarter of 1999
to restructure certain businesses to continue to improve the Company's
performance. These plans resulted in a pre-tax restructuring charge of $23.5
million recorded in the third quarter of 1999. The specific details of the
actions and charges by operating segment are discussed more fully in the 1999
Form 10-K. Due to increases in employee separation costs in certain of the
Company's non-U.S. operations, during the first quarter of 2000, the Company
increased the restructuring liability estimate by $2.4 million.
The following table summarizes restructuring activity from continuing
operations related to the 1998 and 1999 plans:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
APRIL 2, 2000
------------------
<S> <C>
(In millions)
Accrued restructuring costs at beginning of period.......... $27.2
Provisions.................................................. 2.4
Charges/writeroffs.......................................... --
Accrued restructuring costs at end of period................ $29.6
</TABLE>
Approximately $28 million was recorded as accrued restructuring costs in
connection with the May 1999 AI acquisition, and approximately $5 million was
recorded as accrued restructuring costs in connection with the December 1998
Lumen acquisition. The specific details of the actions are discussed in the 1999
Form 10-K.
15
<PAGE> 17
The following table summarizes restructuring activity from continuing
operations related to the Vivid, AI and Lumen acquisitions:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
(IN MILLIONS) APRIL 2, 2000
- ------------- -------------------
<S> <C>
Accrued restructuring costs at beginning of period.......... $14.1
Provisions.................................................. $ .3
Charges/writeoffs........................................... (1.0)
-----
Accrued restructuring costs at end of period................ $13.4
=====
</TABLE>
Cash outlays during the three months ended April 2, 2000 and April 4, 1999
were $1 million and $3.6 million, respectively, for all of these plans. The
Company expects to incur at least $30 million of cash outlays in connection with
these plans throughout fiscal 2000. Most of the actions remaining at April 2,
2000 are expected to occur in fiscal 2000.
DISCONTINUED OPERATIONS
On August 20, 1999, the Company sold its Technical Services segment. The
Company accounted for the sale of its Technical Services segment as a
discontinued operation in accordance with APB Opinion No. 30 and, accordingly,
the results of operations of the Technical Services segment have been segregated
from continuing operations and reported as a separate line item on the Company's
Consolidated Income Statements. As a result of a post-closing selling price
adjustment that was settled in April 2000, the Company is in the process of
finalizing the gain on disposition of discontinued operations, which will be
adjusted in the second quarter of 2000.
Sales from discontinued operations for the three months ended April 4, 1999
were $114.3 million. Operating income from discontinued operations was $8.8
million for the three months ended April 4, 1999.
OTHER EXPENSE
Other expense was $8.6 million for the first quarter of 2000 versus $4.6
million for the same period of 1999. This net increase in other expense was due
primarily to the impact of higher interest expense on increased debt levels
resulting from the AI acquisition.
INCOME TAX EXPENSE
Reported income tax expense as a percent of pre-tax income was 41% and 35%
for the first quarters of 2000 and 1999, respectively. The 2000 rate of 41%
reflects the impact of the nondeductible $8.1 million in-process R&D charge
recorded in connection with the Vivid acquisition. Income tax expense as a
percent of income before nonrecurring items was 30% for the first quarter of
2000.
FINANCIAL CONDITION
Short-term debt at April 2, 2000 was $340 million and included secured
promissory notes of $150 million issued to PE Corp. and commercial paper
borrowings of $180 million. Long-term debt at April 2, 2000 was $115 million
consisting primarily of unsecured notes. During the first quarter of 2000, the
net paydown of debt was approximately $45 million.
In March 2000, the Company's $250 million revolving credit facility was
refinanced and increased to a $300 million revolving credit facility that
expires in March 2001. The Company has an additional revolving credit agreement
for $100 million that expires in March 2002.
In January 1999, the Company filed a shelf registration statement with the
Securities and Exchange Commission (SEC) to register $465 million of securities.
This registration statement, together with the $35 million of securities covered
by a previously filed registration statement, will provide the Company with
financing flexibility to offer up to $500 million aggregate principal amount of
common stock, preferred stock,
16
<PAGE> 18
depository shares, debt securities, warrants, stock purchase contracts and/or
stock purchase units. The Company expects to use the net proceeds from the sale
of the securities for general corporate purposes, which may include, among other
things: the repayment of outstanding indebtedness, working capital, capital
expenditures, the repurchase of shares of common stock and acquisitions. The
precise amount and timing of the application of such proceeds will depend upon
the Company's funding requirements and the availability and cost of other funds.
The Company's credit facilities and shelf registration statements provide
flexibility to refinance its outstanding debt instruments at April 2, 2000 as
they mature.
Cash and cash equivalents decreased by $14.6 million to $112 million at the
end of the first quarter of 2000. Net cash provided by operating activities was
$12.3 million and was comprised of net income from continuing operations before
depreciation, amortization and other noncash items of $43.3 million and a $22.5
million net change in certain assets and liabilities during the first quarter of
2000. The largest component of this net change was a $16.8 million increase in
inventories, largely in the Instruments segment. Capital expenditures for the
first quarter of 2000 were $14.7 million and gains on dispositions were $8.5
million. During the quarter, the Company completed strategic alliances with
Genomic Solutions, a leader in genetic screening, and Bragg Photonics, a maker
of key fiber optic components, with equity investments totaling $15 million.
REVENUE RECOGNITION
The Securities and Exchange Commission released Staff Accounting Bulletin
(SAB) No. 101, Revenue Recognition in Financial Statements, on December 3, 1999.
This SAB provides additional guidance on the accounting for revenue recognition,
including both broad conceptual discussions as well as certain industry-
specific guidance. The new guidance that is most likely to have a potential
impact on the Company concerns customer acceptance and installation terms. The
Company is in the process of accumulating the information necessary to quantify
the potential impact of this new guidance. The guidance is effective for the
second quarter of fiscal 2000 and is required to be adopted effective January 3,
2000 by recording the effect of any prior year revenue transactions affected as
a "cumulative effect of a change in accounting principle" as of January 3, 2000.
First quarter 2000 financial statements would be restated to conform to the new
guidance as necessary.
FORWARD-LOOKING INFORMATION AND FACTORS AFFECTING FUTURE PERFORMANCE
This Quarterly Report contains "forward-looking statements." For this
purpose, any statements contained in this Annual Report that are not statements
of historical fact may be deemed to be forward-looking statements. Words such as
"believes," "anticipates," "plans," "expects," "will" and similar expressions
are intended to identify forward-looking statements. There are a number of
important factors that could cause the results of PerkinElmer to differ
materially from those indicated by these forward-looking statements. These
factors include, without limitation, those set forth in "Item 7. Management's
Discussions and Analysis of Financial Condition and Results of
Operations -- Forward-Looking Information and Factors Affecting Future
Performance" of the Company's 1999 Form 10-K which are expressly incorporated by
reference herein.
ITEM 3. MARKET RISK
Market Risk: The Company is exposed to market risk, including changes in
interest rates and currency exchange rates. To manage the volatility relating to
these exposures, the Company enters into various derivative transactions
pursuant to the Company's policies to hedge against known or forecasted market
exposures.
Foreign Exchange Risk Management: As a multinational corporation, the
Company is exposed to changes in foreign exchange rates. As the Company's
international sales grow, exposure to volatility in exchange rates could have a
material adverse impact on the Company's financial results. The Company's risk
from exchange rate changes is primarily related to non-dollar denominated sales
in Europe and Asia. The Company uses foreign currency forward and option
contracts to manage the risk of exchange rate fluctuations. The Company uses
these derivative instruments to reduce its foreign exchange risk by essentially
creating
17
<PAGE> 19
offsetting market exposures. The instruments held by the Company are not
leveraged and are not held for trading purposes. The Company uses forward
exchange contracts to hedge its net asset (balance sheet) position. The success
of the hedging program depends on forecasts of transaction activity in the
various currencies. To the extent that these forecasts are over or understated
during periods of currency volatility, the Company could experience
unanticipated currency gains or losses. The principal currencies hedged are the
British Pound, Canadian Dollar, Euro, Japanese Yen and Singapore Dollar. In
those currencies where there is a liquid, cost-effective forward market, the
Company maintains hedge coverage between minimum and maximum percentages of its
anticipated transaction exposure for periods not to exceed one year. The gains
and losses on these contracts offset changes in the value of the related
exposure.
Interest Rate Risk: The Company maintains an investment portfolio
consisting of securities of various issuers, types and maturities. The
investments are classified as available for sale. These securities are recorded
on the balance sheet at market value, with any unrealized gain or loss recorded
in comprehensive income. These instruments are not leveraged, and are not held
for trading purposes.
Value-At-Risk: The Company utilizes a Value-at-Risk ("VAR") model to
determine the maximum potential loss in the fair value of its interest rate and
foreign exchange sensitive derivative financial instruments within a 95%
confidence interval. The Company's computation was based on the
interrelationships between movements in interest rates and foreign currencies.
These interrelationships were determined by observing historical interest rate
and foreign currency market changes over corresponding periods. The assets and
liabilities, firm commitments and anticipated transactions, which are hedged by
derivative financial instruments, were excluded from the model. The VAR model
estimates were made assuming normal market conditions and a 95% confidence
level. There are various modeling techniques that can be used in the VAR
computation. The Company's computations are based on the Monte Carlo simulation.
The VAR model is a risk analysis tool and does not purport to represent actual
gains or losses in fair value that will be incurred by the Company. The Company
does not anticipate any material changes to the VAR model's estimated maximum
loss in market value through December 31, 2000 as discussed in the 1999 Form
10-K.
Management periodically reviews its interest rate and foreign currency
exposures and evaluates strategies to manage such exposures in the near future.
The Company implements changes, when deemed necessary, in the management of
hedging instruments which mitigate its exposure.
Since the Company utilizes interest rate and foreign currency sensitive
derivative instruments for hedging, a loss in fair value for those instruments
is generally offset by increases in the value of the underlying transaction.
It is the Company's policy to enter into foreign currency and interest rate
transactions only to the extent considered necessary to meet its objectives as
stated above. The Company does not enter into foreign currency or interest rate
transactions for speculative purposes.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the
quarter ended April 2, 2000. The Company's annual meeting of stockholders was
held on April 25, 2000. Proxies for the meeting were solicited pursuant to
Regulation 14A, and there were no solicitations in opposition to management's
nominees for Directors. All of such nominees (ten) were elected for terms of one
year each.
18
<PAGE> 20
PART II. OTHER INFORMATION
PERKINELMER, INC. AND SUBSIDIARIES
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Part I Exhibits:
Exhibit 27 -- Financial data schedule (submitted in electronic format
only)
Part II Exhibits:
None
(b) Reports on Form 8-K
A report on Form 8-K was filed with the Securities and Exchange
Commission on January 27, 2000 regarding the Company's completion of
its acquisition of Vivid Technologies, Inc.
19
<PAGE> 21
PERKINELMER, INC. AND SUBSIDIARIES
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 thereunto duly authorized.
PerkinElmer, Inc.
By: /s/ ROBERT F. FRIEL
------------------------------------
Robert F. Friel
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
Date: May 16, 2000
20
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-03-2000
<PERIOD-END> APR-02-2000
<CASH> 112,003
<SECURITIES> 0
<RECEIVABLES> 350,444
<ALLOWANCES> 13,300
<INVENTORY> 220,522
<CURRENT-ASSETS> 816,514
<PP&E> 487,051
<DEPRECIATION> 261,393
<TOTAL-ASSETS> 1,752,620
<CURRENT-LIABILITIES> 784,121
<BONDS> 114,850
0
0
<COMMON> 61,744
<OTHER-SE> 589,619
<TOTAL-LIABILITY-AND-EQUITY> 1,752,620
<SALES> 402,286
<TOTAL-REVENUES> 402,286
<CGS> 246,715
<TOTAL-COSTS> 366,398
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,575
<INCOME-PRETAX> 27,313
<INCOME-TAX> 11,070
<INCOME-CONTINUING> 16,243
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 16,243
<EPS-BASIC> $.34
<EPS-DILUTED> $.32
</TABLE>
