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PerkinElmer Inc. Reports Operating Results (10-Q)

August 10, 2010 | About:

10qk

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PerkinElmer Inc. (PKI) filed Quarterly Report for the period ended 2010-07-04.

Perkinelmer Inc. has a market cap of $2.62 billion; its shares were traded at around $22.2 with a P/E ratio of 15.6 and P/S ratio of 1.4. The dividend yield of Perkinelmer Inc. stocks is 1.3%. Perkinelmer Inc. had an annual average earning growth of 1.9% over the past 10 years.PKI is in the portfolios of Manning & Napier Advisors, Inc, Stanley Druckenmiller of Duquesne Capital Management, LLC, Chuck Royce of Royce& Associates, Chuck Royce of Royce& Associates, Steven Cohen of SAC Capital Advisors, Jeremy Grantham of GMO LLC.

Highlight of Business Operations:

Sales for the three months ended July 4, 2010 were $497.8 million, as compared to $438.3 million for the three months ended July 5, 2009, an increase of $59.6 million, or 14%, which includes an approximate 2% decrease in sales attributable to unfavorable changes in foreign exchange rates and an approximate 2% increase from acquisitions. The analysis in the remainder of this paragraph compares segment sales for the three months ended July 4, 2010 as compared to the three months ended July 5, 2009 and includes the effect of foreign exchange rate fluctuations and acquisitions. The total increase in sales reflects an increase of $12.6 million, or 7%, in our Human Health segment sales due to an increase in diagnostics market sales of $9.6 million and an increase in research market sales of $3.0 million. Our Environmental Health segment sales increased $46.9 million, or 19%, due to increases in environmental, safety and security and industrial markets sales of $34.3 million, and an increase in laboratory services market sales of $12.6 million.

Sales for the six months ended July 4, 2010 were $962.9 million, as compared to $873.4 million for the six months ended July 5, 2009, an increase of $89.5 million, or 10%, which includes an approximate 1% increase in sales attributable to favorable changes in foreign exchange rates and an approximate 1% increase from acquisitions. The analysis in the remainder of this paragraph compares segment sales for the six months ended July 4, 2010 as compared to the six months ended July 5, 2009 and includes the effect of foreign exchange rate fluctuations and acquisitions. The total increase in sales reflects an increase of $23.9 million, or 7%, in our Human Health segment sales due to an increase in diagnostics market sales of $17.6 million and an increase in research market sales of $6.3 million. Our Environmental Health segment sales increased $65.6 million, or 13%, due to increases in environmental, safety and security and industrial markets sales of $47.4 million, and an increase in laboratory services market sales of $18.2 million.

Cost of sales for the three months ended July 4, 2010 was $285.0 million, as compared to $250.2 million for the three months ended July 5, 2009, an increase of approximately $34.8 million, or 14%. As a percentage of sales, cost of sales increased to 57.3% for the three months ended July 4, 2010, from 57.1% for the three months ended July 5, 2009, resulting in a decrease in gross margin of approximately 20 basis points to 42.7% for the three months ended July 4, 2010, from 42.9% for the three months ended July 5, 2009. Amortization of intangible assets increased and was $10.8 million for the three months ended July 4, 2010, as compared to $9.2 million for the three months ended July 5, 2009. Stock compensation expense was $0.3 million for each of the three months ended July 4, 2010 and July 5, 2009. The decrease in gross margin was primarily the result of changes in product mix with growth in sales of lower gross margin product offerings, partially offset by productivity improvements and cost containment initiatives.

Selling, general and administrative expenses for the three months ended July 4, 2010 were $133.3 million, as compared to $124.0 million for the three months ended July 5, 2009, an increase of approximately $9.3 million, or 7%. As a percentage of sales, selling, general and administrative expenses decreased and were 26.8% for the three months ended July 4, 2010, as compared to 28.3% for the three months ended July 5, 2009. Amortization of intangible assets was $4.3 million for each of the three months ended July 4, 2010 and July 5, 2009. The gain on the sale of a facility in Boston, Massachusetts that was damaged in a fire in March 2005 was $3.4 million for the three months ended July 4, 2010. Stock compensation expense increased and was $1.4 million for the three months ended July 4, 2010, as compared to $1.3 million for the three months ended July 5, 2009. Purchase accounting adjustments for contingent consideration and other acquisition costs related to certain acquisitions added an expense of approximately $1.0 million for the three months ended July 4, 2010 and approximately $0.1 million for the three months ended July 5, 2009. The increase in selling, general and administrative expenses was primarily the result of increased pension expenses and foreign exchange, partially offset by cost containment initiatives.

Selling, general and administrative expenses for the six months ended July 4, 2010 were $265.4 million, as compared to $253.2 million for the six months ended July 5, 2009, an increase of approximately $12.2 million, or 5%. As a percentage of sales, selling, general and administrative expenses decreased and were 27.6% for the six months ended July 4, 2010, as compared to 29.0% for the six months ended July 5, 2009. Amortization of intangible assets increased and was $8.8 million for the six months ended July 4, 2010, as compared to $8.5 million for the six months ended July 5, 2009. The gain on the sale of a facility in Boston, Massachusetts that was damaged in a fire in March 2005 was $3.4 million for the six months ended July 4, 2010. Stock compensation expense increased and was $3.4 million for the six months ended July 4, 2010, as compared to $3.0 million for the six months ended July 5, 2009. Purchase accounting adjustments for contingent consideration and other acquisition costs related to certain acquisitions added an expense of approximately $2.0 million for the six months ended July 4, 2010 and approximately $1.1 million for the six months ended July 5, 2009. The increase in selling, general and administrative expenses was primarily the result of increased pension expenses, partially offset by cost containment initiatives.

To facilitate the sale of a business in fiscal year 2001, we were required to guarantee the lease obligations that the buyer assumed related to the lease for the building in which the business operated. The lease obligations continue through March 2011. While we assigned our interest in the lease to the buyer at the time of the sale of the business, the buyer subsequently defaulted under the lease, and the lessor sought reimbursement from us. We recorded a charge of $2.7 million in fiscal year 2007 related to payments for this lease obligation. The buyer filed for bankruptcy protection during the third quarter of fiscal year 2008 and was delinquent in making both its lease payments and payments for certain building expenses. The buyer ceased operations in the third quarter of fiscal year 2009 and vacated the property. We recorded an additional charge of $0.9 million during the third quarter of fiscal year 2009 related to waste removal and restoration costs, and reduced the estimated sublease rental payments reasonably expected to be obtained for the property. We also recorded an additional charge of $0.1 million during the second quarter of fiscal year 2010 to further reduce the estimated sublease rental payments reasonably expected to be obtained for the property. We were required to make payments for these obligations of $1.0 million during the first six months of fiscal year 2010, $1.1 million during fiscal year 2009, and $0.4 million during fiscal year 2008. The remaining balance of this accrual as of July 4, 2010 was $1.2 million.

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