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PerkinElmer Inc. Reports Operating Results (10-Q)

November 10, 2010 | About:
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10qk

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PerkinElmer Inc. (PKI) filed Quarterly Report for the period ended 2010-10-03.

Perkinelmer Inc. has a market cap of $2.8 billion; its shares were traded at around $23.74 with a P/E ratio of 16.6 and P/S ratio of 1.5. The dividend yield of Perkinelmer Inc. stocks is 1.2%. 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, Chuck Royce of Royce& Associates, Chuck Royce of Royce& Associates, Stanley Druckenmiller of Duquesne Capital Management, LLC, Paul Tudor Jones of The Tudor Group, Steven Cohen of SAC Capital Advisors, Jean-Marie Eveillard of First Eagle Investment Management, LLC, Jim Simons of Renaissance Technologies LLC, Jeremy Grantham of GMO LLC.

Highlight of Business Operations:

Sales for the three months ended October 3, 2010 were $419.1 million, as compared to $377.0 million for the three months ended October 4, 2009, an increase of $42.1 million, or 11%, which includes an approximate 2% increase from acquisitions and an approximate 1% decrease in sales attributable to unfavorable changes in foreign exchange rates. The analysis in the remainder of this paragraph compares segment sales for the three months ended October 3, 2010 as compared to the three months ended October 4, 2009 and includes the effect of foreign exchange rate fluctuations and acquisitions. The total increase in sales reflects an increase of $15.4 million, or 9%, in our Human Health segment sales due to an increase in diagnostics market sales of $15.4 million. Sales in the research market were flat for the three months ended October 3, 2010 as compared to the three months ended October 4, 2009. Our Environmental Health segment sales increased $26.7 million, or 14%, due to increases in environmental and safety and industrial markets sales of $14.1 million, and an increase in laboratory services market sales of $12.6 million.

Sales for the nine months ended October 3, 2010 were $1,234.4 million, as compared to $1,122.3 million for the nine months ended October 4, 2009, an increase of $112.1 million, or 10%, which includes an approximate 2% increase in sales attributable to acquisitions and no net impact from changes in foreign exchange rates. The analysis in the remainder of this paragraph compares segment sales for the nine months ended October 3, 2010 as compared to the nine months ended October 4, 2009 and includes the effect of foreign exchange rate fluctuations and acquisitions. The total increase in sales reflects an increase of $41.9 million, or 8%, in our Human Health segment sales due to an increase in diagnostics market sales of $35.7 million and an increase in research market sales of $6.2 million. Our Environmental Health segment sales increased $70.2 million, or 12%, due to increases in environmental and safety and industrial markets sales of $39.3 million, and an increase in laboratory services market sales of $30.9 million.

Cost of sales for the nine months ended October 3, 2010 was $684.1 million, as compared to $617.2 million for the nine months ended October 4, 2009, an increase of $66.9 million, or 11%. As a percentage of sales, cost of sales increased to 55.4% for the nine months ended October 3, 2010, from 55.0% for the nine months ended October 4, 2009, resulting in a decrease in gross margin of approximately 40 basis points to 44.6% for the nine months ended October 3, 2010, from 45.0% for the nine months ended October 4, 2009. Amortization of intangible assets increased and was $31.3 million for the nine months ended October 3, 2010, as compared to $26.6 million for the nine months ended October 4, 2009. Stock compensation expense decreased and was $0.7 million for the nine months ended October 3, 2010, as compared to $0.9 million for the nine months ended October 4, 2009. The amortization of purchase accounting adjustments to record the inventory from certain acquisitions completed in fiscal year 2009 was $0.3 million for the nine months ended October 4, 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 increased sales volume, productivity improvements and cost containment initiatives.

Selling, general and administrative expenses for the three months ended October 3, 2010 were $120.6 million, as compared to $112.8 million for the three months ended October 4, 2009, an increase of $7.8 million, or 7%. As a percentage of sales, selling, general and administrative expenses decreased and were 28.8% for the three months ended October 3, 2010, as compared to 29.9% for the three months ended October 4, 2009. Amortization of intangible assets increased and was $4.2 million for the three months ended October 3, 2010, as compared to $4.0 million for the three months ended October 4, 2009. Stock compensation expense decreased and was $1.1 million for the three months ended October 3, 2010, as compared to $1.4 million for the three months ended October 4, 2009. Purchase accounting adjustments for contingent consideration and other acquisition costs related to certain acquisitions added an expense of $0.2 million for the three months ended October 3, 2010 and $0.7 million for the three months ended October 4, 2009. The increase in selling, general and administrative expenses was primarily the result of increased sales and marketing expenses, particularly in emerging territories, increased pension expense and foreign exchange, partially offset by cost containment initiatives.

Selling, general and administrative expenses for the nine months ended October 3, 2010 were $365.4 million, as compared to $347.7 million for the nine months ended October 4, 2009, an increase of $17.7 million, or 5%. As a percentage of sales, selling, general and administrative expenses decreased and were 29.6% for the nine months ended October 3, 2010, as compared to 31.0% for the nine months ended October 4, 2009. Amortization of intangible assets increased and was $12.4 million for the nine months ended October 3, 2010, as compared to $11.5 million for the nine months ended October 4, 2009. Stock compensation expense was $4.3 million for each of the nine months ended October 3, 2010 and October 4, 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 nine months ended October 3, 2010. Purchase accounting adjustments for contingent consideration and other acquisition costs related to certain acquisitions added an expense of $2.1 million for the nine months ended October 3, 2010 and $1.6 million for the nine months ended October 4, 2009. The increase in selling, general and administrative expenses was primarily the result of increased sales and marketing expenses, particularly in emerging territories, increased pension expense and foreign exchange, partially offset by cost containment initiatives.

Research and development expenses for the nine months ended October 3, 2010 were $69.8 million, as compared to $67.1 million for the nine months ended October 4, 2009, an increase of $2.7 million, or 4%. As a percentage of sales, research and development expenses decreased to 5.7% for the nine months ended October 3, 2010, as compared to 6.0% for the nine months ended October 4, 2009. Amortization of intangible assets decreased and was $1.2 million for the nine months ended October 3, 2010, as compared to $1.5 million for the nine months ended October 4, 2009. Stock compensation expense was $0.3 million for the nine months ended October 3, 2010 and $0.4 million for the nine months ended October 4, 2009. We directed research and development efforts similarly during the first nine months of fiscal year 2010 and fiscal year 2009, primarily towards the diagnostics and research markets within our Human Health segment, and the analytical sciences and laboratory service and support markets within our Environmental Health segment, in order to help accelerate our growth initiatives.

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