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PerkinElmer Inc. Reports Operating Results (10-Q)

August 14, 2009 | About:
EconMatters

PerkinElmer Inc. (PKI) filed Quarterly Report for the period ended 2009-07-05.

PerkinElmer Inc. is a global technology company which provides products and systems to the telecom medical pharmaceutical chemical semiconductor and photographic markets. The Company has operations in over 100 countries and is a component of the S&P 500 Index. The Company\'s continuing operations are classified into four operating segments:Life Sciences Optoelectronics Instruments and Fluid Sciences. PerkinElmer Inc. has a market cap of $2.08 billion; its shares were traded at around $17.8 with a P/E ratio of 12.9 and P/S ratio of 1.1. The dividend yield of PerkinElmer Inc. stocks is 1.5%. PerkinElmer Inc. had an annual average earning growth of 2.5% over the past 10 years.

Highlight of Business Operations:

Sales for the three months ended July 5, 2009 were $434.6 million, as compared to $505.0 million for the three months ended June 29, 2008, a decrease of $70.4 million, or 14%, which includes an approximate 6% decrease in sales attributable to unfavorable 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 three months ended July 5, 2009 as compared to the three months ended June 29, 2008 and includes the effect of foreign exchange rate fluctuations and acquisitions. The total decrease in sales reflects a $19.1 million, or 9%, decrease in our Human Health segment sales, due to a decrease in research market sales of $9.7 million and a decrease in diagnostics market sales of $9.4 million. Our Environmental Health segment sales decreased $51.3 million, or 17%, due to decreases in environmental, safety and security and industrial markets sales of $46.6 million and a decrease in laboratory services market sales of $4.7 million.

Sales for the six months ended July 5, 2009 were $866.1 million, as compared to $963.7 million for the six months ended June 29, 2008, a decrease of $97.5 million, or 10%, which includes an approximate 6% decrease in sales attributable to unfavorable 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 5, 2009 as compared to the six months ended June 29, 2008 and includes the effect of foreign exchange rate fluctuations and acquisitions. The total decrease in sales reflects a $21.9 million, or 6%, decrease in our Human Health segment sales, due to a decrease in diagnostics market sales of $15.3 million and a decrease in research market sales of $6.6 million. Our Environmental Health segment sales decreased $75.6 million, or 13%, due to decreases in the environmental, safety and security and industrial markets sales of $73.0 million and a decrease in laboratory services market sales of $2.6 million.

Cost of sales for the three months ended July 5, 2009 was $247.1 million, as compared to $289.9 million for the three months ended June 29, 2008, a decrease of approximately $42.8 million, or 15%. As a percentage of sales, cost of sales decreased to 56.9% for the three months ended July 5, 2009, from 57.4% for the three months ended June 29, 2008, resulting in an increase in gross margin of 50 basis points to 43.1% for the three months ended July 5, 2009, from 42.6% for the three months ended June 29, 2008. Amortization of intangible assets decreased and was $9.2 million for the three months ended July 5, 2009, as compared to $9.6 million for the three months ended June 29, 2008. Stock option expense was $0.3 million for each of the three month periods ended July 5, 2009 and June 29, 2008. The increase in gross margin was primarily the result of the combined favorable impact of productivity improvements and product mix, especially growth in higher gross margin products.

Cost of sales for the six months ended July 5, 2009 was $490.7 million, as compared to $556.5 million for the six months ended June 29, 2008, a decrease of approximately $65.8 million, or 12%. As a percentage of sales, cost of sales decreased to 56.7% for the six months ended July 5, 2009, from 57.8% for the six months ended June 29, 2008, resulting in an increase in gross margin of 110 basis points to 43.3% for the six months ended July 5, 2009, from 42.2% for the six months ended June 29, 2008. Amortization of intangible assets decreased and was $17.9 million for the six months ended July 5, 2009, as compared to $18.8 million for the six months ended June 29, 2008. Stock option expense was $0.6 million for each of the six month periods ended July 5, 2009 and June 29, 2008. The amortization of purchase accounting adjustments to record the inventory from certain acquisitions completed in fiscal year 2009 was approximately $0.2 million for the six months ended July 5, 2009. The increase in gross margin was primarily the result of the combined favorable impact of productivity improvements and product mix, especially growth in higher gross margin products.

Selling, general and administrative expenses for the six months ended July 5, 2009 were $252.4 million, as compared to $272.6 million for the six months ended June 29, 2008, a decrease of approximately $20.2 million, or 7%. As a percentage of sales, selling, general and administrative expenses were 29.1% for the six months ended July 5, 2009, as compared to 28.3% for the six months ended June 29, 2008. Amortization of intangible assets increased and was $8.5 million for the six months ended July 5, 2009, as compared to $8.0 million for the six months ended June 29, 2008. Stock option expense increased and was $3.0 million for the six months ended July 5, 2009, as compared to $2.9 million for the six months ended June 29, 2008. Purchase accounting adjustments for contingent consideration and other acquisition costs related to certain acquisitions completed in fiscal year 2009 were an expense of approximately $1.1 million for the six months ended July 5, 2009. The decrease in selling, general and administrative expenses was primarily the result of cost saving initiatives, partially offset by increased sales and marketing expenses, particularly in emerging territories, increased pension expenses and foreign exchange.

Interest and other expense, net for the six months ended July 5, 2009 was $9.0 million, as compared to $10.3 million for the six months ended June 29, 2008, a decrease of $1.2 million. The decrease in interest and other expense, net, for the six months ended July 5, 2009 as compared to the six months ended June 29, 2008 was primarily due to lower interest rates on outstanding debt balances, which was partially offset by an increase in the amount of fixed rate debt and lower interest rates on cash balances. Interest expense decreased $3.2 million and interest income decreased $1.5 million for the six months ended July 5, 2009, as compared to the six months ended June 29, 2008. Other expenses for the six months ended July 5, 2009 as compared to the six months ended June 29, 2008 decreased by $0.7 million, and consisted primarily of expenses related to foreign currency transactions and foreign currency translation.

Read the The complete ReportPKI is in the portfolios of David Dreman of Dreman Value Management.

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