UNITED STATES SECURITIES AND EXCHANGE COMMISSION
FORM 10-Q
|
(Mark One)
|
||
|
þ
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
| For the quarterly period ended July 1, 2001 | ||
| or | ||
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 |
|
Commission file number 1-5075
PerkinElmer, Inc.
|
Massachusetts
|
04-2052042 | |
|
(State or other jurisdiction of
incorporation or organization) |
(I.R.S. employer
identification no.) |
|
| 45 William Street, Wellesley, Massachusetts | 02481 | |
| (Address of principal executive offices) | (Zip Code) | |
(781) 237-5100
NONE
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.
þ Yes o No
Number of shares outstanding of each of the
issuer’s classes of common stock, as of the latest
practicable date:
Class
Outstanding at August 13, 2001
101,423,668
(Excluding treasury shares)
PART I. FINANCIAL INFORMATION
Item 1.
Financial
Statements
PERKINELMER, INC. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
Three Months Ended
Six Months Ended
July 1,
July 2,
July 1,
July 2,
2001
2000
2001
2000
(In thousands except per share data)
$
390,810
$
369,510
$
795,345
$
742,913
215,887
216,328
447,194
442,227
20,364
19,417
42,201
39,057
—
—
2,493
—
106,421
92,941
209,617
184,949
(1,000
)
(6,300
)
(2,500
)
(3,900
)
(4,461
)
(1,416
)
(8,348
)
(9,212
)
53,599
48,540
104,688
89,792
(7,924
)
(7,166
)
(20,840
)
(14,160
)
45,675
41,374
83,848
75,632
14,799
11,362
29,037
21,885
30,876
30,012
54,811
53,747
(1,467
)
1,108
(1,906
)
(6,384
)
—
4,453
—
4,453
$
29,409
$
35,573
$
52,905
$
51,816
$
.31
$
.31
$
.55
$
.55
(.01
)
.06
(.02
)
(.02
)
$
.29
$
.36
$
.53
$
.53
$
.30
$
.30
$
.53
$
.53
(.01
)
.05
(.02
)
(.02
)
$
.28
$
.35
$
.51
$
.51
100,622
98,070
100,388
97,498
104,097
101,592
104,099
101,208
$
.07
$
.07
$
.14
$
.14
The accompanying unaudited notes are an integral part of these consolidated financial statements.
2
PERKINELMER, INC. AND SUBSIDIARIES
July 1,
December 31,
2001
2000
(Unaudited)
(In thousands except
share data)
$
132,265
$
121,428
313,225
329,312
236,620
209,043
213,751
170,502
63,971
71,430
959,832
901,715
554,500
545,962
(268,348
)
(272,962
)
286,152
273,000
34,937
36,226
911,280
918,065
79,861
103,124
$
2,272,062
$
2,232,130
$
228,944
$
185,411
102,619
135,632
32,077
53,344
316,204
315,026
679,844
689,413
589,760
583,337
229,196
230,991
—
—
122,908
122,908
52,264
37,060
874,782
835,917
(59,184
)
(39,042
)
(217,508
)
(228,454
)
773,262
728,389
$
2,272,062
$
2,232,130
The accompanying unaudited notes are an integral part of these consolidated financial statements.
3
PERKINELMER, INC. AND SUBSIDIARIES
Six Months Ended
July 1,
July 2,
2001
2000
(In thousands)
$
52,905
$
51,816
1,906
6,384
—
(4,453
)
54,811
53,747
2,493
—
(2,500
)
—
10,018
—
43,665
36,284
(8,607
)
(10,865
)
10,550
21,373
(31,495
)
(25,569
)
(19,620
)
5,485
(18,346
)
(20,641
)
(5,298
)
(14,000
)
35,671
45,814
1,350
(9,204
)
37,021
36,610
(43,193
)
(29,235
)
2,574
24,486
(16,412
)
—
(7,062
)
(15,226
)
5,500
—
—
1,571
(58,593
)
(18,404
)
(5,540
)
17,249
(64,133
)
(1,155
)
45,000
187,264
(3,516
)
(236,429
)
17,327
21,188
(705
)
(10,486
)
(14,081
)
(13,624
)
44,025
(52,087
)
(6,076
)
(4,983
)
10,837
(21,615
)
121,428
128,841
$
132,265
$
107,226
The accompanying unaudited notes are an integral part of these consolidated financial statements.
4
PERKINELMER, INC. AND SUBSIDIARIES
(1) Nature of Operations
PerkinElmer, Inc. (the “Company”) is a global technology company, which provides products and systems to the drug discovery, genetic screening, pharmaceutical research, telecommunications, chemical, semiconductor, medical, aerospace and photographic markets. The Company has operations in over 125 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.
The operating segments and their principal products and services are:
Life Sciences: Helps solve the complex analytical problems encountered in drug discovery and genetic screening laboratories by providing solutions, including measuring instrumentation with interfacing software and a wide range of reagents and consumables. Within the field of drug discovery, Life Sciences focuses on customers engaged in pharmaceutical, biotechnology and academia laboratory research. In genetic screening the subject of the screen is typically a large number of patients. Customers include public health authorities in the United States and around the world.
Optoelectronics: Produces a broad spectrum of optoelectronic customer solutions, including, optical fiber communication components and test equipment, imaging devices, CCD cameras, thermopile arrays and large area amorphous silicon detectors, sensor products including single photon counting modules and Positron Emission Tomography (PET) sensors used in life sciences applications, and high-performance specialty lighting sources .
Instruments: Develops, manufactures and markets sophisticated analytical instruments for pharmaceutical companies, research laboratories, academia, medical institutions, government agencies and a wide range of industrial applications designed to provide industry-specific solutions. Analytical Instruments provides world class analytical solutions employing technologies such as molecular and atomic spectroscopies, high pressure liquid chromatography, mass spectrometry, gas chromatography, and thermal and elemental analysis.
Fluid Sciences: Solves critical sealing and sealing system needs for customers in aerospace, semiconductor processing and power generation equipment manufacturing. Provides proprietary coating services and testing for semiconductor process equipment, OEMs and users. The segment designs and manufactures static and dynamic seals, sealing systems, solenoid valves, bellows devices, coatings, advanced pneumatic components, systems and assemblies and sheet metal-formed products for original equipment manufacturers and end users. These products improve equipment efficiency and reliability, lower cost-of-ownership of equipment, reduce harmful emissions and prevent contamination.
(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 (the “SEC”). Certain information in footnote disclosures normally included in financial statements has been condensed or omitted in accordance with the rules and regulations of the SEC. These statements should be read in conjunction with the Company’s Annual Report for the fiscal year ended December 31, 2000, filed on Form 10-K with the SEC (as supplemented by the Form 8-K filed with the SEC on August 3, 2001, the “2000 Form 10-K”). The balance sheet amounts at December 31, 2000 in this report were extracted from the Company’s audited 2000 financial statements included in the 2000 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
5
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 six months ended July 1, 2001 are not necessarily indicative of the results for the entire fiscal year.
In 2001, the Board of Directors approved a plan to sell the Security and Detection Systems business. The results of operations of the Security and Detection Systems business were previously reported as part of the Instruments segment. The Company has accounted for the plan to sell its Security and Detection Systems business as a discontinued operation in accordance with APB Opinion No. 30, Reporting the Results of Operations and, accordingly, the results of operations of the Security and Detection Systems business have been segregated from continuing operations and reported as a separate line on the Company’s Consolidated Income Statements and Statements of Cash Flows. The net assets of the Security and Detection Systems business are reflected as Net Assets of Discontinued Operations in the accompanying Consolidated Balance Sheets.
At the Company’s April 24, 2001 Annual Meeting of Stockholders, an increase in the number of authorized shares of common stock from 100,000,000 shares to 300,000,000 shares was approved. At the April 24, 2001 Board of Directors’ meeting, a two-for-one stock split was approved and was effected on June 1, 2001 by means of a 100% stock dividend to stockholders of record as of May 15, 2001.
(3) Acquisitions
On July 31, 2000, 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 sciences industry. Details of the transaction and pro forma financial information were reported on a Current Report on Form 8-K filed with the SEC on August 1, 2000 and in the 2000 Form 10-K.
Unaudited pro forma operating results for the Company for the six months ended July 2, 2000, assuming the acquisition of NEN was completed as of January 3, 2000, would be as follows: sales of $855.0 million; net income of $43.2 million; basic and diluted earnings of $.43 and $.42 per share, respectively.
The unaudited pro forma financial information is provided for informational purposes only. It is not necessarily indicative of the Company’s operating results that would have occurred had the acquisition been consummated on the date for which the consummation of the acquisition is being given effect, nor is it necessarily indicative of the Company’s future operating results. The unaudited pro forma financial information does not give effect to acquisitions, other than NEN, does not adjust for businesses divested and does not adjust for foreign exchange. The pro forma amounts exclude acquisition related charges of $24.3 million for purchased in-process research and development related to NEN.
(4) Restructuring Charges
Consistent with the strategic direction of the Company and concurrent with the reevaluation of existing restructuring plans at the time, 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 Company’s 2000 Form 10-K.
As a result of a strategic review of the businesses to be restructured in the Company’s Fluid Sciences segment, continued aggressive actions during the first six months of 2001 by the Company to improve the cost structure of the respective businesses, and lower than anticipated costs related to employee separation costs, the Company adjusted its original estimate of restructuring costs and recorded pre-tax credits of $2.5 million
6
during the first six months of 2001. Accrued restructuring costs relating to the 1999 plan were $2.7 million at July 1, 2001.
During the fourth quarter of 2000, the Company reevaluated its 1999 restructuring plan due to the substantial completion of the respective actions and the continuing transformation of the portfolio of businesses during 2000. This resulted in the recording of a pre-tax restructuring charge of $15.1 million for actions to be completed in 2001 (the “2000 plan”). These charges related to the Company’s Life Sciences and Optoelectronics segments. The principal actions in the restructuring plans included close-down or consolidation of a number of offices and facilities, transfer of assembly activities to lower cost geographic locations, disposal of underutilized assets and general cost reductions. Details of the 2000 plan are discussed more fully in the 2000 Form 10-K.
The following table summarizes the restructuring
activity related to the 2000 plan:
Six Months Ended
July 1, 2001
(In millions)
$
15.1
(7.9
)
$
7.2
The Company finalized its restructuring plans related to its acquisition of the Analytical Instruments Division (AI) of PE Corp. (May 1999) during 2000. Additionally, the Company recorded approximately $4 million as accrued restructuring costs in connection with the NEN acquisition in August 2000. These plans include actions primarily to integrate the operations of the acquired businesses and improve their cost structures through consolidation or shutdown of certain facilities, workforce and overhead reductions and the termination of certain leases and other contractual obligations. The majority of the remaining restructuring actions are expected to occur through fiscal 2001.
The following table summarizes the restructuring
activity related to the AI and NEN acquisitions:
Six Months Ended
July 1, 2001
(In millions)
$
32.3
(10.1
)
$
22.2
Cash outlays during the six months ended July 1, 2001 were $14.5 million for all of these plans. The Company expects to incur at least $20 to $25 million of cash outlays in connection with these plans throughout fiscal 2001. Most of the actions remaining at July 1, 2001 are expected to occur in fiscal 2001.
(5) Gains on Dispositions
The Company realized a pre-tax gain of approximately $4.5 million relating to the disposition of its Space Valves product line in the second quarter of 2001. During the first quarter of 2001, the Company recognized previously deferred pre-tax gains of $3.9 million. These gains related to certain businesses previously divested by the Company. The financial results of the divested businesses for all periods were not material to the consolidated results of the Company.
During the first six months of 2000, the Company sold its micromachined sensors and specialty semiconductor businesses, resulting in a pre-tax gain of $6.7 million and recognized $2.5 million of pre-tax
7
gains from previously deferred sales proceeds. The financial results of the divested businesses for all periods were not material to the consolidated results of the Company.
(6) Inventories
Inventories consisted of the following:
July 1,
December 31,
2001
2000
(In thousands)
$
104,206
$
84,184
57,669
50,500
74,745
74,359
$
236,620
$
209,043
| (7) | Property, Plant and Equipment |
Property, plant and equipment, at cost, consisted
of the following:
July 1,
December 31,
2001
2000
(In thousands)
$
25,599
$
26,058
147,420
143,314
381,481
376,590
$
554,500
$
545,962
(8) 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 $656 million and $660 million at July 1, 2001 and December 31, 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 $255 million and $258 million at July 1, 2001 and December 31, 2000, respectively.
(9) Debt
Short-term debt at July 1, 2001 was $229 million and was comprised primarily of commercial paper borrowings of $222 million. The Company also has a $300 million revolving credit facility which expires in March 2002 and a $100 million revolving credit facility expiring in March 2006. There were no outstanding balances on either facility at July 1, 2001 or December 31, 2000. Long-term debt at July 1, 2001 was approximately $590 million, consisting of $115 million of unsecured notes which mature in 2005 and $475 million of convertible debentures. The debentures are currently convertible into 10.8 million shares of the Company’s common stock at approximately $42.50 per share. Conversion of the debentures was not assumed in the computation of diluted earnings per share because the effect of conversion would have been antidilutive.
8
(10) Comprehensive Income
Comprehensive income consisted of the following:
Three Months Ended
Six Months Ended
July 1,
July 2,
July 1,
July 2,
2001
2000
2001
2000
(In thousands)
$
29,409
$
35,573
$
52,905
$
51,816
(4,829
)
(7,144
)
(19,407
)
(17,937
)
3,473
6,670
(736
)
6,740
—
(96
)
—
(96
)
3,473
6,574
(736
)
6,644
(1,356
)
(570
)
(20,143
)
(11,293
)
$
28,053
$
35,003
$
32,762
$
40,523
The components of accumulated other comprehensive
loss were as follows:
July 1,
December 31,
2001
2000
(In thousands)
$
(59,351
)
$
(39,945
)
167
903
$
(59,184
)
$
(39,042
)
(11) 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 2000 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 six months of 2001 and 2000 are discussed in Item 2 of this Quarterly Report on Form 10-Q and are considered an integral part of this note.
9
(12) Discontinued Operations
The results of operations of the Security and Detection Systems business were previously reported as part of the Instruments segment. The Company has accounted for the plan to sell the Security and Detection Business as a discontinued operation in accordance with APB Opinion No. 30 and, accordingly, the results of operations of the Security and Detection Business have been segregated from continuing operations and reported as a separate line on the Company’s Consolidated Income Statements and Statements of Cash Flows. The net assets of the Security and Detection Business are reflected as Net Assets of Discontinued Operations in the accompanying Consolidated Balance Sheets.
| Three Months Ended | Six Months Ended | |||||||||||||||
|
|
|
|||||||||||||||
| July 1, | July 2, | July 1, | July 2, | |||||||||||||
| 2001 | 2000 | 2001 | 2000 | |||||||||||||
|
|
|
|
|
|||||||||||||
| (In thousands) | ||||||||||||||||
|
Sales
|
$ | 19,918 | $ | 29,195 | $ | 41,080 | $ | 58,078 | ||||||||
|
Costs and expenses
|
21,237 | 26,270 | 42,295 | 60,517 | ||||||||||||
|
|
|
|
|
|||||||||||||
|
Operating income (loss) from discontinued
operations
|
(1,319 | ) | 2,925 | (1,215 | ) | (2,439 | ) | |||||||||
|
Other expense
|
(816 | ) | (769 | ) | (1,635 | ) | (2,350 | ) | ||||||||
|
|
|
|
|
|||||||||||||
|
Operating income (loss) from discontinued
operations before income taxes
|
(2,135 | ) | 2,156 | (2,850 | ) | (4,789 | ) | |||||||||
|
Provision (benefit) for income taxes
|
(668 | ) | 1,048 | (944 | ) | 1,595 | ||||||||||
|
|
|
|
|
|||||||||||||
|
Income (loss) from discontinued operations, net
of taxes
|
$ | (1,467 | ) | $ | 1,108 | $ | (1,906 | ) | $ | (6,384 | ) | |||||
|
|
|
|
|
|||||||||||||
The reported loss from discontinued operations for the six month period ended July 2, 2000, included an in-process research and development charge of $8.1 million and a charge for the revaluation of acquired inventory of $1.1 million in connection with the Company’s acquisition of Vivid Technologies, Inc. in January 2000. The specifics of this acquisition are discussed more fully in the Company’s 2000 Form 10-K.
(13) New Accounting Pronouncements
The Company adopted Financial Accounting Standards Board Statement of Financial Accounting Standards (SFAS) No. 137, Accounting for Derivative Instruments and Hedging Activities — Deferral of the Effective Date of SFAS No. 133, effective January 1, 2001. 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 are accounted for depending on the use of the derivative and whether it qualifies for hedge accounting. If a derivative is a hedge, depending on the nature of the hedge, changes in the fair value of the derivative are either offset against the change in fair value of the hedged item through earnings or recognized in other comprehensive income until the hedged item is recognized in earnings. The Company immediately records in earnings the extent to which a hedge is not effective in achieving offsetting changes in fair value. The adoption of SFAS No. 133 did not have a material effect on the Company’s results of operations or financial position.
In July 2001, the Financial Accounting Standards Board (FASB) issued Statements of Financial Accounting Standards (SFAS) No. 141, Business Combinations, and SFAS No. 142, Goodwill and Other Intangible Assets. Under these new Standards the FASB eliminated accounting for any mergers and acquisitions as poolings of interests, eliminated amortization of goodwill and indefinite life intangible assets, and established new impairment measurement procedures for goodwill. For calendar-year reporting companies, the standards become effective for all acquisitions completed on or after June 30, 2001. Changes in financial statement treatment for goodwill and intangible assets arising from mergers and acquisitions
10
completed prior to June 30, 2001 become effective January 1, 2002. The Company is currently assessing the impact of implementing these standards.
(14) Subsequent Event
On July 16, 2001, the Company announced its proposed acquisition of Packard BioScience Company pursuant to an Agreement and Plan of Merger dated as of July 13, 2001. In connection with this acquisition, the Company agreed to issue 0.311 shares of PerkinElmer common stock for each outstanding share of Packard BioScience common stock. The Company also agreed to assume all outstanding options to purchase Packard BioScience common stock, which will become exercisable for shares of PerkinElmer common stock following the merger after giving effect to the same exchange ratio as offered to the Packard BioScience common stockholders. The transaction will be accounted for as a purchase in accordance with recently issued SFAS No. 141, Business Combinations, and SFAS No. 142, Goodwill and Other Intangible Assets, effective for any business combination that is completed after June 30, 2001. These statements requires the use of the purchase method of accounting and the allocation of the purchase price to assets and liabilities assumed based on their respective fair values. The transaction is subject to certain customary closing conditions and regulatory approvals, as well as the approval of the shareholders of Packard BioScience and PerkinElmer, and is expected to close in the fourth quarter of 2001.
11
Item 2. Management’s Discussion And Analysis Of Results Of Operations And Financial Condition
Acquisitions and Divestitures
On July 31, 2000, the Company completed its acquisition on NEN Life Sciences, Inc. (NEN), a provider of state-of-the-art drug discovery products, services, reagents and technologies to the life sciences industry. Details of the transaction and pro forma financial information were reported on a current report on Form 8-K filed with the SEC on August 1, 2000 and in the 2000 Form 10-K.
In 2001, the Board of Directors approved a plan to sell the Security and Detection Systems Business. This business has appropriately been reflected as a discontinued operation in the Company’s consolidated financial statements.
Discussion Of Consolidated Results Of Operations
Revenues
Revenues for the second quarter were $390.8 million, up 6% from $369.5 million for the second quarter last year. For the six month period, revenues increased to $795.3 million, up 7% from $742.9 million for the same period last year. Both periods were affected by the acquisition of the NEN business, which occurred in the second half of 2000. On an organic revenue basis, adjusted for the impact of foreign exchange and the impact of acquisitions and divestitures, revenues grew by 3% in the second quarter. Organic growth was driven by 12% growth in Life Sciences, especially drug discovery tools and genetic screening, 9% growth in Instruments, especially chromatography, 20% growth in the telecom and digital imaging lines within Optoelectronics, as well as 20% growth in aerospace in Fluid Sciences. This growth was offset by organic revenue declines in the Company’s semiconductor and photography end markets served by Fluid Sciences and Optoelectronics, respectively.
Gross Margin
Gross margins as a percentage of sales improved to 44.8% from 41.5% in the second quarter and improved to 43.8% from 40.5% in the six month period. This improvement is a direct reflection of the Company’s improving portfolio of businesses and product mix, strong focus on operations and aggressive approach to cost controls, including low cost sourcing.
Research and Development
Research and development expenses increased $0.9 million and $3.1 million for the quarter and six months ended July 1, 2001, versus the same periods of 2000. The Company maintained research and development expense at approximately 5% of sales for the 2001 periods despite higher revenues in 2001 versus 2000.
Selling, General and Administrative Expenses
Selling, general and administrative expenses as a percentage of sales increased to 27.2% from 25.1% for the quarter and to 26.4% from 24.9% for the six month period. This increase is primarily related to the goodwill amortization resulting from the NEN acquisition, the costs of moving production facilities to lower cost locations and costs associated with the integration of NEN.
Other Expense, Net
Other expense was $7.9 million for the second quarter of 2001 versus $7.2 million for the same period of 2000. Other expense increased $6.6 million to $20.8 million for the first six months of 2001, versus $14.2 million for the same period of 2000. These increases were due primarily to the impact of higher interest expense on increased debt levels resulting from recent acquisitions.
12
Income Tax Expense
Reported income tax expense as a percent of pre-tax income was 35% and 29% for the first six months of 2001 and 2000, respectively. The increase in the rate of income tax is largely attributable to nondeductible goodwill from the acquisition of NEN.
The table below presents earnings per share from
continuing operations before nonrecurring items and goodwill and
intangibles amortization, discussed below under the caption
“Segment Results of Operations”:
Three Months Ended
Six Months Ended
July 1,
July 2,
July 1,
July 2,
2001
2000
2001
2000
(In thousands except per share data)
$
390,810
$
369,510
$
795,345
$
742,913
212,829
216,328
444,521
442,227
20,364
19,417
42,200
39,057
94,538
85,180
185,704
170,580
63,079
48,585
122,920
91,049
(7,924
)
(8,067
)
(20,841
)
(15,061
)
55,155
40,518
102,079
75,988
15,730
11,074
30,123
20,951
$
39,425
$
29,444
$
71,956
$
55,037
$
.38
$
.29
$
.69
$
.54
The table presented below reconciles adjusted
income from continuing operations to net income from continuing
operations:
Three Months Ended
Six Months Ended
July 1,
July 2,
July 1,
July 2,
2001
2000
2001
2000
(In thousands except per share data)
$
55,155
$
40,518
$
102,079
$
75,988
—
—
(2,493
)
—
625
8,241
4,465
13,637
625
8,241
1,972
13,637
(10,105
)
(7,385
)
(20,203
)
(13,993
)
45,675
41,374
83,848
75,632
14,799
11,362
29,037
21,885
$
30,876
$
30,012
$
54,811
$
53,747
$
.31
$
.31
$
.55
$
.55
$
.30
$
.30
$
.53
$
.53
13
Segment Results Of Operations
Life Sciences
Revenues for the second quarter were $77.7 million versus $41.9 million for the prior period, increasing 85%, and revenues for the first six months were $146.9 million versus $81.6 million for the prior period, increasing 80%. Revenues increased from the prior period as a result of the inclusion of revenues from the NEN acquisition and increased revenues from the Company’s drug discovery and genetic screening businesses.
Operating profit for the second quarter was $9.4 million compared to $6.1 million for the prior period, increasing 53%, and for the first six months was $13.0 million versus $10.4 million for the prior period, increasing 25%. The increases, for both the quarter and the six month periods, were a result of the addition of NEN, higher overall sales volume and increased profitability in the genetic screening business.
Operating profit before net nonrecurring items and goodwill and intangibles amortization for the second quarter was $15.2 million versus $6.3 million for the prior period, increasing 142%, and was $25.7 million for the first six months versus $11.1 million for the prior period, increasing 132%. For both 2001 periods, the principal element of the nonrecurring and amortization charges was the goodwill amortization associated with the acquisition of NEN.
Optoelectronics
Revenues for the second quarter were $108.0 million versus $120.9 million for the prior period, resulting in a decrease of 11%. For the first six months, revenues were $228.9 million versus $235.4 million for the prior period, resulting in a decrease of 3%. Higher revenues in telecom and digital imaging were offset by lower revenues in the photography and semiconductor markets which accounted for the decreases in both the quarter and the six month periods.
Operating profit for the second quarter was $16.2 million compared to $22.5 million for the prior period, decreasing 28%, and for the first six months was $34.7 million compared to $42.6 million for the prior period, decreasing 19%. The decline in operating profit for both periods is due to lower revenues, the cost of moving production facilities to lower cost locations and the beneficial impact of nonrecurring credits recorded in the prior year.
Operating profit before net nonrecurring items and goodwill and intangibles amortization for the second quarter was $20.7 million versus $19.4 million for the prior period, increasing 7%, and for the first six months was $40.9 million versus $35.0 million for the prior period, increasing 17%. In the prior year, significant nonrecurring items for the second quarter included restructuring credits and for the six month period, certain nonrecurring pre-tax gains.
Instruments
Revenues for the second quarter were $146.1 million versus $146.3 million for the prior period and for the first six months were $290.9 million versus $304.0 million for the prior period, decreasing 4%. The decrease in revenues for both periods is primarily attributable to the sale of the Company’s Berthold business in late 2000.
Operating profit for the second quarter was $14.6 million compared to $9.8 million for the prior period, increasing 48%, and for the first six months was $29.3 million versus $21.0 million for the prior period, increasing 39%. The increase for both periods of 2001 is attributable to the sale of higher-margin new products and the benefits of restructuring actions in 2001, as well as incremental restructuring charges recorded in 2000.
Operating profit before net nonrecurring items and goodwill and intangibles amortization for the second quarter was $18.0 million versus $15.5 million for the prior period, increasing 17%, and for the first six months was $34.2 million versus $29.9 million, increasing 14%. The primary component of nonrecurring and amortization charges is the amortization of goodwill.
14
Fluid Sciences
Revenues for the second quarter were $59.0 million versus $60.3 million for the prior period, decreasing 2%, and for the first six months were $128.6 million versus $122.0 million for the prior period, increasing 5%. The decrease in revenues for the quarter is a result of a decrease in sales in the semiconductor business due to overall market softening, which was partially offset by higher revenues in the aerospace business. For the first six months of 2001, there was an increase in revenues because the impact of the lower sales to the semiconductor markets was not as prevalent for the entire six months as it was for the second quarter.
Operating profit for the second quarter was $16.8 million compared to $10.2 million for the prior period, increasing 65%, and for the first six months was $33.9 million versus $18.7 million for the prior period, increasing 81%. The primary contributors to the increases in operating profit were the effects of manufacturing and productivity initiatives and the nonrecurring benefit of the gain on the sale of a product line, both occurring in 2001.
Operating profit before net nonrecurring items and goodwill and intangibles amortization for the second quarter was $12.5 million versus $10.8 million for the prior period, increasing 16%, and for the first six months of 2001 was $28.3 million versus $21.5 million for the prior period, increasing 31%. A significant component of nonrecurring charges and amortization is the gain on the sale of a product line in 2001.
Financial Condition
Short-term debt at July 1, 2001 was $229 million and was comprised primarily of commercial paper borrowings of $222 million. The Company also has a $300 million revolving credit facility which expires in March 2002 and a $100 million revolving credit facility expiring in March 2006. There were no outstanding balances on either facility at July 1, 2001 or December 31, 2000. Long-term debt at July 1, 2001 was approximately $590 million, consisting of $115 million of unsecured notes which mature in 2005 and $475 million of convertible debentures. The debentures are currently convertible into 10.8 million shares of the Company’s common stock at approximately $42.50 per share.
Cash and cash equivalents increased by $10.8 million to $132.3 million at the end of the first six months of 2001. Net cash provided by continuing operating activities for the first six months of 2001 was $35.7 million and was comprised of net income from continuing operations before depreciation, amortization and other noncash items of $99.9 million and a $64.2 million net change in certain assets and liabilities. The net change in assets and liabilities was comprised primarily of a $31.5 million increase in inventory, an $18.3 million decrease in accrued restructuring costs and a $10.6 million decrease in accounts receivable. Capital expenditures for the first six months of 2001 were $43.2 million.
Forward-Looking Information and Factors Affecting Future Performance
This Quarterly Report contains “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. For this purpose, any statements contained in this Quarterly Report that relate to prospective events or developments are deemed to be forward-looking statements. Words such as “believes,” “anticipates,” “plans,” “expects,” “will” and similar expressions are intended to identify forward-looking statements. While the Company may elect to update forward-looking statements in the future, it specifically disclaims any obligation to do so, even if the Company’s estimates change, and readers should not rely on these forward-looking statements as representing the Company’s views as of any date subsequent to the date of this Quarterly Report. A number of important factors and uncertainties could cause actual results to differ materially from those described in these forward-looking statements, including without limitation the risk factors set forth in the Company’s registration statement on Form S-4, filed on August 3, 2001 with the SEC, under the caption, “Risk Factors — Risks Relating to PerkinElmer’s Business,” which risk factors are attached to this Quarterly Report as Exhibit 99.1 and are expressly incorporated by reference herein.
15
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 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 as discussed in the 2000 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.
16
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The matters submitted to a vote of the stockholders at the 2001 Annual Meeting of Stockholders of the Company held on April 24, 2001 were previously disclosed in the Company’s Quarterly Report on Form 10-Q for the quarter ended April 1, 2001.
Item 6. Exhibits and Reports on Form 8-K
(a)
Exhibits
Part I Exhibits:
Restated Articles of Organization of the Company.
Specimen certificate of the Company’s Common
Stock, $1 par value.
Risk factors set forth in the Company’s
registration statement on Form S-4, filed on August 3,
2001 with the SEC, under the caption, “Risk
Factors — Risks Relating to PerkinElmer’s
Business.”
Part II Exhibits:
None
(b) Reports on Form 8-K
A Current Report on Form 8-K was filed with the SEC on May 14, 2001 for the purpose of filing as an exhibit Articles of Amendment to the Company’s Restated Articles of Organization, which had the effect of increasing the number of shares of the Company’s authorized common stock from 100,000,000 to 300,000,000.
On June 1, 2001, a Current Report was filed with the SEC for the purpose of updating certain Registration statements to adjust the number of shares of PerkinElmer common stock covered thereby as a result of the 2-for-1 stock split.
On July 18, 2001, a Current Report was filed with the SEC for the purpose of announcing the proposed acquisition by the Company of Packard BioScience as discussed above under “Subsequent Event”.
On August 3, 2001, a Current Report was filed with the SEC for the purpose of reporting that in 2001, the Board of Directors approved a plan to sell the Security and Detection Systems business and to account for the business as a discontinued operation in the Company’s consolidated financial statements.
17
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: August 15, 2001
18
THE COMMONWEALTH OF MASSACHUSETTS
WILLIAM FRANCIS GALVIN
Secretary of the Commonwealth
One Ashburton Place, Boston, Massachusetts 02108-1512
RESTATED ARTICLES OF ORGANIZATION
(GENERAL LAWS, CHAPTER 156B, SECTION 74)
Date
Approved
We, Terrance L. Carlson , *Vice President,
----------------------------------------------------------
and John L. Healy , *Assistant Clerk,
---------------------------------------------------------
of PerkinElmer, Inc. ,
---------------------------------------------------------------------------
(Exact name of corporation)
located at 45 William Street, Wellesley, MA 02481 ,
--------------------------------------------------------------------
(Street address of corporation Massachusetts)
do hereby certify that the following Restatement of the Articles of
Organization was duly adopted at a meeting held on April 24, 2001 by a vote of
-------- --
the director:
shares of of shares outstanding,
------ ------------------------------ ------
(type, class & series, if any)
shares of of shares outstanding, and
------ ------------------------------ ------
(type, class & series, if any)
shares of of shares outstanding.
------ ------------------------------ ------
(type, class & series, if any)
|
**
C / /
P / /
M / /
R.A. / /
ARTICLE I
The name of the corporation is:
PerkinElmer, Inc.
ARTICLE II
The purpose of the corporation is to engage in the following
business activity(ies):
See attached Article II
*Delete the inapplicable words. **Delete the inapplicable clause.
Note: If the space provided under any article or item on this form is insufficient, additions shall be set forth on separate 8 1/2 x 11 sheets of paper with a left margin of at least 1 inch. Additions to more than one article may be made on a single sheet so long as each article requiring each addition is clearly indicated.
[SECRETARY OF THE COMMONWEALTH STAMP]
ARTICLE III
State the total number of shares and par value, if any, of each class of stock which the corporation is authorized to issue:
--------------------------------------------------------------------------------
WITHOUT PAR VALUE WITH PAR VALUE
--------------------------------------------------------------------------------
TYPE NUMBER OF SHARES TYPE NUMBER OF SHARES PAR VALUE
--------------------------------------------------------------------------------
Common: Common: 300,000,000 $1.00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Preferred: Preferred: 1,000,000 $1.00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
|
ARTICLE IV
If more than one class of stock is authorized, state a distinguishing designation for each class. Prior to the issuance of any shares of a class, if shares of another class are outstanding, the corporation must provide a description of the preferences, voting powers, qualifications, and special or relative rights or privileges of that class and of each other class of which shares are outstanding and of each series then established within any class.
See Attached Article IV
ARTICLE V
The restrictions, if any, imposed by the Articles of Organization upon the transfer of shares of stock of any class are:
None
ARTICLE VI
**Other lawful provisions, if any, for the conduct and regulation of the business and affairs of the corporation, for its voluntary dissolution, or for limiting, defining, or regulating the powers of the corporation, or of its directors or stockholders, or of any class of stockholders:
See Attached Article VI
**If there are no provisions state "None".
Note: The preceding six (6) articles are considered to be permanent and may
ONLY be changed by filing appropriate Articles of Amendment.
ARTICLE II
The purpose of the corporation is to engage in the following business activities:
To manufacture, buy, sell, store, alter, and otherwise deal in or with electrical, electronic, photographic and mechanical equipment, devices, machinery, products, supplies, and material of all kinds.
To render consulting and advisory services of all kinds.
To engage in research, experimentation, and development work of all kinds either for its own account or for others.
To engage in, conduct, and carry on any other business or businesses and to engage in any lawful act or activity for which corporations may be organized under Chapter 156B of the Laws of the Commonwealth of Massachusetts or any amendment or substitution therefor.
To purchase, lease, exchange or otherwise acquire, hold, store, sell, encumber, or otherwise deal in or with any real or personal property or any rights or privileges which the corporation may consider necessary or convenient for the purpose of its business, provided, however, that this Corporation shall not engage in the real estate business.
To acquire by purchase, lease, exchange or otherwise the whole or any part of the good will, patents, trade names, rights, licenses, and property of any person or persons, firm, association, or corporation heretofore or hereafter engaged in any of these businesses or any similar business or businesses or in any business which this corporation is authorized to carry on and pay for the same in cash or in stock or other securities of this corporation or otherwise, and hold and in any manner dispose of the whole or any part of the property so acquired, and conduct in any lawful manner the whole or any part of the business or businesses so acquired.
To borrow money, to issue notes, bonds or other obligations, secured or unsecured, of the corporation for any purpose for which it is incorporated.
To purchase or otherwise receive, hold, sell, and otherwise deal in or with all or any part of the capital stock of any class, bonds, notes, debentures, or other securities of any corporation, including this corporation, association, government, state municipality, or other organization.
To do any and all other acts and things and to exercise any and all other powers which a partnership or a natural person could do and exercise which now or hereafter may be authorized by the law governing business corporations in furtherance of these purposes.
To carry on any business herein described either for its own account or as agent broker, or otherwise.
ARTICLE IV
If more than one class of stock is authorized, state a distinguishing designation for each class. Prior to the issuance of any shares of a class, if shares of another class are outstanding, the corporation must provide a description of the preferences, voting powers, qualifications, and special or relative rights or privileges of that class and of each other class of which shares are outstanding and of each series then established within any class:
The following is a description of each class of stock of the corporation and the respective preferences, powers, qualifications and special or relative rights or privileges as to each class.
A. Preferred Stock. The Preferred Stock may be issued in one or more series at such time or times and for such considerations as the Board of Directors may determine. Each series shall be so designated as to distinguish the shares thereof from the shares of all other series and classes. Except as to the relative rights and preferences referred to hereinafter in respect of any or all of which there may be variations between different series, and except that shares of any one series issued at different times may differ as to the dates from which dividends thereon shall accrue and be cumulative, all shares of Preferred Stock shall be identical. Different series of Preferred Stock shall not be construed to constitute different classes of shares for the purpose of voting by classes.
The Board of Directors is expressly authorized, subject to the limitations prescribed by law and the provisions of these Articles, to provide by adopting a resolution or resolutions, a certificate of which shall be filed in accordance with the Business Corporation Law of the Commonwealth of Massachusetts, for the issue of the Preferred Stock in one or more series, each with such designations, preferences and relative, participating, optional or other special rights, and qualifications, limitations or restrictions thereof as shall be stated in the resolution or resolutions creating such series. The authority of the Board of Directors with respect to each such series shall include, without limitation of the foregoing, the right to determine and fix:
(1) The distinctive designation of such series and the number of shares to constitute such series;
(2) The rate at which dividends on the shares of such series shall be declared and paid, or set aside for payment, before any dividends on the Common Stock with respect to the same dividend period shall be declared and paid or set aside for payment; whether dividends at the rate so determined shall be cumulative and if so from what date or dates and on what terms; and whether the shares of such series shall be entitled to any participating or other dividends in addition to dividends at the rate so determined, and if so on what terms;
(3) The right, if any, of the corporation to redeem shares of the particular series and, if redeemable, the terms and conditions of such redemption, including the redemption price or prices which the shares of such series shall be entitled to receive upon redemption;
(4) The preferences, if any, and the amount or amounts per share, which the shares of such series shall be entitled to receive upon any voluntary or involuntary liquidation, dissolution or winding up of the corporation;
(5) The terms and conditions, if any, upon which shares of such series shall be convertible into, or exchangeable for, shares of stock of any other class or classes or other series of the same class, including the price or prices or the rate or rates of conversion or exchange and the terms of adjustment, if any;
(6) The obligation, if any, of the corporation to retire or purchase shares of such series pursuant to a sinking fund of a similar nature or otherwise, and the terms and conditions of such obligations;
(7) Voting rights, if any, provided that the shares of all series with voting rights shall not have more than one vote per share;
(8) The status as to reissuance or sale of shares of such series redeemed, purchased or otherwise reacquired, or surrendered to the corporation on conversion;
(9) The conditions and restrictions, if any, on the payment of dividends or on the making of other distributions on, or the purchase, redemption or other acquisition by the corporation of any subsidiary, of the Common Stock or of any other class of stock of the corporation ranking junior to the shares of such series as to dividends or upon liquidation;
(10) The conditions and restrictions, if any, on the creation of indebtedness of the corporation, or any subsidiary, or on the issue of any additional stock ranking on a parity with or prior to the shares of such series as to dividends or upon liquidation;
(11) Such other preferences or restrictions or qualifications thereof as the Board of Directors may deem advisable and are not inconsistent with law and the provisions of these Articles.
No holder of shares of the Preferred Stock shall be entitled as such, as a matter of right, to subscribe for or purchase any part of any new or additional issue of stock of any class whatsoever of the corporation, or of securities convertible into stock of any class, whether now or hereafter authorized, or whether issued for cash or other consideration or by way of dividend.
TERMS OF SERIES C JUNIOR PARTICIPATING PREFERRED STOCK:
1. Designation and Amount
The shares of such series shall be designated as "Series C Junior Participating Preferred Stock" (the "Series C Preferred Stock") and the number of shares constituting the Series C Preferred Stock shall be 70,000. Such number of shares may be increased or decreased by
resolution of the Board of Directors; provided, that no decrease shall reduce the number of shares of Series C Preferred Stock to a number less than the number of shares then outstanding plus the number of shares reserved for issuance upon the exercise of outstanding options, rights or warrants or upon the conversion of any outstanding securities issued by the Corporation convertible into Series C Preferred Stock.
II. Dividends and Distributions
(A) Subject to the rights of the holders of any shares of any series of Preferred Stock (or any similar stock) ranking prior and superior to the Series C Preferred Stock with respect to dividends, the holders of shares of Series C Preferred Stock, in preference to the holders of Common Stock, par value $1 per share (the "Common Stock"), of the Corporation, and of any other junior stock, shall be entitled to receive, when, as and if declared by the Board of Directors out of funds of the Corporation legally available for the payment of dividends, quarterly dividends payable in cash on the first day of March, June, September and December in each year (each such date being referred to herein as a "Quarterly Dividend Payment Date"), commencing on the first quarterly Dividend Payment Date after the first issuance of a share or fraction of a share of Series C Preferred Stock, in an amount per share (rounded to the nearest cent) equal to the greater of (a) $1 or (b) subject to the provision for adjustment hereinafter set forth, 1,000 times the aggregate per share amount of all cash dividends, and 1,000 times the aggregate per share amount (payable in kind) of all non-cash dividends or other distributions, other than a dividend payable in shares of Common Stock or a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise), declared on the Common Stock since the immediately preceding Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a share of Series C Preferred Stock. In the event the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision, combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the amount to which holders of shares of Series C Preferred Stock were entitled immediately prior to such event under clause (b) of the preceding sentence shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on the Series C Preferred Stock as provided in paragraph (A) of this Section immediately after it declares a dividend or distribution on the Common Stock (other than a dividend payable in shares of Common Stock) and the Corporation shall pay such dividend or distribution on the Series C Preferred Stock before the dividend or distribution declared on the Common Stock is paid or set apart; provided that, in the event no dividend or distribution shall have been declared on the Common Stock during the period between any Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a dividend of $1 per share on the Series C Preferred Stock shall nevertheless be payable on such subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding shares of Series C Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of or is a date after the record date for the determination of holders of shares of Series C Preferred Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either of which events such dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on the shares of Series C Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. The Board of Director may fix a record date for the determination of holders of shares of Series C Preferred Stock entitled to receive payment of a dividend or distribution declared thereon, which record date shall be not more than 60 days prior to the date fixed for the payment thereof.
III. Voting Rights
The holders of shares of Series C Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth, each share of Series C Preferred Stock shall entitle the holder thereof to 1,000 votes on all matters submitted to a vote of the stockholders of the Corporation. In the event the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision, combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the number of votes per share to which holders of shares of Series C Preferred Stock were entitled immediately prior to such event shall be adjusted by multiplying such number by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.
(B) Except as otherwise provided herein, by law, or in any other Certificate of Vote of Directors creating a series of Preferred Stock or any similar stock, the holders of shares of Series C Preferred Stock and the holders of shares of Common Stock and any other capital stock of the Corporation having general voting rights shall vote together as one class on all matters submitted to a vote of stockholders of the Corporation.
(C) (i) If at any time dividends on any Series C Preferred Stock shall be in arrears in an amount equal to six quarterly dividends thereon, the holders of Series C Preferred Stock, voting as a separate series from all other series of Preferred Stock and classes of capital stock, shall be entitled to elect two members of the Board of Directors in addition to any Directors elected by any other series, class or class of securities and the authorized number of Directors will automatically be increased by two. Promptly thereafter, the Board of Directors of this Corporation shall, as soon as may be practicable, call a special meeting of holders of Series C Preferred Stock for the purpose of electing such members of the Board of Directors. Said special meeting shall in any event be held within 45 days of the occurrence of such arrearage.
(ii) During any period when the holders of Series C Preferred Stock,
voting as a separate series, shall be entitled and shall have exercised their
right to elect two Directors, then and during such time as such right continues
(a) the then authorized number of Directors shall be increased by two, and the
holders of Series C Preferred Stock, voting as a separate series, shall be
entitled to elect the additional Directors so provided for, and (b) each such
additional Director shall not be a member of any existing class of the Board of
Directors, but shall serve until the next annual meeting of stockholders for the
election of Directors, or until his successor shall be elected and shall
qualify, or until his right to hold such office terminates pursuant to the
provisions of this Section III(C).
(iii) A Director elected pursuant to the terms hereof may be removed with or without cause by the holders of Series C Preferred Stock entitled to vote in an election of such Director.
(iv) If, during any interval between annual meetings of stockholders for the election of Directors and while the holders of Series C Preferred Stock shall be entitled to elect two Directors, there is no such Director in office by reason of resignation, death or removal, then, promptly thereafter, the Board of Directors shall call a special meeting of the holders of Series C Preferred Stock for the purpose of filling such vacancy and such vacancy shall be filled at such special meeting. Such special meeting shall in any event be held within 45 days of the occurrence of such vacancy.
(v) At such time as the arrearage is fully cured, and all dividends accumulated and unpaid on any shares of Series C Preferred Stock outstanding are paid, and, in addition thereto, at least one regular dividend has been paid subsequent to curing such arrearage, the term of office of any Director elected pursuant to this Section III(C), or his successor, shall automatically terminate, and the authorized number of Directors shall automatically decrease by two, the rights of the holders of the shares of the Series C Preferred Stock to vote as provided in this Section III(C) shall cease, subject to renewal from time to time upon the same terms and conditions, and the holders of shares of the Series C Preferred Stock shall have only the limited voting rights elsewhere herein set forth.
(D) Except as set forth herein, or as otherwise provided by law, holders of Series C Preferred Stock shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of Common Stock as set forth herein) for taking any corporate action.
IV. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions payable on the Series C Preferred Stock as provided in Section II are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on shares of Series C Preferred Stock outstanding shall have been paid in full, the Corporation shall not:
(I) declare or pay dividends, or make any other distributions, on any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series C Preferred Stock;
(ii) declare or pay dividends, or make any other distributions, on any shares of stock ranking on parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series C Preferred Stock, except dividends paid ratably on the Series C Preferred Stock and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration shares of any stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series C Preferred Stock, provided that the Corporation may at any time redeem, purchase or otherwise acquire shares of any such junior stock in exchange for shares of any stock of the Corporation ranking junior (either as to dividends or upon dissolution, liquidation or winding up) to the Series C Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for consideration any shares of Series C Preferred Stock, or any shares of stock ranking on a parity with the Series C Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such shares upon such terms as the Board of Directors, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration any shares of stock of the Corporation unless the Corporation could, under paragraph (A) of this Section IV, purchase or otherwise acquire such shares at such time and in such manner.
V. Reacquired Shares
Any shares of Series C Preferred Stock purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and cancelled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but unissued shares of Preferred Stock and may be reissued as part of a new series of Preferred Stock subject to the conditions and restrictions on issuance set forth herein, in the Articles of Organization, in any other Certificate of Vote of Directors creating a series of Preferred Stock or any similar stock or as otherwise required by law.
VI. Liquidation, Dissolution or Winding Up
(A) Upon any liquidation, dissolution or winding up of the Corporation, no distribution shall be made (1) to the holders of shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series C Preferred Stock unless, prior thereto, the holders of shares of Series C Preferred Stock shall have received $1,000 per share, plus an amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment, provided that the holders of shares of Series C Preferred Stock shall be entitled to receive an aggregate amount per share, subject to the provision for adjustment hereinafter set forth, equal to 1,000 times the aggregate amount to be distributed per share to holders of shares of Common Stock, or (2) to the holders of shares of
stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series C Preferred Stock, except distributions made ratably on the Series C Preferred Stock and all such parity stock in proportion to the total amounts to which the holders of all such shares are entitled upon such liquidation, dissolution or winding up.
(B) Neither the consolidation, merger or other business combination of the Corporation with or into any other corporation nor the sale, lease, exchange or conveyance of all or any part of the property, assets or business of the Corporation shall be deemed to be a liquidation, dissolution or winding up of the Corporation for purposes of this Section VI.
(C) In the event the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the aggregate amount to which holders of shares of Series C Preferred Stock were entitled immediately prior to such event under the proviso in clause (1) of paragraph (A) of this Section VI shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.
VII. Consolidation, Merger, etc.
Notwithstanding anything to the contrary contained herein, in case the Corporation shall enter into any consolidation, merger, combination or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, then in any such case each share of Series C Preferred Stock shall at the same time be similarly exchanged or changed into an amount per share, subject to the provision for adjustment hereinafter set forth, equal to 1,000 times the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of Common Stock is changed or exchanged. In the event the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision, combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the amount set forth in the preceding sentence with respect to the exchange or change of shares of Series C Preferred Stock shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.
VIII. Redemption
The shares of Series C Preferred Stock shall not be redeemable.
IX. Rank
The Series C Preferred Stock shall rank, with respect to the payment of dividends and the distribution of assets, junior to all series of any other class of the Corporation's Preferred Stock issued either before or after the issuance of the Series C Preferred Stock, unless the terms of any such series shall provide otherwise.
X. Amendment
The Articles of Organization of the Corporation shall not be amended in any manner which would materially alter or change the powers, preference or special rights of the Series C Preferred Stock so as to affect them adversely without the affirmative vote of the holders of at least two-thirds of the outstanding shares of Series C Preferred Stock, voting together as a single series.
XI. Fractional Shares
Series C Preferred Stock may be issued in fractions of a share which are integral multiples of one-thousandth of a share which shall entitle the holder, in proportion to such holder's fractional shares, to exercise voting rights, receive dividends, participate in distributions and have the benefit of all other rights of holders of Series C Preferred Stock.
B. Common Stock. After the requirements with respect to preferential dividends on the Preferred Stock (fixed in accordance with the provisions of paragraph A of this Article 4) shall have been met and after the corporation shall have complied with all the requirements, if any, with respect to the setting aside of sums as sinking funds or redemption or purchase accounts (fixed in accordance with the provisions of paragraph A of this Article 4), then and not otherwise the holders of Common Stock shall be entitled to receive such dividends as may be declared from time to time by the Board of Directors.
After distribution in full of the preferential amount (fixed in accordance with the provisions of paragraph A of this Article 4) to be distributed to the holders of Preferred Stock in the event of voluntary and involuntary liquidation, distribution or sale of assets, dissolution or winding up of this corporation, the holders of the Common Stock shall be entitled to receive all the remaining assets of this corporation, tangible and intangible, of whatever kind available for distribution to the stockholders ratably in proportion to the number of shares of Common Stock held by them respectively.
Except as may otherwise be required by law or the provisions of these Articles, or by the Board of Directors pursuant to authority granted in these Articles, each holder of Common Stock shall have one vote in respect of each share of stock held by him in all matters voted upon by the stockholders.
No holder of shares of the Common Stock shall be entitled to such, as a matter of right, to subscribe for or purchase any part of any new or additional issue of stock of any class whatsoever of the corporation, or of securities authorized, or whether issued for cash or other consideration or by way of dividend.
ARTICLE VI
Other lawful provisions, if any, for the conduct and regulation of the business and affairs of the corporation, for its voluntary dissolution, or for limiting, defining, or regulating the powers of the corporation, or of its directors or stockholders, or of any class of stockholders.
Meeting of Stockholders may be held within the Commonwealth of Massachusetts or elsewhere in the United States of America to the extent permitted by the By-laws of the Corporation.
The Directors may make, amend, or repeal the By-laws of the Corporation in whole or in part at any meeting of the Directors by vote of a majority of the Directors then in office, except that the provisions thereof fixing the place of the meetings of Stockholders, designating the number necessary to constitute a quorum at meetings of the Stockholders, governing procedure with respect to the removal of Directors, and affording indemnification to Directors or officers may be made, amended, or repealed only by the Stockholders.
The number of Directors which shall constitute the whole Board of Directors shall be such number, not less than three nor more than thirteen, as shall be fixed by vote of the stockholders or the Board of Directors. During the time periods specified in this Article 6, the Board of Directors shall be divided into three classes in respect of term of office, each class to contain, as nearly as possible, one-third of the whole number of the Board. Of the Board of Directors elected at the Annual Meeting of Stockholders in 1975, the members of one class shall serve until the Annual Meeting of Stockholders held in the year following their election, the members of the second class shall serve until the Annual Meeting of Stockholders held two years following their election, and the members of the third class shall serve until the Annual Meeting of Stockholders held three years following their election; provided, however, that in each case Directors shall serve until their successors shall be elected and qualified. At each Annual Meeting of Stockholders, commencing with the Annual Meeting in 1976 through and including the Annual Meeting 1995, the successors of the Directors of the class whose terms expire in that year shall be elected to serve until the Annual Meeting of Stockholders held three years next following (and until their successors shall be duly elected and qualified), so that the term of one class of Directors shall expire in each year. At each Annual Meeting of Stockholders, commencing with the Annual Meeting in 1996, the successors of the Directors whose terms expire in that year shall be elected to serve until the Annual Meeting of Stockholders held in the following year (and until their successors shall be duly elected and qualified), so that, upon the expiration in 1998 of the terms of the Directors elected at the Annual Meeting in 1995, all Directors shall be elected to hold office for a one-year term. A vacancy in the Board of Directors, however occurring, unless and until filed by the stockholders, may be filled by the Directors. The number of the Board of Directors may be increased or decreased and one or more additional Directors elected at any special meeting of the stockholders or by a vote of the Directors then in office. For so long as the Directors are divided into classes in accordance with the terms of this Article 6. Directors who are elected to fill vacancies, whether or not created by an enlargement of the Board, shall be apportioned among the classes so as to make all classes as nearly equal in number as possible. Directors who are elected to fill vacancies, whether or not created by an enlargement of the Board, shall serve until the expiration of the term of his or her predecessor
and until his or her successor is duly elected and qualified. No decrease in the number of the Board of Directors shall shorten the term of any incumbent Directors.
A Director may be removed from office (a) with or without cause, by vote of two-thirds of the stock outstanding and entitled to vote in the election of Directors, provided that the Directors of a class elected by a particular class of stockholders may be removed only by the vote of two-thirds of the shares of such class which are outstanding and entitled to vote or (b) for cause by vote of a majority of the Directors then in office. A Director may be removed for cause only after reasonable notice and opportunity to be heard before the body proposing to remove him.
To the fullest extent permitted by Chapter 156B of the Massachusetts General Laws, as it exists or may be amended, a Director of this Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a Director, notwithstanding any provision of law imposing such liability.
ARTICLE VIII(b)
NAME ADDRESS
---- -------
President Gregory L. Summe 466 Glenn Rd.
Weston, MA 02493
Treasurer Robert F. Friel 16 Longmeadow Drive
Westwood, MA 02090
Clerk/Vice President Terrance L. Carlson Cronin's Landing
25 Crescent Street Apt. 527
Waltham, MA 02154
Asst. Clerk John L. Healy 50 Rolling Meadow Drive
Holliston, MA 01746
Directors Tamara J. Erickson 866 Lowell Street
Carlisle, MA 01741
Dr. Kent F. Hansen 780 Boylston, Apt 17H
Boston, MA 02199
John F. Keane 55 Black Horse Lane
Cohasset, MA 02025
Nicholas A. Lopardo 62 Boren Lane
Boxford, MA 01921
Michael C. Ruettgers 453 Bedford Rd.
Carlisle, MA 01741
Gregory L. Summe 466 Glen Rd.
Weston, MA 02493
Gabriel Schmergel 15 Lowell Rd.
Wellesley, MA 02481
Kenton J. Sicchitano 25 Hundreds Circle
Wellesley, MA 02481
G. Robert Tod 116 Estabrook Rd.
Concord, MA 01742
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ARTICLE VII
The effective date of the restated Articles of Organization of the corporation shall be the date approved and filed by the Secretary of the Commonwealth. If a later effective date is desired, specify such date which shall not be more than thirty days after the date of filing.
ARTICLE VIII
THE INFORMATION CONTAINED IN ARTICLE VIII IS NOT A PERMANENT PART OF THE ARTICLES OF ORGANIZATION.
a. The street address (post office boxes are not acceptable) of the principal office of the corporation in Massachusetts is:
45 William Street, Wellesley, MA 02481
b. The name, residential address and post office address of each director and officer of the corporation is as follows:
NAME RESIDENTIAL ADDRESS POST OFFICE ADDRESS
President:
Treasurer: See Attached Article VIII(b)
Clerk:
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Directors:
c. The fiscal year (i.e., tax year) of the corporation shall end on the last day of the Sunday closest to December 31
d. The name and business address of the resident agent, if any, of the corporation is:
CT Corporation
101 Federal Street, Boston, MA 02110
**We further certify that the foregoing Restated Articles of Organization affect no amendments in the Articles of Organization of the corporation as heretofore amended, except amendments to the following articles. Briefly describe amendments below:
None
SIGNED UNDER THE PENALTIES OF PERJURY, this 28th day of June, 2001.
/s/ Terrance L. Carlson *Vice President
-----------------------
Terrance L. Carlson
/s/ John L. Healy *Assistant Clerk
-----------------------
John L. Healy
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*Delete the unapplicable words.
**If there are no amendments, state 'None'.
THE COMMONWEALTH OF MASSACHUSETTS
RESTATED ARTICLES OF ORGANIZATION
(General Laws, Chapter 156B, Section 74)
I hereby approve the within Restated Articles of Organization and,
the filing fee in the amount of $_____________ having been paid, said
articles are deemed to have been filed with me this ______________ day of
_________________________, 20___.
Effective Date:__________________________________________________
WILLIAM FRANCIS GALVIN
Secretary of the Commonwealth
TO BE FILLED IN BY CORPORATION
Photocopy of document to be sent to:
Hal J. Leibowitz, Esq. c/o Hale and Dorr LLP
60 State Street
Boston, MA 02109
Telephone: 617-526-6000
EXHIBIT 4.1
COMMON STOCK COMMON STOCK
[LOGO] SHARES
PerkinElmer(TM)
INCORPORATED UNDER THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS
THIS CERTIFICATE IS TRANSFERABLE CUSIP 714046 10 9
IN NEW YORK, NY OR RIDGEFIELD PARK, NJ
THIS IS TO CERTIFY THAT
SEE REVERSE
FOR CERTAIN
DEFINITIONS
IS THE OWNER OF
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FULLY PAID AND NONASSESSABLE SHARES OF THE PAR VALUE
OF $1 PER SHARE OF THE COMMON STOCK
of PerkinElmer, Inc. (herein called the "Corporation") transferable on the books of the Corporation by the holder hereof in person or by duly authorized attorney upon surrender of this Certificate properly endorsed. This Certificate and the shares represented hereby are issued and shall be subject to all of the provisions of the Restated Articles of Organization and the By-Laws of the Corporation, as amended and restated from time to time (copies of which are on file with the Transfer Agent), to all of which the holder, by acceptance hereof, assents. This Certificate is not valid until countersigned by the Transfer Agent and registered by the Registrar.
Witness the facsimile seal of the Corporation and the facsimile signatures of its duly authorized officers.
Dated:
/s/
COUNTERSIGNED AND REGISTERED: PerkinElmer, Inc. Chairman of the Board and Chief Executive Officer
MELLON INVESTOR SERVICES LLC
TRANSFER AGENT AND REGISTRAR 1947
/s/
Senior Vice President and Chief Financial Officer
BY MASSACHUSETTS
AUTHORIZED SIGNATURE
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PERKINELMER, INC.
This certificate also evidences and entitles the holder hereof to certain Rights as set forth in the Amended and Restated Rights Agreement between PerkinElmer, Inc. (the "Corporation") and Mellon Investor Services LLC (the "Rights Agent") dated as of January 30, 2001 (the "Rights Agreement"), the terms of which are hereby incorporated herein by reference and a copy of which is on file at the principal offices of the Corporation. Under certain circumstances, as set forth in the Rights Agreement, such Rights will be evidenced by separate certificates and will no longer be evidenced by this certificate. The Corporation will mail to the holder of this certificate a copy of the Rights Agreement, as in effect on the date of mailing, without charge promptly after receipt of a written request therefor. Under certain circumstances set forth in the Rights Agreement, Rights issued to, or held by, any Person who is, was or becomes an Acquiring Person or any Affiliate or Associate thereof (as such terms are defined in the Rights Agreement), whether currently held by or on behalf of such Person or by any subsequent holder may become null and void.
The Corporation is authorized to issue both Preferred Stock and Common Stock. The Corporation will furnish without charge to each stockholder upon written request a copy of the full text of the preferences, voting powers, qualifications and special and relative rights of the shares of each class and series, if any, authorized to be issued by the Corporation, as set forth in its Restated Articles of Organization and amendments and restatements thereto filed with the Secretary of State of the Commonwealth of Massachusetts.
The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations:
TEN COM -- as tenants in common
TEN ENT -- as tenants by the entireties
JT TEN -- as joint tenants with right of
survivorship and not as tenants
in common
UNIF GIFT MIN ACT-D.........................Custodian.........................
(Cust) (Minor)
under Uniform Gifts to Minors
Act.......................
(State)
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Additional abbreviations may also be used though not in the above list.
For value received, ____________________hereby sell, assign and transfer unto
__________________________________________________________________________Shares
of the capital stock represented by the within Certificate, and do hereby irrevocably constitute and appoint _____________________________________________
Attorney to transfer the said stock on the books of the within-named Corporation with full power of substitution in the premises.
Dated,________________________
Signature(s) Guaranteed: _______________________________________________________
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15.
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT, OR ANY CHANGE WHATEVER.
Exhibit 99.1
Risks Relating to PerkinElmer’s Business
PerkinElmer’s operating results could be harmed if the industries into which it sells its products are in downward cycles.
Some of the industries and markets into which PerkinElmer sells its products are cyclical. Industry downturns often are characterized by reduced product demand, excess manufacturing capacity and erosion of average selling prices. Any significant downturn in PerkinElmer’s customers’ markets or in general economic conditions would likely result in a reduction in demand for PerkinElmer’s products and could harm its business. For example, in the fiscal quarter ended July 1, 2001, the operating results of PerkinElmer’s Optoelectronics and Fluid Sciences segments were adversely affected by the downturn in the photography and semiconductor markets.
If PerkinElmer does not introduce new products in a timely manner, its products could become obsolete, and its operating results would suffer.
PerkinElmer sells many of its products in industries characterized by rapid technological changes, frequent new product and service introductions and evolving industry standards. Without the timely introduction of new products and enhancements, PerkinElmer’s products could become technologically obsolete over time, in which case PerkinElmer’s revenue and operating results would suffer. The success of PerkinElmer’s new product offerings will depend upon several factors, including its ability to:
| • | accurately anticipate customer needs; | |
| • | innovate and develop new technologies and applications; | |
| • | successfully commercialize new technologies in a timely manner; | |
| • | price its products competitively and manufacture and deliver its products in sufficient volumes and on time; and | |
| • | differentiate its offerings from its competitors’ offerings. |
Many of PerkinElmer’s products are used by its customers to develop, test and manufacture their products. Therefore, PerkinElmer must anticipate industry trends and develop products in advance of the commercialization of its customers’ products. In developing any new product, PerkinElmer may be required to make a substantial investment before it can determine the commercial viability of the new product. If PerkinElmer fails to accurately foresee its customers’ needs and future activities, PerkinElmer may invest heavily in research and development of products that do not lead to significant revenue.
Economic, political and other risks associated with international sales and operations could adversely affect PerkinElmer’s sales.
Since PerkinElmer sells its products worldwide, its businesses are subject to risks associated with doing business internationally. PerkinElmer’s revenue originating outside the United States represented 53% of its total revenues from continuing operations in the fiscal year ended December 31, 2000. PerkinElmer anticipates that revenue from international operations will continue to represent a substantial portion of its total revenue. In addition, many of PerkinElmer’s manufacturing facilities, employees and suppliers are located outside the United States. Accordingly, PerkinElmer’s future results could be harmed by a variety of factors, including:
| • | changes in foreign currency exchange rates; | |
| • | changes in a country’s or region’s political or economic conditions, particularly in developing or emerging markets; | |
| • | longer payment cycles of foreign customers and difficulty of collecting receivables in foreign jurisdictions; | |
| • | trade protection measures and import or export licensing requirements; |
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| • | differing tax laws and changes in those laws; | |
| • | difficulty in staffing and managing widespread operations; | |
| • | differing labor laws and changes in those laws; | |
| • | differing protection of intellectual property and changes in that protection; and | |
| • | differing regulatory requirements and changes in those requirements. |
Fluctuations in PerkinElmer’s quarterly operating results may cause its stock price to decline.
Given the nature of the markets in which PerkinElmer participates, it cannot reliably predict future revenue and profitability. Changes in competitive, market and economic conditions may cause PerkinElmer to adjust its operations. A high proportion of PerkinElmer’s costs are fixed, due in part to its significant sales, research and development and manufacturing costs. Thus, small declines in revenue could disproportionately affect PerkinElmer’s operating results in a quarter. Factors that may affect PerkinElmer’s quarterly operating results and the market price of PerkinElmer’s common stock include:
| • | demand for and market acceptance of PerkinElmer’s products; | |
| • | competitive pressures resulting in lower selling prices; | |
| • | adverse changes in the level of economic activity in regions in which PerkinElmer does business; | |
| • | adverse changes in industries, such as drug discovery, pharmaceutical research, telecommunications, semiconductors and electronics, on which PerkinElmer is particularly dependent; | |
| • | changes in the portions of PerkinElmer’s revenue represented by its various products and customers; | |
| • | delays or problems in the introduction of new products; | |
| • | PerkinElmer’s competitors’ announcement or introduction of new products, services or technological innovations; | |
| • | increased costs of raw materials or supplies; and | |
| • | changes in the volume or timing of product orders. |
In addition, the stock market has experienced extreme price and volume fluctuations. This volatility has significantly affected the market prices of securities for reasons frequently unrelated to or disproportionate to the operating performance of specific companies. These broad market fluctuations may adversely affect the market price of PerkinElmer’s common stock.
PerkinElmer may not be able to successfully implement its acquisition strategy and integrate acquired businesses, including Packard BioScience, into its existing business or make acquired businesses profitable.
One of PerkinElmer’s strategies is to supplement its internal growth by acquiring businesses and technologies that complement or augment its existing product lines. PerkinElmer may be unable to identify or complete promising acquisitions for many reasons, including:
| • | competition among buyers; | |
| • | the need for regulatory and other approvals; and | |
| • | the high valuations of businesses. |
Some of the businesses PerkinElmer may seek to acquire may be marginally profitable or unprofitable. In addition, the earnings or losses of acquired businesses may dilute PerkinElmer’s earnings. For these acquired businesses to achieve acceptable levels of profitability, PerkinElmer must improve their management, operations, products and market penetration. PerkinElmer may not be successful in this regard and may encounter other difficulties in integrating acquired businesses into its existing operations.
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To finance PerkinElmer’s acquisitions, PerkinElmer may have to raise additional funds, either through public or private financings. PerkinElmer may be unable to obtain such funds or may be able to do so only on unfavorable terms.
PerkinElmer faces aggressive competition in many areas of its business; if PerkinElmer does not compete effectively, its business will be harmed.
PerkinElmer encounters aggressive competition from numerous competitors in many areas of its business. PerkinElmer may not be able to compete effectively with all of these competitors. To remain competitive, PerkinElmer must develop new products and periodically enhance its existing products in a timely manner. PerkinElmer anticipates that it may have to adjust prices of many of its products to stay competitive. In addition, new competitors may emerge, and entire product lines may be threatened by new technologies or market trends that reduce the value of these product lines.
If PerkinElmer fails to maintain satisfactory compliance with the Food and Drug Administration’s regulations and those of other governmental agencies, PerkinElmer may be forced to recall products and cease their manufacture and distribution, and it could be subject to civil or criminal penalties.
Some of the products produced by PerkinElmer’s Life Sciences segment are subject to regulation by the United States Food and Drug Administration and similar international agencies. These regulations govern a wide variety of product activities, from design and development to labeling, manufacturing, promotion, sales and distribution. If PerkinElmer fails to comply with the FDA’s regulations or those of similar international agencies, PerkinElmer may have to recall products and cease their manufacture and distribution. In addition, PerkinElmer could be subject to fines or criminal prosecution.
Changes in governmental regulations may reduce demand for PerkinElmer’s products or increase PerkinElmer’s expenses.
PerkinElmer competes in markets in which it or its customers must comply with federal, state, local and foreign regulations, such as environmental, health and safety and food and drug regulations. PerkinElmer develops, configures and markets its products to meet customer needs created by these regulations. Any significant change in these regulations could reduce demand for PerkinElmer’s products or the cost of producing these products.
Obtaining and enforcing patent protection for PerkinElmer’s proprietary products, processes and technologies may be difficult and expensive; PerkinElmer may infringe intellectual property rights of third parties.
Patent and trade secret protection is important to PerkinElmer because developing and marketing new technologies and products is time-consuming and expensive. PerkinElmer owns many U.S. and foreign patents and intends to apply for additional patents to cover its products. PerkinElmer may not obtain issued patents from any pending or future patent applications owned by or licensed to PerkinElmer. The claims allowed under any issued patents may not be broad enough to protect PerkinElmer’s technology.
Third parties may seek to challenge, invalidate or circumvent issued patents owned by or licensed to PerkinElmer or claim that PerkinElmer’s products and operations infringe their patent or other intellectual property rights. PerkinElmer may incur significant expense in any legal proceedings to protect its proprietary rights or to defend infringement claims by third parties. In addition, claims of third parties against PerkinElmer could result in awards of substantial damages or court orders that could effectively prevent PerkinElmer from making, using or selling its products in the U.S. or abroad.
PerkinElmer has substantial existing debt and may incur additional debt in the future.
As of April 1, 2001, PerkinElmer had $585.7 million in outstanding long-term debt. In addition, upon completion of the merger, PerkinElmer’s consolidated debt will include Packard BioScience’s indebtedness, including Packard BioScience’s obligations under its senior subordinated notes. As of March 31, 2001, the
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PerkinElmer’s substantial leverage could have significant negative consequences, including:
| • | increasing PerkinElmer’s vulnerability to general adverse economic and industry conditions; | |
| • | limiting PerkinElmer’s ability to obtain additional financing; | |
| • | requiring the dedication of a substantial portion of PerkinElmer’s cash flow from operations to service its indebtedness, thereby reducing the amount of its cash flow available for other purposes, including capital expenditures; | |
| • | limiting PerkinElmer’s flexibility in planning for, or reacting to, changes in its business and the industries in which PerkinElmer competes; and | |
| • | placing PerkinElmer at a possible competitive disadvantage with less leveraged competitors and competitors that may have better access to capital resources. |
A significant portion of PerkinElmer’s outstanding indebtedness bears interest at floating rates. As a result, PerkinElmer’s interest payment obligations on such indebtedness will increase if interest rates increase.
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