PerkinElmer Earnings 2021-04-04

Balance Sheet	Income Statement	Cash Flow
Assets, Equity	Rev, G Profit, Net Income	Ops, Inv, Fin

pki-20210404

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_______________________________________

FORM 10-Q

_______________________________________

(Mark One)


☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 4, 2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission File Number 001-5075

_______________________________________

PerkinElmer, Inc.

(Exact name of Registrant as specified in its Charter)

_______________________________________

Massachusetts

04-2052042

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)

940 Winter Street,

Waltham,

Massachusetts

02451

(Address of principal executive offices)

(Zip Code)

(781) 663-6900

(Registrant’s telephone number, including area code)

______________________________________

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol (s)	Name of each exchange on which registered
Common stock, $1 par value per share	PKI	The New York Stock Exchange
1.875% Notes due 2026	PKI 21A	The New York Stock Exchange

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. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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Large accelerated filer

☑

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark whether the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of May 6, 2021, there were outstanding 112,091,175 shares of common stock, $1 par value per share.

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TABLE OF CONTENTS


		Page
PART I. FINANCIAL INFORMATION

Item 1.	Unaudited Financial Statements	4
	Condensed Consolidated Statements of Operations	4
	Condensed Consolidated Statements of Comprehensive Income	5
	Condensed Consolidated Balance Sheets	6
	Condensed Consolidated Statements of Stockholders' Equity	7
	Condensed Consolidated Statements of Cash Flows	8
	Notes to Condensed Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
	Overview	29
	Critical Accounting Policies and Estimates	29
	Consolidated Results of Continuing Operations	30
	Reporting Segment Results of Continuing Operations	32
	Liquidity and Capital Resources	33
	Dividends	35
	Contractual Obligations	35
	Effects of Recently Adopted and Issued Accounting Pronouncements	36

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	36

Item 4.	Controls and Procedures	36

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	37

Item 1A.	Risk Factors	37

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	45

Item 6.	Exhibits	47

Signatures		48

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PART I. FINANCIAL INFORMATION

Item 1.Unaudited Financial Statements

PERKINELMER, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	Three Months Ended
	April 4, 2021		April 5, 2020
	(In thousands, except per share data)
Product revenue	$	811,552	$	425,529
Service revenue	496,137		226,867
Total revenue	1,307,689		652,396
Cost of product revenue	339,312		206,190
Cost of service revenue	183,231		138,183
Total cost of revenue	522,543		344,373
Selling, general and administrative expenses	251,410		208,569
Research and development expenses	60,216		48,914
Restructuring and other costs, net	5,744		5,858
Operating income from continuing operations	467,776		44,682
Interest and other (income) expense, net	(12,706)		9,993
Income from continuing operations before income taxes	480,482		34,689
Provision for income taxes	101,139		974
Income from continuing operations	379,343		33,715

Loss on disposition of discontinued operations before income taxes	—		—
Provision for income taxes on discontinued operations and dispositions	38		50
Loss from discontinued operations and dispositions	(38)		(50)
Net income	$	379,305	$	33,665
Basic earnings per share:
Income from continuing operations	$	3.39	$	0.30
Loss from discontinued operations and dispositions	(0.00)		(0.00)
Net income	$	3.39	$	0.30
Diluted earnings per share:
Income from continuing operations	$	3.37	$	0.30
Loss from discontinued operations and dispositions	(0.00)		(0.00)
Net income	$	3.37	$	0.30
Weighted average shares of common stock outstanding:
Basic	112,028		111,121
Diluted	112,495		111,644
Cash dividends declared per common share	$	0.07	$	0.07

The accompanying notes are an integral part of these condensed consolidated financial statements.

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PERKINELMER, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


	Three Months Ended
	April 4, 2021		April 5, 2020
	(In thousands)
Net income	$	379,305	$	33,665
Other comprehensive income (loss):
Foreign currency translation adjustments, net of income taxes	(72,305)		(78,593)


Unrealized gain (loss) on securities, net of income taxes	94		(88)
Other comprehensive loss	(72,211)		(78,681)
Comprehensive income (loss)	$	307,094	$	(45,016)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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PERKINELMER, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


	April 4, 2021		January 3, 2021
	(In thousands, except share and per share data)
Current assets:
Cash and cash equivalents	$	988,234	$	402,036
Accounts receivable, net	978,598		1,155,109

Inventories	529,908		514,567
Other current assets	177,831		167,208

Total current assets	2,674,571		2,238,920
Property, plant and equipment, net	371,102		368,304
Operating lease right-of-use assets	213,306		207,236
Intangible assets, net	1,473,256		1,365,693
Goodwill	3,683,790		3,447,114
Other assets, net	346,700		333,048

Total assets	$	8,762,725	$	7,960,315
Current liabilities:
Current portion of long-term debt	$	358,435	$	380,948
Accounts payable	339,326		327,325

Accrued expenses and other current liabilities	822,749		943,916

Total current liabilities	1,520,510		1,652,189
Long-term debt	2,219,670		1,609,701
Long-term liabilities	827,636		774,531
Operating lease liabilities	192,604		188,402

Total liabilities	4,760,420		4,224,823
Commitments and contingencies (see Note 18)
Stockholders’ equity:
Preferred stock—$1 par value per share, authorized 1,000,000 shares; none issued or outstanding	—		—
Common stock—$1 par value per share, authorized 300,000,000 shares; issued and outstanding 112,066,000 shares and 112,090,000 shares at April 4, 2021 and January 3, 2021, respectively	112,066		112,090
Capital in excess of par value	115,690		148,101
Retained earnings	3,878,721		3,507,262
Accumulated other comprehensive loss	(104,172)		(31,961)
Total stockholders’ equity	4,002,305		3,735,492
Total liabilities and stockholders’ equity	$	8,762,725	$	7,960,315

The accompanying notes are an integral part of these condensed consolidated financial statements.

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PERKINELMER, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)


	For the Three-Month Period Ended April 4, 2021
	Common Stock Amount		Capital in Excess of Par Value		Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity
	(In thousands)
Balance, January 3, 2021	$	112,090	$	148,101	$	3,507,262	$	(31,961)	$	3,735,492
Net income	—		—		379,305		—		379,305
Other comprehensive loss	—		—		—		(72,211)		(72,211)
Dividends	—		—		(7,846)		—		(7,846)
Exercise of employee stock options and related income tax benefits	95		4,892		—		—		4,987
Issuance of common stock for employee stock purchase plans	—		8		—		—		8
Purchases of common stock	(295)		(42,484)		—		—		(42,779)
Issuance of common stock for long-term incentive program	176		4,274		—		—		4,450
Stock compensation	—		899		—		—		899
Balance, April 4, 2021	$	112,066	$	115,690	$	3,878,721	$	(104,172)	$	4,002,305


	For the Three-Month Period Ended April 5, 2020
	Common Stock Amount		Capital in Excess of Par Value		Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity
	(In thousands)
Balance, December 29, 2019	$	111,140	$	90,357	$	2,811,973	$	(199,646)	$	2,813,824
Impact of adopting ASU 2016-02	—		—		(1,328)		—		(1,328)
Net income	—		—		33,665		—		33,665
Other comprehensive loss	—		—		—		(78,681)		(78,681)
Dividends	—		—		(7,779)		—		(7,779)
Exercise of employee stock options and related income tax benefits	21		1,085		—		—		1,106
Issuance of common stock for employee stock purchase plans	14		1,242		—		—		1,256
Purchases of common stock	(66)		(6,276)		—		—		(6,342)
Issuance of common stock for long-term incentive program	197		2,831		—		—		3,028
Stock compensation	—		997		—		—		997
Balance, April 5, 2020	$	111,306	$	90,236	$	2,836,531	$	(278,327)	$	2,759,746

The accompanying notes are an integral part of these consolidated financial statements.

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PERKINELMER, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Three Months Ended
	April 4, 2021		April 5, 2020
	(In thousands)
Operating activities:
Net income	$	379,305	$	33,665
Loss from discontinued operations and dispositions, net of income taxes	38		50
Income from continuing operations	379,343		33,715
Adjustments to reconcile income from continuing operations to net cash provided by continuing operations:
Stock-based compensation	5,157		3,050
Restructuring and other costs, net	5,744		5,858
Depreciation and amortization	70,186		60,758


Change in fair value of contingent consideration	240		(12,325)

Amortization of deferred debt financing costs and accretion of discounts	896		707
Change in fair value of financial securities	(19,298)		—
Amortization of acquired inventory revaluation	2,981		1,088
Changes in assets and liabilities which provided (used) cash, excluding effects from companies acquired:
Accounts receivable, net	165,190		80,600

Inventories	(15,008)		(54,758)
Accounts payable	(5,048)		3,164

Accrued expenses and other	(116,883)		(61,807)
Net cash provided by operating activities of continuing operations	473,500		60,050


Investing activities:
Capital expenditures	(14,311)		(20,488)
Purchases of investments	(4,000)		(1,638)

Proceeds from disposition of businesses and assets	—		60
Proceeds from surrender of life insurance policies	—		52
Cash paid for acquisitions, net of cash, cash equivalents and restricted cash acquired	(443,543)		—
Net cash used in investing activities of continuing operations	(461,854)		(22,014)


Financing activities:
Payments on borrowings	(743,545)		(141,000)
Proceeds from borrowings	584,000		125,000
Proceeds from sale of senior unsecured notes	799,856		—
Payments of debt financing costs	(7,882)		—
Settlement of cash flow hedges	6,005		8,708
Net payments on other credit facilities	(9,799)		(4,283)

Proceeds from issuance of common stock under stock plans	4,987		1,106
Purchases of common stock	(42,779)		(6,342)
Dividends paid	(7,852)		(7,781)
Net cash provided by (used in) financing activities of continuing operations	582,991		(24,592)


Effect of exchange rate changes on cash, cash equivalents and restricted cash	(6,849)		(10,169)
Net increase in cash, cash equivalents and restricted cash	587,788		3,275
Cash, cash equivalents and restricted cash at beginning of period	402,613		191,894
Cash, cash equivalents and restricted cash at end of period	$	990,401	$	195,169

Supplemental disclosures of cash flow information
Reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets that sum to the total shown in the condensed consolidated statements of cash flows:
Cash and cash equivalents	$	988,234	$	195,146
Restricted cash included in other current assets	2,167		23
Total cash, cash equivalents and restricted cash shown in the condensed consolidated statements of cash flows	$	990,401	$	195,169

The accompanying notes are an integral part of these condensed consolidated financial statements.

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PERKINELMER, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1: Basis of Presentation

The condensed consolidated financial statements included herein have been prepared by PerkinElmer, Inc. (the “Company”), in accordance with accounting principles generally accepted in the United States of America (the “U.S.” or the "United States") and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information in the footnote disclosures of the financial statements has been condensed or omitted where it substantially duplicates information provided in the Company’s latest audited consolidated financial statements, in accordance with the rules and regulations of the SEC. These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes included in its Annual Report on Form 10-K for the fiscal year ended January 3, 2021, filed with the SEC (the “2020 Form 10-K”). The balance sheet amounts at January 3, 2021 in this report were derived from the Company’s audited 2020 consolidated financial statements included in the 2020 Form 10-K. The condensed consolidated financial statements reflect all adjustments that, in the opinion of management, are necessary to present fairly the Company’s financial position, results of operations and cash flows for the periods indicated. The preparation of financial statements in conformity with U.S. Generally Accepted Accounting Principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts and classifications of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The results of operations for the three months ended April 4, 2021 and April 5, 2020, respectively, are not necessarily indicative of the results for the entire fiscal year or any future period.

The Company’s fiscal year ends on the Sunday nearest December 31. The Company reports fiscal years under a 52/53 week format and as a result, certain fiscal years will contain 53 weeks. The fiscal year ending January 2, 2022 ("fiscal year 2021") will include 52 weeks, and the fiscal year ended January 3, 2021 ("fiscal year 2020") included 53 weeks.

Recently Adopted and Issued Accounting Pronouncements: From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (the "FASB") and are adopted by the Company as of the specified effective dates. Unless otherwise discussed, such pronouncements did not have or will not have a significant impact on the Company’s consolidated financial position, results of operations and cash flows or do not apply to the Company’s operations.

In December 2019, the FASB issued Accounting Standards Update No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes ("ASU 2019-12"). ASU 2019-12 eliminates certain exceptions and adds guidance to reduce complexity in accounting for income taxes. Specifically, this guidance: (1) removes the intraperiod tax allocation exception to the incremental approach; (2) removes the ownership changes in investments exception in determining when a deferred tax liability is recognized after an investor in a foreign entity transitions to or from the equity method of accounting and applies this provision on a modified retrospective basis through a cumulative-effect adjustment to retained earnings at the beginning of the period of adoption; and (3) removes the exception to using the general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year. ASU 2019-12 also simplifies accounting principles by making other changes, including requiring an entity to: (1) evaluate whether a step-up in tax basis of goodwill relates to a business combination or a separate transaction; (2) make a policy election to not allocate consolidated income taxes when a member of a consolidated tax return is not subject to income tax and to apply this provision retrospectively to all periods presented; and (3) recognize a franchise tax (or similar tax) that is partially based on income as an income-based tax and apply this provision either retrospectively for all periods presented or on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption. The provisions of this guidance (except as specifically mentioned above) are to be applied prospectively upon their effective date. ASU 2019-12 is effective for annual reporting periods beginning after December 15, 2020, and interim periods within those years. In accordance with ASU 2019-12, the Company adopted the guidance beginning on January 4, 2021. The adoption did not have a material impact on the Company's consolidated financial position, results of operations and cash flows.

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Note 2: Revenue

Disaggregation of revenue

In the following tables, revenue is disaggregated by primary geographical markets, primary end-markets and timing of revenue recognition. The tables also include a reconciliation of the disaggregated revenue with the reportable segments' revenue.


	Reportable Segments
	Three Months Ended
	April 4, 2021						April 5, 2020
	Discovery & Analytical Solutions		Diagnostics		Total		Discovery & Analytical Solutions		Diagnostics		Total
	(In thousands)
Primary geographical markets
Americas	$	175,115	$	400,927	$	576,042	$	169,116	$	105,157	$	274,273
Europe	135,458		311,743		447,201		118,657		81,599		200,256
Asia	144,036		140,410		284,446		110,622		67,245		177,867
	$	454,609	$	853,080	$	1,307,689	$	398,395	$	254,001	$	652,396

Primary end-markets
Diagnostics	$	—	$	853,080	$	853,080	$	—	$	254,001	$	254,001
Life sciences	277,201		—		277,201		245,733		—		245,733
Applied markets	177,408		—		177,408		152,662		—		152,662
	$	454,609	$	853,080	$	1,307,689	$	398,395	$	254,001	$	652,396

Timing of revenue recognition
Products and services transferred at a point in time	$	326,662	$	615,106	$	941,768	$	267,907	$	231,653	$	499,560
Services transferred over time	127,947		237,974		365,921		130,488		22,348		152,836
	$	454,609	$	853,080	$	1,307,689	$	398,395	$	254,001	$	652,396

Major Customer Concentration

Revenues from one customer in the Company's Diagnostics segment represent approximately $205.6 million of the Company's total revenue for the three months ended April 4, 2021.

Contract Balances

Contract assets: The unbilled receivables (contract assets) primarily relate to the Company's right to consideration for work completed but not billed at the reporting date. The unbilled receivables are transferred to trade receivables when billed to customers. Contract assets are generally classified as current assets and are included in "Accounts receivable, net" in the consolidated balance sheets. The balance of contract assets as of April 4, 2021 and January 3, 2021 were $50.2 million and $59.5 million, respectively. The amount of unbilled receivables recognized at the beginning of the period that were transferred to trade receivables during the three months ended April 4, 2021 was $37.8 million. The increase in unbilled receivables during the three months ended April 4, 2021 as a result of recognition of revenue before billing to customers, excluding amounts transferred to trade receivables during the period, amounted to $28.5 million.

Contract liabilities: The contract liabilities primarily relate to the advance consideration received from customers for products and related installation for which transfer of control has not occurred at the balance sheet date. Contract liabilities are classified as either current in "Accounts payable" or "Accrued expenses and other current liabilities" or as long-term in "Long-term liabilities" in the consolidated balance sheets based on the timing of when the Company expects to recognize revenue. The balance of contract liabilities as of April 4, 2021 and January 3, 2021 were $221.0 million and $238.1 million, respectively. The increase in contract liabilities during the three months ended April 4, 2021 due to cash received, excluding amounts recognized as revenue during the period, was $20.9 million. The amount of revenue recognized during the three months ended April 4, 2021 that was included in the contract liability balance at the beginning of the period was $38.0 million.

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Contract costs: The Company recognizes the incremental costs of obtaining a contract with a customer as an asset if it expects the benefit of those costs to be longer than one year. The Company determined that certain sales incentive programs meet the requirements to be capitalized. Total capitalized costs to obtain a contract were immaterial during the period and are included in other current and long-term assets on the consolidated balance sheets. The Company applies a practical expedient to expense costs as incurred for costs to obtain a contract with a customer when the amortization period would have been one year or less. These costs include the Company's internal sales force compensation program, as the Company determined that annual compensation is commensurate with annual sales activities.

Transaction price allocated to the remaining performance obligations

The Company applies the practical expedient in ASC 606-10-50-14 and does not disclose information about remaining performance obligations that have original expected durations of one year or less. The estimated revenue expected to be recognized beyond one year in the future related to performance obligations that are unsatisfied (or partially unsatisfied) at the end of the period are not material to the Company. The remaining performance obligations primarily include noncancelable purchase orders and noncancelable software subscriptions and cloud service contracts.

Note 3: Business Combinations

Acquisitions in fiscal year 2021

During the first quarter of fiscal year 2021, the Company completed the acquisition of two businesses for aggregate consideration of $593.4 million. The acquired businesses were Oxford Immunotec Global PLC ("Oxford"), a company based in Abingdon, UK with approximately 275 employees, which was acquired on March 8, 2021 for a total consideration of $590.9 million and one other business, which was acquired for a total consideration of $2.5 million. The excess of the purchase prices over the fair values of the acquired businesses' net assets represents cost and revenue synergies specific to the Company, as well as non-capitalizable intangible assets, such as employee workforces acquired, and has been allocated to goodwill, which is not tax deductible. The Company has reported the operations for these acquisitions within the results of the Company's Diagnostics and Discovery and Analytical Solutions segments, as applicable, from the acquisition dates. Identifiable definite-lived intangible assets, such as core technology, trade names, and customer relationships, acquired as part of these acquisitions had a weighted average amortization period of 11.1 years.

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The total purchase price for the acquisitions in fiscal year 2021 has been allocated to the estimated fair values of assets acquired and liabilities assumed as follows:


	Preliminary
	Oxford		Other
	(In thousands)
Fair value of business combination:
Cash payments	$	590,865	$	2,250
Other liability	—		250


Less: cash acquired	(149,586)		—
Total	$	441,279	$	2,500
Identifiable assets acquired and liabilities assumed:
Current assets	$	25,815	$	25
Property, plant and equipment	12,404		65
Other assets	10,553		—
Identifiable intangible assets:
Core technology	150,000		2,410
Trade names	23,800		—


Customer relationships	6,800		—

Goodwill	280,944		—
Deferred taxes	(33,072)		—
Deferred revenue	(102)		—
Debt assumed	(331)		—
Liabilities assumed	(35,532)		—
Total	$	441,279	$	2,500

Acquisitions in fiscal year 2020

During the fiscal year 2020, the Company completed the acquisition of four businesses for aggregate consideration of $438.7 million. The acquired businesses were Horizon Discovery Group plc (“Horizon”), a company based in Cambridge, UK with approximately 400 employees, which was acquired on December 23, 2020 for a total consideration of $399.4 million (£296.0 million), and three other businesses, which were acquired for a total consideration of $39.3 million. The excess of the purchase prices over the fair values of the acquired businesses' net assets represents cost and revenue synergies specific to the Company, as well as non-capitalizable intangible assets, such as the employee workforces acquired, and has been allocated to goodwill, which is not tax deductible. The Company has reported the operations for these acquisitions within the results of the Company's Diagnostics and Discovery & Analytical Solutions segments, as applicable, from the acquisition dates. Identifiable definite-lived intangible assets, such as core technology, trade names, customer relationships and in-process research and development, acquired as part of these acquisitions had a weighted average amortization period of 11.0 years.

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The total purchase price for the acquisitions in fiscal year 2020 has been allocated to the estimated fair values of assets acquired and liabilities assumed as follows:


	Preliminary
	Horizon		Other
	(In thousands)
Fair value of business combination:
Cash payments	$	399,005	$	38,243
Other liability	396		1,263

Working capital and other adjustments	—		(384)
Less: cash acquired	(25,539)		(1,300)
Total	$	373,862	$	37,822
Identifiable assets acquired and liabilities assumed:
Current assets	$	29,762	$	5,770
Property, plant and equipment	17,729		2,673
Other assets	17,743		371
Identifiable intangible assets:
Core technology	60,000		5,730
Trade names	4,900		680


Customer relationships	97,600		10,923

Goodwill	202,071		16,016
Deferred taxes	(22,651)		(1,132)
Deferred revenue	(2,031)		—
Debt assumed	—		(29)
Liabilities assumed	(41,961)		(3,180)
Total	$	373,862	$	37,822

The preliminary allocations of the purchase prices for acquisitions are based upon initial valuations. The Company's estimates and assumptions underlying the initial valuations are subject to the collection of information necessary to complete its valuations within the measurement periods, which are up to one year from the respective acquisition dates. The primary areas of the preliminary purchase price allocations that are not yet finalized relate to the fair value of certain tangible and intangible assets acquired and liabilities assumed, assets and liabilities related to income taxes and related valuation allowances, and residual goodwill. The Company expects to continue to obtain information to assist in determining the fair values of the net assets acquired at the acquisition dates during the measurement periods. During the measurement periods, the Company will adjust assets or liabilities if new information is obtained about facts and circumstances that existed as of the acquisition dates that, if known, would have resulted in the recognition of those assets and liabilities as of those dates. These adjustments will be made in the periods in which the amounts are determined and the cumulative effect of such adjustments will be calculated as if the adjustments had been completed as of the acquisition dates. All changes that do not qualify as adjustments made during the measurement periods are also included in current period earnings.

Allocations of the purchase price for acquisitions are based on estimates of the fair value of the net assets acquired and are subject to adjustment upon finalization of the purchase price allocations. The accounting for business combinations requires estimates and judgments as to expectations for future cash flows of the acquired business, and the allocation of those cash flows to identifiable intangible assets, in determining the estimated fair values for assets acquired and liabilities assumed.

As of April 4, 2021, the Company may have to pay contingent consideration related to acquisitions with open contingency periods of up to $7.3 million. As of April 4, 2021, the Company has recorded contingent consideration obligations of $3.1 million, of which $3.0 million was recorded in accrued expenses and other current liabilities, and $0.1 million was recorded in long-term liabilities. As of January 3, 2021, the Company had recorded contingent consideration obligations with an estimated fair value of $3.0 million, of which $2.9 million was recorded in accrued expenses and other current liabilities, and $0.1 million was recorded in long-term liabilities. The expected maximum earnout period for acquisitions with open contingency periods does not exceed 1.8 years from April 4, 2021, and the remaining weighted average expected earnout period at April 4, 2021 was 1.1 years. If the actual results differ from the estimates and judgments used in these fair values, the

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amounts recorded in the condensed consolidated financial statements could result in a possible impairment of the intangible assets and goodwill, require acceleration of the amortization expense of definite-lived intangible assets or the recognition of additional contingent consideration which would be recognized as a component of operating expenses from continuing operations.

Total acquisition and divestiture-related costs for the three months ended April 4, 2021 and April 5, 2020 were $4.4 million and $12.4 million, respectively. These amounts included $5.4 million and $12.3 million of incentive award associated with the Company's acquisition of Meizheng Group for the three months ended April 4, 2021 and April 5, 2020, respectively. Net foreign exchange gain and interest expense related to the Company's acquisition of Oxford for the three months ended April 4, 2021 amounted to $5.4 million and $0.2 million, respectively. These acquisition and divestiture-related costs were expensed as incurred and recorded in selling, general and administrative expenses and interest and other expense, net in the Company's consolidated statements of operations.

Note 4: Restructuring and Other Costs, Net

The Company implemented a restructuring plan in the first quarter of fiscal year 2021 consisting of workforce reductions principally intended to realign resources to emphasize growth initiatives and integrate new acquisitions (the "Q1 2021 Plan"). The Company implemented a restructuring plan in the third quarter of fiscal year 2020 consisting of workforce reductions principally intended to realign resources to emphasize growth initiatives (the "Q3 2020 Plan"). The Company implemented a restructuring plan in the first quarter of fiscal year 2020 consisting of workforce reductions and closure of excess facilities principally intended to realign resources to emphasize growth initiatives (the "Q1 2020 Plan"). Details of the plans initiated in previous years (the “Previous Plans”) are discussed more fully in Note 5 to the audited consolidated financial statements in the 2020 Form 10-K.

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The following table summarizes the reductions in headcount, the initial restructuring or contract termination charges by reporting segment, and the dates by which payments were substantially completed, or the dates by which payments are expected to be substantially completed, for restructuring actions implemented during fiscal years 2021 and 2020 in continuing operations:


	Workforce Reductions					Closure of Excess Facility				Total		(Expected) Date Payments Substantially Completed by
	Headcount Reduction	Discovery & Analytical Solutions		Diagnostics		Discovery & Analytical Solutions		Diagnostics				Severance	Excess Facility

	(In thousands, except headcount data)
Q1 2021 Plan	77	$	3,941	$	1,615	$	—	$	—	$	5,556	Q4 FY2021	—
Q3 2020 Plan	23	2,080		901		—		—		2,981		Q2 FY2021	—
Q1 2020 Plan	32	2,312		1,134		92		682		4,220		Q4 FY2020	Q1 FY2022

The Company recorded pre-tax charges of $0.2 million and $1.4 million associated with relocating facilities during the three months ended April 4, 2021 and April 5, 2020, respectively, in the Discovery & Analytical Solutions segment. The Company expects to make payments on these relocation activities through end of fiscal year 2021.

At April 4, 2021, the Company had $10.1 million recorded for accrued restructuring and other costs, of which $8.6 million was recorded in short-term accrued restructuring and other costs, $0.2 million was recorded in operating lease right-of-use assets, and $1.2 million was recorded in operating lease liabilities. At January 3, 2021, the Company had $8.3 million recorded for accrued restructuring and other costs, of which $4.7 million was recorded in short-term accrued restructuring and other costs, $0.3 million was recorded in operating lease right-of-use assets, $2.0 million was recorded in accrued expenses and other current liabilities, and $1.3 million was recorded in operating lease liabilities. The following table summarizes the Company's restructuring accrual balances and related activity by restructuring plan, as well as other accrual balances and related activity, during the three months ended April 4, 2021:


	Balance at January 3, 2021		2021 Charges		2021 Changes in Estimates, Net		2021 Amounts Paid		Balance at April 4, 2021
	(In thousands)
Severance:
Q1 2021 Plan	$	—	$	5,556	$	—	$	(917)	$	4,639
Q3 2020 Plan	1,167

Price	85.16	EPS	2
Shares	112	P/E	41
MCap	9,500	P/FCF	64
Net Debt	1,862	EBIT	292
TEV	11,362	TEV/EBIT	39
TTM 2019-09-29, in MM, except price, ratios

10-Q	2021-04-04	Filed 2021-05-11
10-K	2021-01-03	Filed 2021-03-02
10-Q	2020-10-04	Filed 2020-11-10
10-Q	2020-07-05	Filed 2020-08-11
10-Q	2020-04-05	Filed 2020-05-12
10-K	2019-12-29	Filed 2020-02-25
10-Q	2019-09-29	Filed 2019-11-05
10-Q	2019-06-30	Filed 2019-08-06
10-Q	2019-03-31	Filed 2019-05-07
10-K	2018-12-30	Filed 2019-02-26
10-Q	2018-09-30	Filed 2018-11-06
10-Q	2018-07-01	Filed 2018-08-07
10-Q	2018-04-01	Filed 2018-05-08
10-K	2017-12-31	Filed 2018-02-27
10-Q	2017-10-01	Filed 2017-11-07
10-Q	2017-07-02	Filed 2017-08-08
10-Q	2017-04-02	Filed 2017-05-09
10-K	2017-01-01	Filed 2017-02-28
10-Q	2016-10-02	Filed 2016-11-08
10-Q	2016-07-03	Filed 2016-08-09
10-Q	2016-04-03	Filed 2016-05-10
10-K	2016-01-03	Filed 2016-03-01
10-Q	2015-10-04	Filed 2015-11-10
10-Q	2015-06-28	Filed 2015-08-04
10-Q	2015-03-29	Filed 2015-05-05
10-K	2014-12-28	Filed 2015-02-24
10-Q	2014-09-28	Filed 2014-11-04
10-Q	2014-06-29	Filed 2014-08-05
10-Q	2014-03-30	Filed 2014-05-06
10-K	2013-12-29	Filed 2014-02-25
10-Q	2013-09-29	Filed 2013-11-05
10-Q	2013-06-30	Filed 2013-08-06
10-Q	2013-03-31	Filed 2013-05-06
10-K	2012-12-30	Filed 2013-02-26
10-Q	2012-09-30	Filed 2012-11-06
10-Q	2012-07-01	Filed 2012-08-07
10-Q	2012-04-01	Filed 2012-05-08
10-K	2012-01-01	Filed 2012-02-28
10-Q	2011-10-02	Filed 2011-11-04
10-Q	2011-07-03	Filed 2011-08-10
10-Q	2011-04-03	Filed 2011-05-10
10-K	2011-01-02	Filed 2011-03-01
10-Q	2010-10-03	Filed 2010-11-10
10-Q	2010-07-04	Filed 2010-08-10
10-Q	2010-04-04	Filed 2010-05-13
10-K	2010-01-03	Filed 2010-03-01

8-K	2020-10-28
8-K	2020-10-12
8-K	2020-07-28
8-K	2020-07-13
8-K	2020-05-05
8-K	2020-04-28
8-K	2020-03-26
8-K	2020-03-25
8-K	2020-03-09
8-K	2020-03-01
8-K	2020-01-27
8-K	2019-10-30
8-K	2019-09-17
8-K	2019-09-12
8-K	2019-08-21
8-K	2019-07-29
8-K	2019-04-25
8-K	2019-04-23
8-K	2019-04-08
8-K	2019-01-31
8-K	2018-12-07
8-K	2018-10-31
8-K	2018-08-01
8-K	2018-04-30
8-K	2018-04-24
8-K	2018-04-11
8-K	2018-04-10
8-K	2018-01-25

EX-10.1	q1-2021exhibit101.htm
EX-10.2	q1-2021exhibit102.htm
EX-10.3	q1-2021exhibit103.htm
EX-10.4	q1-2021exhibit104.htm
EX-10.5	q1-2021exhibit105.htm
EX-31.1	pki-04042021xex_311.htm
EX-31.2	pki-04042021xex_312.htm
EX-32.1	pki-04042021xex_321.htm

PKI 10Q Quarterly Report

PerkinElmer Earnings 2021-04-04