Formatech, Inc.

WALTHAM, Mass.--( BUSINESS WIRE )-- PerkinElmer, Inc. (NYSE: PKI), a global leader committed to innovating for a healthier world, today reported financial results for the third quarter ended October 2, 2022. The Company reported GAAP earnings per share from continuing operations of $0.55, as compared to GAAP earnings per share from continuing operations of $0.94 in the same period a year ago. GAAP revenue for the quarter was $712 million, as compared to $861 million in the same period a year ago. GAAP operating income from continuing operations for the quarter was $111 million, as compared to $196 million for the same period a year ago. GAAP operating profit margin was 15.6% as a percentage of revenue, as compared to 22.7% in the same period a year ago. Adjusted operating income from continuing operations was $224 million, as compared to $322 million for the same period a year ago. Adjusted operating profit margin was 31.4% as a percentage of revenue, as compared to 37.4% in the same period a year ago. Pro forma adjusted earnings per share for the quarter was $1.51, as compared to $2.31 in the same period a year ago. Pro forma adjusted revenue for the quarter was $1.03 billion, as compared to $1.17 billion in the same period a year ago. Pro forma adjusted operating income for the quarter was $272 million, as compared to $359 million for the same period a year ago. Pro forma adjusted operating profit margin was 26.3% as a percentage of adjusted revenue, as compared to 30.8% in the same period a year ago. Adjustments for the Company's non-GAAP financial measures have been noted in the attached reconciliations. *Pro forma information includes results from the Applied, Food and Enterprise Services (“AES”) businesses currently held for sale. “ It was great to see how we continued to execute at a high level across the company in the quarter, both operationally and financially,” said Prahlad Singh, president and chief executive officer of PerkinElmer. “ The energy and excitement amongst our employees in all our businesses remains exceptional as we continue to prepare for the upcoming split into two separate companies. I am proud to see the impact our efforts are having on society and how we accomplish this each day.” Financial Overview by Reporting Segment for the Third Quarter Discovery & Analytical Solutions Continuing Operations Third quarter 2022 revenue was $313 million, as compared to $208 million in the same period a year ago. Reported revenue increased 51% and organic revenue increased 14% as compared to the same period a year ago. Third quarter 2022 operating income from continuing operations was $33 million, as compared to $(19) million for the same period a year ago. Third quarter 2022 adjusted operating income was $117 million, as compared to $58 million for the same period a year ago. Discovery & Analytical Solutions Pro Forma* Operations Third quarter 2022 pro forma revenue was $633 million, as compared to $513 million in the same period a year ago. Pro forma revenue increased 23% and pro forma organic revenue increased 12% as compared to the same period a year ago. Third quarter 2022 pro forma operating income was $58 million, as compared to $7 million for the same period a year ago. Third quarter 2022 pro forma adjusted operating income was $165 million, as compared to $95 million for the same period a year ago. Diagnostics Third quarter 2022 revenue was $399 million, as compared to $654 million for the same period a year ago. Reported revenue decreased 39% and organic revenue decreased 33% as compared to the same period a year ago. Third quarter 2022 operating income from continuing operations was $95 million, as compared to $238 million for the same period a year ago. Third quarter 2022 adjusted operating income was $123 million, as compared to $287 million for the same period a year ago. Initiates Fourth Quarter and Updates Full Year 2022 Guidance For the fourth quarter of 2022, the Company forecasts total revenue from continuing operations of $0.73 billion. Pro forma total revenue is expected to be in a range of approximately $1.06-$1.07 billion and pro forma adjusted earnings per share are expected to be in a range $1.65-$1.67. For the full year 2022, the Company now forecasts total revenue from continuing operations of $3.30 billion. Pro forma total revenue is expected to be in the range of approximately $4.59-$4.60 billion and pro forma adjusted earnings per share are expected to be in a range of $7.89-$7.91. The Company’s guidance for the fourth quarter and full year with respect to non-GAAP metrics cannot be reconciled to the closest GAAP measures without unreasonable effort due to the unpredictability of the amounts and timing of events affecting the items the Company excludes from these non-GAAP measures. The timing and amounts of such events and items could be material to the Company’s results prepared in accordance with GAAP. Webcast Information The Company will discuss its third quarter 2022 results and its outlook for business trends during a webcast on November 8, 2022, at 8:00 a.m. Eastern Time. A live audio webcast and presentation will be available on the Investors section of the Company’s website, www.perkinelmer.com . Use of Non-GAAP Financial Measures In addition to financial measures prepared in accordance with generally accepted accounting principles (GAAP), this earnings announcement also contains non-GAAP financial measures. The reasons that we use these measures, a reconciliation of these measures to the most directly comparable GAAP measures, and other information relating to these measures are included below following our GAAP financial statements. Factors Affecting Future Performance This press release contains "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements relating to estimates and projections of future earnings per share, cash flow and revenue growth and other financial results, developments relating to our customers and end-markets, and plans concerning business development opportunities, acquisitions and divestitures. Words such as "believes," "intends," "anticipates," "plans," "expects," “estimates”, "projects," "forecasts," "will" and similar expressions, and references to guidance, are intended to identify forward-looking statements. Such statements are based on management's current assumptions and expectations and no assurances can be given that our assumptions or expectations will prove to be correct. A number of important risk factors could cause actual results to differ materially from the results described, implied or projected in any forward-looking statements. These factors include, without limitation: (1) markets into which we sell our products declining or not growing as anticipated; (2) the effect of the COVID-19 pandemic on our sales and operations; (3) fluctuations in the global economic and political environments; (4) our failure to introduce new products in a timely manner; (5) our ability to execute acquisitions and divestitures, such as the divestiture of the Applied, Food and Enterprise Services businesses, license technologies, or to successfully integrate acquired businesses and licensed technologies into our existing business or to make them profitable, or successfully divest businesses; (6) our ability to compete effectively; (7) fluctuation in our quarterly operating results and our ability to adjust our operations to address unexpected changes; (8) significant disruption in third-party package delivery and import/export services or significant increases in prices for those services; (9) disruptions in the supply of raw materials and supplies; (10) our ability to retain key personnel; (11) significant disruption in our information technology systems, or cybercrime; (12) our ability to realize the full value of our intangible assets; (13) our failure to adequately protect our intellectual property; (14) the loss of any of our licenses or licensed rights; (15) the manufacture and sale of products exposing us to product liability claims; (16) our failure to maintain compliance with applicable government regulations; (17) regulatory changes; (18) our failure to comply with healthcare industry regulations; (19) economic, political and other risks associated with foreign operations; (20) the United Kingdom’s withdrawal from the European Union; (21) our ability to obtain future financing; (22) restrictions in our credit agreements; (23) discontinuation or replacement of LIBOR; (24) significant fluctuations in our stock price; (25) reduction or elimination of dividends on our common stock; and (26) other factors which we describe under the caption "Risk Factors" in our most recent quarterly report on Form 10-Q and in our other filings with the Securities and Exchange Commission. We disclaim any intention or obligation to update any forward-looking statements as a result of developments occurring after the date of this press release. About PerkinElmer PerkinElmer is a leading, global provider of end-to-end solutions that help scientists, researchers and clinicians better diagnose disease, discover new and more personalized drugs, monitor the safety and quality of our food, and drive environmental and applied analysis excellence. With an 85-year legacy of advancing science and a mission of innovating for a healthier world, our dedicated team of more than 16,000 collaborates closely with commercial, government, academic and healthcare customers to deliver reagents, assays, instruments, automation, informatics and strategic services that accelerate workflows, deliver actionable insights and support improved decision making. We are also deeply committed to good corporate citizenship through our dynamic ESG and sustainability programs. The Company reported revenues of approximately $5 billion in 2021, serves customers in 190 countries, and is a component of the S&P 500 index. Additional information is available at www.perkinelmer.com . Follow PerkinElmer on LinkedIn , Twitter , Facebook , Instagram , and YouTube . PerkinElmer, Inc. and Subsidiaries CONDENSED CONSOLIDATED INCOME STATEMENTS Three Months Ended Nine Months Ended (In thousands, except per share data) October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021 Revenue $ 711,803 $ 861,316 $ 2,570,608 $ 2,799,898 Cost of revenue 304,759 338,454 1,017,108 1,009,707 Selling, general and administrative expenses 239,969 275,869 765,746 681,311 Research and development expenses 53,521 49,421 167,081 139,753 Restructuring and other, net 2,774 2,011 15,443 10,517 Operating income from continuing operations 110,780 195,561 605,230 958,610 Interest income (667 ) (544 ) (2,024 ) (1,322 ) Interest expense 25,931 43,531 81,447 74,407 Change in fair value of financial securities 5,106 19,365 14,321 (8,566 ) Other (income) expense, net (1,732 ) (1,803 ) (1,904 ) (9,787 ) Income from continuing operations, before income taxes 82,142 135,012 513,390 903,878 Provision for income taxes 12,634 27,381 98,211 198,531 Income from continuing operations 69,508 107,631 415,179 705,347 Income from discontinued operations, before income taxes 25,180 26,656 36,004 64,329 Provision for income taxes on discontinued operations and dispositions 9,341 6,549 9,662 16,703 Income from discontinued operations and dispositions 15,839 20,107 26,342 47,626 Net income $ 85,347 $ 127,738 $ 441,521 $ 752,973 Diluted earnings per share: Income from continuing operations $ 0.55 $ 0.94 $ 3.28 $ 6.23 Income from discontinued operations and dispositions 0.13 0.17 0.21 0.42 Net income $ 0.67 $ 1.11 $ 3.49 $ 6.65 Weighted average diluted shares of common stock outstanding 126,540 115,022 126,544 113,307 ABOVE PREPARED IN ACCORDANCE WITH GAAP Additional Supplemental Information (1) : (per share, continuing operations) GAAP EPS from continuing operations $ 0.55 $ 0.94 $ 3.28 $ 6.23 Amortization of intangible assets 0.72 0.55 2.22 1.40 Gain from debt extinguishment (0.00 ) - (0.00 ) - Purchase accounting adjustments 0.08 0.09 0.36 0.17 Acquisition and divestiture-related costs 0.07 0.61 0.20 0.64 Change in fair value of financial securities 0.04 0.17 0.11 (0.08 ) Asset impairment - 0.03 - 0.03 Significant litigation matters and settlements 0.00 - (0.00 ) - Disposition of businesses and assets, net - (0.02 ) - (0.02 ) Restructuring and other, net 0.02 0.02 0.12 0.09 Tax on above items (0.24 ) (0.31 ) (0.77 ) (0.49 ) Significant tax items (0.03 ) (0.01 ) (0.03 ) 0.12 Adjusted EPS from Continuing Operations $ 1.21 $ 2.07 $ 5.50 $ 8.10 Adjusted EPS from AES $ 0.30 $ 0.24 $ 0.75 $ 0.74 Pro Forma Adjusted EPS including the results of AES $ 1.51 $ 2.31 $ 6.24 $ 8.84 (1) amounts may not sum due to rounding PerkinElmer, Inc. and Subsidiaries REVENUE AND OPERATING INCOME (LOSS) Three Months Ended Nine Months Ended (In thousands, except percentages) October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021 DAS Reported revenue $ 312,783 $ 207,511 $ 945,484 $ 577,371 Purchase accounting adjustments - - - 1,849 Adjusted revenue 312,783 207,511 945,484 579,220 Reported operating income (loss) from continued operations 32,631 (19,263 ) 106,005 50,624 OP% 10.4 % -9.3 % 11.2 % 8.8 % Amortization of intangible assets 64,426 25,757 185,094 50,903 Purchase accounting adjustments 9,164 5,673 43,710 9,322 Acquisition and divestiture-related costs 8,475 44,409 11,746 46,498 Significant litigation matters and settlements 629 - (632 ) - Restructuring and other, net 1,556 1,424 11,738 6,867 Adjusted operating income 116,881 58,000 357,661 164,214 Adjusted OP% 37.4 % 28.0 % 37.8 % 28.4 % Diagnostics Reported revenue 399,020 653,805 1,625,124 2,222,527 Purchase accounting adjustments 203 199 609 597 Adjusted revenue 399,223 654,004 1,625,733 2,223,124 Reported operating income from continued operations 94,654 237,903 553,898 965,650 OP% 23.7 % 36.4 % 34.1 % 43.4 % Amortization of intangible assets 27,099 37,517 95,375 107,743 Purchase accounting adjustments 457 5,107 1,884 9,485 Asset impairment - 3,868 - 3,868 Acquisition and divestiture-related costs - 2,023 14,119 7,833 Restructuring and other, net 1,218 587 3,705 3,650 Adjusted operating income 123,428 287,005 668,981 1,098,229 Adjusted OP% 30.9 % 43.9 % 41.1 % 49.4 % Corporate Reported operating loss (16,505 ) (23,079 ) (54,673 ) (57,664 ) Continuing Operations Reported revenue $ 711,803 $ 861,316 $ 2,570,608 $ 2,799,898 Purchase accounting adjustments 203 199 609 2,446 Adjusted revenue 712,006 861,515 2,571,217 2,802,344 Reported operating income from continued operations 110,780 195,561 605,230 958,610 OP% 15.6 % 22.7 % 23.5 % 34.2 % Amortization of intangible assets 91,525 63,274 280,469 158,646 Purchase accounting adjustments 9,621 10,780 45,594 18,807 Acquisition and divestiture-related costs 8,475 46,432 25,865 54,331 Asset impairment - 3,868 - 3,868 Significant litigation matters and settlements 629 - (632 ) - Restructuring and other, net 2,774 2,011 15,443 10,517 Adjusted operating income $ 223,804 $ 321,926 $ 971,969 $ 1,204,779 Adjusted OP% 31.4 % 37.4 % 37.8 % 43.0 % REPORTED REVENUE AND REPORTED OPERATING INCOME (LOSS) PREPARED IN ACCORDANCE WITH GAAP PerkinElmer, Inc. and Subsidiaries RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (1) Three Months Ended Nine Months Ended (In thousands, except percentages) October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021 DAS Reported revenue $ 312,783 $ 207,511 $ 945,484 $ 577,371 Purchase accounting adjustments - - - 1,849 Adjusted revenue 312,783 207,511 945,484 579,220 Reported operating income from continued operations 32,631 (19,263 ) 106,005 50,624 OP% 10.4 % -9.3 % 11.2 % 8.8 % Amortization of intangible assets 64,426 25,757 185,094 50,903 Purchase accounting adjustments 9,164 5,673 43,710 9,322 Acquisition and divestiture-related costs 8,475 44,409 11,746 46,498 Significant litigation matters and settlements 629 - (632 ) - Restructuring and other, net 1,556 1,424 11,738 6,867 Adjusted operating income 116,881 58,000 357,661 164,214 Adjusted OP% 37.4 % 28.0 % 37.8 % 28.4 % AES Discontinued Operations Revenue in Discontinued Ops 320,616 305,369 950,822 902,946 Reported operating income in discontinued operations 25,389 26,409 36,642 63,624 OP% 7.9 % 8.6 % 3.9 % 7.0 % Amortization of intangible assets 2,387 7,680 16,984 26,026 Acquisition and divestiture-related costs 22,026 2,651 47,042 15,066 Restructuring and other, net 486 200 13,131 2,501 Pro-Forma deprecation on assets held for sale (2,363 ) - (2,363 ) - Adjusted operating income of AES 47,925 36,940 111,436 107,217 Adjusted OP% 14.9 % 12.1 % 11.7 % 11.9 % Pro Forma DAS Revenue including AES 633,399 512,880 1,896,306 1,480,317 Purchase accounting adjustments - - - 1,849 Adjusted revenue including AES 633,399 512,880 1,896,306 1,482,166 Operating income including AES 58,020 7,146 142,647 114,248 OP% 9.2 % 1.4 % 7.5 % 7.7 % Amortization of intangible assets 66,813 33,437 202,078 76,929 Purchase accounting adjustments 9,164 5,673 43,710 9,322 Acquisition and divestiture-related costs 30,501 47,060 58,788 61,564 Significant litigation matters and settlements 629 - (632 ) - Restructuring and other, net 2,042 1,624 24,869 9,368 Pro-Forma deprecation on assets held for sale (2,363 ) - (2,363 ) - Adjusted operating income including AES 164,806 94,940 469,097 271,431 Adjusted OP% 26.0 % 18.5 % 24.7 % 18.3 % Diagnostics Reported revenue 399,020 653,805 1,625,124 2,222,527 Purchase accounting adjustments 203 199 609 597 Adjusted revenue 399,223 654,004 1,625,733 2,223,124 Reported operating income from continued operations 94,654 237,903 553,898 965,650 OP% 23.7 % 36.4 % 34.1 % 43.4 % Amortization of intangible assets 27,099 37,517 95,375 107,743 Purchase accounting adjustments 457 5,107 1,884 9,485 Asset impairment - 3,868 - 3,868 Acquisition and divestiture-related costs - 2,023 14,119 7,833 Restructuring and other, net 1,218 587 3,705 3,650 Adjusted operating income 123,428 287,005 668,981 1,098,229 Adjusted OP% 30.9 % 43.9 % 41.1 % 49.4 % Corporate Reported operating loss (16,505 ) (23,079 ) (54,673 ) (57,664 ) Pro Forma Operating Results including AES Revenue including AES $ 1,032,419 $ 1,166,685 $ 3,521,430 $ 3,702,844 Purchase accounting adjustments 203 199 609 2,446 Adjusted revenue including AES 1,032,622 1,166,884 3,522,039 3,705,290 Operating income including AES 136,169 221,970 641,872 1,022,234 OP% 13.2 % 19.0 % 18.2 % 27.6 % Amortization of intangible assets 93,912 70,954 297,453 184,672 Purchase accounting adjustments 9,621 10,780 45,594 18,807 Acquisition and divestiture-related costs 30,501 49,083 72,907 69,397 Asset impairment - 3,868 - 3,868 Significant litigation matters and settlements 629 - (632 ) - Restructuring and other, net 3,260 2,211 28,574 13,018 Pro-Forma deprecation on assets held for sale (2,363 ) - (2,363 ) - Adjusted operating income including AES $ 271,729 $ 358,866 $ 1,083,405 $ 1,311,996 Adjusted OP% 26.3 % 30.8 % 30.8 % 35.4 % REPORTED REVENUE AND REPORTED OPERATING INCOME (LOSS) PREPARED IN ACCORDANCE WITH GAAP (1) amounts may not sum due to rounding PerkinElmer, Inc. and Subsidiaries CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) October 2, 2022 January 2, 2022 Current assets: Cash and cash equivalents $ 400,741 $ 603,320 Accounts receivable, net 540,867 707,941 Inventories, net 378,256 425,890 Other current assets 138,867 148,255 Current assets of discontinued operations 1,657,749 555,374 Total current assets 3,116,480 2,440,780 Property, plant and equipment, net 460,397 485,531 Operating lease right-of-use assets 160,120 164,040 Intangible assets, net 3,401,143 3,821,847 Goodwill 6,373,327 6,627,119 Other assets, net 312,297 312,887 Long-term assets of discontinued operations - 1,148,350 Total assets $ 13,823,764 $ 15,000,554 Current liabilities: Current portion of long-term debt $ 503,549 $ 4,240 Accounts payable 275,824 324,811 Accrued expenses and other current liabilities 471,570 728,445 Current liabilities of discontinued operations 234,788 156,248 Total current liabilities 1,485,731 1,213,744 Long-term debt 3,898,267 4,979,737 Long-term liabilities 1,231,724 1,413,196 Operating lease liabilities 142,842 147,395 Long-term liabilities of discontinued operations - 105,237 Total liabilities 6,758,564 7,859,309 Total stockholders' equity 7,065,200 7,141,245 Total liabilities and stockholders' equity $ 13,823,764 $ 15,000,554 PREPARED IN ACCORDANCE WITH GAAP PerkinElmer, Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS Three Months Ended Nine Months Ended October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021 (In thousands) (In thousands) Operating activities: Net income $ 85,347 $ 127,738 $ 441,521 $ 752,973 Income from discontinued operations and dispositions, net of income taxes (15,839 ) (20,107 ) (26,342 ) (47,626 ) Income from continuing operations 69,508 107,631 415,179 705,347 Adjustments to reconcile income from continuing operations to net cash provided by continuing operations: Stock-based compensation 10,112 5,835 39,776 16,718 Restructuring and other, net 2,774 2,011 15,443 10,517 Depreciation and amortization 104,736 76,146 322,766 197,386 Change in fair value of contingent consideration (2,132 ) 1,076 (769 ) 1,553 Amortization of deferred debt financing costs and accretion of discounts 2,194 1,500 6,046 3,224 Change in fair value of financial securities 5,106 19,365 14,321 (8,566 ) Debt extinguishment income (580 ) - (92 ) - Amortization of acquired inventory revaluation 11,315 9,425 45,039 14,728 Gain on disposition of businesses and assets, net - (1,970 ) - (1,970 ) Asset impairment - 3,868 - 3,868 Changes in assets and liabilities which provided (used) cash, excluding effects from companies acquired: Accounts receivable, net 28,637 87,718 93,092 224,162 Inventories (19,996 ) 7,796 (61,632 ) 14,683 Accounts payable (16,429 ) (9,358 ) (24,314 ) (40,009 ) Accrued expenses and other (72,496 ) (20,787 ) (338,223 ) (168,949 ) Net cash provided by operating activities of continuing operations 122,749 290,256 526,632 972,692 Net cash provided by operating activities of discontinued operations 37,205 23,539 14,020 102,466 Net cash provided by operating activities 159,954 313,795 540,652 1,075,158 Investing activities: Capital expenditures (13,095 ) (26,365 ) (59,502 ) (59,066 ) Purchases of investments (17,765 ) (4,623 ) (45,010 ) (19,130 ) Proceeds from notes receivables 8,890 - 8,890 - Proceeds from disposition of businesses and assets 4,610 1,460 5,664 1,460 Cash paid for acquisitions, net of cash acquired (1,884 ) (3,264,981 ) (7,768 ) (3,967,678 ) Net cash used in investing activities of continuing operations (19,244 ) (3,294,509 ) (97,726 ) (4,044,414 ) Net cash used in investing activities of discontinued operations (3,263 ) (6,419 ) (9,441 ) (8,393 ) Net cash used in investing activities (22,507 ) (3,300,928 ) (107,167 ) (4,052,807 ) Financing Activities: Payments on borrowings - (427,580 ) (220,000 ) (1,191,125 ) Proceeds from borrowings - 415,282 220,000 1,144,282 Payments of term loan (50,000 ) - (500,000 ) - Proceeds from term loan - 500,000 - 500,000 Payments of senior debt (7,472 ) - (7,472 ) (339,605 ) Proceeds from sale of senior debt - 2,286,239 - 3,086,095 Payments of debt financing costs - (22,741 ) - (30,983 ) Settlement of cash flow hedges - 4,477 (762 ) (1,459 ) Net payments on other credit facilities 343 (905 ) (487 ) (12,731 ) Proceeds from issuance of common stock under stock plans 413 8,575 6,254 22,760 Purchases of common stock (89 ) (89 ) (56,137 ) (73,013 ) Dividends paid (8,835 ) (7,842 ) (26,502 ) (23,539 ) Net cash (used in) provided by financing activities of continuing operations (65,640 ) 2,755,416 (585,106 ) 3,080,682 Net cash (used in) provided by financing activities of discontinued operations - - - - Net cash (used in) provided by financing activities (65,640 ) 2,755,416 (585,106 ) 3,080,682 Effect of exchange rate changes on cash, cash equivalents, and restricted cash (17,427 ) (5,925 ) (51,404 ) (16,584 ) Net increase (decrease) in cash, cash equivalents, and restricted cash 54,380 (237,642 ) (203,025 ) 86,449 Cash, cash equivalents, and restricted cash at beginning of period 361,932 726,704 619,337 402,613 Cash, cash equivalents, and restricted cash at end of period $ 416,312 $ 489,062 $ 416,312 $ 489,062 Supplemental disclosure of cash flow information: Reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total shown in the consolidated statements of cash flows: Cash and cash equivalents $ 400,741 $ 472,374 $ 400,741 $ 472,374 Restricted cash included in other current assets 284 1,689 284 1,689 Restricted cash included in other assets 288 - 288 - Cash and cash equivalents included in current assets of discontinued operations 14,999 14,999 14,999 14,999 Total cash, cash equivalents and restricted cash $ 416,312 $ 489,062 $ 416,312 $ 489,062 PREPARED IN ACCORDANCE WITH GAAP PerkinElmer, Inc. and Subsidiaries RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (1) (In millions, except per share data and percentages) PKI Three Months Ended October 2, 2022 October 3, 2021 Adjusted revenue: Revenue $ 711.8 $ 861.3 Purchase accounting adjustments 0.2 0.2 Adjusted revenue $ 712.0 $ 861.5 Adjusted gross margin: Gross margin $ 407.0 57.2 % $ 522.9 60.7 % Amortization of intangible assets 35.3 5.0 % 28.5 3.3 % Purchase accounting adjustments 11.7 1.6 % 9.6 1.1 % Acquisition and divestiture-related costs 1.5 0.2 % - 0.0 % Adjusted gross margin $ 455.5 64.0 % $ 560.9 65.1 % Adjusted SG&A: SG&A $ 240.0 33.7 % $ 275.9 32.0 % Amortization of intangible assets (56.2 ) -7.9 % (34.8 ) -4.0 % Purchase accounting adjustments 2.1 0.3 % (1.2 ) -0.1 % Acquisition and divestiture-related costs (5.7 ) -0.8 % (46.4 ) -5.4 % Asset impairment - 0.0 % (3.9 ) -0.4 % Significant litigation matters and settlements (0.6 ) -0.1 % - 0.0 % Adjusted SG&A $ 179.6 25.2 % $ 189.6 22.0 % Adjusted R&D: R&D $ 53.5 7.5 % $ 49.4 5.7 % Purchase accounting adjustments (0.1 ) 0.0 % - 0.0 % Acquisition and divestiture-related costs (1.3 ) -0.2 % - 0.0 % Adjusted R&D $ 52.2 7.3 % $ 49.4 5.7 % Adjusted operating income: Operating income $ 110.8 15.6 % $ 195.6 22.7 % Amortization of intangible assets 91.5 12.9 % 63.3 7.3 % Purchase accounting adjustments 9.6 1.4 % 10.8 1.3 % Acquisition and divestiture-related costs 8.5 1.2 % 46.4 5.4 % Asset impairment - 0.0 % 3.9 0.4 % Significant litigation matters and settlements 0.6 0.1 % - 0.0 % Restructuring and other, net 2.8 0.4 % 2.0 0.2 % Adjusted operating income $ 223.8 31.4 % $ 321.9 37.4 % PKI Three Months Ended October 2, 2022 October 3, 2021 Adjusted EPS: GAAP EPS $ 0.67 $ 1.11 Discontinued operations, net of income taxes 0.13 0.17 GAAP EPS from continuing operations 0.55 0.94 Amortization of intangible assets 0.72 0.55 Debt extinguishment costs (0.00 ) - Purchase accounting adjustments 0.08 0.09 Acquisition and divestiture-related costs 0.07 0.61 Change in fair value of financial securities 0.04 0.17 Asset impairment - 0.03 Significant litigation matters and settlements 0.00 - Disposition of businesses and assets, net - (0.02 ) Restructuring and other, net 0.02 0.02 Tax on above items (0.24 ) (0.31 ) Significant tax items (0.03 ) (0.01 ) Adjusted EPS $ 1.21 $ 2.07 GAAP EPS from discontinued operations 0.13 0.17 Amortization of intangible assets included in discontinued operations 0.02 0.07 Acquisition and divestiture-related costs included in discontinued operations 0.17 0.02 Restructuring and other, net included in discontinued operations 0.00 0.00 Pro Forma depreciation expense on assets held for sale (0.02 ) - Tax on above items (0.00 ) (0.02 ) Less non-AES income tax items in discontinued operations 0.00 0.00 Adjusted EPS from AES $ 0.30 $ 0.24 Pro Forma Adjusted EPS including the results of AES $ 1.51 $ 2.31 DAS Three Months Ended October 2, 2022 October 3, 2021 Revenue $ 312.8 $ 207.5 Adjusted operating income: Operating income $ 32.6 10.4 % $ (19.3 ) -9.3 % Amortization of intangible assets 64.4 20.6 % 25.8 12.4 % Purchase accounting adjustments 9.2 2.9 % 5.7 2.7 % Acquisition and divestiture-related costs 8.5 2.7 % 44.4 21.4 % Significant litigation matters and settlements 0.6 0.2 % - 0.0 % Restructuring and other, net 1.6 0.5 % 1.4 0.7 % Adjusted operating income $ 116.9 37.4 % $ 58.0 28.0 % Diagnostics Three Months Ended October 2, 2022 October 3, 2021 Adjusted revenue: Revenue $ 399.0 $ 653.8 Purchase accounting adjustments 0.2 0.2 Adjusted revenue $ 399.2 $ 654.0 Adjusted operating income: Operating income $ 94.7 23.7 % $ 237.9 36.4 % Amortization of intangible assets 27.1 6.8 % 37.5 5.7 % Purchase accounting adjustments 0.5 0.1 % 5.1 0.8 % Asset impairment - 0.0 % 3.9 0.6 % Acquisition and divestiture-related costs - 0.0 % 2.0 0.3 % Restructuring and other, net 1.2 0.3 % 0.6 0.1 % Adjusted operating income $ 123.4 30.9 % $ 287.0 43.9 % (1) amounts may not sum due to rounding PerkinElmer, Inc. and Subsidiaries RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (1) (In millions, except per share data and percentages) PKI Nine Months Ended October 2, 2022 October 3, 2021 Adjusted revenue: Revenue $ 2,570.6 $ 2,799.9 Purchase accounting adjustments 0.6 2.4 Adjusted revenue $ 2,571.2 $ 2,802.3 Adjusted gross margin: Gross margin $ 1,553.5 60.4 % $ 1,790.2 63.9 % Amortization of intangible assets 107.1 4.2 % 64.3 2.3 % Purchase accounting adjustments 46.1 1.8 % 17.2 0.6 % Acquisition and divestiture-related costs 4.7 0.2 % - 0.0 % Adjusted gross margin $ 1,711.3 66.6 % $ 1,871.7 66.8 % Adjusted SG&A: SG&A $ 765.7 29.8 % $ 681.3 24.3 % Amortization of intangible assets (173.4 ) -6.7 % (94.3 ) -3.4 % Purchase accounting adjustments 0.6 0.0 % (1.6 ) -0.1 % Acquisition and divestiture-related costs (17.1 ) -0.7 % (54.3 ) -1.9 % Asset impairment - 0.0 % (3.9 ) -0.1 % Significant litigation matters and settlements 0.6 0.0 % - 0.0 % Adjusted SG&A $ 576.5 22.4 % $ 527.1 18.8 % Adjusted R&D: R&D $ 167.1 6.5 % $ 139.8 5.0 % Purchase accounting adjustments (0.2 ) 0.0 % - 0.0 % Acquisition and divestiture-related costs (4.1 ) -0.2 % - 0.0 % Adjusted R&D $ 162.8 6.3 % $ 139.8 5.0 % Adjusted operating income: Operating income $ 605.2 23.5 % $ 958.6 34.2 % Amortization of intangible assets 280.5 10.9 % 158.6 5.7 % Purchase accounting adjustments 45.6 1.8 % 18.8 0.7 % Acquisition and divestiture-related costs 25.9 1.0 % 54.3 1.9 % Asset impairment - 0.0 % 3.9 0.1 % Significant litigation matters and settlements (0.6 ) 0.0 % - 0.0 % Restructuring and other, net 15.4 0.6 % 10.5 0.4 % Adjusted operating income $ 972.0 37.8 % $ 1,204.8 43.0 % PKI Nine Months Ended October 2, 2022 October 3, 2021 Adjusted EPS: GAAP EPS $ 3.49 $ 6.65 Discontinued operations 0.21 0.42 GAAP EPS from continuing operations 3.28 6.23 Amortization of intangible assets 2.22 1.40 Debt extinguishment costs (0.00 ) - Purchase accounting adjustments 0.36 0.17 Acquisition and divestiture-related costs 0.20 0.64 Change in fair value of financial securities 0.11 (0.08 ) Asset impairment - 0.03 Significant litigation matters and settlements (0.00 ) - Disposition of businesses and assets, net - (0.02 ) Restructuring and other, net 0.12 0.09 Tax on above items (0.77 ) (0.49 ) Significant tax items (0.03 ) 0.12 Adjusted EPS $ 5.50 $ 8.10 GAAP EPS from discontinued operations 0.21 0.42 Amortization of intangible assets included in discontinued operations 0.13 0.23 Acquisition and divestiture-related costs included in discontinued operations 0.37 0.13 Restructuring and other, net included in discontinued operations 0.10 0.02 Pro Forma depreciation expense on assets held for sale (0.02 ) - Tax on above items (0.05 ) (0.06 ) Less non-AES income tax items in discontinued operations 0.00 0.00 Adjusted EPS from AES $ 0.75 $ 0.74 Pro forma adjusted EPS including the results of AES $ 6.24 $ 8.84 PKI Three Months Ended Twelve Months Ended January 1, 2023 January 1, 2023 Pro forma adjusted revenue: Projected Projected GAAP revenue from continuing operations $ 730 $ 3,300 AES revenue 330 - 340 1,290 - 1,300 Pro forma adjusted revenue $1,060 - $1,070 $4,590 $4,600 DAS Nine Months Ended October 2, 2022 October 3, 2021 Revenue $ 945.5 $ 577.4 Adjusted operating income: Operating income $ 106.0 11.2 % $ 50.6 8.8 % Amortization of intangible assets 185.1 19.6 % 50.9 8.8 % Purchase accounting adjustments 43.7 4.6 % 9.3 1.6 % Acquisition and divestiture-related costs 11.7 1.2 % 46.5 8.1 % Significant litigation matters and settlements (0.6 ) -0.1 % - 0.0 % Restructuring and other, net 11.7 1.2 % 6.9 1.2 % Adjusted operating income $ 357.7 37.8 % $ 164.2 28.4 % Diagnostics Nine Months Ended October 2, 2022 October 3, 2021 Adjusted revenue: Revenue $ 1,625.1 $ 2,222.5 Purchase accounting adjustments 0.6 0.6 Adjusted revenue $ 1,625.7 $ 2,223.1 Adjusted operating income: Operating income $ 553.9 34.1 % $ 965.7 43.4 % Amortization of intangible assets 95.4 5.9 % 107.7 4.8 % Purchase accounting adjustments 1.9 0.1 % 9.5 0.4 % Asset impairment - 0.0 % 3.9 0.2 % Acquisition and divestiture-related costs 14.1 0.9 % 7.8 0.4 % Restructuring and other, net 3.7 0.2 % 3.7 0.2 % Adjusted operating income $ 669.0 41.1 % $ 1,098.2 49.4 % (1) amounts may not sum due to rounding PerkinElmer, Inc. and Subsidiaries RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (1) Continuing Operations Three Months Ended October 2, 2022 Organic revenue growth: Reported revenue growth from continuing operations -17% Less: effect of foreign exchange rates -6% Less: effect of acquisitions including purchase accounting adjustments and impact of divested businesses 11% Organic revenue growth from continuing operations -23% Less: effect of COVID products -31% Non-COVID organic revenue growth from continuing operations 8% Pro Forma PKI Three Months Ended October 2, 2022 Pro forma organic revenue growth: Reported revenue growth from continuing operations -17% Plus: effect of discontinued operations 6% Less: effect of foreign exchange rates -6% Less: effect of acquisitions including purchase accounting adjustments and impact of divested businesses 8% Pro forma organic revenue growth -13% Less: effect of COVID products -23% Pro Forma non-COVID organic revenue growth 9% DAS Three Months Ended October 2, 2022 Organic revenue growth: Reported revenue growth continuing operations 51% Less: effect of foreign exchange rates -5% Less: effect of acquisitions including purchase accounting adjustments and impact of divested businesses 42% Organic revenue growth from continuing operations 14% Pro Forma DAS Three Months Ended October 2, 2022 Pro forma organic revenue growth: Reported revenue growth from DAS continuing operations 51% Plus: effect of discontinued operations -27% Less: effect of foreign exchange rates -6% Less: effect of acquisitions including purchase accounting adjustments and impact of divested businesses 17% Pro forma organic revenue growth 12% Diagnostics Three Months Ended October 2, 2022 Organic revenue growth: Reported revenue growth continuing operations -39% Less: effect of foreign exchange rates -6% Less: effect of acquisitions including purchase accounting adjustments and impact of divested businesses 1% Organic revenue growth from continuing operations -33% Less: effect of COVID products -38% Non-COVID organic revenue growth from continuing operations 5% (1) amounts may not sum due to rounding Explanation of Non-GAAP Financial Measures We report our financial results in accordance with GAAP. However, management believes that, in order to more fully understand our short-term and long-term financial and operational trends, investors may wish to consider the impact of certain non-cash, non-recurring or other items, which result from facts and circumstances that vary in frequency and impact on continuing operations. Accordingly, we present non-GAAP financial measures as a supplement to the financial measures we present in accordance with GAAP. These non-GAAP financial measures provide management with additional means to understand and evaluate the operating results and trends in our ongoing business by adjusting for certain non-cash expenses and other items that management believes might otherwise make comparisons of our ongoing business with prior periods more difficult, obscure trends in ongoing operations, or reduce management's ability to make useful forecasts. Management believes these non-GAAP financial measures provide additional means of evaluating period-over-period operating performance. In addition, management understands that some investors and financial analysts find this information helpful in analyzing our financial and operational performance and comparing this performance to our peers and competitors. We use the term “adjusted revenue” to refer to GAAP revenue, including purchase accounting adjustments for revenue from contracts acquired in acquisitions that will not be fully recognized due to accounting rules. We use the related term “adjusted revenue growth” to refer to the measure of comparing current period adjusted revenue with the corresponding period of the prior year. We use the term “pro forma adjusted revenue” to refer to GAAP revenue, including purchase accounting adjustments for revenue from contracts acquired in acquisitions that will not be fully recognized due to accounting rules and including revenue from the AES business reported in discontinued operations. We use the related term “pro forma adjusted revenue growth” to refer to the measure of comparing current period pro forma adjusted revenue with the corresponding period of the prior year. We use the term “organic revenue” to refer to GAAP revenue, excluding the effect of foreign currency changes and revenue from recent acquisitions and divestitures and including purchase accounting adjustments for revenue from contracts acquired in acquisitions that will not be fully recognized due to accounting rules. We use the related term “organic revenue growth” to refer to the measure of comparing current period organic revenue with the corresponding period of the prior year. We use the related term “non-COVID organic revenue growth” to refer to the measure of comparing current period organic revenue excluding revenue from COVID related products and services with the corresponding period of the prior year excluding revenue from COVID related products and services. We use the term “pro forma organic revenue” to refer to GAAP revenue, excluding the effect of foreign currency changes and revenue from recent acquisitions and divestitures and including purchase accounting adjustments for revenue from contracts acquired in acquisitions that will not be fully recognized due to accounting rules and including revenue from the AES business reported in discontinued operations. We use the related term “organic revenue growth” to refer to the measure of comparing current period organic revenue with the corresponding period of the prior year. We use the related term “pro forma non-COVID organic revenue growth” to refer to the measure of comparing current period organic revenue excluding revenue from COVID related products and services with the corresponding period of the prior year excluding revenue from COVID related products and services. We use the term “adjusted gross margin” to refer to GAAP gross margin, excluding amortization of intangible assets and inventory fair value adjustments related to business acquisitions, asset impairments, and including purchase accounting adjustments for revenue from contracts acquired in acquisitions that will not be fully recognized due to business combination accounting rules. We use the related term “adjusted gross margin percentage” to refer to adjusted gross margin as a percentage of adjusted revenue. We use the term “pro forma adjusted gross margin” to refer to GAAP gross margin, adjusted for the inclusion of the AES business reported in discontinued operations and including the depreciation of long-lived assets that is ceased upon reporting the business as held for sale. Additional adjustments include: excluding amortization of intangible assets and inventory fair value adjustments related to business acquisitions, asset impairments, and including purchase accounting adjustments for revenue from contracts acquired in acquisitions that will not be fully recognized due to business combination accounting rules. We use the related term “pro forma adjusted gross margin percentage” to refer to pro forma adjusted gross margin as a percentage of pro forma adjusted revenue. We use the term “adjusted SG&A expense” to refer to GAAP SG&A expense, excluding amortization of intangible assets, purchase accounting adjustments, acquisition and divestiture-related expenses, acceleration of executive compensation, significant litigation matters and settlements, asset impairments, and significant environmental charges. We use the related term “adjusted SG&A percentage” to refer to adjusted SG&A expense as a percentage of adjusted revenue. We use the term “pro forma adjusted SG&A expense” to refer to GAAP SG&A expense, adjusted for the inclusion of the AES business reported in discontinued operations and including the depreciation of long-lived assets that is ceased upon reporting the business as held for sale. Additional adjustments include: excluding amortization of intangible assets, purchase accounting adjustments, acquisition and divestiture-related expenses, acceleration of executive compensation, significant litigation matters and settlements, asset impairments, and significant environmental charges. We use the related term “pro forma adjusted SG&A percentage” to refer to pro forma adjusted SG&A expense as a percentage of pro forma adjusted revenue. We use the term “adjusted R&D expense” to refer to GAAP R&D expense, excluding amortization of intangible assets and purchase accounting adjustments. We use the related term “adjusted R&D percentage” to refer to adjusted R&D expense as a percentage of adjusted revenue. We use the term “pro forma adjusted R&D expense” to refer to GAAP R&D expense, adjusted for the inclusion of the AES business reported in discontinued operations and including the depreciation of long-lived assets that is ceased upon reporting the business as held for sale. Additional adjustments include: excluding amortization of intangible assets and purchase accounting adjustments. We use the related term “pro forma adjusted R&D percentage” to refer to pro forma adjusted R&D expense as a percentage of pro forma adjusted revenue. We use the term “adjusted net interest and other expense” to refer to GAAP net interest and other expense, excluding adjustments for mark-to-market accounting on post-retirement benefits, changes in the value of financial securities and debt extinguishment costs. We use the term “adjusted operating income,” to refer to GAAP operating income, including revenue from contracts acquired in acquisitions that will not be fully recognized due to accounting rules, and excluding amortization of intangible assets, other purchase accounting adjustments, acquisition and divestiture-related expenses, acceleration of executive compensation, significant litigation matters and settlements, significant environmental charges, asset impairments, and restructuring and other charges. We use the related terms “adjusted operating profit percentage,” “adjusted operating profit margin,” or “adjusted operating margin” to refer to adjusted operating income as a percentage of adjusted revenue. We use the term “pro forma adjusted operating income,” to refer to GAAP operating income, adjusted for the inclusion of the AES business reported in discontinued operations and including the depreciation of long-lived assets that is ceased upon reporting the business as held for sale. Additional adjustments include: including revenue from contracts acquired in acquisitions that will not be fully recognized due to accounting rules, and excluding amortization of intangible assets, other purchase accounting adjustments, acquisition and divestiture-related expenses, acceleration of executive compensation, significant litigation matters and settlements, significant environmental charges, asset impairments, and restructuring and other charges. We use the related terms “pro forma adjusted operating profit percentage,” “pro forma adjusted operating profit margin,” or “pro forma adjusted operating margin” to refer to pro forma adjusted operating income as a percentage of pro forma adjusted revenue. We use the term “adjusted earnings per share,” or “adjusted EPS,” to refer to GAAP earnings per share, including revenue from contracts acquired in acquisitions that will not be fully recognized due to accounting rules, and excluding discontinued operations, amortization of intangible assets, debt extinguishment costs, other purchase accounting adjustments, acquisition and divestiture-related expenses, acceleration of executive compensation, significant litigation matters and settlements, significant environmental charges, changes in the value of financial securities, disposition of businesses and assets, net, asset impairments and restructuring and other charges. We also exclude adjustments for mark-to-market accounting on post-retirement benefits, therefore only our projected costs have been used to calculate this non-GAAP measure. We also adjust for any tax impact related to the above items and exclude the impact of significant tax events. We use the term “pro forma adjusted earnings per share,” or “pro forma adjusted EPS,” to refer to GAAP earnings per share, adjusted for the inclusion of the AES business reported in discontinued operations and including the depreciation of long-lived assets that is ceased upon reporting the business as held for sale. Additional adjustments include: including revenue from contracts acquired in acquisitions that will not be fully recognized due to accounting rules, and excluding discontinued operations, amortization of intangible assets, debt extinguishment costs, other purchase accounting adjustments, acquisition and divestiture-related expenses, acceleration of executive compensation, significant litigation matters and settlements, significant environmental charges, changes in the value of financial securities, disposition of businesses and assets, net, asset impairments and restructuring and other charges. We also exclude adjustments for mark-to-market accounting on post-retirement benefits, therefore only our projected costs have been used to calculate this non-GAAP measure. We also adjust for any tax impact related to the above items and exclude the impact of significant tax events. Management includes or excludes the effect of each of the items identified below in the applicable non-GAAP financial measure referenced above for the reasons set forth below with respect to that item: Amortization of intangible assets —purchased intangible assets are amortized over their estimated useful lives and generally cannot be changed or influenced by management after the acquisition. Accordingly, this item is not considered by management in making operating decisions. Management does not believe such charges accurately reflect the performance of our ongoing operations for the period in which such charges are incurred. Debt extinguishment costs —we incur costs and income related to the extinguishment of debt; including make-whole payments to debt holders, accelerated amortization of debt fees and discounts, and expense or income from hedges to lock in make-whole payments. We exclude the impact of these items from our non-GAAP measures because we believe they do not reflect the performance of our ongoing operations. Revenue from contracts acquired in acquisitions that will not be fully recognized due to accounting rules —accounting rules require us to account for the fair value of revenue from contracts assumed in connection with our acquisitions. As a result, our GAAP results reflect the fair value of those revenues, which is not the same as the revenue that otherwise would have been recorded by the acquired entity. We include such revenue in our non-GAAP measures because we believe the fair value of such revenue does not accurately reflect the performance of our ongoing operations for the period in which such revenue is recorded. Other purchase accounting adjustments —accounting rules require us to adjust various balance sheet accounts, including inventory, fixed assets and deferred rent balances to fair value at the time of the acquisition. As a result, the expenses for these items in our GAAP results are not the same as what would have been recorded by the acquired entity. Accounting rules also require us to estimate the fair value of contingent consideration at the time of the acquisition, and any subsequent changes to the estimate or payment of the contingent consideration and purchase accounting adjustments are charged to expense or income. We exclude the impact of any changes to contingent consideration from our non-GAAP measures because we believe these expenses or benefits do not accurately reflect the performance of our ongoing operations for the period in which such expenses or benefits are recorded. Acquisition and divestiture-related expenses —we incur legal, due diligence, stay bonuses, incentive awards, stock-based compensation, interest expense, foreign exchange gains and losses, integration expenses and other costs related to acquisitions and divestitures. We exclude these expenses from our non-GAAP measures because we believe they do not reflect the performance of our ongoing operations. Asset impairments —we incur expense related to asset impairments. Management does not believe such charges accurately reflect the performance of our ongoing operations for the periods in which such charges were incurred. Acceleration of executive compensation — the announced retirement of a senior executive resulted in an acceleration of compensation expense. We exclude these expenses from our non-GAAP measures because we believe they do not reflect the performance of our ongoing operations. Restructuring and other charges —restructuring and other charges consist of employee severance, other exit costs as well as the cost of terminating certain lease agreements or contracts as well as costs associated with relocating facilities. Management does not believe such costs accurately reflect the performance of our ongoing operations for the period in which such costs are reported. Adjustments for mark-to-market accounting on post-retirement benefits —we exclude adjustments for mark-to-market accounting on post-retirement benefits, and therefore only our projected costs are used to calculate our non-GAAP measures. We exclude these adjustments because they do not represent what we believe our investors consider to be costs of producing our products, investments in technology and production, and costs to support our internal operating structure. Significant litigation matters and settlements —we incur expenses related to significant litigation matters, including the costs to settle or resolve various claims and legal proceedings. Management does not believe such charges accurately reflect the performance of our ongoing operations for the periods in which such charges were incurred. Significant environmental charges —we incur expenses related to significant environmental charges. Management does not believe such charges accurately reflect the performance of our ongoing operations for the periods in which such charges were incurred. Disposition of businesses and assets, net —we exclude the impact of gains or losses from the disposition of businesses and assets from our adjusted earnings per share. Management does not believe such gains or losses accurately reflect the performance of our ongoing operations for the period in which such gains or losses are reported. Impact of foreign currency changes on the current period —we exclude the impact of foreign currency from these measures by using the prior period’s foreign currency exchange rates for the current period because foreign currency exchange rates are subject to volatility and can obscure underlying trends. Impact of significant tax events —we exclude the impact of significant tax events, such as the Tax Cuts and Jobs Act of 2017. Management does not believe the impact of significant tax events accurately reflects the performance of our ongoing operations for the periods in which the impact of such events was recorded. Changes in value of financial securities —we exclude the impact of changes in the value of financial securities. Management does not believe such gains or losses accurately reflect the performance of our ongoing operations for the period in which such gains or losses are reported. Inclusion of the AES business in pro forma information —we report the results of the AES business in discontinued operations and include those results as a component of pro forma information. Management believes that including the results of the AES business in discontinued operations as a component of pro forma information increases the comparability of the financial results with historically presented results as well as recent forecasts. Depreciation of fixed assets ceased upon reporting the business as held for sale —we exclude the impact of ceasing depreciation of fixed assets that are held for sale. Management does not believe such charges accurately reflect the performance of our ongoing operations for the periods in which such expenses were ceased. The tax effect for discontinued operations is calculated based on the authoritative guidance in the Financial Accounting Standards Board’s Accounting Standards Codification 740, Income Taxes. The tax effect for amortization of intangible assets, inventory fair value adjustments related to business acquisitions, changes to the fair values assigned to contingent consideration, debt extinguishment costs, other costs related to business acquisitions and divestitures, acceleration of executive compensation, significant litigation matters and settlements, significant environmental charges, changes in the fair value of financial securities, adjustments for mark-to-market accounting on post-retirement benefits, disposition of businesses and assets, net, restructuring and other charges, and the revenue from contracts acquired with various acquisitions is calculated based on operational results and applicable jurisdictional law, which contemplates tax rates currently in effect to determine our tax provision. The tax effect for the impact from foreign currency exchange rates on the current period is calculated based on the average rate currently in effect to determine our tax provision. The non-GAAP financial measures described above are not meant to be considered superior to, or a substitute for, our financial statements prepared in accordance with GAAP. There are material limitations associated with non-GAAP financial measures because they exclude charges that have an effect on our reported results and, therefore, should not be relied upon as the sole financial measures by which to evaluate our financial results. Management compensates and believes that investors should compensate for these limitations by viewing the non-GAAP financial measures in conjunction with the GAAP financial measures. In addition, the non-GAAP financial measures included in this earnings announcement may be different from, and therefore may not be comparable to, similar measures used by other companies. Each of the non-GAAP financial measures listed above is also used by our management to evaluate our operating performance, communicate our financial results to our Board of Directors, benchmark our results against our historical performance and the performance of our peers, evaluate investment opportunities including acquisitions and discontinued operations, and determine the bonus payments for senior management and employees.

ANDOVER, Mass.--(BUSINESS WIRE)--Formatech proudly supports the Massachusetts Biotechnology Education Foundation (MassBioEd). Founded in 2001, MassBioEd’s goals are to create a biotechnology literate populace, prepare the biotechnology workforce, and develop future Massachusetts’ biotechnology leaders. As a corporate sponsor, Formatech will help this non-profit organization promote math and science education throughout the state.