PerkinElmer Announces Financial Results for the Second Quarter 2008

Revenue for the second quarter 2008 was $528.6 million, an increase of 21% versus the second quarter 2007. Revenue growth was 22% in Life and Analytical Sciences and 19% in Optoelectronics compared to the same period a year ago. Changes resulting from foreign exchange rates and acquisitions each contributed approximately 5% to the second quarter 2008 revenue growth.

"During the second quarter, we experienced excellent growth across the entire portfolio, enabling us to exceed our profit and cash flow expectations," said Robert F. Friel, president and chief executive officer of PerkinElmer. "The strength of our businesses and geographic diversity position us for a strong 2008."

GAAP operating profit for the second quarter 2008 was $47.0 million, compared to $48.1 million for the same period a year ago. On a non-GAAP basis, which includes the adjustments noted in the attached reconciliation, adjusted operating profit for the second quarter 2008 was $63.8 million, up 26% as compared to $50.8 million in the second quarter 2007. For the second quarter of 2008, cash flow from operations was $79.3, up 14% from the same period a year ago.

Financial Overview by Reporting Segment

Life and Analytical Sciences reported revenue of $397.1 million for the second quarter 2008, up 22% from revenue of $326.3 million in the second quarter 2007, driven by growth in the markets for human and environmental health, as well as a positive impact from acquisitions and changes in foreign exchange rates.

The segment's GAAP operating profit for the second quarter 2008 was $35.5 million, compared to $44.6 million for the same period a year ago. On a non-GAAP basis, which includes the adjustments noted in the attached reconciliation, the segment's adjusted operating profit for the second quarter 2008 was $50.8 million, up 25% as compared to $40.7 million in the second quarter 2007.

Optoelectronics reported revenue of $131.6 million for the second quarter 2008, up 19% from revenue of $111.0 million in the second quarter 2007, driven primarily by revenue growth from increased demand in medical imaging and specialty lighting, as well as a positive impact from changes in foreign exchange rates.

The segment's GAAP operating profit for the second quarter 2008 was $23.7 million, compared to $13.0 million for the same period a year ago. On a non-GAAP basis, which includes the adjustments noted in the attached reconciliation, the segment's adjusted operating profit for the second quarter 2008 was $24.5 million, up 32% as compared to $18.5 million in the second quarter 2007.

Conference Call Information

The Company will discuss its second quarter results and forecast for the remainder of the year in a conference call on July 24, 2008, at 5:00 p.m. Eastern Time (ET). To access the call, please dial (617) 597-5341 prior to the scheduled conference call time and provide the access code 45271883. A replay of this conference call will be available approximately two hours after the call. The replay phone number is (617) 801-6888 and the access code is 39550543.

A live audio webcast of the call will be available on the Investor Corner section of the Company's Web site, www.perkinelmer.com. Please go to the site at least 15 minutes prior to the call in order to register, download, and install any necessary software. An archived version of the webcast will be posted on the Company's Web site approximately two hours after the call and will be available through August 24, 2008.

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. Words such as "believes," "intends," "anticipates," "plans," "expects," "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) our failure to introduce new products in a timely manner; (2) our ability to execute acquisitions and license technologies, or to successfully integrate acquired businesses and licensed technologies into our existing business or to make them profitable; (3) markets into which we sell our products decline or do not grow as anticipated; (4) our failure to adequately protect our intellectual property; (5) the loss of any of our licenses or licensed rights; (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) disruptions in the supply of raw materials and supplies; (9) our ability to produce an adequate quantity of products to meet our customers' demands; (10) the manufacture and sale of products may expose us to product liability claims; (11) our failure to maintain compliance with applicable government regulations; (12) regulatory changes; (13) our failure to comply with health care industry regulations; (14) economic, political and other risks associated with foreign operations; (15) our ability to retain key personnel; (16) restrictions in our credit agreements; (17) our ability to realize the full value of our intangible assets; and (18) other factors which we describe under the caption "Risk Factors" in our most recent annual report on Form 10-K 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.

PerkinElmer, Inc. is a global technology leader driving growth and innovation in Health Sciences and Photonics markets to improve the quality of life. The Company reported revenue of $1.8 billion in 2007, has 9,100 employees serving customers in more than 150 countries, and is a component of the S&P 500 Index. Additional information is available through www.perkinelmer.com or 1-877-PKI-NYSE.

PerkinElmer, Inc. and Subsidiaries CONSOLIDATED INCOME STATEMENTS Three Months Ended Six Months Ended -------------------------- -------------------------- (In thousands, June 29, 2008 July 1, 2007 June 29, 2008 July 1, 2007 except per share data) ------------- ------------ ------------- ------------ Sales $528,636 $437,290 $1,010,979 $840,190 Cost of sales 308,996 262,642 593,762 505,475 Amortization of acquired inventory revaluation - 670 - 2,047 Research and development expenses 29,890 27,316 59,008 55,157 In-process research and development charges - - - 1,502 Selling, general and administrative expenses 143,022 109,357 275,099 211,122 Gain on settlement of insurance claim - (15,346) - (15,346) Restructuring and lease (reversals) charges, net (305) 4,547 (305) 8,985 ------------- ------------ ------------- ------------ Operating income from continuing operations 47,033 48,104 83,415 71,248 Interest income (827) (1,093) (2,185) (2,304) Interest expense 5,746 3,509 12,064 5,764 Gains on dispositions of investments, net (269) (135) (1,158) (536) Other expense, net 298 1,149 1,537 3,272 ------------- ------------ ------------- ------------ Income from continuing operations before income taxes 42,085 44,674 73,157 65,052 Provision for income taxes 10,339 11,371 17,988 16,930 ------------- ------------ ------------- ------------ Net income from continuing operations 31,746 33,303 55,169 48,122 Loss from discontinued operations, net of income taxes (1,250) - (4,166) - (Loss) gain on disposition of discontinued operations, net of income taxes (6,790) 384 (7,159) 257 ------------- ------------ ------------- ------------ Net income $ 23,706 $ 33,687 $ 43,844 $ 48,379 ============= ============ ============= ============ Diluted earnings (loss) per share: Continuing operations $ 0.27 $ 0.28 $ 0.46 $ 0.39 Loss from discontinued operations, net of income taxes (0.01) - (0.04) - (Loss) gain on disposition of discontinued operations, net of income taxes (0.06) - (0.06) - ------------- ------------ ------------- ------------ Net income $ 0.20 $ 0.28 $ 0.37 $ 0.40 ============= ============ ============= ============ Weighted average diluted shares of common stock outstanding 119,263 120,689 118,861 121,976

ABOVE PREPARED IN ACCORDANCE WITH GAAP

Additional Supplemental Information: (per share, continuing operations) Three Months Ended -------------------------- June 29, 2008 July 1, 2007 ------------- ------------ GAAP diluted EPS from continuing operations $0.27 $ 0.28 Amortization of intangible assets, net of income taxes 0.08 0.06 Stock options, net of income taxes 0.01 0.01 Gain on settlement of insurance claim, net of income taxes - (0.08) Amortization of acquired inventory revaluation, net of income taxes - 0.01 Purchase accounting adjustment - revenue not recognized, net of income taxes - - Restructuring and lease (reversals) charges, net of income taxes - 0.02 ------------- ------------ Adjusted EPS $0.36 $ 0.30 ============= ============

PerkinElmer, Inc. and Subsidiaries SALES AND OPERATING PROFIT (LOSS) Three Months Ended Six Months Ended ------------------ -------------------- (In thousands) June 29, July 1, June 29, July 1, 2008 2007 2008 2007 -------- -------- ---------- -------- Life and Analytical Sciences Sales $397,050 $326,284 $ 753,664 $625,822 OP$ reported 35,541 44,617 58,904 59,469 OP% reported 9.0% 13.7% 7.8% 9.5% Amortization expense 13,545 10,000 26,372 19,783 Stock option expense 741 718 1,575 1,466 Revaluation of acquired inventory - 670 - 2,047 In-process research and development charges - - - 1,502 Gain on settlement of insurance claim - (15,346) - (15,346) Purchase accounting adj. - revenue not recognized 936 - 2,289 - Restructuring and lease charges 78 - 78 4,438 OP$ adjusted 50,841 40,659 89,218 73,359 OP% adjusted 12.8% 12.5% 11.8% 11.7% Optoelectronics Sales 131,586 111,006 257,315 214,368 OP$ reported 23,733 12,993 47,064 29,262 OP% reported 18.0% 11.7% 18.3% 13.7% Amortization expense 812 663 1,570 1,316 Stock option expense 305 341 641 751 Restructuring and lease (reversals) charges (383) 4,547 (383) 4,547 OP$ adjusted 24,467 18,544 48,892 35,876 OP% adjusted 18.6% 16.7% 19.0% 16.7% Corporate OP$ reported (12,241) (9,506) (22,553) (17,483) Stock option expense 718 1,078 1,531 2,110 OP$ adjusted (11,523) (8,428) (21,022) (15,373) Continuing Operations Sales $528,636 $437,290 $1,010,979 $840,190 OP$ reported 47,033 48,104 83,415 71,248 OP% reported 8.9% 11.0% 8.3% 8.5% Amortization expense 14,357 10,663 27,942 21,099 Stock option expense 1,764 2,137 3,747 4,327 Revaluation of acquired inventory - 670 - 2,047 In-process research and development charges - - - 1,502 Gain on settlement of insurance claim - (15,346) - (15,346) Purchase accounting adj. - revenue not recognized 936 - 2,289 - Restructuring and lease (reversals) charges (305) 4,547 (305) 8,985 -------- -------- ---------- -------- OP$ adjusted $ 63,785 $ 50,775 $ 117,088 $ 93,862 ======== ======== ========== ======== OP% adjusted 12.1% 11.6% 11.6% 11.2%

SALES AND REPORTED OPERATING PROFIT PREPARED IN ACCORDANCE WITH GAAP

PerkinElmer, Inc. and Subsidiaries CONSOLIDATED BALANCE SHEETS June 29, March 30, December 2008 2008 30, 2007 ----------- ----------- ----------- (In thousands) Current assets: Cash and cash equivalents $ 193,451 $ 185,262 $ 203,348 Accounts receivable, net 349,688 353,487 337,659 Inventories, net 222,636 223,465 202,394 Other current assets 116,283 113,306 98,797 Current assets of discontinued operations 633 628 750 ----------- ----------- ----------- Total current assets 882,691 876,148 842,948 ----------- ----------- ----------- Property, plant and equipment, net: At cost 610,296 598,717 579,771 Accumulated depreciation (403,265) (395,219) (378,885) ----------- ----------- ----------- Property, plant and equipment, net 207,031 203,498 200,886 Marketable securities and investments 4,254 4,985 5,919 Intangible assets, net 483,582 493,976 479,209 Goodwill 1,442,487 1,437,817 1,355,656 Other assets, net 55,013 56,985 59,451 Long-term assets of discontinued operations 1,410 5,194 5,268 ----------- ----------- ----------- Total assets $3,076,468 $3,078,603 $2,949,337 =========== =========== =========== Current liabilities: Short-term debt $ 43 $ 549 $ 562 Accounts payable 194,699 189,800 186,388 Accrued restructuring and integration costs 8,734 10,371 12,821 Accrued expenses 361,025 355,666 346,778 Current liabilities of discontinued operations 6,084 1,338 1,049 ----------- ----------- ----------- Total current liabilities 570,585 557,724 547,598 ----------- ----------- ----------- Long-term debt 521,059 566,068 516,078 Long-term liabilities 329,324 336,892 310,384 ----------- ----------- ----------- Total liabilities 1,420,968 1,460,684 1,374,060 ----------- ----------- ----------- Commitments and contingencies Total stockholders' equity 1,655,500 1,617,919 1,575,277 ----------- ----------- ----------- Total liabilities and stockholders' equity $3,076,468 $3,078,603 $2,949,337 =========== =========== ===========

PREPARED IN ACCORDANCE WITH GAAP

PerkinElmer, Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS Three Months Ended Six Months Ended -------------------- --------------------- June 29, July 1, June 29, July 1, 2008 2007 2008 2007 ---------- --------- ---------- ---------- (In thousands) Operating activities: Net income $ 23,706 $ 33,687 $ 43,844 $ 48,379 Add: loss from discontinued operations, net of income taxes 1,250 - 4,166 - Add: loss (gain) on disposition of discontinued operations, net of income taxes 6,790 (384) 7,159 (257) ---------- --------- ---------- ---------- Net income from continuing operations 31,746 33,303 55,169 48,122 ---------- --------- ---------- ---------- Adjustments to reconcile net income from continuing operations to net cash provided by continuing operations: Stock-based compensation 3,089 4,618 8,331 7,506 Restructuring and lease (reversals) charges, net (305) 4,547 (305) 8,985 Amortization of deferred debt issuance costs 416 74 797 148 Depreciation and amortization 22,714 19,076 44,706 38,161 In-process research and development charges - - - 1,502 Amortization of acquired inventory revaluation - 670 - 2,047 Gain on settlement of insurance claim - (15,346) - (15,346) Gains on dispositions, net (269) (135) (1,158) (536) Changes in operating assets and liabilities: Accounts receivable, net 3,159 (3,003) 7,793 9,457 Inventories, net 787 2,445 (11,429) (6,456) Accounts payable 2,939 4,210 893 (5,945) Accrued expenses and other 14,535 18,900 (7,610) (904) ---------- --------- ---------- ---------- Net cash provided by operating activities of continuing operations 78,811 69,359 97,187 86,741 ---------- --------- ---------- ---------- Net cash provided by (used in) operating activities of discontinued operations 446 377 (2,325) 246 ---------- --------- ---------- ---------- Net cash provided by operating activities 79,257 69,736 94,862 86,987 ---------- --------- ---------- ---------- Investing activities: Capital expenditures (12,145) (16,124) (19,401) (27,517) Proceeds from dispositions of property, plant and equipment, net - 10,787 - 10,787 Proceeds from surrender of life insurance policies - 1,327 - 1,327 Payments for business development activity (4) (177) (148) (1,094) Proceeds from disposition of businesses and investments, net 269 135 1,158 580 Payments for acquisitions and investments, net of cash and cash equivalents acquired (10,126) (2,930) (86,358) (42,925) ---------- --------- ---------- ---------- Net cash used in investing activities of continuing operations (22,006) (6,982) (104,749) (58,842) ---------- --------- ---------- ---------- Net cash provided by (used in) investing activities of discontinued operations - 800 (68) 800 ---------- --------- ---------- ---------- Net cash used in investing activities (22,006) (6,182) (104,817) (58,042) ---------- --------- ---------- ---------- Financing Activities: Payments on debt (205,500) (49,694) (510,500) (49,694) Proceeds from borrowings 10,500 104,012 365,500 129,462 Proceeds from the sale of senior subordinated debt 150,000 - 150,000 - Payments for debt issuance costs (1,256) - (1,841) - Settlement of cash flow hedges (11,702) - (11,702) - Decrease in other credit facilities (483) (810) (499) (824) Tax benefit from exercise of common stock options 104 732 108 1,435 Proceeds from issuance of common stock under stock plans 17,722 6,611 18,368 12,781 Purchases of common stock - (87,077) (408) (147,105) Dividends paid (8,251) (8,494) (16,487) (17,123) ---------- --------- ---------- ---------- Net cash used in financing activities (48,866) (34,720) (7,461) (71,068) ---------- --------- ---------- ---------- Effect of exchange rate changes on cash and cash equivalents (196) 1,644 7,519 1,104 ---------- --------- ---------- ---------- Net increase (decrease) in cash and cash equivalents 8,189 30,478 (9,897) (41,019) Cash and cash equivalents at beginning of period 185,262 119,562 203,348 191,059 ---------- --------- ---------- ---------- Cash and cash equivalents at end of period $ 193,451 $150,040 $ 193,451 $ 150,040 ========== ========= ========== ==========

PREPARED IN ACCORDANCE WITH GAAP

PerkinElmer, Inc. and Subsidiaries RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES --------------------------------- PKI Q208 Q207 ------------------- ------------- Adjusted gross margin: GAAP gross margin $ 219.6 41.5% $174.0 39.8% Intangibles amortization 9.6 1.8% 8.6 2.0% Stock option expense 0.3 0.1% 0.3 0.1% Purchase accounting adjustment - revenue not recognized 0.9 0.2% - 0.0% Revaluation of acquired inventory - 0.0% 0.7 0.2% --------------------------------- Adjusted gross margin $ 230.5 43.6% $183.5 42.0% ================================= Adjusted SG&A: GAAP SG&A $ 143.0 27.1% $109.4 25.0% Intangibles amortization (4.2) -0.8% (1.7) -0.4% Stock option expense (1.4) -0.3% (1.7) -0.4% --------------------------------- Adjusted SG&A $ 137.5 26.0% $106.0 24.2% ================================= Adjusted R&D: GAAP R&D $ 29.9 5.7% $ 27.3 6.2% Intangibles amortization (0.6) -0.1% (0.4) -0.1% Stock option expense (0.1) 0.0% (0.1) 0.0% --------------------------------- Adjusted R&D $ 29.2 5.5% $ 26.8 6.1% ================================= Adjusted operating profit: GAAP operating profit $ 47.0 8.9% $ 48.1 11.0% Intangibles amortization 14.4 2.7% 10.7 2.4% Stock option expense 1.8 0.3% 2.1 0.5% Purchase accounting adjustment - revenue not recognized 0.9 0.2% - 0.0% Revaluation of acquired inventory - 0.0% 0.7 0.2% Gain on settlement of insurance claim - 0.0% (15.3) -3.5% Restructuring and lease (reversals) charges (0.3) -0.1% 4.5 1.0% --------------------------------- Adjusted operating profit $ 63.8 12.1% $ 50.8 11.6% ================================= --------------------------------- PKI Q208 Q207 ------------------- ------------- Adjusted EPS: GAAP EPS $ 0.20 $ 0.28 Discontinued operations 0.07 - --------------------------------- GAAP EPS from continuing operations 0.27 0.28 Intangibles amortization 0.08 0.06 Stock option expense 0.01 0.01 Purchase accounting adjustment - revenue not recognized - - Revaluation of acquired inventory - 0.01 Gain on settlement of insurance claim - (0.08) Restructuring and lease (reversals) charges - 0.02 --------------------------------- Adjusted EPS $ 0.36 $ 0.30 ================================= --------------------------------- LAS Q208 Q207 ------------------- ------------- Adjusted operating profit: GAAP operating profit $ 35.5 9.0% $ 44.6 13.7% Intangibles amortization 13.5 3.4% 10.0 3.1% Stock option expense 0.7 0.2% 0.7 0.2% Purchase accounting adjustment - revenue not recognized 0.9 0.2% - 0.0% Revaluation of acquired inventory - 0.0% 0.7 0.2% Gain on settlement of insurance claim - 0.0% (15.3) -4.7% Restructuring and lease charges 0.1 0.0% - 0.0% --------------------------------- Adjusted operating profit $ 50.8 12.8% $ 40.7 12.5% ================================= --------------------------------- OPTO Q208 Q207 ------------------- ------------- Adjusted operating profit: GAAP operating profit $ 23.7 18.0% $ 13.0 11.7% Intangibles amortization 0.8 0.6% 0.7 0.6% Stock option expense 0.3 0.2% 0.3 0.3% Restructuring and lease (reversals) charges (0.4) -0.3% 4.5 4.1% --------------------------------- Adjusted operating profit $ 24.5 18.6% $ 18.5 16.7% =================================

Adjusted Gross Margin and Adjusted Gross Margin Percentage

We use the term "adjusted gross margin" to refer to GAAP gross margin, excluding amortization of intangible assets, inventory fair value adjustments related to business acquisitions, and stock option expense, and including estimated revenue from contracts acquired in the acquisition of ViaCell, Inc., or ViaCell, 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 GAAP revenue. We believe that these non-GAAP measures, when taken together with our GAAP financial measures, allow us and our investors to better measure the performance of our investments in technology, to evaluate the long-term profitability trends and to assess our ability to invest in the business. We exclude amortization of intangible assets from these measures because intangibles amortization charges do not represent what our management and what we believe our investors consider to be costs of producing our products and could distort the additional value generated over the cost of producing those products. Inventory fair value adjustments related to business acquisitions also do not represent what our management and what we believe our investors consider to be costs used in producing our products. In addition, we exclude stock option expense from these measures because stock-based compensation plans and the critical assumptions used to calculate the expense vary dramatically between us and our peers, which we believe makes comparisons of long-term operating performance trends difficult for management and investors, and could result in overstating or understating to our investors the costs used in producing our products. We include estimated revenue from contracts acquired in the ViaCell acquisition that will not be fully recognized because our GAAP revenue for the periods subsequent to our acquisition do not reflect the full amount of storage revenue on these contracts that would have otherwise been recorded by ViaCell. The non-GAAP adjustment is intended to reflect the full amount of such revenue. Our management and we believe our investors will use this adjustment as a measure of the ongoing performance of the ViaCell business because customers have historically renewed these contracts, although there can be no assurance that customers will do so in the future.

Adjusted Selling, General and Administrative (SG&A) Expense and Adjusted SG&A Percentage

We use the term "adjusted SG&A expense" to refer to GAAP SG&A expense, excluding amortization of intangible assets and stock option expense. We use the related term "adjusted SG&A percentage" to refer to adjusted SG&A expense as a percentage of GAAP revenue. We believe that these non-GAAP measures, when taken together with our GAAP financial measures, allow us and our investors to better measure the cost of the internal operating structure, our ability to leverage that structure and the level of investment required to grow our business. We exclude amortization of intangible assets from these measures because intangibles amortization charges do not represent what our management and what we believe our investors consider to be costs that support our internal operating structure and could distort the efficiencies of that structure. We also exclude stock option expense from these measures because stock-based compensation plans and the critical assumptions used to calculate the expense vary dramatically between us and our peers, which we believe makes comparisons of long-term operating performance trends difficult for management and investors, and could result in overstating or understating to our investors the costs to support our internal operating structure.

Adjusted Research and Development (R&D) Expense and Adjusted R&D Percentage

We use the term "adjusted R&D expense" to refer to GAAP R&D expense, excluding amortization of intangible assets, and stock option expense. We use the related term "adjusted R&D percentage" to refer to adjusted R&D expense as a percentage of GAAP revenue. We believe that these non-GAAP measures, when taken together with our GAAP financial measures, allow us and our investors to better understand and evaluate our internal technology investments. We exclude amortization of intangible assets from these measures because intangibles amortization charges do not represent what our management and what we believe our investors consider to be internal investments in R&D activities and could distort our R&D investment level. In addition, we exclude stock option expense from these measures because stock-based compensation plans and the critical assumptions used to calculate the expense vary dramatically between us and our peers, which we believe makes comparisons of long-term operating performance trends difficult for management and investors, and could result in overstating or understating to our investors the amount of our internal investments in R&D activities.

Adjusted Operating Profit and Adjusted Operating Profit Margin

We use the term "adjusted operating profit" to refer to GAAP operating profit, excluding amortization of intangible assets, inventory fair value adjustments related to business acquisitions, gains on the settlement of insurance claim, restructuring and lease (reversals) charges, and stock option expense, and including estimated revenue from contracts acquired in the ViaCell acquisition that will not be fully recognized due to business combination accounting rules. Adjusted operating profit is calculated by subtracting adjusted R&D expense, adjusted SG&A expense and restructuring and lease charges from adjusted gross margin. We use the related term "adjusted operating profit margin" to refer to adjusted operating profit as a percentage of GAAP revenue. We believe that these non-GAAP measures, when taken together with our GAAP financial measures, allow us and our investors to analyze the costs of the different components of producing and selling our products, to better measure the performance of our internal investments in technology and to evaluate the long-term profitability trends of our core operations. Adjusted operating profit also provides for easier comparisons of our performance and profitability with prior and future periods and relative comparisons to our peers. We believe our investors do not consider the items that we exclude from adjusted operating profit to be costs of producing our products, investments in technology and production, and costs to support our internal operating structure, and so we present this non-GAAP measure to avoid overstating or understating to our investors the performance of our operations. We exclude restructuring and lease (reversals) charges and gains on the settlement of insurance claim because they tend to occur due to an acquisition, divestiture, repositioning of the business or other unusual event that could distort the performance measures of our internal investments and costs to support our internal operating structure. We include estimated revenue from contracts acquired in the ViaCell acquisition that will not be fully recognized because our GAAP revenue for the periods subsequent to our acquisition do not reflect the full amount of storage revenue on these contracts that would have otherwise been recorded by ViaCell. The non-GAAP adjustment is intended to reflect the full amount of such revenue. Our management and we believe our investors will use this adjustment as a measure of the ongoing performance of the ViaCell business because customers have historically renewed these contracts, although there can be no assurance that customers will do so in the future.

Adjusted Earnings per Share

We use the term "adjusted earnings per share," or "adjusted EPS," to refer to GAAP earnings per share, excluding discontinued operations, amortization of intangible assets, inventory fair value adjustments related to business acquisitions, gains on the settlement of insurance claim, restructuring and lease (reversals) charges, and stock option expense, and including estimated revenue from contracts acquired in the ViaCell acquisition that will not be fully recognized due to business combination accounting rules. Adjusted earnings per share is calculated by subtracting adjusted R&D expense, adjusted SG&A expense, restructuring and lease charges, other income/expense and provision for taxes from adjusted gross margin. We believe that this non-GAAP measure, when taken together with our GAAP financial measures, allows us and our investors to analyze the costs of producing and selling our products and the performance of our internal investments in technology and our internal operating structure, to evaluate the long-term profitability trends of our core operations and to calculate the underlying value of the core business on a dilutive share basis, which is a key measure of the value of the Company used by our management and we believe used by investors as well. Adjusted earnings per share also facilitates the overall analysis of the value of the Company and the core measure of the success of our operating business model as compared to prior and future periods and relative comparisons to our peers. We exclude discontinued operations, amortization of intangible assets, inventory fair value adjustments related to business acquisitions, gains on the settlement of insurance claim, restructuring and lease (reversals) charges, and stock option expense as these items do not represent what our management and 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, which could result in overstating or understating to our investors the performance of our operations. We include estimated revenue from contracts acquired in the ViaCell acquisition that will not be fully recognized because our GAAP revenue for the periods subsequent to our acquisition do not reflect the full amount of storage revenue on these contracts that would have otherwise been recorded by ViaCell. The non-GAAP adjustment is intended to reflect the full amount of such revenue. Our management and we believe our investors will use this adjustment as a measure of the ongoing performance of the ViaCell business because customers have historically renewed these contracts, although there can be no assurance that customers will do so in the future.

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 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 are 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.

SOURCE: PerkinElmer, Inc.

Investor Relations: PerkinElmer, Inc. Michael A. Lawless, 781-663-5659 or Media Contact: PerkinElmer, Inc. Stephanie R. Wasco, 781-663-5701 stephanie.wasco@perkinelmer.com