Restructuring Charges. The Company developed restructuring plans during 1998 to integrate and consolidate its businesses and recorded restructuring charges in the first and second quarters of 1998. Details are discussed in the Company's 1998 and 1999 Forms 10-K. During the third quarter of 1999, the Company reevaluated its 1998 restructuring plans due to the substantial completion of the respective actions. As a result of this review, costs associated with the previously planned shutdown of two businesses were no longer required due to actions taken to improve performance. Therefore, the Company recognized a restructuring credit of $12 million during the third quarter of 1999. During the second quarter of 2000, the Company recognized a restructuring credit of $6 million related to its 1998 restructuring plans. This resulted from the Company's strategic review during the second quarter of 2000 of its portfolio of businesses, actions taken to improve performance at costs lower than originally estimated, and the sale of certain businesses originally included in the restructuring plans. The Company's acquisitions in 1998 and 1999 and the Company's 1999 divestiture of its Technical Services segment (exiting government services) were strategic milestones in the Company's transition to a commercial high-technology company. Consistent with the strategic direction of the Company and concurrent with the reevaluation of existing restructuring plans during the third quarter of 1999, the Company developed additional plans during the third quarter of 1999 to restructure certain businesses to continue to improve the Company's performance. These plans resulted in a pre-tax restructuring charge of $23.5 million recorded in the third quarter of 1999. The specific details of the actions and charges by operating segment are discussed more fully in the 1999 Form 10-K. The following table summarizes restructuring activity from continuing operations related to the 1998 and 1999 plans: Accrued restructuring costs at beginning of period...... $27.2 Provisions.............................................. 2.4 Reversals............................................... (6.3) Charges/writeoffs....................................... (11.4) 9 PERKINELMER, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) During the second quarter of 2000, the Company finalized its original estimates of the goodwill and restructuring plans related to the acquired AI business. As a result of a strategic review of the acquired business, continued aggressive actions by the Company to improve the cost structure of the acquired business, and increased costs related primarily to employment integration, the Company adjusted its original estimate of restructuring costs recorded at the acquisition date in connection with purchase accounting. Approximately $5 million was recorded as accrued restructuring costs in connection with the NEN acquisition in the third quarter of 2000 (see Note 3). The following table summarizes restructuring activity from continuing operations related to the Lumen, AI, Vivid and NEN acquisitions: Accrued restructuring costs at beginning of period...... $ 14.1 Provisions.............................................. 48.5 Charges/writeoffs....................................... (16.6) Cash outlays during the nine months ended October 1, 2000 were approximately $28 million for all of these plans. The Company expects to incur approximately $7 to $10 million of cash outlays in connection with these plans throughout the remainder of fiscal 2000. The majority of the actions remaining at October 1, 2000 are expected to occur during 2001.
Appears in 1 contract
Sources: Quarterly Report
Restructuring Charges. The Company developed restructuring plans during 1998 to integrate and consolidate its businesses and recorded restructuring charges in the first and second quarters of 1998. Details are discussed in the Company's 1998 and 1999 Forms 10-K. During the third quarter of 1999, the Company reevaluated its 1998 restructuring plans due to the substantial completion of the respective actions. As a result of this review, costs associated with the previously planned shutdown of two businesses were no longer required due to actions taken to improve performance. Therefore, the Company recognized a restructuring credit of $12 million during the third quarter of 1999. During the second quarter of 2000, the Company recognized a restructuring credit of $6 million related to its 1998 restructuring plans. This resulted from the Company's strategic review during the second quarter of 2000 of its portfolio of businesses, actions taken to improve performance at costs lower than originally estimated, and the sale of certain businesses originally included in the restructuring plans. The Company's acquisitions in 1998 and 1999 and the Company's 1999 divestiture of its Technical Services segment (exiting government services) were strategic milestones in the Company's transition to a commercial high-technology company. Consistent with the strategic direction of the Company and concurrent with the reevaluation of existing restructuring plans during the third quarter of 1999, the Company developed additional plans during the third quarter of 1999 to restructure certain businesses to continue to improve the Company's performance. These plans resulted in a pre-tax restructuring charge of $23.5 million recorded in the third quarter of 1999. The specific details of the actions and charges by operating segment are discussed more fully in the 1999 Form 10-K. The following table summarizes restructuring activity from continuing operations related to the 1998 and 1999 plans: Accrued restructuring costs at beginning of period...... $27.2 Provisions.............................................. 2.4 Reversals............................................... (6.3) Charges/writeoffs....................................... (11.4) 9 PERKINELMER, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) During the second quarter of 2000, the Company finalized its original estimates of the goodwill and restructuring plans related to the acquired AI business. As a result of a strategic review of the acquired business, continued aggressive actions by the Company to improve the cost structure of the acquired business, and increased costs related primarily to employment integration, the Company adjusted its original estimate of restructuring costs recorded at the acquisition date in connection with purchase accounting. Approximately $5 million was recorded as accrued restructuring costs in connection with the NEN acquisition in the third quarter of 2000 (see Note 3). The following table summarizes restructuring activity from continuing operations related to the Lumen, AI, Vivid and NEN acquisitions: Accrued restructuring costs at beginning of period...... $ $14.1 Provisions.............................................. 48.5 Charges/writeoffs....................................... (16.6) Cash outlays during the nine months ended October 1, 2000 were approximately $28 million for all of these plans. The Company expects to incur approximately $7 to $10 million of cash outlays in connection with these plans throughout the remainder of fiscal 2000. The majority of the actions remaining at October 1, 2000 are expected to occur during 2001.. OTHER EXPENSE Other expense for the third quarter of 2000 was $13.1 million versus $8.6 million for the comparable period in 1999. Other expense increased to $29.6 million for the first nine months of 2000 from $19.4 million for the comparable period of 1999. These increases were primarily due to the impact of higher interest expense on increased debt levels resulting from the NEN and AI acquisitions. INCOME TAX EXPENSE Income tax expense as a percent of pre-tax income before nonrecurring items was 36.6% for the third quarter of 2000 versus 27.4% for the third quarter of 1999. The third-quarter of 2000 expense reflects a cumulative catch-up adjustment to adjust the full-year rate to 32.5% from 30%. The increase in the forecasted effective tax rate for 2000 is principally caused by the non-tax deductible goodwill associated with the NEN acquisition. 20 The third-quarter of 1999 expense before nonrecurring items reflects a cumulative catch-up adjustment to adjust the full-year rate to 32% from 36%. The decrease in the 1999 income tax rate was largely attributable to changes in the taxing jurisdictions in which income is recognized as a result of acquisitions and dispositions. DISCONTINUED OPERATIONS On August 20, 1999, the Company sold its Technical Services segment. The Company accounted for the sale of its Technical Services segment as a discontinued operation in accordance with APB Opinion No. 30 and, accordingly, the results of operations of the Technical Services segment and the gain on disposition were segregated from continuing operations and reported as separate line items on the Company's Consolidated Income Statements. As a result of a post-closing selling price adjustment, the Company recorded an additional pre-tax gain of $7.3 million on the disposition of discontinued operations in the second quarter of 2000. Sales from discontinued operations for the three and nine months ended October 3, 1999 were $69.9 million and $302.3 million, respectively. Operating income from discontinued operations was $6.2 million for the three months ended October 3, 1999 and $24.5 million for the nine months then ended. FINANCIAL CONDITION Short-term debt at October 1, 2000 was $295 million, consisting primarily of commercial paper borrowings. Long-term debt at October 1, 2000 was approximately $579 million, consisting primarily of $115 million of unsecured notes which mature in 2005 and $463 million of convertible debentures. In early August 2000, the Company sold zero coupon senior convertible debentures with an aggregate purchase price of $460 million. The Company used the offering's net proceeds of approximately $448 million to repay a portion of its commercial paper borrowings, which had been increased temporarily to finance the NEN acquisition. Deferred issuance costs of $12 million were recorded as a noncurrent asset and are being amortized over three years. The debentures, which were offered by a prospectus supplement pursuant to the Company's effective shelf registration statement, are due August 2020 and were priced with a yield to maturity of 3.5%. At maturity, the Company will repay $921 million, comprised of $460 million of original purchase price plus accrued interest. The Company may redeem some or all of the debentures at any time on or after August 7, 2003 at a redemption price equal to the issue price plus accrued original issue discount through the redemption date. Holders of the debentures may require the Company to repurchase some or all of the debentures in August 2003 and August 2010, or at any time when there is a change in control of the Company, as is customary and ordinary for debentures of this nature, at a repurchase price equal to the initial price to the public plus accrued original issue discount through the date of repurchase. The debentures are currently convertible into
Appears in 1 contract
Sources: Quarterly Report