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Improving the Quality of Life Improving the Quality of Life. Annual Report 2005 PerkinElmer, Inc. is a global technology in Health Sciences and Photonics GENETIC SCREENING ENVIRONMENTAL MEDICAL IMAGING SCIENCES Health Sciences LIFE SCIENCES SERVICE RESEARCH Photonics DRUG DISCOVERY SAFETY & SECURITY & DEVELOPMENT DIGITAL PHOTOGRAPHY HEALTH SCIENCES PHOTONICS Provides application-focused solutions – Provides specialty lighting and optical detection solutions including instruments, reagents, software and services – for a wide variety of consumer electronic, to improve human health. office automation, and safety and security applications. Growth Drivers Growth Drivers • Predictive diagnostics • Digitalization • Personalized therapeutics • Communications • Environmental quality • Globalization leader driving growth and innovation markets to improve the quality of life. GLOBAL CENTERS OF EXCELLENCE PerkinElmer’s geographic centers for research, development, operations and manufacturing 36% EUROPE 19% ASIA 45% AMERICAS 2005 Revenue 26% EUROPE 35% AMERICAS 39% ASIA 8,000 Employees 2,500 Sales and Service Professionals 1,474 1,429 .95 208 1,345 201 .73 168 .54 ’03 ’04 ’05 ’03 ’04 ’05* ’03 ’04 ’05 Revenue Cash EPS Cash Provided by ($ millions) ($/share) Operating Activities *Excludes restructuring/gains/tax benefit/other ($ millions) See inside back cover for reconciliation Dear Fellow Shareholders: Your company delivered an excellent financial performance in 2005 – cash EPS grew 30%, adjusted operating margins expanded 140 basis points, revenue grew 4% organically, and free cash flow was very strong at $1.40 per share. The results were recognized as our return to shareholders exceeded the major equity market indices for the third consecutive year. PerkinElmer also made significant progress enhanced standard of care. The new U.S. strategically by focusing our business standard provides for the screening of 29 portfolio on the promising growth markets of different inherited disorders. In addition, this Health Sciences and Photonics. During the market is being fueled by the increased year, we completed the sale of a majority of adoption of both prenatal and neonatal our Fluid Sciences business. This action screening in emerging markets, including reduces the cyclicality of our results, focuses China and India. We are also the world’s investment on our growth platforms, and leading provider of digital x-ray flat panel provides a very strong balance sheet for detectors. This business, which grew 17% future internal and external growth initiatives. in 2005, is driven by demand in both diagnostic and therapeutic applications. Our growing leadership position in Health Our digital imaging technology is providing Sciences, which now represents approxi- exciting benefits, including enhanced mately 83% of our sales, is attributable to resolution and image processing, easy our core competencies in developing and information storage and retrieval, and the delivering applications-based solutions – ability to capture results in a patient’s consisting of chemistries and reagents, electronic medical record. instrumentation, software and services – to customers engaged in developing new Several products introduced in 2005 within drugs, improving clinical care, and our Biopharma segment – including the protecting the environment. BioXPRESSION™ biomarker discovery platform, the JANUS™ automation and liquid Our Genetic Screening handling system and the LumiLux™ cellular business, which is the screening platform – gained rapid market world’s leading supplier of acceptance as the industry continues to newborn screening invest in productive drug development tools systems, grew 15% in that help improve drug safety and efficacy. 2005 driven by the expansion of newborn Our Laboratory Services business, screening programs in represented by more than 1,100 factory- the United States, trained service and support professionals where states are deployed globally, grew 7% during the year. moving toward an In addition to expanding its value-added 2 Officers pictured from left to right: Richard F. Walsh Senior Vice President and Chief Administrative Officer Jeffrey D. Capello Senior Vice President and Chief Financial Officer Robert F. Friel (seated) Vice Chairman and President, Life and Analytical Sciences Gregory L. Summe Chairman, Chief Executive Officer and President Katherine A. O’Hara Senior Vice President and General Counsel John A. Roush Senior Vice President and President, Optoelectronics product offerings – which range from development solutions. We also announced electronics and automation. And we will preventative maintenance contracts, to partnerships which will expand our offerings focus on enhancing our customers’ validation services, to product training – in the rapidly growing area of multiplexed experience with us through effective sales Laboratory Services reported increased assay technologies. The acquisition of Elcos execution and simplifying their interactions. sales for its flagship OneSource® program, AG builds our capabilities as a provider of a comprehensive multi-vendor laboratory specialty LED solutions, and the integration of While driving stronger top-line results, we management and maintenance solution Biomatic Inc. into OneSource extends our remain committed to delivering excellent aimed at helping customers in pharmaceu- compliance and validation services. returns to our shareholders. Our focus on tical and other markets improve their cash flow performance will continue through performance and generate increased return PerkinElmer enters 2006 in excellent our “Compressing the Cash Cycle,” or C3, on their laboratory investment. financial condition with great operating initiatives, which have become ingrained in momentum. We have more than 8,000 the PerkinElmer culture. We also continue Our Photonics segment also focuses on dedicated and very capable employees – to aggressively seek opportunities to improving the quality of life through specialty over 60% based outside the U.S. – who are increase our operating productivity through lighting and optical detection solutions used fully committed to helping our customers re-engineering processes, simplifying our in an expanding number of consumer succeed. We plan to leverage our strong physical and administrative footprint, and electronic, office automation, and safety and position and global presence to accelerate reducing product and development costs security applications. In 2005, the Company our growth in key markets, through with global sourcing. reported double-digit growth in sales of its increased investment in innovation and Cermax® Xenon lamps for use in home strategic business development. In our Thank you for your continued support of theater and other video projectors, as well Health Sciences segments, we expect PerkinElmer. I look forward to sharing as its digital photoflash products, used our growth to be driven by the further with you our 2006 progress on our strategic increasingly in mobile phone and other development of predictive diagnostics and goal: To improve the quality of life advanced cameras. personalized therapeutics. In addition, we through innovation in the Health Sciences plan to further extend our presence in China and Photonics markets. Several business development initiatives, and India, where environmental concerns are designed to accelerate the growth of our driving significant investment in improving Sincerely, Health Sciences and Photonics platforms, infrastructure and expanding health care were completed in the period. PerkinElmer systems. In our Photonics markets, we entered into a number of strategic partner- anticipate our growth to be driven by the ships – including research collaborations to continued development of digital electronics Gregory L. Summe develop new biomarker assay kits, and agree- and global communications, which are Chairman, Chief Executive Officer ments to co-market new drug discovery and opening up new applications in consumer and President 3 Genetic Screening LIFE SAVING SOLUTIONS so too does our drive for continuous innovation Genetic screening programs provide a means to increase our systems’ capabilities. In 2005, we of testing an entire population of people to began shipping our FDA-approved NeoGram™ accurately identify those at risk of specific, often AAAC assay kit, which can detect up to 30 life threatening, conditions. Each year, nearly different metabolic diseases from a single dried eight million babies worldwide are born with blood spot sample. serious genetic defects and some 3.3 million die as a result. Pre-eclampsia, which is a potentially RAPID EXPANSION life-threatening condition for both the mother and The benefits of genetic screening to human life the fetus, occurs in 5% of all pregnancies. and to reducing long-term health care costs are Many of these genetic conditions can be treated being recognized around the world. In the United and overcome through a combination of States, existing state programs are expanding screening and early medical intervention. following the recommendation by the American PerkinElmer, the world’s leading supplier of College of Medical Genetics that 29 metabolic neonatal screening systems and a pioneer in disorders be screened in all newborns. At the area of maternal health, is at the forefront of present, only 10% of the U.S. states follow this advances in this critical industry. standard, but the number is increasing. On a global scale, PerkinElmer is helping emerging growth countries – AN INDUSTRY LEADER including
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