Revvity Inc (RVTY) 2002 Q4 法說會逐字稿

Good day and welcome to the PerkinElmer fourth quarter 2002 earnings results conference call. Today's conference is being recorded. At this time for opening remarks and introductions, I'd like to turn the conference over to the Vice President of Investor Relations, Mr. Dan Southerby. Go ahead, sir.

Good morning and welcome to the PerkinElmer fourth quarter 2002 Earnings Conference Call. If you have not received a copy of our press release, you can obtain one on our website at www.perkinelmer.com. From the First Call network or by calling our toll-free investor hotline, 1-877-PKI-NYSE.

Please note, the financial results we have included in the press release are presented in a GAAP format. Consistent with the guidelines issued last Wednesday by the SEC on the use of nonGAAP financial measures, we have included only GAAP financials in this release.

Before we begin the call, we need to remind everyone of the following Safe Harbor statements. Certain remarks that we may make about management's future expectations, plans and prospects constitute forward-looking statements about the company's performance that involves important risks and uncertainties. These forward-looking statements are only predictions. Actual results or events may differ materially from those indicated by these forward-looking statements. We disclaim any intention or obligation to update any forward-looking statements as a result of developments occurring after the date of this call. Please refer to the documents filed by the company with the SEC, to our quarterly report on form 10Q for the quarter ended September 29, 2002 which identify important risk factors that could cause actual results to differ from those contained in the forward-looking statements.

I am now pleased to introduce the Chairman and Chief Executive Officer of PerkinElmer, Greg Summe.

Thank you, Dan. Good morning, everyone. I appreciate you taking the time to join us today to discuss PerkinElmer's fourth quarter 2002 results. With me today is Rob Friel, our Chief Financial Officer. I will begin by reviewing the highlights of the fourth quarter. Rob will talk in more detail on the financial results. We will break for questions and answers and then close the call.

Overall, we had very strong results relative to our forecast. Our sales, profit and cash flow were all better than projected. We also successfully recapitalized our entire debt structure, moving our average maturity to approximately seven years. Furthermore, we successfully launched the integration of our Life and Analytical Sciences business and I will cover each of these in more detail. As described in our press release this morning, we reported revenue of $410 million for the fourth quarter, up 1% on a reported basis over the same period in 2001. We reported GAAP earnings per share of 1 cent from continuing operations which includes a 17-cent earnings per share charge from restructuring intangible amortization and a net gain from the debt refinancing. Rob will provide more detail of those items later in the call.

These operating results are above the high end of the range we had projected for Q4 during our Q3 earnings release. Our free cash flow of $50 million for the fourth quarter was very strong and a result of excellent progress in improving our working capital. Improvement in working capital generated $18 million in cash during the fourth quarter and $48 million during the second half of the year. For the year, 2002 we generated operating cash flow of $108 million. We were pleased with this performance which allowed us to reduce our net debt by $100 million in addition to retiring our $30 million synthetic lease.

As mentioned earlier, we successfully completed our debt refinancing program. The new debt consists of a $300 million 10-year subordinated debenture in a senior secured six-year term loan of $315 million. We also have $100 million revolving credit facility which remains undrawn.

We were pleased to receive significant demand for the debt offering, which was five times oversubscribed. With these proceeds, we retired the majority of our zero coupon convertible debentures and remained funds in escrow to retire the remaining float during 2003. In addition, we retired $110 million of our 2005 bonds.

The consolidation and restructuring of our newly-combined Life and Analytical Sciences business is off to a good start. The customer reaction has been very positive. This combined business allows us to provide a broad, integrated offering of research and development tools, quality assurance, quality control instrumentation software and extensive application and service support. We're finding even more synergy in the merger than anticipated and we believe we're on track to realize between 40 to $50 million of annualized cost savings by the end of 2004.

We also made good progress during the quarter introducing new products. In Life Sciences, we received FDA certification for our neo gram [ph] test system, making PerkinElmer the first company to receive FDA certification for the detection of a metabolic deficiency known as PKU, which is prevalent in newborns. We also introduced two highly-sensive assays for monitoring individuals at risk of pipe [indiscernible] or juvenile diabetes.

In our analytical instrument business, we introduced a range of software instruments to fully automate and provide better data integrity for the quality assurance, quality control function in pharmaceutical manufacturing. In Optoelectronics, we introduced break through sensor technology with the traditional mainstream carbon monoxide sensor, used for medical diagnostic and monitoring applications. We also shipped our 1,000th digital amorphis [ph] silicon detector, used in chest radiation, cardiac and angiography applications.

In the first quarter, we anticipate launching our new mass spectrometer, an orthoganal [indiscernible] time of flight, [ph] the first of its kind in the world. We developed this with our partner MBS Siex [ph] and are very excited that our -- about its performance. Look for our launch at the lab automation conference the first week in February.

Looking ahead to 2003, we see a -- we see continuing softness in the economy. Consequently, our priorities have focused around cost reduction, new products and cash flow. We've put down a range of EPS during the debt offering in December of 37 to 43 cents on a GAAP basis. Which includes a 15-cent per share charge in intangible amortization. We continue to feel comfortable with that forecast.

I will now turn the call over to Rob Friel to discuss our financial results in greater detail and then we will move on to questions. Rob?

Thank you, Greg and good morning. This morning, I will provide some details on our fourth quarter results, including cash flow and changes in the balance sheet and conclude with some guidance for 2003.

Before I get into the specific details for the fourth quarter, I want to repeat what Dan mentioned earlier and point out that the financials included with the press release are presented exclusively on a GAAP basis. Previously we had presented both GAAP and adjusted results because we felt, due to the number of portfolio changes we made in the last few years, it was helpful to supplement our GAAP information with pro forma financials and organic growth rates. However, consistent with the guidelines issued last Wednesday by the SEC, on the use of non-GAAP financial measures, we have only included GAAP financials in this release. Consequently, I will not discuss non-GAAP financial measures during the call, however, I will provide supplemental information to help with your analysis and bridge the financial information during this transitional period.

If you would now turn to page 5 of the press release, I would like to walk through our income statement for Q4, 2002. Sales for the quarter were $410 million versus $406 million during the fourth quarter of 2001. Representing an increase of $4 million or 1%. The net impact of acquisitions and divestitures was $350,000. Geographically, we experienced flat revenue year-over-year in the Americas, which represents about 50% of our revenue. Our European sales, which were 30 -- 30% of our revenue in the quarter were down 7% and Asia, which makes up the remaining 20%, grew over 20% in the quarter. We increasingly see Asia as an area of significant growth in the future. Particularly in China and have recently announced our plans to increase our investments there to take advantage of a rising GDP growth rate and sizeable investments in the infrastructure. Due to the weakening of the dollar over the last 12 months against both the euro and the Asian currencies, the impact of foreign exchange on reported revenue was about 4% year-over-year.

In our Life Sciences and Analytical Instruments segments, we experienced growth in service, reagents and consumables as our pharmaceutical and academic research customers continued to increase the activity within their labs. However, as we've seen throughout 2002, they are not increasing their capacity and consequently orders for certain instruments were down significantly year-over-year. In several of the other industrial markets, though, our analytical instrument business did experience growth in instruments as we believe a number of our new products are providing meaningful productivity improvements over previous models and therefore provide a compelling reason to make the capital investment. The Life Sciences segment had revenue of $130.8 million in Q4 2002 compared to 124.5 in Q4 2001.

As we discuss in the press release, the impact of including Packard [ph] for all of Q4 2001 would have increased Q4 2001 revenue by $15.6 million. The Analytical Instruments segment had revenue of $141 million in Q4 2001 versus 147.1 in Q4 2001.

The fourth quarter of 2001 included $13 million of revenue related to the IRS product line that was sold at the end of 2001. The [indiscernible] decrease in 2001 by $13 million.

In Optoelectronics, our digital imaging and sensor products continued to experience good growth. Optoelectronics experienced positive growth this quarter year-over-year for the first time in eight quarters. Revenue in Q4 2002 was $87 million compared to 85.1 in Q4 2001 representing an increase of 2%. In Fluent Sciences, revenue was down 1% from $48.6 million, down 1% from $49.3 million in Q4 2001, reflecting continued weakness in aerospace markets. This was offset by increasing within Semicon, which were up over 50% versus the comparatively low level in Q4 of '01.

Sequentially for the quarter, revenue was up 12% from Q3 2002 as Q4 has historically been our strongest quarter. Both Life Sciences and Analytical Instruments grew over double digits from Q3 with Optoelectronics up 4% and Fluid Sciences roughly flat.

Turning to cost of sales in the fourth quarter, it was $241 million versus $227 million in Q4 2001 resulting in gross margins of 41% in Q4 2002 versus 44% in Q4 2001. In Life Sciences and Analytical Instruments, we experienced growth margin contraction from sales of our instruments due to lower volumes and pricing pressure. While gross margins in our Reagents and Consumables remained flat. Optoelectronics gross margins remain flat year-over-year as pricing pressures were offset by cost actions and a better mix. And in Fluid Sciences, gross margins were down year-over-year due to price and an unfavorable shift to lower margin products.

Sequentially, gross margins increased 130 basis points over Q3 2002 due to the higher volume. Research and Development expenses were $21.5 million in the fourth quarter of 2002 and approximately 5.2% of revenue. The $90 million of R&D in Q4 of 2001 included a $69.5 million in-process R&D charge associated with the Packard acquisition. Excluding that charge, R&D expenses were roughly flat year-over-year in dollars and as a percentage of revenue. However, while the R&D spending was flat in Q4 2002 versus Q4 2001, we continued to improve the productivity and yield of our spending. By rationalizing the number of products to ensure that they are resourced properly, resourcing the time to market and focusing our spending on the higher growth markets and applications.

Greg already commented on some of the new products that we're excited about in the Life Sciences and Analytical Instruments area. In Optoelectronics and Fluid Sciences, we continue to invest in higher value-added assembles and ensuring our products are designed into our customer's products and applications. SG&A expenses on page 5 of the press release for Q4 2002 were $108 million versus $113 million in Q4 2001. As a percentage of revenue, Q4 2002 was 26% versus 28% in Q4 2001. SG&A is an area we are looking to reduce significantly in '03 as the downturn in the markets as a resulted in us having overinvested in both our selling and G&A infrastructures. Greg mentioned that the consolidation of the Life Sciences and Analytical Instruments is off to a good start and we believe by combining these two businesses, we can reduce our SG&A run rate by 30 to $45 million by the end of next year.

In addition to the Life Sciences and Analytical Instruments consolidation, the other business segments are also reducing their G&A cost structures and we're functionalizing a number of administrative areas such as IT, accounting, and marcomp [ph] across the company.

On the next slotted income statement, you will note a $26.5 million restructuring charge we took in Q4 related to these cost take-out actions. Over 80% of this charge is related to census reductions with the remaining amount attributable to lease cancellation and asset write-offs as we closed some sales and customer support offices. Our expectation is that most of these actions will be completed by the end of this year.

Amortization of intangible assets was $7 million in the quarter, down from 14 in Q4 2001, as goodwill is no longer amortized in accordance with recent GAAP rule changes.

Other expenses for the quarter were $6 million, roughly flat with the fourth quarter of 2001. In Q4 2002 interest expense was about $6.4 million, with costs associated with the refinancing and foreign exchange losses being offset by a gain from the termination of an interest rate swap entered into in 2001.

The tax benefit of $1.6 million in the fourth quarter is the appropriate provision to result in a full-year tax rate of about 52%. The higher rate is due to the fact that our tax losses in the U.S. provide a higher benefit and our income is taxed overseas due to the favorable tax arrangements we have negotiated. The result is net income for continuing operations of 1 cent per share. The $3.3 million loss in discontinued operations is principally attributable to the entertainment lighting business and writedown of minority equity investments.

Consistent with last quarter, we've attached a cash flow and balance sheet on pages 6 and 7 of the press release. In the beginning of 2002, we set out to significantly improve the cash generation capability of the company through a number of actions including training all of our employees, dedicating specific resources, providing better and more current metrics and information to people in the field, and changing incentive programs. Over the last 12 months, we were pleased with some of the progress we have made, but clearly see a lot of opportunities remaining to improve our asset turns and increase our cash flow.

For the fourth quarter 2002, operating cash flow was $50 million with roughly $18 million coming from lower working capital. Inventories were reduced by $18 million through tighter controls around procurement and manufacturing planning. Receivables grew modestly by $3.5 million, despite being adversely affected by a $9 million decrease through a securitization facility. Indicating that our focus on customer terms, order management processes and cash collection efforts are gaining traction. These improvements were achieved even though our sales increased 12% sequentially from Q3 2002.

During the fourth quarter, our working capital turns increased to 2.4 turns from 3.7. Restructuring spending during the quarter -- fourth quarter, was $4 million, down significantly from the same period of 2001. We also continue to rationalize and prioritize our capital expenditure requirements and Cap Ex during the fourth quarter of 2002 was $6 million, down significantly from the fourth quarter of 2001. The cash we generated in the quarter along with the refinancing that Greg discussed allowed to us both reduce the level of our indebtedness and lengthen its maturity.

Turning to the balance sheet, you will see that our net debt at the end of 2002 was $488 million. In addition, while it did not count as debt, we also paid off the lease of our synthetic lease of our Freemont, California property and as I mentioned previously, our AR securitization was reduced by $9 million. Therefore, we ended the year at a net debt to capital, including AR securitization, below 30%.

Working through the balance sheet, you see, first of all, restricted cash of $186 million, which is held in escrow and earmarked for the redemption of the convertible bond that will occur between now and August of this year. The remaining portion of the convertible is characterized as short-term debt. Other current assets arise principally of short-term deferred tax assets associated with the timing of tax deductions. References to assets and liabilities and discontinued operations represent the balance sheet of businesses that are in the process of being divested, with the change year-over-year being due to the sale of our detection systems business in early 2002. Fixed assets grew by $68 million in the year as a result of regular capital expenditures of 38, which were down year-over-year due to better controls around asset management as well as the purchase of the property previously characterized as a synthetic lease through $30 million.

Intangible assets of goodwill and other intangibles decreased due to the regular amortization of intangibles as well as a reduction in goodwill due to the true-up of [indiscernible] purchase accounting. Other assets include pension assets and long-term deferred tax. An accrued expense is decreased due to the reduction of the Packard purchase accounting reserves mentioned previously. Other long-term liabilities are comprised of our pension and post retirement as well as deferred taxes.

Before opening the call to your questions, I'd like to briefly discuss our guidance for this year and the first quarter. As I mentioned at the offset, the guidance will be based on GAAP with no adjustments made for intangible amortization. Looking first at revenue, given the current economic and political environment, we believe it is prudent to forecast very modest revenue levels this year. For the first quarter, we are projecting revenue of 346 to $353 million, which would be flat to up 2% from Q1 of 2002.

EPS is projected to be in the 2 to 5 cent range which excludes the negative impact of intangible amortization of 4 cents. For the full year, we are forecasting revenues to be in the $1.5 billion to $1.53 billion, which similar to Q1, would be flat or up to 2%. EPS for 2003 is forecasted to be between 37 and 43 cents, which includes about 15 cents of intangible amortization. Since we are forecasting very little revenue growth, income improvement year-over-year is coming predominantly from our ability to reduce our costs through the integration of Life Sciences and Analytical Instruments as well as the other actions discussed previously.

Let me now open the call to your questions.

Thank you. The question and answer session will be conducted electronically. If you would like to ask a question, press the star key followed by the digit 1 on your touch-tone phone. If you on a speaker phone, turn off your mute function. Once again that, will be star 1 if you'd like to ask a question.

And we'll go first to Balsa Branson, Regimen Capital.

Thanks, didn't expect to be first. Just a little confused about the debt. Could you give us a breakdown of the debt on the balance sheet?

Yes, the debt on the balance sheet is about -- well, $300 million from the 10-year senior subordinated and $315 million from the term loan, that would be the $615 million. And off-balance sheet is the AR securitization, which the balance now is $29 million.

Okay. And short-term debt is the -- is the converts?

It is, it's the -- it's a portion of the convert that wasn't tendered and because the expectation that will be called in August of '03, that's moved up to short-term.

Oh, and the escrow cash relates to that?

Yes.

Okay.

So, -- so the amount in the restricted cash basically offsets the short-term debt and there's another cost, less than $2 million, of short-term debt that's basically we have overseas.

I'm sorry, $200 million of short-term debt overseas?

$2 million.

Oh, I'm sorry.

The difference between the 186-483 and the 188-334.

Got it. Okay, thank you.

We'll go next to Paul Knight with Thomas Weisel Partners.

Rob, can you hear me?

Yes.

Could you go over that -- you were getting full year, the EPS full year guidance again.

Yes, for the full year, we're looking at 37 to 43 on revenue of $1.5 billion to 1.53. And as I mentioned, that would include the intangible amortization deduction of 15 cents.

What kind of operating income do you back out to on that number?

The operating income on a GAAP basis is about 8%.

Okay. And what was interest income in the quarter?

Interest income was less than $500,000. The one piece that I mentioned was that we actually had a gain from an interest rate swap that we put on in 2001 relating to the '05 notes, we swapped that from six to floating. So, when we retired the majority of the '05 notes that actually resulted in a gain and that slightly more than offset some of the cost in the quarter associated with the refinancing.

And then the integration of the Analytical with the Life Science group. Can you -- what are you doing with the sales force, the distribution network?

Paul, let me -- let me start on that and then Rob can chime in if he'd like. The -- the -- if you recall, the Analytical Instruments and the Life Sciences business both have a similar kind of structure. They both cover round the world and use a mix of direct and distributor. So, the initial change there was to bring it together under one leadership. That's been complete. That leadership is at the top and that leadership is in each of the regions around the world. We've gone from two leaderships to one.

The other structure that's taking place, that we've put in to place, an account manager structure at the large accounts around the world. That covers both of them.

And then you move to kind of the back office side of it so we're -- we recently announced a consolidation of a number of the customer care centers. So, for example, in the U.S. we did customer care in three locations, Boston and Downer's Grove. In Shelton, that's now announced to be consolidated in Shelton. In Europe,four locations, that's now announced to be consolidated into two. So, we -- we're -- we're going for with one integrated organization from a management structure and a back office operations perspective, it's had relatively less impact or a lot less impact in terms of individual sales people out there in the market.

Okay. Thank you.

You're welcome.

And our next question comes from Lakshmi Bhojraj with Salomon Smith Barney.

Good morning.

Good morning.

Just a couple of quick questions. First, Rob, would you be able to give us more specific guidance by business for the top line in 2003? And also related to that fact, could you give us a preliminary sense of how you expect the quarters to break out in terms of EPS?

And my second question is as you look at some of your weaker end markets, such as, you know, general industrial and opto and the chemical petro market and AI as well as, of course, pharma spending with respect to instruments, I mean, could you give us some thoughts on when you think the prospects are for turn-around in '03, if you're seeing any signs that that might happen?

Let me start off and give you a sense of revenue growth by business. As I mentioned before, we -- we believe we're being fairly conservative here, but if you look across all the businesses, we're generally looking at sort of flat to up low single digits in basically all of the businesses. And the only place we're really forecasting any type of growth is where we either have fairly good visibility, an example of that might be the digital imaging business, where we have fair amounts of visibility into GE med systems demand, or in areas like genetic straining, where we, you know, we throughout the last couple of quarters, continue to see pretty good growth there. But across all the businesses, you'd be safe in using about a 0 to 2% growth across each of the segments.

Okay.

With regard to EPS guidance by quarter, at this point, what we'd like to do is just give full-year and first quarter and I think for the foreseeable future now, our intentions would be to give sort of guidance, one quarter out and then the full year.

Okay.

And then the last question, with regard to the turn-around in the various segments, I would say -- as I mentioned in the pharmaceutical and academic research, we continue to see good demand for the consumables and reagent side. As I mentioned, we -- our customers are continuing to sort of run their labs, if you will, in the case of our Life Sciences business, our consumables were up 10% in the quarter. Of course, the difficulty has been that they're not expanding either their capacity order capability. So, the instrument businesses was down fairly significantly.

At this point, we don't see any change or there's no indication that that's changing in the foreseeable future. And consequently, that's why we're forecasting revenue growth in the 0 to 2%.

In the case of Analytical Instruments, we did see some recovery some in some of the more industrial markets like chemical and petro chemical, they had a good Q4. It is yet to be seen whether that is market or whether it is a function of some of the new products that we offered out into the marketplace.

Uh-huh.

I think in -- I think in Fluid Sciences we believe aerospace will stay down probably at least through this year but I think we are cautiously optimistic that semi con comes back in the second half. I would say, as I mentioned in optoelectronics, it's really almost application-specific. Digital imaging, I think continues to do well. And -- and our sensor applications grew nicely in the quarter and we would expect that to occur in '03 with some of our flash and some of our other lighting business, sort of flat to down slightly.

Okay. Great. Thank you.

Our next question comes from Larry Neibor with Robert W. Baird.

Thanks, good morning.

Good morning.

Could you give us some idea of what you're doing with your supply chain management to try to improve your manufacturing cost structure to improve your gross margins?

Yeah, I'll take that, Larry, I mean in the supply chain side, we're doing a number of -- a number of things. One, on just a material side itself, we've moved to a consolidated material organization across the whole corporation and so the -- the drive there is to both consolidate the number of suppliers and to continue to shift our supply base into lower cost countries. And so that's active and under way.

Second, on the -- on the manufacturing side, we continue to look for opportunities to shift manufacturing at a higher cost location and lower cost locations like Asia. And as you know, we have a fairly significant capability in Asia, some 3,000 people in manufacturing. Across the company, we continue to build that up.

Third, you know, we continue to look at, you know, closing down and sort of consolidating the number of manufacturing sites we have. And so we don't have any announcements on that at this time, although we did recently announce that we're closing the Akron site and that manufacturing is moving to Turku. [ph] We continue to work on all three of those axis, [ph] Larry, to bring the manufacturing costs down.

Do you think it will have an impact on gross margin in '03?

Yeah, I mean because if you go back to before I said we're targeting 40 to $50 million of cost savings on a run rate basis, not all in SG&A, some in the cost of goods. It comes out of both the materials and the manufacturing side.

Okay. The mass spectrometer you're going to be launching next week.

Yeah. Is that the first of several models or will that be your sole entry for the foreseeable future in the mass spec market?

Well, it is a -- I will call it a whole new lineup, if you will. We're not going to introduce a lot of variety behind it. I think this will be recognized as a very significant product in itself. I mean what we -- not to get into sort of any early launch, but we think that the product has a dramatic step up in terms of resolution across a very wide range of atomic masses and so we think that's going to be a great product. We are in the mass spec market today as you know with the ICP mass spec and in the GC mass spec, also. I would say this orthogonal, multi [indiscernible] is a new product line. It doesn't come with a lot of variations, we will of course continue to build out the accessories and to complement it. Okay. And one quick question for Rob. Rob, what was the gain on the swap you were talking about?

It was about $4 million.

Great. Thank you very much.

You're welcome.

And just a reminder for everyone, that's star 1 to ask a question. Next we go to Rachel Golder with Goldman Sachs.

Yes, good morning. A couple of quickies, please. Because of all the one-time items, I wonder if you could just tell us what your calculation of EBITDA for this quarter and then the prior quarter was? I mean the year earlier quarter?

Well, the EBITDA calculation, I'd say based on the definition in the -- in the debt documents is $51 million.

Uh-huh.

And for the -- for the year it's 152.

And could you give us what the fourth quarter of last year was?

Fourth quarter of last year was 73.

73. Okay. Thank you. And just extrapolating from your expectations for 2003 for both revenues and EPS, it sounds as though margins are likely to stay relatively consistent at the EBITDA line through 2003?

No, no actually we would expect margins to increase 150 to 200 basis points.

Okay.

The 8% margin I talked about was on a GAAP basis.

Uh-huh.

And so on a comparable basis for this year, that would be about 6%.

Okay.

Say 5 to 6%.

Okay. Terrific. Your AR facility, could you remind me what the total size of it is? Excuse me, the total size?

Yes. Well, it's a facility that's -- it can go up to as much as 50 million. We have -- currently have about 30 million of it used.

Okay. And the 9 million reduction, that was sequentially from third quarter?

Yes. Okay. Do you expect that in 2003 there will be further improvements in working capital management? We do. We -- as I mentioned before, while we've made good progress this year, we continue to see opportunities to continue to drive our turns and I would say our expectations for next year would be to increase it another 6 or 7 turns -- points or .6 or .7, which is about what we did in '02.

Okay, great. Clearly a bunch of the restructuring programs are ongoing, can you give us a sense of what you think the charges for these will be in 2003?

I would say at this point we don't anticipate any charges in '03.

Okay. And then, I don't know whether you've broken this out in the past, but do you give a revenue and/or operating income or cash flow mix breakdown between instruments and then reagents and consumables?

Well, we can give you a rough revenue break, we don't break the -- the margins or the operating income. I can give you roughly by -- let me giving you a Life Sciences and Analytical Instruments.

Great.

In the case of Life Sciences in the quarter, consumables was about 50%. Service was 10. Instruments was 40.

Uh-huh.

In the case of Analytical Instruments, instruments was 65, service was 25, consumables was 10.

Okay. Just for reference, do you have what that was a year earlier?

I -- I would say it's -- it's roughly the same -- if you were to put Packard into the numbers --

Uh-huh.

All right, Packard had the impact of increasing our percentage of instruments and reducing our percentage of consumables in that they were a little less reliable on the consumable side. But I would say it's sort of directionally the same with the exception of the inclusion of Packard.

Okay, great. Do you give a backlog number for instrument sales?

No, no we generally don't give out backlog. In most of our businesses, it's -- it's pretty much a book and bill within the month, anyway.

Okay. Great. And my last would be there have been some inventory write-ups from the Packard purchase that flowed through your cost of goods sold. Is that completely out of the numbers?

Yes it was out in the first quarter of last year and it was only 1.5 million.

Thank you very much.

You're welcome.

And we'll go next to Jane Gail with Carlisle Investments.

Hi, all my questions were answered. Thank you.

Once again for everyone, that's star 1 for a question. Next to Vic Harnon with Argus Partners.

Yes, I had a question, Rob, in terms of the foreign exchange impact on the quarter, how should we think about that, is that the 4% that you said for the whole company? Is that relevant for AI and Life Sciences?

I would say those are the major impact. A little bit in Opto and effectively no impact in Fluid.

And the improvement that you're seeing in AI, is that primarily petro chemical or getting more broad-based now?

I'd say it's broad-based. You know, clearly we're seeing some in the environmental area, as well.

Okay.

And in terms of the sales force reorganization, what you said, are you combining both Life Science and AI sales force? I didn't catch that. They will be combined.

Okay. Great. Thank you.

You're welcome.

And there are no further questions at this time. I'd like to turn the conference back over to you, Mr. Summe, for additional closing remarks.

Thank you. As I mentioned earlier, we feel good about our progress in Q4 and are optimistic about our prospects in '03, not due to the economy recovering dramatically, but because we're better positioned for a lower growth economic environment. I want to thank you for your interest in PerkinElmer. This call is adjourned. Have a good day.

Thank you, that concludes today's teleconference. We appreciate your participation. You may disconnect at this time.