Revvity Inc (RVTY) 2003 Q1 法說會逐字稿

Good day, everyone, and welcome to the Perkin Elmer first quarter 2003 earnings results conference call. Today's call is being recorded. At this time, for opening remarks and introductions, I would like to turn the conference over to Mr. Dan Sotheby. Please go ahead, sir.

Good morning, and welcome to the Perkin Elmer first quarter 2003 earnings conference call. If have you not received a copy of our earnings press release, you may get one from visiting our website at www.PerkinElmer.com, or from the first call network, or from our toll-free investor hotline, 1-877-PKI-NYSE. Before we begin, we need to remind everyone of the following Safe Harbor statements. Various remarks we may make about the company's future expectations, plans and prospects, constitute forward-looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995.

Actual results or events may differ materially from those indicated by these forward-looking statements, as a result of various important factors. Including those discussed in our earnings press release filed today and our most recently filed annual report on form 10K, both of which are on file with the SEC. In addition, any forward-looking statements represent our views only as of today.

We disclaim any obligation to update forward-looking statements in the future, even if our estimates change, so you should not rely on any of today's forward-looking statements as representing our views as of any day after today. Note that the financials included in the release are presented on a GAAP basis, consistent with the SEC guidelines.

If during the Q&A period of today's call any non-GAAP financial measures arise, we will provide information to reconcile the non-GAAP measure to the appropriate GAAP measure as required by the SEC. At this time, I am now pleased to introduce the Chairman and CEO, of Perkin Elmer, Greg Summe.

Thank you, Dan. Good morning, everyone. I appreciate you taking the time to join us today to talk about Perkin Elmer's first quarter results. With me today also is Rob Friel, our CFO.

I'm going to begin by reviewing the highlights of the quarter, Rob will then talk in more detail on the financial results, we'll break for questions and answers and then close the call. Overall, we were pleased by our results this quarter in a tough economic environment. Our revenue is $358 million, up 4%. Driven by double-digit growth in optical electronics and analytical instruments, offset by softness in Life Sciences and the semiconductor market.

Our GAAP EPS was 3 cents a share, which was within the range of 2 to 5 cents of we projected for the quarter back in January. And these GAAP EPS results include 4 cents a share of intangible amortization. Our operating cash flow was a positive 24 million and improvement of 55 million from prior year of minus 31. The integration of Life and Analytical Science is doing well, in fact it is running ahead of plan in cost reduction. We see this continuing throughout the rest of year and expect to exceed our cost reduction goal of $45 million, and annualized savings by the end of 2004.

We also launched our new Life and Analytical Sciences service business, branded one source, this business generates over $190 million of revenue and added 1200 field engineers supporting customers around the globe. They offer a broad range of services from maintenance and repair to compliance, validation training, and consulting.

We were also pleased to be to be recognized by Frost and Sullivan as Analytical Instrument Company of the Year for 2000. We received this award over our peers in recognition of our broad technology and application platform. Progress and new product introductions, and in improving our customer care process. We continue to accelerate our new product introductions and launch more than 25 new products this quarter. For example, at the Photonics West show we announced the availability of our high performance single photon counting module, which quadruples the speed of biomedical sample testing over conventional devices.

And in lab automation we introduced the prOTOF 2000, which has the distinction of being the first multi TOF mass spectrometer with an --[inaudible] side. This marks a substantial leap forward from conventional multi TOFs in mass accuracy and stability across the wide mass range. Making possible much higher rate of protein identification. We anticipate making our first revenue shipments of the prOTOF this quarter.

Looking ahead to second quarter and the rest of 2003, we see the economy continuing about as it is. We see some bright spots, but we're also deeply concerned about the potential impact of SARS. Consequently, our priorities remain focused on cost reduction, new products, and cash flow.

We believe our 2003 EPS guidance we issued in January of 37 to 43 cents on a GAAP basis, which includes 15 cents a share of intangible amortization, still looks reasonable. I'll now turn the call over to Rob Friel, who will discuss our financial results in greater detail, and then we'll move on to questions. Rob?

Thank you, Greg. And good morning. This morning I will provide some details on our financial results for the first quarter of 2003, discuss guidance for Q2, and then open up the call for your questions. Turn to the income statement I'll provide some specific deals for our financial results for the quarter.

Sales for the quarter were $358 million versus $346 million in the first quarter of 2002, representing an increase of 12 million dollars or 4%. Foreign exchange positively impacted sales during the quarter by approximately 3% year over year, due primarily to the strength of the Euro and Yen year over year. Geographically we experienced strong growth in Asia, which was up over 20%, Europe grew 9%, and the Americas was down 4%. I will give more specific revenue details in my discussion of the segment results later on in the call.

Cost of sales in the first quarter of 2003 were $219 million or 61% of the revenue for the period. In Q1 last year, cost of sales were 221 million, or 64% of revenue for the period. However, Q1 '02 cost of sales included a inventory write-down of 17 million. In life sciences, lower instrument volume during the quarter suppressed gross margins due to under absorption of manufacturing overhead.

In analytical instruments, gross margins were down slightly year over year as high volume during the quarter was offset by the effects of pricing pressure in Europe, due to the stronger currency. Optoelectronics gross margins increased year over year, as Q1 '02 cost of sales included the inventory write-down of 17 million, and in fluid sciences gross margins were down significantly year over year due to the lower volume and an unfavorable shift to lower margin products. Research and development expenses were 20.9 million in the first quarter of 2003, approximately 6% of sales, roughly flat year over year.

As we rationalize our cost base, we continue to invest in our technological capabilities to fuel our new product pipeline. Particularly in this environment, we believe new products are crucial to stimulating demand within our end markets. With this in mind, we continue to focus our R&D efforts around the higher growth markets and applications while ensuring we are maximizing the productivity of each R&D dollar spent.

For example, within life and analytical sciences, we have established four worldwide regional centers of excellence to establish critical mass, focus core competencies and leverage technology sharing across the company. Life and analytical sciences launched over 20 new products during the first quarter of 2003, focused primary in high growth areas such as our Proteomics, genetic screening and environmental and chemical businesses.

Turning to SG&A, we are very pleased with the progress we are making. For Q1 2003, SG&A expenses were 92 million or 26% of revenues, versus 108 million in Q1 '02 or 31% of revenue. This 500 basis point reduction year over year reflects lower SG&A across all four segments, as we look to minimize our general and administrative expenses while maintaining the level of investment on our sales and service organizations. Our SG&A head count is down 138 people year over year, with over 80% coming from the general and administrative functions.

As Greg mentioned, one of our key initiatives this year given the uncertain economic environment was to significantly reduce our cost base through the integration of life and analytical sciences, the consolidation of certain functions, such as control, IT, and our continued focus on improving the productivity over manufacturing process. With regard to the LAS integration, our plan was to reduce approximately 500 people throughout the year.

Through the first quarter of 2003, we are ahead of our plan and are confident that we're on track to achieve our targeted full-year cost savings from this integration. In addition, the centralization of finance IT more common purchasing is progressing well. Amortization of intangible assets was $7 million in the quarter, approximately flat with the first quarter of 2002.

Operating income from continuing operations was 19 million for the first quarter of 2003, or 5.4% of revenue, up from a loss of 15 million in Q1 '02. This loss included a 17 million inventory write-down, 13.9 million over structuring and acquisition-related charges, and a 5.2 million gain from the sale of assets. Other expenses for the quarter, which is mostly net interest expense, was 14 million, roughly flat with the first quarter of 2002. Included in Q1 '02 other expense is a 5.5 million cost associated with the early retirement of bonds, acquired through the acquisition of Packard.

The 14 million of other -- in this quarter includes one million cost associated with the negative arbitrage from the portion of the convertible that was not tendered and we have placed cash in escrow equal to the outstanding balance. In addition since 33 million of the convertible was tendered during the quarter, we had to recognize 500,000 of unamortized issuance costs.

We also have about a million of amortized debt issuance cost in this number and about a million of foreign exchange loss. The tax provision of 1.6 million for the first quarter of 2003 reflects a tax rate of 32.5%, roughly in line with our guidance. Net income from continuing operations was 3.3 million, or 3 cents per share on a GAAP basis. Net of intangible amortization of roughly 4 cents per share.

This compares with a net loss from continuing operations of 20.7 million for the first quarter of 2002 or a loss of 17 cents per share. The Q1 '03 loss in discontinued operations of 960,000 is attributable to the entertainment lighting business. This compares to an 8.9 million loss in Q1 '02 that included both our entertainment lighting as well as the results from our telecom component business, which was shut down in Q2 of last year.

I will now discuss segment results for the quarter in more detail. If you will turn to the page that shows the segment results, we have presented the results for first quarter of '03, as well as compared them to the same quarter 2002. For this quarter, we've continued to present the financial results of Life Sciences and Analytical Sciences as separate businesses, as a financial systems and certain processes of the two businesses have yet to be consolidated. However, since we have effectively combined the two businesses operationally, I will provide revenue detail by Genetic Screening, Biopharma, Environmental and Chemical, and Service, which are the key end markets of the combined businesses.

In Life Sciences, revenue in the first quarter of 2003 was 104 million, down 11% from 117 million in Q1 '02. On a GAAP basis, Life Sciences operating loss for the first quarter of 2003 was 400,000, compared to a 1 million dollar operating Q1 of '02. Both quarters included about 5.5 million of intangible amortization with the first quarter of 2002 including 8.7 million over restructuring and acquisition-related charges. The Analytical Instrument business had revenue of 128 million in Q 103, up 11% from 115 million in Q1 of '02.

On a GAAP basis, operating profit for Q1 '03 was 12 million dollars or 9.4% of revenues, while Q1 '02 operating profit was 8.8 million. This number includes a 3.7 million gain from the sale of assets [inaudible] restructuring, and both periods include about a million of intangible amortization. From an end market perspective, we experienced strong growth from sales to industrial customers in the environmental and chemical markets. Academical and clinical markets grew year over year, while sales in the biopharma markets were down year over year.

In environmental and chemical, revenue was up 15% year over year, reflecting strong market acceptance of the more than 15 new products we've introduced in this area in the last year. In particular our ELAN DRC platform is selling well into the environmental market as we capitalize on the significant infrastructural investments well under way to improve air water and overall environmental quality. In genetic screening, which was up 7% year over year, we were seeing increased awareness of screening as an overall benefit to the population, particularly in the U.S. and developing nations.

In the U.S., we continue to expand our market share as evidenced by our recently introduced tandem mass [inaudible] that are now utilized in 20% of all newborn screening. In China, where currently only 15% of total newborns are screened, PerkinElmer's products and service offerings are used to screen 65% of those babies actually screened. In biopharma, revenue for the first quarter of 2003 were down 9% year over year, as growth in pharmaceutical QA and QC was more than offset by lower sales in the drug discovery markets.

Even though our sales to the drug discovery markets were down during the quarter, we believe the underlying growth drivers to this market appear to be intact as the need for greater R&D productivity will increase within the pharma and biotech labs. For the combined life and analytical sciences businesses, instrument sales which represent 48% of revenue for the quarter were down 4% year over year, with sales growth in the industrial markets more than offsetting declines in the drug discovery markets.

During the first quarter of 2003, reagents and consumables, which were 31% of revenue for the quarter, grew 4%, and here the drug discovery market grew faster than the industrial. The activity in the research labs remains healthy. So -- remaining 21% of revenue for the quarter, was up 5% in the quarter year over year. During the quarter, as Greg mentioned, we launched our one source laboratory service business to take advantage of a trend we are seeing in the marketplace, where customers look to out source non-core capabilities to improve productivity and reduce costs within their laboratories.

We feel that we're uniquely positioned to take advantage of this trend, given our broad product scope and geographic reach. In optoelectronic, revenue for the quarter was 83 million, up 20% compared to the first quarter of 2002 revenue of 69 million. Digital imaging grew significantly driven by higher sales over our [inaudible] products year over year, as the conversion from analog to digital X-ray continues to expand in applications beyond radiography to include cardiac, angio, and cancer treatment.

Our sensors business grew double digits during the quarter as a number of applications experienced good growth, particularly those involving security or military applications. Revenues in our specialty lighting were up year over year due to a relatively easy comparison, to Q1 '02 in photography. During the quarter, we had 57 designing wins and are experiencing excellent momentum in the marketplace.

GAAP operating profit for the first quarter of 2003 was 8.7 million, or 10.4% of revenues, up significantly versus Q1 '02 operating loss of 22.6 million. Both periods included intangible amortization of 300,000 and Q1 '02 included 21 million of charges from restructuring and an inventory write down. In Fluid Sciences, revenue was 43 million, down 4% from 45 million in Q1 of '02, reflecting continued weakness in both of their key end markets, aerospace and semiconductor.

GAAP operating profit for the first quarter of 2003 was 2.4 million, or 5.5% of revenue, versus 3.4 million in Q1 '02.or 7.6% of revenue. Q1 '03 operating profit included intangible amortization of 400,000 while Q1 '02 operating profits included intangible amortization of 200,000. Consistent with prior quarters, we've attached a cash flow statement and balance sheet.

We remain focused on driving strong cash flow across the organization. And continue to drive our CQ initiative aimed at compressing the cash cycle. In addition, for 2003 all bonus eligible employees have 50% of their bonus based on free cash flow targets, a practice we started last year, and that we felt was very successful. For the first quarter of 2003, operating cash flow was 28 million, compared to a use of cash of 31 million for the same period of 2002, or an improvement of 55 million.

We continue to reduce working capital as our working capital terms improved, .7 turns, to 4.2 from 3.5 in Q1 of '02. This generated 24 million of cash during the quarter which includes the benefit of 11 million dollars additional amount in our accounts receivable securization program. Restructuring spending during the first quarter of 2003 was 4.6 million, down from the 23 million in Q1 of last year.

Depreciation and amortization was 19 million for the quarter, and capex during the quarter was 2003, was 3.5 million, down significantly from the 16.5 million in first-quarter of 2002, as last year included IT costs associated with the Packard integration. The cash regenerated in the quarter was used to pay down 15 million of our term debt, as well as pay the quarterly dividend of 9 million dollars. I was not planning on discussing the balance sheet in detail, other than to point out that we have 154 million of restricted cash held in escrow, which is 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. As mentioned previously, we utilized 33 million of the restricted cash during the first quarter to repay a portion of the convertible. Earnings before interest expense, income taxes and depreciation or amortization expense or EBITDA was 35.5 million for the first quarter of 2003.

The EBITDA for the first quarter of 2003 was comprised of earnings before interest expense and income taxes of 19.3 million, plus intangible amortization of 7.1, plus the depreciation of 11.6, less an aggregate 2.5 million of other expense and the loss from discontinued operations. Moving to the second quarter, we expect the economic environment to remain challenging and are watching closely the impact of SARS, on the Asian economy. As well as the significant manufacturing presence we have in the region.

Given those concerns, we're providing a range of guidance of 5 cents to 8 cents on a GAAP basis, which reflects the impact of intangible amortization of 4 cents. And as Greg mentioned, for the year we continue to believe the actions we're taking should allow us to achieve EPS on a GAAP basis of 37 to 43 cents, consistent with our January guidance. I will now open the call to your questions.

Thank you. The question and answer session will be conducted electronically today. If you would like to ask a question, press the star key, followed by the digit 1 on your touch tone telephone. And if you're using a speaker phone, make sure your mute function is turned off to allow your signal to reach our equipment. Once again, if you would like to ask a question, press star 1 at this time. And we'll pause for a moment to assemble the roster. [ pause ] And we'll first hear from Walter Branson of Regimen Capital.

Thanks very much. You mentioned restructuring charges and inventory write downs in a number of different places this year and last year, could you just summarize those for me and give us the total for this year and last year?

For this year, there were no restructuring charges or inventory write downs. Basically all the discussions were really referencing the Q1 '02, just for comparative purposes. Really wasn't, this year is relatively clean of any restructuring or inventory write downs. I could give you for 2002 the restructuring was about 9.2 million, a million and a half was in the instruments SBU, 3.7 was in the optoelectronics business, and 4 million was in the Life Sciences, and the inventory write-down of 17 million was exclusively in the optoelectronics business.

Okay. And what is the balance on your AR securization debt?

It's $40 million.

Okay. Thank you.

We'll now hear from Lakshmi Bhojraj from Smith Barney.

Hi, good quarter!

Thank you.

Just a few questions. First of all, was there a currency impact on the bottom line in the quarter?

No, very little. As I mentioned, the top line was about 3% and we have a fair amount of our expenses both in Europe and in Asia, so I would say on a net basis a relatively small -- and, of course, probably when you consider the fact that I think this strength of the dollar or the strength of the foreign currencies impact us a little bit on price, I think overall it might have been a little negative, to tell you the truth.

Okay. And then you've talked about -- revenue growth expectations of zero to 2% in 2003, but could you give us an update on how you expect that to break out, between each of the 4 divisions?

Yeah, I would say in the Life Sciences area, we're saying low single digits. Probably I would say both Life Sciences and Analytical Instruments in the low single digits. Up to a little higher than that. I would say up to probably in the mid to high single digits, and Fluid Sciences negative probably in the high single digits.

Okay. And now that we're looking at numbers on a GAAP basis, it would be helpful if you could kind of run through the cost assumptions or the expense assumption for SG&A and R&D and cost this year, as a percentage of sales or what you expect growth in those line items to be.

Why don't I do it as a percentage of revenue.

Okay.

And I would say we think our gross margins are going to come in I would say, relative flat year over year, maybe up about 50 basis points, so call it at about 41 1/2 to 42% in that type of range.

Okay.

R&D, probably about what it's been in the 5 1/2 to 6% of sales. SG&A, we're clearly forecasting a significant improvement in there, and we feel good about the progress we made in Q1. So that's probably down about 300 basis points. And the 25 1/2% range.

Okay. Great. And Greg, you alluded to some bright spots in the economy. That we could potentially look forward too. Can you elaborate there?

Well, I think it really kind of follows the revenue growth that we saw in the first quarter. So we saw the environmental area to be fairly strong. We saw the pharmaceutical quality assurance, quality control area be fairly strong. We continue to see medical imaging and diagnostics to hold up, do okay. The photography market has gotten stronger. And so it's really just sort of picking out some of those segments. I mean, I continue to be somewhat optimistic that at some point the business investment climate will become stronger. You know we had the overhang of the war. That's now pretty much gone away we now have the overhang of SARS. So if we can get through all these things, I think, I think at least we're at a bottom in terms of some of the business investment outlook. So I would characterize the economy as stable. With the promise to get better. And those are the segments I spiked out are just those that have continued to do well or have started doing better.

Okay. And it seems like from your Life Sciences revenue growth, guidance for the full year, you talk about low single digit growth. It looks like you're banking on a second half recovery there, and I guess just from the way things are going in the end markets now, is that realistic or what is behind that assumption?

Well, I think -- I'll start then Rob can dig in. I think from a Life Science perspective, you know, we continue to see -- we'll continue to see growth in the reagents line and we think we'll see growth in the service line. And capital expenditures will stay, you know, soft throughout the year. And I think as we go through the year, maybe the comparisons get a little bit easier year over year, relative to the capital expenditure side of the equation. So we're not forecasting a dramatic turn in capital expenditures. We think to be a slight positive trend on them. But really, it's kind of the service and consumer elements that become a larger portion of the revenue, and we'll -- it will provide the growth.

Great. Thank you.

Yeah. You're welcome.

Our next question comes from Paul Knight of Thomas Weisel Partners.

Hi, Paul.

Hi, Greg. How are you?

Good.

The Perkin Elmer analytical instrument division had a good quarter, particularly in terms of operating income performance. Why has that rather dramatic change occurred after, you know, a year of tough times?

You know, I think -- I would attribute it back to combination of two things. One, in the Analytical Instrument business we have done almost a complete refresh of all our product lines, and two I think, in doing so we've gotten more focused around some specific end market applications, and that is the environmental side. And the pharmaceutical QA QC area.

Three, I think those sectors have seen a little bit of turn themselves. They probably were earlier into, I'll call it the downturn, than certainly the Life Science business was. And so I think they -- I think they come out of it a little bit quicker. Same with some of the component areas within optical electrics. Some of those have an earlier lead time because they're not the system level, and so those are probably -- we hope those are good leading indicators. So I think it's really the NPIs, focus on the application, more complete application definitions, and then some positive lift in those end markets. So I'd say it's a combination of share and recovery there.

And then on the Life Science division, is the consolidation of the sales force -- that's been over for a while, I believe, correct? And then lastly, the tone of business as we kind of plow through April, is it gotten better than general tone of Q1?

Well, you know, to go back to the integration, the integration of Life and Analytical has been underway for six months now, and the first priority we're working on just out of the chute was to integrate the front end. So the front end is integrated and in place, and we feel good about that. That continues to drive ahead. There's obviously lots of other areas within the integration. We continue to work on and make progress and we're pacing those out as we go. Everything from site shutdowns which we're going to announce, to completing those, to continuing to integrate customer care and a few other areas. So I think yes, that that's a fair conclusion on the front end. Relative to the tone of business in April, you know, versus January, as a first month of each quarter, I would say, April is improved over January, but we only have three weeks of sales under our belt, so I'm always hesitant to extrapolate off that too much. But I would say it's an encouraging start.

Thank you.

You're welcome.

As a reminder, if you want to ask a question, press star 1 at this time. And we'll now hear from Larry Niebor of Robert W Baird.

Hi, Larry.

Thank you, good morning. You highlighted your exposure to SARS in Asia. Are you seeing any current impact, either from your customers or on your manufacturing operations, or is that just --?

Let me address those specifically. The manufacturing operations, no. And so we haven't seen any impact on that. On our customers, you know, we haven't seen a big impact there. I would say probably the most immediate impact we've seen is just been translated back through the aerospace industry. So because obviously the airlines are getting battered and they're the first ones out of the blocks on this.

Our anxiety really about SARS is that as you think about economic activity in Asia, it is being affected by the inability of global transportation and also by the fact of local people are concerned about this containing themselves. So you have to assume that economic activity will -- that this I'll call it immediate reduction in overall economic activity within the area will have some kind of an impact. So we can't point to -- and I wouldn't say there was any impact in the first quarter, and you can't point to a discernable impact at this point, but eventually it will have some impact on the economy. We can't predict it exactly what that means, Larry. Specifics, it's just -- I think to be prudent, certainly the transportation and the hospitality industries are hit hard, and from there how far does it spread? I think it's a question of whether it gets contained quickly or whether it mushrooms.

Okay. Thank you.

Okay.

We'll now hear from Tom Stolberg (phonetic) of State Street Research.

Thank you, good morning.

Good morning.

I just have one question regarding the actually pretty amazing year over year decline in your SG&A. You noted head count reduction, was that entirely the reason for the reduced amount there?

No, I think it's a combination of things. Clearly, a big piece of that is head count. But we're looking at discretionary expenses across the board. And we're -- things like getting out of facilities, one of the things we talked about is as we consolidate the Life and Analytical Sciences, we have a number of sites that we can consolidate down into, so it's across the board almost every element of expense we've been working pretty hard, and you say we're pleased to see the reduction coming through in the P&L.

And do you think -- I mean, I think it's amazing, 15 million bucks year over year for the first Q out of the box this year. I would expect that with the year over year declines probably won't match that, will they, over the next two or three Qs?

You mean on a --

-- On a straight absolute dollar basis.

Well as I mentioned earlier, we're looking to take for the year about 300 basis points out of SG&A. And that roughly translates on a year over year basis to some $25 million. So it's a --.

So the declines will be less going forward?

Yes.

Okay. That's really it. I appreciate it.

You're welcome. Thank you.

Our next question comes from Jim Brutus of Alliance Investments.

Can you tell us what the top line growth is for each segment on a local currency basis?

Let me go through the segments. As I mentioned, the company was at a 4 on a reported and the foreign exchange impact, and let me give you sort of the reported and foreign exchange impact, if that's probably the best way to do that. 4% on a reported basis. The foreign exchange impact was 3. And the case of Life Sciences, on a reported basis they were down about 11. And the foreign exchange impact to that would be an additional 3. In the case of optoelectronics, they were up 20% on a reported basis. The impact of that is relatively small, I would say, a point to a point and a half. And the case of instruments, they were up 11% on a reported basis, and I would say, the impact there is about 5% on foreign exchange and in the case of fluids they were down 4, and foreign exchange has virtually no impact on them.

Thank you.

You're welcome.

Next we'll hear from Mike McCarthy of Shapiro Capital Management.

Good morning. I'm just curious have the prospects of selling any of the discontinued operations changed, or do you think you're still --?

We have one business, Mike, in discontinued right now. It's the entertainment lighting. And I think we're fairly optimistic we'll be able to sell that this quarter. That's really the only business right now that's in discontinued.

And just -- you know, the unfortunate existence of these infectious diseases like SARS and so forth, am I wrong, or long-term does that not create ultimate demand for products likes yours? -- I -- Does this not provide evidence for your long-term optimism?

I think it's good evidence for why the life science marketplace is going to be a robust marketplace over the next couple decades. And when you looks at how people are attacking SARS, this is an interesting question but when you looks at how people are attacking SARS, what it's going to be is technology is going to solve this, right? So this isn't going to be the plague rolling out. Where literally millions of people die around the world. But that there's a huge investment driven by technology, which is analyzing, has already sequenced the virus, and is looking at solutions for it. So I think the answer to that is yes.

Thank you.

You're welcome.

Next we'll hear from Peter Schwartzman of Black Rock Financial Management.

Good morning. You guys just reconcile your 35.5 million of EBITDA, with the -- if we add up the segments, you know, earnings points, risk taxes and then your amortization, is there some other losses in there that we're not capturing in terms of the discontinued or currency or corporate?

Yeah, there's about -- 2 1/2 million that we include from discontinued and other non-interest expenses.

Okay.

And there would also be some level of corporate -- I don't know what numbers you're starting with from the

I guess I took the -- the numbers in the paragraphs of the press release and I added those up. To get an earnings for [inaudible] charges before amortization. And then I added, I added back to the depreciation and amortization for that. I got more of a 38 million dollar number.

Right. It's probably the 2 1/2 million from the discontinued ops and the other.

Okay. So the other is based might be more of a 5 million dollar number, 6 million dollar?

No, it should be about 2 1/2.

Okay. Okay.

If you came up with 38, and I used 35.5 --

Yeah, 2 1/2. and I have some other, okay. I'll -- all right. I can follow up off line. Think I got the right numbers added up here, but I.

Okay, sure.

And Mr. Sotheby, there are no further questions at this time. I'll turn the call back over to you for any additional or closing remarks.

Okay. This is Greg. Let me just jump in here. As I mentioned, in my earlier remarks, we feel good about our progress in Q1, and are optimistic about our prospects throughout the remainder of the year. Not because we see the economy recovering dramatically, but because we're better positioned for a lower growth economic environment. Thank you for your interest in Perkin Elmer, this call is adjourned and have a great day.

That concludes today's conference call, you may now disconnect.