PerkinElmer, Inc. (NYSE: PKI - News), a global leader focused on improving the health and safety of people and the environment, today announced that it has agreed to sell its Illumination and Detection Solutions (IDS) business to Veritas Capital Fund III, L.P., a New York-based private equity firm, for approximately $500 million in cash ($482 million net of payment for acquired cash balances).

IDS includes approximately 3,000 employees and 14 manufacturing facilities worldwide and is a leading global provider of custom-designed specialty lighting and sensor components, subsystems and integrated solutions to major OEMs serving a number of applications within various health, environmental, and security segments. The business is expected to generate revenue of approximately $300 million in 2010.

“The divestiture of our IDS business reduces the complexity of the company and frees up capital to reinvest in our more attractive Human Health and Environmental Health end markets,” said Robert Friel, chairman and CEO of PerkinElmer. “In addition, this transaction should reduce the company’s exposure to more cyclical end markets and improve our top-line growth profile. Furthermore, we would expect adjusted gross margins to improve by over 200 basis points, contributing to higher earnings growth.”

As a result of the agreement to sell IDS, the Company will report the financial results for IDS as a discontinued operation. Consequently, for the third quarter 2010, the Company forecasts organic revenue to grow at a high single digit rate and now forecasts GAAP earnings per share from continuing operations in the range of $0.19 to $0.21. On a non-GAAP basis, which includes the adjustments noted in the attached reconciliation, the Company now forecasts adjusted earnings per share from continuing operations in the range of $0.27 to $0.29.

For the full year 2010, the Company forecasts organic revenue to grow at a high single digit rate and now forecasts GAAP earnings per share from continuing operations in the range of $1.06 to $1.11. On a non-GAAP basis, which includes the adjustments noted in the attached reconciliation, the Company now forecasts adjusted earnings per share from continuing operations in the range of $1.24 to $1.29.

Although the Company has not issued guidance for 2011, the Company expects that the transaction will be $0.08 to $0.10 dilutive in 2011 or 5%-6% based on the current 2011 Thomson First Call consensus of $1.70.

The Company also announced today that its Board of Directors has authorized an increase in the number of shares of the Company’s common stock available for repurchase to 13 million. Purchases will be made through open market transactions or privately negotiated transactions, subject to market conditions and trading restrictions.

The transaction is expected to close by the end of 2010 and is subject to customary closing conditions, including the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act.

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.

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, changes to the fair values assigned to contingent consideration, other costs related to business acquisitions, the gain on sale of building, the gain on the step acquisition, and restructuring and lease charges, 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 the items above included in adjusted gross margin, adjusted R&D expense, adjusted SG&A expense, restructuring and lease charges, and provision for taxes, related to these items, from GAAP earnings per share. 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, changes to the fair values assigned to contingent consideration, other costs related to business acquisitions, the gain on sale of building, the gain on the step acquisition, and restructuring and lease charges, 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.