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Six money managers examine portfolio management strategies in the latest issue of The Wall Street Transcript, available at (212/952-7433) or http://www.twst.com/info/info550.htm

TWST: Tell us what attracted you to a life sciences company, PerkinElmer.

Mr. Ganucheau: PerkinElmer (NYSE:PKI) used to be EG&G Corp. Management of EG&G wanted to be more exposed to growing life sciences markets, and began a process in 1998 to reconfigure its portfolio of businesses to accomplish this goal. In May 1999 they bought PerkinElmer’s analytical instruments division and the PerkinElmer name from Applied Biosystems (ABI). In July 2000 they bought NEN Life Sciences (drug discovery products, services, reagents, technologies). In November 2001, they bought Packard BioScience to bring the total life science exposure (in three divisions) to roughly two-thirds of sales (up from 15% in 1998). Most of the repositioning is complete, and shareholders will now enjoy the exposure to the high growth life sciences market. The life sciences division (40% of est. 2002 sales) focuses on drug discovery (80%) and genetic screening (20%). Products include instrumentation, reagents, consumables, assay development, sample preparation, and biochip technologies. Reagents and disposables account for about 60% of life sciences sales (a razor-blade type business with repeat demand), with the balance from hardware systems. Customers include pharmaceutical and biotech firms, academic institutions, and government health agencies. PKI is number one in drug screening, liquid handling and sample preparation, and genetic disease screening. The analytical instruments division (38% of est. 2002 sales) serves pharmaceutical (30%), environmental (20%) and general analytical (50%) markets. These products are used in drug development and manufacturing, studying molecular mechanisms of drug actions, monitoring for environmental pollutants, analyzing nutritional content of food and beverages, analyzing purity of raw materials used in semiconductor and optical products, and for detection of weapons, explosives, and contraband with hand-held and walk-through metal detectors. They are leaders in the pharmaceutical quality control and environmental testing markets.

The optoelectronics division (22% of est. 2002 sales) serves biomedical (25%), telecom (10%), and industrial (65%) customers. Products include fiber-optic network test equipment, telecom components, large area amorphous silicon detectors, high performance specialty lighting sources, and advanced sensing and imaging equipment. Optoelectronics has leading positions in digital imaging and medical sensors. At today’s price of around $13, PerkinElmer is trading at 16.3 times next year’s earnings estimate, which is cyclically depressed and will meaningfully increase when the environment improves. We think this is very reasonable, given their sales and earnings growth rates, which should approach 10% and 13%, respectively, over the next five to seven years given the end markets that they operate in. We like the balance of exposure to the cyclical recovery in the industrial earnings and above GDP secular growth in the life sciences markets. PerkinElmer has a strong balance sheet and is going to be essentially debt-free after they sell their fluid sciences division. PKI will be a debt-free company trading at 16 times depressed earnings exposed to good growth markets with significant proprietary value-added products. A discounted cash flow model on PKI shows today’s price is implying a 13% return. Looked at another way, if earnings grow 13% (including the benefit of a cyclical recovery), investors could realize a 15.2% total return, including PKI’s 2.2% current dividend yield, assuming the p/e ratio remains flat. If we assume that the market rewards them for higher than average growth, raising the p/e ratio 25% to 20 times earnings, an investment will be up 2.5 times (doubling earnings and taking the p/e ratio up 25%) over 5.7 years (the time it takes to double the earnings at 13%). This represents a 17.5% compound annual return. Adding the dividend yield of 2.2% means investors could approach a 20% annual total return over the next five to six years. PerkinElmer is attractive at these levels.

This special Investing Strategies Report includes:

1) Peter F. Ganucheau IV, Principal, Portfolio Manager/Analyst with GSB Investment Management, Inc., examines portfolio management strategies in this timely and deeply informative 11,400-word interview from The Wall Street Transcript.

2) William J. DeRosa Jr., Portfolio Manager with Badgley, Phelps and Bell, Inc., examines portfolio management strategies in this timely and deeply informative 4,500-word interview from The Wall Street Transcript.

3)Jonathan W. White, Senior Vice President and Chief Investment Strategist for Banknorth Investment Management Group, examines portfolio management strategies in this timely and deeply informative 3,100-word interview from The Wall Street Transcript.

4) Geoffrey R.B. Carey and Jane W. Korhonen, both Partner and Senior Portfolio Managers at Brown Investment Advisory & Trust Company, examine portfolio management strategies in this timely and deeply informative 3,500-word interview from The Wall Street Transcript.

5) Richard H. Earnest, Director for HighMark Capital Management, examines portfolio management strategies in this timely and deeply informative 4,900-word interview from The Wall Street Transcript.